<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 25, 2000
REGISTRATION NO. 333-32874
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ADVANTA BUSINESS RECEIVABLES CORP.
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ADVANTA BUSINESS CARD MASTER TRUST
(ISSUER OF THE NOTES)
NEVADA 23-2852207
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
639 ISBELL ROAD, SUITE 390
RENO, NEVADA 89509
(775) 823-3080
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ELIZABETH H. MAI, ESQ.
ADVANTA CORP.
WELSH & MCKEAN ROADS
SPRING HOUSE, PENNSYLVANIA 19477
(215) 444-5920
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
COPY TO:
KEITH L. KRASNEY, ESQ.
WOLF, BLOCK, SCHORR AND SOLIS-COHEN LLP
250 PARK AVENUE
NEW YORK, NEW YORK 10177
(212) 883-4954
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after this registration statement becomes effective as determined
by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. / x /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / __________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / / _________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================
PROPOSED
PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE AMOUNT TO BE MAXIMUM AGGREGATE AMOUNT OF
REGISTERED REGISTERED AGGREGATE PRICE OFFERING PRICE REGISTRATION
(a) (b) PER NOTE(c) (c) FEE(d)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSET BACKED NOTES $1,000,000 100% $1,000,000 $264
====================================================================================================================
</TABLE>
(a) With respect to any Asset Backed Notes issued with original issue
discount, the amount to be registered is calculated based on the initial
public offering price thereof.
(b) With respect to any Asset Backed Notes denominated in any foreign
currency, the amount to be registered shall be the U.S. dollar equivalent
thereof based on the prevailing exchange rate at the time such Asset
Backed Note is first offered.
(c) Estimated solely for the purpose of calculating the registration fee.
(d) Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
INTRODUCTORY NOTE
This registration statement includes:
- - a representative form of prospectus supplement to the base prospectus
relating to the offering by Advanta Business Card Master Trust of a series
of asset backed notes; and
- - a base prospectus relating to asset backed notes of Advanta Business Card
Master Trust.
<PAGE> 3
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS
NOT COMPLETE AND MAY BE AMENDED. WE MAY NOT SELL THESE SECURITIES UNTIL WE
DELIVER A FINAL PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS ARE NOT AN OFFER TO SELL
NOR ARE THEY SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
Representative Form of Prospectus Supplement
SUBJECT TO COMPLETION, DATED MAY 25, 2000
Prospectus Supplement to Prospectus dated , 2000
ADVANTA BUSINESS CARD MASTER TRUST
Issuer
ADVANTA BUSINESS RECEIVABLES CORP.
Transferor
ADVANTA BANK CORP.
Servicer
SERIES 2000- ASSET BACKED NOTES
<TABLE>
<CAPTION>
CLASS A NOTES CLASS B NOTES CLASS C NOTES
<S> <C> <C> <C>
Principal Amount $ $ $
Interest Rate [One-Month LIBOR [One-Month LIBOR [One-Month LIBOR
plus plus plus
[ ]% per year] [ ]% per year] [ ]% per year]
Interest payment dates Monthly on the 15th, Monthly on the 15th, Monthly on the 15th,
beginning , 2000 beginning , 2000 beginning , 2000
Expected principal
payment date ,200 ,200 ,200
Legal maturity date ,200 ,200 ,200
Price to public $ (or %) $ (or %) $ (or %)
Underwriting discount $ (or %) $ (or %) $ (or %)
Proceeds to issuer $ (or %) $ (or %) $ (or %)
</TABLE>
The Class B notes are subordinated to the Class A notes. The Class C notes are
subordinated to the Class A and Class B notes. The Class D notes are
subordinated to the Class A, Class B and Class C notes.
Only the Class A, Class B and Class C notes are offered by this prospectus
supplement and the accompanying prospectus.
The Trust will have an interest in
- receivables in a portfolio of MasterCard(R) business revolving credit
card accounts;
- payments due on those receivables; and
- other property described in this prospectus supplement and in the
accompanying prospectus.
<PAGE> 4
THE NOTES --
- will be paid only from the trust assets;
- offered with this prospectus supplement and the accompanying
prospectus will be rated in one of the four highest rating categories
by at least one nationally recognized rating organization.
We expect to issue your series of notes on or about ________________, 2000. We
will deliver your notes in book-entry form.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE [8] IN THE
PROSPECTUS.
A note is not a deposit and neither the notes nor the underlying accounts or
receivables are insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency.
The notes are obligations of Advanta Business Card Master Trust only and are not
obligations of Advanta Business Receivables Corp., Advanta Bank Corp., Advanta
Corp., any affiliate of them or any other person.
THIS PROSPECTUS SUPPLEMENT MAY BE USED TO OFFER AND SELL THE OFFERED NOTES ONLY
IF ACCOMPANIED BY THE PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THESE NOTES OR DETERMINED THAT THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Underwriters of the Series 2000- notes
, 2000
<PAGE> 5
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about your notes in two separate documents: (a)
the accompanying prospectus, which provides general information, some of which
may not apply to your series of notes, and (b) this prospectus supplement, which
describes the specific terms of your series of notes.
Whenever the information in this prospectus supplement is more specific than
the information in the accompanying prospectus, you should rely on the
information in this prospectus supplement.
You should rely only on the information provided in this prospectus supplement
and the accompanying prospectus, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information. We are not offering the notes in any state where the offer is not
permitted.
We include cross references in this prospectus supplement and the accompanying
prospectus to captions in these materials where you can find further related
discussions. The following Table of Contents and the Table of Contents in the
accompanying prospectus provide the pages on which these captions are located.
This prospectus supplement uses some defined terms. You can find a glossary of
terms under the caption "Glossary of Terms for Prospectus Supplement" beginning
on page S-56 in this prospectus supplement and under the caption "Glossary of
Terms for Prospectus" beginning on page 102 in the accompanying prospectus.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Transaction Summary ......................................... S-1
Summary of Terms ............................................ S-3
The Issuer .................................................. S-3
Seller, Servicer and Transferor ............................. S-3
The Series 2000-Notes ....................................... S-3
Credit Enhancement .......................................... S-4
[Pre-Funding Account ........................................ S-5
Events of Default ........................................... S-5
Other Interests in the Trust ................................ S-6
The Receivables ............................................. S-7
Allocations of Collections .................................. S-7
Application of Collections .................................. S-8
Pay Out Events .............................................. S-9
Optional Redemption ......................................... S-10
Denominations ............................................... S-10
Registration, Clearance and Settlement ..................... S-10
Tax Status .................................................. S-10
ERISA Considerations ........................................ S-10
[Exchange Listing ........................................... S-11
The Seller's Business Card Portfolio ........................ S-12
Delinquency and Loss Experience ............................. S-12
Receivable Yield Considerations ............................. S-15
Recoveries .................................................. S-16
Payment Rates ............................................... S-16
Recent Developments Relating to Advanta Corp ................ S-16
The Trust Portfolio ......................................... S-17
Maturity Considerations ..................................... S-21
Controlled Accumulation Period .............................. S-21
Early Amortization Period ................................... S-22
Description of Series Provisions ............................ S-23
Issuance .................................................... S-23
Interest Payments ........................................... S-24
[Pre-Funding Account ........................................ S-27
Principal Payments .......................................... S-27
Postponement of Controlled Accumulation Period .............. S-30
Allocation Percentages ...................................... S-30
Floating Allocation Definitions ............................. S-31
Fixed Allocation Definitions ................................ S-32
Invested Amount Definitions ................................. S-33
Reallocated Principal Collections ........................... S-33
Application of Collections .................................. S-34
Payments of Principal ....................................... S-36
Subordination ............................................... S-38
Shared Finance Charge Collections ........................... S-39
Shared Principal Collections ................................ S-39
Defaulted Receivables; Investor Charge-Offs ................. S-40
Principal Funding Account ................................... S-40
Reserve Account ............................................. S-41
Cash Collateral Account ..................................... S-43
Cash Collateral Account Distributions ....................... S-46
Additional Series Enhancement ............................... S-46
[Issuance of Additional Notes ............................... S-46
Pay Out Events .............................................. S-47
Events of Default ........................................... S-49
Servicing Compensation and Payment of Expenses .............. S-50
Reports to Noteholders ...................................... S-51
ERISA Considerations ........................................ S-51
Underwriting ................................................ S-53
Legal Matters ............................................... S-55
Glossary of Terms for Prospectus Supplement ................. S-56
Annex I-Other Series Issued and Outstanding ................. A-1
</TABLE>
-i-
<PAGE> 7
TRANSACTION SUMMARY
This Transaction Summary lists certain information concerning the Advanta
Business Card Master Trust Notes, Series 2000- . The table also describes the
Class D notes which have not been registered under the Securities Act of 1933
and will be retained by the transferor or an affiliate or sold to investors in
private transactions.
Trust: Advanta Business Card Master Trust
Transferor: Advanta Business Receivables Corp.
Seller: Advanta Bank Corp.
Servicer: Advanta Bank Corp.
Indenture Trustee: [_____________________________]
Owner Trustee: [_____________________________]
Closing Date: __________, 2000
Clearance and Settlement: DTC/Clearstream/Euroclear
Primary Trust Assets: Receivables generated under unsecured
lines of credit with small businesses
Offered Notes Class A, Class B and Class C
<TABLE>
<CAPTION>
NOTE STRUCTURE Amount % of Total
Series
<S> <C> <C>
Class A $ %
Class B $ %
Class C $ %
Class D $ %
Annual Servicing Fee Rate: 2.0%
</TABLE>
<TABLE>
<CAPTION>
CLASS A Class B Class C
<S> <C> <C> <C>
Anticipated Ratings:* AAA/Aaa/AAA A/A2/A BBB/Baa2/BBB
(Fitch IBCA/ Moody's/Standard &
Poor's)
Credit Enhancement: subordination of subordination of subordination of
Class B, Class C Class C and Class D; cash
and Class D Class D collateral
account
Interest Rate: One-Month One-Month One-Month
LIBOR plus LIBOR plus LIBOR plus
[___]% per year [___]% per year [___]% per year
Interest Accrual Method: actual/360 actual/360 actual/360
Interest Payment Dates: monthly (15th) monthly (15th) monthly (15th)
</TABLE>
S-1
<PAGE> 8
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Interest Rate Index Reset Date: 2 London 2 London 2 London
business days business days business days
before each before each before each
interest payment interest payment interest payment
date date date
First Interest Payment Date: , 200 , 200 , 200
Expected Principal Payment Date: , 200 , 200 , 200
Commencement of Accumulation
Period (subject to adjustment): , 200 , 200 , 200
Legal Maturity Date: , 200 , 200 , 200
</TABLE>
- ----------
* It is a condition to issuance that at least one of these ratings for each
class be obtained.
S-2
<PAGE> 9
SUMMARY OF TERMS
This summary highlights selected information and does not contain all of the
information that you need to consider in making your investment decision. You
should carefully read this entire document and the accompanying prospectus
before you purchase any notes.
THE ISSUER
The notes will be issued by Advanta Business Card Master Trust, a Delaware
common law business trust, pursuant to an indenture supplement to an indenture,
each between the trust and the indenture trustee.
For additional information concerning the issuer, see "The Issuer" in the
accompanying prospectus.
SELLER, SERVICER AND TRANSFEROR
For additional information concerning Advanta Bank Corp. as a seller, servicer
and administrator and Advanta Business Receivables Corp. as a transferor, see
"Advanta Bank Corp., Advanta Business Receivables Corp. and Advanta Corp." in
the accompanying prospectus.
THE SERIES 2000- NOTES
Only the Class A, Class B and Class C notes are offered by this prospectus
supplement and the accompanying prospectus.
INTEREST
The Class A notes will bear interest at [one-month LIBOR as determined each
month plus ___% per annum.]
The Class B notes will bear interest at [one-month LIBOR as determined each
month plus ___% per annum.]
The Class C notes will bear interest at [one-month LIBOR as determined each
month plus ___% per annum.]
[The Class D notes will bear interest at [one-month LIBOR as determined each
month plus ___% per annum.]]
For each class of the Series 2000- notes, interest will be calculated as
follows:
Principal balance Number of days
at end of prior X in interest X Interest
monthly period period rate
360
Each interest period begins on and includes a payment date and ends on but
excludes the next payment date. However, the first interest period will begin on
and include the closing date.
Interest on the Series 2000- notes will be paid on each payment date, which will
be __________[15], 2000 and the 15th day of each following month if the 15th is
a business day and, if not, the following business day.
You may obtain the interest rates for the current interest period and the
immediately preceding interest period by telephoning the indenture trustee at
(___) ___-____.
See "Description of Series Provisions -- Interest Payments" in this prospectus
supplement for a description of how and when LIBOR will be determined.
S-3
<PAGE> 10
PRINCIPAL
Principal of the Class A notes, Class B notes, Class C notes and Class D notes
is expected to be paid in full on the ____________, 200 payment date, which is
the expected principal payment date.
However:
- no principal will be paid on the Class B notes until the Class A notes
are paid in full;
- no principal will be paid on the Class C notes until the Class A and
Class B notes are paid in full; and
- no principal will be paid on the Class D notes until the Class A
notes, Class B notes and Class C notes are paid in full.
We are scheduled to begin accumulating collections of principal receivables
starting on __________, 200 for payment to the Series 2000- noteholders on the
expected principal payment date, but we may begin accumulating at a later date.
Principal of the Series 2000- notes may be paid earlier or later than the
expected principal payment date. You will not be entitled to any premium for
early or late payment of principal. If specified events known as pay out events
occur, principal may be paid earlier than expected. If collections of the
business card receivables are less than expected or are collected more slowly
than expected, then principal payments may be delayed. If the Series 2000- notes
are not paid on the expected principal payment date, collections of principal
receivables will continue to be used to pay principal on the Series 2000- notes
until the notes are paid or until the legal maturity date of __________ , 200 ,
whichever occurs first.
For more information about principal payments, see "Maturity Considerations,"
"Description of Series Provisions--Principal Payments" and "--Allocation
Percentages" in this prospectus supplement.
CREDIT ENHANCEMENT
Credit enhancement for your series is for the benefit of your series only. You
are not entitled to the benefits of credit enhancement available to other
series.
SUBORDINATION
Credit enhancement for the Class A notes is provided by the subordination of the
Class B notes, Class C notes and Class D notes.
Credit enhancement for the Class B notes is provided by the subordination of the
Class C notes and Class D notes.
Credit enhancement for the Class C notes is provided in part by the
subordination of the Class D notes.
The Class D notes do not have the benefit of subordination of any other class of
notes.
CASH COLLATERAL ACCOUNT
A cash collateral account will provide credit enhancement for the Class C notes
and the Class D notes.
The cash collateral account initially will [not] be funded. After the Series
2000-notes are
S-4
<PAGE> 11
issued, deposits in the cash collateral account will be made each month from
available finance charge collections and, if necessary, shared finance charge
collections from other series in group [one] up to the required cash collateral
account amount as described in this prospectus supplement under "Description of
Series Provisions--Cash Collateral Account." The cash collateral account will be
used to make payments on the Class C notes and the Class D notes if collections
of finance charge and administrative receivables allocated to the Class C notes
and the Class D notes are insufficient to make required payments.
For more information about credit enhancement, see "Description of Series
Provisions -- Reallocated Principal Collections," "-- Application of
Collections" and "-- Defaulted Receivables; Investor Charge-Offs" in this
prospectus supplement.
[PRE-FUNDING ACCOUNT
On the closing date, $__________ will be deposited into a pre-funding account.
Funds will be maintained in this account until the earliest of:
- the commencement of the early amortization period;
- the date on which the invested amount first equals $__________; and
- __________, 200__.
During this funding period, funds may be withdrawn on a weekly basis to the
extent of any increases in the invested amount resulting from an increase in the
amount of the trust's principal receivables. Funds may be withdrawn only to the
extent that (a) the transferor interest on that day exceeds the required
transferor interest on that day and (b) the aggregate amount of principal
receivables in the trust on that day exceeds the required minimum principal
balance on that day. However, the invested amount will not exceed the initial
outstanding principal amount of the Series 2000- notes or increase by an amount
greater than the funds on deposit in the pre-funding account immediately prior
to that increase. If there are funds in the pre-funding account after the end of
the funding period, those funds will be paid to the noteholders based on each
noteholder's interest in the trust.]
EVENTS OF DEFAULT
The Series 2000- notes are subject to specified events of default described
under "Description of Series Provisions -- Events of Default" in this prospectus
supplement and "The Indenture -- Events of Default; Rights upon Event of
Default" in the accompanying prospectus. These include, among other things, the
failure to pay interest for 35 days after it is due or to pay principal on the
legal maturity date.
If an event of default occurs and continues with respect to the Series 2000-
notes, the indenture trustee or holders of more than 50% of the then-outstanding
principal balance of the Series 2000- notes may declare the principal amount of
the notes to be immediately due and payable. That declaration may be rescinded
by holders of more than 50% of the then-outstanding principal balance of the
Series 2000- notes.
After an event of default and the acceleration of the Series 2000- notes, funds
on deposit in the collection account, the principal
S-5
<PAGE> 12
funding account, the reserve account, and the excess funding account and, for
the Class C notes and the Class D notes, the cash collateral account, will be
applied to pay principal of and interest on the Series 2000- notes to the extent
permitted by law. Collections of principal receivables and collections of
finance charge and administrative receivables allocated to the Series 2000-
notes will be applied to make the monthly principal and interest payments on the
Series 2000- notes until the earlier of the date those notes are paid in full or
the legal maturity of those notes.
If the Series 2000- notes are accelerated or the issuer fails to pay the
principal of the Series 2000- notes on the legal maturity date, once certain
conditions described under "The Indenture -- Events of Default; Rights upon
Event of Default" are satisfied, the indenture trustee may, if legally
permitted, or will at the direction of holders of at least 66 2/3% of the
principal amount of each class of Series 2000- notes:
- institute proceedings in its own name for the collection of all
amounts then payable on the Series 2000- notes;
- take any other appropriate action to protect and enforce the rights
and remedies of the indenture trustee and the Series 2000-
noteholders; or
- foreclose on a portion of the trust's assets by causing the trust to
issue a foreclosure certificate to the holders of the notes or to a
third party selected by the indenture trustee or by holders of more
than 50% of the then-outstanding principal balance of the Series
2000- notes.
A foreclosure certificate is an investor certificate issued by the trust
representing ownership of the interest in the assets of the trust securing the
Series 2000- notes. A foreclosure certificate held by a noteholder or a third
party will be subject to certain restrictions on transfer described under "The
Indenture -- Events of Default; Rights upon Event of Default" in the
accompanying prospectus.
OTHER INTERESTS IN THE TRUST
OTHER SERIES OF NOTES
The trust will issue other series of notes secured by the assets of the trust
from time to time in the future. A summary of the outstanding series is in
"Annex I: Other Series Issued and Outstanding" included at the end of this
prospectus supplement.
A predecessor master trust has issued 3 series of asset-backed securities in
private transactions. The receivables in that master trust will be conveyed to
the new trust that is the issuer of the notes offered by this prospectus
supplement and the accompanying prospectus on or before the initial issuance of
a series of notes. The holders of the previously issued securities, prior to the
initial issuance of notes offered under this prospectus, will receive in
exchange for their old securities notes issued by the trust in private
transactions. Those new privately issued notes will have economic
characteristics substantially similar to the economic characteristics of the
securities previously issued by the old master trust. As with any series of
notes offered
S-6
<PAGE> 13
hereunder, the new privately issued series of notes will be secured by the
assets of the trust and will receive payments from the cashflow produced by the
receivables. With respect to those privately issued notes and any other notes
that may be issued by the trust privately in the future, references in this
prospectus supplement or the accompanying prospectus to the terms of any series
of notes described in the applicable prospectus supplement instead refer to the
governing documents for those privately issued notes. The previously issued
private securities entitle their holders to some rights that are not being
granted to the holders of the notes. The issuance of future series will occur
without prior review or consent by you or any other noteholder.
THE TRANSFEROR INTEREST
The transferor interest is the interest in the trust not securing your series or
any other series and is owned by the transferor. The transferor may, however,
sell all or a portion of its interest in the transferor interest. The transferor
interest does not provide credit enhancement for your series or any other
series.
THE RECEIVABLES
The primary assets of the trust are receivables in MasterCard(R)* revolving
credit card accounts. The receivables consist of principal receivables and
finance charge and administrative receivables.
The following information is as of , 2000:
- Receivables in the trust: $
- Accounts designated to the trust:
For more information, see "The Trust Portfolio" in this prospectus supplement.
ALLOCATIONS OF COLLECTIONS
The servicer will collect payments on the receivables and will deposit those
collections in an account. It will keep track of those collections that are
finance charge and administrative receivables and those that are principal
receivables.
Each month, the servicer will allocate collections received among:
- your series;
- other series outstanding; and
- the transferor interest in the trust.
The amount allocated to your series will be determined based mainly upon the
size of the invested amount of your series compared to the total amount of
principal receivables in the trust. At the time of issuance of Series 2000- ,
the invested amount for your series will be $[_____].
You are entitled to receive payments of interest and principal only from
collections of receivables and other trust assets allocated to your series. If
the invested amount of your series declines, amounts allocated and available for
payment to your series and to you may be reduced. For a description of the
allocation calculations and the events which may lead to these reductions, see
_____________
* MasterCard(R) is a federally registered trademark of MasterCard
International Inc.
S-7
<PAGE> 14
"Description of Series Provisions -- Allocation Percentages" and "-- Reallocated
Principal Collections" in this prospectus supplement.
APPLICATION OF COLLECTIONS
COLLECTIONS OF FINANCE CHARGE AND ADMINISTRATIVE RECEIVABLES
The trust will apply your series' share of collections of finance charge and
administrative receivables in the following order of priority:
- to pay interest on the Class A notes;
- to pay interest on the Class B notes;
- to pay the monthly servicing fee to the servicer;
- to pay interest on the Class C Notes;
- to cover your series' allocation of defaulted receivables;
- to cover reductions in your series' invested amount resulting from
investor charge-offs allocated to your series and from reallocated
principal collections, in each case that have not been reimbursed;
- to fund a reserve account to cover interest payment shortfalls for the
Series 2000- notes during the controlled accumulation period;
- to make a deposit to the cash collateral account for the Class C notes
and Class D notes up to the required cash collateral account amount;
- to pay interest on the Class D notes;
- to other series in group [one]; and
- to the holders of the transferor interest.
For a more detailed description of these applications, see "Description of
Series Provisions -- Application of Collections" in this prospectus supplement.
COLLECTIONS OF PRINCIPAL RECEIVABLES
The trust will apply your series' share of collections of principal receivables
each month as follows:
- During the revolving period, no principal will be paid to you or
accumulated in a trust account. Instead, your series' share of
collections of principal receivables will be treated as shared
principal collections and may be available to make principal
payments for other series in group [one].
- The controlled accumulation period is scheduled to begin on ,
200 , but may
S-8
<PAGE> 15
begin at a later date. During the accumulation period, your series'
share of collections of principal receivables will be deposited in a
trust account, up to a controlled deposit amount. On the expected
principal payment date, amounts on deposit in that account will be
paid first to the Class A noteholders, then to the Class B
noteholders, then to the Class C noteholders and then to the Class D
noteholders.
- If a pay out event that applies only to Series 2000- or to all series
occurs, the early amortization period will begin. During the early
amortization period, your series' share of collections of principal
receivables will be paid first to the Class A noteholders, then to the
Class B noteholders, then to the Class C noteholders and then to the
Class D noteholders.
- During any of the above periods, collections of principal receivables
allocated to your series may be reallocated, if necessary, to make
required interest payments on the Class A notes, the Class B notes
and the Class C notes and required servicing fee payments, not made
from available finance charge collections, shared finance charge
collections available from other series in group [one] or funds in the
reserve account or the cash collateral account. However, for any
monthly period, the sum of these reallocated principal collections
cannot exceed the sum of (i) for the required interest payments on the
Class A notes, [_____]% of the initial invested amount of your series,
(ii) for the required interest payments on the Class B notes, [_____]%
of the initial invested amount of your series, and (iii) for the
required interest payments on the Class C notes and the required
servicing fee payments, [_____]% of the initial invested amount of
your series, in each case after the initial invested amount has been
reduced due to the writing off of receivables or for previously
reallocated principal collections, in each case, that have not been
reimbursed.
- Any remaining collections of principal receivables will first be made
available to other series in group [one] and then be paid to the
holders of the transferor interest or deposited in the excess funding
account.
For a more detailed description of these applications, see "Description of
Series Provisions -- Application of Collections" in this prospectus supplement.
PAY OUT EVENTS
The documents under which the Series 2000- notes will be issued include a list
of events known as pay out events. There are two types of pay out events: series
pay out events that apply only to the Series 2000- notes and trust pay out
events that apply to notes of all series. If a Series 2000- pay out event or a
trust pay out event occurs, the trust will use collections of principal
receivables allocated to Series 2000- each month to pay principal on the Series
2000- notes.
The following are Series 2000- pay out events:
- the transferor fails to make required payments or deposits, violates
other covenants and agreements or makes representations and warranties
that are materially incorrect;
- the three-month average yield on the trust portfolio, calculated after
reduction for the amount of receivables that are written off as
uncollectible allocated to Series 2000- , is less than a three-month
average rate called the base rate;
- the Class A notes, Class B notes, Class C notes or Class D notes are
not paid in full on their expected principal payment dates; and
- an event of default occurs for the Series 2000- notes.
The following are trust pay out events:
- a failure by the transferor (including any additional transferor) to
transfer receivables in additional accounts to the trust within 5
business days after the date required by the transfer and servicing
agreement;
- any servicer default occurs which would have a material adverse effect
on the noteholders;
- specified bankruptcy, insolvency, liquidation, conservatorship,
receivership or similar events relating to the transferor;
- the transferor (including any additional transferor) is unable to
transfer receivables to the trust in accordance with the provisions of
the transfer and servicing agreement; or
- the trust becomes subject to regulation as an investment company
within the meaning of the Investment Company Act of 1940.
For a more detailed discussion of the pay out events, see "Description of Series
Provisions -- Pay Out Events" in this prospectus supplement and "Description of
the Notes -- Pay Out Events" in the accompanying prospectus.
S-9
<PAGE> 16
OPTIONAL REDEMPTION
The trust has the option to repurchase your notes when the invested amount for
your series, less amounts on deposit in the principal funding account, has been
reduced to 10% or less of the initial principal amount [as increased by the
initial principal amount of any notes of your series issued after the closing
date of your series]. See "Description of the Notes -- Final Payment of
Principal; Termination" in the accompanying prospectus.
DENOMINATIONS
Beneficial interests in the Offered Series 2000- notes may be purchased in
minimum denominations of $1,000 and multiples of $1,000 in excess of that
amount.
REGISTRATION, CLEARANCE AND SETTLEMENT
Your Series 2000- notes will be in book-entry form and will be registered in the
name of Cede & Co., as the nominee of The Depository Trust Company. Except in
certain limited circumstances, you will not receive a definitive instrument
representing your notes. See "Description of the Notes -- Definitive Notes" in
the accompanying prospectus.
You may elect to hold your Series 2000- notes through The Depository Trust
Company, in the United States, or Clearstream Banking, societe anonyme, or the
Euroclear System, in Europe.
Transfers will be made in accordance with the rules and operating procedures of
those clearing systems. See "Description of the Notes -- Book Entry
Registration" in the accompanying prospectus.
TAX STATUS
Subject to important considerations described under "Federal Income Tax
Consequences" in the accompanying prospectus, Wolf, Block, Schorr and
Solis-Cohen LLP, as special tax counsel to the trust, is of the opinion that
under existing law your Series 2000- notes will be characterized as debt for
federal income tax purposes and that the trust will not be an association or
publicly traded partnership taxable as a corporation for U.S. Federal income tax
purposes. By your acceptance of an offered Series 2000- note, you will agree to
treat your offered Series 2000- notes as debt for federal, state and local
income and franchise tax purposes. See "Federal Income Tax Consequences" in the
accompanying prospectus for additional information concerning the application of
federal income tax laws.
ERISA CONSIDERATIONS
Subject to important considerations described under "ERISA Considerations" in
this prospectus supplement and in the accompanying prospectus, the offered
Series 2000- notes are eligible for purchase by persons investing assets of
employee benefit plans or individual retirement accounts. We suggest that a
fiduciary or other person contemplating purchasing an offered Series 2000- note
on behalf of or with plan assets of any plan or account consult with its counsel
regarding whether the purchase or holding of an offered Series 2000- note could
give rise to a transaction prohibited or not otherwise permissible under ERISA
or Section 4975 of the Internal Revenue Code.
S-10
<PAGE> 17
[EXCHANGE LISTING
We will apply to list the offered Series 2000- notes on the Luxembourg Stock
Exchange. We cannot guarantee that the application for the listing will be
accepted.]
S-11
<PAGE> 18
THE SELLER'S BUSINESS CARD PORTFOLIO
For additional information regarding the Advanta Business Card Portfolio,
see "The Bank's Credit Card Activities" in the accompanying prospectus.
DELINQUENCY AND LOSS EXPERIENCE
The following tables set forth the delinquency and loss experience for each
of the periods shown for the Advanta Business Card Portfolio. As of
____________, 200 , the Advanta Business Card Portfolio included receivables
from accounts designated to the trust and forming the trust assets in an
aggregate amount equal to $______ million. The accounts designated to the trust
have been selected from the accounts in the Advanta Business Card Portfolio
based on certain eligibility criteria specified in the transfer and servicing
agreement.
Actual delinquency and charge off experience for the receivables may be
different from that set forth below for the Advanta Business Card Portfolio, for
reasons including:
- because the trust portfolio is only a portion of the Advanta Business
Card Portfolio;
- because additional sellers may in the future originate or acquire
accounts to be designated to the trust; and
- because the transferor will have the right, subject to certain
conditions set forth in the transfer and servicing agreement, and in
some circumstances, the obligation, to designate additional accounts,
and to convey to the trust all receivables in such additional
accounts, which additional accounts may not have the same
characteristics as accounts previously designated to the trust.
We cannot assure you that the future delinquency and loss experience for
the receivables in either the Advanta Business Card Portfolio or the trust
portfolio will be similar to the historical experience of the Advanta Business
Card Portfolio set forth below.
S-12
<PAGE> 19
ADVANTA BUSINESS CARD PORTFOLIO
DELINQUENCY EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
AS OF DECEMBER 31,
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997 1996
---------- -------- -------- --------
<S> <C> <C> <C> <C>
RECEIVABLES OUTSTANDING: $1,040,114 $814,734 $663,087 $305,962
---------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
RECEIVABLES DELINQUENT % OF REC. % OF REC. % OF REC. % OF REC.
AND NUMBER OF DAYS DEL. OUT- DEL. OUT- DEL. OUT- DEL. OUT-
DELINQUENT AMOUNT STANDING AMOUNT STANDING AMOUNT STANDING AMOUNT STANDING
---------------- -------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30 TO 59 DAYS $13,050 1.25% $11,600 1.42% $9,894 1.49% $4,725 1.54%
60 TO 89 DAYS $ 8,300 0.80% $8,007 0.98% $7,110 1.07% $2,777 0.91%
90 TO 119 DAYS $ 6,650 0.64% $6,347 0.78% $4,988 0.75% $1,345 0.44%
120 TO 149 DAYS $ 5,523 0.53% $5,312 0.65% $4,035 0.61% $105 0.03%
150 TO 179 DAYS $ 4,633 0.45% $4,462 0.55% $3,260 0.49% $0 0.00%
180 OR MORE DAYS $280 0.03% $172 0.02% $54 0.01% $0 0.00%
TOTAL $38,436 3.70% $35,900 4.40% $29,341 4.42% $8,952 2.93%
======== ======== ======= ======== ======= ======== ======= ========
</TABLE>
- ----------
(1) The receivables outstanding on the accounts consist of all amounts due from
cardholders as posted to the accounts as of the end of the period shown,
including principal and finance charge and administrative receivables.
ADVANTA BUSINESS CARD PORTFOLIO
DELINQUENCY EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF MARCH 31, 2000
-------------------------
<S> <C>
Receivables Outstanding: $1,226,210
----------
</TABLE>
<TABLE>
<CAPTION>
Receivables Delinquent and % of
Number of Days Delinquent Delinquency Receivables
Amount Outstanding
-------------- -----------
<S> <C> <C>
30 to 59 days $13,509 1.10%
60 to 89 days $9,547 0.78%
90 to 119 days $7,067 0.58%
120 to 149 days $6,646 0.54%
150 to 179 days $5,305 0.43%
180 or more days $125 0.01%
------- -----
TOTAL $42,199 3.44%
======= =====
</TABLE>
- ----------
(1) The receivables outstanding on the accounts consist of all amounts due from
cardholders as posted to the accounts as of the end of the period shown,
including principal and finance charge and administrative receivables.
S-13
<PAGE> 20
Since 1996, changes in the delinquency rates for the Advanta Business Card
Portfolio have been driven by the rate of growth and the seasoning of the
portfolio, the mix of businesses in the portfolio and the general economic
environment. The delinquency rate in 1996 was relatively low due to the rate of
growth in the portfolio and the resultant low seasoning. In 1997, the
delinquency rate was affected by the level of bankruptcies in the economy. In
1998, the mix of the businesses changed to include a greater number of
cardholders who pay their balances in full each month. The downward trend in the
delinquency rate between 1998 and 1999 was the result of continued growth in the
portfolio, the seasoning of the older vintages, the continued change in the mix
of businesses and the robust economic environment.
We expect that the delinquency rates for the Advanta Business Card
Portfolio will increase if the rate of growth in the portfolio slows down. We
also expect that the delinquency rates would increase if the general economic
environment in the United States deteriorates.
ADVANTA BUSINESS CARD PORTFOLIO
LOSS EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended, Year Ending December 31,
------------------- ------------------------------------------------
March 31, 2000 1999 1998 1997 1996
------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Average Receivables Outstanding(1) $1,119,222 $893,006 $743,940 $504,360 $159,939
---------- -------- -------- -------- --------
Gross Losses(2) $14,998 $53,085 $51,062 $20,801 $4,533
Interest Charged-Off(3) $1,367 $4,092 $3,408 $1,153 $215
Recoveries $1,252 $4,689 $3,909 $731 $106
-------- -------- -------- --------
Net Losses(4) $12,379 $44,304 $43,745 $18,917 $4,211
========= ======== ======== ======== ========
Net Losses as a Percentage of 4.42%(5) 4.96% 5.88% 3.75% 2.63%
Average Receivables Outstanding(4)
</TABLE>
- ----------------
(1) Average Receivables Outstanding for each indicated period is calculated as
the average of the opening monthly balances for such periods and includes
principal and finance charge and administrative receivables.
(2) Gross Losses include charge-offs of principal and finance charge and
administrative receivables.
(3) Interest charged-off includes charge-offs of finance charge and
administrative receivables.
(4) Net Losses are calculated as gross losses less interest charge-offs less
recoveries.
(5) Annualized.
Since 1996, changes in the loss experience for the Advanta Business Card
Portfolio have been driven by the rate of growth and the seasoning of the
portfolio, the mix of businesses in the portfolio and the general economic
environment. The changes in the loss experience have been similar to the changes
in the delinquency rates but have lagged due to the timing of charge-offs. The
net loss rates in 1996 and 1997 were relatively low due to the rate of growth in
the portfolio and the resultant low seasoning. In 1998, the net loss rate was
effected by the level of bankruptcies in the economy during 1997. The downward
trend in the net loss rate between 1998 and 1999 was the result of continued
growth in the portfolio, the seasoning of the older vintages, the continued
change in the mix of businesses and the robust economic environment.
S-14
<PAGE> 21
We expect that the net loss rate for the Advanta Business Card Portfolio
will increase if the rate of growth in the portfolio slows down. We also expect
that the net loss rate would increase if the general economic environment in the
United States deteriorates.
RECEIVABLE YIELD CONSIDERATIONS
The yield on the Advanta Business Card Portfolio for certain periods is set
forth in the following table. The historical yield figures in the table are
calculated on an as-billed basis. Revenues from finance charges and fees will be
affected by numerous factors, including the rates of the finance charges on
principal receivables, the amount of other fees paid by cardholders, the
percentage of cardholders who pay off their balances in full each month, and
changes in delinquency rates. There can be no assurance that the portfolio yield
in the future will be similar to the historical experience set forth below or
that the portfolio yield experience with respect to the trust portfolio, which
is only a portion of the Advanta Business Card Portfolio, will be similar to the
historical experience for the Advanta Business Card Portfolio. See "The Bank's
Credit Card Activities" in the accompanying prospectus.
ADVANTA BUSINESS CARD PORTFOLIO
REVENUE FROM FINANCE CHARGES AND FEES(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Year Ending December 31,
March 31,
------------------ ---------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Average Monthly Accrued Fees and
Charges(2)(3) $81.07 $76.29 $73.35 $71.62 $52.83
Average Account Balance(4) $3,931 $4,167 $4,470 $4,725 $3,833
Yield From Fees and Finance Charges(2)(3) 24.75%(5) 21.97% 19.69% 18.19% 16.54%
</TABLE>
- ----------
(1) The figures shown include revenue attributable to interchange.
(2) Fees and Charges are comprised of finance charges, annual cardholder
fees and certain other service charges.
(3) Average Monthly Accrued Fees and Charges and Yield from Fees and
Charges are presented net of adjustments made pursuant to the seller's
normal servicing procedures, including removal of incorrect or
disputed finance charges and reversal of finance charges accrued on
charged off accounts.
(4) Average Account Balance includes purchases, cash advances and billed
and unpaid finance and other charges, and is calculated based on the
average of the opening monthly account balances for accounts with
balances during the periods shown.
(5) Annualized.
S-15
<PAGE> 22
RECOVERIES
Pursuant to the terms of the indenture, the transferor will be required to
transfer to the trust all of the recoveries that are reasonably estimated by the
servicer on receivables in charged-off accounts of the trust, including amounts
received by the transferor or the servicer from the purchaser or transferee with
respect to the sale or other disposition of receivables in defaulted accounts
("RECOVERIES"). Collections of recoveries will be treated as collections of
finance charge and administrative receivables and included as part of the Net
Portfolio Yield.
PAYMENT RATES
The following table sets forth the highest and lowest cardholder monthly
payment rates for the Advanta Business Card Portfolio during any month in the
periods shown and the average cardholder monthly payment rates for all months in
the periods shown, in each case calculated as a percentage of total opening
monthly account balances during the periods shown. Payment rates shown in the
table are based on amounts which would be deemed payments of principal
receivables and finance charge and administrative receivables for the accounts.
ADVANTA BUSINESS CARD PORTFOLIO
CARDHOLDER MONTHLY PAYMENTS RATES
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------
1999 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Lowest Month(1) 15.97% 12.32% 11.84% 14.99%
Highest Month(1) 19.10% 17.64% 14.80% 17.38%
Monthly Average 17.82% 15.23% 13.44% 16.07%
</TABLE>
- ----------
(1) The monthly payment rates are calculated as the total amount of
payments received during the month divided by the average monthly
receivables outstanding for each month.
The amount of collections on receivables may vary from month to month due
to seasonal variations, general economic conditions and payment habits of
individual cardholders. We cannot assure you that collections of principal
receivables for the trust portfolio, and thus the rate at which noteholders
could expect to accumulate or receive payments of principal on their notes
during the controlled accumulation period or the early amortization period, will
be similar to the historical experience of the Advanta Business Card Portfolio
set forth above.
RECENT DEVELOPMENTS RELATING TO ADVANTA CORP.
On May 17, 2000, Advanta Corp., the indirect parent of the bank and the
servicer, issued a press release stating that it had retained Salomon Smith
Barney, Inc. to assist it in studying possible strategic alternatives for
Advanta's mortgage and equipment leasing business units. Although there are no
specific actions contemplated at this time, these strategic alternatives could
include the sale
S-16
<PAGE> 23
of, or strategic alliances or partnerships in respect of, all or a portion of
Advanta's mortgage loan origination, mortgage servicing or equipment leasing
businesses.
THE TRUST PORTFOLIO
The receivables conveyed to the trust arise in accounts selected from the
Advanta Business Card Portfolio at the time the trust was established, and in
additional accounts selected since that time, on the basis of criteria described
in the transfer and servicing agreement (the "TRUST PORTFOLIO"). The transferor
has the right to designate additional accounts for the trust portfolio and to
transfer to the trust all receivables of those additional accounts, whether the
receivables already exist or arise after the designation, if certain conditions
are satisfied. For a discussion of these conditions, see "Description of the
Notes --Addition of Trust Assets" in the accompanying prospectus. In addition,
the transferor will be required to designate additional accounts, to the extent
available, (a) to maintain the Transferor Interest so that, during any period of
30 consecutive days, the Transferor Interest averaged over that period equals or
exceeds the Required Transferor Interest for the same period and (b) to
maintain, for so long as notes of any series remain outstanding, an aggregate
amount of principal receivables in the trust portfolio equal to or greater than
the Required Minimum Principal Balance, as adjusted for any series having a
paired series as described in the related indenture supplement.
The "TRANSFEROR INTEREST" on any date is equal to the difference between:
(a) the sum of
(i) the total amount of principal receivables in the trust and
(ii) the Excess Funding Account balance
minus
(b) the total adjusted invested amounts of all series of notes then
outstanding.
The "REQUIRED TRANSFEROR INTEREST" will be calculated as follows:
Required Transferor Percentage X total amount of principal receivables
in the trust portfolio
The "REQUIRED TRANSFEROR PERCENTAGE" initially is 7%, but may be reduced if
certain conditions set forth in the transfer and servicing agreement are
satisfied, including receipt of written confirmation that reducing the Required
Transferor Percentage will not result in the reduction or withdrawal by any
rating agency of its rating of any outstanding series or class.
The "REQUIRED MINIMUM PRINCIPAL BALANCE" on any date is, for all
outstanding series, unless otherwise provided in the related indenture
supplement for a series having a paired series,
S-17
<PAGE> 24
- the sum of the Invested Amounts for each series outstanding on that
date, plus
- the Required Transferor Interest on that date, minus
- the amounts on deposit in the Excess Funding Account on that date.
The transferor also has the right to designate certain removed accounts and
to require the indenture trustee to transfer all receivables in the removed
accounts back to the transferor, whether the receivables already exist or arise
after the designation, if certain conditions are satisfied. For a discussion of
these conditions, see "Description of the Notes -- Removal of Accounts" in the
accompanying prospectus.
Throughout the term of the trust, the accounts from which the receivables
arise will be the accounts designated by the transferor at the time the trust is
established, plus any additional accounts, minus any removed accounts. As a
result, the composition of the trust assets is expected to change over time. For
a general description of the receivables in the trust, see "The Trust Portfolio"
in the accompanying prospectus.
Delinquent and non-performing receivables may be included in the trust. The
Servicer will consider any account as to which less than the minimum payment is
received on the scheduled due date as delinquent.
The following is selected information about the receivables:
- The receivables in the trust portfolio, as of the beginning of the day
on __________, 2000, included $__________ of principal receivables and
$__________ of finance charge and administrative receivables.
- The accounts designated for the trust portfolio had an average
principal receivable balance of $__________ and an average credit
limit of $__________.
- The percentage of the aggregate total receivable balance to the
aggregate total credit limit was ___%. The average age of the accounts
was approximately __________ months.
- As of the beginning of the day on __________, 2000, cardholders whose
accounts are designated for the trust portfolio had billing addresses
in all 50 states and the District of Columbia.
The following tables summarize the trust portfolio by various criteria as
of the beginning of the day __________, 2000. Because the future composition of
the trust portfolio may change over time, these tables are not necessarily
indicative of the composition of the trust portfolio at any subsequent time.
S-18
<PAGE> 25
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OUTSTANDING OF TOTAL
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
<S> <C> <C> <C> <C>
Credit Balance................................... % $ ( ) ( )%
$0.00............................................ 0 0.0
$0.01-$1,000.00..................................
$1,000.01-$2,500.00..............................
$2,500.01-$5,000.00..............................
$5,000.01-$7,500.00..............................
Over $7,500.00...................................
--------------------------------------------------------------------
Total................................... 100.00% $ 100.00%
====================================================================
</TABLE>
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OUTSTANDING OF TOTAL
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
<S> <C> <C> <C> <C>
$0.00-$1,000.00.................................. % $ %
$1,000.01-$2,000.00..............................
$2,000.01-$2,500.00..............................
$2,500.01-$5,000.00..............................
$5,000.01-$7,500.00..............................
Over $7,500.00...................................
--------------------------------------------------------------------
Total................................... 100.00% $ 100.00%
====================================================================
</TABLE>
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OUTSTANDING OF TOTAL
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
<S> <C> <C> <C> <C>
Not Delinquent................................... % $ %
Up to 29 Days....................................
30 to 59 Days....................................
60 to 89 Days ...................................
90 to 119 Days...................................
120 to 149 Days..................................
150 to 179 Days..................................
180 or more Days.................................
--------------------------------------------------------------------
Total................................... 100.00% $ 100.00%
====================================================================
</TABLE>
S-19
<PAGE> 26
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
ACCOUNT AGE NUMBER OF NUMBER OF OUTSTANDING OF TOTAL
(IN MONTHS) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
<S> <C> <C> <C> <C>
Not more than 6 Months.......................... % $ %
Over 6 Months to 12 Months.......................
Over 12 Months to 24 Months......................
Over 24 Months to 36 Months......................
Over 36 Months to 60 Months......................
Over 60 Months...................................
-------------------------------------------------------------------
Total................................... 100.00% $ 100.00%
===================================================================
</TABLE>
COMPOSITION BY STATE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OUTSTANDING OF TOTAL
STATE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
<S> <C> <C> <C> <C>
Alabama.......................................... % $ %
Alaska...........................................
Arizona .........................................
Arkansas.........................................
California.......................................
Colorado.........................................
Connecticut......................................
Delaware.........................................
District of Columbia.............................
Florida..........................................
Georgia..........................................
Hawaii...........................................
Idaho............................................
Illinois.........................................
Indiana..........................................
Iowa.............................................
Kansas...........................................
Kentucky.........................................
Louisiana........................................
Maine............................................
Maryland.........................................
Massachusetts....................................
Michigan.........................................
Minnesota........................................
Mississippi......................................
Missouri.........................................
Montana..........................................
Nebraska.........................................
</TABLE>
S-20
<PAGE> 27
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Nevada...........................................
New Hampshire....................................
New Jersey.......................................
New Mexico.......................................
New York.........................................
North Carolina...................................
North Dakota.....................................
Ohio.............................................
Oklahoma.........................................
Oregon...........................................
Pennsylvania.....................................
Rhode Island.....................................
South Carolina...................................
South Dakota.....................................
Tennessee........................................
Texas............................................
Utah.............................................
Vermont..........................................
Virginia.........................................
Washington.......................................
West Virginia....................................
Wisconsin........................................
Wyoming..........................................
All Others.......................................
-------------------------------------------------------------------
Total................................... 100.00% $ 100.00%
===================================================================
</TABLE>
MATURITY CONSIDERATIONS
You are expected to receive payment of principal in full on _______, 200 .
We call this date the "EXPECTED PRINCIPAL PAYMENT DATE." You may, however,
receive payments of principal earlier than the Expected Principal Payment Date
if a pay out event occurs and the early amortization period begins. The holders
of the Class B notes will not begin to receive payments of principal until the
final principal payment on the Class A notes has been made. The holders of the
Class C notes will not begin to receive payments of principal until the final
principal payments on the Class A notes and Class B notes have been made. The
holders of the Class D notes will not begin to receive payments of principal
until the final principal payment on the Class A notes, Class B notes and Class
C notes have been made.
CONTROLLED ACCUMULATION PERIOD
Principal for payment to the Series 2000- noteholders will accumulate
during the controlled accumulation period in the Principal Funding Account
established by the indenture trustee. The controlled accumulation period is
scheduled to begin at the close of business on __________, 200 , but may be
delayed based on recent payment rate experience, as discussed under "Description
of Series Provisions -- Postponement of Controlled Accumulation Period" in this
prospectus supplement. On each payment date during the controlled accumulation
period, an amount will be deposited into the Principal Funding Account equal to,
for each monthly period, the least of:
S-21
<PAGE> 28
- Available Principal Collections;
- the Controlled Deposit Amount; and
- the Adjusted Invested Amount prior to any deposits on that day.
We expect, but cannot assure you, that the amounts available in the
Principal Funding Account on the Expected Principal Payment Date will be
sufficient to pay in full the outstanding principal balance of the Class A
notes, Class B notes, Class C notes and Class D notes. If these amounts are not
available on the Expected Principal Payment Date, a pay out event will occur and
the early amortization period will begin.
EARLY AMORTIZATION PERIOD
If a pay out event occurs during either the revolving period or the
controlled accumulation period, the early amortization period will begin. If a
pay out event occurs during the controlled accumulation period, on the next
payment date any amount on deposit in the Principal Funding Account will be paid
to the Class A noteholders. After the outstanding principal balance of the Class
A notes has been paid in full, any remaining amount will be paid to the Class B
noteholders. After the outstanding principal balance of the Class B notes has
been paid in full, any remaining amount will be paid to the Class C noteholders.
After the outstanding principal balance of the Class C notes has been paid in
full, any remaining amount will be paid to the Class D noteholders, up to the
outstanding principal balance of the Class D notes.
In addition, if the outstanding principal balance of the Class A notes has
not been paid in full, Available Principal Collections will be paid to the Class
A noteholders on each payment date until the earlier of:
- the date the Class A notes are paid in full; and
- __________, 200 , called the "SERIES 2000- TERMINATION DATE."
After the Class A notes have been paid in full, and if the Series 2000-
termination date has not occurred, Available Principal Collections will be paid
to the Class B noteholders on each payment date until the date the Class B notes
are paid in full.
After the Class B notes have been paid in full, and if the Series 2000-
termination date has not occurred, Available Principal Collections will be paid
to the Class C noteholders on each payment date until the date the Class C notes
are paid in full.
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After the Class C notes have been paid in full, and if the Series 2000-
termination date has not occurred, Available Principal Collections will be paid
to the Class D noteholders on each payment date until the date the Class D notes
are paid in full
DESCRIPTION OF SERIES PROVISIONS
The following is a summary of the material provisions of the Series 2000-
notes. This summary is not a complete description of the terms of the Series
2000- notes. You should refer to "Description of the Notes" in the accompanying
prospectus as well as to the transfer and servicing agreement, the indenture and
the Series 2000- indenture supplement for a complete description. The form of
each of these agreements has been filed with the SEC as an exhibit to the
registration statement for the notes.
ISSUANCE
The Class A notes, Class B notes, Class C notes and Class D notes comprise
the "SERIES 2000- NOTES." Only the Class A notes, Class B notes and Class C
notes are offered by this prospectus supplement and the accompanying prospectus.
We call these notes the "OFFERED NOTES" or the "OFFERED SERIES 2000- NOTES." The
Series 2000- notes will be issued under the indenture, as supplemented by the
indenture supplement relating to the Series 2000- notes (the "SERIES 2000-
INDENTURE SUPPLEMENT"), in each case between the trust and the indenture
trustee. As described under "Description of the Notes -- Issuance of Additional
Series" in the accompanying prospectus, the transferor may cause the owner
trustee, on behalf of the trust, and the indenture trustee to execute further
indenture supplements in order to issue additional series.
The "CLOSING DATE" for the Series 2000- notes is __________, 2000. The
Offered Series 2000- notes will be issued in denominations of $1,000 and
integral multiples of $1,000 and will be available only in book-entry form,
registered in the name of Cede & Co., as nominee of DTC. As described under
"Description of the Notes--General," "-- Book-Entry Registration" and "--
Definitive Notes" in the accompanying prospectus, unless and until definitive
notes are issued, you will be able to transfer your notes only through the
facilities of DTC. You will receive payments and notices through DTC and its
participants. Payments of interest and principal will be made on each payment
date on which those amounts are due to the noteholders in whose names Series
2000- notes were registered on the record date for that payment date. The
"RECORD DATE" is the business day immediately preceding a payment date.
[Application will be made to list the notes on the Luxembourg Stock
Exchange. However, we cannot assure you that the listing will be obtained. You
should consult with [_____________], the Luxembourg listing agent for the notes,
[Address] Luxembourg, phone number (__________) ___________, for the status of
the listing.]
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INTEREST PAYMENTS
The Class A notes will accrue interest from and including the closing date
through but excluding __________, 2000, and for each following interest period,
at a rate of ___% per annum above LIBOR for the related LIBOR determination date
for each interest period (the "CLASS A NOTE INTEREST RATE").
The Class B notes will accrue interest from and including the closing date
through but excluding __________, 2000, and for each following interest period,
at a rate of ___% per annum above LIBOR for the related LIBOR determination date
for each interest period (the "CLASS B NOTE INTEREST RATE").
The Class C notes will accrue interest from and including the closing date
through but excluding __________, 2000, and for each following interest period,
at a rate of ___% per annum above LIBOR for the related LIBOR determination date
for each interest period (the "CLASS C NOTE INTEREST RATE").
The Class D notes will accrue interest from and including the closing date
through but excluding __________, 2000, and for each following interest period,
at a rate of ___% per annum above LIBOR for the related LIBOR determination date
for each interest period (the "CLASS D NOTE INTEREST RATE").
The indenture trustee will determine LIBOR for each interest period two
London business days before the related interest period commences. We call each
of these determination dates a "LIBOR DETERMINATION DATE." In calculating LIBOR,
a "LONDON BUSINESS DAY" is any business day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
An "INTEREST PERIOD" begins on and includes a payment date and ends on but
excludes the next payment date. However, the first interest period will begin on
and include the closing date.
"LIBOR" means, for any LIBOR determination date, the London interbank
offered rate for deposits in U.S. dollars having a maturity of one month
commencing on the related LIBOR determination date (the "ONE-MONTH INDEX
MATURITY") which appears on Telerate Page 3750 as of 11:00 a.m., London time, on
that LIBOR determination date. If that rate does not appear on Telerate Page
3750, the rate for that day will be determined on the basis of the rates at
which deposits in United States dollars, having the One-Month Index Maturity and
in an amount of not less than U.S. $1,000,000, are offered by three major banks
selected by the servicer at approximately 11:00 a.m., London time, on that LIBOR
determination date to prime banks in the London interbank market. The indenture
trustee will request the principal London office of each of those banks to
provide a quotation of its rate. If at least two quotations are provided, the
rate for that
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LIBOR determination date will be the arithmetic mean of the quotations. If fewer
than two quotations are provided, the rate for that LIBOR determination date
will be the arithmetic mean of the rates quoted by major banks in New York City,
selected by the servicer, at approximately 11:00 a.m., New York City time, on
that day for loans in United States dollars to leading European banks having the
One Month Index Maturity and in an amount equal to an amount of not less than
U.S. $1,000,000; provided that if the banks selected are not quoting as
mentioned in this sentence, LIBOR in effect for the applicable interest period
will be LIBOR in effect for the previous interest period.
"TELERATE PAGE 3750" means the display page currently so designated on the
Bridge Telerate Capital Markets Report, or any other page that replaces that
page on that service for the purpose of displaying comparable rates or prices.
The Class A note interest rate, Class B note interest rate, Class C note
interest rate and Class D note interest rate applicable to the then-current and
immediately preceding interest period may be obtained by telephoning the
indenture trustee at its corporate trust office at (___) ________.
Interest on the notes will be calculated on the basis of the actual number
of days in the related interest period and a 360-day year.
Interest will be paid on each "PAYMENT DATE," which will be __________ ,
2000 and the 15th day of each following month. If the 15th day is not a business
day, then the payment date will be the following business day. For purposes of
this prospectus supplement and the accompanying prospectus, a "BUSINESS DAY" is
any day other than a Saturday, a Sunday or a day on which banking institutions
in New York, Delaware, Utah or any other state in which the principal executive
offices of the seller, the owner trustee or the indenture trustee are located,
are authorized or obligated by law, executive order or governmental decree to be
closed.
Interest payments on the Class A notes, Class B notes, Class C notes and
Class D notes on any payment date will be calculated on the outstanding
principal balance of the Class A notes, Class B notes, Class C notes and Class D
notes, as applicable, as of the preceding record date. However, interest for the
first payment date will accrue at the applicable note interest rate on the
initial outstanding principal balance of the Class A notes, Class B notes, Class
C notes and Class D notes, as applicable, from the closing date.
Interest due on the Class A notes, Class B notes, Class C notes and Class D
notes but not paid on any payment date will be payable on the following payment
date, together with additional interest on that amount at the applicable note
interest rate. We refer to this additional interest as "CLASS A ADDITIONAL
INTEREST," "CLASS B ADDITIONAL INTEREST," "CLASS C ADDITIONAL INTEREST" and
"CLASS D ADDITIONAL INTEREST." Additional interest will accrue on the same basis
as interest on the Series 2000- notes, and will accrue from the payment date on
which the overdue interest became due, to but excluding the payment date on
which the additional interest is paid. Unpaid additional interest will not also
accrue additional interest.
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Interest payments on the Series 2000- notes on any payment date will be
paid from Available Finance Charge Collections for the related monthly period
and, to the extent Available Finance Charge Collections are insufficient to pay
the interest, from any Shared Finance Charge Collections and Reallocated
Principal Collections for that monthly period. Interest payments on the Class C
notes and the Class D notes on any payment date will also be paid from available
amounts on deposit in the cash collateral account to the extent needed.
"AVAILABLE FINANCE CHARGE COLLECTIONS" means, for any monthly period, an
amount equal to the sum of:
- the Investor Percentage of collections of finance charge and
administrative receivables deposited in the collection account for
that monthly period;
- any net investment earnings on amounts on deposit in the Principal
Funding Account for that monthly period; and
- any amounts withdrawn from the reserve account which are required to
be included in Available Finance Charge Collections under the Series
2000- indenture supplement for the related payment date.
For purposes of the Series 2000- notes,
"FINANCE CHARGE AND ADMINISTRATIVE RECEIVABLES," are periodic finance
charges, and annual membership fees and service charges, late fees,
overlimit fees, cash advance fees, and the portion of interchange and
all other fees and charges on accounts designated by the transferor to
be included as finance charge and administrative receivables, and any
other amounts, other than principal receivables, designated by the
transferor to be "finance charge and administrative receivables." See
"The Trust Portfolio" for further information on the type of
receivables included in the trust.
The transferor will be required to transfer to the trust a percentage of
the interchange attributed to the accounts in the trust. Interchange arising
under the accounts will be allocated to the Invested Amount on the basis of the
Floating Investor Percentage of the ratio which the amount of principal
receivables in the trust bears to the total amount of principal receivables
attributable to accounts owned by the seller, as reasonably estimated by the
servicer. See "The Bank's Credit Card Activities--Interchange" in the
accompanying prospectus. Interchange will be treated as collections of finance
charge and administrative receivables for purposes of allocating collections of
finance charge and administrative receivables, making required monthly payments
and calculating Net Portfolio Yield. Interchange will be used to pay a portion
of the monthly servicing fee, as described under "Description of the Notes --
Servicing Compensation and Payment of Expenses."
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Each "MONTHLY PERIOD" will be the period from and including the first day
of a calendar month to and including the last day of that calendar month. The
initial monthly period will commence on and include the closing date and end on
and include __________ , 2000.
[PRE-FUNDING ACCOUNT
On the closing date, $__________ will be deposited into an account called
the "PRE-FUNDING ACCOUNT." The Pre-Funding Account will be established with an
eligible institution. Funds will be maintained in the Pre-Funding Account until
the earliest of:
- the commencement of the Early Amortization Period;
- the date on which the Invested Amount first equals $__________; and
- __________, 20__.
During this funding period, funds may be withdrawn and paid to the transferor on
a weekly basis to the extent of any increases in the Invested Amount resulting
from an increase in the amount of the trust's principal receivables. Funds may
be withdrawn only to the extent that (a) the Transferor Interest on that day
exceeds the Required Transferor Interest on that day and (b) the aggregate
amount of principal receivables in the trust on that day exceeds the Required
Minimum Principal Balance on that day. However, the Invested Amount will not
exceed the initial outstanding principal amount of the Series 2000- notes or
increase by an amount greater than the funds on deposit in the Pre-Funding
Account immediately prior to that increase. If there are funds in the
Pre-Funding Account after the end of the funding period, those funds will be
paid to the noteholders based on each noteholder's interest in the trust.
All amounts on deposit in the Pre-Funding Account will be invested by the
indenture trustee in eligible investments. On each payment date during the
funding period, all net investment income earned on amounts in the Pre-Funding
Account during the preceding monthly period will be withdrawn from the
Pre-Funding Account and deposited into the collection account for distribution
as collections of finance charge and administrative receivables allocable to the
noteholders. This investment income will be deemed to be collections of finance
charge and administrative receivables allocable to the Series 2000- notes for
that monthly period.]
PRINCIPAL PAYMENTS
Principal payments on the Series 2000- notes will be paid from "AVAILABLE
PRINCIPAL COLLECTIONS" which, for any monthly period, equal:
- the Investor Percentage of collections of principal receivables
deposited in the collection account for that monthly period; minus
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- the amount of Reallocated Principal Collections for that monthly
period; plus
- any Shared Principal Collections from other series in group [one]
allocated to your series.
REVOLVING PERIOD
The "REVOLVING PERIOD" for the Series 2000- notes begins on the closing
date and ends on the earlier of the date the controlled accumulation period or
the early amortization period begins. During the revolving period, the Investor
Percentage of collections of principal receivables will, subject to specified
limitations, including the allocation of any Reallocated Principal Collections
for that monthly period, be treated as Shared Principal Collections and used to
pay principal to other series in group [one] or will be paid to the holders of
the transferor interest.
CONTROLLED ACCUMULATION PERIOD
The "CONTROLLED ACCUMULATION PERIOD" for the Series 2000- notes is
scheduled to begin on __________, 200 , but may be postponed, as discussed under
"Description of Series Provisions -- Postponement of the Controlled Accumulation
Period" in this prospectus supplement.
The controlled accumulation period ends on the earliest of:
- the beginning of the early amortization period;
- the payment in full of the Invested Amount; and
- the Series 2000- termination date.
If a pay out event occurs before the controlled accumulation period begins,
there will be no controlled accumulation period and the early amortization
period will begin.
On each payment date during the controlled accumulation period, the
indenture trustee will deposit in the Principal Funding Account an amount equal
to the least of (a) Available Principal Collections for that payment date, (b)
the applicable Controlled Deposit Amount and (c) the Adjusted Invested Amount
prior to any deposits on that date. Amounts in the Principal Funding Account
will be paid:
- first to Class A noteholders, up to the outstanding principal balance
of the Class A notes;
- then to Class B noteholders, up to the outstanding principal balance
of the Class B notes;
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- then to Class C noteholders, up to the outstanding principal balance
of the Class C notes;
- then to Class D noteholders, up to the outstanding principal balance
of the Class D notes;
in each case, on the expected principal payment date unless paid earlier due to
the commencement of the early amortization period.
During the controlled accumulation period, the portion of Available
Principal Collections not applied for the payment of principal on the Class A
notes, the Class B notes, the Class C notes or the Class D notes on a payment
date and not treated as Reallocated Principal Collections generally will be
treated as Shared Principal Collections.
EARLY AMORTIZATION PERIOD
The "EARLY AMORTIZATION PERIOD" for the Series 2000- notes will begin on
the day on which a pay out event for Series 2000- occurs.
The early amortization period ends on the earliest of:
- the payment in full of the Invested Amount; and
- the Series 2000- termination date.
On each payment date during the early amortization period, the Class A
noteholders will be entitled to receive Available Principal Collections for the
related monthly period in an amount up to the outstanding principal balance of
the Class A notes.
After payment in full of the outstanding principal balance of the Class A
notes, the Class B noteholders will be entitled to receive, on each payment date
during the early amortization period, Available Principal Collections for the
related monthly period in an amount up to the outstanding principal balance of
the Class B notes.
After payment in full of the outstanding principal balance of the Class B
notes, the Class C noteholders will be entitled to receive, on each payment date
during the early amortization period, Available Principal Collections for the
related monthly period in an amount up to the outstanding principal balance of
the Class C notes.
After payment in full of the outstanding principal balance of the Class C
notes, the Class D noteholders will be entitled to receive on each payment date
during the early amortization period, Available Principal Collections for the
related monthly period in an amount up to the outstanding principal balance of
the Class D notes.
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See "-- Pay Out Events" below for a discussion of events that might lead to
the commencement of the early amortization period.
POSTPONEMENT OF CONTROLLED ACCUMULATION PERIOD
The controlled accumulation period is scheduled to last [__________]
months. However, the servicer may elect to extend the revolving period and
postpone the controlled accumulation period by notifying the indenture trustee.
The servicer can make this election only if the number of months needed to fund
the Principal Funding Account based on expected collections of principal
receivables needed to pay principal on the Series 2000- notes is less than
[__________] months.
On each determination date beginning in __________200__ and ending when the
controlled accumulation period begins, the servicer will review the amount of
expected collections of principal receivables and determine the number of months
expected to be required to fully fund the Principal Funding Account by the
expected principal payment date and may elect to postpone the controlled
accumulation period. In making its decision, the servicer is required to assume
that the principal payment rate will be no greater than the lowest monthly
payment rate for the prior 12 months and will consider the amount of principal
expected to be allocable to noteholders of all other series which are expected
to be amortizing or accumulating principal during the controlled accumulation
period for Series 2000- .
In no case will the controlled accumulation period be reduced to less than
one month.
The method for determining the number of months required to fully fund the
Principal Funding Account may be changed upon receipt of written confirmation
that the change will not result in the reduction or withdrawal by any rating
agency of its rating of any outstanding series or class.
ALLOCATION PERCENTAGES
Under the indenture, for each monthly period, the servicer will allocate
among the Invested Amount, the invested amount for all other series issued and
outstanding and the transferor interest, all amounts collected on finance charge
and administrative receivables, all amounts collected on principal receivables
and all Defaulted Amounts for that monthly period. These amounts will be
allocated based on the Investor Percentage.
The "INVESTOR PERCENTAGE," for any monthly period, means (a) for Defaulted
Amounts at any time and for collections of finance charge and administrative
receivables and principal receivables during the revolving period, the Floating
Investor Percentage and (b) for collections of finance charge and administrative
receivables and principal receivables during the controlled accumulation period
and early amortization period, the Fixed Investor Percentage.
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FLOATING ALLOCATION DEFINITIONS
Defaulted Amounts at any time and collections of finance charge and
administrative receivables and principal receivables during the revolving period
will be allocated to the Invested Amount based on the Floating Investor
Percentage. The "FLOATING INVESTOR PERCENTAGE" means, for any monthly period,
the percentage equivalent of a fraction:
(a) the numerator of which is the Adjusted Invested Amount as of the close
of business on the last day of the preceding monthly period, or for
the first monthly period, the initial Invested Amount, and
(b) the denominator of which is the greater of:
(i) the sum of (A) the aggregate amount of principal receivables in
the trust as of the close of business on the last day of the
preceding monthly period, or for the first monthly period, the
aggregate amount of principal receivables in the trust as of the
close of business on the closing date, and (B) the principal
amount on deposit in the Excess Funding Account as of the close
of business on the last day of the preceding monthly period, or
for the first monthly period, as of the closing date, and
(ii) the sum of the numerators used to calculate the Investor
Percentages for allocations of finance charge and administrative
receivables, Defaulted Amounts or principal receivables, as
applicable, for all outstanding series on the date of
determination.
The denominator used in the calculation of Floating Investor Percentage,
however, will be adjusted as follows, for any monthly period in which a Reset
Date occurs:
the amount in clause (b)(i)(A) above will be:
(1) the aggregate amount of principal receivables in the trust as of
the close of business on the last day of the prior monthly
period, for the period from and including the first day of the
prior monthly period to but excluding the related Reset Date; and
(2) the aggregate amount of principal receivables in the trust as of
the close of business on the related Reset Date after adjusting
for the aggregate amount of principal receivables added to or
removed from the trust on the related Reset Date, for the period
from and including the related Reset Date to and including the
last day of that monthly period.
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A "RESET DATE" is any date that is an addition date, a date on which the
issuance of additional notes of an outstanding series occurs, a date on which an
increase or decrease in the invested amount of any series that is a variable
principal funding series occurs, or a removal date on which for any series that
has been paid in full, principal receivables in an aggregate amount
approximately equal to the initial invested amount of that series are removed
from the trust.
FIXED ALLOCATION DEFINITIONS
Collections of finance charge and administrative receivables and principal
receivables during the controlled accumulation period and early amortization
period will be allocated to the Invested Amount based on the Fixed Investor
Percentage. The "FIXED INVESTOR PERCENTAGE" means, for any monthly period, the
percentage equivalent of a fraction:
(a) the numerator of which is the Invested Amount as of the close of
business on the last day of the revolving period; and
(b) the denominator of which is the greater of:
(i) the sum of (A) the aggregate amount of principal receivables in
the trust as of the close of business on the last day of the
prior monthly period, or for the first monthly period, the
aggregate amount of principal receivables in the trust as of the
closing date, and (B) the principal amount on deposit in the
Excess Funding Account as of the close of business on the last
day of the preceding monthly period, or with respect to the first
monthly period, as of the closing date, and
(ii) the sum of the numerators used to calculate the Investor
Percentages for allocations of principal receivables or finance
charge receivables, as applicable, for all outstanding series on
the date of determination.
The denominator used in the calculation of Fixed Investor Percentage,
however, will be adjusted as follows, for any monthly period in which a Reset
Date occurs:
the amount in clause (b)(1)(A) above will be:
(1) the aggregate amount of principal receivables in the trust as of the
close of business on the last day of the prior monthly period, for the
period from and including the first day of the prior monthly period to
but excluding the related Reset Date; and
(2) the aggregate amount of principal receivables in the trust as of the
close of business on the related Reset Date after adjusting for the
aggregate amount of principal receivables added to or removed from the
trust on the related Reset Date, for the
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period from and including the related Reset Date to and including the
last day of that monthly period.
During the controlled accumulation period, on any date, at the option of
the transferor, for purposes of allocating collections of principal receivables,
the numerator of the Fixed Investor Percentage may be reduced below the
numerator used in the previous monthly period, to an amount not less than the
greater of:
- the Invested Amount as of the last day of the immediately preceding
monthly period, less the amount of any distributions of principal
deposited in the Principal Funding Account since the last day of the
immediately preceding monthly period; and
- an amount that if used as the numerator of the Fixed Investor
Percentage for the remainder of the controlled accumulation period,
based on assumptions set forth in the indenture supplement, would
assure that the Available Principal Collections for Series 2000- would
equal at least 125% of the Controlled Deposit Amount for each monthly
period for so long as the Invested Amount is greater than zero.
INVESTED AMOUNT DEFINITIONS
The "INVESTED AMOUNT," for any date of determination, means an amount equal
to (a) the initial outstanding principal amount of the Series 2000- notes, minus
(b) the amount of principal previously paid to the Series 2000- noteholders,
minus (c) the amount of unreimbursed Investor Charge-Offs and Reallocated
Principal Collections.
The "ADJUSTED INVESTED AMOUNT" means for any date of determination the
Invested Amount as of that date, minus the amount on deposit in the Principal
Funding Account for that date.
REALLOCATED PRINCIPAL COLLECTIONS
On each payment date, if the sum of Class A Monthly Interest, Class B
Monthly Interest, Class C Monthly Interest and the monthly servicing fee cannot
be paid from Available Finance Charge Collections, Shared Finance Charge
Collections as described under "-- Application of Collections," and, in the case
of the Class C notes, monthly interest from amounts withdrawn from the cash
collateral account, then collections of principal receivables allocated to the
Invested Amount will be treated as collections of finance charge and
administrative receivables and will be available to pay these amounts in an
amount equal to the Reallocated Principal Collections, and the Invested Amount
will be reduced accordingly. A reduction in the Invested Amount will reduce the
allocation of collections of finance charge and administrative receivables and
collections of principal receivables to your series.
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"REALLOCATED PRINCIPAL COLLECTIONS" means for any monthly period Available
Principal Collections used to pay interest on the Class A notes, the Class B
notes, the Class C notes or used to pay the monthly servicing fee in an amount
equal to:
the lower of:
- the excess of the amounts needed to pay current and past due Class A
Monthly Interest and Class A additional interest as described under
"-- Application of Collections -- Payment of Interest, Fees and Other
Items" below over the Available Finance Charge Collections and Shared
Finance Charge Collections allocated to cover these amounts; and
- [ ]% of the initial Invested Amount, minus the amount of unreimbursed
Investor Charge-Offs and unreimbursed Reallocated Principal
Collections;
plus the lower of:
- the sum of (a) the excess of the amounts needed to pay current and
past due Class B Monthly Interest and Class B additional interest as
described under "--Application of Collections -- Payments of Interest,
Fees and Other Items" below over the Available Finance Charge
Collections and Shared Finance Charge Collections allocated to cover
these amounts and (b) the excess of the monthly servicing fee over the
Available Finance Charge Collections allocated to cover these amounts;
and
- [___]% of the initial Invested Amount minus the amount of unreimbursed
Investor Charge-Offs and unreimbursed Reallocated Principal
Collections;
plus the lower of:
- the excess of the amounts needed to pay current and past due Class C
Monthly Interest and Class C additional interest as described under
"-- Application of Collections -- Payment of Interest, Fees and Other
Items" below over the Available Finance Charge Collections, Shared
Finance Charge Collections and amounts withdrawn from the cash
collateral account for the benefit of the Class C notes allocated to
cover these amounts; and
- [ ]% of the initial Invested Amount, minus the amount of unreimbursed
Investor Charge-Offs and unreimbursed Reallocated Principal
Collections.
APPLICATION OF COLLECTIONS
Payment of Interest, Fees and Other Items
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On each payment date, the servicer will direct the indenture trustee to
apply Available Finance Charge Collections and Shared Finance Charge Collections
on deposit in the collection account in the following order:
- an amount equal to the Class A Monthly Interest plus Class A
additional interest due for the related payment date, and past due for
any prior payment dates, will be paid to the Class A noteholders on
that payment date;
- an amount equal to the Class B Monthly Interest plus Class B
additional interest due for the related payment date, and past due for
any prior payment dates, will be paid to the Class B noteholders on
that payment date;
- an amount equal to the noteholder monthly servicing fee due for the
related payment date, and past due for any prior payment date, will be
paid to the servicer;
- an amount equal to the Class C Monthly Interest plus Class C
additional interest due for the related payment date, and past due for
any prior payment dates, will be paid to the Class C noteholders on
that payment date;
- an amount equal to any Investor Default Amount for the related monthly
period, will be treated as Available Principal Collections;
- an amount equal to the sum of the Investor Charge-Offs and the amount
of unreimbursed Reallocated Principal Collections will be treated as
Available Principal Collections;
- on and after the reserve account funding date, but prior to the
termination of the reserve account, an amount equal to any excess of
the Required Reserve Account Amount over the amount then on deposit in
the reserve account will be deposited into the reserve account;
- an amount equal to the Class D Monthly Interest plus Class D
additional interest due for the related payment date, and past due for
any prior payment dates, will be paid to the Class D noteholders on
that payment date;
- an amount equal to any excess of the Required Cash Collateral Account
Amount over the amount then on deposit in the cash collateral account
will be deposited into the cash collateral account;
- all remaining amounts will be treated as Shared Finance Charge
Collections and will be available to cover any shortfalls in
collections of finance charge and administrative receivables for other
outstanding series in group [one]; and
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- after payment of these shortfalls, the remaining amount will be paid
to the holders of the transferor interest.
In the event that Available Finance Charge Collections and Shared Finance
Charge Collections for any monthly period are insufficient to pay the Class C
Monthly Interest or the Class D Monthly Interest when due, a draw will be made
from amounts available in the cash collateral account to the extent of that
insufficiency and will be paid to the Class C noteholders or the Class D
noteholders on the related payment date.
"CLASS A MONTHLY INTEREST" for any payment date will equal the product of
(a) the Class A note interest rate for the related interest period, (b) the
actual number of days in that interest period divided by 360 and (c) the
outstanding principal balance of the Class A notes as of the close of business
on the applicable record date or, for the first payment date, the outstanding
principal balance of the Class A notes as of the closing date.
"CLASS B MONTHLY INTEREST" for any payment date will equal the product of
(a) the Class B note interest rate for the related interest period, (b) the
actual number of days in that interest period divided by 360 and (c) the
outstanding principal balance of the Class B notes as of the close of business
on the applicable record date or, with respect to the first payment date, the
outstanding principal balance of the Class B notes as of the closing date.
"CLASS C MONTHLY INTEREST" for any payment date will equal the product of
(a) the Class C note interest rate for the related interest period, (b) the
actual number of days in that interest period divided by 360 and (c) the
outstanding principal balance of the Class C notes as of the close of business
on the applicable record date or, with respect to the first payment date, the
outstanding principal balance of the Class C notes as of the closing date.
"CLASS D MONTHLY INTEREST" for any payment date will equal the product of
(a) the Class D note interest rate for the related interest period, (b) the
actual number of days in that interest period divided by 360 and (c) the
outstanding principal balance of the Class D notes as of the close of business
on the applicable record date or, with respect to the first payment date, the
outstanding principal balance of the Class D notes as of the closing date.
"MONTHLY INTEREST" for any payment date will equal the sum of the Class A
Monthly Interest, the Class B Monthly Interest, the Class C Monthly Interest and
the Class D Monthly Interest for that payment date.
PAYMENTS OF PRINCIPAL
On each payment date, the servicer will direct the indenture trustee to
apply Available Principal Collections on deposit in the collection account in
the following priority:
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- on each payment date during the revolving period, all Available
Principal Collections will be treated as Shared Principal Collections
and applied as described under "Description of Series Provisions --
Shared Principal Collections" in this prospectus supplement and
"Description of the Notes -- Shared Principal Collections" in the
accompanying prospectus;
- on each payment date during the controlled accumulation period and the
early amortization period, all Available Principal Collections will be
paid or deposited in the following priority:
- during the controlled accumulation period, an amount equal to
Monthly Principal will be deposited in the Principal Funding
Account;
- during the early amortization period, an amount equal to the
Monthly Principal will be distributed to the paying agent for
payment to the Class A noteholders until the outstanding
principal balance of the Class A notes has been paid in full;
- during the early amortization period, an amount equal to Monthly
Principal will, after the outstanding principal balance of the
Class A notes has been paid in full, be distributed to the paying
agent for payment to the Class B noteholders until the
outstanding principal balance of the Class B notes has been paid
in full; and
- during the early amortization period, an amount equal to Monthly
Principal will, after the outstanding principal balances of the
Class A notes and the Class B notes have been paid in full, be
distributed to the paying agent for payment to the Class C
noteholders until the outstanding principal balance of the Class
C notes has been paid in full; and
- during the early amortization period, an amount equal to Monthly
Principal will, after the outstanding principal balances of the
Class A notes, the Class B notes and the Class C notes have been
paid in full, be distributed to the paying agent for payment to
the Class D noteholders until the outstanding principal balance
of the Class D notes has been paid in full; and
- on each payment date during the controlled accumulation period and the
early amortization period, any Available Principal Collections not
applied as described above will be treated as Shared Principal
Collections and applied as described under "Description of Series
Provisions -- Shared Principal
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<PAGE> 44
Collections" in this prospectus supplement and "Description of
the Notes -- Shared Principal Collections" in the accompanying
prospectus.
"ACCUMULATION SHORTFALL" means:
(a) on the first payment date zero; and
(b) on each subsequent payment date during the controlled accumulation
period, any excess of the Controlled Deposit Amount for the previous
monthly period over the amount deposited in the Principal Funding
Account for the previous monthly period.
"CONTROLLED ACCUMULATION AMOUNT" for any payment date during the controlled
accumulation period means $__________. However, if the commencement of the
controlled accumulation period is postponed as described under "-- Postponement
of Controlled Accumulation Period," the Controlled Accumulation Amount may be
higher than the amount stated above for each payment date during the controlled
accumulation period and will be determined by the servicer in accordance with
the Series 2000- indenture supplement based on the principal payment rates for
the accounts and on the invested amounts of other series, other than certain
excluded series, which are scheduled to be in their revolving periods and then
scheduled to create Shared Principal Collections during the controlled
accumulation period.
"CONTROLLED DEPOSIT AMOUNT" for any payment date during the controlled
accumulation period means the sum of (i) the Controlled Accumulation Amount for
that payment date, plus (ii) any Accumulation Shortfall.
"MONTHLY PRINCIPAL" for any payment date will equal the least of (i) the
Available Principal Collections on deposit in the collection account for that
payment date, (ii) for each payment date during the controlled accumulation
period, the Controlled Deposit Amount for that payment date, and (iii) the
Adjusted Invested Amount (as adjusted for any Investor Charge-Offs and
Reallocated Principal Collections on that payment date) prior to any deposits
into the Principal Funding Account on that payment date.
SUBORDINATION
The Class B notes, the Class C notes and the Class D notes are subordinated
to the Class A notes. The Class C notes and the Class D notes are subordinated
to the Class B notes. The Class D notes are subordinated to the Class C notes.
Interest payments will be made on the Class A notes prior to being made on
the Class B notes, the Class C notes and the Class D notes. Interest payments
will be made on the Class B notes prior to being made on the Class C notes and
the Class D notes. Interest payments will be made on the Class C notes prior to
being made on the Class D notes.
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Principal payments on the Class B notes will not begin until the Class A
notes have been paid in full. Principal payments on the Class C notes will not
begin until the Class A notes and the Class B notes have been paid in full.
Principal payments on the Class D notes will not begin until the Class A notes,
the Class B notes and the Class C notes have been paid in full. If collections
of principal receivables allocated to your series are reallocated to pay the
interest on the Class A notes, the principal balance of the Class D notes, the
Class C notes and the Class B notes may not be repaid. If collections of
principal receivables allocated to your series are reallocated to pay interest
on the Class B notes, the principal balance of the Class C notes and the Class D
notes may not be repaid. If a foreclosure certificate is sold after an event of
default, the net proceeds of that sale which are available to pay principal on
the Series 2000- notes would be paid first to the Class A notes before any
remaining net proceeds would be available for payments due to the Class B notes,
the Class C notes or the Class D notes.
SHARED FINANCE CHARGE COLLECTIONS
Collections of finance charge and administrative receivables and other
amounts treated like collections of finance charge and administrative
receivables in excess of the amount required to make payments or deposits for
your series will be made available to other series included in group [one] whose
allocation of collections of finance charge and administrative receivables is
not sufficient to make its required payments or deposits. If collections of
finance charge and administrative receivables allocated through the Investor
Percentage are insufficient to make payments described under "-- Application of
Collections -- Payment of Interest, Fees and Other Items" in this prospectus
supplement, your series will have access to collections of finance charge and
administrative receivables and other amounts treated like collections of finance
charge and administrative receivables from each other series in group [one], if
any, to the extent they exceed the amounts necessary to make required payments
for that series. We call these collections "SHARED FINANCE CHARGE COLLECTIONS."
Each series that is part of group [one] and has a shortfall will receive a share
of the total amount of Shared Finance Charge Collections available for that
month based on the amount of shortfall for that series divided by the total
shortfall for all series for that same month. The amount of the shortfall for
each series will be calculated as described in the documents governing each
series.
SHARED PRINCIPAL COLLECTIONS
Collections of principal receivables for any monthly period allocated to
the Invested Amount will first be used to cover, for any monthly period during
the controlled accumulation period, deposits of the Controlled Deposit Amount to
the Principal Funding Account, and during the early amortization period,
payments to the noteholders. The servicer will determine the amount of
collections of principal receivables for any monthly period allocated to the
Invested Amount remaining after covering required payments to the noteholders.
This remaining amount constitutes "SHARED PRINCIPAL COLLECTIONS." The servicer
will allocate the Shared Principal Collections of all series to cover any
scheduled or permitted principal payments to noteholders and any deposits to
Principal Funding Accounts for any series in group [one] which have not been
covered out of the
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<PAGE> 46
collections of principal receivables allocable to that series in group [one] and
certain other amounts for those series. We call these uncovered amounts
"PRINCIPAL SHORTFALLS." Shared Principal Collections will not be used to cover
investor charge-offs for any series. If Principal Shortfalls exceed Shared
Principal Collections for any monthly period, then Shared Principal Collections
will be allocated among the applicable series in group [one] based on the
relative amounts of Principal Shortfalls. To the extent that Shared Principal
Collections exceed Principal Shortfalls, the balance will be paid to the holders
of the transferor interest or deposited in the Excess Funding Account.
DEFAULTED RECEIVABLES; INVESTOR CHARGE-OFFS
The Investor Default Amount represents the series' share of losses from the
trust portfolio. On each payment date, the servicer will calculate the "INVESTOR
DEFAULT AMOUNT" by multiplying:
- the Floating Investor Percentage for that month, by
- the "DEFAULTED AMOUNT," which is the total amount of principal
receivables, other than ineligible receivables, in the trust that were
charged-off for that month.
If the Investor Default Amount exceeds the amount of collections of finance
charge and administrative receivables allocated to fund this amount for the
prior month, then the Invested Amount will be reduced by the excess. In no
event, however, will the Invested Amount be reduced below zero. Reductions in
the Invested Amount may be reimbursed from subsequent collections of finance
charge and administrative receivables allocated for reimbursement. If the
Invested Amount is reduced to zero, your series will not receive any further
allocations of collections of finance charge and administrative receivables and
collections of principal receivables.
PRINCIPAL FUNDING ACCOUNT
The indenture trustee will establish and maintain with an eligible
institution an eligible deposit account held for the benefit of the noteholders
to serve as the "PRINCIPAL FUNDING ACCOUNT." During the controlled accumulation
period, the indenture trustee at the direction of the servicer will transfer
Available Principal Collections from the collection account to the Principal
Funding Account as described under "-- Application of Collections" in this
prospectus supplement.
Funds on deposit in the Principal Funding Account will be invested to the
following payment date by the indenture trustee at the direction of the servicer
in eligible investments. Investment earnings, net of investment losses and
expenses, on funds on deposit in the Principal Funding Account will be deposited
in the collection account and included in Available Finance Charge Collections
for the related interest period.
If, for any payment date, the net investment earnings are less than the
product of (i) the balance of the Principal Funding Account, up to the Invested
Amount on the record date immediately preceding that payment date, (ii) the
weighted average of the Class A note interest rate,
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Class B note interest rate, Class C note interest rate and Class D note interest
rate for the related interest period and (iii) the number of days in the related
interest period divided by 360, then the indenture trustee will withdraw the
shortfall, called the "RESERVE DRAW AMOUNT," to the extent required and
available, from the reserve account and deposit it in the collection account for
use as Available Finance Charge Collections.
RESERVE ACCOUNT
The indenture trustee will establish and maintain a segregated trust
account with an eligible institution for the benefit of the noteholders to serve
as the "RESERVE ACCOUNT." The reserve account is established to assist with the
payment of interest on the notes during the controlled accumulation period and
on the first payment date during the early amortization period. On each payment
date from and after the reserve account funding date, but prior to the
termination of the reserve account, the indenture trustee, acting on the
servicer's instructions, will apply Available Finance Charge Collections and
Shared Finance Charge Collections allocated to the Series 2000- notes, to the
extent described above under "-- Application of Collections -- Payment of
Interest, Fees and Other Items," to increase the amount on deposit in the
reserve account up to the Required Reserve Account Amount.
The "RESERVE ACCOUNT FUNDING DATE" will be the payment date for the monthly
period which commences no later than three months prior to the commencement of
the controlled accumulation period, or an earlier date selected by the servicer.
The "REQUIRED RESERVE ACCOUNT AMOUNT" for any payment date on or after the
reserve account funding date will be equal to (a) the product of (i) [___]% of
the outstanding aggregate principal balance of the Class A notes, the Class B
notes, the Class C notes and the Class D notes as of the preceding payment date
and (ii) a fraction the numerator of which is the number of monthly periods
scheduled to be included in the controlled accumulation period as of that date,
and the denominator of which is [___] (except that if the numerator is one, the
Required Reserve Account Amount determined as described above will be [zero]) or
(b) any other amount selected by the transferor. However, if the amount
designated by the transferor under clause (b) is less than the amount in clause
(a), the transferor will provide the servicer and the indenture trustee with
written confirmation that the designation will not result in the reduction or
withdrawal by any rating agency of its rating of any outstanding series or
class, and the transferor will deliver to the indenture trustee a certificate of
an authorized officer to the effect that, based on the facts known to that
officer at the time, in the reasonable belief of the transferor, the other
amount selected will not cause a pay out event or an event that, after the
giving of notice or the lapse of time, would cause a pay out event to occur for
Series 2000-.
On each payment date, after giving effect to any deposit to be made to, and
any withdrawal to be made from, the reserve account on that payment date, the
indenture trustee will withdraw from the reserve account an amount equal to any
excess of the amount on deposit in the reserve account over the Required Reserve
Account Amount. The indenture trustee will deposit the excess in the
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cash collateral account to the extent that funds available in the cash
collateral account are less than the Required Cash Collateral Account Amount and
will distribute any remaining excess to the holders of the transferor interest.
Any amounts withdrawn from the reserve account and deposited in the cash
collateral account as described above will be available for distribution only to
the holders of the Class C notes and the Class D notes. Any amounts withdrawn
from the reserve account and distributed to the holders of the transferor
interest as described above will not be available for distribution to the
noteholders.
So long as the reserve account is not terminated as described below, all
amounts on deposit in the reserve account on any payment date, after giving
effect to any deposits to, or withdrawals from, the reserve account to be made
on that payment date, will be invested to the following payment date by the
indenture trustee at the direction of the servicer in eligible investments. The
interest and other investment income, net of investment expenses and losses,
earned on these investments will be retained in the reserve account, to the
extent the amount on deposit is less than the Required Reserve Account Amount,
or deposited in the collection account and treated as Available Finance Charge
Collections.
On or before each payment date during the controlled accumulation period
and on the first payment date during the early amortization period, the
indenture trustee will withdraw from the reserve account and deposit in the
collection account to be included as Available Finance Charge Collections for
that payment date an aggregate amount equal to the least of:
- the amount then on deposit in the reserve account for that payment
date;
- the Required Reserve Account Amount; and
- the Reserve Draw Amount for that payment date.
However, the amount of the withdrawal will be reduced to the extent that funds
otherwise would be available to be deposited in the reserve account on that
payment date.
The reserve account will be terminated upon the earliest of:
- the first payment date during the early amortization period;
- the Expected Principal Payment Date; and
- the Series 2000- termination date.
Upon the termination of the reserve account, all amounts on deposit in the
reserve account, after giving effect to any withdrawal from the reserve account
on that date as described above, will be deposited in the cash collateral
account to the extent that funds available in the cash collateral account are
less than the Required Cash Collateral Account Amount and any remaining amounts
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will be distributed to the holders of the transferor interest. Any amounts
withdrawn from the reserve account and deposited in the cash collateral account
as described above will be available for distribution only to the holders of the
Class C notes and the Class D notes. Any amounts withdrawn from the reserve
account and distributed to the holders of the transferor interest as described
above will not be available for distribution to the noteholders.
CASH COLLATERAL ACCOUNT
The servicer will establish and maintain a segregated account with an
eligible institution for the benefit of the Class C noteholders and Class D
noteholders called the "CASH COLLATERAL ACCOUNT." Amounts on deposit in the cash
collateral account will be used to fund shortfalls in interest payments on the
Class C notes and the Class D notes and on the Series 2000- termination date to
fund any shortfall in payment of the outstanding principal balance of the Class
C notes and the Class D notes.
The cash collateral account initially will [not] be funded, but will be
funded by (a) Available Finance Charge Collections and Shared Finance Charge
Collections, as described above under "--Application of Collections-- Payment of
Interest, Fees and Other Items," (b) any amounts withdrawn from the reserve
account to be treated as Available Finance Charge Collections, as described
above under "-- Reserve Account," and deposited into the cash collateral account
on any payment date to the extent that the funds available in the cash
collateral account are less than the Required Cash Collateral Account Amount on
that payment date and (c) investment earnings on funds in the cash collateral
account.
The "REQUIRED CASH COLLATERAL ACCOUNT AMOUNT" will be determined on each
payment date. In general, for any payment date, it will be equal to the product
of (a) the Cash Collateral Account Percentage in effect on that date and (b) the
initial Invested Amount. However, in the absence of an event of default for your
series, the Required Cash Collateral Account Amount will not exceed the
outstanding aggregate principal balance of the Class C notes and the Class D
notes minus any excess of the Principal Funding Account balance over the sum of
the outstanding principal balances of the Class A notes and the Class B notes on
that date.
Upon an event of default for your series, the Required Cash Collateral
Account Amount for any payment date will be equal to the sum of (a) the amount
on deposit in the cash collateral account on that payment date plus (b)
Available Finance Charge Collections and Shared Finance Charge Collections for
that payment date available immediately after funding the reserve account plus
(c) amounts withdrawn from the reserve account to be treated as Available
Finance Charge Collections, as described above under "-- Reserve Account."
However, following an event of default for your series, if the maturity of your
notes is not accelerated, the increase in the Required Cash Collateral Account
Amount will be limited to an amount equal to the outstanding principal amount of
your series of notes.
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The "REQUIRED CASH COLLATERAL ACCOUNT PERCENTAGE" will be determined as
follows:
<TABLE>
<CAPTION>
IF THE QUARTERLY EXCESS CASH
COLLATERAL PERCENTAGE IS GREATER THEN, THE CASH COLLATERAL ACCOUNT
THAN OR EQUAL TO: AND LESS THAN PERCENTAGE WILL EQUAL:
<S> <C> <C>
[ ]% [ ]% 0
[ ]% [ ]% [ ]%
[ ]% [ ]% [ ]%
</TABLE>
However, if a pay out event, other than a pay out event resulting from the
occurrence of an event of default for Series 2000- has occurred, the Cash
Collateral Account Percentage will be [__]%.
After the Cash Collateral Account Percentage has been increased above zero
as specified in the table above, it will remain at the specified percentage
until:
- further increased to a higher required percentage as specified above;
or
- the payment date on which the Quarterly Excess Cash Collateral
Percentage has increased to a level above that for the then-current
Cash Collateral Account Percentage, in which case the Cash Collateral
Account Percentage will be decreased to the appropriate percentage as
specified above, or, if the Quarterly Excess Cash Collateral
Percentage is greater than or equal to [__]%, the Cash Collateral
Account Percentage will be zero and the Required Cash Collateral
Account Amount will be zero.
However, if a pay out event, other than a pay out event resulting from the
occurrence of an event of default for Series 2000- has occurred, the Cash
Collateral Account Percentage will equal [___]%, as provided in the definition
of Cash Collateral Account Percentage above, and may not be subsequently
reduced.
The transferor may at any time in its sole discretion decrease the
"Required Cash Collateral Percentage." However, any decrease in the Required
Cash Collateral Percentage is permitted only if that decrease will not cause a
reduction or withdrawal by any rating agency of its rating of any outstanding
series or class.
The "QUARTERLY EXCESS CASH COLLATERAL PERCENTAGE" will be determined as
follows:
For the [Month 1]
2000 payment date The Excess Cash Collateral Percentage
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For the [Month 2] The Excess Cash Collateral Percentage
2000 payment date for the first monthly period, plus the
Excess Cash Collateral Percentage for the
[Month 1] 2000 period
-------------------------------------------
2
For the [Month 3] The Excess Cash Collateral Percentage for
2000 payment date the first monthly period, plus the Excess
Cash Collateral Percentage for the
[Month 1] 2000 monthly period, plus the
Excess Cash Collateral Percentage for the
[Month 2] 2000 monthly period
-------------------------------------------
3
For each following The sum of the Excess Cash Collateral
payment date Percentages for the 3 prior monthly periods
-------------------------------------------
3
The "EXCESS CASH COLLATERAL PERCENTAGE" for any monthly period will be
determined as follows:
- during the controlled accumulation period, but only if the amount on
deposit in the reserve account is greater than or equal to the
Required Reserve Account Amount:
Available Finance Charge Collections for the related payment
date available immediately after covering the noteholder
servicing fee for that payment date and [___]% of any times 12
Investor Default Amount for that monthly period
------------------------------------------------
the Adjusted Invested Amount on the first day of that
monthly period
- AND, IN ALL OTHER CASES:
Available Finance Charge Collections for the related
payment date available immediately after covering
the noteholder servicing fee for that payment date times 12
and [___]% of any Investor Default Amount
-------------------------------------------
the Invested Amount on the first day of that monthly
period
Funds on deposit in the cash collateral account will be invested at the
direction of the servicer in eligible investments. Investment earnings, net of
losses and investment expenses, will be
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deposited into the cash collateral account and will be available for payment to
holders of the Class C notes and the Class D notes.
CASH COLLATERAL ACCOUNT DISTRIBUTIONS
If on any payment date, the aggregate interest to be paid on the Class C
notes and the Class D notes exceeds the amount allocated to pay that interest,
the servicer will direct the indenture trustee to withdraw from the cash
collateral account the lesser of (i) the amount on deposit in the cash
collateral account, including investment earnings to the extent necessary to
fund that excess, and (ii) the amount of the excess, and will deposit that
amount into the collection account for payment of interest on the Class C notes
and the Class D notes.
On the Series 2000- termination date, funds available in the cash
collateral account, after giving effect to any withdrawals to be made as
discussed in the preceding paragraph, will be used to fund any shortfall in the
payment of the outstanding principal balance of the Class C notes and Class D
notes.
Funds on deposit in the cash collateral account on any payment date in
excess of the Required Cash Collateral Account Amount on that date will be paid
to the holders of the transferor interest. On the date on which all amounts due
the Class C noteholders and the Class D noteholders from the cash collateral
account have been paid in full, all amounts then remaining in the cash
collateral account will be distributed to the holders of the transferor
interest.
ADDITIONAL SERIES ENHANCEMENT
The transferor may at any time in its sole discretion arrange for any
additional series enhancement for the benefit of any class or classes of the
Series 2000- notes. This additional series enhancement may be in the form of
additional cash collateral funded from collections of receivables otherwise
allocable to the Transferor Interest, a letter of credit, surety bond, the
purchase of interest rate caps or swaps and/or another form of series
enhancement, provided that the form and amount of additional series enhancement
will not cause a reduction or withdrawal by any rating agency of its rating of
any outstanding series or class.
[ISSUANCE OF ADDITIONAL NOTES
The Series 2000- indenture supplement provides that, from time to time
during the revolving period, the transferor may, subject to conditions specified
in the indenture supplement, cause the trust to issue additional notes of Series
2000- . When issued, the additional notes of each class will be identical in all
respects to the other outstanding notes of that class and will be equally and
ratably entitled to the benefits of the transfer and servicing agreement, the
indenture and the Series 2000- indenture supplement without preference, priority
or distinction.
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In connection with each additional issuance, the outstanding principal
amount of each class of notes and the series enhancement will be increased
proportionately. As of the date of any additional issuance, the Invested Amount
will be increased to reflect the initial principal amount of the additional
notes of each class.]
PAY OUT EVENTS
As described above, the revolving period will continue through __________,
200 , unless that date is postponed as described under "--Postponement of
Controlled Accumulation Period" in this prospectus supplement, unless a pay out
event occurs prior to that date.
There are two types of pay out events: series pay out events that apply
only to the Series 2000- notes; and trust pay out events that apply to notes of
all series.
A "SERIES 2000- PAY OUT EVENT" refers to any of the following events:
(a) failure by the transferor (i) to make any payment or deposit on the
date required under the transfer and servicing agreement, the
indenture or the Series 2000- indenture supplement, or within the
applicable grace period which shall not exceed 5 business days or (ii)
to observe or perform in any material respect any other covenants or
agreements of the transferor set forth in the transfer and servicing
agreement, the indenture or the Series 2000- indenture supplement,
which failure has a material adverse effect on the Series 2000-
noteholders and which continues unremedied for a period of 60 days
after written notice of the failure, requiring the same to be
remedied, and continues to materially and adversely affect the
interests of the noteholders for the designated period. However, a
Series 2000- pay out event described in this subparagraph (a) will not
be deemed to have occurred if the transferor repurchases the related
receivables or all related receivables, during the designated period
in accordance with the provisions of transfer and servicing agreement;
(b) any representation or warranty made by the transferor in the transfer
and servicing agreement, the indenture or the Series 2000- indenture
supplement, or any information required to be given by the transferor
to the indenture trustee to identify the accounts proves to have been
incorrect in any material respect when made or delivered and which
continues to be incorrect in any material respect for a period of 60
days after written notice of the failure, requiring the same to be
remedied, and as a result of which the interests of the noteholders
are materially and adversely affected and continue to be materially
and adversely affected for the designated period. However, a pay out
event described in this subparagraph (b) will not occur if the
transferor has accepted reassignment of the related receivable or all
related
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receivables, during the designated period in accordance with the
provisions of the transfer and servicing agreement;
(c) the Net Portfolio Yield averaged over any three consecutive monthly
periods is less than the weighted average of the Base Rates for the
same monthly periods; or
(d) an event of default for Series 2000- occurs under the indenture.
A "TRUST PAY OUT EVENT" refers to any of the following events:
(i) a failure by the transferor (including any additional transferor) to
transfer receivables in additional accounts to the trust within 5
business days after the date required by the transfer and servicing
agreement;
(ii) any servicer default occurs which would have a material adverse effect
on the noteholders;
(iii) certain bankruptcy, insolvency, liquidation, conservatorship,
receivership or similar events relating to the transferor;
(iv) the transferor (including any additional transferor) is unable to
transfer receivables to the trust in accordance with the provisions of
the transfer and servicing agreement; or
(v) the trust becomes subject to regulation as an investment company
within the meaning of the Investment Company Act of 1940.
Series 2000- pay out events and trust pay out events together are called
"PAY OUT EVENTS."
In the case of any Series 2000- pay out event described in clause (a) or
(b) or any trust pay out event described in clause (ii) above, a pay out event
will be deemed to have occurred with respect to the notes only if, after any
applicable grace period, either the indenture trustee or the Series 2000-
noteholders evidencing interests aggregating not less than 50% of the then
outstanding principal balance of the Series 2000- notes, by written notice to
the transferor and the servicer, and to the indenture trustee if given by the
Series 2000- noteholders, declare that a pay out event has occurred with respect
to the Series 2000- notes as of the date of the notice.
In the case of any event described in clause (i), (iii), (iv) or (v), a pay
out event with respect to all series then outstanding, and in the case of any
event described in clause (c) or (d), a pay out event with respect to only the
Series 2000- notes, will occur without any notice or other action on the part of
the indenture trustee or the Series 2000- noteholders immediately upon the
occurrence of the event.
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On the date on which a pay out event is deemed to have occurred, the early
amortization period will begin.
See "Description of the Notes--Pay Out Events" in the accompanying
prospectus for an additional discussion of the consequences of an insolvency,
conservatorship or receivership of the transferor.
The term "BASE RATE" means, with respect to any monthly period, the
annualized percentage equivalent of a fraction:
- the numerator of which is the sum of the Monthly Interest and the
monthly servicing fee, each for the related payment date; and
- the denominator of which is the Invested Amount as of the close of
business on the last day of the prior monthly period.
The term "NET PORTFOLIO YIELD" means, for any monthly period, the
annualized percentage equivalent of a fraction:
- the numerator of which is the sum of collections of finance charge and
administrative receivables and any other amount, other than principal
receivables, designated by the transferor to be finance charge and
administrative receivables, Shared Finance Charge Collections, any net
investment earnings on funds deposited in the Principal Funding
Account and any amounts withdrawn from the Reserve Account and
deposited in the collection account and allocable to the Series 2000-
notes for that monthly period, calculated on a cash basis after
subtracting the Investor Default Amount for that monthly period; and
- the denominator of which is the Invested Amount as of the last day of
the prior monthly period.
EVENTS OF DEFAULT
The events of default for Series 2000-, as well as the rights and remedies
available to the indenture trustee and the Series 2000- noteholders when an
event of default occurs, are described under "The Indenture -- Events of
Default; Rights Upon Event of Default" in the accompanying prospectus.
If an event of default for Series 2000- occurs, the indenture trustee or
the holders of a majority of the then-outstanding principal balance of the
Series 2000- notes may declare the Series 2000- notes to be immediately due and
payable. If the Series 2000- notes are accelerated, you may receive principal
prior to the expected principal payment date for your notes.
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SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The share of the monthly servicing fee allocable to Series 2000- for any
payment date will be equal to one-twelfth of the product of (a) 2% and (b)(i)
the Adjusted Invested Amount as of the last day of the monthly period preceding
that payment date, minus (ii) the product of any amount on deposit in the Excess
Funding Account as of the last day of the monthly period preceding that payment
date and the Floating Percentage. However, for the first payment date, the
monthly servicing fee will equal $[________].
The share of the monthly servicing fee allocable to the Invested Amount for
any payment date will be equal to one-twelfth of the product of (a) the net
servicing fee rate and (b)(i) the Adjusted Invested Amount as of the last day of
the monthly period preceding that payment date, minus (ii) the product of any
amount on deposit in the Excess Funding Account as of the last day of the
monthly period preceding that payment date and the Floating Percentage of
collections of finance charge and administrative receivables for that monthly
period. This is called the "NOTEHOLDER SERVICING FEE." However, for the first
payment date, the noteholder servicing fee will equal $[________].
The "NET SERVICING FEE RATE" is equal to, so long as the bank, an affiliate
of the bank or the indenture trustee is the servicer, [__]% per annum and if
another entity is the servicer, [__]% per annum.
On each payment date, but only if the bank, an affiliate of the bank or the
Indenture Trustee is the servicer, Servicer Interchange for the related Monthly
Period that is on deposit in the collection account will be withdrawn and paid
to the servicer in payment of a portion of the monthly servicing fee for that
monthly period. "SERVICER INTERCHANGE" for any monthly period for which Advanta
Bank Corp., an affiliate or the Indenture Trustee is the servicer will be an
amount equal to the portion of collections of finance charge and administrative
receivables allocated to the Invested Amount for that monthly period that is
attributable to interchange. However, Servicer Interchange for a monthly period
will not exceed one-twelfth of the product of (i) the Adjusted Invested Amount,
as of the last day of that monthly period, and (ii) [__]%. For the first payment
date, the Servicer Interchange may equal but will not exceed $_________.
In the case of any insufficiency of Servicer Interchange on deposit in the
collection account, a portion of the monthly servicing fee for that monthly
period will not be paid to the extent of the insufficiency. In no event will the
trust, the indenture trustee, the owner trustee, the noteholders or the
transferor be liable for the share of the monthly servicing fee to be paid out
of Servicer Interchange.
The servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the receivables including, without
limitation, payment of the fees and disbursements of the indenture trustee and
independent certified public accountants and other fees which are not expressly
stated in the transfer and servicing agreement, the indenture or the Series
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2000- indenture supplement to be payable by the trust or the noteholders other
than federal, state and local income and franchise taxes, if any, of the trust.
REPORTS TO NOTEHOLDERS
On each payment date, the paying agent, on behalf of the indenture trustee
will forward to each noteholder of record, a statement prepared by the servicer
setting forth the items described in "Description of the Notes--Reports to
Noteholders" in the accompanying prospectus.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code impose certain requirements on employee benefit
plans and certain other plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and certain collective investment funds or
insurance company general or separate accounts in which the plans, accounts or
arrangements are invested, that are subject to the fiduciary responsibility
provisions of ERISA and/or Section 4975 of the Code (collectively called
"PLANS"), and on persons who are fiduciaries with respect to plans, in
connection with the investment of plan assets of any plan. ERISA generally
imposes on plan fiduciaries certain general fiduciary requirements, including
those of investment prudence and diversification and the requirement that a
plan's investments be made in accordance with the documents governing the plan.
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving plan assets and persons (called "parties in interest" under ERISA and
"disqualified persons" under the Code) who have specified relationships to a
plan or its plan assets, unless a statutory or administrative exemption is
available. These persons are collectively called "PARTIES IN INTEREST." Parties
in interest that participate in a prohibited transaction may be subject to a
penalty imposed under ERISA and/or an excise tax imposed pursuant to Section
4975 of the Code, unless a statutory or administrative exemption is available.
These prohibited transactions generally are set forth in Section 406 of ERISA
and Section 4975 of the Code.
Subject to the considerations described below and in the accompanying
prospectus, the notes are eligible for purchase with plan assets of any plan.
Any fiduciary or other plan investor considering whether to purchase the
notes with plan assets of any plan should determine whether that purchase is
consistent with its fiduciary duties and whether that purchase would constitute
or result in a non-exempt prohibited transaction under ERISA and/or Section 4975
of the Code because any of the transferor, the servicer, the indenture trustee,
the owner trustee or any other party may be parties in interest with respect to
the investing plan and may be deemed to be benefitting from the issuance of the
notes. If the transferor or the servicer is a party in interest with respect to
the prospective plan investor, any fiduciary or other plan investor considering
whether to purchase or hold the notes should consult with its counsel regarding
the availability of exemptive relief under United States Department of Labor
Prohibited
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Transaction Class Exemption (called a "PTCE") 96-23 (for transactions determined
by "in-house asset managers"), PTCE 95-60 (for transactions involving insurance
company general accounts), PTCE 91-38 (for transactions involving bank
collective investment funds), PTCE 90-1 (for transactions involving insurance
company pooled separate accounts) or PTCE 84-14 (for transactions determined by
independent "qualified professional asset managers") or any other prohibited
transaction exemption issued by the Department of Labor. A purchaser of the
notes should be aware, however, that even if the conditions specified in one or
more of the above-referenced exemptions are met, the scope of the exemptive
relief provided by the exemption might not cover all acts which might be
construed as prohibited transactions.
In addition, under Department of Labor Regulation Section 2510.3-101
(called the "PLAN ASSET REGULATION"), the purchase with plan assets of equity
interests in the issuer could, in certain circumstances, cause the receivables
and other assets of the issuer to be deemed plan assets of the investing plan.
This, in turn, would subject the issuer and its assets to the fiduciary
responsibility provisions of ERISA and the prohibited transaction provisions of
ERISA and Section 4975 of the Code. Nevertheless, because the notes (a) are
expected to be treated as indebtedness under local law and will, in the opinion
of Special Tax Counsel, be treated as debt, rather than equity, for federal tax
purposes (see "Federal Income Tax Consequences -- Tax Characterization of the
Trust and the Notes -- Treatment of the Notes as Debt" in the accompanying
prospectus), and (b) should not be deemed, at the time of initial issuance, to
have any "substantial equity features," purchases of the notes with plan assets
should not be treated as equity investments and, therefore, the receivables and
other assets included as assets of the issuer should not be deemed to be plan
assets of the investing plans. Those conclusions are based, in part, upon the
traditional debt features of the notes, including the reasonable expectation of
purchasers of the notes that the notes will be repaid when due, as well as the
absence of conversion rights, warrants and other typical equity features. The
characterization of the notes as debt could change subsequent to initial
issuance--that is, they could be treated as equity--if the trust incurs losses
or the rating of the notes is downgraded.
The notes may not be purchased or held by any plan, or any person investing
plan assets of any plan, if any of the transferor, the servicer, the indenture
trustee, the owner trustee or any of their respective affiliates (a) has
investment or administrative discretion with respect to the plan assets used to
effect the purchase; (b) has authority or responsibility to give, or regularly
gives, investment advice with respect to the plan assets, for a fee and pursuant
to an agreement or understanding that the advice (1) will serve as a primary
basis for investment decisions with respect to the plan assets, and (2) will be
based on the particular investment needs of that plan; or (c) unless PTCE 95-60,
PTCE 91-38 or PTCE 90-1 is applicable, is an employer maintaining or
contributing to that plan. Each purchaser or holder of the notes or any interest
in the notes will be deemed to have represented by its purchase and holding of
the notes that it is not subject to the foregoing limitation.
We suggest that any fiduciary or other plan investor considering whether to
purchase any notes on behalf of or with plan assets of any plan consult with its
counsel and refer to this prospectus supplement for guidance regarding the ERISA
considerations applicable to the notes offered by this prospectus supplement and
the accompanying prospectus.
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UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
as supplemented by a terms agreement relating to the Class A notes, the Class B
notes and the Class C notes (together, the "UNDERWRITING AGREEMENT") between the
transferor and the underwriters named below (the "UNDERWRITERS"), the transferor
has agreed to sell to the underwriters, and each of the underwriters has
severally agreed to purchase, the principal amount of the notes set forth
opposite its name:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF
UNDERWRITERS CLASS A NOTES CLASS B NOTES CLASS C NOTES
<S> <C> <C> <C>
Total.................... $ $ $
$ $ $
</TABLE>
In the underwriting agreement, the underwriters have agreed, subject to the
terms and conditions set forth in that agreement, to purchase all of the notes
offered hereby if any of the notes are purchased.
The underwriters propose initially to offer the Class A notes to the public
at [_____]% of their principal balance and to certain dealers at that price less
concessions not in excess of [_____]% of the principal balance of the Class A
notes. The underwriters may allow, and the dealers may reallow, concessions not
in excess of [_____]% of the principal balance of the Class A notes to certain
brokers and dealers. After the initial public offering, the public offering
price and other selling terms may be changed by the underwriters.
The underwriters propose initially to offer the Class B notes to the public
at [_____ ]% of their principal balance and to certain dealers at that price
less concessions not in excess of [_____ ]% of the principal balance of the
Class B notes. The underwriters may allow, and the dealers may reallow,
concessions not in excess of [_____]% of the principal balance of the Class B
notes to certain brokers and dealers. After the initial public offering, the
public offering price and other selling terms may be changed by the
underwriters.
The underwriters propose initially to offer the Class C notes to the public
at [_____]% of their principal balance and to certain dealers at that price less
concessions not in excess of [_____ ]% of the principal balance of the Class C
notes. The underwriters may allow, and the dealers may reallow, concessions not
in excess of [_____]% of the principal balance of the Class C notes to certain
brokers and dealers. After the initial public offering, the public offering
price and other selling terms may be changed by the underwriters.
We will receive proceeds of approximately $[_____ ] from the sale of the
notes (representing [_____]% of the principal balance of each Class A note,
[_____ ]% of the principal
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balance of each Class B note and [_____ ]% of the
principal balance of each Class C note) after paying the underwriting discount
of $[_____ ] (representing [_____ ]% of the principal balance of each Class A
note, [_____ ]% of the principal balance of each Class B note and [_____ ]% of
the principal balance of each Class C note). Additional offering expenses are
estimated to be $[_____].
Each underwriter has represented and agreed that:
- 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 notes in, from or otherwise involving the United Kingdom;
- 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 or sale
of the notes to a person who is of a kind described in Article 11 (3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom that document may otherwise lawfully be issued or passed
on;
- if it is an authorized person under Chapter III of part I of the
Financial Services Act 1986, it has only promoted and will only promote (as that
term is defined in Regulation 1.02(2) of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991) to any person in the United Kingdom the
scheme described in this prospectus supplement and the accompanying prospectus
if that person is of a kind described either in Section 76(2) of the Financial
Services Act 1986 or in Regulation 1.04 of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991; and
- it is a person of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996.
The seller will indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, or contribute to payments the
underwriters may be required to make in respect thereof.
The underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the notes in accordance with Regulation M under the Securities Exchange Act.
Over-allotment transactions involve syndicate sales in excess of the offering
size, which creates a syndicate short position. Stabilizing transactions permit
bids to purchase the notes so long as the stabilizing bids do not exceed a
specified maximum. Syndicate covering transactions involve purchases of the
notes in the open market after the distribution has been completed in order to
cover syndicate short positions. Penalty bids permit the underwriters to reclaim
a selling concession from a syndicate member when the notes originally sold by
that syndicate member are purchased in a syndicate covering transaction.
Over-allotment transactions, stabilizing transactions, syndicate covering
transactions and penalty bids may cause the prices of the notes to be higher
than they would otherwise be in the absence of those transactions.
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Neither the transferor nor the underwriters represent that the underwriters will
engage in any of these transactions or that those transactions, once commenced,
will not be discontinued without notice at any time.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Series 2000- notes
will be passed upon for the transferor by Wolf, Block, Schorr and Solis-Cohen
LLP, special counsel to the transferor. Certain legal matters relating to the
federal tax consequences of the issuance of the Series 2000- notes will be
passed upon for the transferor by Wolf, Block, Schorr and Solis-Cohen LLP.
Certain legal matters relating to the issuance of the Series 2000- notes will be
passed upon for the underwriters by ___________________________________.
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<PAGE> 62
GLOSSARY OF TERMS FOR PROSPECTUS SUPPLEMENT
"ACCUMULATION SHORTFALL" means: (a) on the first payment date zero; and (b) on
each subsequent payment date during the controlled accumulation period, any
excess of the applicable Controlled Deposit Amount for the previous monthly
period over the amount deposited in the Principal Funding Account for the
previous monthly period.
"ADJUSTED INVESTED AMOUNT" means, for any date of determination, the Invested
Amount as of that date, minus the amount on deposit in the Principal Funding
Account for that date.
"AVAILABLE PRINCIPAL COLLECTIONS" means, for any monthly period, the sum of: (i)
the Investor Percentage of collections of principal receivables deposited in the
collection account for that monthly period; minus (ii) the amount of Reallocated
Principal Collections for that monthly period; plus (iii) any Shared Principal
Collections from other series in group [one] allocated to your series, from
which principal payments on the Series 2000- notes will be paid.
"AVAILABLE FINANCE CHARGE COLLECTIONS" means, for any monthly period, an amount
equal to the sum of: (i) the Investor Percentage of collections of finance
charge and administrative receivables deposited in the collection account for
that monthly period; (ii) any net investment earnings on amounts on deposit in
the Principal Funding Account for that monthly period; and (iii) any amounts
withdrawn from the reserve account which are required to be included in
Available Finance Charge Collections under the Series 2000-A indenture
supplement for the related payment date.
"BASE RATE" means, with respect to any monthly period, the annualized percentage
equivalent of a fraction: (a) the numerator of which is the sum of the Monthly
Interest and the monthly servicing fee, each for the related payment date; and
(b) the denominator of which is the Invested Amount as of the close of business
on the last day of the prior monthly period.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on which
banking institutions in New York, Delaware, Utah or any other state in which the
principal executive offices of the seller, the owner trustee or the indenture
trustee are located, are authorized or obligated by law, executive order or
governmental decree to be closed.
"CASH COLLATERAL ACCOUNT" means a segregated account established and maintained
by the servicer with an eligible institution for the benefit of the Class C
noteholders and the Class D noteholders that will be used to fund shortfalls in
interest payments on the Class C notes and the Class D notes and on the Series
2000- termination date to fund any shortfall in payment of the outstanding
principal balance of the Class C notes and the Class D notes.
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"CLASS A ADDITIONAL INTEREST" means interest due on the Class A notes but not
paid on any payment date and payable on the following payment date, together
with additional interest on that amount at the Class A note interest rate.
"CLASS A MONTHLY INTEREST" means, for any payment date, the product of (a) the
Class A note interest rate for the related interest period, (b) the actual
number of days in that interest period divided by 360 and (c) the outstanding
principal balance of the Class A notes as of the close of business on the
applicable record date or, for the first payment date, the outstanding principal
balance of the Class A notes as of the closing date.
"CLASS A NOTE INTEREST RATE" means a rate of ___% per annum above LIBOR for the
related LIBOR determination date for each interest period.
"CLASS A UNDERWRITERS" means the Class A underwriters so named in the prospectus
supplement.
"CLASS A UNDERWRITING AGREEMENT" means, collectively, the underwriting
agreement, as supplemented by a terms agreement, between the transferor and the
Class A underwriters relating to the Class A notes.
"CLASS B ADDITIONAL INTEREST" means interest due on the Class B notes but not
paid on any payment date and payable on the following payment date, together
with additional interest on that amount at the Class B note interest rate.
"CLASS B MONTHLY INTEREST" means, for any payment date, the product of (a) the
Class B note interest rate for the related interest period, (b) the actual
number of days in that interest period divided by 360 and (c) the outstanding
principal balance of the Class B notes as of the close of business on the
applicable record date or, with respect to the first payment date, the
outstanding principal balance of the Class B notes as of the closing date.
"CLASS B NOTE INTEREST RATE" means a rate of ___% per annum above LIBOR for the
related LIBOR determination date for each interest period.
"CLASS B UNDERWRITERS" means the Class B underwriters so named in the prospectus
supplement.
"CLASS B UNDERWRITING AGREEMENT" means, collectively, the underwriting
agreement, as supplemented by a terms agreement, between the transferor and the
Class B underwriters relating to the Class B notes.
"CLASS C ADDITIONAL INTEREST" means interest due on the Class C notes but not
paid on any payment date and payable on the following payment date, together
with additional interest on that amount at the Class C note interest rate.
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"CLASS C MONTHLY INTEREST" means, for any payment date, the product of (a) the
Class C note interest rate for the related interest period, (b) the actual
number of days in that interest period divided by 360 and (c) the outstanding
principal balance of the Class C notes as of the close of business on the
applicable record date or, with respect to the first payment date, the
outstanding principal balance of the Class C notes as of the closing date.
"CLASS C NOTE INTEREST RATE" means a rate of ___% per annum above LIBOR for the
related LIBOR determination date for each interest period.
"CLASS C UNDERWRITERS" means the Class C underwriters so named in the prospectus
supplement.
"CLASS C UNDERWRITING AGREEMENT" means, collectively, the underwriting
agreement, as supplemented by a terms agreement, between the transferor and the
Class C underwriters relating to the Class C notes.
"CLASS D ADDITIONAL INTEREST" means interest due on the Class D notes but not
paid on any payment date and payable on the following payment date, together
with additional interest on that amount at the Class D note interest rate.
"CLASS D MONTHLY INTEREST" means, for any payment date, the product of (a) the
Class D note interest rate for the related interest period, (b) the actual
number of days in that interest period divided by 360 and (c) the outstanding
principal balance of the Class D notes as of the close of business on the
applicable record date or, with respect to the first payment date, the
outstanding principal balance of the Class D notes as of the closing date.
"CLASS D NOTE INTEREST RATE" means a rate of ___% per annum above LIBOR for the
related LIBOR determination date for each interest period.
"CLOSING DATE" means, for the Series 2000- notes, __________, 2000.
"CODE" means the Internal Revenue Code of 1986.
"CONTROLLED ACCUMULATION AMOUNT" means, for any payment date during the
controlled accumulation period, $__________. However, if the commencement of the
controlled accumulation period is postponed as described under "Description of
Series Provisions--Postponement of Controlled Accumulation Period," the
Controlled Accumulation Amount may be higher than the amount stated above for
each payment date during the controlled accumulation period and will be
determined by the servicer in accordance with the Series 2000- indenture
supplement based on the principal payment rates for the accounts and on the
invested amounts of other series, other than certain excluded series, which are
scheduled to be in their revolving periods and then scheduled to create Shared
Principal Collections during the controlled accumulation period.
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"CONTROLLED ACCUMULATION PERIOD" means the period that is scheduled to begin on
__________, 200 (but may be postponed, as discussed in this prospectus
supplement) under "Description of Series Provisions--Postponement of Controlled
Accumulation Period"and ends on the earliest of: (i) the beginning of the early
amortization period; (ii) the payment in full of the Invested Amount; or (iii)
the Series 2000- termination date.
"CONTROLLED DEPOSIT AMOUNT" means, for any payment date during the controlled
accumulation period, the sum of (i) the Controlled Accumulation Amount for that
payment date, plus (ii) any Accumulation Shortfall.
"DEFAULTED AMOUNT" means, for any monthly period, the total amount of principal
receivables, other than ineligible receivables, in the trust that were
charged-off for that month.
"EARLY AMORTIZATION PERIOD" means the period that begins on the day on which a
pay out event for Series 2000- occurs and ends on the earliest of (i) the
payment in full of the Invested Amount, or (ii) the Series 2000- termination
date.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"EXCESS CASH COLLATERAL PERCENTAGE" means an amount determined as described in
the prospectus supplement under "Description of Series Provisions-Cash
Collateral Account."
"EXPECTED PRINCIPAL PAYMENT DATE" means the date on which the Series 2000-
noteholders are expected to receive payment in full of principal, which is
________, 200_.
"FINANCE CHARGE AND ADMINISTRATIVE RECEIVABLES" means periodic finance charges,
and annual membership fees and service charges, late fees, overlimit fees, cash
advance fees, and the portion of interchange and all other fees and charges on
accounts designated by the transferor to be included as finance charge and
administrative receivables, and any other amounts, other than principal
receivables, so designated by the transferor.
"FIXED INVESTOR PERCENTAGE" means, for any monthly period, the percentage
equivalent of a fraction that is defined in this prospectus supplement under
"Description of Series Provisions--Fixed Allocation Definitions."
"FLOATING INVESTOR PERCENTAGE" means, for any monthly period, the percentage
equivalent of a fraction that is defined in this prospectus supplement under
"Description of Series Provisions--Floating Allocation Definitions."
"INTEREST PERIOD" means the period that begins on and includes a payment date
and ends on but excludes the next payment date, except that the first interest
period begins on and includes the closing date.
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"INVESTED AMOUNT" means, for any date of determination, an amount equal to (a)
the initial outstanding principal amount of the Series 2000- notes, minus (b)
the amount of principal previously paid to the Series 2000- noteholders, minus
(c) the amount of unreimbursed Investor Charge-Offs and Reallocated Principal
Collections.
"INVESTOR DEFAULT AMOUNT" means the series' share of losses from the trust
portfolio, which, as of each payment date, is equal to the Floating Investor
Percentage for that month multiplied by the Defaulted Amount for that payment
date.
"INVESTOR PERCENTAGE" means, for any monthly period, (a) for Defaulted Amounts
at any time and for collections of finance charge and administrative receivables
and principal receivables during the revolving period, the Floating Investor
Percentage, and (b) for collections of finance charge and administrative
receivables and principal receivables during the controlled accumulation period
and the early amortization period, the Fixed Investor Percentage.
"LIBOR DETERMINATION DATE" means the day on which the indenture trustee will
determine LIBOR for each interest period, which is the day two London business
days before the related interest period commences.
"LIBOR" means, for any LIBOR determination date, the London interbank offered
rate for deposits in U.S. dollars having a maturity of one month commencing on
the related LIBOR determination date and which appears on Telerate Page 3750 as
of 11:00 a.m., London time, on that LIBOR determination date, except that if
that rate does not appear on Telerate Page 3750, then as otherwise stated in the
prospectus supplement under "Description of Series Provisions-Interest
Payments."
"LONDON BUSINESS DAY" means any business day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
"MONTHLY PERIOD" means the period from and including the first day of a calendar
month to and including the last day of that calendar month; the initial monthly
period will commence on and include the closing date and end on and include
__________ , 2000.
"MONTHLY INTEREST" means, for any payment date, the sum of the Class A Monthly
Interest, the Class B Monthly Interest, the Class C Monthly Interest and the
Class D Monthly Interest for that payment date.
"MONTHLY PRINCIPAL" means, for any payment date, an amount equal to the least of
(i) the Available Principal Collections on deposit in the collection account for
that payment date, (ii) for each payment date during the controlled accumulation
period, the Controlled Deposit Amount for that payment date, and (iii) the
Adjusted Invested Amount (as adjusted for any Investor Charge- Offs and
Reallocated Principal Collections on that payment date) prior to any deposits
into the Principal Funding Account on that payment date.
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<PAGE> 67
"NET PORTFOLIO YIELD" means, for any monthly period, the annualized percentage
equivalent of a fraction: (a) the numerator of which is the sum of collections
of finance charge and administrative receivables and any other amount, other
than principal receivables, designated by the transferor to be finance charge
and administrative receivables, Shared Finance Charge Collections, any net
investment earnings on funds deposited in the Principal Funding Account and any
amounts withdrawn from the Reserve Account and deposited in the collection
account and allocable to the Series 2000- notes for that monthly period,
calculated on a cash basis after subtracting the Investor Default Amount for
that monthly period; and (b) the denominator of which is the Invested Amount as
of the last day of the prior monthly period.
"NET SERVICING FEE RATE" means, so long as the bank, an affiliate of the bank or
the indenture trustee is the servicer, [__]% per annum and if another entity is
the servicer, [__]% per annum.
"OFFERED NOTES" or "OFFERED SERIES 2000- NOTES" means the Class A notes, the
Class B notes and the Class C notes that are offered by this prospectus
supplement and the accompanying prospectus.
"ONE-MONTH INDEX MATURITY" means a maturity of one month commencing on the
related LIBOR determination date.
"PARTIES IN INTEREST" means persons (called "parties in interest" under ERISA
and "disqualified persons" under the Code) who have specified relationships to a
plan or its plan assets.
"PAY OUT EVENTS" means, collectively, Series 2000- pay out events and trust pay
out events.
"PAYMENT DATE" means __________ , 2000 and the 15th day of each following month.
If the 15th day is not a business day, then the payment date will be the
following business day.
"PLAN ASSET REGULATION" means Department of Labor Regulation Section 2510.3-101.
"PLANS" means \employee benefit plans and certain other plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and certain
collective investment funds or insurance company general or separate accounts in
which the plans, accounts or arrangements are invested, that are subject to the
fiduciary responsibility provisions of ERISA and/or Section 4975 of the Code.
"PRE-FUNDING ACCOUNT" means an account established with an eligible institution
on the closing date from which funds are withdrawn on a weekly basis and paid to
the transferor to the extent of any increase in the trust's principal
receivables.
"PRINCIPAL FUNDING ACCOUNT" means the eligible deposit account established and
maintained by the indenture trustee with an eligible institution for the benefit
of the noteholders. During the controlled accumulation period, the indenture
trustee at the direction of the servicer will transfer
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<PAGE> 68
Available Principal Collections from the collection account to the Principal
Funding Account as described under "-- Application of Collections" in this
prospectus supplement.
"PRINCIPAL SHORTFALLS" means the amount by which any scheduled or permitted
principal payments to noteholders and any deposits to Principal Funding Accounts
for any series in group [one] which have not been covered out of the collections
of principal receivables allocable to that series in group [one] is less than
the collections of principal receivables allocable to that series and certain
other amounts for those series.
"PTCE" means a United States Department of Labor Prohibited Transaction Class
Exemption.
"QUARTERLY EXCESS CASH COLLATERAL PERCENTAGE" means an amount determined as
described in the prospectus supplement under "Description of Series
Provisions-Cash Collateral Account."
"REALLOCATED PRINCIPAL COLLECTIONS" means, for any monthly period, Available
Principal Collections used to pay interest on the Class A notes, the Class B
notes, the Class C notes or used to pay the monthly servicing fee in an amount
that is defined in this prospectus supplement under "Description of Series
Provisions--Reallocated Principal Collections."
"RECORD DATE" means, for the Series 2000- notes, the business day immediately
preceding a payment date.
"RECOVERIES" means all of the recoveries that are reasonably estimated by the
servicer on receivables in charged-off accounts of the trust, including amounts
received by the transferor or the servicer from the purchaser or transferee with
respect to the sale or other disposition of receivables in defaulted accounts.
"REQUIRED TRANSFEROR INTEREST" is an amount equal to (a) Required Transferor
Percentage multiplied by (b) the total amount of principal receivables in the
trust portfolio.
"REQUIRED RESERVE ACCOUNT AMOUNT" means, for any payment date on or after the
reserve account funding date, an amount equal to (a) the product of (i) [___]%
of the outstanding aggregate principal balance of the Class A notes, the Class B
notes, the Class C notes and the Class D notes as of the preceding payment date
and (ii) a fraction the numerator of which is the number of monthly periods
scheduled to be included in the controlled accumulation period as of that date,
and the denominator of which is [___] (except that if the numerator is one, the
Required Reserve Account Amount determined as described above will be [zero]) or
(b) any other amount selected by the transferor. However, if the amount
designated by the transferor under clause (b) is less than the amount in clause
(a), the transferor will provide the servicer and the indenture trustee with
certain written confirmation as described in the prospectus supplement under
"Description of Series Provisions--Reserve Account."
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"REQUIRED CASH COLLATERAL ACCOUNT AMOUNT" means, for each payment date, in
general the product of (a) the Cash Collateral Account Percentage in effect on
that date and (b) the initial Invested Amount. However, in the absence of an
event of default for your series, the Required Cash Collateral Account Amount
will not exceed the outstanding aggregate principal balance of the Class C notes
and the Class D notes minus any excess of the Principal Funding Account balance
over the sum of the outstanding principal balances of the Class A notes and the
Class B notes on that date.
"REQUIRED CASH COLLATERAL ACCOUNT PERCENTAGE" means an amount determined as
described in the prospectus supplement under "Description of Series
Provisions-Cash Collateral Account."
"REQUIRED TRANSFEROR PERCENTAGE" means, initially, 7%, but it may be reduced if
certain conditions set forth in the transfer and servicing agreement are
satisfied.
"REQUIRED MINIMUM PRINCIPAL BALANCE" means, as of any date, for all outstanding
series, unless otherwise provided in the related indenture supplement for a
series having a paired series (a) the sum of the Invested Amounts for each
series outstanding on that date, plus (b) the Required Transferor Interest on
that date, minus (c) the amounts on deposit in the Excess Funding Account on
that date.
"RESERVE ACCOUNT" means the segregated trust account established and maintained
by the indenture trustee with an eligible institution for the benefit of the
noteholders, to assist with the payment of interest on the notes during the
controlled accumulation period and on the first payment date during the early
amortization period.
"RESERVE ACCOUNT FUNDING DATE" means the payment date for the monthly period
which commences no later than three months prior to the commencement of the
controlled accumulation period, or an earlier date selected by the servicer.
"RESERVE DRAW AMOUNT" means, for any payment date, the draw made by the
indenture trustee from the reserve account of funds to be used as Available
Finance Charge Collections and deposited in the collection account in an amount
equal to the shortfall, if any, that results if the net investment earnings on
funds on deposit in the Principal Funding Account are less than the product of
(i) the balance of the Principal Funding Account, up to the Invested Amount on
the record date immediately preceding that payment date, (ii) the weighted
average of the Class A note interest rate, the Class B note interest rate, the
Class C note interest rate and the Class D note interest rate for the related
interest period and (iii) the number of days in the related interest period
divided by 360.
"RESET DATE" means any date that is an addition date, a date on which the
issuance of additional notes of an outstanding series occurs, a date on which an
increase or decrease in the invested amount of any series that is a variable
principal funding series occurs, or a removal date on which for any series that
has been paid in full, principal receivables in an aggregate amount
approximately equal to the initial invested amount of that series are removed
from the trust.
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<PAGE> 70
"REVOLVING PERIOD" means the period that begins on the closing date and ends on
the earlier of the date the controlled accumulation period or the early
amortization period begins.
"SERIES 2000- PAY OUT EVENT" means any of the following events:
(a) failure by the transferor (i) to make any payment or deposit on the date
required under the transfer and servicing agreement, the indenture or the
Series 2000- indenture supplement, or within the applicable grace period
which shall not exceed 5 business days or (ii) to observe or perform in any
material respect any other covenants or agreements of the transferor set
forth in the transfer and servicing agreement, the Series 2000- indenture
or the Series 2000- indenture supplement, which failure has a material
adverse effect on the Series 2000- noteholders and which continues
unremedied for a period of 60 days after written notice of the failure,
requiring the same to be remedied, and continues to materially and
adversely affect the interests of the noteholders for the designated
period. However, a Series 2000- pay out event described in this
subparagraph (a) will not be deemed to have occurred if the transferor
repurchases the related receivables or all related receivables, during the
designated period in accordance with the provisions of transfer and
servicing agreement;
(b) any representation or warranty made by the transferor in the transfer and
servicing agreement, the Series 2000- indenture or the Series 2000-
indenture supplement, or any information required to be given by the
transferor to the indenture trustee to identify the accounts proves to have
been incorrect in any material respect when made or delivered and which
continues to be incorrect in any material respect for a period of 60 days
after written notice of the failure, requiring the same to be remedied, and
as a result of which the interests of the noteholders are materially and
adversely affected and continue to be materially and adversely affected for
the designated period. However, a pay out event described in this
subparagraph (b) will not occur if the transferor has accepted reassignment
of the related receivable or all related receivables, during the designated
period in accordance with the provisions of the transfer and servicing
agreement;
(c) the Net Portfolio Yield averaged over any three consecutive monthly periods
is less than the weighted average of the Base Rates for the same monthly
periods; or
(d) an event of default for Series 2000- occurs under the indenture.
"SERIES 2000- INDENTURE SUPPLEMENT" means the indenture supplement relating to
the Series 2000- notes between the trust and the indenture trustee.
"SERIES 2000- NOTES" means the Class A notes, the Class B notes, the Class C
notes and the Class D notes.
"SERIES 2000- TERMINATION DATE" means __________, 200_.
"SERVICER INTERCHANGE" means, for any monthly period for which Advanta Bank
Corp., an affiliate or the Indenture Trustee is the servicer, an amount equal to
the portion of collections of finance charge and administrative receivables
allocated to the Invested Amount for that monthly period that is attributable to
interchange. However, Servicer Interchange for a monthly period will not exceed
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<PAGE> 71
one-twelfth of the product of (i) the Adjusted Invested Amount, as of the last
day of that monthly period, and (ii) [__]%. For the first payment date, the
Servicer Interchange may equal but will not exceed $_________.
"SHARED FINANCE CHARGE COLLECTIONS" means, for any series of notes in group
[one], collections of finance charge and administrative receivables and other
amounts treated like collections of finance charge and administrative
receivables in excess of the amount required to make payments or deposits for
that series and made available to other series included in group [one] whose
allocation of collections of finance charge and administrative receivables is
not sufficient to make its required payments or deposits.
"SHARED PRINCIPAL COLLECTIONS" means the balance of collections of principal
receivables for any monthly period after allocation to the Invested Amount and
used first to cover, for any monthly period during the controlled accumulation
period, deposits of the Controlled Deposit Amount to the Principal Funding
Account, and during the early amortization period, payments to the noteholders,
as determined by the servicer.
"TELERATE PAGE 3750" means the display page currently so designated on the
Bridge Telerate Capital Markets Report, or any other page that replaces that
page on that service for the purpose of displaying comparable rates or prices.
"TRANSFEROR INTEREST" is the interest in the trust not securing your series or
any other series of notes and is equal to (a) the sum of the total amount of
principal receivables in the trust and the Excess Funding Account balance, minus
(b) the total adjusted invested amounts of all series of notes then outstanding.
"TRUST PAY OUT EVENT" means any of the following events:
(i) a failure by the transferor (including any additional transferor) to
transfer receivables in additional accounts to the trust within 5
business days after the date required by the transfer and servicing
agreement;
(ii) any servicer default occurs which would have a material adverse effect on
the noteholders;
(iii) certain bankruptcy, insolvency, liquidation, conservatorship,
receivership or similar events relating to the transferor;
(iv) the transferor (including any additional transferor) is unable to
transfer receivables to the trust in accordance with the provisions of
the transfer and servicing agreement; or
(v) the trust becomes subject to regulation as an investment company within
the meaning of the Investment Company Act of 1940.
"TRUST PORTFOLIO" consists of the accounts selected by the transferor from the
Advanta Business Card Portfolio at the time the trust was established, and
additional accounts selected since that time, on the basis of criteria described
in the transfer and servicing agreement, the receivables of which have been
transferred to the trust.
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<PAGE> 72
"UNDERWRITERS" means, collectively, the Class A underwriters, the Class B
underwriters and the Class C underwriters.
"UNDERWRITING AGREEMENT" means, collectively, the Class A underwriting
agreement, the Class B underwriting agreement and the Class C underwriting
agreement.
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<PAGE> 73
ANNEX I
OTHER SERIES ISSUED AND OUTSTANDING
The table below sets forth the principal characteristics of the other
series previously issued by the trust, or a predecessor trust, that are
currently outstanding, all of which are in group [one]. For more specific
information with respect to any series, any prospective investor should contact
Advanta Bank Corp., Treasury Department at (___) ___-____. Advanta Bank Corp.
will provide, without charge, to any prospective purchaser of the notes, a copy
of the disclosure documents for any previous publicly-issued series.
<TABLE>
<S> <C>
[ Series 2000 -
<S> <C> <C>
Initial Class A Invested Amount $
Current Class A Invested Amount $
Class A note interest rate [one-month] LIBOR plus ___% per annum
Initial Class B Invested Amount $
Current Class B Invested Amount $
Class B note interest rate [one-month] LIBOR plus ___% per annum
Initial Class C Invested Amount $
Current Class C Invested Amount $
Class C note interest rate [one-month] LIBOR plus ___% per annum
Initial Class D Invested Amount $
Current Class D Invested Amount $
Class D note interest rate [one-month] LIBOR plus ___% per annum
[Controlled Accumulation Amount $_________*]
[Expected principal payment date [__________] payment date]
Annual servicing fee percentage [___] per annum
[Enhancement for the Class A notes subordination of Class B notes,
Class C notes and Class
D notes]
[Enhancement for the Class B notes subordination of Class C notes
and Class D notes]
[Enhancement for the Class C notes subordination of Class D notes
and cash collateral
account]
[Enhancement for the Class D notes cash collateral account]
Series 2000- termination date [__________] payment date
Series Issuance Date [__________] __________, 200__
</TABLE>
- -------------
*Subject to change if the commencement of the accumulation period or controlled
accumulation period, as applicable, is delayed.
A-1
<PAGE> 74
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE AMENDED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject to Completion, dated May 25, 2000
Prospectus
ADVANTA BUSINESS CARD MASTER TRUST
Issuer
ADVANTA BUSINESS RECEIVABLES CORP.
Transferor
ADVANTA BANK CORP.
Servicer
Asset Backed Notes
THE TRUST --
- may periodically issue asset backed notes in one or more
series with one or more classes; and
- will have an interest in --
- receivables in a portfolio of MasterCard(R) business revolving
credit card accounts;
- payments due on those receivables; and
- other property described in this prospectus and in the
accompanying prospectus supplement.
THE NOTES --
- will be paid only from the trust assets;
- offered with this prospectus will be rated in one of the four
highest rating categories by at least one nationally
recognized rating organization;
- may have one or more forms of series enhancement; and
- will be issued as part of a designated series which may
include one or more classes of notes.
You should consider carefully the risk factors beginning on page 8 in this
prospectus.
A note is not a deposit and neither the notes nor the underlying accounts or
receivables are insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency.
The notes are obligations of Advanta Business Card Master Trust only and are not
obligations of Advanta Business Receivables Corp., Advanta Bank Corp., Advanta
Corp., any affiliate of them or any other person.
This prospectus may be used to offer and sell notes of a series only if
accompanied by the prospectus supplement for that series.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE NOTES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 75
, 2000
<PAGE> 76
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the notes in two separate documents:
(a) this prospectus, which provides general information, some of which may not
apply to your series of notes; and (b) the accompanying prospectus supplement,
which describes the specific terms of your series of notes, including:
- the terms, including interest rates, for each class;
- the timing of interest and principal payments; - information
about the receivables;
- information about any series enhancement for each class;
- the ratings for each class being offered; and
- the method for selling the notes.
The accompanying supplement to this prospectus may update or modify
this prospectus. Whenever the information in the prospectus supplement is more
specific than the information in this prospectus, you should rely on the
information in the prospectus supplement.
You should rely only on the information provided in this prospectus and
the accompanying prospectus supplement, including the information incorporated
by reference. We have not authorized anyone to provide you with different
information. We are not offering the notes in any state where the offer is not
permitted.
We include cross references in this prospectus and the accompanying
prospectus supplement to captions in these materials where you can find further
related discussions. The following Table of Contents and the Table of Contents
in the accompanying prospectus supplement provide the pages on which these
captions are located.
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<PAGE> 77
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary...................................................................................... 1
Issuer............................................................................................. 1
Series............................................................................................. 1
Indenture Trustee.................................................................................. 1
Transferor......................................................................................... 1
Seller, Servicer and Administrator................................................................. 2
Trust Assets....................................................................................... 2
Collections and Allocations........................................................................ 3
Interest Payments on the Notes..................................................................... 3
Principal Payments on the Notes.................................................................... 3
Events of Default.................................................................................. 5
Event of Default Remedies.......................................................................... 6
Shared Finance Charge Collections.................................................................. 6
Shared Principal Collections....................................................................... 6
Paired Series...................................................................................... 7
Series Enhancement................................................................................. 7
Tax Status ........................................................................................ 7
ERISA Considerations............................................................................... 7
Note Ratings....................................................................................... 8
Risk Factors....................................................................................... 8
Risk Factors............................................................................................ 9
The Issuer.............................................................................................. 16
Advanta Bank Corp.,
Advanta Business Receivables Corp.
and Advanta Corp........................................................................................ 17
The Bank's Credit Card Activities....................................................................... 17
Advanta Business Card Portfolio.................................................................... 17
Acquisition and Use of
Credit Cards...................................................................................... 19
Partnerships ...................................................................................... 21
Underwriting and Credit Risk ...................................................................... 21
Risk Based Pricing ............................................................................... 22
Interchange........................................................................................ 23
Operations......................................................................................... 23
Billing and Payments............................................................................... 25
Key Supplier Relationships ....................................................................... 25
Credit Card Association
Relationships..................................................................................... 25
Description of First Data
Resources......................................................................................... 25
The Trust Portfolio..................................................................................... 26
Maturity Considerations................................................................................. 28
Use of Proceeds......................................................................................... 29
Description of the Notes................................................................................ 29
General............................................................................................ 29
Securities Depository.............................................................................. 31
Book-Entry Registration............................................................................ 32
Definitive Notes................................................................................... 35
Interest Payments.................................................................................. 37
Principal Payments................................................................................. 37
Transfer and Assignment
of Receivables.................................................................................... 38
Issuance of Additional Series...................................................................... 39
Issuance of Additional Notes....................................................................... 41
Representations and Warranties..................................................................... 42
Addition of Trust Assets........................................................................... 47
Removal of Accounts................................................................................ 50
Collection and Other Servicing
Procedures........................................................................................ 52
Adjustment......................................................................................... 52
Trust Accounts..................................................................................... 52
Funding Period..................................................................................... 54
Investor Percentage and Transferor
Percentage......................................................................................... 56
Application of Collections......................................................................... 56
Shared Finance Charge
Collections....................................................................................... 58
Shared Principal Collections....................................................................... 59
Defaulted Receivables; Rebates and
Fraudulent Charges; Investor
Charge-Offs....................................................................................... 60
Final Payment of Principal;
Termination....................................................................................... 61
Paired Series...................................................................................... 62
Pay Out Events..................................................................................... 63
Servicing Compensation and
Payment of Expenses............................................................................... 64
Certain Matters Regarding the
Transferor and the Servicer....................................................................... 64
Servicer Default................................................................................... 67
</TABLE>
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<PAGE> 78
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Reports to Noteholders............................................................................. 69
Evidence as to Compliance.......................................................................... 70
Amendments......................................................................................... 71
The Indenture........................................................................................... 73
Events of Default; Rights upon
Event of Default.................................................................................. 73
Certain Covenants.................................................................................. 78
Modification of the Indenture...................................................................... 79
Annual Compliance Statement........................................................................ 80
Indenture Trustee's Annual Report.................................................................. 81
List of Noteholders................................................................................ 81
Satisfaction and Discharge of
Indenture......................................................................................... 81
The Indenture Trustee.............................................................................. 81
Certain Matters Regarding the
Administrator...................................................................................... 82
Credit Enhancement...................................................................................... 82
General............................................................................................ 82
Subordination...................................................................................... 83
Letter of Credit................................................................................... 84
Cash Collateral Guaranty or
Account........................................................................................... 84
Collateral Interest................................................................................ 85
Surety Bond or Insurance Policy.................................................................... 85
Spread Account..................................................................................... 85
Reserve Account.................................................................................... 85
Interest Rate Swap Agreements
and Interest Rate Cap Agreements.................................................................. 86
Description of the Purchase
Agreement.............................................................................................. 86
Note Ratings............................................................................................ 88
Material Legal Aspects of the
Receivables............................................................................................ 88
Transfer of Receivables............................................................................ 88
Borrower Protection Laws........................................................................... 90
Claims and Defenses of Cardholders
Against the Trust.................................................................................. 90
Certain Matters Relating to
Conservatorship, Receivership and
Bankruptcy......................................................................................... 90
Federal Income Tax Consequences......................................................................... 93
General............................................................................................ 93
Tax Characterization of the Trust
and the Notes..................................................................................... 93
Consequences to Holders of
the Notes......................................................................................... 94
State and Local Tax Consequences................................................................... 98
ERISA Considerations.................................................................................... 98
Plan of Distribution.................................................................................... 99
Legal Matters........................................................................................... 99
Reports to Noteholders.................................................................................. 100
Where You Can Find More
Information............................................................................................ 100
Glossary of Terms for Prospectus........................................................................ 102
Annex I Global Clearance, Settlement
and Tax Documentation Procedures...................................................................... A-1
</TABLE>
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<PAGE> 79
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION AND DOES NOT CONTAIN ALL OF THE
INFORMATION THAT YOU NEED TO CONSIDER IN MAKING YOUR INVESTMENT DECISION. YOU
SHOULD CAREFULLY READ THIS ENTIRE DOCUMENT AND THE ACCOMPANYING PROSPECTUS
SUPPLEMENT BEFORE YOU PURCHASE ANY NOTES.
ISSUER
Advanta Business Card Master Trust, a Delaware common law trust, is the issuer
of the notes. The trust's principal place of business is located at
[_______________]. Its telephone number is [______________________].
The trust is a master trust and will issue notes in series.
SERIES
The trust will issue other series of notes secured by the assets of the trust
from time to time in the future.
Each series of notes will consist of one or more classes. The classes of a
series may be issued at the same time or at different times. The notes of each
series will be issued under an indenture supplement to an indenture, in each
case between the trust and the indenture trustee.
Some classes or series may not be offered by this prospectus. They may be
offered, for example, in a private placement.
The issuance of future series will occur without your prior review or consent .
INDENTURE TRUSTEE
[_________________________]
TRANSFEROR
Advanta Business Receivables Corp. is the initial transferor of the credit card
receivables to the trust. Its principal place of business is 639 Isbell
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<PAGE> 80
Road, Suite 390, Reno, Nevada 89509. Its telephone number is (775) 823-3080. It
is a wholly owned subsidiary of Advanta Bank Corp. Additional transferors that
are affiliates of the initial transferor may be designated.
SELLER, SERVICER AND ADMINISTRATOR
The bank is the initial seller of the credit card receivables to the transferor.
Additional sellers that are affiliates of the bank may be designated. A seller
may sell credit card receivables to the transferor or transfer the receivables
directly to the trust.
The bank's principal place of business is 11850 South Election Road, Draper,
Utah 84020. Its telephone number is (801) 523-0858. The bank is an indirect
wholly-owned subsidiary of Advanta Corp.
The bank will service the receivables for the trust and will act as the trust's
administrator.
In limited cases, the servicer may resign or be removed, and either the
indenture trustee or a third party may be appointed as the new servicer. The
servicer receives a servicing fee from the trust, and each series is obligated
to pay a portion of that fee.
TRUST ASSETS
The seller is the owner of the accounts in which the credit card receivables
were created and will continue to own the accounts after the receivables
generated in those accounts have been transferred to the trust. The Seller's
portfolio of accounts represents agreements between the seller and small
businesses governing the extension of unsecured revolving lines of credit that
can be used through the MasterCard(R)* or VISA(R)* payment-processing systems.
It has designated selected MasterCard(R) revolving business credit card accounts
from its portfolio and has either sold the receivables in those accounts to the
transferor under a receivables purchase agreement or transferred the receivables
directly to the trust under a transfer and servicing agreement. If the bank has
sold receivables to the transferor, then the transferor has, in turn,
transferred the receivables to the trust under the transfer and servicing
agreement. In the future, receivables in VISA(R) revolving business credit card
accounts could be transferred to the trust.
All new receivables generated in the accounts will be transferred automatically
to the trust. The total amount of receivables in the trust fluctuates daily as
new receivables are generated and payments are received on existing receivables.
See "The Receivables" in the accompanying prospectus supplement.
The receivables transferred to the trust are the primary trust assets.
Additional similar assets may be transferred to the trust as described under
"Description of the Notes --Addition of Trust Assets" in this prospectus. The
transferor may also remove receivables that it transferred to the trust as
described under "Description of the Notes--Removal of Accounts" in this
prospectus.
- --------
* MasterCard(R) and VISA(R) are federally registered trademarks of Mastercard
International Inc. and VISA U.S.A., Inc., respectively.
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<PAGE> 81
For more information about the receivables, see "The Trust Portfolio" in this
prospectus.
COLLECTIONS AND ALLOCATIONS
The servicer receives collections on the receivables, deposits those collections
in the collection account and keeps track of them as either finance charge and
administrative receivables or principal receivables.
The servicer then allocates those collections among each series of notes
outstanding and the transferor beneficial interest. The servicer allocates (a)
collections of finance charge and administrative receivables and principal
receivables and (b) receivables in accounts written off as uncollectible to each
series based on varying percentages. The accompanying prospectus supplement
describes the allocation percentages applicable to your series. The amount of
cashflows from the trust assets the transferor beneficial interest is entitled
to receive is called the transferor interest.
The principal amount of the transferor interest fluctuates with the amount of
the principal receivables held in the trust and the amount of notes outstanding.
The transfer and servicing agreement requires the transferor to transfer
receivables in additional accounts to the trust (a) if the transferor interest,
averaged over any 30-day period, is less than the required transferor interest,
or (b) if the total amount of principal receivables in the trust portfolio is
less than the required minimum principal balance. The transferor may sell all or
part of its interest in the transferor beneficial interest by issuing a
supplemental certificate. The transferor interest does not provide series
enhancement for any series.
INTEREST PAYMENTS ON THE NOTES
Each note entitles the holder to receive payments of interest as described in
the applicable prospectus supplement. If a series of notes consists of more than
one class, each class may differ in priority of payments, payment dates,
interest rates, methods for computing interest, rights to series enhancement and
other things.
Each class of notes may have a fixed, floating or any other type of interest
rate. Generally, interest will be paid monthly, quarterly, semi-annually or on
other scheduled dates over the life of the notes. See "Description of the
Notes--Interest Payments" in this prospectus.
PRINCIPAL PAYMENTS ON THE NOTES
Each note offered under this prospectus entitles the holder to receive payments
of principal as described in the applicable prospectus supplement. If a series
of notes has more than one class, each class may differ in the amounts allocated
for principal payments, priority of payments, payment dates, maturity, rights to
series enhancement and other things. See "Description of the Notes--Principal
Payments" in this prospectus.
REVOLVING PERIOD
From the date a series of notes is issued until a date specified in the series
supplement, the trust will not pay or accumulate principal for payment to the
noteholders. During this revolving period, the trust will pay available
principal to noteholders of other series in a group as shared principal
collections or to the transferor as holder
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of the transferor beneficial interest, or in certain circumstances will deposit
the available principal in the excess funding account.
After the revolving period, each class of notes will have one or more of the
following periods:
- the controlled accumulation period, during which principal is
accumulated in specified amounts per month and paid on an
expected principal payment date;
- the controlled amortization period, during which principal is
paid in fixed amounts at scheduled intervals; or
- the early amortization period or early accumulation period,
during which principal is paid or accumulated, respectively,
in varying amounts each month based on the amount of principal
receivables collected following a pay out event.
CONTROLLED ACCUMULATION PERIOD
If a series or class of notes is in a controlled accumulation period, the trust
is expected to pay available principal to those noteholders on the expected
principal payment date specified in the prospectus supplement for that series.
If the series has more than one class, each class may have a different priority
of payment. For a period of time prior to the expected principal payment date,
the trust will deposit specified amounts of available principal in a trust
account. The controlled accumulation period for a series or class begins on a
date specified in the applicable prospectus supplement and ends when any one of
the following occurs:
- the notes of that series or class are paid in full;
- the early amortization period or early accumulation period
starts; or
- the series termination date.
CONTROLLED AMORTIZATION PERIOD
If a series or class of notes is in a controlled amortization period, the trust
will pay available principal up to a fixed amount to those noteholders on each
payment date during that period. The trust will pay available principal in a
fixed amount, plus any amounts not previously paid. If the series has more than
one class, each class may have a different priority of payment. The controlled
amortization period for a series or class starts on the date specified in the
applicable prospectus supplement and ends when any one of the following occurs:
- the notes of that series or class are paid in full;
- the early amortization period or early accumulation period
starts; or
- the series termination date.
EARLY AMORTIZATION PERIOD OR EARLY
ACCUMULATION PERIOD
If a series or class of notes is in an early amortization period or early
accumulation period, the trust will pay available principal to those noteholders
on each payment date or accumulate available principal by making a deposit into
an account on each payment date. If the series has more than one class, each
class may have a different priority for payment. The
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early amortization period or early accumulation period for a series or class
starts on the day a pay out event occurs and ends when any of the following
occurs:
- the notes of that series or class are paid in full;
- the series termination date; or
- the trust termination date.
All principal and interest will be due and payable no later than the series
termination date.
PAY OUT EVENTS
Pay out events for any series of notes will consist of series pay out events and
trust pay out events. Series pay out events are described in the prospectus
supplement for that series and apply only to that series. Trust pay out events
apply to all series and consist of the following:
- any servicer default occurs which would have a material
adverse effect on the noteholders;
- certain bankruptcy, insolvency, liquidation, conservatorship,
receivership or similar events relating to the transferor or
the seller unless, in the case of any of those events with
respect to a seller, the receivables originated by that seller
are no longer eligible and written confirmation is received
from each rating agency that the subsequent exclusion of that
seller's receivables from the trust portfolio will not result
in a reduction or withdrawal of its rating of any outstanding
series or class;
- the transferor is unable for any reason to transfer
receivables to the trust in accordance with the provisions of
the transfer and servicing agreement; or
- the trust becomes subject to regulation as an "investment
company" within the meaning of the Investment Company Act of
1940.
See "Description of the Notes--Pay Out Events" in this prospectus.
EVENTS OF DEFAULT
The indenture and related indenture supplement governing the terms and
conditions of the notes include a list of events of default.
If an event of default occurs, then, after any applicable cure period, the
indenture trustee or the holders of a majority in principal amount of the
affected series of notes may accelerate those notes by declaring the principal
amount of those notes to be immediately due and payable. That declaration may be
rescinded by the holders of a majority in principal amount of the affected
series of notes.
Events of default include the following:
- the trust fails to pay interest on any note within 35 days of
its due date;
- the trust fails to pay in full principal on any note on its
series termination date;
- the trust defaults on any covenant or breaches any agreement
under the indenture, the default or breach is materially
adverse to noteholders and the default or breach continues
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unremedied for 60 days after written notice of the default or
breach is given to the trust by the indenture trustee or to
the trust and the indenture trustee by holders of at least 50%
in principal amount of the affected notes;
- the occurrence of certain bankruptcy, insolvency,
reorganization or similar events relating to the trust; or
- as to any series of notes, any additional events of default
specified in the applicable prospectus supplement.
See "The Indenture--Events of Default; Rights upon Event of Default" in this
prospectus for a description of the events of default and their consequences to
noteholders.
It is not an event of default if the principal of a note is not paid on its
expected principal payment date.
EVENT OF DEFAULT REMEDIES
After an event of default and the acceleration of a series of notes, funds on
deposit in the collection account and any trust accounts for that series will be
applied to pay principal of and interest on those notes to the extent permitted
by law. After an event of default, collections of principal receivables and
finance charge and administrative receivables allocated to the affected notes
will be applied to make monthly principal and interest payments on those notes
until the earlier of the date those notes are paid in full or the series
termination date of those notes.
After an event of default, the indenture trustee (acting on its own or at the
direction of holders of notes that have been accelerated) will have a limited
right to foreclose on the portion of the receivables allocable to the
accelerated notes by causing the trust to sell an interest in the assets of the
trust by issuing a foreclosure certificate. This foreclosure certificate would
represent an undivided interest in the assets of the trust equal to the invested
amount securing the notes of the related series. See "The Indenture--Events of
Default; Rights upon Event of Default" in this prospectus.
SHARED FINANCE CHARGE COLLECTIONS
Any series may be included in a group of series. The group to which a series
belongs will be specified in the prospectus supplement for that series. If
specified in the prospectus supplement for any of these series, to the extent
that collections of finance charge and administrative receivables allocated to a
series are not needed for that series, those collections may be applied to cover
certain shortfalls of other series in the same group. See "Description of the
Notes-- Shared Finance Charge Collections" in this prospectus.
SHARED PRINCIPAL COLLECTIONS
If a series is identified in its prospectus supplement as being in a group of
series, to the extent that collections of principal receivables allocated to
that series are not needed for that series at that time, those collections may
be applied to cover principal payments for other principal sharing series in the
same group, and vice versa. Once principal receivables are transferred from one
series to another, the series providing the principal receivables is not
entitled to recoup these
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amounts. Certain principal payments for certain principal sharing series in the
same group may have priority in receiving those collections over other principal
payments for other principal sharing series in that group. See "Description of
the Notes -- Shared Collections of Principal" in this prospectus.
PAIRED SERIES
If specified in its prospectus supplement, a series may be paired with another
series so that a reduction in the invested amount securing the notes of one
series results in an increase in the invested amount securing the notes of the
other such series.
SERIES ENHANCEMENT
Each class of a series may be entitled to series enhancement. Series enhancement
for the notes of any class may take the form of one or more of the following:
- subordination
- letter of credit
- collateral interest
- surety bond
- insurance policy
- spread account
- cash collateral guaranty
- reserve account
- cash collateral account
- swap arrangement
- interest rate cap agreement
- cross support feature
The type, characteristics and amount of any series enhancement for a series will
be:
- based on several factors, including the characteristics of the
receivables and accounts at the time a series of notes is
issued; and
- established based on the requirements of the rating agencies.
See "Credit Enhancement" in this prospectus.
TAX STATUS
Subject to important considerations described under "Federal Income Tax
Consequences" in this prospectus, Wolf, Block, Schorr and Solis-Cohen LLP, as
special tax counsel to the trust, is of the opinion that, for United States
federal income tax purposes (1) the notes will be treated as indebtedness and
(2) the trust will not be an association or a publicly traded partnership
taxable as a corporation. In addition, noteholders will agree, by acquiring
notes, to treat the notes as debt for federal, state and local income and
franchise tax purposes.
ERISA CONSIDERATIONS
Under the regulations issued by the United States Department of Labor, the
trust's assets would not be deemed plan assets of any employee benefit plan
holding notes and may be purchased by employee benefit plans if certain
conditions are met. If the trust's assets were deemed to be plan assets of an
employee benefit plan, there is uncertainty as to whether existing exemptions
from the prohibited transaction rules of the Employee Retirement Income Security
Act of 1974, as amended, would apply to all transactions involving the trust's
assets. We suggest that
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fiduciaries or other persons contemplating purchasing notes of any series with
"plan assets" of any employee benefit plan consult their counsel before making a
purchase. See "ERISA Considerations" in this prospectus.
NOTE RATINGS
Any note offered by this prospectus and an accompanying prospectus supplement
will be rated in one of the four highest rating categories by at least one
nationally recognized rating organization.
A rating is not a recommendation to buy, sell or hold securities, and may be
revised or withdrawn at any time by the assigning agency. Each rating should be
evaluated independently of any other rating. See "Note Ratings" in this
prospectus.
RISK FACTORS
Investment in the notes will be subject to one or more risk factors. We suggest
that you read "Risk Factors" beginning on page 8 in this prospectus and any Risk
Factors discussion in the accompanying prospectus supplement for a discussion of
risk factors that you may wish to consider before investing in the notes.
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RISK FACTORS
The following is a summary of the material risks that apply to an investment in
the notes. The remainder of this prospectus and the attached prospectus
supplement provide more detailed information about these risks. You should
consider the following risk factors and any risk factors in the accompanying
prospectus supplement before deciding whether to purchase the notes.
IT MAY NOT BE POSSIBLE TO FIND AN INVESTOR TO PURCHASE YOUR NOTES.
The underwriters may assist in resales of the notes of any class or series but
they are not required to do so. A secondary market for the notes of your class
may not develop. If a secondary market does develop, it might not continue or it
might not be sufficiently liquid to allow you to resell any of your notes. You
must be prepared to hold the notes you purchase for as long as they are
outstanding.
THE SERIES ENHANCEMENT FOR YOUR NOTES MAY NOT BE SUFFICIENT TO PROTECT YOU
AGAINST LOSSES.
The series enhancement for your notes is designed to protect your investment
against certain types and amount of losses as described in the prospectus
supplement for your series of notes. The amount of any series enhancement is
limited and may decline during an amortization or accumulation period. If a
series enhancer fails to perform its obligations or if the series enhancement
ends under the terms on which it is provided, then you will bear directly the
credit and other risks associated with your investment in the notes.
THE INTEREST OF THE INDENTURE TRUSTEE IN THE RECEIVABLES MAY BECOME JUNIOR TO
THE INTERESTS OF OTHER PERSONS IN THE RECEIVABLES.
There are certain limited circumstances under the Uniform Commercial Code and
applicable Federal law in which prior or subsequent transferees of receivables
could have an interest in the receivables superior to the interest of the
indenture trustee. A tax or other statutory lien on the property of any seller
or transferor arising before any receivable comes into existence may have
priority over the interests of the transferor or the indenture trustee in the
receivables.
SOME LIENS WOULD BE GIVEN PRIORITY OVER YOUR NOTES WHICH COULD CAUSE DELAYED OR
REDUCED PAYMENTS.
The seller and the transferor will account for the transfer of the receivables
as a sale. However, a court could conclude that the seller or the transferor
still owns the receivables and that the trust holds only a security interest.
Even if a court would reach that conclusion, the indenture trustee will have a
first priority perfected security interest.
If a court were to conclude that the trust has only a security interest, a tax
or government lien (or other lien imposed under applicable state or federal law
without consent) on the property of the
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person that owns the receivables arising before new receivables come into
existence may be senior to the trust's interest in the receivables.
Additionally, if a receiver or conservator were appointed for any seller, the
fees and expenses of the receiver or conservator might be paid from the
receivables before the trust received any payments on the receivables. If a
receiver or conservator were appointed for the bank, the trust may not have a
first-priority perfected security interest in collections commingled and used
for the benefit of the bank as servicer. If any of these events occur, payments
to you could be delayed or reduced. See "Certain Legal Aspects of the
Receivables--Transfer of Receivables" and "Description of the
Notes--Representations and Warranties" in this prospectus.
IF A RECEIVER OR CONSERVATOR WERE APPOINTED FOR A SELLER OR A TRANSFEROR THAT IS
A BANK, OR IF A SELLER OR A TRANSFEROR THAT IS NOT A BANK BECAME A DEBTOR IN A
BANKRUPTCY CASE, DELAYS OR REDUCTIONS IN PAYMENT OF YOUR NOTES COULD OCCUR.
The Federal Deposit Insurance Act, as amended by the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 provides that a security interest
granted by a bank in the receivables would be respected to the extent that:
- the applicable receivables purchase agreement, transfer and
servicing agreement or back-up security agreement, as the case
may be, complies with the requirements of the FDIA;
- the security interest granted under the applicable receivables
purchase agreement, transfer and servicing agreement or
back-up security agreement, as the case may be, was perfected
before the Federal Deposit Insurance Corporation is appointed
as receiver or conservator for the bank; and
- the security interest was not taken in contemplation of the
bank's insolvency or with the intent to hinder, delay or
defraud the bank or its creditors.
Opinions and policy statements issued by the FDIC suggest that, because of the
manner in which these transactions are structured, the FDIC would respect the
security interest granted by any seller or transferor that is a bank in the
receivables. If the FDIC were to assert a contrary position, however, payments
of principal and interest on your notes could be delayed and possibly reduced.
Furthermore, the FDIC could:
- require the indenture trustee to go through an administrative
claims procedure to obtain payments on the notes;
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- request a stay of any actions by the indenture trustee or
owner trustee to enforce the applicable receivables purchase
agreement, transfer and servicing agreement or back-up
security agreement, as the case may be, or the notes; or
- repudiate the applicable receivables purchase agreement,
transfer and servicing agreement or back-up security
agreement, as the case may be, and limit the claims of the
holders of the notes to "actual direct compensatory damages."
If the FDIC were to take any of these actions, the amount payable to you could
be lower than the outstanding principal and accrued interest on the notes, thus
resulting in losses to you.
ABRC is a wholly-owned bankruptcy remote subsidiary of the bank. The certificate
of incorporation of ABRC limits the nature of its business and restricts its
ability to commence a voluntary case under the bankruptcy code without the
unanimous consent of its directors.
If, however, ABRC or any other transferor or any seller that is not a bank
became a debtor in a bankruptcy case, and if its transfer of the receivables to
a transferor or the trust were construed as the grant of a security interest to
secure a borrowing, your payments of outstanding principal and interest could be
delayed and possibly reduced.
If a receiver or conservator were appointed for any seller or transferor that is
a bank, or if any seller or transferor that is not a bank became a debtor in a
bankruptcy case, this could cause a pay out event and an early payment of
principal on all outstanding series of notes could result. Under the terms of
the applicable receivables purchase agreement or transfer and servicing
agreement, new principal receivables would not be transferred to the trust.
However, the bankruptcy court, the receiver or conservator may have the power,
regardless of the terms of the transfer and servicing agreement, (a) to delay
the effect of any provision under the indenture, the applicable receivables
purchase agreement or transfer and servicing agreement, (b) to prevent the early
payment of principal or (c) to require new principal receivables to continue
being transferred.
If a receiver or conservator were appointed for the servicer and no servicer
default other than the appointment of the receiver or conservator has occurred,
the receiver or conservator may have the power to prevent either the indenture
trustee or the noteholders from appointing a new servicer.
See "Certain Legal Aspects of the Receivables--Certain Matters Relating to
Conservatorship, Receivership and Bankruptcy" in this prospectus.
THE ACCOUNT OWNER MAY CHANGE THE TERMS AND CONDITIONS OF THE ACCOUNTS IN A WAY
THAT REDUCES COLLECTIONS.
The bank and any other seller which owns accounts will have the right to change
the finance charge and the other fees and charges which will be applicable from
time to time on the accounts, to alter the
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minimum monthly payment required under the accounts and to change various other
terms of its agreement with cardholders on the accounts. Such changes may be
voluntary on the part of the owner of the accounts or may be required by law or
forced by market conditions. For example, changes in applicable law, changes in
the marketplace or prudent business practice might result in a determination by
the bank or any other seller which owns accounts to decrease finance charges or
other fees and charges for existing accounts, or to take actions which would
otherwise change the terms of the accounts. Changes could also result in lower
credit ratings on your notes. A decrease in the finance charges and the other
fees and charges assessed on the accounts should decrease the effective yield on
the accounts and could result in the occurrence of a pay out event and
commencement of the early amortization period or early accumulation period. If
an early amortization period occurs, you could receive an early payment of
principal on your notes.
LIMITED REMEDIES FOR BREACHES OF REPRESENTATIONS COULD REDUCE OR DELAY PAYMENTS.
The transferor makes representations and warranties relating to the validity and
enforceability of the receivables arising under the accounts in the trust
portfolio, as to compliance with applicable law of the accounts and the
receivables, and as to the perfection and priority of the trust's interest in
the receivables. However, neither the owner trustee nor the indenture trustee
will make any examination of the receivables or the related assets to determine
the presence of defects, compliance with the representations and warranties or
for any other purpose.
If a representation or warranty relating to the receivables is violated, the
related obligors may have defenses to payment or offset rights, or creditors of
the seller or the transferor may claim rights to the trust assets. If a
representation or warranty is violated, the transferor may have an opportunity
to cure the violation. If it is unable to cure the violation within the
specified time period or if there is no right to cure the violation, the
transferor must accept reassignment of the receivables affected by the
violation. These reassignments are the only remedy for breaches of
representations and warranties, even if your damages exceed your share of the
reassignment price. See "Description of the Notes --Representations and
Warranties" in this prospectus.
PAYMENT PATTERNS OF RECEIVABLES COULD REDUCE COLLECTIONS.
The receivables transferred to the trust may be paid at any time. The trust
cannot assure the creation of additional receivables in the trust's accounts or
that any particular pattern of cardholder payments will occur. A significant
decline in the amount of new receivables generated could result in the
occurrence of a pay out event for one or more series and the commencement of the
early amortization period or the early accumulation period for each of those
series. If a pay out event occurs, you could receive payment of principal sooner
than expected. The bank's ability to compete in the current industry environment
will affect its ability to generate new receivables and might also affect
payment patterns on the receivables. In addition, changes in finance charges can
alter the monthly payment rates of cardholders. A significant decrease in
monthly payment rates could slow the return or
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accumulation of principal during an amortization period or accumulation period.
See "Maturity Considerations" in this prospectus.
CREDIT CARD INDUSTRY ANTITRUST LITIGATION COULD ADVERSELY AFFECT THE BANK'S
BUSINESS CARD PROGRAM.
On October 7, 1998 the United States Department of Justice filed suit in United
States District Court for the Southern District of New York, in United States of
America v. VISA U.S.A., Inc. et al. challenging two sets of membership rules
adopted by VISA U.S.A., Inc. and MasterCard International Inc. that have been
significant to the profitability of the bank's credit card businesses. In
particular, the suit seeks to eliminate the exclusionary policies of MasterCard
and VISA that have prevented the associations' member banks from offering other
branded credit card products (e.g., American Express(R), Discover Card(R)). The
suit also seeks to eliminate the "duality" policies of VISA and MasterCard that
allow a bank to belong to both the MasterCard and VISA associations. The suit
alleges that, as a result of the duality policies, the same large banks control
both associations, and that this has substantially lessened competition between
the associations because these banks have been, and continue to be,
significantly less willing to fund and implement competitive initiatives that
would cause consumers to switch their business from one association to the
other. The suit alleges that the exclusionary policies have eliminated certain
forms of competition among MasterCard and VISA member banks, and have
effectively precluded American Express and Discover Financial Services, Inc.
from competing to enlist banks in the United States to issue their cards. The
suit also alleges that, through their control of both the MasterCard and VISA
associations, the largest banks have stifled competition between these two
networks and have thwarted competition from smaller competitor networks, and
that this has hindered and delayed the development and implementation of
improved network products and services and has lessened consumer choice.
If successful in eliminating the duality policies, the suit would force banks to
choose to belong to one or the other of the MasterCard and VISA systems. This
could have the effect of reducing the competitiveness of the MasterCard product
to banks (and ultimately, to merchants an consumers as well) as banks may choose
to belong to the significantly larger VISA association. This could have an
adverse effect on the bank's existing business card program generally, which is
significantly dependent today on the bank's membership in the MasterCard
association. Eliminating the exclusivity policies could adversely affect the
operation, competitiveness and profitability of the bank's business card
program.
THE RATING ASSIGNED TO A CLASS OF NOTES IS LIMITED.
Any rating assigned to the notes by a credit rating agency will reflect the
rating agency's assessment solely of the likelihood that noteholders will
receive the payments of interest and principal required to be made under the
terms of the series and will be based primarily on the value of the receivables
in the trust and the series enhancement provided. The rating is not a
recommendation to purchase, hold or sell any notes. The rating does not
constitute a
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comment as to the marketability of any notes, any market price or suitability
for a particular investor. Any rating can be changed or withdrawn by a rating
agency at any time.
ADDITION OF RECEIVABLES WITH DIFFERENT CHARACTERISTICS COULD AFFECT ADVERSELY
THE COMPOSITION OF THE TRUST AND REDUCE THE AVERAGE YIELD ON THE PORTFOLIO.
The transferor expects, and in some cases will be obligated, to designate
additional accounts, and the receivables generated in these additional accounts
will be conveyed to the trust. These may include receivables arising in accounts
originated using criteria different from those which were applied to the initial
accounts transferred to the trust because these accounts were originated at a
later date, were part of a portfolio of accounts which were not part of the
bank's portfolio as of the initial cut-off date or were acquired from another
institution. Moreover, additional accounts designated at any time may not be
accounts of the same type as those previously included in the trust.
Consequently, the trust cannot assure you that additional accounts and the
receivables generated in those accounts will be of the same credit quality as
the accounts and receivables previously included in the trust. In addition,
additional accounts may consist of receivables arising in revolving business
credit card accounts that have different terms than the accounts previously
transferred to the trust, including lower periodic finance charges and other
fees and charges, which may have the effect of reducing the average yield on the
portfolio of accounts included in the trust. The designation of additional
accounts will be subject to the satisfaction of certain conditions, including
that each rating agency that has rated the series of notes confirm in writing
that the addition of receivables will not result in a reduction or withdrawal of
its rating of any class.
THE NOTES ARE SOLELY LIMITED OBLIGATIONS OF THE TRUST.
The notes of any series will represent the right to receive payments of
principal and interest in the amounts and at the times described in the
prospectus supplement for the series. The notes will not represent an interest
in or obligation of the seller, the transferor, the owner trustee, the indenture
trustee or any of their affiliates and will not be guaranteed or insured by any
of them. A specified percentage of collections, amounts on deposit in specified
accounts and funds provided by any series enhancer will be the sole source of
payment on the notes. You will not have recourse to the seller, the transferor,
the owner trustee, the indenture trustee or any other entity if the proceeds are
insufficient or otherwise unavailable to make all payments provided for under
the notes of your series.
SUBORDINATED CLASSES BEAR LOSSES BEFORE SENIOR CLASSES.
One or more classes of notes in a series may be subordinated to one or more
senior classes of notes in the same series. Principal payments to the
subordinated class or classes will not begin until each of the more senior
classes has been paid in full. Additionally, if collections of finance charge
and administrative receivables allocated to a series are insufficient to cover
amounts due for that series' senior notes, the invested amount for the series
might be reduced. This would reduce the amount of
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the collections of finance charge and administrative receivables available to
the subordinated notes in future periods and could cause a possible delay or
reduction in principal and interest payments on the subordinated notes.
ALLOCATIONS OF CHARGED-OFF RECEIVABLES COULD REDUCE PAYMENTS TO YOU.
The servicer will write off the receivables arising in accounts in the trust
portfolio if the receivables become uncollectible. Your series will be allocated
a portion of these charged-off receivables. See "Description of Series
Provisions--Allocation Percentages" and "The Seller's Business Card
Portfolio --Delinquency and Loss Experience" in the accompanying prospectus
supplement. If the amount of charged-off receivables allocated to your series of
notes exceeds the amount of funds available to reimburse those charge-offs, you
may not receive the full amount of principal and interest due to you. If a
cardholder sought protection under federal or state bankruptcy or debtor relief
laws, a court could reduce or discharge completely the cardholder's obligations
to repay amounts due on its account and, as a result, the related receivables
would be written off as uncollectible. See "Certain Legal Aspects of the
Receivables--Borrower Protection Laws" in this prospectus and "Description of
Series Provisions-- Reallocated Principal Collections," "--Application of
Collections" and "--Defaulted Receivables; Investor Charge-Offs" in the
accompanying prospectus supplement.
THE NOTE INTEREST RATE AND THE RECEIVABLES INTEREST RATE MAY RE-SET AT DIFFERENT
TIMES, BE BASED ON DIFFERENT INDICES, OR BE CALCULATED IN A DIFFERENT MANNER, OR
ONE COULD BE FIXED AND THE OTHER FLOATING, RESULTING IN REDUCED OR EARLY
PAYMENTS TO YOU.
Some accounts may have finance charges set at a variable rate based on a
designated index, for example, the prime rate. A series of notes may bear
interest either at a fixed rate or at a floating rate based on a different
index. If the interest rate charged on the accounts declines, collections of
finance charge and administrative receivables may be reduced without a
corresponding reduction in the amounts of interest payable on your notes and
other amounts required to be paid out of collections of finance charge and
administrative receivables. This could result in delayed or reduced payments to
you.
A series of notes may bear interest at a floating rate, while all or a portion
of the receivables bear interest at a fixed rate. If the rate on the notes
increased, collections of finance charge and administrative receivables may not
support the note interest rate. This could result in delayed or reduced payments
to you.
A decrease in the spread, or difference, between collections of finance charge
and administrative receivables and those collections allocated to make interest
payments on your notes could reduce the net portfolio yield and increase the
risk of early repayment of your notes.
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ISSUANCE OF ADDITIONAL SERIES BY THE TRUST MAY AFFECT THE TIMING OF PAYMENTS TO
YOU.
The trust will issue additional series of notes from time to time. The trust may
issue additional series with terms that are different from your series without
your prior review or consent. It is a condition to the issuance of each new
series that each rating agency that has rated an outstanding series confirm in
writing that the issuance of the new series will not result in a reduction or
withdrawal of its then-existing rating of any class of any outstanding series.
The rating agency confirmation primarily will be based on the trust's ability to
pay principal by the series termination date and interest on each payment date.
The rating agency confirmation will not consider how the terms of a new series
could affect the timing and amounts of payments on your series.
This prospectus uses some defined terms. You can find a glossary of
terms under the caption "Glossary of Terms for Prospectus" beginning on page 102
in this prospectus.
THE ISSUER
Advanta Business Card Master Trust is a common law trust created under
the laws of the State of Delaware on ___________ , 2000. It is operated under a
trust agreement, dated as of __________, 2000, between ABRC, as transferor, and
[______________________], as owner trustee. Advanta Business Card Master Trust
is called the "ISSUER" or the "TRUST" and [___________________________], in its
capacity as owner trustee of the issuer, is called the "OWNER TRUSTEE."
The activities of the issuer are limited to:
- acquiring, owning and managing the trust assets and the
proceeds of those assets;
- issuing and making payments on the notes; and
- engaging in related activities.
As a consequence, the trust is not expected to have any need for, or
sources of, capital resources other than the trust assets.
The bank, in its capacity as "ADMINISTRATOR," under the administration
agreement, dated as of __________, 2000, between the administrator and the
trust, will provide the notices and perform on behalf of the trust certain other
administrative obligations required by the transfer and servicing agreement, the
indenture and the indenture supplement for each series, and will be compensated
for acting as the administrator.
The trust's principal offices are in Delaware, in care of
[____________________], as owner trustee, at the following address:
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[_________________________]
The transferor will pay the fees of the owner trustee and will reimburse
it for certain liabilities and expenses.
ADVANTA BANK CORP.,
ADVANTA BUSINESS RECEIVABLES CORP.
AND ADVANTA CORP.
The bank is a Utah-chartered industrial loan corporation. It is a
depository institution subject to regulatory oversight and examination by both
the FDIC and the Utah Department of Financial Institutions. Under its banking
charter, the bank is permitted to make consumer and commercial loans and to
accept all FDIC insured deposits with the exception of demand deposits (checking
accounts). The bank is an indirect wholly-owned subsidiary of Advanta Corp.
Advanta Corp. is a publicly-traded company based in Spring House, Pennsylvania
and is listed on the NASDAQ as ADVNA and ADVNB.
The principal executive office of the bank is located in Draper, Utah.
ABRC is a corporation incorporated under the laws of the State of Nevada
in May, 1996. The articles of incorporation of ABRC limit its purpose and
activities to reduce the likelihood that a bankruptcy petition will be filed
concerning it. An entity which is structured in this manner is frequently called
bankruptcy remote. All of ABRC's issued and outstanding shares of common stock
are owned by the bank.
The principal executive office of ABRC is located in Reno, Nevada.
ABRC's articles of incorporation and by-laws limit the types of business in
which it may engage.
THE BANK'S CREDIT CARD ACTIVITIES
ADVANTA BUSINESS CARD PORTFOLIO
The receivables have been generated from transactions made by holders of
MasterCard(R) credit card accounts selected from the portfolio of credit card
accounts originated by the bank. This portfolio is called the "ADVANTA BUSINESS
CARD PORTFOLIO." In the future, the Advanta Business Card Portfolio, and the
accounts designated to the trust, could include VISA(R) credit card accounts or
another type of account.
The bank has traditionally defined its target market as established
small businesses that have been in operation for at least two years.
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The bank's principal product is a co-branded MasterCard(R) business
card offering access, through merchants, banks and ATMs, to an instant unsecured
revolving business credit line. Under the terms of the cardholder agreement, the
card may be used solely for business purposes. The interest rate and credit line
size offered varies and is ultimately determined based upon credit history and
creditworthiness of the cardholder. The bank's business card offering is
customized in a variety of ways that differentiate its product. The bank offers
a business card that can be personalized with the cardholder customer's company
name and generally charges no annual fee. In addition, the bank offers a number
of benefits that it believes are important to a small business owner including:
- personalized company checks which can be used at the same
interest rate as the interest rate on card purchases;
- additional cards for company employees at no fee with the
ability to set individual spending limits;
- detailed quarterly and annual expense management reports that
categorize purchases and itemize charges for record keeping
and tax purposes; and
- access to cash advances up to the full credit line at the same
interest rate as the interest rate on card purchases.
The card also offers free auto rental insurance, free purchase
protection service for a specified time period, and several free emergency
assistance and referral services. Purchase protection service is a form of
warranty which protects the cardholder from defective merchandise. The service
is provided by an independent third party. The receivables subject to this
service do not differ from other receivables. The provider of the purchase
protection service will reimburse the cardholder for the defective merchandise,
if warranted. The cardholder is still obligated to make payments on amounts due
on his card.
The bank also offers on a limited basis for an annual fee a bonus miles
program whereby the cardholder receives credit toward the purchase of airline
tickets with each card purchase. Additionally, it offers a travel card whereby
use of the card entitles the cardholder to discounts at various hotels and
restaurants along with all of the benefits described above. The bank expects to
continue to expand its product offerings as it looks for innovative ways to
tailor the bank's products to the unique needs of small businesses.
Some data processing and administrative functions associated with the
servicing of the Advanta Business Card Portfolio are currently performed on
behalf of the bank by First Data Resources, Inc. See "--Description of First
Data Resources." If First Data Resources were to fail or become insolvent,
delays in processing and recovery of information about charges incurred by
cardholders could occur. The replacement of the services that First Data
Resources now provides to
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the bank could be time-consuming. As a result, delays in payments to noteholders
of each series outstanding at that time could occur.
ACQUISITION AND USE OF CREDIT CARDS
The bank credit card industry is highly competitive. There is increased
competitive use of advertising, target marketing and pricing competition in
interest rates and annual cardholder fees as both traditional and new credit
card issuers seek to expand or to enter the market. The bank issues
Master Card(R) credit cards to customers nationwide, competing with certain
money center banks and other large nationwide issuers, as well as with regional
and local banks, savings and loan associations and other depository
institutions. Many of these competitors have sizeable branch systems through
which credit cards are marketed to the institutions' customer bases and have
greater capital resources and a larger depositor base than the bank. Certain
major credit card issuers assess finance charges for selected portions of their
portfolios at rates significantly lower than the rates currently being assessed
on the accounts designated to the trust. The bank has responded to the increased
competition primarily by marketing cards to a target market of small businesses
that have been in operation for at least two years and introducing benefits and
incentives for a set period of time (generally less than 12 months in length).
See "-- Advanta Business Card Portfolio."
Substantially all of the bank's new accounts are generated through
direct mail and telemarketing solicitation of potential cardholders.
The bank prescreens potential applicants to identify those who meet its
target market profile. The source of information used in the prescreening
process is compiled by Dun & Bradstreet and includes general demographic and
credit information. The bank then uses targeted direct marketing programs,
primarily direct mail and telemarketing, to reach its prospective customers.
The bank currently mails solicitations monthly, offering potential
applicants the invitation to apply for an Advanta MasterCard business card.
Interested applicants may return the application to the bank via fax, mail or
the Internet. Upon receipt, the applicant data is verified and input into the
bank's database. If an application is submitted via the Internet and approved,
the applicant is sent a cardholder agreement which must be signed and returned
to the bank before a card is issued. Similarly, the bank uses inbound and
outbound telemarketing to invite potential applicants to apply. Through the use
of proprietary models, the bank scores applicants to determine creditworthiness.
If an applicant is approved, a fulfillment package including the card is sent
via mail. If an applicant is declined, typically due to a poor credit history or
lack of complete or accurate credit information, a decline letter is issued.
In an effort to expand the bank's customer reach, the bank is testing
new sources by which to identify potential customers. These sources include the
use of other external credit reporting agencies, as well as the purchase of
customer lists from establishments with a small business customer base.
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The bank is also expanding its marketing channels through the use of an
Internet site that offers instant online approval. The site address is
www.applytoday.com. The bank is the first in the business card market to offer
this service. All of its direct mail solicitations offer the invitation to apply
online, and the bank hopes to obtain customers via the Internet through the use
of banner advertising to draw potential customers to its website.
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PARTNERSHIPS
The bank anticipates finding new customers by forming relationships
with third parties whose customers fit the bank's target market profile. These
third parties might include, for example, suppliers of office products, office
furniture, and personal computers and related software.
UNDERWRITING AND CREDIT RISK
The bank has developed sophisticated modeling techniques for assessing
the creditworthiness of potential cardholders. Through the application process,
the bank is able to verify the applicant's demographic information and collect
current sales and income statistics. This information, coupled with credit
reports received from external credit agencies, forms the basis for the bank's
decision to extend credit. Using a scoring system, the bank is able to rank
prospective cardholders based upon their expected creditworthiness and
profitability potential.
The bank's current scoring system, implemented in August 1999, includes
an underwriting risk score and a revolving balance score. The underwriting risk
score is a measure of credit risk or potential for default. The revolving
balance score measures the expected potential balance of an account or the
propensity for a cardholder to maintain an ongoing balance on its account. These
scores, when taken together, are key determinants of overall profitability.
Using this two-score technique, the bank is able to eliminate those potential
applicants who are low risk but have a low propensity to maintain an ongoing
balance, indicating little or no card usage, and which does not contribute to
the bank's overall profitability. Likewise, it allows the bank to include
potential applicants who are moderate risk, but who have a high propensity to
maintain an ongoing balance, and which can therefore contribute to the bank's
overall profitability, who may have been traditionally excluded using only
credit risk criteria.
The underwriting risk score is determined using several indicators of
risk. One predictive indicator is the FICO score. The FICO score is a
measurement determined by Fair, Isaac & Company using information contained
within the major credit bureaus to assess consumer risk. Although Fair, Isaac &
Company does not disclose the variables it uses to assess risk, the bank
believes they include, but are not limited to, debt level, number of credit
experiences, delinquency experience and utilization level of available credit.
The bank believes that the FICO score, as a measure of consumer risk, has only
limited value in assessing the small business market because it does not capture
all relevant information. Therefore, the bank also scores potential applicants
based on their current and historical business performance via information
purchased from an external-reporting agency. In cases where this information is
not available, a score is assigned which is reflective of the additional risk
inherent in this lack of performance data.
At the point of approval of a potential cardholder, the bank's profile
of that cardholder is limited to the information outlined above, including the
FICO score and possibly historical business information. As the bank compiles
information regarding cardholder behavior, it maintains
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and continually updates its performance database. The bank believes that this
information regarding actual account performance and behavior over time becomes
a better indicator of future performance and therefore diminishes the relevance
of the criteria initially used to score cardholders and potential cardholders.
Hence, the bank periodically re-scores the cardholder based on all of the
information the bank has accumulated and uses this information to evaluate and
potentially adjust both the interest rate and credit line size offered to the
cardholder.
The bank does not report credit information on its cardholders to
external credit agencies as these agencies typically collect only consumer
credit information rather than information regarding a business's credit
history. The bank does, however, report to the consumer bureaus exclusively in
the case of delinquency, as the authorizing officer of the business is an
undersignor to the account and agrees to be held liable in conjunction with the
company for all charges.
The bank's credit policies are recommended by the bank's credit policy
group, the members of which are responsible for identifying potential
cardholders, establishing the initial credit assessment of those cardholders,
and monitoring cardholder performance and behavior throughout the account's
life.
RISK BASED PRICING
Upon the completion of credit assessment and identification of
potential cardholders who meet the bank's criteria via the prescreening process,
the bank's solicitation will offer a range of potential interest rates for which
the cardholder may be eligible. The offer is not pre-approved and is subject to
verification of information provided by the potential cardholder through the
application process. If the applicant is approved, the actual interest rate and
credit line size assigned will reflect the level of risk in the cardholder's
creditworthiness. The bank offers primarily variable rate credit card accounts.
The periodic finance charge assessed on balances in most of these accounts is
indexed to LIBOR (London Interbank Offered Rate) plus an add-on percentage. The
interest rate will typically range from approximately 12% to 20%. In most cases,
the rate will change with changes in LIBOR and is subject to a minimum below
which the rate cannot fall. The bank's typical business credit card interest
rate, as of the date of this prospectus, is between 15% and 19%.
With minimal notice, any account may be subject to re-pricing at the
bank's discretion, typically based upon changes in a cardholder's credit
standing. The credit line size may also be adjusted up or down based on the
bank's continual credit monitoring. To discourage delinquent payments, the bank
utilizes penalty pricing whereby any account that is two payment cycles
delinquent is automatically subject to a rate increase of 3% or greater.
Each cardholder is subject to an agreement governing the terms and
conditions of the related account. Under each agreement, the seller that owns
the account reserves the right, upon advance notice to the cardholder, to change
or terminate any terms, conditions, services or features of its
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accounts at any time, including increasing or decreasing finance charges, other
fees and charges or minimum payment terms. The agreement with each cardholder
provides that the relevant seller may, after notice to a cardholder of any
change, apply changes, when applicable, to current outstanding balances as well
as to future transactions.
A cardholder may use the credit card for purchases, balance transfers
or cash advances. Cardholders make purchases when using the credit card to buy
goods or services. A cash advance is made when a credit card is used to obtain
cash from a financial institution or an automated teller machine or when the
cardholder uses special drafts issued by the relevant seller to draw against the
cardholder's credit line.
When a cardholder uses the credit card issued by a bank (a "MEMBER
BANK") under contract with MasterCard or VISA, the seller of goods or services
or the provider of cash advances generally sells the resulting receivable to a
merchant bank, which in turn sells the receivable (usually indirectly, through a
clearing corporation and its agent bank) to the member bank that issued the
credit card for its face amount less interchange and other fees. The member bank
is usually required by its contracts with MasterCard and VISA to purchase and
pay daily for all receivables generated by use of credit cards issued by the
member bank. If the member bank were to fail to perform these obligations,
MasterCard or VISA would have the right to cancel the credit cards issued by the
member bank.
INTERCHANGE
Creditors participating in the MasterCard and VISA associations receive
certain fees called "INTERCHANGE," as partial compensation for taking credit
risk, absorbing fraud losses and funding receivables for a limited period prior
to initial billing. Under the MasterCard and VISA systems, a portion of
interchange in connection with cardholder charges for goods and services is
passed from banks that clear the related transactions to credit card-issuing
banks. MasterCard and VISA set interchange fees annually based on the number of
credit card transactions and the amount charged per transaction. To the extent
set forth in the accompanying prospectus supplement, (a) collections of finance
charge and administrative receivables for any monthly period will be deemed to
include any interchange allocated to the receivables and (b) interchange will be
used to pay a portion of the monthly servicing fee.
OPERATIONS
The bank's operations are organized and designed to support rapid
product introduction and cardholder growth. The bank uses internal and external
resources to support different functions, allowing it to achieve operational
efficiencies in the most cost effective manner. The bank's operations management
team provides management oversight for those functions that are outsourced. The
key functional components of the bank's operations are as follows:
- Customer Service and Support
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The bank's operations staff performs customer service and support
functions. The quality of the bank's customer service is reviewed through
monitoring of telephone contacts with customers. In addition, the bank uses call
management software to monitor call abandonment, call length and other call
productivity measurements.
- Delinquencies and Collections
Each account is billed monthly on or about the same day of the month.
An account is "contractually delinquent" if the minimum payment indicated on the
cardholder's statement is not received by the due date. For purposes of
determining the delinquency of an account, the period from one monthly billing
statement to the next is considered a period of 30 days, regardless of the
actual number of days elapsed. Efforts to collect contractually delinquent
credit card receivables currently are made by the bank's service center
personnel or its designees. Collection activities include statement messages,
formal collection letters and telephone calls. Collection personnel initiate
telephone contact with delinquent cardholders as early as the first day the
cardholder becomes contractually delinquent. The intensity at which collection
activity is pursued depends on the risk the account presents to the bank, which
is determined by behavioral scoring and adaptive control techniques. If initial
telephone contact fails to resolve the delinquency, the bank continues to
contact the cardholder by telephone and by mail. Although such arrangements are
made infrequently, the bank may also enter into arrangements with cardholders to
extend or otherwise change payment schedules. Delinquency levels are monitored
by management of both the collections and asset quality department of the bank,
and information is reported daily to senior management. Accounts are charged off
when they become 180 days contractually delinquent, at which time delinquent
accounts of cardholders who have not filed bankruptcy are generally referred to
outside collection agencies. The bank charges-off an account within 90 days
after receipt of any notice of fraudulent charges within such account. For
accounts for which the bank has received a notice of bankruptcy of the business,
the bank uses a 90-day investigation period to determine whether the bank should
challenge the bankruptcy. Following that 90-day period, if it decides not to
challenge the bankruptcy, the bank charges off the outstanding balance. Once an
account is charged off, it cannot revert to non-charged-off status. The credit
evaluation, servicing and charge-off policies and collection practices of the
bank may change from time to time in accordance with its business judgment and
applicable laws and regulations.
- Processing
First Data Resources performs certain core processing services for the
bank. These services include authorizing transactions through the MasterCard
system, performing billing and settlement processes, generating and monitoring
monthly billing statements, and issuing credit card plastics and new account
agreements.
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BILLING AND PAYMENTS
First Data Resources, as the bank's service bureau, generates and mails
to cardholders monthly statements summarizing account activity. For the majority
of accounts, cardholders receive a 25-day grace period on purchases. All
cardholders must make a minimum monthly payment. For significantly all of the
accounts in the Advanta Business Card Portfolio, the minimum monthly payment is
equal to 2.25% of the cardholder's principal balance.
All fees, charges and credit insurance premiums assessed by the bank
are automatically charged to an account and are included in the account balance
at the end of each billing cycle. The finance charges assessed by the bank are
calculated by multiplying the average daily balances of cash advances and
previously billed unpaid purchases in an account by the applicable daily
periodic rate, and then multiplying the resulting product by the number of days
in the billing cycle. Finance charges are not assessed in most circumstances on
purchases if all balances shown in the billing statement are paid by the due
date. Under certain conditions related to customer performance, the bank may
immediately convert the annual percentage rate applicable to existing and future
balances to a higher rate.
The bank primarily offers cards to cardholders without an annual fee.
The bank does, however, assess miscellaneous transaction fees, including cash
advance and draft fees, late and over-limit charges, and returned check,
returned draft, and draft stop payment charges.
KEY SUPPLIER RELATIONSHIPS
The bank relies on third parties to provide several essential services.
First Data Resources provides essential fulfillment and processing functions
while CFM Direct provides marketing and acquisition support services and Dun &
Bradstreet provides customer sourcing and credit history information. Any
interruption, deterioration or termination of these services could adversely
affect the bank's business operations and reputation.
CREDIT CARD ASSOCIATION RELATIONSHIPS
MasterCard and VISA license banks to issue credit cards using their
trademarks and to utilize their interchange networks. The bank is licensed to
issue both MasterCard(R) and VISA(R) credit cards. However, to date the bank has
issued MasterCard credit cards exclusively.
DESCRIPTION OF FIRST DATA RESOURCES
First Data Resources provides certain data processing and
administrative functions associated with servicing the receivables in the
Advanta Business Card Portfolio.
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First Data Resources is located in Omaha, Nebraska and provides
computer data processing services primarily to the bankcard industry. First Data
Resources is a subsidiary of First Data Corp.
The bank utilizes a variety of services provided by First Data
Resources in originating and servicing the Advanta Business Card Portfolio.
These functions include transaction processing and data management systems,
fraud management and transaction level pricing. The bank currently does not
employ any of First Data Resource's direct customer service capabilities. All
direct customer service functions, such as collections and customer service
inquiries, are handled directly by the bank.
THE TRUST PORTFOLIO
The assets of the trust include receivables generated through accounts
selected from the Advanta Business Card Portfolio owned by the bank or accounts
owned by another seller the receivables of which have been transferred to the
trust. These designated accounts are called the "TRUST PORTFOLIO." In addition
to the receivables in the trust portfolio, the trust assets include:
- all monies due or to become due in payment of these receivables;
- all proceeds of these receivables;
- all proceeds of any credit insurance policies relating to these
receivables;
- any recoveries allocable to the trust because of these
receivables;
- interchange, if any, allocated to your series of notes, as
described in the prospectus supplement for your series;
- all monies on deposit in specified trust accounts or investments
made with these monies, including any earned investment proceeds
if the prospectus supplement for your series of notes so
indicates;
- proceeds of any series enhancement, as described in the prospectus
supplement for your series of notes; and
- proceeds of any derivative contracts, consisting of interest rate
swaps, currency swaps, credit swaps, interest rate caps or
bankruptcy options, between the trust or a transferor and a
counterparty, as described in the prospectus supplement for your
series of notes.
Receivables in the trust consist of:
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- "PRINCIPAL RECEIVABLES," which are amounts charged by cardholders
for merchandise, services, cash advances and balance transfers;
and
- "FINANCE CHARGE AND ADMINISTRATIVE RECEIVABLES," which are
periodic finance charges, and annual membership fees and service
charges, late fees, over-limit fees, cash advance fees, and all
other fees and charges on accounts designated by the transferor to
be included as finance charge and administrative receivables, and
any other amounts, other than principal receivables, designated by
the transferor to be "finance charge and administrative
receivables."
The trust considers net recovery amounts for defaulted receivables,
called "RECOVERIES," as collections of finance charge and administrative
receivables.
Initially, a group of accounts were selected on __________ , 2000 (the
"INITIAL CUT-OFF DATE") and designated to the trust. These accounts are the
"INITIAL DESIGNATED ACCOUNTS." On one or more future dates (each, an "additional
cut-off date"), additional accounts may be designated for inclusion in the
trust. The initial cut-off date and each additional cut-off date are called
"cut-off dates" in this prospectus. The initial designated accounts and any
additional accounts designated for inclusion in the trust must meet eligibility
criteria set forth in the transfer and servicing agreement. Existing receivables
in the initial designated accounts have been conveyed to the trust. Additional
receivables arising from time to time in the initial designated accounts or
additional accounts designated for inclusion in the trust will also be conveyed
to the trust. Receivables conveyed to the trust must also meet eligibility
criteria set forth in the transfer and servicing agreement. If receivables
conveyed to the trust are found to have been ineligible when created or
designated for inclusion, the transferor that transferred those receivables must
accept retransfer of those receivables back to it.
The transferor has the right, and may be required to, designate
additional accounts for inclusion in the trust portfolio or may elect to
automatically designate additional accounts, as described under "Description of
the Notes-- Addition of Trust Assets" in this prospectus.
The transferor also has the right to remove accounts from the trust
portfolio, as described under "Description of the Notes-- Removal of Accounts"
in this prospectus. If the transferor does so, the trust will reconvey all
receivables in these removed accounts, whether existing or to be created, to the
transferor that transferred those receivables.
When the trust issues a new series of notes, the transferor will
represent and warrant to the trust that, as of the closing date for the new
series, the accounts designated to the trust met the eligibility criteria set
forth in the transfer and servicing agreement at their time of designation. See
"Description of the Notes-- Representations and Warranties" in this prospectus
for more information on eligibility criteria for accounts and receivables.
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The prospectus supplement relating to each series of notes will provide
certain information about the trust portfolio as of the date specified. This
information will include:
- the amount of principal receivables;
- the amount of finance charge and administrative receivables;
- the range and average of principal balances of the accounts;
- the range and average of credit limits of the accounts;
- the range and average of ages of the accounts;
- the geographic distribution of the accounts; and
- delinquency statistics relating to the accounts.
MATURITY CONSIDERATIONS
Following its revolving period, each series of notes is expected to
begin to accumulate principal or begin to distribute principal to noteholders.
The accompanying prospectus supplement describes the conditions under which an
accumulation or amortization period will begin for your class of notes.
Principal will accumulate in a principal funding account if your series
features controlled accumulation or early accumulation and one of these
accumulation periods begins. As described in the accompanying prospectus
supplement, during controlled accumulation on each payment date an amount of
principal, up to the amount specified, will be set aside in the principal
funding account. If a pay out event occurs and your series features early
accumulation, the full amount of principal available to your series will be
deposited in the principal funding account, up to the amount specified in the
related prospectus supplement. This accumulated principal will be paid to you on
the Expected Principal Payment Date for your class of notes, or earlier if an
early amortization period begins before your Expected Principal Payment Date.
Note that although your series may feature an accumulation period, your class of
notes might not make use of it.
Principal will be paid to you in increments, up to the amount specified
in the accompanying prospectus supplement, if your series features controlled
amortization and this period begins. Your class of notes might also begin to pay
principal to you if the accompanying prospectus supplement specifies that your
class will begin early amortization. Early amortization will begin for all
classes of your series when a pay out event occurs. During any amortization
period, principal will be paid to you only on a payment date.
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If the series described in the accompanying prospectus supplement
features multiple classes, different classes of your series may have differing
priorities for the accumulation or payment of principal. This means that
noteholders of other classes could begin to receive payments of principal before
you do.
The trust cannot assure you that principal will be available when
expected, either to accumulate or to pay to you. The Expected Principal Payment
Date for your class of notes is based upon assumptions about payment rates on
the receivables, as detailed in the accompanying prospectus supplement. The
trust cannot assure you that these payment rate assumptions will be correct.
Payment rates depend on collections of receivables. Collections can vary
seasonally and are also affected by general economic conditions and the payment
habits of individual cardholders. The accompanying prospectus supplement will
provide historical payment rates, total charge-offs and other information
relating to the Advanta Business Card Portfolio. The trust cannot assure you
that future events will be consistent with this historical performance. The life
of your notes might be longer than expected if principal is collected more
slowly. The accompanying prospectus supplement may provide that if the principal
payment rate falls below a specified level, a pay out event will occur. The
occurrence of any pay out event may substantially shorten the average life of
your notes.
USE OF PROCEEDS
The net proceeds from the sale of each series of notes the trust offers
by this prospectus and the accompanying prospectus supplement will be paid to
the relevant transferor. The transferor will use those proceeds to pay the
relevant seller the purchase price of the receivables transferred to it and to
pay its other expenses. The seller will use the proceeds received from the
transferor to provide liquidity for anticipated future asset growth and for its
general corporate purposes.
DESCRIPTION OF THE NOTES
The notes will be issued in series. Each series will represent an
obligation of the trust. Each series of notes will be issued under the
indenture, as supplemented by an indenture supplement, in each case entered into
by the trust and the indenture trustee. The following summaries describe the
material provisions common to each series of notes. The accompanying prospectus
supplement gives you additional information specific to the notes of your
series. The summaries are qualified by reference to all of the provisions of the
transfer and servicing agreement, the indenture and the related indenture
supplement.
GENERAL
The notes will be secured by and paid from the assets of the trust.
Each series will be allocated collections of principal receivables, finance
charge and administrative receivables and defaulted receivables based on a
specified percentage called the
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"INVESTOR PERCENTAGE." The Investor Percentage will be set forth in the related
prospectus supplement. The Investor Percentage will be based on the Invested
Amount for a series.
The "INVESTED AMOUNT" for a series on any date will be equal to:
- the initial outstanding principal amount of that series of notes
as of the closing date for that series (increased by the principal
balance of any notes of that series issued after the closing date
for that series); minus
- the amount of principal paid to noteholders of that series prior
to that date; minus
- the amount of unreimbursed Investor Charge-Offs for notes of that
series prior to that date.
If specified in the prospectus supplement for any series of notes, under certain
circumstances the Invested Amount may be further adjusted by the amount of
principal allocated to noteholders, the funds on deposit in any specified
account, and any other amount specified in the accompanying prospectus
supplement.
Each series of notes may consist of one or more classes, one or more of
which may be senior notes and one or more of which may be subordinated notes.
Each class of a series will evidence the right to receive a specified portion of
each payment of principal or interest or both. Each class of a series may differ
from other classes in some aspects, including:
- amounts allocated to principal payments;
- maturity date;
- interest rate; and
- availability and amount of series enhancement.
Payments and deposits of interest and principal will be made on payment
dates to noteholders in whose names the notes were registered on the last day of
the month preceding any payment date unless a different record date is specified
in the accompanying prospectus supplement. Interest will be paid to noteholders
in the amounts, for the periods and on the dates specified in the accompanying
prospectus supplement.
The transferor initially will own the "TRANSFEROR BENEFICIAL INTEREST"
WHICH IS AN UNDIVIDED BENEFICIAL INTEREST IN THE TRUST AND which represents the
right to receive all cash flows from the trust assets not required to make
payments on the notes or to be paid to a series enhancer. We call the amount of
those cashflows the "TRANSFEROR INTEREST." The holder of the Transferor
Beneficial
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Interest, subject to certain limitations, will have the right to a percentage,
called the "TRANSFEROR PERCENTAGE," of all cardholder payments from the
receivables in the trust. The Transferor Beneficial Interest may be transferred,
in whole or in part, subject to certain limitations and conditions described in
the trust agreement and in a transaction exempt from the registration
requirements of the Securities Act of 1933. At the discretion of the transferor,
the Transferor Beneficial Interest may be held either in an uncertificated form
or in the form of a certificate representing the Transferor Beneficial Interest,
called a "TRANSFEROR CERTIFICATE." See "-- Certain Matters Regarding the
Transferor and the Servicer" in this prospectus.
During the revolving period, the Invested Amount of a series will
remain constant except under certain limited circumstances. See "-- Defaulted
Receivables; Rebates and Fraudulent Charges; Investor Charge-Offs" in this
prospectus. The amount of principal receivables in the trust, however, will vary
each day as new principal receivables are created and others are paid. The
amount of the Transferor Interest will fluctuate each day, therefore, to reflect
the changes in the amount of the principal receivables in the trust. When a
series is amortizing, the Invested Amount of that series will decline as
customer payments of principal receivables are collected and distributed, or
accumulated for payment, to the noteholders. As a result, the Transferor
Interest will generally increase to reflect reductions in the Invested Amount
for that series and will also change to reflect the variations in the amount of
principal receivables in the trust. The Transferor Interest may also be reduced
as the result of new issuances. See "-- New Issuances" in this prospectus.
SECURITIES DEPOSITORY
Generally, notes offered through this prospectus and the accompanying
prospectus supplement:
- will be represented by notes registered in the name of a DTC
nominee;
- will be available for purchase in minimum denominations of $1,000
and multiples of $1,000 in excess of that amount; and
- will be available for purchase in book-entry form only.
The accompanying prospectus supplement will specify if your notes have
different characteristics from those listed above.
DTC has informed the transferor that initially its nominee will be Cede
& Co. Accordingly, Cede & Co. is expected to be the holder of record of each
series of notes. As an owner of beneficial interests in the notes, called a
"NOTE OWNER," you will generally not be entitled to a definitive note
representing your interest in the issued notes because you will own notes
through a book-entry record maintained by DTC. References in this prospectus and
the accompanying prospectus supplement to payments, reports, notices and
statements to noteholders refer to DTC or Cede & Co., as registered
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holder of the notes, for payment to you in accordance with DTC procedures. All
references in this prospectus and the accompanying prospectus supplement to
actions by noteholders shall refer to actions taken by DTC upon instructions
from DTC participants.
The accompanying prospectus supplement may state that application will
be made to list your series or class of notes on the Luxembourg Stock Exchange
or another exchange.
BOOK-ENTRY REGISTRATION
Following is a description of the form your notes will take. We also
describe how your notes may be transferred and how payments will be made to you.
The information in this section concerning DTC and DTC's book-entry
system has been provided by DTC. The transferor has not independently verified
the accuracy of this information.
You may hold your notes through DTC in the U.S., Clearstream Banking or
Euroclear in Europe or in any other manner described in the accompanying
prospectus supplement. You may hold your notes directly with one of these
systems if you are a participant in the system, or indirectly through
organizations which are participants.
Cede & Co., as nominee for DTC, will hold the global notes. Clearstream
Banking and Euroclear will hold omnibus positions on behalf of the Clearstream
Banking customers and the Euroclear participants, respectively, through
customers' securities accounts in Clearstream Banking's and Euroclear's names on
the books of their respective depositaries collectively called the
"DEPOSITARIES," which in turn will hold such positions in customers' securities
accounts in the depositaries' names on the books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered under the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers (who may
include the underwriters of any series), banks, trust companies and clearing
corporations and may include certain other organizations. Indirect access to the
DTC system also is available to others such as banks, brokers, dealers and trust
companies, as indirect participants, that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Transfers between DTC participants will occur in accordance with DTC
rules. Transfers between Clearstream Banking customers and Euroclear
participants will occur in the ordinary way in accordance with their rules and
operating procedures.
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Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream
Banking customers or Euroclear participants, on the other, will be effected
through DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in that system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
depositary to take action to effect final settlement on its behalf by delivering
or receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC.
Clearstream Banking customers and Euroclear participants may not deliver
instructions directly to the depositaries.
Because of time-zone differences, credits of securities in Clearstream
Banking or Euroclear as a result of a transaction with a participant will be
made during the subsequent securities settlement processing, dated the business
day following the DTC settlement date, and such credits or any transactions in
such securities settled during such processing will be reported to the relevant
Clearstream Banking customer or Euroclear participant on that business day. Cash
received in Clearstream Banking or Euroclear as a result of sales of securities
by or through a Clearstream Banking customer or a Euroclear participant to a DTC
participant will be received with value on the DTC settlement date but will be
available in the relevant Clearstream Banking or Euroclear cash account only as
of the business day following settlement in DTC.
Note owners that are not participants or indirect participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, notes may do so only through participants and indirect participants. In
addition, note owners will receive all payments of principal of and interest on
the notes from the indenture trustee through the participants who in turn will
receive them from DTC. Under a book-entry format, note owners may experience
some delay in their receipt of payments, since payments will be forwarded by the
indenture trustee to Cede & Co., as nominee for DTC. DTC will forward payments
to its participants, which thereafter will forward them to indirect participants
or note owners. It is anticipated that the only "noteholder" will be Cede & Co.,
as nominee of DTC. Note owners will not be recognized by the indenture trustee
as noteholders, as such term is used in the indenture, and note owners will only
be permitted to exercise the rights of noteholders indirectly through the
participants who in turn will exercise the rights of noteholders through DTC.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers among
participants on whose behalf it acts with respect to the notes and is required
to receive and transmit payments of principal and interest on the notes.
Participants and indirect participants with which note owners have accounts with
respect to the notes similarly are required to make book-entry transfers and
receive and transmit payments on behalf of their respective note owners.
Accordingly, although note owners will not possess notes, note owners will
receive payments and will be able to transfer their interests.
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Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, the ability of a note owner
to pledge notes to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of its notes, may be limited due to
the lack of a physical certificate for its notes.
DTC has advised the transferor that it will take any action permitted
to be taken by a noteholder under the indenture only at the direction of one or
more participants to whose account with DTC the notes are credited.
Additionally, DTC has advised the transferor that it will take such actions with
respect to specified percentages of the Invested Amount only at the direction of
and on behalf of participants whose holdings include interests that satisfy such
specified percentages. DTC may take conflicting actions with respect to other
interests to the extent that such actions are taken on behalf of participants
whose holdings include such interests.
Clearstream Banking is incorporated under the laws of Luxembourg as a
professional depository. Clearstream Banking holds securities for its customers
and facilitates the clearance and settlement of securities transactions between
Clearstream Banking customers through electronic book-entry changes in accounts
of Clearstream Banking customers, thereby eliminating the need for physical
movement of notes. Transactions may be settled in Clearstream Banking in any of
28 currencies, including United States dollars. Clearstream Banking provides to
its Clearstream Banking customers, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream Banking interfaces with
domestic markets in several countries. As a registered bank in Luxembourg,
Clearstream Banking is subject to regulation by the Luxembourg Commission for
the Supervision of the Financial Sector. Clearstream Banking customers are
world-wide financial institutions, including underwriters, securities brokers
and dealers, banks, trust companies, clearing corporations and certain other
organizations and may include the underwriters of any series of notes. Indirect
access to Clearstream Banking is also available to other institutions, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Clearstream Banking customer, either directly or
indirectly.
Euroclear was created in 1968 to hold securities for participants of
the Euroclear System and to clear and settle transactions between Euroclear
participants through simultaneous electronic book-entry delivery against
payment, thereby eliminating the need for physical movement of notes and any
risk from lack of simultaneous transfers of securities and cash. Transactions
may now be settled in any of 27 currencies, including United States dollars. The
Euroclear System includes various other services, including securities lending
and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. The Euroclear System is operated by Morgan Guaranty Trust
Company of New York, Brussels, Belgium office as the Euroclear operator, under
contract with Euro-clear Clearance System, S.C., a Belgian cooperative
corporation. All operations are conducted by the Euroclear operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear operator, not the cooperative. The cooperative establishes
policy for the
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Euroclear System on behalf of Euroclear participants. Euroclear participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the underwriters of
any series of notes. Indirect access to the Euroclear System is also available
to other firms that clear through or maintain a custodial relationship with a
Euroclear participant, either directly or indirectly.
The Euroclear operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law. These rules and laws govern transfers of securities and cash within the
Euroclear System, withdrawal of securities and cash from the Euroclear System,
and receipts of payments with respect to securities in the Euroclear System. All
securities in the Euroclear System are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under these rules and laws only on behalf of
Euroclear participants and has no record of or relationship with persons holding
through Euroclear participants.
Payments with respect to notes held through Clearstream Banking or
Euroclear will be credited to the cash accounts of Clearstream Banking customers
or Euroclear participants in accordance with the relevant system's rules and
procedures, to the extent received by its depositary. Such distributions will be
subject to tax reporting in accordance with relevant United States tax laws and
regulations. See "Federal Income Tax Consequences" in this prospectus.
Clearstream Banking or the Euroclear operator will take any other action
permitted to be taken by a noteholder under the indenture on behalf of a
Clearstream Banking customer or Euroclear participant only in accordance with
its rules and procedures and subject to its depositary's ability to effect those
actions on its behalf through DTC.
Although DTC, Clearstream Banking and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of notes among
participants of DTC, Clearstream Banking and Euroclear, they are under no
obligation to perform or continue to perform those procedures. Those procedures
may be discontinued at any time.
DEFINITIVE NOTES
Notes issued in fully registered, certificated form are called
"DEFINITIVE NOTES." The notes of each series will be issued as definitive notes
to note owners or their nominees, rather than to DTC or its nominee, only if:
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- the transferor advises the indenture trustee in writing that DTC
is no longer willing or able to discharge properly its
responsibilities as depository with respect to that series of
notes, and the indenture trustee or the transferor is unable to
locate a qualified successor,
- the transferor at its option, advises the indenture trustee in
writing that it elects to terminate the book-entry system through
DTC; or
- after the occurrence of a servicer default, note owners
representing not less than 51% (or another percentage specified in
the accompanying prospectus supplement) of the Invested Amount
advise the indenture trustee and DTC through participants in
writing that the continuation of a book-entry system through DTC
(or a successor thereto) is no longer in the best interest of the
note owners.
If any of these events occur, DTC must notify all participants of the
availability through DTC of definitive notes. Upon surrender by DTC of the
definitive instrument representing the notes and instructions for
re-registration, the indenture trustee will issue the notes as definitive notes,
and thereafter the indenture trustee will recognize the holders of those
definitive notes as noteholders under the indenture.
Payment of principal and interest on the notes will be made by the
indenture trustee directly to holders of definitive notes in accordance with the
procedures set forth in this prospectus and in the indenture. Interest payments
and any principal payments on each payment date will be made to holders in whose
names the definitive notes were registered at the close of business on the
record date. Payments will be made by check mailed to the address of the
noteholders as it appears on the register maintained by the indenture trustee.
The final payment on any note (whether definitive notes or the notes registered
in the name of Cede & Co. representing the noteholders) will be made only upon
presentation and surrender of that note at the office or agency specified in the
notice of final payment to noteholders. The indenture trustee will provide this
notice to registered noteholders not later than the fifth day of the month of
the final payment.
Definitive notes will be transferable and exchangeable at the offices
of the transfer agent and registrar, which will initially be the indenture
trustee. No service charge will be imposed for any registration of transfer or
exchange, but the transfer agent and registrar may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
with the transfer or exchange. The transfer agent and registrar will not be
required to register the transfer or exchange of definitive notes for a period
of fifteen days preceding the payment date for any payment on those definitive
notes.
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INTEREST PAYMENTS
For each series of notes and each class, interest will accrue from the
relevant closing date on the applicable outstanding principal balance at the
applicable interest rate. The interest rate on any note may be a fixed, floating
or any other type of rate as specified in the accompanying prospectus
supplement. Interest will be paid, or deposited for later payment, to
noteholders on the payment dates.
Interest payments or deposits on any payment date will be funded from:
- collections of finance charge and administrative receivables
allocated to the Invested Amount during the preceding monthly
period or periods;
- investment earnings, if any, on any funds held in trust accounts;
- any series enhancement, to the extent described in the
accompanying prospectus supplement; and
- any derivative counterparty, to the extent described in the
accompanying prospectus supplement.
If interest payments will be made less frequently than monthly, an
interest funding account may be established to accumulate the required interest
amount. If a series has more than one class of notes, that series may have more
than one interest funding account.
Your class of notes will pay interest on the payment dates and at the
interest rate specified in the accompanying prospectus supplement. If your notes
bear interest at a floating or variable rate, the accompanying prospectus
supplement will describe how that rate is calculated. The interest rate on
floating rate notes will be a variable or adjustable rate. The payment dates for
floating rate notes will be set forth in the accompanying prospectus supplement
and need not be the same as the payment dates for the other notes of that
series, but may be either more or less frequent. For each class of floating rate
notes, the related prospectus supplement will set forth the initial floating
rate note interest rate, or the method of determining it, the dates or the
method for determining the dates on which the floating rate note interest rate
is adjusted, and the formula, index or other method by which the interest rate
is determined on such dates.
PRINCIPAL PAYMENTS
Generally, each series will begin with a period, called the "REVOLVING
PERIOD," when no principal is paid or accumulated. The revolving period begins
on the closing date for a series and ends on the day before an amortization
period or accumulation period begins. During the revolving period no principal
payments will be made to the noteholders of that series.
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During the controlled amortization period, which will be scheduled to
begin on the date specified in, or determined in the manner specified in, the
accompanying prospectus supplement, and during the early amortization period,
which will begin upon the occurrence of a pay out event, principal will be
distributed to any class of the series in the amounts and on the dates specified
in the accompanying prospectus supplement.
During the controlled accumulation period, or, if specified in the
accompanying prospectus supplement, the early accumulation period, principal
will be accumulated in a trust account, called a "PRINCIPAL FUNDING ACCOUNT,"
established for the benefit of one or more specified classes of noteholders for
later distribution to noteholders on the date specified in the prospectus
supplement, called the "EXPECTED PRINCIPAL PAYMENT DATE," in the amounts
specified in the accompanying prospectus supplement.
Principal payments for any series or class will be funded from
collections of principal receivables received during the related monthly period
or periods as specified in the accompanying prospectus supplement and allocated
to that series or class and from certain other sources specified in the
accompanying prospectus supplement. In the case of a series with more than one
class of notes, the noteholders of one or more classes may receive payments of
principal at different times. The accompanying prospectus supplement will
describe the manner, timing and priority of payments of principal to noteholders
of each class.
TRANSFER AND ASSIGNMENT OF RECEIVABLES
The bank, as the initial seller, has transferred and assigned to ABRC,
as the initial transferor, for further transfer and assignment by ABRC to the
trust, all of the bank's right, title and interest in and to the receivables in
the accounts designated as accounts of the trust and future receivables created
in these accounts. One or more additional sellers that are affiliates of the
bank may transfer and assign to the transferor or directly to the trust all
their right, title and interest in and to receivables in designated accounts.
The bank and any additional sellers, together, may sometimes be called the
"SELLER." Additional transferors that are affiliates of the initial transferor
may also be designated. ABRC, any additional transferors and any sellers that
transfer receivables directly to the trust, together, may sometimes be called
the "TRANSFEROR." Any additional seller or transferor will be designated only in
accordance with the procedures specified in the governing documents.
Each of the seller and the transferor has indicated and, in connection
with each future transfer of receivables to the trust, will indicate in its
computer files or books and records that the receivables have been conveyed to
the trust. In addition, the seller and the transferor have provided or caused to
be provided (or will provide or cause to be provided) to the owner trustee
computer files or microfiche lists, containing a true and complete list showing
each account designated to the trust, identified by account number and by total
outstanding balance on the applicable cut-off date. Neither the seller nor the
transferor will deliver to the owner trustee any other records or
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agreements relating to the accounts or the receivables, except in connection
with additions or removals of accounts. Except as stated above, the records and
agreements relating to the accounts and the receivables maintained by the seller
or the transferor are not and will not be segregated from other documents and
agreements relating to other credit card accounts and receivables and are not
and will not be stamped or marked to reflect the transfers described above. The
computer records of the seller and the transferor are and will be required to be
marked to evidence these transfers. Each of the seller and the transferor has
filed or will file in all appropriate jurisdictions Uniform Commercial Code
financing statements covering the receivables meeting the requirements of
applicable law. See "Risk Factors-- Some liens would be given priority over your
notes which could cause delayed or reduced payments" and "Certain Legal Aspects
of the Receivables" in this prospectus.
ISSUANCE OF ADDITIONAL SERIES
The indenture provides that, under any one or more indenture
supplements, the transferor may cause the owner trustee, on behalf of the trust,
to issue one or more new series of notes and may designate all principal terms
of those series. Each additional series issued may contain one or more classes
and may have different terms and enhancements than any other series. A
predecessor master trust has issued 3 series of asset-backed securities in
private transactions. The receivables in that master trust will be conveyed to
the trust that is the issuer of the notes offered by this prospectus on or
before the initial issuance of a series of notes. The previously issued
securities, prior to the initial issuance of notes offered under this
prospectus, will receive in exchange for their old securities, notes issued by
the trust in private transactions. With respect to those privately issued notes
and any other notes that may be issued by the trust privately in the future,
references in this prospectus or the accompanying prospectus supplement to the
terms of any series of notes described in the applicable prospectus supplement
instead refer to the governing documents for those privately issued notes.
The issuance of future series will occur without prior review or
consent by you or any other noteholder. Upon the issuance of an additional
series of notes, none of the transferor, the servicer, the indenture trustee,
the owner trustee or the trust will be required or will intend to obtain the
consent of any noteholder of any other series previously issued by the trust.
However, as a condition of a new issuance, the indenture trustee must receive
written confirmation that the new issuance will not result in the reduction or
withdrawal by any rating agency of its then-existing rating of any outstanding
series or class. The principal terms of one series may vary substantially from
those of another series. Some series may be in revolving periods while others
are in amortization periods or accumulation periods. The trust cannot assure you
that the terms of any series might not have an impact on the time or amount of
payments received by the noteholders of any other series. The issuance of a
series of notes will cause a reduction in the Transferor Interest. The trust may
offer any additional series under a prospectus or other disclosure document in
offerings under this prospectus or in transactions either registered under the
Securities Act of 1933, or exempt from registration under
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the Securities Act of 1933, directly, through one or more underwriters or
placement agents, in fixed-price offerings or in negotiated transactions or
otherwise.
Unless otherwise specified in the accompanying prospectus supplement, a
new issuance may only occur upon the satisfaction of certain conditions provided
in the indenture. Under the indenture, the transferor may cause the owner
trustee, on behalf of the trust, to issue new series of notes by notifying the
owner trustee, the indenture trustee, the servicer and each rating agency at
least five days in advance of the date upon which the new issuance is to occur.
Under the indenture, the notice will state the date upon which the new issuance
is to occur.
The owner trustee will execute, and the indenture trustee will
authenticate, the notes of any series only upon delivery to them of the
following items, or satisfaction of the following conditions, among others:
- an indenture supplement specifying the principal terms of the new
series;
- an opinion of counsel to the effect that, except as otherwise
stated in the related indenture supplement, the notes of the new
series will be characterized as indebtedness for federal income
tax purposes;
- for any series for which a tax opinion was given at the time of
its issuance, an opinion of counsel to the effect that, for
federal income tax purposes:
- the issuance will not adversely affect the tax
characterization as debt of notes of any outstanding series or
class that were characterized as debt at the time of their
issuance;
- the new issuance will not cause the trust to be deemed to be
an association (or publicly traded partnership) taxable as a
corporation; and
- the new issuance will not cause or constitute an event in
which gain or loss would be recognized by any noteholder (an
opinion of counsel with respect to these tax matters is
referred to in this prospectus as a "TAX OPINION");
- if required by the related indenture supplement, the form of
series enhancement and an appropriate series enhancement agreement
for that series enhancement executed by the transferor and the
series enhancer;
- written confirmation from each rating agency that the new issuance
will not result in a reduction or withdrawal of its rating of any
outstanding series or class;
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- the new issuance will not:
- cause a pay out event or an event of default; or
- materially and adversely affect the amount or timing of
payments to be made to the noteholders of any series or class
(any such effect is referred to in this prospectus as an
"ADVERSE EFFECT");
- a certificate of an authorized officer of the transferor to the
effect that it reasonably believes the new issuance will not have
an adverse effect; and
- after giving effect to the new issuance, (a) the total amount of
outstanding principal receivables previously transferred to the
trust exceeds a specified amount, called the "REQUIRED MINIMUM
PRINCIPAL BALANCE" and (b) the Transferor Interest exceeds the
Required Transferor Interest.
ISSUANCE OF ADDITIONAL NOTES
If specified in the accompanying prospectus supplement, from time to
time during the revolving period, the transferor may, subject to certain
conditions described below, cause the trust to issue additional notes of an
outstanding series. Each issuance of additional notes of an outstanding series
is called an "ADDITIONAL ISSUANCE." When issued, the additional notes of each
class will be identical in all respects to the other outstanding notes of that
class and will be equally and ratably entitled to the benefits of the transfer
and servicing agreement, the indenture and the related indenture supplement
without preference, priority or distinction.
In connection with each additional issuance, the outstanding principal
amounts of each class of notes and the series enhancement will be increased
proportionately. The additional series enhancement provided in connection with
an additional issuance may take the form of an additional letter of credit, the
establishment of a cash collateral account, the purchase of interest rate caps
or swaps and/or another form of series enhancement, provided that the form and
amount of additional series enhancement will not cause a reduction or withdrawal
by any rating agency of its rating of any outstanding series or class of notes.
Following an additional issuance of a series and class, the respective
portions of the series enhancement that are for the benefit of the holders of
notes of that series and class will remain the same, as a percentage of the
total series enhancement, as the respective proportions in effect on the closing
date for that series. If applicable, the amount to be deposited into the
principal funding account also will be increased proportionately to reflect the
principal amount of additional notes.
Except as set forth in the accompanying prospectus supplement, in order
to issue additional notes of a series, several conditions must be satisfied,
including:
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- notice to the indenture trustee, the owner trustee, the servicer
and any series enhancer of the issuance and the date upon which it
is to occur;
- after giving effect to the additional issuance, the total amount
of principal receivables must at least equal the Required Minimum
Principal Balance;
- delivery to the indenture trustee of any additional series
enhancement agreement related to the additional issuance, executed
by each of the parties to the series enhancement agreement;
- delivery to the indenture trustee of written confirmation that the
additional issuance will not result in the reduction or withdrawal
by any rating agency of its rating of any outstanding series or
class;
- delivery to the indenture trustee of a certificate of an
authorized officer of the transferor to the effect that, in the
transferor's reasonable belief, the issuance will not have a
material adverse effect on the interests of the holders of any
outstanding series or class of notes at the date of issuance or at
any future date;
- as of the date of the additional issuance, all amounts due to the
holders of notes of that series must have been paid, and there
must not be any unreimbursed Investor Charge-Offs;
- the excess of the principal amount of the additional notes over
their issue price shall not exceed the maximum amount permitted
under the Code without the creation of original issue discount;
- after giving effect to the issuance, the Transferor Interest must
equal or exceed the Required Transferor Interest; and
- delivery by the transferor to the indenture trustee of a tax
opinion.
There are no restrictions on the timing or amount of any additional issuance,
provided that the conditions described above are met. As of the date of any
additional issuance, the Invested Amount will be increased to reflect the
initial principal balance of the additional notes of each class.
REPRESENTATIONS AND WARRANTIES
When the trust issues a new series of notes, the transferor will make
several representations and warranties to the trust in the transfer and
servicing agreement, including the following:
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- the execution and delivery by the transferor of the transfer and
servicing agreement and each other document relating to the
issuance to which it is a party will not conflict with any law or
any other agreement to which it is a party; and
- all required governmental approvals in connection with the
execution and delivery by the transferor of the transfer and
servicing agreement and each other document relating to the
issuance have been obtained and remain in force and effect.
If a representation or warranty made by the transferor is later found
to be materially incorrect when made, and:
- continues to be materially incorrect for 60 days after notice to
the transferor by the indenture trustee, or to the transferor and
the indenture trustee by any noteholder; and
- as a result, the interests of the noteholders are materially and
adversely affected, and continue to be materially and adversely
affected during the 60-day period;
then the indenture trustee or noteholders holding more than 50% of the
then-outstanding principal balance of the notes of the affected series may give
notice to the transferor and the servicer (and to the indenture trustee if given
by the noteholders) declaring that a pay out event has occurred. Declaring a pay
out event will automatically begin early amortization or, if specified in the
accompanying prospectus supplement, early accumulation of principal.
The transferor will make other representations and warranties to the
trust in the transfer and servicing agreement, including the following:
- as of the closing date, the transferor is duly incorporated and in
good standing and has the authority to consummate the issuance;
- the transfer and servicing agreement, and each other document
relating to the issuance to which it is a party constitutes a
legal, valid and binding obligation enforceable against ABRC or
the additional transferor; and
- the trust has all right, title and interest in the receivables in
the trust portfolio or has a first priority perfected security
interest in these receivables.
In the event:
- any representation or warranty described immediately above is
breached; and
- as a result, the interests of noteholders in the receivables in
the trust portfolio are materially and adversely affected;
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then the owner trustee, the indenture trustee or noteholders representing 50% or
more of the then-outstanding principal balance of all of the trust's outstanding
series may give notice to the transferor and the servicer (and to the owner
trustee and indenture trustee if given by the noteholders) directing the
transferor to accept reassignment of the entire trust portfolio and to pay into
the trust's collection account a cash deposit equal to the sum of the amounts
specified with respect to each outstanding series in the related indenture
supplement. However, no reassignment will be required if:
- within 60 days, or up to 120 days if specified in the notice, ABRC
or the additional transferor cures the breach and any material
adverse effect caused by the breach; or
- on any day within the applicable 60-day to 120-day period, the
relevant representation and warranty is then true and correct in
all material respects and ABRC or the additional transferor
delivers to the owner trustee a certificate of an authorized
officer describing the nature of the breach and the manner in
which the relevant representation and warranty became true and
correct.
Reassignment of the trust portfolio and ABRC's or the additional
transferor's obligation to make the cash deposit in the trust's collection
account are the only remedies for any breach of the representations and
warranties described above.
The transferor makes representations and warranties in the transfer and
servicing agreement concerning the accounts and the receivables in the trust
portfolio. Only eligible accounts can be designated as accounts for the trust
portfolio. The trust can give you no assurance that eligible accounts will
remain eligible once added to the trust.
The transferor represents that each receivable transferred by it in the
trust portfolio is an eligible receivable when created or transferred. If a
receivable in the trust portfolio is found to be ineligible when created, and,
as a result, the interests of noteholders in any receivable in the trust
portfolio are materially and adversely affected, the transferor must accept
reassignment of the principal amount of this ineligible receivable. However, the
transferor will have 60 days, or up to 120 days if agreed to by the indenture
trustee and the servicer, from the earlier to occur of discovery of the breach
by the transferor or receipt by the transferor of written notice of the breach
given by the owner trustee, the indenture trustee or the servicer, to cure the
ineligibility before reassignment is required.
The transferor will accept reassignment by directing the servicer to
deduct the principal amount of the ineligible receivable from the Transferor
Interest. If this would reduce the Transferor Interest below the Required
Transferor Interest, the transferor will make a cash deposit in the trust's
Excess Funding Account in the amount by which the Transferor Interest would have
been reduced below the Required Transferor Interest. Any deduction or deposit is
considered a repayment in full of the ineligible receivable. The transferor's
obligation to accept reassignment of any ineligible receivable is the only
remedy for any breach of a representation concerning eligibility of receivables.
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The accompanying prospectus supplement may specify additional representations
and warranties made by the transferor when your notes are issued. The indenture
trustee is not required to make periodic examinations of receivables in the
trust portfolio or any records relating to them. However, the servicer will
deliver to the indenture trustee once each year an opinion of counsel affirming,
among other things, that no further action is necessary to maintain the trust's
perfected security interest in the receivables.
For each series of notes, an "ELIGIBLE ACCOUNT" means, as of the
applicable cut-off date, each account originated by the seller:
- which was in existence and maintained by the seller, as
applicable;
- which is payable in United States dollars;
- the obligor of which has provided, as his or her most recent
billing address, an address located in the United States or its
territories, possessions or military bases;
- which, except as provided below, an obligor who has not been
identified by the servicer in its computer files as currently
being involved in a bankruptcy proceeding;
- which has not been classified as stolen or lost;
- which has not been sold or pledged to any other party except for
any sale to another account owner that has either entered into a
receivables purchase agreement or is an additional transferor;
- which does not have receivables which have been sold or pledged by
the bank or any other account owner, as the case may be, to any
party other than the bank or ABRC under a receivables purchase
agreement;
- which has a cardholder who has not been identified by the servicer
as an employee or affiliate of the seller;
- which does not have any receivables that are defaulted
receivables;
- which does not have any receivables that have been identified by
the servicer or the relevant cardholder as having been incurred as
a result of fraudulent use of any credit card; and
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- which, except as provided below, does not have any receivables
that are more than 180 days past due from the date of the initial
billing statement.
Eligible accounts may include accounts, the receivables of which have
been charged off, or with respect to which the servicer believes the related
cardholder is bankrupt, in each case as of the applicable cut-off date, if:
- the balance of all receivables included in those accounts is
reflected on the books and records of the transferor as "zero";
and
- charging privileges on these accounts have been canceled in
accordance with the customary policies and procedures, as amended
from time to time, of the seller.
For each series of notes, an "ELIGIBLE RECEIVABLE" means each
receivable:
- which has arisen in an eligible account;
- which was created in compliance, in all material respects, with
all requirements of law applicable to the seller at the time of
its creation, and under the terms of a credit card agreement which
complies in all material respects with all requirements of law
applicable to the seller;
- for which all consents, licenses or authorizations of, or
registrations with, any governmental authority required to be
obtained or given in connection with the creation of the
receivable or the execution, delivery and performance by the
seller of the related credit card agreement have been duly
obtained or given and are in full force and effect;
- as to which, at the time of its transfer to the trust, the
transferor or the trust has good title, free and clear of all
liens and security interests , other than tax liens for taxes not
then due or which the transferor is contesting;
- which has been the subject of either a valid transfer and
assignment from the transferor to the trust of all of the
transferor's right, title and interest in the receivable
(including any proceeds of the receivable), or the grant of a
first priority perfected security interest in the receivable (and
in the proceeds of the receivable), effective until the
termination of the trust;
- which is the legal, valid and binding payment obligation of the
obligor under the receivable, legally enforceable against that
obligor in accordance with its terms, subject to some
bankruptcy-related exceptions;
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- which, at the time of transfer to the trust, has not been waived
or modified except as permitted under the customary policies and
procedures, as amended from time to time, of the seller, and then
only if the waiver or modification is reflected in the servicer's
computer file of revolving credit card accounts;
- which, at the time of transfer to the trust, is not subject to any
right of rescission, setoff, counterclaim or any other defense
(including defenses arising out of violations of usury laws) of
the obligor, other than defenses arising out of bankruptcy,
insolvency or other similar laws affecting the enforcement of
creditors' rights in general;
- which, at the time of transfer to the trust, the seller has
satisfied all of its obligations required to be satisfied by that
time;
- which, at the time of transfer to the trust, none of the
transferor or the seller has taken any action, or omitted to take
any action, that would impair the rights of the trust or the
noteholders; and
- which constitutes an "account" or "general intangible" under
Article 9 of the Uniform Commercial Code as then in effect in any
state where the filing of a financing statement is required to
perfect the trust's interest in the receivables and the proceeds
thereof.
ADDITION OF TRUST ASSETS
As described above under "The Trust Portfolio," the transferor will
have the right to designate, from time to time, additional accounts to be
included as accounts for the trust. In addition, the transferor will be required
to designate additional accounts under the circumstances and in the amounts
specified in the accompanying prospectus supplement. The transferor will convey
to the trust its interest in all receivables of those additional accounts,
whether the receivables are then existing or subsequently created.
Each additional account must be an eligible account on the applicable
cut-off date. However, additional accounts may not be of the same credit quality
as the initial accounts. The seller will not use selection procedures it
believes are adverse to the interests of the noteholders in selecting additional
accounts from the available eligible accounts in the Advanta Business Card
Portfolio. Each seller will designate additional accounts on a random basis from
all available eligible accounts owned by that seller. However, since additional
accounts may not have been part of the Advanta Business Card Portfolio at the
time of the initial transfer of accounts to the trust, additional accounts may
not be of the same credit quality as the initial accounts. Additional accounts
may have been originated by the bank or other seller at a later date using
credit criteria different from those that were applied to the initial accounts
or may have been acquired by the bank or other seller from another credit card
issuer that had different credit criteria.
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When the transferor transfers receivables in additional accounts it
must satisfy several conditions, including, as applicable:
- notice to the owner trustee, the indenture trustee, the servicer
and each rating agency;
- delivery and acceptance by the owner trustee of a written
assignment of receivables in the additional accounts to the trust;
- delivery to the owner trustee of a computer file or microfiche
list with an accurate list of all additional accounts;
- delivery to the owner trustee and the indenture trustee of a
certificate of an authorized officer to the effect that:
- as of the applicable cut-off date, each additional account is
an eligible account;
- the transferor has delivered to the Indenture Trustee copies
of UCC financing statements, if necessary to perfect the
trust's interest in the receivables arising in the additional
accounts;
- as of the date of assignment, called the "ADDITION DATE," and
the applicable cut-off date, none of the seller or the
transferor is insolvent; and
- in the transferor's reasonable belief, adding the receivables
in additional accounts will not have a material adverse effect
on the interests of the noteholders;
- delivery of certain opinions of counsel with respect to the
transfer of the receivables in the additional accounts to the
trust;
- in circumstances where the transferor, in its discretion,
designates additional accounts to be included as accounts for the
trust, written confirmation from each rating agency that the
addition will not result in the reduction or withdrawal of its
then-existing rating of any outstanding series or class;
- in circumstances where the transferor , in its discretion,
designates additional accounts to be included as accounts for the
trust, unless each rating agency then rating any series or class
of notes outstanding under the trust shall have
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consented, the number of additional accounts designated during a three-month
period will not exceed the number specified in the transfer and servicing
agreement; and
- deposit to the collection account of amounts specified in the
indenture with respect to such accounts.
In addition to the periodic reports otherwise required to be filed by
the servicer with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, the servicer intends to file, on behalf of the
trust, a Report on Form 8-K with respect to any addition to the trust of
receivables in additional accounts that would have a material effect on the
composition of the assets of the trust.
The transferor may, from time to time, designate one or more of its
affiliates as additional transferors under the transfer and servicing agreement.
In connection with this designation, the transferor will cause the owner trustee
to note on the books and records of the trust the new percentage in the
Transferor Beneficial Interest owned by it and owned by the additional
transferor or the transferor will exchange the transferor certificate for a
newly issued transferor certificate modified to reflect any additional interest
in the Transferor Beneficial Interest. The transfer and servicing agreement may
be amended to permit the designation of these additional transferors and the
division of the Transferor Beneficial Interest or the exchange of the transferor
certificate without the consent of noteholders of any series offered under this
prospectus upon:
- delivery to the owner trustee and the indenture trustee of a tax
opinion regarding the exchange; and
- receipt of written confirmation from each rating agency that the
exchange will not result in a reduction or withdrawal of its
rating of any outstanding series or class.
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REMOVAL OF ACCOUNTS
The transferor has the right to designate certain accounts for removal
from the trust and to require the indenture trustee to transfer and reassign to
it or its designee all receivables in the removed accounts back to it, whether
the receivables already exist or arise after the designation. The transferor's
rights to removal are subject to satisfaction of several conditions, including:
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- written notice to the owner trustee, the indenture trustee, the
servicer, each rating agency and each series enhancer;
- delivery to the owner trustee for execution of a written
reassignment of receivables in the removed accounts to the
transferor or its designee;
- delivery to the owner trustee of a computer file or microfiche
list with an accurate list of all removed accounts;
- written confirmation from each rating agency that the removal will
not result in the reduction or withdrawal of its then-existing
rating of any outstanding series or class;
- delivery to the owner trustee and the indenture trustee of a
certificate of an authorized officer to the effect that, in the
transferor's reasonable belief:
- the removal will not have a material adverse effect on the
interests of the noteholders;
- the removal will not cause a pay out event or event of
default; and
- the accounts to be removed were not selected through a
selection process believed to be materially adverse to the
interests of the noteholders; and
- any other conditions specified in the accompanying prospectus
supplement.
For non-charged-off accounts, removed accounts usually will be selected on a
random basis from all previously designated accounts, subject to the rating
agency condition. For charged-off accounts, the removed accounts will be
selected at the discretion of the transferor subject to the rating agency
condition. A non-random basis of selection for removal will be used only in
special circumstances, such as the end of a co-branding program, when those
accounts may be removed.
Upon satisfaction of the above conditions, the indenture trustee will
execute and deliver to the transferor or its designee a written reassignment and
will, without further action, be deemed to sell, transfer, assign, set over and
otherwise convey to the transferor or its designee, effective as of the removal
date, without recourse, representation or warranty, all the right, title and
interest of the trust in and to the receivables arising in the removed accounts,
all moneys due and to become due and all amounts received with respect thereto
and all proceeds thereof.
The conditions described above relating to rating agency confirmation
and the delivery of an officer's certificate will not apply if the transferor is
purchasing receivables in accounts designated for re-purchase by a merchant or
co-branding participant upon termination of its affinity agreement with the
seller.
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In all cases of removal, the transferor will purchase the related
receivables by directing the servicer to deduct the principal amount of those
receivables from the Transferor Interest. If this would reduce the Transferor
Interest below the Required Transferor Interest, the transferor will make a cash
deposit in the trust's Excess Funding Account in the amount by which the
Transferor Interest would have been reduced below the Required Transferor
Interest. Any deduction or deposit is considered a payment in full for those
receivables.
COLLECTION AND OTHER SERVICING PROCEDURES
For each series of notes, the servicer will be responsible for
servicing and administering the receivables in the trust in accordance with the
servicer's policies and procedures for servicing revolving business credit card
receivables comparable to the receivables in the trust and in accordance with
the customary guidelines of the servicer. The servicer will be required to
maintain fidelity bond coverage insuring against losses through wrongdoing of
its officers and employees who are involved in the servicing of credit card
receivables covering such actions and in amounts that the servicer believes are
reasonable. The bank as servicer or any new servicer is called the "SERVICER."
ADJUSTMENT
On each day that the servicer adjusts downward the amount of any
receivable because of a rebate, refund, unauthorized charge or billing error to
a cardholder, or because the receivable was created in respect of merchandise
which was refused or returned by a cardholder, or if the servicer otherwise
adjusts downward the amount of any receivable without receiving collections
therefor or charging off such amount as uncollectible, then, in any such case,
the amount of principal receivables used to calculate the Transferor Interest,
the Investor Percentage and any other percentages used to allocate within or
among series will be reduced by the amount of the adjustment. Similarly, the
amount of principal receivables used to calculate the Transferor Interest, the
series percentages and any other percentage used to allocate within or among
series will be reduced by the amount of any receivable discovered to have been
created through a fraudulent or counterfeit charge. Any of these adjustments
will be made on or prior to the end of the monthly period in which the
adjustment arises. If after the exclusion of the principal receivables from the
calculation of the Transferor Interest, the Transferor Interest would be less
than the Required Transferor Interest, or the aggregate amount of principal
receivables is less than the Required Minimum Principal Balance, the transferor
will be required to pay an amount equal to such deficiency into the Excess
Funding Account.
TRUST ACCOUNTS
The servicer will establish and maintain in the name of the indenture
trustee, for the benefit of noteholders of all series, a "COLLECTION ACCOUNT,"
into which the servicer will deposit collections on the receivables and other
amounts described herein. The collection account will be either (a) a segregated
account with an eligible institution or (b) a segregated trust account with the
corporate trust department of a depositary institution organized under the laws
of the United States or any one
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of the 50 states, the District of Columbia (or any domestic branch of a foreign
bank), and acting as a trustee for funds deposited in that account, so long as
any of the securities of this depository institution are rated at least
investment grade by each rating agency rating a class of notes. An account that
meets these requirements is called a "QUALIFIED account."
The collection account will initially be maintained with the indenture
trustee. If at any time the collection account ceases to be an eligible account,
the indenture trustee will move the collection account to another eligible
institution so that it will again be a qualified account.
The servicer will also establish and maintain with an eligible
institution in the name of the indenture trustee an "EXCESS FUNDING ACCOUNT,"
which also is required to be a qualified account.
An "ELIGIBLE INSTITUTION" is either:
- a depository institution, including the owner trustee or the
indenture trustee
- that is organized under the laws of the United States or any
one of the 50 states or the District of Columbia (or any
domestic branch of a foreign bank); and
- which at all times (i) has FDIC deposit insurance and (ii) has
either a long-term unsecured debt rating or a certificate of
deposit rating acceptable to each rating agency rating a
series or class of notes; or
- any other institution acceptable to each rating agency rating a
series or class of notes.
Funds in the collection account and the Excess Funding Account will be
assets of the trust and will be invested, at the direction of the servicer, in
"ELIGIBLE INVESTMENTS." Eligible investments are securities, instruments,
security entitlements or other investment property which evidence:
- direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States of
America;
- 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 the District of
Columbia (or domestic branches of foreign banks) and subject to
supervision and examination by federal or state banking or
depository institution authorities. However, at the time of the
trust's investment or contractual commitment to invest, the
short-term debt rating of that depository institution or trust
company must be in the highest investment category of at least one
of the rating agencies rating a class of notes;
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- commercial paper or other short-term obligations having original
or remaining maturities of no more than 30 days, and having, at
the time of the trust's investment or contractual commitment to
invest, a rating in the highest rating category of at least one of
the rating agencies rating a class of notes;
- demand deposits, time deposits and certificates of deposit which
are fully insured by the FDIC having, at the time of the trust's
investment, a rating in the highest rating category of at least
one of the rating agencies rating a class of notes;
- notes or bankers' acceptances (having original maturities of no
more than 365 days) issued by any depository institution or trust
company referred to in the second clause above;
- money market funds having, at the time of the trust's investment,
a rating in the highest rating category of at least one of the
rating agencies rating a class of notes (including funds for which
the indenture trustee or any of its affiliates is investment
manager or advisor);
- time deposits (having maturities not later than the next payment
date) other than those referred to in the fourth clause above,
with a person whose commercial paper has a credit rating
satisfactory to at least one of the rating agencies rating a class
of notes; or
- any other investment upon receipt of written confirmation from
each rating agency rating a class of notes that the additional
form of investment will not result in a reduction or withdrawal of
its then-existing rating of any outstanding series or class.
Any earnings (net of losses and investment expenses) on funds in the
collection account and the Excess Funding Account will be treated as collections
of finance charge and administrative receivables.
The indenture trustee, acting as the initial paying agent, will have
the revocable power to withdraw funds from the collection account for the
purpose of making payments to the noteholders of any series under the related
indenture supplement. The indenture trustee, acting as the initial paying agent,
together with any successor to the indenture trustee acting in that capacity,
and any entity specified in an indenture supplement to act in that capacity for
the related series, is referred to collectively as the "PAYING AGENT."
FUNDING PERIOD
For any series of notes, the total amount of principal receivables in
the trust available to that series at the time of its issuance may be less than
the total principal balance of the notes of that series. If this occurs, the
initial Invested Amount for that series of notes will be less than the principal
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amount of that series of notes. In this case, the prospectus supplement for the
series will set forth the terms of the "FUNDING PERIOD," which is the period
from that series' closing date to the earlier of:
- the commencement of an early amortization period;
- the date that series' Invested Amount equals the principal amount
of that series of notes; and
- the date specified in the related prospectus supplement.
During the funding period, the portion of the Invested Amount not
invested in receivables will be maintained in a "PRE-FUNDING ACCOUNT," which is
a trust account established and maintained with the indenture trustee for the
benefit of the noteholders of that series. On the closing date for that series
of notes, this amount may be up to 100% of the principal balance of that series
of notes. The Invested Amount for that series will increase as new receivables
are transferred to the trust or as the Invested Amounts of other outstanding
series are reduced. The Invested Amount may decrease due to charge-offs
allocated to the series. The funding period will not be longer than one year.
During the funding period, funds on deposit in the pre-funding account
will be paid to the transferor as the Invested Amount increases. If the Invested
Amount for a series is not increased so that it equals the principal balance of
the notes of that series by the end of the funding period, any amount remaining
in the pre-funding account will be repaid to noteholders of that series. This
type of event may also cause repayment of other amounts to noteholders, as set
forth in the related prospectus supplement.
The prospectus supplement for a series with a funding period will set
forth:
- the series' initial Invested Amount;
- the series' full Invested Amount, which is the initial principal
balance of the series of notes;
- the date on which the series' Invested Amount is expected to equal
the full Invested Amount;
- the date by which the funding period will end; and
- what other events, if any, will occur if the end of the funding
period is reached before the full Invested Amount is funded.
The monthly reports provided to noteholders will include a line item which will
describe the balance in the pre-funding account as of the end of the monthly
period, any amounts withdrawn from the
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pre-funding account during the monthly period, and the interest earned on the
pre-funding account during the monthly period.
INVESTOR PERCENTAGE AND TRANSFEROR PERCENTAGE
The servicer will allocate all collections of finance charge and
administrative receivables, all collections of principal receivables and all
defaulted receivables among:
- each series issued and outstanding;
- the Transferor Interest; and
- if the related prospectus supplement so states, to any series
enhancers.
All allocations of these amounts will be made through the respective Investor
Percentages for each series, the Transferor Percentage and, where applicable,
the percentage interest of certain series enhancers, called the "SERIES
ENHANCEMENT PERCENTAGE." The related prospectus supplements will set forth how
the Investor Percentages and series enhancement percentages are calculated.
The Transferor Percentage will equal 100% minus:
- the total Investor Percentages for all outstanding series; minus
- the total series enhancement percentages for all outstanding
series.
APPLICATION OF COLLECTIONS
Except in the circumstances described below, the servicer must deposit
into the collection account, no later than two business days after processing,
all payments made on receivables in the trust portfolio. The servicer must also
allocate these deposits between accounts and to various parties, as described
below.
However, the servicer will be able to make these deposits on a monthly or other
periodic basis if one of the following is true:
- the bank remains the servicer under the transfer and servicing
agreement;
- no pay out event has occurred; and
- either: (i) the bank maintains a long or short term rating which
is satisfactory to each rating agency; or (ii) Advanta Corp. has
provided the indenture trustee a performance
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guaranty covering collection risk of the servicer and written
confirmation is received from each rating agency that this
arrangement will not result in a reduction or withdrawal of its
rating of any outstanding series or class; or (iii) the servicer
delivers to the indenture trustee a letter of credit or other
guaranty covering collection risk and written confirmation is
received from each rating agency that this arrangement will not
result in a reduction or withdrawal of its rating of any
outstanding series or class.
The servicer must make daily or periodic deposits to the collection
account only to the extent that the funds are needed for deposit into other
trust accounts or distribution to noteholders or other parties. If the
collection account balance ever exceeds the amount needed for deposit or
distribution, the servicer will be able to withdraw the excess. The servicer may
retain its servicing fee for any series and will not be required to deposit it
in the collection account.
Each time a collection account deposit is made, the servicer will
withdraw from, or retain in, the collection account, as applicable, the
following amounts and apply them as indicated:
- the Transferor Percentage of collections of finance charge and
administrative receivables and principal receivables in the trust
portfolio will be paid or held for payment to the holders of the
Transferor Beneficial Interest. However, collections of principal
receivables allocable to the holders of the Transferor Beneficial
Interest will be:
- paid to the holders of the Transferor Beneficial Interest only
if the Transferor Interest exceeds zero; or
- deposited in the Excess Funding Account;
- for each series, the relevant Investor Percentage of collections
of finance charge and administrative receivables in the trust
portfolio will be retained in the collection account for
allocation and payment as set forth in the related prospectus
supplement;
- if the series is in its revolving period, the applicable Investor
Percentage of collections of principal receivables in the trust
portfolio allocated to the series will be paid or held for payment
to the holders of the Transferor Beneficial Interest. However,
collections of principal receivables will be:
- paid to the holders of the Transferor Beneficial Interest only
if the Transferor Interest is greater than a specified minimum
level, called the "REQUIRED TRANSFEROR INTEREST;" or
- deposited in the Excess Funding Account;
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- if the series is in (a) the period in which principal is
accumulated in specified amounts per month and paid on an expected
principal payment date, known as the "CONTROLLED ACCUMULATION
PERIOD," (b) the period in which principal is paid in fixed
amounts at scheduled intervals, known as the "CONTROLLED
AMORTIZATION PERIOD," or (c) the period in which principal is paid
or accumulated in varying amounts each month based on the amount
of principal receivables collected following a pay out event,
known as the "EARLY AMORTIZATION PERIOD" or "EARLY ACCUMULATION
PERIOD," respectively, the applicable Investor Percentage of
collections of principal receivables in the trust portfolio
allocated to the series up to the amount, if any, specified in the
accompanying prospectus supplement will be retained in the
collection account or deposited in a principal funding account, as
applicable, for allocation and payment to noteholders as described
in the accompanying prospectus supplement. However, if collections
of principal receivables exceed the principal payments which may
be allocated or distributed to noteholders, the excess will be
paid to the holders of the Transferor Beneficial Interest, subject
to the limitations described in the third clause above.
In the case of a series of notes having more than one class, the
amounts in the collection account will be allocated and applied to each class in
the manner and order of priority described in the accompanying prospectus
supplement.
Any amounts, called "UNALLOCATED PRINCIPAL COLLECTIONS," collected in
respect of principal receivables and not paid to the holders of the Transferor
Beneficial Interest because the Transferor Interest is less than the Required
Transferor Interest as described above, together with any adjustment payments as
described above, will be paid to and held in the Excess Funding Account and paid
to the holders of the Transferor Beneficial Interest if, and only to the extent
that, the Transferor Interest is greater than the Required Transferor Interest.
If an amortization period or accumulation period has commenced, unallocated
collections of principal receivables will be held for payment to the noteholders
on the dates specified in the accompanying prospectus supplement or accumulated
for payment on the Expected Principal Payment Date, as applicable, and paid to
the noteholders of each class or held for and paid to the noteholders of other
series of notes issued by the trust in the manner and order of priority
specified in the accompanying prospectus supplement.
SHARED FINANCE CHARGE COLLECTIONS
If a series is identified in the prospectus supplement for that series
as included in a group, collections of finance charge and administrative
receivables in the trust portfolio allocated to the series in excess of the
amount needed to make deposits or payments may be shared with other series
identified in the prospectus supplements for those other series as included in
the same group. These shared collections are called "SHARED FINANCE CHARGE
COLLECTIONS." If one series requires more collections of finance charge and
administrative receivables than allocated through its Investor Percentage, it
will have access to all of these Shared Finance Charge Collections in other
series in its
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group. If two or more series require more collections of finance charge and
administrative receivables, Shared Finance Charge Collections in the group will
be shared among the series in the manner and priority set forth in the related
prospectus supplements.
SHARED PRINCIPAL COLLECTIONS
If a series is allocated principal in excess of the amount needed for
deposit or distribution, this excess amount will be available to make principal
payments or deposits required by other series. This excess amount which is made
available to other series is called "SHARED PRINCIPAL COLLECTIONS." These Shared
Principal Collections may be limited to series identified in the prospectus
supplements for those series as included in the same group. Once principal
receivables from one series are made available to another series, the series
providing the excess principal receivables is not entitled to recoup those
amounts. If collections of principal receivables in the trust portfolio
allocated to a series are shared with another series, the Invested Amount for
the series from which collections were shared will not be reduced.
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DEFAULTED RECEIVABLES; REBATES AND FRAUDULENT CHARGES; INVESTOR CHARGE-OFFS
Unless otherwise specified in the accompanying prospectus supplement,
for each series of notes, on the third business day preceding the fifteenth day
of each calendar month ( called the "DETERMINATION DATE"), the servicer will
calculate the aggregate Investor Default Amount for the preceding monthly
period. The "INVESTOR DEFAULT AMOUNT" will be equal to the aggregate amount of
the Investor Percentage of principal receivables that are defaulted receivables.
The term "DEFAULTED RECEIVABLES" means those principal receivables
which in that monthly period were written off as uncollectible in accordance
with the servicer's credit card guidelines and customary and usual servicing
procedures for servicing revolving credit card receivables comparable to the
receivables in the trust. However, in any event, a principal receivable will be
deemed a defaulted receivable if, by the 180th day following the due date of the
required minimum payment set forth in the related account's billing statement,
that minimum payment has not been received by the servicer. If provided in the
accompanying prospectus supplement for a series, an amount equal to the Investor
Default Amount for any monthly period may be paid from other amounts, including
from series enhancement, and applied to pay principal to noteholders or, subject
to certain limitations, the holder of the Transferor Beneficial Interest, as
appropriate.
The term "INVESTOR CHARGE-OFFS" means, for any monthly period, and for
any series or class, the amount by which:
(a) the related monthly interest and overdue monthly interest, together
with, if applicable, additional interest, the accrued and unpaid monthly
servicing fee payable from collections of finance charge and administrative
receivables and other amounts treated like collections of finance charge and
administrative receivables, the Investor Default Amount and any other required
fees exceeds
(b) amounts available to pay those amounts out of collections of
finance charge and administrative receivables and other amounts treated like
collections of finance charge and administrative receivables, any available
series enhancement amounts and other sources specified in the accompanying
prospectus supplement, but not more than the Investor Default Amount.
For each series of notes, the Invested Amount will be reduced by the
amount of Investor Charge-Offs for any monthly period. Investor Charge-Offs will
be reimbursed on any payment date to the extent amounts on deposit in the
collection account and otherwise available exceed the interest, fees and any
aggregate Investor Default Amount payable on that date. This reimbursement of
Investor Charge-Offs will result in an increase in the Invested Amount for that
series.
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FINAL PAYMENT OF PRINCIPAL; TERMINATION
For each series, the servicer has the option to repurchase the notes at
any time after the remaining outstanding principal balance of that series, less
the balance in any principal funding account, is 10% or less of the initial
principal amount of that series (as increased by the principal amount of any
notes of that series issued after the related closing date) if certain
conditions set forth in the related indenture supplement are met. Unless
otherwise specified in the accompanying prospectus supplement for your series of
notes, the repurchase price will equal:
- the outstanding principal amount of the notes of that series,
plus
- any accrued and unpaid interest through the day preceding the
payment date on which the repurchase occurs or, if the
repurchase occurs on any other date, through the day preceding
the payment date immediately following the repurchase date,
plus
- any amounts due the series enhancer, as specified in the
prospectus supplement for that series.
Any amounts on deposit in the principal funding account for that series
will be applied toward the repurchase price on behalf of the transferor.
For any series of notes, the related prospectus supplement may specify
different conditions to the servicer's repurchase option and a different method
for determining the repurchase price. Unless specified in the accompanying
prospectus supplement for your series of notes, the repurchase price will not be
less than the sum of the outstanding principal amount of the notes plus any
accrued and unpaid interest.
The notes of each series will be retired on the day on which the final
payment of principal is made to the noteholders, whether as a result of payment
of the repurchase price, optional reassignment of the receivables to the
transferor or otherwise. Each prospectus supplement will specify the series
termination date for the related series of notes. However, the notes may be
subject to prior termination as provided above and in the prospectus supplement.
For any series the failure to pay principal of the related notes on the latest
date by which principal and interest for that series can be paid, called the
"SERIES TERMINATION DATE," will be an event of default and the indenture trustee
or holders of a specified percentage of the notes of that series will have
certain rights described under "The Indenture-- Events of Default; Rights upon
Event of Default" in this prospectus.
Upon the retirement of a series of notes, upon optional repurchase or
otherwise, there will be no continuing direct or indirect liability of the trust
or noteholders to the holders of the Transferor Beneficial Interest.
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Unless the servicer and the holder of the Transferor Beneficial
Interest instruct the indenture trustee otherwise, the trust will terminate on
the date designated by the servicer, but no earlier than the day after the
payment date on which the Invested Amount and Enhancement Invested Amount, if
any, for each series outstanding is zero. This date is called the "TRUST
TERMINATION DATE." Upon the termination of the trust and the surrender of the
Transferor Beneficial Interest, the indenture trustee shall convey to the
holders of the Transferor Beneficial Interest all right, title and interest of
the trust in and to the receivables and other funds of the trust.
PAIRED SERIES
The prospectus supplement for a series of notes will specify whether
that series may be paired with a previously or later issued series so that a
decrease in the Invested Amount of the previously issued series results in a
corresponding increase in the Invested Amount of the later issued series. Each
of these series is called a "PAIRED SERIES." In general, a series may be issued
as a paired series so the trust can fund the amount by which the previously
issued series has amortized or accumulated funds for a principal payment and
will amortize or accumulate in the future.
If a pay out event occurs for the previously issued series or its
paired series when the previously issued series is amortizing, the Investor
Percentage for the allocation of collections of principal receivables for the
previously issued series may be reset to a lower percentage as described in the
prospectus supplement for that series and the period over which it will amortize
may be lengthened as a result. The extent to which the period over which it
amortizes is lengthened will depend on many factors, only one of which is the
reduction of its Investor Percentage. For a discussion of these factors, see
"Risk Factors-- Issuance of additional series by the trust may affect the timing
of payments to you." in this prospectus and "Maturity Considerations" in the
accompanying prospectus supplement.
We cannot assure you that the terms of a paired series will not have an
adverse impact on the timing or amount of payments allocated to your series. If
an early amortization period or an early accumulation period occurs for a paired
series while your series is outstanding, the percentage of receivables allocated
to your series may be reduced if the terms of the indenture supplement relating
to the paired series requires that the paired series also receive its share of
principal collections. In addition, if an early amortization period or early
accumulation period occurs for your series, the percentage of receivables
allocated to the paired series may be reduced until your series is paid in full.
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PAY OUT EVENTS
The revolving period will continue through the date specified in the
accompanying prospectus supplement unless a pay out event occurs prior to that
date, unless otherwise specified in the accompanying prospectus supplement.
There are two types of pay out events: a trust pay out event and a series pay
out event.
A "TRUST PAY OUT EVENT" occurs with respect to all series issued by the
trust upon the occurrence of any of the following events:
- any servicer default occurs which would have a material
adverse effect on the noteholders;
- certain bankruptcy, insolvency, liquidation, conservatorship,
receivership or similar events relating to the transferor or
the seller unless, in the case of any of those events with
respect to a seller, the receivables originated by that seller
are no longer eligible and written confirmation is received
from each rating agency that the subsequent exclusion of that
seller's receivables from the trust portfolio will not result
in a reduction or withdrawal of its then-existing rating of
any outstanding series or class;
- the transferor is unable for any reason to transfer
receivables to the trust in accordance with the provisions of
the transfer and servicing agreement; or
- the trust becomes subject to regulation as an "investment
company" within the meaning of the Investment Company Act of
1940.
In addition, a "SERIES PAY OUT EVENT" may occur with respect to any
particular series upon the occurrence of any other event specified in the
prospectus supplement for that series.
On the date on which a pay out event is deemed to have occurred, the
early amortization period or, if specified in the accompanying prospectus
supplement, the early accumulation period will commence.
If, because of the occurrence of a pay out event, the early
amortization period begins earlier than the scheduled commencement of an
amortization period or prior to an Expected Principal Payment Date, noteholders
will begin receiving payments of principal earlier than they otherwise would
have, which may shorten the average life of the notes. A pay out event which
causes an early accumulation period to occur will not shorten the average life
of the notes.
In addition to the consequences of a pay out event discussed above,
unless otherwise specified in the accompanying prospectus supplement, if certain
bankruptcy, insolvency or similar proceedings under the Bankruptcy Code or
similar laws occur with respect to the transferor, on the
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day of that event the transferor will immediately cease to transfer principal
receivables to the trust and will promptly give notice to the indenture trustee
and the owner trustee of this occurrence. Any principal receivables transferred
to the trust prior to the event, as well as collections on those principal
receivables and finance charge and administrative receivables accrued at any
time with respect to those principal receivables, will continue to be part of
the trust assets and will be applied as specified above in "-- Application of
Collections" and in the accompanying prospectus supplement.
If the only pay out event to occur is either the insolvency of the
transferor or the commencement of a bankruptcy case by or against the
transferor, the bankruptcy court may have the power to require the continued
transfer of principal receivables to the trust. See "Risk Factors -- If a
receiver or conservator were appointed for a seller or a transferor that is a
bank, or if a seller or a transferor that is not a bank became a debtor in a
bankruptcy case, delays or reductions in payment of your notes could occur" in
this prospectus.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The servicer receives a fee for its servicing activities and
reimbursement of expenses incurred administering the trust. This servicing fee
accrues for each outstanding series in the amounts and is calculated on the
balances set forth in the related prospectus supplement. Each series' servicing
fee is payable each period from collections of finance charge and administrative
receivables allocated to the series; some series, however, may direct all or a
portion of the interchange arising from the accounts toward paying the servicing
fee. Neither the trust nor the noteholders are responsible for any servicing fee
allocable to the transferor interest.
The servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the receivables including, without
limitation, payment of the fees and disbursements of the indenture trustee, any
paying agent, transfer agent and registrar and independent accountants fees and
other fees which are not expressly stated in the indenture to be payable by the
trust or the noteholders of a series other than any Federal, state, local and
foreign income, franchise or other taxes, or any interest or penalties with
respect thereto, imposed upon the trust.
CERTAIN MATTERS REGARDING THE TRANSFEROR AND THE SERVICER
The servicer may not resign from its obligations and duties under the
transfer and servicing agreement, except:
- upon a determination that performance of its duties is no
longer permissible under applicable law; or
- upon assumption of its obligations and duties by one of its
affiliates that is a direct or indirect wholly-owned
subsidiary of Advanta Corp. or by appointment of any other
eligible successor if written confirmation is received from
each rating agency that the
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appointment will not result in a reduction or withdrawal of
its then-existing rating of any outstanding series or class.
If:
- within 120 days of the determination that the servicer is no
longer permitted to act as servicer, and
- the indenture trustee is unable to appoint a successor,
then the indenture trustee will act as servicer. If the indenture trustee is
unable to act as servicer, it will petition an appropriate court to appoint an
eligible successor.
The servicer has the right to delegate any of its responsibilities and
obligations as servicer to any entity that agrees to conduct such duties in
accordance with the transfer and servicing agreement and the Credit Card
Guidelines. The servicer currently contracts and intends to continue to contract
with First Data Resources to perform certain of its servicing activities.
Notwithstanding any such delegation to any entity, the servicer will continue to
be liable for all of its obligations under the transfer and servicing agreement.
The servicer will indemnify the trust, the owner trustee and the
indenture trustee for any losses suffered as a result of (i) its actions or
omissions as servicer or (ii) the administration by the owner trustee of the
trust, except in each case, for losses resulting from the negligence or willful
misconduct of the owner trustee or the indenture trustee, as applicable.
Neither the servicer nor any of its directors, officers, employees or
agents will be under any other liability to the trust, the owner trustee, the
indenture trustee, the noteholders, any series enhancer or any other person for
any action taken, or for refraining from taking any action, in good faith under
the transfer and servicing agreement. However, none of them will be protected
against any liability resulting from willful wrongdoing, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of obligations and duties under the transfer and servicing agreement. In
addition, the transfer and servicing agreement provides that the servicer is not
under any obligation to appear in, prosecute or defend any legal action which is
not incidental to its servicing responsibilities under the transfer and
servicing agreement and which in its opinion may expose it to any expense or
liability.
Each transferor will be severally, but not jointly, liable for all of
its obligations, covenants, representations and warranties under the transfer
and servicing agreement. No transferor or seller or any of its directors,
officers, employees, incorporators or agents will be liable to the trust, the
owner trustee, the indenture trustee, the noteholders, any series enhancer or
any other person for any action taken, or for refraining from taking any action,
in good faith under the applicable transfer and servicing agreement or the
applicable receivables purchase agreement. However, none of them will
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be protected against any liability resulting from willful wrongdoing, bad faith
or gross negligence in the performance of its duties or by reason of reckless
disregard of obligations and duties under the transfer and servicing agreement.
The trust agreement provides that the transferor may transfer its
interest in all or a portion of the Transferor Beneficial Interest by exchanging
its interest for a new Transferor Beneficial Interest and a second interest,
called a "SUPPLEMENTAL BENEFICIAL INTEREST." The Supplemental Beneficial
Interest may be held either in an uncertificated form or in the form of a
certificate representing the Supplemental Beneficial Interest, called a
"supplemental certificate." The terms of the Supplemental Beneficial Interest
must be defined in a supplement to the trust agreement. Except for transfers to
affiliates of the transferor, before a Supplemental Beneficial Interest is
issued, the following must occur:
- notice of the exchange to the owner trustee, the indenture
trustee, the servicer and each rating agency;
- delivery to the owner trustee and the indenture trustee of an
executed supplement to the trust agreement;
- written confirmation from each rating agency that the exchange
will not result in a reduction or withdrawal of its
then-existing rating of any outstanding series or class;
- delivery to the owner trustee and the indenture trustee of a
certificate of an authorized officer of the transferor to the
effect that it reasonably believes the exchange will not have
an adverse effect;
- delivery to the owner trustee and the indenture trustee of a
tax opinion to the effect that the transfer will not adversely
affect the tax characterization of the notes as debt and that
the transfer will not cause the trust to be taxable as a
corporation;
- the total amount of principal receivables in the trust
portfolio must exceed the Required Minimum Principal Balance
on the date of the exchange; and
- after giving effect to the issuance of the supplemental
certificate, the Transferor Interest must be at least equal to
the Required Transferor Interest.
Except for transfers to affiliates of the transferor, no Supplemental
Beneficial Interest may be transferred or exchanged except in a transaction
exempt from the registration requirements of the Securities Act of 1933 and
unless a tax opinion is delivered to the owner trustee and the indenture trustee
regarding the exchange.
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The transferor or the servicer may consolidate with, merge into, or
sell its business to, another entity, in accordance with the transfer and
servicing agreement, on the following conditions:
- if the transferor or servicer, as the case may be, is not the
surviving entity, execution of an agreement relating to the
succession that supplements the transfer and servicing
agreement;
- in the case of a transaction relating to the transferor, (i)
delivery to the owner trustee and the indenture trustee of a
certificate of an authorized officer of the transferor and an
opinion of counsel, each addressing compliance with the
applicable provisions of the transfer and servicing agreement
and the validity and enforceability of the supplemental
agreement and (ii) written confirmation from each rating
agency that the succession will not result in a reduction or
withdrawal of its then-existing rating of any outstanding
series or class; and
- in the case of a transaction relating to the servicer, (i)
delivery to the owner trustee and the indenture trustee of a
certificate of an authorized officer of the servicer and an
opinion of counsel, each addressing compliance with the
applicable provisions of the transfer and servicing agreement,
(ii) notification of the succession to each rating agency and
(iii) that the successor is eligible to act as servicer.
SERVICER DEFAULT
The transfer and servicing agreement specifies the duties and
obligations of the servicer. A failure by the servicer to perform its duties or
fulfill its obligations can result in a servicer default.
A "SERVICER DEFAULT" includes each of the following:
- failure by the servicer to make any payment, transfer
or deposit, or to give instructions or to give notice
to the indenture trustee to do so, within 5 business
days of the required date under the transfer and
servicing agreement, the indenture or any indenture
supplement;
- failure on the part of the servicer to observe or
perform in any material respect any of its other
covenants or agreements set forth in the transfer and
servicing agreement, the indenture or any indenture
supplement, if the failure:
- will result in the occurrence of a pay out
event for any series or materially adversely
affects noteholders of any series issued and
outstanding under the trust; and
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- continues unremedied for a period of 60 days
after written notice to (i) the servicer by
the owner trustee or the indenture trustee,
or (ii) the servicer, the owner trustee and
the indenture trustee by noteholders holding
50% or more of the then-outstanding
principal amount of all of the trust's
outstanding series (or, where the servicer's
failure does not relate to all series, 50%
or more of the then-outstanding principal
balance of all series affected); or
- the servicer assigns or delegates its
duties, except as specifically permitted
under the transfer and servicing agreement;
- any representation, warranty or certification made by
the servicer in the transfer and servicing agreement,
or in any certificate delivered under the transfer
and servicing agreement, proves to have been
incorrect in any material respect when made if it:
- materially adversely affects noteholders of
any series issued and outstanding under the
trust; and
- continues to be incorrect and to materially
adversely affect those noteholders for a
period of 60 days after written notice to
(i) the servicer by the owner trustee or the
indenture trustee, or (ii) the servicer, the
owner trustee and the indenture trustee by
noteholders holding 50% or more of the
then-outstanding principal amount of all of
the trust's outstanding series (or, where
the servicer's inaccuracy does not relate to
all series, 50% or more of the
then-outstanding principal balance of all
series affected);
- specific bankruptcy, insolvency, liquidation,
conservatorship, receivership or similar events
relating to the servicer; or
- any other event specified in the accompanying
prospectus supplement.
Notwithstanding the foregoing, a delay in or failure of performance
referred to in the first clause above for a period of 10 business days after the
applicable grace period, or referred to in the second or third clauses above for
a period of 60 business days after the applicable period, will not constitute a
servicer default if the delay or failure could not be prevented by the exercise
of reasonable diligence by the servicer and the delay or failure was caused by
an act of God or the public enemy, acts of declared or undeclared war,
terrorism, public disorder, rebellion or sabotage, epidemics, landslides,
lightning, fire, hurricanes, earthquakes, floods or other similar occurrence.
Upon the occurrence of any of the events identified above, the servicer
will not be relieved from using all commercially reasonable efforts to perform
its obligations in a timely manner in accordance with the terms of the transfer
and servicing agreement. The servicer must provide the indenture trustee, the
owner trustee, each transferor and any series enhancer with an officer's
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certificate giving prompt notice of its failure or delay, together with a
description of its efforts to perform its obligations. If a servicer default
occurs, for as long as it has not been remedied, the indenture trustee or
noteholders holding more than 50% of the then-outstanding principal amount of
all of the trust's outstanding series may give a notice to the servicer and the
owner trustee (and to the indenture trustee if given by the noteholders)
terminating all of the rights and obligations of the servicer under the transfer
and servicing agreement. The indenture trustee will as promptly as possible
appoint an eligible successor to the servicer. If no successor has been
appointed or has accepted the appointment by the time the servicer ceases to act
as servicer, the indenture trustee will automatically become the successor.
The rights and obligations of the transferor under the transfer and
servicing agreement and of the seller under the receivables purchase agreement
will be unaffected by any change in the person acting as servicer.
In the event of the appointment of a receiver or conservator of the
servicer, the receiver or conservator may have the power to prevent either the
indenture trustee or the noteholders from appointing a successor servicer.
REPORTS TO NOTEHOLDERS
Noteholders of each series issued by the trust will receive reports
with information on the series and the trust. The paying agent will forward to
each noteholder of record a report, prepared by the servicer, for its series on
the payment dates for that series. The report will set forth information as
specified in the related prospectus supplement. If a series has multiple
classes, information will be provided for each class, as specified in the
related prospectus supplement.
Periodic information to noteholders generally will include:
- the total amount paid;
- the amount paid allocable to principal;
- the amount paid allocable to interest;
- collections of principal receivables and finance charge and
administrative receivables allocated to the series;
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- the aggregate amount of principal receivables, the Invested
Amount and the Invested Amount as a percentage of the
aggregate amount of the principal receivables in the trust
portfolio;
- the aggregate outstanding balance of accounts broken out by
delinquency status;
- the aggregate defaults allocated to the series;
- Investor Charge-Offs for the series and any reimbursements of
previous Investor Charge-Offs;
- the servicing fee for that series;
- the amount available under any series enhancement for the
series or each class of the series;
- the "pool factor," which is the ratio of the current Invested
Amount to the initial Invested Amount;
- the Base Rate and Net Portfolio Yield (each as defined in the
accompanying prospectus supplement) for the series;
- if the series or a class of the series bears interest at a
floating or variable rate, information relating to that rate,
and
- if the series has a funding period, the period ending balance
in the pre-funding account, the amount withdrawn from the
pre-funding account to date and the amount of interest earned
on the pre-funding account during the monthly period.
By January 31 of each calendar year, the paying agent will also provide
to each person who at any time during the preceding calendar year was a
noteholder of record a statement, prepared by the servicer. The statement will
contain the type of information presented in the periodic reports, aggregated
for that calendar year or the portion of that calendar year that the person was
a noteholder, together with other information that is customarily provided to
holders of debt, to assist noteholders in preparing their United States tax
returns.
EVIDENCE AS TO COMPLIANCE
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The transfer and servicing agreement provides that on or before
September 30 of each calendar year, the servicer will have a firm of independent
certified public accountants furnish reports showing that, for the prior
calendar year:
- the accounting firm has applied certain agreed upon procedures
and has examined certain documents and records pertaining to
the servicing of the accounts and that nothing has come to
that firm's attention that has caused it to believe that the
servicing has not been conducted in compliance with the
transfer and servicing agreement, except for specified
exceptions, and
- the accounting firm has compared certain amounts set forth in
the periodic reports prepared by the servicer for the prior
calendar year with the servicer's computer reports and that,
in the accounting firm's opinion, the amounts are in
agreement, except for any specified exceptions,
The transfer and servicing agreement also provides that by September 30
of each calendar year, the servicer will deliver to the owner trustee, the
indenture trustee and each rating agency a certificate of an authorized officer
to the effect that the servicer has fully performed its obligations under the
transfer and servicing agreement during the preceding year, or, if there has
been a default in the performance of any of its obligations, specifying the
nature and status of the default.
AMENDMENTS
The transfer and servicing agreement may be amended by the transferor,
the servicer and the trust, without the consent of the indenture trustee or the
noteholders of any series offered under this prospectus, on the following
conditions:
- the transferor delivers to the owner trustee and the indenture
trustee a certificate of an authorized officer stating that,
in the transferor's reasonable belief, the amendment will not
have a material adverse effect on the interests of the
noteholders; and
- receipt of written confirmation from each rating agency that
the amendment will not result in a reduction or withdrawal of
its then-existing rating of any outstanding series or class.
The transfer and servicing agreement may also be amended by the
servicer and the trust at the direction of the transferor, without the consent
of the indenture trustee, the noteholders of any series offered under this
prospectus or the series enhancers for any series to add, modify or eliminate
any provisions necessary or advisable in order to enable the trust or any
portion
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of the trust to (i) qualify as, and to permit an election to be made for the
trust to be treated as, a "financial asset securitization investment trust"
under the Internal Revenue Code of 1986 and (ii) avoid the imposition of state
or local income or franchise taxes on the trust's property or its income. The
following conditions apply for the amendments described in this paragraph:
- delivery to the owner trustee and the indenture trustee of a
certificate of an authorized officer of the transferor to the
effect that the requirements under the transfer and servicing
agreement applicable to the proposed amendments have been met;
- receipt of written confirmation from each rating agency that
the amendment will not result in a reduction or withdrawal of
its then-existing rating of any outstanding series or class;
and
- the amendment must not affect the rights, duties or
obligations of the indenture trustee or the owner trustee
under the transfer and servicing agreement.
The amendments which the transferor may make without the consent of the
noteholders of any series offered under this prospectus or the series enhancers
for any series in accordance with the preceding paragraph may include, without
limitation, the addition or sale of receivables in the trust portfolio.
The transfer and servicing agreement may also be amended by the
transferor, the servicer and the trust with the consent of noteholders holding
at least 662/3% of the then-outstanding principal amount of the notes of all
series offered under this prospectus adversely affected by the amendment. Even
with consent, no amendment may occur if it:
- reduces the amount of, or delays the timing of:
- any payments to be made to noteholders of any series
(changes in pay out events or events of default that
decrease the likelihood of the occurrence of those
events will not be considered delays in the timing of
payments for purposes of this clause) or deposits of
amounts to be distributed; or
- the amount available under any series enhancement, in
each case, without the consent of each affected
noteholder,
- changes the manner of calculating the interests of any
noteholder, without the consent of each affected noteholder,
- reduces the percentage of the outstanding principal balance of
the notes required to consent to any amendment, without the
consent of each affected noteholder, or
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- adversely affects the rating of any series or class by each
rating agency, without the consent of noteholders holding at
least 66 2/3% of the then-outstanding principal amount of the
notes of each affected series or class offered under this
prospectus.
THE INDENTURE
The following summarizes the material terms of the indenture and is
qualified in its entirety by reference to the indenture.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT
With respect to the notes of any series, "EVENTS OF DEFAULT" under the
indenture will be any of the following:
- the trust fails to pay principal when it becomes due and
payable on the series termination date for that series of
notes;
- the trust fails to pay interest when it becomes due and
payable and the default continues for a period of 35 days;
- certain bankruptcy, insolvency, conservatorship, receivership,
liquidation or similar events relating to the trust;
- the trust fails to observe or perform covenants or agreements
made in the indenture, and:
- the failure continues, or is not cured, for 60 days
after notice to the trust by the indenture trustee or
to the trust and the indenture trustee by noteholders
holding 25% or more of the then-outstanding principal
amount of all of the trust's outstanding series; and
- as a result, the interests of the noteholders are
materially and adversely affected, and continue to be
materially and adversely affected during the 60-day
period; or
- any additional events of default specified in the applicable
prospectus supplement.
Failure to pay the full principal amount of a note on its Expected
Principal Payment Date will not constitute an event of default.
An event of default with respect to one series of notes will not
necessarily be an event of default with respect to any other series of notes.
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If an event of default occurs and continues with respect to the notes,
the indenture trustee or noteholders holding more than 50% of the
then-outstanding principal amount of the notes of the affected series may
declare the principal of the notes of that series to be immediately due and
payable. This declaration may, under certain circumstances, be rescinded by
noteholders holding more than 50% of the then-outstanding principal amount of
the notes of that series.
Generally, in the case of any event of default, the indenture trustee
will be under no obligation to exercise any of the rights or powers under the
indenture if requested or directed by any of the holders of the notes of the
affected series if the indenture trustee reasonably believes it will not be
adequately indemnified against the costs, expenses and liabilities which might
be incurred by it in complying with that request. Subject to those provisions
for indemnification and certain limitations contained in the indenture,
noteholders holding more than 50% (or not less than 66 2/3% if an event of
default occurs and continues) of the then-outstanding principal amount of the
notes of the affected series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the indenture
trustee. Noteholders holding more than 50% of the then-outstanding principal
amount of the notes of the affected series may, in certain cases, waive any
default with respect to the notes, except a default in the payment of principal
or interest or a default relating to a covenant or provision of the indenture
that cannot be modified without the waiver or consent of all noteholders of the
affected series.
After acceleration of a series of notes, collections of principal
receivables and collections of finance charge and administrative receivables
allocated to those notes will be applied to make monthly principal and interest
payments on the notes until the earlier of the date the notes are paid in full
or the series termination date. Funds in the collection account, the Excess
Funding Account and other trust accounts for a series of notes that have been
accelerated will be applied immediately to pay principal of and interest on
those notes.
Upon acceleration of the maturity of a series of notes following an
event of default, the indenture trustee will have a lien on the collateral for
those notes for its unpaid fees and expenses that ranks senior to the lien of
those notes on the collateral.
In general, the indenture trustee will enforce the rights and remedies
of the holders of accelerated notes. However, noteholders will have the right to
institute any proceeding with respect to the indenture if the following
conditions are met:
- the noteholder gives the indenture trustee written notice of a
continuing event of default;
- noteholders holding at least 25% of the then-outstanding
principal amount of the notes of the affected series make a
written request of the indenture trustee to institute a
proceeding as indenture trustee;
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- the noteholders offer reasonable indemnification to the
indenture trustee against the costs, expenses and liabilities
of instituting a proceeding;
- the indenture trustee has not instituted a proceeding within
60 days after receipt of the request and offer of
indemnification; and
- the indenture trustee has not received from noteholders
holding more than 50% of the then-outstanding principal amount
of the notes of that series a direction inconsistent with the
request.
Upon failure to receive payment of the principal of and interest on
their notes when due, noteholders holding more than 25% of the then-outstanding
principal amount of notes of the affected series may request the indenture
trustee to institute a proceeding against the trust for payment. If the
indenture trustee fails to do so, then the holders of 25% of the
then-outstanding principal amount of notes of the affected series may institute
suit to enforce the overdue payment.
If any series of notes has been accelerated following an event of
default, and the indenture trustee has not received any valid directions from
noteholders of that series, the indenture trustee may elect to continue to hold
the portions of the trust assets that secures those notes and apply
distributions on the trust assets to make payments on those notes to the extent
funds are available.
Subject to the provisions of the indenture relating to the duties of
the indenture trustee, if any series of notes has been accelerated following an
event of default, the indenture trustee may:
- institute proceedings in its own name for the collection of
all amounts then payable on the notes of the affected series;
or
- take any other appropriate action to protect and enforce the
rights and remedies of the indenture trustee and the
noteholders of the affected series.
Subject to the conditions described below, the indenture trustee also:
- may, at its own election, foreclose on the portion of the
receivables which secure a series of notes that have been
accelerated by causing the trust to issue a foreclosure
certificate to the holders of those notes;
- may, at its own election, foreclose on the portion of the
receivables which secure a series of notes that have been
accelerated by causing the trust to issue a foreclosure
certificate to a third party selected by the indenture
trustee, but only if it determines that the proceeds of the
issuance of the foreclosure certificate to that third party
will be sufficient to pay principal of and interest on the
notes that have been accelerated in full; and
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- must, at the direction of noteholders holding more than 50% of
the then-outstanding principal amount of the series of notes
that have been accelerated, foreclose on the portion of the
receivables which secure that series of notes that have been
accelerated by causing the trust to issue a foreclosure
certificate to the holders of that series of notes or to one
or more third parties.
The conditions that must be satisfied for the indenture trustee to
exercise one of these foreclosure remedies include:
- satisfaction of at least one of the following three
conditions:
- the indenture trustee receives the consent of all
noteholders of the affected series;
- the indenture trustee determines that any proceeds
from exercising the foreclosure remedy that are to be
distributed to the noteholders of that series are
sufficient to discharge in full all principal and
interest due on those notes; or
- the indenture trustee determines that the trust
assets may not continue to provide sufficient funds
for the payment of principal and interest on those
notes as they would have become due if the notes had
not been accelerated, and the indenture trustee
obtains the consent of noteholders holding at least
66 2/3% of the then outstanding principal amount of
each class of the notes of the affected series;
and
- the indenture trustee has obtained an opinion of counsel:
- that the exercise of the foreclosure remedy will not
cause the trust or any portion of the trust to be
classified as an association (or a publicly traded
partnership) taxable as a corporation for federal
income tax purposes; and
- that the exercise of the foreclosure remedy complies
with applicable federal and state securities laws.
A "FORECLOSURE CERTIFICATE" is an investor certificate issued by the
trust as a result of a foreclosure on a portion of the receivables that
corresponds to the portion of the receivables that secured the notes that have
been accelerated. The foreclosure certificate represents an undivided interest
in the assets of the trust. The principal amount of the foreclosure certificate
would be equal to the principal amount of the notes that have been accelerated,
and the Invested Amount of the foreclosure certificate would be equal to the
Invested Amount of the series of notes that have been accelerated.
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When a foreclosure certificate is issued with respect to notes that
have been accelerated, those notes will be deemed to have been paid in full by
the trust and not outstanding, and the holders of the notes that have been
accelerated will no longer have any claim against the trust. Accordingly, the
Invested Amount of the notes that have been accelerated will be applicable to
the holders of the foreclosure certificate.
A foreclosure certificate held by a noteholder or a third party will be
subject to restrictions on transfer, including:
- restrictions required to prevent the trust from becoming a
publicly traded partnership taxable as a corporation for
federal income tax purposes, including a limitation on the
number of holders or interests in the foreclosure certificate
and restrictions on transfers to holders that are
partnerships, Subchapter S corporations or grantor trusts for
United States federal income tax purposes;
- restrictions on transfers of interest in the foreclosure
certificate to non-U.S. persons;
- restrictions on transfers to employee benefit plans, or any
entity whose underlying assets include "plan assets;" and
- other restrictions that counsel to the trust may require to
avoid adverse tax and other consequences to the trust or the
noteholders.
The indenture trustee and the noteholders will covenant that they will
not at any time institute against the trust or the transferor any bankruptcy,
reorganization or other proceeding under any federal or state bankruptcy or
similar law.
The remedies described above are the exclusive remedies available to
the noteholders upon an event of default. The indenture trustee and each
noteholder, by its acceptance of an interest in any note, waive any other remedy
that may be available under the Uniform Commercial Code as then in effect in any
applicable jurisdiction.
None of the transferor, the administrator, the owner trustee, the
indenture trustee, the servicer, the seller or the trust, in its individual
capacity, nor any holder of an ownership interest in the trust, nor any of their
respective owners, beneficiaries, agents, officers, directors, employees,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or interest
on the notes or for the agreements of the trust contained in the indenture. The
notes will represent obligations solely of the trust, and the notes will not be
insured or guaranteed by the transferor, the servicer, the administrator, the
owner trustee, the indenture trustee, the seller or any other person or entity.
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CERTAIN COVENANTS
The indenture provides that the trust may not consolidate with, merge
into or sell or transfer its properties or assets to, another entity, unless:
- the entity formed by or surviving the consolidation or merger,
or that acquires the trust's properties or assets, is
organized under the laws of the United States, any state
thereof or the District of Columbia;
- the successor entity is not subject to regulation as an
investment company under the Investment Company Act of 1940;
- the successor entity expressly assumes, by supplemental
indenture, the trust's obligation to make due and punctual
payments upon the notes and the performance of every covenant
of the trust under the indenture;
- no pay out event or event of default has occurred and is
continuing immediately after the merger, consolidation or
sale;
- written confirmation is received from each rating agency that
the transaction will not result in a reduction or withdrawal
of its then-existing rating of any outstanding series or
class;
- the trust has received a tax opinion and an opinion of counsel
to the effect that the transaction would have no material
adverse federal income tax consequence to any noteholder;
- any action as is necessary to maintain the lien and security
interest created by the indenture shall have been taken;
- the trust has delivered to the indenture trustee an opinion of
counsel and officer's certificate each stating that the
transaction satisfies all requirements under the indenture and
that the supplemental indenture is duly authorized, executed
and delivered and is valid, binding and enforceable;
- in the case of a sale or transfer of the trust's properties or
assets, the acquiring entity expressly agrees, by supplemental
indenture, that all right, title and interest so acquired
shall be subject and subordinate to the rights of noteholders,
to indemnify the trust and to make all required filings with
the Commission;
As long as the notes are outstanding, the trust will not:
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- except as expressly permitted by the indenture, the transfer
and servicing agreement or certain related documents, sell,
transfer, exchange or otherwise dispose of any of the assets
of the trust, unless directed to do so by the indenture
trustee;
- claim any credit on or make any deduction from payments in
respect of the principal of and interest on the notes (other
than amounts withheld under the Internal Revenue Code or
applicable state law) or assert any claim against any present
or former noteholders because of the payment of taxes levied
or assessed upon the trust;
- voluntarily dissolve or liquidate in whole or in part; or
- permit: (i) the validity or effectiveness of the indenture to
be impaired, or permit the lien under the 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 the indenture
except as may be expressly permitted by the indenture; (ii)
any lien, charge, excise, claim, security interest, mortgage
or other encumbrance to be created on or extend to or
otherwise arise upon or burden the assets of the trust or any
part thereof, except as may be created by the terms of the
indenture; or (iii) the lien of the indenture not to
constitute a valid first priority perfected security interest
in the assets of the trust that secure the notes.
The trust may not engage in any activity other than as specified under
"The Issuer" in this prospectus. The trust will not incur, assume or guarantee
any indebtedness other than indebtedness incurred under the notes and the
indenture.
MODIFICATION OF THE INDENTURE
The trust and the indenture trustee may, without the consent of the
noteholders of any series offered under this prospectus, enter into one or more
supplemental indentures to add provisions to, change in any manner or eliminate
any provision of the indenture, or to change the rights of the noteholders under
the indenture, upon:
- receipt of written confirmation from each rating agency that
the action will not result in a reduction or withdrawal of its
then-existing rating of any outstanding series or class; and
- delivery to the owner trustee and the indenture trustee of a
certificate of an authorized officer of the transferor to the
effect that the requirements under the indenture applicable to
the proposed amendments have been met.
The trust and the indenture trustee will not, without prior notice to
each rating agency and without the consent of the noteholders of any affected
series, enter into any supplemental indenture to:
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- change the date of payment of any installment of principal of
or interest on any note or reduce the principal amount of a
note, the note interest rate or the redemption price of the
note or change any place of payment where, or the currency in
which, any note is payable;
- impair the right to institute suit for the enforcement of
specified payment provisions of the indenture;
- reduce the percentage of the aggregate principal amount of the
notes of any series whose consent is required (i) for
execution of any supplemental indenture or (ii) for any waiver
of compliance with specified provisions of the indenture or of
some defaults under the indenture and their consequences
provided in the indenture;
- reduce the percentage of the aggregate outstanding principal
amount of the notes required to direct the indenture trustee
to sell or liquidate the trust assets if the proceeds of the
sale would be insufficient to pay the principal amount and
interest due on those notes;
- decrease the percentage of the aggregate principal amount of
the notes required to amend the sections of the indenture that
specify the percentage of the principal amount of the notes of
a series necessary to amend the indenture or other related
agreements;
- modify any provisions of the indenture regarding the voting of
notes held by the trust, any other party obligated on the
notes, the seller or any of its affiliates; or
- permit the creation of any lien superior or equal to the lien
of the indenture with respect to any of the collateral for any
notes or, except as otherwise permitted or contemplated in the
indenture, terminate the lien of the indenture on the
collateral or deprive any noteholder of the security provided
by the lien of the indenture.
The trust and the indenture trustee may otherwise, with prior notice to
each rating agency and with the consent of noteholders holding more than 50% of
the then-outstanding principal amount of the notes of each adversely affected
series, enter into one or more supplemental indentures to add provisions to,
change in any manner or eliminate any provision of the indenture, or to change
the rights of the noteholders under the indenture.
ANNUAL COMPLIANCE STATEMENT
The trust will be required to present to the indenture trustee each
year a written statement as to the performance of its obligations under the
indenture.
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INDENTURE TRUSTEE'S ANNUAL REPORT
The indenture trustee will be required to mail to the noteholders each
year a brief report relating to its eligibility and qualification to continue as
indenture trustee under the indenture, the property and funds physically held by
the indenture trustee and any action it took that materially affects the notes
and that has not been previously reported.
LIST OF NOTEHOLDERS
Upon application of noteholders of record holding, in the aggregate,
not less than 10% of the then-outstanding principal amount of notes of any
series or all series, the indenture trustee will, having been adequately
indemnified by those noteholders, within 5 business days of the request, afford
those noteholders access during business hours to the current list of registered
noteholders of that series or all series, as applicable, for purposes of
communicating with other noteholders with respect to their rights under the
indenture or any indenture supplement or the notes. The indenture trustee may
elect not to allow the requesting noteholders access to the list of noteholders
if it agrees to mail the requested communication or proxy, on behalf and at the
expense of the requesting noteholders, to all noteholders of record.
SATISFACTION AND DISCHARGE OF INDENTURE
The indenture will be discharged with respect to the notes upon the
delivery to the indenture trustee for cancellation of all the notes or, with
specific limitations, upon deposit with the indenture trustee of funds
sufficient for the payment in full of all the notes.
THE INDENTURE TRUSTEE
The indenture trustee will be named in the accompanying prospectus
supplement. The indenture trustee may transact business with the servicer, the
transferor or any series enhancer or their affiliates with the same rights as if
it were not the indenture trustee under the indenture. The indenture trustee may
become the owner or pledgee of notes. In addition, for purposes of meeting the
legal requirements of certain local jurisdictions, the indenture trustee will
have the power to appoint a co-trustee or separate trustees of all or any part
of the trust. In the event of such appointment, all rights, powers, duties and
obligations conferred or imposed upon the indenture trustee by the indenture
will be conferred or imposed upon the indenture trustee and the separate
indenture trustee or co-trustee jointly. However, in any jurisdiction in which
the indenture trustee is incompetent or unqualified to perform certain acts, all
rights, powers, duties and obligations will be conferred or imposed upon the
separate indenture trustee or co-trustee. In this event, the separate indenture
trustee or co-trustee will exercise and perform the rights, powers, duties and
obligations solely at the direction of the indenture trustee.
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The indenture trustee may resign at any time, in which event your
administrator will appoint a successor indenture trustee for your series. The
administrator may also remove the indenture trustee if it ceases to be eligible
to continue as an indenture trustee under the indenture , if the indenture
trustee becomes insolvent or otherwise becomes legally unable to act as
indenture trustee. The administrator will then be obligated to appoint a
successor indenture trustee for your series. If an event of default occurs under
the indenture and the accompanying prospectus supplement provides that a given
series or class of notes is subordinated to one or more other series or classes
of notes, under the Trust Indenture Act of 1939, the indenture trustee may be
deemed to have a conflict of interest and be required to resign as indenture
trustee for one of more of those series or classes of notes. In that case, a
successor indenture trustee will be appointed for one or more of those classes
of notes. The right of the senior noteholders to consent to or direct actions by
the indenture trustee may be in conflict with the interests of the subordinated
noteholders. Any resignation or removal of the indenture trustee and appointment
of a successor indenture trustee for any series of notes will not become
effective until the successor indenture trustee accepts its appointment for your
series.
CERTAIN MATTERS REGARDING THE ADMINISTRATOR
The administrator will, to the extent provided in the administration
agreement, provide the notices and perform on behalf of the trust other
administrative obligations required by the indenture.
CREDIT ENHANCEMENT
GENERAL
For any series, credit enhancement may be provided for one or more of
its classes. Credit enhancement for a series is called "SERIES ENHANCEMENT."
Series enhancement may be in the form of the subordination of one or more
classes of the notes of that series, a letter of credit, the establishment of a
cash collateral guaranty or account, a surety bond, an insurance policy, a
spread account, a reserve account, the use of cross support features, an
interest rate swap agreement, interest rate cap agreement, currency exchange
agreement or other derivatives agreement, or another method of series
enhancement described in the accompanying prospectus supplement, or any
combination of these. If so specified in the accompanying prospectus supplement,
any form of series enhancement may be structured so as to be drawn upon by more
than one class to the extent described in that accompanying prospectus
supplement.
Unless otherwise specified in the accompanying prospectus supplement
for a series, the series enhancement will not provide protection against all
risks of loss and will not guarantee repayment of the entire principal balance
of the notes and interest thereon. If losses occur which exceed the amount
covered by the series enhancement or which are not covered by the series
enhancement, noteholders will bear their allocable share of deficiencies.
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If series enhancement is provided with respect to a series, the
accompanying prospectus supplement will include a description of:
- the amount payable under that series enhancement;
- any conditions to payment not described here;
- the conditions, if any, under which the amount payable under
that series enhancement may be reduced and under which that
series enhancement may be terminated or replaced; and
- any material provision of any agreement relating to that
series enhancement.
Additionally, the accompanying prospectus supplement may set forth certain
information with respect to any provider of series enhancement, including:
- a brief description of its principal business activities;
- its principal place of business, place of incorporation and
the jurisdiction under which it is chartered or licensed to do
business;
- if applicable, the identity of regulatory agencies which
exercise primary jurisdiction over the conduct of its
business; and
- its total assets, and its stockholders' or policy holders'
surplus, if applicable, and other appropriate financial
information as of the date specified in the prospectus
supplement.
The provider of third party series enhancement is called the "SERIES
ENHANCER." If specified in the accompanying prospectus supplement, series
enhancement for a series may be available to pay principal of the notes of that
series following the occurrence of certain pay out events for that series. In
this event, the series enhancer will have an interest in certain cash flows in
respect of the receivables to the extent described in that prospectus
supplement. This interest is called the "ENHANCEMENT INVESTED AMOUNT."
SUBORDINATION
If specified in the accompanying prospectus supplement, one or more
classes of notes of any series will be subordinated as described in the
accompanying prospectus supplement to the extent necessary to fund payments for
the more senior classes of notes. The rights of the holders of these
subordinated notes to receive payments of principal and/or interest on any
payment date for that series will be subordinate in right and priority to the
rights of the holders of senior notes, but only to the extent set forth in the
accompanying prospectus supplement. The amount of subordination will
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decrease whenever certain amounts otherwise payable to the holders of
subordinated notes are paid to the holders of senior notes. If specified in the
accompanying prospectus supplement, subordination may apply only in the event of
certain types of losses not covered by other series enhancement.
The accompanying prospectus supplement will also set forth information
concerning:
- the amount of subordination of a class or classes of
subordinated notes in a series;
- the circumstances in which that subordination will be
applicable;
- the manner, if any, in which the amount of subordination will
decrease over time; and
- the conditions under which amounts available from payments
that would otherwise be made to holders of those subordinated
notes will be distributed to holders of senior notes.
If collections of receivables otherwise distributable to holders of a
subordinated class of a series will be used as series enhancement for a class of
another series, the accompanying prospectus supplement will specify the manner
and conditions for applying that cross-support feature.
LETTER OF CREDIT
If specified in the accompanying prospectus supplement, series
enhancement for a series or one or more of the classes of a series will be
provided by one or more letters of credit. A letter of credit may provide
limited protection against certain losses in addition to or in lieu of other
series enhancement. The series enhancer in this case, the issuer of the letter
of credit, called the "L/C BANK," will be obligated to honor demands under that
letter of credit, to the extent of the amount available, to provide funds under
the circumstances and subject to any conditions as are specified in the
accompanying prospectus supplement.
The maximum liability of an L/C bank under its letter of credit will
generally be an amount equal to a percentage of the initial Invested Amount of a
series or a class of that series. This percentage will be specified in the
accompanying prospectus supplement. The amount available under a letter of
credit will be reduced to the extent of its unreimbursed payments. The maximum
amount available at any time to be paid under a letter of credit will be set
forth in the accompanying prospectus supplement.
CASH COLLATERAL GUARANTY OR ACCOUNT
If specified in the accompanying prospectus supplement, series
enhancement for a series or one or more of the classes of a series will be
provided by a guaranty, called the "CASH COLLATERAL GUARANTY," secured by the
deposit of cash or certain permitted investments in an account, called the "CASH
COLLATERAL ACCOUNT," reserved for the beneficiaries of the cash collateral
guaranty or by a cash
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collateral account alone. The amount available under the cash collateral
guaranty or the cash collateral account will be the lesser of amounts on deposit
in the cash collateral account and an amount specified in the accompanying
prospectus supplement. The accompanying prospectus supplement will set forth the
circumstances under which payments are made to beneficiaries of the cash
collateral guaranty from the cash collateral account or from the cash collateral
account directly. Any guaranty will be a guaranty of payment on the underlying
receivables, not a guaranty of payment on the notes.
COLLATERAL INTEREST
If specified in the accompanying prospectus supplement, series
enhancement for a series of notes or one or more of the classes of a series may
be provided initially by a subordinated interest in the trust, called the
"COLLATERAL INTEREST," in an amount initially equal to a percentage of the
initial Invested Amount of the series. The collateral interest may be
certificated or uncertificated. This percentage will be specified in the
accompanying prospectus supplement.
SURETY BOND OR INSURANCE POLICY
If specified in the accompanying prospectus supplement, insurance with
respect to a series or one or more of the classes of a series will be provided
by one or more insurance companies. The insurance will guarantee, with respect
to one or more classes of the series, payments of interest or principal in the
manner and amount specified in the accompanying prospectus supplement.
If specified in the accompanying prospectus supplement, a surety bond
will be purchased for the benefit of the holders of a series or one or more
classes of that series to assure payments of interest or principal for that
series or class of notes in the manner and amount specified in the accompanying
prospectus supplement.
SPREAD ACCOUNT
If specified in the accompanying prospectus supplement, series
enhancement for a series or one or more of the classes of a series will be
provided by the periodic deposit of certain available excess cash flow from the
trust assets into an account, called the "SPREAD ACCOUNT," intended to assist
with subsequent payment of interest and principal on the notes of that class or
series in the manner specified in the accompanying prospectus supplement.
RESERVE ACCOUNT
If so specified in the accompanying prospectus supplement, series
enhancement for a series or one or more of the classes of a series or support
for any related enhancement will be provided by the establishment of an account,
called the "RESERVE ACCOUNT." The reserve account may be funded, to the extent
provided in the accompanying prospectus supplement, by an initial cash deposit,
the retention
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of certain periodic payments of principal or interest or both otherwise payable
to one or more classes of notes, including the subordinated notes, or the
provision of a letter of credit, guarantee, insurance policy or other form of
series enhancement or any combination of these arrangements. The reserve account
will be established to assist with the subsequent payment of principal or
interest on the notes of that series or the related class or any other amount
owing on any related series enhancement in the manner provided in the
accompanying prospectus supplement.
INTEREST RATE SWAP AGREEMENTS AND INTEREST RATE CAP AGREEMENTS
If so specified in the accompanying prospectus supplement, the
indenture trustee, on behalf of the trust, or the transferor, seller or other
party may enter into one or more interest rate swap agreements, interest rate
floor and/or cap agreements, currency exchange agreements or other derivatives
securities agreements for the benefit of a class or series, the terms of which
will be specified in the accompanying prospectus supplement.
DESCRIPTION OF THE PURCHASE AGREEMENT
Following is a summary of the material terms of the receivables
purchase agreement entered into by the bank and ABRC. The summary is qualified
in its entirety by reference to the receivables purchase agreement. A form of
this agreement is filed as an exhibit to the registration statement which
contains this prospectus. Any receivables purchase agreement entered into by an
additional seller or an additional transferor will contain substantially similar
provisions as those discussed here. In addition, the bank and the owner trustee
have entered, and each seller that is a bank and that is not a transferor will
enter, into a back-up security agreement under which the bank or other seller,
as applicable, has granted directly to the indenture trustee a security interest
in the receivables.
Sale of Receivables. The receivables transferred to the trust by ABRC
were acquired by ABRC from the bank under a receivables purchase agreement. In
connection with the sale of the receivables to ABRC, the bank has filed
appropriate UCC financing statements to evidence that sale and perfect ABRC's
right, title and interest in those receivables. In addition, the bank has
indicated in its computer files that the receivables have been sold to ABRC by
the bank.
Under the receivables purchase agreement, the bank sold and, in the
future, may sell to ABRC all of its right, title and interest in and to (i) all
of the receivables existing in the initial accounts and in additional accounts
as of the applicable cut-off date and (ii) recoveries allocable to those
receivables and certain other property.
Representations and Warranties. In the receivables purchase agreement,
the seller represents and warrants to the transferor to the effect that, among
other things, as of the date of the receivables
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purchase agreement and, with respect to any receivables in any designated
additional accounts, as of the date of designation of those additional accounts,
it is duly organized and in good standing and has the authority to consummate
the transactions contemplated by the receivables purchase agreement. In the
receivables purchase agreement, the seller additionally represents and warrants
that as of the initial cut-off date and, with respect to any receivables in any
designated additional accounts, as of each additional cut-off date, each
receivable transferred thereunder is an eligible receivable. In the event of a
breach of any representation or warranty set forth in the receivables purchase
agreement which results in the requirement that the transferor accept
re-transfer of an ineligible receivable under the transfer and servicing
agreement, then the seller will repurchase that ineligible receivable from the
transferor on the date of the re-transfer. The purchase price for the ineligible
receivables will be the principal amount of those receivables plus applicable
finance charges.
The seller also represents and warrants to the transferor in the
receivables purchase agreement that, among other things, as of the date of the
receivables purchase agreement and, with respect to any receivables in any
designated additional accounts, as of each additional cut-off date (a) the
receivables purchase agreement constitutes a valid and binding obligation of the
seller and (b) the receivables purchase agreement constitutes a valid sale to
the transferor of all right, title and interest of the seller in and to the
receivables existing in the accounts as of the initial cut-off date and, with
respect to any receivables in any designated additional accounts, as of each
additional cut-off date and in the proceeds thereof. If the breach of any of the
representations or warranties described in this paragraph results in the
obligation of the transferor under the transfer and servicing agreement to
accept re-transfer of the receivables, the seller will repurchase the
receivables re-transferred to the transferor for an amount of cash at least
equal to the amount of cash the transferor is required to deposit under the
transfer and servicing agreement in connection with the re-transfer.
Amendments. The receivables purchase agreement may be amended by the
seller or the transferor without the consent of the holders of any notes offered
under this prospectus and the accompanying prospectus supplement. No amendment,
however, may have a materially adverse effect on the interest of the noteholders
and no amendment may change, modify, delete or add any other obligation of the
seller or the transferor unless written confirmation is received from each
rating agency that the amendment will not result in a reduction or withdrawal of
its then-existing rating of any outstanding series or class.
Termination. The receivables purchase agreement will terminate
immediately after the trust terminates. In addition, if a receiver or
conservator is appointed for any seller or transferor that is a bank or any
seller or transferor that is not a bank becomes a debtor in a bankruptcy case or
certain other liquidation, bankruptcy, insolvency or similar events occur, the
seller will immediately cease to sell receivables to the transferor and will
promptly give notice of that event to the transferor and the indenture trustee,
unless the bankruptcy court, receiver or conservator instructs otherwise.
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NOTE RATINGS
Any rating of the notes by a rating agency will indicate:
- its view on the likelihood that noteholders will receive required
interest and principal payments; and
- its evaluation of the receivables and the availability of any
series enhancement for the notes.
Among the things a rating will not indicate are:
- the likelihood that interest or principal payments will be paid on
a scheduled date;
- the likelihood that a pay out event will occur;
- the likelihood that a U.S. withholding tax will be imposed on
non-U.S. noteholders;
- the marketability of the notes;
- the market price of the notes; or
- whether the notes are an appropriate investment for any purchaser.
A rating will not be a recommendation to buy, sell or hold the notes. A
rating may be lowered or withdrawn at any time by a rating agency.
The transferor will request a rating of the notes offered by this
prospectus and the accompanying prospectus supplement from at least one rating
agency. Rating agencies other than those requested could assign a rating to the
notes and, if so assigned, that rating could be lower than any rating assigned
by a rating agency chosen by the transferor. Except as otherwise expressly
stated, any reference in this prospectus or the accompanying prospectus
supplement to a "RATING AGENCY" refers to a rating agency selected by the
transferor to rate the notes of a series or class issued by the trust.
MATERIAL LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
Each seller will represent in the receivables purchase agreement that
its transfer of receivables constitutes a valid sale and assignment of all its
right, title and interest in and to the receivables to the
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transferor. In the transfer and servicing agreement, the transferor will
represent and warrant that its transfer of receivables constitutes a valid sale
and assignment of all of its right, title and interest in and to the
receivables, except for its interest as the holder of the Transferor Beneficial
Interest, or creates in favor of the trust a valid first-priority perfected
security interest in the transferor's rights in the receivables in existence at
the time that the trust is formed or at the time that receivables in additional
accounts are transferred, as the case may be, and a valid first-priority
perfected security interest in the transferor's rights in the receivables
arising in accounts already designated for the trust on and after their
creation, in each case until termination of the trust.
Each seller and transferor will represent that the receivables
attributed to it are either "accounts" or "general intangibles" within the
meaning of the UCC as in effect in the States of New York, Utah and Nevada. To
the extent the receivables constitute accounts, both the sale of the receivables
and the transfer of the receivables as security for an obligation are governed
by Article 9 of the UCC as in effect in the States of New York, Utah and Nevada,
and to the extent that Article 9 is applicable, the filing of appropriate
financing statements is required to perfect the sale of such receivables by a
seller to a transferor, and by a transferor to the trust. Appropriate financing
statements covering the receivables have been or will be filed in Utah and
Nevada.
To the extent the receivables constitute general intangibles and the
transfer of the receivables is deemed to be a transfer as security for an
obligation, the provisions of Article 9 of the UCC relating to the perfection of
the transfer are applicable. If the transfer of receivables constituting general
intangibles is deemed to be a sale, then the UCC is not applicable and no
further action is required to protect the trust's interest from third parties.
Although, to the extent the transfer is deemed to be a sale, the priority of
general intangibles is not as clear as the priority of interests governed by the
UCC, the bank and ABRC believe that it would be inconsistent for a court to
afford the trust less favorable treatment if the transfer of the receivables is
deemed to be a sale than if it were deemed to be a security interest and that a
court should conclude that a sale of receivables consisting of general
intangibles would be deemed to have occurred as of the applicable transfer date.
There are certain limited circumstances under the UCC and applicable
Federal law in which prior or subsequent transferees of receivables coming into
existence after a series closing date could have an interest in those
receivables with priority over the trust's interest. A tax or other government
lien on property of a seller or transferor arising prior to the time a
receivable comes into existence may also have priority over the interest of the
trust in that receivable. Under the receivables purchase agreement, a seller
will warrant to the transferor, and under the transfer and servicing agreement,
a transferor will warrant to the indenture trustee, that it has transferred the
receivables free and clear of the lien of any third party. Furthermore, if the
FDIC were appointed as a receiver or conservator of a seller or transferor that
is a bank, some administrative expenses of the receiver or conservator may have
priority over the interest of the trust in the receivables.
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BORROWER PROTECTION LAWS
Application of federal and state bankruptcy and debtor relief laws
would affect the interests of the holders of notes if the protection provided to
debtors under those laws result in any receivables of the trust being written
off as uncollectible when there are insufficient funds available from
collections of finance charge and administrative receivables and under any
series enhancement.
CLAIMS AND DEFENSES OF CARDHOLDERS AGAINST THE TRUST
The UCC would be applicable to the trust if the trust were deemed to
have acquired a security interest in the receivables. The UCC provides that
unless a cardholder has made an enforceable agreement not to assert defenses or
claims arising out of a transaction, the rights of the trust, as assignee, are
subject to all the terms of the cardholder agreement between the seller and the
cardholder and any defense or claim arising therefrom, to rights of set off and
to any other defense or claim of the cardholder against the seller that accrues
before the cardholder receives notification of the assignment. The UCC also
provides that any cardholder is authorized to continue to pay the seller until
(a) the cardholder receives notification, reasonably identifying the rights
assigned, that the amount due or to become due has been assigned and that
payment is to be made to the indenture trustee or the servicer and (b) if
requested by the cardholder, the indenture trustee or the servicer has furnished
reasonable proof of assignment. No agreement not to assert defenses has been
entered into and no notice of the assignment of the receivable to the trust will
be sent to the cardholders obligated on the accounts in connection with the
transfer of the receivables to the trust.
CERTAIN MATTERS RELATING TO CONSERVATORSHIP, RECEIVERSHIP AND BANKRUPTCY
The receivables purchase agreement, the transfer and servicing
agreement, the indenture and related agreements contemplate a number of
transfers of receivables, including transfers by the seller to the transferor
and transfers by the transferor to the trust.
The seller and the transferor intend to treat the transfers between the
seller and the transferor under the receivables purchase agreement as absolute
conveyances. It is possible that a creditor, trustee, receiver or conservator of
such a party, or such party as debtor-in-possession, may at some time take a
contrary position. The implications of such action are discussed below.
The seller and the transferor intend to treat transfers of receivables
from the transferor to the trust either as an absolute transfer or as the grant
of a first perfected security interest. The implications of characterization of
a transfer as a security interest are also discussed below.
The bank is chartered as a Utah industrial loan corporation and is
regulated and supervised by the FDIC. The FDIC may act as conservator or
receiver for the bank and any other seller or
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transferor that is a bank the deposits of which are issued by the FDIC, if
certain events occur relating to the bank's financial condition or the propriety
of its actions.
To the extent that (i) the applicable receivables purchase agreement
complies with the regulatory requirements of the FDIA, (ii) the security
interest granted under the applicable receivables purchase agreement and back-up
security agreement was perfected before the FDIC is appointed as conservator or
receiver for a seller or transferor that is a bank, and (iii) the security
interest was not taken in contemplation of that seller's or transferor's
insolvency or with the intent to hinder, delay or defraud that seller or
transferor or its creditors, the FDIA provides that the security interest should
be respected. In addition, opinions and policy statements issued by the FDIC
suggest that, because of the manner in which these transactions are structured,
the FDIC would respect the security interest granted by a seller or transferor
that is a bank in the receivables. Nevertheless, if the FDIC were to assert a
contrary position, or were to require the owner trustee or indenture trustee to
go through the administrative claims procedure established by the FDIC in order
to obtain payments on the notes, or were to request a stay of any actions by the
indenture trustee to enforce the applicable receivables purchase agreement or
back-up security agreement against a seller or transferor that is a bank, delays
in payments on outstanding series of notes and possible reductions in the amount
of those payments could occur.
In addition, the FDIC as conservator or receiver for a seller or
transferor that is a bank could repudiate the applicable receivables purchase
agreement and back-up security agreement. The FDIA would limit the damages for
any such repudiation to the trust's "actual direct compensatory damages"
determined as of the date that the FDIC were appointed as conservator or
receiver for that seller or transferor. The FDIC, moreover, could delay its
decision whether to repudiate the applicable receivables purchase agreement and
back-up security agreement for a reasonable period following its appointment as
conservator or receiver for the seller or transferor. Therefore, if the FDIC as
conservator or receiver for a seller or transferor that is a bank were to
repudiate the applicable receivables purchase agreement and back-up security
agreement, the amount payable to you could be lower than the outstanding
principal and accrued interest on the notes, thus resulting in losses to you.
In addition, regardless of the terms of the indenture, the FDIC as
conservator or receiver for a seller or transferor that is a bank may have the
power to prevent the commencement of an early amortization period or to prevent
or limit the early liquidation of the receivables and termination of the trust,
or to require the continued transfer of new principal receivables. Regardless of
the instructions of those authorized to direct the indenture trustee's action,
moreover, the FDIC as conservator or receiver for a seller or transferor that is
a bank may have the power to require the early liquidation of the receivables,
to require the early termination of the trust and the retirement of the notes,
or to prohibit or limit the continued transfer of new principal receivables.
ABRC has been structured so that (i) the filing of a voluntary or
involuntary petition for relief by or against it under the Bankruptcy Code and
(ii) the substantive consolidation of its assets and liabilities with those of a
seller is unlikely. ABRC is a separate, limited purpose corporation, and its
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certificate of incorporation contains limitations on the nature of its business
and restrictions on its ability to commence a voluntary case or proceeding under
the Bankruptcy Code or similar laws without the prior unanimous consent of all
of its directors. In addition, the indenture trustee will covenant in the
indenture that it will not at any time institute against ABRC or any additional
transferor any bankruptcy, insolvency or similar proceedings under the
Bankruptcy Code or similar laws. Nevertheless, if ABRC or any additional
transferor that is not a bank were to become a debtor in a bankruptcy case and
if (a) its bankruptcy trustee or creditor or (b) it, as debtor-in-possession,
were to take the position that the transfer of the receivables by it to the
trust or transferor, as applicable, should be characterized as a pledge of those
receivables, or if the assets and liabilities of ABRC or any additional
transferor that is not a bank were substantively consolidated with those of an
entity in bankruptcy, then delays in payments on the notes and possible
reductions in the amount of those payments could result.
If bankruptcy, insolvency or similar proceedings under the Bankruptcy
Code or similar laws occur with respect to ABRC or any additional transferor
that is not a bank, then ABRC or that additional transferor, as the case may be,
will promptly notify the indenture trustee and a pay out event will occur with
respect to each series. Under the transfer and servicing agreement, newly
created receivables will not be transferred to the trust on and after any such
event. Any principal receivables transferred to the trust prior to the event, as
well as collections on those principal receivables and finance charge and
administrative receivables related to those principal receivables, will continue
to be part of the trust assets and will be applied as specified above in
Description of the Notes --Application of Collections" and in the accompanying
prospectus supplement.
The bankruptcy court, however, may have the power to delay any such
procedure or to require the continued transfer of principal receivables to the
trust.
Application of Federal and state bankruptcy and debtor relief laws
would affect the interests of the noteholders in the receivables, if these laws
result in any receivables being written off as uncollectible.
If a receiver or conservator were appointed for the servicer and no
servicer default other than the insolvency of the servicer exists, the receiver
or conservator may have the power to prevent either the indenture trustee or the
noteholders from appointing a new servicer.
See "Risk Factors--If a receiver or conservator were appointed for a
seller or a transferor that is a bank, or if a seller or a transferor that is
not a bank became a debtor in a bankruptcy case, delays or reductions in payment
of your notes could occur" in this prospectus.
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FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary describes the material United States federal
income tax consequences of the purchase, ownership and disposition of the notes.
Additional federal income tax considerations relevant to a particular series may
be set forth in the accompanying prospectus supplement. The following summary
has been prepared and reviewed by Wolf, Block, Schorr and Solis-Cohen LLP, as
special tax counsel to the issuer ("SPECIAL TAX COUNSEL"). The summary is based
on the Internal Revenue Code of 1986, as amended (the "CODE"), as of the date
hereof, and existing final, temporary and proposed Treasury regulations, revenue
rulings and judicial decisions, all of which are subject to prospective and
retroactive changes. The summary is addressed only to original purchasers of the
notes, deals only with notes held as capital assets within the meaning of
Section 1221 of the Code and, except as specifically set forth below, does not
address tax consequences of holding notes that may be relevant to investors in
light of their own investment circumstances or their special tax situations,
such as certain financial institutions, tax-exempt organizations, life insurance
companies, dealers in securities, non-U.S. persons, or investors holding the
notes as part of a conversion transaction, as part of a hedge or hedging
transaction, or as a position in a straddle for tax purposes. Further, this
discussion does not address alternative minimum tax consequences or any tax
consequences to holders of interests in a noteholder. Special tax counsel is of
the opinion that the following summary of federal income tax consequences is
correct in all material respects. An opinion of special tax counsel, however, is
not binding on the Internal Revenue Service or the courts, and no ruling on any
of the issues discussed below will be sought from the IRS. Moreover, there are
no authorities on similar transactions involving interests issued by an entity
with terms similar to those of the notes described in this prospectus.
Accordingly, we suggest that persons considering the purchase of notes consult
their own tax advisors with regard to the United States federal income tax
consequences of an investment in the notes and the application of United States
federal income tax laws, as well as the laws of any state, local or foreign
taxing jurisdictions, to their particular situations.
TAX CHARACTERIZATION OF THE TRUST AND THE NOTES
Treatment of the Trust as an Entity Not Subject to Tax. Special tax
counsel is of the opinion that, although no transaction closely comparable to
that contemplated herein has been the subject of any Treasury regulation,
revenue ruling or judicial decision, the trust will not be classified as an
association or as a publicly traded partnership taxable as a corporation for
federal income tax purposes. As a result, the trust will not be subject to
federal income tax. However, as discussed above, this opinion is not binding on
the IRS and no assurance can be given that this characterization will prevail.
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The precise tax characterization of the trust for federal income tax
purposes is not certain. It might be viewed as merely holding assets on behalf
of the transferor as collateral for notes issued by the transferor. On the other
hand, the trust could be viewed as a separate entity for tax purposes issuing
its own notes. This distinction, however, should not have a significant tax
effect on noteholders except as stated below under "Possible Alternative
Characterizations."
Treatment of the Notes as Debt. Special tax counsel is of the opinion
that, although no transaction closely comparable to that contemplated herein has
been the subject of any Treasury regulation, revenue ruling or judicial
decision, the notes will be characterized as debt for United States federal
income tax purposes. Additionally, the trust will agree by entering into the
indenture, and the noteholders will agree by their purchase and holding of
notes, to treat the notes as debt for United States federal income tax purposes.
Possible Alternative Characterizations. If, contrary to the opinion of
special tax counsel, the IRS successfully asserted that a series or class of
notes did not represent debt for United States federal income tax purposes,
those notes might be treated as equity interests in the trust or some other
entity for such purposes. If so treated, investors could be treated for such
purposes either as partners in a partnership or, alternatively, as shareholders
in a taxable corporation. Treatment of a noteholder as a partner could have
adverse tax consequences to certain holders; for example, income to foreign
persons generally would be subject to United States tax and United States tax
return filing and withholding requirements, and individual holders might be
subject to certain limitations on their ability to deduct their share of
partnership expenses. If notes instead were treated as corporate stock, the
taxable corporation would not be able to reduce its taxable income by deductions
for interest expense on notes recharacterized as equity, and any increase in the
corporate tax imposed with respect to such corporation could materially reduce
cash available to make payments on the notes; further, noteholders might not be
entitled to any dividends received deduction in respect of payments of interest
on notes treated as dividends. In addition, even if the notes are treated as
debt, the trust is also able to issue other securities which may be treated as
debt or as equity interests in the trust. The issuance of such securities
requires the delivery of a new opinion of counsel generally to the effect that
such issuance will not cause the trust to become taxable as a separate entity
for federal income tax purposes; however, any such new opinion would not bind
the IRS, and the trust could become taxable as a corporation as a result of such
issuance, potentially diminishing cash available to make payments on the notes.
Prospective investors should consult with their own tax advisors with regard to
the consequences of each such possible alternative characterization to them in
their particular circumstances; the following discussion assumes that the
characterization of the notes as debt is correct.
CONSEQUENCES TO HOLDERS OF THE NOTES
Interest and Original Issue Discount. In general, stated interest on a
note will be includable in gross income as it accrues or is received in
accordance with a noteholder's usual method of tax accounting. If a class of
notes is issued with original issue discount ("OID"), the provisions of
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Sections 1271 through 1273 and 1275 of the Code will apply to those notes. Under
those provisions, a holder of such a note (including a cash basis holder)
generally would be required to include the OID on a note in income for federal
income tax purposes on a constant yield basis, resulting in the inclusion of OID
in income in advance of the receipt of cash attributable to that income. In
general, a note will be treated as having OID to the extent that its "stated
redemption price" exceeds its "issue price," if such excess equals or exceeds
0.25 percent multiplied by the weighted average life of the note (determined by
taking into account the number of complete years following issuance until
payment is made for each partial principal payment). Under Section 1272(a) (6)
of the Code, special provisions apply to debt instruments on which payments may
be accelerated due to prepayments of other obligations securing those debt
instruments. However, no regulations have been issued interpreting those
provisions, and the manner in which those provisions would apply to the notes is
unclear, but the application of Section 1272(a) (6) could affect the rate of
accrual of OID and could have other consequences to holders of the notes.
Additionally, the IRS could take the position based on Treasury regulations that
none of the interest payable on a note is "unconditionally payable" and hence
that all of such interest should be included in the note's stated redemption
price at maturity. If sustained, such treatment should not significantly affect
tax liabilities for most holders of the notes, but prospective noteholders
should consult their own tax advisors concerning the impact to them in their
particular circumstances. The trust intends to take the position that interest
on the notes constitutes "qualified stated interest" and that the above
consequences do not apply.
Market Discount. A holder of a note who purchases an interest in a note
at a discount that exceeds any OID not previously includable in income may be
subject to the "market discount" rules of Sections 1276 through 1278 of the
Code. These rules provide, in part, that gain on the sale or other disposition
of a note and partial principal payments on a note are treated as ordinary
income to the extent of accrued market discount. The market discount rules also
provide for deferral of interest deductions with respect to debt incurred to
purchase or carry a note that has market discount.
Market Premium. A holder of a note who purchases an interest in a note
at a premium may elect to amortize the premium against interest income over the
remaining term of the note in accordance with the provisions of Section 171 of
the Code.
Disposition of the Notes. Upon the sale, exchange or retirement of a
note, the holder of the note generally will recognize taxable gain or loss in an
amount equal to the difference between the amount realized on the disposition
(other than amounts attributable to accrued interest) and the holder's adjusted
tax basis in the note. The holder's adjusted tax basis in the note generally
will equal the cost of the note to such holder, increased by any market or
original issue discount previously included in income by such holder with
respect to the note, and decreased by the amount of any bond premium previously
amortized and any payments of principal or OID previously received by such
holder with respect to such note. Any such gain or loss generally will be
capital gain or loss, except to the extent of accrued market discount not
previously included in income, and will be long-term capital gain or loss if at
the time of sale the note has been held for more than one year.
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Foreign Holders. Under United States federal income tax law now in
effect, payments of interest by the trust to a holder of a note who, as to the
United States, is a nonresident alien individual or a foreign corporation (a
"foreign person") generally will be considered "portfolio interest," and
generally will not be subject to United States federal income tax and
withholding tax, provided the interest is not effectively connected with the
conduct of a trade or business within the United States by the foreign person
and the foreign person (i) is not for United States federal income tax purposes
(a) actually or constructively a "10 percent shareholder" of the transferor or
the trust, (b) a "controlled foreign corporation" with respect to which the
transferor or the trust is a "related person" within the meaning of the Code, or
(c) a bank extending credit under a loan agreement entered into in the ordinary
course of its trade or business, and (ii) provides the person who is otherwise
required to withhold United States tax with respect to the notes with an
appropriate statement (on IRS Form W-8 or a substitute form), signed under
penalties of perjury, certifying that the beneficial owner of the note is a
foreign person and providing the foreign person's name and address. If a note is
held through a securities clearing organization or certain other financial
institutions (as is expected to be the case unless definitive notes are issued),
the organization or institution may provide the relevant signed statement
generally to the withholding agent; in that case, however, the signed statement
generally must be accompanied by an IRS Form W-8 or substitute form provided by
the foreign person that owns the note. If such interest is not portfolio
interest, then it will be subject to United States federal income and
withholding tax at a rate of 30%, unless reduced or eliminated under an
applicable tax treaty or such interest is effectively connected with the conduct
of a trade or business within the United States and, in either case, the
appropriate statement has been provided. The U.S. Treasury Department recently
issued final Treasury regulations which will revise some of the foregoing
procedures whereby a foreign person may establish an exemption from withholding
generally beginning January 1, 2001; foreign persons should consult their tax
advisors concerning the impact to them, if any, of such revised procedures.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a note by a foreign person will be exempt from United
States federal income tax and withholding tax, provided that (i) such gain is
not effectively connected with the conduct of a trade or business in the United
States by the foreign person, and (ii) in the case of an individual foreign
person, such individual is not present in the United States for 183 days or more
in the taxable year.
Backup Withholding. Payments of principal and interest, as well as
payments of proceeds from the sale, retirement or disposition of a note, may be
subject to "backup withholding" tax under Section 3406 of the Code at a rate of
31% if a recipient of such payments fails to furnish to the payor certain
identifying information. Any amounts deducted and withheld would be allowed as a
credit against such recipient's United States federal income tax, provided
appropriate proof is provided under rules established by the IRS. Furthermore,
certain penalties may be imposed by the IRS on a recipient of payments that is
required to supply information but that does not do so in the proper manner.
Backup withholding will not apply with respect to payments made to certain
exempt recipients, such as corporations and financial institutions. Holders of
the notes should consult their
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tax advisors regarding their qualification for exemption from backup withholding
and the procedure for obtaining such an exemption.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY, MAY NOT BE APPLICABLE DEPENDING UPON A
HOLDER'S PARTICULAR TAX SITUATION, AND DOES NOT PURPORT TO ADDRESS THE ISSUES
DESCRIBED WITH THE DEGREE OF SPECIFICITY THAT WOULD BE PROVIDED BY A TAXPAYER'S
OWN TAX ADVISOR. WE SUGGEST THAT PROSPECTIVE PURCHASERS CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP
AND DISPOSITION OF THE NOTES AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL TAX
LAWS.
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STATE AND LOCAL TAX CONSEQUENCES
The discussion above does not address the taxation of the trust or
the tax consequences of the purchase, ownership or disposition of an interest in
the notes under any state or local tax law. We suggest that each investor
consult its own tax adviser regarding state and local tax consequences.
ERISA CONSIDERATIONS
Subject to the considerations described below and in the accompanying
prospectus supplement, the notes may be purchased by, on behalf of, or with
"plan assets" of, any employee benefit or other plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code (each is called a "PLAN"). Any plan fiduciary that
proposes to cause a plan to acquire any of the notes should consult with its
counsel concerning the potential consequences under ERISA and the Code of the
plan's acquisition and ownership of notes. See "ERISA Considerations" in the
accompanying prospectus supplement.
Section 406 of ERISA and Section 4975 of the Code prohibit plans from
engaging in certain transactions involving plan assets with persons that are
"parties in interest" under ERISA or "disqualified persons" under the Code
(referred to together as "PARTIES IN INTEREST") with respect to the plan. A
violation of these "prohibited transaction" rules may generate excise tax and
other liabilities under ERISA and Section 4975 of the Code for these persons,
unless a statutory, regulatory or administrative exemption is available.
Certain employee benefit plans, such as governmental plans (as defined
in Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33)
of ERISA), are not subject to the requirements of ERISA or Section 4975 of the
Code. Accordingly, assets of these plans may be invested in the notes without
regard to the ERISA considerations described herein, subject to the provisions
of other applicable federal and state law. However, any such plan that is
qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code
is subject to the prohibited transaction rules set forth in Section 503 of the
Code.
We suggest that fiduciaries or other persons contemplating purchasing
the notes on behalf of or with plan assets of any plan consult their own counsel
regarding whether the trust assets represented by the notes would be considered
plan assets, the consequences that would apply if the trust's assets were
considered plan assets, and the availability of exemptive relief from the
prohibited transaction rules.
Finally, plan fiduciaries and other persons using plan assets to
purchase notes should consider the fiduciary standards under ERISA or other
applicable law in the context of the plan's particular circumstances before
authorizing an investment of a portion of the plan's assets in the
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notes. Among other factors, plan fiduciaries and other plan investors should
consider whether the investment (i) satisfies the diversification requirement of
ERISA or other applicable law, (ii) is in accordance with the plan's governing
instruments, and (iii) is prudent in light of the "Risk Factors" and other
factors discussed in this prospectus and the accompanying prospectus supplement.
PLAN OF DISTRIBUTION
The transferor and the seller and one or more underwriters named in the
prospectus supplement will enter into an underwriting agreement for each series
of notes. Under each underwriting agreement, the transferor will cause the notes
to be sold by the trust to the underwriters named in that underwriting agreement
and in the accompanying prospectus supplement. Each of those underwriters will
severally agree to purchase from the trust the principal balance of notes set
forth in that underwriting agreement and in the accompanying prospectus
supplement (subject to proportional adjustment on the terms and conditions set
forth in the underwriting agreement in the event of an increase or decrease in
the aggregate balance of notes offered by this prospectus and by the
accompanying prospectus supplement).
In each underwriting agreement, the underwriters will agree, subject to
the terms and conditions set forth in that underwriting agreement, to purchase
all the notes offered by this prospectus and by the accompanying prospectus
supplement if any of those notes are purchased. In the event of a default by any
underwriter, each underwriting agreement will provide that, in certain
circumstances, purchase commitments of the nondefaulting underwriters may be
increased or the underwriting agreement may be terminated.
Each prospectus supplement will set forth the price at which each
series of notes or class being offered initially will be offered to the public
and any concessions that may be offered to certain dealers participating in the
offering of those notes. After the initial public offering, the public offering
price and such concessions may be changed.
Each underwriting agreement will provide that the transferor and the
seller will indemnify the related underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
The place and time of delivery for any series of notes for which this
prospectus is delivered will be set forth in the accompanying prospectus
supplement.
LEGAL MATTERS
Legal matters relating to the issuance of the notes will be passed upon
for the transferor and the seller by Wolf, Block, Schorr and Solis-Cohen LLP,
New York, New York, special counsel to the transferor and the seller. Legal
matters relating to the federal tax consequences of the issuance of the
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notes will be passed upon for the transferor and the seller by Wolf, Block,
Schorr and Solis-Cohen LLP, New York, New York.
REPORTS TO NOTEHOLDERS
The servicer will prepare monthly and annual reports that will contain
information about the trust. The financial information contained in the reports
will not be prepared in accordance with generally accepted accounting
principles. Unless and until definitive notes are issued, the reports will be
sent to Cede & Co. which is the nominee of DTC and the registered holder of the
notes. No financial reports will be sent to you. See "Description of the
Notes--Book-Entry Registration,"--"Reports to Noteholders" and "--Evidence as to
Compliance" in this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
ABRC filed a registration statement relating to the notes with the
SEC. This prospectus is part of the registration statement, but the registration
statement includes additional information.
The servicer will file with the SEC all required annual, monthly and
special SEC reports and other information about the trust.
You may read and copy any reports, statements or other information the
trust and ABRC files at the SEC's public reference room in Washington, D.C. You
can request copies of these documents, upon payment of a duplicating fee, by
writing to the SEC. Please call the SEC at (800) SEC-0330 for further
information on the operation of the public reference rooms. The trust's and
ABRC's SEC filings are also available to the public on the SEC Internet site
http://www.sec.gov.
The SEC allows the trust to "incorporate by reference" information the
trust and ABRC files with it, which means that the trust can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information that the trust and ABRC files later with the SEC will automatically
update the information in this prospectus. In all cases, you should rely on the
later information over different information included in this prospectus or the
accompanying prospectus supplement. The trust and ABRC incorporate by reference
any future annual, monthly and special SEC reports and proxy materials filed by
or on behalf of the trust and ABRC until the trust terminates its offering of
the notes. The documents incorporated by reference will be filed with the SEC
under the name of Advanta Business Card Master Trust and Advanta Business
Receivables Corp.
As a recipient of this prospectus, you may request a copy of any
document the trust incorporates by reference, except exhibits to the documents
(unless the exhibits are specifically
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incorporated by reference), at no cost, by writing or calling the servicer at:
11850 South Election Road, Draper, Utah 84020, Attention: Treasury Department,
Telephone: (801) 523-0858.
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GLOSSARY OF TERMS FOR PROSPECTUS
"ABRC" means Advanta Business Receivables Corp., a Nevada corporation.
"ADDITION DATE " means the date of assignment of each additional account to the
trust.
"ADDITIONAL ISSUANCE " means each issuance of additional notes of an outstanding
series of NOTES.
"ADMINISTRATOR " means the bank, in its capacity as administrator under the
administration agreement, dated as of __________, 2000, between the
administrator and the trust.
"ADVANTA BUSINESS CARD PORTFOLIO " means the portfolio of credit card accounts
originated by the bank.
"ADVERSE EFFECT " means, with respect to any action, that the action will (a)
materially and adversely affect the amount or timing of payments made to the
noteholders of any series or class or (b) result in the occurrence of a Pay Out
Event or an Event of Default.
"BANK" means Advanta Bank Corp., a Utah industrial loan corporation.
"CASH COLLATERAL ACCOUNT " means either an account securing a cash collateral
guaranty into which cash or permitted investments are held or an account that is
series enhancement for a series of notes.
"CASH COLLATERAL GUARANTY " means series enhancement in the form of a guaranty
secured by the deposit of cash or certain permitted investments for a series or
one or more classes
.
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"CODE" means the Internal Revenue Code of 1986.
"COLLECTION ACCOUNT" means an account established and maintained by the servicer
in the name of the indenture trustee, for the benefit of noteholders of all
series, into which the servicer will deposit collections on the receivables and
other specified amounts. The collection account will be a qualified account.
"CONTROLLED AMORTIZATION PERIOD" means the period during which principal is paid
on the notes in fixed amounts at scheduled intervals.
"CONTROLLED ACCUMULATION PERIOD" means the period during which principal is
accumulated in specified amounts per month and paid on an Expected Principal
Payment Date.
"DEFAULTED RECEIVABLES" means principal receivables which in a monthly period
are written off as uncollectible in accordance with the servicer's credit card
guidelines and customary and usual servicing procedures for servicing revolving
credit card receivables comparable to the receivables in the trust.
"DEFINITIVE NOTES" means notes that are issued in fully registered, certificated
form.
"DEPOSITARIES" means DTC, Clearstream Banking or Euroclear.
"DETERMINATION DATE" means the third business day preceding the fifteenth day of
each calendar month, unless otherwise specified in the prospectus supplement for
a series of notes.
"EARLY ACCUMULATION PERIOD" means the period during which principal on the
receivables is accumulated each month based on the amount of principal
receivables collected following a pay out event.
"EARLY AMORTIZATION PERIOD" means the period during which principal is paid each
month based on the amount of principal receivables collected following a pay out
event.
"ELIGIBLE ACCOUNT" means, for each series of notes, as of the cut-off date, each
account originated by the seller
- which was in existence and maintained by the seller or other
account owner, as applicable;
- which is payable in United States dollars;
- the obligor of which has provided, as his or her most recent
billing address, an address located in the United States or
its territories, possessions or military bases;
- which, except as provided below, has an obligor who has not
been identified by the servicer in its computer files as
currently being involved in a bankruptcy proceeding;
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- which has not been classified as stolen or lost; which has an
obligor who has not been identified by the servicer as an
employee or affiliate of the seller;
- which does not have any receivables that are defaulted
receivables; - which does not have any receivables that have
been identified by the servicer or the relevant obligor as
having been incurred as a result of fraudulent use of any
credit card; and
- which, except as provided below, does not have any receivables
that are more than 180 days past due from the date of the
initial billing statement.
Eligible accounts may include accounts, the receivables of which have been
charged off, or with respect to which the servicer believes the related obligor
is bankrupt, in each case as of the applicable cut-off date, if the balance of
all receivables included in those accounts is reflected on the books and records
of the transferor as "zero" and charging privileges on these accounts have
been canceled in accordance with the customary policies and procedures, as
amended from time to time, of the seller.
"ELIGIBLE INSTITUTION" means either:
- - a depository institution, including the owner trustee or the indenture
trustee
- that is organized under the laws of the United States or any
one of the 50 states or the District of Columbia (or any
domestic branch of a foreign bank); and
- which at all times (i) has FDIC deposit insurance and (ii) has
either a long-term unsecured debt rating or a certificate of
deposit rating acceptable to each rating agency rating a
series or class of notes; or
- - any other institution acceptable to each rating agency rating a series
or class of notes.
"ELIGIBLE INVESTMENTS" means securities, instruments, security entitlements or
other investment property which evidence:
- - direct obligations of, or obligations fully guaranteed as to timely
payment of principal and interest by, the United States of America;
- - 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 the District of
Columbia (or domestic branches of foreign banks) and subject to
supervision and examination by federal or state banking or depository
institution authorities. however, at the time of the trust's investment
or contractual commitment to invest, the short-term debt rating of that
depository institution or trust company must be in the highest
investment category of at least one of the rating agencies rating a
class of notes;
- - commercial paper or other short-term obligations having original or
remaining maturities of no more than 30 days, and having, at the time
of the trust's investment or contractual commitment to invest, a rating
in the highest rating category of at least one of the rating agencies
rating a class of notes;
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- - demand deposits, time deposits and certificates of deposit which are
fully insured by the FDIC having, at the time of the trust's
investment, a rating in the highest rating category of at least one of
the rating agencies rating a class of notes;
- - notes or bankers' acceptances (having original maturities of no more
than 365 days) issued by any depository institution or trust company
referred to in the second clause above;
- - money market funds having, at the time of the trust's investment, a
rating in the highest rating category of at least one of the rating
agencies rating a class of notes (including funds for which the
indenture trustee or any of its affiliates is investment manager or
advisor);
- - time deposits (having maturities not later than the next payment date)
other than those referred to in the fourth clause above, with a person
whose commercial paper has a credit rating satisfactory to at least one
of the rating agencies rating a class of notes; or
- - any other investment upon receipt of written confirmation from each
rating agency rating a class of notes that the additional form of
investment will not result in a reduction or withdrawal of its rating
of any outstanding series or class.
"ELIGIBLE RECEIVABLE" means, for each series of notes, each receivable:
- - which has arisen in an eligible account;
- - which was created in compliance, in all material respects, with all
requirements of law applicable to the seller at the time of its
creation, and under the terms of a credit card agreement which complies
in all material respects with all requirements of law applicable to the
seller;
- - for which all consents, licenses or authorizations of, or registrations
with, any governmental authority required to be obtained or given in
connection with the creation of the receivable or the execution,
delivery and performance by the seller of the related credit card
agreement have been duly obtained or given and are in full force and
effect;
- - as to which, at the time of its transfer to the trust, the transferor
or the trust has good title, free and clear of all liens and security
interests arising under or through the transferor, other than tax liens
for taxes not then due or which the transferor is contesting;
- - which has been the subject of either a valid transfer and assignment
from the transferor to the trust of all of the transferor's right,
title and interest in the receivable (including any proceeds of the
receivable), or the grant of a first priority perfected security
interest in the receivable (and in the proceeds of the receivable),
effective until the termination of the trust;
- - which is the legal, valid and binding payment obligation of the obligor
under the receivable, legally enforceable against that obligor in
accordance with its terms, subject to some bankruptcy-related
exceptions;
- - which, at the time of transfer to the trust, has not been waived or
modified except as permitted under the customary policies and
procedures, as amended from time to time, of the seller, and then only
if the waiver or modification is reflected in the servicer's computer
file of revolving credit card accounts;
- - which, at the time of transfer to the trust, is not subject to any
right of rescission, setoff, counterclaim or any other defense
(including defenses arising out of violations of usury laws)
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of the obligor, other than defenses arising out of bankruptcy,
insolvency or other similar laws affecting the enforcement of
creditors' rights in general;
- - which, at the time of transfer to the trust, the seller has satisfied
all of its obligations required to be satisfied by that time;
- - which, at the time of transfer to the trust, none of the transferor or
the seller has taken any action, or omitted to take any action, that
would impair the rights of the trust or the noteholders; and
- - which constitutes an "account" or "general intangible" under Article 9
of the Uniform Commercial Code as then in effect in any state where the
filing of a financing statement is required to perfect the Trust's
interest in the receivables and the proceeds thereof.
"ENHANCEMENT INVESTED AMOUNT" means the interest the series enhancer will have
in certain cash flows in respect of the receivables to the extent described in
the applicable prospectus supplement, if the prospectus supplement specifies
that series enhancement may be available to pay principal of the notes following
the occurrence of certain pay out events.
"ERISA" means the employee retirement income security act of 1974.
"EVENTS OF DEFAULT" means, under the indenture, and with respect to the notes of
any series, any of the following:
- - the trust fails to pay principal when it becomes due and payable on the
series termination date for that series of notes;
- - the trust fails to pay interest when it becomes due and payable and the
default continues for a period of 35 days;
- - certain bankruptcy, insolvency, conservatorship, receivership,
liquidation or similar events relating to the trust;
- - the trust fails to observe or perform covenants or agreements made in
the indenture, and:
- the failure continues, or is not cured, for 60 days after
notice to the trust by the indenture trustee or to the trust
and the indenture trustee by noteholders holding 25% or more
of the then-outstanding principal amount of all of the trust's
outstanding series; and
- as a result, the interests of the noteholders are materially
and adversely affected, and continue to be materially and
adversely affected during the 60-day period; or
- - any additional events of default specified in the applicable prospectus
supplement.
"EXCESS FUNDING ACCOUNT" means an account established and maintained by the
servicer in the name of the indenture trustee, which will be a qualified
account.
"EXPECTED PRINCIPAL PAYMENT DATE" means the date specified in the prospectus
supplement for a series of notes on which amounts on deposit in the principal
funding account will be paid to the noteholders.
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"FDIA" means the Federal Deposit Insurance Act, as amended by the Financial
Institutions Reform, Recovery And Enforcement Act of 1989.
"FDIC" means the Federal Deposit Insurance Corporation.
"FINANCE CHARGE AND ADMINISTRATIVE RECEIVABLES" are periodic finance charges,
and annual membership fees and service charges, late fees, over-limit fees, cash
advance fees, and all other fees and charges on accounts designated by the
transferor to be included as finance charge and administrative receivables, and
any other amounts, other than principal receivables, designated by the
transferor to be "Finance Charge and Administrative Receivables."
"FORECLOSURE CERTIFICATE" means an investor certificate issued by the trust as a
result of a foreclosure on a portion of the receivables that corresponds to the
portion of the receivables that secured the notes that have been accelerated.
"FUNDING PERIOD" means the period from a series' closing date to the earlier of
(i) the date that series' invested amount equals the principal amount of that
series of notes, or (ii) the date specified in the related prospectus
supplement.
"INITIAL DESIGNATED ACCOUNTS" means the group of eligible accounts that were
designated on the initial cut-off date to the trust.
"INITIAL CUT-OFF DATE" means __________ , 2000.
"INTERCHANGE" means certain fees received by creditors participating in the
Mastercard and Visa associations as partial compensation for taking credit risk,
absorbing fraud losses and funding receivables for a limited period prior to
initial billing.
"INVESTED AMOUNT" for a series of notes on any date will mean a sum equal to:
- the initial outstanding principal amount of that series of
notes as of the closing date for that series (increased by the
principal balance of any notes of that series issued after the
closing date for that series); minus
- the amount of principal paid to noteholders of that series
prior to that date; and minus
- the amount of unreimbursed investor charge-offs for notes of
that series prior to that date.
"INVESTOR CHARGE-OFFS" means, for any monthly period, and for any series or
class, the amount by which: (a) the related monthly interest and overdue monthly
interest, together with, if applicable, additional interest, the accrued and
unpaid monthly servicing fee payable from collections of finance
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charge and administrative receivables and other amounts treated like collections
of finance charge and administrative receivables, the investor default amount
and any other required fees, exceeds (b) amounts available to pay those amounts
out of collections of finance charge and administrative receivables and other
amounts treated like collections of finance charge and administrative
receivables, any available series enhancement amounts and other sources
specified in the accompanying prospectus supplement, but not more than the
investor default amount.
"INVESTOR DEFAULT AMOUNT" means the aggregate amount of the investor percentage
of principal receivables that are defaulted receivables.
"INVESTOR PERCENTAGE" means a specified percentage of collections of principal
receivables, finance charge and administrative receivables and defaulted
receivables allocated to each series of notes and to the transferor interest.
"ISSUER" means Advanta Business Card Master Trust, a Delaware common law trust.
"L/C BANK" means the issuer of a letter of credit, if a series enhancer has
issued a letter of credit.
"MEMBER BANK" means a bank under contract with Mastercard or Visa to issue
credit cards.
"NOTE OWNER" means the owner of beneficial interests in the notes of a series
held in book-entry form.
"OWNER TRUSTEE" means [___________________________], in its capacity as owner
trustee of the issuer.
"PAIRED SERIES" means each of the series specified in the applicable prospectus
supplements as being paired with a previously or later issued series so that a
decrease in the invested amount of the previously issued series results in a
corresponding increase in the invested amount of the later issued series.
"PARTIES IN INTEREST" means persons that are "PARTIES IN INTEREST" under ERISA
or "DISQUALIFIED PERSONS" under the code.
"PAYING AGENT" means the indenture trustee, acting as the initial paying agent,
together with any successor to the indenture trustee acting in that capacity,
and any entity specified in an indenture supplement to act in that capacity for
the related series.
"PLAN" means any employee benefit or other plan that is subject to ERISA or
Section 4975 of the Code.
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"PRE-FUNDING ACCOUNT" means a trust account established and maintained with the
indenture trustee for the benefit of the noteholders of a series that has a
funding period into which the portion of the invested amount not invested in
receivables will be maintained.
"PRINCIPAL FUNDING ACCOUNT" means the trust account, established for the benefit
of one or more specified classes of noteholders in which principal is
accumulated for later distribution to noteholders.
"PRINCIPAL RECEIVABLES" are amounts charged by cardholders for merchandise,
services, cash advances and balance transfers.
"QUALIFIED ACCOUNT" means an account which will be either (a) a segregated
account with an eligible institution or (b) a segregated trust account with the
corporate trust department of a depositary institution organized under the laws
of the United States or any one of the 50 states, the District of Columbia (or
any domestic branch of a foreign bank).
"RATING AGENCY" means a rating agency selected by the transferor to rate the
notes of a series or class issued by the trust.
"RECOVERIES" means net recovery amounts for defaulted receivables.
"REQUIRED TRANSFEROR INTEREST" means a specified minimum level for the
transferor interest.
"REQUIRED MINIMUM PRINCIPAL BALANCE" means a specified amount of outstanding
principal receivables.
"RESERVE ACCOUNT" means an account established as credit enhancement for a
series of notes to assist with payment of principal or interest on a series or
class of notes or any other amount owing on any series enhancement in the manner
described in a prospectus supplement.
"REVOLVING PERIOD" means the period, for each series, when no principal is paid
or accumulated, which begins on the closing date for a series and ends on the
day before an amortization period or accumulation period begins.
"SELLER" means, collectively, the bank and any additional sellers.
"SERIES TERMINATION DATE" means the latest date by which principal and interest
for that series can be paid.
"SERIES ENHANCEMENT PERCENTAGE" means the payments made by the servicer to any
series enhancer, as may be described in the related prospectus supplement.
"SERIES ENHANCER" means the provider of third party series enhancement.
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"SERIES PAY OUT EVENT" means, with respect to any particular series, the
occurrence of any event, in addition to a trust pay out event, specified as a
pay out event in the prospectus supplement for that series.
"SERIES ENHANCEMENT" means credit enhancement for a series.
"SERVICER DEFAULT" means the following:
- - failure by the servicer to make any payment, transfer or deposit, or to
give instructions or to give notice to the indenture trustee to do so,
within 5 business days of the required date under the transfer and
servicing agreement, the indenture or any indenture supplement;
- - failure on the part of the servicer to observe or perform in any
material respect any of its other covenants or agreements set forth in
the transfer and servicing agreement, the indenture or any indenture
supplement, if the failure:
- will result in the occurrence of a pay out event for any series or
materially adversely affects noteholders of any series issued and
outstanding under the trust; and
- continues unremedied for a period of 60 days after written notice
to (i) the servicer by the owner trustee or the indenture trustee,
or (ii) the servicer, the owner trustee and the indenture trustee
by noteholders holding 50% or more of the then-outstanding
principal amount of all of the trust's outstanding series (or,
where the servicer's failure does not relate to all series, 50% or
more of the then-outstanding principal balance of all series
affected); or
- - the servicer assigns or delegates its duties, except as specifically
permitted under the transfer and servicing agreement;
- - any representation, warranty or certification made by the servicer in
the transfer and servicing agreement, or in any certificate delivered
under the transfer and servicing agreement, proves to have been
incorrect in any material respect when made if it:
- materially adversely affects noteholders of any series issued
and outstanding under the trust; and
- continues to be incorrect and to materially adversely affect
those noteholders for a period of 60 days after written notice
to (i) the servicer by the owner trustee or the indenture
trustee, or (ii) the servicer, the owner trustee and the
indenture trustee by noteholders holding 50% or more of the
then-outstanding principal amount of all of the trust's
outstanding series (or, where the servicer's inaccuracy does
not relate to all series, 50% or more of the then-outstanding
principal balance of all series affected);
- - specific bankruptcy, insolvency, liquidation, conservatorship,
receivership or similar events relating to the servicer; or
- - any other event specified in the accompanying prospectus supplement.
notwithstanding the foregoing, a delay in or failure of performance referred to
in the first clause above for a period of 10 business days after the applicable
grace period, or referred to in the second or third clauses above for a period
of 60 business days after the applicable period, will not constitute a servicer
default if the delay or failure could not be prevented by the exercise of
reasonable diligence
110
<PAGE> 189
by the servicer and the delay or failure was caused by an act of god or the
public enemy, acts of declared or undeclared war, terrorism, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods or other similar occurrence.
"SERVICER" means the bank or any successor servicer that is responsible for
servicing and administering the receivables in the trust.
"SHARED FINANCE CHARGE COLLECTIONS" means, for a series identified in a
prospectus supplement as included in a group, collections of finance charge and
administrative receivables in the trust portfolio allocated to that series in
excess of the amount needed to make deposits or payments for that series that
may be shared with other series identified in the prospectus supplements for
those other series as included in the same group.
"SHARED PRINCIPAL COLLECTIONS" means an amount of principal receivables
allocated to a series in excess of the amount needed for deposit or distribution
that is made available to other series to make principal payments or deposits
required by those other series.
"SPECIAL TAX COUNSEL" means Wolf, Block, Schorr and Solis-Cohen LLP, as special
tax counsel to the issuer.
"SPREAD ACCOUNT" means an account that provides series enhancement for a series
or class of notes that is intended to assist with payment of interest and
principal in the manner described in a prospectus supplement and funded by the
periodic deposit of certain available excess cash flow from the trust assets.
"SUPPLEMENTAL BENEFICIAL INTEREST" means an undivided beneficial interest in the
trust created in exchange, in part, upon the surrender by the transferor of its
transferor beneficial interest.
"SUPPLEMENTAL CERTIFICATE" means a certificate issued in exchange, in part, for
a transferor certificate.
"TAX OPINION" means an opinion of counsel with respect to tax matters.
"TRANSFEROR" means, collectively, ABRC, any additional transferors and any
sellers that transfer receivables directly to the trust.
"TRANSFEROR BENEFICIAL INTEREST" means an undivided beneficial interest in the
trust initially owned by the transferor which entitles the holder to receive all
cash flows from the trust assets not required to make payments on the notes or
to be paid to a series enhancer.
"TRANSFEROR CERTIFICATE" means a certificate representing the transferor
beneficial interest if the transferor interest is held in certificated form.
-111-
<PAGE> 190
"TRANSFEROR PERCENTAGE" means the percentage of all cardholder payments from the
receivables in the trust the right to which is owned by the transferor.
"TRUST" means Advanta Business Card Master Trust, a Delaware common law trust.
"TRUST PAY OUT EVENT" means, with respect to all series issued by the trust, the
occurrence of any of the following events:
- - any servicer default occurs which would have a material adverse effect
on the noteholders;
- - certain bankruptcy, insolvency, liquidation, conservatorship,
receivership or similar events relating to the transferor or the seller
unless, in the case of any of those events with respect to a seller,
the receivables originated by that seller are no longer eligible and
written confirmation is received from each rating agency that the
subsequent exclusion of that seller's receivables from the trust
portfolio will not result in a reduction or withdrawal of its rating of
any outstanding series or class;
- - the transferor is unable for any reason to transfer receivables to the
trust in accordance with the provisions of the transfer and servicing
agreement; or
- - the trust becomes subject to regulation as an "INVESTMENT COMPANY"
within the meaning of the investment company act of 1940.
"TRUST PORTFOLIO" means designated accounts selected from the Advanta Business
Card Portfolio owned by the bank or another seller that generates receivables
transferred to the trust.
"TRUST TERMINATION DATE" means the date designated by the servicer on which the
trust will terminate, which shall be no earlier than the day after the payment
date on which the invested amount and enhancement invested amount, if any, for
each series outstanding is zero.
"UNALLOCATED PRINCIPAL COLLECTIONS" means any amounts collected in respect of
principal receivables and not paid to the holders of the transferor certificates
because the transferor interest is less than the required transferor interest.
112
<PAGE> 191
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Advanta
Business Card Master Trust Asset Backed Notes (the "global securities") to be
issued in series from time to time (each, a "series") will be available only in
book-entry form. Investors in the global securities may hold those global
securities through any of The Depository Trust Company ("DTC"), Clearstream
Banking or Euroclear. The global securities will be tradable as home market
instruments in both the European and U.S. domestic markets. Initial settlement
and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding global securities
through Clearstream Banking and Euroclear will be conducted in the ordinary way
in accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding global securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Clearstream Banking or Euroclear
and DTC participants holding notes will be effected on a
delivery-against-payment basis through the respective depositaries of
Clearstream Banking and Euroclear (in such capacity) and as DTC participants.
Non-U.S. holders (as described below) of global securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All global securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the global
securities will be represented through financial institutions acting on their
behalf as direct and indirect participants in DTC. As a result, Clearstream
Banking and Euroclear will hold positions on behalf of their participants
through their respective depositaries, which in turn will hold such positions in
accounts as DTC participants.
Investors electing to hold their global securities through DTC (other
than through accounts at Clearstream Banking or Euroclear) will follow the
settlement practices applicable to U.S. corporate debt obligations. Investor
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
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<PAGE> 192
Investors electing to hold their global securities through Clearstream
Banking or Euroclear accounts will follow the settlement procedures applicable
to conventional eurobonds in registered form. Global securities will be credited
to the securities custody accounts on the settlement date against payment for
value on the settlement date.
SECONDARY MARKET TRADING
Because the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
participants (other than Citibank, N.A. ("Citibank") and Morgan Guaranty Trust
Company of New York ("Morgan") as depositories for Clearstream Banking and
Euroclear, respectively) will be settled using the procedures applicable to U.S.
corporate debt obligations in same-day funds.
Trading between Clearstream Banking Customers and/or Euroclear
Participants. Secondary market trading between Clearstream Banking customers or
Euroclear participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.
Trading between DTC seller and Clearstream Banking or Euroclear
purchaser. When global securities are to be transferred from the account of a
DTC participant (other than Citibank and Morgan as depositories for Clearstream
Banking and Euroclear, respectively) to the account of a Clearstream Banking
customer or a Euroclear participant, the purchaser must send instructions to
Clearstream Banking prior to settlement date 12:30. Clearstream Banking or
Euroclear, as the case may be, will instruct Citibank or Morgan, respectively,
to receive the global securities for payment. Payment will then be made by
Citibank or Morgan, as the case may be, to the DTC participant's account against
delivery of the global securities. After settlement has been completed, the
global securities will be credited to the respective clearing system and by the
clearing system, in accordance with its usual procedures, to the Clearstream
Banking customer's or Euroclear participant's account. Credit for the global
securities will appear the next day (European time) and the cash debit will be
backvalued to, and the interest on the global securities will accrue from, the
value date (which would be the preceding day when settlement occurred in New
York). If settlement is not completed on the intended value date (i.e., the
trade fails), the Clearstream Banking or Euroclear cash debit will be valued
instead as of the actual settlement date.
Clearstream Banking customers and Euroclear participants will need to
make available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream Banking or Euroclear.
Under this approach, they may take on credit exposure to Clearstream Banking or
Euroclear until the global securities are credited to their accounts one day
later.
A-2
<PAGE> 193
As an alternative, if Clearstream Banking or Euroclear has extended a
line of credit to them, Clearstream Banking customers or Euroclear participants
can elect not to pre-position funds and allow that credit line to be drawn upon
the finance settlement. Under this procedure, Clearstream Banking customers or
Euroclear participants purchasing global securities would incur overdraft
charges for one day, assuming they cleared the overdraft when the global
securities were credited to their accounts. However, interest on the global
securities would accrue from the value date. Therefore, in many cases the
investment income on the global securities earned during that one-day period may
substantially reduce or offset the amount of such overdraft charges, although
this result will depend on each Clearstream Banking customer's or Euroclear
participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC participants can employ their usual procedures for sending global securities
to Citibank or Morgan for the benefit of Clearstream Banking customers or
Euroclear participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC participant a cross-market transaction
will settle no differently from a trade between two DTC participants.
Trading between Clearstream Banking or Euroclear seller and DTC
purchaser. Due to time zone differences in their favor, Clearstream Banking
customers and Euroclear participants may employ their customary procedures for
transactions in which global securities are to be transferred by the respective
clearing system, through Citibank or Morgan, to another DTC participant. The
seller will send instructions to Clearstream Banking before settlement date
12:30. In these cases, Clearstream Banking or Euroclear will instruct Citibank
or Morgan, as appropriate, to credit the global securities to the DTC
participant's account against payment. The payment will then be reflected in the
account of the Clearstream Banking customer or Euroclear participant the
following day, and receipt of the cash proceeds in the Clearstream Banking
customer's or Euroclear participant's account would be back-valued to the value
date (which would be the preceding day, when settlement occurred in New York).
If the Clearstream Banking customer or Euroclear participant has a line of
credit with its respective clearing system and elects to draw on such line of
credit in anticipation of receipt of the sale proceeds in its account, the
back-valuation may substantially reduce or offset any overdraft charges incurred
over that one-day period. If settlement is not completed on the intended value
date (i.e., the trade fails), receipt of the cash proceeds in the Clearstream
Banking customer's or Euroclear participant's account would instead be valued as
of the actual settlement date.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of global securities holding securities through
Clearstream Banking or Euroclear (or through DTC if the holder has an address
outside the U.S.) will be subject to the 30% U.S. withholding tax that generally
applies to payments of interest (including original issue discount) on
registered debt issued by U.S. Persons, unless, under currently applicable law,
(i) each clearing system, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business in the
chain of intermediaries between such beneficial owner and the U.S. entity
A-3
<PAGE> 194
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of notes
that are non-U.S. Persons generally can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are note owners residing in a
country that has a tax treaty with the United States can obtain an exemption or
reduced tax rate (depending on the treaty terms) by filing Form 1001 (Ownership,
Exemption or Reduced Rate Certificate). If the treaty provides only for a
reduced rate, withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the note owner or his
agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The note owner of a global
security or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States, any state thereof, or any political subdivision of either
(including the District of Columbia), or (iii) an estate or trust the income of
which is includable in gross income for United States tax purposes regardless of
its source. This summary does not deal with all aspects of U.S. Federal income
tax withholding that may be relevant to foreign holders of the global
securities. Investors are advised to consult their own tax advisors for specific
tax advice concerning their holding and disposing of the global securities.
Further, the U.S. Treasury Department has recently finalized new regulations
that will revise some aspects of the current system for withholding on amounts
paid to foreign persons. Under these regulations, interest or OID paid to a
nonresident alien would continue to be exempt from U.S.
A-4
<PAGE> 195
withholding taxes (including backup withholding) provided that the holder
complies with the new certification procedures.
A-5
<PAGE> 196
ADVANTA BUSINESS CARD MASTER TRUST
Issuer
ADVANTA BUSINESS RECEIVABLES CORP.
Transferor
ADVANTA BANK CORP.
Servicer
Series 2000-
$
Class A Floating Rate Asset Backed Notes
$
Class B Floating Rate Asset Backed Notes
$
Class C Floating Rate Asset Backed Notes
--------------
PROSPECTUS SUPPLEMENT
---------------
Underwriters
You should rely only on the information contained or incorporated by reference
in this prospectus supplement and the accompanying prospectus. We have not
authorized anyone to provide you with different information.
We are not offering the notes in any state where the offer is not permitted.
We do not claim the accuracy of the information in this prospectus supplement
and the accompanying prospectus as of any date other than the dates stated on
their respective covers.
Dealers will deliver a prospectus supplement and prospectus when acting as
underwriters of the notes and with respect to their unsold allotments or
subscriptions. In addition, all dealers selling the notes will deliver a
prospectus supplement and prospectus until , 2000
<PAGE> 197
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses to be incurred in
connection with the offering of the securities being offered hereunder, other
than underwriting discounts and commissions.
<TABLE>
<S> <C>
Registration Fee.............................................. $264*
Printing and Engraving Expenses............................... **
Trustee's Fees and Expenses................................... **
Legal Fees and Expenses....................................... **
Accountants' Fees and Expenses................................ **
Blue Sky Fees and Expenses ................................... **
Rating Agency Fees............................................ **
Miscellaneous Expenses ....................................... **
-----
Total **
=====
</TABLE>
- ----------------------
* Actual
** To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.7502 of the Nevada Revised Statutes (the "Nevada Law")
empowers a Nevada corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of the
fact that such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such person acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the corporation's best interests, and, for criminal proceedings, had
no reasonable cause to believe his or her conduct was unlawful. A Nevada
corporation may indemnify any person against expenses (including attorneys'
fees) in connection with the defense or settlement of an action by or in the
right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where a director, officer,
employee or agent is successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him or her against the
expenses which such officer or director actually and reasonably incurred in
connection with the defense.
In accordance with the Nevada Law, the Articles of Incorporation of
Advanta Business Receivables Corp. ("ABRC") contains a provision to limit the
personal liability of the directors (and to the extent specified from time to
time by the Board of Directors, the officers) of ABRC for violations of their
fiduciary duty except for (i) acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law or (ii) the payment of dividends
in violation of Section 78.300 of the Nevada Law. To the extent that the Nevada
Law is amended to authorize the further elimination or limitation of liability
of directors or
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<PAGE> 198
officers, then the provision shall also be so amended to provide for the
elimination or limitation of liability to the fullest extent permitted by the
Nevada Law. The effect of this provision is to eliminate the personal liability
of directors for monetary damages for actions involving a breach of their
fiduciary duty of care, including any such actions involving gross negligence.
The Articles of Incorporation of ABRC provides for indemnification of
the officers and directors of ABRC to the fullest extent permitted by the Nevada
Law, as it may be amended from time to time. The Articles of Incorporation
further require ABRC to pay the expenses incurred by an officer or director in
defending any civil, criminal, administrative, or investigative action, suit or
proceeding in advance of the final disposition thereof upon receipt of an
undertaking by or on behalf of such officer to repay such amount if it is
ultimately determined that such person is not entitled to indemnification.
The By-laws of ABRC also contain provisions regarding indemnification
and limitation of liability of directors for breach of fiduciary duty and
payment of unlawful distributions similar to those contained in the Articles of
Incorporation.
Pursuant to underwriting agreements filed as exhibits to registration
statements relating to underwritten offerings of securities, the underwriters
parties thereto have agreed to indemnify each officer and director of ABRC and
each person, if any, who controls ABRC within the meaning of the Securities Act
of 1933, against certain liabilities, including liabilities under said Act.
ITEM 16. EXHIBITS.
(a) Exhibits.
1.1 ----Form of Underwriting Agreement
4.1 ----Form of Master Indenture
4.2 ----Form of Indenture Supplement
4.3 ----Form of Transfer and Servicing Agreement
4.4 ----Form of Trust Agreement of Advanta Business Card
Master Trust
4.5 ----Form of Administration Agreement
4.6 ----Form of Notes*
5.1 ----Opinion of Wolf, Block, Schorr and Solis-Cohen
LLP with respect to legality
8.1 ----Opinion of Wolf, Block, Schorr and Solis-Cohen
LLP with respect to tax matters
23.1 ----Consent of Wolf, Block, Schorr and Solis-Cohen
LLP (included in Exhibit 5. 1 and Exhibit 8.1)
24.1 ----Powers of Attorney (included on page II-5)
25.1 ----Form T-1 Statement of Eligibility and
Qualification under the Trust Indenture Act of
1939, as amended, of [___________], as indenture
trustee under the Indenture*
- ----------------------
* To be filed by amendment.
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<PAGE> 199
(b) Financial Statements
All financial statements, schedules and historical information have
been omitted as they are not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii)to reflect in the prospectus any facts or events
arising after the effective date of this registration statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in this registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
registration statement or any material change to such information in
this registration statement;
provided, however, that (a)(1)(i) and (a)(1)(ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Securities and
Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the termination of
the offering.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be
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<PAGE> 200
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 15
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d)(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424 (b)(1) or (4) or
497 (h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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<PAGE> 201
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3, has reasonable grounds to believe
that the security rating requirement contained in Transaction Requirement B.5.
of Form S-3 will be met by the time of the sale of the securities registered
hereunder and has duly caused this Amendment to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the city
of Spring House, state of Pennsylvania, on May 24, 2000.
ADVANTA BUSINESS
RECEIVABLES CORP.,
AS ORIGINATOR OF THE TRUST AND REGISTRANT
By: /S/ Mark Shapiro
-----------------------
Name: Mark Shapiro
Title: Treasurer
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Mark B. Hales, Michael Coco and Cole B.
Silver, and each of them, his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for and in his own name, place
and stead, in any and all capacities to sign any and all amendments (including
post-effective amendments) to this registration statement, any registration
statement for additional Asset Backed Notes that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, and any or all other
documents in connection therewith, and to file the same, with all exhibits
thereto, with the Securities and Exchange Commission, granting unto said persons
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
might or could be done in person, hereby ratifying and confirming all said
attorneys-in-fact and agents or any of them, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement has been signed on May 24, 2000 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
* President, Director
- -------------------------------- (Principal Executive Officer and Chief
Mark B. Hales Financial Officer)
/S/ Michael Coco Vice President of Finance, Director
- -------------------------------- (Principal Accounting Officer)
Michael Coco
</TABLE>
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<PAGE> 202
<TABLE>
<S> <C>
* Treasurer
- --------------------------------
Mark Shapiro
* Director
- --------------------------------
Janice C. George
* Director
- --------------------------------
Francis B. Jacobs, II
* Director
- --------------------------------
Cole B. Silver
</TABLE>
- ----------------------
* The undersigned, by signing his name hereto, does hereby sign this Amendment
to Registration Statement on behalf of each of the above-indicated directors and
officers of Advanta Business Receivables Corp. pursuant to powers of attorney
signed by such directors.
/S/ Michael Coco
--------------------------------------
Michael Coco
Attorney-in-Fact
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<PAGE> 203
EXHIBIT INDEX
1.1 ----Form of Underwriting Agreement
4.1 ----Form of Master Indenture
4.2 ----Form of Indenture Supplement
4.3 ----Form of Transfer and Servicing Agreement
4.4 ----Form of Trust Agreement of Advanta Business Card
Master Trust
4.5 ----Form of Administration Agreement
4.6 ----Form of Notes*
5.1 ----Opinion of Wolf, Block, Schorr and
Solis-Cohen LLP with respect to legality
8.1 ----Opinion of Wolf, Block, Schorr and Solis-Cohen
LLP with respect to tax matters
23.1 ----Consent of Wolf, Block, Schorr and Solis-Cohen
LLP (included in Exhibit 5.1 and Exhibit 8.1)
24.1 ----Powers of Attorney (included on page II-5)
25.1 ----Form T-1 Statement of Eligibility and
Qualification under the Trust Indenture Act of
1939, as amended, of [___________], as indenture
trustee under the Indenture*
- ----------------------
* To be filed by amendment.
II-7
<PAGE> 1
Exhibit 1.1
ADVANTA BUSINESS CARD MASTER TRUST
ASSET-BACKED NOTES, SERIES 2000-[____]
$[_________] CLASS A NOTES
$[_________] CLASS B NOTES
$[_________] CLASS C NOTES
UNDERWRITING AGREEMENT
__________, 2000
[__________________________________________]
as Representative of the several Underwriters
[Address]
Ladies and Gentlemen:
1. Introductory. Advanta Business Receivables Corp., a Nevada
corporation (the "Company"), and Advanta Bank Corp., a Utah industrial loan
corporation ("Advanta"), propose, subject to the terms and conditions stated
herein, to cause Advanta Business Card Master Trust, a Delaware common law trust
(the "Issuer") to sell to the Underwriters named in Schedule A hereto (the
"Underwriters"), for whom [_______________] is acting as representative (the
"Representative") an aggregate of $[_________] principal amount of the Class A
Notes, $[_____________] principal amount of the Class B Notes, and $[_________]
principal amount of the Class C Notes (collectively, the "Offered Securities"),
of the Issuer. The Offered Securities will be issued under a Master Indenture
(the "Indenture") dated as of [________], 2000 and an Indenture Supplement dated
as of [_________], 2000 (the "Indenture Supplement"), each between the Issuer
and [______________], as indenture trustee (the "Trustee").
The Company has previously purchased or will purchase from Advanta
receivables in a portfolio of MasterCard(R) business revolving credit card
accounts (as more fully defined in the Purchase Agreement and the Transfer
Agreement, the "Receivables") and certain related rights (together with the
Receivables, and as more fully defined in the Purchase Agreement, the "Purchased
Assets") pursuant to the Receivables Purchase Agreement (the "Purchase
Agreement") dated as of [________], 2000 by and between the Company and Advanta.
The Issuer will acquire the Receivables and the other Purchased Assets
pursuant to the Transfer and Servicing Agreement (the "Transfer Agreement")
dated as of [_______, 2000 by and among the Company, as transferor, Advanta, as
servicer, and the Issuer. Pursuant to the Transfer Agreement, Advanta has agreed
to service the Receivables.
<PAGE> 2
Capitalized terms used herein without definition shall have the
meanings set forth in the Indenture, the Purchase Agreement, the Transfer
Agreement or the Trust Agreement. As used herein, the term "Transaction
Documents" means the Indenture, the Indenture Supplement, the Offered
Securities, the Purchase Agreement, the Transfer Agreement and the Letter of
Representations among the Issuer, the Trustee and The Depository Trust Company.
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) The Company and the Offered Securities meet the requirements for
use of Form S-3 under the Securities Act of 1933, as amended (the
"Act"); the Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
___________), 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 ___________, 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 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
2
<PAGE> 3
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 third, fourth and fifth paragraphs under the
caption "Underwriting", the information contained in the seventh,
eighth and ninth paragraphs under the caption "Underwriting" and the
discount and commission table on page S-[__] 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," "The Indenture" and
"Description of the Purchase Agreement" in the Base Prospectus and
"Description of Series Provisions " in the Prospectus Supplement, to
the extent they constitute a summary of the Notes, the Indenture, the
Purchase Agreement 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 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
3
<PAGE> 4
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, the Issuer 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 Receivables considered in the aggregate;
(e) The Company has been duly formed and is validly existing as a
corporation 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; the Issuer has
been duly formed [and is validly existing] as a common law [business]
trust under the laws of Delaware; 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; the Issuer has the power and
authority to own its properties and conduct its business to the extent
described in the Prospectus and to perform its obligations under 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, Advanta, the
Issuer 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, Advanta, or the Issuer 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;
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<PAGE> 5
(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 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 Issuer 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, the Offered Securities will have been duly executed,
authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Issuer, 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
Issuer, 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 to which it is a party will constitute
a valid and legally binding obligation of the Company, Advanta and the
Issuer, 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 each of the Company, Advanta and the Issuer of the Transaction
Documents to which it is a party and the consummation of the
transactions contemplated thereby have been duly and validly authorized
by all necessary action and proceedings required of it; and the Offered
Securities, the Indenture, the Purchase Agreement, 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 Issuer as
contemplated hereby and the compliance by the Company and Advanta with
all of the provisions of this Agreement, and the compliance by each of
the Company, Advanta and the Issuer with all of the provisions of all
of the Transaction Documents to which it is a party 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, Advanta or the Issuer is a party
5
<PAGE> 6
or by which the Company, Advanta or the Issuer or any of their
subsidiaries is bound or to which any of the property or assets of the
Company, Advanta or the Issuer is subject, nor will such action result
in any violation of the provisions of the Articles of Incorporation,
By-laws or Trust Agreement of the Company, Advanta, or the Issuer, as
applicable, or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company, Advanta or the Issuer 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 Issuer, the consummation by the Company, Advanta or
the Issuer 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, Advanta or the Issuer is a party or of which any property of
the Company, Advanta or the Issuer 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, Advanta or the Issuer, 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, Advanta or the Issuer; 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) None of the Company, Advanta and the Issuer is in violation of its
respective Articles of Incorporation, Trust Agreement or By-laws, and
none of the Company, Advanta and the Issuer 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) None of the Company, Advanta and the Issuer 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");
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<PAGE> 7
(n) As of the Initial Cut-off Date, the computer tape of the Initial
Designated Accounts made available to the Representative by Advanta and
the Company was accurate in all material respects;
(o) No selection procedures adverse to the holders of the Offered
Securities were utilized in selecting those Receivables transferred by
Advanta to the Company from those Receivables available therefor;
(p) Upon execution and delivery of the Purchase Agreement and the
Transfer Agreement, the Company and the Issuer, respectively, will
acquire the Receivables and the other Purchased Assets, 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, neither
Advanta nor the Company is obligated to repurchase Receivables in the
Initial Designated Accounts constituting a material portion of the
aggregate Receivables in the Initial Designated Accounts existing as of
the Time of Delivery;
(r) As of the date hereof, the Company is wholly-owned by Advanta and
the Issuer is wholly-owned by the Company;
(s) In accordance with Generally Accepted Accounting Principles, as
currently in effect, each party to the Purchase Agreement and the
Transfer Agreement will treat the transactions contemplated by the
Purchase Agreement and the Transfer Agreement as absolute assignments
of the Receivables to the Company and to the Issuer, respectively;
(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, the Company or the Issuer of this
Agreement, the Purchase 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 Receivables and
the other Purchased Assets, have been paid or will be paid by the
Company prior to the Closing Date; and
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<PAGE> 8
(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 representation or warranty relates to a specific
date, such representation and warranty shall be deemed to continue to relate
only to such date.
3. Sale and Delivery to the Underwriters; Closing. Subject to the terms
and conditions herein set forth, the Company agrees to cause the Issuer 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 Issuer, 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 Issuer 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 cause
the Issuer to 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 [__________],
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 Wolf, Block, Schorr and Solis-Cohen LLP, 250 Park Avenue, New York, New York
10177 (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
8
<PAGE> 9
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 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
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<PAGE> 10
furnish the Representative 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 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 neither the Company
nor the Issuer shall 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
reasonably 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 the
Representative 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's
request will, at the Company's expense, prepare and deliver to such
Underwriter as
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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.
(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 Receivables.
(f) So long as any Offered Securities shall be outstanding, Advanta
will deliver or cause to be delivered to the Representative the annual
statement as to compliance to be delivered by Advanta to the Owner
Trustee, the Trustee and each Rating Agency pursuant to Section 3.06 of
the Transfer Agreement, as soon as such statement is furnished to
Advanta.
(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 any 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 Receivables conveyed by Advanta to the Company
and, in turn, conveyed by the Company to the Issuer, shall be marked in
such a manner as shall clearly indicate the Issuer's absolute ownership
of such Receivables, and from and after the Time of Delivery, neither
the Company nor Advanta nor any of their
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<PAGE> 12
affiliates shall take any action inconsistent with the Issuer's
ownership of such Receivables, other than as permitted by the
Transaction Documents.
(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.
(l) Each of the Company and Advanta 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 Receivables 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.
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<PAGE> 13
(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).
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 only 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) The Underwriters shall have received an opinion, dated the Closing
Date, of [_____________] as special counsel for Advanta, satisfactory
in form and substance to the Representative and its counsel to the
effect that:
(i) Advanta (x) has been duly incorporated and is validly
existing as an industrial loan corporation under the laws of the State
of Utah, with power and authority to own its properties and conduct its
business as described in the Prospectus and (y) has the power,
authority and legal right to acquire and own the Designated Accounts
and the Receivables, to sell and assign the Receivables to the Company
pursuant to the Purchase Agreement and to service the Designated
Accounts and Receivables pursuant to the Transfer Agreement;
(ii) Advanta has, or at the time of execution thereof, had,
the power and authority to execute and deliver each of the Transaction
Documents to which it is a party, and Advanta had and at all times
since the time of execution thereof has had and does
13
<PAGE> 14
now have the power to consummate the transactions contemplated herein
and in the Transaction Documents to which it is a party;
(iii) Advanta has duly authorized, and, as of the Closing
Date, will have executed and delivered, each Transaction Document to
which it is a party;
(iv) This Agreement has been duly authorized, executed and
delivered by Advanta;
(v) No consent, approval, authorization or order of, or filing
of any UCC Financing statements with, any court or governmental agency
or body of the State of Utah having jurisdiction over Advanta is
required for the consummation of the transactions contemplated by this
Agreement and the Transaction Documents, except for (x) filing of UCC
financing statements with respect to the transactions contemplated in
the Purchase Agreement and the Transfer Agreement and (y) such
consents, approvals, authorizations, orders or filings as may be
required under the state securities or blue sky laws of any
jurisdiction;
(vi) The execution, delivery and performance by Advanta of
this Agreement, the transfer of the Receivables from Advanta to the
Company and, in turn, from the Company to the Issuer, the issuance and
sale of the Notes and the consummation of any other of the transactions
contemplated herein or in the Transaction Documents will not conflict
with, result in a breach of or a violation of any of the terms of, or
constitute a default under (x) the Articles of Incorporation and Bylaws
of Advanta, (y) any rule, order, statute or regulation known to such
counsel to be currently applicable to Advanta or (z) any agreement or
other instrument, known to such counsel, to which Advanta is a party or
by which it is bound; and
(vii) To such counsel's knowledge, there are no actions,
proceedings or investigations pending before any court, administrative
agency or other tribunal (v) asserting the invalidity of this
Agreement, any of the Transaction Documents or the Notes, (w) seeking
to prevent the issuance of the Notes or the consummation of any of the
transactions contemplated by this Agreement or the Transaction
Documents, (x) which might materially and adversely affect the
performance by Advanta of its obligations under, or the validity or
enforceability of, this Agreement or any of the Transaction Documents
to which it is a party or (y) seeking adversely to affect the federal
income tax attributes of the Notes as described in the Base Prospectus
under the heading "Federal Income Tax Consequences."
(c) The Underwriters shall have received an opinion, dated the Closing
Date, of [_____________] as special counsel for the Company,
satisfactory in form and substance to the Representative and its
counsel to the effect that:
(i) The Company (x) has been duly incorporated and is validly
existing as a corporation under the laws of the State of Nevada, with
power and authority to own its properties and conduct its business as
described in the Prospectus and (y) has the power, authority and legal
right to acquire and own the Designated Accounts and the
14
<PAGE> 15
Receivables, to sell and assign the Receivables to the Issuer pursuant
to the Transfer Agreement;
(ii) The Company has, or at the time of execution thereof,
had, the power and authority to execute and deliver each of the
Transaction Documents to which it is a party, and the Company had and
at all times since the time of execution thereof has had and does now
have the power to consummate the transactions contemplated herein and
in the Transaction Documents to which it is a party;
(iii) The Company has duly authorized, and, as of the Closing
Date, will have executed and delivered, each Transaction Document to
which it is a party;
(iv) This Agreement has been duly authorized, executed and
delivered by the Company;
(v) No consent, approval, authorization or order of, or filing
of any UCC Financing statements with, any court or governmental agency
or body of the State of Nevada having jurisdiction over the Company is
required for the consummation of the transactions contemplated by this
Agreement and the Transaction Documents, except for (x) filing of UCC
financing statements with respect to the transactions contemplated in
the Purchase Agreement and the Transfer Agreement and (y) such
consents, approvals, authorizations, orders or filings as may be
required under the state securities or blue sky laws of any
jurisdiction;
(vi) The execution, delivery and performance by the Company of
this Agreement, the transfer of the Receivables from the Company to the
Issuer, the issuance and sale of the Notes and the consummation of any
other of the transactions contemplated herein or in the Transaction
Documents will not conflict with, result in a breach of or a violation
of any of the terms of, or constitute a default under (x) the Articles
of Incorporation and Bylaws of the Company, (y) any rule, order,
statute or regulation known to such counsel to be currently applicable
to the Company or (z) any agreement or other instrument, known to such
counsel, to which the Company is a party or by which it is bound; and
(vii) To such counsel's knowledge, there are no actions,
proceedings or investigations pending before any court, administrative
agency or other tribunal (v) asserting the invalidity of this
Agreement, any of the Transaction Documents or the Notes, (w) seeking
to prevent the issuance of the Notes or the consummation of any of the
transactions contemplated by this Agreement or the Transaction
Documents, (x) which might materially and adversely affect the
performance by the Company of its obligations under, or the validity or
enforceability of, this Agreement or any of the Transaction Documents
to which it is a party or (y) seeking adversely to affect the federal
income tax attributes of the Notes as described in the Base Prospectus
under the heading "Federal Income Tax Consequences."
15
<PAGE> 16
(d) The Underwriters shall have received an opinion dated the Closing
Date, of Wolf, Block, Schorr and Solis-Cohen LLP, special counsel to
the Company and Advanta, satisfactory in form and substance to the
Representative and its counsel, to the effect that:
(i) Each of the Transaction Documents, including the
allocation of Collections provisions thereof, to which the Company or
Advanta is a party constitutes the legal, valid and binding obligation
of each of them, as applicable, under the laws of the State of New York
enforceable against the Company and Advanta, as applicable, in
accordance with its terms.
(ii) This Agreement constitutes the legal, valid and binding
obligation of the Company and Advanta under the laws of the State of
New York, enforceable against the Company and Advanta in accordance
with its terms.
(iii) The Notes, when executed and authenticated in accordance
with the terms of the Indenture and delivered to and paid for by the
Underwriters in accordance with this Agreement, will be duly and
validly issued and outstanding, will constitute legal, valid and
binding obligations of the Issuer, enforceable against the Issuer in
accordance with their terms and will be entitled to the benefits of the
Indenture.
(iv) The statements in the Base Prospectus under the headings
"Risk Factors-if a conservator or receiver were appointed for a seller
or transferor that is a bank, or if a seller or transferor that is not
a bank became a debtor in a bankruptcy case, delays or reductions in
payment of your notes could occur," "Material Legal Aspects of the
Receivables," "ERISA Considerations" and "Federal Income Tax
Consequences" and the statements in the Prospectus Supplement under the
headings "Summary of Terms-Tax Status" and " - ERISA Considerations"
and "ERISA Considerations," to the extent they constitute matters of
law or legal conclusions with respect thereto, have been reviewed by us
and are correct in all material respects.
(v) This Agreement, the Transaction Documents and the Notes
conform in all material respects to the descriptions thereof contained
in the Prospectus.
(vi) The Indenture has been duly qualified under the TIA and
complies as to form with the TIA and the rules and regulations of the
Commission thereunder. The Trust is not now, and immediately following
the sale of the Notes pursuant to this Agreement will not be, required
to be registered under the Investment Company Act of 1940, as amended.
(vii) Subject to the discussion in the Prospectus under the
heading "U.S. Federal Income Tax Consequences", the Notes will properly
be characterized as indebtedness and the issuance of the Notes will not
cause the Issuer to be classified as an association (or publicly traded
partnership) taxable as a corporation, for U.S. federal income tax
purposes.
(viii) The Indenture constitutes the legal, valid and binding
obligation of the Issuer under the laws of the State of New York.
16
<PAGE> 17
(ix) The Registration Statement and the Prospectus (other than
the financial and statistical information contained therein) on their
respective effective dates or dates of issuance appear on their face to
be appropriately responsive in all material respects to the applicable
requirements of the Act and the Rules and Regulations; such counsel has
no reason to believe that either the Registration Statement or the
Prospectus, as of such respective dates, contained any untrue statement
of a material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
or that the Prospectus, as amended or supplemented as of the date of
such opinion, contains any untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary
in order to make the statements, therein, in light of the circumstances
under which they were made, not misleading (except that such counsel
may express no opinion as to (x) any financial statements, supporting
schedules or other financial or statistical information included in the
Registration Statement or the Prospectus or (y) the exhibits to the
Registration Statement.
(x) If the FDIC is appointed as conservator or receiver for
Advanta and if a court were to determine that the Company has a
security interest in the Receivables and the proceeds thereof, the
court would hold that the security interest of the Company would be
enforceable against Advanta with respect to the Receivables and such
proceeds.
(e) The Underwriters shall have received from [___________________],
special counsel for the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to such matters relating to this
transaction as the Representative and its counsel may require, and the
Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(f) The Underwriters shall have received an opinion, dated the Closing
Date, of [____________________], special Utah counsel for Advanta,
satisfactory in form and substance to the Representative and its
counsel with respect to (i) certain matters relating to the transfer of
the Receivables from Advanta to the Company and (ii) the perfection of
the security interest in favor of the Company in the Receivables and
the proceeds thereof.
(g) The Underwriters shall have received an opinion, dated the Closing
Date, of [___________________], special Nevada counsel for Company
satisfactory in form and substance to the Representative and its
counsel, with respect to (i) certain matters relating to the transfer
of the Receivables from the Company to the Issuer, and (ii) the
perfection of the security interests in favor of the Issuer in the
Receivables and the proceeds thereof.
(h) The Underwriters shall have received a certificate from each of the
Company and Advanta, dated the Closing Date, of two Vice Presidents or
more senior officers of the Company or Advanta, as the case may be, in
which such officers, to the best of their knowledge after reasonable
investigation, shall state that (u) the representations and warranties
of the Company and Advanta, as the case may be, in this Agreement
17
<PAGE> 18
are true and correct in all material respects on and as of the Closing
Date, (v) the Company or Advanta, as the case may be, has complied with
all agreements and satisfied all conditions on its part to be performed
or satisfied hereunder at or prior to the Closing Date, (w) the
representations and warranties of the Company or Advanta, as the case
may be, contained in this Agreement and the Transaction Documents to
which it is a party are true and correct as of the dates specified
herein and therein, (x) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are threatened by the Commission, (y)
nothing has come to such officers' attention that would lead such
officers to believe that the Registration Statement or the Prospectus,
and any amendment or supplement thereto, as of its date and as of the
Closing Date, contained an untrue statement of a material fact or
omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, and (z) in the officer's certificate for
Advanta only, subsequent to the date of the Prospectus, there has been
no material adverse change in the financial position or results of
operation of Advanta's credit card business except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(i) The Underwriters shall have received an opinion of
[________________], counsel to the Owner Trustee, dated the Closing
Date, satisfactory in form and substance to the Representative and its
counsel, to the effect that:
(i) The Owner Trustee is duly incorporated and validly
existing as a banking corporation in good standing under the laws of
the State of Delaware;
(ii) The Owner Trustee has the power and authority to execute,
deliver and perform the Trust Agreement and to consummate the
transactions contemplated thereby;
(iii) The Trust Agreement has been duly authorized, executed
and delivered by the Owner Trustee and constitutes a legal, valid and
binding obligation of the Owner Trustee, enforceable against the Owner
Trustee in accordance with its terms;
(iv) Each of the Indenture, the Trust Agreement and the
Transfer Agreement (collectively referred to in this subsection (j) as
the "Trust Documents") has been duly executed and delivered by the
Owner Trustee, as Owner Trustee on behalf of the Issuer;
(v) Neither the execution, delivery or performance by the
Owner Trustee, in its individual capacity or as Owner Trustee, as the
case may be, of the Trust Documents, nor the consummation of the
transactions by the Owner Trustee, in its individual capacity or as
Owner Trustee, as the case may be, contemplated thereby, requires the
consent or approval of, the withholding of objection on the part of,
the giving of notice to, the filing, registration or qualification
with, or the taking of any other action in respect of, any governmental
authority or agency of the State of Delaware or the United States of
America governing the banking or trust powers of the Owner Trustee;
(vi) Neither the execution, delivery and performance by the
Owner Trustee, in its individual capacity or as Owner Trustee, as the
case may be, of the Trust Documents,
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<PAGE> 19
nor the consummation of the transactions by the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be,
contemplated thereby, is in violation of the charter or bylaws of the
Owner Trustee or of any law, governmental rule or regulation of the
State of Delaware or of the United States of America governing the
banking or trust powers of the Owner Trustee or, to such counsel's
knowledge, without independent investigation, or any indenture,
mortgage, bank credit agreement, note or bond purchase agreement,
long-term lease, license or other agreement or instrument to which it
is a party or by which it is bound or, to such counsel's knowledge,
without independent investigation, of any judgment or order applicable
to the Owner Trustee;
(vii) No consent, approval or other authorization of, or
registration, declaration or filing with, any court or governmental
agency or commission of the State of Delaware is required by or with
respect to the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, for the valid execution and delivery of
the Trust Documents, or for the validity or enforceability thereof; and
(viii) To such counsel's knowledge, without independent
investigation, there are no pending or threatened actions, suits or
proceedings affecting the Owner Trustee before any court or other
governmental authority which, if adversely determined, would materially
and adversely affect the ability of the Owner Trustee to carry out the
transactions contemplated by the Trust Agreement.
(j) The Underwriters shall have received an opinion of
[_______________], special Delaware counsel to the Issuer, dated the
Closing Date, satisfactory in form and substance to the Representative
and its counsel, to the effect that:
(i) The Issuer is validly existing as a common law trust under
the laws of the State of Delaware.
(ii) The Trust Agreement constitutes a legal, valid and
binding obligation of the Owner Trustee and the Transferor, enforceable
against the Owner Trustee and the Transferor, in accordance with its
terms;
(iii) The Trust Agreement authorizes the Issuer to execute and
deliver the Transfer Agreement and the Indenture, to issue the Notes
and the Transferor Certificate and to Grant the Trust Estate to the
Indenture Trustee as security for the Notes;
(iv) The Issuer has the power and authority, pursuant to the
Trust Agreement to execute, deliver and perform its obligations under
the Trust Agreement, the Indenture and the Transfer Agreement
(collectively referred to in this subsection (j) as the "Trust
Documents"), the Notes and the Owner Certificate and has duly
authorized, executed and delivered such agreements and obligations;
(v) When the Transferor Certificate is duly executed and
issued by the Issuer and duly authenticated by the Owner Trustee in
accordance with the Trust Agreement, the Transferor Certificate will be
validly issued and entitled to the benefits of the Trust Agreement;
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<PAGE> 20
(vi) Neither the execution, delivery and performance by the
Issuer of the Trust Documents, the Notes or the Transferor Certificate,
nor the consummation by the Issuer of any of the transactions by the
Issuer contemplated thereby, requires the consent or approval of, the
withholding of objection on the part of, the giving of notice to, the
filing, registration or qualification with, or the taking of any other
action in respect of, any governmental authority or agency of the State
of Delaware, other than the filing of any financing statements with the
Delaware Secretary of State in connection with the Trust Documents;
(vii) Neither the execution, delivery and performance by the
Issuer of the Trust Documents, nor the consummation by the Issuer of
the transactions contemplated thereby, is in violation of the Trust
Agreement or of any law, rule or regulation of the State of Delaware
applicable to the Issuer;
[(viii) No creditor of the holder of the Transferor
Certificate shall have any right to obtain possession of, or otherwise
exercise legal or equitable remedies with respect to, the property of
the Issuer except in accordance with the terms of the Trust Agreement;]
[(ix) The Issuer may not be terminated or revoked by any
holder of a Certificate, and the dissolution, termination or bankruptcy
of any holder of a Certificate shall not result in the termination or
dissolution of the Issuer, except to the extent otherwise provided in
the Trust Agreement;] [(x) There is no excise or other tax imposed by
the State of Delaware upon the perfection of a security interest in the
Receivables;]
[(xi) There is no excise or other tax imposed by the State of
Delaware upon the transfer of the Receivables to or from the Issuer;]
[(xii) There is no personal property tax imposed by the State
of Delaware upon or measured by the corpus of the Issuer;]
[(xiii) The characterization of the Issuer for federal income
tax purposes, whether as a trust, partnership or association taxable as
a corporation, will be determinative of the character of the Issuer
under the laws of the State of Delaware concerning any tax imposed on
or measured by income;]
[(xiv) Assuming the Issuer will be taxed as a partnership for
federal income tax purposes, there will be no income tax imposed by the
State of Delaware upon the Issuer entity;]
[(xv) Any income tax imposed by the State of' Delaware that
might be applicable to the Issuer would be based upon "federal taxable
income," and for the purpose of ascertaining such income, the amount of
taxable income as computed for federal income tax purposes will be
determinative, whether such amount is computed based upon a
characterization of the transaction as a sale or as a loan;]
(xvi) There is no document or stamp tax imposed by the State
of Delaware upon
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<PAGE> 21
the issuance of the Notes;
(xvii) There is no income tax imposed by the [City of
Wilmington, Delaware] upon the Issuer and the [City of Wilmington,
Delaware] is prohibited by Delaware State law from imposing a personal
property tax upon or measured by the corpus of the Issuer; and
(xviii) The Transferor is the sole beneficial owner of the
Issuer.
(k) The Underwriters shall have received an opinion of
[___________________], counsel to the Indenture Trustee dated the
Closing Date, satisfactory in form and substance to the Representative
and its counsel, to the effect that:
(i) The Indenture Trustee has been duly incorporated and is
validly existing as a banking corporation under the laws of the State
of [_______________] and has the power and authority to enter into and
take all action required of it and accept the trusts imposed by the
Indenture and to act as Indenture Trustee under the Indenture;
(ii) The acknowledgment by the Indenture Trustee of the
Administration Agreement has been duly authorized, executed and
delivered by the Indenture Trustee. The Indenture Trustee has duly
authorized, executed and delivered the Indenture. Assuming the due
authorization, execution and delivery thereof by the other parties
thereto, the Indenture is the legal, valid and binding agreement of the
Indenture Trustee, enforceable against the Indenture Trustee in
accordance with its terms;
(iii) The Notes have been duly authenticated and delivered by
the Indenture Trustee;
(iv) The Indenture Trustee is duly authorized and empowered to
exercise trust powers under applicable law;
(v) Neither the execution and delivery of the Notes, the
acknowledgment of the Administration Agreement, the execution, delivery
nor the performance of the Indenture by the Indenture Trustee conflicts
with or will result in a violation of (A) any law or regulation of the
United States of America or the State of [__________________] governing
the banking or trust powers of the Indenture Trustee or (B) the
Certificate of Incorporation or Bylaws of the Indenture Trustee.
(vi) No approval, authorization or other action by, or filing
with, any governmental authority of the United States of America or the
State of [__________________] having jurisdiction over the banking or
trust powers of the Indenture Trustee is required in connection with
the execution and delivery by the Indenture Trustee of the Indenture or
the performance by the Indenture Trustee of the terms of the Indenture
or the acknowledgment of the Transfer Agreement.
(l) [The Underwriters shall have received an opinion dated the Closing
Date, of Wolf, Block, Schorr and Solis - Cohen LLP, special counsel to
the Company and Advanta, satisfactory in form and substance to the
Representative and its counsel, to
21
<PAGE> 22
the effect that transfer of the Receivables from Advanta to the Company
would constitute an absolute sale rather than a borrowing of Advanta
secured by the Receivables and would not be property of the estate of
Advanta under Section 541(a) of the Bankruptcy Code, and the rights of
the Company to the Receivables would not be impaired by the operation
of Section 362(a) of the Bankruptcy Code.]
(m) You shall have received reliance letters addressed to the
Representative, dated as of the Closing Date, allowing the
Representative to rely on each opinion of counsel delivered to a Rating
Agency, the Indenture Trustee, the Company or Advanta in connection
with the issuance of the Notes.
(n) At the Time of Delivery, [_________________________] shall have
furnished to the Representative a letter, dated the date of delivery
thereof, in form and substance satisfactory to the Representative,
containing a statement to the effect that [__________________] is an
independent public accountant with respect to the Company and Advanta,
as defined in the Act and the rules and regulations of the Commission
thereunder;
(o) 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 Receivables 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);
(p) At the Time of Delivery, (i) the Class A Notes, the Class B Notes
and the Class C Notes shall be rated by Moody's Investors Service, Inc.
("Moody's") at least "Aaa", "A-2", and "Baa2", respectively, (ii) the
Class A Notes, the Class B Notes and the Class C Notes shall be rated
by Fitch IBCA, Inc. ("Fitch") at least "AAA", "A" and "BBB",
respectively and (iii) the Class A Notes, the Class B Notes and the
Class C Notes shall be rated by Standard & Poor's Rating Services
("Standard & Poor's") at least "AAA", "A" and "BBB", respectively.
(q) 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;
22
<PAGE> 23
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 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) 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; provided,
however, that the Company and Advanta shall not be liable in any such
case if 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.
23
<PAGE> 24
(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, joint or
several, to which the Company, Advanta or such indemnified 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, 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, 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 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.
(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 except to the extent it has been materially
prejudiced by such failure. 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
24
<PAGE> 25
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).
(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, 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.
25
<PAGE> 26
(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:
(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 Receivables 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
26
<PAGE> 27
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 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.
27
<PAGE> 28
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 within
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 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
28
<PAGE> 29
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 and the Prospectus Supplement,
(iii) any advertising expenses connected with any offers they may make
and (iv) fees and expenses of counsel to the Underwriters.
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 any 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
[_______________________________],
29
<PAGE> 30
Attention: [________________];if to the Company shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth in
the Registration Statement, Attention: General Counsel; and if to Advanta shall
be delivered or sent by mail, telex or facsimile transmission to Advanta Bank
Corp., 11850 South Election Road, Draper, Utah, 84020, Attention:
[_______________], 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 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
30
<PAGE> 31
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. GOVERNING 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 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]
31
<PAGE> 32
If you are in agreement with the foregoing, please sign and return to
us a counterpart hereof for each of the Company and Advanta and for each of the
Underwriters and each counsel to the parties hereto, 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 BUSINESS RECEIVABLES CORP.
By:_______________________________
Name:
Title:
ADVANTA BANK CORP.
By:_______________________________
Name:
Title:
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written.
[_____________________________________]
as Representative of the Underwriters
By: [_____________________________]
By:___________________________
Authorized Representative
Signature Page to Underwriting Agreement
<PAGE> 33
SCHEDULE A
<TABLE>
<CAPTION>
Underwriter Class A Class B Class C
----------- ------- ------- -------
<S> <C> <C> <C>
Total
------- ------- -------
</TABLE>
Purchase Price to Public
(as a percentage of
the principal amount of
each class of Offered Securities)*
Class A: %
Class B: %
Class C: %
<PAGE> 1
EXHIBIT 4.1
ADVANTA BUSINESS CARD MASTER TRUST
Issuer
and
[_________________________________________]
Indenture Trustee
MASTER INDENTURE
Dated as of ________________, 2000
<PAGE> 2
------------------------------
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE
ACT OF 1939 AND INDENTURE PROVISIONS(1)
<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
(a)(5) .......................................................... 6.11
(b) ............................................................. 6.08, 6.11
(c) ............................................................. Not Applicable
311(a) ............................................................. 6.12
(b) ............................................................. 6.12
(c) ............................................................. Not Applicable
312(a) ............................................................. 7.01, 7.02(a)
(b) ............................................................. 7.02(b)
(c) ............................................................. 7.02(c)
313(a) ............................................................. 7.04
(b) ............................................................. 7.04
(c) ............................................................. 7.03, 7.04
(d) ............................................................. 7.04
314(a) ............................................................. 3.09, 7.03(a)
(b) ............................................................. 3.06
(c)(1)........................................................... 2.11, 8.09(c), 12.01(a)
(c)(2)........................................................... 2.11, 8.09(c), 12.01(a)
(c)(3)........................................................... 2.11, 8.09(c), 12.01(a)
(d)(1)........................................................... 2.11, 8.09(c), 12.01(b)
(d)(2) .......................................................... Not Applicable
(d)(3) .......................................................... Not Applicable
(e) ............................................................. 12.01(a)
315(a) ............................................................. 6.01(b)
(b) ............................................................. 6.02
(c) ............................................................. 6.01(c)
(d) ............................................................. 6.01(d)
(d)(1) .......................................................... 6.01(d)
(d)(2) .......................................................... 6.01(d)
(d)(3) .......................................................... 6.01(d)
(e) ............................................................. 5.14
316(a)(1)(A) ....................................................... 5.12
316(a)(1)(B) ....................................................... 5.13
316(a)(2) .......................................................... Not Applicable
316(b) ............................................................. 5.08
317(a)(1) .......................................................... 5.04
317(a)(2) .......................................................... 5.04(d)
317(b) ............................................................. 5.04(a)
318(a) ............................................................. 12.07
</TABLE>
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(1) This reconciliation and tie shall not, for any purpose, be deemed to be
part of the within indenture.
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ARTICLE I
DEFINITIONS ................................................................. 2
Section 1.01. Definitions ......................................... 2
Section 1.02. Other Definitional Provisions ....................... 14
ARTICLE II
THE NOTES ................................................................... 15
Section 2.01. Form Generally ...................................... 15
Section 2.02. Denominations ....................................... 16
Section 2.03. Execution, Authentication and Delivery .............. 16
Section 2.04. Authenticating Agent ................................ 16
Section 2.05. Registration of and Limitations on Transfer and
Exchange of Notes ................................... 18
Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes .......... 19
Section 2.07. Persons Deemed Owners ............................... 20
Section 2.08. Appointment of Paying Agent ......................... 20
Section 2.09. [Reserved] .......................................... 21
Section 2.10. Cancellation ........................................ 21
Section 2.11. Release of Collateral ............................... 21
Section 2.12. New Issuances ....................................... 21
Section 2.13. BookEntry Notes ..................................... 23
Section 2.14. Notices to Clearing Agency or Foreign Clearing Agency 24
Section 2.15. Definitive Notes .................................... 24
Section 2.16. Global Note ......................................... 25
Section 2.17. Meetings of Noteholders ............................. 25
Section 2.18. Uncertificated Classes .............................. 25
ARTICLE III
REPRESENTATIONS AND COVENANTS OF ISSUER ..................................... 25
Section 3.01. Payment of Principal and Interest ................... 25
Section 3.02. Maintenance of Office or Agency ..................... 26
Section 3.03. Money for Note Payments to Be Held in Trust ......... 26
Section 3.04. Existence ........................................... 27
Section 3.05. Protection of Trust ................................. 27
Section 3.06. Opinions as to Collateral ........................... 28
Section 3.07. Performance of Obligations; Servicing of Receivables 29
Section 3.08. Negative Covenants .................................. 30
Section 3.09. Statements as to Compliance ......................... 31
Section 3.10. Issuer May Consolidate, Etc., Only on Certain Terms . 31
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Section 3.11. Successor Substituted ................................. 33
Section 3.12. No Other Business ..................................... 33
Section 3.13. [Reserved] ............................................ 33
Section 3.14. Servicer's Obligations ................................ 33
Section 3.15. Investments ........................................... 34
Section 3.16. Capital Expenditures .................................. 34
Section 3.17. Removal of Administrator .............................. 34
Section 3.18. Restricted Payments ................................... 34
Section 3.19. Notice of Events of Default ........................... 34
Section 3.20. Further Instruments and Acts .......................... 34
ARTICLE IV
SATISFACTION AND DISCHARGE .................................................... 35
Section 4.01. Satisfaction and Discharge of this Indenture .......... 35
Section 4.02. Application of Trust Money ............................ 36
ARTICLE V
PAY OUT EVENTS, DEFAULTS AND REMEDIES ......................................... 36
Section 5.01. Pay Out Events ........................................ 36
Section 5.02. Events of Default ..................................... 37
Section 5.03. Acceleration of Maturity; Rescission and Annulment .... 38
Section 5.04. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee ..................................... 38
Section 5.06. Optional Preservation of the Collateral ............... 41
Section 5.07. Limitation on Suits ................................... 42
Section 5.08. Unconditional Rights of Noteholders to Receive
Principal and Interest ................................ 43
Section 5.10. Rights and Remedies Cumulative ........................ 43
Section 5.11. Delay or Omission Not Waiver .......................... 43
Section 5.12. Rights of Noteholders to Direct Indenture Trustee ..... 43
Section 5.13. Waiver of Past Defaults ............................... 44
Section 5.14. Undertaking for Costs ................................. 44
Section 5.16. Action on Notes ....................................... 45
ARTICLE VI
THE INDENTURE TRUSTEE ......................................................... 45
Section 6.01. Duties of the Indenture Trustee ....................... 45
Section 6.02. Notice of Pay Out Event or Event of Default ........... 47
Section 6.03. Rights of Indenture Trustee ........................... 47
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Section 6.04. Not Responsible for Recitals or Issuance of Notes ........ 48
Section 6.05. May Hold Notes ........................................... 49
Section 6.06. Money Held in Trust ...................................... 49
Section 6.07. Compensation, Reimbursement and Indemnification .......... 49
Section 6.08. Replacement of Indenture Trustee ......................... 50
Section 6.09. Successor Indenture Trustee by Merger .................... 51
Section 6.10. Appointment of CoIndenture Trustee or Separate
Indenture Trustee ........................................ 51
Section 6.11. Eligibility; Disqualification ............................ 52
Section 6.12. Preferential Collection of Claims Against ................ 52
Section 6.13. Tax Returns .............................................. 52
Section 6.14. Representations and Covenants of the Indenture Trustee ... 53
Section 6.15. Custody of the Collateral ................................ 53
ARTICLE VII
NOTEHOLDERS' LIST AND REPORTS BY
INDENTURE TRUSTEE AND ISSUER .................................................... 54
Section 7.01. Issuer to Furnish Indenture Trustee Names and
Addresses of Noteholders ................................. 54
Section 7.02. Preservation of Information; Communications to Noteholders 54
Section 7.03. Reports by Issuer ........................................ 54
Section 7.04. Reports by Indenture Trustee ............................. 55
ARTICLE VIII
ALLOCATION AND APPLICATION OF COLLECTIONS ........................................ 55
Section 8.01. Collection of Money ...................................... 55
Section 8.02. Rights of Noteholders .................................... 56
Section 8.03. Establishment of Collection Account and Excess
Funding Account .......................................... 56
Section 8.04. Collections and Allocations .............................. 58
Section 8.05. Shared Principal Collections ............................. 59
Section 8.06. Additional Withdrawals from the Collection Account ....... 59
Section 8.07. Allocation of Collateral to Series or Groups ............. 60
Section 8.08. Excess Finance Charge Collections ........................ 60
Section 8.09. Release of Collateral; Eligible Loan Documents ........... 61
Section 8.10. Opinion of Counsel ....................................... 61
ARTICLE IX
DISTRIBUTIONS AND REPORTS TO NOTEHOLDERS ......................................... 62
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ARTICLE X
SUPPLEMENTAL INDENTURES ...................................................... 62
Section 10.01. Supplemental Indentures Without Consent of Noteholders 62
Section 10.02. Supplemental Indentures with Consent of Noteholders .. 63
Section 10.03. Execution of Supplemental Indentures ................. 65
Section 10.04. Effect of Supplemental Indenture ..................... 65
Section 10.05. Conformity With Trust Indenture Act .................. 65
Section 10.06. Reference in Notes to Supplemental Indentures ........ 65
ARTICLE XI
TERMINATION .................................................................. 66
Section 11.01. Termination of Trust ................................. 66
Section 11.02. Final Distribution ................................... 66
Section 11.03. Issuer's Termination Rights .......................... 67
Section 11.04. [Reserved] ........................................... 67
ARTICLE XII
MISCELLANEOUS ................................................................ 67
Section 12.01. Compliance Certificates and Opinions etc ............. 67
Section 12.02. Form of Documents Delivered to Indenture Trustee ..... 69
Section 12.03. Acts of Noteholders .................................. 69
Section 12.04. Notices, Etc. to Indenture Trustee and Issuer ........ 70
Section 12.05. Notices to Noteholders; Waiver ....................... 70
Section 12.06. Alternate Payment and Notice Provisions .............. 71
Section 12.07. Conflict with Trust Indenture Act .................... 71
Section 12.08. Effect of Headings and Table of Contents ............. 71
Section 12.09. Successors and Assigns ............................... 72
Section 12.10. Separability ......................................... 72
Section 12.11. Benefits of Indenture ................................ 72
Section 12.12. Legal Holidays ....................................... 72
Section 12.13. GOVERNING LAW ........................................ 72
Section 12.14. Counterparts ......................................... 72
Section 12.15. Trust Obligation ..................................... 72
Section 12.16. No Petition .......................................... 73
</TABLE>
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<PAGE> 7
MASTER INDENTURE, dated as of _______ __, 2000 (herein, as amended,
modified or supplemented from time to time as permitted hereby, called the
"Indenture"), between Advanta Business Card Master Trust, a common law business
trust formed under the laws of the State of Delaware (herein, together with its
permitted successors and assigns, called the "Issuer" or the "Trust"), and
[__________________], a [__________________], as indenture trustee (herein,
together with its successors in the trusts hereunder, called the "Indenture
Trustee"). This Indenture may be supplemented at any time and from time to time
by an indenture supplement in accordance with Article X hereof (an "Indenture
Supplement," and any Indenture Supplement together with this Indenture and
amendments hereof collectively referred to as the "Agreement"). If a conflict
exists between the terms and provisions of this Indenture and any Indenture
Supplement, the terms and provisions of the Indenture Supplement shall be
controlling with respect to the related Series.
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this Indenture
to provide for an issue of its asset backed notes (the "Notes") as provided in
this Indenture. All covenants and agreements made by the Issuer herein are for
the benefit and security of the Noteholders. The Issuer is entering into this
Indenture, and the Indenture Trustee is accepting the trusts created hereby, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
Simultaneously with the delivery of this Indenture, the Issuer is entering
into the Transfer and Servicing Agreement with Advanta Business Receivables
Corp., a Nevada corporation, as Transferor (the "Transferor"), and Advanta Bank
Corp., a Utah industrial loan corporation, as Servicer (in such capacity, the
"Servicer"), pursuant to which (a) the Transferor will convey to the Issuer all
of its right, title and interest in, to and under the Receivables, which the
Transferor will have received from Advanta Bank Corp. or another Account Owner
(in such capacity, each, a "Seller") pursuant to a Receivables Purchase
Agreement and (b) the Servicer will agree to service the Receivables and make
collections thereon on behalf of the Noteholders.
Under each Receivables Purchase Agreement and the Transfer and Servicing
Agreement, Receivables arising in the Accounts from time to time will be
conveyed thereunder to the Issuer.
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture 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 (a) the Receivables, (b)
Interchange and Recoveries related to and all money, instruments, investment
property and other property distributed or distributable in respect of (together
with all earnings, dividends, distributions, income, issues, and profits
relating to) the Receivables pursuant to the terms of the Transfer and Servicing
Agreement, this Indenture and any Indenture Supplement; (c) all Eligible
Investments and all money, investment property, instruments and other property
on deposit from time to time in, credited to or related to the Collection
Account, the Series Accounts and the Excess Funding Account (including any
subaccounts of such account), and in all interest, dividends, earnings, income
and other distributions from time to time received, receivable or otherwise
distributed or distributable thereto or in respect thereof (including any
accrued discount realized on liquidation of any investment purchased at a
discount); (d) all rights, remedies, powers, privileges and claims of the Issuer
under or with respect to any Series Enhancement and the Transfer and Servicing
Agreement (whether arising pursuant to the terms
<PAGE> 8
of such Series Enhancement or the Transfer and Servicing Agreement or otherwise
available to the Issuer at law or in equity), including, without limitation, the
rights of the Issuer to enforce such Series Enhancement or the Transfer and
Servicing Agreement, and to give or withhold any and all consents, requests,
notices, directions, approvals, extensions or waivers under or with respect to
such Series Enhancement or the Transfer and Servicing Agreement to the same
extent as the Issuer could but for the assignment and security interest granted
to the Indenture Trustee for the benefit of the Noteholders; (e) all proceeds of
any credit insurance policies relating to the Receivables; (f) all proceeds of
any derivative contracts between the Trust or ABRC and a counterparty, as
described in any Indenture Supplement; (g) all money, accounts, general
intangibles, chattel paper, instruments, documents, goods, investment property,
deposit accounts, certificates of deposit, letters of credit, and advices of
credit belonging to the Issuer; (h) all other property of the Issuer; (i) all
present and future claims, demands, causes and choses 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; and (j) any proceeds of the foregoing, in each
case, excluding the Transferor Interest (including, without limitation, all
amounts payable to the Holders of any Certificates, pursuant to the terms of any
Transaction Document) (collectively, the "Collateral").
LIMITED RECOURSE
The obligation of the Issuer to make payments of principal of, interest on
and other amounts in respect of, the Notes is limited by recourse only to the
Collateral.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
Whenever used in this Indenture, the following words and phrases shall have
the following meanings, and the definitions of such terms are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
"ABC" shall mean Advanta Bank Corp., a Utah industrial loan corporation,
and its successors and permitted assigns.
"ABRC" shall mean Advanta Business Receivables Corp., a Nevada corporation,
and its successors and permitted assigns.
"Accumulation Period" shall mean, with respect to any Series, or any Class
within a Series, a period following the Revolving Period during which
Collections of Principal Receivables are accumulated in an account for the
benefit of the Noteholders of such Series or Class within such Series, which
shall be the controlled accumulation period, the principal accumulation period,
the early accumulation period, the optional accumulation period, the limited
accumulation period or other
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<PAGE> 9
accumulation period, in each case as defined with respect to such Series in the
related Indenture Supplement.
"Act" shall have the meaning specified in subsection 12.03(a).
"Adjusted Invested Amount" shall mean, as of any particular date of
determination, the Invested Amount as of that date, minus the amount on deposit
in the applicable Series Account, as described in any Indenture Supplement.
"Administration Agreement" shall mean the Administration Agreement, dated
as of _____ __, 2000 between the Issuer and the Administrator, as the same may
be amended, supplemented or otherwise modified from time to time.
"Administrator" shall mean ABC, or its permitted successors and assigns, or
any successor Administrator under the Administration Agreement.
"Adverse Effect" shall have the meaning specified in the Transfer and
Servicing Agreement.
"Aggregate Investor Percentage" shall mean, with respect to Principal
Receivables, Finance Charge and Administrative Receivables and Defaulted
Receivables, as the case may be, as of any date of determination, the sum of the
Investor Percentages (as defined in the related Indenture Supplements) of all
Series of Notes issued and outstanding on such date of determination; provided,
however, that the Aggregate Investor Percentage shall not exceed 100%.
"Agreement" shall mean this Master Indenture, as the same may be amended,
supplemented or otherwise modified from time to time, including, with respect to
any Series or Class, the related Indenture Supplement.
"Amortization Period" shall mean, with respect to any Series, or any Class
within a Series, a period following the Revolving Period during which
Collections of Principal Receivables are distributed to Noteholders, which shall
be the controlled amortization period, the principal amortization period, the
early amortization period, the optional amortization period, the limited
amortization period or other amortization period, in each case as defined with
respect to such Series in the related Indenture Supplement.
"Applicants" shall have the meaning specified in Section 2.09.
"Authorized Officer" shall mean:
(a) with respect to the Issuer, any officer of the Owner Trustee who is
authorized to act for the Owner Trustee 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 by the Owner Trustee to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter) and any Vice President or more senior officer of the
Administrator who is authorized to act for the Administrator in matters relating
to the Issuer and to be acted upon by the Administrator pursuant to the
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<PAGE> 10
Administration Agreement and who is identified on the list of Authorized
Officers (containing the specimen signatures of such officers) delivered by the
Administrator to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter).
(b) with respect to the Transferor, any officer of the Transferor who is
authorized to act for the Transferor in matters relating to the Transferor and
who is identified on the list of Authorized Officers, containing the specimen
signature of each such Person, delivered by the Transferor to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
(c) with respect to the Servicer, any officer of the Servicer who is
authorized to act for the Servicer in matters relating to the Servicer and who
is identified on the list of Authorized Officers, containing the specimen
signature of each such Person, delivered by the Servicer to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
"Bearer Notes" shall have the meaning specified in Section 2.01.
"Beneficial Owner" shall mean, with respect to a Book-Entry Note, the
Person who is the owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency or Foreign Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency or Foreign Clearing Agency
(directly as a Clearing Agency Participant or as an Indirect Participant, in
accordance with the rules of such Clearing Agency or Foreign Clearing Agency).
"Book-Entry Notes" shall mean beneficial interests in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
or Foreign Clearing Agency as described in Section 2.13.
"Class" shall mean, with respect to any Series, any one of the classes of
Notes of that Series.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended, and serving as clearing agency for a Series or Class of Book-Entry
Notes.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Clearstream" shall mean Clearstream Banking, societe anonyme, a
professional depository incorporated under the laws of Luxembourg, and its
successors.
"Closing Date" shall mean, with respect to any Series, the closing date
specified in the related Indenture Supplement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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<PAGE> 11
"Collateral" shall have the meaning specified in the Granting Clause of
this Indenture.
"Collection Account" shall have the meaning specified in Section 8.03.
"Commission" shall mean the Securities and Exchange Commission and its
successors in interest.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at date of the execution of this Indenture is located
at [___________________________], or at such other address as the Indenture
Trustee may designate from time to time by notice to the Noteholders and the
Transferor, or the principal corporate trust office of any successor Indenture
Trustee (the address of which the successor Indenture Trustee will notify the
Noteholders and the Transferor); provided that for the purposes of Section 3.02,
the address of any such office shall be in [______________________________].
"Coupon" shall have the meaning specified in Section 2.01.
"Default" shall mean any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" shall mean Notes in definitive, fully registered form.
"Deposit Date" shall mean each day on which the Servicer deposits
Collections in the Collection Account.
"Determination Date" shall mean, unless otherwise specified in the
Indenture Supplement for a particular Series, the third Business Day preceding
the fifteenth day of each calendar month.
"Dollars," "$" or "U.S. $" shall mean United States dollars.
"DTC" shall mean The Depository Trust Company.
"Eligible Institution" shall mean [any depository institution (which may be
the Owner Trustee or the Indenture Trustee) organized under the laws of the
United States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), which depository
institution at all times (a) is a member of the FDIC and (b) has (i) a long-term
unsecured debt rating acceptable to the Rating Agencies or (ii) a certificate of
deposit rating acceptable to the Rating Agencies. Notwithstanding the previous
sentence, any institution the appointment of which satisfies the Rating Agency
Condition shall be considered an Eligible Institution. If so qualified, the
Servicer may be considered an Eligible Institution for the purposes of this
definition].
"Eligible Investments" shall mean the following securities, instruments,
investments or other property, other than securities issued by or obligations of
the Seller:
(a) direct obligations of, or obligations fully guaranteed as to timely
payment of principal and interest by, the United States of America;
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<PAGE> 12
(b) demand deposits, time deposits or certificates of deposit (having
original maturities of no more than 365 days) of depository institutions or
trust companies incorporated under the laws of the United States of America or
any state thereof, including the District of Columbia (or domestic branches of
foreign banks) and subject to supervision and examination by federal or state
banking or depository institution authorities; provided that at the time of the
Trust's investment or contractual commitment to invest therein, the short-term
debt rating of such depository institution or trust company shall be in the
highest rating category of at least one of the Rating Agencies;
(c) commercial paper or other short-term obligations having original or
remaining maturities of no more than thirty (30) days, and having, at the time
of the Trust's investment or contractual commitment to invest therein, a rating
in the highest rating category of at least one of the Rating Agencies;
(d) demand deposits, time deposits and certificates of deposit which are
fully insured by the FDIC having, at the time of the Trust's investment therein,
a rating in the highest rating category of at least one of the Rating Agencies;
(e) notes or bankers' acceptances (having original maturities of no more
than 365 days) issued by any depository institution or trust company referred to
in clause (b) above;
(f) money market funds having, at the time of the Trust's investment
therein, a rating in the highest rating category of at least one of the Rating
Agencies (including funds for which the Indenture Trustee or any of its
Affiliates is investment manager or advisor);
(g) time deposits (having maturities not later than the succeeding Payment
Date) other than as referred to in clause (d) above, with a Person the
commercial paper of which has a credit rating satisfactory to at least one of
the Rating Agencies; or
(h) any other investment of a type or rating that satisfies the Rating
Agency Condition.
"Enhancement Agreement" shall mean any agreement, instrument or document
governing the terms of any Series Enhancement or pursuant to which any Series
Enhancement is issued or outstanding.
"Euroclear Operator" shall mean Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System.
"Event of Default" shall have the meaning specified in Section 5.02.
"Excess Allocation Series" shall mean a Series that, pursuant to the
Indenture Supplement therefor, is entitled to receive certain excess Collections
of Finance Charge and Administrative Receivables, as more specifically set forth
in such Indenture Supplement. If so specified in the Indenture Supplement for a
Group of Series, each such Series may be an Excess Allocation Series only for
the other Series in such Group.
"Excess Finance Charge Collections" shall have the meaning specified in
Section 8.08.
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<PAGE> 13
"Excess Funding Account" shall have the meaning set forth in Section 8.03.
"Excess Funding Amount" shall mean the amount on deposit in the Excess
Funding Account [(other than interest and investment earnings)].
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Finance Charge Shortfalls" shall have the meaning specified in Section
8.08.
"Foreclosure Certificate" shall have the meaning specified in the Trust
Agreement.
"Foreclosure Remedy" shall have the meaning specified in subsection
5.05(a)(iii).
"Foreign Clearing Agency" shall mean Clearstream and the Euroclear
Operator.
"GAAP" means generally accepted accounting principles in the United States
of America in effect from time to time.
"Global Note" shall have the meaning specified in Section 2.16.
"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.
"Group" shall mean, with respect to any Series, the group of Series, if
any, in which the related Indenture Supplement specifies such Series is to be
included.
"Indenture" shall mean this Master Indenture, dated as of [___________ __],
2000, between the Issuer and the Indenture Trustee, as the same may be amended,
supplemented or otherwise modified from time to time.
"Indenture Supplement" shall mean, with respect to any Series, a supplement
to this Indenture, executed and delivered in connection with the original
issuance of the Notes of such Series pursuant to Section 10.01, and an amendment
to this Indenture executed pursuant to Sections 10.01 or 10.02, and, in either
case, including all amendments thereof and supplements thereto.
"Indenture Trustee" shall mean [_______________________], in its capacity
as trustee under the Agreement, its successors in interest and any successor
indenture trustee under the Agreement.
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<PAGE> 14
"Independent" shall mean, 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" shall mean a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 12.01, 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.
"Indirect Participant" shall mean other Persons such as securities brokers
and dealers, banks and trust companies that clear or maintain a custodial
relationship with a participant of DTC, either directly or indirectly.
"Invested Amount" shall mean, with respect to any Series and for any date,
an amount equal to the "Invested Amount" or "Adjusted Invested Amount," as
applicable, specified in the related Indenture Supplement.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended.
"Issuer" shall mean the Trust.
"Issuer Order" and "Issuer Request" shall mean a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Monthly Period" shall mean, with respect to each Payment Date, unless
otherwise provided in an Indenture Supplement, the period from and including the
first day of the preceding calendar month to and including the last day of such
calendar month; provided, however, that the initial Monthly Period with respect
to any Series will commence on the Closing Date with respect to such Series.
"New Issuance" shall have the meaning specified in subsection 2.12(a).
"Note Interest Rate" shall mean, as of any particular date of determination
and with respect to any Series or Class, the interest rate as of such date
specified therefor in the related Indenture Supplement.
"Note Owner" shall mean, with respect to a Book-Entry Note, the Person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an Indirect Participant,
in accordance with the rules of such Clearing Agency).
"Note Register" shall have the meaning specified in Section 2.05.
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"Noteholder" or "Holder" shall mean the Person in whose name a Note is
registered on the Note Register and, if applicable, the holder of any Bearer
Note, Global Note, or Coupon, as the case may be, or such other Person deemed to
be a "Noteholder" or "Holder" in any related Indenture Supplement.
"Notes" shall mean all Series of Notes issued by the Trust pursuant to this
Indenture and the applicable Indenture Supplements.
"Officer's Certificate" shall mean, unless otherwise specified in this
Indenture, a certificate delivered to the Indenture Trustee signed by any
Authorized Officer of the Issuer, Transferor, or Servicer, as applicable, under
the circumstances described in, and otherwise complying with, the applicable
requirements of Section 12.01.
"Opinion of Counsel" shall mean a written opinion of counsel, who may be
counsel for, or an employee of, the Person providing the opinion and who shall
be reasonably acceptable to the Indenture Trustee; provided that a Tax Opinion
shall be an opinion of nationally recognized tax counsel.
"Outstanding" shall mean, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Transfer Agent and Registrar or
delivered to the Transfer Agent and Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the necessary
amount has been theretofore deposited with the Indenture 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 Indenture 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 Indenture Trustee is presented that any such Notes are held by a
protected purchaser (as defined in Section 8-303 of the UCC as in effect in the
State of New York);
provided that in determining whether the Holders of Notes representing the
requisite Outstanding Amount have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Notes owned by the Issuer, any
other obligor upon the Notes, the Transferor, the Servicer or any Affiliate of
any of the foregoing Persons shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that a Responsible Officer of the
Indenture 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 Indenture 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, the Servicer or
any Affiliate of any of the foregoing Persons.
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In making any such determination, the Indenture 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
Outstanding at the date of determination.
"Owner Trustee" shall mean _________________________, in its capacity as
owner trustee under the Trust Agreement, its successors in interest and any
successor owner trustee under the Trust Agreement.
"Paired Series" shall mean (i) each Series which has been paired with
another Series (which Series may be prefunded or partially prefunded), such that
the reduction of the Invested Amount or Adjusted Invested Amount of such Series
results in the increase of the Invested Amount of such other Series, as
described in the related Indenture Supplements, and (ii) such other Series.
"Pay Out Event" shall mean, with respect to any Series, a Trust Pay Out
Event or a Series Pay Out Event.
"Paying Agent" shall mean any paying agent appointed pursuant to Section
2.08 and shall initially be the Indenture Trustee; provided that if the
Indenture Supplement for a Series so provides, a separate or additional Paying
Agent may be appointed with respect to such Series.
"Payment Date" shall mean, with respect to any Series, the date specified
in the applicable Indenture Supplement.
"Permitted Assignee" shall mean any Person who, if it were to purchase
Receivables (or interests therein) in connection with a sale thereof pursuant to
Section 5.05(a), would not cause the Trust to be taxable as an association (or a
publicly traded partnership) taxable as a corporation for federal income tax
purposes.
"Principal Sharing Series" shall mean a Series that, pursuant to the
Indenture Supplement therefor, is entitled to receive Shared Principal
Collections. If so specified in the Indenture Supplements for a Group of Series,
each such Series may be a Principal Sharing Series only for the other Series in
such Group.
"Principal Shortfalls" shall have the meaning specified in subsection
8.05(a).
"Principal Terms" shall mean, with respect to any Series, (a) the name or
designation; (b) the initial principal amount (or method for calculating such
amount), the Invested Amount and the Required Transferor Interest; (c) the Note
Interest Rate for each Class of Notes of such Series (or method for the
determination thereof); (d) the payment date or dates and the date or dates from
which interest shall accrue; (e) the method for allocating Collections to
Noteholders; (f) the designation of any Series Accounts and the terms governing
the operation of any such Series Accounts; (g) the Servicing Fee; (h) the terms
of any form of Series Enhancements with respect thereto; (i) the terms on which
the Notes of such Series may be exchanged for Notes of another Series,
repurchased by the Transferor or remarketed
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to other investors; (j) the Series Termination Date; (k) the number of Classes
of Notes of such Series and, if more than one Class, the rights and priorities
of each such Class; (l) the extent to which the Notes of such Series will be
issuable in temporary or permanent global form (and, in such case, the
depositary for such global note or notes, the terms and conditions, if any, upon
which such global note or notes may be exchanged, in whole or in part, for
Definitive Notes, and the manner in which any interest payable on a temporary or
global note will be paid); (m) whether the Notes of such Series may be issued in
bearer form and any limitations imposed thereon; (n) the priority of such Series
with respect to any other Series; (o) whether such Series will be part of a
Group; (p) whether such Series will be a Principal Sharing Series; (q) whether
such Series will be an Excess Allocation Series; (r) whether such Series will or
may be a Paired Series and the Series with which it will be paired, if
applicable; and (t) any other terms of such Series.
"Proceeding" shall mean any suit in equity, action at law or other judicial
or administrative proceeding.
"Qualified Account" shall mean either (a) a segregated account with an
Eligible Institution, or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States or any one of the states thereof, including the District of Columbia (or
any domestic branch of a foreign bank), and acting as a trustee for funds
deposited in such account, so long as any of the securities of such depository
institution shall have a credit rating from each Rating Agency in one of its
generic credit rating categories that signifies investment grade.
"Rating Agency" shall mean, with respect to any outstanding Series or
Class, each rating agency, as specified in the applicable Indenture Supplement,
selected by the Transferor to rate the Notes of such Series or Class.
"Rating Agency Condition" shall mean, with respect to any action, that each
Rating Agency shall have notified the Transferor, the Servicer, the Owner
Trustee and the Indenture Trustee in writing that such action will not result in
a reduction or withdrawal of the then existing rating of any outstanding Series
or Class with respect to which it is a Rating Agency.
"Record Date" shall mean, with respect to any Payment Date, the last day of
the calendar month immediately preceding such Payment Date unless otherwise
specified for a Series in the related Indenture Supplement.
"Redemption Date" shall mean, with respect to any Series, the date or dates
specified in the related Indenture Supplement.
"Registered Notes" shall have the meaning specified in Section 2.01.
"Required Minimum Principal Balance" shall mean, as of any particular date
of determination, for all Series (unless otherwise specified in the related
Indenture Supplement for any Series which is a Paired Series) (i) the sum of the
"Invested Amounts" for all Series on such date, plus (ii) the Required
Transferor Interest on such date, minus (iii) the amount on deposit in the
Excess Funding Account.
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"Required Transferor Interest" shall mean, with respect to any date, an
amount equal to the product of (i) the Required Transferor Percentage and (ii)
the aggregate amount of Principal Receivables.
"Required Transferor Percentage" shall mean 7%; provided, however, that the
Transferor may reduce the Required Transferor Percentage upon (x) thirty (30)
days prior notice to the Indenture Trustee and each Rating Agency, (y)
satisfaction of the Rating Agency Condition with respect thereto and (z)
delivery to the Indenture Trustee of a certificate of a Vice President or more
senior officer of the Transferor stating that the Transferor reasonably believes
that such reduction will not, based on the facts known to such officer at the
time of such certification, then or thereafter have an Adverse Effect; provided
further that the Required Transferor Percentage shall not at any time be less
than 2%.
"Responsible Officer" shall mean, when used with respect to the Indenture
Trustee, any officer within the Corporate Trust Office of the Indenture Trustee
including any vice president, assistant vice president, assistant treasurer,
assistant secretary, trust officer or any other officer of the Indenture Trustee
customarily performing functions similar to those performed by the persons who
at the time shall be such officers or to whom any corporate trust matter is
referred at the Corporate Trust Office because of such officer's knowledge of
and familiarity with the particular subject.
"Revolving Period" shall have, with respect to each Series, the meaning
specified in the related Indenture Supplement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall mean any of ABC or another Account Owner, in its capacity as
seller under a Receivables Purchase Agreement.
"Series" shall mean any series of Notes issued pursuant to this Indenture
and the related Indenture Supplement.
"Series Account" shall mean any deposit, trust, securities escrow or
similar account maintained for the benefit of the Noteholders of any Series or
Class, as specified in any Indenture Supplement.
"Series Enhancement" shall mean the rights and benefits provided to the
Trust or the Noteholders of any Series or Class pursuant to any letter of
credit, surety bond, cash collateral account, collateral interest, spread
account, reserve account, cash collateral guaranty, insurance policy, tax
protection agreement, interest rate swap agreement, interest rate cap agreement,
cross support feature or other similar arrangement. The subordination of any
Series or Class to another Series or Class shall be deemed to be a Series
Enhancement.
"Series Enhancer" shall mean the Person or Persons providing any Series
Enhancement, other than (except to the extent otherwise provided with respect to
any Series in the Indenture Supplement for such Series) any account or deposits
therein or the Noteholders of any Series or Class which is subordinated to
another Series or Class.
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"Series Issuance Date" shall mean, with respect to any Series, the date on
which the Notes of such Series are to be originally issued in accordance with
Section 2.12 and the related Indenture Supplement.
"Series Pay Out Event" shall have, with respect to any Series, the meaning
specified pursuant to the related Indenture Supplement.
"Series Termination Date" shall mean, with respect to any Series, the
termination date for such Series specified in the related Indenture Supplement.
"Servicer" shall have the meaning specified in the Transfer and Servicing
Agreement.
"Shared Finance Charge Collections" shall mean, with respect to any Payment
Date, the aggregate amount for all outstanding Series that the related Indenture
Supplements specify are to be treated as "Shared Finance Charge Collections" for
such Payment Date.
"Shared Principal Collections" shall have the meaning specified in
subsection 8.05(a).
"Tax Opinion" shall mean, with respect to any action, an Opinion of Counsel
to the effect that, for federal income tax purposes, (a) such action will not
adversely affect the tax characterization as debt of the Notes of any
outstanding Series or Class that were characterized as debt at the time of their
issuance, (b) such action will not cause the Trust to be deemed to be an
association (or publicly traded partnership) taxable as a corporation and (c)
such action will not cause or constitute an event in which gain or loss would be
recognized by any Noteholder.
"Transaction Documents" shall mean, with respect to any Series of Notes,
the Certificate of Trust, the Trust Agreement, the Receivables Purchase
Agreement, the Transfer and Servicing Agreement, this Indenture, the related
Indenture Supplement, the Administration Agreement and such other documents and
certificates delivered in connection therewith.
"Transfer Agent and Registrar" shall have the meaning specified in Section
2.05.
"Transfer and Servicing Agreement" shall mean the Transfer and Servicing
Agreement, dated as of [_______ __], 2000, among the Transferor, the Servicer
and the Issuer, as the same may be amended, supplemented or otherwise modified
from time to time.
"Transfer Date" shall mean the Business Day immediately preceding each
Payment Date.
"Transferor" shall have the meaning specified in the Transfer and Servicing
Agreement.
"Transferor Interest" shall mean on any date of determination an amount
equal to the difference between (a) the sum of (i) the aggregate balance of
Principal Receivables at the end of the day immediately prior to such date of
determination, plus (ii) the Excess Funding Amount at the end of the day
immediately prior to such date of determination, minus (b) the aggregated
Adjusted Invested Amounts of all Series of Notes issued and outstanding on such
date of determination.
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"Transferor Percentage" shall mean, on any date of determination, when used
with respect to Principal Receivables, Finance Charge and Administrative
Receivables and Defaulted Receivables, a percentage equal to 100% minus the
Aggregate Investor Percentage with respect to such category of Receivables.
"Trust" shall mean the Advanta Business Card Master Trust.
"Trust Agreement" shall mean the Trust Agreement relating to the Trust,
dated as of [______ __], 2000, between ABRC and the Owner Trustee, as the same
may be amended, supplemented or otherwise modified from time to time.
"Trust Indenture Act" or "TIA" shall mean the Trust Indenture Act of 1939,
as amended.
"Trust Pay Out Event" shall have, with respect to each Series, the meaning
specified in Section 5.01.
"Trustee Officer" shall mean, with respect to the Indenture Trustee any
officer assigned to the Corporate Trust Office, including any managing director,
vice president, assistant vice president, assistant treasurer, assistant
secretary or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
having direct responsibility for the administration of the applicable
Transaction Documents, and also, with respect to a particular matter, any other
officer, to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"UCC" shall have the meaning specified in the Transfer and Servicing
Agreement.
Section 1.02. Other Definitional Provisions.
(a) With respect to any Series, all terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Trust Agreement,
the Transfer and Servicing Agreement or the related Indenture Supplement, as
applicable.
(b) All terms defined in this Indenture shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Indenture and in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms not defined in this
Indenture or in any such certificate or other document, and accounting terms
partly defined in this Indenture or in any such certificate or other document to
the extent not defined, shall have the respective meanings given to them under
GAAP. To the extent that the definitions of accounting terms in this Indenture
or in any such certificate or other document are inconsistent with the meanings
of such terms under GAAP, the definitions contained in this Indenture or in any
such certificate or other document shall control.
(d) Any reference to a Rating Agency shall only apply to any specific
rating agency if such rating agency is then rating any outstanding Series.
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(e) Unless otherwise specified, references to any amount as on deposit or
outstanding on any particular date shall mean such amount at the close of
business on such day.
(f) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Indenture shall refer to this Indenture as a whole and not to
any particular provision of this Indenture; references to any subsection,
Section, Schedule or Exhibit are references to subsections, Sections, Schedules
and Exhibits in or to this Indenture unless otherwise specified; and the term
"including" means "including without limitation."
(g) 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:
"indenture securities" means the Notes
"indenture security holder" means a Noteholder
"indenture to be qualified" means this Indenture
"indenture trustee" or "institutional trustee" means the Indenture 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 meanings assigned to them by such definitions.
ARTICLE II
THE NOTES
Section 2.01. Form Generally.
Any Series or Class of Notes, together with the Indenture Trustee's
certificate of authentication related thereto, may be issued in bearer form (the
"Bearer Notes") with attached interest coupons and a special coupon
(collectively, the "Coupons") or in fully registered form (the "Registered
Notes") and shall be in substantially the form of an exhibit to the related
Indenture Supplement with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture or such
Indenture Supplement, 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 such Notes. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Note. The terms of any Notes set forth in an exhibit to the
related Indenture Supplement are part of the terms of this Indenture, as
applicable.
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The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
Each Note will be dated the Closing Date and each Definitive Note will be
dated as of the date of its authentication.
Section 2.02. Denominations.
Except as otherwise specified in the related Indenture Supplement and the
Notes, each class of Notes of each Series shall be issued in fully registered
form in minimum amounts of $1,000 and in integral multiples of $1,000 in excess
thereof (except that one Note of each Class may be issued in a different amount,
so long as such amount exceeds the applicable minimum denomination for such
Class), and shall be issued upon initial issuance as one or more Notes in an
aggregate original principal amount equal to the applicable Invested Amount for
such Class or Series.
Section 2.03. Execution, Authentication and Delivery.
Each Note shall be executed by manual or facsimile signature on behalf of
the Issuer by an Authorized Officer.
Notes bearing the manual or facsimile signature of an individual who was,
at the time when such signature was affixed, authorized to sign on behalf of the
Issuer shall not be rendered invalid, notwithstanding the fact that such
individual ceased to be so authorized prior to the authentication and delivery
of such Notes or does not hold such office at the date of issuance of such
Notes.
At any time and from time to time after the execution and delivery of this
Indenture, the Issuer may deliver Notes executed by the Issuer to the Indenture
Trustee for authentication and delivery, and the Indenture Trustee shall
authenticate and deliver such Notes as provided in this Indenture or the related
Indenture Supplement and not otherwise.
No Note shall be entitled to any benefit under this Indenture or the
applicable Indenture Supplement or be valid or obligatory for any purpose,
unless there appears on such Note a certificate of authentication substantially
in the form provided for herein or in the related Indenture Supplement executed
by or on behalf of the Indenture Trustee by the manual signature of a duly
authorized signatory, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
Section 2.04. Authenticating Agent.
(a) The Indenture Trustee may appoint one or more authenticating agents
with respect to the Notes which shall be authorized to act on behalf of the
Indenture Trustee in authenticating the Notes in connection with the issuance,
delivery, registration of transfer, exchange or repayment of the Notes. Whenever
reference is made in this Indenture to the authentication of Notes by the
Indenture Trustee or the Indenture Trustee's certificate of authentication, such
reference shall be deemed to include
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authentication on behalf of the Indenture Trustee by an authenticating agent and
a certificate of authentication executed on behalf of the Indenture Trustee by
an authenticating agent. Each authenticating agent must be acceptable to the
Issuer and the Servicer.
(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any power or any further act on the part of the Indenture
Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving written notice
of resignation to the Indenture Trustee, the Issuer and the Servicer. The
Indenture Trustee may at any time terminate the agency of an authenticating
agent by giving notice of termination to such authenticating agent and to the
Issuer and the Servicer. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time an authenticating agent shall cease
to be acceptable to the Indenture Trustee or the Issuer and the Servicer, the
Indenture Trustee may promptly appoint a successor authenticating agent. Any
successor authenticating agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an authenticating agent.
No successor authenticating agent shall be appointed unless acceptable to the
Issuer and the Servicer.
(d) The Issuer agrees to pay to each authenticating agent from time to time
reasonable compensation for its services under this Section 2.04.
(e) The provisions of Sections 6.01 and 6.04 shall be applicable to any
authenticating agent.
(f) Pursuant to an appointment made under this Section 2.04, the Notes may
have endorsed thereon, in lieu of or in addition to the Indenture Trustee's
certificate of authentication, an alternative certificate of authentication in
substantially the following form:
"This is one of the Notes described in the within-mentioned Agreement.
- --------------------------
- --------------------------
as Authenticating Agent
for the Indenture Trustee
By: __________________________
"Authorized Signatory"
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Section 2.05. Registration of and Limitations on Transfer and Exchange of
Notes.
The Issuer shall cause to be kept a register (the "Note Register") in which
the Issuer shall provide for the registration of Notes and the registration of
transfers of Notes. The Indenture Trustee initially shall be the transfer agent
and registrar (in such capacity, the "Transfer Agent and Registrar") for the
purpose of registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Transfer Agent and Registrar, the Issuer shall promptly
appoint a successor or, if it elects not to make such an appointment, assume the
duties of Transfer Agent and Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer as
Transfer Agent and Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of a Transfer Agent and Registrar and of the
location, and any change in the location, of the Transfer Agent and Registrar
and Note Register. The Indenture Trustee shall have the right to inspect the
Note Register at all reasonable times and to obtain copies thereof, and the
Indenture Trustee shall have the right to rely upon a certificate executed on
behalf of the Transfer Agent and Registrar by an officer thereof as to the names
and addresses of the Noteholders and the principal amounts and numbers of such
Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Transfer Agent and Registrar, to be maintained as provided in
Section 3.02, if the requirements of Section 8-401 of the UCC are met, the
Issuer shall execute, and upon receipt of such surrendered Note the Indenture
Trustee shall authenticate and deliver to the Noteholder, in the name of the
designated transferee or transferees, one or more new Notes (of the same Series
and Class) in any authorized denominations of like aggregate principal amount.
At the option of a Noteholder, Notes may be exchanged for other Notes (of
the same Series and Class) in any authorized denominations and of like aggregate
principal amount, upon surrender of such Notes to be exchanged at the office or
agency of the Transfer Agent and Registrar. Whenever any Notes are so
surrendered for exchange, if the requirements of Section 8-401 of the UCC are
met, the Issuer shall execute, and upon receipt of such surrendered Note the
Indenture Trustee shall authenticate and deliver to the Noteholder, 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 evidence the same obligations, evidence the same debt, and be entitled to
the same rights and privileges 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 a form satisfactory to the Indenture Trustee duly executed by, the
Noteholder thereof or its attorney-in-fact duly authorized in writing, and by
such other documents as the Indenture Trustee may reasonably require.
Any Note held by the Transferor at any time after the date of its initial
issuance may be transferred or exchanged only upon the delivery to the Owner
Trustee and the Indenture Trustee of a Tax Opinion dated as of the date of such
transfer or exchange, as the case may be, with respect to such transfer or
exchange.
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The registration of transfer of any Note shall be subject to the additional
requirements, if any, set forth in the related Indenture Supplement.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Issuer and the Transfer Agent and Registrar 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 such Notes.
All Notes surrendered for registration of transfer and exchange shall be
canceled by the Issuer and delivered to the Indenture Trustee for subsequent
destruction without liability on the part of either. The Indenture Trustee shall
destroy the Global Note upon its exchange in full for Definitive Notes and shall
deliver a certificate of destruction to the Transferor. Such certificate shall
also state that a certificate or certificates of each Foreign Clearing Agency
referred to in the applicable Indenture Supplement was received with respect to
each portion of the Global Note exchanged for Definitive Notes.
The preceding provisions of this Section 2.05 notwithstanding, the Issuer
shall not be required to make, and Transfer Agent and Registrar need not
register, transfers or exchanges of Notes for a period of twenty (20) days
preceding the due date for any payment with respect to the Note.
If and so long as any Series of Notes are listed on the Luxembourg Stock
Exchange and such exchange shall so require, the Indenture Trustee shall appoint
a co-transfer agent and co-registrar in Luxembourg or another European city. Any
reference in this Indenture to the Transfer Agent and Registrar shall include
any co-transfer agent and co-registrar unless the context otherwise requires.
The Indenture Trustee will enter into any appropriate agency agreement with any
co-transfer agent and co-registrar not a party to this Indenture, which will
implement the provisions of this Indenture that relate to such agent. [The
Indenture Trustee initially appoints [_____________________] at its office
located at [_____________________], as Transfer Agent and Registrar for each
Series of Notes listed on the Luxembourg Stock Exchange.]
Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes.
If (a) any mutilated Note is surrendered to the Indenture Trustee, or the
Indenture Trustee receives evidence to its reasonable satisfaction of the
destruction, loss or theft of any Note, and (b) in case of destruction, loss, or
theft there is delivered to the Indenture Trustee such security or indemnity as
may be required by it to hold the Issuer, the Noteholders and the Indenture
Trustee harmless, then, in the absence of notice to the Issuer, the Transfer
Agent and Registrar or the Indenture Trustee that such Note has been acquired by
a protected purchaser (as defined in Section 8-303 of the UCC as in effect in
the State of New York), the Issuer shall execute, and the Indenture Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note of like tenor
(including the same date of issuance) and principal amount, bearing a number not
contemporaneously outstanding; provided, however, that if any such mutilated,
destroyed, lost or stolen Note shall have become or within seven (7) days shall
be due and payable, or shall have been selected or called for redemption,
instead of issuing a replacement Note, the Issuer may pay such Note without
surrender thereof, except that any mutilated Note shall be surrendered. If,
after the delivery of such replacement Note or payment of a destroyed, lost or
stolen Note pursuant to the proviso to the preceding
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sentence, a protected purchaser (as defined in Section 8-303 of the UCC as in
effect in the State of New York) of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, the Issuer
and the Indenture 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 protected 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 Indenture Trustee in
connection therewith.
Upon the issuance of any replacement Note under this Section 2.06, 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 Indenture Trustee or the Transfer Agent and Registrar) connected therewith.
Every replacement Note issued pursuant to this Section 2.06 in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute complete and
indefeasible evidence of an obligation of the Trust, as if originally issued,
whether or not the mutilated, destroyed, lost or stolen Note shall be found at
any time, 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 2.06 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 2.07. Persons Deemed Owners.
Prior to due presentment for registration of transfer of any Note, the
Issuer, the Transferor, the Indenture Trustee and any agent of the Issuer, the
Transferor or the Indenture Trustee shall treat the Person in whose name any
Note is registered as the owner of such Note for the purpose of receiving
distributions pursuant to the terms of the applicable Indenture Supplement and
for all other purposes whatsoever, whether or not such Note is overdue, and
neither the Issuer, the Transferor, the Indenture Trustee nor any agent of the
Issuer, the Transferor or the Indenture Trustee shall be affected by any notice
to the contrary.
Section 2.08. Appointment of Paying Agent.
(a) The Issuer reserves the right at any time to vary or terminate the
appointment of a Paying Agent for the Notes, and to appoint additional or other
Paying Agents, provided that it will at all times maintain the Indenture Trustee
as Paying Agent.
If and so long as any Notes are listed on the Luxembourg Stock Exchange and
such exchange shall so require, the Indenture Trustee will appoint a co-paying
agent in Luxembourg or another European city. The Indenture Trustee will enter
into any appropriate agency agreement with any co-paying agent not a party to
this Indenture, which will implement the provisions of this Indenture that
relate to such agent. [The Indenture Trustee initially appoints
[________________________], at its office located at
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[________________________], as Paying Agent for each Series of Notes listed
on the Luxembourg Stock Exchange.
Notice of all changes in the identity or specified office of a Paying Agent
will be delivered promptly to the Noteholders by the Indenture Trustee.
(b) The Indenture Trustee shall cause each Paying Agent (other than itself)
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee that such Paying Agent will
hold all sums, if any, held by it for payment to the Noteholders in trust for
the benefit of the Noteholders entitled thereto until such sums shall be paid to
such Noteholders and shall agree, and if the Indenture Trustee is the Paying
Agent it hereby agrees, that it shall comply with all requirements of the Code
regarding the withholding by the Indenture Trustee of payments in respect of
federal income taxes due from the Beneficial Owners.
Section 2.09. [Reserved].
Section 2.10. Cancellation.
All Notes surrendered for payment, registration of transfer, exchange or
redemption shall, if surrendered to any Person other than the Indenture Trustee,
be delivered to the Indenture Trustee and shall be promptly canceled by it. The
Issuer may at any time deliver to the Indenture Trustee for cancellation any
Notes previously authenticated and delivered hereunder which the Issuer may have
acquired in any lawful manner whatsoever, and all Notes so delivered shall be
promptly canceled by the Indenture Trustee. No Notes shall be authenticated in
lieu of or in exchange for any Notes canceled as provided in this Section 2.10,
except as expressly permitted by this Indenture. All canceled Notes held by the
Indenture Trustee shall be destroyed unless the Issuer shall direct by a timely
order that they be returned to it.
Section 2.11. Release of Collateral.
Subject to Section 12.01, the Indenture 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 Section314(c) and 314(d) or an Opinion of Counsel in lieu of
such Independent Certificates to the effect that the TIA does not require any
such Independent Certificates.
Section 2.12. New Issuances.
(a) Pursuant to one or more Indenture Supplements, the Transferor may from
time to time direct the Owner Trustee, on behalf of the Issuer, to issue one or
more new Series of Notes (a "New Issuance"). The Notes of all outstanding Series
shall be equally and ratably entitled as provided herein to the benefits of this
Indenture without preference, priority or distinction, all in accordance with
the terms and provisions of this Indenture and the applicable Indenture
Supplement except, with respect to any Series or Class, as provided in the
related Indenture Supplement. Interest on the Notes of all outstanding Series
shall be paid on each Payment Date as specified in the Indenture Supplement
relating to such
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outstanding Series. Principal of the Notes of each outstanding Series shall be
paid as specified in the Indenture Supplement relating to such outstanding
Series.
(b) On or before the Series Issuance Date relating to any new Series of
Notes, the parties hereto will execute and deliver an Indenture Supplement which
will specify the Principal Terms of such Series. The terms of such Indenture
Supplement may modify or amend the terms of this Indenture solely as applied to
such new Series. The obligation of the Owner Trustee to execute, on behalf of
the Issuer, the Notes of any Series and of the Indenture Trustee to authenticate
such Notes (other than any Series issued pursuant to an Indenture Supplement
dated as of the date hereof) and to execute and deliver the related Indenture
Supplement is subject to the satisfaction of the following conditions:
(i) on or before the fifth day immediately preceding the Series
Issuance Date the Transferor shall have given the Owner Trustee, the Indenture
Trustee, the Servicer and each Rating Agency notice (unless such notice
requirement is otherwise waived) of such issuance and the Series Issuance Date;
(ii) the Transferor shall have delivered to the Owner Trustee and the
Indenture Trustee any related Indenture Supplement, in form satisfactory to the
Owner Trustee and the Indenture Trustee, executed by each party hereto (other
than the Indenture Trustee);
(iii) the Transferor shall have delivered to the Owner Trustee and the
Indenture Trustee any related Enhancement Agreement executed by the Transferor
and the Series Enhancer;
(iv) the Rating Agency Condition shall have been satisfied with respect
to such issuance;
(v) such issuance will not result in any Adverse Effect and the
Transferor shall have delivered to the Owner Trustee and the Indenture Trustee
an Officer's Certificate, dated the Series Issuance Date to the effect that the
Transferor reasonably believes that such issuance will not, based on the facts
known to such officer at the time of such certification, have an Adverse Effect;
(vi) the Transferor shall have delivered to the Owner Trustee and the
Indenture Trustee (with a copy to each Rating Agency) (a) an Opinion of Counsel,
dated the Series Issuance Date with respect to such issuance, to the effect
that, except as otherwise stated in the related Indenture Supplement, the Notes
of the new Series will be characterized as debt for federal income tax purposes
and (b) a Tax Opinion, dated the Series Issuance Date with respect to such
issuance; and
(vii) the aggregate amount of Principal Receivables theretofore
conveyed to the Trust shall be greater than the Required Minimum Principal
Balance and the Transferor Interest shall be greater than the Required
Transferor Interest, each as of the Series Issuance Date and after giving effect
to such issuance.
(c) Upon satisfaction of the above conditions, pursuant to Section 2.03,
the Owner Trustee, on behalf of the Issuer, shall execute and the Indenture
Trustee shall authenticate and deliver the Notes of such Series as provided in
this Indenture and the applicable Indenture Supplement. Notwithstanding
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the provisions of this Section 2.12, prior to the execution of any Indenture
Supplement, the Indenture Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such Indenture Supplement is
authorized or permitted by this Indenture and any Indenture Supplement related
to any outstanding Series. The Indenture Trustee may, but shall not be obligated
to, enter into any such Indenture Supplement which adversely affects the
Indenture Trustee's own rights, duties or immunities under this Indenture.
(d) The Issuer may direct the Indenture Trustee to deposit the net proceeds
from any New Issuance in the Excess Funding Account. The Issuer may also specify
that on any Transfer Date the proceeds from the sale of any new Series may be
withdrawn from the Excess Funding Account and treated as Shared Principal
Collections.
Section 2.13. Book-Entry Notes.
Unless otherwise provided in any related Indenture Supplement, the Notes,
upon original issuance, shall be issued in the form of typewritten Notes
representing the Book-Entry Notes to be delivered to the depository specified in
such Indenture Supplement which shall be the Clearing Agency or Foreign Clearing
Agency, by or on behalf of such Series.
The Notes of each Series shall, unless otherwise provided in the related
Indenture Supplement, initially be registered in the Note Register in the name
of the nominee of the Clearing Agency or Foreign Clearing Agency for such
Book-Entry Notes and shall be delivered to the Indenture Trustee or, pursuant to
such Clearing Agency's or Foreign Clearing Agency's instructions held by the
Indenture Trustee's agent as custodian for the Clearing Agency or Foreign
Clearing Agency.
Unless and until Definitive Notes are issued under the limited
circumstances described in Section 2.15, no Beneficial Owner shall be entitled
to receive a Definitive Note representing such Beneficial Owner's interest in
such Note. Unless and until Definitive Notes have been issued to the Beneficial
Owners pursuant to Section 2.15:
(a) the provisions of this Section 2.13 shall be in full force and effect
with respect to each such Series;
(b) the Indenture Trustee shall be entitled to deal with the Clearing
Agency or Foreign Clearing Agency and the Clearing Agency Participants for all
purposes of this Indenture (including the payment of principal of and interest
on the Notes of each such Series) as the authorized representatives of the
Beneficial Owners;
(c) to the extent that the provisions of this Section 2.13 conflict with
any other provisions of this Indenture, the provisions of this Section 2.13
shall control with respect to each such Series;
(d) the rights of Beneficial Owners of each such Series shall be exercised
only through the Clearing Agency or Foreign Clearing Agency and the applicable
Clearing Agency Participants and shall be limited to those established by law
and agreements between such Beneficial Owners and the Clearing Agency or Foreign
Clearing Agency and/or the Clearing Agency Participants. Pursuant to the
depository
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agreement applicable to a Series, unless and until Definitive Notes of such
Series are issued pursuant to Section 2.15, the initial Clearing Agency shall
make book-entry transfers among the Clearing Agency Participants and receive and
transmit distributions of principal and interest on the Notes to such Clearing
Agency Participants; and
(e) whenever this Indenture requires or permits actions to be taken based
upon instructions or directions of the Holders of Notes representing a specified
percentage of the Outstanding Amount, the Clearing Agency or Foreign Clearing
Agency shall be deemed to represent such percentage only to the extent that they
have received instructions to such effect from the Beneficial 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 Indenture Trustee.
Section 2.14. Notices to Clearing Agency or Foreign Clearing Agency.
Whenever a notice or other communication to the Noteholders is required
under this Indenture, unless and until Definitive Notes shall have been issued
to Beneficial Owners pursuant to Section 2.15, the Indenture Trustee shall give
all such notices and communications specified herein to be given to Noteholders
to the Clearing Agency or Foreign Clearing Agency, as applicable, and shall have
no obligation to the Beneficial Owners.
Section 2.15. Definitive Notes.
If (i) (a) the Transferor advises the Indenture Trustee in writing that the
Clearing Agency or Foreign Clearing Agency is no longer willing or able to
discharge properly its responsibilities as Clearing Agency or Foreign Clearing
Agency with respect to the Book-Entry Notes of a given Series and (b) the
Indenture Trustee or Issuer is unable to locate and reach an agreement on
satisfactory terms with a qualified successor, (ii) the Transferor, at its
option, advises the Indenture Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency or Foreign Clearing Agency with
respect to such Series or (iii) after the occurrence of a Servicer Default,
Beneficial Owners of Notes evidencing more than 50% of the Outstanding Amount
(or such other percentage as specified in the related Indenture Supplement) of
such Series advise the Indenture Trustee and the applicable Clearing Agency or
Foreign Clearing Agency through the applicable Clearing Agency Participants in
writing that the continuation of a book-entry system is no longer in the best
interests of the Beneficial Owners of such Series, the Clearing Agency or
Foreign Clearing Agency, as the case may be, shall notify all Beneficial Owners
of such Series of the occurrence of such event and of the availability of
Definitive Notes to Beneficial Owners of such Series requesting the same. Upon
surrender to the Indenture Trustee of the Notes of such Series, accompanied by
registration instructions from the applicable Clearing Agency, the Issuer shall
execute and the Indenture Trustee shall authenticate Definitive Notes of such
Series and shall recognize the registered holders of such Definitive Notes as
Noteholders under this Indenture. Neither the Issuer nor the Indenture Trustee
shall be liable for any delay in delivery of such instructions, and the Issuer
and the Indenture Trustee may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Notes of such
Series, all references herein to obligations imposed upon or to be performed by
the applicable Clearing Agency or Foreign Clearing Agency shall be deemed to be
imposed upon and performed by the Indenture Trustee, to the extent applicable
with respect to such Definitive Notes, and the Indenture Trustee shall recognize
the registered holders of the Definitive Notes
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of such Series as Noteholders of such Series hereunder. Definitive Notes will be
transferable and exchangeable at the offices of the Transfer Agent and
Registrar.
Section 2.16. Global Note.
If specified in the related Indenture Supplement for any Series, Notes may
be initially issued in the form of a single temporary Global Note (the "Global
Note") in bearer form, without interest coupons, in the denomination of the
Initial Invested Amount and substantially in the form attached to the related
Indenture Supplement. Unless otherwise specified in the related Indenture
Supplement, the provisions of this Section 2.16 shall apply to such Global Note.
The Global Note will be authenticated by the Indenture Trustee upon the same
conditions, in substantially the same manner and with the same effect as the
Definitive Notes. The Global Note may be exchanged in the manner described in
the related Indenture Supplement for Registered Notes or Bearer Notes in
definitive form. Except as otherwise specifically provided in the Indenture
Supplement, any Notes that are issued in bearer form pursuant to this Indenture
shall be issued in accordance with the requirements of Code section 163(f)(2).
Section 2.17. Meetings of Noteholders.
To the extent provided by the Indenture Supplement for any Series issued in
whole or in part in Bearer Notes, the Servicer or the Indenture Trustee may at
any time call a meeting of the Noteholders of such Series, to be held at such
time and at such place as the Servicer or the Indenture Trustee, as the case may
be, shall determine, for the purpose of approving a modification of or amendment
to, or obtaining a waiver of, any covenant or condition set forth in this
Indenture with respect to such Series or in the Notes of such Series, subject to
Article X.
Section 2.18. Uncertificated Classes.
Notwithstanding anything to the contrary contained in this Article II or in
Article XI, unless otherwise specified in any Indenture Supplement, any
provisions contained in this Article II and in Article XI relating to the
registration, form, execution, authentication, delivery, presentation,
cancellation and surrender of Notes shall not be applicable to any
uncertificated Notes, provided, however, that, except as otherwise specifically
provided in the Indenture Supplement, any such uncertificated Notes shall be
issued in "registered form" within the meaning of Code section 163(f)(1).
ARTICLE III
REPRESENTATIONS AND COVENANTS OF ISSUER
Section 3.01. Payment of Principal and Interest.
(a) The Issuer will duly and punctually pay principal and interest in
accordance with the terms of the Notes as specified in the relevant Indenture
Supplement.
(b) The Noteholders of a Series as of the Record Date in respect of a
Payment Date shall be entitled to the interest accrued and payable and principal
payable on such Payment Date as specified in
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the related Indenture Supplement. All payment obligations under a Note are
discharged to the extent such payments are made to the Noteholder of record.
Section 3.02. Maintenance of Office or Agency.
The Issuer will maintain an office or agency within
[___________________________] and such other locations as may be set forth in an
Indenture Supplement where Notes may be presented or surrendered for payment,
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 Indenture
Trustee at its Corporate Trust Office to serve as its agent for the foregoing
purposes. The Issuer will give prompt written notice to the Indenture Trustee
and the Noteholders 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 Indenture Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee at its Corporate Trust Office as its agent to receive all such
presentations, surrenders, notices and demands.
Section 3.03. Money for Note Payments to Be Held in Trust.
As specified in Section 8.03(a) and (b) herein and in the related Indenture
Supplement, all payments of amounts due and payable with respect to the Notes
which are to be made from amounts withdrawn from the Collection Account and the
Excess Funding Account shall be made on behalf of the Issuer by the Indenture
Trustee or by the Paying Agent, and no amounts so withdrawn from the Collection
Account or the Excess Funding Account shall be paid over to or at the direction
of the Issuer except as provided in this Section 3.03 and in the related
Indenture Supplement.
On or before each Payment Date, the Issuer shall deposit or cause to be
deposited in the Collection Account of each outstanding Series an aggregate sum
sufficient to pay the amounts then becoming due under the Notes of such
outstanding Series, such sum to be held in trust for the benefit of the Persons
entitled thereto, and (unless the Paying Agent is the Indenture Trustee) shall
promptly notify the Indenture Trustee in writing of its action or failure so to
act.
Whenever the Issuer shall have a Paying Agent in addition to the Indenture
Trustee, it will, on or before the Business Day next preceding each Payment
Date, direct the Indenture Trustee to deposit with such Paying Agent on or
before such Payment Date an aggregate sum sufficient to pay the amounts then
becoming due, such sum to be (i) held in trust for the benefit of Persons
entitled thereto and (ii) invested, pursuant to an Issuer Order, by the Paying
Agent in an Eligible Investment in accordance with the terms of the related
Indenture Supplement. For all investments made by a Paying Agent under this
Section 3.03, such Paying Agent shall be entitled to all of the rights and
obligations of the Indenture Trustee under the related Indenture Supplement,
such rights and obligations being incorporated in this paragraph by this
reference.
The Issuer will cause each Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee an instrument in which such Paying
Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts
as Paying Agent, it hereby so agrees), subject to the provisions of this
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Section 3.03, that such Paying Agent, in acting as Paying Agent, is an express
agent of the Issuer and, further, 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 Indenture Trustee notice of any default by the Issuer (or
any other obligor upon the Notes) of which it has actual knowledge in the making
of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture Trustee
all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture 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 Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Trustee upon the same trusts as those
upon which such sums were held by such Paying Agent; and upon such payment by
any Paying Agent to the Indenture Trustee, such Paying Agent shall be released
from all further liability with respect to such sums.
Section 3.04. Existence.
The Issuer will keep in full effect its existence, rights and franchises as
a common law business trust under the laws of the State of Delaware (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 be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other related instrument or agreement.
Section 3.05. Protection of Trust.
The Issuer will from time to time prepare, or cause to be prepared, execute
and deliver all such supplements and amendments hereto and all such financing
statements, continuation statements,
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instruments of further assurance and other instruments, and will take such other
action necessary or advisable to:
(a) grant more effectively all or any portion of the Collateral as security
for the Notes;
(b) maintain or preserve the lien (and the priority thereof) of this
Indenture or to carry out more effectively the purposes hereof;
(c) perfect, publish notice of, or protect the validity of any Grant made
or to be made under this Indenture;
(d) enforce any of the Collateral; or
(e) preserve and defend title to the Collateral securing the Notes and the
rights therein of the Indenture Trustee and the Noteholders secured thereby
against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required pursuant to this Section 3.05.
The Issuer shall pay or cause to be paid any taxes levied on all or any
part of the Receivables securing the Notes.
Section 3.06. Opinions as to Collateral.
(a) On the Series Issuance Date relating to any new Series of Notes, the
Issuer shall furnish to the Indenture 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.
(b) On or before [June 30] in each calendar year, beginning in 2001, the
Issuer shall furnish to the Indenture 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, filing, re-recording and refiling 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 is 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. Such Opinion of Counsel shall also describe the recording, filing,
rerecording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and the execution and filing of any financing
statements and continuation statements that will, in the opinion of such
counsel, be required to maintain the perfection of the lien and security
interest of this Indenture until [June 30] in the following calendar year.
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Section 3.07. Performance of Obligations; Servicing of Receivables.
(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 Collateral 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 Indenture 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 Administrator to assist the Issuer in performing its duties
under this Indenture.
(c) The Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, the other Transaction Documents and
in the instruments and agreements relating to the Collateral, 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. Except as otherwise expressly provided
herein or therein, the Issuer shall not waive, amend, modify, supplement or
terminate any Transaction Document or any provision thereof without the consent
of the Holders of Notes representing 662/3% of the Outstanding Amount of each
adversely affected Series.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Default under the Transfer and Servicing Agreement, the Issuer shall cause the
Indenture Trustee to promptly notify the Rating Agencies thereof, and shall
cause the Indenture Trustee to specify in such notice the action, if any, being
taken 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 Receivables, the Issuer
shall take all reasonable steps available to it to remedy such failure.
(e) On and after the receipt by the Servicer of a Termination Notice
pursuant to Section 7.01 of the Transfer and Servicing Agreement, the Servicer
shall continue to perform all servicing functions under this Indenture until the
date specified in the Termination Notice or otherwise specified by the Indenture
Trustee or until a date mutually agreed upon by the Servicer and the Indenture
Trustee. As promptly as possible after the giving of a Termination Notice to the
Servicer, the Indenture Trustee shall appoint a Successor Servicer, and such
Successor Servicer shall accept its appointment by a written assumption in a
form acceptable to the Indenture 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 Indenture Trustee without further action
shall automatically be appointed the Successor Servicer. The Indenture Trustee
may delegate any of its servicing obligations to an Affiliate or agent in
accordance with subsection 3.01(b) and Section 5.07 of the Transfer and
Servicing Agreement. Notwithstanding the foregoing, the Indenture Trustee shall,
if it is legally unable so to act, petition at the expense of the Servicer a
court of competent jurisdiction to appoint any established institution
qualifying as an Eligible Servicer as the Successor Servicer hereunder. The
Indenture Trustee shall give prompt notice to each
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Rating Agency and each Series Enhancer upon the appointment of a Successor
Servicer. Upon its appointment, the Successor Servicer shall be the successor in
all respects to the Servicer with respect to servicing functions under this
Indenture and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Indenture to the Servicer shall be deemed to
refer to the Successor Servicer. In connection with any Termination Notice, the
Indenture Trustee will review any bids which it obtains from Eligible Servicers
and shall be permitted to appoint any Eligible Servicer submitting such a bid as
a Successor Servicer for servicing compensation, subject to the limitations set
forth in Section 7.02 of the Transfer and Servicing Agreement.
(f) Without derogating from the absolute nature of the assignment granted
to the Indenture Trustee under this Indenture or the rights of the Indenture
Trustee hereunder, the Issuer agrees (i) that it will not, without the prior
written consent of the Indenture Trustee and the Holders of Notes representing
more than 50% of the Outstanding Amount of each Series, 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 provided in the Transfer and Servicing
Agreement) or the Transaction Documents (except to the extent otherwise provided
in the Transaction Documents), or waive timely performance or observance by the
Servicer or the Transferor under the Transfer and Servicing Agreement; and (ii)
that any such amendment shall not (A) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on the
Receivables or distributions that are required to be made for the benefit of the
Noteholders or (B) reduce the aforesaid percentage of the Notes that is 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 Indenture Trustee and such Noteholders, the
Issuer agrees, promptly following a request by the Indenture 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 Indenture Trustee may deem
necessary or appropriate in the circumstances.
Section 3.08. Negative Covenants.
So long as any Notes are Outstanding, the Issuer will not:
(a) sell, transfer, exchange, or otherwise dispose of any part of the
Collateral unless directed to do so by the Indenture Trustee, except as
expressly permitted by this Indenture and any Indenture Supplement, the
Receivables Purchase Agreement, the Trust Agreement or the Transfer and
Servicing Agreement;
(b) claim any credit on, or make any deduction from, the principal and
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 or former Noteholder by reason of the payment of any taxes
levied or assessed upon any part of the Collateral;
(c) incur, assume, guarantee or otherwise become liable, directly or
indirectly, for any indebtedness other than incurred under the Notes and this
Indenture;
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(d) (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 Collateral or any part thereof or any interest therein or the
proceeds thereof or (C) permit the lien of this Indenture not to constitute a
valid first priority security interest in the Collateral; or
(e) voluntarily dissolve or liquidate in whole or in part.
Section 3.09. Statements as to Compliance.
The Issuer will deliver to the Indenture Trustee, within 120 days after the
end of each fiscal year of the Issuer (commencing within 120 days after the end
of the fiscal year 2001), an Officer's Certificate stating, as to the Authorized
Officer signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during the 12-month period
ending at the end of such fiscal year (or in the case of the fiscal year ending
December 31, 2001, the period from the Closing Date to December 31, 2001) and of
performance under this Indenture has been made under such Authorized Officer's
supervisions, and
(ii) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has complied with all conditions and covenants under this
Indenture throughout such year, or, if there has been a default in the
compliance of any such condition or covenant, specifying each such default known
to such Authorized Officer and the nature and status thereof.
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:
(1) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger (the "Surviving Person") (i) is organized and existing
under the laws of the United States of America or any state or the District of
Columbia, (ii) is not subject to regulation as an "investment company" under the
Investment Company Act, (iii) expressly assumes, by an indenture supplemental
hereto, executed and delivered to the Indenture Trustee, in a form satisfactory
to the Indenture Trustee, the obligation to make due and punctual payment of the
principal of and interest on all Notes and the performance of every covenant of
this Indenture on the part of the Issuer to be performed or observed and (iv)
expressly agrees by means of such supplemental indenture to make all filings
with the Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
(2) immediately after giving effect to such transaction, no Event of
Default or Pay Out Event shall have occurred and be continuing;
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(3) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that (i) such
consolidation or merger and such supplemental indenture comply with this Section
3.10, (ii) all conditions precedent in this Section 3.10 relating to such
transaction have been complied with (including any filing required by the
Exchange Act), and (iii) such supplemental indenture is duly authorized,
executed and delivered and is valid, binding and enforceable against the
Surviving Person;
(4) the Rating Agency Condition shall have been satisfied with respect
to such transaction;
(5) the Issuer shall have received a Tax Opinion and an Opinion of
Counsel dated the date of such consolidation or merger (and shall have delivered
copies thereof to the Indenture Trustee) to the effect that such transaction
will not have any material adverse federal income tax consequence to any
Noteholder; and
(6) any action that is necessary to maintain the lien and security
interest created by this Indenture shall have been taken.
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Collateral, substantially as an entirety
to any Person, unless:
(1) the Person that acquires by conveyance or transfer the properties
and assets of the Issuer the conveyance or transfer of which is hereby
restricted (the "Acquiring Person") (A) is a United States citizen or a Person
organized and existing under the laws of the United States of America or any
state, or the District of Columbia, (B) expressly assumes, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee, in form
satisfactory to the Indenture Trustee, the obligation to make due and punctual
payments of the principal of and interest on all Notes and the performance of
every covenant of this Indenture on the part of the Issuer to be performed or
observed, (C) 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, (D) unless otherwise provided
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, (E) 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
and (F) is not subject to regulation as an "investment company" under the
Investment Company Act.;
(2) immediately after giving effect to such transaction, no Event of
Default or Pay Out Event shall have occurred and be continuing;
(3) the Rating Agency Condition shall have been satisfied with respect
to such transaction;
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(4) the Issuer shall have received a Tax Opinion and an Opinion of
Counsel (and shall have delivered copies thereof to the Indenture Trustee) to
the effect that such transaction will not have any material adverse federal
income tax consequence to any Noteholder;
(5) any action that is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(6) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that (i) such
conveyance or transfer and such supplemental indenture comply with this Section
3.10, (ii) all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by the
Exchange Act), and (iii) such supplemental indenture is duly authorized,
executed and delivered and is valid, binding and enforceable against the
Acquiring Person.
Section 3.11. Successor Substituted.
Upon any consolidation or merger, or any conveyance or transfer of the
properties and assets of the Issuer substantially as an entirety in accordance
with Section 3.10 hereof, the Surviving Person or the Acquiring Person, as the
case may be, shall succeed to, and be substituted for, and may exercise 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. In the event of any such
conveyance or transfer, the Person named as the Issuer in the first paragraph of
this Indenture or any successor which shall theretofore have become such in the
manner prescribed in this Section 3.11 shall be released from its obligations
under this Indenture as issued immediately upon the effectiveness of such
conveyance or transfer, provided that the Issuer shall not be released from any
obligations or liabilities to the Indenture Trustee or the Noteholders arising
prior to such effectiveness.
Section 3.12. No Other Business.
The Issuer shall not engage in any business other than (i) purchasing,
owning and managing the Trust Estate and the proceeds thereof in the manner
contemplated by this Indenture and the other Transaction Documents, (ii) issuing
and making payments in respect of the Notes and (iii) all activities related
thereto.
Section 3.13. [Reserved].
Section 3.14. Servicer's Obligations.
The Issuer shall cause the Servicer to comply with all of its obligations
under the Transaction Documents.
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Section 3.15. Investments.
Except as contemplated by this Indenture or the Transfer and Servicing
Agreement, the Issuer shall not 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. Removal of Administrator.
So long as any Notes are outstanding, the Issuer shall not remove the
Administrator without cause unless the Rating Agency Condition shall have been
satisfied in connection with such removal.
Section 3.18. Restricted Payments.
The Issuer shall not, directly or indirectly, (i) pay any dividend or make
any distribution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to the Owner Trustee or any owner
of a beneficial interest in the Issuer or otherwise with respect to any
ownership or equity interest or security in or of the Issuer or to the Servicer,
(ii) redeem, purchase, retire or otherwise acquire for value any such ownership
or equity interest or security or (iii) set aside or otherwise segregate any
amounts for any such purpose; provided, however, that the Issuer may make, or
cause to be made, (x) distributions as contemplated by, and to the extent funds
are available for such purpose under, the Transfer and Servicing Agreement or
the Trust Agreement and (y) payments to the Indenture Trustee pursuant to
Section 6.07 hereof. The Issuer will not, directly or indirectly, make payments
to or distributions from the Collection Account except in accordance with the
Transaction Documents.
Section 3.19. Notice of Events of Default.
The Issuer agrees to give the Indenture Trustee and the Rating Agencies
prompt written notice of each Event of Default hereunder and, immediately after
obtaining knowledge of any of the following occurrences, written notice of each
default on the part of the Servicer or the Transferor of its obligations under
the Transfer and Servicing Agreement and each default on the part of a Seller of
its obligations under the Receivables Purchase Agreement, as applicable.
Section 3.20. Further Instruments and Acts.
Upon request of the Indenture 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 this Indenture.
This Indenture shall cease to be of further effect with respect to the
Notes except as to (a) rights of registration of transfer and exchange, (b)
substitution of mutilated, destroyed, lost or stolen Notes, (c) the rights of
Noteholders to receive payments of principal thereof and interest thereon, (d)
Sections 3.03, 3.07, 3.08, 3.11, 3.12 and 12.16, (e) the rights and immunities
of the Indenture Trustee hereunder, including the rights of the Indenture
Trustee under Section 6.07, and the obligations of the Indenture Trustee under
Section 4.02, and (f) the rights of Noteholders as beneficiaries hereof with
respect to the property so deposited with the Indenture Trustee and payable to
all or any of them, and the Indenture 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:
(i) either
(A) all Notes theretofore authenticated and delivered (other than
(1) Notes which have been destroyed, lost or stolen and which have been
replaced, or paid as provided in Section 2.06, and (2) Notes for whose full
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 Indenture Trustee
for cancellation; or
(B) all Notes not theretofore delivered to the Indenture Trustee
for cancellation:
(1) have become due and payable;
(2) will become due and payable at the Series Termination Date
for such Class or Series of Notes; or
(3) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and at the expense, of the
Issuer;
(4) and the Issuer, in the case of (1), (2) or (3) above, has
irrevocably deposited or caused to be irrevocably deposited with the Indenture
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
Indenture Trustee for cancellation when due at the Series Termination Date for
such Class or Series of Notes or the Redemption Date (if Notes shall have been
called for redemption pursuant to the related Indenture Supplement), as the case
may be;
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(ii) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(iii) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the Indenture
Trustee) an Independent Certificate from a firm of certified public accountants,
each meeting the applicable requirements of Section 12.01(a) and each stating
that all conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Section 4.02. Application of Trust Money.
All monies deposited with the Indenture Trustee pursuant to Section 4.01
hereof shall be held in trust and applied by it, in accordance with the
provisions of the Notes, this Indenture and the applicable Indenture Supplement,
to make payments, either directly or through any Paying Agent, as the Indenture
Trustee may determine, to the Noteholders and for the payment in respect of
which such monies have been deposited with the Indenture Trustee, of all sums
due and to become due thereon for principal and interest; but such monies need
not be segregated from other funds except to the extent required herein or in
the Transfer and Servicing Agreement or required by law.
ARTICLE V
PAY OUT EVENTS, DEFAULTS AND REMEDIES
Section 5.01. Pay Out Events.
If any one of the following events (each, a "Trust Pay Out Event") shall
occur:
(a) the occurrence of a Servicer Default which would have an Adverse
Effect;
(b) the occurrence of an Insolvency Event relating to the Transferor;
(c) a Transfer Restriction Event shall occur; or
(d) the Trust shall become subject to regulation by the Commission as an
"investment company" within the meaning of the Investment Company Act;
then a Pay Out Event with respect to all Series of Notes shall occur without any
notice or other action on the part of the Indenture Trustee or the Noteholders
immediately upon the occurrence of such event.
Upon the occurrence of a Pay Out Event, an Amortization Period or, if
specified in the related Indenture Supplement, an Accumulation Period, shall
commence and payment on the Notes of each Series will be made in accordance with
the terms of the related Indenture Supplement.
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Section 5.02. Events of Default.
"Event of Default," wherever used herein, means with respect to any Series
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):
(a) default in the payment of the principal of any Note of that Series, if
and to the extent not previously paid, when the same becomes due and payable on
its Series Termination Date; or
(b) default in the payment of any interest on any Note of that Series when
the same becomes due and payable, and such default shall continue for a period
of thirty-five (35) days; or
(c) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer 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, conservator,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
the Issuer 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
sixty (60) consecutive days; or
(d) the commencement by the Issuer 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 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 of or the taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator or similar official of the Issuer,
or the making by the Issuer of any general assignment for the benefit of
creditors, or the failure by the Issuer generally to pay, or the admission in
writing by the Issuer of its inability to pay, its debts as such debts become
due, or the taking of action by the Issuer in furtherance of any of the
foregoing; or
(e) default in the observance or performance of any covenant or agreement
of the Issuer made in this Indenture made in respect of the Notes of such Series
(other than a covenant or agreement, a default in the observance or performance
of which is elsewhere in this Section 5.02 specifically dealt with) (all of such
covenants and agreements in the Indenture which are not expressly stated to be
for the benefit of a particular Series being deemed to be in respect of the
Notes of all Series for this purpose) and such default shall continue or not be
cured for a period of sixty (60) days after there shall have been given, by
registered or certified mail, return receipt requested to the Issuer by the
Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of
Notes representing at least 25% of the Outstanding Amount of all Series, a
written notice specifying such default and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder and, as a result of
such default, the interests of the Holders of the Notes are materially and
adversely affected and continue to be materially and adversely affected during
the 60-day period; or
(f) any additional events specified in the Indenture Supplement related to
such Series.
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The Issuer shall deliver to the Indenture Trustee, within five (5) 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, its status and what action the Issuer is
taking or proposes to take with respect thereto.
Section 5.03. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default described in paragraph (a), (b) or (e) of Section
5.02 should occur and be continuing with respect to a Series, then and in every
such case the Indenture Trustee or the Holders of Notes representing more than
50% of the Outstanding Amount of such Series may declare all the Notes of such
Series to be immediately due and payable, by a notice in writing to the Issuer
(and to the Indenture Trustee if declared by Noteholders), and upon any such
declaration the unpaid principal amount of such Notes, together with accrued and
unpaid interest thereon through the date of acceleration, shall become
immediately due and payable.
If an Event of Default described in paragraph (c) or (d) of Section 5.02
should occur and be continuing, then the unpaid principal of the Notes, together
with accrued and unpaid interest thereon through the date of acceleration, shall
automatically become due and payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided, the
Holders of Notes representing more than 50% of the Outstanding Amount of such
Series, by written notice to the Issuer and the Indenture Trustee, may rescind
and annul such declaration and its consequences.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
Section 5.04. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) 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 thirty-five (35) days following the date on which such
interest became due and payable, or (ii) default is made in the payment of
principal of any Note, if and to the extent not previously paid, when the same
becomes due and payable on the Series Termination Date, the Issuer will, upon
demand of the Indenture Trustee, pay to it, for the benefit of the Holders of
the Notes of the affected Series, 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,
interest upon overdue installments of interest, at the applicable Note Interest
Rate borne by the Notes of such Series, 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 Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture 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,
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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.
(c) If an Event of Default occurs and is continuing, the Indenture Trustee
may, as more particularly provided in Section 5.05, in its discretion, proceed
to protect and enforce its rights and the rights of the Noteholders of the
affected Series, by such appropriate Proceedings as the Indenture 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 Indenture Trustee by this Indenture or
by law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes of the affected Series, or any Person having or claiming
an ownership interest in the Collateral, Proceedings under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or in case a
receiver, conservator, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator, custodian or other 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 of such Series, or to the
creditors or property of the Issuer or such other obligor, the Indenture
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 Indenture Trustee shall have made any demand pursuant to the
provisions of this Section 5.04, 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 of such Series
and to file such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances made,
by the Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence or bad faith) and of the Noteholders of such Series allowed
in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes of such Series in any election of a trustee, a
standby trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders of such Series and of the Indenture
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture Trustee
or the Holders of Notes of such Series allowed in any judicial Proceedings
relative to the Issuer, its creditors and its property;
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and any trustee, receiver, conservator, liquidator, custodian, assignee,
sequestrator or other similar official in any such Proceeding is hereby
authorized by each of such Noteholders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Indenture Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Indenture Trustee, each predecessor Indenture Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Indenture Trustee and each predecessor Indenture
Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
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 Indenture 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.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture 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 Indenture 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 Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
benefit of the Holders of the Notes of the affected Series as provided herein.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes of the affected Series, and it
shall not be necessary to make any such Noteholder a party to any such
Proceedings.
Section 5.05. Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing with
respect to any Series, and the Notes of such Series have been accelerated
pursuant to Section 5.03, the Indenture Trustee may do one or more of the
following (subject to Sections 5.06 and 12.16):
(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 of the
affected Series 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;
(ii) take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee and the Holders of the Notes of the
affected Series;
(iii) (A) at its own election, institute Proceedings from time to time
for the complete or partial foreclosure of the portion of the Collateral which
secures such Series of Notes by causing the Trust to issue a Foreclosure
Certificate to the Holders of such Notes, (B) at its own election, institute
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Proceedings from time to time for the complete or partial foreclosure of the
portion of the Collateral which secures such Series of Notes by causing the
Trust to issue a Foreclosure Certificate to a third party selected by the
Indenture Trustee, but only if the Indenture Trustee determines that the
proceeds of the issuance of the Foreclosure Certificate to such third party will
be sufficient to pay principal of and interest on such Notes in full, and (C) at
the direction of the Holders of Notes representing more than 50% of the
Outstanding Amount of the affected Series, institute Proceedings from time to
time for the complete or partial foreclosure of the portion of the Collateral
which secures such Seies of Notes by causing the Trust to issue a Foreclosure
Certificate to the Holders of such Notes or to one or more third parties
selected by the Holders of Notes representing more than 50% of the Outstanding
Amount of the affected Series (each, a "Foreclosure Remedy");
provided, however, that the Indenture Trustee may not exercise the remedy
described in subparagraph (iii) above unless (A) (1) the Holders of Notes
representing 100% of the Outstanding Amount of the affected Series consent
thereto, (2) the Indenture Trustee determines that any proceeds of such exercise
distributable to the Noteholders of the affected Series are sufficient to
discharge in full all amounts then due and unpaid upon the Notes for principal
and interest or (3) the Indenture Trustee determines that the Collateral may 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 Indenture Trustee obtains the consent of the
Holders of Notes representing at least 66-2/3% of the Outstanding Amount of each
Class of such Series and (B) the Indenture Trustee has obtained an Opinion of
Counsel to the effect that the exercise of such remedy (1) will not cause the
Trust or any portion thereof to be deemed to be an association (or publicly
traded partnership) taxable as a corporation for federal income tax purposes and
(2) complies with applicable federal and state securities laws. In determining
such sufficiency or insufficiency with respect to clause (A)(1) and (2), the
Indenture 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
Collateral for such purpose.
The remedies provided in this Section 5.05(a) are the exclusive
remedies provided to the Noteholders with respect to the Collateral and each of
the Noteholders (by their acceptance of their respective interests in the Notes)
or the Indenture Trustee hereby expressly waive any other remedy that might have
been available under the applicable UCC.
(b) The Indenture Trustee may, upon notification to the Issuer, fix a
record date and payment date for any payment to Noteholders of the affected
Series pursuant to this Section 5.05. At least fifteen (15) days before such
record date, the Indenture Trustee shall mail or send by facsimile to each such
Noteholder a notice that states the record date, the payment date and the amount
to be paid.
Section 5.06. Optional Preservation of the Collateral.
If the Notes of any Series have been declared to be due and payable under
Section 5.03 following an Event of Default and such declaration and its
consequences have not been rescinded and annulled, and the Indenture Trustee has
not received directions from the Noteholders pursuant to Section 5.12, the
Indenture Trustee may, but need not, elect to maintain possession of the portion
of the Collateral which secures such Notes and apply proceeds of the Collateral
to make payments on such Notes to the extent
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such proceeds are available therefor. 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 Indenture Trustee shall take
such desire into account when determining whether or not to maintain possession
of the Collateral. In determining whether to maintain possession of the
Collateral, the Indenture 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 5.07. Limitation on Suits.
No Noteholder shall have any right to institute any proceedings, judicial
or otherwise, with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:
(a) the Holders of Notes representing not less than 25% of the Outstanding
Amount of any affected Series have made written request to the Indenture Trustee
to institute such proceeding in its own name as indenture trustee;
(b) such Noteholder or Noteholders has previously given written notice to
the Indenture Trustee of a continuing Event of Default;
(c) such Noteholder or Noteholders has offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(d) the Indenture Trustee for sixty (60) days after its receipt of such
request and offer of indemnity has failed to institute any such Proceeding; and
(e) no direction inconsistent with such written request has been given to
the Indenture Trustee during such 60-day period by the Holders of Notes
representing more than 50% of the Outstanding Amount of such Series;
it being understood and intended that no one or more Noteholders of the affected
Series 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 Noteholders of such Series or to obtain or to seek to obtain
priority or preference over any other Noteholders of such Series or to enforce
any right under this Indenture, except in the manner herein provided .
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two (2) or more groups of Noteholders
of such affected Series, each representing no more than 50% of the Outstanding
Amount of such Series, the Indenture Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
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Section 5.08. Unconditional Rights of Noteholders to Receive Principal and
Interest.
Notwithstanding any other provision in this Indenture, each Noteholder
shall have the right which is absolute and unconditional to receive payment of
the principal of and interest in respect of such Note as such principal and
interest becomes due and payable and, subject to the requirements set forth in
Section 5.07, to institute suit for the enforcement of any such payment, and
such right shall not be impaired without the consent of such Noteholder.
Section 5.09. Restoration of Rights and Remedies.
If the Indenture 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, or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholder 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 Indenture Trustee and
the Noteholders shall continue as though no such Proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
No right, remedy, power or privilege herein conferred upon or reserved to
the Indenture Trustee or to the Noteholders is intended to be exclusive of any
other right, remedy, power or privilege, and every right, remedy, power or
privilege shall, to the extent permitted by law, be cumulative and in addition
to every other right, remedy, power or privilege given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or exercise
of any right or remedy shall not preclude any other further assertion or the
exercise of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
No failure to exercise and no delay in exercising, on the part of the
Indenture Trustee or of any Noteholder or other Person, any right or remedy
occurring hereunder upon any Event of Default shall impair any such right or
remedy or constitute a waiver thereof of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
Section 5.12. Rights of Noteholders to Direct Indenture Trustee.
The Holders of Notes representing more than 50% of the Outstanding Amount
of any affected Series (or the Holders of Notes representing at least 66-2/3% of
the Outstanding Amount of any affected Series if an Event of Default has
occurred and is continuing) shall have the right to direct the time, method and
place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
the Indenture Trustee with respect to the Notes; provided, however, that subject
to Section 6.01:
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(a) Indenture Trustee shall have the right to decline any such direction if
the Indenture Trustee, after being advised by counsel, determines that the
action so directed is in conflict with any rule of law or with this Indenture,
and
(b) the Indenture Trustee shall have the right to decline any such
direction if the Indenture Trustee in good faith shall, by a Responsible Officer
of the Indenture Trustee, determine that the Proceedings so directed would be
illegal or involve the Indenture Trustee in personal liability or be unjustly
prejudicial to the Noteholders not parties to such direction.
Section 5.13. Waiver of Past Defaults.
Prior to the declaration of the acceleration of the maturity of the Notes
of the affected Series as provided in Section 5.03, Holders of Notes
representing more than 50% of the Outstanding Amount of the Notes of such Series
may, on behalf of all such Noteholders, waive in writing any past default with
respect to such Notes and its consequences, except a default:
(a) in the payment of the principal or interest in respect of any Note of
such Series, or
(b) in respect of a covenant or provision hereof that under Section 10.02
hereof cannot be modified or amended without the consent of the Noteholder of
each Outstanding Note affected.
Upon any such written waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Noteholder by its acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Indenture Trustee for any action taken,
suffered or omitted by it as Indenture Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.14 shall not apply to any suit instituted
by the Indenture Trustee, to any suit instituted by any Noteholder, or group of
Noteholders (in compliance with Section 5.08 hereof), holding Notes representing
more than 10% of the Outstanding Amount of the affected Series, or to any suit
instituted by any Noteholder for the enforcement of the payment of the principal
or interest in respect of any Note on or after the Payment Date on which any of
such amounts was due (or, in the case of redemption, on or after the applicable
Redemption Date).
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Section 5.15. 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, which may adversely 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 Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 5.16. Action on Notes.
The Indenture Trustee's right to seek and recover judgment on the Notes or
under this Indenture shall not be affected by the seeking or obtaining of or
application for any other relief under or with respect to this Indenture.
Neither the lien of this Indenture nor any rights or remedies of the Indenture
Trustee or the Noteholders shall be impaired by the recovery of any judgment by
the Indenture Trustee against the Issuer or by the levy of any execution under
such judgment upon any portion of the Collateral or upon any of the assets of
the Issuer. Any money or property collected by the Indenture Trustee shall be
applied as specified in the applicable Indenture Supplement.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of the Indenture Trustee.
(a) If an Event of Default has occurred and is continuing and a Trustee
Officer shall have actual knowledge or written notice of such Event of Default,
the Indenture Trustee shall, prior to the receipt of directions, if any, from
the Holders of Notes representing not less than 662/3% of the Outstanding Amount
of the affected Series, 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 Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the Indenture
Trustee; and
(ii) in the absence of bad faith or negligence on its part, the
Indenture 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 Indenture Trustee and conforming to the requirements of this
Indenture; provided, however, the Indenture Trustee, upon receipt of any
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments furnished to the Indenture Trustee which are specifically
required to be furnished pursuant to any provision of this Indenture or any
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Indenture Supplement, shall examine them to determine whether they substantially
conform to the requirements of this Indenture or any Indenture Supplement. The
Indenture Trustee shall give prompt written notice to the Noteholders and each
Rating Agency of any material lack of conformity of any such instrument to the
applicable requirements of this Indenture or any Indenture Supplement discovered
by the Indenture Trustee which would entitle the Holders of Notes representing
more than 50% of the Outstanding Amount to take any action pursuant to this
Indenture or any Indenture Supplement.
(c) In case a Pay Out Event has occurred and is continuing and a Trustee
Officer shall have actual knowledge or written notice of such Pay Out Event, the
Indenture Trustee shall, prior to the receipt of directions, if any, from the
Holders of Notes representing more than 50% of the Outstanding Amount of the
affected Series, exercise such of 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.
(d) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) this subsection (d) shall not be construed to limit the effect of
subsection (a) of this Section 6.01;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Trustee Officer, unless it shall be proved that
the Indenture Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the Indenture and/or the direction of the Holders of Notes representing
more than 50% of the Outstanding Amount of each Series relating to the time,
method and place of conducting any proceeding for any remedy available to the
Indenture Trustee, or for exercising any trust or power conferred upon the
Indenture Trustee, under this Indenture. The Indenture Trustee shall not be
liable for any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Servicer, the Transferor or the Trust in
compliance with the terms of this Indenture or any Indenture Supplement.
(e) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur any 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 for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(f) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to subsections (a), (b), (c) and (d) of this
Section 6.01.
(g) Except as expressly provided in this Indenture, the Indenture Trustee
shall have no power to vary the Collateral, including, without limitation, by
(i) accepting any substitute payment obligation
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for a Receivable initially transferred to the Trust under the Transfer and
Servicing Agreement, (ii) adding any other investment, obligation or security to
the Trust or (iii) withdrawing from the Trust any Receivable (except as
otherwise provided in the Transfer and Servicing Agreement).
(h) The Indenture Trustee shall have no responsibility or liability for
investment losses on Eligible Investments (other than Eligible Investments on
which the institution acting as Indenture Trustee is an obligor).
(i) The Indenture Trustee shall notify each Rating Agency (i) of any change
in any rating of the Notes by any other Rating Agency of which the Indenture
Trustee has actual knowledge, (ii) immediately of the occurrence of any Event of
Default or Pay Out Event of which the Indenture Trustee has actual knowledge and
any potential Event of Default or Pay Out Event of which the Indenture Trustee
has actual notice from the Servicer and (iii) monthly that no Events of Default
have occurred and are continuing.
(j) For all purposes under this Indenture, the Indenture Trustee shall not
be deemed to have notice or knowledge of any Event of Default, Pay Out Event or
Servicer Default unless a Trustee Officer assigned to and working in the
Corporate Trust Office of the Indenture Trustee has actual knowledge thereof or
has received written notice thereof. For purposes of determining the Indenture
Trustee's responsibility and liability hereunder, any reference to an Event of
Default, Pay Out Event or Servicer Default shall be construed to refer only to
such event of which the Indenture Trustee is deemed to have notice as described
in this subsection 6.01(j).
Section 6.02. Notice of Pay Out Event or Event of Default.
Upon the occurrence of any Pay Out Event or Event of Default of which a
Trustee Officer has actual knowledge or has received notice thereof, the
Indenture Trustee shall transmit by mail to all Noteholders as their names and
addresses appear on the Note Register and the Rating Agencies, notice of such
Pay Out Event or Event of Default hereunder known to the Indenture Trustee
within thirty (30) days after it occurs or within ten (10) Business Days after
it receives such notice or obtains actual notice, if later.
Section 6.03. Rights of Indenture Trustee.
Except as otherwise provided in Section 6.01 hereof:
(a) The Indenture Trustee may conclusively rely and shall fully be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, note or other paper or document reasonably believed by it to be
genuine and to have been signed or presented by the proper party or parties;
(b) Whenever in the administration of this Indenture the Indenture Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Indenture Trustee (unless other
evidence is specifically prescribed herein) may, in the absence of bad faith on
its part, rely upon an Officer's Certificate of the Issuer. The Issuer shall
provide a copy of such
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Officer's Certificate to the Noteholders at or prior to the time the Indenture
Trustee receives such Officer's Certificate;
(c) As a condition to the taking, suffering or omitting of any action by it
hereunder, the Indenture Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in-good faith and in reliance thereon;
(d) The Indenture Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture or to honor the request or
direction of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) The Indenture Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document, but the Indenture Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it
may see fit, and, if the Indenture Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books, records and
premises of the Issuer and the Servicer, personally or by agent or attorney;
(f) The Indenture Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
attorneys, custodians or nominees and the Indenture Trustee shall not be
responsible for any (i) misconduct or negligence on the part of any agent,
attorney, custodians or nominees appointed with due care by it hereunder or (ii)
the supervision of such agents, attorneys, custodians or nominees after such
appointment with due care;
(g) The Indenture Trustee shall not be liable for any actions taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights conferred upon the Indenture Trustee by this
Indenture; and
(h) In the event that the Indenture Trustee is also acting as Paying Agent
and Transfer Agent and Registrar, the rights and protections afforded to the
Indenture Trustee pursuant to this Article VI shall also be afforded to such
Paying Agent and Transfer Agent and Registrar.
Section 6.04. Not Responsible for Recitals or Issuance of Notes.
The recitals contained herein and in the Notes, except the certificate of
authentication of the Indenture Trustee, shall be taken as the statements of the
Issuer, and the Indenture Trustee assumes no responsibility for their
correctness. The Indenture Trustee makes no representation as to the validity or
sufficiency of the Agreement, the Notes, or any related document. The Indenture
Trustee shall not be accountable for the use or application by the Issuer of the
proceeds from the Notes.
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Section 6.05. May Hold Notes.
The Indenture Trustee, any Paying Agent, Transfer Agent and Registrar or
any other agent of the Issuer, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with the Issuer with
the same rights it would have if it were not Indenture Trustee, Paying Agent,
Transfer Agent and Registrar or such other agent.
Section 6.06. Money Held in Trust.
Money held by the Indenture Trustee in trust hereunder need not be
segregated from other funds held by the Indenture Trustee in trust hereunder
except to the extent required herein or required by law. The Indenture Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed upon in writing by the Indenture Trustee and the
Issuer.
Section 6.07. Compensation, Reimbursement and Indemnification.
The Servicer shall pay to the Indenture Trustee from time to time
reasonable compensation for all services rendered by the Indenture Trustee under
this Agreement (which compensation shall not be limited by any law on
compensation of a trustee of an express trust). The Servicer shall reimburse the
Indenture 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 Indenture Trustee's agents, counsel,
accountants and experts. Pursuant to the Transfer and Servicing Agreement, the
Issuer shall direct the Servicer to indemnify and the Servicer shall indemnify
the Indenture Trustee 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 this trust and the performance of
its duties hereunder. The Indenture Trustee shall notify the Issuer and the
Servicer promptly of any claim for which it may seek indemnity. Failure by the
Indenture Trustee to so notify the Issuer and the Servicer shall not relieve the
Issuer or the Servicer 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 Servicer shall defend any claim against the Indenture Trustee, the
Indenture Trustee may have separate counsel and, if it does, the Servicer shall
pay the fees and expenses of such counsel. Neither the Issuer nor the Servicer
need reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee's own willful
misconduct, negligence or bad faith.
The Servicer's payment obligations to the Indenture Trustee pursuant to
this Section 6.07 shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of a Default specified in
subsection 5.02(c) or (d) 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 Indenture Trustee's
right to enforce any of the Servicer's payment obligations pursuant to this
Section 6.07 shall be subject to the provisions of Section 12.16.
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Section 6.08. Replacement of Indenture Trustee.
No resignation or removal of the Indenture Trustee and no appointment of a
successor Indenture Trustee shall become effective until the acceptance of
appointment by the successor Indenture Trustee pursuant to this Section 6.08.
The Indenture Trustee may resign at any time by giving thirty (30) days written
notice to the Issuer. The Holders of Notes representing more than 50% of the
Outstanding Amount of all Series may remove the Indenture Trustee by so
notifying the Indenture Trustee and may appoint a successor Indenture Trustee.
The [Administrator] shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver of the Indenture Trustee or of its property shall be
appointed, or any public officer takes charge of the Indenture Trustee or its
property or its affairs for the purpose of rehabilitation, conservation or
liquidation; or
(iv) the Indenture Trustee otherwise becomes legally unable to act. If
the Indenture Trustee resigns or is removed or if a vacancy exists in the office
of Indenture Trustee for any reason (the Indenture Trustee in such event being
referred to herein as the retiring Indenture Trustee), the [Administrator] shall
promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, the Administrator and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within sixty (60)
days after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of Notes representing more than 50%
of the Outstanding Amount of all Series may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section 6.08, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Indenture Trustee.
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Section 6.09. Successor Indenture Trustee by Merger.
If the Indenture 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 without any further act shall be the successor Indenture
Trustee; provided that such corporation or banking association shall be
otherwise qualified and eligible under Section 6.11. The Indenture Trustee shall
provide the Rating Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion,
consolidation or transfer to the Indenture 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 Indenture Trustee may adopt the certificate
of authentication of any predecessor Indenture 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 Indenture Trustee may authenticate such
Notes in the name of the successor to the Indenture 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 Indenture
Trustee shall have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Collateral may at the time be located, the Indenture Trustee
shall have the power and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Collateral, and to vest in such
Person or Persons, in such capacity and for the benefit of the Noteholders, such
title to the Collateral, or any part hereof, and, subject to the other
provisions of this Section 6.10, such powers, duties, obligations, rights and
trusts as the Indenture 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 Indenture Trustee shall be conferred or imposed upon and exercised or
performed by the Indenture 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 Indenture 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 Indenture Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Collateral or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee, but solely at the
direction of the Indenture Trustee;
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(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Indenture 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 Indenture 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 Indenture 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
Indenture 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 Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture 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 Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 6.11. Eligibility; Disqualification.
The Indenture Trustee shall at all times satisfy the requirements of TIA
Section310(a). The Indenture 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 its long-term unsecured debt shall be rated at least Baa3 by
Moody's and BBB- by Standard & Poor's. The Indenture Trustee shall comply with
TIA Section310(b), including the optional provision permitted by the second
sentence of TIA Section310(b)(9); provided, however, that there shall be
excluded from the operation of TIA Section310(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 Section310(b)(1) are met.
Section 6.12. Preferential Collection of Claims Against.
The Indenture Trustee shall comply with TIA Section311(a), excluding any
creditor relationship listed in TIA Section311(b). An Indenture Trustee who has
resigned or been removed shall be subject to TIA Section311(a) to the extent
indicated.
Section 6.13. Tax Returns.
In the event the Trust shall be required to file tax returns, the Issuer
shall prepare or shall cause to be prepared such tax returns and shall provide
such tax returns to the Owner Trustee for signature at least five (5) days
before such tax returns are due to be filed. The Issuer, in accordance with the
terms
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of each Indenture Supplement, shall also prepare or shall cause to be prepared
all tax information required by law to be distributed to Noteholders and shall
deliver such information to the Owner Trustee at least five (5) days prior to
the date it is required by law to be distributed to Noteholders. The Owner
Trustee, upon request, will furnish the Issuer with all such information known
to the Owner Trustee as may be reasonably required in connection with the
preparation of all tax returns of the Trust, and shall, upon request, execute
such returns. In no event shall the Owner Trustee be liable for any liabilities,
costs or expenses of the Trust or any Noteholder arising under any tax law,
including without limitation, federal, state or local income or excise taxes or
any other tax imposed on or measured by income (or any interest or penalty with
respect thereto arising from a failure to comply therewith).
Section 6.14. Representations and Covenants of the Indenture Trustee.
The Indenture Trustee represents, warrants and covenants that:
(i) the Indenture Trustee is a _________________ duly organized and
validly existing under the laws of the State of _______________;
(ii) The Indenture Trustee has full power and authority to deliver and
perform this Indenture and has taken all necessary action to authorize the
execution, delivery and performance by it of this Indenture and other
Transaction Documents to which it is a party; and
(iii) Each of this Indenture and the other Transaction Documents to
which it is a party has been duly executed and delivered by the Indenture
Trustee and constitutes its legal, valid and binding obligation in accordance
with its terms.
Section 6.15. Custody of the Collateral.
The Indenture Trustee shall hold such of the Trust Estate as consists of
instruments, deposit accounts, negotiable documents, money, goods, letters of
credit, and advices of credit in the State of _________________________. The
Indenture Trustee shall hold such of the Trust Estate as constitutes investment
property through a securities intermediary, which securities intermediary shall
agree with the Indenture Trustee that (a) such investment property shall at all
times be credited to a securities account of the Indenture Trustee, (b) such
securities intermediary shall treat the Indenture Trustee as entitled to
exercise the rights that comprise each financial asset credited to such
securities account, (c) all property credited to such securities account shall
be treated as financial assets, (d) such securities intermediary shall comply
with entitlement orders originated by the Indenture Trustee without the further
consent of any other person or entity, (e) such securities intermediary will not
agree with any person or entity other than the Indenture Trustee to comply with
entitlement orders originated by such other person or entity, (f) such
securities accounts and the property credited thereto shall not be subject to
any lien, security interest, or right of set-off in favor of such securities
intermediary or anyone claiming through it (other than the Indenture Trustee),
and (g) such agreement shall be governed by the laws of the State of New York.
Terms used in the preceding sentence that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC. Except as permitted by this Section 6.15, the Indenture Trustee shall not
hold any part of the Trust Estate through an agent or a nominee.
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ARTICLE VII
NOTEHOLDERS' LIST AND REPORTS BY INDENTURE TRUSTEE AND ISSUER
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders.
The Issuer will furnish or cause to be furnished to the Indenture Trustee
(a) upon each transfer of a Note, a list, in such form as the Indenture Trustee
may reasonably require, of the names, addresses and taxpayer identification
numbers of the Noteholders as they appear on the Note Register as of such Record
Date, and (b) at such other times, as the Indenture Trustee may request in
writing, within ten (10) days after receipt by the Issuer of any such request, a
list of similar form and content as of a date not more than ten (10) days prior
to the time such list is furnished; provided, however, that for so long as the
Indenture Trustee is the Transfer Agent and Registrar, no such list shall be
required to be furnished.
Section 7.02. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained in
the most recent list furnished to the Indenture Trustee as provided in Section
7.01 and the names, addresses and taxpayer identification numbers of the
Noteholders received by the Indenture Trustee in its capacity as Transfer Agent
and Registrar. The Indenture Trustee may destroy any list furnished to it as
provided in Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate, pursuant to TIA Section312(b), with other
Noteholders with respect to their rights under this Indenture or under the
Notes. Every Noteholder, by receiving and holding a Note, agrees that none of
the Issuer, the Indenture Trustee, the Transfer Agent and Registrar and the
Servicer or any of their respective agents and employees shall be held
accountable by reason of the disclosure of any information as to the names and
addresses of the Noteholders hereunder, regardless of the sources from which
such information was derived.
(c) The Issuer, the Indenture Trustee and the Transfer Agent and Registrar
shall have the protection of TIA Section312(c).
Section 7.03. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within fifteen (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 Indenture Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the Commission such
additional information, documents and
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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 Indenture Trustee (and the Indenture Trustee shall
transmit by mail to all Noteholders described in TIA Section313(c)) such
summaries of any information, documents and reports required to be filed by the
Issuer pursuant to clauses (i) and (ii) of this subsection 7.03(a) as may be
required by rules and regulations prescribed from time to time by the
Commission.
(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 Indenture Trustee.
If required by TIA Section313(a), within sixty (60) days after each [June
30] beginning with [June 30], 2001, the Indenture Trustee shall mail to each
Noteholder as required by TIA Section313(c) a brief report dated as of such date
that complies with TIA Section313(a). The Indenture Trustee also shall comply
with TIA Section313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 8.01. Collection of Money.
Except as otherwise expressly provided herein and in the related Indenture
Supplement, the Indenture 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 Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall hold all such money and property received by it in trust for the
Noteholders and shall apply 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 the Transfer and Servicing Agreement
or any other Transaction Document, the Indenture Trustee may, and upon the
request of the Holders of Notes representing not less than 66 2/3% of the
Outstanding Amount of the affected Series shall, 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 Pay Out Event or a Default or Event of Default
under this Indenture and to proceed thereafter as provided in Article V hereof.
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Section 8.02. Rights of Noteholders.
The Collateral shall secure the obligation of the Trust to pay to the
Holders of the Notes of each Series principal and interest and other amounts
payable pursuant to this Indenture and the related Indenture Supplement. Except
as specifically set forth in the Indenture Supplement with respect thereto, the
Notes of any Series or Class shall not have rights to payment from any Series
Account or Series Enhancement allocated for the benefit of any other Series or
Class.
Section 8.03. Establishment of Collection Account and Excess Funding
Account.
(a) The Servicer, for the benefit of the Noteholders, shall establish and
maintain with the Indenture Trustee or its nominee in the name of the Indenture
Trustee, on behalf of the Trust, a Qualified Account (including any subaccount
thereof) bearing a designation clearly indicating that the funds and other
property credited thereto are held for the benefit of the Noteholders (the
"Collection Account"). The Indenture Trustee shall possess all right, title and
interest in all monies, instruments, investment property, documents,
certificates of deposit and other property credited from time to time to the
Collection Account and in all proceeds, earnings, income, revenue, dividends and
distributions thereof for the benefit of the Noteholders.
The Collection Account shall be under the sole dominion and control of the
Indenture Trustee for the benefit of the Noteholders. Except as expressly
provided in this Indenture and the Transfer and Servicing Agreement, the
Servicer agrees that it shall have no right of setoff or banker's lien against,
and no right to otherwise deduct from, any funds held in the Collection Account
for any amount owed to it by the Indenture Trustee, the Trust, any Noteholder or
any Series Enhancer. If, at any time, the Collection Account ceases to be a
Qualified Account, the Indenture Trustee (or the Servicer on its behalf) shall
within ten (10) Business Days (or such longer period, not to exceed thirty (30)
calendar days, as to which each Rating Agency may consent) establish a new
Collection Account meeting the conditions specified above, transfer any monies,
documents, instruments, investment property, certificates of deposit and other
property to such new Collection Account and from the date such new Collection
Account is established, it shall be the "Collection Account." Pursuant to the
authority granted to the Servicer in subsection 3.01(b) of the Transfer and
Servicing Agreement, the Servicer shall have the power, revocable by the
Indenture Trustee, to make withdrawals and payments from the Collection Account
and to instruct the Indenture Trustee to make withdrawals and payments from the
Collection Account for the purposes of carrying out the Servicer's or the
Indenture Trustee's duties hereunder and under the Transfer and Servicing
Agreement, as applicable. The Servicer shall reduce deposits into the Collection
Account payable by the Transferor on any Deposit Date to the extent the
Transferor is entitled to receive funds from the Collection Account on such
Deposit Date, but only to the extent such reduction would not reduce the
Transferor Interest to an amount less than the Required Transferor Interest.
Funds on deposit in the Collection Account (other than investment earnings
and amounts deposited pursuant to Section 2.06, 6.01, or 7.01 of the Transfer
and Servicing Agreement or Section 11.02 of this Indenture) shall at the written
direction of the Servicer be invested by the Indenture Trustee or its nominee in
Eligible Investments selected by the Servicer. All such Eligible Investments
shall be held by the Indenture Trustee for the benefit of the Noteholders
pursuant to 6.15. Investments of funds representing Collections collected during
any Monthly Period shall be invested in Eligible Investments
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that will mature so that such funds will be available no later than the close of
business on each monthly Transfer Date following such Monthly Period in amounts
sufficient to the extent of such funds to make the required distributions on the
following Payment Date. No such Eligible Investment shall be disposed of prior
to its maturity; provided, however, that the Indenture Trustee may sell,
liquidate or dispose of any such Eligible Investment before its maturity, at the
written direction of the Servicer, if such sale, liquidation or disposal would
not result in a loss of all or part of the principal portion of such Eligible
Investment or if, prior to the maturity of such Eligible Investment, a default
occurs in the payment of principal, interest or any other amount with respect to
such Eligible Investment. Unless directed by the Servicer, funds deposited in
the Collection Account on a Transfer Date with respect to the immediately
succeeding Payment Date are not required to be invested overnight. On each
Payment Date, all interest and other investment earnings (net of losses and
investment expenses) on funds on deposit in the Collection Account shall be
treated as Collections of Finance Charge and Administrative Receivables with
respect to the last day of the related Monthly Period, except as otherwise
specified in any Indenture Supplement. The Indenture Trustee shall bear no
responsibility or liability for any losses resulting from investment or
reinvestment of any funds in accordance with this Section 8.03 nor for the
selection of Eligible Investments in accordance with the provisions of this
Indenture and any Indenture Supplement.
(b) The Servicer, for the benefit of the Noteholders, shall establish and
maintain with the Indenture Trustee or its nominee in the name of the Indenture
Trustee, on behalf of the Trust, a Qualified Account (including any subaccounts
thereof) bearing a designation clearly indicating that the funds and other
property credited thereto are held for the benefit of the Noteholders (the
"Excess Funding Account"). The Indenture Trustee shall possess all right, title
and interest in all monies, instruments, investment property, documents,
certificates of deposit and other property credited from time to time to the
Excess Funding Account and in all proceeds, dividends distributions, earnings,
income and revenue thereof for the benefit of the Noteholders. The Excess
Funding Account shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Noteholders. Except as expressly provided in this
Indenture and the Transfer and Servicing Agreement, the Servicer agrees that it
shall have no right of setoff or banker's lien against, and no right to
otherwise deduct from, any funds and other property held in the Excess Funding
Account for any amount owed to it by the Indenture Trustee, the Trust, any
Noteholder or any Series Enhancer. If, at any time, the Excess Funding Account
ceases to be a Qualified Account, the Indenture Trustee (or the Servicer on its
behalf) shall within ten (10) Business Days (or such longer period, not to
exceed thirty (30) calendar days, as to which each Rating Agency may consent)
establish a new Excess Funding Account meeting the conditions specified above,
transfer any monies, documents, instruments, investment property, certificates
of deposit and other property to such new Excess Funding Account and from the
date such new Excess Funding Account is established, it shall be the "Excess
Funding Account."
Funds on deposit in the Excess Funding Account shall at the written
direction of the Servicer be invested by the Indenture Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Indenture Trustee or its nominee (including any securities
intermediary) for the benefit of the Noteholders pursuant to Section 6.15. Funds
on deposit in the Excess Funding Account on any Payment Date will be invested in
Eligible Investments that will mature so that such funds will be available no
later than the close of business on the next succeeding Transfer Date. No such
Eligible Investment shall be disposed of prior to its maturity; provided,
however, that the Indenture Trustee may sell, liquidate or dispose of an
Eligible Investment before its maturity, at the written direction
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of the Servicer, if such sale, liquidation or disposal would not result in a
loss of all or part of the principal portion of such Eligible Investment or if,
prior to the maturity of such Eligible Investment, a default occurs in the
payment of principal, interest or any other amount with respect to such Eligible
Investment. Unless directed by the Servicer, funds deposited in the Excess
Funding Account on a Transfer Date with respect to the immediately succeeding
Payment Date are not required to be invested overnight. [On each Payment Date,
all interest and other investment earnings (net of losses and investment
expenses) on funds on deposit in the Excess Funding Account shall be treated as
Collections of Finance Charge and Administrative Receivables with respect to the
last day of the related Monthly Period except as otherwise specified in the
related Indenture Supplement.] On each Business Day on which funds are on
deposit in the Excess Funding Account and on which no Series is in an
Accumulation Period or Amortization Period, the Servicer shall determine the
amount (if any) by which the Transferor Interest exceeds the Required Transferor
Interest on such date and shall instruct the Indenture Trustee to withdraw any
such excess from the Excess Funding Account and pay such amount to the holders
of Trust Beneficial Interests or Certificates; provided, however, that, if an
Accumulation Period or Amortization Period has commenced and is continuing with
respect to one or more outstanding Series, any funds on deposit in the Excess
Funding Account shall be treated as Shared Principal Collections and shall be
allocated and distributed in accordance with Section 8.05 and the terms of each
Indenture Supplement.
Section 8.04. Collections and Allocations.
(a) The Servicer will apply or will instruct the Indenture Trustee to apply
all funds on deposit in the Collection Account as described in this Article VIII
and in each Indenture Supplement. Except as otherwise provided below, the
Servicer shall deposit Collections into the Collection Account as promptly as
possible after the Date of Processing of such Collections, but in no event later
than the second Business Day following the Date of Processing. Subject to the
express terms of any Indenture Supplement, but notwithstanding anything else in
this Indenture or the Transfer and Servicing Agreement to the contrary, for so
long as any of the following conditions are satisfied: (i) ABC remains the
Servicer; (ii) no Pay Out Event has occurred; or (iii) (A) ABC maintains a long
or short term rating which is satisfactory to each Rating Agency, (B) Advanta
Corp. has provided the Indenture Trustee with a performance guarantee covering
the risk that the Servicer will not deposit Collections in the Collection
Account as required herein and the Rating Agency Condition shall be satisfied
with the respect to such arrangement, or (C) the Servicer delivers to the
Indenture Trustee a letter of credit or other guaranty covering the risk that
the Servicer will not deposit Collections in the Collection Account as required
herein and the Rating Agency Condition shall be satisfied with respect to such
arrangement, the Servicer need not make the daily deposits of Collections into
the Collection Account as provided in the preceding sentence, but may make a
single deposit in the Collection Account in immediately available funds not
later than 1:00 p.m., New York City time, on the Payment Date following the
Monthly Period with respect to which such deposit relates. Subject to the first
proviso in Section 8.05, but notwithstanding anything else in this Indenture or
the Transfer and Servicing Agreement to the contrary, with respect to any
Monthly Period, whether the Servicer is required to make deposits of Collections
pursuant to the first or the second preceding sentence, (i) the Servicer will
only be required to deposit Collections into the Collection Account up to the
aggregate amount of Collections required to be deposited into any Series Account
or, without duplication, distributed on or prior to the related Payment Date to
Noteholders or to any Series Enhancer pursuant to the terms of any Indenture
Supplement or Enhancement Agreement and (ii) if at any time prior to such
Payment Date the amount of Collections deposited in the Collection Account
exceeds the
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amount required to be deposited pursuant to clause (i) above, the Servicer will
be permitted to withdraw the excess from the Collection Account and pay such
amount to the Issuer to be distributed by the Issuer pursuant to the terms of
the Transaction Documents. Subject to the immediately preceding sentence, the
Servicer may retain its Servicing Fee with respect to a Series and shall not be
required to deposit it in the Collection Account. To the extent that, in
accordance with this subsection 8.04(a), the Servicer has retained amounts which
would otherwise be required to be deposited into the Collection Account or any
Series Account with respect to any Monthly Period, the Servicer shall be
required to deposit such amounts in the Collection Account or such Series
Account on the related Payment Date to the extent necessary to make required
distributions on the related Payment Date, including any amounts which are
required to be applied as Reallocated Principal Collections.
(b) Collections of Finance Charge and Administrative Receivables, Principal
Receivables and Defaulted Receivables will be allocated to each Series of Notes
and to the holders of Trust Beneficial Interests or Certificates in accordance
with this Article VIII and each Indenture Supplement and amounts so allocated to
any Series will not, except as specified in the related Indenture Supplement, be
available to the Noteholders of any other Series. Allocations of the foregoing
amounts between the Holders of the Notes and the holders of Trust Beneficial
Interests or Certificates, among the Series and among the Classes in any Series,
shall be set forth in the related Indenture Supplement or Indenture Supplements.
Section 8.05. Shared Principal Collections.
On each Payment Date, (1) the Servicer shall allocate Shared Principal
Collections (as described below) to each Principal Sharing Series, pro rata, in
proportion to the Principal Shortfalls, if any, with respect to each such Series
and (2) the Servicer shall withdraw from the Collection Account and pay to the
holders of Trust Beneficial Interests or Certificates an amount equal to the
excess, if any, of (x) the aggregate amount for all outstanding Series of
Collections of Principal Receivables which the related Indenture Supplements
specify are to be treated as "Shared Principal Collections" for such Payment
Date over (y) the aggregate amount for all outstanding Series which the related
Indenture Supplements specify are "Principal Shortfalls" for such Series and for
such Payment Date; provided, however, that if the Transferor Interest as of such
Payment Date (determined after giving effect to the Principal Receivables
transferred to the Trust on such date) is less than the Required Transferor
Interest, the Servicer will not distribute to the holders of Trust Beneficial
Interests or Certificates any such amounts that otherwise would be distributed
to the holders of Trust Beneficial Interests or Certificates, but shall deposit
such funds in the Excess Funding Account. The Transferor may, at its option,
instruct the Indenture Trustee to deposit Shared Principal Collections which are
otherwise payable to the holders of Trust Beneficial Interests or Certificates
pursuant to the provisions set forth above into the Excess Funding Account.
Notwithstanding the foregoing, a Group of Series may specify in their related
Indenture Supplements that Shared Principal Collections from such Series shall
be allocated as provided above but only among the Series in such Group.
Section 8.06. Additional Withdrawals from the Collection Account.
On or before the Determination Date with respect to any Monthly Period, the
Servicer shall determine the amounts payable to ABRC or any Seller with respect
to such Monthly Period under the related Receivables Purchase Agreement in
respect of amounts credited to the Collection Account that
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were not transferred to the Trust hereunder, and the Servicer shall withdraw
such amounts from the Collection Account and pay such amount to ABRC or such
Seller, as the case may be.
Section 8.07. Allocation of Collateral to Series or Groups.
To the extent so provided in the Indenture Supplement for any Series or in
an Indenture Supplement otherwise executed pursuant to Section 10.01,
Receivables conveyed to the Trust pursuant to Section 2.01 of the Transfer and
Servicing Agreement and Receivables conveyed to the Trust pursuant to Section
2.09 of the Transfer and Servicing Agreement and all Collections received with
respect thereto may be allocated or applied in whole or in part to one or more
Series or Groups as may be provided in such Indenture Supplement; provided,
however, that any such allocation or application shall be effective only upon
satisfaction of the following conditions:
(i) on or before the fifth Business Day immediately preceding such
allocation, the Servicer shall have given the Indenture Trustee and each Rating
Agency written notice of such allocation;
(ii) the Rating Agency Condition shall have been satisfied with respect
to such allocation; and
(iii) the Servicer shall have delivered to the Indenture Trustee an
Officer's Certificate, dated the date of such allocation, to the effect that the
Servicer reasonably believes that such allocation will not have an Adverse
Effect.
Any such Indenture Supplement may provide that (i) such allocation to one
or more particular Series or Groups may terminate upon the occurrence of certain
events specified therein and (ii) that upon the occurrence of any such event,
such assets and any Collections with respect thereto, shall be reallocated to
other Series or Groups or to all Series, all as shall be provided in such
Indenture Supplement.
Section 8.08. Excess Finance Charge Collections.
On each Payment Date, (a) the Servicer shall allocate Excess Finance Charge
Collections (as described below) to each Excess Allocation Series, pro rata, in
proportion to the Finance Charge Shortfalls (as described below), if any, with
respect to each such Series and (b) the Servicer shall withdraw from the
Collection Account and pay to the holders of Trust Beneficial Interests or
Certificates an amount equal to the excess, if any, of (x) the aggregate amount
for all outstanding Series of Collections of Finance Charge and Administrative
Receivables which the related Supplements specify are to be treated as "Excess
Finance Charge Collections" for such Payment Date over (y) the aggregate amount
for all outstanding Series which the related Supplements specify are "Finance
Charge Shortfalls" for such Series and such Payment Date; provided, however,
that the sharing of Excess Finance Charge Collections among Series will continue
only until such time, if any, at which the Transferor shall deliver to the
Indenture Trustee an Officer's Certificate to the effect that, in the reasonable
belief of the Transferor, the continued sharing of Excess Finance Charge
Collections among Series would have adverse regulatory implications with respect
to the Transferor. Notwithstanding the foregoing, a Group of Series may specify
in their related Indenture Supplements that Excess Finance Charge Collections
from such Series shall be allocated as provided above but only among the Series
in such Group.
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Section 8.09. Release of Collateral; Eligible Loan Documents.
(a) The Indenture 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 Indenture Trustee's interest in the same, in a manner
and under circumstances which are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Indenture Trustee
as provided in this Article VIII shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any monies.
(b) In order to facilitate the servicing of the Receivables by the
Servicer, the Indenture Trustee upon Issuer Order shall authorize the Servicer
to execute in the name and on behalf of the Indenture Trustee instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
other comparable instruments with respect to the Receivables (and the Indenture
Trustee shall execute any such documents on request of the Servicer), subject to
the obligations of the Servicer under the Transfer and Servicing Agreement.
(c) The Indenture Trustee shall, at such time as there are no Notes
outstanding, release and transfer, without recourse, all of the Collateral that
secured the Notes (other than any cash held for the payment of the Notes
pursuant to Section 4.02). The Indenture Trustee shall release property from the
lien of this Indenture pursuant to this Section 8.09(c) only upon receipt of an
Issuer Order accompanied by an Officer's Certificate, an Opinion of Counsel and
(if required by the TIA) Independent Certificates in accordance with TIA
Section314(c) and 314(d)(1) meeting the applicable requirements of Section
12.01.
(d) Notwithstanding anything to the contrary in this Indenture, the
Transfer and Servicing Agreement and the Trust Agreement, immediately prior to
the release of any portion of the Collateral or any funds on deposit in the
Series Accounts pursuant to this Indenture, the Indenture Trustee shall remit to
the Transferor for its own account any funds that, upon such release, would
otherwise be remitted to the Issuer.
Section 8.10. Opinion of Counsel.
The Indenture Trustee shall receive at least seven (7) days notice when
requested by the Issuer to take any action pursuant to subsection 8.09(a),
accompanied by copies of any instruments involved, and the Indenture Trustee
shall also require, as a condition to such action, an Opinion of Counsel, in
form and substance reasonably satisfactory to the Indenture 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 value of the
Collateral. The Indenture Trustee and counsel rendering any such opinion may
rely, without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Indenture Trustee in connection
with any such action.
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ARTICLE IX
DISTRIBUTIONS AND REPORTS TO NOTEHOLDERS
Distributions shall be made to, and reports shall be provided to,
Noteholders as set forth in the applicable Indenture Supplement. The identity of
the Noteholders with respect to distributions and reports shall be determined
according to the immediately preceding Record Date.
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 10.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior notice
to the Rating Agencies with respect to the Notes of all Series, the Issuer and
the Indenture 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 satisfactory to the Indenture 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 Indenture 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 Section 3.11
hereof, of another person to the Issuer, and the assumption by any such
successor of the covenants of the Issuer contained herein and in the Notes;
(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 Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture that 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 adversely
affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor indenture 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 indenture
trustee, pursuant to the requirements of Article VI;
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(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary 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;
(viii) to provide for the issuance of one or more new Series of Notes,
in accordance with the provisions of Section 2.12 hereof; or
(ix) to provide for the termination of any interest rate swap agreement
or other form of credit enhancement in accordance with the provisions of the
related Indenture Supplement.
The Indenture 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.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any Noteholders of any Series then
Outstanding but upon satisfaction of the Rating Agency Condition with respect to
the Notes of all Series, 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 (i) the Transferor shall have delivered to the Owner Trustee and
the Indenture Trustee an Officer's Certificate, dated the date of any such
action, stating that all requirements for such amendments contained in the
Agreement have been met and the Transferor reasonably believes that such action
will not have an Adverse Effect and (ii) a Tax Opinion shall have been delivered
to each Rating Agency. Additionally, notwithstanding the preceding sentence, the
Issuer and the Indenture Trustee, when authorized by an Issuer Order, may,
without the consent of any Noteholders of any Series then Outstanding or the
Series Enhancers for any Series, enter into an indenture or indentures
supplemental hereto to add, modify or eliminate such provisions as may be
necessary or advisable in order to enable all or a portion of the Trust (i) to
qualify as, and to permit an election to be made to cause the Trust to be
treated as, a "financial asset securitization investment trust" as described in
the provisions of Section 860L of the Code, and (ii) to avoid the imposition of
state or local income or franchise taxes imposed on the Trust's property or its
income; provided, however, that (i) the Transferor delivers to the Indenture
Trustee and the Owner Trustee an Officer's Certificate to the effect that the
proposed amendments meet the requirements set forth in this subsection 10.01(b),
(ii) the Rating Agency Condition will have been satisfied and (iii) such
amendment does not affect the rights, duties or obligations of the Indenture
Trustee or the Owner Trustee hereunder. The amendments which the Transferor may
make without the consent of Noteholders pursuant to the preceding sentence may
include, without limitation, the addition of a sale of Receivables.
Section 10.02. Supplemental Indentures with Consent of Noteholders.
The Issuer and the Indenture Trustee, when authorized by an Issuer Order,
also may, upon satisfaction of the Rating Agency Condition and with the consent
of the Holders of Notes representing more than 50% of the Outstanding Amount of
each adversely affected Series, by Act of such Holders delivered to the Issuer
and the Indenture Trustee, enter into an indenture or indentures supplemental
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hereto for the purpose of adding any provisions to, changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of such Noteholders under this Indenture; provided, however
that no such supplemental indenture shall, without the consent of the Holder of
each outstanding Note affected thereby:
(a) change the due date of any installment of principal of or interest on
any Note, or reduce the principal amount thereof, the interest rate specified
thereon or the redemption price with respect thereto or change any place of
payment where, or the coin or currency in which, any Note or any interest
thereon is payable;
(b) 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);
(c) reduce the percentage of the Outstanding Amount of any Series 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 as provided for in this Indenture;
(d) reduce the percentage of the Outstanding Amount of any Series, the
consent of the Holders of which is required to direct the Indenture Trustee to
sell or liquidate the Collateral if the proceeds of such sale would be
insufficient to pay the principal amount and accrued but unpaid interest on the
outstanding Notes of such Series;
(e) decrease the percentage of the Outstanding Amount required to amend the
sections of this Indenture which specify the applicable percentage of the
Outstanding Amount of the Notes of any Series necessary to amend the Indenture
or any Transaction Documents which require such consent;
(f) modify or alter the provisions of this Indenture prohibiting the voting
of Notes held by the Trust, any other Obligor on the Notes, a Seller or any
affiliate thereof; or
(g) 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 Collateral for any
Notes or, except as otherwise permitted or contemplated herein, terminate the
Lien of this Indenture on any such Collateral at any time subject hereto or
deprive the Holder of any Note of the security provided by the Lien of this
Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
10.02 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
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Promptly after the execution by the Issuer and the Indenture Trustee of any
Supplement Indenture pursuant to this Section 10.02, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates written notice setting forth in general terms the substance of
such Supplement Indenture. Any failure of the Indenture 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 10.03. Execution of Supplemental Indentures.
In executing, or permitting the additional trusts created by, any
supplemental indenture permitted by this Article X or the modification thereby
of the trusts created by this Indenture, the Indenture 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
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
Section 10.04. Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture under this Article X, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes, and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
Section 10.05. Conformity With Trust Indenture Act.
Every amendment of this Indenture and every supplemental indenture executed
pursuant to this Article X shall conform to the requirements of the TIA as then
in effect so long as this Indenture shall then be qualified under the TIA.
Section 10.06. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article X may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Issuer shall so
determine, new Notes so modified as to conform, in the opinion of the Indenture
Trustee and the Issuer, to any such supplemental indenture may be prepared and
executed by the Issuer and authenticated and delivered by the Indenture Trustee
in exchange for the outstanding Notes.
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ARTICLE XI
TERMINATION
Section 11.01. Termination of Trust.
The Trust and the respective obligations and responsibilities of the
Indenture Trustee created hereby (other than the obligation of the Indenture
Trustee to make payments to Noteholders as hereinafter set forth) shall
terminate, except with respect to the duties described in subsection 11.02(b),
as provided in the Trust Agreement.
Section 11.02. Final Distribution.
(a) The Servicer shall give the Indenture Trustee at least thirty (30) days
prior notice of the Payment Date on which the Noteholders of any Series or Class
may surrender their Notes for payment of the final distribution on and
cancellation of such Notes (or, in the event of a final distribution resulting
from the application of Section 2.06, 6.01 or 7.01 of the Transfer and Servicing
Agreement, notice of such Payment Date promptly after the Servicer has
determined that a final distribution will occur, if such determination is made
less than thirty (30) days prior to such Payment Date). Such notice shall be
accompanied by an Officer's Certificate setting forth the information specified
in Section 3.05 of the Transfer and Servicing Agreement covering the period
during the then-current calendar year through the date of such notice. Not later
than the fifth day of the month in which the final distribution in respect of
such Series or Class is payable to Noteholders, the Indenture Trustee shall
provide notice to Noteholders of such Series or Class specifying (i) the date
upon which final payment of such Series or Class will be made upon presentation
and surrender of Notes of such Series or Class at the office or offices therein
designated, (ii) the amount of any such final payment and (iii) that the Record
Date otherwise applicable to such payment date is not applicable, payments being
made only upon presentation and surrender of such Notes at the office or offices
therein specified (which, in the case of Bearer Notes, shall be outside the
United States). The Indenture Trustee shall give such notice to the Transfer
Agent and Registrar and the Paying Agent at the time such notice is given to
Noteholders.
(b) Notwithstanding a final distribution to the Noteholders of any Series
or Class (or the termination of the Trust), except as otherwise provided in this
paragraph, all funds then on deposit in the Collection Account and any Series
Account allocated to such Noteholders shall continue to be held in trust for the
benefit of such Noteholders and the Paying Agent or the Indenture Trustee shall
pay such funds to such Noteholders upon surrender of their Notes, if
certificated (and any excess shall be paid in accordance with the terms of any
Enhancement Agreement). In the event that all such Noteholders shall not
surrender their Notes for cancellation within six (6) months after the date
specified in the notice from the Indenture Trustee described in paragraph (a),
the Indenture Trustee shall give a second notice to the remaining such
Noteholders to surrender their Notes for cancellation and receive the final
distribution with respect thereto (which surrender and payment, in the case of
Bearer Notes, shall be outside the United States). If within one year after the
second notice all such Notes shall not have been surrendered for cancellation,
the Indenture Trustee may take appropriate steps, or may appoint an agent to
take appropriate steps, to contact the remaining such Noteholders concerning
surrender of their Notes, and the cost thereof shall be paid out of the funds in
the Collection Account or any Series Account held for the
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benefit of such Noteholders. The Indenture Trustee and the Paying Agent shall
pay to the Issuer any monies held by them for the payment of principal or
interest that remains unclaimed for two (2) years. After payment to the Issuer,
Noteholders entitled to the money must look to the Issuer for payment as general
creditors unless an applicable abandoned property law designates another Person.
Section 11.03. Issuer's Termination Rights.
Upon the termination of the Trust pursuant to the terms of the Trust
Agreement, the Indenture Trustee shall assign and convey to the holders of Trust
Beneficial Interests or Certificates or any of their designees, without
recourse, representation or warranty, all right, title and interest of the Trust
in the Receivables, whether then existing or thereafter created, all Interchange
and Recoveries related thereto all monies due or to become due and all amounts
received or receivable with respect thereto (including all moneys then held in
the Collection Account or any Series Account) and all proceeds thereof, except
for amounts held by the Indenture Trustee pursuant to subsection 11.02(b). The
Indenture Trustee shall execute and deliver such instruments of transfer and
assignment, in each case without recourse, as shall be reasonably requested by
the holders of Trust Beneficial Interests or Certificates to vest in the holders
of Trust Beneficial Interests or Certificates or any of their designees all
right, title and interest which the Indenture Trustee had in the Collateral and
such other property.
Section 11.04. [Reserved].
ARTICLE XII
MISCELLANEOUS
Section 12.01. Compliance Certificates and Opinions etc.
(a) Upon any application or request by the Issuer to the Indenture Trustee
to take any action under any provision of this Indenture, the Issuer shall
furnish to the Indenture 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 12.01, 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;
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(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) (i) Prior to the deposit of any Collateral or other property or
investment property with the Indenture Trustee that is to be made the basis for
the release of any property or investment property subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in subsection
12.01(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an
Officer's Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (within ninety (90) days of such deposit)
to the Issuer of the Collateral or other property or investment property to be
so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Issuer shall also
deliver to the Indenture Trustee (if required by the TIA) an Independent
Certificate as to the same matters, if the fair value to the Issuer of the
investment property to be so deposited and of all other such investment property
made the basis of any such withdrawal or release since the commencement of the
then-current fiscal year of the Issuer, as set forth in the certificates
delivered pursuant to clause (i) above and this clause (ii), is 10% or more of
the Outstanding Amount of the Notes, but such a certificate need not be
furnished with respect to any investment property so deposited if the fair value
thereof to the Issuer as set forth in the related Officer's Certificate is less
than $25,000 or less than one percent of the Outstanding Amount of the Notes.
(iii) Other than with respect to the release of any Receivables in
Removed Accounts, whenever any property or investment property is to be released
from the lien of this Indenture, the Issuer shall also furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value (within ninety (90) days of
such release) of the property or securities proposed to be released and stating
that in the opinion of such person the proposed release will not impair the
security under this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Issuer shall also
furnish to the Indenture Trustee (if required by the TIA) an Independent
Certificate as to the same matters if the fair value of the property or
investment property and of all other property, other than Receivables in Removed
Accounts, or investment property released from the lien of this Indenture since
the commencement of the then current calendar year, as set forth in the
certificates required by clause (iii) above and this clause (iv), equals 10% or
more of the Outstanding Amount of the Notes, but such certificate need not be
furnished in the case of any release of property or investment property if the
fair value thereof as set forth in the related Officer's Certificate is less
than $25,000 or less than one percent of the then Outstanding Amount of the
Notes.
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(iv) Notwithstanding Section 2.11 or any other provision of this
Section 12.01, the Issuer may (A) collect, liquidate, sell or otherwise dispose
of Receivables as and to the extent permitted or required by the Transaction
Documents and (B) make cash payments out of the Series Accounts as and to the
extent permitted or required by the Transaction Documents.
Section 12.02. Form of Documents Delivered to Indenture 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.
Any certificate or opinion of a Responsible 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 such officer's certificate or opinion is
based are erroneous. Any such certificate of a Responsible 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, a Seller, the Issuer or the Administrator, stating that the
information with respect to such factual matters is in the possession of the
Servicer, a Seller, the Issuer or the Administrator, unless such Responsible
Officer or Counsel 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 (2) 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 Indenture 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 Indenture 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 12.03. 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 their agents duly
appointed in writing and satisfying any requisite percentages as to minimum
number or dollar
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value of outstanding principal amount represented by such Noteholders; and,
except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Indenture
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 conclusive in favor of the Indenture Trustee and
the Issuer, if made in the manner provided in this Section 12.03.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved in any manner which the Indenture 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 (and any
transferee thereof) of every Note issued upon the registration thereof in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Indenture Trustee or the Issuer in reliance thereon,
whether or not notation of such action is made upon such Note.
Section 12.04. Notices, Etc. to Indenture Trustee and Issuer.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Noteholders or other documents provided or permitted by the Agreement to
be made upon, given or furnished to, or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to a Trustee Officer, by facsimile transmission or by other means
acceptable to the Indenture Trustee to or with the Indenture Trustee at its
Corporate Trust Office; or
(b) the Issuer by the Indenture 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 it at
[______________________________________________________________________________]
or at any other address previously furnished in writing to the Indenture Trustee
by the Issuer. A copy of each notice to the Issuer shall be sent in writing and
mailed, first-class postage prepaid, to the Administrator at 11850 South
Election Road, Draper, Utah 84020.
Section 12.05. Notices to Noteholders; Waiver.
Where the 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 by registered or certified mail or first class postage
prepaid or national overnight courier service to each Noteholder affected by
such event, at its 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
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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
which 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 Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In the event that, 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 Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to any Rating Agency, 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 12.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer, with the consent of the Indenture Trustee, may enter into
any agreement with any Holder of a Note providing for a method of payment, or
notice by the Indenture 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 Indenture Trustee a copy of each such
agreement and the Indenture Trustee will cause payments to be made and notices
to be given in accordance with such agreements.
Section 12.07. 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 12.08. 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.
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<PAGE> 78
Section 12.09. Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer shall bind its
successors and assigns, whether so expressed or not.
Section 12.10. 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 12.11. 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, the Servicer and the Transferor, any benefit.
Section 12.12. 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 12.13. GOVERNING LAW.
THIS INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED THEREIN.
Section 12.14. 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 12.15. Trust Obligation.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Indenture Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or
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<PAGE> 79
the Indenture Trustee or of any successor or assign of the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that the Indenture Trustee and the Owner
Trustee have no such obligations in their individual capacity) and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity. For all purposes of this Indenture, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Articles V, VI and VII
of the Trust Agreement.
Section 12.16. No Petition.
The Indenture 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 Issuer or the Transferor, or join in instituting
against the Issuer or the Transferor, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized and attested, all as of the day and year first above written.
ADVANTA BUSINESS CARD MASTER TRUST,
as Issuer
By:[____________________________],
not in its individual capacity,
but solely as Owner Trustee
By: ___________________________
Name:
Title:
[______________________________]
as Indenture Trustee
By: ___________________________
Name:
Title:
Acknowledged and Accepted:
ADVANTA BANK CORP.,
as Servicer
By: ___________________________
Name:
Title:
<PAGE> 81
[Signature Page to Indenture]
Acknowledged and Accepted:
ADVANTA BUSINESS RECEIVABLES CORP.,
as Transferor
By: ___________________________
Name:
Title:
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<PAGE> 1
Exhibit 4.2
ADVANTA BUSINESS CARD MASTER TRUST
Issuer
and
[____________________________________]
Indenture Trustee
SERIES 2000-[___] INDENTURE SUPPLEMENT
Dated as of [ _____ __], 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I
CREATION OF THE SERIES 2000-[____] NOTES
Section 1.01. Designation ..................................................... 1
ARTICLE II
DEFINITIONS
Section 2.01. Definitions ..................................................... 2
ARTICLE III
SERVICING FEE AND INTERCHANGE
Section 3.01. Servicing Compensation; Interchange ............................. 14
ARTICLE IV
RIGHTS OF SERIES 2000-[____] NOTEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.01. Collections and Allocations ..................................... 16
Section 4.02. Determination of Monthly Interest ............................... 18
Section 4.03. Determination of Monthly Principal .............................. 19
Section 4.04. Application of Available Finance Charge
Collections and Available Principal Collections ............... 19
Section 4.05. Investor Charge-Offs ............................................ 22
Section 4.06. Reallocated Principal Collections ............................... 22
Section 4.07. Excess Finance Charge Collections ............................... 22
Section 4.08. Shared Principal Collections .................................... 23
Section 4.09. Principal Funding Account ....................................... 23
Section 4.10. Reserve Account ................................................. 25
Section 4.11. Cash Collateral Account ......................................... 27
Section 4.12. Determination of LIBOR .......................................... 29
Section 4.13. Investment Instructions ......................................... 30
ARTICLE V
DELIVERY OF SERIES 2000-[____] NOTES; DISTRIBUTIONS;
REPORTS TO SERIES 2000-[____] NOTEHOLDERS
Section 5.01. Delivery and Payment for the Series 2000-[____] Notes ........... 31
Section 5.02. Distributions ................................................... 31
Section 5.03. Reports and Statements to Series 2000-[____] Noteholders ........ 32
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
ARTICLE VI
SERIES 2000-A PAY OUT EVENTS
Section 6.01. Series 2000-[____] Pay Out Events ............................... 33
ARTICLE VII
REDEMPTION OF SERIES 2000-[____] NOTES;
FINAL DISTRIBUTIONS; SERIES TERMINATION
Section 7.01 Optional Redemption of Series 2000-[____]
Notes; Final Distributions .................................. 35
Section 7.02. Series Termination .............................................. 36
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Ratification of Indenture ....................................... 37
Section 8.02. Form of Delivery of the Series 2000-[____] Notes ................ 37
Section 8.03. Counterparts .................................................... 37
Section 8.04. GOVERNING LAW ................................................... 37
Section 8.05. Limitation of Liability ......................................... 37
</TABLE>
ii
<PAGE> 4
EXHIBITS
EXHIBIT A-1 FORM OF CLASS A NOTE
EXHIBIT A-2 FORM OF CLASS B NOTE
EXHIBIT A-3 FORM OF CLASS C NOTE
EXHIBIT A-4 FORM OF CLASS D NOTE
EXHIBIT B FORM OF MONTHLY PAYMENT INSTRUCTIONS AND
NOTIFICATION TO THE INDENTURE TRUSTEE
EXHIBIT C FORM OF MONTHLY STATEMENT
EXHIBIT D FORM OF MONTHLY SERVICER'S CERTIFICATE
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<PAGE> 5
SERIES 2000-[__] INDENTURE SUPPLEMENT, dated as of ______ __, 2000 (the
"INDENTURE SUPPLEMENT"), between ADVANTA BUSINESS CARD MASTER TRUST, a common
law trust organized and existing under the laws of the State of Delaware
(herein, the "ISSUER" or the "TRUST"), and [_________________________], a
[________________] organized and existing under the laws of [__________], not in
its individual capacity, but solely as indenture trustee (herein, together with
its successors in the trusts thereunder as provided in the Master Indenture
referred to below, the "INDENTURE TRUSTEE") under the Master Indenture, dated as
of [__________], 2000 (the "INDENTURE") between the Issuer and the Indenture
Trustee (the Indenture, together with this Indenture Supplement, the
"AGREEMENT").
Pursuant to Section 2.12 of the Indenture, the Transferor may direct the
Issuer, to issue one or more Series of Notes. The Principal Terms of this Series
are set forth in this Indenture Supplement to the Indenture.
ARTICLE I
Creation of the Series 2000-[ ] Notes
Section 1.01. Designation.
(a) There is hereby created and designated a Series of Notes to be issued
pursuant to the Indenture and this Indenture Supplement to be known as "ADVANTA
BUSINESS CARD MASTER TRUST, SERIES 2000-[ ] ASSET BACKED NOTES" or the "SERIES
2000-[ ] NOTES." The Series 2000-[ ] Notes shall be issued in [four ] Classes,
the first of which shall be known as the "CLASS A SERIES 2000-[__] FLOATING RATE
ASSET BACKED NOTES," the second of which shall be known as the "CLASS B SERIES
2000-[__] FLOATING RATE ASSET BACKED NOTES," the third of which shall be known
as the "CLASS C SERIES 2000-[__] FLOATING RATE ASSET BACKED NOTES," and the
fourth of which shall be known as the "CLASS D SERIES 2000-[__] FLOATING RATE
ASSET BACKED NOTES."
(b) Series 2000-[__] shall be included in Group [One] and shall be a
Principal Sharing Series with respect to Group [One] only. Series 2000-[__]
shall be an Excess Allocation Series with respect to Group [One] only. Series
2000-[__]shall not be subordinated to any other Series.
[END OF ARTICLE I]
<PAGE> 6
ARTICLE II
Definitions
Section 2.01. Definitions.
(a) Whenever used in this Indenture Supplement, the following words and
phrases shall have the following meanings, and the definitions of such terms are
applicable to the singular as well as the plural forms of such terms and the
masculine as well as the feminine and neuter genders of such terms. All
capitalized terms not otherwise defined herein are defined in the Indenture, the
Transfer and Servicing Agreement or the Trust Agreement. Each capitalized term
defined herein shall relate only to the Series 2000-[__] Notes and no other
Series of Notes issued by the Issuer, unless the context otherwise requires. In
the event that any term or provision contained herein shall conflict with or be
inconsistent with any term or provision contained in the Indenture, the Transfer
and Servicing Agreement or the Trust Agreement, the terms and provisions of this
Indenture Supplement shall be controlling.
"Accumulation Period Factor" shall mean, with respect to any Monthly
Period, a fraction, the numerator of which is equal to the sum of the initial
invested amounts of all outstanding Series, and the denominator of which is
equal to the sum of (a) the Initial Invested Amount, (b) the initial invested
amounts of all outstanding Series (other than Series 2000-[____]) which are not
expected to be in their revolving periods, and (c) the initial invested amounts
of all other outstanding Series which are not allocating Shared Principal
Collections to other Series and are in their revolving periods; provided,
however, that this definition may be changed at anytime if the Rating Agency
Condition is satisfied.
"Accumulation Period Length" shall have the meaning assigned such term in
subsection 4.04(e).
"Accumulation Shortfall" shall initially mean zero and shall thereafter
mean, with respect to any Monthly Period during the Controlled Accumulation
Period, the excess, if any, of the Controlled Deposit Amount for the previous
Monthly Period over the amount deposited into the Principal Funding Account
pursuant to subsection 4.04(c)(i) for the previous Monthly Period.
"Additional Interest" shall mean, with respect to any Payment Date, Class A
Additional Interest, Class B Additional Interest, Class C Additional Interest
and Class D Additional Interest for such Payment Date.
"Adjusted Invested Amount" shall mean, as of any date of determination, an
amount equal to the Invested Amount as of such date, minus the amount on deposit
in the Principal Funding Account on such date.
"Available Cash Collateral Account Amount" shall mean, with respect to any
Payment Date, an amount equal to the lesser of (a) the amount on deposit in the
Cash Collateral Account (exclusive of Investment Earnings, unless and until the
occurrence of an Event of Default with respect to Series 2000-[____] and
acceleration of the maturity of the Series 2000-[____] Notes pursuant to Section
5.03 of the Indenture) on such date (before giving effect to any deposit to, or
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<PAGE> 7
withdrawal from, the Cash Collateral Account made or to be made with respect to
such date) and (b) the Required Cash Collateral Account Amount for such Payment
Date.
"Available Finance Charge Collections" shall mean, with respect to any
Monthly Period, an amount equal to the sum of (a) the Investor Finance Charge
Collections for such Monthly Period, excluding the portion of Investor Finance
Charge Collections attributable to Servicer Interchange, (b) Principal Funding
Investment Proceeds, if any, with respect to the related Payment Date and (c)
amounts, if any, to be withdrawn from the Reserve Account which will be
deposited into the Collection Account on the related Payment Date to be treated
as Available Finance Charge Collections pursuant to subsection 4.10(d).
"Available Principal Collections" shall mean, with respect to any Monthly
Period, an amount equal to the sum of (a) the Investor Principal Collections for
such Monthly Period minus (b) the amount of Reallocated Principal Collections
with respect to such Monthly Period which pursuant to Section 4.06 are required
to be applied on the related Payment Date, plus (c) any Shared Principal
Collections with respect to other Principal Sharing Series in Group [One]
(including any amounts on deposit in the Excess Funding Account that are
allocated to Series 2000-[__] pursuant to the Agreement for application as
Shared Principal Collections)[, plus (d) the aggregate amount to be treated as
Available Principal Collections pursuant to subsections 4.04(a)(v) and (vi) for
the related Payment Date].
"Available Reserve Account Amount" shall mean, with respect to any Payment
Date, the lesser of (a) the amount on deposit in the Reserve Account on such
date (after taking into account any interest and earnings retained in the
Reserve Account pursuant to subsection 4.10(b) on such date, but before giving
effect to any deposit made or to be made pursuant to subsection 4.04(a)(vii) to
the Reserve Account on such date) and (b) the Required Reserve Account Amount.
"Base Rate" shall mean, with respect to any Monthly Period, the annualized
percentage equivalent of a fraction, the numerator of which is equal to the sum
of the Monthly Interest and the Noteholder Servicing Fee, each with respect to
the related Payment Date, and the denominator of which is the Invested Amount as
of the close of business on the last day of the immediately preceding Monthly
Period.
"Cash Collateral Account" shall have the meaning specified in subsection
4.11(a).
"Cash Collateral Account Deficiency" shall mean the excess, if any, of the
Required Cash Collateral Account Amount over the Available Cash Collateral
Account Amount.
"Cash Collateral Account Percentage" shall mean, (i) zero, if the Quarterly
Excess Spread Percentage on such Payment Date is greater than or equal to
[___]%, (ii) [___]%, if the Quarterly Excess Spread Percentage on such Payment
Date is less than [____]% and greater than or equal to [____]%, (iii) [____]%,
if the Quarterly Excess Spread Percentage on such Payment Date is less than
[____]% and greater than or equal to [____]%, (iv) [____]%, if the Quarterly
Excess Spread Percentage on such Payment Date is less than [____]% and greater
than or equal to [____]%, and (v) [____]%, if the Quarterly Excess Spread
Percentage on such Payment Date is less than
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<PAGE> 8
[____]%, provided, that if a Pay Out Event with respect to Series 2000-[____]
has occurred, the Cash Collateral Account Percentage shall be [____]%.
"Class A Additional Interest" shall have the meaning specified in
subsection 4.02(a).
"Class A Interest Shortfall" shall have the meaning specified in
subsection 4.02(a).
"Class A Monthly Interest" shall have the meaning specified in
subsection 4.02(a).
"Class A Note Initial Principal Balance" shall mean $___________.
"Class A Note Interest Rate" shall mean a per annum rate of ____% in
excess of LIBOR as determined (i) on _____ __, 2000, for the period from and
including the Closing Date through and including _____ __, 2000 and (ii) on the
related LIBOR Determination Date with respect to each Interest Period
thereafter.
"Class A Note Principal Balance" shall mean, on any date of
determination, an amount equal to (a) the Class A Note Initial Principal
Balance, minus (b) the aggregate amount of principal payments made to the Class
A Noteholders on or prior to such date.
"Class A Noteholder" shall mean the Person in whose name a Class A Note
is registered in the Note Register.
"Class A Notes" shall mean any one of the Notes executed by the Issuer
and authenticated by or on behalf of the Indenture Trustee, substantially in the
form of EXHIBIT A-1.
"Class A Required Amount" shall mean, with respect to any Payment Date,
an amount equal to the excess of the amount described in subsection 4.04(a)(i)
over the Available Finance Charge Collections applied to pay such amount
pursuant to subsection 4.04(a).
"Class B Additional Interest" shall have the meaning specified in
subsection 4.02(b).
"Class B Interest Shortfall" shall have the meaning specified in
subsection 4.02(b).
"Class B Monthly Interest" shall have the meaning specified in
subsection 4.02(b).
"Class B Note Initial Principal Balance" shall mean $___________.
"Class B Note Interest Rate" shall mean a per annum rate of ____% in
excess of LIBOR as determined (i) on _____ __, 2000, for the period from and
including the Closing Date through and including _____ __, 2000 and (ii) on the
related LIBOR Determination Date with respect to each Interest Period
thereafter.
"Class B Note Principal Balance" shall mean, on any date of
determination, an amount equal to (a) the Class B Note Initial Principal
Balance, minus (b) the aggregate amount of principal payments made to the Class
B Noteholders on or prior to such date.
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<PAGE> 9
"Class B Noteholder" shall mean the Person in whose name a Class B Note
is registered in the Note Register.
"Class B Notes" shall mean any one of the Notes executed by the Issuer
and authenticated by or on behalf of the Indenture Trustee, substantially in the
form of EXHIBIT A-2.
"Class B Required Amount" shall mean, with respect to any Payment Date,
an amount equal to the excess of the amount described in subsection 4.04(a)(ii)
over the Available Finance Charge Collections applied to pay such amount
pursuant to subsection 4.04(a).
"Class C Additional Interest" shall have the meaning specified in
subsection 4.02(c).
"Class C Interest Shortfall" shall have the meaning specified in
subsection 4.02(c).
"Class C Monthly Interest" shall have the meaning specified in
subsection 4.02(c).
"Class C Note Initial Principal Balance" shall mean $___________.
"Class C Note Interest Rate" shall mean a per annum rate of ____% in
excess of LIBOR as determined (i) on _____ __, 2000, for the period from and
including the Closing Date through and including _____ __, 2000 and (ii) on the
related LIBOR Determination Date with respect to each Interest Period
thereafter.
"Class C Note Principal Balance" shall mean, on any date of
determination, an amount equal to (a) the Class C Note Initial Principal
Balance, minus (b) the aggregate amount of principal payments made to the Class
C Noteholders on or prior to such date.
"Class C Noteholder" shall mean the Person in whose name a Class C Note
is registered in the Note Register.
"Class C Notes" shall mean any one of the Notes executed by the Issuer
and authenticated by or on behalf of the Indenture Trustee, substantially in the
form of EXHIBIT A-3.
"Class C Required Amount" shall mean, with respect to any Payment Date,
an amount equal to the excess of the amount described in subsection 4.04(a)(iv)
over the Available Finance Charge Collections applied to pay such amount
pursuant to subsection 4.04(a).
"Class D Additional Interest" shall have the meaning specified in
subsection 4.02(d).
"Class D Interest Shortfall" shall have the meaning specified in
subsection 4.02(d).
"Class D Monthly Interest" shall have the meaning specified in
subsection 4.02(d).
"Class D Note Initial Principal Balance" shall mean $_________________.
"Class D Note Interest Rate" shall mean [a per annum rate of ____% in
excess of LIBOR as determined (i) on __________ ____, 2000, for the period from
and including the Closing
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<PAGE> 10
Date through and including ___________ ____, 2000 and (ii) on the related LIBOR
Determination Date with respect to each Interest Period thereafter].
"Class D Note Principal Balance" shall mean, on any date of
determination, an amount equal to (a) the Class D Note Initial Principal
Balance, minus (b) the aggregate amount of principal payments made to the Class
D Noteholders on or prior to such date.
"Class D Noteholder" shall mean the Person in whose name a Class D Note
is registered in the Note Register.
"Class D Notes" shall mean any one of the Notes executed by the Issuer
and authenticated by or on behalf of the Indenture Trustee, substantially in the
form of EXHIBIT A-4.
"Class D Required Amount" shall mean, with respect to any Payment Date,
an amount equal to the excess of the amount described in subsection
4.04(a)(viii) over the Available Finance Charge Collections applied to pay such
amount pursuant to subsection 4.04(d).
"Closing Date" shall mean [_____ __], 2000.
"Controlled Accumulation Amount" shall mean, for any Payment Date
occurring during the Controlled Accumulation Period, $[___________]; provided,
however, that if the Accumulation Period Length is determined to be less than 12
months pursuant to subsection 4.04(e), the Controlled Accumulation Amount for
each Payment Date with respect to the Controlled Accumulation Period will be
equal to (i) the product of (x) the Initial Invested Amount and (y) the
Accumulation Period Factor for such Monthly Period divided by (ii) the Required
Accumulation Factor Number.
"Controlled Accumulation Period" shall mean, unless a Pay Out Event
shall have occurred prior thereto, the period commencing at the close of
business on [_____ __, 20__] or such later date as is determined in accordance
with subsection 4.04(e), and ending on the first to occur of (a) the
commencement of the Early Amortization Period, (b) the payment in full of the
Invested Amount and (c) the Series 2000-[___] Final Maturity Date.
"Controlled Deposit Amount" shall mean, for any Payment Date occurring
during the Controlled Accumulation Period, an amount equal to the sum of the
Controlled Accumulation Amount for such Payment Date and any existing
Accumulation Shortfall.
"Covered Amount" shall mean an amount, determined as of each Payment
Date with respect to any Interest Period, equal to the sum of (a) the product of
(i) a fraction, the numerator of which is the actual number of days in such
Interest Period and the denominator of which is 360, times (ii) the weighted
average of the Class A Note Interest Rate, the Class B Note Interest Rate and
the Class C Note Interest Rate in effect with respect to such Interest Period,
times (iii) the aggregate amount on deposit in the Principal Funding Account up
to the Invested Amount as of the Record Date preceding such Payment Date.
"Early Amortization Period" shall mean the period commencing on the
Business Day immediately preceding the day on which a Pay Out Event with respect
to Series 2000-[____] is
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<PAGE> 11
deemed to have occurred, and ending on the first to occur of (i) the payment in
full of the Invested Amount and (ii) the Series 2000-[____] Final Maturity Date.
"Excess Cash Collateral Percentage" shall mean, with respect to any
Monthly Period, an amount equal to the product of (i) the percentage equivalent
of a fraction, the numerator of which is an amount equal to Available Finance
Charge Collections for the related Payment Date remaining after application of
such amounts pursuant to subsection 4.04(a)(iii), less [____]% of the Investor
Default Amount, if any, for such Monthly Period, and the denominator of which is
an amount equal to (A) for any Monthly Period during the Controlled Accumulation
Period, and for so long as the amount on deposit in the Reserve Account is
greater than or equal to the Required Reserve Account Amount, the Adjusted
Invested Amount on the first day of such Monthly Period and (B) for any other
Monthly Period, the Invested Amount on the first day of such Monthly Period and
(ii) twelve (12).
"Expected Final Principal Payment Date" shall mean the [____ 20__]
Payment Date.
"Finance Charge Shortfall" shall have the meaning specified in Section
4.07.
"Finance Charge and Administrative Receivables" shall have the meaning
specified in the Transfer and Servicing Agreement.
"Fixed Investor Percentage" shall mean, with respect to any Monthly
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, (a) the numerator of which is the Invested Amount as of the close of
business on the last day of the Revolving Period and (b) the denominator of
which is the greater of (i) the sum of (A) the total amount of Principal
Receivables in the Trust as of the close of business on the last day of the
immediately preceding Monthly Period (or with respect to the first Monthly
Period, the total amount of Principal Receivables in the Trust as of the Closing
Date) and (B) the principal amount on deposit in the Excess Funding Account as
of the close of business on such last day (or with respect to the first Monthly
Period, the Closing Date) and (ii) the sum of the numerators used to calculate
the investor percentages for allocations with respect to Principal Receivables
or Finance Charge and Administrative Receivables for all Series outstanding as
of the date as to which such determination is being made; provided, however,
that after the commencement of the Controlled Accumulation Period, the
Transferor may, by written notice delivered to the Indenture Trustee and the
Servicer, for purposes of allocating Collections of Principal Receivables,
designate a different numerator for the foregoing fraction, provided that such
numerator is not less than the greater of (x) the Invested Amount as of the last
day of the immediately preceding Monthly Period, less the amount of any
distributions of principal deposited in the Principal Funding Account since the
last day of the immediately preceding Monthly Period and (y) an amount that if
used as the numerator for the foregoing fraction for the remainder of the
Controlled Accumulation Period, would assure that the Available Principal
Collections for Series 200-[____] would equal at least 125% of the Controlled
Deposit Amount for each Monthly Period for so long as the Invested Amount is
greater than zero; provided further, however, that with respect to any Monthly
Period in which a Reset Date occurs, the amount in clause (b)(i)(A) above shall
be (1) the aggregate amount of Principal Receivables in the Trust as of the
close of business on the last day of the prior Monthly Period, for the period
from and including the first day of the prior Monthly Period to but excluding
the related Reset Date, and
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<PAGE> 12
(2) the aggregate amount of Principal Receivables in the Trust as of the close
of business on the related Reset Date after adjusting for the aggregate amount
of Principal Receivables added to or removed from the Trust on the related Reset
Date, for the period from and including the related Reset Date, to and including
the last day of such Monthly Period.
"Floating Investor Percentage" shall mean, with respect to any Monthly
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, (a) the numerator of which is the Adjusted Invested Amount as of the
close of business on the last day of the preceding Monthly Period (or with
respect to the first Monthly Period, the Initial Invested Amount) and (b) the
denominator of which is the greater of (i) the sum of (A) the total amount of
Principal Receivables in the Trust as of the close of business on such last day
(or with respect to the first Monthly Period, the total amount of Principal
Receivables in the Trust on the Closing Date) and (B) the principal amount on
deposit in the Excess Funding Account as of the close of business on such last
day (or with respect to the first Monthly Period, as of the Closing Date) and
(ii) the sum of the numerators used to calculate the investor percentages for
allocations with respect to Finance Charge and Administrative Receivables,
Defaulted Amounts or Principal Receivables, as applicable, for all Series
outstanding as of the date as to which such determination is being made;
provided, however, that with respect to any Monthly Period in which a Reset Date
occurs, the amount in clause (b)(i)(A) above shall be (1) the aggregate amount
of Principal Receivables in the Trust as of the close of business on the last
day of the prior Monthly Period, for the period from and including the first day
of such Monthly Period to but excluding the related Reset Date and (2) the
aggregate amount of Principal Receivables in the Trust as of the close of
business on the related Reset Date after adjusting for the aggregate amount of
Principal Receivables added to or removed from the Trust on the related Reset
Date, for the period from and including the related Reset Date to and including
the last day of such Monthly Period.
"Funding Period" shall mean the period commencing on the Closing Date
and ending upon the earlier of (a) the commencement of the Early Amortization
Period, (b) the date on which the Invested Amount shall first equal the [Initial
Investor Amount] and (c) [________________].
"Group [One]" shall mean Series 2000-[____] [__] and each other Series
hereafter specified in the related Indenture Supplement to be included in Group
[One].
"Initial Invested Amount" shall mean $[_________].
"Initial Pre-Funded Amount" shall mean $[___________________________].
"Interest Period" shall mean, with respect to any Payment Date, the
period from and including the Payment Date immediately preceding such Payment
Date (or, in the case of the first Payment Date, from and including the Closing
Date) to but excluding such Payment Date.
"Invested Amount" shall mean, as of any date of determination, an
amount equal to (i) the initial principal amount of the Series 2000-[__]Notes,
minus (ii) the amount of principal previously paid to the Series 2000-[_]
Noteholders, minus [iii] the excess, if any, of the aggregate amount of Investor
Charge-Offs and Reallocated Principal Collections over the reimbursements of
such amounts pursuant to subsection 4.04(a)(vi) prior to such date.
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<PAGE> 13
"Investment Earnings" shall mean, with respect to any Payment Date, all
interest and earnings on Eligible Investments included in the Cash Collateral
Account (net of losses and investment expenses) during the period commencing on
and including the Payment Date immediately preceding such Payment Date and
ending on but excluding such Payment Date.
"Investor Charge-Offs" shall have the meaning specified in Section
4.05.
"Investor Default Amount" shall mean, with respect to any Payment Date,
an amount equal to the product of (a) the Defaulted Amount for the related
Monthly Period and (b) the Floating Investor Percentage for such Monthly Period.
"Investor Finance Charge Collections" shall mean, with respect to any
Monthly Period, an amount equal to the Investor Percentage for such Monthly
Period of Collections of Finance Charge and Administrative Receivables
(including Recoveries treated as Collections of Finance Charge and
Administrative Receivables) deposited in the Collection Account for such Monthly
Period and Interchange treated as Investor Finance Charge Collections for such
Monthly Period pursuant to subsection 3.01(b).
"Investor Percentage" shall mean, for any Monthly Period, (a) with
respect to Defaulted Amounts at any time and with respect to Finance Charge and
Administrative Receivables and Principal Receivables during the Revolving
Period, the Floating Investor Percentage and (b) with respect to Finance Charge
and Administrative Receivables and Principal Receivables during the Controlled
Accumulation Period or the Early Amortization Period, the Fixed Investor
Percentage.
"Investor Principal Collections" shall mean, with respect to any
Monthly Period, the aggregate amount retained in the Collection Account for
Series 2000-[____] pursuant to subsection 4.01(c)(ii) for such Monthly Period.
"LIBOR" shall mean, for any Interest Period, the London interbank
offered rate for one-month United States dollar deposits determined by the
Indenture Trustee for each Interest Period in accordance with the provisions of
Section 4.12.
"LIBOR Determination Date" shall mean (i) _____ __, 2000 for the period
from and including the Closing Date through and including _____ __, 2000 and
(ii) the second London Business Day prior to the commencement of the second and
each subsequent Interest Period.
"London Business Day" shall mean any Business Day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
"Monthly Interest" shall mean, with respect to any Payment Date, the
sum of the Class A Monthly Interest, the Class B Monthly Interest, the Class C
Monthly Interest and the Class D Monthly Interest for such Payment Date.
"Monthly Principal" shall mean the monthly principal distributable in
respect of the Notes as calculated in accordance with Section 4.03.
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<PAGE> 14
"Monthly Principal Reallocation Amount" shall mean, with respect to any
Monthly Period, an amount equal to the sum of:
(A) the lower of (i) the Class A Required Amount and (ii) [the greater
of (a)(x)] the product of (I) [__]% and (II) the Initial Invested Amount
minus (y) the amount of unreimbursed Investor Charge-Offs (after giving
effect to Investor Charge-Offs for the related Monthly Period) and
unreimbursed Reallocated Principal Collections (as of the previous Payment
Date) [and (b) zero]; and
(B) the lower of (i) the sum of the Class B Required Amount and the
Servicing Fee Required Amount and (ii) [the greater of (a)(x)] the product
of (I) [__]% and (II) the Initial Invested Amount minus (y) the amount of
unreimbursed Investor Charge-Offs (after giving effect to Investor
Charge-Offs for the related Monthly Period) and unreimbursed Reallocated
Principal Collections (as of the previous Payment Date and as required in
(A) above) [and (b) zero]; and
(C) the lower of (i) the Class C Required Amount and (ii) [the greater
of (a)(x)] the product of (I) [______]% and (II) the Initial Invested
Amount minus (y) the amount of unreimbursed Investor Charge-Offs (after
giving effect to Investor Charge-Offs for the related Monthly Period) and
unreimbursed Reallocated Principal Collections (as of the previous Payment
Date and as required in (A) and (B) above) [and (b) zero].
"Monthly Servicing Fee" shall have the meaning specified in subsection
3.01(a).
"Net Adjusted Portfolio Yield" shall mean, with respect to any Payment
Date, the average of the percentages obtained for each of the three preceding
Monthly Periods by subtracting the Base Rate for each such Monthly Period from
the Net Portfolio Yield for each such Monthly Period.
"Net Portfolio Yield" shall mean, with respect to any Monthly Period,
the annualized percentage equivalent of a fraction, (a) the numerator of which
is equal to the sum of (i) Investor Finance Charge Collections with respect to
such Monthly Period, plus (ii) the Principal Funding Investment Proceeds
deposited into the Collection Account on the Payment Date related to such
Monthly Period, plus (iii) the amount of the Reserve Draw Amount (up to the
Available Reserve Account Amount) plus any amounts of interest and earnings
described in Section 4.10, each deposited into the Collection Account on the
Payment Date relating to such Monthly Period, such sum to be calculated on a
cash basis after subtracting the Investor Default Amount for such Monthly
Period, and (b) the denominator of which is the Invested Amount as of the last
day of the prior Monthly Period; provided, however, that Excess Finance Charge
Collections that are allocated to Series 2000-[____] with respect to such
Monthly Period may be added to the numerator if the Transferor shall have
provided ten (10) Business Days prior written notice of such action to each
Rating Agency and the Transferor, the Servicer and the Indenture Trustee shall
have received notification in writing that such action will not result in any
Rating Agency reducing or withdrawing
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<PAGE> 15
its then existing rating of the Notes or any outstanding Series or Class with
respect to which it is a Rating Agency.
"Net Servicing Fee Rate" shall mean (a) so long as ABC, an Affiliate of
ABC or [________________] is the Servicer, [___]% per annum and (b) if ABC, an
Affiliate of ABC or [_______________] is no longer the Servicer, [_____]% per
annum.
"Note Principal Balance" shall mean, on any date of determination, an
amount equal to the sum of the Class A Note Principal Balance, the Class B Note
Principal Balance, the Class C Note Principal Balance and the Class D Note
Principal Balance.
"Noteholder Servicing Fee" shall have the meaning specified in
subsection 3.01(a) hereof.
"Payment Date" shall mean [_____] 15, 2000 and the fifteenth day of
each calendar month thereafter, or if such fifteenth day is not a Business Day,
the next succeeding Business Day.
"Percentage Allocation" shall have the meaning set forth in subsection
4.01(c)(ii)(y).
"Pre-Funded Amount" shall mean, on any date of determination, the
amount on deposit in the Pre-Funding Account (net of all interest and other
investment income).
"Pre-Funding Account" shall have the meaning set forth in subsection
4.12(a).
"Principal Funding Account" shall have the meaning set forth in
subsection 4.09(a).
"Principal Funding Account Balance" shall mean, with respect to any
date of determination, the principal amount, if any, on deposit in the Principal
Funding Account on such date of determination.
"Principal Funding Investment Proceeds" shall mean, with respect to
each Payment Date, the investment earnings on funds in the Principal Funding
Account (net of investment expenses and losses) for the period from and
including the immediately preceding Payment Date to but excluding such Payment
Date.
"Quarterly Excess Cash Collateral Percentage" shall mean (a) with
respect to the [Month 1] 2000 Payment Date, the Excess Cash Collateral
Percentage, (b) with respect to the [Month 2] 2000 Payment Date, the percentage
equivalent of a fraction the numerator of which is the sum of (i) the Excess
Cash Collateral Percentage for the first Monthly Period and (ii) the Excess Cash
Collateral Percentage with respect to the [Month 2] 2000 Monthly Period and the
denominator of which is two, (c) with respect to the [Month 3] 2000 Payment
Date, the percentage equivalent of a fraction the numerator of which is the sum
of (i) the Excess Cash Collateral Percentage for the first Monthly Period, (ii)
the Excess Cash Collateral Percentage with respect to the [Month 2] 2000 Monthly
Period and (iii) the Excess Cash Collateral Percentage with respect to the
[Month 3] 2000 Monthly Period and the denominator of which is three and (d) with
respect to the [Month 4] 2000 Payment Date and each Payment Date thereafter, the
percentage equivalent of a fraction the
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<PAGE> 16
numerator of which is the sum of the Excess Cash Collateral Percentages with
respect to the immediately preceding three Monthly Periods and the denominator
of which is three.
"Rating Agency" shall mean each of [Standard & Poor's], [Moody's] [and
Fitch].
"Reallocated Principal Collections" shall mean, with respect to any
Payment Date, Investor Principal Collections applied in accordance with Section
4.06 in an amount not to exceed the Monthly Principal Reallocation Amount for
the related Monthly Period.
"Reassignment Amount" shall mean, with respect to any Payment Date,
after giving effect to any deposits and distributions otherwise to be made on
such Payment Date, the sum of (i) the outstanding principal balance of the
Series 2000-[__] Notes on such Payment Date, plus (ii) Monthly Interest for such
Payment Date and any Monthly Interest previously due but not distributed to the
Series 2000-[__] Noteholders, plus (iii) the amount of Additional Interest, if
any, for such Payment Date and any Additional Interest previously due but not
distributed to the Series 2000-[__] Noteholders on a prior Payment Date.
"Reference Banks" shall mean three major banks in the London interbank
market selected by the Servicer.
"Required Accumulation Factor Number" shall be equal to a fraction,
rounded upwards to the nearest whole number, the numerator of which is one and
the denominator of which is equal to the lowest monthly principal payment rate
on the Accounts, expressed as a decimal, for the 12 months preceding the date of
such calculation; provided, however, that this definition may be changed at any
time if the Rating Agency Condition is satisfied.
"Required Reserve Account Amount" shall mean, with respect to any
Payment Date on or after the Reserve Account Funding Date, an amount equal to
(a) the product of (i) [___]% of the Note Principal Balance as of the preceding
Payment Date and (ii) a fraction the numerator of which is the number of Monthly
Periods scheduled to be included in the Controlled Accumulation Period as of
such date and the denominator of which is nine (except that if such numerator is
one, the Required Reserve Account Amount determined pursuant to this clause (a)
shall be $0), or (b) any other amount designated by the Transferor; provided,
however, that if such designation is of a lesser amount, the Transferor shall
(i) provide the Servicer and the Indenture Trustee with evidence that the Rating
Agency Condition with respect to such designation shall have been satisfied and
(ii) deliver to the Indenture Trustee a certificate of an Authorized Officer to
the effect that, based on the facts known to such officer at such time, in the
reasonable belief of the Transferor, such designation will not cause a Pay Out
Event or an event that, after the giving of notice or the lapse of time, would
cause a Pay Out Event to occur with respect to Series 2000-[__].
"Required Cash Collateral Account Amount" shall mean, (a) prior to the
occurrence of an Event of Default with respect to Series 2000-[__] [and
acceleration of the maturity of the Series 2000-[__] Notes pursuant to Section
5.03 of the Indenture], with respect to any date of determination, the product
of (i) the Cash Collateral Account Percentage in effect on such date and (ii)
the Initial Invested Amount; provided that the Required Cash Collateral Account
Amount shall not exceed the sum of the Class C Note Principal Balance and the
Class D Note Principal Balance
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<PAGE> 17
minus the excess, if any, of the Principal Funding Account Balance over the sum
of the Class A Note Principal Balance and the Class B Note Principal Balance on
such date of determination and (b) after the occurrence of an Event of Default
with respect to Series 2000-[____] [and acceleration of the maturity of the
Series 2000-[____] Notes pursuant to Section 5.03 of the Indenture], for any
Payment Date, the sum of (i) the amount on deposit in the Cash Collateral
Account on such Payment Date, plus (ii) Available Finance Charge Collections for
such Payment Date remaining after application of such amounts pursuant to
subsection 4.04(a)(vii), plus (iii) amounts on deposit in the Reserve Account in
excess of the Required Reserve Account Amount; provided, however, that if after
the occurrence of an Event of Default with respect to Series 2000-[____] the
maturity of the Series 2000- [____] Notes is not accelerated, the Required Cash
Collateral Account Amount shall not exceed the Note Principal Balance.
"Required Transferor Interest" shall have the meaning specified in the
Indenture.
"Reserve Account" shall have the meaning specified in subsection
4.10(a).
"Reserve Account Funding Date" shall mean the date designated by the
Servicer which occurs not later than the earliest of (a) the Payment Date with
respect to the Monthly Period which commences 3 months prior to the commencement
of the Controlled Accumulation Period or (b) such other date designated by the
Servicer.
"Reserve Account Surplus" shall mean, as of any Payment Date following
the Reserve Account Funding Date, the amount, if any, by which the amount on
deposit in the Reserve Account exceeds the Required Reserve Account Amount.
"Reserve Draw Amount" shall mean, with respect to each Payment Date,
the amount, if any, by which the Principal Funding Investment Proceeds for such
Payment Date are less than the Covered Amount determined as of such Payment
Date.
"Reset Date" shall mean, any date that is (i) an Addition Date, (ii) a
date on which the issuance of additional Notes of an Outstanding Series occurs,
(iii) a date on which an increase or decrease in the Invested Amount of any
Series that is a variable principal funding Series occurs or (iv) a Removal Date
on which, for any Series that has been paid in full, Principal Receivables in an
aggregate amount approximately equal to the Initial Invested Amount of that
Series are removed from the Trust.
"Revolving Period" shall mean the period beginning on the Closing Date
and ending on the earlier of the close of business on the day immediately
preceding the day the Controlled Accumulation Period commences or the Early
Amortization Period commences.
"Series 2000-[ ]" shall mean the Series of Notes the terms of which are
specified in this Indenture Supplement.
"Series 2000-[ ] Final Maturity Date" shall mean the earlier to occur
of (a) the Payment Date on which the Invested Amount is paid in full and (b) the
[________ ____] Payment Date.
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<PAGE> 18
"Series 2000-[ ] Note" shall mean a Class A Note, a Class B Note, a
Class C Note or a Class D Note.
"Series 2000-[ ] Noteholder" shall mean a Class A Noteholder, a Class B
Noteholder, a Class C Noteholder or a Class D Noteholder.
"Series 2000-[ ] Pay Out Event" shall have the meaning specified in
Section 6.01.
"Series 2000-[ ] Principal Shortfall" shall have the meaning specified
in subsection 4.08.
"Servicer Interchange" shall mean, if ABC, an Affiliate of ABC or the
Indenture Trustee is the Servicer, for any Payment Date, the portion of Investor
Finance Charge Collections deposited in the Collection Account with respect to
the related Monthly Period that is attributable to Interchange; provided,
however, that Servicer Interchange for any Payment Date shall not exceed
one-twelfth of the product of (a) [___]% and (b)(i) the Adjusted Invested Amount
as of the last day of the related Monthly Period[, minus (ii) the product of the
amount, if any, on deposit in the Excess Funding Account as of the last day of
such Monthly Period and the Floating Investor Percentage with respect to such
Monthly Period]; provided further, however, with respect to the first Payment
Date, the Servicer Interchange may equal but shall not exceed $[________].
"Servicing Fee Rate" shall mean 2% per annum.
"Servicing Fee Required Amount" shall mean, with respect to any Payment
Date, an amount equal to the excess of the amount described in subsection
4.04(a)(iii) over the Available Finance Charge Collections applied to pay such
amount pursuant to subsection 4.04(a).
"Telerate Page 3750" shall mean the display page currently so
designated on the Bridge Telerate Capital Markets Report (or such other page as
may replace that page in that service for the purpose of displaying comparable
rates or prices).
(b) The words "HEREOF," "HEREIN," "HEREUNDER" and words of similar
import when used in this Indenture Supplement shall refer to this Indenture
Supplement as a whole and not to any particular provision of this Indenture
Supplement; references to any Article, subsection, Section or Exhibit are
references to Articles, subsections, Sections and Exhibits in or to this
Indenture Supplement unless otherwise specified; and the term "INCLUDING" means
"INCLUDING WITHOUT LIMITATION."
[END OF ARTICLE II]
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ARTICLE III
Servicing Fee and Interchange
Section 3.01. Servicing Compensation; Interchange.
(a) Servicing Fee. The share of the Servicing Fee allocable to Series
2000-[___] with respect to any Payment Date (the "MONTHLY SERVICING FEE") shall
be equal to one-twelfth of the product of (a) the Servicing Fee Rate and (b) (i)
the Adjusted Invested Amount as of the last day of the Monthly Period preceding
such Payment Date, minus (ii) the product of the amount, if any, on deposit in
the Excess Funding Account as of the last day of the Monthly Period preceding
such Payment Date and the Floating Investor Percentage with respect to such
Monthly Period; provided, however, that with respect to the first Payment Date,
the Monthly Servicing Fee shall be equal to $[________]. On each Payment Date
for which ABC, an Affiliate of ABC or [______________] is the Servicer, the
Servicer Interchange with respect to the related Monthly Period that is on
deposit in the Collection Account shall be withdrawn from the Collection Account
and paid to the Servicer in payment of a portion of the Monthly Servicing Fee
with respect to such Monthly Period. Should the Servicer Interchange on deposit
in the Collection Account on any Payment Date with respect to the related
Monthly Period be less than one-twelfth of the product of (a) [___]% and (b)(i)
the Adjusted Invested Amount as of the last day of such Monthly Period, minus
(ii) the product of the amount, if any, on deposit in the Excess Funding Account
as of the last day of such Monthly Period and the Floating Investor Percentage
with respect to such Monthly Period, the Monthly Servicing Fee with respect to
such Monthly Period will not be paid to the extent of such insufficiency of
Servicer Interchange on deposit in the Collection Account. The Servicer
Interchange with respect to the first Payment Date may equal but shall not
exceed $[________]. The share of the Monthly Servicing Fee allocable to the
Invested Amount with respect to any Payment Date (the "NOTEHOLDER SERVICING
FEE") shall be equal to one-twelfth of the product of (a) the Net Servicing Fee
Rate and (b)(i) the Adjusted Invested Amount as of the last day of the Monthly
Period preceding such Payment Date, minus (ii) the product of the amount, if
any, on deposit in the Excess Funding Account as of the last day of the Monthly
Period preceding such Payment Date and the Floating Investor Percentage with
respect to such Monthly Period; provided, however, that with respect to the
first Payment Date, the Noteholder Servicing Fee shall be equal to $[________].
The remainder of the Servicing Fee shall be paid by the holder of the Transferor
Beneficial Interest or the noteholders of other Series (as provided in the
related Indenture Supplements) and in no event shall the Trust, the Indenture
Trustee or the Series 2000-[____] Noteholders be liable for the share of the
Servicing Fee to be paid by the holder of the Transferor Beneficial Interest or
the noteholders of any other Series. To the extent that the Monthly Servicing
Fee is not paid in full pursuant to the preceding provisions of this Section
3.01, and Section 4.04, it shall be paid by the Holder of the Transferor
Beneficial Interest.
(b) Interchange. On or before each Determination Date, the Servicer
shall notify the Transferor of the amount of Interchange to be included as
Investor Finance Charge Collections with respect to the preceding Monthly Period
as determined pursuant to this subsection 3.01(b). Such amount of Interchange
shall be equal to the product of (i) the amount of Interchange attributable to
the Accounts, as reasonably estimated by the Servicer, and (ii) the Investor
Percentage
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with regard to Finance Charge and Administrative Receivables. On each Payment
Date, the Servicer shall deposit into the Collection Account, in immediately
available funds, the amount of Interchange to be so included as Investor Finance
Charge Collections with respect to the preceding Monthly Period and such
Interchange shall be treated as a portion of Investor Finance Charge Collections
for all purposes of this Indenture Supplement, the Indenture and the Transfer
and Servicing Agreement.
[END OF ARTICLE III]
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<PAGE> 21
ARTICLE IV
Rights of Series 2000-[__] Noteholders
and Allocation and Application of Collections
Section 4.01. Collections and Allocations.
(a) Allocations. Collections of Finance Charge and Administrative
Receivables and Principal Receivables and Defaulted Receivables allocated to
Series 2000-[__] pursuant to Article VIII of the Indenture shall be allocated
and distributed as set forth in this Article.
(b) Payments to the Transferor. The Servicer shall on Deposit Dates
withdraw from the Collection Account and pay to the holders of Trust Beneficial
Interests or Certificates the following amounts:
(i) an amount equal to the Transferor Percentage for the related
Monthly Period of Collections of Finance Charge and Administrative
Receivables to the extent such amount is deposited in the Collection
Account; and
(ii) an amount equal to the Transferor Percentage for the related
Monthly Period of Collections of Principal Receivables deposited in the
Collection Account, if the Transferor Interest (determined after giving
effect to any Principal Receivables transferred to the Trust on such
Deposit Date) exceeds zero.
The withdrawals to be made from the Collection Account pursuant to this
subsection 4.01(b) do not apply to deposits into the Collection Account that do
not represent Collections, including payment of the purchase price for the
Receivables or the Notes pursuant to, respectively, Section 2.06 or 7.01 of the
Transfer and Servicing Agreement or Section 11.04 of the Indenture and payment
of the purchase price for the Series 2000-[___] Notes pursuant to Section 7.01
of this Indenture Supplement.
(c) Allocations to the Series 2000-[ ] Noteholders. The Servicer shall,
prior to the close of business on any Deposit Date, allocate to the Series
2000-[ ] Noteholders the following amounts as set forth below:
(i) Allocations of Finance Charge Collections. The Servicer shall
allocate to the Series 2000-[____] Noteholders and retain in the Collection
Account for application as provided herein an amount equal to the product
of (A) the Investor Percentage and (B) the aggregate amount of Collections
of Finance Charge and Administrative Receivables deposited in the
Collection Account on such Deposit Date.
(ii) Allocations of Principal Collections. The Servicer shall allocate
to the Series 2000-[__] Noteholders the following amounts as set forth
below:
(x) Allocations During the Revolving Period. During the Revolving
Period an amount equal to the product of (I) the Investor Percentage and
(II) the
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<PAGE> 22
aggregate amount of Collections of Principal Receivables deposited in the
Collection Account on such Deposit Date, shall be allocated to the Series
2000-[____] Noteholders and shall be first, if any other Principal Sharing
Series in Group [One] is outstanding and in its amortization period or
accumulation period, retained in the Collection Account for application, to
the extent necessary, as Shared Principal Collections to other Series in
Group [One] on the related Payment Date, and second, paid to the holders of
Trust Beneficial Interests or Certificates only if the Transferor Interest
on such Deposit Date is greater than the Required Transferor Interest
(after giving effect to all Principal Receivables transferred to the Trust
on such day) and otherwise shall be deposited in the Excess Funding
Account.
(y) Allocations During the Controlled Accumulation Period. During the
Controlled Accumulation Period an amount equal to the product of (I) the
Investor Percentage and (II) the aggregate amount of Collections of
Principal Receivables deposited in the Collection Account on such Deposit
Date (the product for any such date is hereinafter referred to as a
"PERCENTAGE ALLOCATION") shall be allocated to the Series 2000-[__]
Noteholders and deposited in the Principal Funding Account until applied as
provided herein; provided, however, that if the sum of such Percentage
Allocation and all preceding Percentage Allocations with respect to the
same Monthly Period exceeds the Controlled Deposit Amount during the
Controlled Accumulation Period for the related Payment Date, then such
excess shall not be treated as a Percentage Allocation and shall be first,
if any other Principal Sharing Series in Group [One] is outstanding and in
its amortization period or accumulation period, retained in the Collection
Account for application, to the extent necessary, as Shared Principal
Collections to other Series in Group [One] on the related Payment Date, and
second paid to the holders of Trust Beneficial Interests or Certificates
only if the Transferor Interest on such Deposit Date is greater than the
Required Transferor Interest (after giving effect to all Principal
Receivables transferred to the Trust on such day) and otherwise shall be
deposited in the Excess Funding Account.
(z) Allocations During the Early Amortization Period. During the Early
Amortization Period, an amount equal to the product of (I) the Investor
Percentage and (II) the aggregate amount of Collections of Principal
Receivables deposited in the Collection Account on such Deposit Date, shall
be allocated to the Series 2000-[____] Noteholders and retained in the
Collection Account until applied as provided herein; provided, however,
that after the date on which an amount of such Collections equal to the
Adjusted Invested Amount has been deposited into the Collection Account and
allocated to the Series 2000-[____] Noteholders, such amount shall be
first, if any other Principal Sharing Series in Group [One] is outstanding
and in its amortization period or accumulation period, retained in the
Collection Account for application, to the extent necessary, as Shared
Principal Collections to other Series in Group [One] on the related Payment
Date, and second paid to the holders of Trust Beneficial Interests or
Certificates only if the Transferor Interest on such date is greater than
the Required Transferor Interest (after giving effect to all Principal
Receivables transferred to the Trust on such day) and otherwise shall be
deposited in the Excess Funding Account.
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<PAGE> 23
Section 4.02. Determination of Monthly Interest.
(a) The amount of monthly interest ("CLASS A MONTHLY INTEREST")
distributable from the Collection Account with respect to the Class A Notes on
any Payment Date shall be an amount equal to the product of (i) (A) a fraction,
the numerator of which is the actual number of days in the related Interest
Period and the denominator of which is 360, times (B) the Class A Note Interest
Rate in effect with respect to the related Interest Period and (ii) the Class A
Note Principal Balance as of the close of business on the related Record Date
(or, with respect to the initial Payment Date, the Class A Note Initial
Principal Balance).
On the Determination Date preceding each Payment Date, the Servicer shall
determine the excess, if any (the "CLASS A INTEREST SHORTFALL"), of (x) the
Class A Monthly Interest for such Payment Date over (y) the aggregate amount of
funds allocated and available to pay such Class A Monthly Interest on such
Payment Date. If the Class A Interest Shortfall with respect to any Payment Date
is greater than zero, on each subsequent Payment Date until such Class A
Interest Shortfall is fully paid, an additional amount ("CLASS A ADDITIONAL
INTEREST") equal to the product of (i) (A) a fraction, the numerator of which is
the actual number of days in the related Interest Period and the denominator of
which is 360, times (B) the Class A Note Interest Rate in effect with respect to
the related Interest Period and (ii) such Class A Interest Shortfall (or the
portion thereof which has not been paid to the Class A Noteholders) shall be
payable as provided herein with respect to the Class A Notes. Notwithstanding
anything to the contrary herein, Class A Additional Interest shall be payable or
distributed to the Class A Noteholders only to the extent permitted by
applicable law.
(b) The amount of monthly interest ("CLASS B MONTHLY INTEREST")
distributable from the Collection Account with respect to the Class B Notes on
any Payment Date shall be an amount equal to the product of (i) (A) a fraction,
the numerator of which is the actual number of days in the related Interest
Period and the denominator of which is 360, times (B) the Class B Note Interest
Rate in effect with respect to the related Interest Period and (ii) the Class B
Note Principal Balance as of the close of business on the related Record Date
(or, with respect to the initial Payment Date, the Class B Note Initial
Principal Balance).
On the Determination Date preceding each Payment Date, the Servicer shall
determine the excess, if any (the "CLASS B INTEREST SHORTFALL"), of (x) the
Class B Monthly Interest for such Payment Date over (y) the aggregate amount of
funds allocated and available to pay such Class B Monthly Interest on such
Payment Date. If the Class B Interest Shortfall with respect to any Payment Date
is greater than zero, on each subsequent Payment Date until such Class B
Interest Shortfall is fully paid, an additional amount ("CLASS B ADDITIONAL
INTEREST") equal to the product of (i) (A) a fraction, the numerator of which is
the actual number of days in the related Interest Period and the denominator of
which is 360, times (B) the Class B Note Interest Rate in effect with respect to
the related Interest Period and (ii) such Class B Interest Shortfall (or the
portion thereof which has not been paid to the Class B Noteholders) shall be
payable as provided herein with respect to the Class B Notes. Notwithstanding
anything to the contrary herein, Class B Additional Interest shall be payable or
distributed to the Class B Noteholders only to the extent permitted by
applicable law.
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<PAGE> 24
(c) The amount of monthly interest ("CLASS C MONTHLY INTEREST")
distributable from the Collection Account with respect to the Class C Notes on
any Payment Date shall be an amount equal to the product of (i) (A) a fraction,
the numerator of which is the actual number of days in the related Interest
Period and the denominator of which is 360, times (B) the Class C Note Interest
Rate in effect with respect to the related Interest Period and (ii) the Class C
Note Principal Balance as of the close of business on the related Record Date
(or, with respect to the initial Payment Date, the Class C Note Initial
Principal Balance).
On the Determination Date preceding each Payment Date, the Servicer
shall determine an amount (the "CLASS C INTEREST SHORTFALL") equal to (x) the
aggregate Class C Monthly Interest for such Payment Date minus (y) the aggregate
amount of funds allocated and available to pay such Class C Monthly Interest on
such Payment Date. If the Class C Interest Shortfall with respect to any Payment
Date is greater than zero, on each subsequent Payment Date until such Class C
Interest Shortfall is fully paid, an additional amount ("CLASS C ADDITIONAL
INTEREST") shall be payable as provided herein with respect to the Class C Notes
equal to the product of (i) (A) a fraction, the numerator of which is the actual
number of days in the related Interest Period and the denominator of which is
360, times (B) the Class C Note Interest Rate in effect with respect to the
related Interest Period and (ii) such Class C Interest Shortfall (or the portion
thereof which has not been paid to the Class C Noteholders (after giving effect
to the application of the proceeds of any draw made on the Cash Collateral
Account as provided in subsections 4.04(a)(iv) and 4.11(c) for the purpose of
paying such amount with respect to such Payment Date)). Notwithstanding anything
to the contrary herein, Class C Additional Interest shall be payable or
distributed to the Class C Noteholders only to the extent permitted by
applicable law.
(d) The amount of monthly interest ("CLASS D MONTHLY INTEREST")
distributable from the Collection Account with respect to the Class D Notes on
any Payment Date shall be an amount equal to the product of (i) (A) a fraction,
the numerator of which is the actual number of days in the related Interest
Period and the denominator of which is 360, times (B) the Class D Note Interest
Rate in effect with respect to the related Interest Period and (ii) the Class D
Note Principal Balance as of the close of business on the related Record Date
(or, with respect to the initial Payment Date, the Class D Note Initial
Principal Balance).
On the Determination Date preceding each Payment Date, the Servicer
shall determine an amount (the "CLASS D INTEREST SHORTFALL") equal to (x) the
aggregate Class D Monthly Interest for such Payment Date minus (y) the aggregate
amount of funds allocated and available to pay such Class D Monthly Interest on
such Payment Date. If the Class D Interest Shortfall with respect to any Payment
Date is greater than zero, on each subsequent Payment Date until such Class D
Interest Shortfall is fully paid, an additional amount ("CLASS D ADDITIONAL
INTEREST") shall be payable as provided herein with respect to the Class D Notes
equal to the product of (i) (A) a fraction, the numerator of which is the actual
number of days in the related Interest Period and the denominator of which is
360, times (B) the Class D Note Interest Rate in effect with respect to the
related Interest Period and (ii) such Class D Interest Shortfall (or the portion
thereof which has not been paid to the Class D Noteholders (after giving effect
to the application of the proceeds of any draw made on the Cash Collateral
Account as provided in subsections 4.04(a)(viii) and 4.11(c) for the purpose of
paying such amount with respect to such Payment Date)). Notwithstanding anything
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to the contrary herein, Class D Additional Interest shall be payable or
distributed to the Class D Noteholders only to the extent permitted by
applicable law.
Section 4.03. Determination of Monthly Principal.
The amount of monthly principal distributable from the Collection
Account with respect to the Notes on each Payment Date (the "MONTHLY
PRINCIPAL"), beginning with the Payment Date in the month following the month in
which the Controlled Accumulation Period or, if earlier, the Early Amortization
Period, begins, shall be equal to the least of (i) the Available Principal
Collections on deposit in the Collection Account with respect to such Payment
Date, (ii) for each Payment Date during the Controlled Accumulation Period, the
Controlled Deposit Amount for such Payment Date and (iii) the Adjusted Invested
Amount (after taking into account any adjustments to be made on such Payment
Date pursuant to Sections 4.05 and 4.06) prior to any deposit into the Principal
Funding Account on such Payment Date.
Section 4.04. Application of Available Finance Charge Collections and
Available Principal Collections. The Servicer shall apply, or shall cause the
Indenture Trustee to apply by written instruction to the Indenture Trustee, on
each Payment Date, Available Finance Charge Collections and Available Principal
Collections on deposit in the Collection Account with respect to such Payment
Date to make the following distributions:
(a) On each Payment Date, an amount equal to the Available Finance Charge
Collections with respect to such Payment Date on deposit in the Collection
Account will be distributed or deposited in the following priority:
(i) an amount equal to Class A Monthly Interest for such Payment Date,
plus the amount of any Class A Monthly Interest previously due but not
distributed to Class A Noteholders on a prior Payment Date, plus the amount
of any Class A Additional Interest for such Payment Date, plus the amount
of any Class A Additional Interest previously due but not distributed to
Class A Noteholders on a prior Payment Date, shall be distributed to the
Paying Agent for payment to Class A Noteholders on such Payment Date;
(ii) an amount equal to Class B Monthly Interest for such Payment
Date, plus the amount of any Class B Monthly Interest previously due but
not distributed to Class B Noteholders on a prior Payment Date, plus the
amount of any Class B Additional Interest for such Payment Date, plus the
amount of any Class B Additional Interest previously due but not
distributed to Class B Noteholders on a prior Payment Date, shall be
distributed to the Paying Agent for payment to Class B Noteholders on such
Payment Date;
(iii) an amount equal to the Noteholder Servicing Fee for such Payment
Date, plus the amount of any Noteholder Servicing Fee previously due but
not distributed to the Servicer on a prior Payment Date, shall be
distributed to the Servicer (unless such amount has been netted against
deposits to the Collection Account in accordance with Section 8.04 of the
Indenture);
(iv) an amount equal to Class C Monthly Interest for such Payment
Date, plus the amount of any Class C Monthly Interest previously due but
not distributed to the Class C
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Noteholders on a prior Payment Date, plus the amount of any Class C
Additional Interest for such Payment Date, plus the amount of any Class C
Additional Interest previously due but not distributed to the Class C
Noteholders on a prior Payment Date shall be distributed to the Paying
Agent for payment to the Class C Noteholders on such Payment Date;
provided, however, that, in the event that the sum of Class C Monthly
Interest exceeds the amount of Available Finance Charge Collections
available (after giving effect to subsections 4.04(a)(i) through (iii)
above) to fund such Class C Monthly Interest [and Class C Additional
Interest], a draw will be made from amounts available for distribution in
the Cash Collateral Account (at the times and in the amounts specified in
Section 4.11) and shall be distributed to the Paying Agent for payment to
the Class C Noteholders on such Payment Date in accordance with this
subsection 4.04(a)(iv);
(v) an amount equal to the Investor Default Amount, if any, for the
related Monthly Period shall be treated as a portion of Available Principal
Collections for such Payment Date;
(vi) an amount equal to the sum of the aggregate amount of Investor
Charge-Offs and the amount of Reallocated Principal Collections which have
not been previously reimbursed pursuant to this subparagraph (vi) shall be
treated as a portion of Available Principal Collections for such Payment
Date;
(vii) on each Payment Date from and after the Reserve Account Funding
Date, but prior to the date on which the Reserve Account terminates as
described in subsection 4.10(f), an amount up to the excess, if any, of the
Required Reserve Account Amount over the Available Reserve Account Amount
shall be deposited into the Reserve Account;
(viii) an amount equal to Class D Monthly Interest for such Payment
Date, plus the amount of any Class D Monthly Interest previously due but
not distributed to the Class D Noteholders on a prior Payment Date, plus
the amount of any Class D Additional Interest for such Payment Date, plus
the amount of any Class D Additional Interest previously due but not
distributed to the Class D Noteholders on a prior Payment Date shall be
distributed to the Paying Agent for payment to the Class D Noteholders on
such Payment Date; provided, however, that, in the event that the sum of
Class D Monthly Interest exceeds the amount of Available Finance Charge
Collections available (after giving effect to subsections 4.04(a)(i)
through (vii) above) to fund such Class D Monthly Interest and Class D
Additional Interest, a draw will be made from amounts available for
distribution in the Cash Collateral Account (at the times and in the
amounts specified in Section 4.11) and shall be distributed to the Paying
Agent for payment to the Class D Noteholders on such Payment Date in
accordance with this subsection 4.04(a)(viii);
(ix) an amount equal to the amounts required to be deposited in the
Cash Collateral Account pursuant to Section 4.11(f) shall be deposited into
the Cash Collateral Account as provided in Section 4.11(f);
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(x) the balance, if any, will constitute a portion of Excess Finance
Charge Collections for such Payment Date and will be available for
allocation to other Series in Group [One] Uncertificated Interest as
described in Section 8.08 of the Indenture; and
(xi) to the extent not applied as set forth in clause (x), any
remaining amounts will be paid to the holders of Trust Beneficial Interests
or Certificates as described in Section 4.1.
(b) On each Payment Date with respect to the Revolving Period, an amount
equal to the Available Principal Collections deposited in the Collection Account
for the related Monthly Period shall be treated as Shared Principal Collections
and applied in accordance with Section 8.05 of the Indenture.
(c) On each Payment Date during the Controlled Accumulation Period or the
Early Amortization Period, an amount equal to the Available Principal
Collections deposited in the Collection Account for the related Monthly Period
shall be distributed or deposited in the following order of priority:
(i) during the Controlled Accumulation Period, an amount equal to the
Monthly Principal for such Payment Date shall be deposited into the
Principal Funding Account;
(ii) during the Early Amortization Period, an amount equal to the
Monthly Principal for such Payment Date shall be distributed to the Paying
Agent for payment to the Class A Noteholders on such Payment Date and on
each subsequent Payment Date until the Class A Note Principal Balance has
been paid in full;
(iii) after the Class A Note Principal Balance has been paid in full,
during the Early Amortization Period, an amount equal to the Monthly
Principal remaining, if any, shall be distributed to the Paying Agent for
payment to the Class B Noteholders on such Payment Date and on each
subsequent Payment Date until the Class B Note Principal Balance has been
paid in full;
(iv) after the Class A Note Principal Balance and the Class B Note
Principal Balance have been paid in full, during the Early Amortization
Period, an amount equal to the Monthly Principal remaining, if any, shall
be distributed to the Paying Agent for payment to the Class C Noteholders
on such Payment Date and on each subsequent Payment Date until the Class C
Note Principal Balance has been paid in full;
(v) after the Class A Note Principal Balance, the Class B Note
Principal Balance and the Class C Note Principal Balance have been paid in
full, during the Early Amortization Period, an amount equal to the Monthly
Principal remaining, if any, shall be distributed to the Paying Agent for
payment to the Class D Noteholders on such Payment Date and on each
subsequent Payment Date until the Class D Note Principal Balance has been
paid in full; and
(vi) in the case of each of the Controlled Accumulation Period and the
Early Amortization Period, the balance of such Available Principal
Collections remaining after application in accordance with clause (i) or
(v) above shall be treated as Shared Principal Collections and applied in
accordance with Section 8.05 of the Indenture.
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(d) On the earlier to occur of (i) the first Payment Date with respect to
the Early Amortization Period and (ii) the Expected Final Principal Payment
Date, the Indenture Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Principal Funding Account and distribute to
the Paying Agent for payment to the Class A Noteholders, the Class B
Noteholders, the Class C Noteholders and the Class D Noteholders, the amounts
deposited into the Principal Funding Account pursuant to subsection 4.04(c)(i).
(e) The Controlled Accumulation Period is scheduled to commence at the
close of business on [_____ __, 20__]; provided, however, that, if the
Accumulation Period Length (determined as described below) is less than 12
months, the date on which the Controlled Accumulation Period actually commences
will be delayed to the first Business Day of the month that is the number of
whole months prior to the Expected Final Principal Payment Date at least equal
to the Accumulation Period Length and, as a result, the number of Monthly
Periods in the Controlled Accumulation Period will at least equal the
Accumulation Period Length. On the Determination Date immediately preceding the
[_____ ____] Payment Date, and each Determination Date thereafter until the
Controlled Accumulation Period begins, the Servicer will determine the
"ACCUMULATION PERIOD LENGTH" which will equal the number of whole months such
that the sum of the Accumulation Period Factors for each month during such
period will be equal to or greater than the Required Accumulation Factor Number;
provided, however, that the Accumulation Period Length will not be determined to
be less than one month; provided further, however, that the determination of the
Accumulation Period Length may be changed at any time if the Rating Agency
Condition is satisfied.
Section 4.05. Investor Charge-Offs. On each Determination Date, the
Servicer shall calculate the Investor Default Amount, if any, for the related
Payment Date. If, on any Payment Date, the Investor Default Amount for such
Payment Date exceeds the amount of Available Finance Charge Collections
allocated with respect thereto pursuant to subsection 4.04(a)(v) with respect to
such Payment Date, the Invested Amount (after giving effect to any reductions
for any Reallocated Principal Collections on such Payment Date) will be reduced
by the amount of such excess, but not by more than the lesser of the Investor
Default Amount and the Invested Amount (after giving effect to any reductions
for any Reallocated Principal Collections on such Payment Date) for such Payment
Date (such reduction, an "INVESTOR CHARGE-OFF").
Section 4.06. Reallocated Principal Collections. On each Payment Date, the
Servicer shall apply, or shall cause the Indenture Trustee to apply, Reallocated
Principal Collections with respect to such Payment Date, to fund any deficiency
pursuant to and in the priority set forth in subsections 4.04(a)(i), (ii), (iii)
and (iv). On each Payment Date, the Invested Amount shall be reduced by the
amount of Reallocated Principal Collections for such Payment Date.
Section 4.07. Excess Finance Charge Collections. Series 2000-[___] shall be
an Excess Allocation Series with respect to Group [One] only. Subject to Section
8.08 of the Indenture, Excess Finance Charge Collections with respect to the
Excess Allocation Series in Group [One] for any Payment Date will be allocated
to Series 2000-[___] in an amount equal to the product of (x) the aggregate
amount of Excess Finance Charge Collections with respect to all the Excess
Allocation Series in Group [One] for such Payment Date and (y) a fraction, the
numerator of which is the Finance Charge Shortfall for Series 2000-[__] for such
Payment Date and the denominator of which
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is the aggregate amount of Finance Charge Shortfalls for all the Excess
Allocation Series in Group [One] for such Payment Date. The "FINANCE CHARGE
SHORTFALL" for Series 2000-[__] for any Payment Date will be equal to the
excess, if any, of (a) the full amount required to be paid, without duplication,
pursuant to subsections 4.04(a)(i) through (ix) on such Payment Date over (b)
the Investor Finance Charge Collections with respect to such Payment Date.
Section 4.08. Shared Principal Collections.
Subject to Section 8.05 of the Indenture, Shared Principal Collections with
respect to the Series in Group [One] for any Payment Date will be allocated to
Series 2000-[__] in an amount equal to the product of (x) the aggregate amount
of Shared Principal Collections with respect to all Principal Sharing Series in
Group [One] for such Payment Date and (y) a fraction, the numerator of which is
the Series 2000-[__] Principal Shortfall for such Payment Date and the
denominator of which is the aggregate amount of Principal Shortfalls for all the
Series which are Principal Sharing Series in Group [One] for such Payment Date.
The "SERIES 2000-[ ] PRINCIPAL SHORTFALL" will be equal to (a) for any Payment
Date with respect to the Revolving Period, zero, (b) for any Payment Date with
respect to the Controlled Accumulation Period, the excess, if any, of the
Controlled Deposit Amount with respect to such Payment Date over the amount of
Available Principal Collections for such Payment Date (excluding any portion
thereof attributable to Shared Principal Collections), and (c) for any Payment
Date with respect to the Early Amortization Period, the excess, if any, of the
Adjusted Invested Amount over the amount of Available Principal Collections for
such Payment Date (excluding any portion thereof attributable to Shared
Principal Collections).
Section 4.09. Principal Funding Account.
(a) The Indenture Trustee shall establish and maintain with an Eligible
Institution, which may be the Indenture Trustee in the name of the Trust, on
behalf of the Trust, for the benefit of the Series 2000-[__] Noteholders, a
segregated trust account with the corporate trust department of such Eligible
Institution (the "PRINCIPAL FUNDING ACCOUNT"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 2000-[__] Noteholders. The Indenture Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Principal
Funding Account and in all proceeds thereof. The Principal Funding Account shall
be under the sole dominion and control of the Indenture Trustee for the benefit
of the Series 2000-[__] Noteholders. If at any time the institution holding the
Principal Funding Account ceases to be an Eligible Institution, the Servicer
shall notify the Indenture Trustee, and the Indenture Trustee upon being
notified (or the Servicer on its behalf) shall, within ten (10) Business Days,
establish a new Principal Funding Account meeting the conditions specified above
with an Eligible Institution, and shall transfer any cash or any investments to
such new Principal Funding Account. The Indenture Trustee, at the direction of
the Servicer, shall (i) make withdrawals from the Principal Funding Account from
time to time, in the amounts and for the purposes set forth in this Indenture
Supplement, and (ii) on each Payment Date (from and after the commencement of
the Controlled Accumulation Period) prior to the termination of the Principal
Funding Account, make deposits into the Principal Funding Account in the amounts
specified in, and otherwise in accordance with, subsection 4.04(c)(i).
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(b) Funds on deposit in the Principal Funding Account shall be invested at
the direction of the Servicer by the Indenture Trustee in Eligible Investments[;
provided, however, that, for purposes of the investment of funds on deposit in
the Principal Funding Account, references in the definition of "Eligible
Investments" to a rating in the "highest rating category" shall be modified to
require a rating, from any one of the following Rating Agencies, of at least A-2
by Standard & Poor's, P-2 by Moody's or (if such investment is rated by Fitch)
F2 by Fitch.] Funds on deposit in the Principal Funding Account on any Payment
Date, after giving effect to any deposits to or withdrawals from the Principal
Funding Account on such Payment Date, shall be invested in such investments that
will mature so that such funds will be available for withdrawal on or prior to
the following Payment Date.
The Indenture Trustee shall hold such of the Eligible Investments as
consists of instruments, deposit accounts, negotiable documents, money, goods,
letters of credit, and advices of credit in the State of [__________]. The
Indenture Trustee shall hold such of the Eligible Investments as constitutes
investment property through a securities intermediary, which securities
intermediary shall agree with the Indenture Trustee that (a) such investment
property shall at all times be credited to a securities account of the Indenture
Trustee, (b) such securities intermediary shall treat the Indenture Trustee as
entitled to exercise the rights that comprise each financial asset credited to
such securities account, (c) all property credited to such securities account
shall be treated as a financial asset, (d) such securities intermediary shall
comply with entitlement orders originated by the Indenture Trustee without the
further consent of any other person or entity, (e) such securities intermediary
will not agree with any person or entity other than the Indenture Trustee to
comply with entitlement orders originated by such other person or entity, (f)
such securities accounts and the property credited thereto shall not be subject
to any lien, security interest or right of set-off in favor of such securities
intermediary or anyone claiming through it (other than the Indenture Trustee),
and (g) such agreement shall be governed by the laws of the State of [New York.
Terms used in the preceding sentence that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC].
On each Payment Date during the Controlled Accumulation Period and on the
first Payment Date to occur during the Early Amortization Period, the Indenture
Trustee, acting at the Servicer's direction given on or before such Payment
Date, shall transfer from the Principal Funding Account to the Collection
Account the Principal Funding Investment Proceeds on deposit in the Principal
Funding Account for application as Available Finance Charge Collections in
accordance with Section 4.04.
Principal Funding Investment Proceeds (including reinvested interest) shall
not be considered part of the amounts on deposit in the Principal Funding
Account for purposes of this Indenture Supplement.
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Section 4.10. Reserve Account.
(a) The Indenture Trustee shall establish and maintain with an Eligible
Institution, which may be the Indenture Trustee in the name of the Trust, on
behalf of the Trust, for the benefit of the Series 2000-[__] Noteholders, a
segregated trust account with the corporate trust department of such Eligible
Institution (the "RESERVE ACCOUNT"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Series
2000-[___] Noteholders. The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Reserve Account and in
all proceeds thereof. The Reserve Account shall be under the sole dominion and
control of the Indenture Trustee for the benefit of the Series 2000-[___]
Noteholders. If at any time the institution holding the Reserve Account ceases
to be an Eligible Institution, the Servicer shall notify the Indenture Trustee,
and the Indenture Trustee upon being notified (or the Servicer on its behalf)
shall, within ten (10) Business Days, establish a new Reserve Account meeting
the conditions specified above with an Eligible Institution, and shall transfer
any cash or any investments to such new Reserve Account. The Indenture Trustee,
at the direction of the Servicer, shall (i) make withdrawals from the Reserve
Account from time to time in an amount up to the Available Reserve Account
Amount at such time, for the purposes set forth in this Indenture Supplement,
and (ii) on each Payment Date (from and after the Reserve Account Funding Date)
prior to termination of the Reserve Account, make a deposit into the Reserve
Account in the amount specified in, and otherwise in accordance with, subsection
4.04(a)(vii).
(b) Funds on deposit in the Reserve Account shall be invested at the
direction of the Servicer by the Indenture Trustee in Eligible Investments[;
provided, however, that, for purposes of the investment of funds on deposit in
the Reserve Account, references in the definition of "Eligible Investments" to a
rating in the "highest rating category" shall be modified to require a rating,
from any one of the following Rating Agencies, of at least A-2 by Standard &
Poor's, P-2 by Moody's or (if such investment is rated by Fitch) F2 by Fitch.]
Funds on deposit in the Reserve Account on any Payment Date, after giving effect
to any deposits to or withdrawals from the Reserve Account on such Payment Date,
shall be invested in such investments that will mature so that such funds will
be available for withdrawal on or prior to the following Payment Date.
The Indenture Trustee shall hold such of the Eligible Investments as
consists of instruments, deposit accounts, negotiable documents, money, goods,
letters of credit, and advices of credit in the State of [____________]. The
Indenture Trustee shall hold such of the Eligible Investments as constitutes
investment property through a securities intermediary, which securities
intermediary shall agree with the Indenture Trustee that (a) such investment
property shall at all times be credited to a securities account of the Indenture
Trustee, (b) such securities intermediary shall treat the Indenture Trustee as
entitled to exercise the rights that comprise each financial asset credited to
such securities account, (c) all property credited to such securities account
shall be treated as a financial asset, (d) such securities intermediary shall
comply with entitlement orders originated by the Indenture Trustee without the
further consent of any other person or entity, (e) such securities intermediary
will not agree with any person or entity other than the Indenture Trustee to
comply with entitlement orders originated by such other person or entity, (f)
such securities accounts and the property credited thereto shall not be subject
to any lien, security interest, or right of set-off in favor of such securities
intermediary or anyone claiming through it (other than the Indenture Trustee),
and (g) such agreement shall be governed by the laws of the State of [New York.
Terms used in the preceding
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sentence that are defined in the New York UCC and not otherwise defined herein
shall have the meaning set forth in the New York UCC].
On each Payment Date, all interest and earnings (net of losses and
investment expenses) accrued since the preceding Payment Date on funds on
deposit in the Reserve Account shall be retained in the Reserve Account (to the
extent that the Available Reserve Account Amount is less than the Required
Reserve Account Amount) and the balance, if any, shall be deposited into the
Collection Account and included in Available Finance Charge Collections for such
Payment Date. For purposes of determining the availability of funds or the
balance in the Reserve Account for any reason under this Indenture Supplement,
except as otherwise provided in the preceding sentence, investment earnings on
such funds shall be deemed not to be available or on deposit.
(c) On or before each Payment Date during the Controlled Accumulation
Period and on or before the first Payment Date to occur during the Early
Amortization Period, the Servicer shall calculate the Reserve Draw Amount;
provided, however, that such amount will be reduced to the extent that funds
otherwise would be available for deposit in the Reserve Account under Section
4.04(a)(vii) with respect to such Payment Date.
(d) In the event that for any Payment Date the Reserve Draw Amount is
greater than zero, the Reserve Draw Amount, up to the Available Reserve Account
Amount, shall be withdrawn from the Reserve Account on such Payment Date by the
Indenture Trustee (acting in accordance with the instructions of the Servicer)
and deposited into the Collection Account for application as Available Finance
Charge Collections for such Payment Date.
(e) In the event that the Reserve Account Surplus on any Payment Date,
after giving effect to all deposits to and withdrawals from the Reserve Account
with respect to such Payment Date, is greater than zero, the Indenture Trustee,
acting in accordance with the instructions of the Servicer, shall withdraw from
the Reserve Account an amount equal to such Reserve Account Surplus and (i)
deposit such amounts in the Cash Collateral Account, to the extent that funds on
deposit in the Cash Collateral Account are less than the Required Cash
Collateral Account Amount, and (ii) distribute any such amounts remaining after
application pursuant to subsection 4.10(e)(i) to the holders of Trust Beneficial
Interests or Certificates.
(f) Upon the earliest to occur of (i) the termination of the Trust pursuant
to Article VIII of the Trust Agreement, (ii) the first Payment Date to occur
during the Early Amortization Period and (iii) the Expected Final Principal
Payment Date, the Indenture Trustee, acting in accordance with the instructions
of the Servicer, after the prior payment of all amounts owing to the Series
2000-[____] Noteholders that are payable from the Reserve Account as provided
herein, shall withdraw from the Reserve Account all amounts, if any, on deposit
in the Reserve Account and (i) deposit such amounts in the Cash Collateral
Account, to the extent that funds on deposit in the Cash Collateral Account are
less than the Required Cash Collateral Account Amount, and (ii) distribute any
such amounts remaining after application pursuant to subsection 4.10(f)(i) to
the holders of the Trust Beneficial Interests or Certificates. The Reserve
Account shall thereafter be deemed to have terminated for purposes of this
Indenture Supplement.
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Section 4.11. Cash Collateral Account.
(a) On or prior to the Closing Date, the Servicer shall establish and
maintain with an Eligible Institution, which may be the Indenture Trustee in the
name of the Trust, on behalf of the Trust, for the benefit of the Class C
Noteholders and the Class D Noteholders , a segregated account with the
corporate trust department of such Eligible Institution (the "CASH COLLATERAL
ACCOUNT"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Class C Noteholders and the Class D
Noteholders. Except as otherwise provided in this Section 4.11, the Indenture
Trustee shall possess all right, title and interest in all funds on deposit from
time to time in the Cash Collateral Account and in all proceeds thereof. The
Cash Collateral Account shall be under the sole dominion and control of the
Indenture Trustee for the benefit of the Class C Noteholders and the Class D
Noteholders. If at any time the institution holding the Cash Collateral Account
ceases to be an Eligible Institution, the Servicer shall notify the Indenture
Trustee, and the Indenture Trustee upon being notified (or the Servicer on its
behalf) shall, within ten (10) Business Days (or such longer period as to which
the Rating Agencies may consent) establish a new Cash Collateral Account meeting
the conditions specified above with an Eligible Institution and shall transfer
any cash or any investments to such new Cash Collateral Account. The Indenture
Trustee, at the direction of the Servicer, shall (i) make withdrawals from the
Cash Collateral Account from time to time in an amount up to the Available Cash
Collateral Account Amount at such time, for the purposes set forth in this
Indenture Supplement, and (ii) on each Payment Date prior to termination of the
Cash Collateral Account, make a deposit into the Cash Collateral Account in the
amount specified in, and otherwise in accordance with, subsection 4.11(f).
(b) Funds on deposit in the Cash Collateral Account shall be invested at
the direction of the Servicer by the Indenture Trustee in Eligible Investments[;
provided, however, that, for purposes of the investment of funds on deposit in
the Cash Collateral Account, references in the definition of "Eligible
Investments" to a rating in the "highest rating category" shall be modified to
require a rating, from any one of the following Rating Agencies, of at least A-2
by Standard & Poor's, P-2 by Moody's or (if such investment is rated by Fitch)
F2 by Fitch.] Funds on deposit in the Cash Collateral Account on any Payment
Date, after giving effect to any withdrawals from and deposits to the Cash
Collateral Account on such Payment Date, shall be invested in such investments
that will mature so that such funds will be available for withdrawal on or prior
to the following Payment Date.
The Indenture Trustee shall hold such of the Eligible Investments as
consists of instruments, deposit accounts, negotiable documents, money, goods,
letters of credit, and advices of credit in the State of [_________]. The
Indenture Trustee shall hold such of the Eligible Investments as constitutes
investment property through a securities intermediary, which securities
intermediary shall agree with the Indenture Trustee that (a) such investment
property shall at all times be credited to a securities account of the Indenture
Trustee, (b) such securities intermediary shall treat the Indenture Trustee as
entitled to exercise the rights that comprise each financial asset credited to
such securities account, (c) all property credited to such securities account
shall be treated as a financial asset, (d) such securities intermediary shall
comply with entitlement orders originated by the Indenture Trustee without the
further consent of any other person or entity, (e) such securities intermediary
will not agree with any person or entity other than the Indenture Trustee to
comply with entitlement orders originated by such other person or entity, (f)
such securities accounts and the property credited thereto shall not be subject
to any lien, security interest, or right of set-off in favor of such securities
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intermediary or anyone claiming through it (other than the Indenture Trustee),
and (g) such agreement shall be governed by the laws of the State of New York.
Terms used in the preceding sentence that are defined in the [New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC]. Except as permitted by this subsection 4.11(b), the Indenture Trustee
shall not hold Eligible Investments through an agent or a nominee.
[On each Payment Date (but subject to subsections 4.11(c) and 4.11(d)), the
Investment Earnings, if any, accrued since the preceding Payment Date on funds
on deposit in the Cash Collateral Account shall be paid to the Transferor by the
Indenture Trustee.] For purposes of determining the availability of funds or the
balance in the Cash Collateral Account for any reason under this Indenture
Supplement (subject to subsections 4.11(c) and 4.11(d)), all Investment Earnings
shall be deemed not to be available or on deposit.
(c) If, on any Payment Date, the aggregate amount available for
distribution pursuant to subsections 4.04(a)(iv) and 4.04(a)(viii) is less than
the aggregate amount required to be distributed pursuant to subsections
4.04(a)(iv) and 4.04(a)(viii) (without giving effect to any limitation based on
Available Finance Charge Collections), the Indenture Trustee, at the direction
of the Servicer, shall withdraw from the Cash Collateral Account the amount of
such deficiency up to the Available Cash Collateral Account Amount and, if the
Available Cash Collateral Account Amount is less than such deficiency,
Investment Earnings credited to the Cash Collateral Account, and deposit such
amount in the Collection Account for payment to the Class C Noteholders in
respect of interest on the Class C Notes and the Class D Noteholders in respect
of interest on the Class D Notes in accordance with Section 4.04.
(d) On the Series 2000-[___] Final Maturity Date, the Indenture Trustee at
the direction of the Servicer shall withdraw from the Cash Collateral Account an
amount equal to the lesser of (i) the sum of the Class C Note Principal Balance
and the Class D Note Principal Balance (after any payments to be made pursuant
to subsection 4.04(c) on such date) and (ii) the Available Cash Collateral
Account Amount and, if the Available Cash Collateral Account Amount is not
sufficient to reduce each of the Class C Note Principal Balance and the Class D
Note Principal Balance to zero, Investment Earnings credited to the Cash
Collateral Account up to the amount required to reduce each of the Class C Note
Principal Balance and the Class D Note Principal Balance to zero, and the
Indenture Trustee or the Servicer shall deposit such amounts into the Collection
Account for distribution to the Class C Noteholders and the Class D Noteholders
in accordance with subsections 5.02(e) and 5.02(g).
(e) On any day following the occurrence of an Event of Default with respect
to Series 2000-[___] and acceleration of the maturity of the Series 2000-[___]
Notes pursuant to Section 5.03 of the Indenture, the Servicer shall withdraw
from the Cash Collateral Account an amount equal to the Available Cash
Collateral Account Amount and the Indenture Trustee or the Servicer shall
deposit such amounts into the Collection Account for distribution to the Class C
Noteholders, the Class D Noteholders, the Class A Noteholders and the Class B
Noteholders, in that order of priority, in accordance with Section 5.02, to fund
any shortfalls in amounts owed to such Noteholders.
(f) If on any Payment Date, after giving effect to all withdrawals from the
Cash Collateral Account, the Available Cash Collateral Account Amount is less
than the Required Cash
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Collateral Account Amount then in effect, Available Finance Charge Collections
shall be deposited into the Cash Collateral Account under the circumstances set
forth in subsection 4.04(a)(ix) up to the amount of the Cash Collateral Account
Deficiency.
(g) After the Cash Collateral Account Percentage has been increased above
zero pursuant to any of clauses (ii) through (v) of the definition thereof, the
Cash Collateral Account Percentage shall remain at that percentage until (a)
further increased to a higher required percentage specified in clauses (ii)
through (v) of the definition thereof or (b) the Payment Date on which the
Quarterly Excess Spread Percentage has increased to a level above that for the
then current Cash Collateral Account Percentage, in which case the Cash
Collateral Account Percentage shall be decreased to the appropriate percentage
in clauses (ii) through (iv) of the definition thereof (or, if the Excess Spread
Percentage is greater than or equal to [___]%, the Cash Collateral Account
Percentage shall be zero and the Required Cash Collateral Account Amount shall
be $0). Notwithstanding the foregoing, if a Pay Out Event with respect to Series
2000-[____] has occurred, the Cash Collateral Account Percentage shall equal
[___]% (as provided in the definition of Cash Collateral Account Percentage) and
shall no longer be subject to reduction.
(h) If on any Payment Date, after giving effect to all withdrawals from and
deposits to the Cash Collateral Account, the amount on deposit in the Cash
Collateral Account would exceed the Required Cash Collateral Account Amount then
in effect, the Indenture Trustee shall, at the written direction of the
Servicer, release such excess to the Transferor. On the date on which each of
the Class C Note Principal Balance and the Class D Note Principal Balance has
been paid in full (including amounts to be paid to the Class C Noteholders and
the Class D Noteholders pursuant to subsection 4.11(d) above), the Indenture
Trustee, at the direction of the Servicer, shall withdraw from the Cash
Collateral Account all amounts then remaining in the Cash Collateral Account and
pay such amounts to the Transferor.
Section 4.12 Pre-Funding Account.
(a) The Servicer hereby directs the Indenture Trustee, for the benefit of
the Series 2000-[____] Noteholders, to establish and maintain or cause to be
established and maintained with an Eligible Institution, which may be the
Indenture Trustee, in the name of the Trust, on behalf of the Series 2000-[____]
Noteholders, a segregated account with the corporate trust department of such
Eligible Institution (the "PRE-FUNDING ACCOUNT"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 2000-[____] Noteholders. The Pre- Funding Account shall be under the sole
dominion and control of the Indenture Trustee for the benefit of the Series
2000-[____] Noteholders. If at any time the institution holding the Pre-Funding
Account ceases to be an Eligible Institution, the Servicer shall notify the
Indenture Trustee and the Indenture Trustee upon being notified (or the Servicer
on its behalf) shall within ten (10) Business Days (or such longer period as to
which the Rating Agencies may consent) establish a new Pre-Funding Account
meeting the conditions specified above, transfer any cash and/or any investments
from the old Pre-Funding Account to such new Pre-Funding Account and from the
date such new Pre-Funding Account is established, it shall be the "Pre-Funding
Account." The Indenture Trustee, at the direction of the Servicer, shall make
withdrawals and payments from the Pre-Funding Account from time to time for the
purposes set forth in this Indenture Supplement.
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(b) The Indenture Trustee shall on the Closing Date deposit into the
Pre-Funding Account the Initial Pre-Funded Amount from the proceeds of the sale
of the Series 2000-[____] Notes. On each Payment Date, the Indenture Trustee,
acting in accordance with written instructions from the Servicer, shall withdraw
from the Pre-Funding Account and deposit into the Collection Account all
interest and earnings (net of losses and investment expenses) on the Pre-Funded
Amount with respect to the prior Monthly Period. Such investment income shall be
deemed to be Collections of Finance Charge and Administrative Receivables
allocated to Series 2000-[____]. Interest (including reinvested interest) and
other investment income on funds on deposit in the Pre-Funding Account shall not
be considered part of the Pre-Funded Amount for purposes of this Indenture
Supplement.
(c) Funds on deposit in the Pre-Funding Account shall be invested at the
direction of the Servicer by the Indenture Trustee in Eligible Investments[;
provided, however, that, for purposes of the investment of funds on deposit in
the Pre-Funding Account, references in the definition of "Eligible Investments"
to a rating in the "highest rating category" shall be modified to require a
rating, from any one of the following Rating Agencies, of at least A-2 by
Standard & Poor's, P-2 by Moody's or (if such investment is rated by Fitch) F2
by Fitch]. Funds on deposit in the Pre-Funding Account on the Closing Date and
thereafter shall be invested in Eligible Investments that will mature so that
such funds will be available for withdrawal on the Business Day next succeeding
the next increase in the Invested Amount pursuant to Section 4.1.3 or, if
earlier, on the next succeeding Payment Date.
The Indenture Trustee shall hold such of the Eligible Investments as
consists of instruments, deposit accounts, negotiable documents, money, goods,
letters of credit, and advices of credit in the State of [_________]. The
Indenture Trustee shall hold such of the Eligible Investments as constitutes
investment property through a securities intermediary, which securities
intermediary shall agree with the Indenture Trustee that (a) such investment
property shall at all times be credited to a securities account of the Indenture
Trustee, (b) such securities intermediary shall treat the Indenture Trustee as
entitled to exercise the rights that comprise each financial asset credited to
such securities account, (c) all property credited to such securities account
shall be treated as a financial asset, (d) such securities intermediary shall
comply with entitlement orders originated by the Indenture Trustee without the
further consent of any other person or entity, (e) such securities intermediary
will not agree with any person or entity other than the Indenture Trustee to
comply with entitlement orders originated by such other person or entity, (f)
such securities accounts and the property credited thereto shall not be subject
to any lien, security interest, or right of set-off in favor of such securities
intermediary or anyone claiming through it (other than the Indenture Trustee),
and (g) such agreement shall be governed by the laws of the State of [New York.
Terms used in the preceding sentence that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC]. Except as permitted by this subsection 4.11(b), the Indenture Trustee
shall not hold Eligible Investments through an agent or a nominee.
(d) In the event that the Pre-Funded Amount exceeds zero at the end of the
Funding Period, on the first Payment Date on or after the last day of the
Funding Period, the Servicer shall apply or shall cause the Trustee to apply the
Pre-Funded Amount to the payment by the Paying Agent of principal on the Class A
Notes, the Class B Notes, the Class C Notes and the Class D Notes on a pro rata
basis based on the Class A Note Principal Balance, the Class B Note Principal
Balance, the Class C Note Principal Balance and the Class D Note Principal
Balance as of such date.
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Section 4.13 Increases in Invested Amount. On each [Wednesday] during the
Funding Period, commencing [__________________], the Invested Amount shall
increase to the extent that the Transferor Interest on the preceding day exceeds
the product of (A) the sum of [______]% and the Required Transferor Percentage
on such date and (B) the sum of the aggregate amount of Principal Receivables in
the Trust and amounts on deposit in the Excess Funding Account on such preceding
day; provided, however, that the Invested Amount shall in no event exceed
$[______________________________________] or increase pursuant to this Section
4.13 by an amount in excess of the Pre-Funded Amount immediately prior to giving
effect to such increase. Such increase in the Invested Amount shall be allocated
to the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes
on a pro rata basis based on the Class A Note Principal Balance, the Class B
Note Principal Balance, the Class C Note Principal Balance and the Class D Note
Principal Balance immediately prior to such increase. Upon any increase in the
Invested Amount pursuant to this Section 4.13, the Servicer shall instruct the
Indenture Trustee in writing to withdraw from the Pre-Funding Account and pay to
holders of Trust Beneficial Interests or Certificates no later than the next
succeeding Business Day an amount equal to the amount of such increase in the
Invested Amount.
Section 4.14 Determination of LIBOR.
(a) On each LIBOR Determination Date, the Indenture Trustee shall determine
LIBOR on the basis of the rate for deposits in United States dollars having a
maturity of one month commencing on [such LIBOR Determination Date] which
appears on Telerate Page 3750 as of 11:00 a.m., London time, on such date. If
such rate does not appear on Telerate Page 3750, LIBOR for that LIBOR
Determination Date shall be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market for a one-month period and in an amount of not less than U.S.
$1,000,000. The Indenture Trustee shall request the principal London office of
each of the Reference Banks to provide a quotation of its rate. If at least two
(2) such quotations are provided, LIBOR for that LIBOR Determination Date shall
be the arithmetic mean of the quotations. If fewer than two (2) quotations are
provided as requested, LIBOR for that LIBOR Determination Date will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by
the Servicer, at approximately 11:00 a.m., New York City time, on that day for
loans in United States dollars to leading European banks for a one-month period
and in an amount of not less than U.S. $1,000,000; provided, that, if the banks
selected by the Servicer are not quoting such rates, LIBOR for that LIBOR
Determination Date will be the same as LIBOR for the immediately preceding LIBOR
Determination Date.
(b) The Class A Note Interest Rate, Class B Note Interest Rate, the Class C
Note Interest Rate and the Class D Note Interest Rate applicable to the then
current and the immediately preceding Interest Periods may be obtained by
telephoning the Indenture Trustee at its corporate trust office at (___)
___-____ or such other telephone number as shall be designated by the Indenture
Trustee for such purpose by prior written notice by the Indenture Trustee to
each Series 2000-[__] Noteholder from time to time.
(c) On each LIBOR Determination Date, the Indenture Trustee shall send to
the Transferor by facsimile transmission, notification of LIBOR for the
following Interest Period.
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Section 4.15. Investment Instructions. Any investment instructions required
to be given to the Indenture Trustee pursuant to the terms hereof must be given
to the Indenture Trustee no later than 11:00 a.m., New York City time, on the
date such investment is to be made. In the event the Indenture Trustee receives
such investment instruction later than such time, the Indenture Trustee may, but
shall have no obligation to, make such investment. In the event the Indenture
Trustee is unable to make an investment required in an investment instruction
received by the Indenture Trustee after 11:00 a.m., New York City time, on such
day, such investment shall be made by the Indenture Trustee on the next
succeeding Business Day. In no event shall the Indenture Trustee be liable for
any investment not made pursuant to investment instructions received after 11:00
a.m., New York City time, on the day such investment is requested to be made.
[END OF ARTICLE IV]
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ARTICLE V
Delivery of Series 2000-[__] Notes;
Distributions; Reports to Series 2000-[ ] Noteholders
Section 5.01. Delivery and Payment for the Series 2000-[ ]Notes.
The Issuer shall execute and issue, and the Indenture Trustee shall
authenticate, the Series 2000-[__]Notes in accordance with Section 2.03 of the
Indenture. The Indenture Trustee shall deliver the Series 2000-[__]Notes to or
upon the order of the Trust when so authenticated.
Section 5.02 Distributions.
(a) On each Payment Date, the Paying Agent shall distribute to each Class A
Noteholder of record on the related Record Date (other than as provided in
Section 11.02 of the Indenture) such Class A Noteholder's pro rata share of the
amounts held by the Paying Agent that are allocated and available on such
Payment Date to pay interest on the Class A Notes pursuant to this Indenture
Supplement.
(b) On each Payment Date, the Paying Agent shall distribute to each Class A
Noteholder of record on the related Record Date (other than as provided in
Section 11.02 of the Indenture) such Class A Noteholder's pro rata share of the
amounts held by the Paying Agent that are allocated and available on such
Payment Date to pay principal of the Class A Notes pursuant to this Indenture
Supplement.
(c) On each Payment Date, the Paying Agent shall distribute to each Class B
Noteholder of record on the related Record Date (other than as provided in
Section 11.02 of the Indenture) such Class B Noteholder's pro rata share of the
amounts held by the Paying Agent that are allocated and available on such
Payment Date to pay interest on the Class B Notes pursuant to this Indenture
Supplement.
(d) On each Payment Date, the Paying Agent shall distribute to each Class B
Noteholder of record on the related Record Date (other that as provided in
Section 11.02 of the Indenture) such Class B Noteholder's pro rata share of the
amounts held by the Paying Agent that are allocated and available on such
Payment Date to pay principal of the Class B Notes pursuant to this Indenture
Supplement.
(e) On each Payment Date, the Paying Agent shall distribute to each Class C
Noteholder of record on the related Record Date (other than as provided in
Section 11.02 of the Indenture) such Class C Noteholder's pro rata share of the
amounts held by the Paying Agent (including amounts held by the Paying Agent
with respect to amounts withdrawn from the Cash Collateral Account (at the times
and in the amounts specified in Section 4.11)) that are allocated and available
on such Payment Date to pay interest on the Class C Notes pursuant to this
Indenture Supplement.
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(f) On each Payment Date, the Paying Agent shall distribute to each Class C
Noteholder of record on the related Record Date (other that as provided in
Section 11.02 of the Indenture) such Class C Noteholder's pro rata share of the
amounts held by the Paying Agent that are allocated and available on such
Payment Date to pay principal of the Class C Notes pursuant to this Indenture
Supplement.
(g) On each Payment Date, the Paying Agent shall distribute to each Class D
Noteholder of record on the related Record Date (other than as provided in
Section 11.02 of the Indenture) such Class D Noteholder's pro rata share of the
amounts held by the Paying Agent (including amounts held by the Paying Agent
with respect to amounts withdrawn from the Cash Collateral Account (at the times
and in the amounts specified in Section 4.11)) that are allocated and available
on such Payment Date to pay interest on the Class D Notes pursuant to this
Indenture Supplement.
(h) On each Payment Date, the Paying Agent shall distribute to each Class D
Noteholder of record on the related Record Date (other that as provided in
Section 11.02 of the Indenture) such Class D Noteholder's pro rata share of the
amounts held by the Paying Agent that are allocated and available on such
Payment Date to pay principal of the Class D Notes pursuant to this Indenture
Supplement.
(i) The distributions to be made pursuant to this Section 5.02 are subject
to the provisions of Sections 2.06, 6.01 and 7.01 of the Transfer and Servicing
Agreement, Section 11.02 of the Indenture and Section 7.01 of this Indenture
Supplement.
(j) Except as provided in Section 11.02 of the Indenture with respect to a
final distribution, distributions to Series 2000-[___] Noteholders hereunder
shall be made by (i) check mailed to each Series 2000-[___] Noteholder (at such
Noteholder's address as it appears in the Note Register), except that with
respect to any Series 2000-[__] Notes registered in the name of the nominee of a
Clearing Agency, such distribution shall be made in immediately available funds
and (ii) without presentation or surrender of any Series 2000-[__] Note or the
making of any notation thereon.
Section 5.03 Reports and Statements to Series 2000-[ ] Noteholders.
(a) On each Payment Date, the Paying Agent, on behalf of the Indenture
Trustee, shall forward to each Series 2000-[__] Noteholder a statement
substantially in the form of EXHIBIT C prepared by the Servicer.
(b) Not later than the second Business Day preceding each Payment Date, the
Servicer shall deliver to the Owner Trustee, the Indenture Trustee, the Paying
Agent and each Rating Agency (i) a statement substantially in the form of
EXHIBIT C prepared by the Servicer and (ii) a certificate of an Authorized
Officer substantially in the form of EXHIBIT D; provided that the Servicer may
amend the form of EXHIBIT C and EXHIBIT D, from time to time, with the consent
of the Indenture Trustee.
(c) A copy of each statement or certificate provided pursuant to paragraph
(a) or (b) may be obtained by any Series 2000-[__] Noteholder by a request in
writing to the Servicer.
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(d) On or before January 31 of each calendar year, beginning with calendar
year 2001, the Paying Agent, on behalf of the Indenture Trustee, shall furnish
or cause to be furnished to each Person who at any time during the preceding
calendar year was a Series 2000-[__] Noteholder, a statement prepared by the
Servicer containing the information which is required to be contained in the
statement to Series 2000-[__] Noteholders, as set forth in paragraph (a) above,
aggregated for such calendar year or the applicable portion thereof during which
such Person was a Series 2000-[__] Noteholder, together with other information
as is required to be provided by an issuer of indebtedness under the Code. Such
obligation of the Paying Agent shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the Paying
Agent pursuant to any requirements of the Code as from time to time in effect.
[END OF ARTICLE V]
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ARTICLE VI
Series 2000-[ ] Pay Out Events
Section 6.01. Series 2000-[ ]Pay Out Events. If any one of the following
events shall occur with respect to the Series 2000-[__]Notes:
(a) failure on the part of the Transferor (i) to make any payment or
deposit required to be made by the Transferor by the terms of the Transfer and
Servicing Agreement, the Indenture or this Indenture Supplement on or before the
date occurring five (5) Business Days after the date such payment or deposit is
required to be made therein or herein or (ii) duly to observe or perform any
other covenants or agreements of the Transferor set forth in the Transfer and
Servicing Agreement, the Indenture or this Indenture Supplement, which failure
has a material adverse effect on the Series 2000-[____] Noteholders and which
continues unremedied for a period of sixty (60) days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Transferor by the Indenture Trustee, or to the Transferor and
the Indenture Trustee by any Holder of the Series 2000-[____] Notes;
(b) any representation or warranty made by the Transferor in the Transfer
and Servicing Agreement, the Indenture or this Indenture Supplement, or any
information contained in a computer file or microfiche list required to be
delivered by the Transferor pursuant to Section 2.01 or subsection 2.09(h) of
the Transfer and Servicing Agreement shall prove to have been incorrect in any
material respect when made or when delivered, which continues to be incorrect in
any material respect for a period of sixty (60) days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Transferor by the Indenture Trustee, or to the Transferor and
the Indenture Trustee by any Holder of the Series 2000-[__]Notes and as a result
of which the interests of the Series 2000-[__] Noteholders are materially and
adversely affected for such period; provided, however, that a Series 2000-[__]
Pay Out Event pursuant to this subsection 6.01(b) shall not be deemed to have
occurred hereunder if the Transferor has accepted reassignment of the related
Receivable, or all of such Receivables, if applicable, during such period in
accordance with the provisions of the Transfer and Servicing Agreement;
(c) the average of the Net Portfolio Yield for any three consecutive
Monthly Periods is reduced to a rate which is less than the average of the Base
Rates for such period; or
(d) without limiting the foregoing, the occurrence of an Event of Default
with respect to Series 2000-[__];
then, in the case of any event described in subparagraph (a) or (b) or any Trust
Pay Out Event described in Section 5.01(a) of the Indenture, after the
applicable grace period, if any, set forth in such subparagraphs or in Section
5.01 of the Indenture, either the Indenture Trustee or the Holders of Series
2000-[__] Notes evidencing not less than 50% of the aggregate unpaid principal
amount of Series 2000-[__] Notes by notice then given in writing to the
Transferor and the Servicer (and to the Indenture Trustee if given by the Series
2000-[__] Noteholders) may declare that a "Series Pay Out Event" with respect to
Series 2000-[__] (a "SERIES 2000-[ ] PAY OUT EVENT") has occurred as
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of the date of such notice, and, in the case of any event described in
subparagraph (c) or (d) or any Trust Pay Out Event described in Sections
5.01(b), (c) or (d) of the Indenture, a Series 2000-[__] Pay Out Event shall
occur without any notice or other action on the part of the Indenture Trustee or
the Series 2000-[__] Noteholders immediately upon the occurrence of such event.
[END OF ARTICLE VI]
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ARTICLE VII
Redemption of Series 2000-[ ] Notes; Final Distributions; Series Termination
Section 7.01. Optional Redemption of Series 2000-[ ] Notes; Final
Distributions.
(a) On any day occurring on or after the date on which the Invested Amount
is reduced to 10% or less of the initial Invested Amount[, as increased by the
principal amount of any Notes issued after the Closing Date], the Issuer shall
have the option to redeem the Series 2000-[__] Notes, at a purchase price equal
to (i) if such day is a Payment Date, the Reassignment Amount for such Payment
Date or (ii) if such day is not a Payment Date, the Reassignment Amount for the
Payment Date following such day.
(b) The Issuer shall give the Servicer and the Indenture Trustee at least
thirty (30) days prior written notice of the date on which the Issuer intends to
exercise such optional redemption. Not later than 12:00 noon, New York City
time, on such day the Issuer shall deposit into the Collection Account in
immediately available funds the excess of the Reassignment Amount over the
amount, if any, on deposit in the Principal Funding Account. Such redemption
option is subject to payment in full of the Reassignment Amount. Following such
deposit into the Collection Account in accordance with the foregoing, the
Invested Amount for Series 2000-[__] shall be reduced to zero and the Series
2000-[__] Noteholders shall have no further security interest in the
Receivables. The Reassignment Amount shall be distributed as set forth in
subsection 7.01(d).
(c) (i) The amount to be paid by the Transferor with respect to Series
2000-[__] in connection with a reassignment of Receivables to the Transferor
pursuant to Section 2.06 of the Transfer and Servicing Agreement shall equal the
Reassignment Amount for the first Payment Date following the Monthly Period in
which the reassignment obligation arises under the Transfer and Servicing
Agreement.
(ii) The amount to be paid by the Transferor with respect to Series
2000-[__] in connection with a repurchase of the Notes pursuant to Section 7.01
of the Transfer and Servicing Agreement shall equal the Reassignment Amount for
the Payment Date of such repurchase.
(d) With respect to the Reassignment Amount deposited into the Collection
Account pursuant to this Section 7.01, the Indenture Trustee shall, in
accordance with the written direction of the Servicer, not later than 12:00
noon, New York City time, on the related Payment Date, make deposits or
distributions of the following amounts (in the priority set forth below and, in
each case, after giving effect to any deposits and distributions otherwise to be
made on such date) in immediately available funds: (i) (x) the Class A Note
Principal Balance on such Payment Date will be distributed to the Paying Agent
for payment to the Class A Noteholders and (y) an amount equal to the sum of (A)
Class A Monthly Interest for such Payment Date, (B) any Class A Monthly Interest
previously due but not distributed to the Class A Noteholders on a prior Payment
Date and (C) the amount of Class A Additional Interest, if any, for such Payment
Date and any Class A Additional Interest previously due but not distributed to
the Class A Noteholders on any prior Payment Date,
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will be distributed to the Paying Agent for payment to the Class A Noteholders,
(ii) (x) the Class B Note Principal Balance on such Payment Date will be
distributed to the Paying Agent for payment to the Class B Noteholders and (y)
an amount equal to the sum of (A) Class B Monthly Interest for such Payment
Date, (B) any Class B Monthly Interest previously due but not distributed to the
Class B Noteholders on a prior Payment Date and (C) the amount of Class B
Additional Interest, if any, for such Payment Date and any Class B Additional
Interest previously due but not distributed to the Class B Noteholders on any
prior Payment Date, will be distributed to the Paying Agent for payment to the
Class B Noteholders, (iii) (x) the Class C Note Principal Balance on such
Payment Date will be distributed to the Paying Agent for payment to the Class C
Noteholders and (y) an amount equal to the sum of (A) Class C Monthly Interest
for such Payment Date, (B) any Class C Monthly Interest previously due but not
distributed to the Class C Noteholders on a prior Payment Date and (C) the
amount of Class C Additional Interest, if any, for such Payment Date and any
Class C Additional Interest previously due but not distributed to the Class C
Noteholders on any prior Payment Date, will be distributed to the Paying Agent
for payment to the Class C Noteholders, (iv) (x) the Class D Note Principal
Balance on such Payment Date will be distributed to the Paying Agent for payment
to the Class D Noteholders and (y) an amount equal to the sum of (A) Class D
Monthly Interest for such Payment Date, (B) any Class D Monthly Interest
previously due but not distributed to the Class D Noteholders on a prior Payment
Date and (C) the amount of Class D Additional Interest, if any, for such Payment
Date and any Class D Additional Interest previously due but not distributed to
the Class D Noteholders on any prior Payment Date, will be distributed to the
Paying Agent for payment to the Class D Noteholders and (iv) any excess shall be
released to the Issuer.
(e) Notwithstanding anything to the contrary in this Indenture Supplement,
the Indenture or the Transfer and Servicing Agreement, if the Paying Agent is
not also the Indenture Trustee, all amounts distributed to the Paying Agent
pursuant to subsection 7.01(d) for payment to the Series 2000-[____] Noteholders
shall be deemed distributed in full to the Series 2000-[____] Noteholders on the
date on which such funds are distributed to the Paying Agent pursuant to this
Section 7.01 and shall be deemed to be a final distribution pursuant to Section
11.02 of the Indenture.
Section 7.02. Series Termination.
On the Series 2000-[____] Final Maturity Date, the right of the Series
2000-[____] Noteholders to receive payments from the Issuer will be limited
solely to the right to receive payments pursuant to Section 5.05 of the
Indenture.
[END OF ARTICLE VII]
41
<PAGE> 46
ARTICLE VIII
Miscellaneous Provisions
Section 8.01. Ratification of Indenture. As supplemented by this Indenture
Supplement, the Indenture is in all respects ratified and confirmed and the
Indenture as so supplemented by this Indenture Supplement shall be read, taken
and construed as one and the same instrument.
Section 8.02. Form of Delivery of the Series 2000-[____] Notes.
The Series 2000-[__] Notes shall be Book-Entry Notes and shall be delivered
as Registered Notes as provided in Section 2.01 of the Indenture.
Section 8.03. Counterparts. This Indenture Supplement may be executed in
two or more counterparts, and by different parties on separate counterparts,
each of which shall be an original, but all of which shall constitute one and
the same instrument.
Section 8.04. GOVERNING LAW. THIS INDENTURE SUPPLEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 8.05. Limitation of Liability. Notwithstanding any other provision
herein or elsewhere, this Agreement has been executed and delivered by
[__________________________], not in its individual capacity, but solely in its
capacity as Owner Trustee of the Trust, in no event shall [____________________]
in its individual capacity have any liability in respect of the representations,
warranties, or obligations of the Trust hereunder or under any other document,
as to all of which recourse shall be had solely to the assets of the Trust, and
for all purposes of this Agreement and each other document, the Owner Trustee
(as such or in its individual capacity) shall be subject to, and entitled to the
benefits of, the terms and provisions of the Trust Agreement.
[END OF ARTICLE VIII]
[SIGNATURE PAGE FOLLOWS]
42
<PAGE> 47
IN WITNESS WHEREOF, the undersigned have caused this Indenture Supplement
to be duly executed and delivered by their respective duly authorized officers
on the day and year first above written.
ADVANTA BUSINESS CARD MASTER TRUST,
as Issuer
By: [________________________],
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________________
Name:
Title:
[______________________________________]
as Indenture Trustee
By: ______________________________________
Name:
Title:
[Signature Page to Series 2000-[____] Indenture Supplement]
43
<PAGE> 48
Acknowledged and Accepted:
ADVANTA BANK CORP.,
as Servicer
By:
------------------------------------------------
Name:
Title:
Acknowledged and Accepted:
ADVANTA BUSINESS RECEIVABLES CORP.,
as Transferor
By:
------------------------------------------------
Name:
Title:
[Signature Page to Series 2000-[____] Indenture Supplement]
<PAGE> 49
STATE OF NEW YORK )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared ____________________ 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 she/he executed the same as the corporation for the
purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of __________,
2000.
______________________________________________
Notary Public
[Seal]
My commission expires:
________________________________
<PAGE> 50
STATE OF DELAWARE )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared _____________________ 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 Delaware
common law trust and that she/he executed the same as the corporation for the
purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of __________,
2000.
______________________________
Notary Public
[Seal]
My commission expires:
______________________________
<PAGE> 1
EXHIBIT 4.3
ADVANTA BUSINESS CARD MASTER TRUST
TRANSFER AND SERVICING AGREEMENT
among
ADVANTA BUSINESS RECEIVABLES CORP.,
Transferor,
ADVANTA BANK CORP.,
Servicer,
and
ADVANTA BUSINESS CARD MASTER TRUST,
Issuer,
Dated as of [__________] 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DEFINITIONS .............................................................................. 1
Section 1.01. Definitions ............................................. 1
ARTICLE II
CONVEYANCE OF RECEIVABLES ................................................................ 14
Section 2.01. Conveyance of Receivables ............................... 14
Section 2.03. Representations and Warranties of Each Transferor
Relating to Such Transferor ............................. 16
Section 2.04. Representations and Warranties of each Transferor
Relating to the Agreement and the Receivables ........... 17
Section 2.05. Reassignment of Ineligible Receivables .................. 19
Section 2.07. Covenants of each Transferor ............................ 21
Section 2.08. Covenants of each Transferor with Respect to the
Applicable Receivables Purchase Agreement .............. 23
Section 2.09. Addition of Accounts .................................... 24
Section 2.10. Removal of Accounts ..................................... 26
Section 2.11. Account Allocations ..................................... 28
[Section 2.12. Discount Option ......................................... 28
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES .............................................. 30
Section 3.01. Acceptance of Appointment and Other Matters
Relating to the Servicer ................................ 30
Section 3.02. Servicing Compensation .................................. 31
Section 3.03. Representations, Warranties and Covenants of the Servicer 31
Section 3.04. Reports and Records for the Owner Trustee ............... 34
Section 3.05. Annual Certificate of Servicer .......................... 34
Section 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available ................ 34
Section 3.07. Tax Treatment ........................................... 35
Section 3.08. Notices to ABC .......................................... 35
Section 3.09. Adjustments ............................................. 36
Section 3.10. Reports to the Commission ............................... 36
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<S> <C>
ARTICLE IV
OTHER MATTERS RELATING TO EACH TRANSFEROR ......................................... 37
Section 4.01. Liability of each Transferor ..................... 37
Section 4.02. Merger or Consolidation of, or Assumption of the
Obligations of, a Transferor ..................... 37
Section 4.03. Limitations on Liability of Each Transferor ...... 38
ARTICLE V
OTHER MATTERS RELATING TO THE SERVICER ............................................ 39
Section 5.01. Liability of the Servicer ........................ 39
Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer ..................... 39
Section 5.03. Limitation on Liability of the Servicer and Others 39
Section 5.04. Servicer Indemnification of the Trust, the Owner
Trustee and the Indenture Trustee ................ 40
Section 5.05. Resignation of the Servicer ...................... 40
Section 5.06. Access to Certain Documentation and Information
Regarding the Receivables ........................ 41
Section 5.07. Delegation of Duties ............................. 41
Section 5.08. Examination of Records ........................... 41
ARTICLE VI
INSOLVENCY EVENTS ................................................................. 42
Section 6.01. Rights upon the Occurrence of an Insolvency Event 42
ARTICLE VII
SERVICER DEFAULTS ................................................................. 43
Section 7.01. Servicer Defaults ................................ 43
Section 7.02. Indenture Trustee To Act; Appointment of Successor 45
Section 7.03. Notification to Noteholders ...................... 46
ARTICLE VIII
TERMINATION ....................................................................... 47
Section 8.01. Termination of Agreement ......................... 47
ARTICLE IX
MISCELLANEOUS PROVISIONS .......................................................... 48
Section 9.01. Amendment; Waiver of Past Defaults ............... 48
Section 9.02. Protection of Right, Title and Interest to Trust . 49
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<S> <C>
Section 9.03. GOVERNING LAW..................................... 50
Section 9.04. Notices; Payments................................. 50
Section 9.05. Severability of Provisions........................ 51
Section 9.06. Further Assurances................................ 51
Section 9.07. No Waiver; Cumulative Remedies.................... 51
Section 9.08. Counterparts...................................... 52
Section 9.09. ThirdParty Beneficiaries.......................... 52
Section 9.10. Actions by Noteholders............................ 52
Section 9.11. Rule 144A Information............................. 52
Section 9.12. Merger and Integration............................ 53
Section 9.13. Headings.......................................... 53
Section 9.14. Limitation of Liability........................... 53
EXHIBITS
EXHIBIT A Form of Assignment of Receivables in Additional
Designated Accounts.................................................. A-1
EXHIBIT B Form of Reassignment of Receivables in Removed Accounts................ B-1
EXHIBIT C Form of Annual Servicer's Certificate.................................. C-1
EXHIBIT D-1 Form of Opinion of Counsel with Respect to Amendments.................. D-1-1
EXHIBIT D-2 Form of Opinion of Counsel with Respect to Accounts.................... D-2-1
EXHIBIT D-3 Provisions to be Included in Annual Opinion of Counsel................. D-3-1
SCHEDULES
SCHEDULE 1 List of Accounts........................................................ 1-1
</TABLE>
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<PAGE> 5
TRANSFER AND SERVICING AGREEMENT, dated as of [__________] , 2000 among
ADVANTA BUSINESS RECEIVABLES CORP., a Nevada corporation, as Transferor, ADVANTA
BANK CORP., a Utah industrial loan corporation, as Servicer, and ADVANTA
BUSINESS CARD MASTER TRUST, a Delaware common law trust, as Issuer.
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties, the Noteholders and any
Series Enhancer to the extent provided herein, in the Indenture and in any
Indenture Supplement:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the following
words and phrases shall have the following meanings, and the definitions of such
terms are applicable to the singular as well as the plural forms of such terms
and to the masculine as well as to the feminine and neuter genders of such
terms.
"ABC" shall mean Advanta Bank Corp., a Utah industrial loan corporation,
and its successors and permitted assigns.
"ABRC" shall mean Advanta Business Receivables Corp., a Nevada corporation,
and its successors and permitted assigns.
"Account" shall mean each Mastercard(R) [and VISA(R)] (1) account
established pursuant to a Credit Card Agreement between ABC or any other Account
Owner and any Person.
"Account Owner" shall mean ABC or any other entity which is the issuer of
the credit card relating to an Account pursuant to a Credit Card Agreement.
"Addition Date" shall mean with respect to Additional Designated Accounts,
the date from and after which such Additional Designated Accounts are to be
included as Designated Accounts pursuant to subsection 2.09(a) or (b).
"Additional Cut-Off Date" shall mean with respect to Additional Designated
Accounts, the date specified as such in the notice delivered with respect
thereto pursuant to subsection 2.09(c).
"Additional Designated Account" shall mean each Eligible Account designated
pursuant to subsection 2.09(a) or (b) to be included as a Designated Account and
identified in the computer file or microfiche list delivered to the Owner
Trustee by the Transferor pursuant to Section 2.01 and subsection 2.09(h).
"Additional Transferors" shall have the meaning specified in subsection
2.09(g).
- ----------
(1) MasterCard [is a][and VISA are] registered trademark[s] of Mastercard
International Incorporated [and VISA USA, Inc., respectively].
<PAGE> 6
"Adverse Effect" shall mean, with respect to any action, that such action
will (a) result in the occurrence of a Pay Out Event or an Event of Default or
(b) materially and adversely affect the amount or timing of distributions to be
made to the Noteholders of any Series or Class pursuant to this Agreement, the
Indenture or the related Indenture Supplement.
"Affiliate" shall mean, 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" shall mean the power to
direct the management and policies of a Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Aggregate Addition" shall mean the designation of additional Eligible
Accounts to be included as Designated Accounts pursuant to subsection 2.09(a) or
(b).
"Agreement" shall mean this Transfer and Servicing Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
"Appointment Date" shall have the meaning specified in Section 6.01.
"Assignment" shall have the meaning specified in subsection 2.09(h).
"Authorized Newspaper" shall mean any newspaper or newspapers of general
circulation in the Borough of Manhattan, the City of New York, printed in the
English language (and, with respect to any Series or Class, if and so long as
the Notes of such Series are (i) listed on the Luxembourg Stock Exchange and
such Exchange shall so require, in Luxembourg, printed in any language
satisfying the requirements of such Exchange or (ii) Bearer Notes, in such place
as may be specified in the applicable Indenture Supplement) and customarily
published on each business day at such place, whether or not published on
Saturdays, Sundays or holidays.
"Bearer Notes" shall have the meaning specified in the Indenture.
"Business Day" shall mean any day other than (a) a Saturday or Sunday or
(b) any other day on which national banking associations or state banking
institutions in New York, Utah, Delaware or any other state in which the
principal executive offices of ABC, the Owner Trustee, the Indenture Trustee or
other Account Owner, as the case may be, are located, are authorized or
obligated by law, executive order or governmental decree to be closed or (c) for
purposes of any particular Series, any other day specified in the related
Indenture Supplement.
"Cash Advance Fees" shall mean cash advance transaction fees and cash
advance late fees, if any, as specified in the Credit Card Agreement applicable
to each Account.
"Certificate" shall have the meaning specified in the Trust Agreement.
"Class" shall have the meaning specified in the Indenture.
-2-
<PAGE> 7
"Closing Date" shall mean, with respect to any Series, the closing date
specified in the related Indenture Supplement.
"Collections" shall mean all payments by or on behalf of Obligors
(including Insurance Proceeds) received in respect of the Receivables, in the
form of cash, checks, wire transfers, electronic transfers, ATM transfers or any
other form of payment in accordance with a Credit Card Agreement in effect from
time to time and all other amounts specified by this Agreement, the Indenture or
any Indenture Supplement as constituting Collections. All Recoveries with
respect to Receivables previously charged off as uncollectible will be treated
as Collections of Finance Charge and Administrative Receivables. Collections
with respect to any Monthly Period shall include a portion, calculated pursuant
to subsection 2.07(i), of Interchange paid to the Trust with respect to such
Monthly Period, to be applied as if such amount were Collections of Finance
Charge and Administrative Receivables for all purposes.
"Corporate Trust Office" shall have the meaning (a) when used in respect of
the Owner Trustee, specified in the Trust Agreement and (b) when used in respect
of the Indenture Trustee, specified in the Indenture.
"Coupon" shall have the meaning specified in the Indenture.
"Credit Card Agreement" shall mean, with respect to a revolving credit card
account, the agreements between an Account Owner and the Obligor governing the
terms and conditions of such account, as such agreements may be amended,
modified or otherwise changed from time to time and as distributed (including
any amendments and revisions thereto) to holders of such account.
"Credit Card Guidelines" shall mean the respective policies and procedures
of ABC or any other Account Owner, as the case may be, as such policies and
procedures may be amended from time to time, (a) relating to the operation of
its credit card business, which generally are applicable to its portfolio of
revolving credit card accounts or, in the case of an Account Owner that has only
a portion of its portfolio subject to a Receivables Purchase Agreement,
applicable to such portion of its portfolio, and in each case which are
consistent with prudent practice, including the policies and procedures for
determining the creditworthiness of credit card customers and the extension of
credit to credit card customers, and (b) relating to the maintenance of credit
card accounts and collection of credit card receivables.
"Date of Processing" shall mean, with respect to any transaction or receipt
of Collections, the date on which such transaction is first recorded on the
Servicer's computer file of revolving credit card accounts (without regard to
the effective date of such recordation).
"Defaulted Amount" shall mean, with respect to any Monthly Period, an
amount (which shall not be less than zero) equal to (a) the amount of Principal
Receivables which became Defaulted Receivables in such Monthly Period, minus (b)
the amount of any Defaulted Receivables of which the Transferor or the Servicer
became obligated to accept reassignment or assignment in accordance with the
terms of this Agreement during such Monthly Period; provided, however, that, if
an Insolvency Event occurs with respect to the Transferor, the amount of such
Defaulted Receivables
-3-
<PAGE> 8
which are subject to reassignment to the Transferor in accordance with the terms
of this Agreement shall not be added to the sum so subtracted and, if any of the
events described in subsection 7.01(d) occur with respect to the Servicer, the
amount of such Defaulted Receivables which are subject to reassignment or
assignment to the Servicer in accordance with the terms of this Agreement shall
not be added to the sum so subtracted.
"Defaulted Receivables" shall mean, with respect to any Monthly Period, all
Principal Receivables which are charged off as uncollectible in such Monthly
Period in accordance with the Credit Card Guidelines and the Servicer's
customary and usual servicing procedures for servicing revolving credit card
accounts. A Principal Receivable shall become a Defaulted Receivable on the day
on which such Principal Receivable is recorded as charged-off on the Servicer's
computer file of revolving credit card accounts.
"Designated Account" shall mean (a) each Initial Designated Account, (b)
each Additional Designated Account (but only from and after the Addition Date
with respect thereto), (c) each Related Account, and (d) each Transferred
Account, but shall exclude (e) any Account all the Receivables in which are
either: (i) after the Removal Date, removed by the Transferor pursuant to
Section 2.10, (ii) reassigned to the Transferor pursuant to Section 2.05 or
(iii) assigned and transferred to the Servicer pursuant to Section 3.03.
"Discount Option Collections" shall have the meaning specified in Section
2.12. The aggregate amount of Discount Option Collections on any Date of
Processing shall equal the product of (a) the amount of any Collections of
Principal Receivables received on such Date of Processing and (b) the Discount
Percentage, if any, in effect on such Date of Processing.
"Discount Option Date" shall have the meaning specified in Section 2.12.
"Discount Percentage" shall have the meaning specified in Section 2.12.
"Document Delivery Date" shall have the meaning specified in subsection
2.09(h).
"Dollars," "$" or "U.S. $" shall mean United States dollars.
"Eligible Account" shall mean a revolving credit card account owned by ABC
in the case of the Initial Designated Accounts on the Initial Cut-Off Date, or
ABC or other Account Owner, in the case of Additional Designated Accounts after
the Initial Cut-Off Date which, as of the Initial Cut-Off Date with respect to
an Initial Designated Account or as of the Additional Cut-Off Date with respect
to an Additional Designated Account meets the following requirements:
(a) is a revolving credit card account in existence and maintained by ABC
or other Account Owner, as the case may be;
(b) is payable in Dollars;
-4-
<PAGE> 9
(c) has an obligor who has provided, as his or her most recent billing
address, an address located in the United States or its territories or
possessions or a military address;
(d) except as provided below, has an obligor who has not been identified by
the Servicer in its computer files as being involved in a voluntary or
involuntary bankruptcy proceeding;
(e) has not been identified as an account with respect to which the related
card has been lost or stolen;
(f) has not been sold or pledged to any other party except for any sale to
another Account Owner that has either entered into a Receivables Purchase
Agreement or is an Additional Transferor;
(g) does not have receivables which have been sold or pledged by ABC or any
other Account Owner, as the case may be, to any other party other than ABRC
pursuant to a Receivables Purchase Agreement;
(h) with respect to the Initial Designated Accounts, is an account in
existence and maintained by ABC as of the Initial Cut-Off Date and with respect
to Additional Designated Accounts is an account in existence and maintained by
ABC or other Account Owner as of the Additional Cut-Off Date;
(i) except as provided below, does not have any Receivables that are
Defaulted Receivables; and
(j) does not have any Receivables that have been identified by the Servicer
or the relevant Obligor as having been incurred as a result of fraudulent use of
any related credit card.
Eligible Accounts may include Accounts, the Receivables of which have been
charged off, or with respect to which the Servicer believes the related Obligor
is bankrupt, in each case as of the Initial Cut-Off Date, with respect to the
Initial Designated Accounts, and as of the related Additional Cut-Off Date, with
respect to Additional Designated Accounts; provided that (a) the balance of all
Receivables included in such Accounts is reflected on the books and records of
such Transferor (and is treated for purposes of this Agreement) as "zero" and
(b) charging privileges with respect to all such Accounts have been canceled in
accordance with the relevant Credit Card Guidelines.
"Eligible Receivable" shall mean each Receivable, including, where
applicable, the underlying receivable:
(a) which has arisen in an Eligible Account;
(b) which was created in compliance in all material respects with all
Requirements of Law applicable to the institution which owned such Receivable at
the time of its creation and pursuant to a Credit Card Agreement which complies
in all material respects with all Requirements of Law applicable to ABC or other
Account Owner, as the case may be;
-5-
<PAGE> 10
(c) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any Governmental
Authority required to be obtained, effected or given in connection with the
creation of such Receivable or the execution, delivery and performance by ABC or
other Account Owner, as the case may be, of the Credit Card Agreement pursuant
to which such Receivable was created, have been duly obtained, effected or given
and are in full force and effect;
(d) as to which at the time of the transfer of such Receivable to the
Trust, the Transferor or the Trust will have good and marketable title thereto
and which itself is, and the underlying receivables are, free and clear of all
Liens;
(e) which has been the subject of either a valid transfer and assignment
from the Transferor to the Trust of all the Transferor's right, title and
interest therein (including any proceeds thereof), or the grant of a first
priority perfected security interest therein (and in the proceeds thereof),
effective until the termination of the Trust;
(f) which at all times will be the legal, valid and binding payment
obligation of the Obligor thereon enforceable against such Obligor in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting the enforcement of creditors' rights in general
and except as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);
(g) which, at the time of transfer to the Trust, has not been waived or
modified except as permitted in accordance with the Credit Card Guidelines and
which waiver or modification is reflected in the Servicer's computer file of
revolving credit card accounts;
(h) which, at the time of transfer to the Trust, is not subject to any
right of rescission, setoff, counterclaim or any other defense (including
defenses arising out of violations of usury laws) of the Obligor, other than
defenses arising out of applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
in general;
(i) as to which, at the time of transfer to the Trust, none of the
Transferor, ABC or any other Account Owner, as the case may be, has taken any
action which would impair, or omitted to take any action the omission of which
would impair, the rights of the Trust or the Noteholders therein; and
(j) which constitutes either an "account" or a "general intangible" under
and as defined in Article 9 of the UCC as then in effect in the State of
Delaware and any other state where the filing of a financing statement is
required to perfect the Trust's interest in the Receivables and the proceeds
thereof.
"Eligible Servicer" shall mean the Indenture Trustee or, if the Indenture
Trustee is not acting as Servicer, an entity which, at the time of its
appointment as Servicer, (a) is servicing a portfolio of revolving credit card
accounts, (b) is legally qualified and has the capacity to service the
-6-
<PAGE> 11
Accounts, (c) in the sole determination of the Indenture Trustee, which
determination shall be conclusive and binding, has demonstrated the ability to
service professionally and competently a portfolio of similar accounts in
accordance with high standards of skill and care, (d) is qualified to use the
software that is then being used to service the Accounts or obtains the right to
use or has its own software which is adequate to perform its duties under this
Agreement and (e) has a net worth of at least $50,000,000 as of the end of its
most recent fiscal quarter.
"Event of Default" shall have the meaning specified in the Indenture.
"Excess Funding Account" shall have the meaning specified in the Indenture.
"Excess Funding Amount" shall have the meaning specified in the Indenture.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor.
"Finance Charge and Administrative Receivables" shall mean all amounts
billed to the Obligors on any Account in respect of (a) all Periodic Rate
Finance Charges, (b) Cash Advance Fees, (c) annual membership fees and annual
service charges, (d) Late Fees, (e) Overlimit Fees, and (f) any other fees with
respect to the Accounts designated by the Transferor at any time and from time
to time to be included as Finance Charge and Administrative Receivables. Finance
Charge and Administrative Receivables shall also include (a) Interchange as
calculated pursuant to the Indenture Supplement for any Series and (b) all
Recoveries with respect to Receivables previously charged off as uncollectible.
"Governmental Authority" shall mean 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.
"Indenture" shall mean the Master Indenture, dated as of [__________],
2000, between the Issuer and the Indenture Trustee, as the same may be amended,
supplemented or otherwise modified from time to time.
"Indenture Supplement" shall have the meaning specified in the Indenture.
"Indenture Trustee" shall mean [____________________], in its capacity as
trustee under the Indenture, its successors in interest and any successor
indenture trustee under the Indenture.
"Independent Director" shall have the meaning specified in subsection
2.07(h)(vii).
"Ineligible Receivables" shall have the meaning specified in subsection
2.05(a).
"Initial Designated Account" shall mean each Account, which account is
identified in the computer file or microfiche list delivered to the Owner
Trustee by the Transferor pursuant to Section 2.01 on the Initial Issuance Date.
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"Initial Cut-Off Date" shall mean [_________], 2000.
"Initial Issuance Date" shall mean [__________], 2000, the date the
Transferor's Certificate is delivered by the Trust to the Transferor pursuant to
the Trust Agreement.
"Insolvency Event" shall have the meaning specified in Section 6.01.
"Insurance Proceeds" shall mean any amounts received pursuant to the
payment of benefits under any credit life insurance policies, credit disability
or unemployment insurance policies covering any Obligor with respect to
Receivables under such Obligor's Account.
"Interchange" shall mean interchange fees payable to ABC or any other
Account Owner, in its capacity as credit card issuer, through MasterCard or VISA
in connection with cardholder charges for goods or services with respect to the
Accounts, as calculated pursuant to the related Indenture Supplement for any
Series. Any reference in this Agreement, the Indenture or any Indenture
Supplement to Interchange shall refer to only the fractional undivided interest
in the interchange fees that are transferred by ABC or another Account Owner to
a Transferor pursuant to a Receivables Purchase Agreement (or if the other
Account Owner is an Additional Transferor, transferred directly to the Trust
pursuant to this Agreement), which fractional undivided interest may be less
than a 100% interest therein.
"Invested Amount" shall mean, with respect to any Series and for any date,
an amount equal to the invested amount or adjusted invested amount, as
applicable, specified in the related Indenture Supplement.
"Issuer" shall mean the Trust.
"Late Fees" shall have the meaning specified in the Credit Card Agreement
applicable to each Account for late fees or similar terms.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, equity interest, encumbrance, lien (statutory
or other), preference, participation interest, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing and
the filing of any financing statement under the UCC or comparable law of any
jurisdiction to evidence any of the foregoing; provided, however, that any Lien
for municipal or other local taxes if such taxes are not then due and payable or
if the Transferor is then contesting the validity thereof in good faith by
appropriate proceedings and has set aside on its books adequate reserves with
respect thereto and any assignment permitted by subsection 3.06(b) of the Trust
Agreement or Section 4.02 of, and the lien created by, this Agreement shall not
be deemed to constitute a Lien.
"MasterCard" shall mean MasterCard International Incorporated, and its
successors in interest.
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"Monthly Period" shall have the meaning specified in the Indenture.
"Monthly Servicing Fee" shall have the meaning specified in Section 3.02.
"Net Portfolio Yield" shall have the meaning specified in the Indenture
Supplement.
"Note Interest Rate" shall have the meaning specified in the Indenture.
"Note Owner" shall have the meaning specified in the Indenture.
"Note Register" shall have the meaning specified in the Indenture.
"Noteholder" or "Holder" shall have the meaning specified in the Indenture.
"Notices" shall have the meaning specified in subsection 9.04(a).
"Obligor" shall mean, with respect to any Account, the Person or Persons
obligated to make payments with respect to such Account, including any guarantor
thereof, but excluding any merchant.
"Officer's Certificate" shall have the meaning specified in the Indenture.
"Opinion of Counsel" shall have the meaning specified in the Indenture.
"Overlimit Fees" shall have the meaning specified in the Credit Card
Agreement applicable to each Account for overlimit fees or similar terms if such
fees are provided for with respect to such Account.
"Owner Trustee" shall mean [____________________], in its capacity as owner
trustee under the Trust Agreement, its successors in interest and any successor
owner trustee under the Trust Agreement.
"Pay Out Event" shall have the meaning specified in the Indenture.
"Paying Agent" shall have the meaning specified in the Indenture.
"Payment Date" shall mean, with respect to any Series, the date specified
in the applicable Indenture Supplement.
"Periodic Rate Finance Charges" shall have the meaning specified in the
Credit Card Agreement applicable to each Account for finance charges (due to
periodic rate) or any similar term.
"Person" shall mean any legal person, including any individual,
corporation, limited liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, governmental entity or
other entity of any nature.
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"Principal Receivables" shall mean all Receivables other than Finance
Charge and Administrative Receivables or Defaulted Receivables. In calculating
the aggregate amount of Principal Receivables on any day, the amount of
Principal Receivables shall be reduced by the aggregate amount of credit
balances in the Accounts on such day. Any Principal Receivables which the
Transferor is unable to transfer as provided in Section 2.11 shall not be
included in calculating the amount of Principal Receivables.
"Rating Agency" shall have the meaning specified in the Indenture.
"Rating Agency Condition" shall have the meaning specified in the
Indenture.
"Reassignment" shall have the meaning specified in Section 2.10.
"Receivables" shall mean all amounts shown on the Servicer's records as
amounts payable by Obligors on any Account from time to time, including amounts
payable for Principal Receivables and Finance Charge and Administrative
Receivables. Receivables which become Defaulted Receivables will cease to be
included as Receivables as of the day on which they become Defaulted
Receivables. Unless the context otherwise requires (whether or not there is a
specific reference to the underlying receivable), any reference in this
Agreement, the Indenture or any Indenture Supplement to a Receivable (including
any Principal Receivable, Finance Charge and Administrative Receivable or
Defaulted Receivable) and any Collections thereon or other amounts recoverable
with respect thereto (including any Insurance Proceeds or Recoveries with
respect thereto) shall refer to only the fractional undivided interest in the
amounts paid or payable by Obligors on the Accounts that are transferred by ABC
or another Account Owner to a Transferor pursuant to a Receivables Purchase
Agreement, which undivided interest may be less than a 100% undivided interest
therein. Any reference in this Agreement, the Indenture or any Indenture
Supplement to the "underlying receivable" with respect to a Receivable shall
refer to the receivable in which such Receivable represents an undivided
interest.
"Receivables Purchase Agreement" shall mean the Receivables Purchase
Agreement, dated as of [__________] , 2000, between ABC and ABRC, as amended
from time to time.
"Receivables Purchase Agreement" shall mean the receivables purchase
agreement, dated as of [__________], 2000, between ABC and ABRC, as amended from
time to time, and includes any receivables purchase agreement, substantially in
the form of such agreement entered into between a Transferor and ABC or another
Account Owner in the future, if any.
"Recoveries" shall mean all amounts received (net of out-of-pocket costs of
collection) including Insurance Proceeds, which is reasonably estimated by the
Transferor to be attributable to Defaulted Receivables, including the net
proceeds of any sale of such Defaulted Receivables by the Transferor.
"Registered Notes" shall have the meaning specified in the Indenture.
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"Related Account" shall mean an Account with respect to which a new credit
account number has been issued by the applicable Account Owner or Servicer or
the applicable Transferor under circumstances resulting from a lost or stolen
credit card and not requiring standard application and credit evaluation
procedures under the Credit Card Guidelines.
"Removal Date" shall have the meaning specified in Section 2.10.
"Removed Accounts" shall have the meaning specified in Section 2.10.
"Required Designation Date" shall have the meaning specified in subsection
2.09(a).
"Required Minimum Principal Balance" shall mean, unless otherwise provided
in an Indenture Supplement relating to a Series having a Paired Series, with
respect to any date (a) the sum of the Initial Invested Amounts for each Series
outstanding on such date minus (b) the Excess Funding Amount.
"Required Transferor Interest" shall have the meaning specified in the
Indenture.
"Requirements of Law" shall mean any law, treaty, rule or regulation, or
determination of an arbitrator or Governmental Authority, whether Federal, state
or local (including usury laws, the Federal Truth in Lending Act and Regulation
B and Regulation Z of the Board of Governors of the Federal Reserve System),
and, when used with respect to any Person, the certificate of incorporation and
by-laws or other organizational or governing documents of such Person.
"Series" shall have the meaning specified in the Indenture.
"Series Account" shall have the meaning specified in the Indenture.
"Series Enhancement" shall have the meaning specified in the Indenture.
"Series Enhancer" shall have the meaning specified in the Indenture.
"Servicing Transfer" shall have the meaning specified in Section 7.01.
"Servicer" shall mean ABC, in its capacity as Servicer pursuant to this
Agreement, and, after any Servicing Transfer, the Successor Servicer.
"Servicer Default" shall have the meaning specified in Section 7.01.
"Servicing Fee" shall have the meaning specified in Section 3.02.
"Servicing Fee Rate" shall mean, with respect to any Series, the servicing
fee rate specified in the related Indenture Supplement.
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"Successor Servicer" shall have the meaning specified in subsection
7.02(a).
"Supplemental Certificate" shall have the meaning specified in the Trust
Agreement.
"Tax Opinion" shall have the meaning specified in the Indenture.
"Termination Notice" shall have the meaning specified in subsection
7.01(d).
"Transfer Agent and Registrar" shall have the meaning specified in the
Indenture.
"Transfer Restriction Event" shall have the meaning specified in Section
2.11.
"Transferor" shall mean (a) ABRC and (b) any Additional Transferor or
Transferors. References to "each Transferor" shall refer to each entity
mentioned in the preceding sentence and references to "the Transferor" shall
refer to all of such entities.
"Transferor Interest" shall have the meaning specified in the Indenture.
"Transferred Account" shall mean each account into which an Account shall
be transferred; provided that (i) such transfer was made in accordance with the
Credit Card Guidelines and (ii) such account can be traced or identified as an
account into which an Account has been transferred.
"Trust" shall mean the Advanta Business Card Master Trust.
"Trust Agreement" shall mean the Trust Agreement relating to the Trust,
dated as of [__________], 2000, between ABRC and the Owner Trustee, as the same
may be amended, supplemented or otherwise modified from time to time.
"Trust Assets" shall have the meaning specified in Section 2.01.
"Trust Beneficial Interest" shall have the meaning specified in the Trust
Agreement.
"UCC" shall mean the Uniform Commercial Code, as amended from time to time,
as in effect in any specified jurisdiction.
"VISA" shall mean VISA USA, Inc., and its successors in interest.
Section 1.02. Other Definitional Provisions.
(a) With respect to any Series, all terms used herein and not otherwise
defined herein shall have meanings ascribed to them in the Trust Agreement, the
Indenture or the related Indenture Supplement, as applicable.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
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(c) As used in this Agreement and in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, shall have the respective meanings given to them under
GAAP. 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 GAAP, the definitions contained in this Agreement or in any
such certificate or other document shall control.
(d) The agreements, representations and warranties of ABRC and ABC in this
Agreement in each of their respective capacities as Transferor and Servicer
shall be deemed to be the agreements, representations and warranties of ABRC and
ABC solely in each such capacity for so long as ABRC and ABC act in each such
capacity under this Agreement.
(e) Any reference to each Rating Agency shall only apply to any specific
rating agency if such rating agency is then rating any outstanding Series.
(f) Unless otherwise specified, references to any amount as on deposit or
outstanding on any particular date shall mean such amount at the close of
business on such day.
(g) 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; references to any subsection,
Section, Schedule or Exhibit are references to subsections, Sections, Schedules
and Exhibits in or to this Agreement unless otherwise specified; and the term
"including" means "including without limitation."
[END OF ARTICLE I]
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ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables. By execution of this Agreement,
ABRC and, in the case of Additional Designated Accounts, ABRC or, if applicable,
any Additional Transferor does hereby transfer, assign, set over and otherwise
convey to the Trust, without recourse except as provided herein, all its right,
title and interest in, to and under the Receivables existing at the close of
business on the Initial Cut-Off Date, in the case of Receivables arising in the
Initial Designated Accounts, and on each Additional Cut-Off Date, in the case of
Receivables arising in the Additional Designated Accounts, and in each case
thereafter created from time to time until the termination of the Trust, all
Interchange and Recoveries allocable to the Trust as provided herein, all monies
due or to become due and all amounts received or receivable with respect thereto
and all proceeds (including "proceeds" as defined in the UCC) thereof. Such
property, together with all monies and other property credited to the Collection
Account, the Series Accounts and the Excess Funding Account (including any
subaccounts of such account), the rights of the Trust under this Agreement and
the Trust Agreement and the right to receive Recoveries attributed to cardholder
charges for merchandise and services in the Accounts shall constitute the assets
of the Trust (the "Trust Assets"). The foregoing does not constitute and is not
intended to result in the creation or assumption by the Trust, the Owner
Trustee, the Indenture Trustee or any Noteholder of any obligation of ABC or
other Account Owner or the Transferor, any Additional Transferor, the Servicer
or any other Person in connection with the Accounts or the Receivables or under
any agreement or instrument relating thereto, including any obligation to
Obligors, merchant banks, merchants clearance systems, VISA, MasterCard or
insurers. The Obligors shall not be notified in connection with the creation of
the Trust of the transfer, assignment, set-over and conveyance of the
Receivables to the Trust. The Transferor does hereby further transfer, assign,
set over and otherwise convey to the Trust all of its right, title and interest
in and under the Receivables Purchase Agreements.
Each Transferor agrees to record and file, at its own expense, financing
statements (and continuation statements when applicable) with respect to the
Receivables conveyed by such Transferor existing on the Initial Cut-Off Date and
thereafter created meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect, and maintain the
perfection of, the transfer and assignment of its interest in such Receivables
to the Trust, and to deliver a file stamped copy of each such financing
statement or other evidence of such filing to the Owner Trustee as soon as
practicable after the first Closing Date, in the case of Receivables arising in
the Initial Designated Accounts, and (if any additional filing is so necessary)
as soon as practicable after the applicable Addition Date, in the case of
Receivables arising in Additional Designated Accounts. The Owner Trustee shall
be under no obligation whatsoever to file such financing or continuation
statements or to make any other filing under the UCC in connection with such
transfer and assignment.
Each Transferor further agrees, at its own expense, on or prior to (x) the
first Closing Date, in the case of the Initial Designated Accounts, (y) the
applicable Addition Date, in the case of Additional Designated Accounts
specified in the Receivables Purchase Agreement with such Transferor, if any,
and (z) the applicable Removal Date, in the case of Removed Accounts with
respect to such Transferor, (a) to indicate in the appropriate computer files
that Receivables created
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(or reassigned, in the case of Removed Accounts) in connection with the Accounts
have been conveyed to the Trust pursuant to this Agreement (or conveyed to each
such Transferor or its designee in accordance with Section 2.10, in the case of
Removed Accounts) by including (or deleting in the case of Removed Accounts) in
such computer files the applicable code in the field "CHD-PORTFOLIO-NO" that
identifies each such Account and (b) to deliver to the Owner Trustee a computer
file or microfiche list containing a true and complete list of all such Accounts
specifying for each such Account, as of the Initial Cut-Off Date, in the case of
the Initial Designated Accounts, the applicable Additional Cut-Off Date in the
case of Additional Designated Accounts, and the applicable Removal Date in the
case of Removed Accounts, its account number and, other than in the case of
Additional Designated Accounts, the aggregate amount outstanding in such Account
and the aggregate amount of Principal Receivables outstanding in such Account.
Each such file or list, as supplemented, from time to time, to reflect
Additional Designated Accounts and Removed Accounts, shall be marked as Schedule
1 to this Agreement and is hereby incorporated into and made a part of this
Agreement. Each Transferor further agrees not to alter the code referenced in
this paragraph with respect to any Account during the term of this Agreement
unless and until such Account becomes a Removed Account.
If the arrangements with respect to the Receivables hereunder shall
constitute a loan and not a purchase and sale of such Receivables, it is the
intention of the parties hereto that this Agreement shall constitute a security
agreement under applicable law, and that each Transferor shall be deemed to have
granted to the Trust a first priority perfected security interest in all of such
Transferor's right, title and interest, whether owned on the Initial Cut-Off
Date or thereafter acquired, in, to and under the Receivables and the other
Trust Assets conveyed by such Transferor, and all money, accounts, general
intangibles, chattel paper, instruments, documents, goods, investment property,
deposit accounts, certificates of deposit, letters of credit, and advices of
credit consisting of, arising from or related to the Trust Assets, to secure its
obligations hereunder.
Section 2.02. Acceptance by Trust.
(a) The Trust hereby acknowledges its acceptance of all right, title and
interest to the property, now existing and hereafter created, conveyed to the
Trust pursuant to Section 2.01. The Trust further acknowledges that, prior to or
simultaneously with the execution and delivery of this Agreement, the Transferor
delivered to the Owner Trustee the computer file or microfiche list relating to
the Initial Designated Accounts described in the penultimate paragraph of
Section 2.01. The Owner Trustee shall maintain a copy of Schedule 1, as
delivered from time to time, at its Corporate Trust Office.
(b) The Owner Trustee and the Trust each hereby agrees not to disclose to
any Person any of the account numbers or other information contained in the
computer files or microfiche lists marked as Schedule 1 and delivered to the
Owner Trustee or the Trust, from time to time, except (i) to a Successor
Servicer or as required by a Requirement of Law applicable to the Owner Trustee,
(ii) in connection with the performance of the Owner Trustee's or the Trust's
duties hereunder, (iii) to the Indenture Trustee in connection with its duties
in enforcing the rights of Noteholders or (iv) to bona fide creditors or
potential creditors of any Account Owner, ABC or any Transferor for the limited
purpose of enabling any such creditor to identify Receivables or Accounts
subject to this
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Agreement or the Receivables Purchase Agreement. The Owner Trustee and the Trust
each agrees to take such measures as shall be reasonably requested by any
Transferor to protect and maintain the security and confidentiality of such
information and, in connection therewith, shall allow each Transferor or its
duly authorized representatives to inspect the Owner Trustee's security and
confidentiality arrangements as they specifically relate to the administration
of the Trust from time to time during normal business hours upon prior written
notice. The Owner Trustee and the Trust shall provide the applicable Transferor
with notice five (5) Business Days prior to disclosure of any information of the
type described in this subsection 2.02(b).
Section 2.03. Representations and Warranties of Each Transferor Relating to
Such Transferor. Each Transferor hereby severally represents and warrants to the
Trust (and agrees that the Owner Trustee and the Indenture Trustee may
conclusively rely on each such representation and warranty in accepting the
Receivables in trust and in authenticating the Notes, respectively) as of each
Closing Date (but only if it was a Transferor on such date) that:
(a) Organization and Good Standing. Such Transferor is a corporation
validly existing under the laws of the jurisdiction of its organization or
incorporation and has, in all material respects, full power and authority to own
its properties and conduct its business as presently owned or conducted, and to
execute, deliver and perform its obligations under this Agreement and the
applicable Receivables Purchase Agreement, if any.
(b) Due Qualification. Such Transferor is duly qualified to do business and
is in good standing as a foreign corporation and has obtained all necessary
licenses and approvals, in each jurisdiction in which failure to so qualify or
to obtain such licenses and approvals would (i) render any Credit Card Agreement
relating to any Receivable conveyed to the Trust by such Transferor
unenforceable by such Transferor or the Trust or (ii) have a material adverse
effect on the Noteholders.
(c) Due Authorization. The execution and delivery of this Agreement and the
applicable Receivables Purchase Agreement by such Transferor and the order to
the Owner Trustee to have the Notes authenticated and delivered and the
consummation by such Transferor of the transactions provided for in this
Agreement and the Receivables Purchase Agreement have been duly authorized by
such Transferor by all necessary corporate action on the part of such
Transferor.
(d) No Conflict. The execution and delivery by such Transferor of this
Agreement and the applicable Receivables Purchase Agreement, and the performance
of the transactions contemplated by this Agreement and the fulfillment of the
terms hereof and thereof applicable to such Transferor, will not conflict with
or violate any Requirements of Law applicable to such Transferor or conflict
with, result in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material default
under, any indenture, contract, agreement, mortgage, deed of trust or other
instrument to which such Transferor is a party or by which it or its properties
are bound.
(e) No Proceedings. There are no proceedings or investigations, pending or,
to the best knowledge of such Transferor, threatened against such Transferor
before any Governmental
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Authority (i) asserting the invalidity of this Agreement or the applicable
Receivables Purchase Agreement, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or the applicable Receivables
Purchase Agreement, (iii) seeking any determination or ruling that, in the
reasonable judgment of such Transferor, would materially and adversely affect
the performance by such Transferor of its obligations under this Agreement or
the applicable Receivables Purchase Agreement, (iv) seeking any determination or
ruling that would materially and adversely affect the validity or enforceability
of this Agreement or the applicable Receivables Purchase Agreement or (v)
seeking to affect adversely the income or franchise tax attributes of the Trust
under the United States Federal or any State income or franchise tax systems.
(f) All Consents. All authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given by such Transferor in connection with the execution
and delivery by such Transferor of this Agreement, the applicable Receivables
Purchase Agreement, and the performance of the transactions contemplated by this
Agreement, the applicable Receivables Purchase Agreement by such Transferor have
been duly obtained, effected or given and are in full force and effect.
Section 2.04. Representations and Warranties of each Transferor Relating to
the Agreement and the Receivables.
(a) Representations and Warranties. Each Transferor hereby severally
represents and warrants to the Trust as of the Initial Issuance Date, each
Closing Date and, with respect to Additional Designated Accounts, as of the
related Addition Date (but only if, in either case, it was a Transferor on such
date and only with respect to Accounts it has transferred on such date) that:
(i) this Agreement, the applicable Receivables Purchase Agreement, and,
in the case of Additional Designated Accounts, the related Assignment, each
constitutes a legal, valid and binding obligation of such Transferor enforceable
against such Transferor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally from time to time in effect or general principles of equity;
(ii) as of the Initial Cut-Off Date with respect to the Initial
Designated Accounts (and the Receivables arising therein), and as of the related
Additional Cut-Off Date with respect to Additional Designated Accounts (and the
Receivables arising therein), the portion of Schedule 1 to this Agreement under
such Transferor's name, as supplemented to such date, is an accurate and
complete listing in all material respects of all the Accounts the Receivables in
which were transferred by such Transferor as of the Initial Cut-Off Date or such
Additional Cut-Off Date, as the case may be, and the information contained
therein with respect to the identity of such Accounts and the Receivables
existing thereunder is true and correct in all material respects as of the
Initial Cut-Off Date or such Additional Cut-Off Date, as the case may be;
(iii) each Receivable conveyed to the Trust by such Transferor has been
conveyed to the Trust free and clear of any Lien and each underlying receivable
is free and clear of all Liens;
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(iv) all authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given by such Transferor in connection with the conveyance
by such Transferor of Receivables to the Trust have been duly obtained, effected
or given and are in full force and effect;
(v) either this Agreement or, in the case of Additional Designated
Accounts, the related Assignment constitutes a valid sale, transfer and
assignment to the Trust of all right, title and interest of such Transferor in
the Receivables conveyed to the Trust by such Transferor and the proceeds
thereof and Recoveries and Interchange identified as relating to the Receivables
conveyed to the Trust by such Transferor which have become Defaulted Receivables
or, if this Agreement or, in the case of Additional Designated Accounts, the
related Assignment does not constitute a sale of such property, it constitutes a
grant of a first priority perfected "security interest" (as defined in the UCC)
in such property to the Trust, which, in the case of existing Receivables and
the proceeds thereof and said Recoveries and Interchange, is enforceable upon
execution and delivery of this Agreement, or, with respect to then existing
Receivables in Additional Designated Accounts, as of the applicable Addition
Date, and which will be enforceable with respect to such Receivables hereafter
and thereafter created and the proceeds thereof upon such creation. Upon the
filing of the financing statements and, in the case of Receivables hereafter
created and the proceeds thereof, upon the creation thereof, the Trust shall
have a first priority perfected security or ownership interest in such property
and proceeds;
(vi) as of the Initial Cut-Off Date, each Initial Designated Account
specified in Schedule 1 with respect to such Transferor is an Eligible Account
and, as of the applicable Additional Cut-Off Date, each related Additional
Designated Account specified in Schedule 1 with respect to such Transferor is an
Eligible Account;
(vii) on the Initial Cut-Off Date, each Receivable then existing and
conveyed to the Trust by such Transferor is an Eligible Receivable and, on the
applicable Additional Cut-Off Date, each Receivable contained in the related
Additional Designated Accounts and conveyed to the Trust by such Transferor is
an Eligible Receivable;
(viii) as of the date of the creation of any new Receivable in an
Account, such Receivable is an Eligible Receivable; and
(ix) no selection procedures believed by such Transferor to be
materially adverse to the interests of the Noteholders have been used in
selecting such Accounts.
(b) Notice of Breach. The representations and warranties set forth in
Section 2.03, this Section 2.04 and subsection 2.09(f) shall survive the
transfers and assignments of the Receivables to the Trust, the pledge of the
Receivables to the Indenture Trustee pursuant to the Indenture, and the issuance
of the Notes. Upon discovery by any Transferor, the Servicer or the Owner
Trustee of a breach of any of the representations and warranties set forth in
Section 2.03, this Section 2.04 or subsection 2.09(f), the party discovering
such breach shall give notice to the other parties and to the Indenture Trustee
within three (3) Business Days following such discovery; provided that the
failure to give notice within three (3) Business Days does not preclude
subsequent notice.
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Section 2.05. Reassignment of Ineligible Receivables.
(a) Reassignment of Receivables. In the event (i) any representation or
warranty contained in subsection 2.04(a)(ii), (iii), (iv), (vi), (vii) or (viii)
is not true and correct in any material respect as of the date specified therein
with respect to any Receivable or the related Account and such breach has a
material adverse effect on the Noteholders' Interest in any Receivable (which
determination shall be made without regard to whether funds are then available
pursuant to any Series Enhancement) unless cured within sixty (60) days (or such
longer period, not in excess of 120 days, as may be agreed to by the Indenture
Trustee and the Servicer) after the earlier to occur of the discovery thereof by
the Transferor which conveyed such Receivables to the Trust or receipt by such
Transferor of written notice thereof given by the Owner Trustee, the Indenture
Trustee or the Servicer, or (ii) it is so provided in subsection 2.07(a) with
respect to any Receivables conveyed to the Trust by such Transferor, then such
Transferor shall accept reassignment of all Receivables in the related Account
("Ineligible Receivables") on the terms and conditions set forth in paragraph
(b) below.
(b) Price of Reassignment. The Servicer shall deduct the portion of such
Ineligible Receivables reassigned to each Transferor which are Principal
Receivables from the aggregate amount of the Principal Receivables used to
calculate the Transferor Interest. In the event that, following the exclusion of
such Principal Receivables from the calculation of the Transferor Interest, the
Transferor Interest would be less than the Required Transferor Interest, not
later than 1:00 p.m., New York City time, on the first Payment Date following
the Monthly Period in which such reassignment obligation arises, the applicable
Transferor shall make a deposit into the Excess Funding Account in immediately
available funds in an amount equal to the amount by which the Transferor
Interest would be below the Required Transferor Interest (up to the amount of
such Principal Receivables).
Upon reassignment of any Ineligible Receivable, the Trust shall
automatically and without further action be deemed to transfer, assign, set over
and otherwise convey to the applicable Transferor or its designee, without
recourse, representation or warranty, all the right, title and interest of the
Trust in and to such Ineligible Receivable, all Interchange and Recoveries
related thereto, all monies and amounts due or to become due and all proceeds
thereof and such reassigned Ineligible Receivable shall be treated by the Trust
as collected in full as of the date on which it was transferred. The obligation
of each Transferor to accept reassignment of any Ineligible Receivables conveyed
to the Trust by such Transferor, and to make the deposits, if any, required to
be made to the Excess Funding Account as provided in this Section, shall
constitute the sole remedy respecting the event giving rise to such obligation
available to the Trust, the Noteholders (or the Owner Trustee on behalf of the
Noteholders) or any Series Enhancer. Notwithstanding any other provision of this
subsection 2.05(b), a reassignment of an Ineligible Receivable in excess of the
amount that would cause the Transferor Interest to be less than the Required
Transferor Interest shall not occur if the applicable Transferor fails to make
any deposit required by this subsection 2.05(b) with respect to such Ineligible
Receivable. The Trust shall execute such documents and instruments of transfer
or assignment and take such other actions as shall reasonably be requested and
provided by the applicable Transferor to effect the conveyance of such
Ineligible Receivables pursuant to this
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subsection 2.05(b), but only upon receipt of an Officer's Certificate from such
Transferor that states that all conditions set forth in this Section 2.05 have
been satisfied.
Section 2.06. Reassignment of Trust Portfolio. In the event any
representation or warranty of a Transferor set forth in subsection 2.03(a) or
(c) or subsection 2.04(a)(i) or (v) is not true and correct in any material
respect and such breach has a material adverse effect on the Receivables
conveyed to the Trust by such Transferor or the availability of the proceeds
thereof to the Trust (which determination shall be made without regard to
whether funds are then available pursuant to any Series Enhancement), then
either the Owner Trustee, the Indenture Trustee or the Holders of Notes
evidencing not less than 50% of the aggregate unpaid principal amount of all
outstanding Notes, by notice then given to such Transferor and the Servicer (and
to the Owner Trustee and Indenture Trustee if given by the Noteholders), may
direct such Transferor to accept a reassignment of the Receivables conveyed to
the Trust by such Transferor if such breach and any material adverse effect
caused by such breach is not cured within sixty (60) days of such notice (or
within such longer period, not in excess of 120 days, as may be specified in
such notice), and upon those conditions such Transferor shall be obligated to
accept such reassignment on the terms set forth below; provided, however, that
such Receivables will not be reassigned to such Transferor if, on any day prior
to the end of such 60-day or longer period (i) the relevant representation and
warranty shall be true and correct in all material respects as if made on such
day and (ii) such Transferor shall have delivered to the Owner Trustee a
certificate of an authorized officer describing the nature of such breach and
the manner in which the relevant representation and warranty has become true and
correct.
The applicable Transferor shall deposit in the Collection Account in
immediately available funds not later than 1:00 p.m., New York City time, on the
first Payment Date following the Monthly Period in which such reassignment
obligation arises, in payment for such reassignment, an amount equal to the sum
of the amounts specified therefor with respect to each outstanding Series in the
related Indenture Supplement. Notwithstanding anything to the contrary in this
Agreement, such amounts shall be distributed to the Noteholders on such Payment
Date in accordance with the terms of each Indenture Supplement. If the Owner
Trustee, the Indenture Trustee or the Noteholders give notice directing the
applicable Transferor to accept a reassignment of the Receivables as provided
above, the obligation of such Transferor to accept such reassignment pursuant to
this Section 2.06 and to make the deposit required to be made to the Collection
Account as provided in this paragraph shall constitute the sole remedy
respecting an event of the type specified in the first sentence of this Section
2.06 available to the Noteholders (or the Owner Trustee or Indenture Trustee on
behalf of the Noteholders) or any Series Enhancer. Upon reassignment of the
Receivables on such Payment Date, the Trust shall automatically and without
further action be deemed to sell, transfer, assign, set-over and otherwise
convey to the applicable Transferor, without recourse, representation or
warranty, all the right, title and interest of the Trust in and to the
Receivables, all Interchange and Recoveries allocable to the Trust, and all
monies and amounts due or to become due with respect thereto and all proceeds
thereof. The Trust shall execute such documents and instruments of transfer or
assignment and take such other actions as shall reasonably be requested by the
applicable Transferor to effect the conveyance of such property pursuant to this
subsection.
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Section 2.07. Covenants of each Transferor. Each Transferor hereby
severally covenants that:
(a) Receivables Not To Be Evidenced by Promissory Notes. Except in
connection with its enforcement or collection of an Account, such Transferor
will take no action to cause any Receivable conveyed by it to the Trust to be
evidenced by any instrument (as defined in the UCC) and if any such Receivable
(or any underlying receivable) is so evidenced it shall be deemed to be an
Ineligible Receivable in accordance with subsection 2.05(a) and shall be
reassigned to such Transferor in accordance with subsection 2.05(b).
(b) Security Interests. Except for the conveyances hereunder, such
Transferor will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on, any Receivable (or
any underlying receivable) conveyed by it to the Trust, whether now existing or
hereafter created, or any interest therein, and such Transferor shall defend the
right, title and interest of the Trust and the Indenture Trustee in, to and
under the Receivables, whether now existing or hereafter created, against all
claims of third parties claiming through or under such Transferor.
(c) Transferor Certificate. Except for (i) the conveyances hereunder, in
connection with any transaction permitted by subsection 4.02(a)(i) and as
provided in subsection 2.09(g) of this Agreement or Section 2.12 of the
Indenture or (ii) conveyances permitted under the Trust Agreement, such
Transferor agrees not to transfer, sell, assign, exchange or otherwise convey or
pledge, hypothecate or otherwise grant a security interest in its Transferor
Beneficial Interest or Transferor Certificate or any Supplemental Beneficial
Interest or Supplemental Certificate and any such attempted transfer,
assignment, exchange, conveyance, pledge, hypothecation, grant or sale shall be
void; provided, however, that: (i) nothing in this subsection 2.07(c) shall
prevent the holder of a Transferor Beneficial Interest or a Transferor
Certificate from granting to an Affiliate a participation interest or other
beneficial interest in the rights to receive cash flows related to such
Transferor Beneficial Interest or Transferor Certificate, if (A) such interest
does not grant such Affiliate any rights hereunder or delegate to such Affiliate
any obligations or duties hereunder, (B) the transferor of such interest obtains
the prior written consent of such Transferor and (C) after giving effect to such
transfer, the Transferor Beneficial Interest or Transferor Certificate owned
directly by such Transferor represents an undivided ownership interest in two
percent (2.0%) or more of the Trust Assets; and (ii) the holder of a Transferor
Certificate may pledge, hypothecate or otherwise grant a security interest in
all or any portion of such Transferor Certificate to a Federal Reserve Bank or a
Federal Home Loan Bank, provided, that (x) such pledge, hypothecation or grant
may not be used as an artifice or device to avoid or limit the foregoing
prohibition on transfer and (y) under no circumstances may such holder pledge,
hypothecate or otherwise grant a security interest in any of its rights in a
Transferor Certificate other than the right to receive cash payments in respect
of such Transferor Certificate as provided in the Trust Agreement and the
Transaction Documents.
(d) Delivery of Collections or Recoveries. In the event that such
Transferor receives Collections or Recoveries, such Transferor agrees to pay the
Servicer all such Collections and Recoveries as soon as practicable after
receipt thereof.
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(e) Notice of Liens. Such Transferor shall notify the Owner Trustee, the
Indenture Trustee and each Series Enhancer promptly after becoming aware of any
Lien on any Receivable (or on the underlying receivable) conveyed by it to the
Trust other than the conveyances hereunder and under the applicable Receivables
Purchase Agreement, Transferor Purchase Agreement, if any, and the Indenture.
(f) Amendment of the Certificate of Incorporation. Such Transferor will not
amend in any material respect its certificate of incorporation without providing
the Rating Agency with notice no later than the fifth Business Day prior to such
amendment (unless the right to such notice is waived by the Rating Agency) and
satisfying the Rating Agency Condition.
(g) Other Indebtedness. Such Transferor shall not incur any additional
debt, unless (i) such debt is contemplated by the Transaction Documents or (ii)
the Rating Agency is provided with notice no later than the fifth Business Day
prior to the incurrence of such additional debt (unless the right to such notice
is waived by the Rating Agency) and the Rating Agency Condition is satisfied
with respect to the incurrence of such debt.
(h) Separate Corporate Existence. Such Transferor shall:
(i) Maintain in full effect its existence, rights and franchises as a
corporation under the laws of the state of its incorporation and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and the applicable Receivables Purchase
Agreement and each other instrument or agreement necessary or appropriate to
proper administration hereof and permit and effectuate the transactions
contemplated hereby.
(ii) Except as provided herein, maintain its own deposit, securities
and other account or accounts, separate from those of any Affiliate of such
Transferor, with financial institutions. The funds of such Transferor shall not
be commingled with those of any other person or entity.
(iii) Ensure that all material transactions between such Transferor and
any of its Affiliates shall be only on an arm's-length basis.
(iv) Maintain a principal executive and administrative office through
which its business is conducted separate from those of its stockholders and
Affiliates.
(v) Conduct its affairs strictly in accordance with its Articles of
Incorporation and observe all necessary, appropriate and customary corporate
formalities, including, but not limited to, holding all regular and special
stockholders' and directors' meetings appropriate to authorize all corporate
action, keeping separate and accurate minutes of such meetings, passing all
resolutions or consents necessary to authorize actions taken or to be taken, and
maintaining accurate and separate books, records and accounts, including, but
not limited to, intercompany transaction accounts. Regular stockholders' and
directors' meetings shall be held at least annually.
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(vi) Ensure that its board of directors shall at all times include at
least [two] "Independent Directors" (as defined in such Transferor's Articles of
Incorporation).
(vii) Act solely in its own corporate name and through its own
authorized officers and agents.
(viii) Ensure that no Affiliate of such Transferor shall advance funds
to such Transferor, and no Affiliate of such Transferor will otherwise guaranty
debts of, such Transferor, unless on an arm's-length basis.
(ix) Other than organizational expenses and as expressly provided
herein, pay all expenses, indebtedness and other obligations incurred by it
using its own funds.
(x) Not enter into any guaranty, or otherwise become liable, with
respect to or hold its assets or creditworthiness out as being available for the
payment of any obligation of any Affiliate of such Transferor nor shall the
Transferor make any loans to any Person.
(xi) Ensure that at all times it is adequately capitalized to engage in
the transactions contemplated in its Articles of Incorporation.
(i) Interchange. With respect to any Payment Date, on or prior to the
immediately preceding Determination Date, the Transferor shall notify the
Servicer of the amount of Interchange required to be included as Collections of
Finance Charge and Administrative Receivables with respect to such Monthly
Period, which amount for any Series shall be specified in the related Indenture
Supplement. Not later than 1:00 p.m., New York City time, on the related Payment
Date, the Transferor shall deposit, or cause to be deposited, into the
Collection Account, in immediately available funds, the amount of Interchange to
be so included as Collections of Finance Charge and Administrative Receivables
with respect to such Monthly Period.
Section 2.08. Covenants of each Transferor with Respect to the Applicable
Receivables Purchase Agreement. Each Transferor, in its capacity as purchaser of
Receivables from ABC pursuant to the applicable Receivables Purchase Agreement,
hereby covenants that such Transferor will at all times enforce the covenants
and agreements of ABC in the Receivables Purchase Agreement, including covenants
that ABC will at all times enforce the covenants and agreements of any other
Account Owner, as the case may be, in any Receivables Purchase Agreements,
including covenants substantially to the effect set forth below:
(a) Periodic Rate Finance Charges. Except (x) as otherwise required by any
Requirements of Law or (y) as is deemed by ABC or any other Account Owner, as
the case may be, to be necessary in order for it to maintain its credit card
business or a program operated by such credit card business on a competitive
basis based on a good faith assessment by it of the nature of the competition
with respect to the credit card business or such program, it shall not at any
time take any action which would have the effect of reducing the Net Portfolio
Yield to a level that could be reasonably expected to cause any Series to
experience any Pay Out Event or Event of Default based on the insufficiency of
the Net Portfolio Yield or any similar test.
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(b) Credit Card Agreements and Guidelines. Subject to compliance with all
Requirements of Law and paragraph (a) above, ABC or other Account Owner, as the
case may be, may change the terms and provisions of the applicable Credit Card
Agreements or the applicable Credit Card Guidelines in any respect (including
the calculation of the amount or the timing of charge-offs and the Periodic Rate
Finance Charges to be assessed thereon). Notwithstanding the above, unless
required by Requirements of Law or as permitted by paragraph (a) above, ABC or
other Account Owner, as the case may be, will not take any action unless (i) at
the time of such action, ABC or other Account Owner, as the case may be,
reasonably believes that such action will not cause a Pay Out Event or Event of
Default to occur, and (ii) is made applicable to the comparable segment of the
revolving credit card accounts owned by ABC or other Account Owner which have
characteristics the same as, or substantially similar to, the Accounts that are
the subject of such change, except as otherwise restricted by an endorsement,
sponsorship, or other agreement between ABC or other Account Owner, as the case
may be, and an unrelated third party or by the terms of the Credit Card
Agreements.
Section 2.09. Addition of Accounts.
(a) Required Additional Designated Accounts. (i) If, as of the close of
business on the last Business Day of any calendar month, the product of (A) the
total amount of Principal Receivables and (B) one minus the Discount Percentage
is less than the Required Minimum Principal Balance (as adjusted for any Series
having a Paired Series as described in the Indenture Supplement for such Series)
on such date, the Transferor shall on or prior to the close of business on the
tenth Business Day of the next succeeding Monthly Period (the "Required
Designation Date"), unless the product of (A) the total amount of Principal
Receivables and (B) one minus the Discount Percentage exceeds the Required
Minimum Principal Balance as of the close of business on any day after the last
Business Day of such calendar month and prior to the Required Designation Date,
cause to be designated additional Eligible Accounts to be included as Designated
Accounts as of the Required Designation Date or any earlier date in a sufficient
amount (or such lesser amount as shall represent all Eligible Accounts
constituting MasterCard [and VISA] revolving credit card accounts then available
to the Transferor under the applicable Receivables Purchase Agreement, if any)
such that, after giving effect to such addition and the addition by each other
Transferor, the product of (A) the aggregate principal balance of Principal
Receivables and (B) one minus the Discount Percentage is at least equal to the
Required Minimum Principal Balance on such date.
(ii) Any Additional Designated Accounts designated to be included as
Trust Assets pursuant to clause (i) above may only be so included if the
applicable conditions specified in paragraph (c) below have been satisfied.
(b) Permitted Additional Designated Accounts. Each Transferor may from time
to time, in its sole discretion, subject to the conditions specified in
paragraph (c) below, voluntarily cause the designation of additional Eligible
Accounts to be included as Designated Accounts to be included as Trust Assets,
in either case as of the applicable Addition Date.
(c) Conditions to Aggregate Additions. On the Addition Date with respect to
any Aggregate Additions, the Trust shall acquire the Receivables in Additional
Designated Accounts
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(and such Additional Designated Accounts shall be deemed to be Designated
Accounts for purposes of this Agreement), subject to the satisfaction of the
following conditions:
(i) on or before the eighth Business Day immediately preceding the
Addition Date, the applicable Transferor shall have given the Owner Trustee, the
Indenture Trustee, the Servicer and each Rating Agency notice (unless such
notice requirement is otherwise waived) that the Additional Designated Accounts
will be included and specifying the applicable Addition Date and Additional
Cut-Off Date;
(ii) as of the applicable Additional Cut-Off Date, such Additional
Designated Accounts shall be Eligible Accounts;
(iii) such Transferor shall have delivered to the Owner Trustee and
Indenture Trustee copies of UCC-1 financing statements covering such Additional
Designated Accounts, if necessary to perfect the Trust's interest in the
Receivables arising therein and a schedule of such Additional Designated
Accounts;
(iv) to the extent required by Section 8.04 of the Indenture, such
Transferor shall have deposited in the Collection Account all Collections with
respect to such Additional Designated Accounts since the Additional Cut-Off
Date;
(v) as of each of the Additional Cut-Off Date and the Addition Date, no
Insolvency Event with respect to ABC or any other Account Owner, as applicable,
ABRC or such Transferor shall have occurred nor shall the transfer to the Trust
of the Receivables arising in the Additional Designated Accounts have been made
in contemplation of the occurrence thereof;
(vi) solely with respect to Aggregate Additions designated pursuant to
subsection 2.09(b), the Rating Agency Condition shall have been satisfied;
(vii) such Transferor shall have delivered to the Owner Trustee and the
Indenture Trustee an Officer's Certificate, dated the Addition Date, confirming,
to the extent applicable, the items set forth in clauses (ii) through (vi) above
and clause (x) below;
(viii) the acquisition by the Trust of the Receivables arising in the
Additional Designated Accounts will not result in an Adverse Effect and, in the
case of Aggregate Additions, such Transferor shall have delivered to the Owner
Trustee and the Indenture Trustee an Officer's Certificate, dated the Addition
Date, stating that such Transferor reasonably believes that the acquisition by
the Trust of the Receivables arising in the Additional Designated Accounts will
not have an Adverse Effect; and
(ix) such Transferor shall have delivered to the Owner Trustee, the
Indenture Trustee and each Rating Agency an Opinion of Counsel, dated the
Addition Date, in accordance with subsection 9.02(d)(ii) or (iv), as applicable.
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(x) unless each Rating Agency otherwise consents, the number of
Additional Designated Accounts designated pursuant to subsection 2.09(b) with
respect to any of the three (3) consecutive Monthly Periods commencing in
December, March, June and September of each calendar year, commencing [June
2000], shall not exceed 15% of the number of Accounts as of the first day of the
calendar year during which such Monthly Periods commence and the number of
Additional Designated Accounts designated pursuant to subsection 2.09(b) during
any calendar year shall not exceed 20% of the number of Accounts as of the first
day of such calendar year.
(d) [Reserved.
(e) [Reserved].
(f) Representations and Warranties. Each Transferor conveying Additional
Designated Accounts hereby represents and warrants to the Trust as of the
related Addition Date as to the matters set forth in clauses (v) and (viii) of
subsection 2.09(c) above and that, in the case of Additional Designated
Accounts, the list delivered pursuant to subsection 2.09(h) is, as of the
applicable Additional Cut-Off Date, true and complete in all material respects.
(g) Additional Transferors. The Transferor may designate Affiliates of the
Transferor to be included as Transferors ("Additional Transferors") under this
Agreement in an amendment hereto pursuant to subsection 9.01(a) and, in
connection with such designation, the Transferor shall surrender the Transferor
Certificate, if any, to the Owner Trustee in exchange for a newly issued
Transferor Certificate modified to reflect such Additional Transferor's interest
in the Trust. Any such designation and exchange shall be in accordance with
Section 3.06 of the Trust Agreement.
(h) Delivery of Documents. In the case of the designation of Additional
Designated Accounts, the Transferor designating such Accounts shall deliver to
the Owner Trustee (i) the computer file or microfiche list required to be
delivered pursuant to Section 2.01 with respect to such Additional Designated
Accounts on the date such file or list is required to be delivered pursuant to
Section 2.01 (the "Document Delivery Date") and (ii) a duly executed, written
Assignment (including an acceptance by the Owner Trustee), substantially in the
form of Exhibit A (the "Assignment"), on the Document Delivery Date. In
addition, in the case of the designation of Additional Designated Accounts, the
Transferor designating such Accounts shall deliver to the Owner Trustee on the
Document Delivery Date an Officer's Certificate confirming, to the extent
applicable, the items set forth in clauses (i) through (v) of subsection 2.09(e)
above.
Section 2.10. Removal of Accounts.
On any day of any Monthly Period each Transferor shall have the right to
require the reassignment to it or its designee of all the Trust's right, title
and interest in, to and under the Receivables then existing and thereafter
created, all Interchange and Recoveries related thereto, all monies due or to
become due and all amounts received or receivable with respect thereto and all
proceeds thereof in or with respect to the Accounts (the "Removed Accounts")
(unless otherwise set
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forth in the applicable Indenture Supplement) and designated for removal by the
Transferor, upon satisfaction of the conditions in clauses (i) through (vi)
below;
(i) on or before the eighth Business Day immediately preceding the
Removal Date, such Transferor shall have given written notice to the Owner
Trustee, the Indenture Trustee, the Servicer, the Rating Agency and each Series
Enhancer (unless such notice requirement is otherwise waived) of such removal
and specifying the date for removal of the Removed Accounts (the "Removal
Date");
(ii) on or prior to the date that is five (5) Business Days on or
before the Removal Date, such Transferor shall amend Schedule 1 by delivering to
the Owner Trustee a computer file or microfiche list containing a true and
complete list of the Removed Accounts specifying for each such Account, as of
the date notice of the Removal Date is given, its account number, the aggregate
amount outstanding in such Account and the aggregate amount of Principal
Receivables outstanding in such Account;
(iii) such Transferor shall have represented and warranted as of the
Removal Date that the list of Removed Accounts delivered pursuant to paragraph
(ii) above, as of the Removal Date, is true and complete in all material
respects;
(iv) the Rating Agency Condition shall have been satisfied with respect
to the removal of the Removed Accounts;
(v) such Transferor shall have delivered to the Owner Trustee and the
Indenture Trustee an Officer's Certificate, dated the Removal Date, to the
effect that such Transferor reasonably believes that (A) such removal will not
have a material adverse effect on the Noteholders, (B) such removal will not
result in the occurrence of a Pay Out Event or Event of Default, and (C) no
selection procedures believed by such Transferor to be materially adverse to the
interests of the Noteholders have been used in selecting the Removed Accounts;
and
(vi) any other conditions specified in the related Indenture
Supplement.
Upon satisfaction of the above conditions, the Trust shall execute and deliver
to such Transferor a written reassignment in substantially the form of Exhibit B
(the "Reassignment") and shall, without further action, be deemed to transfer,
assign, set over and otherwise convey to such Transferor or its designee,
effective as of the Removal Date, without recourse, representation or warranty,
all the right, title and interest of the Trust in and to the Receivables arising
in the Removed Accounts, all Interchange and Recoveries related thereto, all
monies due and to become due and all amounts received or receivable with respect
thereto and all proceeds thereof and any Insurance Proceeds relating thereto.
The Owner Trustee may conclusively rely on the Officer's Certificate delivered
pursuant to this Section 2.10 and shall have no duty to make inquiries with
regard to the matters set forth therein and shall incur no liability in so
relying.
In addition to the foregoing, on the date when any Receivable in an Account
becomes a Defaulted Receivable, the Trust shall automatically and without
further action or consideration be
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deemed to transfer, set over and otherwise convey to the Transferor with respect
to such Account, without recourse, representation or warranty, all right, title
and interest of the Trust in and to the Defaulted Receivables in such Account,
all Interchange and Recoveries related thereto all monies and amounts due or to
become due with respect thereto, all proceeds thereof and any Insurance Proceeds
relating thereto; provided that Recoveries of such Account shall be applied as
provided herein.
Section 2.11. Account Allocations. In the event that any Transferor is
unable for any reason to transfer Receivables to the Trust in accordance with
the provisions of this Agreement, including by reason of the application of the
provisions of Section 6.01 or any order of any Governmental Authority (a
"Transfer Restriction Event"), then, (a) such Transferor and the Servicer agree
(except as prohibited by any such order) to allocate and pay to the Trust, after
the date of such inability, all Collections, including Collections of
Receivables transferred to the Trust prior to the occurrence of such event, and
all amounts which would have constituted Collections but for such Transferor's
inability to transfer Receivables (up to an aggregate amount equal to the amount
of Receivables transferred to the Trust by such Transferor in the Trust on such
date), (b) such Transferor and the Servicer agree that such amounts will be
applied as Collections in accordance with Article VIII of the Indenture and the
terms of each Indenture Supplement and (c) for so long as the allocation and
application of all Collections and all amounts that would have constituted
Collections are made in accordance with clauses (a) and (b) above, Principal
Receivables and all amounts which would have constituted Principal Receivables
but for such Transferor's inability to transfer Receivables to the Trust which
are charged off as uncollectible in accordance with this Agreement shall
continue to be allocated in accordance with Article VIII of the Indenture and
the terms of each Indenture Supplement. For the purpose of the immediately
preceding sentence, such Transferor and the Servicer shall treat the first
received Collections with respect to the Accounts as allocable to the Trust
until the Trust shall have been allocated and paid Collections in an amount
equal to the aggregate amount of Principal Receivables in the Trust as of the
date of the occurrence of such event. If such Transferor and the Servicer are
unable pursuant to any Requirements of Law to allocate Collections as described
above, such Transferor and the Servicer agree that, after the occurrence of such
event, payments on each Account with respect to the principal balance of such
Account shall be allocated first to the oldest principal balance of such Account
and shall have such payments applied as Collections in accordance with Article
VIII of the Indenture and the terms of each Indenture Supplement. The parties
hereto agree that Finance Charge and Administrative Receivables, whenever
created, accrued in respect of Principal Receivables which have been conveyed to
the Trust shall continue to be a part of the Trust notwithstanding any cessation
of the transfer of additional Principal Receivables to the Trust and Collections
with respect thereto shall continue to be allocated and paid in accordance with
Article VIII of the Indenture and the terms of each Indenture Supplement.
[Section 2.12. Discount Option.
(a) The Transferor shall have the option to designate at any time and from
time to time a percentage or percentages, which may be a fixed percentage or a
variable percentage based on a formula (the "Discount Percentage"), of all or
any specified portion of Collections of Principal Receivables to be treated as
Collections of Finance Charge and Administrative Receivables
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("Discount Option Collections"). Subject to the conditions specified below, the
Transferor may, without notice to or the consent of any Noteholder, from time to
time, increase, reduce or eliminate the Discount Percentage for all or any
specified portion of Collections of Principal Receivables on or after a
specified date (each, a "Discount Option Date"). The Transferor shall provide
thirty (30) days prior written notice of any such change in the Discount
Percentage and the related Discount Option Date to the Servicer, the Owner
Trustee, the Indenture Trustee and any Rating Agency and such change in the
Discount Percentage shall become effective on such Discount Option Date (i)
unless such designation in the reasonable belief of the Transferor would cause a
Pay Out Event or Event of Default with respect to any Series to occur, or an
event which, with notice or lapse of time or both, would constitute a Pay Out
Event or Event of Default with respect to any Series and (ii) only if the Rating
Agency Condition shall have been satisfied with respect to such designation.
(b) On each Date of Processing, Discount Option Collections, if any,
shall be treated as Collections of Finance Charge and Administrative
Receivables.]
[END OF ARTICLE II]
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ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. Acceptance of Appointment and Other Matters Relating to the
Servicer.
(a) ABC agrees to act as the Servicer under this Agreement and the
Noteholders by their acceptance of Notes consent to ABC acting as Servicer.
(b) As agent for each Transferor and the Trust, the Servicer shall service
and administer the Receivables (including the underlying receivables), shall
collect and deposit into the Collection Account amounts received under the
Receivables (including the underlying receivables) and shall charge off as
uncollectible Receivables, all in accordance with its customary and usual
servicing procedures for servicing credit card receivables comparable to the
Receivables and in accordance with the Credit Card Guidelines. As agent for each
Transferor and the Trust, the Servicer shall have full power and authority,
acting alone or through any party properly designated by it hereunder, to do any
and all things in connection with such servicing and administration which it may
deem necessary or desirable; provided, however, that subject to the rights of
the Owner Trustee, the Indenture Trustee and the Noteholders hereunder, ABRC
shall have the absolute right to direct the Servicer with respect to any power
conferred on the Servicer hereunder in accordance with any such direction.
Without limiting the generality of the foregoing and subject to Section 7.01,
the Servicer or its designee is hereby authorized and empowered, unless such
power is revoked by the Indenture Trustee on account of the occurrence of a
Servicer Default pursuant to Section 7.01, (i) to instruct the Owner Trustee or
the Indenture Trustee to make withdrawals and payments from the Collection
Account, the Excess Funding Account and any Series Account, as set forth in this
Agreement, the Indenture or any Indenture Supplement, (ii) to take any action
required or permitted under any Series Enhancement, as set forth in this
Agreement, the Indenture or any Indenture Supplement, (iii) to execute and
deliver, on behalf of the Trust, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable Requirements of Law, to commence collection
proceedings with respect to such Receivables and (iv) to make any filings,
reports, notices, applications and registrations with, and to seek any consents
or authorizations from, the Commission and any state securities authority on
behalf of the Trust as may be necessary or advisable to comply with any Federal
or state securities or reporting requirements or other laws or regulations. The
Owner Trustee and the Indenture Trustee shall furnish the Servicer with any
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
(c) The Servicer shall not, and no Successor Servicer shall, be obligated
to use separate servicing procedures, offices, employees or accounts for
servicing the Receivables from the procedures, offices, employees and accounts
used by the Servicer or such Successor Servicer, as the case may be, in
connection with servicing other credit card receivables.
(d) The Servicer shall comply with and perform its servicing obligations
with respect to the Accounts and Receivables in accordance with the Credit Card
Agreements relating to the Accounts and the Credit Card Guidelines and all
applicable rules and regulations of MasterCard and
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VISA, except insofar as any failure to so comply or perform would not materially
and adversely affect the Trust or the Noteholders.
(e) The Servicer shall pay out of its own funds, without reimbursement, all
expenses incurred in connection with the Trust and the servicing activities
hereunder including expenses related to enforcement of the Receivables, fees and
disbursements of the Owner Trustee and the Indenture Trustee (including the
reasonable fees and expenses of its outside counsel) and independent accountants
and all other fees and expenses, including the costs of filing UCC continuation
statements, the costs and expenses relating to obtaining and maintaining the
listing of any Notes on any stock exchange and any stamp, documentary, excise,
property (whether on real, personal or intangible property) or any similar tax
levied on the Trust or the Trust's assets that are not expressly stated in this
Agreement to be payable by the Trust or the Transferor (other than federal,
state, local and foreign income and franchise taxes, if any, or any interest or
penalties with respect thereto, assessed on the Trust).
Section 3.02. Servicing Compensation. As full compensation for its
servicing activities hereunder and as reimbursement for any expense incurred by
it in connection therewith, the Servicer shall be entitled to receive a
servicing fee (the "Servicing Fee") prior to the termination of the Trust
pursuant to Section 8.01 of the Trust Agreement. The share of the Servicing Fee
allocable to the Noteholders' Interest of a particular Series with respect to
any Monthly Period (the "Monthly Servicing Fee") will each be determined in
accordance with the relevant Indenture Supplement. The portion of the Servicing
Fee with respect to any Monthly Period not so paid by the Noteholders' Interest
of any particular Series shall be paid by the holder of the Transferor
Beneficial Interest on the related Payment Date and in no event shall the Trust,
the Owner Trustee, the Indenture Trustee, the Noteholders of any Series or any
Series Enhancer be liable for the share of the Servicing Fee with respect to any
Monthly Period to be paid by the holder of the Transferor Beneficial Interest.
Section 3.03. Representations, Warranties and Covenants of the Servicer.
ABC, as initial Servicer, hereby makes, and any Successor Servicer by its
appointment hereunder shall make, with respect to itself, on each Closing Date
(and on the date of any such appointment), the following representations,
warranties and covenants on which the Trust and the Indenture Trustee shall be
deemed to have relied in accepting the Receivables in trust and in entering into
the Indenture:
(a) Organization and Good Standing. The Servicer is a corporation validly
existing under the laws of the jurisdiction of its organization or incorporation
and has, in all material respects, full power and authority to own its
properties and conduct its credit card servicing business as presently owned or
conducted, and to execute, deliver and perform its obligations under this
Agreement.
(b) Due Qualification. The Servicer is duly qualified to do business and is
in good standing as a foreign corporation or other foreign entity (or is exempt
from such requirements) and has obtained all necessary licenses and approvals in
each jurisdiction in which the servicing of the Receivables (including the
underlying receivables) as required by this Agreement requires such
qualification except where the failure to so qualify or obtain licenses or
approvals would not have a material adverse effect on its ability to perform its
obligations as Servicer under this Agreement.
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(c) Due Authorization. The execution, delivery, and performance of this
Agreement and the other agreements and instruments executed or to be executed by
the Servicer as contemplated hereby, have been duly authorized by the Servicer
by all necessary action on the part of the Servicer.
(d) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally from time to time in effect or by general principles
of equity.
(e) No Conflict. The execution and delivery of this Agreement by the
Servicer, and the performance of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof and thereof applicable to the Servicer,
will not conflict with, violate or result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a material default under, any indenture, contract, agreement, mortgage,
deed of trust or other instrument to which the Servicer is a party or by which
it or its properties are bound.
(f) No Violation. The execution and delivery of this Agreement by the
Servicer, the performance of the transactions contemplated by this Agreement and
the fulfillment of the terms hereof and thereof applicable to the Servicer will
not conflict with or violate any Requirements of Law applicable to the Servicer.
(g) No Proceedings. There are no proceedings or investigations pending or,
to the best knowledge of the Servicer, threatened against the Servicer before
any Governmental Authority seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or seeking any determination or
ruling that, in the reasonable judgment of the Servicer, would materially and
adversely affect the performance by the Servicer of its obligations under this
Agreement.
(h) Compliance with Requirements of Law. The Servicer shall duly satisfy
all obligations on its part to be fulfilled under or in connection with each
Receivable (and the underlying receivable) and the related Account, if any, will
maintain in effect all qualifications required under Requirements of Law in
order to service properly each Receivable and the related Account, if any, and
will comply in all material respects with all other Requirements of Law in
connection with servicing each Receivable and the related Account the failure to
comply with which would have an Adverse Effect.
(i) No Rescission or Cancellation. The Servicer shall take no action to
permit any rescission or cancellation of any Receivable (or the underlying
receivable) except in accordance with the Credit Card Guidelines or as ordered
by a court of competent jurisdiction or other Governmental Authority.
(j) Protection of Rights. The Servicer shall take no action which, nor omit
to take any action the omission of which, would impair the rights of the Trust,
the Indenture Trustee or the Noteholders in any Receivable (or the underlying
receivable) or the related Account, if any, nor shall
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it reschedule, revise or defer payments due on any Receivable except in
accordance with the Credit Card Guidelines.
(k) Receivables Not To Be Evidenced by Promissory Notes. Except in
connection with its enforcement or collection of an Account, the Servicer shall
take no action to cause any Receivable to be evidenced by any instrument (as
defined in the UCC) and if any Receivable is so evidenced it shall be reassigned
or assigned to the Servicer as provided in this Section.
(l) All Consents. All authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given by the Servicer in connection with the execution and
delivery of this Agreement by the Servicer and the performance of the
transactions contemplated by this Agreement by the Servicer, have been duly
obtained, effected or given and are in full force and effect.
In the event (x) any of the representations, warranties or covenants of the
Servicer contained in subsection 3.03(h), (i) or (j) with respect to any
Receivable or the related Account is breached, and such breach has a material
adverse effect on the Noteholders' Interest in such Receivable (which
determination shall be made without regard to whether funds are then available
to any Noteholders pursuant to any Series Enhancement) and is not cured within
sixty (60) days (or such longer period, not in excess of 150 days, as may be
agreed to by the Indenture Trustee and the Transferor) of the earlier to occur
of the discovery of such event by the Servicer, or receipt by the Servicer of
notice of such event given by the Indenture Trustee or the Transferor, or (y) as
provided in subsection 3.03(k) with respect to any Receivable, all Receivables
in the Account or Accounts to which such event relates shall be assigned and
transferred to the Servicer on the terms and conditions set forth below.
The Servicer shall effect such assignment by making a deposit into the
Collection Account in immediately available funds on the Payment Date following
the Monthly Period in which such assignment obligation arises in an amount equal
to the amount of such Receivables.
Upon each such reassignment or assignment to the Servicer, the Trust shall
automatically and without further action be deemed to sell, transfer, assign,
set over and otherwise convey to the Servicer, without recourse, representation
or warranty, all right, title and interest of the Trust in and to such
Receivables, all Interchange and Recoveries related thereto all monies due or to
become due and all amounts received or receivable with respect thereto and all
proceeds thereof. The Trust shall execute such documents and instruments of
transfer or assignment and take such other actions as shall be reasonably
requested by the Servicer to effect the conveyance of any such Receivables
pursuant to this Section but only upon receipt of an Officer's Certificate of
the Servicer that states that all conditions set forth in this section have been
satisfied. The obligation of the Servicer to accept reassignment or assignment
of such Receivables, and to make the deposits, if any, required to be made to
the Collection Account as provided in the preceding paragraph, shall constitute
the sole remedy respecting the event giving rise to such obligation available to
Noteholders (or the Indenture Trustee on behalf of Noteholders) or any Series
Enhancer, except as provided in Section 5.04.
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Section 3.04. Reports and Records for the Owner Trustee.
(a) Daily Records. On each Business Day, the Servicer shall make or cause
to be made available at the office of the Servicer for inspection by the Owner
Trustee upon request a record setting forth (i) the Collections in respect of
Principal Receivables and in respect of Finance Charge and Administrative
Receivables processed by the Servicer on the second preceding Business Day in
respect of each Account and (ii) the amount of Receivables as of the close of
business on the second preceding Business Day in each Account. The Servicer
shall, at all times, maintain its computer files with respect to the Accounts in
such a manner so that the Accounts may be specifically identified and shall make
available to the Owner Trustee at the office of the Servicer on any Business Day
any computer programs necessary to make such identification. The Owner Trustee
shall enter into such reasonable confidentiality agreements as the Servicer
shall deem necessary to protect its interests and as are reasonably acceptable
in form and substance to the Owner Trustee.
(b) Monthly Servicer's Certificate. Not later than the second Business Day
preceding each Payment Date, the Servicer shall, with respect to each
outstanding Series, deliver to the Owner Trustee, the Indenture Trustee and each
Rating Agency a certificate of an Authorized Officer in substantially the form
set forth in the related Indenture Supplement.
Section 3.05. Annual Certificate of Servicer.
The Servicer shall deliver to the Owner Trustee, the Indenture Trustee and
each Rating Agency on or before April 30 of each calendar year, beginning with
April 30, 2001, an Officer's Certificate substantially in the form of Exhibit C.
Section 3.06. Annual Servicing Report of Independent Public Accountants;
Copies of Reports Available.
(a) On or before [September 30] of each calendar year, beginning with
[September 30], 2001, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report covering the one-year period
ending [June 30] of such calendar year (addressed to the Owner Trustee) to the
Owner Trustee, the Indenture Trustee, the Servicer and each Rating Agency to the
effect that they have applied certain procedures agreed upon with the Servicer
and examined certain documents and records relating to the servicing of Accounts
under this Agreement, the Indenture and each Indenture Supplement and that, on
the basis of such agreed-upon procedures, nothing has come to the attention of
such accountants that caused them to believe that the servicing (including the
allocation of Collections) has not been conducted in compliance with the terms
and conditions as set forth in Article III and Section 5.08 of this Agreement
and the applicable provisions of the Indenture and each Indenture Supplement,
except for such exceptions as they believe to be immaterial and such other
exceptions as shall be set forth in such statement. Such report shall set forth
the agreed-upon procedures performed.
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(b) On or before [September 30] of each calendar year, beginning with
[September 30], 2001, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or Transferor) to furnish a report covering the one-year period ending
[June 30] of such calendar year to the Owner Trustee, the Indenture Trustee, the
Servicer and each Rating Agency to the effect that they have applied certain
procedures agreed upon with the Servicer to compare the mathematical
calculations of certain amounts set forth in the Servicer's certificates
delivered pursuant to subsection 3.04(b) during the period covered by such
report with the Servicer's computer reports that were the source of such amounts
and that on the basis of such agreed-upon procedures and comparison, such
accountants are of the opinion that such amounts are in agreement, except for
such exceptions as they believe to be immaterial and such other exceptions as
shall be set forth in such statement. Such report shall set forth the
agreed-upon procedures performed.
(c) A copy of each certificate and report provided pursuant to subsection
3.04(b), or Section 3.05 or 3.06 may be obtained by any Noteholder or Note Owner
by a request in writing to the Owner Trustee addressed to the Corporate Trust
Office.
Section 3.07. Tax Treatment.
Unless otherwise specified in the Indenture or an Indenture Supplement with
respect to a particular Series, the Transferor has entered into this Agreement,
and the Notes will be issued, with the intention that, for federal, state and
local income and franchise tax purposes, (i) the Notes of each Series which are
characterized as indebtedness at the time of their issuance will qualify as
indebtedness secured by the Receivables and (ii) the Trust shall not be treated
as an association or publicly traded partnership taxable as a corporation. The
Transferor, by entering into this Agreement, and each Noteholder, by the
acceptance of any such Note (and each Note Owner, by its acceptance of an
interest in the applicable Note), agree to treat such Notes for federal, state
and local income and franchise tax purposes as indebtedness of the Transferor.
Each Holder of such Note agrees that it will cause any Note Owner acquiring an
interest in a Note through it to comply with this Agreement as to treatment as
indebtedness under applicable tax law, as described in this Section 3.07. The
parties hereto agree that they shall not cause or permit the making, as
applicable, of any election under Treasury Regulation Section 301.7701-3 whereby
the Trust or any portion thereof would be treated as a corporation for federal
income tax purposes and, except as required by Section 6.13 of the Indenture,
shall not file tax returns or obtain any federal employer identification number
for the Trust but shall treat the Trust as a security device for federal income
tax purposes. The provisions of this Agreement shall be construed in furtherance
of the foregoing intended tax treatment.
Section 3.08. Notices to ABC.
In the event that ABC is no longer acting as Servicer, any Successor
Servicer shall deliver or make available to ABC each certificate and report
required to be provided thereafter pursuant to subsection 3.04(b) and Sections
3.05 and 3.06.
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Section 3.09. Adjustments.
(a) If the Servicer adjusts downward the amount of any Receivable because
of a rebate, refund, unauthorized charge or billing error to a cardholder,
because such Receivable was created in respect of merchandise which was refused
or returned by a cardholder, then, in any such case, the amount of Principal
Receivables used to calculate the Transferor Interest, and (unless otherwise
specified) any other amount required herein or in the Indenture or any Indenture
Supplement to be calculated by reference to the amount of Principal Receivables,
will be reduced by the amount of the adjustment. Similarly, the amount of
Principal Receivables used to calculate the Transferor Interest and (unless
otherwise specified) any other amount required herein or in any Indenture
Supplement to be calculated by reference to the amount of Principal Receivables
will be reduced by the principal amount of any Receivable which was discovered
as having been created through a fraudulent or counterfeit charge or with
respect to which the covenant contained in subsection 2.07(b) was breached. Any
adjustment required pursuant to either of the two preceding sentences shall be
made on or prior to the end of the Monthly Period in which such adjustment
obligation arises. In the event that, following the exclusion of such Principal
Receivables from the calculation of the Transferor Interest, the Transferor
Interest would be less than the Required Transferor Interest, not later than
1:00 p.m., New York City time, on the Payment Date following the Monthly Period
in which such adjustment obligation arises, the Transferor shall make a deposit
into the Excess Funding Account in immediately available funds in an amount
equal to the amount by which the Transferor Interest would be less than the
Required Transferor Interest, due to adjustments with respect to Receivables
conveyed by such Transferor (up to the amount of such Principal Receivables).
(b) If (i) the Servicer makes a deposit into the Collection Account in
respect of a Collection of a Receivable and such Collection was received by the
Servicer in the form of a check which is not honored for any reason or (ii) the
Servicer makes a mistake with respect to the amount of any Collection and
deposits an amount that is less than or more than the actual amount of such
Collection, the Servicer shall appropriately adjust the amount subsequently
deposited into the Collection Account to reflect such dishonored check or
mistake. Any Receivable in respect of which a dishonored check is received shall
be deemed not to have been paid. Notwithstanding the first two sentences of this
paragraph, adjustments made pursuant to this Section 3.09 shall not require any
change in any report previously delivered pursuant to subsection 3.04(a).
Section 3.10. Reports to the Commission.
The Servicer shall, on behalf of the Trust, cause to be filed with the
Commission any periodic reports required to be filed under the provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder. The Transferor shall, at its own expense, cooperate
in any reasonable request of the Servicer in connection with such filings. The
Trust agrees to cooperate with the Servicer in connection with such filings.
[END OF ARTICLE III]
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ARTICLE IV
OTHER MATTERS RELATING TO EACH TRANSFEROR
Section 4.01. Liability of each Transferor.
Each Transferor shall be severally, and not jointly, liable for all
obligations, covenants, representations and warranties of such Transferor
arising under or related to this Agreement. Except as provided in the preceding
sentence, each Transferor shall be liable only to the extent of the obligations
specifically undertaken by it in its capacity as a Transferor.
Section 4.02. Merger or Consolidation of, or Assumption of the Obligations
of, a Transferor.
(a) No Transferor shall dissolve, liquidate, consolidate with or merge into
any other corporation or convey, transfer or sell its properties and assets
substantially as an entirety to any Person unless:
(i) (x) the corporation formed by such consolidation or into which such
Transferor is merged or the Person which acquires by conveyance, transfer or
sale the properties and assets of the Transferor substantially as an entirety
shall be, if such Transferor is not the surviving entity, organized and existing
under the laws of the United States of America or any state or the District of
Columbia, and shall be a savings association, a national banking association, a
bank or other entity which is not eligible to be a debtor in a case under Title
11 of the United States Code or is a special purpose corporation whose powers
and activities are limited to substantially the same degree as provided in the
certificate of incorporation of ABRC and, if such Transferor is not the
surviving entity, shall expressly assume, by an agreement supplemental hereto,
executed and delivered to the Owner Trustee and the Indenture Trustee, in form
reasonably satisfactory to the Owner Trustee and the Indenture Trustee, the
performance of every covenant and obligation of such Transferor hereunder; and
(y) such Transferor or the surviving entity, as the case may be, has delivered
to the Owner Trustee and the Indenture Trustee (with a copy to each Rating
Agency) an Officer's Certificate and an Opinion of Counsel each stating that
such consolidation, merger, conveyance, transfer or sale and such supplemental
agreement comply with this Section, that such supplemental agreement is a valid
and binding obligation of such surviving entity enforceable against such
surviving entity in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally from time to time in
effect or general principles of equity, and that all conditions precedent herein
provided for relating to such transaction have been complied with; and
(ii) the Rating Agency Condition shall have been satisfied with respect
to such consolidation, merger, conveyance or transfer.
(b) Except as permitted by subsection 2.07(c), the obligations, rights or
any part thereof of each Transferor hereunder shall not be assignable nor shall
any Person succeed to such obligations or rights of any Transferor hereunder
except (i) for conveyances, mergers, consolidations,
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assumptions, sales or transfers in accordance with the provisions of the
foregoing paragraph and (ii) for conveyances, mergers, consolidations,
assumptions, sales or transfers to other entities (1) which such Transferor and
the Servicer determine will not result in an Adverse Effect, (2) which meet the
requirements of clause (ii) of the preceding paragraph and (3) for which such
purchaser, transferee, pledgee or entity shall expressly assume, in an agreement
supplemental hereto, executed and delivered to the Owner Trustee and the
Indenture Trustee in writing in form satisfactory to the Owner Trustee and the
Indenture Trustee, the performance of every covenant and obligation of such
Transferor thereby conveyed.
Section 4.03. Limitations on Liability of Each Transferor.
Subject to Section 4.01, no Transferor nor any of the directors, officers,
employees, incorporators or agents of any Transferor acting in such capacities
shall be under any liability to the Trust, the Owner Trustee, the Indenture
Trustee, the Noteholders, any Series Enhancer or any other Person for any action
taken, or for refraining from the taking of any action, in good faith in such
capacities pursuant to this Agreement, it being expressly understood that such
liability is expressly waived and released as a condition of, and consideration
for, the execution of this Agreement, the Indenture and any Indenture Supplement
and the issuance of the Notes; provided, however, that this provision shall not
protect any Transferor or any such person against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. Each Transferor and any director, officer,
employee or agent of such Transferor may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person (other than
such Transferor) respecting any matters arising hereunder.
[END OF ARTICLE IV]
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ARTICLE V
OTHER MATTERS RELATING TO THE SERVICER
Section 5.01. Liability of the Servicer.
The Servicer shall be liable under this Article V only to the extent of the
obligations specifically undertaken by the Servicer in its capacity as Servicer.
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer.
The Servicer shall not consolidate with or merge into any other corporation
or convey, transfer or sell its properties and assets substantially as an
entirety to any Person, unless:
(a) (i) the corporation formed by such consolidation or into which the
Servicer is merged or the Person which acquires by conveyance, transfer or sale
the properties and assets of the Servicer substantially as an entirety shall be,
if the Servicer is not the surviving entity, a corporation organized and
existing under the laws of the United States of America or any state or the
District of Columbia, and, if the Servicer is not the surviving entity, such
corporation shall expressly assume, by an agreement supplemental hereto,
executed and delivered to the Owner Trustee and the Indenture Trustee, in form
satisfactory to the Owner Trustee and the Indenture Trustee, the performance of
every covenant and obligation of the Servicer hereunder;
(ii) the Servicer has delivered to the Owner Trustee and the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each stating that
such consolidation, merger, conveyance, transfer or sale comply with this
Section 5.02 and that all conditions precedent herein provided for relating to
such transaction have been complied with;
(iii) the Servicer shall have given the Rating Agencies notice of such
consolidation, merger or transfer of assets; and
(b) the corporation formed by such consolidation or into which the Servicer
is merged or the Person which acquires by conveyance or transfer the properties
and assets of the Servicer substantially as an entirety shall be an Eligible
Servicer.
Section 5.03. Limitation on Liability of the Servicer and Others.
Except as provided in Section 5.04, neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer in its capacity as
Servicer shall be under any liability to the Trust, the Owner Trustee, the
Indenture Trustee, the Noteholders, any Series Enhancer or any other Person for
any action taken, or for refraining from the taking of any action, in good faith
in its capacity as Servicer pursuant to this Agreement; provided, however, that
this provision shall not protect the Servicer or any such Person against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Servicer and any director,
officer, employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie
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properly executed and submitted by any Person (other than the Servicer)
respecting any matters arising hereunder. The Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties as Servicer in accordance with this Agreement and which
in its reasonable judgment may involve it in any expense or liability. The
Servicer may, in its sole discretion, undertake any such legal action which it
may deem necessary or desirable for the benefit of the Noteholders with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Noteholders hereunder.
Section 5.04. Servicer Indemnification of the Trust, the Owner Trustee and
the Indenture Trustee.
The Servicer shall indemnify and hold harmless each of the Trust, the Owner
Trustee, the Indenture Trustee and any trustees predecessor thereto (including
the Indenture Trustee in its capacity as Transfer Agent and Registrar or as
Paying Agent) and their respective directors, officers, employees and agents
from and against any and all loss, liability, claim, expense, damage or injury
suffered or sustained by reason of (a) any acts or omissions of the Servicer
with respect to the Trust pursuant to this Agreement or (b) the administration
by the Owner Trustee of the Trust (in the case of clause (a) or (b), other than
such as may arise from the negligence or willful misconduct of the Owner Trustee
or the Indenture Trustee, as applicable), including any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any action, proceeding or claim. Indemnification
pursuant to this Section 5.04 shall not be payable from the Trust Assets. The
Servicer's obligations under this Section 5.04 shall survive the termination of
this Agreement or the Trust or the earlier removal or resignation of the Owner
Trustee or the Indenture Trustee, as applicable.
Section 5.05. Resignation of the Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) upon determination that (i) the performance of its
duties hereunder is no longer permissible under applicable law and (ii) there is
no reasonable action which the Servicer could take to make the performance of
its duties hereunder permissible under applicable law or (b) upon the
assumption, by an agreement supplemental hereto, executed and delivered to the
Owner Trustee and the Indenture Trustee, in form satisfactory to the Owner
Trustee and the Indenture Trustee, of the obligations and duties of the Servicer
hereunder by any of its Affiliates or by any other entity the appointment of
which shall have satisfied the Rating Agency Condition and, in either case,
qualifies as an Eligible Servicer. Any determination permitting the resignation
of the Servicer shall be evidenced as to clause (a) above by an Opinion of
Counsel to such effect delivered to the Owner Trustee and the Indenture Trustee.
No resignation shall become effective until the Indenture Trustee or a Successor
Servicer shall have assumed the responsibilities and obligations of the Servicer
in accordance with Section 7.02 hereof. If within 120 days of the date of the
determination that the Servicer may no longer act as Servicer under clause (a)
above the Indenture Trustee is unable to appoint a Successor Servicer, the
Indenture Trustee shall serve as Successor Servicer. Notwithstanding the
foregoing, the Indenture Trustee shall, if it is legally unable so to act,
petition a court of competent jurisdiction to appoint any established
institution qualifying as an Eligible Servicer as the Successor Servicer
hereunder. The Trust shall give prompt notice to each Rating
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Agency and each Series Enhancer upon the appointment of a Successor Servicer.
Notwithstanding anything in this Agreement to the contrary, ABC may assign part
or all of its obligations and duties as Servicer under this Agreement to an
Affiliate of ABC so long as ABC shall have fully guaranteed the performance of
such obligations and duties under this Agreement.
Section 5.06. Access to Certain Documentation and Information Regarding the
Receivables.
The Servicer shall provide to the Owner Trustee or the Indenture Trustee,
as applicable, access to the documentation regarding the Accounts and the
Receivables in such cases where the Owner Trustee or the Indenture Trustee, as
applicable, is required in connection with the enforcement of the rights of
Noteholders or by applicable statutes or regulations to review such
documentation, such access being afforded without charge but only (a) upon
reasonable request, (b) during normal business hours, (c) subject to the
Servicer's normal security and confidentiality procedures and (d) at reasonably
accessible offices in the continental United States designated by the Servicer.
Nothing in this Section shall derogate from the obligation of the Transferor,
the Owner Trustee, the Indenture Trustee and the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors and
the failure of the Servicer to provide access as provided in this Section as a
result of such obligation shall not constitute a breach of this Section.
Section 5.07. Delegation of Duties.
In the ordinary course of business, the Servicer may at any time delegate
its duties hereunder with respect to the Accounts and the Receivables to any
Person that agrees to conduct such duties in accordance with the Credit Card
Guidelines and this Agreement. Such delegation shall not relieve the Servicer of
its liability and responsibility with respect to such duties, and shall not
constitute a resignation within the meaning of Section 5.05.
Section 5.08. Examination of Records.
Each Transferor and the Servicer shall indicate generally in their computer
files or other records that the Receivables arising in the Accounts have been
conveyed to the Trust, pursuant to this Agreement. Each Transferor and the
Servicer shall, prior to the sale or transfer to a third party of any receivable
held in its custody, examine its computer records and other records to determine
that such receivable is not, and does not include, a Receivable.
[END OF ARTICLE V]
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ARTICLE VI
INSOLVENCY EVENTS
Section 6.01. Rights upon the Occurrence of an Insolvency Event.
If any Transferor shall consent or fail to object to the appointment of a
bankruptcy trustee or conservator, receiver or liquidator in any bankruptcy
proceeding or other insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to any Transferor of or
relating to all or substantially all of such Transferor's property, or the
commencement of an action seeking a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a bankruptcy trustee or conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up, insolvency, bankruptcy, reorganization,
conservatorship, receivership or liquidation of such entity's affairs, or
notwithstanding an objection by such Transferor any such action shall have
remained undischarged or unstayed for a period of sixty (60) days or upon entry
of any order or decree providing for such relief; or such Transferor shall admit
in writing its inability to pay its debts generally as they become due, file, or
consent or fail to object (or object without dismissal of any such filing within
sixty (60) days of such filing) to the filing of, a petition to take advantage
of any applicable bankruptcy, insolvency or reorganization, receivership or
conservatorship statute, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations (any such act or occurrence with
respect to any Person being an "Insolvency Event"), such Transferor shall on the
day any such Insolvency Event occurs (the "Appointment Date"), immediately cease
to transfer Principal Receivables to the Trust and shall promptly give notice to
the Indenture Trustee and the Owner Trustee thereof. Notwithstanding any
cessation of the transfer to the Trust of additional Principal Receivables,
Principal Receivables transferred to the Trust prior to the occurrence of such
Insolvency Event, Collections in respect of such Principal Receivables and
Finance Charge and Administrative Receivables (whenever created) accrued in
respect of such Principal Receivables shall continue to be a part of the Trust
Assets and shall be allocated and distributed to Noteholders in accordance with
the terms of the Indenture and each Indenture Supplement.
[END OF ARTICLE VI]
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ARTICLE VII
SERVICER DEFAULTS
Section 7.01. Servicer Defaults. If any one of the following events (a "Servicer
Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer or deposit or
to give instructions or to give notice to the Indenture Trustee to make such
payment, transfer or deposit on or before the date occurring five (5) Business
Days after the date such payment, transfer or deposit or such instruction or
notice is required to be made or given, as the case may be, under the terms of
this Agreement, the Indenture or any Indenture Supplement;
(b) failure on the part of the Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Servicer set forth in
this Agreement which has an Adverse Effect and which continues unremedied for a
period of sixty (60) days after the date on which notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by the
Owner Trustee or the Indenture Trustee, or to the Servicer, the Owner Trustee
and the Indenture Trustee by Holders of Notes evidencing not less than 10% of
the aggregate unpaid principal amount of all Notes (or, with respect to any such
failure that does not relate to all Series, 10% of the aggregate unpaid
principal amount of all Series to which such failure relates); or the Servicer
shall assign or delegate its duties under this Agreement, except as permitted by
Sections 5.02 and 5.07;
(c) any representation, warranty or certification made by the Servicer in
this Agreement or in any certificate delivered pursuant to this Agreement shall
prove to have been incorrect when made, which has an Adverse Effect on the
rights of the Noteholders of any Series (which determination shall be made
without regard to whether funds are then available pursuant to any Series
Enhancement) and which Adverse Effect continues for a period of sixty (60) days
after the date on which notice thereof, requiring the same to be remedied, shall
have been given to the Servicer by the Owner Trustee or the Indenture Trustee,
or to the Servicer, the Owner Trustee and the Indenture Trustee by the Holders
of Notes evidencing not less than 10% of the aggregate unpaid principal amount
of all Notes (or, with respect to any such representation, warranty or
certification that does not relate to all Series, 10% of the aggregate unpaid
principal amount of all Series to which such representation, warranty or
certification relates);
(d) the Servicer shall consent to the appointment of a bankruptcy trustee
or conservator or receiver or liquidator in any bankruptcy proceeding or other
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Servicer or of or relating to all or
substantially all 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 bankruptcy trustee or a conservator or receiver or liquidator in any
bankruptcy, insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or the winding-up or liquidation of its
affairs, shall have been entered against the Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period of sixty (60)
days; or the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage
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of any applicable bankruptcy, insolvency or reorganization statute, make any
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations; or
(e) any other Servicer Default described in the related Indenture
Supplement.
Then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, either the Indenture Trustee or the Holders of
Notes evidencing more than 50% of the aggregate unpaid principal amount of all
Notes, by notice then given to the Servicer and the Owner Trustee (and to the
Indenture Trustee if given by the Noteholders) (a "Termination Notice"), may
terminate all but not less than all the rights and obligations of the Servicer
as Servicer under this Agreement; provided, however, if within sixty (60) days
of receipt of a Termination Notice the Indenture Trustee does not receive any
bids from Eligible Servicers in accordance with subsection 7.02(c) to act as a
Successor Servicer and receives an Officer's Certificate of the Servicer to the
effect that the Servicer cannot in good faith cure the Servicer Default which
gave rise to the Termination Notice, the Indenture Trustee shall grant a right
of first refusal to the Transferor which would permit the Transferor at its
option to acquire the Noteholders' Interest on the Payment Date in the next
calendar month.
The price for the Noteholders' Interest shall be equal to the sum of the
amounts specified therefor with respect to each outstanding Series in the
related Indenture Supplement. The Transferor shall notify the Indenture Trustee
prior to the Record Date for the Payment Date of the acquisition if it is
exercising such right of first refusal. If the Transferor exercises such right
of first refusal, the Transferor shall deposit the price into the Collection
Account not later than 1:00 p.m., New York City time, on such Payment Date in
immediately available funds. The price shall be allocated and distributed to
Noteholders in accordance with the terms of the Indenture and each Indenture
Supplement.
After receipt by the Servicer of a Termination Notice, and on the date that
a Successor Servicer is appointed by the Indenture Trustee pursuant to Section
7.02, all authority and power of the Servicer under this Agreement shall pass to
and be vested in the Successor Servicer (a "Servicing Transfer"); and, without
limitation, the Indenture Trustee is hereby authorized and empowered (upon the
failure of the Servicer to cooperate) to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, all documents and other instruments
upon the failure of the Servicer to execute or deliver such documents or
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such Servicing Transfer. The Servicer
agrees to cooperate with the Indenture Trustee and such Successor Servicer in
effecting the termination of the responsibilities and rights of the Servicer to
conduct servicing hereunder, including the transfer to such Successor Servicer
of all authority of the Servicer to service the Receivables provided for under
this Agreement, including all authority over all Collections which shall on the
date of transfer be held by the Servicer for deposit, or which have been
deposited by the Servicer, in the Collection Account, or which shall thereafter
be received with respect to the Receivables, and in assisting the Successor
Servicer. The Servicer shall within twenty (20) Business Days transfer its
electronic records relating to the Receivables to the Successor Servicer in such
electronic form as the Successor Servicer may reasonably request and shall
promptly transfer to the Successor Servicer all other records, correspondence
and documents necessary for the continued servicing of the Receivables in
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the manner and at such times as the Successor Servicer shall reasonably request.
To the extent that compliance with this Section shall require the Servicer to
disclose to the Successor Servicer information of any kind which the Servicer
deems to be confidential, the Successor Servicer shall be required to enter into
such customary licensing and confidentiality agreements as the Servicer shall
deem reasonably necessary to protect its interests.
Notwithstanding the foregoing, a delay in or failure of performance
referred to in paragraph (a) above for a period of ten (10) Business Days after
the applicable grace period or under paragraph (b) or (c) above for a period of
sixty (60) Business Days after the applicable grace period, shall not constitute
a Servicer Default if such delay or failure could not be prevented by the
exercise of reasonable diligence by the Servicer and such delay or failure was
caused by an act of God or the public enemy, acts of declared or undeclared war,
public disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence shall
not relieve the Servicer from using all commercially reasonable efforts to
perform its obligations in a timely manner in accordance with the terms of this
Agreement and the Servicer shall provide the Indenture Trustee, Owner Trustee,
each Transferor and any Series Enhancer with an Officer's Certificate giving
prompt notice of such failure or delay by it, together with a description of its
efforts so to perform its obligations.
Section 7.02. Indenture Trustee To Act; Appointment of Successor.
(a) On and after the receipt by the Servicer of a Termination Notice
pursuant to Section 7.01, the Servicer shall continue to perform all servicing
functions under this Agreement until the date specified in the Termination
Notice or otherwise specified by the Indenture Trustee or until a date mutually
agreed upon by the Servicer and the Indenture Trustee. The Indenture Trustee
shall as promptly as possible after the giving of a Termination Notice appoint
an Eligible Servicer as a successor servicer (the "Successor Servicer"), and
such Successor Servicer shall accept its appointment by a written assumption in
a form acceptable to the Indenture Trustee. In the event that a Successor
Servicer has not been appointed or has not accepted its appointment at the time
when the Servicer ceases to act as Servicer, the Indenture Trustee without
further action shall automatically be appointed the Successor Servicer. The
Indenture Trustee may delegate any of its servicing obligations to an Affiliate
or agent in accordance with subsection 3.01(b) and Section 5.07. Notwithstanding
the foregoing, the Indenture Trustee shall, if it is legally unable so to act,
petition at the expense of the Servicer a court of competent jurisdiction to
appoint any established institution qualifying as an Eligible Servicer as the
Successor Servicer hereunder. The Indenture Trustee shall give prompt notice to
each Rating Agency and each Series Enhancer upon the appointment of a Successor
Servicer.
(b) Upon its appointment, the Successor Servicer shall be the successor in
all respects to the Servicer with respect to servicing functions under this
Agreement and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be deemed to
refer to the Successor Servicer.
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(c) In connection with any Termination Notice, the Indenture Trustee will
review any bids which it obtains from Eligible Servicers and shall be permitted
to appoint any Eligible Servicer submitting such a bid as a Successor Servicer
for servicing compensation not in excess of the aggregate Servicing Fees for all
Series plus the sum of the amounts with respect to each Series and with respect
to each Payment Date equal to any Collections of Finance Charge and
Administrative Receivables allocable to Noteholders of such Series which are
payable to the holders of Trust Beneficial Interests or Certificates after
payment of all amounts owing to the Noteholders of such Series with respect to
such Payment Date or required to be deposited in the applicable Series Accounts
with respect to such Payment Date and any amounts required to be paid to any
Series Enhancer for such Series with respect to such Payment Date pursuant to
the terms of any Enhancement Agreement; provided, however, that the holder of
the Transferor Beneficial Interest shall be responsible for payment of the
Transferor's portion of such aggregate Servicing Fees and all other such amounts
in excess of such aggregate Servicing Fees. Each Holder of the Transferor's
Certificates agrees that, if ABC (or any Successor Servicer) is terminated as
Servicer hereunder, the portion of the Collections in respect of Finance Charge
and Administrative Receivables that the Transferor is entitled to receive
pursuant to this Agreement, the Indenture or any Indenture Supplement shall be
reduced by an amount sufficient to pay the Transferor's share of the
compensation of the Successor Servicer.
(d) All authority and power granted to the Successor Servicer under this
Agreement shall automatically cease and terminate upon termination of the Trust
pursuant to Section 8.01 of the Trust Agreement, and shall pass to and be vested
in the Transferor and, without limitation, the Transferor is hereby authorized
and empowered to execute and deliver, on behalf of the Successor Servicer, as
attorney-in-fact or otherwise, all documents and other instruments, and to do
and accomplish all other acts or things necessary or appropriate to effect the
purposes of such transfer of servicing rights. The Successor Servicer agrees to
cooperate with the Transferor in effecting the termination of the
responsibilities and rights of the Successor Servicer to conduct servicing of
the Receivables. The Successor Servicer shall transfer its electronic records
relating to the Receivables to the Transferor or its designee in such electronic
form as it may reasonably request and shall transfer all other records,
correspondence and documents to it in the manner and at such times as it shall
reasonably request. To the extent that compliance with this Section shall
require the Successor Servicer to disclose to the Transferor information of any
kind which the Successor Servicer deems to be confidential, the Transferor shall
be required to enter into such customary licensing and confidentiality
agreements as the Successor Servicer shall deem necessary to protect its
interests.
Section 7.03. Notification to Noteholders. Within five (5) Business Days
after the Servicer becomes aware of any Servicer Default, the Servicer shall
give notice thereof to the Owner Trustee, the Indenture Trustee, each Rating
Agency and each Series Enhancer and the Indenture Trustee shall give notice to
the Noteholders. Upon any termination or appointment of a Successor Servicer
pursuant to this Article, the Indenture Trustee shall give prompt notice thereof
to the Noteholders.
[END OF ARTICLE VII]
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ARTICLE VIII
TERMINATION
Section 8.01. Termination of Agreement. This Agreement and the respective
obligations and responsibilities of the Trust, the Transferor and the Servicer
under this Agreement shall terminate, except with respect to the duties
described in Section 5.04, on the Trust Termination Date.
[END OF ARTICLE VIII]
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ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment; Waiver of Past Defaults.
(a) This Agreement may be amended by the parties hereto from time to time
prior to, or in connection with, the issuance of the first Series of Notes
hereunder without the requirement of any consents or the satisfaction of any
conditions set forth below. This Agreement may be amended from time to time by
the Servicer, the Transferor and the Trust, by a written instrument signed by
each of them, without the consent of the Indenture Trustee or any of the
Noteholders; provided that (i) the Transferor shall have delivered to the
Indenture Trustee and the Owner Trustee an Officer's Certificate, dated the date
of any such Amendment, stating that the Transferor reasonably believes that such
amendment will not have an Adverse Effect and (ii) the Rating Agency Condition
shall have been satisfied with respect to any such amendment. Additionally,
notwithstanding the preceding sentence, this Agreement will be amended by the
Servicer and the Trust at the direction of the Transferor without the consent of
the Indenture Trustee or any of the Noteholders or Series Enhancers to add,
modify or eliminate such provisions as may be necessary or advisable in order to
enable all or a portion of the Trust (i) to qualify as, and to permit an
election to be made to cause the Trust to be treated as, a "financial asset
securitization investment trust" as described in the provisions of Section 860L
of the Code, and (ii) to avoid the imposition of state or local income or
franchise taxes imposed on the Trust's property or its income; provided,
however, that (i) the Transferor delivers to the Indenture Trustee and the Owner
Trustee an Officer's Certificate to the effect that the proposed amendments meet
the requirements set forth in this subsection, (ii) each Rating Agency will have
notified the Transferor, the Servicer, the Indenture Trustee and the Owner
Trustee in writing that the amendment will not result in a reduction or
withdrawal of the rating of any outstanding Series or Class as to which it is a
Rating Agency and (iii) such amendment does not affect the rights, duties or
obligations of the Indenture Trustee or the Owner Trustee hereunder. The
amendments which the Transferor may make without the consent of Noteholders or
Series Enhancers pursuant to the preceding sentence may include, without
limitation, the addition of a sale of Receivables.
(b) This Agreement may also be amended from time to time by the Servicer,
the Transferor and the Trust, with the consent of the Holders of Notes
evidencing not less than 66-2/3% of the aggregate unpaid principal amount of the
Notes of all affected Series for which the Transferor has not delivered an
Officer's Certificate stating that there is no Adverse Effect, 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 (i) reduce in any
manner the amount of or delay the timing of any distributions (changes in Pay
Out Events or Events of Default that decrease the likelihood of the occurrence
thereof shall not be considered delays in the timing of distributions for
purposes of this clause) to be made to Noteholders or deposits of amounts to be
so distributed or the amount available under any Series Enhancement without the
consent of each affected Noteholder, (ii) change the definition of or the manner
of calculating the interest of any Noteholder without the consent of each
affected Noteholder, (iii) reduce the aforesaid percentage required to consent
to any such amendment without the consent of each Noteholder or (iv) adversely
affect the rating of any Series or Class by
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each Rating Agency without the consent of the Holders of Notes of such Series or
Class evidencing not less than 66-2/3% of the aggregate unpaid principal amount
of the Notes of such Series or Class.
(c) Promptly after the execution of any such amendment or consent (other
than an amendment pursuant to paragraph (a)), the Trust shall furnish
notification of the substance of such amendment to the Indenture Trustee and
each Noteholder, and the Servicer shall furnish notification of the substance of
such amendment to each Rating Agency and each Series Enhancer.
(d) It shall not be necessary for the consent of Noteholders under this
Section 9.01 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Noteholders shall be subject to such reasonable
requirements as the Indenture Trustee may prescribe.
(e) Notwithstanding anything in this Section 9.01 to the contrary, no
amendment may be made to this Agreement which would adversely affect in any
material respect the interests of any Series Enhancer without the consent of
such Series Enhancer.
(f) Any Indenture Supplement executed in accordance with the provisions of
Article X of the Indenture shall not be considered an amendment of this
Agreement for the purposes of this Section 9.01.
(g) The Holders of Notes evidencing more than 66-2/3% of the aggregate
unpaid principal amount of the Notes of each Series or, with respect to any
Series with two (2) or more Classes, of each Class (or, with respect to any
default that does not relate to all Series, 66-2/3% of the aggregate unpaid
principal amount of the Notes of each Series to which such default relates or,
with respect to any such Series with two or more Classes, of each Class) may, on
behalf of all Noteholders, waive any default by the Transferor or the Servicer
in the performance of their obligations hereunder and its consequences, except
the failure to make any distributions required to be made to Noteholders or to
make any required deposits of any amounts to be so distributed. Upon any such
waiver of a past default, such default shall cease to exist, and any default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon except to the extent expressly so waived.
(h) The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee's rights, duties or immunities
under this Agreement or otherwise. In connection with the execution of any
amendment hereunder, the Owner Trustee shall be entitled to receive the Opinion
of Counsel described in subsection 9.02(d).
Section 9.02. Protection of Right, Title and Interest to Trust.
(a) The Transferor shall cause this Agreement, all amendments and
supplements hereto and all financing statements and continuation statements and
any other necessary documents covering the Indenture Trustee's and the Trust's
right, title and interest to the Trust to be promptly
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recorded, registered and filed, and at all times to be kept recorded, registered
and filed, all in such manner and in such places as may be required by law fully
to preserve and protect the right, title and interest of the Indenture Trustee,
Noteholders and the Trust hereunder to all property comprising the Trust. The
Transferor shall deliver to the Owner Trustee and Indenture Trustee file-stamped
copies of, or filing receipts for, any document recorded, registered or filed as
provided above, as soon as available following such recording, registration or
filing. The Transferor shall cooperate fully with the Servicer in connection
with the obligations set forth above and will execute any and all documents
reasonably required to fulfill the intent of this paragraph.
(b) Within thirty (30) days after any Transferor makes any change in its
name, identity or corporate structure which would make any financing statement
or continuation statement filed in accordance with paragraph (a) seriously
misleading within the meaning of Section 9-402(7) (or any comparable provision)
of the UCC, such Transferor shall give the Owner Trustee and the Indenture
Trustee notice of any such change and shall file such financing statements or
amendments as may be necessary to continue the perfection of the Trust's
security interest or ownership interest in the Receivables and the proceeds
thereof.
(c) Each Transferor shall give the Owner Trustee and the Indenture Trustee
prompt notice of any relocation of its chief principal executive office or any
change in the jurisdiction under whose laws it is organized and whether, as a
result of such relocation or change, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall file such
financing statements or amendments as may be necessary to perfect or to continue
the perfection of the Trust's security interest in the Receivables and the
proceeds thereof. Each Transferor shall at all times maintain its chief
principal executive offices within the United States and shall at all times be
organized under the laws of a jurisdiction located within the United States.
(d) The Transferor shall deliver to the Owner Trustee and the Indenture
Trustee (i) upon the execution and delivery of each amendment of this Agreement,
an Opinion of Counsel to the effect specified in Exhibit D-1; (ii) on each date
specified in subsection 2.09(c)(ix) with respect to Aggregate Additions to be
designated as Accounts, an Opinion of Counsel substantially in the form of
Exhibit D-2; and (iii) on or before [June 30] of each year, beginning with
[June 30], 2001, an Opinion of Counsel substantially in the form of Exhibit D-3.
Section 9.03. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS, AND
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 9.04. Notices; Payments.
(a) All demands, notices, instructions, directions and communications
(collectively, "Notices") under this Agreement shall be in writing and shall be
deemed to have been duly given
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if personally delivered at, mailed by registered mail, return receipt requested,
or sent by facsimile transmission (i) in the case of the Transferor, to Advanta
Business Receivables Corp., Attention: [_______________] facsimile no. [(___)
________]), with a copy to: [_________________________________________________]
Attention: [_______________] (facsimile no. [(___) ________]), (ii) in the case
of the Servicer, to Advanta Bank Corp., 11850 South Election Road, Draper, Utah
84020, Attention: [_______________] (facsimile no. [(___) ________]), (iii) in
the case of the Trust or the Owner Trustee, to
[_________________________________________________] Attention: [Corporate Trust
Administration] facsimile no. [(___) ________]), (iv) in the case of the Rating
Agency for a particular Series, the address, if any, specified in the Indenture
Supplement relating to such Series, and (v) to any other Person as specified in
the Indenture or any Indenture Supplement; or, as to each party, at such other
address or facsimile number as shall be designated by such party in a written
notice to each other party.
(b) Any Notice required or permitted to be given to a Holder of Registered
Notes shall be given by first-class mail, postage prepaid, at the address of
such Holder as shown in the Note Register. No Notice shall be required to be
mailed to a Holder of Bearer Notes or Coupons but shall be given as provided
below. Any Notice so mailed within the time prescribed in this Agreement shall
be conclusively presumed to have been duly given, whether or not the Noteholder
receives such Notice. In addition, (a) if and so long as any Series or Class is
listed on the Luxembourg Stock Exchange and such Exchange shall so require, any
Notice to Noteholders shall be published in an Authorized Newspaper of general
circulation in Luxembourg within the time period prescribed in this Agreement
and (b) in the case of any Series or Class with respect to which any Bearer
Notes are outstanding, any Notice required or permitted to be given to
Noteholders of such Series or Class shall be published in an Authorized
Newspaper within the time period prescribed in this Agreement.
Section 9.05. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall for any reason whatsoever be held invalid, then such
provisions shall be deemed severable from the remaining provisions of this
Agreement and shall in no way affect the validity or enforceability of the
remaining provisions or of the Notes or the rights of the Noteholders.
Section 9.06. Further Assurances.
The Transferor and the Servicer agree to do and perform, from time to time,
any and all acts and to execute any and all further instruments required or
reasonably requested by the Owner Trustee and the Indenture Trustee more fully
to effect the purposes of this Agreement, including the execution of any
financing statements or continuation statements relating to the Receivables for
filing under the provisions of the UCC of any applicable jurisdiction.
Section 9.07. No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of the Owner
Trustee, the Indenture Trustee or the Noteholders, any right, remedy, power or
privilege under this Agreement
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<PAGE> 56
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided under this
Agreement are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
Section 9.08. Counterparts.
This Agreement may be executed in two or more counterparts (and by
different parties on separate counterparts), each of which shall be an original,
but all of which together shall constitute one and the same instrument.
Section 9.09. Third-Party Beneficiaries.
This Agreement will inure to the benefit of and be binding upon the parties
hereto, the Indenture Trustee, the Noteholders, any holder of a Foreclosure
Certificate or Supplemental Certificate, any Series Enhancer and their
respective successors and permitted assigns. Except as otherwise expressly
provided in this Agreement, no other Person will have any right or obligation
hereunder.
Section 9.10. Actions by Noteholders.
(a) Wherever in this Agreement a provision is made that an action may be
taken or a Notice given by Noteholders, such action or Notice may be taken or
given by any Noteholder, unless such provision requires a specific percentage of
Noteholders.
(b) Any Notice, request, authorization, direction, consent, waiver or other
act by the Holder of a Note shall bind such Holder and every subsequent Holder
of such Note and of any Note issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done or omitted
to be done by the Owner Trustee, the Transferor or the Servicer in reliance
thereon, whether or not notation of such action is made upon such Note.
Section 9.11. Rule 144A Information.
For so long as any of the Notes of any Series or Class are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act, each
of the Transferor, the Owner Trustee, the Indenture Trustee, the Servicer and
any Series Enhancer agree to cooperate with each other to provide to any
Noteholders of such Series or Class and to any prospective purchaser of Notes
designated by such Noteholder, upon the request of such Noteholder or
prospective purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Securities Act.
-52-
<PAGE> 57
Section 9.12. Merger and Integration.
Except as specifically stated otherwise herein, this Agreement sets forth
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement.
This Agreement may not be modified, amended, waived or supplemented except as
provided herein.
Section 9.13. Headings.
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
Section 9.14. Limitation of Liability.
Notwithstanding any other provision herein or elsewhere, this Agreement has
been executed and delivered by [____________________], not in its individual
capacity, but solely in its capacity as Owner Trustee of the Trust, in no event
shall [____________________] in its individual capacity have any liability in
respect of the representations, warranties, or obligations of the Trust
hereunder or under any other document, as to all of which recourse shall be had
solely to the assets of the Trust, and for all purposes of this Agreement and
each other document, the Owner Trustee (as such or in its individual capacity)
shall be subject to, and entitled to the benefits of, the terms and provisions
of the Trust Agreement.
[END OF ARTICLE IX]
-53-
<PAGE> 58
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trust 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 BUSINESS RECEIVABLES CORP.,
Transferor
By:________________________________________
Name:
Title:
ADVANTA BANK CORP.,
Servicer
By:________________________________________
Name:
Title:
ADVANTA BUSINESS CARD MASTER
TRUST, Issuer
By: [___________________________________],
not in its individual capacity but solely as
Owner Trustee on behalf of the Trust,
By:________________________________________
Name:
Title:
Acknowledged and Accepted:
[__________________________],
not in its individual capacity but
solely as Indenture Trustee
By:__________________________________
Name:
Title:
[Signature Page to Transfer and Servicing Agreement]
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<PAGE> 59
EXHIBIT A
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL DESIGNATED ACCOUNTS
(AS REQUIRED BY SECTION 2.09 OF THE TRANSFER AND SERVICING AGREEMENT)
ASSIGNMENT No. __ OF RECEIVABLES IN Additional Designated Accounts dated as
of _____________,* by and among ADVANTA BUSINESS RECEIVABLES CORP., a Nevada
corporation, as Transferor (the "Transferor"), ADVANTA BANK CORP., a Utah
industrial loan corporation, as Servicer (the "Servicer") and ADVANTA BUSINESS
CARD MASTER TRUST (the "Trust"), pursuant to the Transfer and Servicing
Agreement referred to below.
WITNESSETH
WHEREAS, the Transferor, the Servicer and the Trust are parties to the
Transfer and Servicing Agreement, dated as of ____________ __, 2000 (as amended
and supplemented, the "Agreement");
WHEREAS, pursuant to the Agreement, the Transferor wishes to designate
Additional Designated Accounts to be included as Accounts and to convey the
Receivables of such Additional Designated Accounts (as each such term is defined
in the Agreement), whether now existing or hereafter created, to the Trust; and
WHEREAS, the Trust is willing to accept such designation and conveyance
subject to the terms and conditions hereof;
NOW, THEREFORE, the Transferor, the Servicer and the Trust hereby agree as
follows:
1. Defined Terms. All capitalized terms used herein shall have the meanings
ascribed to them in the Agreement unless otherwise defined herein.
"Addition Date" shall mean, with respect to the Additional Designated
Accounts designated hereby, ____________, ____.
"Additional Cut-Off Date" shall mean, with respect to the Additional
Designated Accounts designated hereby, ____________, ____.
- ----------
* To be dated as of the applicable Addition Date.
Exhibit A-1
<PAGE> 60
2. Designation of Additional Designated Accounts. On or before the date
hereof, the Transferor will deliver to the Owner Trustee a computer file or
microfiche list containing a true and complete schedule identifying all such
Additional Designated Accounts (the "Additional Designated Accounts") specifying
for each such Additional Designated Account, as of the Additional Cut-Off Date,
its account number, the aggregate amount outstanding in such Account and the
aggregate amount of Principal Receivables outstanding in such Account, which
computer file or microfiche list shall supplement Schedule 1 to the Agreement.
3. Conveyance of Receivables. (a) The Transferor does hereby transfer,
assign, set over and otherwise convey, without recourse except as set forth in
the Transfer and Servicing Agreement, to the Trust, all its right, title and
interest in, to and under the Receivables of such Additional Designated Accounts
existing at the close of business on the Additional Cut-Off Date and thereafter
created from time to time until the termination of the Trust, all Interchange
and Recoveries related thereto, all monies due or to become due and all amounts
received or receivable with respect thereto and all proceeds (including
"proceeds" as defined in the UCC) thereof. The foregoing does not constitute and
is not intended to result in the creation or assumption by the Trust, the Owner
Trustee, the Indenture Trustee, any Noteholders or any Series Enhancer of any
obligation of the Servicer, the Transferor or any other Person in connection
with the Accounts, the Receivables or under any agreement or instrument relating
thereto, including any obligation to Obligors, merchant banks, merchants
clearance systems, MasterCard(R)1, [and VISA(R)(1)] or insurers.
(b) The Transferor agrees to record and file, at its own expense,
financing statements (and continuation statements when applicable) with respect
to the Receivables in Additional Designated Accounts existing on the Additional
Cut-Off Date and thereafter created meeting the requirements of applicable state
law in such manner and in such jurisdictions as are necessary to perfect, and
maintain perfection of, the sale and assignment of its interest in such
Receivables to the Trust, and to deliver a file-stamped copy of each such
financing statement or other evidence of such filing to the Owner Trustee on or
prior to the Addition Date. The Owner Trustee shall be under no obligation
whatsoever to file such financing or continuation statements or to make any
other filing under the UCC in connection with such sale and assignment.
(c) In connection with such sale, the Transferor further agrees, at its
own expense, on or prior to the date of this Assignment, to indicate in the
appropriate computer files that Receivables created in connection with the
Additional Designated Accounts and designated hereby have been conveyed to the
Trust pursuant to the Agreement and this Assignment.
- ----------
(1) MasterCard and Visa are registered trademarks of MasterCard International
Incorporated and VISA USA, Inc., respectively.
Exhibit A-2
<PAGE> 61
(d) The Transferor does hereby grant to the Trust a security interest
in all of its right, title and interest, whether now owned or hereafter
acquired, in and to the Receivables in the Additional Designated Accounts
existing on the Additional Cut-Off Date and thereafter created, all Interchange
and Recoveries related thereto, all monies due or to become due and all amounts
received or receivable with respect thereto, all money, accounts, general
intangibles, chattel paper, instruments, documents, goods, investment property,
deposit accounts, certificates of deposit, letters of credit, and advices of
credit consisting of, arising from or related to the foregoing, and all
"proceeds" (including "proceeds" as defined in the UCC) thereof. This Assignment
constitutes a security agreement under the UCC.
4. Acceptance by Trust. The Trust hereby acknowledges its acceptance of all
right, title and interest to the property, existing on the Additional Cut-Off
Date and thereafter created, conveyed to the Trust pursuant to Section 3(a) of
this Assignment. The Trust further acknowledges that, prior to or simultaneously
with the execution and delivery of this Assignment, the Transferor delivered to
the Owner Trustee the computer file or microfiche list described in Section 2 of
this Assignment.
5. Representations and Warranties of the Transferor. The Transferor hereby
represents and warrants to the Trust, as the Addition Date that:
(a) Legal Valid and Binding Obligation. This Assignment constitutes a
legal, valid and binding obligation of the Transferor enforceable against the
Transferor in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in equity);
(b) Eligibility of Accounts. As of the Additional Cut-Off Date, each
Additional Designated Account designated hereby is an Eligible Account;
(c) Insolvency. As of each of the Additional Cut-Off Date and the
Addition Date, no Insolvency Event with respect to the Transferor has occurred
and the transfer by the Transferor of Receivables arising in the Additional
Designated Accounts to the Trust has not been made in contemplation of the
occurrence thereof;
(d) Pay Out Event; Event of Default. The Transferor reasonably believes
that (A) the transfer of the Receivables arising in the Additional Designated
Accounts will not, based on the facts known to the Transferor, then or
thereafter cause a Pay Out Event or Event of Default to occur with respect to
any Series and (B) no selection procedure was utilized by the Transferor which
would result in the selection of Additional Designated Accounts (from among the
available Eligible Accounts available to the Transferor) that would be
materially adverse to the interests of the Noteholders of any Series as of the
Addition Date;
(e) Security Interest. This Assignment constitutes a valid sale,
transfer and assignment to the Trust of all right, title and interest, whether
owned on the Additional Cut-Off Date
Exhibit A-3
<PAGE> 62
or thereafter acquired, of the Transferor in the Receivables existing on the
Additional Cut-Off Date or thereafter created in the Additional Designated
Accounts, all Interchange and Recoveries related thereto, all monies due or to
become due and all amounts received or receivable with respect thereto and the
"proceeds" (including "proceeds" as defined in the applicable UCC) thereof, or,
if this Assignment does not constitute a sale of such property, it constitutes a
grant of a "security interest" (as defined in the applicable UCC) in such
property to the Trust, which, in the case of existing Receivables and the
proceeds thereof, is enforceable upon execution and delivery of this Assignment,
and which will be enforceable with respect to such Receivables hereafter created
and the proceeds thereof upon such creation. Upon the filing of the financing
statements described in Section 3 of this Assignment and, in the case of the
Receivables hereafter created and the proceeds thereof, upon the creation
thereof, the Trust shall have a first priority perfected security or ownership
interest in such property;
(f) No Conflict. The execution and delivery by the Transferor of this
Assignment, the performance of the transactions contemplated by this Assignment
and the fulfillment of the terms hereof applicable to the Transferor, will not
conflict with or violate any Requirements of Law applicable to the Transferor or
conflict with, result in any breach of any of the material terms and provisions
of, or constitute (with or without notice or lapse of time or both) a material
default under, any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which the Transferor is a party or by which it or its
properties are bound;
(g) No Proceedings. There are no proceedings or investigations, pending
or, to the best knowledge of the Transferor, threatened against the Transferor
before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality (i) asserting the invalidity of this Assignment,
(ii) seeking to prevent the consummation of any of the transactions contemplated
by this Assignment, (iii) seeking any determination or ruling that, in the
reasonable judgment of the Transferor, would materially and adversely affect the
performance by the Transferor of its obligations under this Assignment or (iv)
seeking any determination or ruling that would materially and adversely affect
the validity or enforceability of this Assignment; and
(h) All Consents. All authorizations, consents, orders or approvals of
any court or other governmental authority required to be obtained by the
Transferor in connection with the execution and delivery of this Assignment by
the Transferor and the performance of the transactions contemplated by this
Assignment by the Transferor, have been obtained.
6. Ratification of Agreement. As supplemented by this Assignment, the
Agreement is in all respects ratified and confirmed and the Agreement as so
supplemented by this Assignment shall be read, taken and construed as one and
the same instrument.
7. Counterparts. This Assignment may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
8. GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE
Exhibit A-4
<PAGE> 63
TO ITS CONFLICT OF LAWS PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
9. Limitation of Liability. Notwithstanding any other provision herein or
elsewhere, this Assignment has been executed and delivered by
[____________________], not in its individual capacity, but solely in its
capacity as Owner Trustee of the Trust, in no event shall [____________________]
in its individual capacity have any liability in respect of the representations,
warranties, or obligations of the Trust hereunder or under any other document,
as to all of which recourse shall be had solely to the assets of the Trust, and
for all purposes of this Assignment and each other document, the Owner Trustee
(as such or in its individual capacity) shall be subject to, and entitled to the
benefits of, the terms and provisions of the Trust Agreement.
[SIGNATURE PAGE FOLLOWS]
Exhibit A-5
<PAGE> 64
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trust have caused
this Assignment to be duly executed by their respective officers as of the day
and year first above written.
ADVANTA BUSINESS RECEIVABLES CORP.,
Transferor
By:________________________________
Name:
Title:
ADVANTA BANK CORP.,
Servicer
By:________________________________
Name:
Title:
ADVANTA BUSINESS CARD MASTER TRUST,
Issuer
By: [____________________________
__________],
not in its individual capacity but
solely as Owner Trustee on behalf of
the Trust
By:________________________________
Name:
Title:
Exhibit A-6
<PAGE> 65
EXHIBIT B
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
(AS REQUIRED BY SECTION 2.10 OF THE TRANSFER AND SERVICING AGREEMENT)
REASSIGNMENT No. _______ OF RECEIVABLES dated as of _________,* by and
among ADVANTA BUSINESS RECEIVABLES CORP., a Nevada corporation, as Transferor
(the "Transferor"), ADVANTA BANK CORP., a Utah industrial loan corporation, as
Servicer and ADVANTA BUSINESS CARD MASTER TRUST (the "Trust"), pursuant to the
Transfer and Servicing Agreement referred to below.
WITNESSETH:
WHEREAS the Transferor, the Servicer and the Trust are parties to the
Transfer and Servicing Agreement, dated as of ___________ __, 20__ (as amended
and supplemented, the "Agreement");
WHEREAS pursuant to the Agreement, the Transferor wishes to remove from
the Trust all Receivables owned by the Trust in certain designated Accounts (the
"Removed Accounts") and to cause the Trust to reconvey the Receivables of such
Removed Accounts, whether now existing or hereafter created, from the Trust to
the Transferor; and
WHEREAS the Trust is willing to accept such designation and to reconvey
the Receivables in the Removed Accounts subject to the terms and conditions
hereof;
NOW, THEREFORE, the Transferor and the Trust hereby agree as follows:
1. Defined Terms. All terms defined in the Agreement and used herein
shall have such defined meanings when used herein, unless otherwise defined
herein.
"Removal Date" shall mean, with respect to the Removed Accounts
designated hereby, ___________, ____.
"Removal Notice Date" shall mean, with respect to the Removed Accounts
______________, ____.
________________________________________
* To be dated as of the Removal Date.
Exhibit B-1
<PAGE> 66
2. Designation of Removed Accounts. On or before the date that is 10
Business. Days after the Removal Date, the Transferor will deliver to the Owner
Trustee a computer file or microfiche list containing a true and complete
schedule identifying all Accounts the Receivables of which are being removed
from the Trust, specifying for each such Account, as of the Removal Notice Date,
its account number, the aggregate amount outstanding in such Account and the
aggregate amount of Principal Receivables in such Account, which computer file
or microfiche list shall supplement Schedule 1 to the Agreement.
3. Conveyance of Receivables. (a) The Trust does hereby transfer, assign,
set over and otherwise convey to the Transferor, without recourse, on and after
the Removal Date, all right, title and interest of the Trust in, to and under
the Receivables existing at the close of business on the Removal Notice Date and
thereafter created from time to time in the Removed Accounts designated hereby,
all Interchange and Recoveries related thereto, all monies due or to become due
and all amounts received or receivable with respect thereto and all proceeds
thereof.
(b) In connection with such transfer, the Trust agrees to execute and
deliver to the Transferor on or prior to the date this Reassignment is
delivered, applicable termination statements prepared by the Transferor with
respect to the Receivables existing at the close of business on the Removal
Notice Date and thereafter created from time to time in the Removed Accounts
reassigned hereby and the proceeds thereof evidencing the release by the Trust
of its interest in the Receivables in the Removed Accounts, and meeting the
requirements of applicable state law, in such manner and such jurisdictions as
are necessary to terminate such interest.
4. Representations and Warranties of the Transferor. The Transferor hereby
represents and warrants to the Trust as of the Removal Date:
(a) Legal Valid and Binding Obligation. This Reassignment constitutes a
legal, valid and binding obligation of the Transferor enforceable against the
Transferor, in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in equity);
and
(b) Pay Out Event; Event of Default. The Transferor reasonably believes
that (A) the removal of the Receivables existing in the Removed Accounts will
not, based on the facts known to the Transferor, then or thereafter cause a Pay
Out Event or Event of Default to occur with respect to any Series and (B) no
selection procedure was utilized by the Transferor which would result in a
selection of Removed Accounts that would be materially adverse to the interests
of the Noteholders of any Series as of the Removal Date.
Exhibit B-2
<PAGE> 67
(c) List of Removed Accounts. The list of Removed Accounts delivered
pursuant to subsection 2.09(c) of the Agreement, as of the Removal Date, is true
and complete in all material respects. 5. Ratification of Agreement. As
supplemented by this Reassignment, the Agreement is in all respects ratified and
confirmed and the Agreement as so supplemented by this Reassignment shall be
read, taken and construed as one and the same instrument.
6. Counterparts. This Reassignment may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
7. GOVERNING LAW. THIS REASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
8. Limitation of Liability. Notwithstanding any other provision herein or
elsewhere, this Reassignment has been executed and delivered by
[____________________], not in its individual capacity, but solely in its
capacity as Owner Trustee of the Trust, in no event shall [_________________]in
its individual capacity have any liability in respect of the representations,
warranties, or obligations of the Trust hereunder or under any other document,
as to all of which recourse shall be had solely to the assets of the Trust, and
for all purposes of this Reassignment and each other document, the Owner Trustee
(as such or in its individual capacity) shall be subject to, and entitled to the
benefits of, the terms and provisions of the Trust Agreement.
Exhibit B-3
<PAGE> 68
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trust have caused
this Reassignment to be duly executed by their respective officers as of the day
and year first above written.
ADVANTA BUSINESS RECEIVABLES CORP.,
Transferor:
By:________________________________
Name:
Title:
ADVANTA BANK CORP.,
Servicer
By:________________________________
Name:
Title:
ADVANTA BUSINESS CARD MASTER TRUST,
Issuer
By: [________________________________],
not in its individual capacity but
solely as Owner Trustee on behalf of
the Trust
By:________________________________
Name:
Title:
Exhibit B-4
<PAGE> 69
EXHIBIT C
FORM OF ANNUAL SERVICER'S CERTIFICATE
(To be delivered on or before April 30 of each calendar year beginning with
April 30, 2001, pursuant to Section 3.05 of the Transfer and Servicing Agreement
referred to below)
ASSOCIATES CREDIT CARD MASTER NOTE TRUST
The undersigned, a duly authorized representative of Advanta Bank
Corp., Inc., as Servicer ("ABC"), pursuant to the Transfer and Servicing
Agreement, dated as of _____________ __, 2000 (as amended and supplemented, the
"Agreement"), among ADVANTA BUSINESS RECEIVABLES CORP., as transferor, ABC and
ADVANTA BUSINESS CARD MASTER TRUST, does hereby certify that:
1. ABC is, as of the date hereof, the Servicer under the Agreement.
Capitalized terms used in this Certificate have their respective meanings as set
forth in the Agreement.
2. The undersigned is an Authorized Officer who is duly authorized
pursuant to the Agreement to execute and deliver this Certificate to the Trust.
3. A review of the activities of the Servicer during the year ended
December 31, ____, and of its performance under the Agreement was conducted
under my supervision.
4. Based on such review, the Servicer has, to the best of my knowledge,
performed in all material respects its obligations under the Agreement
throughout such year and no default in the performance of such obligations has
occurred or is continuing except as set forth in paragraph 5 below.
5. The following is a description of each default in the performance of
the Servicer's obligations under the provisions of the Agreement known to me to
have been made by the Servicer during the year ended December 31, ____ which
sets forth in detail (i) the nature of each such default, (ii) the action taken
by the Servicer, if any, to remedy each such default and (iii) the current
status of each such default: [If applicable, insert "None."]
Exhibit C-1
<PAGE> 70
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
this ____ day of __________________, 20__.
ADVANTA BANK CORP.,
Servicer
By:________________________________
Name:
Title:
Exhibit C-2
<PAGE> 71
EXHIBIT D-1
FORM OF OPINION OF COUNSEL
WITH RESPECT TO AMENDMENTS
(Provisions to be included in Opinion of Counsel to be delivered pursuant to
subsection 9.02(d)(i))
The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the Opinions Of Counsel
delivered on any applicable Closing Date.
(i) The amendment to the Transfer and Servicing Agreement, attached
hereto as Schedule 1 (the "Amendment" ), has been duly authorized, executed and
delivered by the Transferor and constitutes the legal, valid and binding
agreement of the Transferor, enforceable in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws from time to time in effect affecting
creditors' rights generally. The enforceability of the Transferor's obligations
is also subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(ii) The Amendment has been entered into in accordance with the terms
and provisions of Section 9.01 of the Transfer and Servicing Agreement.
Exhibit D-1-1
<PAGE> 72
EXHIBIT D-2
FORM OF OPINION OF COUNSEL
WITH RESPECT TO ACCOUNTS
(Provisions to be included in Opinion of Counsel to be delivered pursuant to
subsection 9.02(d)(ii))
The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the Opinions of Counsel
delivered on any applicable Closing Date.
1. Except for any Receivable that is evidenced by an instrument, the
Receivables constitute accounts under Article 9 of the UCC.
2. The Assignment creates in favor of the Trust a security interest in
the rights of the Transferor in such of the Receivables arising in accounts
identified in Schedule 1 to the Assignment as constitute accounts. To the extent
that such security interest is not an interest of a buyer of accounts, then the
Assignment creates in favor of the Trust a security interest in the rights of
the Transferor in the proceeds of the Receivables.
3. To extent that transactions contemplated by the Assignment do not
constitute a sale by the Transferor to the Trust of such of the Receivables as
constitute general intangibles or the proceeds thereof, the Assignment creates
in favor of the Trust a security interest in the rights of the Transferor in
such of the Receivables as constitute general intangibles and the proceeds
thereof.
4. The applicable Receivables Purchase Agreement and related Conveyance
Papers creates in favor of the Transferor a security interest in the rights of
ABC in such of the Receivables arising in accounts identified in Schedule 1 to
the applicable Receivables Purchase Agreement and related Conveyance Papers as
constitute accounts. To the extent that such security interest is not an
interest of a buyer of accounts, then the Receivables Purchase Agreement and
related Conveyance Papers create in favor of the Transferor a security interest
in the rights of ABC in the proceeds of the Receivables.
5. To the extent that transactions contemplated by the applicable
Receivables Purchase Agreement and related Conveyance Papers do not constitute a
sale by ABC to the Transferor of such of the Receivables as constitute general
intangibles or the proceeds thereof, the applicable Receivables Purchase
Agreement and related Conveyance Papers creates in favor of the Transferor a
security interest in the rights of ABC in such of the Receivables as constitute
general intangibles and the proceeds thereof.
6. The security interests described in paragraphs 2, 3, 4 and 5 above
are perfected and of first priority.
Exhibit D-2-1
<PAGE> 73
EXHIBIT D-3
PROVISIONS TO BE INCLUDED IN
ANNUAL OPINION OF COUNSEL
The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the Opinions of Counsel
delivered on any applicable Closing Date. Unless otherwise indicated, all
capitalized terms used herein shall have the meanings ascribed to them in the
Transfer and Servicing Agreement and in the Assignment.
1. No filing or other action, other than such filing or other action
described in this opinion letter, is necessary from the date of this opinion
letter through [June 30] of the following year to continue the perfected status
of the security interest of the Trust in the Receivables described in the
financing statements referenced in this opinion letter.
2. No filing or other action, other than such filings or other action
described in this opinion letter, is necessary from the date of this opinion
letter through [June 30] of the following year to continue the perfected status
of the security interest of the Transferor in the Receivables described in the
financing statements referenced in this opinion letter.
Exhibit D-3-1
<PAGE> 74
SCHEDULE 1
List of Accounts
[Original list delivered to Owner Trustee]
1-1
<PAGE> 1
EXHIBIT 4.4
ADVANTA BUSINESS CARD MASTER TRUST
TRUST AGREEMENT
between
ADVANTA BUSINESS RECEIVABLES CORP.,
as Transferor
and
[___________________________________],
as Owner Trustee
Dated as of ______, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C>
ARTICLE I
DEFINITIONS..................................................................................................... 1
SECTION 1.01. Capitalized Terms....................................................................... 1
SECTION 1.02. Other Definitional Provisions........................................................... 2
ARTICLE II
ORGANIZATION.................................................................................................... 3
SECTION 2.01. Name.................................................................................... 3
SECTION 2.02. Office.................................................................................. 3
SECTION 2.03. Purpose and Powers...................................................................... 3
SECTION 2.04. Appointment of Owner Trustee............................................................ 4
SECTION 2.05. Initial Capital Contribution of Trust Estate............................................ 4
SECTION 2.06. Declaration of Trust.................................................................... 4
SECTION 2.07. Title to Trust Property................................................................. 5
SECTION 2.08. Situs of Trust.......................................................................... 5
SECTION 2.09. Representations and Warranties of Transferor............................................ 5
SECTION 2.10. Liability of Beneficial Owners of Trust. .............................................. 6
ARTICLE III
OWNERSHIP....................................................................................................... 6
SECTION 3.01. Initial Ownership....................................................................... 6
SECTION 3.02. Transferor Certificates................................................................. 6
SECTION 3.03. Form of Transferor Beneficial Interest; Form of Certificates............................ 6
SECTION 3.04. Authentication of Certificates.......................................................... 7
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Certificate........................................ 7
SECTION 3.06. Issuance of Supplemental Beneficial Interests or New Certificates; Exchange of
Certificates and Uncertificated Trust Beneficial Interests.............................. 7
SECTION 3.07. ........................................................................................ 9
ARTICLE IV
ACTIONS BY OWNER TRUSTEE........................................................................................ 9
SECTION 4.01. Prior Notice to Owner and Transferor with Respect to Certain Matters.................... 9
SECTION 4.02. Restrictions on Power................................................................... 10
ARTICLE V
AUTHORITY AND DUTIES OF OWNER TRUSTEE........................................................................... 10
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<TABLE>
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<S> <C>
SECTION 5.01. General Authority....................................................................... 10
SECTION 5.02. General Duties.......................................................................... 11
SECTION 5.03. Action Upon Instruction................................................................. 11
SECTION 5.04. No Duties Except as Specified in this Agreement or in Instructions...................... 12
SECTION 5.05. No Action Except under Specified Documents or Instructions.............................. 12
SECTION 5.06. Restrictions............................................................................ 12
ARTICLE VI
CONCERNING THE OWNER TRUSTEE.................................................................................... 12
SECTION 6.01. Acceptance of Trusts and Duties......................................................... 12
SECTION 6.02. Furnishing of Documents................................................................. 14
SECTION 6.03. Representations and Warranties.......................................................... 14
SECTION 6.04. Reliance; Advice of Counsel............................................................. 14
SECTION 6.05. Not Acting in Individual Capacity....................................................... 15
SECTION 6.06. Owner Trustee Not Liable for Notes or Receivables....................................... 15
SECTION 6.07. Owner Trustee May Own Notes............................................................. 15
ARTICLE VII
COMPENSATION OF OWNER TRUSTEE................................................................................... 16
SECTION 7.01. Owner Trustee's Fees and Expenses....................................................... 16
SECTION 7.02. Indemnification......................................................................... 16
SECTION 7.03. Payments to the Owner Trustee........................................................... 16
ARTICLE VIII
TERMINATION OF TRUST AGREEMENT.................................................................................. 16
SECTION 8.01. Termination of Trust Agreement.......................................................... 16
ARTICLE IX
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES.......................................................... 17
SECTION 9.01. Eligibility Requirements for Owner Trustee.............................................. 17
SECTION 9.02. Resignation or Removal of Owner Trustee................................................. 17
SECTION 9.03. Successor Owner Trustee................................................................. 18
SECTION 9.04. Merger or Consolidation of Owner Trustee................................................ 18
SECTION 9.05. Appointment of Co-Trustee or Separate Trustee........................................... 19
ARTICLE X
MISCELLANEOUS................................................................................................... 20
SECTION 10.01. Supplements and Amendments............................................................. 20
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<CAPTION>
<S> <C>
SECTION 10.02. No Legal Title to Trust Estate in Transferor........................................... 21
SECTION 10.03. Limitations on Rights of Others........................................................ 21
SECTION 10.04. Notices................................................................................ 21
SECTION 10.05. Severability........................................................................... 22
SECTION 10.06. Separate Counterparts.................................................................. 22
SECTION 10.07. Successors and Assigns................................................................. 22
SECTION 10.08. Nonpetition Covenants.................................................................. 22
SECTION 10.09. No Recourse............................................................................ 22
SECTION 10.10. Headings............................................................................... 23
SECTION 10.11. GOVERNING LAW.......................................................................... 23
SECTION 10.12. Transferor Payment Obligation.......................................................... 23
SECTION 10.13. Acceptance of Terms of Agreement....................................................... 23
SECTION 10.14. Integration of Documents............................................................... 23
EXHIBIT A Form of Certificate................................................................. A-1
</TABLE>
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<PAGE> 5
ADVANTA BUSINESS CARD MASTER TRUST TRUST AGREEMENT, dated as of [_______],
2000, between ADVANTA BUSINESS RECEIVABLES CORP., a Nevada corporation, as
Transferor, and [____________________________], a [___________________________],
as Owner Trustee.
ARTICLE I
DEFINITIONS
SECTION 1.01. Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"ABC" shall mean Advanta Bank Corp., a Utah industrial loan corporation.
"ABRC" shall mean Advanta Business Receivables Corp., a Nevada corporation.
"Administration Agreement" shall mean the Administration Agreement, dated
as of [______], 2000, between the Issuer and ABC, as Administrator.
"Administrator" shall mean ABC, or any successor Administrator under the
Administration Agreement.
"Agreement" shall mean this Trust Agreement of Advanta Business Card Master
Trust, as the same may be amended, modified or otherwise supplemented from time
to time.
"Certificate" shall mean, unless otherwise indicated, the Transferor
Certificate or a Supplemental Certificate.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee located at
[______________________________], Attention: [Corporate Trust Administration];
or such other address as the Owner Trustee may designate by notice to the
Indenture Trustee and the Transferor, or the principal corporate trust office of
any successor Owner Trustee (the address of which the successor Owner Trustee
will notify the Owner and the Transferor).
"Expenses" shall have the meaning specified in Section 7.02.
"Foreclosure Certificate" shall have the meaning specified in subsection
3.07(a).
"Foreclosure Certificate Supplement" shall have the meaning specified in
subsection 3.07(a).
"Indemnified Parties" shall have the meaning specified in Section 7.02.
"Indenture" shall mean the Master Indenture, dated as of [_________], 2000,
between the Trust and [___________] as Indenture Trustee, as the same may be
amended, supplemented or otherwise modified from time to time.
"Indenture Trustee" shall mean [___________], not in its individual
capacity but solely as Indenture Trustee under the Indenture, and any successor
Indenture Trustee under the Indenture.
<PAGE> 6
"Initial Closing Date " shall mean __________, 2000.
"Issuer" shall mean the Trust.
"Owner Trustee" shall mean [__________________________], a
[____________________] corporation, not in its individual capacity but solely as
Owner Trustee under this Agreement, and any successor Owner Trustee hereunder.
"Supplemental Beneficial Interest" shall mean an additional undivided
beneficial ownership interest in the Trust created pursuant to Section 3.06.
"Supplemental Certificate" shall have the meaning specified in Section
3.06.
"Transfer and Servicing Agreement" shall mean the Transfer and Servicing
Agreement, dated as of [_________], 2000, among the Issuer, the Transferor and
ABC, as Servicer, as the same may be amended, supplemented or otherwise modified
from time to time.
"Transferor" shall mean ABRC, in its capacity as Transferor hereunder and
its successors and assigns in such capacity.
"Transferor Beneficial Interest" shall mean an undivided beneficial
ownership interest in the Trust.
"Transferor Certificate" shall mean a certificate evidencing the Transferor
Beneficial Interest.
"Transferor Certificate Supplement" shall have the meaning specified in
Section 3.06.
"Trust" shall mean the trust created by this Agreement.
"Trust Beneficial Interest" shall mean either a Transferor Beneficial
Interest or a Supplemental Beneficial Interest.
"Trust Estate" shall mean all right, title and interest of the Trust in and
to the property and rights assigned to the Trust pursuant to Section 2.05 of
this Agreement and Section 2.01 of the Transfer and Servicing Agreement, all
monies, investment property, instruments and other property on deposit from time
to time in the Collection Account, the Series Accounts and the Excess Funding
Account and all other property of the Trust from time to time, including any
rights of the Owner Trustee and the Trust pursuant to the Transaction Documents.
"Trust Termination Date" shall have the meaning specified in Section 8.01.
SECTION 1.02. Other Definitional Provisions. Capitalized terms used herein
and not otherwise defined have the meanings assigned to them in the Transfer and
Servicing Agreement or, if not defined therein, 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.
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<PAGE> 7
(b) As used in this Agreement and in any certificate or other document made
or delivered pursuant hereto, 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 GAAP. 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 GAAP, 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, subsection and Exhibit
references contained in this Agreement are references to Sections, subsections
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.
ARTICLE II
ORGANIZATION
SECTION 2.01. Name. The Trust created hereby shall be known as "Advanta
Business Card Master Trust," in which name the Trust or the Owner Trustee on
behalf of the Trust each shall have power and authority and is hereby authorized
and empowered to and may conduct the business of the Trust, make and execute
contracts and other instruments on behalf of the Trust and sue and be sued.
SECTION 2.02. Office. The office of the Trust shall be in care of the Owner
Trustee at the Corporate Trust Office or at such other address in the State of
Delaware as the Owner Trustee may designate by written notice to the Owner, the
Indenture Trustee and the Transferor.
SECTION 2.03. Purpose and Powers. The purpose of the Trust is to engage in
the activities set forth in this Section 2.03. The Trust shall have power and
authority and is hereby authorized and empowered, without the need for further
action on the part of the Trust, and the Owner Trustee shall have power and
authority, and is hereby authorized and empowered, in the name and on behalf of
the Trust, to do or cause to be done all acts and things necessary, appropriate
or convenient to cause the Trust, to engage in the activities set forth in this
Section 2.03 as follows:
(i) to execute, deliver and issue the Notes pursuant to the Indenture
and to execute, authenticate, issue and deliver the Certificates, if any,
pursuant to this Agreement;
(ii) with the proceeds of the sale of the Notes, to pay the
organizational, startup and transactional expenses of the Trust, to acquire the
Trust Assets and to pay the Transferor the amounts owed pursuant to Section 2.01
of the Transfer and Servicing Agreement;
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<PAGE> 8
(iii) to Grant the Collateral to the Indenture Trustee pursuant to the
Indenture and to hold, manage and distribute to the holders of Trust Beneficial
Interests pursuant to the terms of this Agreement and the Transaction Documents
any portion of the Collateral released from the lien of, and remitted to the
Trust pursuant to, the Indenture;
(iv) to enter into, execute, deliver and perform its obligations under
the Transaction Documents to which it is to be a party;
(v) to engage in those activities, including entering into agreements,
that are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith; and
(vi) subject to compliance with the Transaction Documents, to engage in
such other activities as may be required in connection with conservation of the
Trust Estate and the making of payments to the Noteholders and distributions to
the holders of the Transferor Beneficial Interest and the Transferor.
The Trust shall not engage in any activity other than in connection with
the foregoing or other than as required or authorized by the terms of this
Agreement or the Transaction Documents.
SECTION 2.04. Appointment of Owner Trustee. The Transferor hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein.
SECTION 2.05. Initial Capital Contribution of Trust Estate. The Transferor
hereby assigns, transfers, conveys and sets over to the Owner Trustee, as of the
date hereof, the sum of $1. The Owner Trustee hereby acknowledges receipt in
trust from the Transferor, as of the date hereof, of the foregoing contribution,
which shall constitute the initial Trust Estate and shall be held by the Owner
Trustee. The Transferor shall pay the organizational expenses of the Trust as
they may arise or shall, upon the request of the Owner Trustee, promptly
reimburse the Owner Trustee for any such expenses paid by the Owner Trustee.
SECTION 2.06. Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Trust Estate in trust upon and subject to the conditions set
forth herein for the use and benefit of the Transferor subject to the
obligations of the Trust under the Transaction Documents to which it is a party.
It is the intention of the parties hereto that the Trust constitute a common law
trust duly formed under the laws of the State of Delaware and that this
Agreement constitute the governing instrument of such trust. It is the intention
of the parties hereto that, for income tax purposes, the Trust shall be treated
as a security device and disregarded as an entity and its assets shall be
treated as owned in whole by the Transferor. The parties hereto agree that they
will take no action contrary to the foregoing intention. Effective as of the
date hereof, the Owner Trustee shall have all rights, powers and authority set
forth herein with respect to accomplishing the purposes of the Trust.
SECTION 2.07. Title to Trust Property. Legal title to all the Trust Estate
shall be vested at all times in the Owner Trustee, on behalf of the Trust,
except where applicable law in any jurisdiction requires title to any part of
the Trust Estate to be vested in a co-trustee or separate
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<PAGE> 9
trustee, in which case title shall be deemed to be vested in the Owner Trustee,
such co-trustee and/or a separate trustee, as the case may be.
SECTION 2.08. Situs of Trust. The Trust will be located and administered in
the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
New York. The Trust shall not have any employees in any state other than
Delaware; provided, however, that nothing herein shall restrict or prohibit the
Owner Trustee from having employees within or without the State of Delaware.
Payments will be received by the Trust only in Delaware or New York, and
payments will be made by the Trust only from Delaware or New York. The only
office of the Trust will be at the Corporate Trust Office in Delaware.
SECTION 2.09. Representations and Warranties of Transferor. The Transferor
hereby represents and warrants to the Owner Trustee that:
(a) The Transferor is a corporation duly organized and validly existing in
good standing under the laws of the State of Nevada and has full corporate power
and authority to own its properties and to conduct its business as such
properties are presently owned and such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement and any other
Transaction Documents to which it is a party and to perform its obligations as
contemplated hereby and thereby.
(b) The Transferor is duly qualified to do business and is in good standing
and has obtained all necessary licenses and approvals in each jurisdiction in
which failure to so qualify or to obtain such licenses and approvals would have
a material adverse effect on its ability to perform its obligations under this
Agreement or any other Transaction Documents to which the Transferor is a party.
(c) The execution and delivery of this Agreement and the consummation of
the transactions provided for in this Agreement and in the other Transaction
Documents to which the Transferor is a party have been duly authorized by the
Transferor by all necessary corporate action on its part; the Transferor has the
power and authority to assign the property to be assigned to and deposited with
the Trust pursuant to Section 2.05 of this Agreement and Section 2.01 of the
Transfer and Servicing Agreement.
(d) The execution and delivery of this Agreement, the performance of the
transactions contemplated by this Agreement and the fulfillment of the terms
hereof will not conflict with, result in any breach of any of the material terms
and provisions of, or constitute (with or without notice or lapse of time or
both) a material default under, any indenture, contract, agreement, mortgage,
deed of trust or other instrument to which the Transferor is a party or by which
it or any of its properties are bound (other than violations of such indentures,
contracts, agreements, mortgages, deeds of trust or other instruments which,
individually or in the aggregate, would not have a material adverse effect on
the Transferor's ability to perform its obligations under this Agreement).
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<PAGE> 10
(e) The execution and delivery of this Agreement, the performance of the
transactions contemplated by this Agreement and the fulfillment of the terms
hereof will not conflict with or violate any Requirements of Law applicable to
the Transferor.
(f) There are no proceedings or investigations pending or, to the best
knowledge of the Transferor, threatened against the Transferor before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality having jurisdiction over the Transferor (i) asserting the
invalidity of any of the Transaction Documents to which the Transferor is a
party, (ii) seeking to prevent the consummation of any of the transactions
contemplated by any of the Transaction Documents to which the Transferor is a
party, (iii) seeking any determination or ruling that, in the reasonable
judgment of the Transferor, would materially and adversely affect the
performance by the Transferor of its obligations under the Transaction Documents
to which the Transferor is a party, or (iv) seeking any determination or ruling
that would materially and adversely affect the validity or enforceability of the
Transaction Documents to which the Transferor is a party.
SECTION 2.10. Liability of Beneficial Owners of Trust. Neither the
Transferor nor any other holder of the Transferor Beneficial Interest shall be
liable for any liability or obligation of the Trust or the Owner Trustee.
ARTICLE III
OWNERSHIP
SECTION 3.01. Initial Ownership. The Transferor (i) shall be the initial
beneficial owner of the Trust and initially shall hold and own the Transferor
Beneficial Interest and (ii) shall be bound by the provisions of this Trust
Agreement. Any subsequent holder of an interest in the Transferor Beneficial
Interest shall be bound by the provisions of this Trust Agreement.
SECTION 3.02. Transferor Certificates. The Transferor Beneficial Interest
shall represent an undivided beneficial interest in the Trust Estate subject to
the lien of the Notes created pursuant to the Indenture, including the right to
receive Collections with respect to the Receivables and other amounts at the
times and in the amounts specified in the Indenture and any Indenture Supplement
to be paid to the Transferor on behalf of all of the holders of the Transferor
Beneficial Interest.
SECTION 3.03. Form of Transferor Beneficial Interest; Form of Certificates.
(a) Initially, the Transferor Beneficial Interest shall be issued, and held, in
uncertificated form. If requested by the Transferor, the Transferor Beneficial
Interest will be issued in certificated, registered form, in substantially the
form attached as Exhibit A hereto (a "Transferor Certificate").
(b) The Certificates shall be executed by manual or facsimile signature of
the Owner Trustee. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust, shall, when duly authenticated
pursuant to Section 3.04, be validly issued and fully paid undivided beneficial
interests in the assets of the Trust and entitled to the benefits of this
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the authentication and
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<PAGE> 11
delivery of the Certificates or did not hold such offices at the date of
authentication and delivery of the Certificates.
SECTION 3.04. Authentication of Certificates. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein, executed by or on behalf of the
Owner Trustee by the manual signature of a duly authorized signatory, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated, validly issued and
delivered hereunder. Each Certificate which is certificated shall be dated the
date of its authentication.
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Certificate. If (a) a
mutilated Certificate shall be surrendered to the Owner Trustee, or if the Owner
Trustee shall receive evidence to its satisfaction of the destruction, loss or
theft of a Certificate and (b) there shall be delivered to the Owner Trustee
such security or indemnity as may be required by it to save it harmless, then
the Owner Trustee on behalf of the Trust shall execute and the Owner Trustee
shall authenticate and deliver, in exchange for or in lieu of the mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
denomination. In connection with the issuance of any new Certificate under this
Section 3.05, the Owner Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge or expense that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant to this Section
3.05 shall constitute conclusive evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 3.06. Issuance of Supplemental Beneficial Interests or New
Certificates; Exchange of Certificates and Uncertificated Trust Beneficial
Interests. (a) At any time, the Transferor may notify the Owner Trustee in
writing to mark in the books and records of the Trust that the Transferor
Beneficial Interest has been divided and participated and to mark in such books
and records the ownership interest in the Transferor Beneficial Interest owned
by the Transferor and each additional holder. The forms and terms of the
interest in the Transferor Beneficial Interest held by each such additional
holder (the "Supplemental Beneficial Interest") shall be defined in a supplement
(a "Transferor Interest Supplement") to this Agreement (which Transferor
Interest Supplement shall be subject to Section 10.01 to the extent that it
amends any of the terms of this Agreement) to be delivered to or upon the order
of the Transferor. The creation of any such Supplemental Beneficial Interest
with respect to a holder other than an Affiliate of the Transferor shall be
subject to satisfaction of the conditions set forth in Section 3.07 below.
(b) At any time, the Transferor may surrender its Transferor Certificate to
the Owner Trustee in exchange for a newly issued Transferor Certificate and a
second certificate (a "Supplemental Certificate"), the form and terms of which
shall be defined in a supplement (a "Transferor Certificate Supplement") to this
Agreement (which Transferor Certificate Supplement shall be subject to Section
10.01 to the extent that it amends any of the terms of this Agreement) to be
delivered to or upon the order of the Transferor. The issuance of any such
Supplemental Certificate to a Person other than the Transferor or any of its
Affiliates shall be subject to satisfaction of the conditions set forth in
Section 3.07 below.
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<PAGE> 12
(c) At any time, the holder of the Transferor Beneficial Interest or a
Supplemental Beneficial Interest may exchange (i) its uncertificated Transferor
Beneficial Interest or uncertificated Supplemental Beneficial Interest for a
Transferor Certificate or a Supplemental Certificate, as the case may be, or
(ii) its Transferor Certificate or Supplemental Certificate for an
uncertificated Transferor Beneficial Interest or for an uncertificated
Supplemental Beneficial Interest, as the case may be, by written request to the
Owner Trustee. The Owner Trustee, upon receipt of such request, shall promptly
effect such transfer, by issuance and authentication of a certificate evidencing
the Transferor Certificate or Supplemental Certificate in the case of clause (i)
or by appropriate entry in the records of the Trust in the case of clause (ii).
SECTION 3.07. Restrictions on Transfer. To the fullest extent permitted by
applicable law, a Trust Beneficial Interest or a Certificate may not, in whole
or in part, be sold, transferred, assigned, participated, pledged or otherwise
disposed of to any Person, other than to the Transferor or an Affiliate of the
Transferor, unless each of the following conditions have been satisfied:
(i) on or before the fifth day immediately preceding such sale,
transfer, assignment, participation, pledge or other disposition, the transferor
of such Trust Beneficial Interest or Certificate shall have given the Owner
Trustee, the Servicer, the Indenture Trustee and each Rating Agency notice
(unless such notice requirement is otherwise waived) thereof;
(ii) the transferor of such Trust Beneficial Interest or Certificate
shall have delivered to the Owner Trustee and the Indenture Trustee any related
Transferor Interest Supplement or Transferor Certificate Supplement in a form
satisfactory to the Owner Trustee, the Indenture Trustee and such transferor,
executed by each party hereto;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such sale, transfer, assignment, participation, pledge or other
disposition;
(iv) such sale, transfer, assignment, participation, pledge or other
disposition will not result in any Adverse Effect and the transferor of such
Trust Beneficial Interest or Certificate shall have delivered to the Owner
Trustee and the Indenture Trustee an Officer's Certificate, dated the date of
such sale, transfer, assignment, participation, pledge or other disposition to
the effect that such transferor reasonably believes that such sale, transfer,
assignment, participation, pledge or other disposition will not, based on the
facts known to such officer at the time of such certification, have an Adverse
Effect and that all other conditions to such sale, transfer, assignment,
participation, pledge or other disposition have been satisfied;
(v) the transferor of such Trust Beneficial Interest or Certificate
shall have delivered to the Owner Trustee and the Indenture Trustee (with a copy
to each Rating Agency) a Tax Opinion with respect to such sale, transfer,
assignment, participation, pledge or other disposition, dated the date thereof;
and
(vi) the aggregate amount of Principal Receivables theretofore conveyed
to the Trust as of the date of such sale, transfer, assignment, participation,
pledge or other disposition shall be
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<PAGE> 13
greater than the Required Minimum Principal Balance as of the date of such sale,
transfer, assignment, participation, pledge or other disposition after giving
effect thereto.
SECTION 3.07. Issuance of Foreclosure Certificates. (a) If an Event of
Default occurs with respect to an accelerated Series of Notes entitled to a
Foreclosure Remedy, and if such Foreclosure Remedy is exercised by the Indenture
Trustee pursuant to the Indenture and related Indenture Supplement, then the
Owner Trustee shall issue a certificate evidencing a beneficial interest in the
Trust (a "Foreclosure Certificate"), the terms of which shall be the same as the
terms of such Series of Notes for which the Foreclosure Remedy is exercised and
which shall be set forth in a supplement (a "Foreclosure Certificate
Supplement") to this Agreement to be delivered to or upon the order of the
Indenture Trustee upon surrender by the Indenture Trustee of related Series of
Notes.
(b) The Foreclosure Certificate shall be issued with an "Invested Amount"
equal to the "Invested Amount" of the accelerated Series of Notes and the
holders of such Foreclosure Certificate shall be entitled to the related Series'
Investor Percentage of Finance Charge Collections (net of such Series' allocable
servicing fee) and Principal Collections.
(c) The Foreclosure Certificate may not be sold, transferred, assigned,
participated, pledged or otherwise disposed of to any Person, other than an
Affiliate of the Transferor, unless each of the following conditions has been
satisfied:
(ii) the Person that acquires an interest in the Foreclosure
Certificate is organized and existing under the laws of the United States or any
state thereof or the District of Columbia;
(ii) the Person that acquires an interest in the Foreclosure
Certificate is not (A) and "employee benefit plan" (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended, (B) a "plan"
(as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended the (the Code")) that is subject to Section 4975 of the Code, or (C) a
Person acting on behalf of or using the assets of a plan described in (A) or (B)
above; and
(iii) such sale, transfer, assignment, participation, pledge or
disposition shall not cause the Trust to be deemed to be an association (or
publicly traded partnership) taxable as a corporation, as evidenced by an
Opinion of Counsel.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.01. Prior Notice to Owner and Transferor with Respect to Certain
Matters. With respect to the following matters, unless otherwise instructed by
the Transferor, the Trust shall not take action unless at least thirty (30) days
before the taking of such action the Owner Trustee shall have notified the
Transferor:
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(a) the initiation of any claim or lawsuit by the Trust (other than an
action to collect on the Trust Estate) and the settlement of any action, claim
or lawsuit brought by or against the Trust (other than an action to collect on
the Trust Estate);
(b) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Transferor;
(d) the amendment, change or modification of the Administration Agreement,
except to cure any ambiguity or to amend or supplement any provision in a manner
that would not materially adversely affect the interests of the Transferor; or
(e) the appointment pursuant to the Indenture of a replacement or successor
Transfer Agent and Registrar or Indenture Trustee, or the consent to the
assignment by the Transfer Agent and Registrar, Administrator or Indenture
Trustee of its obligations under the Indenture.
SECTION 4.02. Restrictions on Power. (a) The Owner Trustee shall not be
required to take or refrain from taking any action if such action or inaction
would be contrary to any obligation of the Trust or the Owner Trustee under any
of the Transaction Documents or would be contrary to Section 2.03.
(b) The Owner Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement, the Transfer and Servicing Agreement and the
Indenture.
ARTICLE V
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 5.01. General Authority. Each of the Trust and the Owner Trustee in
the name of and on behalf of the Trust shall have power and authority, and is
authorized and empowered to execute and deliver the Transaction Documents to
which the Trust is to be a party and each certificate or other document attached
as an exhibit to or contemplated by the Transaction Documents to which the Trust
is to be a party, or any amendment thereto or other agreement, in each case, in
such form as the Transferor shall approve as evidenced conclusively by the Owner
Trustee's execution thereof and the Transferor's execution of the related
documents. In addition to the foregoing, the Owner Trustee in the name of and on
behalf of the Trust shall also have power and authority and is hereby authorized
and empowered, but shall not be obligated, in the name of and on behalf of the
Trust to take all actions required of the Trust pursuant to the Transaction
Documents. The Owner Trustee is hereby further authorized and empowered from
time to time to take such action as the Transferor or the Administrator directs
in writing with respect to the Transaction Documents.
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SECTION 5.02. General Duties. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the other Transaction Documents to which the
Trust is a party and to administer the Trust in the interest of the Transferor,
subject to the Transaction Documents and in accordance with the provisions of
this Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed
to have discharged its duties and responsibilities hereunder and under the other
Transaction Documents to the extent the Administrator has agreed in the
Administration Agreement or another Transaction Document to perform any act or
to discharge any duty of the Owner Trustee or the Trust under any Transaction
Document, and the Owner Trustee shall not be personally liable for the default
or failure of the Administrator to carry out its obligations under the
Administration Agreement.
SECTION 5.03. Action Upon Instruction.
(a) The Owner Trustee shall not be required to take any action hereunder or
under any other Transaction Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in personal liability on the part of the Owner Trustee or is contrary to
the terms of any Transaction Document or is otherwise contrary to law.
(b) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of any Transaction
Document, the Owner Trustee shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Transferor requesting instruction as
to the course of action to be adopted, and to the extent the Owner Trustee acts
or refrains from acting in good faith in accordance with such written
instruction of the Transferor received, the Owner Trustee shall not be
personally liable on account of such action or inaction to any Person. If the
Owner Trustee shall not have received appropriate instruction within ten (10)
days of such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not in
violation of the Transaction Documents, as it shall deem to be in the best
interest of the Transferor, and shall have no personal liability to any Person
for such action or inaction.
(c) In the event that the Owner Trustee is unsure as to the application of
any provision of any Transaction Document or any such provision is ambiguous as
to its application, or is, or appears to be, in conflict with any other
applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the Transferor requesting
instruction and, to the extent that the Owner Trustee acts or refrains from
acting in good faith in accordance with any such instruction received, the Owner
Trustee shall not be personally liable, on account of such action or inaction,
to any Person. If the Owner Trustee shall not have received appropriate
instruction within ten (10) days of such notice (or within such shorter period
of time as reasonably may be specified in such notice or may be necessary under
the circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not in violation of the Transaction Documents, as it shall
deem to be in the best interests of the Transferor, and shall have no personal
liability to any Person for such action or inaction.
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SECTION 5.04. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Trust or the Trust Estate, or to otherwise take or
refrain from taking any action under, or in connection with, this Agreement or
any document contemplated hereby to which the Trust is a party, except as
expressly provided by the terms of this Agreement or in any document or written
instruction received by the Owner Trustee pursuant to Section 5.03; and no
implied duties or obligations shall be read into any Transaction Document
against the Owner Trustee. The Owner Trustee shall have no responsibility for
any filing or recording, including filing any financing or continuation
statement in any public office at any time or to otherwise perfect or maintain
the perfection of any security interest or lien granted to it or the Trust
hereunder or to prepare or file any Commission filing for the Trust or to record
any Transaction Document. The Owner Trustee in its individual capacity
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of the Trust
Estate that result from actions by, or claims against, the Owner Trustee in its
individual capacity that are not related to the ownership or the administration
of the Trust Estate or the transactions contemplated by the Transaction
Documents.
SECTION 5.05. No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Trust Estate except (i) in accordance with the powers
granted to and the authority conferred upon the Owner Trustee pursuant to this
Agreement, (ii) in accordance with the Transaction Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 5.03.
SECTION 5.06. Restrictions. The Owner Trustee shall not take any action (a)
that, to the actual knowledge of the Owner Trustee, would violate the purposes
of the Trust set forth in Section 2.03 or (b) that, to the actual knowledge of
the Owner Trustee, would result in the Trust's becoming taxable as a corporation
or publicly traded partnership for federal income tax purposes. The Transferor
shall not direct the Owner Trustee to take action that would violate the
provisions of this Section 5.06.
ARTICLE VI
CONCERNING THE OWNER TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts, but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Trust Estate upon the terms of the Transaction Documents. The Owner
Trustee shall not be personally answerable or accountable under any Transaction
Document under any circumstances, except (i) for its own willful misconduct or
negligence or (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 6.03 expressly made by the Owner Trustee in its
individual capacity. In particular, but not by way of limitation (and subject to
the exceptions set forth in the preceding sentence):
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(a) the Owner Trustee shall not be personally liable for any error of
judgment made in good faith by the Owner Trustee;
(b) the Owner Trustee shall not be personally liable with respect to any
action taken or omitted to be taken by it in accordance with the instructions of
the Administrator or the Transferor;
(c) no provision of this Agreement or any other Transaction Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
personal financial liability in the exercise or performance of any of its
duties, rights or powers hereunder or under any other Transaction Document, if
the Owner Trustee shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be personally liable for
indebtedness evidenced by or arising under any of the Transaction Documents,
including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement, the due execution hereof by the
Transferor or the form, character, genuineness, sufficiency, value or validity
of any of the Trust Estate, the Transaction Documents, the Notes or the
Certificates (other than the genuineness of the Owner Trustee's signature on the
certificate of authentication on the Certificates) and the Owner Trustee shall
in no event assume or incur any personal liability, duty, or obligation to any
Noteholder or to the Transferor or any other Person, other than as expressly
provided for herein or expressly agreed to in the other Transaction Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct of
the Transferor, the Servicer, the Administrator or the Indenture Trustee or any
other Person under any of the Transaction Documents or otherwise, and the Owner
Trustee shall have no obligation or personal liability to perform the
obligations of the Trust under the Transaction Documents, including those that
are required to be performed by the Administrator under the Administration
Agreement, the Indenture Trustee under the Indenture or the Servicer under the
Transfer and Servicing Agreement;
(g) the Owner Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any other Transaction Document, at the request, order or direction
of the Transferor, unless the Transferor has offered to the Owner Trustee
security or indemnity satisfactory to them against the costs, expenses and
liabilities that may be incurred by them therein or thereby. The right of the
Owner Trustee to perform any discretionary act enumerated in this Agreement or
any other Transaction Document shall not be construed as a duty, and the Owner
Trustee shall not be answerable or liable to any Person for any such act other
than liability to the Trust and the beneficial owners of the Trust for its own
negligence or willful misconduct in the performance of any such act or the
omission to perform any such act; and
(h) Notwithstanding anything contained herein to the contrary, the Owner
Trustee shall not be required to take any action in any jurisdiction other than
in the State of Delaware if the taking of
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such action will: (i) require the registration with, licensing by or the taking
of any other similar action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware by or
with respect to the Owner Trustee; (ii) result in any fee, tax or other
governmental charge under the laws of any jurisdiction or any political
subdivisions thereof in existence on the date hereof other than the State of
Delaware becoming payable by the Owner Trustee; or (iii) subject the Owner
Trustee to personal jurisdiction in any jurisdiction other than the State of
Delaware for causes of action arising from acts unrelated to the consummation of
the transactions by the Owner Trustee contemplated hereby. The Owner Trustee
shall be entitled to obtain advice of counsel (which advice shall be an expense
of the Transferor) to determine whether any action required to be taken pursuant
to the Agreement results in the consequences described in clauses (i), (ii) and
(iii) of the preceding sentence. In the event that said counsel advises the
Owner Trustee that such action will result in such consequences, the Transferor
shall appoint an additional trustee pursuant to Section 9.05 hereof to proceed
with such action.
SECTION 6.02. Furnishing of Documents. The Owner Trustee shall furnish to
the Transferor and the Indenture Trustee, promptly upon written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Transaction Documents.
SECTION 6.03. Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Transferor that:
(a) It is a [Delaware banking] corporation duly organized and validly
existing in good standing under the laws of the State of [Delaware]. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the execution
and delivery by it of this Agreement, and this Agreement will be executed and
delivered by one of its officers who is duly authorized to execute and deliver
this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement, nor the
consummation by it of the transactions contemplated hereby nor compliance by it
with any of the terms or provisions hereof will contravene any federal or
[Delaware] law, governmental rule or regulation governing the banking or trust
powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
SECTION 6.04. Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no personal liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper reasonably
believed by it to be genuine and reasonably believed by it to be signed by the
proper party or parties. The Owner Trustee may accept a certified copy of a
resolution of the board of directors or other governing body of any Person as
conclusive evidence that such resolution has been duly adopted by such body and
that the same is in full force and effect. As to any fact or matter the method
of the determination of which is not specifically prescribed
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herein, the Owner Trustee may for all purposes hereof rely on a certificate,
signed by the president or any vice president or by the treasurer or other
authorized officer of an appropriate Person, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the other
Transaction Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
the Owner Trustee shall not be personally liable for the conduct or misconduct
of such agents or attorneys if such agents or attorneys shall have been selected
by the Owner Trustee with reasonable care, and (ii) may consult with counsel,
accountants and other skilled Persons to be selected with reasonable care and
employed by it. The Owner Trustee shall not be personally liable for anything
done, suffered or omitted in good faith by it in accordance with the written
opinion or written advice of any such counsel, accountants or other such
Persons.
SECTION 6.05. Not Acting in Individual Capacity. Except as expressly
provided in this Article VI, in accepting the trusts hereby created,
[_________________________] acts solely as Owner Trustee hereunder and not in
its individual capacity, and all Persons having any claim against the Owner
Trustee by reason of the transactions contemplated by any Transaction Document
shall look only to the Trust Estate for payment or satisfaction thereof.
SECTION 6.06. Owner Trustee Not Liable for Notes or Receivables. The
statements contained herein and in the Certificates, Notes and other Transaction
Documents (other than the genuineness of the signature and authentication (as
applicable) of the Owner Trustee on the Certificates and its representations and
warranties in Section 6.03) shall be taken as the statements of the Transferor,
and the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Agreement, any other Transaction Document, the Notes, the Certificates (other
than the genuineness of the signature and authentication (as applicable) of the
Owner Trustee on the Certificates) or any related documents. The Owner Trustee
shall at no time have any personal responsibility or liability for or with
respect to the legality, validity and enforceability of the Receivables or the
perfection and priority of any security interest in the Receivables or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Trust Estate or its ability to generate the payments to be
distributed to the Noteholders under the Indenture, including, without
limitation: the existence, condition and ownership of the Receivables; the
existence and contents of the Receivables on any computer or other record
thereof; the validity of the assignment of the Receivables to the Trust or of
any intervening assignment; the completeness of the Receivables; the performance
or enforcement of the Receivables; the compliance by the Transferor with any
warranty or representation made under any Transaction Document or in any related
document or the accuracy of any such warranty or representation or any action of
the Administrator, the Servicer or the Indenture Trustee taken in the name of
the Owner Trustee.
SECTION 6.07. Owner Trustee May Own Notes. The Owner Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may deal with the Transferor, the Administrator, the Servicer and the Indenture
Trustee in banking transactions with the same rights as it would have if it were
not Owner Trustee.
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ARTICLE VII
COMPENSATION OF OWNER TRUSTEE
SECTION 7.01. Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Transferor and the
Trust Company, and the Owner Trustee shall be entitled to be reimbursed by the
Transferor for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder and under the
Transaction Documents ; provided, however, that the Owner Trustee's right to
enforce such obligation shall be subject to the provisions of Section 10.08.
SECTION 7.02. Indemnification. To the fullest extent permitted by law, the
Transferor shall indemnify, defend and hold harmless the Owner Trustee and its
successors, assigns, directors, officers, agents, employees and servants
(collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred by, or asserted
against the Owner Trustee or any Indemnified Party in any way relating to or
arising out of the Transaction Documents, the Trust Estate, the acceptance and
administration of the Trust Estate or any action or inaction of the Owner
Trustee; provided that the Transferor shall not be liable for or required to
indemnify any Indemnified Party from and against Expenses arising or resulting
from any of the matters described in the third sentence of Section 6.01 or
Expenses for which indemnification is actually received under other Transaction
Documents; provided further that the Transferor shall not be liable for or
required to indemnify an Indemnified Party from and against expenses arising or
resulting from (i) the Indemnified Party's own willful misconduct, bad faith or
negligence, or (ii) the inaccuracy of any representation or warranty contained
in Section 6.03 . An Indemnified Party's right to enforce such obligation shall
be subject to the provisions of Section 10.08. The indemnities contained in this
Section 7.02 shall survive the resignation or termination of the Owner Trustee
or the termination of this Agreement. In the event of any claim, action or
proceeding for which indemnity will be sought pursuant to this Section 7.02, the
Owner Trustee's choice of legal counsel shall be subject to the approval of the
Transferor, which approval shall not be unreasonably withheld.
SECTION 7.03. Payments to the Owner Trustee. Any amounts paid to an
Indemnified Party pursuant to this Article VII shall not be construed to be a
part of the Trust Estate.
ARTICLE VIII
TERMINATION OF TRUST AGREEMENT
SECTION 8.01. Termination of Trust Agreement.
(a) The Trust shall dissolve upon the earlier of (i) at the option of the
Transferor (written notice of which shall be provided to the Owner Trustee), the
day on which the rights of all Series to
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receive payments from the Trust have terminated (the "Trust Termination Date")
and (ii) dissolution of the Trust in accordance with applicable law. After
satisfaction of liabilities of the Trust as provided by applicable law, any
money or other property held as part of the Trust Estate following such
distribution shall be distributed to the Transferor. The bankruptcy,
liquidation, dissolution, termination, death or incapacity of the Transferor
shall not (x) operate to terminate this Agreement or annul, dissolve or
terminate the Trust, or (y) entitle the Transferor's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of all or any part of the Trust or Trust Estate or
(z) otherwise affect the rights, obligations and liabilities of the parties
hereto.
(b) Except as provided in subsection 8.01(a), the Transferor shall not be
entitled to revoke, dissolve or terminate the Trust.
(c) Sections 7.02 and 10.08 shall survive the termination of the Trust and
of this Agreement.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 9.01. Eligibility Requirements for Owner Trustee. The Owner Trustee
shall at all times be a Person authorized to exercise trust powers; having a
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by federal or state authorities; and having (or having a parent
which has) a rating [of at least Baa3 by Moody's, at least BBB- by Standard &
Poor's and, if rated by Fitch, at least BBB- by Fitch, or otherwise]
satisfactory to each Rating Agency (it being understood that [______________] is
satisfactory to the Rating Agencies). If such Person shall publish reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 9.01, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Owner Trustee shall
cease to be eligible in accordance with the provisions of this Section 9.01, the
Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 9.02.
SECTION 9.02. Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Transferor; provided, however, that such
resignation and discharge shall only be effective upon the appointment of a
successor Owner Trustee. Upon receiving such notice of resignation, the
Transferor shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Owner Trustee and one copy to the successor Owner Trustee. If no
successor Owner Trustee shall have been so appointed and have accepted
appointment within thirty (30) days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 9.01 and shall fail to resign after written
request therefor by the Transferor, or if at any
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time the Owner Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Owner Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Owner Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Transferor may, but shall not be required
to, remove the Owner Trustee. If the Transferor shall remove the Owner Trustee
under the authority of the immediately preceding sentence, the Transferor shall
promptly (i) appoint a successor Owner Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the outgoing Owner
Trustee so removed and one copy to the successor Owner Trustee and (ii) pay all
amounts owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section 9.02
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 9.03 and, in the case of removal, payment of
all fees and expenses owed to the outgoing Owner Trustee. The Transferor shall
provide notice of such resignation or removal of the Owner Trustee to each
Rating Agency.
SECTION 9.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 9.02 shall execute, acknowledge and deliver to the
Transferor and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties, and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Transferor and the predecessor Owner Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Owner Trustee all such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section 9.03 unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 9.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section 9.03, the Transferor shall mail notice of such acceptance of
appointment including the name of such successor Owner Trustee to the
Transferor, the Indenture Trustee, the Noteholders and each Rating Agency. If
the Transferor shall fail to mail such notice within ten (10) days after
acceptance of appointment by the successor Owner Trustee, the successor Owner
Trustee shall cause such notice to be mailed at the expense of the Transferor.
SECTION 9.04. Merger or Consolidation of Owner Trustee. Notwithstanding
anything herein to the contrary, any Person into which the Owner Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Owner
Trustee shall be a party, or any Person succeeding to all or substantially all
of the corporate trust business of the Owner Trustee, shall be the successor of
the Owner Trustee hereunder (provided that such Person shall meet the
eligibility requirements set forth in Section
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9.01), without the execution or filing of any instrument or any further act on
the part of any of the parties hereto; provided further that the Owner Trustee
shall mail notice of such merger or consolidation to each Rating Agency.
SECTION 9.05. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate may at the time be located, the Transferor and the Owner
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by each of the Transferor
and the Owner Trustee to act as co-trustee, jointly with the Owner Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Estate,
and to vest in such Person, in such capacity, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section 9.05, such
powers, duties, obligations, rights and trusts as the Transferor and the Owner
Trustee may consider necessary or desirable. If the Transferor shall not have
joined in such appointment within fifteen (15) days after the receipt by it of a
request so to do, the Owner Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 9.01 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 9.03.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties, and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed by the
Owner Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Owner Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties, and
obligations (including the holding of title to the Trust or any portion thereof
in any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the Owner
Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement; and
(iii) the Transferor and the Owner Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
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the conduct of, affecting the liability of, or affording protection to, the
Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a
copy thereof given to the Transferor.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Supplements and Amendments. This Agreement may be amended
from time to time, by a written amendment duly executed and delivered by the
Transferor and the Owner Trustee, with the written consent of the Indenture
Trustee, but without the consent of any of the Noteholders, and upon
satisfaction of the Rating Agency Condition, to cure any ambiguity, to correct
or supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or modifying in any manner the rights of the Noteholders;
provided, however, that such amendment will not (i) as evidenced by an Officer's
Certificate of the Transferor addressed and delivered to the Owner Trustee and
the Indenture Trustee, materially and adversely affect the interest of any
Noteholder or cause the Trust to fail to be treated as a "qualified special
purpose entity" as defined in FASB Statement No. 125 and (ii) as evidenced by an
Opinion of Counsel addressed and delivered to the Owner Trustee and the
Indenture Trustee, cause the Trust to be classified as an association (or a
publicly traded partnership) taxable as a corporation for federal income tax
purposes; provided, further, that Section 2.03 of this Agreement may be amended
only with the consent of the Holders of Notes representing more than 50% of the
Outstanding Amount of all Series. Additionally, notwithstanding the preceding
sentence, this Agreement will be amended by the Transferor and the Owner Trustee
without the consent of the Indenture Trustee or any of the Noteholders to add,
modify or eliminate such provisions as may be necessary or advisable in order to
enable all or a portion of the Trust (i) to qualify as, and to permit an
election to be made to cause the Trust to be treated as, a "financial asset
securitization investment trust" as described in the provisions of Section 860L
of the Code, and (ii) to avoid the imposition of state or local income or
franchise taxes imposed on the Trust's property or its income; provided,
however, that (i) the Transferor delivers to the Indenture Trustee and the Owner
Trustee an Officer's Certificate to the effect that the proposed amendments meet
the requirements set forth in this subsection, (ii) the Rating Agency Condition
shall have been satisfied with respect to such amendment and (iii) such
amendment does not affect the rights, benefits, protections, privileges,
immunities, duties or obligations of the Owner Trustee hereunder. The amendments
which the Transferor may make without the consent of Noteholders pursuant to the
preceding sentence may include, without limitation, the addition of a sale of
Receivables.
This Agreement may also be amended from time to time by a written amendment
duly executed and delivered by the Transferor and the Owner Trustee, with the
consent of the Indenture Trustee and the Holders of Notes representing more than
50% of the Outstanding Amount of all
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<PAGE> 25
Series, and upon satisfaction of the Rating Agency Condition, 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 without the consent of all Noteholders, no
such amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of payments that are required to be made for the
benefit of the Noteholders or (b) reduce the aforesaid percentage of the
Outstanding Amount of the Notes, the Holders of which are required to consent to
any such amendment; provided further, that such amendment will not, as evidenced
by an Opinion of Counsel addressed and delivered to the Owner Trustee and the
Indenture Trustee, cause the Trust to be classified as an association (or a
publicly traded partnership) taxable as a corporation for federal income tax
purposes.
Promptly after the execution of any such amendment or consent, the
Transferor shall furnish written notification of the substance of such amendment
or consent to the Indenture Trustee and each Rating Agency.
It shall not be necessary for the consent of the Noteholders pursuant to
this Section 10.01 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof.
The Owner Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Officer's Certificate of the Transferor to the
effect that the conditions to such amendment have been satisfied.
The Owner Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Owner Trustee's own rights, duties, benefits,
protections, privileges or immunities under this Agreement or otherwise.
SECTION 10.02. No Legal Title to Trust Estate in Transferor. The Transferor
shall not have legal title to any part of the Trust Estate. No transfer, by
operation of law or otherwise, of any right, title, and interest of the
Transferor to and in its undivided beneficial interest in the Trust Estate shall
operate to terminate this Agreement or annul, dissolve or terminate the Trust or
entitle any transferee to an accounting or to the transfer to it of legal title
to any part of the Trust Estate.
SECTION 10.03. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Transferor, the
holder of any Trust Beneficial Interest or Certificate and the holder of any
Foreclosure Certificate and, to the extent expressly provided herein, the
Indenture 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 10.04. Notices. Unless otherwise expressly specified or permitted
by the terms hereof, all notices and other communications shall be in writing
and shall be deemed given upon receipt by the intended recipient or three (3)
Business Days after mailing if mailed by certified mail, postage prepaid (except
that notice to the Owner Trustee, the Transferor or Indenture Trustee shall be
deemed given only upon actual receipt by the Owner Trustee, the Transferor or
Indenture
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<PAGE> 26
Trustee), if to the Owner Trustee, addressed to the Corporate Trust Office; if
to the Indenture Trustee, addressed to [_____], if to the Transferor, addressed
to 639 Isbell Road, Suite 390, Reno, Nevada 89509, Attention: [______]; or, as
to each party, at such other address as shall be designated by such party in a
written notice to each other party.
SECTION 10.05. 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 10.06. 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 10.07. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Transferor and its permitted assignees, the Owner Trustee and its successors ,
all as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by the Transferor shall bind the successors and assigns of
the Transferor.
SECTION 10.08. Nonpetition Covenants. Notwithstanding any prior termination
of the Trust or this Agreement, the [______________________] individually or in
its capacity as Owner Trustee shall not at any time with respect to the Trust or
the Transferor, acquiesce, petition or otherwise invoke or cause the Trust or
the Transferor to invoke the process of any court or governmental authority for
the purpose of commencing or sustaining a case against the Trust or the
Transferor under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, conservator, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Trust or the Transferor or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Trust or the Transferor; provided, however, that this Section
10.08 shall not operate to preclude any remedy described in Article V of the
Indenture.
Notwithstanding any prior termination of the Trust or this Agreement, the
Transferor shall not at any time with respect to the Trust, acquiesce, petition
or otherwise invoke or cause the Trust to invoke the process of any court or
governmental authority for the purpose of commencing or sustaining a case
against the Trust under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, conservator, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Trust or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Trust; provided, however, that this Section 10.08 shall not
operate to preclude any remedy described in Article V of the Indenture.
SECTION 10.09. No Recourse. The Transferor and each subsequent holder of a
Trust Beneficial Interest or a Certificate acknowledges that its beneficial
interest in the Trust does not represent an interest in or obligation of the
Transferor, the Servicer, the Owner Trustee, the Indenture Trustee or any
Affiliate thereof (other than the Trust), and no recourse may be had against
such
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<PAGE> 27
parties or their assets, or against the assets pledged under the Indenture,
except as expressly provided in the Transaction Documents.
SECTION 10.10. 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.
SECTION 10.11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.12. Transferor Payment Obligation. The Transferor shall be
responsible for payment of the Administrator's fees under the Administration
Agreement (to the extent not paid pursuant to Section [4.05] of the applicable
Indenture Supplement) and shall reimburse the Administrator for all expenses and
liabilities of the Administrator incurred thereunder.
SECTION 10.13. Acceptance of Terms of Agreement. THE RECEIPT AND ACCEPTANCE
OF A TRANSFEROR BENEFICIAL INTEREST OR A TRANSFEROR CERTIFICATE BY THE
TRANSFEROR, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL
CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE TRANSFEROR OF ALL THE TERMS AND
PROVISIONS OF THIS AGREEMENT, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST
THAT THE TERMS AND PROVISIONS OF THIS AGREEMENT SHALL BE BINDING, OPERATIVE AND
EFFECTIVE AS BETWEEN THE TRUST AND THE TRANSFEROR.
SECTION 10.14. Integration of Documents. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements relating to the subject matter hereof.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the
day and year first above written.
[________________________________],
as Owner Trustee
By:
Name:
Title:
ADVANTA BUSINESS RECEIVABLES CORP.,
as Transferor
By:
Name:
Title:
<PAGE> 29
EXHIBIT A
Form of Transferor Certificate
THIS TRANSFEROR CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. NEITHER THIS TRANSFEROR CERTIFICATE NOR ANY PORTION
HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION PROVISIONS.
THIS TRANSFEROR CERTIFICATE IS NOT PERMITTED TO BE TRANSFERRED, ASSIGNED,
EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE WITH THE TERMS
OF THE TRUST AGREEMENT REFERRED TO HEREIN.
No. R-__ One Unit
ADVANTA BUSINESS CARD MASTER TRUST
TRANSFEROR CERTIFICATE
THIS CERTIFICATE REPRESENTS AN INTEREST IN CERTAIN
ASSETS OF THE ADVANTA BUSINESS CARD MASTER TRUST
Evidencing an undivided beneficial interest in a trust, the corpus of which
consists primarily of receivables generated from time to time in the ordinary
course of business in a portfolio of revolving credit card accounts transferred
by Advanta Business Receivables Corp. (the "Transferor").
(This Certificate does not represent an interest in or obligation of the
Transferor, the Servicer, the Owner Trustee, the Indenture Trustee or any
affiliate thereof)
This certifies that ADVANTA BUSINESS RECEIVABLES CORP. is the registered
owner of an undivided beneficial interest in the assets of a trust (the "Trust")
subject to the lien of the Notes created pursuant to the Master Indenture, dated
as of _________ __, 2000 (as amended and supplemented, the "Indenture"), between
the Trust and [______ ] as Indenture Trustee, established pursuant to the Trust
Agreement, dated as of _________ __, 2000 (as amended and supplemented, the
"Trust Agreement"), between Advanta Business Receivables Corp., a Nevada
corporation, as Transferor, and [_________________________], as owner trustee
(the "Owner Trustee"). The corpus of the Trust consists of (a) an undivided
beneficial interest in a portfolio of certain receivables (the "Receivables")
existing in the revolving credit card accounts identified under the Transfer and
Servicing Agreement, dated as of [______], 2000, as amended from time to time
(the "Transfer and Servicing Agreement"), among the Transferor, Advanta Bank
Corp., as Servicer (the "Servicer") and the Trust, as Issuer, from time to time
(the "Accounts"), (b) certain funds collected or to be collected from
accountholders in respect of the Receivables, (c) all funds which are from time
to time on deposit in the Collection Account, the Excess Funding Account and in
the Series Accounts, (d) the benefits of any Series Enhancements issued and to
be issued by Series Enhancers with respect to one or more Series of Notes and
(e) all other assets and interests constituting the
A-1
<PAGE> 30
Trust, including Interchange and Recoveries allocated to the Trust pursuant to
the Transfer and Servicing Agreement. Although a summary of certain provisions
of the Transfer and Servicing Agreement, the Trust Agreement and the Indenture
(collectively, the "Agreements") is set forth below, this Certificate does not
purport to summarize the Agreements and reference is made to the Agreements for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Owner Trustee. A copy of the Agreements may be requested from the Owner
Trustee by writing to the Owner Trustee at the Corporate Trust Office. To the
extent not defined herein, the capitalized terms used herein have the meanings
ascribed to them in the Agreements.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreements, to which Agreements, as amended and
supplemented from time to time, the Transferor by virtue of the acceptance
hereof assents and is bound.
The Receivables consist of Principal Receivables which arise generally
from the purchase of merchandise and services and amounts advanced to
cardholders as cash advances and Finance Charge and Administrative Receivables
which arise generally from Periodic Rate Finance Charges, Late Fees and other
fees and charges with respect to the Accounts.
This Certificate (this "Certificate") is the Transferor Certificate,
which represents the Transferor's undivided beneficial interest in certain
assets of the Trust, subject to the lien of the Notes, including the right to
receive a portion of the Collections and other amounts at the times and in the
amounts specified in the Indenture. In addition to the Transferor Certificate,
(a) Notes will be issued to investors pursuant to the Indenture and (b)
Supplemental Certificates may be issued pursuant to the Trust Agreement. This
Certificate may be exchanged for an uncertificated beneficial interest in the
Trust (the "Transferor Beneficial Interest").
Unless otherwise specified in an Indenture Supplement with respect to a
particular Series, the Transferor has entered into the Transfer and Servicing
Agreement, and this Certificate is issued, with the intention that, for federal,
state and local income and franchise tax purposes, (a) the Notes of each Series
which are characterized as indebtedness at the time of their issuance will
qualify as indebtedness of the Transferor secured by the Receivables and (b) the
Trust shall not be treated as an association (or a publicly traded partnership)
taxable as a corporation. The Transferor by the acceptance of this Certificate,
agrees to treat the Notes for federal, state and local income tax purposes as
indebtedness of the Transferor.
Subject to certain conditions and exceptions specified in the
Agreements, the obligations created by the Agreements and the Trust created
thereby shall terminate upon the earlier of (a) at the option of the Transferor,
the day on which the rights of all Series of Notes to receive payments from the
Trust have terminated (the "Trust Termination Date") and (b) dissolution of the
Trust in accordance with applicable law.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Owner Trustee, by manual signature, this Certificate shall not
be entitled to any benefit under the Agreement or be valid for any purpose.
A-2
<PAGE> 31
IN WITNESS WHEREOF, the Trust has caused this Certificate to
be duly executed.
ADVANTA BUSINESS CARD MASTER TRUST
By: [____________________________________]
Not in its individual capacity, but solely as
Owner Trustee
By:
Name:
Title:
Dated: [_________ __], 2000
A-3
<PAGE> 32
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Transferor Certificate described in the within-mentioned
Trust Agreement.
[___________________________________],
not in its individual capacity but solely
as Owner Trustee, of the Trust
By:
Authorized Signatory
A-4
<PAGE> 33
ANNEX 1 TO EXHIBIT A
Registered Owner and address:
Advanta Business Receivables Corp.
639 Isbell Road, Suite 390
Reno, Nevada 89509
Tax Identification Number: 23-2852207
A-5
<PAGE> 1
EXHIBIT 4.5
ADVANTA BUSINESS CARD MASTER TRUST
Issuer
and
ADVANTA BANK CORP.
Administrator
ADMINISTRATION AGREEMENT
Dated as of [_____________ ____], 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. Duties of Administrator ............................................ 2
2. Records ............................................................ 6
3. Compensation ....................................................... 6
4. Additional Information to be Furnished to Issuer ................... 6
5. Independence of Administrator ...................................... 6
6. No Joint Venture ................................................... 7
7. Other Activities of Administrator .................................. 7
8. Term of Agreement; Resignation and Removal of Administrator ........ 7
9. Action upon Termination, Resignation or Removal .................... 8
10.Notices ............................................................ 8
11.Amendments ......................................................... 9
12.Successors and Assigns ............................................. 10
13.GOVERNING LAW ...................................................... 10
14.Headings ........................................................... 10
15.Counterparts ....................................................... 10
16.Severability ....................................................... 10
17.Not Applicable to ABC in Other Capacities .......................... 10
18.Limitation of Liability of Owner Trustee ........................... 11
19.Third-Party Beneficiary ............................................ 11
20.Nonpetition Covenants .............................................. 11
21.Successor Administrator ............................................ 11
</TABLE>
i
<PAGE> 3
ADMINISTRATION AGREEMENT, dated as of _____ __, 2000 (the "Administration
Agreement"), between ADVANTA BUSINESS CARD MASTER TRUST, a common law trust
organized and existing under the laws of the State of Delaware (herein, the
"Issuer"), and ADVANTA BANK CORP., a national banking association ("ABC"), as
administrator (herein, the "Administrator").
W I T N E S S E T H :
WHEREAS, the Issuer has entered into a Master Indenture, dated as of
________ __, 2000 (as amended, modified or supplemented from time to time in
accordance with the provisions thereof, the "Indenture"), between the Issuer and
[________________________], a [_______________], as indenture trustee (the
"Indenture Trustee") to provide for the issuance of its asset backed notes (the
"Notes");
WHEREAS, the Issuer has entered into certain agreements in connection with
the issuance of the Notes and of the beneficial ownership interest in the
Issuer, including (i) a Transfer and Servicing Agreement, dated as of __________
__, 2000 (as amended, modified or supplemented from time to time in accordance
with the provisions thereof, the "Transfer and Servicing Agreement"), among
Advanta Business Receivables Corp., as Transferor (the "Transferor"), ABC, as
Servicer (in such capacity, the "Servicer"), and the Issuer, (ii) [a Depository
Agreement, dated __________ __, 2000 (the "Depository Agreement"), among the
Issuer, the Indenture Trustee, and The Depository Trust Company, and (iii)] the
Indenture (the Transfer and Servicing Agreement, [the Depository Agreement,] the
Trust Agreement and the Indenture being hereinafter referred to collectively as
the "Related Agreements") (capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Transfer and Servicing
Agreement, or if not defined therein, in the Indenture or the Trust Agreement);
WHEREAS, pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (a) the Notes
and the collateral therefor pledged pursuant to the Indenture (the "Collateral")
and (b) the beneficial ownership interest in the Issuer (the holder of such
interest being referred to herein as the "Owner");
WHEREAS, the Issuer and the Owner Trustee desire to have the Administrator
perform certain of the duties of the Issuer and the Owner Trustee referred to in
the preceding clause, and to provide such additional services consistent with
the terms of this Agreement and the Related Agreements as the Issuer and the
Owner Trustee may from time to time request;
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
<PAGE> 4
1. Duties of Administrator.
(a) Duties with Respect to the Related Agreements.
The Administrator shall consult with the Owner Trustee regarding the duties
of the Issuer and the Owner Trustee under the Related Agreements. The
Administrator shall monitor the performance of the Issuer and shall advise the
Owner Trustee when action is necessary to comply with the Issuer's or the Owner
Trustee's duties under the Related Agreements. The Administrator shall prepare
for execution by the Issuer or the Owner Trustee or shall cause the preparation
by other appropriate persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the Issuer or
the Owner Trustee to prepare, file or deliver pursuant to any Related Agreement.
In furtherance of the foregoing, the Administrator shall take all appropriate
action that it is the duty of the Issuer or the Owner Trustee to take pursuant
to the Indenture including, without limitation, such of the foregoing as are
required with respect to the following matters under the Indenture (references
are to sections of the Indenture):
(i) the preparation of or obtaining of the documents and instruments
required for authentication of the Notes, if any, and delivery of the same to
the Indenture Trustee (Section 2.03);
(ii) the duty to cause the Note Register to be kept, to appoint a
successor Transfer Agent and Registrar, if necessary, and to give the Indenture
Trustee notice of any appointment of a new Transfer Agent and Registrar and the
location, or change in location, of the Note Register (Section 2.05);
(iii) the furnishing to the Indenture Trustee, the Servicer, any
Noteholder or the Paying Agent with the names and addresses of Noteholders after
receipt of a written request therefor from the Indenture Trustee, the Servicer,
any Noteholder or the Paying Agent, respectively (Section 2.09(a));
(iv) the preparation, obtaining or filing of the instruments, opinions
and certificates and other documents required for the release of collateral
(Sections 2.11 and 8.09);
(v) the duty to direct the Indenture Trustee to deposit with any Paying
Agent the sums specified in the Indenture and the preparation of an Issuer Order
directing the investment of such funds in Eligible Investments (3.03);
(vi) the duty to cause newly appointed Paying Agents, if any, to
deliver to the Indenture Trustee the instrument specified in the Indenture
regarding funds held in trust (Section 3.03);
(vii) the direction to Paying Agents to pay to the Indenture Trustee
all sums held in trust by such Paying Agents (Section 3.03);
(viii) the obtaining and preservation of the Issuer's qualification to
do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes, the Collateral and each other instrument and agreement (Section 3.04);
2
<PAGE> 5
(ix) the preparation of all supplements, amendments, financing
statements, continuation statements, if any, instruments of further assurance
and other instruments necessary to protect the Collateral (Section 3.05);
(x) the obtaining of the Opinion of Counsel on the Closing Date and the
annual delivery of Opinions of Counsel as to the Collateral, and the annual
delivery of the Officer's Certificate and certain other statements as to
compliance with the Indenture (Sections 3.06 and 3.09);
(xi) the identification to the Indenture Trustee in an Officer's
Certificate of a Person with whom the Issuer has contracted to perform its
duties under the Indenture (Section 3.07(b));
(xii) the delivery of notice to the Indenture Trustee of the occurrence
of any Servicer Default of which the Issuer has knowledge and the action, if
any, the Issuer is taking in connection with such default (Section 3.07(d));
(xiii) the delivery to the Indenture Trustee, within 120 days after the
end of each fiscal year of the Issuer of an Officer's Certificate with respect
to various matters relating to compliance with the Indenture (Section 3.09);
(xiv) the preparation and obtaining of documents, certificates,
opinions and instruments required in connection with the consolidation or merger
by the Issuer with or into any other Person or the sale of the Issuer's assets
substantially as an entirety to any Person (Section 3.10);
(xv) the delivery of notice to the Indenture Trustee and the Rating
Agencies of (1) each Event of Default, (2) each default by the Servicer or the
Transferor under the Transfer and Servicing Agreement and (3) each default by a
seller under a Receivables Purchase Agreement (Section 3.19);
(xvi) the monitoring of the Issuer's obligations as to the satisfaction
and discharge of the Indenture and the preparation of an Officer's Certificate
and the obtaining of the Opinion of Counsel and the Independent Certificate
relating thereto (Section 4.01);
(xvii) the preparation of any written instruments required to confirm
more fully the authority of any co-trustee or separate trustee and any written
instruments necessary in connection with the resignation or removal of any
co-trustee or separate trustee (Sections 6.08 and 6.10);
(xviii) the opening of one or more accounts in the Trust's name
(Section 8.03);
(xix) the removal of the Indenture Trustee, if necessary and in
compliance with the Indenture, and the appointment of a successor (Section
6.08);
(xx) the preparation of various reports to be filed with the Indenture
Trustee and the Commission, as applicable (Section 7.03);
3
<PAGE> 6
(xxi) notifying the Indenture Trustee if and when the Notes are listed
on any stock exchange (Section 7.04);
(xxii) the preparation of an Issuer Request and Officer's Certificate
and the obtaining of an Opinion of Counsel and Independent Certificates, if
necessary, for the release of the Collateral (Sections 8.09 and 8.10);
(xxiii) the taking of the steps necessary with respect to removing the
Indenture Trustee (Section 6.08).
(xxiv) the preparation of Issuer Orders and the obtaining of Opinions
of Counsel with respect to the execution of supplemental indentures and the
mailing to the Noteholders of notices with respect to such supplemental
indentures (Sections 10.01, 10.02 and 10.03);
(xxv) the execution of new Notes conforming to any supplemental
indenture (Section 10.06);
(xxvi) the preparation of all Officers' Certificates, Opinions of
Counsel and Independent Certificates with respect to any requests by the Issuer
to the Indenture Trustee to take any action under the Indenture (Section
12.01(a));
(xxvii) the preparation and delivery of Officers' Certificates and the
obtaining of Independent Certificates, if necessary, for the release of property
from the lien of the Indenture (Section 12.01(b));
(xxviii) the notification to each Rating Agency of the information
required pursuant to Section 12.05 of the Indenture (Section 12.05);
(xxix) the preparation and delivery to Noteholders and the Indenture
Trustee of any agreements with respect to alternate payment and notice
provisions (Section 12.06); and
(xxx) compliance with the provisions of the Transfer and Servicing
Agreement applicable to the Issuer.
(b) Additional Duties.
(i) In addition to the duties of the Administrator set forth above, but
subject to Section 1(c)(ii), the Administrator shall perform all duties and
obligations of the Issuer under the Related Agreements and shall perform such
calculations and shall prepare for execution by the Issuer and shall cause the
preparation by other appropriate persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer or the Owner Trustee to prepare, file or deliver pursuant to the Related
Agreements, and at the request of the Issuer shall take all appropriate action
that it is the duty of the Issuer or the Owner Trustee to take pursuant to the
Related Agreements. Subject to Section 1(c)(ii) and 5 of this Agreement, and in
accordance with the directions of the Issuer, the Administrator shall
administer, perform or supervise the performance of such other activities in
connection with the Collateral (including the Related Agreements) as are
4
<PAGE> 7
not covered by any of the foregoing provisions and as are expressly requested by
the Owner Trustee and are reasonably within the capability of the Administrator.
(ii) The Administrator shall perform the duties of the Transferor
specified in Section 9.02 of the Trust Agreement required to be performed in
connection with the resignation or removal of the Owner Trustee, and any other
duties expressly required to be performed by the Transferor or the Administrator
under the Trust Agreement.
(iii) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into transactions
with or otherwise deal with any of its Affiliates; provided, however, that the
terms of any such transactions or dealings shall be in accordance with any
directions received from the Issuer or the Owner Trustee and shall be, in the
Administrator's opinion, no less favorable to the Issuer than would be available
from unaffiliated parties.
(iv) It is the intention of the parties hereto that the Administrator
shall, and the Administrator hereby agrees to, prepare, file and deliver on
behalf of the Issuer all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer to prepare, file
or deliver pursuant to the Related Documents. In furtherance thereof, the Owner
Trustee shall, on behalf of the Issuer, execute and deliver to the Administrator
and its agents, and to each successor Administrator appointed pursuant to the
terms hereof, one or more powers of attorney substantially in the form of
Exhibit A hereto, appointing the Administrator the attorney-in-fact of the
Issuer for the purpose of executing on behalf of the Issuer all such documents,
reports, filings, instruments, certificates and opinions.
(c) Non-Ministerial Matters.
(i) With respect to matters that in the reasonable judgment of the
Administrator are non-ministerial, the Administrator shall not take any action
unless within a reasonable time before the taking of such action, the
Administrator shall have notified the Owner Trustee of the proposed action and
the Owner Trustee shall not have withheld consent or provided an alternative
direction. For the purpose of the preceding sentence, "non-ministerial matters"
shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the Issuer
(other than in connection with the collection or enforcement of the
Collateral);
(C) the amendment, change or modification of the Related Agreements;
(D) the appointment of successor Transfer Agents and Registrars,
successor Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of successor Administrators, or the consent to
the assignment by the Transfer Agent and Registrar, Paying Agent or
Indenture Trustee of its obligations under the Indenture; and
5
<PAGE> 8
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement, the
Administrator shall not be obligated to, and shall not, (x) make any payments
from its own funds to the Noteholders, the holders of Trust Beneficial Interests
or Certificates or any other Person under the Related Agreements, (y) sell the
Collateral pursuant to Section 5.05 of the Indenture other than pursuant to a
written directive of the Indenture Trustee or (z) take any other action that the
Issuer directs the Administrator not to take on its behalf.
2. Records. The Administrator shall maintain appropriate books of account
and records relating to services performed hereunder, which books of account and
records shall be accessible for inspection by the Issuer, the Owner Trustee, the
Indenture Trustee and the Transferor at any time during normal business hours.
3. Compensation. As compensation for the performance of the Administrator's
obligations under this Agreement, the Administrator shall be entitled to $___
per month which shall be payable in accordance with Section 4.05 of the
applicable Indenture Supplement. The Transferor shall be responsible for payment
of the Administrator's fees (to the extent not paid pursuant to Section 4.05 of
the applicable Indenture Supplement) and shall reimburse the Administrator for
any of its liabilities and extra out-of-pocket expenses related to its
performance hereunder or under any Related Document.
4. Additional Information to be Furnished to Issuer. The Administrator
shall furnish to the Issuer from time to time such additional information
regarding the Collateral as the Issuer shall reasonably request.
5. Independence of Administrator. For all purposes of this Agreement, the
Administrator shall be an independent contractor and shall not be subject to the
supervision of the Issuer or the Owner Trustee with respect to the manner in
which it accomplishes the performance of its obligations hereunder. Unless
expressly set forth herein or expressly authorized by the Issuer, the
Administrator shall have no authority to act for or represent the Issuer or the
Owner Trustee in any way and shall not otherwise be deemed an agent of the
Issuer or the Owner Trustee.
6. No Joint Venture. Nothing contained in this Agreement shall (i)
constitute the Administrator and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) be construed to impose
any liability as such on any of them or (iii) be deemed to confer on any of them
any express, implied or apparent authority to incur any obligation or liability
on behalf of the others.
7. Other Activities of Administrator. Nothing herein shall prevent the
Administrator or its affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other person or entity even though such person or entity may engage in business
activities similar to those of the Issuer, the Owner Trustee or the Indenture
Trustee.
6
<PAGE> 9
8. Term of Agreement; Resignation and Removal of Administrator.
(a) This Agreement shall continue in force until the termination of the
Issuer, upon which event this Agreement shall automatically terminate.
(b) Subject to Section 8(e) and (f), the Administrator may resign its
duties hereunder by providing the Issuer with at least sixty (60) days prior
written notice.
(c) Subject to Section 8(e) and (f), the Issuer may remove the
Administrator without cause by providing the Administrator with at least sixty
(60) days prior written notice.
(d) Subject to Section 8(e) and (f), at the sole option of the Issuer, the
Administrator may be removed immediately upon written notice of termination from
the Issuer to the Administrator if any of the following events shall occur:
(i) the Administrator shall default in the performance of any of its
duties under this Agreement and, after notice of such default, shall not cure
such default within thirty (30) days (or, if such default cannot be cured in
such time, shall not give within thirty (30) days such assurance of cure as
shall be reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter a decree
or order for relief, and such decree or order shall not have been vacated within
sixty (60) days, in respect of the Administrator in any involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect or appoint a receiver, conservator, liquidator, assignee, custodian,
trustee, sequestrator or similar official for the Administrator or any
substantial part of its property or order the winding-up or liquidation of its
affairs; or
(iii) the Administrator shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator or similar official for
the Administrator or any substantial part of its property, shall consent to the
taking of possession by any such official of any substantial part of its
property, shall make any general assignment for the benefit of creditors, shall
admit in writing its inability to pay its debts generally as they become due or
shall fail generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in clause (ii)
or (iii) of this Section 8(d) shall occur, it shall give written notice thereof
to the Issuer and the Indenture Trustee within seven (7) days after the
happening of such event.
(e) No resignation or removal of the Administrator pursuant to this Section
8 shall be effective until (i) a successor Administrator shall have been
appointed by the Issuer and (ii) such successor Administrator shall have agreed
in writing to be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder.
(f) The appointment of any successor Administrator shall be effective only
after satisfaction of the Rating Agency Condition with respect to the proposed
appointment.
7
<PAGE> 10
9. Action upon Termination, Resignation or Removal. Promptly upon the
effective date of termination of this Agreement pursuant to Section 8(a) or the
resignation or removal of the Administrator pursuant to Section 8(b), (c) or
(d), respectively, the Administrator shall be entitled to be paid all fees and
reimbursable expenses accruing to it to the date of such termination,
resignation or removal. The Administrator shall forthwith upon such termination
pursuant to Section 8(a) deliver to the Issuer all property and documents of or
relating to the Collateral then in the custody of the Administrator. In the
event of the resignation or removal of the Administrator pursuant to Section
8(b), (c) or (d), respectively, the Administrator shall cooperate with the
Issuer and take all reasonable steps requested to assist the Issuer in making an
orderly transfer of the duties of the Administrator.
10. Notices. Any notice, report or other communication given hereunder
shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to
Advanta Business Card Master Trust
[c/o ___________________________
________________________________
________________________________
Attention: _____________________]
(b) if to the Administrator , to
Advanta Bank Corp.
11850 South Election Road
Draper, Utah 84020
Attn: [____________________]
(c) if to the Indenture Trustee, to
[____________________________]
[____________________________]
[____________________________]
(d) if to the Transferor, to
Advanta Business Receivables Corp.
639 Isbell Road, Suite 390
Reno, Nevada 89509
Attn: [____________________]
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above, except that notices
8
<PAGE> 11
to the Indenture Trustee, the Transferor, the Administrator or the Issuer are
effective only upon receipt.
11. Amendments. This Agreement may be amended from time to time, by a
written amendment duly executed and delivered by the Issuer, the Administrator
and the Transferor, with the written consent of the Owner Trustee, without the
consent of any of the Noteholders, the Transferor or the Owner, to cure any
ambiguity, to correct or supplement any provisions in this Agreement or for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or modifying in any manner the rights of the
Noteholders or Owner; provided, however, that (i) such amendment will not, as
evidenced by an Officer's Certificate of the Administrator addressed and
delivered to the Owner Trustee, materially and adversely affect the interests of
any Noteholder or the Owner and (ii) the Rating Agency Condition will have been
satisfied with respect to such amendment.
This Agreement may also be amended from time to time, by a written
amendment duly executed and delivered by the Issuer and the Administrator and
the Transferor, with the written consent of the Owner Trustee, the Holders of
Notes representing more than 50% of the Outstanding Amount of each adversely
affected Series, the Transferor and the Owner, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or modifying in any manner the rights of Noteholders or the
Owner; provided, however, that, without the consent of the Holders of all of the
Notes then outstanding, 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 the Collateral or distributions that are 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
Prior to the execution of any such amendment or consent, the Administrator
shall furnish written notification of the substance of such amendment or consent
to each Rating Agency. Promptly after the execution of any such amendment or
consent, the Administrator shall furnish written notification of the substance
of such amendment or consent to the Indenture Trustee.
It shall not be necessary for the consent of Noteholders pursuant to this
Section 11 to approve the particular form of any proposed amendment or consent,
but it shall be sufficient if such consent shall approve the substance thereof.
12. Successors and Assigns. This Agreement may not be assigned by the
Administrator unless such assignment is previously consented to in writing by
the Issuer, the Transferor and the Owner Trustee and subject to the satisfaction
of the Rating Agency Condition in respect thereof. An assignment with such
consent and satisfaction, if accepted by the assignee, shall bind the assignee
hereunder in the same manner as the Administrator is bound hereunder.
Notwithstanding the foregoing, this Agreement may be assigned by the
Administrator without the consent of the Issuer, the Transferor, the Owner
Trustee or the Rating Agencies to a corporation or other organization that is a
successor (by merger, consolidation or purchase of assets) to the Administrator,
provided that such successor organization executes and delivers to the Issuer,
the Transferor and the Owner Trustee an agreement in which such corporation or
other organization agrees to be bound hereunder by the terms of said assignment
in the same manner as the Administrator is bound
9
<PAGE> 12
hereunder. Subject to the foregoing, this Agreement shall bind any successors or
assigns of the parties hereto.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS
PROVISIONS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
14. Headings. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
15. Counterparts. This Agreement may be executed in counterparts, each of
which when so executed shall together constitute but one and the same agreement.
16. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall 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.
17. Not Applicable to ABC in Other Capacities. Nothing in this Agreement
shall affect any obligation ABC may have in any other capacity, other than as
Administrator.
18. Limitation of Liability of Owner Trustee. Notwithstanding anything
contained herein to the contrary, this instrument has been signed by
[__________________] not in its individual capacity but solely in its capacity
as Owner Trustee of the Issuer and in no event shall [_________________] in its
individual capacity or any beneficial owner of the Issuer have any liability for
the representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder, as to all of which recourse shall be had solely to the
assets of the Issuer. For all purposes of this Agreement, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles IV, V, VI and VII of the Trust Agreement.
19. Third-Party Beneficiary.
(a) The Owner Trustee is a third-party beneficiary to this Agreement and is
entitled to the rights and benefits hereunder and may enforce the provisions
hereof as if it were a party hereto.
(b) Solely with respect to any amounts owing to the Indenture Trustee
pursuant to Section 6.07 of the Indenture, the Indenture Trustee is a
third-party beneficiary to this Agreement and is entitled to the rights and
benefits hereunder and may enforce the provisions hereof as if it were a party
hereto.
20. Nonpetition Covenants. Notwithstanding any prior termination of this
Agreement, the Administrator shall not at any time with respect to the Issuer or
the Transferor acquiesce, petition or otherwise invoke or cause the Issuer or
the Transferor to invoke the process of any court or
10
<PAGE> 13
government authority for the purpose of commencing or sustaining a case against
the Issuer or the Transferor under any Federal or state bankruptcy, insolvency
or similar law or appointing a receiver, conservator, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or the
Transferor or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Issuer or the Transferor; provided,
however, that this Section 20 shall not operate to preclude any remedy described
in Article V of the Indenture.
21. Successor Administrator. In the event of a servicing transfer pursuant
to Article V of the Transfer and Servicing Agreement, the successor servicer
under the Transfer and Servicing Agreement shall, upon the date of such
servicing transfer, become the successor Administrator hereunder.
"Administrator" shall mean initially ABC and thereafter its permitted successor
and assigns as provided in Section 12 or any successor Administrator as provided
in this Section 21.
[SIGNATURE PAGE FOLLOWS]
11
<PAGE> 14
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
ADVANTA BUSINESS CARD MASTER TRUST
By: [_______________________________],
not in its individual capacity
but solely as Owner Trustee
By:
Name:
Title:
ADVANTA BANK CORP.,
as Administrator
By: _____________________________________
Name:
Title:
Acknowledged and Accepted:
ADVANTA BUSINESS RECEIVABLES CORP.,
as Transferor
By:
Name:
Title:
<PAGE> 15
EXHIBIT A
[Form of Power of Attorney]
POWER OF ATTORNEY
STATE OF DELAWARE )
)
COUNTY OF _____________)
KNOW ALL MEN BY THESE PRESENTS, that Advanta Business Card Master Trust, a
Delaware common law business trust ("Trust"), does hereby make, constitute and
appoint Advanta Bank Corp., as Administrator under the Administration Agreement
(as defined below), and its agents and attorneys, as Attorneys-in-Fact to
execute on behalf of the Trust all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the Trust to
prepare, file or deliver pursuant to the Related Documents (as defined in the
Administration Agreement), including, without limitation, to appear for and
represent the Trust in connection with the preparation, filing and audit of
federal, state and local tax returns pertaining to the Trust, and with full
power to perform any and all acts associated with such returns and audits that
the Trust could perform, including without limitation, the right to distribute
and receive confidential information, defend and assert positions in response to
audits, initiate and defend litigation, and to execute waivers of restriction on
assessments of deficiencies, consents to the extension of any statutory or
regulatory time limit, and settlements. For the purpose of this Power of
Attorney, the term "Administration Agreement" means the Administration
Agreement, dated as of _____ __, 2000, between the Trust and Advanta Bank Corp.,
as Administrator, and as such may be amended from time to time.
This power of attorney is coupled with an interest and shall survive and
not be affected by the subsequent bankruptcy, insolvency or dissolution of the
Trust.
All powers of attorney for this purpose heretofore filed or executed by the
Trust are hereby revoked.
EXECUTED this ____ day of _________, 2000.
ADVANTA BUSINESS CARD MASTER TRUST
By: [______________________________],
not in its individual capacity
but solely as Owner Trustee
By:
Name:
Title:
A-1
<PAGE> 1
Exhibit 5.1
May 25, 2000
Advanta Business Receivables Corp.
639 Isbell Road, Suite 390
Reno, Nevada 89509
Re: ADVANTA BUSINESS CARD MASTER TRUST
ASSET BACKED NOTES
Ladies and Gentlemen:
We have acted as special counsel for Advanta Business
Receivables Corp., a Nevada corporation ("ABRC"), in connection with the filing
by ABRC, on behalf of Advanta Business Card Master Trust (the "Trust"), with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), of a Registration Statement on Form S-3, Registration No. 333-
32874 (the "Registration Statement"), and Amendment No. 1 to the Registration
Statement, filed by ABRC under the Act, registering its Asset Backed Notes
secured by receivables in a portfolio of business revolving credit card accounts
and related assets (the "Notes"). The Notes of a particular Series will be
issued pursuant to a Master Indenture (the "Indenture") between the Trust and an
indenture trustee (the "Indenture Trustee"), substantially in the form filed as
Exhibit 4.1 to the Registration Statement, and a related Series Supplement to
the Indenture (the "Series Supplement") between the Trust and the Indenture
Trustee, substantially in the form filed as Exhibit 4.2 to the Registration
Statement.
We have examined the Registration Statement, the form of
Indenture and the form of Series Supplement. We also have examined the
originals, or duplicates or certified or conformed copies, of such records,
agreements, instruments and other documents and have made such other and further
investigations as we have deemed relevant and necessary in connection with the
opinions expressed herein. As to questions of fact material to this opinion, we
have relied upon certificates of public officials and of officers and
representatives of ABRC.
We have assumed that at the time of execution, authentication, issuance
and delivery of any Series of Notes, each of the following will be true: (i)
each of the Trust and the Indenture Trustee will be duly formed and validly
existing under the laws of the jurisdiction of its formation; (ii) each of the
Trust and the Indenture Trustee will have the requisite power and authority to
execute, deliver, and perform its obligations under, the Indenture and the
related Series Supplement; (iii) each of the
<PAGE> 2
Advanta Business Receivables Corp.
May 25, 2000
Page 2
Indenture and the related Series Supplement will constitute the legal, valid and
binding obligation of the Indenture Trustee, and will be enforceable against the
Indenture Trustee in accordance with its respective terms; (iv) no consent,
approval, authorization or order of, registration or filing with, or notice to,
any governmental authority or court will be required for the execution, delivery
and performance of the Indenture or the related Series Supplement by the Trust
or the Indenture Trustee or the consummation of the transactions contemplated
thereby; (v) there will be no action, proceeding or investigation pending or
threatened against the Trust or the Indenture Trustee before any court,
governmental agency or body or other tribunal (a) asserting the invalidity of
the Indenture or the related Series Supplement or such Notes, (b) seeking to
prevent the issuance of such Notes or the consummation of any of the
transactions contemplated by the Indenture or the related Series Supplement, or
(c) which would adversely affect the performance by the Trust or the Indenture
Trustee of its obligations under, or the validity or enforceability of, the
Indenture or the related Series Supplement; and (vi) none of the issuance or
sale of such Notes, or the execution, delivery or performance of the Indenture
or the related Series Supplement by the Trust or the Indenture Trustee (a) will
conflict with or result in a breach of, or will constitute a default under (1)
any term or provision of any material agreement, contract instrument or
indenture to which the Trust or the Indenture Trustee is a party or to which it
is bound, (2) any order, judgment, writ, injunction or decree of any court or
governmental agency or body or other tribunal having jurisdiction over the Trust
or the Indenture Trustee, or (3) any law, rule or regulation, or (b) will result
in the creation or imposition of any lien, charge or encumbrance upon the Trust
Estate, except as otherwise contemplated by the Indenture.
Based upon the foregoing, and subject to the qualifications
and limitations set forth herein, we are of the opinion that:
1. When the Indenture and the Series Supplement relating to a
particular Series of Notes have been duly authorized, executed and
delivered by each of the Trust and the Indenture Trustee, the Indenture
and such Series Supplement will constitute binding obligations of the
Trust.
2. When the Notes of a particular Series have been duly
authorized by the Trust, and when such Notes have been duly executed,
authenticated, issued and delivered in accordance with the provisions
of the Indenture and the related Series Supplement, such Notes will be
fully paid, nonassessable and validly issued and will constitute
binding obligations of the Trust.
Our opinions set forth above in paragraphs 1 and 2 are subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law).
<PAGE> 3
Advanta Business Receivables Corp.
May 25, 2000
Page 3
We are members of the Bar of the State of New York, and we do
not express any opinion herein concerning any law other than the law of the
State of New York and the Federal law of the United States.
We hereby consent to the filing of this opinion letter as
Exhibit 5 to the Registration Statement.
Very truly yours,
WOLF, BLOCK, SCHORR and SOLIS-COHEN LLP
<PAGE> 1
Exhibit 8.1
May 25, 2000
Advanta Business Receivables Corp.
639 Isbell Road, Suite 390
Reno, Nevada 89509
Re: ADVANTA BUSINESS CARD MASTER TRUST
ASSET BACKED NOTES
Ladies and Gentlemen:
We have acted as special tax counsel to Advanta Business
Receivables Corp., a Nevada corporation ("ABRC"), in connection with the filing
by ABRC, on behalf of Advanta Business Card Master Trust (the "Trust"), with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), of a Registration Statement on Form S-3, Registration No. 333-32874
(the "Registration Statement"), and Amendment No. 1 to the Registration
Statement, filed by ABRC under the Act, registering its Asset Backed Notes
secured by receivables in a portfolio of business revolving credit card accounts
and related assets (the "Notes"). The Notes of a particular Series will be
issued pursuant to a Master Indenture (the "Indenture") between the Trust and an
indenture trustee (the "Indenture Trustee"), substantially in the form filed as
Exhibit 4.1 to the Registration Statement, and a related Series Supplement to
the Indenture (the "Series Supplement") between the Trust and the Indenture
Trustee, substantially in the form filed as Exhibit 4.2 to the Registration
Statement. Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in the form of Indenture.
We have examined the Registration Statement, the form of
Indenture and the form of Series Supplement. We also have examined the
originals, or duplicates or certified or conformed copies, of such records,
agreements, instruments and other documents and have made such other and further
investigations as we have deemed relevant and necessary in connection with the
opinions expressed herein. As to questions of fact material to this opinion, we
have relied upon certificates of public officials and of officers and
representatives of ABRC.
We have assumed that at the time of execution, authentication,
issuance and delivery of any Series of Notes, each of the following will be
true: (i) each party to the related Transaction Documents will be duly formed
and validly existing under the laws of the jurisdiction of its formation; (ii)
each party to the related Transaction Documents will have the requisite power
and authority to execute, deliver, and perform its obligations under, the
related Transaction Documents to which it is a party; (iii) each of the related
Transaction Documents will have been duly authorized, executed and delivered by
the parties thereto; (iv) the related Transaction Documents will constitute the
legal, valid and binding obligations of the parties thereto, and will be
enforceable against the parties thereto in accordance with their respective
terms; (v) no consent, approval, authorization or
<PAGE> 2
Advanta Business Receivables Corp.
May 25, 2000
Page 2
order of, registration or filing with, or notice to, any governmental authority
or court will be required for the execution, delivery and performance of the
related Transaction Documents by any party thereto or the consummation of the
transactions contemplated thereby; (vi) there will be no action, proceeding or
investigation pending or threatened before any court, governmental agency or
body or other tribunal (a) asserting the invalidity of any Transaction Document
or such Notes, (b) seeking to prevent the issuance of such Notes or the
consummation of any of the transactions contemplated by the related Transaction
Documents, or (c) which would adversely affect the performance by any party of
its obligations under, or the validity or enforceability of, any of the related
Transaction Documents; and (vii) none of the transfer of the Receivables to the
Trust, the issuance or sale of such Notes, or the execution, delivery or
performance of any related Transaction Document by any party thereto (a) will
conflict with or result in a breach of, or will constitute a default under (1)
any term or provision of any material agreement, contract, instrument or
indenture to which any party to a related Transaction Document is a party or to
which it is bound, (2) any order, judgment, writ, injunction or decree of any
court or governmental agency or body or other tribunal, or (3) any law, rule or
regulation, or (b) will result in the creation or imposition of any lien, charge
or encumbrance upon the Trust Estate, except as otherwise contemplated by the
Indenture.
Based upon the foregoing, and subject to the qualifications
and limitations set forth herein, we are of the opinion that the statements set
forth in the prospectus included in the Registration Statement (the
"Prospectus") under the caption "Federal Income Tax Consequences," insofar as
they purport to constitute summaries of matters of United States federal income
tax law and regulations or legal conclusions with respect thereto, constitute
accurate summaries of the matters described therein in all material respects. We
hereby confirm the opinions expressly set forth under the caption "Federal
Income Tax Consequences" in the Prospectus.
We are members of the Bar of the State of New York, and we do
not express any opinion herein concerning any law other than the law of the
State of New York and the Federal law of the United States.
We hereby consent to the filing of this opinion letter as
Exhibit 8 to the Registration Statement and the use of our name under the
captions "Legal Matters" and "Federal Income Tax Consequences" in the Prospectus
included in the Registration Statement.
Very truly yours,
WOLF, BLOCK, SCHORR and SOLIS-COHEN LLP
