As filed with the Securities and Exchange Commission,
via EDGAR, on March 17, 1999.
Registration No. 333-____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Advanta Corp.
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(Exact name of Registrant as specified in its charter)
Delaware 23-1462070
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation of Registrant) Identification Number)
Welsh & McKean Roads
SpringHouse, PA 19477
(215) 657-4000
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(Address, including zip code, and telephone number, including area code, of
Registrant principal executive offices)
Elizabeth H. Mai, Esquire
Senior Vice President, Secretary and General Counsel
Advanta Corp.
Welsh & McKean Roads
SpringHouse, PA 19477
(215) 657-4000
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are to be 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, as amended (the "Securities Act"), 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
under the Securities Act, please check the following box. [ ]
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=====================================================================================================================
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price aggregate offering Amount of
securities to be registered registered (1) per unit (1)(2) price (1)(2) registration fee (3)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RediReserve Certificates, Notes.... $300,000,000 100% $300,000,000 $83,400
=====================================================================================================================
</TABLE>
(1) Pursuant to Rule 457 under the Securities Act, which permits the
registration fee to be calculated on the basis of the maximum offering
price of all the securities listed, the table does not specify by each
class information as to the amount to be registered, proposed maximum
offering price per unit or proposed maximum aggregate offering price. In no
event will the aggregate initial offering price of the securities
registered hereby exceed $300,000,000.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.
(3) Calculated pursuant to Rule 457(o) under the Securities Act.
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>
Subject to Completion, Dated March 17, 1999
$300,000,000 Principal Amount of Senior Debt Securities
[ADVANTA LOGO]
RediReserve Variable Rate Certificates
91 Day Notes
Six, 18 and 30 Month Notes
One, Two, Three, Four, Five, Seven and Ten Year Notes
We are offering the RediReserve Variable Rate Certificates ("RediReserve
Certificates") and the Notes of Advanta Corp. ("Advanta"). The RediReserve
Certificates do not have a maturity date but may be redeemed by the holder at
any time. The Notes will be offered from time to time with maturities ranging
from 91 days to ten years, at our option. We will establish interest rates on
the RediReserve Certificates and the Notes from time to time in supplements to
this prospectus. You should read this prospectus and the applicable prospectus
supplement carefully before you invest.
The RediReserve Certificates and the Notes offered in this prospectus are
unsecured obligations of Advanta. Neither the RediReserve Certificates nor the
Notes are insured or guaranteed by the Federal Deposit Insurance Corporation or
any other governmental agency.
Unless otherwise indicated in the supplement to this prospectus, the
RediReserve Certificates and the Notes are being sold by Advanta directly
through employees of Advanta who, under Rule 3a4-1 of the Securities Exchange
Act of 1934, as amended, are not deemed to be brokers.
The RediReserve Certificates and the Notes will not be listed for sale on a
securities exchange and we do not expect that any active trading market for
these securities will develop or be sustained.
An investment in the RediReserve Certificates or the Notes involves certain
risks. You should consider carefully the risk factors and other information set
forth in this prospectus before you decide to purchase these securities. See
"Risk Factors" beginning on page 6.
Advanta will receive all of the proceeds from the sale of the RediReserve
Certificates and the Notes, from which it will pay underwriters' discounts and
commissions, if any.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed on the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _________ __, 1999.
The information in this prospectus is not complete and may be changed. 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 it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
TABLE OF CONTENTS
PAGE
----
SUMMARY OF THE OFFERING..................................... 3
HIGHLIGHTS OF TERMS OF SECURITIES OFFERED................... 5
RISK FACTORS................................................ 6
THE COMPANY................................................. 11
USE OF PROCEEDS............................................. 13
DESCRIPTION OF SECURITIES................................... 13
General................................................ 13
Provisions Relating to RediReserve Certificates........ 13
Provisions Relating to Notes........................... 16
Provisions Relating to All Securities.................. 17
A SPECIAL NOTE ABOUT CERTAIN OTHER ADVANTA DEBT SECURITIES
NOT COVERED BY THIS PROSPECTUS............................ 20
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES............... 20
U.S. Holders........................................... 21
Backup Withholding and Information Reporting........... 21
PLAN OF DISTRIBUTION........................................ 22
WHERE YOU CAN FIND MORE INFORMATION --
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE......... 24
LEGAL OPINIONS.............................................. 24
EXPERTS..................................................... 24
------------------------
You should rely only on the information contained or incorporated by
reference in this prospectus and any applicable prospectus supplement. We have
not authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of the document. Our business, financial condition, results of operations
and prospects may have changed since that date.
We are not making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted.
All references to "we" or "us" or "our" or "Advanta" in this prospectus and
any accompanying prospectus supplement mean only Advanta Corp., unless it is
made clear that the term means Advanta Corp. and its consolidated subsidiaries.
2
<PAGE>
SUMMARY OF THE OFFERING
This summary highlights selected information about the securities offered
in this prospectus. It does not contain all of the information that you may need
to consider in making your investment decision. Read carefully this entire
prospectus and the applicable prospectus supplement to understand all of the
terms of this offering.
Securities Offered
This prospectus relates to $300,000,000 of RediReserve Certificates and
Notes. The RediReserve Certificates and the Notes are sometimes collectively
referred to in this prospectus as the "Securities". The RediReserve Certificates
are payable on the demand of the holder. The Notes are offered from time to time
with maturities of:
o 91 days;
o six, 18 and 30 months; and
o one, two, three, four, five, seven and ten years.
The buyer of each Note selects the maturity date at the time of purchase
from among the maturities then offered by Advanta.
The Securities are not insured, guaranteed or secured by any of our assets.
In addition, we do not contribute funds to a separate account, commonly known as
a sinking fund, to ensure repayment of the Securities upon maturity or interest
when due.
We will compound interest on the RediReserve Certificates daily and we will
add the interest to the balance of a holder's RediReserve Certificate monthly.
We will not pay interest by check, except upon a holder's redemption of the
entire amount of a RediReserve Certificate. Upon a holder's redemption of the
entire amount of a RediReserve Certificate, we will pay by check any accrued
interest that has not previously been added to the principal balance of the
RediReserve Certificate. We will not pay interest on any RediReserve Certificate
for any day for which the end-of-the-day balance of that RediReserve Certificate
is less than $100. Advanta may elect to charge a service fee of $10 for any
statement period for each RediReserve Certificate that has an average
end-of-the-day balance for the period of less than $100. Holders may obtain by
draft funds held in the form of RediReserve Certificates, except as described
under the sections of this prospectus titled "Description of Securities --
Redemption at Holder's Election" and " -- Redemption by Draft."
We will compound interest on all Notes daily. We will pay interest on Notes
with maturities of 91 days or six months only at maturity. On all other Notes,
we will pay interest monthly, quarterly, semi-annually, annually or at maturity,
at the holder's election.
A table summarizing the terms of the Securities appears on page 5.
Modification, Termination or Extension of Offering
We reserve the right to change the terms of this offering or the terms of
the Securities at any time. However, any modification will apply only to
Securities offered after the date of the modification, except as described under
"Description of Securities -- General." From time to time, the total amount of
Securities we offer for sale may be increased.
How to Contact Us
Holders of RediReserve Certificates or Notes who have customer service
inquiries and potential investors who would like to receive a copy of this
prospectus may call us at 1-800-223-7074 or write us at the following address:
Advanta Corp., Delaware Corporate Center - Second Floor, One Righter Parkway,
Wilmington, Delaware 19803.
3
<PAGE>
Our Principal Executive Office
Our principal executive office is located at Welsh & McKean Roads, Spring
House, Pennsylvania 19477-0844. The telephone number at our principal executive
office is (215) 657-4000.
Ratio of Earnings to Fixed Charges
The following table sets forth the ratio of earnings to fixed charges of
Advanta for the periods indicated:
<TABLE>
<CAPTION>
Three Months Nine Months Year Ended December 31,
Ended Ended -------------------------------------
September 30, 1998 September 30, 1998 1997 1996 1995 1994 1993
------------------ ------------------ ----- ----- ----- ----- -----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges (A)...... 1.57x 3.85x 1.29x 1.97x 2.26x 2.71x 2.52x
</TABLE>
- ------------------
(A) For purposes of computing these ratios, "earnings" represent income before
income taxes plus fixed charges. "Fixed charges" consist of interest
expense, one-third (the proportion deemed representative of the interest
factor) of rental expenses on operating leases and preferred stock dividends
of a subsidiary trust.
4
<PAGE>
HIGHLIGHTS OF TERMS OF SECURITIES OFFERED
<TABLE>
<S> <C>
|
| RediReserve Variable Rate Certificates
|
Denomination of | Minimum initial purchase: $5,000 or other amount we specify
Initial Purchase and | in a prospectus supplement; additional purchases in any
Additional Purchases | amount.
|
Annual Interest Rate | The interest rate we pay on any particular RediReserve
| Certificate depends on the tier into which the
| end-of-the-day balance of that RediReserve Certificate
| falls. Different interest rates and annual percentage yields
| may apply to RediReserve Certificates depending upon which
| of the following tiers, or ranges, the end-of-the-day
| balance of a RediReserve Certificate falls:
|
| o $100.00 to $4,999.99
| o $5,000.00 to $24,999.99
| o $25,000.00 to $49,999.99
| o $50,000.00 and above
|
| We will not pay interest on a RediReserve Certificate for
| any day on which the end-of-the-day balance of a RediReserve
| Certificate is less than $100. Interest rates and annual
| percentage yields for each tier may change from week to week
| and will apply to outstanding RediReserve Certificates. We
| will set interest rates for each tier each Sunday, and they
| will be in effect through the following Saturday. We will
| set interest rates at our discretion, however interest rates
| for each one-week period commencing on Sunday will be at
| least equal to the rate of the Thirteen Week U.S. Treasury
| Bills auctioned on the immediately preceding Monday less one
| percent.
|
Payment of Interest | Interest is compounded daily. We add accrued interest
| monthly to the principal balance of each RediReserve
| Certificate. Except as otherwise provided in this
| prospectus, we will not pay interest by check.
|
Redemption by Holder | Holders may require redemption upon oral or written demand,
| or by draft. Holders may cause redemption by draft utilizing
| up to four drafts per statement period without any service
| fee. We will charge a service fee of $15 for each draft in
| excess of four in any statement period.
|
Redemption by Advanta | We may redeem on 30 days' notice.
Form | Book-entry and non-negotiable.
| A confirmation of the transaction will be issued, not a
| promissory note.
|
Automatic Extension | Not applicable -- no fixed maturity.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
<CAPTION>
<S> <C>
91 Day, Six, 18 and 30 Month, and
One, Two, Three, Four, Five, Seven and Ten Year Notes
Denomination of Minimum purchase: $5,000 or other amount we specify in a
Initial Purchase and prospectus supplement.
Additional Purchases
Annual Interest Rate We fix interest rates, from time to time, based on market
conditions and our financial requirements. Once determined,
the interest rate on each Note remains fixed until its
maturity, but may change if the term of the Note is
extended. If the term of a Note is extended, we will inform
holders of any change in the interest rate in a supplement
to this prospectus.
Payment of Interest Interest is compounded daily. We pay interest on Notes with
maturities of 91 days or six months only at maturity. On all
other Notes, at the election of the holder,
we pay interest monthly, quarterly, semi-annually, annually
or at maturity.
Redemption by Holder An individual holder may cause redemption after his or her
total permanent disability, or his or her estate may cause
redemption after his or her death. For Notes with joint
holders, the election to cause redemption may be made by any
holder after the death or total permanent disability of any
holder. The redemption price is the principal amount plus
accrued and unpaid interest up to but not including the date
of redemption. Otherwise, holders have no right to
redemption of their Notes prior to maturity.
Redemption by Advanta We may not redeem until maturity.
Form Book-entry and non-negotiable.
A confirmation of the transaction will be issued, not a
promissory note.
Automatic Extension If we do not give notice of redemption at least seven
Business Days prior to maturity and if redemption or
conversion to another term is not requested by the holder
within seven Business Days after the maturity date, then a
Note with a principal amount of $2,500 or more will be
extended automatically for a period equal to the original
term if Notes of the same term and denomination are then
being offered. A Note with a principal amount that is less
than $2,500 at maturity will be redeemed automatically.
Notes are extended at the rate we are offering on
newly-issued Notes of the same term and denomination at
their respective maturity dates. If Notes of the same term
and denomination are not then being offered, a maturing Note
will be redeemed unless the holder selects a Note with a
term currently being offered.
</TABLE>
The Securities are Advanta's unsecured debt obligations. We are not subject to
state or federal regulations applicable to banks and savings and loan
associations, including, among other things, regulations regarding the
maintenance of reserves and the quality or condition of our assets. It is not
expected that there will be a trading market for the Securities. See
"Description of Securities -- Provisions Relating to All Securities --
Liquidity."
The Securities are not insured or guaranteed by us or any of our subsidiaries or
any other public or private entity.
5
<PAGE>
RISK FACTORS
Before you invest in any of the Securities offered in this prospectus, you
should be aware that there are various risks, including those described below.
You should consider carefully these risk factors together with all of the other
information included in this prospectus and the applicable prospectus supplement
before you decide to purchase any of the Securities.
Some of the information in this prospectus may contain forward-looking
statements. These statements can be identified by the use of forward-looking
phrases such as "will likely result," "may," "are expected to," "is
anticipated," "estimate," "projected," "intends to," or other similar words.
These forward-looking statements are subject to certain risks and uncertainties,
including those described below, that could cause actual results to differ
materially from those projected, as described below. Additional risks that may
affect our future performance are included elsewhere in this prospectus and in
our other filings with the SEC. When considering forward-looking statements, you
should keep in mind these risk factors and other cautionary statements in this
prospectus. You should not place undue reliance on any forward-looking statement
that speaks only as of the date made.
Absence of Sinking Fund, Security, Insurance and Guarantees for Payment on
Securities
The Securities are not secured by any of our assets. We do not contribute
funds to a separate account, commonly known as a sinking fund, to make interest
or principal payments on the Securities. Further, no governmental or other
entity insures or guarantees payment on the Securities if we do not have
sufficient funds to make interest and/or principal payments. Therefore, if you
invest in any of the Securities, you will have to rely solely upon Advanta
Corp.'s revenues from operations and other sources of funds for repayment of
principal at maturity or redemption and for payment of interest when due.
Limited Events of Default; Absence of Provisions Relating to Highly Leveraged
Transactions or a Change in Control
The Securities are governed by a trust indenture which is an agreement
between us and the trustee relating to certain aspects of the Securities. The
indenture governing the Securities contains only limited events of default other
than our failure to pay principal or interest on time. See "Description of
Securities -- Provisions Relating to All Securities -- Events of Default."
Further, the indenture provides only limited protection for holders of the
Securities if we are purchased through what is known as a leveraged buy-out or
if there is a change in control. A leveraged buy-out is a transaction where a
buyer seeking to purchase Advanta relies on our credit and uses our assets as
collateral to borrow funds to finance the purchase. Though the indenture
requires a buyer to assume our obligations to holders of Securities under the
indenture, the indenture does not prohibit the buyer from incurring additional
debt through a leveraged buy-out which might be senior in right of repayment to
that of the holders of the Securities. This type of transaction might adversely
impact our liquidity and our ability or our successor's ability to make payments
on the Securities.
Non-Investment Grade Ratings of Our Debt May Adversely Affect Our Ability to
Obtain Financing
Our ability to access the capital markets for the sale of additional debt
or equity securities could be adversely affected by non-investment grade ratings
from rating agencies. Our debt is currently rated investment grade by one rating
agency and below investment grade by four rating agencies. Continuation of a
current below investment grade rating or a down-grade of any of the ratings of
our debt may adversely impact, among other things, our access to the capital
markets for the sale of additional debt or equity securities, the amount of
collateral lenders will require that we pledge to secure future financing and
our ability to raise funds on terms that we consider favorable to us.
6
<PAGE>
Reduced Availability of Funding May Adversely Affect Our Ability to Fund Our
Operations and Loan and Lease Portfolios
Advanta Corp. and its subsidiaries depend on funds available under secured
lending facilities, known as warehouse facilities, and asset-backed lending
facilities, known as commercial paper conduit facilities, with institutional
lenders to fund our operations. At December 31, 1998, Advanta Corp. and its
subsidiaries had available over $770 million in unused warehouse lines and
commercial paper conduit facilities. These lending facilities are subject to
renewal or extension at the lender's option. The facilities also require us to
comply with various covenants and restrictions which, if breached, could cause
an early termination of the facility. There can be no assurance that the
existing facilities will be extended or renewed and we cannot be certain that we
will be able to replace the existing facilities on terms that are favorable to
us when they expire. If we are unable to obtain additional lending facilities on
terms similar to the existing facilities, it may have a material adverse effect
on our ability to continue to fund our operations, including our ability to
repay indebtedness, including the Securities.
To generate cash for the funding of our operations we rely on our ability
to aggregate and sell loans and leases as asset-backed securities through
transactions known as securitizations. Our ability to complete securitizations
is dependent upon:
o general conditions in the securities markets;
o specific conditions in the asset-backed security markets; and
o the quality of our loan and lease portfolios.
Adverse changes in these conditions or the quality of our loan and lease
portfolios may adversely impact the timing of our securitization transactions
and our ability to complete securitizations on terms that are satisfactory to
us. Any substantial reduction in our ability to complete securitizations could
adversely affect our results of operations and financial condition.
Restrictions on Our Ability to Receive Funds From Our Bank and Insurance
Subsidiaries May Adversely Affect Our Liquidity
We conduct most of our business operations through our wholly-owned
subsidiaries, including our insurance companies and our two depository
subsidiaries, Advanta National Bank and Advanta Bank Corp. Our depository
institutions and insurance companies are subject to significant state and
federal regulation that, among other things, restrict our ability to receive
dividends and loans from them. Among those restrictions are the following:
o Banking regulations limit the amount of dividends that our depository
subsidiaries may pay to us.
o Insurance regulations in the State of Arizona, where our insurance
subsidiaries are incorporated, restrict the amount of dividends that any
of our insurance subsidiaries may distribute to us in any twelve-month
period without the prior consent of the State of Arizona Department of
Insurance.
o Sections 23A and 23B of the Federal Reserve Act restrict the ability of
our depository institutions to transfer funds to us and certain of our
affiliates in the form of loans, extensions of credit, investments or
purchases of assets. These regulations also require generally that
transactions between our depository subsidiaries and us be on terms no
less favorable to the depository subsidiaries than comparable
transactions with unrelated third parties. Similarly, transfers of funds
in any twelve-month period by any one depository subsidiary to us or to
any single affiliate may not exceed 10% of the depository subsidiary's
capital and surplus, and transfers to all affiliates in any twelve-month
period may not exceed 20% of its capital and surplus.
7
<PAGE>
o We must comply with certain collateral requirements when obtaining loans
or other extensions of credit from our affiliated depository
institutions.
The limitations on our ability to obtain funds from our depository and insurance
subsidiaries affect the amount of cash we may have available at any time and may
adversely affect our financial condition, including our ability to make interest
and/or principal payments on the Securities.
Subordination of the Securities to Indebtedness of Subsidiaries
According to state and federal regulations that govern our depository and
insurance subsidiaries, our right to receive any distribution of assets from any
of these subsidiaries if they liquidate their assets or undergo a reorganization
or other similar transaction is subject to the prior claims of creditors of the
subsidiary, unless we are recognized as a creditor of the subsidiary.
Consequently, the Securities will be effectively junior in right of repayment to
all of the existing and future liabilities of our depository and insurance
subsidiaries. At December 31, 1998, our subsidiaries had total liabilities
(excluding liabilities owed to us) of approximately $2 billion. The indenture
does not limit the amount of secured or unsecured debt that we or any of our
subsidiaries may incur. See "Description of Securities -- Provisions Relating to
All Securities -- Aggregate Indebtedness."
Regulation of the Banking and Financing Industries May Impact Our Profitability
By Increasing the Cost of Doing Business
Our banking and finance businesses in general, and our banking and
insurance subsidiaries in particular, are subject to extensive federal and state
regulation. Our lending activities are subject to regulation under various
federal and state laws including the following:
o the Truth-in-Lending Act;
o the Equal Credit Opportunity Act;
o the Home Mortgage Disclosure Act;
o the Community Reinvestment Act;
o the Electronic Funds Transfer Act;
o the Real Estate Settlement Practices Act; and
o the Fair Credit Reporting Act.
Certain of these statutes and regulations also apply to our leasing activities.
In addition, the subsidiaries through which we conduct our home equity lending
businesses are required to be licensed, and are subject to regulation in various
states as mortgage bankers, mortgage brokers, and originators, sellers and
servicers of mortgage loans. We are also subject to examinations by federal and
state regulatory authorities with respect to originating, processing,
underwriting, selling and servicing home equity loans. Failure to comply with
these statutory and regulatory requirements can lead to, among other remedies,
termination or suspension of licenses, certain rights of rescission for mortgage
loans, class action lawsuits and administrative enforcement actions.
We have implemented systems and procedures for compliance with these
requirements and we believe that we are in compliance in all material respects
with applicable local, state and federal laws, rules and regulations. However,
we cannot be certain that more restrictive laws, rules and regulations will not
be adopted in the future that could make compliance more difficult or expensive.
8
<PAGE>
Risks Associated with Maintaining Portfolios of Home Equity Loans and Making
Loans to Non-Conforming Borrowers May Cause Uncertainty in Our Future
Profitability
Certain risks are associated with maintaining portfolios of home equity
loans. These risks are inherent to every lender and involve potential increases
in credit losses. Any material decline in real estate values reduces the ability
of borrowers to use home equity to support borrowings. It also increases the
loan-to-value ratios of loans previously made by us. The consequence is a
weakening of collateral coverage and an increase in the possibility of a loss if
a borrower defaults.
In addition, we market home equity loans to borrowers who, for one reason
or another, are not able, or do not wish, to obtain financing from more
traditional sources. Loans made to these borrowers entail additional risks and
uncertainties not present in traditional types of loans. As a result, we may
experience higher delinquency rates and losses than those experienced by other
lenders if adverse economic conditions occur. While we use underwriting
standards and collection procedures designed to help overcome the higher credit
risk associated with lending to these borrowers, we cannot be certain that these
standards or procedures will offer adequate protection against this risk. We
also regularly review our loan and lease portfolio to evaluate the adequacy of
the reserves we establish for anticipated credit losses. This evaluation takes
into account a number of factors including the credit quality of our loan
portfolio, past experience, current economic conditions and changes in the
composition of our loan portfolio. We believe that we establish adequate
reserves for credit losses. However, if loans we manage experience higher
delinquencies, foreclosures or losses than anticipated, our reserves could be
inadequate and our results of operations or financial condition could be
adversely affected.
Risks Associated with Leasing Activities May Cause Uncertainty in Our Future
Profitability
There are risks inherent in our leasing activities which differ in certain
respects from those existing in our mortgage and other businesses. Our equipment
leases are generally secured by a lien on the leased equipment. However, it is
possible that the value of the leased equipment will be impaired due to damage,
destruction or technological obsolescence before the termination of the lease.
The consequences of this impairment to the value of our collateral may adversely
impact our financial results.
Market Risk; Changes in Interest Rates May Adversely Affect Profitability
Our profitability may be affected by fluctuations in interest rates,
changes in economic conditions, shifts in consumer behavior and other factors.
Any decline in interest rates could reduce the amounts that we can earn on our
newly originated loans and leases. A decline in interest rates could also result
in an increase in prepayments which could decrease the size of our loan
portfolio if we are unsuccessful in originating new loans. Changes in economic
conditions and shifts in customer behavior are difficult to predict, and our
financial performance generally cannot be insulated from these forces. We
continually analyze the impact of interest rate risk and attempt to reduce its
impact on our profitability. Among other things, we:
o enter into hedging transactions to reduce interest rate risk;
o periodically securitize our loans and leases;
o buy and sell assets;
o alter the mix and term structure of our funding base; and
o change our investment portfolio from time to time.
Although we believe that these are effective methods of minimizing interest rate
risk, there can be no assurance that they will reduce that risk in the future or
that our financial condition would not be adversely affected by changes in
interest rates or other economic conditions.
9
<PAGE>
Litigation
On January 22, 1999, Fleet Financial Group, Inc. and certain of its
affiliates ("Fleet") filed a complaint against Advanta and certain of its
affiliates relating to the transaction with Fleet that closed on February 20,
1998 in which Advanta contributed most of its consumer credit card business to a
limited liability company controlled by Fleet. The complaint centers on
post-closing adjustments to the transaction and other matters relating to the
transaction with Fleet. We believe that the lawsuit is inappropriate and without
merit. On February 16, 1999, we filed an answer to the complaint in which we
denied all of the substantive allegations in the complaint and we filed
counterclaims against Fleet seeking damages. Although we do not expect this
lawsuit to have any material adverse impact on our business, because of the
uncertainties of the legal process and the significant legal and other expenses
associated with litigation, including the time and effort that will be spent by
Advanta personnel involved in defending the litigation, there can be no
assurance that this lawsuit will not have a material adverse impact on our
operations or financial condition.
Advanta and its subsidiaries are involved in other legal proceedings,
claims and litigation arising in the ordinary course of our business. Although
the ultimate resolution of these proceedings cannot be predicted, we believe
that the resolution of these proceedings will not have a material adverse impact
on our financial condition or results of operations.
Competition May Impact Growth and Profitability
We face intense competition from numerous other providers of financial
services. Many of these companies are substantially larger and have more capital
and other resources than we do. Although we believe we are generally competitive
in most of the geographic areas in which we offer services, we cannot be certain
that we will be able to market our services successfully. Our ability to grow
our businesses and obtain adequate returns on loans may be adversely impacted by
the competition that now exists or may develop in the future.
Year 2000 Readiness Disclosure; Risk of Failure of Systems Due to Year 2000
Many existing computer programs use only two digits, instead of four, to
identify a year in the date field. As a result, they may not recognize the
upcoming change in the century. The "Year 2000 Issue" affects computer and
information technology ("IT") systems, as well as non-IT systems which include
embedded technology that have date sensitive programs that may not properly
recognize the year 2000 or beyond. If the systems and products we use are not
properly equipped to recognize the year 2000, our IT systems and non-IT systems
could fail or create erroneous results. This could cause us to experience a
temporary inability to process transactions, originate loans or leases, service
the loans of third parties and engage in other normal business activities. Under
these circumstances, the Year 2000 Issue could have a material adverse effect on
our products, services, operations and financial results.
We are engaging in an ongoing effort to assess the impact of the Year 2000
Issue on our operations and to implement appropriate responses and remedies in
the event any of our computer systems and applications or those of third parties
with whom we maintain significant business relationships are not compliant. We
believe that the Year 2000 Issue will not pose significant operational problems
for us and will not have a material adverse effect on our future financial
condition, liquidity or results of operations. In addition, to date, we are not
aware of any material third party business relationship, product or system with
a Year 2000 problem that we believe would have a material adverse effect on us.
However, we cannot be certain that the systems and products used by third
parties with whom we maintain significant business relationships will be timely
converted, or that a failure to convert by another company, or a conversion that
is incompatible with our systems, would not result in a material adverse effect
on our operations.
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THE COMPANY
Advanta is a highly focused financial services company which, at December
31, 1998, had 2,700 employees, over $12 billion in managed assets and $8.3
billion in assets serviced for third parties. We provide consumers and small
businesses with innovative products and services including mortgages, equipment
leases, business credit cards and insurance and deposit products. Advanta also
provides a full range of services to the mortgage industry, including loan
purchasing, contract servicing for third parties and securitization services.
Advanta Mortgage
Advanta Mortgage, a business unit of Advanta, capitalizes on numerous niche
opportunities primarily in the home equity industry by offering a broad range of
services to consumers, brokers and other originators of home equity loans
throughout the country. Advanta Mortgage originates, purchases, securitizes, and
services non-conforming first and second lien home equity loans, and home equity
lines of credit, directly through subsidiaries of Advanta, including Advanta
National Bank, Advanta Bank Corp. and Advanta Mortgage Corp. USA.
Loan production is generated through multiple distribution channels. Home
equity loans and home equity lines of credit are originated directly from
consumers using targeted direct mail and direct response television and radio
techniques, and through a branch office system of 56 branches throughout the
country. First and second mortgage loans are also originated through a broker
network, correspondent relationships and purchases from other financial
institutions.
In addition to servicing and managing the loans it originates, Advanta
Mortgage contracts with third parties to service their home equity loans.
Advanta bears no risk of credit loss on this portfolio.
Advanta Business Services
Advanta Business Services ("ABS"), a business unit of Advanta, offers
flexible lease financing programs on small-ticket equipment and business credit
cards to small businesses. Advanta Business Services is one of the nation's
leading providers of these products to small businesses.
The commercial equipment leasing business is generated primarily through
third party referrals from manufacturers or distributors of equipment as well as
independent brokers. Most contact with these referral sources is made through
extensive direct marketing operations.
The primary markets of the leasing business include office machinery,
security systems and computers. ABS has also expanded its presence into
additional market segments. The most significant of these are leasing programs
for certain industrial and agricultural equipment and programs for leasing
equipment to agencies of state and local governments. Additionally, ABS has
expanded its National Accounts program which seeks referral business from larger
distributors and manufacturers.
The "Advanta Business Card" is marketed by ABS and issued by its affiliate,
Advanta Bank Corp. Direct marketing techniques, primarily direct mail to
prospective customers, are the source of new accounts.
Advanta Insurance Companies
Advanta's insurance subsidiaries make available, through unaffiliated
insurance carriers, specialty credit related insurance products and services to
Advanta's existing customer base. The focus of these products is on the
customers' ability to repay their debt in the event of certain circumstances.
These products include a combined credit life, disability and unemployment
program, an accidental death program and equipment insurance. Enrollment in
these programs is achieved through Advanta's direct mail or telemarketing
distribution channels. The lending subsidiary of Advanta that extends the loan
to Advanta's customers receives a percentage of the insurance premiums collected
by the unaffiliated insurance carriers.
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Depository Institutions
Advanta owns two depository institutions, Advanta National Bank ("ANB") and
Advanta Bank Corp. ("ABC"). ANB is a national banking association with its
headquarters and sole branch currently located in Wilmington, Delaware. ABC is
an FDIC-insured industrial loan corporation with its principal executive offices
located in Salt Lake City, Utah.
Advanta offers a range of insured deposit products through ANB and ABC.
Bank deposit products offered through ANB include money market savings, retail
certificates of deposit and large denomination certificates of deposit
(certificates of $99,000 or more). Deposit products offered through ABC include
retail certificates of deposit and large denomination certificates of deposit
(certificates of $99,000 or more). Consumer deposit business is generated from
repeat sales to existing depositors and from new depositors attracted by
newspaper advertising and direct mail solicitations.
------------------------
Advanta was incorporated in Delaware in 1974 as Teachers Service
Organization, Inc., the successor to a business originally founded in 1951. In
January 1988, our name was changed from TSO Financial Corp. to Advanta Corp.
How to Contact Us
Holders of RediReserve Certificates or Notes who have customer service
inquiries and potential investors who would like to receive a copy of this
prospectus may call us at 1-800-223-7074 or write us at the following address:
Advanta Corp., Delaware Corporate Center - Second Floor, One Righter Parkway,
Wilmington, Delaware 19803.
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USE OF PROCEEDS
We will use the proceeds from the sale of the Securities for general
corporate purposes, including the purchase of assets from, investments in and
extensions of credit to, our subsidiaries and affiliates which will use the
proceeds for general corporate purposes. We also may use the proceeds to finance
future acquisitions, including without limitation acquisitions of mortgage,
business card and equipment lease portfolios. Presently we have no specific
plans for any proposed acquisitions. Proceeds also may be used to invest in
income-producing securities and other assets. The amount of Securities offered
from time to time and the precise amounts and timing of the applications of the
proceeds will depend upon market conditions as well as our funding requirements
and those of our subsidiaries and affiliates.
In view of our current requirements, we expect to engage periodically in
additional private or public financing of a character and amount to be
determined in the future and as the need arises.
DESCRIPTION OF SECURITIES
General
This offering relates to the RediReserve Certificates and the Notes. The
Securities will be issued under an Indenture dated October 23, 1995 (the
"Indenture") between Advanta and The Chase Manhattan Bank, a corporation
organized and existing under the laws of the State of New York, as successor
trustee (the "Trustee"). A copy of the Indenture is filed as an exhibit to the
Registration Statement of which this prospectus is a part. The following
statements are brief summaries of certain provisions of the Indenture, and are
subject to the detailed provisions of the Indenture. You should refer to the
Indenture for a complete statement of those provisions. Whenever this prospectus
refers to particular provisions of the Indenture or terms defined in the
Indenture, those provisions or definitions are incorporated by reference as part
of the statements made in this prospectus, and the statements are qualified in
their entirety by that reference. Parenthetical Section and Article references
appearing below refer to Sections and Articles of the Indenture.
The Indenture may be modified as described below. Additionally, Advanta
reserves the right to terminate this offering, or modify the terms of the
offering or the Securities, at any time, by an appropriate amendment or
supplement to this prospectus. No modification will affect the rights of the
holders of then outstanding Securities, except that, at Advanta's election:
o the principal amount holders may be required to maintain in
existing RediReserve Certificates may be increased or decreased,
after 30 days' notice;
o the minimum amount holders of RediReserve Certificates may withdraw
may be increased or decreased, after 30 days' notice; and
o certain service charges may be imposed or modified as described
under "Description of Securities -- Provisions Relating to
RediReserve Certificates -- Service Charges."
The Securities are not secured by any collateral or lien. There are no
provisions for a sinking fund.
Provisions Relating to RediReserve Certificates
Form; Non-negotiability and Statements: RediReserve Certificates are not
negotiable and are not evidenced by any promissory note issued to the holder.
Each purchaser of a RediReserve Certificate will receive a confirmation of the
transaction that evidences ownership of the RediReserve Certificate, but this
confirmation will not be a negotiable instrument, and the holder can not
transfer rights of ownership in a RediReserve Certificate by mere endorsement
and delivery of this confirmation to a purchaser. Each holder of a RediReserve
Certificate will receive, at the end of each month during which there is any
investment, withdrawal or payment or credit of interest, a statement indicating
the transactions affecting the holder's RediReserve Certificate.
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Advanta maintains a register to record the owner(s) of each outstanding
RediReserve Certificate and may treat the person(s) whose name(s) is (are) so
recorded as the owner(s) of the RediReserve Certificate for all purposes.
Ownership of a RediReserve Certificate may be transferred on the register only
by written notice to Advanta signed by the holder(s) or the duly authorized
representative(s) of the holder(s) on a form to be supplied by Advanta. (Article
Three) A holder may not pledge, assign or hypothecate any RediReserve
Certificate as collateral for a loan or otherwise.
Denomination and Minimum Purchase: As of the date of this prospectus, the
minimum initial purchase of a RediReserve Certificate is $5,000. Additional
purchases of RediReserve Certificates may be in any amount. From time to time,
Advanta may in a prospectus supplement increase or decrease the minimum purchase
amount or minimum balance required (as described below) for RediReserve
Certificates.
Interest on RediReserve Certificates: The interest rate we pay and the
annual percentage yield ("APY") on any particular RediReserve Certificate
depends on the tier into which the end-of-the-day balance of that RediReserve
Certificate falls. Different interest rates and APYs may apply to RediReserve
Certificates depending upon which of the following tiers the end-of-the-day
balance of a RediReserve Certificate falls:
o $100.00 to $4,999.99
o $5,000.00 to $24,999.99
o $25,000.00 to $49,999.99
o $50,000.00 and above
We will not pay interest for any day on which the end-of-the-day balance of a
RediReserve Certificate is less than $100. The interest rate and APY is
determined separately for each RediReserve Certificate, regardless of the number
of RediReserve Certificates a holder may own. The interest rates and APYs for
each tier may change from week to week and will apply to outstanding RediReserve
Certificates. We will set interest rates for each tier each Sunday, and they
will be in effect through the following Saturday. We will set interest rates at
our discretion, however interest rates for each one-week period commencing on
Sunday will be at least equal to the rate of the Thirteen Week U.S. Treasury
Bills auctioned on the immediately preceding Monday less one percent. The
interest rates will be paid on the entire end-of-the-day balance of a
RediReserve Certificate for each day the end-of-the-day balance of that
RediReserve Certificate is $100 or more. Investors may inquire concerning the
interest rates then being paid on outstanding RediReserve Certificates by
writing or telephoning us at Advanta Corp., Delaware Corporate Center - Second
Floor, One Righter Parkway, Wilmington, Delaware 19803, telephone
1-800-223-7074.
Interest is compounded daily on a 365-day basis and is added monthly to the
principal balance of a RediReserve Certificate. Except as noted below, we will
not pay interest accrued during each monthly period by check. Instead, we will
add the interest to the principal balance of the RediReserve Certificate.
Interest accrues on the principal balance of each RediReserve Certificate up to
but not including the date of redemption. If a holder redeems in full the entire
amount of a RediReserve Certificate, we will pay by check all interest that is
accrued and not previously added to the principal balance of that RediReserve
Certificate as soon as practicable after redemption.
Minimum Balance Requirement for RediReserve Certificates: We will not pay
interest on a RediReserve Certificate for any day the end-of-the-day balance of
that RediReserve Certificate is less than $100. Advanta may elect to charge a
service fee of $10 for any statement period during that the average
end-of-the-day balance of a RediReserve Certificate is less than $100. If a
holder owns more than one RediReserve Certificate, the service fee may be
charged for each RediReserve Certificate that has an average end-of-day balance
of less than $100 during a statement period. We have the right to increase or
decrease the minimum principal amount that must be maintained in a RediReserve
Certificate. We may apply the increase or decrease, at our election, to
RediReserve Certificates outstanding as of the date of the increase or decrease
as well as to RediReserve Certificates issued after the increase or decrease. We
must give the holders of
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RediReserve Certificates that are outstanding as of the date of any increase in
this service fee at least 30 days' advance written notice if we elect to
increase the minimum principal amount that must be maintained in those
RediReserve Certificates.
Redemption at the Holder's Election: A holder may require redemption of
all or a portion of a holder's RediReserve Certificate at any time subject to
any established minimum redemption amount. Upon demand by the holder, the holder
will be paid for the full amount of the RediReserve Certificate for which the
holder requests redemption. This demand must be received by Advanta at our
principal place of business or such other place as we may designate for this
purpose. Advanta may delay payment on redemption of a newly purchased
RediReserve Certificate for whatever time is necessary to assure that we have
received the full purchase price of the RediReserve Certificate -- for example,
until a check given to us in payment for the RediReserve Certificate clears.
From time to time Advanta may establish, in its sole discretion, minimum
amounts for redemptions of RediReserve Certificates. Advanta will give holders
of RediReserve Certificates 30 days' notice before establishing any such minimum
or increasing a previously established minimum redemption amount. A holder may
redeem in full a RediReserve Certificate at any time regardless of the
established minimum redemption amount.
Redemption by Draft: Subject to any established minimum redemption amount,
a holder may elect to make redemptions by draft payable to the order of any
payee. At the request of a holder, Advanta will provide drafts drawn on it that
will be payable through one of its subsidiary banks, or a successor bank. All
authorized signers on a RediReserve Certificate must submit specimen signatures
to Advanta and must agree to abide by our rules and regulations pertaining to
RediReserve Certificates. Certain banks may not provide cash at the time of
deposit of a draft, but will wait until they have received payment from
Advanta's subsidiary bank. When a draft is presented to the subsidiary bank for
payment, the subsidiary bank, as agent of the holder, will cause Advanta to
redeem a sufficient amount from the holder's RediReserve Certificate to cover
the amount of the draft. If a holder of more than one RediReserve Certificate
wishes to redeem less than all of that holder's RediReserve Certificates, then
the holder must direct Advanta as to which of the holder's RediReserve
Certificates to redeem in whole or in part. Interest continues to accrue on the
amount of a RediReserve Certificate covered by a draft until the draft is
presented to the subsidiary bank for payment. The subsidiary bank will return a
draft if the amount of collected funds in the holder's RediReserve Certificate
is insufficient to cover the draft or if the signature(s) on the draft is (are)
not, in our judgment, the same as the specimen signature(s) previously submitted
to us. We reserve the right to charge a fee for the dishonor of a draft or for a
stop payment order.
Neither Advanta nor the subsidiary bank will return canceled drafts to the
holders of RediReserve Certificates, although Advanta will provide a holder with
copies of drafts requested by the holder upon payment of a service charge.
Holders of RediReserve Certificates will receive statements as described under
"Form; Non-negotiability and Statements" above, which will reflect draft
transactions.
Advanta will charge holders a $15 service fee for each draft presented in
excess of four drafts during any statement period.
Redemption at Advanta's Election: Advanta may, at its election, redeem any
RediReserve Certificate either as a whole or, from time to time, in part, upon
not less than 30 days' written notice to the holder, at the principal amount of
the RediReserve Certificate without premium, plus interest accrued to the date
of redemption and not previously added to the principal balance of the
RediReserve Certificate. Accrued interest on a redeemed RediReserve Certificate
will be paid as soon as practicable after redemption.
Service Charges: Advanta will charge a service fee of $10 per statement
period during which the average end-of-the-day balance of a RediReserve
Certificate is less than $100. In addition, Advanta will charge a service fee of
$15 per redemption draft in excess of four drafts per statement period on any
RediReserve Certificate. Advanta also reserves the right to assess charges
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for the dishonor of a draft or for a stop payment order and, upon 30 days'
written notice to the holder, to assess charges for certain other services
provided with respect to RediReserve Certificates, including but not limited to
providing a holder with a copy of a canceled draft. Upon 30 days' written notice
to the holder, Advanta also may increase any existing service charge.
Provisions Relating to Notes
Maturities: We may offer from time to time Notes which have maturities of
91 days, six months, one year, 18 months, two years, 30 months, or three, four,
five, seven or ten years after their respective dates of issue.
Form and Denominations: The Notes will be uncertificated and evidenced by
a confirmation of book entry and a statement issued by Advanta to each holder.
Confirmations and statements issued by Advanta are not negotiable
instruments. No rights of ownership can be transferred by mere endorsement and
delivery of a confirmation or statement. Advanta maintains a register to record
the owner(s) of each outstanding Note and may treat the person(s) whose name(s)
is (are) so recorded as the owner(s) of the Note for all purposes. Holders may
transfer ownership of a Note on Advanta's register only by written notice to
Advanta signed by the owner(s), or the owner's duly authorized representative,
on a form to be supplied by Advanta. As of the date of this prospectus, the
minimum denomination for the purchase of a Note is $5,000. Holders may not
pledge, assign or hypothecate the Notes as collateral for a loan or otherwise.
Holders may purchase Notes in minimum denominations to be determined, from time
to time, by Advanta. Holders may not accumulate separate purchases to satisfy
the minimum denomination requirements.
Interest: From time to time, Advanta will fix the interest rates payable
on the Notes based on market conditions and Advanta's financial requirements.
Once determined, the rate of interest payable on a Note will remain fixed until
the Note matures or is redeemed by the holder. Advanta will compound interest
daily on all Notes.
We will pay interest on 91 Day and Six Month Notes only at maturity. We
will pay interest on One Year, 18 Month, Two Year, 30 Month, and Three, Four,
Five, Seven and Ten Year Notes monthly, quarterly, semiannually, annually or at
maturity, at the holder's election. A holder may change this election one time
during the term of the Note, except that holders of One Year Notes may not
change this election during the term of the One Year Note.
Automatic Extension: If Advanta does not give notice of redemption of a
Note at least seven Business Days prior to maturity, and if the Note is not
redeemed or converted to another term at the request of the holder within seven
Business Days after maturity, we will extend the Note automatically for a period
equal to the original term if the Note has a principal amount of $2,500 or more
and Notes of the same term and denomination are then being offered. As used in
this prospectus, "Business Day" means any day that is not a Saturday, a Sunday,
a federal banking holiday or other day on which Advanta is not open for
business. If a Note is renewed as described above, except as otherwise described
in a prospectus supplement, the Note will have the same provisions, including
provisions relating to payment, except that the interest rate payable during any
renewed term will be the interest rate, as of the renewal date, that is being
offered by Advanta on Notes of the same term and denomination as the maturing
Note. If Notes of the same term and denomination are not then being offered, the
maturing Note will not renew and will be redeemed unless we receive instructions
from the holder to renew the maturing Note with a new Note with a term that is
currently being offered. Advanta will give each holder of a Note notice of the
Note's maturity at least seven Business Days prior to the maturity date. If
Advanta gives notice to a holder of Advanta's intention to redeem a Note at
maturity, no interest will accrue after the date of maturity. Likewise, if a
holder submits a written request for redemption within seven Business Days after
its maturity date, no interest will accrue after the date of maturity. We will
redeem automatically any Note with a principal amount that is less than $2,500
at maturity.
No Redemption by Advanta: We have no right to redeem a Note prior to its
maturity date as originally stated or as it may be extended. Redemption of a
Note by Advanta at maturity requires
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that we give notice of the redemption at least seven Business Days prior to the
maturity date. The holder of a Note has no right to require us to redeem a Note
except as described below.
Redemption by the Holder on Death or Total Permanent Disability: We will
redeem a Note at the election of an individual holder, following the total
permanent disability of the holder, or at the election of his or her estate
following his or her death, as established to our satisfaction. If two or more
persons are joint holders of a Note, the election to redeem may be made by any
holder after the death or total permanent disability of any holder, as
established to our satisfaction. The redemption price, in the event of death or
total permanent disability, is the principal amount of the Note plus accrued and
unpaid interest up to but not including the date of redemption.
We may modify the policy on redemption upon death or total permanent
disability. Any modification of this policy will be set forth in a prospectus
supplement. However, no modification will affect the right of redemption
applicable to any Note that was purchased prior to the modification.
Liquidity: Although holders have no contractual right to redeem a Note
prior to maturity, except in the event of death or total permanent disability as
described above, Advanta, in its sole discretion, may honor a written request
for early redemption. Should Advanta elect to do so, we will impose a penalty
that is the higher of:
o 90 days' compounded interest at the actual rate of interest borne
by the Note on the amount being redeemed; or
o the "Economic Replacement Value." As used in this prospectus,
"Economic Replacement Value" means the approximate cost, if any,
that Advanta would incur to replace the money that is redeemed
early by a holder.
When we issue a Note, we plan to use the invested funds for the full term
of the Note. When a holder redeems all or part of his or her Note early, we must
replace those funds by issuing a new Note in the principal amount of, and with a
maturity that is at least equal to, the remaining term of the redeemed Note. If
current interest rates on Notes are higher than the rate on the redeemed Note,
there is an additional cost, in the form of additional interest, that we must
incur to replace those funds.
To calculate the Economic Replacement Value for an early redeemed Note,
Advanta will first determine the "Calculation Rate." The "Calculation Rate"
means either (1) the interest rate, on the date of early redemption, that
Advanta has posted for a Note with a maturity that matches exactly the remaining
term of the Note that is being redeemed, or (2) if the remaining term of the
Note that is being redeemed does not exactly match one of the maturities then
offered by Advanta, the interest rate, on the date of early redemption, that
Advanta has posted for a Note with a maturity that is the next longest. The
amount, if any, by which the Calculation Rate exceeds the rate on the Note that
is being redeemed is expressed as a percentage and is called the "Excess
Spread." The Excess Spread, the principal amount being redeemed and the actual
number of days remaining until maturity are used to calculate the Economic
Replacement Value. This calculation is computed on a compounded basis,
consistent with the interest method of the Note that is being redeemed. Under
either calculation method, early redemption may result in a loss of principal.
Provisions Relating to All Securities
Interest Accrual Date: Interest on the Securities accrues from the date of
purchase. The date of purchase is deemed to be the date Advanta receives funds
that are received prior to 3:00 p.m., Eastern Time, on a Business Day, or the
next Business Day if Advanta receives the funds on a non-Business Day or after
3:00 p.m., Eastern Time, on a Business Day.
Interest Withholding: We will withhold 31% of any interest paid to any
investor who has not provided Advanta with a fully executed Form W-9 or
satisfactory equivalent.
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Additional Interest: In addition to the interest rates payable as
described above, Advanta may make such additional payments of interest, premiums
or other benefits ("Additional Interest") on the Securities, in the amounts, in
the form, on the terms and at the times as Advanta may determine from time to
time. Advanta may modify or discontinue Additional Interest payments at any
time. For example, Advanta may limit Additional Interest payments to only new
investors, or to only current investors who are increasing or renewing their
investments in the Securities. Also, Advanta may limit Additional Interest to
only current or new investors residing in one or more states or localities where
Advanta is authorized to sell the Securities.
Aggregate Indebtedness and Additional Securities: The Indenture does not
limit the amount of indebtedness that may be outstanding under the Indenture at
any one time or the amount of any class of Securities that may be outstanding at
any one time. Advanta has issued other Securities under the Indenture pursuant
to prior registration statements. The aggregate principal amount of such
Securities issued and outstanding at December 31, 1998 was approximately
$145,559,000. Advanta may offer from time to time, under the Indenture,
additional classes of securities with terms and conditions different from the
Securities offered in this prospectus, except that no security issued under the
Indenture may be senior to the Securities offered in this prospectus. If
required by applicable laws and regulations, Advanta will supplement this
prospectus if and when it decides to offer to the public any additional class of
Security under the Indenture.
Modification of Indenture: The Indenture may be modified by Advanta and
the Trustee at any time with the consent of the holders of at least a majority
in principal amount of the Securities then outstanding. However, no modification
of the Indenture may be made that will:
o affect the terms of payment or the principal of any Security,
unless the holder of the Security consents; or
o reduce the percentage of holders of Securities whose consent is
required to modify the Indenture.
Advanta and the Trustee may enter into supplemental indentures, without
action by the holders of Securities, that add covenants or agreements of Advanta
for the protection of the holders of Securities, that clarify any ambiguity or
correct any defect in the Indenture, consistent with its terms, or that modify
provisions of the Indenture provided that the modifications do not have a
material adverse effect on the interest of the holders of outstanding
Securities. (Article Nine)
Place and Method of Payment: Principal and interest on the Securities will
be payable at the office of Advanta, as it may be established from time to time,
or at such other place as Advanta may designate for that purpose; provided,
however, that payments may be made at the option of Advanta by check or draft
mailed to the person entitled to the payments at his or her address appearing in
the register that Advanta maintains for that purpose. (Sections 307 and 1002)
Events of Default: An Event of Default is defined in the Indenture as
being any of the following:
o default in payment of principal on any of the Securities under the
Indenture that has not been cured;
o a default for 30 days in payment of any installment of interest on
a Security; or
o certain events of bankruptcy, insolvency or reorganization or
default in the performance or breach of any covenant or warranty of
Advanta in the Indenture and continuance of the default in
performance or breach for a period of 60 days after notice of the
default has been received by Advanta from the Trustee or from the
holders of 25% in principal amount of the outstanding Securities.
Advanta is required to file annually with the Trustee an officer's
certificate as to the absence of certain defaults under the terms of the
Indenture. The Indenture provides that the holders of a majority in aggregate
principal amount of the applicable Securities then outstanding may, on behalf of
all holders, waive any past default or Event of Default except in payment of
principal or interest on the Securities and certain other specified covenants or
provisions. (Article Five)
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Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee is under
no obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the holders of Securities, unless the
holders of Securities have offered to the Trustee reasonable indemnity. (Section
601) Subject to such provisions for the indemnification of the Trustee, the
holders of a majority in principal amount of the Securities at the time
outstanding have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any power
conferred on the Trustee. The Indenture contains certain limitations on the
right of individual holders of Securities to institute legal proceedings in the
event of Advanta's default. (Sections 507 and 512)
Liquidity: We do not expect that there will be a trading market for the
RediReserve Certificates or the Notes.
Certain Covenants: Advanta has entered into certain covenants including a
covenant that it will not consolidate or merge with or into any other
corporation, unless the other corporation expressly assumes the obligations of
Advanta under the Indenture. (Article Eight) The Indenture contains no covenants
or other provisions to afford protection to holders of Securities in the event
of a highly leveraged transaction or a change in the control of Advanta.
Exchanges: Advanta, in its discretion, may offer and/or accept outstanding
Securities in exchange for other Securities issued under the Indenture. (Section
305)
Concerning the Trustee: The Trustee may resign at any time, may be removed
by the holders of a majority of the principal amount of outstanding Securities
or, upon the occurrence of certain contingencies relating generally to the
insolvency of the Trustee or the Trustee's ineligibility to serve as such under
the Trust Indenture Act of 1939, as amended, may be removed by Advanta or by a
court of competent jurisdiction upon petition of a holder of Securities.
However, no resignation or removal of the Trustee may become effective until a
successor Trustee has accepted the appointment as provided in the Indenture.
(Sections 607 and 608) The Trustee or one of its subsidiaries or affiliates
currently serves as trustee under other indentures that govern other outstanding
debt securities of Advanta or its affiliates, acts as transfer agent in
connection with Advanta's dividend reinvestment program and is a counterparty to
several interest rate swap transactions with Advanta. Advanta and its
subsidiaries reserve the right to enter into additional banking relationships
with the Trustee and its subsidiaries and affiliates in the future.
Satisfaction and Discharge of Indenture: The Indenture may be discharged
upon the payment of all RediReserve Certificates and Notes outstanding under the
Indenture and any additional securities outstanding under the Indenture or upon
deposit in trust of funds sufficient for such payment, plus compliance with
certain formal procedures described in the Indenture. (Article Four)
Reports: Advanta publishes annual reports containing audited financial
statements and quarterly reports containing unaudited financial information for
the first three quarters of each fiscal year. Advanta will send copies of such
reports to any holder of Securities who requests them orally or in writing.
Variations in Terms and Conditions: Advanta reserves the right from time
to time to offer different Securities and to vary the terms and conditions of
the offer, including, but not limited to, minimum balance requirements for
RediReserve Certificates and minimum denominations, additional interest payments
and service charges for all Securities, depending upon the state or locality
where the purchaser resides, the purchaser's tenure as an investor with Advanta
or whether an investor is increasing or renewing his or her investment in
Securities. In addition, Advanta may vary certain terms and conditions of the
RediReserve Certificates and/or Notes for its employees and the employees of its
subsidiaries.
Compliance With Rule 14e-1: Any purchase of Securities by Advanta will be
accomplished in compliance with Section 14(e) of the Exchange Act and Rule l4e-1
promulgated under the Exchange Act, if applicable.
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A SPECIAL NOTE ABOUT CERTAIN OTHER ADVANTA
DEBT SECURITIES NOT COVERED BY THIS PROSPECTUS
Advanta may from time to time offer notes (the "Value Notes") under a
separate retail note program. If offered by Advanta, Value Notes would be
offered on a continuous basis for sale through one or more agents, each of which
would agree to use its reasonable efforts to solicit offers to purchase the
Value Notes. While the Value Notes are expected to be comparable in many ways to
the Notes described in this prospectus, rates on the Value Notes for comparable
maturities and certain other terms and conditions of the Value Notes, may be
different from those for the Notes described in this prospectus. The Value Notes
are expected to be DTC eligible book-entry notes and, unlike the Notes (for
which there is no secondary market), the agents may, from time to time, purchase
and sell the Value Notes in the secondary market, although they would not be
obligated to do so.
The information provided in this section is meant only to avoid confusion
between the Notes offered by this prospectus and any Value Notes that Advanta
may offer in the future. The information provided in this section does not
constitute an offer to sell or the solicitation of an offer to buy the Value
Notes. The Value Notes may be issued only pursuant to a current prospectus
relating to the Value Notes.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of the Securities is
based upon laws, regulations, rulings and decisions now in effect, all of which
are subject to change or possible differing interpretations, which could apply
retroactively, so as to result in United States federal income tax consequences
different from those discussed below. This summary deals only with Securities
held as capital assets and does not purport to deal with persons in special tax
situations, such as financial institutions, insurance companies, regulated
investment companies, dealers in securities or currencies, persons holding
Securities as a hedge against currency risks or as a position in a "straddle"
for tax purposes, or persons whose functional currency is not the United States
dollar. It also does not deal with holders other than original purchasers
(except where otherwise specifically noted). Persons considering the purchase of
the Securities should consult their own tax advisors concerning the application
of United States federal income tax laws to their particular situations as well
as any consequences of the purchase, ownership, and disposition of the
Securities arising under the laws of any other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of the
Securities that is for United States federal income tax purposes:
o a citizen or resident of the United States;
o a corporation, partnership or other entity created or organized in
or under the laws of the United States or of any political
subdivision thereof;
o an estate the income of which is subject to United States federal
income taxation regardless of its source;
o a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more United States fiduciaries having authority to control
decisions of the trust; or
o any other person whose income or gain in respect of the Securities
is effectively connected with the conduct of a United States trade
or business.
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U.S. Holders
Payments of Interest: Payments of interest on the Securities generally
will be taxable to a U.S. Holder as ordinary interest income at the time such
payments are accrued or are received, actually or constructively (in accordance
with the U.S. Holder's regular method of tax accounting.) Holders of Notes with
91 day and 6 month maturities and holders of One Year Notes who wish to receive
tax deferred status will have interest credited only at maturity or on the date
of early withdrawal. Holders of other term Notes may elect to receive payments
of interest at monthly, quarterly, semi-annual or annual intervals, or at
maturity. The interest payment option election may be changed once during the
term of the Note, except that holders of One Year Notes may not change this
election during the term of the One Year Note. If no interest payment option is
elected, interest will be credited to your account on December 31. All interest,
credited or accrued, will be reported to the Internal Revenue Service as of
December 31. With respect to tax-deferred Notes, interest will be both credited
and paid only at maturity or upon early redemption and will be reported to the
IRS for the year in which maturity or early redemption occurred.
Disposition of Securities: Upon the sale, exchange or retirement of a
Security, a U.S. Holder generally will recognize taxable gain or loss equal to
the difference between the amount realized on the sale, exchange or retirement
(other than amounts representing accrued and unpaid interest) and such U.S.
Holder's adjusted tax basis in the Security. A U.S. Holder's adjusted tax basis
in a Security generally will equal the U.S. Holder's initial investment in the
Security increased by any original issue discount included in income (and
accrued market discount, if any, if the U.S. Holder has included such market
discount in income) and decreased by the amount of any principal payments, and
in the case of a Security issued with original issue discount, any payments,
other than qualified stated interest payments, received and amortizable bond
premium taken with respect to such Security. The maximum capital gains rates for
individuals with respect to gain recognized upon the disposition of capital
assets held for more than one year is 20%. Thus, gain recognized by a Holder
upon the disposition of a Security may be subject to the more favorable capital
gains rates depending in part upon the Holder's holding period for the Security.
Holders should consult their own tax advisors with respect to the tax
consequences to them of the disposition of the Securities. The distinction
between capital gain or loss is also relevant for purposes of, among other
things, limitations on the deductibility of capital losses.
If a U.S. Holder disposes of only a portion of a Security pursuant to a
redemption or repayment, such disposition will be treated as a pro rata
prepayment in retirement of a portion of a debt instrument. Generally, the
resulting gain or loss would be calculated by assuming that the original
Security being tendered consists of two instruments, one that is retired (or
repaid), and one that remains outstanding. The adjusted issue price, the U.S.
Holder's adjusted basis and the accrued but unpaid original issue discount of
the Security, determined immediately before the disposition, would be allocated
between these two instruments based on the portion of the instrument that is
treated as retired by the pro rata prepayment.
Backup Withholding and Information Reporting
Backup withholding and information reporting requirements may apply to
certain payments of principal, premium and interest on the Securities, and to
payments of proceeds of the sale or redemption of the Securities, to certain
non-corporate U.S. Holders. Advanta, its agent, a broker, the relevant Trustee
or any paying agent, as the case may be, will be required to withhold from any
payment a tax equal to 31 percent of such payment if the U.S. Holder fails to
furnish or certify his or her correct taxpayer identification number (social
security number or employer identification number) to the payor in the manner
required, fails to certify that such U.S. Holder is not subject to backup
withholding, or otherwise fails to comply with the applicable requirements of
the backup withholding rules. Any amounts withheld under the backup withholding
rules from a payment to a Holder may be credited against such Holder's United
States federal income tax and may entitle such Holder to a refund, provided that
the required information is furnished to the United States Internal Revenue
Service.
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The United States federal income tax discussion set forth above is included
for general information only and may not be applicable depending upon a holder's
particular situation. Holders should consult their own tax advisors with respect
to the tax consequences to them of the ownership and disposition of the
Securities, including the tax consequences under state, local, foreign and other
tax laws and the possible effects of changes in federal or other tax laws.
PLAN OF DISTRIBUTION
Advanta may sell the Securities being offered in this prospectus (1)
directly to purchasers; (2) through agents; (3) through underwriters; (4)
through dealers; or (5) through a combination of any these methods of sale.
Except as otherwise indicated in the prospectus supplement, Advanta will
sell the Securities directly, without an underwriter or selling agent, and the
Securities will be sold by employees of Advanta who, under Rule 3a4-1(a) of the
Exchange Act, are deemed not to be brokers. In accordance with the provisions of
Rule 3a4-1(a), employees of Advanta who sell Securities will not be compensated
by commission, will not be associated with any broker or dealer and will limit
their activities so that, among other things, they do not engage in oral
solicitations of, and comply with certain specified limitations when responding
to inquiries from, potential purchasers.
The distribution of the Securities may be effected from time to time in one
or more transactions: (1) at a fixed price or prices, which may be changed; (2)
at market prices prevailing at the time of sale; (3) at prices related to the
prevailing market prices; or (4) at negotiated prices.
Offers to purchase Securities may be solicited directly by Advanta or by
agents designated by Advanta from time to time. Any agent, which may be deemed
to be an underwriter as that term is defined in the Securities Act, involved in
the offer or sale of the Securities in respect of which this prospectus is
delivered will be named, and any commissions payable by Advanta to that agent
will be identified in the applicable prospectus supplement. Unless otherwise
indicated in the prospectus supplement, any agent will be acting on a reasonable
efforts basis.
If Advanta uses an underwriter or underwriters in the sale of the
Securities being offered in this prospectus, Advanta will execute an
underwriting agreement with the underwriter(s) at the time of sale to it or
them, and the name(s) of the underwriter(s) and the terms of the transaction
will be included in the prospectus supplement, which will be used by the
underwriter(s) to make resales of the Securities in respect of which this
prospectus and the prospectus supplement are delivered to the public.
If Advanta uses a dealer in the sale of the Securities being offered in
this prospectus, Advanta will sell those Securities to the dealer, as principal.
The dealer may then resell the Securities to the public at varying prices to be
determined by the dealer at the time of resale.
Certain of the underwriters, dealers or agents used by Advanta in any
offering of Securities under this prospectus may be customers of, including
borrowers from, engage in transactions with, and perform services for, Advanta
or one or more of its affiliates in the ordinary course of business.
Underwriters, dealers, agents and other persons may be entitled, under
agreements which may be entered into with Advanta, to indemnification against
certain civil liabilities, including liabilities under the Securities Act.
If indicated in the applicable prospectus supplement, Advanta will
authorize agents and underwriters to solicit offers by certain institutions to
purchase Securities from Advanta at the public offering price set forth in the
prospectus supplement pursuant to delayed delivery contracts ("Contracts")
providing for payment and delivery on the date stated in the prospectus
supplement. Each Contract will be for an amount not less than, and, unless
Advanta otherwise agrees, the aggregate principal amount of Securities sold
pursuant to Contracts shall be not less nor more than,
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the respective amounts stated in the prospectus supplement. Institutions with
whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but shall in all cases be
subject to the approval of Advanta. Contracts will not be subject to any
conditions except that the purchase by an institution of the Securities covered
by its Contract shall not at the time of delivery be prohibited under the laws
of any jurisdiction in the United States to which that institution is subject. A
commission indicated in the prospectus supplement will be paid to underwriters
and agents soliciting purchases of debt securities pursuant to Contracts
accepted by Advanta.
Until the distribution of the Securities is completed, rules of the SEC may
limit the ability of the underwriters and certain selling group members, if any,
to bid for and purchase the Securities. As an exception to these rules, the
representatives of the underwriters, if any, are permitted to engage in certain
transactions that stabilize the price of the Securities. Such transactions may
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Securities.
If an underwriter creates a short position in the Securities in connection
with the offering thereof (i.e., if the underwriter sells more Securities than
are set forth on the cover page of the applicable prospectus supplement), the
representatives of the underwriters may reduce that short position by purchasing
Securities in the open market. The representatives of the underwriters also may
elect to reduce any short position by exercising all or part of an
over-allotment option, if applicable, described in the applicable prospectus
supplement.
The representatives of the underwriters also may impose a penalty bid on
certain underwriters and selling group members. This means that if the
representatives purchase Securities in the open market to reduce the
underwriters' short position or to stabilize the price of the Securities, they
may reclaim the amount of the selling concession from the underwriters and
selling group members who sold those shares as part of the offering thereof.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it discourages resales of the security by purchasers in the
offering.
Neither Advanta nor the underwriters, if any, makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Securities. In addition, neither
Advanta nor the underwriters, if any, makes any representation that the
representatives of the underwriters, if any, will engage in such transactions or
that such transactions, once commenced, will not be discontinued without notice.
Advanta may vary the terms and conditions of the offer by state, locality
or as otherwise described under "Description of Securities Provisions Relating
to All Securities Additional Interest" and " Variations in Terms and Conditions"
in this prospectus. Further, Advanta may offer different Securities at different
times depending on such factors as Advanta's liquidity requirements, the
interest rate environment and other economic conditions.
Advanta estimates that the total expenses it will incur in offering the
Securities to which this prospectus relates, excluding underwriting discounts
and commissions, if any, will be approximately $190,000.
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WHERE YOU CAN FIND MORE INFORMATION --
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
Advanta files annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the following public reference rooms maintained by the SEC at:
<TABLE>
<S> <C>
Judiciary Plaza 7 World Trade Center
450 Fifth Street, N.W. 13th Floor
Washington, D.C. 20549 New York, New York 10048
</TABLE>
You may obtain information on the operation of the SEC's public reference
rooms by calling the SEC at 1-800-SEC-0330. Advanta's SEC filings also are
available to the public from the SEC's Internet website at http.//www.sec.gov.
Advanta has filed a registration statement on Form S-3 with the SEC to
register the Securities offered by this prospectus. This prospectus is part of
the registration statement but, as permitted by SEC rules and regulations, this
prospectus does not contain all the information that you can find in the
registration statement or the exhibits to the registration statement. You should
refer to the registration statement and to the exhibits filed with the
registration statement for further information about Advanta, our consolidated
subsidiaries and the Securities.
The SEC allows us to "incorporate by reference" the information we file
with them. This means that we are permitted to disclose certain information to
you by referring you to other documents we have filed with the SEC. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file with the SEC after the date of this
prospectus will automatically update and supersede this information.
We incorporate by reference in this prospectus all the documents listed
below and any filings we make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and before all the
Securities offered by this prospectus have been sold or de-registered:
o Advanta's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
o Advanta's Current Reports on Form 8-K dated January 22, February
24, March 6, April 22, July 23, September 1, October 27, 1998,
January 25, 1999, January 26, 1999 and March 3, 1999; and
o Advanta's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30, and September 30, 1998.
We will deliver, without charge, to anyone receiving this prospectus, upon
written or oral request, a copy of any document incorporated by reference in
this prospectus but not delivered to you with this prospectus, excluding all
exhibits to those documents except any exhibit that has been specifically
incorporated by reference. Requests for these documents should be made to the
following address and phone number: Investor Relations, Advanta Corp., Welsh &
McKean Roads, P.O. Box 844, Spring House, Pennsylvania 19477, telephone: (215)
444-5335.
LEGAL OPINIONS
Wolf, Block, Schorr and Solis-Cohen LLP will pass upon certain matters
relating to the Securities offered hereby as well as on the material United
States federal income tax consequences of the purchase, ownership and
disposition of the Securities.
EXPERTS
The consolidated financial statements incorporated by reference in this
prospectus and elsewhere in the Registration Statement to the extent and for the
periods indicated in their reports have been audited by Arthur Andersen LLP,
independent public accountants, and are incorporated herein in reliance upon the
authority of that firm as experts in giving such reports.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Registration fees................................................. $ 83,400
Printing and engraving............................................ 10,000
Legal fees and expenses........................................... 75,000
Accountants' fees and expenses ................................... 3,000
Indenture Trustee's fees and expenses............................. 11,000
Miscellaneous..................................................... 7,600
--------
Total.......................................................... $190,000
* Estimated, other than registration fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides, inter alia,
that under specified circumstances a corporation shall have the power to
indemnify any person who is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation, against expenses, attorneys' fees, judgments, fines and
settlements. The By-Laws of the Company provide that the Company shall indemnify
any director, officer, employee or agent of the Company to the fullest extent
now or hereafter permitted by law in connection with any such action, suit or
proceeding. The By-Laws further provide that the Board of Directors of the
Company may, by resolution, indemnify any person other than a director, officer,
employee or agent of the Company for liabilities incurred in connection with
services rendered for or at the request of the Company or its subsidiaries. In
addition, consistent with Section 102 of the Delaware General Corporation Law,
the Company's Restated Certificate of Incorporation limits the personal
liability of the Company's directors to the Company or its stockholders for
monetary damages for certain breaches of fiduciary duty. The Company maintains
director and officer liability insurance which would provide coverage against
certain securities law liabilities.
ITEM 16. EXHIBITS
3.1 Restated Certificate of Incorporation of the Registrant (incorporated
by reference to Exhibit 4.1 to Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form S-3 (File No. 33-53475),
filed June 19, 1994), as amended by the Certificate of Designations,
Preferences, Rights and Limitations of the Registrant's 6 3/4%
Convertible Class B Preferred Stock, Series 1995 (Stock Appreciation
Income Linked Securities (SAILS)) (incorporated by reference to
Exhibit 4.3 to the Registrant's Current Report on Form 8-K dated
August 15, 1995, as further amended by the Certificate of
Designations, Preferences, Rights and Limitations of the Registrant's
Series A Junior Participating Preferred Stock (incorporated by
reference to Exhibit 1 to the Registrant's Registration Statement on
Form 8-A, dated March 17, 1997)).
3.2 By-Laws of the Registrant, as amended (incorporated by reference to
Exhibit 3.1 of the Registrant's Current Report on Form 8-K dated
March 17, 1997).
4.1 Trust Indenture between Registrant and Mellon Bank, N.A., as original
Trustee, and Instrument of Resignation, Appointment and Acceptance
among Mellon Bank, N.A. and The Chase Manhattan Bank, as successor
Trustee.
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5 Opinion of Wolf, Block, Schorr and Solis-Cohen LLP.
12 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Wolf, Block, Schorr and Solis-Cohen LLP (included in
Exhibit 5).
24 Power of Attorney (included on Signature Pages).
25 Form T-1, Statement of Eligibility and Qualification Under the Trust
Indenture Act of 1939 of a Corporation Designated to Act as Trustee.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of the 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 Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that the undertakings set forth in clauses (i) and (ii) of
this paragraph do not apply if the Registration Statement is on Form S-3, Form
S-8 or Form F-3, and the information required to be included in a post-effective
amendment is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act 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
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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 which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes 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 section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by 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.
SIGNATURES AND POWER OF ATTORNEY
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 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Lower Gwynedd Township, Montgomery County, Commonwealth of
Pennsylvania, on March 16, 1999.
Advanta Corp.
By: /s/ Olaf Olafsson
-------------------------------------
Olaf Olafsson, President and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Dennis Alter, William A. Rosoff, Olaf Olafsson,
Philip M. Browne, John J. Calamari, Jeffrey D. Beck and Elizabeth H. Mai and
each of them, jointly and
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severally, his or her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same with all exhibits thereto, and other documents in connection
therewith (including, without limitation, any related Registration Statement or
amendment thereto filed in accordance with Rule 462 under the Securities Act of
1933, as amended), with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as she or he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their or his or her substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on March 16, 1999.
Signature Title
--------- -----
/s/ Dennis Alter Chief Executive Officer and Chairman of Board
- ------------------------
Dennis Alter
/s/ William A. Rosoff Vice Chairman and Director
- ------------------------
William A. Rosoff
/s/ Olaf Olafsson President and Director
- ------------------------
Olaf Olafsson
/s/ Philip Browne Senior Vice President and Chief Financial Officer
- ------------------------
Philip Browne
/s/ John J. Calamari Vice President, Finance and Chief Accounting Officer
- ------------------------
John J. Calamari
/s/ Arthur P. Bellis
- ------------------------
Arthur P. Bellis Director
/s/ Max Botel
- ------------------------
Max Botel Director
II-4
<PAGE>
/s/ William C. Dunkelberg Director
- -------------------------
William C. Dunkelberg
Director
- -------------------------
Dana Becker Dunn
/s/ Robert C. Hall Director
- -------------------------
Robert C. Hall
/s/ James E. Ksansnak Director
- -------------------------
James E. Ksansnak
/s/ Ronald Lubner Director
- -------------------------
Ronald Lubner
/s/ Michael Stolper Director
- -------------------------
Michael Stolper
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
DOCUMENT METHOD OF FILING
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<S> <C> <C>
3.1 Restated Certificate of Incorporation of the Registrant (incorporated Incorporated herein
by reference to Exhibit 4.1 to Pre-Effective Amendment No. 1 to the by reference
Registrant's Registration Statement on Form S-3 (File No. 33-53475),
filed June 19, 1994), as amended by the Certificate of Designations,
Preferences, Rights and Limitations of the Registrant's 6 3/4%
Convertible Class B Preferred Stock, Series 1995 (Stock Appreciation
Income Linked Securities (SAILS)) (incorporated by reference to
Exhibit 4.3 to the Registrant's Current Report on Form 8-K dated
August 15, 1995, as further amended by the Certificate of
Designations, Preferences, Rights and Limitations of the Registrant's
Series A Junior Participating Preferred Stock (incorporated by
reference to Exhibit 1 to the Registrant's Registration Statement on
Form 8-A, dated March 17, 1997)).
3.2 By-Laws of the Registrant, as amended (incorporated by reference to Incorporated herein
Exhibit 3.1 of the Registrant's Current Report on Form 8-K dated by reference
March 17, 1997).
4.1 Trust Indenture between Registrant and Mellon Bank, N.A., as original *
Trustee, and Instrument of Resignation, Appointment and Acceptance
among Mellon Bank, N.A. and The Chase Manhattan Bank, as successor
Trustee.
5 Opinion of Wolf, Block, Schorr and Solis-Cohen LLP. *
12 Computation of Ratio of Earnings to Fixed Charges. *
23.1 Consent of Arthur Andersen LLP. *
23.2 Consent of Wolf, Block, Schorr and Solis-Cohen LLP (included in *
Exhibit 5).
24 Power of Attorney (included on Signature Pages). *
25 Form T-1, Statement of Eligibility and Qualification Under the Trust *
Indenture Act of 1939 of a Corporation Designated to Act as Trustee.
- ----------------
* Electronically filed herewith.
</TABLE>
================================================================================
Advanta Corp.,
Issuer
to
Mellon Bank, N.A.,
Trustee
---------------
SENIOR INDENTURE
---------------
Dated as of October 23, 1995
Debt Securities
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Recitals...................................................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions................................................................. 2
Act......................................................................... 2
Additional Amounts.......................................................... 2
Affiliate................................................................... 2
Authorized Newspaper........................................................ 2
Board of Directors.......................................................... 2
Board Resolution............................................................ 3
Business Day................................................................ 3
Commission.................................................................. 3
Company..................................................................... 3
Company Request and Company Order........................................... 3
Corporate Trust Office...................................................... 3
Corporation................................................................. 3
Defaulted Interest.......................................................... 3
Depository.................................................................. 3
Event of Default............................................................ 3
Government Obligations...................................................... 3
Holder...................................................................... 4
Indenture................................................................... 4
Independent Public Accountants.............................................. 4
Indexed Security............................................................ 4
interest.................................................................... 4
Interest Payment Date....................................................... 4
Legal Holiday............................................................... 4
Maturity.................................................................... 4
Office or Agency............................................................ 4
Officers' Certificate....................................................... 4
Opinion of Counsel.......................................................... 4
Outstanding................................................................. 4
Paying Agent................................................................ 6
Person...................................................................... 6
Place of Payment............................................................ 6
Predecessor Security........................................................ 6
Redemption Date............................................................. 6
Redemption Price............................................................ 6
Regular Record Date......................................................... 6
Responsible Officer......................................................... 6
Security or Securities...................................................... 6
Security Register and Security Registrar.................................... 7
Special Record Date......................................................... 7
Stated Maturity............................................................. 7
Trust Indenture Act......................................................... 7
Trustee..................................................................... 7
Vice Chairman............................................................... 8
Vice President.............................................................. 8
</TABLE>
<PAGE>
<TABLE>
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Section 102. Compliance Certificates and Opinions......................................... 8
Section 103. Form of Documents Delivered to Trustee....................................... 8
Section 104. Acts of Holders.............................................................. 9
Section 105. Notices, etc. to Trustee and Company......................................... 9
Section 106. Notice to Holders of Securities; Waiver......................................10
Section 107. Conflict with Trust Indenture Act........................................... 10
Section 108. Effect of Headings and Table of Contents.................................... 10
Section 109. Successors and Assigns...................................................... 10
Section 110. Separability Clause......................................................... 10
Section 111. Benefits of Indenture....................................................... 11
Section 112. Governing Law............................................................... 11
Section 113. Legal Holidays.............................................................. 11
ARTICLE TWO
SECURITIES FORMS
Section 201. Forms Generally............................................................. 12
Section 202. Form of Trustee's Certificate of Authentication............................. 12
ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series........................................ 13
Section 302. Denominations............................................................... 14
Section 303. Execution, Authentication, Delivery and Dating.............................. 15
Section 304. Temporary Securities........................................................ 16
Section 305. Registration, Transfer and Exchange......................................... 16
Section 306. Mutilated, Destroyed, Lost and Stolen Securities............................ 17
Section 307. Payment of Interest and Certain Additional Amounts; Rights to
Interest and Certain Additional Amounts Preserved........................... 18
Section 308. Persons Deemed Owners....................................................... 19
Section 309. Cancellation................................................................ 19
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture..................................... 20
Section 402. Application of Trust Money.................................................. 21
</TABLE>
<PAGE>
ARTICLE FIVE
REMEDIES
<TABLE>
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Section 501. Events of Default........................................................... 21
Section 502. Acceleration of Maturity; Rescission and Annulment.......................... 23
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee............. 24
Section 504. Trustee May File Proofs of Claim............................................ 25
Section 505. Trustee May Enforce Claims without Possession of Securities................. 25
Section 506. Application of Money Collected.............................................. 25
Section 507. Limitations on Suits........................................................ 26
Section 508. Unconditional Right of Holders to Receive Principal and any Premium,
Interest and Additional Amounts............................................. 26
Section 509. Restoration of Rights and Remedies.......................................... 27
Section 510. Rights and Remedies......................................................... 27
Section 511. Delay or Omission Not Waiver................................................ 27
Section 512. Control by Holders of Securities............................................ 27
Section 513. Waiver of Past Defaults..................................................... 27
Section 514. Waiver of Stay or Extension Laws............................................ 28
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Rights of Trustee................................................... 28
Section 602. Not Responsible for Recitals or Issuance of Securities...................... 30
Section 603. May Hold Securities......................................................... 30
Section 604. Money Held in Trust......................................................... 30
Section 605. Compensation and Reimbursement.............................................. 30
Section 606. Corporate Trustee Required; Eligibility..................................... 31
Section 607. Resignation and Removal; Appointment of Successor........................... 31
Section 608. Acceptance of Appointment by Successor...................................... 32
Section 609. Merger, Conversion, Consolidation or Succession to Business................. 33
Section 610. Appointment of Authenticating Agent......................................... 33
ARTICLE SEVEN
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders................... 36
Section 702. Preservation of Information; Communications to Holders...................... 36
Section 703. Reports by Trustee.......................................................... 36
Section 704. Reports by Company.......................................................... 36
ARTICLE EIGHT
CONSOLIDATION, MERGER AND SALES
Section 801. Company May Consolidate, Etc., Only on Certain Terms........................ 38
</TABLE>
<PAGE>
<TABLE>
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Section 802. Successor Person Substituted for Company.................................... 39
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of Holders.......................... 39
Section 902. Supplemental Indentures with Consent of Holders............................. 40
Section 903. Execution of Supplemental Indentures........................................ 41
Section 904. Effect of Supplemental Indentures........................................... 41
Section 905. Reference in Securities to Supplemental Indentures.......................... 41
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal and any Premium, Interest and Additional Amounts....... 41
Section 1002. Maintenance of Office or Agency............................................. 41
Section 1003. Money for Securities Payments to Be Held in Trust........................... 42
Section 1004. Additional Amounts.......................................................... 43
Section 1005. Corporate Existence......................................................... 43
Section 1006. Waiver of Certain Covenants................................................. 44
Section 1007. Company Statement as to Compliance; Notice of Certain Defaults.............. 44
</TABLE>
<PAGE>
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
<TABLE>
<S> <C> <C>
Section 1101. Applicability of Article.................................................... 44
Section 1102. Election to Redeem; Notice to Trustee....................................... 44
Section 1103. Selection by Trustee of Securities to be Redeemed........................... 45
Section 1104. Notice of Redemption........................................................ 45
Section 1105. Deposit of Redemption Price................................................. 46
Section 1106. Securities Payable on Redemption Date....................................... 46
Section 1107. Securities Redeemed in Part................................................. 46
ARTICLE TWELVE
SINKING FUNDS
Section 1201. Applicability of Article.................................................... 47
Section 1202. Satisfaction of Sinking Fund Payments with Securities....................... 47
Section 1203. Redemption of Securities for Sinking Fund................................... 47
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
Section 1301. Applicability of Article.................................................... 48
ARTICLE FOURTEEN
MEETINGS OF HOLDERS OF SECURITIES
Section 1401. Purposes for Which Meetings May Be Called................................... 48
Section 1402. Call, Notice and Place of Meetings.......................................... 48
Section 1403. Persons Entitled to Vote at Meetings........................................ 49
Section 1404. Quorum; Action.............................................................. 49
Section 1405. Determination of Voting Rights; Conduct and Adjournment of Meetings......... 49
Section 1406. Counting Votes and Recording Action of Meetings............................. 50
ARTICLE FIFTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 1501. Indenture and Securities Solely Corporate Obligations....................... 50
</TABLE>
<PAGE>
INDENTURE, dated as of October 23, 1995 (the "Indenture"), between Advanta
Corp., a corporation duly organized and existing under the laws of the State of
Delaware (hereinafter called the "Company"), having its principal executive
office located at 650 Naamans Road, Claymont, Delaware 19703, and MELLON BANK,
N.A., a national banking association duly organized and existing under the laws
of the United States (hereinafter called the "Trustee"), having its Corporate
Trust Office located at One Mellon Bank Center, Pittsburgh, PA 15258-0001.
RECITALS
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (hereinafter called the
"Securities"), unlimited as to principal amount, to bear such rates of interest,
to mature at such time or times, to be issued in one or more series and to have
such other provisions as shall be fixed as hereinafter provided.
The Company has duly authorized the execution and delivery of this
Indenture. All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act of
1939, as amended, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder that are required to be part of this Indenture
and, to the extent applicable, shall be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities as follows:
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
Except as otherwise expressly provided in or pursuant to this Indenture or
unless the context otherwise requires, for all purposes of this Indenture:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
(4) the words "herein", "hereof", "hereto" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms used principally in certain Articles hereof are defined in
those Articles.
"Act", when used with respect to any Holders, has the meaning specified in
Section 104.
"Additional Amounts" means any additional amounts which are required hereby
or by any Security, under circumstances specified herein or therein, to be paid
by the Company in respect of certain taxes imposed on Holders specified therein
and which are owing to such Holders.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have the meanings correlative to
the foregoing.
"Authorized Newspaper" means a newspaper, in the English language,
customarily published on each day that is a Business Day in the place of
publication, whether or not published on days that are Legal Holidays in the
place of publication, and of general circulation in each place in connection
with which the term is used or in the financial community of each such place.
Where successive publications are required to be made in Authorized Newspapers,
the successive publications may be made in the same or in different newspapers
in the same city meeting the foregoing requirements and in each case on any day
that is a Business Day in the place of publication.
"Board of Directors" means the board of directors of the Company or any
committee of that board duly authorized to act generally or in any particular
respect for the Company hereunder.
2
<PAGE>
"Board Resolution" means a copy of one or more resolutions, certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, delivered to the Trustee.
"Business Day", with respect to any Place of Payment or other location,
means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a Legal
Holiday in such Place of Payment or other location.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934 or, if at
any time after the execution of this Indenture such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" and "Company Order" mean, respectively, a written request
or order, as the case may be, signed in the name of the Company by the Chairman
of the Board of Directors, a Vice Chairman, the President or a Vice President,
and by the Treasurer, an Assistant Treasurer, the Controller, an Assistant
Controller, the Secretary or an Assistant Secretary, of the Company, and
delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered, which
office at the date of original execution of this Indenture is located at the
address specified in the first paragraph of this instrument.
"Corporation" includes corporations and, except for purposes of Article
Eight, associations, companies and business trusts.
"Defaulted Interest" has the meaning specified in Section 307.
"Depository" means, with respect to any Security issuable or issued in the
form of one or more global Securities, the Person designated as Depository by
the Company in or pursuant to this Indenture, which Person must be, to the
extent required by applicable law or regulation, a clearing agency registered
under the Securities Exchange Act of 1934, as amended, and, if so provided with
respect to any Security, any successor to such Person.
"Event of Default" has the meaning specified in Section 501.
"Government Obligations", with respect to any Security, means direct
obligations of the United States of America and agencies and instrumentalities
thereof, where the payment or payments thereunder are supported by the full
faith and credit of the United States of America and which are not callable or
redeemable at the option of the issuer or issuers thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of or other amount with respect to any such Government Obligation
held by such custodian for the account of the holder of a depository receipt,
provided that (except as required by law) such custodian in respect of the
Government Obligation or the specific payment of interest on or principal of or
other amount with respect to the Government Obligation evidenced by such
depository receipt.
3
<PAGE>
"Holder" means the Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and, with respect to any
Security, by the terms and provisions of such Security established pursuant to
Section 301 (as such terms and provisions may be amended pursuant to the
applicable provisions hereof).
"Independent Public Accountants" means accountants or a firm of accountants
that, with respect to the Company and any other obligor under the Securities,
are independent public accountants within the meaning of the Securities Act of
1933, as amended, and the rules and regulations promulgated by the Commission
thereunder, who may be the independent public accountants regularly retained by
the Company or who may be other independent public accountants. Such accountants
or firm shall be entitled to rely upon any Opinion of Counsel as to the
interpretation of any legal matters relating to the Indenture or certificates
required to be provided hereunder.
"interest", when used with respect to a Security which provides for payment
of Additional Amounts pursuant to Section 1004, includes such Additional
Amounts.
"Interest Payment Date", with respect to any Security, means the Stated
Maturity of an installment of interest on such Security.
"Legal Holiday", with respect to any Place of Payment or other location,
means a Saturday, a Sunday or a day on which banking institutions or trust
companies in such Place of Payment or other location are not authorized or
obligated to be open.
"Maturity", with respect to any Security, means the date on which the
principal of such Security or an installment of principal becomes due and
payable as provided in or pursuant to this Indenture, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption, notice of
option to elect repayment or otherwise, and includes Redemption Date.
"Office or Agency", with respect to any Securities, means an office or
agency of the Company maintained or designated in a Place of Payment for such
Securities pursuant to Section 1002 or any other office or agency of the Company
maintained or designated for such Securities pursuant to Section 1002 or, to the
extent designated or required by Section 1002 in lieu of such office or agency,
the Corporate Trust Office of the Trustee.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman, the President or a Vice President, and by the Treasurer,
an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary
or an Assistant Secretary of the Company, that complies with the requirements of
Section 314(e) of the Trust Indenture Act and is delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company or other counsel who shall be reasonably
acceptable to the Trustee, that complies with the requirements of Section 314(e)
of the Trust Indenture Act.
"Outstanding", when used with respect to any Securities, means, as of the
date of determination, all such Securities theretofore issued under this
Indenture, except:
(i) any such Security theretofore canceled by the Trustee or the
Security Registrar or delivered to the Trustee or the Security Registrar
for cancellation;
4
<PAGE>
(ii) any such Security or portions thereof for whose payment at the
Maturity thereof money in the necessary amount has been theretofore
deposited pursuant hereto with the Trustee or any Paying Agent (other than
the Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the Holders of such
Securities, provided that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and
5
<PAGE>
(iii) any such Security in exchange for or in lieu of which other
Securities have been issued pursuant to this Indenture, unless there shall
have been presented to the Trustee proof satisfactory to it that such
Security is held by a bona fide purchaser in whose hands such Security is a
valid obligation of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders of Securities for quorum purposes, Securities owned by the
Company or any other obligor upon the Securities or any Affiliate of the Company
or such other obligor, shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in making any
such determination or relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which a Responsible
Officer of the Trustee actually knows to be so owned shall be so disregarded.
Securities so owned which shall have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Trustee (A)
the pledgee's right so to act with respect to such Securities and (B) that the
pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of, or any premium or interest on, or any Additional Amounts with
respect to any Security on behalf of the Company.
"Person" means any individual, Corporation, partnership, joint venture,
joint-stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Place of Payment", with respect to any Security, means the place or places
where the principal of, or any premium or interest on, or any Additional Amounts
with respect to such Security is payable as provided in or pursuant to this
Indenture.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
issued under Section 306 in exchange for or in lieu of a lost, destroyed,
mutilated or stolen Security shall be deemed to evidence the same debt as the
lost, destroyed, mutilated or stolen Security.
"Redemption Date", with respect to any Security or portion thereof to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", with respect to any Security or portion thereof to be
redeemed, means the price at which it is to be redeemed as determined by or
pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Security on any
Interest Payment Date therefor means the date, if any, specified in or pursuant
to this Indenture as the "Regular Record Date".
"Responsible Officer" means an officer of the Trustee assigned to the
Corporate Trust Office, including any Vice President, any trust officer or any
other officer performing functions similar to those performed by the persons who
at the time shall be such officers, and any other officer of the Trustee to whom
a matter is referred because of his knowledge of and familiarity with the
particular subject.
"Security" or "Securities" means any Security or Securities, as the case
may be, authenticated and delivered under this Indenture; provided, however,
that, if at any time there is more than one Person acting as Trustee under this
Indenture, "Securities", with respect to any such Person, shall mean Securities
6
<PAGE>
authenticated and delivered under this Indenture, exclusive, however, of
Securities of any series as to which such Person is not Trustee; and further
provided, however, that if uncertificated Securities are issued the "Security"
or "Securities" means any Security or Securities, as the case may be, registered
in the Security Register.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest on any
Security means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", with respect to any Security or any installment of
principal thereof or interest thereon or any Additional Amounts with respect
thereto, means the date established by or pursuant to this Indenture as the
fixed date on which the principal of such Security or such installment of
principal or interest is or such Additional Amounts are due and payable.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
and any reference herein to the Trust Indenture Act or a particular provision
thereof shall mean such Act or provision, as the case may be, as amended or
replaced from time to time or as supplemented from time to time by rules or
regulations adopted by the Commission under or in furtherance of the purposes of
such Act or provision, as the case may be.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such with respect to
one or more series of Securities pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean each Person who is then a Trustee
hereunder; provided, however, that if at any time there is more than one such
Person, "Trustee" shall mean each such Person and as used with respect to the
Securities of any series shall mean the Trustee with respect to the Securities
of such series.
7
<PAGE>
"Vice Chairman", when used with respect to the Company or the Trustee,
means any vice chairman, whether or not designated by a number or a word or
words added before or after the title "Vice Chairman".
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "Vice President".
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents or any of them is specifically required by any provision of
this Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate 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 Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such 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 or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture or any Security, they may, but need not, be
consolidated and form one instrument.
8
<PAGE>
Section 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by or pursuant to this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing. Except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments or record or both are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments and any such record (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments or so voting at any
such meeting. Proof of execution of any such instrument or of a writing
appointing any such agent, or of the holding by any Person of a Security, shall
be sufficient for any purpose of this Indenture and (subject to Section 315 of
the Trust Indenture Act) conclusive in favor of the Trustee and the Company and
any agent of the Trustee or the Company, if made in the manner provided in this
Section. The record of any meeting of Holders of Securities shall be proved in
the manner provided in Section 1406.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved in any reasonable manner which the Trustee deems
sufficient and in accordance with such reasonable rules as the Trustee may
determine; and the Trustee may in any instance require further proof with
respect to any of the matters referred to in this Section 104.
(c) The ownership and principal amount of Securities held by any Person,
and the date of the commencement and the date of the termination of holding the
same, shall be proved by the Security Register.
(d) If the Company shall solicit from the Holders of any Securities any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may at its option (but is not obligated to), by Board Resolutions,
fix in advance a record date for the determination of Holders of Securities
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other Act may be
given before or after such record date, but only the Holders of Securities of
record at the close of business on such record date shall be deemed to be
Holders for the purpose of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be computed as of
such record date; provided that no such authorization, agreement or consent by
the Holders of Securities shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than six months
after the record date.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Security shall bind every future Holder of
the same Security and the Holder of every Security issued upon the registration
of transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee, any Security Registrar, any
Paying Agent or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
Section 105. Notices, etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, or
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(2) the Company by the Trustee or any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed
to the attention of its Treasurer at the address of its principal office
specified in the first paragraph of this instrument (with a copy to Five
Horsham Business Center, 300 Welsh Road, Horsham, Pennsylvania 19004,
Attention: Secretary) or at any other address previously furnished in
writing to the Trustee by the Company.
Section 106. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided in or pursuant to this Indenture,
where this Indenture provides for notice to Holders of Securities of any event,
such notice shall be sufficiently given to Holders of Securities if in writing
and mailed, first-class postage prepaid, to each Holder of a Security affected
by such event, at his address as it appears in the Security 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 Holders of Securities is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder of a Security shall affect the sufficiency of such notice with
respect to other Holders of Securities given as provided herein. Any notice
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. In the case by reason of the suspension of
regular mail service or by reason of any other cause it shall be impracticable
to give such notice by mail, then such notification as shall be made with the
approval of the Trustee shall constitute a sufficient notification for every
purpose hereunder.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders of Securities shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
Section 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with any duties
under any required provision of the Trust Indenture Act imposed hereon by
Section 318(c) thereof, such required provision shall control.
Section 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
In case any provision in this Indenture, or any Security 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.
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Section 111. Benefits of Indenture.
Nothing in this Indenture or any Security, express or implied, shall give
to any Person, other than the parties hereto, any Security Registrar, any Paying
Agent and their successors hereunder and the Holders of Securities, any benefit
or any legal or equitable right, remedy or claim under this Indenture.
Section 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
or instruments entered into and, in each case, performed in said state.
Section 113. Legal Holidays.
In any case where any Interest Payment Date, Stated Maturity or Maturity of
any Security, shall be a Legal Holiday at any Place of Payment, then
(notwithstanding any other provision of this Indenture, or any Security other
than a provision in any Security that specifically states that such provision
shall apply in lieu of this Section 113) payment need not be made at such Place
of Payment on such date, but may be made on the next succeeding day that is a
Business Day at such Place of Payment with the same force and effect as if made
on the Interest Payment Date or at the Stated Maturity or Maturity, and no
interest shall accrue on the amount payable on such date or at such time for the
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period from and after such Interest Payment Date or Stated Maturity or Maturity,
as the case may be.
ARTICLE TWO
SECURITIES FORMS
Section 201. Forms Generally.
Each Security, issued pursuant to this Indenture shall be, (i) in the case
of certificated Securities, in the form established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, shall have such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by or pursuant to this Indenture or any indenture
supplemental hereto 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 Security as
evidenced by their execution of such Security and (ii) in the case of
uncertificated Securities, established by or pursuant a Board Resolution
providing that such Securities shall fulfill all requirements of state law
wherever sold.
Unless otherwise provided in or pursuant to this Indenture, certificated
Securities shall be issuable in registered form without coupons.
In the case of certificated Securities, Definitive Securities shall be
printed, lithographed or engraved or produced by any combination of these
methods on a steel engraved border or steel engraved borders or may be produced
in any other manner, all as determined by the officers of the Company executing
such Securities, as evidenced by their execution of such Securities.
Section 202. Form of Trustee's Certificate of Authentication.
In the case of certificated Securities, subject to Section 610, the
Trustee's certificate of authentication shall be in substantially the following
form:
This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.
MELLON BANK, N.A., as Trustee
By
----------------------------------
Authorized Signer
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ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be issued under this
Indenture is unlimited. The Securities may be issued in one or more series.
With respect to any Securities to be (i) authenticated and delivered
hereunder in the case of certificated Securities or (ii) registered in the
Security Register in the case of uncertificated Securities, there shall be
established in or pursuant to a Board Resolution and set forth in a Company
Order, or established in one or more indentures supplemental hereto,
(1) the title of such Securities and the series in which such
Securities shall be included;
(2) any limit upon the aggregate principal amount of the Securities of
such title or the Securities of such series which may be issued under this
Indenture (except for Securities authenticated and delivered upon
registration or transfer of, or in exchange for, or in lieu of, other
Securities of such series pursuant to Section 304, 305, 306, 905 or 1107 or
the terms of such Securities);
(3) the date or dates, or the method or methods, if any, by which such
date or dates shall be determined, on which the principal of such
Securities is payable;
(4) the rate or rates at which such Securities shall bear interest, if
any, or the method or methods, if any, by which such rate or rates are to
be determined, the date or dates, if any, from which such interest shall
accrue or the method or methods, if any, by which such date or dates are to
be determined, the Interest Payment Dates, if any, on which such interest
shall be payable and the Regular Record Date, if any, for the interest
payable on Securities on any Interest Payment Date, the manner in which
interest is to be paid, whether and under what circumstances Additional
Amounts on such Securities or any of them shall be payable, and the basis
upon which interest shall be calculated if other than that of a 360-day
year of twelve 30-day months; the place or places where the principal of,
any premium and interest on or any Additional Amounts with respect to such
Securities shall be payable, any of such Securities may be surrendered for
registration of transfer, any of such Securities may be surrendered for
exchange and notices or demands to or upon the Company in respect of such
Securities and this Indenture may be served;
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(5) whether any of such Securities are to be redeemable at the option
of the Company and, if so, the period or periods within which, the price or
prices at which and the other terms and conditions upon which such
Securities may be redeemed, in whole or in part, at the option of the
Company;
(6) whether the Company is obligated to redeem or purchase any of such
Securities pursuant to any sinking fund or at the option of any Holder
thereof and, if so, the period or periods within which, the price or prices
at which and the other terms and conditions upon which such Securities
shall be redeemed or purchased, in whole or in part, pursuant to such
obligation;
(7) the denominations in which any of such Securities shall be
issuable;
(8) any deletions from, modifications of or additions to the Events of
Default or covenants of the Company with respect to any of such Securities,
whether or not such Events of Default or covenants are consistent with the
Events of Default or covenants set forth herein;
(9) if not the Trustee, the identity of each Paying Agent or
Authenticating Agent with respect to such Securities;
(10) if not the Company, the identity of each Security Registrar with
respect to such Securities;
(11) whether such Securities shall be automatically extended, and if
so, the period or periods within which notice may be given that such
extension should not occur automatically, and the terms of any such
extended Security;
(12) whether the Securities will be certificated or uncertificated;
(13) provisions relating to seniority; and
(14) any other terms of such Securities (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as
to denomination and the rate or rates of interest, if any, and Maturity, the
date from which interest, if any, shall accrue and except as may otherwise be
provided by the Company in or pursuant to the Board Resolution and set forth in
the Company Order or in any indenture or indentures supplemental hereto
pertaining to such series of Securities. All Securities of any one series need
not be issued at the same time and, unless otherwise so provided by the Company,
a series may be reopened for issuances of additional Securities of such series
or to establish additional terms of such series of Securities.
If any of the terms of the Securities of any series shall be established by
action taken by or pursuant to a Board Resolution, the Board Resolution shall be
delivered to the Trustee at or prior to the delivery of the Company Order
setting forth the terms of such series.
Section 302. Denominations.
Unless otherwise provided in or pursuant to this Indenture, Securities
shall be issuable in registered form without coupons in such minimum
denominations as may be determined from time to time by Company Order.
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Section 303. Execution, Authentication, Delivery and Dating.
Securities in certificated form shall be executed on behalf of the Company
by its Chairman of the Board, one of its Vice Chairmen, its President, its
Treasurer or one of its Vice Presidents under its corporate seal reproduced
thereon and attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver to the Trustee (i) with respect to Securities
in certificated form, the certificates representing such Securities for
authentication, together with the Board Resolution and Officers' Certificate or
supplemental indenture with respect to such Securities referred to in Section
301 and a Company Order for the authentication and delivery of such Securities,
and the Trustee in accordance with the Company Order and subject to the
provisions hereof shall authenticate and deliver such Securities and (ii) with
respect to Securities in uncertificated form, the Board Resolution and Officers'
Certificate or supplemental indenture with respect to such Securities referred
to in Section 301. In authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Article Six hereof)
shall be fully protected in relying upon an Opinion of Counsel substantially to
the effect that:
(a) the form or forms and terms of such Securities have been
established in conformity with the provisions of this Indenture;
(b) all conditions precedent to the authentication and delivery of
such Securities have been complied with and that such Securities when
completed by appropriate insertion and executed and delivered by the
Company to the Trustee for authentication pursuant to this Indenture, and
authenticated and delivered by the Trustee and issued by the Company in the
manner and subject to any conditions specified in such Opinion of Counsel,
will constitute legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws affecting the enforcement of creditors' rights
generally, and subject to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law);
(c) all laws and requirements in respect of the execution and delivery
by the Company of such Securities have been complied with; and
(d) as to such other matters as the Trustee may reasonably request.
If all the Securities of any series are not to be issued at one time, it
shall not be necessary to deliver an Opinion of Counsel and an Officers'
Certificate at the time of issuance of each Security, but such opinion and
certificate, with appropriate modifications, shall be delivered at or before the
time of issuance of the first Security of such series. After any such first
delivery, any separate request by the Company that the Trustee authenticate
Securities of such series for original issue will be deemed to be a
certification by the Company that all conditions precedent provided for in this
Indenture relating to authentication and delivery of such Securities continue to
have been complied with.
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The Trustee shall not be required to authenticate or to cause an
Authenticating Agent to authenticate any Securities if the issue of such
Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee or if the Trustee,
being advised by counsel, determines that such action may not lawfully be taken.
Each certificated Security shall be dated the date of its authentication.
No certificated Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears on
such Security a certificate of authentication substantially in the form provided
for in Section 202 or 610 executed by or on behalf of the Trustee by the manual
signature of one of its authorized officers or by an Authenticating Agent. Such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder
Section 304. Temporary Securities.
Pending the preparation of definitive certificated Securities, the Company
may execute and deliver to the Trustee and, upon Company Order, the Trustee
shall authenticate and deliver, in the manner provided in Section 303, temporary
Securities in lieu thereof which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form with such appropriate insertions, omissions,
substitutions and other variations as the officers of the Company executing such
Securities may determine, as conclusively evidenced by their execution of such
Securities. Such temporary Securities may be in global form.
Except in the case of temporary Securities in global form, which shall be
exchanged in accordance with the provisions thereof, if temporary Securities are
issued, the Company shall cause definitive Securities to be prepared without
unreasonable delay. After the preparation of definitive Securities of the same
series and containing terms and provisions that are identical to those of any
temporary Securities, such temporary Securities shall be exchangeable for such
definitive Securities upon surrender of such temporary Securities at an Office
or Agency for such Securities, without charge to any Holder thereof. Upon
surrender for cancellation of any one or more temporary Securities, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of authorized
denominations of the same series and containing identical terms and provisions.
Unless otherwise provided in or pursuant to this Indenture with respect to a
temporary global Security, until so exchanged the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series.
Section 305. Registration, Transfer and Exchange.
With respect to the Securities of each series the Company shall cause to be
kept a register (each such register being herein sometimes referred to as the
"Security Register") at an Office or Agency for such series in which, subject to
such reasonable regulations as it may prescribe, the Company shall provide for
the registration of the Securities of such series and of transfers of the
Securities of such series. At such times as the Trustee shall not be the
Security Registrar, it shall have the right to examine the Security Register at
all reasonable times. The Company is hereby initially appointed as Security
Registrar for each series of Securities.
Upon surrender for registration of transfer of any certificated Security of
any series at any Office or Agency for such series, the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities of the same series
denominated as authorized in or pursuant to this Indenture, of a like aggregate
principal amount bearing a number not contemporaneously outstanding and
containing identical terms and provisions.
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At the option of the Holder, certificated Securities of any series may be
exchanged for other Securities of the same series containing identical terms and
provisions, in any authorized denominations, and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at any Office or Agency
for such series. Whenever any certificated Securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company evidencing the same
debt and entitling the Holders thereof to the same benefits under this Indenture
as the Securities surrendered upon such registration of transfer or exchange.
Every certificated Security presented or surrendered for registration of
transfer or for exchange or redemption shall (if so required by the Company or
the Security Registrar for such Security) be duly endorsed, or be accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Security Registrar for such Security duly executed by the Holder thereof or his
attorney duly authorized in writing.
The Company reserves the right to assess a service charge for any
registration of transfer or exchange, or redemption of Securities, and the
Company 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 Securities, other than exchanges pursuant to Section
304, 905 or 1107 not involving any transfer.
Except as otherwise provided in or pursuant to this Indenture, the Company
shall not be required (i) to issue, register the transfer of or exchange any
Securities during a period beginning at the opening of business 15 days before
the day of the selection for redemption of Securities of like tenor and the same
series under Section 1103 and ending at the close of business on the day of the
mailing of the relevant notice of redemption, or (ii) to register the transfer
of or exchange any Security so selected for redemption in whole or in part,
except in the case of any Security to be redeemed in part, the portion thereof
not to be redeemed, or (iii) to issue, register the transfer of or exchange any
Security which, in accordance with its terms, has been surrendered for repayment
at the option of the Holder, except the portion, if any, of such Security not to
be so repaid.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, subject to the
provisions of this Section 306, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same series
containing identical terms and of like principal amount and bearing a number not
contemporaneously outstanding.
If there be delivered to the Company and to the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security, and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and, upon the Company's request the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Security a new Security of the same series
containing identical terms and of like principal amount and bearing a number not
contemporaneously outstanding.
Notwithstanding the foregoing provisions of this Section 306, in case any
mutilated, destroyed, lost or stolen Security has become or is about to become
due and payable, the Company in its discretion may, instead of issuing a new
Security, pay such Security.
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Upon the issuance of any new Security under this Section 306, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security, issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security, shall constitute a separate obligation of
the Company, whether or not the destroyed, lost or stolen Security shall be at
any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest and Certain Additional Amounts; Rights to
Interest and Certain Additional Amounts Preserved.
Unless otherwise provided in or pursuant to this Indenture, any interest on
and any Additional Amounts with respect to any Security which shall be payable,
and are punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name such Security (or one or more Predecessor
Securities) is registered as of the close of business on the Regular Record Date
for such interest.
Unless otherwise provided in or pursuant to this Indenture, any interest on
and any Additional Amounts with respect to any Security which shall be payable,
but shall not be punctually paid or duly provided for, on any Interest Payment
Date for such Security (herein called "Defaulted Interest") shall forthwith
cease to be payable to the Holder thereof on the relevant Regular Record Date by
virtue of having been such Holder; and such Defaulted Interest may be paid by
the Company, at its election in each case, as provided in Clause (1) or (2)
below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Person in whose name such Security (or a Predecessor Security thereof)
shall be registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on such Security and the
date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit on or prior to
the date of the proposed payment, such money when so deposited to be held
in trust for the benefit of the Person entitled to such Defaulted Interest
as in this Clause provided. Thereupon, the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the expense
of the Company shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to the Holder of such Security (or a Predecessor Security
thereof) at his address as it appears in the Security Register not less
than 10 days prior to such Special Record Date. The Trustee may, in its
discretion, in the name and at the expense of the Company cause a similar
notice to be published at least once in an Authorized Newspaper of general
circulation in the City of Philadelphia, Pennsylvania, but such publication
shall not be a condition precedent to the establishment of such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Person in whose name such Security
(or a Predecessor Security thereof) shall be registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
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(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which such Security may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause,
such payment shall be deemed practicable by the Trustee.
At the option of the Company, interest on Securities that bear interest may
be paid by mailing a check to the address of the Person entitled thereto as such
address shall appear in the Security Register.
Subject to the foregoing provisions of this Section 307 and Section 305,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
Section 308. Persons Deemed Owners.
Prior to (i) due presentment of a certificated Security for registration of
transfer and (ii) acceptance of duly authorized written induction to transfer an
uncertificated Security, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name such Security is registered in
the Security Register as the owner of such Security for all purposes including
without limitation for the purpose of receiving payment of principal of, any
premium and (subject to Sections 305 and 307) interest on and any Additional
Amounts with respect to such Security and for all other purposes whatsoever,
whether or not any payment with respect to such Security shall be overdue, and
neither the Company, nor the Trustee or any agent of the Company or the Trustee
shall be affected by notice to the contrary.
No holder of any beneficial interest in any global Security held on its
behalf by a Depository shall have any rights under this Indenture with respect
to such global Security, and such Depository may be treated by the Company, the
Trustee, and any agent of the Company or the Trustee as the owner of such global
Security for all purposes whatsoever. None of the Company, the Trustee, any
Paying Agent or the Security Registrar will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of a global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
Section 309. Cancellation.
All certificated Securities surrendered for payment, redemption,
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee, and any such Securities, as well as Securities surrendered
directly to the Trustee for any such purpose, shall be canceled promptly by the
Trustee. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be canceled promptly by the Trustee. No Securities shall be authenticated
in lieu of or in exchange for any Securities canceled as provided in this
Section, except as expressly permitted by or pursuant to this Indenture. All
canceled Securities held by the Trustee shall be destroyed by the Trustee,
unless by a Company Order the Company directs their return to it in a timely
manner.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
Upon the direction of the Company by a Company Order, this Indenture shall
cease to be of further effect (except as to any surviving rights of registration
of transfer or exchange of Securities herein expressly provided for and any
right to receive Additional Amounts), and the Trustee, on receipt of a Company
Order, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306 and (ii)
Securities for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) if redeemable at the option of the Company, are to be
called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for such purpose, money and/or Government Obligations which
through the payment of interest and principal in respect thereof in
accordance with their terms, without consideration of any
reinstatement thereof, will provide not later than the opening of
business on the due dates of any payment of principal and any premium,
interest and Additional Amounts with respect thereto, or a combination
thereof, money in an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, including the principal of, any premium and
interest on, and any Additional Amounts with respect to such
Securities, to the date of such deposit (in the case of Securities
which have become due and payable) or to the Maturity thereof, as the
case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company;
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with; and
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(4) the Company has delivered to the Trustee a
certificate of Independent Public Accountants certifying as to the
sufficiency of the amounts deposited pursuant to subclause (B) of
Clause (1) of this Section 401 for payment of the principal and any
premium, interest and Additional Amounts with respect thereto on the
dates such payments are due.
In the event there are Securities of two or more series hereunder, the
Trustee shall be required to execute an instrument acknowledging satisfaction
and discharge of this Indenture only if requested to do so with respect to
Securities of all series as to which it is Trustee and if the other conditions
thereto are met. In the event there are two or more Trustees hereunder, then the
effectiveness of any such instrument shall be conditioned upon receipt of each
such instrument from all Trustees hereunder.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 605, the obligations of
the Trustee to any Authenticating Agent under Section 610 and, if money and/or
Government Obligations shall have been deposited with the Trustee pursuant to
subclause (B) of Clause (1) of this Section, the obligations of the Trustee
under Section 402 and the last paragraph of Section 1003 shall survive.
In the event that, subsequent to the date a discharge is effected pursuant
to this Section 401, Additional Amounts in excess of those established as of the
date such discharge is effected become payable in respect of any Securities, in
order to preserve the benefits of the discharge established hereunder, the
Company shall deposit or cause to be deposited in accordance with provisions of
this Section 401, within ten business days prior to the earlier to occur of (i)
one year after the existence of such excess Additional Amounts is established
and (ii) the date the first payment in respect of any portion of such excess
Additional Amounts becomes due, such additional funds as are necessary to
satisfy the provisions of this Section 401 as if a discharge were being effected
as of the date of such subsequent deposit. For purposes of this paragraph, the
existence of excess Additional Amounts shall be deemed to have been established
as of the date the governmental authority imposing the tax, assessment or other
governmental charge resulting in the Additional Amounts first publishes the
legislation, regulation or other enactment adopting such tax, assessment or
other governmental charge. Failure to comply with the requirements of this
paragraph shall result in the termination of the benefits of the discharge
established by this Section 401.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
and Government Obligations deposited with the Trustee pursuant to Section 401
shall be held in trust and applied by it, in accordance with the provisions of
the Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal,
premium, interest and Additional Amounts for whose payment such money has or
Government Obligations have been deposited with or received by the Trustee; but
such money and Government Obligations need not be segregated from other funds
except to the extent required by law.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
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Event of Default and whether it shall be voluntary or be effected by operation
of law pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) default in the payment of any interest on or any Additional
Amounts payable in respect of any Security of such series when such
interest becomes or such Additional Amounts become due and payable, and
continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of and any premium on any
Security of such series when it becomes due and payable at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of such series; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture or the Securities (other than a covenant
or warranty a default in the performance or the breach of which is
elsewhere in this Section specifically dealt with or which has been
expressly included in this Indenture solely for the benefit of a series of
Securities other than such series), and continuance of such default or
breach for a period of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of such series a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(5) the entry by a court having competent jurisdiction of:
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(a) a decree or order for relief in respect of the Company in an
involuntary proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law and such decree or order shall
remain unstayed and in effect for a period of 60 consecutive days; or
(b) a decree or order adjudging the Company to be insolvent, or
approving a petition seeking reorganization, arrangement, adjustment
or composition of the Company and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or
(c) a final and non-appealable order appointing a custodian,
receiver, liquidator, assignee, trustee or other similar official of
the Company or of any substantial part of the property of the Company,
as the case may be, or ordering the winding up or liquidation of the
affairs of the Company; or
(6) the commencement by the Company of a voluntary proceeding under
any applicable bankruptcy, insolvency, reorganization or other similar law
or of a voluntary proceeding seeking to be adjudicated insolvent or the
consent by the Company to the entry of a decree or order for relief in an
involuntary proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
insolvency proceedings against it, or the filing by the Company of a
petition or answer or consent seeking reorganization or relief under any
applicable law, or the consent by the Company to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or similar official of the Company
or any substantial part of the property of the Company or the making by the
Company of an assignment for the benefit of creditors, or the taking of
corporate action by the Company in furtherance of any such action; or
(7) any other Event of Default provided in or pursuant to this
Indenture with respect to Securities of such series.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then the Trustee or the Holders of not
less than 25% in principal amount of the Outstanding Securities of such series
may declare the principal of all the Securities of such series, or such lesser
amount as may be provided for in the Securities of such series, to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by the Holders), and upon any such declaration such principal or such
lesser amount shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of not less than a majority in principal amount of
the Outstanding Securities of such series, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum of money
sufficient to pay
(A) all overdue installments of any interest on and any
Additional Amounts with respect to all Securities of such series,
(B) the principal of and any premium on any Securities of such
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series which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates borne by or
provided for in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of any interest and Additional
Amounts at the rate or rates borne by or provided for in such
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of such series,
other than the non-payment of the principal of, any premium and interest
on, and any Additional Amounts with respect to Securities of such series
which shall have become due solely by such declaration of acceleration,
shall have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(1) default is made in the payment of any installment of interest on
or any Additional Amounts with respect to any Security when such interest
or Additional Amounts shall have become due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of or any premium
on any Security at its Maturity,
the Company shall, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount of money then due
and payable with respect to such Securities with interest upon the overdue
principal, any premium and, to the extent that payment of such interest shall be
legally enforceable, upon any overdue installments of interest and Additional
Amounts at the rate or rates borne by or provided for in such Securities, and,
in addition thereto, such further amount of money as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
If the Company fails to pay the money it is required to pay the Trustee
pursuant to the preceding paragraph forthwith upon the demand of the Trustee,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the money so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or such Securities or in aid of the
exercise of any power granted herein or therein, or to enforce any other proper
remedy.
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Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of any overdue principal, premium, interest or
Additional Amounts) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(i) to file and prove a claim for the whole amount, or such lesser
amount as may be provided for in the Securities of such series, of the
principal and any premium, interest and Additional Amounts owing and unpaid
in respect of the Securities and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents or counsel) and of
the Holders of Securities allowed in such judicial proceeding, and
(ii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders of Securities, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and any other amounts due the Trustee under Section 605.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder of a Security in any such proceeding.
Section 505. Trustee May Enforce Claims without Possession of Securities.
All rights of action and claims under this Indenture or any of the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery or judgment, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, shall be for
the ratable benefit of each and every Holder of a Security in respect of which
such judgment has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal, or any
premium, interest or Additional Amounts, upon presentation of the Securities and
the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 605;
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SECOND: To the payment of the amounts then due and unpaid upon the
Securities for principal and any premium, interest and Additional Amounts
in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the aggregate amounts due and payable on such Securities for principal
and any premium, interest and Additional Amounts, respectively;
THIRD: The balance, if any, to the Person or Persons entitled thereto.
Section 507. Limitations on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of such
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of such series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of such series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture or any Security to affect, disturb or prejudice the rights of
any other such Holders or Holders of Securities of any other series, or to
obtain or to seek to obtain priority or preference over any other Holders or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal and ratable benefit of all such Holders.
Section 508. Unconditional Right of Holders to Receive Principal and any
Premium, Interest and Additional Amounts.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of, any premium and (subject to Sections 305 and 307)
interest on, and any Additional Amounts with respect to such Security, on the
respective Stated Maturity or Maturities therefor specified in such Security
(or, in the case of redemption, on the Redemption Date or, in the case of
repayment at the option of such Holder if provided in or pursuant to this
Indenture, on the date such repayment is due) and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
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Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and each such Holder shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and each such
Holder shall continue as though no such proceeding had been instituted.
Section 510. Rights and Remedies.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
each and every Holder of a Security is intended to be exclusive of any other
right or remedy, and every right and remedy, to the extent permitted by law,
shall be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to any Holder of a Security may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by such Holder, as
the case may be.
Section 512. Control by Holders of Securities.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the Securities of
such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture or with the Securities of any series,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) such direction is not unduly prejudicial to the rights of the
other Holders of Securities of such series not joining in such action.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series on behalf of the Holders of all the
Securities of such series may waive any past default hereunder with respect to
such series and its consequences, except a default
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(1) in the payment of the principal of, any premium or interest on, or
any Additional Amounts with respect to any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
Section 514. Waiver of Stay or Extension Laws.
The Company covenants that (to the extent that it may lawfully do so) 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 affect the covenants or the
performance of this Indenture; and the Company expressly waives (to the extent
that it may lawfully do so) all benefit or advantage of any such law and
covenant that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Rights of Trustee.
Subject to Sections 315(a) through 315(d) of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon 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) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or a Company Order (in each
case, other than delivery of any Security to the Trustee for authentication
and delivery pursuant to Section 303 which shall be sufficiently evidenced
as provided therein) and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence shall be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
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(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by or pursuant to this Indenture at the
request or direction of any of the Holders of Securities of any series
pursuant to this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request
or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine,
during business hours and upon reasonable notice, the books, records and
premises of the Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
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Section 602. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificate of authentication, shall be taken as the statements of the Company
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Securities and perform its obligations hereunder and that the
statements made by it in a Statement of Eligibility and Qualification on Form
T-1 supplied to the Company are true and accurate, subject to the qualifications
set forth therein. Neither the Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of the Securities or the
proceeds thereof.
Section 603. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other Person that may be an agent of the Trustee or the
Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Sections 310(b) and 311 of the Trust
Indenture Act, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other Person.
Section 604. Money Held in Trust.
Except as provided in Section 402 and Section 1003, money held by the
Trustee in trust hereunder need not be segregated from other funds except to the
extent required by law and shall be held uninvested. The Trustee shall be under
no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
Section 605. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by the Trustee hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to the Trustee's negligence
or bad faith; and
(3) to indemnify the Trustee and its agents for, and to hold them
harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending themselves against any claim
or liability in connection with the exercise or performance of any of their
powers or duties hereunder.
As security for the performance of the obligations of the Company under
this Section 605, the Trustee shall have a lien prior to the Securities of any
series upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of, and premium or
interest on or any Additional Amounts with respect to Securities.
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Section 606. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder that is a Corporation
permitted by the Trust Indenture Act to act as trustee under an indenture
qualified under the Trust Indenture Act and that has a combined capital and
surplus (computed in accordance with Section 310(a)(2) of the Trust Indenture
Act) of at least $50,000,000. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 606, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
Section 607. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee pursuant to Section 608.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If
the instrument of acceptance by a successor Trustee required by Section 608
shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor
Trustee with respect to such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the
Trustee and the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the obligations imposed
upon it under Section 310(b) of the Trust Indenture Act with respect
to Securities of any series after written request therefor by the
Company or any Holder of a Security of such series who has been a bona
fide Holder of a Security of such series for at least six months, or
(2) the Trustee shall cease to be eligible under Section 606 and
shall fail to resign after written request therefor by the Company or
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by or pursuant to a Board Resolution,
may remove the Trustee with respect to all Securities or the Securities of such
series, or (ii) subject to Section 315(e) of the Trust Indenture Act, any Holder
of a Security who has been a bona fide Holder of a Security of such series for
at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee with
respect to all Securities of such series and the appointment of a successor
Trustee or Trustees.
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(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Company, by or
pursuant to a Board Resolution, shall promptly appoint a successor Trustee
or Trustees with respect to the Securities of that or those series (it
being understood that any such successor Trustee may be appointed with
respect to the Securities of one or more or all of such series and that at
any time there shall be only one Trustee with respect to the Securities of
any particular series) and shall comply with the applicable requirements of
Section 608. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of
such series delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 608,
become the successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by the Company or the Holders of
Securities and accepted appointment in the manner required by Section 608,
any Holder of a Security who has been a bona fide Holder of a Security of
such series for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of
such series.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Securities, of such series as their names and
addresses appear in the Security Register. Each notice shall include the
name of the successor Trustee with respect to the Securities of such series
and the address of its Corporate Trust Office.
Section 608. Acceptance of Appointment by Successor.
(a) Upon the appointment hereunder of any successor Trustee with
respect to all Securities, such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties hereunder of the retiring
Trustee; but, on the request of the Company or such successor Trustee, such
retiring Trustee, upon payment of its charges, shall execute and deliver an
instrument transferring to such successor Trustee all the rights, powers
and trusts of the retiring Trustee and, subject to Section 1003, shall duly
assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder, subject nevertheless to its
claim, if any, provided for in Section 605.
(b) Upon the appointment hereunder of any successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and such successor Trustee shall execute and deliver
an indenture supplemental hereto wherein each successor Trustee shall
accept such appointment and which (1) shall contain such provisions as
shall be necessary or desirable to transfer and confirm to, and to vest in,
such successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates, (2) if the
retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to
confirm that all the rights, powers, trusts and duties of the retiring
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Trustee with respect to the Securities of that or those series as to which
the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust, that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such Trustee
and that no Trustee shall be responsible for any notice given to, or
received by, or any act or failure to act on the part of any other Trustee
hereunder, and, upon the execution and delivery of such supplemental
indenture, the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein, such retiring Trustee shall have
no further responsibility for the exercise of rights and powers or for the
performance of the duties and obligations vested in the Trustee under this
Indenture with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates other than as hereinafter
expressly set forth, and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates;
but, on request of the Company or such successor Trustee, such retiring
Trustee, upon payment of its charges with respect to the Securities of that
or those series to which the appointment of such successor relates and
subject to Section 1003 shall duly assign, transfer and deliver to such
successor Trustee, to the extent contemplated by such supplemental
indenture, the property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.
(c) Upon request of any Person appointed hereunder as a successor
Trustee, the Company shall execute any and all instruments for more fully
and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts referred to in paragraph (a) or (b) of this
Section 608, as the case may be.
(d) No Person shall accept its appointment hereunder as a successor
Trustee unless at the time of such acceptance such successor Person shall
be qualified and eligible under this Article.
Section 609. Merger, Conversion, Consolidation or Succession to Business.
Any Corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any Corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
Corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated
but not delivered by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
Section 610. Appointment of Authenticating Agent.
The Trustee may appoint one or more Authenticating Agents acceptable to the
Company with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of that or
those series issued upon original issue, exchange, registration of transfer,
partial redemption or pursuant to Section 306, and Securities so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and delivery
of Securities by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent.
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Each Authenticating Agent shall be acceptable to the Company and, except as
provided in or pursuant to this Indenture, shall at all times be a corporation
that would be permitted by the Trust Indenture Act to act as trustee under an
indenture qualified under the Trust Indenture Act, is authorized under
applicable law and by its charter to act as an Authenticating Agent and has a
combined capital and surplus (computed in accordance with Section 310(a)(2) of
the Trust Indenture Act) of at least $50,000,000. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 610, it shall resign immediately in the manner and
with the effect specified in this Section 610.
Any Corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any Corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall be the successor of
such Authenticating Agent hereunder, provided such Corporation shall be
otherwise eligible under this Section 610, without the execution or filing of
any paper or any further act on the part of the Trustee or the Authenticating
Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent shall
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent, upon acceptance of its appointment hereunder,
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 610.
The Company agrees to pay each Authenticating Agent from time to time
reasonable compensation for its services under this Section 610. If the Trustee
makes such payments, it shall be entitled to be reimbursed for such payments,
subject to the provisions of Section 605.
The provisions of Sections 308, 602 and 603 shall be applicable to each
Authenticating Agent.
If an Authenticating Agent is appointed with respect to one or more series
of Securities pursuant to this Section 610, the Securities of such series may
have endorsed thereon, in addition to or in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.
MELLON BANK, N.A., As Trustee
By
-----------------------------------
As Authenticating Agent
By
-----------------------------------
Authorized Signatory
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If all of the Securities of any series may not be originally issued at one
time, and if the Trustee does not have an office capable of authenticating
Securities upon original issuance located in a Place of Payment where the
Company wishes to have Securities of such series authenticated upon original
issuance, the Trustee, if so requested in writing (which writing need not be
accompanied by or contained in an Officers' Certificate by the Company), shall
appoint in accordance with this Section 610 an Authenticating Agent having an
office in a Place of Payment designated by the Company with respect to such
series of Securities.
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
In accordance with Section 312(a) of the Trust Indenture Act, the Company
shall furnish or cause to be furnished to the Trustee
(a) semi-annually with respect to Securities of each series on April
30 and October 31 of each year or upon such other dates as are set forth in
or pursuant to the Board Resolution or indenture supplemental hereto
authorizing such series, a list, in each case in such form as the Trustee
may reasonably require, of the names and addresses of Holders as of the
applicable date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished,
provided, however, that such times as the Trustee is the Security Registrar no
such list shall be required to be furnished.
Section 702. Preservation of Information; Communications to Holders.
The Trustee shall comply with the obligations imposed upon it pursuant to
Section 312 of the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company, the Trustee, any Paying
Agent or any Security Registrar shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
of Securities in accordance with Section 312 of the Trust Indenture Act,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under Section 312(b) of the Trust Indenture Act.
Section 703. Reports by Trustee.
(a) Within 60 days after July 31 of each year commencing with the first
July 31 following the first issuance of Securities pursuant to Section 301, if
required by Section 313(a) of the Trust Indenture Act, the Trustee shall
transmit, in accordance with Section 313 of the Trust Indenture Act, a brief
report dated as of such July 31 with respect to any of the events specified in
said Section 313(a) which may have occurred since the later of the immediately
preceding September 15 and the date of this Indenture.
(b) The Trustee shall transmit the reports required by Section 313(b) of
the Trust Indenture Act at the times specified therein.
(c) Reports pursuant to this Section shall be transmitted in the manner and
to the Persons required by Sections 313(c) and 313(d) of the Trust Indenture
Act.
Section 704. Reports by Company.
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The Company, pursuant to Section 314(a) of the Trust Indenture Act, shall:
(1) file with the Trustee, within 15 days after the Company 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 Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not required to file
information, documents or reports pursuant to either of said Sections, then
it shall file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company, as the case may be, with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(3) transmit within 30 days after the filing thereof with the Trustee,
in the manner and to the extent provided in Section 313(c) of the Trust
Indenture Act, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of
this Section 704 as may be required by rules and regulations prescribed
from time to time by the Commission.
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ARTICLE EIGHT
CONSOLIDATION, MERGER AND SALES
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Company with or into any other Person
or Persons (whether or not affiliated with the Company), or successive
consolidations or mergers in which the Company or its successor or successors
shall be a party or parties, or shall prevent any conveyance, transfer or lease
of the property of the Company as an entirety or substantially as an entirety,
to any other Person (whether or not affiliated with the Company); provided,
however, that:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, the entity formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a Corporation organized and existing
under the laws of the United States of America, any state thereof or the
District of Columbia and shall expressly assume, by an indenture (or
indentures, if at such time there is more than one Trustee) supplemental
hereto, executed by the successor Person and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the
principal of, any premium and interest on and any Additional Amounts with
respect to all the Securities and the performance of every other covenant
of this Indenture on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no event
which, after notice or lapse of time, would become an Event of Default,
shall have occurred and be continuing;
(3) either the Company or the successor Person shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, stating
that such consolidation, merger, conveyance, transfer or lease and such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with.
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Section 802. Successor Person Substituted for Company.
Upon any consolidation or merger or any conveyance, transfer or lease of
the properties and assets of the Company substantially as an entirety to any
Person in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
and thereafter, except in the case of a lease to another Person, the predecessor
Person shall be released from all obligations and covenants under this
Indenture, and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders of Securities, the Company (when
authorized by or pursuant to a Board Resolution) and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (as shall be specified in such
supplemental indenture or indentures) or to surrender any right or power
herein conferred upon the Company; or
(3) to facilitate the issuance of Securities in uncertificated form,
provided any such action shall not adversely affect the interests of the
Holders of Securities of any series in any material respect; or
(4) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(5) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 608; or
(6) to cure any ambiguity or to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not adversely affect the
interests of the Holders of Securities of any series in any material
respect; or
(7) to add to, delete from or revise the conditions, limitations and
restrictions on the authorized amount, terms or purposes of issue,
authentication and delivery of Securities, as herein set forth; or
(8) to add any additional Events of Default with respect to all or any
series of Securities (as shall be specified in such supplemental
indenture); or
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(9) to secure the Securities pursuant to Section 1006 or otherwise; or
(10) to amend or supplement any provision contained herein or in any
supplemental indenture, provided that no such amendment or supplement shall
materially adversely affect the interests of the Holders of any Securities
then Outstanding.
Section 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company (when authorized by or pursuant to a Company's Board
Resolution), and the Trustee may enter into one or more 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 Securities of such series under this
Indenture; provided, however, that no such supplemental indenture, without the
consent of the Holder of each Outstanding Security affected thereby, shall
(1) change the Stated Maturity of the principal of, or any premium or
installment of interest on or any Additional Amounts with respect to, any
Security, or reduce the principal amount thereof or the rate of interest
thereon or any Additional Amounts with respect thereto, or any premium
payable upon the redemption thereof or otherwise, or change the obligation
of the Company to pay Additional Amounts pursuant to Section 1004 (except
as contemplated by Section 801(1) and permitted by Section 901(1)), or
adversely affect the right of repayment at the option of any Holder as
contemplated by Article Thirteen, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date or, in the
case of repayment at the option of the Holder, on or after the date for
repayment), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or reduce the requirements of Section 1404 for quorum or voting,
or
(3) modify any of the provisions of this Section 902, or Section 513
or Section 1006, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which shall have been included expressly and solely
for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders of Securities under this
Section 902 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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Section 903. Execution of Supplemental Indentures.
As a condition to executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trust created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Article Six hereof) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, 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 a Security theretofore or thereafter issued hereunder shall be bound thereby.
Section 905. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal and any Premium, Interest and Additional
Amounts.
The Company covenants and agrees for the benefit of the Holders of the
Securities of each series that it will duly and punctually pay the principal of,
any premium and interest on and any Additional Amounts with respect to the
Securities of such series in accordance with the terms thereof and this
Indenture.
Section 1002. Maintenance of Office or Agency.
The Company shall maintain in each Place of Payment for any series of
Securities an Office or Agency where Securities of such series may be presented
or surrendered for payment, where Securities of such series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of such series relating thereto
and this Indenture may be served.
The Company may also from time to time designate one or more other Offices
or Agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an Office or Agency
in each Place of Payment for Securities of any series for such purposes. The
Company shall give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other Office or
Agency. Unless otherwise provided in or pursuant to this Indenture, the Company
hereby designates as the Place of Payment for each series The City of Horsham,
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and initially appoints its offices in the City of Horsham, Pennsylvania as the
Office or Agency for such purpose. Pursuant to Section 301(9) of this Indenture,
the Company may subsequently appoint a place or places in The City of
Philadelphia or its immediate vicinity where such Securities may be payable.
Section 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it shall, on or before each due date of the
principal of, any premium or interest on or Additional Amounts with respect to
any of the Securities of such series, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum of money sufficient to pay the
principal or any premium, interest or Additional Amounts so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided, and shall promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents for any series of
Securities, it shall, on or prior to each due date of the principal of, any
premium or interest on or any Additional Amounts with respect to any Securities
of such series, deposit with any Paying Agent a sum of money sufficient to pay
the principal or any premium, interest or Additional Amounts so becoming due,
such sum to be held in trust for the benefit of the Persons entitled thereto,
and (unless such Paying Agent is the Trustee) the Company will promptly notify
the Trustee of its action or failure so to act.
The Company shall cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent shall:
(1) hold all sums held by it for the payment of the principal of, any
premium or interest on or any Additional Amounts with respect to Securities
of such series in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as
provided in or pursuant to this Indenture;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of such series) in the making of any
payment of principal, any premium or interest on or any Additional Amounts
with respect to the Securities of such series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same terms as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Except as otherwise provided herein or pursuant hereto, any money deposited
with the Trustee or any Paying Agent, or then held by the Company, in trust for
the payment of the principal of, any premium or interest on or any Additional
Amounts with respect to any Security of any series and remaining unclaimed for
two years after such principal or any such premium or interest or any such
Additional Amounts shall have become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
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money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in an Authorized Newspaper in each Place of Payment for such
series or to be mailed to Holders of Securities of such series, or both, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication or
mailing nor shall it be later than two years after such principal and any
premium or interest or Additional Amounts shall have become due and payable, any
unclaimed balance of such money then remaining will be repaid to the Company.
Section 1004. Additional Amounts.
If any Securities of a series provide for the payment of Additional
Amounts, the Company agrees to pay to the Holder of any such Security Additional
Amounts as provided therein. Whenever in this Indenture there is mentioned, in
any context, the payment of the principal of or any premium or interest on, or
in respect of, any Security of any series or the net proceeds received on the
sale or exchange of any Security of any series, such mention shall be deemed to
include mention of the payment of Additional Amounts provided by the terms of
such series established hereby or pursuant hereto to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof
pursuant to such terms, and express mention of the payment of Additional Amounts
(if applicable) in any provision hereof shall not be construed as excluding
Additional Amounts in those provisions hereof where such express mention is not
made.
Except as otherwise provided in or pursuant to this Indenture, if the
Securities of a series provide for the payment of Additional Amounts, at least
10 days prior to the first Interest Payment Date with respect to such series of
Securities (or if the Securities of such series shall not bear interest prior to
Maturity, the first day on which a payment of principal is made), and at least
10 days prior to each date of payment of principal or interest if there has been
any change with respect to the matters set forth in the below-mentioned
Officers' Certificate, the Company shall furnish to the Trustee and the
principal Paying Agent or Paying Agents, if other than the Trustee, an Officers'
Certificate instructing the Trustee and such Paying Agent or Paying Agents
whether such payment of principal of or interest on the Securities of such
series shall be made to Holders of Securities of such series who are United
States Aliens without withholding for or on account of any tax, assessment or
other governmental charge described in the Securities of such series. If any
such withholding shall be required, then such Officers' Certificate shall
specify by country the amount, if any, required to be withheld on such payments
to such Holders of Securities, and the Company agrees to pay to the Trustee or
such Paying Agent the Additional Amounts required by the terms of such
Securities. The Company covenants to indemnify the Trustee and any Paying Agent
for, and to hold them harmless against, any loss, liability or expense
(including reasonable fees and expenses) reasonably incurred without negligence
or bad faith on their part arising out of or in connection with actions taken or
omitted by any of them in reliance on any Officers' Certificate furnished
pursuant to this Section 1004.
Section 1005. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and its rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve any such right or
franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of its business and that the loss thereof is not
disadvantageous in any material respect to the Holders.
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Section 1006. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Section 1002, 1004, 1006 or 1007 with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series, by Act of such Holders, either shall waive such
compliance in such instance or generally shall have waived compliance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
Section 1007. Company Statement as to Compliance; Notice of Certain
Defaults.
(a) The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year, a written statement (which need not be contained in or
accompanied by an Officers' Certificate) signed by the principal executive
officer, the principal financial officer or the principal accounting officer of
the Company, stating that
(1) a review of the activities of the Company during such year and of
its performance under this Indenture has been made under his or her
supervision, and
(2) to the best of his or her knowledge, based on such review, (A) the
Company has complied with all the conditions and covenants imposed on it
under this Indenture throughout such year, or, if there has been a default
in the fulfillment of any such condition or covenant, specifying each such
default known to him or her and the nature and status thereof, and (B) no
event has occurred and is continuing which is, or after notice or lapse of
time or both would become, an Event of Default, or, if such an event has
occurred and is continuing, specifying each such event known to him and the
nature and status thereof.
(b) The Company shall deliver to the Trustee, within five days after the
occurrence thereof, written notice of any event which after notice or lapse of
time or both would become an Event of Default pursuant to clause (4) of Section
501.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article.
Redemption of Securities of any series at the option of the Company as
permitted or required by the terms of such Securities shall be made in
accordance with the terms of this Article, except as otherwise permitted or
required by the terms of such Securities.
Section 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
or pursuant to a Board Resolution. In case of any redemption at the election of
the Company of the Securities of any series, with the same issue date, interest
rate, Stated Maturity and other terms, the Company shall, at least 45 days prior
to the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities of such series to be redeemed.
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Section 1103. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities of any series with the same issue date,
interest rate, Stated Maturity and other terms are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions of the principal amount of Securities of such series;
provided, however, that no such partial redemption shall reduce the portion of
the principal amount of a Security of such series not redeemed to less than the
minimum denomination for a Security of such series established herein or
pursuant hereto.
The Trustee shall promptly notify the Company and the Security Registrar
(if other than itself) in writing of the Securities selected for redemption and,
in the case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal of such Securities which has been or is to be redeemed.
Section 1104. Notice of Redemption.
Notice of redemption shall be given in the manner provided in Section 106,
not less than 30 nor more than 60 days prior to the Redemption Date, unless a
shorter period is specified in the Securities to be redeemed, to the Holders of
Securities to be redeemed. Failure to give notice by mailing in the manner
herein provided to the Holder of any Securities designated for redemption as a
whole or in part, or any defect in the notice to any such Holder, shall not
affect the validity of the proceedings for the redemption of any other
Securities or portion thereof.
Any notice that is mailed to the Holder of any Securities in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not such Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Security or Securities to be redeemed,
(4) in case any certificated Security is to be redeemed in part only,
the notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the Holder of such
Security will receive, without charge, a new Security or Securities of
authorized denominations for the principal amount thereof remaining
unredeemed,
(5) that, on the Redemption Date, the Redemption Price shall become
due and payable upon each such Security or portion thereof to be redeemed,
and, if applicable, that interest thereon shall cease to accrue on and
after said date,
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(6) the place or places where such Securities are to be surrendered
for payment of the Redemption Price and any accrued interest and Additional
Amounts pertaining thereto,
(7) that the redemption is for a sinking fund, if such is the case,
(8) the CUSIP number, if any (or any other numbers used by a
Depository to identify such Securities).
A notice of redemption published as contemplated by Section 106 need not
identify particular Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
Section 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) any accrued interest on and Additional
Amounts with respect thereto, all the Securities or portions thereof which are
to be redeemed on that date.
Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with any accrued
interest and Additional Amounts to the Redemption Date; provided, however, that
installments of interest on Securities whose Stated Maturity is on or prior to
the Redemption Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such at the close of business on
the Regular Record Dates therefor according to their terms and the provisions of
Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium, until paid, shall bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
Section 1107. Securities Redeemed in Part.
Any certificated Security which is to be redeemed only in part shall be
surrendered at any Office or Agency for such Security (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing) and the Company shall
execute and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities of the same
series, containing identical terms and provisions, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so
surrendered.
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ARTICLE TWELVE
SINKING FUNDS
Section 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series, except as otherwise permitted or
required by the terms of such Securities.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of such series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.
Section 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company may, in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of any series to be made pursuant to the
terms of such Securities (1) deliver Outstanding Securities of such series
(other than any of such Securities previously called for redemption or any of
such Securities in respect of which cash shall have been released to the
Company), and (2) apply as a credit Securities of such series which have been
redeemed either at the election of the Company pursuant to the terms of such
series of Securities or through the application of permitted optional sinking
fund payments pursuant to the terms of such Securities, provided that such
series of Securities have not been previously so credited. Such Securities shall
be received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
If as a result of the delivery or credit of Securities of any series in lieu of
cash payments pursuant to this Section 1202, the principal amount of Securities
of such series to be redeemed in order to exhaust the aforesaid cash payment
shall be less than $100,000, the Trustee need not call Securities of such series
for redemption, except upon Company Request, and such cash payment shall be held
by the Trustee or a Paying Agent and applied to the next succeeding sinking fund
payment, provided, however, that the Trustee or such Paying Agent shall at the
request of the Company from time to time pay over and deliver to the Company any
cash payment so being held by the Trustee or such Paying Agent upon delivery by
the Company to the Trustee of Securities of that series purchased by the Company
having an unpaid principal amount equal to the cash payment requested to be
released to the Company.
Section 1203. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any
series of Securities (unless a shorter notice shall be satisfactory to the
Trustee), the Company shall deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing mandatory sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting of Securities of that
series pursuant to Section 1202, and the optional amount, if any, to be added in
cash to the next ensuing mandatory sinking fund payment, and will also deliver
to the Trustee any Securities to be so credited and not theretofore delivered.
If such Officers' Certificate shall specify an optional amount to be added in
cash to the next ensuing mandatory sinking fund payment, the Company shall
thereupon be obligated to pay the amount therein specified. Not less than 40
days before each such sinking fund payment date the Trustee shall select the
Securities to be redeemed upon such sinking fund payment date in the manner
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specified in Section 1103 and cause notice of the redemption thereof to be given
not less than 30 nor more than 40 days prior to the sinking fund payment date in
the name of and at the expense of the Company in the manner provided in Section
1104. Such notice having been duly given, the redemption of such Securities
shall be made upon the terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
Section 1301. Applicability of Article.
Securities of any series which are repayable at the option of the Holders
thereof before their Stated Maturity shall be repaid in accordance with the
terms of the Securities of such series. The repayment of any principal amount of
Securities pursuant to such option of the Holder to require repayment of
Securities before their Stated Maturity, for purposes of Section 309, shall not,
in the case of certificated Securities, operate as a payment, redemption or
satisfaction of the indebtedness represented by such Securities unless and until
the Company, at its option, shall deliver or surrender the same to the Trustee
with a directive that such Securities be canceled.
ARTICLE FOURTEEN
MEETINGS OF HOLDERS OF SECURITIES
Section 1401. Purposes for Which Meetings May Be Called.
A meeting of Holders of Securities of any series may be called at any time
and from time to time pursuant to this Article to make, give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be made, given or taken by Holders of
Securities of such series.
Section 1402. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of Securities of
any series for any purpose specified in Section 1401, to be held at such time
and at such place in The City of Philadelphia as the Trustee shall determine.
Notice of every meeting of Holders of Securities of any series, setting forth
the time and the place of such meeting and in general terms the action proposed
to be taken at such meeting, shall be given, in the manner provided in Section
106, not less than 21 nor more than 180 days prior to the date fixed for the
meeting.
(b) In case at any time the Company (by or pursuant to a Board Resolution)
or the Holders of at least 10% in principal amount of the Outstanding Securities
of any series shall have requested the Trustee to call a meeting of the Holders
of Securities of such series for any purpose specified in Section 1401, by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have made the first publication
of the notice of such meeting within 21 days after receipt of such request or
shall not thereafter proceed to cause the meeting to be held as provided herein,
then the Company or the Holders of Securities of such series in the amount above
specified, as the case may be, may determine the time and the place in The City
of Philadelphia and may call such meeting for such purposes by giving notice
thereof as provided in subsection (a) of this Section 1402.
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Section 1403. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding Securities of
such series, or (2) a Person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Securities of such series by such
Holder or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel and any representatives of the Company and its counsel.
Section 1404. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series shall constitute a quorum for a meeting of
Holders of Securities of such series. In the absence of a quorum within 30
minutes after the time appointed for any such meeting, the meeting shall, if
convened at the request of Holders of Securities of such series, be dissolved.
In any other case the meeting may be adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the adjournment of
such meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided in Section 1402(a), except that such notice need be given only
once not less than five days prior to the date on which the meeting is scheduled
to be reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage, as provided above, of the principal amount of the
Outstanding Securities of such series which shall constitute a quorum.
Except as limited by the proviso to Section 902, any resolution presented
to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Securities of that series;
provided, however, that, except as limited by the proviso to Section 902, any
resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action which this Indenture expressly provides
may be made, given or taken by the Holders of a specified percentage, which is
less than a majority, in principal amount of the Outstanding Securities of a
series may be adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum is present as aforesaid by the affirmative vote of the Holders
of such specified percentage in principal amount of the Outstanding Securities
of such series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section 1404 shall be
binding on all the Holders of Securities of such series, whether or not such
Holders were present or represented at the meeting.
Section 1405. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities of such series in regard to proof of the holding of
Securities of such series and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall deem appropriate.
Except as otherwise permitted or required by any such regulations, the holding
of Securities shall be proved in the manner specified in Section 104 and the
appointment of any proxy shall be proved in the manner specified in Section 104.
Such regulations may provide that written instruments appointing proxies,
regular on their face, may be presumed valid and genuine without the proof
specified in Section 104 or other proof.
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(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Securities as provided in Section 1402(b), in which
case the Company or the Holders of Securities of the series calling the meeting,
as the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting, each Holder of a Security of such series or proxy shall
be entitled to one vote for each $1,000 principal amount of Securities of such
series held or represented by him; provided, however, that no vote shall be cast
or counted at any meeting in respect of any Security challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding. The
chairman of the meeting shall have no right to vote, except as a Holder of a
Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called pursuant
to Section 1402 at which a quorum is present may be adjourned from time to time
by Persons entitled to vote a majority in principal amount of the Outstanding
Securities of such series represented at the meeting; and the meeting may be
held as so adjourned without further notice.
Section 1406. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and account numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1402 and, if
applicable, Section 1404. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
ARTICLE FIFTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 1501. Indenture and Securities Solely Corporate Obligations.
No recourse for the payment of the principal of or premium, if any, or
interest or Additional Amounts on any Security, or for any claim based thereon
or otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company in this Indenture or in any supplemental
indenture or, in any Security, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder, officer
or director, as such, past, present or future, of the Company or of any
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successor corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issuance of the Securities.
* * * * *
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This instrument 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.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed, all
as of the day and year first above written.
[SEAL] Advanta Corp.
Attest:
/s/ Linda Morris By /s/ David Wesselink
- ------------------------------ -----------------------------------
Name: David Wesselink
Title:
[SEAL] MELLON BANK, N.A., as Trustee
Attest:
/s/ By /s/ B.M. Schessler
- ------------------------------ -----------------------------------
Name: B.M. Schessler
Title: Vice President
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ADVANTA CORP.
SENIOR INVESTMENT NOTE PROGRAM
-------------------------------------
INSTRUMENT
OF
RESIGNATION, APPOINTMENT AND ACCEPTANCE
among
Mellon Bank, N.A. as Trustee,
and
THE CHASE MANHATTAN BANK, as Successor Trustee
-------------------------
Dated as of July 31, 1997
-------------------------------------
<PAGE>
INSTRUMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE
INSTRUMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE entered into as of
July 31, 1997, among Advanta Corp., a corporation organized and existing under
the laws of the State of Delaware (the "Company"), having its principal office
at Welsh & McKean Roads, Spring House, PA 19477, Mellon Bank, N.A., a national
banking association, having its principal corporate trust office at Two Mellon
Bank Center, Pittsburgh, PA 15258 ("Mellon"), as Trustee, and THE CHASE
MANHATTAN BANK, a corporation organized and existing under the laws of the State
of New York ("Chase"), having its corporate trust office at 450 West 3rd Street,
New York, New York 10001, as successor Trustee.
W I T N E S S E T H:
WHEREAS, the Company heretofore executed and delivered to Mellon, as
Trustee, its Indenture dated as of October 23, 1995 (the "Original Indenture"),
to provide for the issuance of securities issued and to be issued in accordance
with the provisions of the Original Indenture, as supplemented and amended from
time to time, (the "Indenture"); and
WHEREAS, as of June 30, 1997, securities in the amount of $177,103,000
were outstanding under the Indenture; and
WHEREAS, Section 607(b) of the Indenture provides that the trustee under
the Indenture may at any time resign and be discharged of the trusts created by
the Indenture by giving written notice to the Company, addressed and mailed to
the Company at its principal office; and
WHEREAS, Section 607(e) of the Indenture provides that a successor
Trustee may be appointed, in the manner provided in said Section 607(c), in case
the Trustee under the Indenture shall resign, by the Company to fill the vacancy
in the Office Of Trustee under the Indenture by an instrument executed by order
of the Board of Directors of the Company; and
WHEREAS, Section 607(f) of the Indenture further provides that the
Company shall mail notice of any appointment of a successor Trustee made by it
pursuant to said Section 607(f) in the manner provided in Section 607(f); and
WHEREAS, Section 608(d) of the Indenture provides that any Trustee under
the Indenture shall at all times satisfy the requirements set forth in Article
Six; and
WHEREAS, Section 608(a) of the Indenture provides that any successor
Trustee shall execute, acknowledge and deliver to its predecessor Trustee, and
also to the Company an instrument accepting such appointment under the
Indenture; and
-1-
<PAGE>
WHEREAS, Mellon desires to resign as Trustee under the Indenture; and
WHEREAS, the Company desires to appoint Chase as successor Trustee under
the Indenture; and
WHEREAS, Chase is willing to accept such appointment as successor Trustee
under the Indenture; and
WHEREAS, as of the date of these presents, no successor Trustee under the
Indenture has been appointed by the security holders; and
WHEREAS, by resolution of the Board of Directors of the Company adopted
on June 26, 1997, the undersigned officers of the Company were authorized,
directed and ordered to execute and deliver this instrument;
NOW THEREFORE, THIS INSTRUMENT OF RESIGNATION, APPOINTMENT AND
ACCEPTANCE, WITNESSETH: That for and in consideration, of the premises, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is hereby covenanted, declared and decreed by the
Company, Mellon and Chase, as follows:
FIRST: The Company, as soon as practicable after the execution and
delivery of these presents and the Registration Statement on Form S-3 (No.
333-28291) registering additional securities for issuance pursuant to the
Indenture has been declared effective by the Securities and Exchange Commission,
will cause the notice required pursuant to the provisions of Section 607(f) of
the Indenture to be mailed as therein required.
SECOND: Chase hereby represents that it is a bank eligible under the
provisions of Section 606 of the Indenture and Section 310(a) of the Trust
Indenture Act of 1939, as amended to be appointed successor Trustee under the
Indenture.
THIRD: Effective at the close of business on the date hereof, Mellon
hereby resigns and, by written notice to the Company dated May 23, 1997, as
required by Section 607(b), has given notice of its resignation as Trustee under
the Indenture and as agent of the Company where notices and demands to or upon
the Company in respect of the securities issued in accordance with the Indenture
or in respect of the Indenture may be served.
FOURTH: The Company hereby accepts the foregoing resignations and
appoints Chase as successor Trustee under the Indenture and as the office or
agency of the Company in the borough of Manhattan, City and State of New York,
where notices and demands to or upon the Company in respect of the securities
issued in accordance with the Indenture or in respect of the Indenture may be
served, with all the estates, properties, rights, powers, trusts, duties and
obligations of Mellon under the Indenture as provided in the Indenture, such
appointment to be effective at the close of business on the date hereof.
-2-
<PAGE>
FIFTH: Chase hereby accepts its appointment as successor Trustee under
the Indenture, effective at the close of business on the date hereof, and
assumes all the estates, properties, rights, powers, trusts, duties and
obligations of the Trustee thereunder as provided in the Indenture, and Chase
also accepts, effective at the close of business on the date hereof, its
appointment as agent of the Company where notices and demands to or upon the
Company in respect of the securities issued in accordance with the Indenture or
in respect of the Indenture may be served, subject to all the terms and
provisions therein contained.
SIXTH: The Company and Chase hereby request Mellon to confirm, assign,
transfer and set over to Chase, as its successor in trust under the Indenture,
all the rights, powers, trusts, duties and obligations of Mellon, as Trustee,
and to assign, transfer and deliver to Chase, as successor Trustee, any and all
money and other property subject to the lien of the Indenture held by Mellon as
Trustee under the Indenture.
SEVENTH: Pursuant to the request of Chase and the Company hereby made,
Mellon hereby confirms, assigns, transfers and sets over to Chase, as its
successor in trust under the Indenture, all the rights, powers, trusts, duties
and obligations and hereby does assign, transfer and deliver to Chase as such
successor Trustee any and all money and other property subject to the lien of
the Indenture held by Mellon as Trustee under the Indenture.
EIGHTH: The Company, for the purpose of more fully and certainly vesting
in and confirming to Chase as successor Trustee under the Indenture said rights,
powers, trusts, duties and obligations, at the request of Chase, joins in the
execution hereof.
NINTH: The Company, Mellon and Chase hereby agree, upon reasonable
request of any of them, to execute, acknowledge and deliver such further
instruments of conveyance and further assurance and to do such other things as
may reasonably be required for more fully and certainly vesting in and
confirming to Chase all the right, title and interest of Mellon, as Trustee, in
and to the estates held in trust under the Indenture, and to such rights,
powers, trusts, duties and obligations of Chase, as Trustee. Mellon agrees to
provide whatever reasonable assistance Chase may require for the orderly
transfer of this trusteeship and the foregoing agency appointments, including
furnishing Chase with a list of security holders and such other documentation
from Mellon's files as Chase may reasonably require and providing Chase with any
explanation of Mellon's services under the Indenture that Chase may consider
necessary or advisable in connection with its administration as successor
Trustee and of such agency appointments.
TENTH: This instrument may be executed in any number of 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.
ELEVENTH: Terms not otherwise defined in this instrument of Resignation,
Appointment and Acceptance shall have the definitions given thereto in the
Indenture.
-3-
<PAGE>
TWELFTH: This Instrument of Resignation, Appointment and Acceptance shall
be construed in accordance with and governed by the laws of the State of New
York.
IN WITNESS WHEREOF, the Company has caused this Instrument to be signed
and acknowledged by one of its authorized officers, its corporate seal to be
affixed hereunto, and the same to be attested by its Secretary or one of its
Assistant Secretaries; Mellon has caused this instrument to be executed and
acknowledged by one of its authorized officers, its corporate seal to be affixed
hereunto, and the same to be attested by one of its authorized officers; and
Chase has caused this Instrument to be executed and acknowledged by one of its
authorized officers, its corporate seal to be affixed hereunto, and the same to
be attested by one of its Senior Trust Officers, as of the date first set forth
above.
-4-
<PAGE>
Advanta Corp.
By: /s/ Jeffrey D. Beck
-----------------------------
Name: Jeffrey D. Beck
Title: Vice President
and Treasurer
[Seal]
Attest:
/s/ Linda C. Morris
- ------------------------------------------
Name: Linda C. Morris
Title: Vice President and Assistant Secretary
The Chase Manhattan Bank
By:
------------------------------
Name:
Title:
[Seal]
Attest:
- ------------------------------------------
Name:
Title:
Mellon Bank, N.A.
By:
------------------------------
Name:
Title:
[Seal]
Attest:
- -----------------------------------------
Name:
Title:
-5-
<PAGE>
Advanta Corp.
By:
------------------------------
Name:
Title:
[Seal]
Attest:
- -----------------------------------------
Name:
Title:
The Chase Manhattan Bank
By: /s/ Sheik Wiltshire
------------------------------
Name: Sheik Wiltshire
Title: Second Vice President
[Seal]
Attest:
/s/ Francine Springer
- ------------------------------------------
Name: Francine Springer
Title: Trust Officer
Mellon Bank, N.A.
By:
------------------------------
Name:
Title:
[Seal]
Attest:
- ------------------------------------------
Name:
Title:
-6-
<PAGE>
Advanta Corp.
By:
------------------------------
Name:
Title:
[Seal]
Attest:
- ------------------------------------------
Name:
Title:
The Chase Manhattan Bank
By:
------------------------------
Name:
Title:
[Seal]
Attest:
- ------------------------------------------
Name:
Title:
Mellon Bank, N.A.
By: /s/ Marvin Kirstead
-----------------------------
Name: Marvin Kirstead
Title: Assistant Vice
President
[Seal]
Attest:
/s/ John Sohier
- ------------------------------------------
Name: John Sohier
Title: Assistant Officer
-7-
LAW OFFICES
WOLF, BLOCK, SCHORR AND SOLIS-COHEN LLP
TWELFTH FLOOR PACKARD BUILDING
111 SOUTH 15TH STREET
PHILADELPHIA, PA 19102-2678
(215) 977-2000
FACSIMILE: (215) 977-2334
(215) 977-2000
March 16, 1999
Advanta Corp.
Welsh and McKean Roads
P.O. Box 844
Spring House, PA 19477
Re: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
As special counsel to Advanta Corp., a Delaware corporation (the
"Company"), we have assisted in the preparation of a Registration Statement on
Form S-3 (together with all exhibits thereto and documents incorporated by
reference therein, the "Registration Statement") in the form proposed to be
filed with the Securities and Exchange Commission (the "Commission"). The
Registration Statement relates to the issuance and sale from time to time,
pursuant to Rule 415 of the General Rules and Regulations promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), of up to $300,000,000
aggregate principal amount of RediReserve Variable Rate Certificates which will
be payable at the demand of the holder (the "RediReserve Certificates") and
Notes with 91 Day, Six, Eighteen and Thirty Month and One, Two, Three, Four,
Five, Seven and Ten Year maturities (collectively with the RediReserve
Certificates, the "Securities"), all of which will be uncertificated.
This opinion is being delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K promulgated under the Securities Act.
In connection with the opinions expressed herein, we have examined, among
other things, the originals or copies, certified or otherwise identified to our
satisfaction, of the Restated Certificate of Incorporation and Bylaws of the
Company, the Registration Statement, resolutions of the Board of Directors
of the Company
<PAGE>
Advanta Corp.
March 16, 1999
Page 2
with respect to the Registration Statement and the authorization of the
securities registered thereby and the authorization of the filing of an
additional registration statement (the "Additional Registration Statement") for
the purpose of registering for issuance and sale an additional amount of
Securities pursuant to Rule 462 under the Securities Act (the "Additional
Securities," and collectively with the Securities, the "Offered Securities"),
the Indenture, dated October 23, 1995, between the Company and The Chase
Manhattan Bank, as successor trustee (the "Indenture"), and such other documents
as we have deemed necessary or appropriate for the purpose of rendering this
opinion.
In our examination, we have assumed without independent verification (i)
the legal capacity of all natural persons, (ii) the genuineness of all
signatures, (iii) the authenticity of all documents submitted to us as
originals, (iv) the conformity to original documents of all documents submitted
to us as certified, conformed or photostatic copies and the authenticity of the
originals of such documents, and (v) the power and authority of all persons
other than the Company signing such documents to execute, deliver and perform
such documents, and the valid authorization, execution and delivery of such
documents by such other persons. As to any facts material to the opinions
expressed herein which were not independently established or verified, we have
relied upon oral or written statements and representations of officers or other
representatives of the Company.
We are admitted to practice in the Commonwealth of Pennsylvania and the
State of Delaware and we do not express any opinion as to the laws of any other
jurisdiction other than the federal laws of the United States of America to the
extent referred to specifically herein. The Offered Securities may be issued
from time to time on a delayed or continuous basis, and this opinion is limited
to the laws, including applicable rules and regulations, in effect on the date
hereof, and to the facts in existence on the date hereof. We assume no
obligation to update such opinion.
Based upon and subject to the foregoing, and such examinations of law and
such other matters as we have deemed relevant under the circumstances, it is our
opinion that:
1. The Indenture has been duly authorized by the Board of Directors of
the Company, has been duly executed and delivered by the Company and
is a valid and binding agreement, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium and other similar laws now or
hereafter in effect relating to or affecting the rights of creditors
generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
<PAGE>
Advanta Corp.
March 16, 1999
Page 3
2. When and if the definitive terms of any Offered Securities and of
their issue and sale have been duly established in accordance with the
Board Resolutions, the Board Resolutions and an Officer's Certificate
(as defined in the Indenture) or a supplemental indenture with respect
to such Offered Securities are delivered to the Trustee under the
Indenture in accordance with the terms of the Indenture, the
consideration for such Offered Securities approved by the Executive
Committee of the Company's Board of Directors in accordance with the
Board Resolutions has been received by the Company, and such Offered
Securities have been registered in the "Security Register" (as defined
in the Indenture) in accordance with the provisions of the Indenture,
so as not to violate any applicable law or agreement or instrument
then binding on the Company, such Offered Securities will be duly
authorized, legal and valid binding obligations of the Company,
enforceable in accordance with their terms and entitled to the
benefits provided in the Indenture, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium and other
similar laws now or hereafter in effect relating to or affecting the
rights of creditors generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement and to the incorporation by reference of
this opinion as an exhibit to the Additional Registration Statement. We also
consent to the reference to our firm under the heading "Legal Opinions" in the
prospectus and any prospectus supplements constituting a part of the
Registration Statement and to the incorporation by reference of such references
to our firm in the Additional Registration Statement. In giving this consent, we
do not admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act or the rules and regulations of the
Commission.
<PAGE>
Advanta Corp.
March 16, 1999
Page 4
Very truly yours,
WOLF, BLOCK, SCHORR AND SOLIS-COHEN LLP
Exhibit 12
ADVANTA Corp.
and Subsidiaries
Statements setting forth details of computation of ratio
of earnings to fixed charges
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Dollars in thousands)
<TABLE>
<CAPTION>
For The Years Ended December 31,
Three Months Ended Nine Months Ended ---------------------------------------------------
September 30, 1998 September 30, 1998 1997 1996 1995 1994 1993
------------------- ------------------ -------- -------- -------- -------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Net earnings $15,025 $443,282 $71,625 $175,657 $136,677 $106,063 $ 77,920
Federal and state income
taxes 6,439 (11,013) 24,905 89,104 75,226 59,144 45,335
Earnings before income taxes 21,464 432,269 96,530 264,761 211,903 165,207 123,255
Fixed charges:
Interest 39,165 142,936 324,558 269,700 166,032 94,758 79,303
One-third of all rentals 583 2,006 3,492 2,834 1,641 1,809 1,591
Preferred stock dividend of
subsidiary trust 2,248 6,743 8,990 350 0 0 0
Total fixed charges 41,996 151,685 337,040 272,884 167,673 96,567 80,894
Earnings before income taxes and
fixed charges $63,460 583,954 433,570 537,645 379,576 261,774 204,149
Ratio of earnings to fixed
charges (1) 1.51x 3.85x 1.29x 1.97x 2.26x 2.71x 2.52x
</TABLE>
(1) For purposes of computing these ratios, "earnings" represent income before
income taxes plus fixed charges. "Fixed charges" consist of interest
expense, one-third (the proportion deemed representative of the interest
factor) of rental expense on operating leases and preferred stock
dividends of a subsidiary trust.
EXHIBIT 23.1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 Registration Statement of our reports dated February
27, 1998 included in Advanta Corp.'s Form 10-K for the year ended December 31,
1997 and to all references to our Firm included in this Form S-3 Registration
Statement.
/s/ Arthur Andersen LLP
Philadelphia, PA
March 15, 1999
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
---------------------------------------------------
(Exact name of trustee as specified in its charter)
New York 13-4994650
------------------------ -------------------
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
---------------------------------------------------------
(Name, address and telephone number of agent for service)
Advanta Corp.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 23-1462070
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
Welsh & McKean Roads
Spring House, PA 19477
--------------------------------------- ----------
Address of principal executive offices) (Zip Code)
----------------------------------------------------
Senior Investment Notes and RediReserve Certificates
----------------------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany,
New York 12110.
Board of Governors of the Federal Reserve System,
Washington, D.C., 20551.
Federal Reserve Bank of New York, District No. 2,
33 Liberty Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 8th day of March, 1999.
THE CHASE MANHATTAN BANK
By /s/ Sheik Wiltshire
---------------------------------------------
/s/ Sheik Wiltshire, Assistant Vice President
-3-
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1998, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar
Amounts
in Millions
-----------
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin .............. $ 11,951
Interest-bearing balances ....................................... 4,551
Securities:
Held to maturity securities...................................... 1,740
Available for sale securities.................................... 48,537
Federal funds sold and securities purchased under
agreements to resell .......................................... 29,730
Loans and lease financing receivables:
Loans and leases, net of unearned income.... $127,379
Less: Allowance for loan and lease losses... 2,719
Less: Allocated transfer risk reserve....... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve........................................ 124,660
Trading Assets ....................................................... 51,549
Premises and fixed assets (including capitalized leases).............. 3,009
Other real estate owned .............................................. 272
Investments in unconsolidated subsidiaries and associated companies... 300
Customers' liability to this bank on acceptances outstanding ......... 1,329
Intangible assets .................................................... 1,429
Other assets ......................................................... 13,563
--------
TOTAL ASSETS ......................................................... $292,620
========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices ............................................. $ 98,760
Noninterest-bearing ............................................. $ 39,071
Interest-bearing ................................................ 59,689
In foreign offices, Edge and Agreement, subsidiaries and IBF's .. 75,403
Noninterest-bearing ............................................. $ 3,877
Interest-bearing ................................................ 71,526
Federal funds purchased and securities sold under
agreements to repurchase ........................................ 34,471
Demand notes issued to the U.S. Treasury ............................. 1,000
Trading liabilities .................................................. 41,589
Other borrowed money (includes mortgage indebtedness and
obligations under capitalized leases):
With a remaining maturity of one year or less ................... 3,781
With a remaining maturity of more than one year
through three years............................................ 213
With a remaining maturity of more than three years............... 104
Bank's liability on acceptances executed and outstanding.............. 1,329
Subordinated notes and debentures .................................... 5,408
Other liabilities .................................................... 12,041
TOTAL LIABILITIES .................................................... 274,099
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus......................... 0
Common stock ......................................................... 1,211
Surplus exclude all surplus related to preferred stock)............... 10,441
Undivided profits and capital reserves ............................... 6,287
Net unrealized holding gains (losses) on
available-for-sale securities ................................... 566
Cumulative foreign currency translation adjustments .................. 16
TOTAL EQUITY CAPITAL ................................................. 18,521
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ................................. $292,620
========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
