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EXHIBIT 4.2
OH&S DRAFT
02/16/00
TRANSFER AND SERVICING AGREEMENT
between
ADVANTA EQUIPMENT RECEIVABLES SERIES 2000-__ LLC
Issuer
ADVANTA BANK CORP.
Transferor and Servicer
Dated as of __________ __, 2000
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.....................................................1
Section 1.02. Other Definitional Provisions..................................20
Section 1.03. Calculations...................................................21
ARTICLE II
CONVEYANCE OF CONTRACTS
Section 2.01. Transfer of Conveyed Assets....................................21
Section 2.02. Closing........................................................22
Section 2.03. Books and Records..............................................22
Section 2.04. Grant of Security Interest.....................................22
ARTICLE III
THE CONTRACTS
Section 3.01. Representations and Warranties of Transferor...................23
Section 3.02. Reacquisition by the Transferor Upon Breach....................24
Section 3.03. Duties of Servicer.............................................24
ARTICLE IV
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Servicer.............................................25
Section 4.02. Collection of Contract Payments................................26
Section 4.03. Realization upon Contracts.....................................26
Section 4.04. Servicer Advances..............................................26
Section 4.05. Maintenance of Security Interests in Financed Equipment........26
Section 4.06. Covenants of Servicer..........................................27
Section 4.07. Acquisition by Servicer of Contracts upon Breach...............27
Section 4.08. Servicing Fee..................................................27
Section 4.09. Servicer's Certificate.........................................27
Section 4.10. Annual Statement as to Compliance..............................28
Section 4.11. Security Deposits..............................................28
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE V
DISTRIBUTIONS; ACCOUNTS;
STATEMENTS TO NOTEHOLDERS
Section 5.01. Establishment of Trust Accounts................................28
Section 5.02. Collections....................................................29
Section 5.03. Additional Deposits............................................30
Section 5.04. Distributions..................................................31
Section 5.05. Reserve Account................................................32
Section 5.06. Statement to Noteholders.......................................33
ARTICLE VI
THE TRANSFEROR
Section 6.01. Representations of Transferor..................................34
Section 6.02. Liability of Transferor; Indemnities...........................35
Section 6.03. Merger or Consolidation of, or Assumption of the
Obligations of, Transferor.....................................36
Section 6.04. Limitation on Liability of Transferor and Others...............36
Section 6.05. Transferor May Own Notes.......................................36
Section 6.06. Tax Treatment..................................................37
ARTICLE VII
THE SERVICER
Section 7.01. Representations of Servicer.....................................37
Section 7.02. Indemnities of Servicer.........................................38
Section 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer........................................39
Section 7.04. Limitation on Liability of Servicer and Others..................40
Section 7.05. Advanta Bank Corp. Not To Resign as Servicer....................40
ARTICLE VIII
DEFAULT
Section 8.01. Servicer Default................................................41
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 8.02. Appointment of Successor.......................................42
Section 8.03. Notification to Noteholders....................................43
Section 8.04. Waiver of Past Defaults........................................43
ARTICLE IX
OPTIONAL ACQUISITION
Section 9.01. Optional Acquisition of All Contracts..........................44
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment......................................................44
Section 10.02. Protection of Title to Trust Estate............................45
Section 10.03. Notices........................................................46
Section 10.04. Assignment.....................................................47
Section 10.05. Limitations on Rights of Others................................47
Section 10.06. Severability...................................................47
Section 10.07. Separate Counterparts..........................................47
Section 10.08. Headings.......................................................47
Section 10.09. Governing Law..................................................47
Section 10.10. Assignment to Trustee..........................................47
Section 10.11. Nonpetition Covenants..........................................47
Section 10.12. Limitation of Liability of Trustee.............................48
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PAGE
SCHEDULE A - List of Contracts [Deemed Incorporated]........................A-1
SCHEDULE B - Location of Contract Files.....................................B-1
SCHEDULE C - Servicer's Certificate.........................................C-1
SCHEDULE D - Officers' Certificate..........................................D-1
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TRANSFER AND SERVICING AGREEMENT dated as of __________ __, 2000, between
ADVANTA EQUIPMENT RECEIVABLES SERIES 2000-__ LLC, a Nevada limited liability
company (the "Issuer") and ADVANTA BANK CORP., a Utah corporation (the
"Transferor" or the "Servicer").
WHEREAS Advanta Bank Corp. in the ordinary course of its business
originates and acquires equipment leases, loans and other financing
arrangements;
WHEREAS, the Issuer desires to acquire from Advanta Bank Corp. a portfolio
of such leases, loans and other equipment financing arrangements as specified in
the List of Contracts delivered to the Issuer in connection with this Agreement
and to acquire all of the Transferor's right, title and interest in, to and
under the Contracts except for the Residual Interest in the equipment related to
such Contracts which Residual Interest will be retained by the Transferor;
WHEREAS, the Transferor has agreed to transfer the contracts, but not any
Residual Interest related to such Contracts, to the Issuer on the term as set
forth in this Agreement; and
WHEREAS, the Issuer has requested that Advanta Bank Corp. service the
Contracts and Advanta Bank Corp. has agreed to service the Contracts on the
terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Acquired Contract" means a Contract acquired as of the close of business
on the last day of a Collection Period by the Servicer pursuant to Section 4.07
or reacquired as of such time by the Transferor pursuant to Section 3.02.
"Advance Payment" means, with respect to any Contract, any Scheduled
Payment or a portion thereof made by or on behalf of an Obligor which does not
become due until a subsequent Collection Period. Advance Payments shall be
"Collections" with respect to the Collection Period to which such Advance
Payment relates. Advance Payments do not include Prepayment Amounts.
"Additional Principal" means, with respect to each Payment Date, an amount
equal to the Monthly Principal Amount less the Class A Monthly Principal Payment
Amount, the Class B Monthly Principal Payment Amount and the Class C Monthly
Principal Payment Amount for such date.
"Affiliate" has the meaning assigned thereto in Section 1.01 of the
Indenture.
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"Agreement" means this Transfer and Servicing Agreement, as the same may be
amended and supplemented from time to time.
"Aggregate Contract Principal Balance" means, as of any Calculation Date,
the sum of the Contract Principal Balances of all Contracts as of such
Calculation Date.
"Applicable Discount Rate" means ____%.
"Available Funds" means, for any Payment Date, (i) all Collections for the
immediately preceding Collection Period, (ii) Servicer Advances made to cover
payments due in the immediately preceding Collection Period, (iii) all
Prepayment Proceeds received by the Servicer for the immediately preceding
Collection Period, (iv) available earnings on the Collection Account and Reserve
Account and (v) all amounts transferred from the Reserve Account and deposited
into the Collection Account for such Payment Date but not including Excluded
Amounts and not including any Residual Receipts.
"Basic Documents" has the meaning assigned to such term in the Indenture.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in New York, New York or Salt Lake
City, Utah, are authorized or obligated by law, regulation or executive order to
remain closed.
"Calculation Date" means for any Payment Date, the last day of the
immediately preceding Collection Period. Amounts calculated from Calculation
Date balances shall be calculated from such balances as of the close of business
on the Calculation Date.
"Class" means of the following classes of Notes: Class A-1, Class A-2,
Class A-3, Class A-4, Class B, Class C or Class D, as applicable.
"Class A Monthly Principal Payment Amount" means, with respect to any
Payment Date on which all or a portion of the Class A-1 Notes remain outstanding
after giving effect to payments on such day, the Monthly Principal Amount, (b)
with respect to the Payment Date on which the outstanding principal of the Class
A-1 Notes is reduced to $0, the sum of (i) the amount necessary to reduce the
outstanding principal of the Class A-1 Notes to $0 and (ii) the amount necessary
to reduce the sum of the outstanding principal amount of the Class A-2 Notes,
the Class A-3 Notes and the Class A-4 Notes to the Class A Target Investor
Principal Amount or (c) on any subsequent Payment Date, the amount necessary to
reduce the sum of the outstanding principal amount of the Class A-2 Notes, the
Class A-3 and the Class A-4 Notes to the Class A Target Investor Principal
Amount.
"Class A Percentage" means a fraction, expressed as a percentage, equal to
(i) the sum of the Class A-2 initial principal balance, the Class A-3 initial
principal balance and the Class A-4 initial principal balance by (ii) the
Initial Aggregate Contract Principal Balance minus the Class A-1 initial
principal balance and being approximately _______%.
"Class A Target Principal Amount" means with respect to each Payment Date,
an amount equal to the product of (i) the Class A Percentage and (ii) the
Aggregate Contract Principal Balance as of the related Calculation Date.
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"Class A-1 Note" means a Class A-1 Note issued pursuant to the Indenture.
"Class A-1 Note Interest" means with respect to any Payment Date, the sum
of (i) the product of (A) the Class A-1 Principal Balance immediately prior to
such Payment Date, (B) the actual number of days in the related Interest Period
divided by 360 and (C) the Class A-1 Interest Rate and (ii) the Class A-1
Overdue Interest from the preceding Payment Date; provided that on the first
Payment Date, the Class A-1 Interest shall be $___________.
"Class A-1 Note Interest Rate" has the meaning assigned to such term in the
Indenture.
"Class A-1 Note Pool Factor" means 1.0000000 as of the Closing Date, and as
of the close of business on the last day of a Collection Period thereafter means
a seven-digit decimal figure equal to the outstanding principal amount of the
Class A-1 Notes as of such date (after giving effect to payments in reduction of
the principal amount of the Class A-1 Notes on the immediately following Payment
Date) divided by the original outstanding principal amount of the Class A-1
Notes.
"Class A-1 Noteholder" means a holder of a Class A-1 Note.
"Class A-1 Overdue Interest" means, with respect to any Payment Date, the
sum of:
(i) the excess, if any, of any Class A-1 Note Interest due on such
Payment Date over the Class A-1 Note Interest paid on such Payment
Date; and
(ii) the product of (a) the amount of Class A-1 Overdue Interest due on
the immediately preceding Payment Date and not paid on such
immediately preceding Payment Date, (b) the actual number of days
in the related Interest Period divided by 360 and (c) the Class A-1
Interest Rate.
"Class A-1 Principal Balance" means, as of any date of determination, an
amount equal to the initial Class A-1 principal balance of $ ______________ less
any principal payments previously made on the Class A-1 Notes.
"Class A-2 Note" means a Class A-2 Note issued pursuant to the Indenture.
"Class A-2 Note Interest" means, with respect to any Payment Date, the sum
of (i) the product of [ (A) the Class A-2 Principal Balance immediately prior to
such Payment Date and (B) one-twelfth of the Class A-2 Interest Rate] and (ii)
the Class A-2 Overdue Interest from the preceding Payment Date; provided that on
the first Payment Date, the Class A-2 Note Interest shall be $ ______________.
"Class A-2 Note Interest Rate" has the meaning assigned to such term in the
Indenture.
"Class A-2 Note Pool Factor" means 1.0000000 as of the Closing Date, and as
of the close of business on the last day of a Collection Period thereafter means
a seven-digit decimal figure equal to the outstanding principal amount of the
Class A-2 Notes as of such date (after
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giving effect to payments in reduction of the principal amount of the Class A-2
Notes on the immediately following Payment Date) divided by the original
outstanding principal amount of the Class A-2 Notes.
"Class A-2 Noteholder" means a holder of a Class A-2 Note.
"Class A-2 Overdue Interest" means, with respect to any Payment Date, the
sum of:
(i) the excess, if any, of any Class A-2 Note Interest due on such
Payment Date over the Class A-2 Note Interest paid on such Payment
Date; and
(ii) the product of (a) the amount of Class A-2 Overdue Interest due on
the immediately preceding Payment Date and not paid on such
immediately preceding Payment Date and (b) one-twelfth of the Class
A-2 Interest Rate.
"Class A-2 Principal Balance" means, as of any date of determination, an
amount equal to the initial Class A-2 principal balance of $ __________ less any
principal payments previously made on the Class A-2 Notes.
"Class A-3 Note" means a Class A-3 Note issued pursuant to the Indenture.
"Class A-3 Note Interest" means, with respect to any Payment Date, the sum
of (i) the product of (A) the Class A-3 Principal Balance immediately prior to
such Payment Date and [(B) one-twelfth of the Class A-3 Interest Rate] and (ii)
the Class A-3 Overdue Interest from the Preceding Payment Date; provided that on
the first Payment Date, the Class A-3 Note Interest shall be $___________.
"Class A-3 Note Interest Rate" has the meaning assigned to such term in the
Indenture.
"Class A-3 Note Pool Factor" means 1.0000000 as of the Closing Date, and as
of the close of business on the last day of a Collection Period thereafter means
a seven-digit decimal figure equal to the outstanding principal amount of the
Class A-3 Notes as of such date (after giving effect to payments in reduction of
the principal amount of the Class A-3 Notes on the immediately following Payment
Date) divided by the original outstanding principal amount of the Class A-3
Notes.
"Class A-3 Noteholder" means a holder of a Class A-3 Note.
"Class A-3 Overdue Interest" means, with respect to any Payment Date, the
sum of:
(i) the excess, if any, of any Class A-3 Note Interest due on such
Payment Date over the Class A-3 Note Interest paid on such Payment
Date; and
(ii) the product of (a) the amount of Class A-3 Overdue Interest due on
the immediately preceding Payment Date and not paid on such
immediately preceding Payment Date and (b) one-twelfth of the Class
A-3 Interest Rate.
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"Class A-3 Principal Balance" means, as of any date of determination, an
amount equal to the initial Class A-3 Principal Balance of $ _________ less any
principal payments previously made on the Class A-3 Notes.
"Class A-4 Note" means a Class A-4 Note issued pursuant to the Indenture.
"Class A-4 Note Interest" means, with respect to any Payment Date, the sum
of (i) the product of [ (A) the Class A-4 Principal Balance immediately prior to
such Payment Date and (B) one-twelfth of the Class A-4 Interest Rate] and (ii)
the Class A-4 Overdue Interest from the preceding Payment Date; provided that on
the first Payment Date, the Class A-4 Note Interest shall be $
______________.
"Class A-4 Note Interest Rate" has the meaning assigned to such term in the
Indenture.
"Class A-4 Note Pool Factor" means 1.0000000 as of the Closing Date, and as
of the close of business on the last day of a Collection Period thereafter means
a seven-digit decimal figure equal to the outstanding principal amount of the
Class A-4 Notes as of such date (after giving effect to payments in reduction of
the principal amount of the Class A-4 Notes on the immediately following Payment
Date) divided by the original outstanding principal amount of the Class A-4
Notes.
"Class A-4 Noteholder" means a holder of a Class A-4 Note.
"Class A-4 Overdue Interest" means, with respect to any Payment Date, the
sum of:
(i) the excess, if any, of any Class A-4 Note Interest due on such
Payment Date over the Class A-4 Note Interest paid on such Payment
Date; and
(ii) the product of (a) the amount of Class A-4 Overdue Interest due on
the immediately preceding Payment Date and not paid on such
immediately preceding Payment Date and (b) one-twelfth of the Class
A-4 Interest Rate.
"Class A-4 Principal Balance" means, as of any date of determination, an
amount equal to the initial Class A-4 Principal Balance of $ __________ less any
principal payments previously made on the Class A-4 Notes.
"Class B Monthly Principal Payment Amount" means, an amount equal to (a)
for any Payment Date on which all or a portion of the Class A-1 Notes remain
outstanding after giving effect to payments on such day, $0, and (b) for any
subsequent Payment Date, the amount necessary to reduce the outstanding
principal amount of the Class B Notes to the Class B Target Principal Amount.
"Class B Note" means a Class B Note issued pursuant to the Indenture.
"Class B Note Interest" means, with respect to any Payment Date, the sum of
(i) the product of (A) the Class B Principal Balance immediately prior to such
Payment Date and (B) [one-twelfth of the Class B Interest Rate] and (ii) the
Class B Overdue Interest from the
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preceding Payment Date; provided that on the first Payment Date, the Class B
Note Interest shall be $________________.
"Class B Note Interest Rate" has the meaning assigned to such term in the
Indenture.
"Class B Note Pool Factor" means 1.0000000 as of the Closing Date, and as
of the close of business on the last day of a Collection Period thereafter means
a seven-digit decimal figure equal to the outstanding principal amount of the
Class B Notes as of such date (after giving effect to payments in reduction of
the principal amount of the Class B Notes on the immediately following Payment
Date) divided by the original outstanding principal amount of the Class B Notes.
"Class B Noteholder" means a holder of a Class B Note.
"Class B Overdue Interest" means, with respect to any Payment Date, the sum
of:
(i) the excess, if any, of any Class B Note Interest due on such
Payment Date over the Class B Note Interest paid on such Payment
Date; and
(ii) the product of (a) the amount of Class B Overdue Interest due on
the immediately preceding Payment Date and not paid on such
immediately preceding Payment Date and (b) one-twelfth of the Class
B Interest Rate.
"Class B Percentage" means a fraction, expressed as a percentage, equal to
(i) the initial Class B Principal Balance or $_________ divided by (ii) the
Initial Aggregate Contact Principal Balance minus the Class A-1 Initial
Principal Balance, and being approximately _______%.
"Class B Principal Balance" means as of any date, an amount equal to the
initial Class B principal balance less any principal payments previously made on
the Class B Notes.
"Class B Target Principal Amount" means, with respect to each Payment Date,
an amount equal to the product of (i) the Class B Percentage and (ii) the
Aggregate Contract Principal Balance as of the related Calculation Date.
"Class C Monthly Principal Payment Amount" means an amount equal to (a) for
any Payment Date on which all or a portion of the Class A-1 Notes remain
outstanding after giving effect to payments on such day, $0, and (b) for any
subsequent Payment Date, the amount necessary to reduce the outstanding
principal amount of the Class C Notes to the Class C Target Principal Amount.
"Class C Note" means a Class C Note issued pursuant to the Indenture.
"Class C Note Interest" means, with respect to any Payment Date, the sum of
(i) the product of (A) the Class C Principal Balance immediately prior to such
Payment Date and (B) [one-twelfth of the Class C Interest Rate] and (ii) the
Class C Overdue Interest from the preceding Payment Date; provided that on the
first Payment Date, the Class C Note Interest shall be $___________.
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"Class C Note Interest Rate" has the meaning assigned to such term in the
Indenture.
"Class C Note Pool Factor" means 1.0000000 as of the Closing Date, and as
of the close of business on the last day of a Collection Period thereafter means
a seven-digit decimal figure equal to the outstanding principal amount of the
Class C Notes as of such date (after giving effect to payments in reduction of
the principal amount of the Class C Notes on the immediately following Payment
Date) divided by the original outstanding principal amount of the Class C Notes.
"Class C Noteholder" means a holder of a Class C Note.
"Class C Noteholders' Monthly Principal Payment Amount" means, an amount
equal to (a) for any Payment Date on which all or a portion of the Class A-1
Notes remain outstanding after giving effect to payments on such day, $0, and
(b) for any subsequent Payment Date, the amount necessary to reduce the
outstanding principal amount of the Class C Notes to the Class C Target
Principal Amount.
"Class C Overdue Interest" means, with respect to any Payment Date, the sum
of:
(i) the excess, if any, of any Class C Note Interest due on such
Payment Date over the Class C Note Interest paid on such Payment
Date; and
(ii) the product of (a) the amount of Class C Overdue Interest due on
the immediately preceding Payment Date and not paid on such
immediately preceding Payment Date and (b) one-twelfth of the Class
C Interest Rate.
"Class C Percentage" means a fraction, expressed as a percentage, equal to
(i) the initial Class C principal balance or $_________ divided by (ii) the
Initial Aggregate Contact Principal Balance minus the Class A-1 initial
principal balance, and being approximately _______%.
"Class C Principal Balance" means as of any date, an amount equal to the
initial Class C principal balance less any principal payments previously made on
the Class C Notes.
"Class C Target Principal Amount" means, with respect to each Payment Date,
an amount equal to the product of (i) the Class C Percentage and (b) the
Aggregate Contract Principal Balance as of the related Calculation Date.
"Class D Floor" means, with respect to each Payment Date, (i) ___% of the
Initial Aggregate Contract Principal Balance, plus (ii) the Cumulative Loss
Amount as of such Payment Date, minus (iii) the amount on deposit in the Reserve
Account after giving effect to payments and withdrawals on such Payment Date.
"Class D Monthly Principal Payment Amount" means, an amount equal to (a)
for any Payment Date on which all or a portion of the Class A-1 Notes remain
outstanding after giving effect to payments on such day, $0, and (b) for any
subsequent Payment Date, the amount necessary to reduce the outstanding
principal amount of the Class D Notes to the greater of the Class D Target
Principal Amount and the Class D Floor.
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"Class D Note" means a Class D Note issued pursuant to the
Indenture.
"Class D Noteholder" means a holder of a Class D Note.
"Class D Percentage" means a fraction, expressed as a percentage,
equal of (i) the initial Class D Principal Balance divided by (ii) the Initial
Aggregate Contract Principal Balance minus the initial Class A-1 Principal
Balance and being approximately ____%.
"Class D Principal Balance" means, as of any date, an amount equal
to the initial Class D principal balance less any principal payments previously
made on the Class D Notes.
"Class D Target Principal Amount" means, with respect to each
Payment Date, an amount equal to the product of (i) the Class D Percentage and
(ii) the Aggregate Contract Principal Balance as of the related Calculation
Date.
"Closing Date" means __________ __, 2000.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 5.01.
"Collection Period" means, with respect to the first Payment Date, the
calendar month ending on and including __________ __, 2000 and, with respect to
each subsequent Payment Date, the immediately preceding calendar month. Any
amount stated "as of the close of business on the last day of a Collection
Period" shall give effect to the following calculations as determined as of the
end of the day on such last day: (1) all applications of collections and (2) all
distributions to be made on the following Payment Date.
"Collections" means all payments and other amounts received by the Servicer
in respect of a Contract and the Related Security other than Residual Receipts
and other than Excluded Amounts. Collections include, but are not limited to,
Scheduled Payments, Prepayment Proceeds, Offset Amounts, Recoveries and
Insurance Proceeds. Collections do not include Excluded Amounts and do not
include Residual Receipts.
"Commission" means the Securities and Exchange Commission.
"Contract" means the leases and other contracts and agreements contained on
the List of Contracts.
"Contract Principal Balance" means as of any date of calculation with
respect to a Contract, the present value of the Scheduled Payments to become due
with respect to such Contract on or after the date of calculation (but in any
event on or prior to _______, 200_) (excluding Scheduled Payments previously due
and unpaid), discounted monthly at one-twelfth of the Applicable Discount Rate,
except that a Defaulted Contract has a Contract Principal Balance of $0.
Contracts which have been prepaid or otherwise terminated or released from the
Trust Estate shall also have a Contract Principal Balance of $0.
"Contract Files" means with respect to each Contract, the following
documents:
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(i) The executed original counterparts of the Contract;
(ii) A copy of any related broker agreement;
(iii) Copies of all documents (which may be in microfiche form or on the
Servicer's computerized information system), if any, that the
Transferor or the Servicer keeps on file for the benefit of the
Transferor in accordance with the Transferor's or Servicer's
customary procedures; and
(iv) Copies (together with all amendments, assignments, and
continuations thereof and including evidence of filings with the
appropriate office) of all UCC financing statements filed with
respect to the Contracts, identifying the Obligor as debtor and the
Transferor as secured party, if applicable.
"Corporate Trust Office" has the meaning assigned to such term in Section
1.01 of the Indenture.
"Credit and Collection Policy" means the credit and collection policies and
practices of the Servicer as the same may be modified from time to time in
accordance with the terms of this Agreement.
"Cumulative Loss Amount" means the excess, if any, of (a) the remainder of
(i) the Outstanding Amount of the Notes minus (ii) the lesser of (A) the Monthly
Principal Amount and (B) Available Funds (after the payment of amounts described
in subsection _____ through ______ hereof) over (b) the Aggregate Contract
Principal Balance as of the related Calculation Date.
"Cumulative Net Loss Ratio" means with respect to each Collection Period,
the percentage equivalent of a fraction, the numerator of which is the excess of
(x) the aggregate amount of the Contract Principal Balances (calculated as of
the date immediately before such Contract become a Defaulted Contract) of all
Contracts which become Defaulted Contracts during all prior Collection Periods
over (y) the aggregate amount of all Recoveries collected by the Servicer with
respect to such Collection Periods and the denominator of which is the Initial
Aggregate Contract Principal Balance.
"Cut-Off Date" means, with respect to the Contracts _________, 2000.
"Debtor Relief Laws" means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments, readjustment of debt, marshalling of assets or similar debtor
relief laws of the United States or any state from time to time in effect,
affecting the rights of creditors generally.
"Defaulted Contract" means any Contract (i) that is a Delinquent Contract
with respect to which an Obligor is contractually delinquent for 121 days or
more (without regard to any Servicer Advances or the application of any Security
Deposit) or (ii) as to which the Servicer has determined in accordance with its
customary servicing practices that eventual payment of the
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remaining Scheduled Payments thereunder is unlikely or (iii) that has been
rejected by or on behalf of the Obligor in a bankruptcy proceeding.
"Delinquent Contract" means, as of any date, a Contract as to which a
Scheduled Payment, or part thereof, remains unpaid for more than 60 days from
the original due date for such Scheduled Payment.
"Determination Date" means, with respect to any Payment Date, the third
Business Day prior to such Payment Date.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution shall have a credit rating from each
Rating Agency in one of its generic rating categories which signifies investment
grade.
"Eligible Institution" means (a) the corporate trust department of the
Trustee, so long as it is a paying agent under the Indenture, or such other
institution acceptable to the Rating Agencies, or (b) a depository institution
(excluding the Servicer or any of its Affiliates) organized under the laws of
the United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank) (i)(A) which has either (1)
a long-term unsecured debt rating of __________ or better by __________ and
__________ or better by __________ or (2) a short-term unsecured debt rating or
a certificate of deposit rating of __________ by __________ and __________or
better by __________, or any other long-term, short-term or certificate of
deposit rating acceptable to the Rating Agencies and (B) whose deposits are
insured by the FDIC or (ii)(A) the parent of which has a long-term or short-term
unsecured debt rating acceptable to the Rating Agencies and (B) whose deposits
are insured by the FDIC. If so qualified, the Trustee may be considered an
Eligible Institution for the purposes of clause (b) of this definition.
"Eligible Investments" mean any instrument, security or security
entitlement evidencing any of the following:
(a) marketable obligations of the United States of America which are
backed by the full faith and credit of the United States of America;
(b) marketable obligations directly and fully guaranteed by the full faith
and credit of the United States of America;
(c) bankers' acceptances and certificates of deposit and other
interest-bearing obligations denominated in United States Dollars and issued by
any bank with capital, surplus and undivided profits aggregating at least
$100,000,000, the short-term securities of which are rated "A-1" by S&P, "P-1"
by Moody's and "F1" by Fitch (if rated by Fitch);
▇▇
▇▇
(▇) ▇▇▇▇▇▇▇▇▇▇ obligations for underlying securities of the types
described in clauses (a), (b) and (c) above entered into with any bank of the
type described in clause (c) above;
(e) commercial paper rated at least "A-1+" by S&P, "P-1" by Moody's and
"F1" by Fitch (if rated by Fitch);
(f) freely redeemable shares in money market funds (including funds for
which the Trustee, any Noteholder or any affiliates of either of the foregoing
may act as sponsor or advisor or for which any of the foregoing Persons may
receive fee income) which money market funds are rated at least "AAm" or "AAm-g"
by S&P, "Aa1" by Moody's and "AA" by Fitch (if rated by Fitch); and
(g) demand deposits, time deposits or certificates of deposit (having
original maturities of no more than 365 days) of depository institutions or
trust companies incorporated under the laws of the United States of America or
any state thereof (or domestic branches of any foreign bank) and subject to
supervision and examination by federal or state banking or depository
institution authorities; provided that at the time such investment, or the
commitment to make such investment, is entered into, the short-term debt rating
of such depository institution or trust company shall be at least "A-1" by S&P,
"P-1" by Moody's and "F1" by Fitch (if rated by Fitch).
Notwithstanding anything set forth in clauses (a) through (g) above, any
Eligible Investment must mature no later than the Business Day prior to the next
Payment Date.
"Excluded Amounts" means (i) any payments received from an Obligor in
connection with any insurance premiums or fees, or Taxes or other charges
imposed by any Governmental Authority, (ii) any indemnity payments made by an
Obligor pursuant to any Contract and (iii) all Late Fees, extension fees, and
other incidental charges (from whatever source) collected with respect to any
Contract.
"Eligible Contract" means a Contract which, as of the Closing Date or,
where indicated, the Cut-Off Date:
(i) (a) is with a Obligor whose billing address is in the United States or
its territories and possessions and requires all payments under such Contract to
be made in United States dollars and (b) is with a Obligor who, if a natural
person, is a resident of the United States or its territories and possessions
with legal capacity to contract or, if a corporation or other business
organization, is organized under the laws of the United States, its territories
or any political subdivision thereof and has its chief executive office in the
United States or its territories or possessions;
(ii) has not had any of its terms, conditions or provisions modified or
waived other than in compliance with the Credit and Collection Policy;
(iii) the payments arising under the Contract constitute an account or
general intangible which is evidenced by a Contract that constitutes "chattel
paper" within the meaning of Section 9-105(b) of the UCC of all applicable
jurisdictions and for which there is only one
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original of such Contract that constitutes "chattel paper" for purposes of the
UCC (other than those which are in the form of a loan which may be evidence by a
promissory note);
(iv) does not contravene any applicable federal, state and local laws and
regulations thereunder (including, without limitation, any law, rule and
regulation relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and privacy)
and, with respect to which no part of such Contract thereto is in violation of
any applicable law, rule or regulation;
(v) satisfies in all material respects all applicable requirements of the
Credit and Collection Policy;
(vi) as of the Cut-Off Date, the Contract is not a Defaulted Contract;
(vii) (other than a Contract which is a loan in form), (a) contains "hell
or high water" provisions requiring the related Obligor to assume all risk of
loss or malfunction of the related Equipment, (b) makes the related Obligor
absolutely and unconditionally liable for all payments required to be made
thereunder, (c) is a triple-net lease and (d) is not cancelable at the option of
the Obligor;
(viii) creates a valid and enforceable security or ownership interest in
favor of the Transferor in the related Equipment, if any;
(ix) has only one set of original documentation;
(x) is free and clear of any Adverse Claims, other than the claims
arising pursuant to the Indenture; provided, however, that nothing in this
clause (x) shall prevent or be deemed to prohibit Permitted Liens;
(xi) is in full force and effect in accordance with its terms and
contains enforceable provisions such that the right and remedies of the holder
thereof shall be adequate for realization against the Financed Equipment, if
any, thereunder and of the benefits of any security granted thereunder;
(xii) does not provide for the substitution, exchange, or addition of any
other items of Financed Equipment pursuant to such Contract which would result
in any reduction or extension of payments due thereunder;
(xiii) by its terms is due and payable on or within 84 months of the
Closing Date and, in either event, has not had its payment terms extended other
than in compliance with the Credit and Collection Policy;
(xiv) is in substantially the form of one of the standard form contracts
that the Transferor uses or a form reviewed and accepted by the Transferor;
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(xv) (a) does not preclude the pledge, transfer or assignment thereof, (b)
does not require the consent of the Obligor to the pledge, assignment or
transfer thereof, and (c) does not contain a confidentiality provision that
purports to restrict the ability of the Trustee to exercise its rights under the
Basic Documents with respect thereto, including, without limitation, its right
to review the Contract;
(xvi) was originated or purchased by the Originator in the ordinary course
of its business, (b) approved and purchased or funded in the ordinary course of
the Originator's business and (c) if purchased from a broker or vendor, has been
re-underwritten by the Originator in the ordinary course of the Originator's
business and in compliance with its underwriting policies;
(xvii) either (a) is an account receivable representing all or part of the
sales price of merchandise, insurance and/or services within the meaning of
Section 3(c)(5) of the Investment Company Act of 1940, as amended, or (b)
represents a financial asset that converts to cash within a finite period of
time within the meaning of Rule 3a-7 promulgated under the Investment Company
Act of 1940, as amended;
(xviii) relates to Financed Equipment which is located in the United States
of America, its territories or possessions;
(xix) it is not a consumer lease;
(xx) no adverse selection was used in selecting the Contract for transfer
to the Issuer;
(xxi) the information with respect to the Contract contained on the List
of Contracts delivered to the Trustee is true and correct in all material
respects; and
(xxii) all filings necessary to evidence the conveyance or transfer of the
Contract to the Issuer have been made in all appropriate jurisdictions.
"Final Scheduled Payment Date" means the __________ ____ Payment Date.
"Fitch" means Fitch IBCA, Inc.
"Financed Equipment" means all goods, equipment or other property which
secure the payment or performance of a Contract which were directly or
indirectly acquired with the proceeds of such Contract, or in the case of a
lease transaction, are leased by the Obligor in connection with such Contract.
"Governmental Authority" means the United States of America, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Holder" or "Noteholder" has the meaning assigned to such term in Section
1.01 of the Indenture.
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"Indenture" means the Indenture dated as of ________ __, 2000 between the
Issuer and the Trustee, as the same may be amended and supplemented from time to
time.
"Initial Aggregate Contract Principal Balance" means the Aggregate Contract
Principal Balance as of the Cut-Off Date, which is $__________.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 90 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable Federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"Insurance Policy" means any insurance policy maintained by an Obligor (or
on an Obligor's behalf by the Servicer) covering physical damage to any financed
equipment relating to any Contract or the related Obligor's ability to make
Scheduled Payments pursuant to such Contract.
"Insurance Proceeds" means all payments made to the Servicer under an
Insurance Policy in respect of or in lieu of any amount that has or may become
due pursuant to any Contract, including any such amount received in respect of
any Scheduled Payment.
"Interest Period," with respect to any interest which is calculated on the
basis of actual days elapsed means the period from and including one Payment
Date to but excluding the next following Payment Date, provided that the first
Interest Period will be the period from and including the Closing Date to but
excluding the first Payment Date.
"Investment Earnings" means, with respect to any Payment Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts to be deposited into the Collection Account on
such Payment Date pursuant to Section 5.01(b).
"Issuer" means Advanta Equipment Receivables Series 2000-__ LLC and any
successors thereto.
"Late Fees" means any interest or other amounts assessed by Advanta Bank
Corp. and paid by an Obligor in excess of the Scheduled Payment due to the
delinquency of such Scheduled Payment.
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"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind with respect to any Contract other than mechanics' liens
and any liens which attach to such Contract by operation of law as a result of
any act or omission by the related Obligor.
"Liquidation Proceeds" means, with respect to any Defaulted Contract, the
moneys collected in respect thereof, from whatever source (including any
Insurance Proceeds) during the Collection Period in which such Contract became a
Defaulted Contract, net of the sum of any amounts expended by the Servicer in
connection with such liquidation and any amounts required by law to be remitted
to the Obligor on such Defaulted Contract.
"List of Contracts" as defined in the Indenture.
"Monthly Class A-1 Note Interest" means, with respect to any Payment Date,
an amount equal to one-twelfth of the product of (a) the Class A-1 Note Interest
Rate and (b) the outstanding principal balance of the Class A-1 Notes as of the
close of business on the preceding Payment Date after giving effect to all
payments of principal made to the Class A-1 Noteholders on such preceding
Payment Date; provided, however, that with respect to the first Payment Date,
interest on the outstanding principal balance of the Class A-1 Notes will accrue
from and including the Closing Date to but excluding the _____ 2000 Payment Date
[and will be calculated on the basis of a 360-day year of twelve 30-day months.]
"Monthly Class A-2 Note Interest" means, with respect to any Payment Date,
an amount equal to one-twelfth of the product of (a) the Class A-2 Note Interest
Rate and (b) the outstanding principal balance of the Class A-2 Notes as of the
close of business on the preceding Payment Date after giving effect to all
payments of principal made to the Class A-2 Noteholder on such preceding Payment
Date; provided, however, that with respect to the first Payment Date, interest
on the outstanding principal balance of the Class A-2 Notes will accrue from and
including the Closing Date to but excluding the __________ 2000 Payment Date
[and will be calculated on the basis of a 360-day year of twelve 30-day months.]
"Monthly Class A-3 Note Interest" means, with respect to any Payment Date,
an amount equal to one-twelfth of the product of (a) the Class A-3 Note Interest
Rate and (b) the outstanding principal balance of the Class A-3 Notes as of the
close of business on the preceding Payment Date after giving effect to all
payments of principal made to the Class A-3 Noteholders on such preceding
Payment Date; provided, however, that with respect to the first Payment Date,
interest on the outstanding principal balance of the Class A-3 Notes will accrue
from and including the Closing Date to but excluding the _____ 2000 Payment Date
[and will be calculated on the basis of a 360-day year of twelve 30-day months.]
"Monthly Class A-4 Note Interest" means, with respect to any Payment Date,
an amount equal to one-twelfth of the product of (a) the Class A-4 Note Interest
Rate and (b) the outstanding principal balance of the Class A-4 Notes as of the
close of business on the preceding Payment Date after giving effect to all
payments of principal made to the Class A-4 Noteholders on such preceding
Payment Date; provided, however, that with respect to the first Payment Date,
interest on the outstanding principal balance of the Class A-4 Notes will accrue
from and including the Closing Date to but excluding the _____ 2000 Payment Date
[and will be calculated on the basis of a 360-day year of twelve 30-day months.]
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"Monthly Class B Note Interest" means, with respect to any Payment Date, an
amount equal to one-twelfth of the product of (a) the Class B Note Interest Rate
and (b) the outstanding principal balance of the Class B Notes as of the close
of business on the preceding Payment Date after giving effect to all payments of
principal made to the Class B Noteholders on such preceding Payment Date;
provided, however, that with respect to the first Payment Date, interest on the
outstanding principal balance of the Class B Notes will accrue from and
including the Closing Date to but excluding the _____ 2000 Payment Date [and
will be calculated on the basis of a 360-day year of twelve 30-day months.]
"Monthly Class C Note Interest" means, with respect to any Payment Date, an
amount equal to one-twelfth of the product of (a) the Class C Note Interest Rate
and (b) the outstanding principal balance of the Class C Notes as of the close
of business on the preceding Payment Date after giving effect to all payments of
principal made to the Class C Noteholders on such preceding Payment Date;
provided, however, that with respect to the first Payment Date, interest on the
outstanding principal balance of the Class C Notes will accrue from and
including the Closing Date to but excluding the _____ 2000 Payment Date [and
will be calculated on the basis of a 360-day year of twelve 30-day months.]
"Monthly Principal Amount" means, with respect to any Payment Date, the
excess of (a) the aggregate outstanding principal amount of all Classes of Notes
as of the immediately preceding Payment Date after giving effect to all
principal payments on that day, over (b) the Aggregate Contract Principal
Balance as of the related Calculation Date.
"Moody's" means ▇▇▇▇▇'▇ Investors Service Inc.
"Nonrecoverable Advances" means, with respect to any Contract, a Servicer
Advance which the Servicer has determined it will be unable to recover, in whole
or in part, with respect to such Contract.
"Note Register" and "Note Registrar" have the meanings specified in Section
2.04 of the Indenture.
"Noteholders' Class A-1 Interest Payment Amount" means, with respect to any
Payment Date, the sum of (a) the Monthly Class A-1 Note Interest for such
Payment Date and (b) the Class A-1 Overdue Interest for such Payment Date.
"Noteholders' Class A-2 Interest Payment Amount" means, with respect to any
Payment Date, the sum of (a) the Monthly Class A-2 Note Interest for such
Payment Date and (b) the Class A-2 Overdue Interest for such Payment Date.
"Noteholders' Class A-3 Interest Payment Amount" means, with respect to any
Payment Date, the sum of (a) the Monthly Class A-3 Note Interest for such
Payment Date and (b) the Class A-3 Overdue Interest for such Payment Date.
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"Noteholders' Class A-4 Interest Payment Amount" means, with respect to any
Payment Date, the sum of (a) the Monthly Class A-4 Note Interest for such
Payment Date and (b) the Class A-4 Overdue Interest for such Payment Date.
"Noteholders' Class B Interest Payment Amount" means, with respect to any
Payment Date, the sum of (a) the Monthly Class B Note Interest for such Payment
Date and (b) the Noteholders' Class B Interest Carryover Shortfall for such
Payment Date.
"Noteholders' Class C Interest Payment Amount" means, with respect to any
Payment Date, the sum of (a) the Monthly Class C Note Interest for such Payment
Date and (b) the Noteholders' Class C Interest Carryover Shortfall for such
Payment Date.
"Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D
Notes collectively.
"Notes of a Class" or "Class of Notes" means all Notes included in Class
A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes,
Class C Notes or Class D Notes, whichever is appropriate.
"Obligor" with respect to any Contract means any Person which is an
obligor, lessee or guarantor thereof; provided, that in no event shall Advanta
Bank Corp. or the Transferor be construed to be the Obligor with respect to any
Contract due to the application of Section 3.02 or Section 4.07, as applicable.
"Officers' Certificate" of any Person means a certificate on behalf of such
Person that is signed by any Vice President or more senior officer of such
Person and states that the certifications set forth in such certificate are
based upon the results of a due inquiry into the matters in question conducted
by or under the supervision of the signing officer and that the facts stated in
such certifications are true and correct to the best of the signing officer's
knowledge.
"Offset Amount" means, in the event that (i) any Obligor requests that a
Security Deposit be applied as an offset against such Obligor's payment
obligations under a Contract or (ii) any Contract becomes a Defaulted Contract
and the Servicer demands that such Obligor remit to the Servicer an amount out
of the applicable Obligor's Security Deposit, an amount equal to the lesser of
(a) the amount of such Security Deposit and (b) the amount of all unpaid and
remaining Scheduled Payments as payment in respect of any unpaid Scheduled
Payments under the related Contract.
"Opinion of Counsel" means one or more written opinions of counsel who may
be an employee of or counsel to the Transferor or the Servicer, which counsel
shall be acceptable to the Trustee and/or the Rating Agencies, as applicable.
"Outstanding" has the meaning assigned to such term in Section 1.01 of the
Indenture.
"Outstanding Amount" means the aggregate principal amount of all Notes, or
a Class of Notes, as applicable, Outstanding at the date of determination.
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"Payment Date" means _______, 2000 and the 15th day of each month
thereafter, or, if such day is not a Business Day, the next succeeding Business
Day.
"Permitted Lien" means any Lien for federal, state, municipal or other
local Taxes and other governmental charges, so long as either (x) such Taxes or
governmental charges are not at the time due and payable or (y) the Transferor
is then contesting the validity of any such Taxes or charges in good faith by
appropriate proceedings that have staged the enforcement thereof and there has
been set aside on the appropriate entity's books any reserve that is required
under generally accepted accounting principles with respect to such Taxes or
charges.
"Prepayment Amount" means with respect to any Contract: (a) the Contract
Principal Balance of such Contract (without any deduction for any security
deposit paid by the related Obligor, unless such security deposit has been
applied to the Contract Principal Balance pursuant to the Credit and Collection
Policy and deposited into the Collection Account) as of the date of reconveyance
of such Contract to the Issuer by the Trustee, plus (b) the product of (i) the
Contract Principal Balance as of the date of reconveyance and (ii) one-twelfth
of the Applicable Discount Rate.
"Prepayment Proceeds" means all payments received in prepayment of a
Contract.
"Principal Distribution Amount" means, with respect to any Payment Date,
the excess of (a) the aggregate outstanding principal amount of all Classes of
Notes as of the immediately preceding Payment Date after giving effect to all
principal payments on that preceding Payment Date, over (b) the Aggregate
Contract Principal Balance as of the related Calculation Date.
"Rating Agencies" means _______________ and _______________. If no such
organization or successor is in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable Person designated
by the Transferor, notice of which designation shall be given to the Trustee and
the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have notified the Transferor, the Servicer, and the Trustee
in writing that such action will not result in a reduction or withdrawal of the
then current rating on any Class of Notes.
"Recoveries" means all amounts received or recovered by the Servicer to be
applied against amount due on a Defaulted Contract; such amounts include, but
are not limited to (i) amounts received from the sale or other disposition of
the Financed Equipment or the sale of the Defaulted Contract, (ii) Insurance
Proceeds received as a result of the damage or destruction of the Financed
Equipment, or (iii) any other payments made by or on behalf of the defaulting
Obligor, including any amounts paid from a Security Deposit applied by the
Servicer as a Recovery.
"Required Reserve Amount" means ___________________________.
"Related Property" means all right, title and interest of the Transferor
in, to and under (a) the security interest in the Financed Equipment granted to
the Transferor, (b) any proceeds with respect to the Contracts from claims on
any physical damage, credit life or disability insurance
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policies covering financed equipment or Obligors with respect to Financed
Equipment, as the case may be, and (c) the proceeds of any of the foregoing.
"Reserve Account" means the account designated as such, established and
maintained pursuant to Section 5.01(a).
"Reserve Account Initial Deposit" means the initial deposit by the
Transferor on the Closing Date of $__________.
"Residual Interest" means the ownership interest, if any, in the Financial
Equipment and the Residual Receipts including, without limitation, the right to
receive and retain Residual Receipts as owner thereof.
"Residual Receipts" means, with respect to any Collection Period, all
residual proceeds received by the Servicer, including, without limitation,
proceeds of the sale or re-lease of the Financed Equipment received by the
Servicer in the event the related Obligor does not purchase the Financed
Equipment at the end of the related Contract, any amounts collected by the
Servicer as judgments against a Obligor or others related to the failure of such
Obligor to pay any required amounts under the related Contract or to return the
Financed Equipment, including any amounts relating to a Security Deposit applied
by the Servicer as Residual Receipts, plus any other amounts which are received
by the Servicer and applied against the booked residual value of such Contract
in accordance with the Servicer's servicing standards during such Collection
Period, in each case as reduced by any reasonably incurred out-of-pocket
expenses incurred by the Servicer in enforcing such Contract or in liquidating
such Financed Equipment.
"S&P" means Standard & Poor's Ratings Services.
"Scheduled Payment" on a Contract means for any Contract, the stated
periodic payments (exclusive of any Excluded Amounts) set forth in the Contract
and due from the Obligor in the related Collection Period.
"Servicer" means Advanta Bank Corp., as the servicer of the Contracts, and
each successor to Advanta Bank Corp. (in the same capacity) pursuant to Section
7.03 or 8.02.
"Servicer Advance" means the amount, if any, which the Servicer at its
option advances with respect to Overdue Payments, in accordance with Section __
of this Agreement.
"Servicer Default" means an event specified as such in Section 8.01.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 4.09, substantially in the form of Schedule C or
in such other form that is acceptable to the Trustee and the Servicer.
"Servicing Fee" means the fee payable to the Servicer for services rendered
during the respective Collection Period, determined pursuant to Section 4.08.
"Servicing Fee Rate" means ___% per annum.
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"Tax" with respect to any Person means each tax, assessment or other
governmental charge or levy imposed upon such Person, its income, any
transaction in which it engages, or any of its properties, franchises or assets.
"Transferor" means Advanta Bank Corp., a Utah corporation, and its
successors in interest to the extent permitted hereunder.
"Trust Accounts" has the meaning assigned thereto in Section 5.01(b).
"Trust Account Property" means the Trust Accounts, all monies, instruments,
securities, documents and other property held in or credited to any Trust
Account from time to time (whether in the form of deposit accounts, physical
property, book-entry securities, uncertificated securities, securities
entitlements or otherwise), including the Reserve Account Initial Deposit, and
all proceeds of the foregoing.
"Trust Estate" means all money, instruments, documents, securities, general
intangibles and other property that are subject or intended to be subject to the
lien and security interest of the Indenture for the benefit of the Noteholders
(including, without limitation, all property and interests Granted (as defined
in the Indenture) to the Trustee), including all proceeds thereof.
"Trust Officer" means, in the case of the Trustee, any Officer within the
Corporate Trust Office of the Trustee assigned to administer the Trustee's
duties under the Basic Documents.
"Trustee" means ____________________, in its capacity as trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"UCC" has the meaning assigned thereto in Section 1.01 of the Indenture.
Section 1.02. Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined herein have the meanings assigned to them in
the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other
document, and accounting terms partly defined in this Agreement or
in any such certificate or other document to the extent not
defined, shall have the respective meanings given to them under
generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such certificate
or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as
a whole and not to any
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particular provision of this Agreement; Section, Schedule and
Exhibit references contained in this Agreement are references to
Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including
without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such
terms.
Section 1.03. Calculations. [For all purposes of this Agreement, interest
on the Class A-1 Notes will be calculated on the basis of actual days and a
360-day year. Interest on the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes,
Class B Notes and Class C Notes will be calculated on the basis of a year of 360
days and twelve 30-day months.]
ARTICLE II
CONVEYANCE OF CONTRACTS
Section 2.01. Transfer of Conveyed Assets. In consideration of the Issuer's
delivery to or upon the order of the Transferor of $__________ and the increase
in the value of the Transferor's membership interest in the Issuer, the
Transferor does hereby sell, transfer, assign, set over, contribute, quitclaim,
and otherwise convey to the Issuer, without recourse (subject to the obligations
of the Transferor herein) all right, title and interest of the Transferor in and
to all accounts, general intangibles, instruments, chattel paper, documents,
money, letters of credit, advices of credit, deposit accounts, certificates of
deposit, investment property, goods and other property consisting of, arising
from or related to any of the following, whether now owned or hereafter
acquired:
(a) all right, title and interest of the Transferor, in and to the
Contracts except the right to the Residual Interest and all moneys
(including accrued interest) due or to become due, or received
under the Contracts on or after the Cut-Off Date except Excluded
Amounts and except any amounts received as Residual Receipts;
(b) the interest of the Transferor in the Trust Accounts and all
monies, instruments, documents, securities and other property held
in or credited thereto;
(c) the security interest, if any, of the Transferor in the Financed
Equipment granted by Obligors pursuant to the Contracts;
(d) the interest of the Transferor in any proceeds with respect to the
Contracts from claims on any physical damage, credit life or
disability insurance policies covering financed equipment or
Obligors with respect to financed equipment;
(e) the proceeds of any and all of the foregoing.
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Section 2.02. Closing. The conveyance of the Contracts shall take place at
the offices of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, on the Closing Date, simultaneously with the issuance of
the Notes. Upon the acceptance by the Transferor of the Class D Note and the
proceeds of the sale of other Notes and upon the payment to the Transferor of
the net proceeds of the Notes, the ownership of each Contract transferred on
such date and the contents of the related Contract File is vested in the Issuer,
subject only to the lien of the Indenture. Notwithstanding the foregoing, the
assignment, transfer and conveyance set forth in Section 2.01 shall not
constitute and is not intended to result in the creation, or an assumption by
the Issuer of any obligation of the Transferor or any other Person in connection
with the Contracts or under any agreement or instrument relating thereto,
including any obligation to any Obligors or any Affiliate of or other Person to
whom the Transferor may delegate servicing duties or to insurers.
Section 2.03. Books and Records.
(a) In connection with the transfer, assignment, set-over and conveyance
set forth in Section 2.01, the Transferor agrees to record and file, at its
own expense, any financing statements (and continuation statements with
respect to such financing statements when applicable) required to be filed
with respect to the Contracts sold or to be sold by the Transferor
hereunder, meeting the requirements of applicable state law in such manner
and in such jurisdictions as are necessary under the applicable UCC to
perfect the transfer and assignment of the Contracts to the Issuer, and to
deliver a file-stamped copy of such financing statements or other evidence
of such filings to the Issuer on or prior to the Closing Date (excluding
such continuation and similar statements, which shall be delivered promptly
after filing).
(b) In connection with the sales and conveyances hereunder, the Transferor
further agrees, at its own expense, on or prior to the Closing Date with
respect to the Contracts to indicate on its books and records (including
any computer files) that all of the Contracts have been sold to the Issuer
pursuant to this Agreement. The Transferor further agrees not to alter the
computer file designation referenced in this paragraph with respect to any
Contract during the term of this Agreement unless and until such Contract
becomes an Acquired Contract. The transfer of each Contract shall be
reflected on the Transferor's balance sheets and other financial statements
prepared in accordance with generally accepted accounting principles as a
transfer of assets by the Transferor to the Issuer. The Transferor shall be
responsible for maintaining, and shall maintain, a complete and accurate
set of books and records and computer files for each Contract which shall
be clearly marked to reflect the ownership of each Contract by the Issuer.
Section 2.04. Grant of Security Interest. In the event that the Contracts
are held to continue to be property of the Transferor, then (i) this Agreement
also shall be deemed to be and hereby is a security agreement within the meaning
of the UCC, and (ii) the conveyance by the Transferor provided for in the
Agreement shall be deemed to be and hereby is a grant by the Transferor to the
Issuer of a security interest in and to all of the Transferor's right, title and
interest in, to and under all accounts, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit, certificated securities
and uncertificated securities consisting of, arising from,
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or relating to the Contracts and the Related Property, to secure the rights of
the Issuer under this Agreement and the obligations of the Transferor hereunder.
The Transferor and the Issuer shall, to the extent consistent with this
Agreement, take such actions (other than delivery of the original contracts) as
may be necessary to ensure that, if the conveyance of the Contracts and the
Related Property by the Transferor to the Issuer pursuant to this Agreement is
not deemed to be a sale, the security interest in the Contracts and the Related
Property created hereunder will be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of this Agreement.
ARTICLE III
THE CONTRACTS
Section 3.01. Representations and Warranties of Transferor. The Transferor
makes the following representations and warranties as to the Contracts on which
the Issuer is deemed to have relied in acquiring the Contracts. Such
representations and warranties speak as of the execution and delivery of this
agreement, but shall survive the transfer and assignment of the Contracts to the
Issuer and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Title. It is the intention of the Transferor that the transfer and
assignment herein contemplated constitute either (i) a sale of the
Contracts or (ii) a grant of a perfected security interest therein from the
Transferor to the Issuer and that the beneficial interest in and title to
such Contracts not be part of the debtor's estate in the event of the
filing of a bankruptcy petition by or against the Transferor under any
bankruptcy law. No Contract has been sold, transferred, assigned or pledged
by the Transferor to any Person other than the Issuer. Immediately prior to
the transfer and assignment herein contemplated, the Transferor had good
and marketable title to each Contract, free and clear of all Liens and
rights of others and, immediately upon the transfer thereof, the Issuer
shall have good and marketable title to each such Contract, free and clear
of all Liens and rights of others or a first priority perfected security
interest therein; and the transfer has been perfected, by the filing of
appropriate financing statements pursuant to the UCC, under the UCC.
(b) All Actions Taken. All actions (other than delivering the original
Contract) necessary under the applicable UCC in any jurisdiction to be
taken (i) to give the Issuer a first priority perfected security interest
or ownership interest in the Contracts, and (ii) to give the Trustee a
first priority perfected security interest therein (including, without
limitation, UCC filings with the Nevada and Utah Secretaries of State) have
been taken.
(c) Location of Contract Files. The Contract Files are kept at the location
specified in Schedule B hereto.
(d) Eligible Contracts. Each of the Contracts is an Eligible Contract.
(e) No Consents Required. All approvals, authorizations, consents, orders
or other actions of any Person or of any Governmental Authority required in
connection with the execution and delivery by the Transferor of this
Agreement or any other Basic Document,
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the performance by the Transferor of the transactions contemplated by this
Agreement or any other Basic Document and the fulfillment by the Transferor
of the terms hereof or thereof, have been obtained or have been completed
and are in full force and effect (other than approvals, authorizations,
consents, orders or other actions which if not obtained or completed or in
full force and effect would not have a material adverse effect on the
Transferor or the Issuer or upon the collectibility of any Contract or upon
the ability of the Transferor to perform its obligations under this
Agreement).
Section 3.02. Reacquisition by the Transferor Upon Breach.
(a) The Transferor, the Servicer, or the Trustee, as the case may be, shall
inform the other parties to this Agreement, promptly, in writing, upon the
discovery of any breach of the Transferor's representations and warranties made
pursuant to Section 3.01. Unless any such breach shall have been cured by the
last day of the second month following the month of the discovery thereof by the
Transferor or receipt by the Transferor of written notice from the Trustee or
the Servicer of such breach, the Transferor shall be obligated to reacquire any
Receivable materially and adversely affected by any such breach as of such last
day (or, at the Transferor's option, as of the last day of the first month
following the month of the discovery).
In consideration of the reacquisition of the Receivable, the Transferor
shall remit the Prepayment Amount in the manner specified in Section 5.03. The
sole remedy of each of the Issuer, the Trustee and the Noteholders with respect
to a breach of representations and warranties pursuant to Section 3.01 and the
agreement contained in this Section shall be to require the Transferor to
reacquire Receivables pursuant to this Section, subject to the conditions
contained herein. The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the reacquisition
of any Contract pursuant to this Section.
(b) The Issuer shall execute such documents and instruments of transfer or
assignment and take other actions as shall reasonably be requested by the
Servicer to evidence the conveyance of such Receivable pursuant to this Section
3.02.
Section 3.03. Duties of Servicer.
(a) Contract Files. The Servicer shall maintain such accurate and complete
accounts, records and computer systems pertaining to each Contract
File as shall enable itself and the Issuer to comply with this
Agreement. In performing its duties, the Servicer shall act with
reasonable care, using that degree of skill and attention that the
Servicer exercises with respect to the contract files relating to all
comparable contracts that the Servicer services for itself or others.
The Servicer shall promptly report to the Issuer and the Trustee any
failure on its part to maintain its accounts, records and computer
systems as herein provided and promptly take appropriate action to
remedy any such failure. Nothing herein shall be deemed to require an
initial review or any periodic review by the Issuer or the Trustee.
(b) Access to Records. The Servicer shall notify the Trustee of any change
in the location of its principal place of business in writing not
later than 90 days after any such change. The Servicer shall make
available to the Trustee, or duly
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authorized representatives, attorneys or auditors, a list of locations
of the related accounts, records and computer systems maintained by
the Servicer at such times as the Trustee shall instruct. The Trustee
shall have access to such accounts, records and computer systems,
after reasonable notice and during normal business hours.
(c) Safekeeping. The Servicer shall hold on behalf of the Issuer (i) all
file stamped copies of UCC financing statements evidencing the
security interest of Advanta Bank Corp. in Financed Equipment, and
(ii) any and all documents, that Advanta Bank Corp. or the Transferor
shall keep on file, in accordance with its customary procedures,
relating to a Contract, an Obligor or Financed Equipment, and shall
maintain such accurate and complete records pertaining to each
Contract as shall enable the Issuer to comply with this Agreement.
Upon instruction from the Trustee, the Servicer shall release any such
UCC filing or other document to the Trustee, the Trustee's agent, or
the Trustee's designee, as the case may be, at such place or places as
the Trustee may designate, as soon as practicable.
ARTICLE IV
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Servicer. The Servicer, as agent for the Issuer (to
the extent provided herein), shall manage, service, administer and make
collections on the Contracts (other than Acquired Contracts) with reasonable
care, using that degree of skill and attention that the Servicer exercises with
respect to all comparable Contracts that it services for itself or others. The
Servicer's duties shall include calculating, billing, collection and posting of
all payments, responding to inquiries of Obligors on such Contracts,
investigating delinquencies, reporting tax information to Obligors (to the
extent required under the related Contracts), accounting for collections, and
furnishing monthly and annual statements to the Trustee with respect to
distributions. Subject to the provisions of Section 4.02, the Servicer shall
follow its customary standards, policies and procedures in performing its duties
as Servicer. Without limiting the generality of the foregoing, the Servicer is
authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Trustee and the Noteholders or any of them, any and all instruments
of satisfaction or cancellation, or partial or full release or discharge, and
all other comparable instruments, with respect to such Contracts or to the
Financed Equipment securing such Contracts. If the Servicer shall commence a
legal proceeding to enforce a Contract, the Issuer (in the case of a Contract
other than an Acquired Contract) shall thereupon be deemed to have automatically
assigned, solely for the purpose of collection, such Contract to the Servicer.
If in any enforcement suit or legal proceeding it shall be held that the
Servicer may not enforce a Contract on the ground that it shall not be a real
party in interest or a holder entitled to enforce such Contract, the Issuer
shall, at the Servicer's expense and direction, take steps to enforce such
Contract, including bringing suit in its name or the name of the Trustee or the
Noteholders. The Issuer shall upon the written request of the Servicer furnish
the Servicer with any powers of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
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Section 4.02. Collection of Contract Payments. The Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Contracts as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
Contracts that it services for itself or others. In connection therewith, the
Servicer may grant extensions, rebates or adjustments on a Contract; provided,
however, that if the Servicer extends the date for final payment by the Obligor
of any Contract beyond the date one month prior to the Final Scheduled Payment
Date, it shall promptly acquire the Contract from the Issuer in accordance with
the terms of Section 4.07. The Servicer shall not agree to any reduction of the
underlying interest rate on any Contract or, subject to the foregoing, of the
amount of any Scheduled Payment on a Contract. Notwithstanding anything in this
Agreement to the contrary, any Recoveries with respect to a Contract shall be
paid to the Transferor, and any Defaulted Contracts shall be assigned by the
Trust to the Transferor, to the extent, in either case, that the Contract
Principal Balance of the Contract has been distributed as part of the Principal
Distribution Amount.
Section 4.03. Realization upon Contracts. On behalf of the Issuer, the
Servicer shall use its customary servicing procedures, to repossess or otherwise
realize upon the Financed Equipment securing any Contract as to which the
Servicer shall have determined eventual payment in full is unlikely. The
Servicer shall follow such customary and usual practices and procedures as it
shall deem necessary or advisable in its servicing of comparable Contracts,
which may include selling the Financed Equipment at public or private sale. The
foregoing shall be subject to the provision that, in any case in which any item
of Financed Equipment shall have suffered damage, the Servicer shall not expend
funds in connection with the repair or the repossession of such Financed
Equipment unless it shall determine in its discretion that such repair and/or
repossession will increase the Liquidation Proceeds by an amount greater than
the amount of such expenses.
Section 4.04. Servicer Advances. If an Obligor fails to remit its full
schedule payment on any Contract by the Calculation Date in the month in which
the payment is due, then no later than one Business Day preceding the following
Payment Date, the Servicer may, but is not required, to make a Servicer Advance
for such overdue Scheduled Payment in an amount equal to the Scheduled Payments,
or portion thereof, which were due but not received during the related
Collection Period (and not previously covered by an unreimbursed Servicer
Advance). On each Determination Date, the Servicer shall deliver to the Trustee
the Servicer's Certificate listing the aggregate amount of Scheduled Payments
not received for the immediately prior Collection Period as of the related
Calculation Date, together with a listing of which such unpaid Scheduled
Payments will not be the subject of a corresponding Servicer Advance. The
Servicer shall remit any Servicer Advances to the Collection Account.
Section 4.05. Maintenance of Security Interests in Financed Equipment. The
Servicer shall, in accordance with its customary servicing procedures, take such
steps as are necessary to maintain perfection of the security interest created
by each Contract in the related Financed Equipment if the original Financed
Equipment had a cost greater than $25,000. The Servicer is hereby authorized to
take such steps as are necessary to re-perfect such security interest or to
maintain such perfected security interest on behalf of the Issuer and the
Trustee in the event of the relocation of Financed Equipment, or for any other
reason.
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Section 4.06. Covenants of Servicer. The Servicer shall not: (i) release
the financed equipment securing any Contract from the security interest granted
by such Contract in whole or in part except (A) in accordance with Section 4.03
above or (B) in the event of payment in full (including a prepayment) by the
Obligor thereunder; (ii) impair the rights of the Issuer, the Trustee or the
Noteholders in any Contract; or (iii) increase the number of Scheduled Payments
due under a Contract except in accordance with the terms thereof or the terms of
Section 4.02.
Section 4.07. Acquisition by Servicer of Contracts upon Breach.
(a) The Servicer shall inform the Trustee and the Transferor promptly, in
writing, upon the discovery of any breach pursuant to Section 4.02, 4.05 or
4.06. Unless the breach shall have been cured by the last day of the second
month following such discovery (or, at the Transferor's election, the last
day of the first following month), the Servicer shall acquire any Contract
materially and adversely affected by such breach. If the Servicer takes any
action pursuant to Section 4.02 that impairs the rights of the Issuer, the
Trustee or the Noteholders in any Contract or as otherwise provided in
Section 4.02, the Servicer shall acquire such Contract. In consideration of
the acquisition of any such Contract pursuant to either of the two
preceding sentences, the Servicer shall remit the Prepayment Amount in the
manner specified in Section 5.03. Subject to Section 7.02, the sole remedy
of any of the Issuer, Trustee and the Noteholders with respect to a breach
pursuant to Section 4.02, 4.05 or 4.06 shall be to require the Servicer to
acquire Contracts pursuant to this Section. The parties hereto intend that
the Servicer will not intentionally breach or cause a breach pursuant to
Section 4.02, 4.05 or 4.06 in order to provide direct or indirect assurance
to the Transferor, the Trustee or the Noteholders, as applicable, against
loss by reason of the bankruptcy or insolvency (or other credit condition)
of, or default by, the Obligor on, or the uncollectibility of, any
Contract.
(b) The Issuer shall execute such documents and instruments of transfer or
assignment and take other actions as shall reasonably be requested by the
Servicer to evidence the conveyance of such Contract pursuant to this
Section 4.07.
Section 4.08. Servicing Fee. On each Payment Date, the Servicer shall be
entitled to receive the Servicing Fee in respect of the immediately preceding
Collection Period equal to the product of (a) one-twelfth of the Servicing Fee
Rate and (b) the Aggregate Contract Principal Balance as of the first day of
such preceding Collection Period. The Servicer shall also be entitled to any
Excluded Amounts with respect to Contracts, collected (from whatever source) on
the Contracts, which Excluded Amounts shall be paid to the Servicer pursuant to
Section 5.07.
Section 4.09. Servicer's Certificate. On each Determination Date, the
Servicer shall deliver to the Trustee and the Issuer, a Servicer's Certificate
containing all information necessary to make the distributions pursuant to
Sections 5.04 and 5.05 for the Collection Period immediately preceding the date
of such Servicer's Certificate. The Trustee shall not be required to determine,
confirm or recalculate the information contained in the Servicer's Certificate.
Contracts to be acquired by the Servicer or to be reacquired by the Transferor
shall be identified by the Servicer by account number with respect to such
Contract as specified in Schedule A.
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Section 4.10. Annual Statement as to Compliance. The Servicer will deliver
to the Issuer and the Trustee, not later than 90 days after the end of each
fiscal year, an Officer's Certificate, dated as of the last day of such fiscal
year, stating that (a) a review of the activities of the Servicer during the
preceding 12-month period and of the Servicer's performance under this Agreement
has been made under such officer's supervision and (b) nothing has come to such
officer's attention to indicate that a Servicer Default (or an event which with
the giving of notice or passage of time, or both, would constitute a Servicer
Default) hereunder has occurred and is continuing on such last day of such
fiscal year or, if a Servicer Default or such other event has so occurred and is
continuing, specifying each such Servicer Default or such other event known to
such officer and the nature and status thereof, and the steps, if any, necessary
to remedy such Servicer Default or such other event.
Section 4.11. Security Deposits. The Issuer acknowledges that the Security
Deposits are held by the Issuer on behalf of the Obligors and the Trustee. In
the event that (i) any Obligor requests that a Security Deposit be applied as an
offset against such Obligor's payment obligations under a Contract or (ii) any
Contract becomes a Defaulted Contract, the Servicer shall deliver to the Issuer
written demand that the Issuer remit to the Servicer, on the next Business Day,
out of the applicable Obligors's Security Deposit an amount equal to the Offset
Amount as payment in respect of any unpaid Scheduled Payments under the related
Contract. The Servicer shall deposit any Offset Amount so delivered to it into
the Collection Account no later than the end of the Collection Period in which
the Offset Amount is applied. The Servicer shall not be required to remit from
its own funds any Offset Amounts not received from the Issuer. The Servicer
shall notify the Issuer in writing of any demand it receives from an Obligor for
refund of such Obligor's Security Deposit at the end of the term of the related
Contract.
In no event shall the Trustee or any Noteholder be liable to any Obligor
with respect to the Security Deposits. The Issuer shall indemnify and hold
harmless the Trustee and its officers, directors, agents and employees and the
Noteholders for any loss, cost and expense (including legal fees and expenses
incurred by such parties in connection with the prosecution of claims made in
connection therewith) suffered as a result of the Issuer's misappropriation or
misapplication of any Security Deposit received from an Obligor. This right of
indemnification shall survive the termination of this Agreement and any earlier
removal or resignation of the Trustee.
ARTICLE V
DISTRIBUTIONS; ACCOUNTS;
STATEMENTS TO NOTEHOLDERS
Section 5.01. Establishment of Trust Accounts
(a) (i) The Servicer, for the benefit of the Noteholders, shall
establish and maintain in the name of the Trustee an Eligible Deposit
Account (the "Collection Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Noteholders.
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(ii) The Servicer, for the benefit of the Class A-1 Noteholders
the Class A-2 Noteholders, the Class A-3 Noteholders, the Class A-4
Noteholders, the Class B Noteholders and the Class C Noteholders, shall
establish and maintain in the name of the Trustee an Eligible Deposit
Account (the "Reserve Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Class A-1
Noteholders, the Class A-2 Noteholders, the Class A-3 Noteholders, the
Class A-4 Noteholders, the Class B Noteholders and the Class C Noteholders.
(iii) Funds on deposit in the Collection Account and the Reserve
Account (collectively the "Trust Accounts") shall be invested by the
Trustee in Eligible Investments selected by the Servicer; provided,
however, it is understood and agreed that the Trustee shall not be liable
for any loss arising from such investment in Eligible Investments. All such
Eligible Investments shall be held by the Trustee for the benefit of the
Noteholders; provided, however, that on each Payment Date all investment
earnings (net of losses and investment expenses) on funds on deposit
therein shall be deposited into the Collection Account and shall be deemed
to constitute a portion of the Available Funds as directed in the Monthly
Servicer Report. Other than as permitted by the Rating Agencies, funds on
deposit in the Trust Accounts shall be invested in Eligible Investments
that will mature so that such funds will be available at the close of
business on the Business Day preceding the immediately following Payment
Date; provided, however, that funds on deposit in Trust Accounts may be
invested in Eligible Investments of the Trustee which may mature so that
such funds will be available on the Payment Date. Notwithstanding the other
provisions of this Agreement, the funds in the Collection Account or the
Reserve Account may be invested in Eligible Investments that will not
mature prior to the next Payment Date and are not to be sold to meet any
shortfalls if the Rating Agency Condition is satisfied with respect to such
investments. Funds deposited in a Trust Account on a Business Day which
immediately precedes a Payment Date upon the maturity of any Eligible
Investments are not required to be invested overnight, but if so invested,
such investments must meet the conditions of the immediately preceding
sentence.
(b) (i) The Trustee shall possess all right, title and interest
in all monies, securities, instruments and other property on deposit from
time to time in or credited to the Trust Accounts and in all proceeds
thereof (including all income thereon) and all such monies, securities,
instruments and other property (together with all earnings, dividends,
distributions, income, issues, and profits relating thereto) shall be part
of the Trust Estate. The Trust Accounts shall be under the sole dominion
and control of the Trustee for the benefit of the Noteholders. If, at any
time, any of the Trust Accounts ceases to be an Eligible Deposit Account,
the Trustee (or the Servicer on its behalf) shall within 10 Business Days
(or such longer period, not to exceed 30 calendar days, as to which each
Rating Agency may consent) establish a new Trust Account as an Eligible
Deposit Account and shall transfer any cash and/or any investments to such
new Trust Account. So long as the Trustee is an Eligible Institution, any
Trust Account may be maintained with it in an Eligible Deposit Account.
Section 5.02. Collections. (a) Except as otherwise provided in this
Agreement, the Servicer and the Issuer shall deposit to the Collection Account
any Collections received by any
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of them as soon as practicable (and, in any event, within two Business Days of
receipt and identification thereof) after their respective receipt thereof.
Notwithstanding anything else in this Agreement to the contrary, for so long as
Advanta Bank Corp. or an Affiliate thereof remains the Servicer and (x)
maintains a short-term debt rating of A-1 by S&P, P-1 by ▇▇▇▇▇'▇ and F1 by Fitch
(if rated by Fitch) (or such other rating above A-1, P-1 or F1 (if rated by
Fitch), as the case may be), or (y) the Servicer has provided to the Trustee a
letter of credit covering collection risk of the Servicer, the Servicer and the
Issuer need not make the daily deposits of Collections into the Collection
Account as provided in the preceding sentence, but the Servicer may make a
single deposit in the Collection Account in immediately available funds not
later than 12:00 noon, New York City time, on the date which is the Business Day
immediately preceding each Payment Date following the Collection Period in which
the deposits were to have been made into the Collection Account.
(b) Furthermore, the Servicer is not required to deposit Advance
Payments into the Collection Account as received, but shall be required to
deposit Advance Payments or the appropriate portions thereof into the Collection
Account on the Business Day preceding the Payment Date following the Collection
Period in which such payment is due and owing.
(c) Notwithstanding the foregoing, the Trustee at the written direction
of the Servicer and/or the Servicer may deduct from amounts otherwise specified
for deposit to the Collection Account any amounts previously deposited by the
Trustee or the Servicer into the Collection but which are (i) subsequently
uncollectible as a result of dishonor of the instrument of payment for or on
behalf of the Obligor or (ii) later determined to have resulted from mistaken
deposits or which amounts were rebated to the Obligor.
(d) The Collection Account shall be under the sole dominion and control
of the Trustee for the benefit of the Noteholders; provided, however, that the
Trustee may conclusively rely on the information and instructions provided by
the Servicer in determining the amount of any withdrawals or payments to be made
from either such account for the purposes of carrying out the Trustee's duties
under this Agreement and the Indenture. Neither the Trustee nor the Servicer
shall have any right of setoff or banker's lien against, and no right to
otherwise deduct from, any funds held in the Collection Account for any amount
owed to it by the Servicer, the Obligors, the Trustee, or any Noteholder.
(e) The Trustee shall credit all net investment earnings on the
Collection Account, as collected, on a monthly basis to the Collection Account.
Section 5.03. Additional Deposits. The Servicer and the Transferor shall
deposit or cause to be deposited in the Collection Account the Prepayment
Amounts with respect to Acquired Contracts and Prepayment Proceeds received from
Obligors as set forth in the immediately following sentence, and the Servicer
shall deposit in the Collection Account all amounts to be paid under Section
9.02 as set forth therein. The Servicer and the Transferor will deposit the
Prepayment Proceeds to the Collection Account as received, unless the Servicer
shall be permitted to make deposits monthly prior to each Payment Date pursuant
to Section 5.02, in which case such deposits shall be made in accordance with
such Section. The Servicer shall account for Prepayment Amounts paid by itself
and the Transferor separately.
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Section 5.04. Distributions.
(a) On or prior to each Determination Date, the Servicer shall
calculate all amounts required to determine the amounts to be paid as interest
and as principal on the notes and the amount, if any, to be deposited into the
Reserve Account.
(b) On the Payment Date, the Trustee (based solely on information
contained in the Servicer's Certificate) will be required to make the following
payments from the Available Funds (including amounts transferred from the
Reserve Account on such Payment Date) then on deposit in the Collection Account,
in the following order of priority:
(i) from the Available Funds, the fees and expenses of the Trustee then
due and payable (including legal fees and expenses);
(ii) from the Available Funds, to the Servicer, any Nonrecoverable
Advances;
(iii) from the Available Funds then remaining in the Collection Account
to the Servicer, the Servicing Fee then due;
(iv) from the Available Funds then remaining in the Collection Account,
to the Class A Noteholders, the Class A Note Interest for the related Interest
Accrual Period, pro rata based on interest due with respect to the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes;
(v) from the Available Funds then remaining in the Collection Account,
to the Class B Noteholders, the Class B Note Interest for the related Interest
Accrual Period;
(vi) from the Available Funds then remaining in the Collection Account,
to the Class C Noteholders, the Class C Note Interest for the related Interest
Accrual Period;
(vii) from Available Funds then remaining in the Collection Account,
until the Class A-1 Principal Balance has been reduced to zero, to the Class A-1
Noteholders, the Class A Principal Payment Amount; when the Class A-1 Principal
Balance has been reduced to zero, then until the Class A-2 Principal Balance has
been reduced to zero, to the Class A-2 Noteholders, the Class A Principal
Payment Amount; after the Class A-1 Principal Balance and the Class A-2
Principal Balance have been reduced to zero, then until the Class A-3 Principal
Balance has been reduced to zero, the Class A-3 Noteholders, the Class A
Principal Payment Amount; after the Class A-1 Principal Balance, the Class A-2
Principal Balance and the Class A-3 Principal Balance have been reduced to zero,
then until the Class A-4 Principal Balance has been reduced to zero, the Class
A-4 Noteholders, the Class A Principal Payment Amount;
(viii) until the Class B Principal Balance has been reduced to zero, to
the Class B Noteholders, from the Available Funds then remaining in the
Collection Account, the Class B Principal Payment Amount;
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(ix) until the Class C Principal Balance has been reduced to zero, to the
Class C Noteholders, from the Available Funds then remaining in the Collection
Account, the Class C Principal Payment Amount;
(x) from the Available Funds then remaining in the Collection Account,
to the Reserve Account, the amount needed to increase the amount on deposit in
the Reserve Account to the Required Reserve Amount for such Payment Date;
(xi) then until the Class D Principal Balance has been reduced to zero,
to the Class D Noteholders, from the Available Fund then remaining in the
Collection Account, the Class D Monthly Principal Payment Amount;
(xii) if on such date the Class D Floor is greater than the Class D
Target Principal Amount, an amount equal to the Additional Principal for such
date shall be to the extent thereof, shall be paid sequentially to the Class A-2
Noteholders, Class A-3 Noteholders, Class B Noteholders, Class C Noteholders and
Class D Noteholders, in that order, until the principal amount of such Class has
been reduced to zero; and
(xiii) then to the Issuer any remaining Available Funds for the preceding
Collection Period on deposit in the Collection Account.
(c) All payments to Noteholders shall be made on each Payment Date to
each Noteholder of record on the related Record Date by check, or, if requested
in writing by such Noteholder, by wire transfer to the account designated in
writing delivered to the Trustee on or prior to the related Determination Date,
in immediately available funds, in amounts equal to such Noteholder's pro rata
share of such payment.
Section 5.05. Reserve Account.
(a) On the Closing Date, the Transferor shall deposit the Reserve
Account Initial Deposit into the Reserve Account. The Servicer shall determine
the Specified Reserve Account Balance for each Payment Date.
(b) If the amount on deposit in the Reserve Account on any Payment Date
(after giving effect to all deposits or withdrawals therefrom on such Payment
Date) is greater than the Specified Reserve Account Balance for such Payment
Date, the Servicer shall instruct the Trustee to distribute the amount of such
excess to the Transferor; provided, however, that if, after giving effect to all
payments made on the Notes on such Payment Date, the Aggregate Contract
Principal Balance as of the end of the preceding Collection Period is less than
the sum of the outstanding principal balance the Notes, such excess amount shall
not be distributed to the Transferor and shall be retained in the Reserve
Account available for application in accordance with Sections 5.05(c) and (d).
Amounts properly distributed to the Transferor pursuant to this Section 5.05(b)
shall be deemed released from the Trust and the security interest therein
granted to the Trustee, and the Transferor shall in no event thereafter be
required to refund any such distributed amounts.
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(c) In the event that the sum of the distributions to be made pursuant
to subsections 5.04(a)(i) through (ix) with respect to any Payment Date exceeds
the Available Funds otherwise available to be distributed in respect thereof on
such Payment Date, the Trustee shall withdraw from the Reserve Account on such
Payment Date, upon receipt of the instruction from the Servicer pursuant to
Section 5.04(b), to the extent of funds available therein, an amount equal to
such excess, and the Trustee shall use such amounts as Available Funds.
(d) Notwithstanding anything in this Section 5.05 to the contrary, if
an Event of Default under the Indenture occurs and the maturities of the Notes
are accelerated pursuant to Section 5.02 of the Indenture, amounts on deposit in
the Reserve Account shall be applied by the Trustee in accordance with Section
5.04(a) of the Indenture.
Section 5.06. Statement to Noteholders. Provided that the Servicer shall
have delivered to the Trustee the Servicer's Certificate on the preceding
Determination Date containing all information necessary to enable the Trustee to
make all distributions pursuant to Section 5.04 (b) hereof, then on each Payment
Date, the Trustee will forward to each Rating Agency, and mail to each
Noteholder, a statement based solely on such Servicer's Certificate, not later
than such Payment Date, setting forth the following information (per $1,000 of
Class A-1 Initial Principal Balance, Class A-2 Initial Principal Balance, Class
A-3 Initial Principal Balance, Class A-4 Initial Principal Balance, Class B
Initial Principal Balance, Class C Initial Principal Balance (as the case may
be) as to (i) and (ii) below):
(i) The amount of such payment allocable to the Class A-1
Principal Payment Amount, Class A-2 Principal Payment Amount, Class A-3
Principal Payment Amount, Class B Principal Payment Amount, or the Class
A-4 Principal Payment Amount, as applicable;
(ii) The amount of such payment allocable to such Class A-1 Note
Interest, Class A-2 Note Interest, Class A-3 Note Interest, Class A-4 Note
Interest, Class B Note Interest or Class C Note Interest, as applicable;
(iii) The aggregate amount of fees and compensation received by
the Servicer for the related Collection Period;
(iv) The aggregate Class A-1 Principal Balance, Class A-2
Principal Balance, Class A-3 Principal Balance, Class A-4 Principal
Balance, Class B Principal Balance and Class C Principal Balance, as
applicable, and the Class A-1 Note Factor, Class A-2 Note Factor, Class A-3
Note Factor, Class A-4 Note Factor, Class B Note Factor or Class C Note
Factor, as applicable, after taking into account all distributions made on
such Payment Date, the Aggregate Contract Principal Balance and the
Collateral Factor;
(v) The total unreimbursed Servicer Advances with respect to the
related Collection Period;
(vi) The aggregate Contract Principal Balance for all Contracts
that became Defaulted Contracts during the related Collection Period,
calculated immediately prior to the time such Contracts became Defaulted
Contracts;
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(vii) The amount on deposit in the Reserve Account;
(viii) 31-60, 61-90 and greater than 90 days delinquencies as of
the end of the related Collections Period; and
(ix) Prepayment Amounts received during the related Collection
Period;
provided, however, the Trustee may deliver a copy of the Servicer's
Certificate to each Noteholder and Rating Agency in satisfaction of the
requirement set forth in this Section.
The Servicer and the Trustee shall furnish to each Noteholder, on written
request, such periodic, special or other reports or information not specifically
provided for herein, as shall be necessary, reasonable or appropriate with
respect to such Noteholder and at the expense of such requesting party all such
reports or information to be provided by and in accordance with such written
applicable instructions and directions as the Noteholder may reasonably require
and as the Servicer and the Trustee may reasonably be able to produce. A
Noteholder may, by written notice to the Trustee, waive receipt of any reports.
The Trustee's obligation under this provision shall only pertain to information
provided by the Servicer to the Trustee or otherwise in the Trustee's
possession.
ARTICLE VI
THE TRANSFEROR
Section 6.01. Representations of Transferor. The Transferor makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Contracts. The representations speak as of the execution and
delivery of this Agreement and shall survive the transfer of the Contracts to
the Issuer and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Transferor is duly organized
and validly existing as a corporation in good standing under the laws of
the State of Utah with the power and authority to own its properties and to
conduct its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and has,
the power, authority and legal right to acquire and own the Contracts.
(b) Due Qualification. The Transferor is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the failure to so
qualify or to obtain any such license or approval would render any Contract
unenforceable that would otherwise be enforceable by the Transferor.
(c) Power and Authority. The Transferor has the power and authority to
execute and deliver this Agreement and to carry out its terms; the
Transferor has full power and
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authority to transfer and assign the Contracts and other property to be
transferred and assigned to and deposited with the Issuer and the
Transferor has duly authorized such transfer and assignment to the Issuer
by all necessary corporate action; and each of the execution, delivery and
performance of this Agreement has been duly authorized by the Transferor by
all necessary corporate action.
(d) FDIC Insurance. The deposits of the Transferor are insured by the
Federal Deposit Insurance Corporation.
(e) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Transferor enforceable in accordance with its
terms, except to the extent that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally, and the
remedy of specific performance and injunctive relief may be subject to
certain equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(f) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not (i) conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or by-laws of the Transferor, or any
indenture, agreement or other instrument to which the Transferor is a party
or by which it is bound; (ii) result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the Basic
Documents); or (iii) violate any law or, to the best of the Transferor's
knowledge, any order, rule or regulation applicable to the Transferor of
any court or of any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the
Transferor or its properties.
(g) No Proceedings. There are no proceedings or investigations pending,
or to the Transferor's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Transferor or its properties:
(i) asserting the invalidity of this Agreement, the Indenture, the Notes or
any of the other Basic Documents, (ii) seeking to prevent the issuance of
the Notes or the consummation of any of the transactions contemplated by
this Agreement, the Indenture or any of the other Basic Documents; (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by the Transferor of its obligations under, or the
validity or enforceability of, this Agreement, the Indenture, the Notes or
any other of the Basic Documents or (iv) which might adversely affect the
Federal or state income tax attributes of the Notes.
Section 6.02. Liability of Transferor; Indemnities. The Transferor shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Transferor under this Agreement.
(a) The Transferor shall indemnify, defend and hold harmless the
Issuer, the Trustee and their officers, directors and agents from and
against any taxes that may at any time be
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asserted against the Issuer or the Trustee or their respective officers,
directors, and agents with respect to the transfer of the Contracts to the
Issuer or the issuance and original sale of the Notes, including any sales,
gross receipts, general corporation, tangible personal property, privilege
or license taxes and costs and expenses in defending against the same.
(b) The Transferor shall indemnify, defend and hold harmless the Issuer
and the Trustee and their officers, directors, and agents from and against
any loss, liability or expense incurred by reason of (i) the Transferor's
willful misfeasance, bad faith or negligence in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (ii) the Transferor's or
the Issuer's violation or alleged violation of Federal or state securities
laws in connection with the offering and sale of the Notes.
Indemnification under this Section shall survive the resignation or
removal of the Trustee and the termination of this Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Transferor shall have made any indemnity payments pursuant to this Section 6.02
and the Person to or on behalf of whom such payments are made thereafter shall
collect any of such amounts from others, such Person shall promptly repay such
amounts collected from others to the Transferor, without interest.
Section 6.03. Merger or Consolidation of, or Assumption of the Obligations
of, Transferor. Any corporation (i) into which the Transferor may be merged or
consolidated, (ii) resulting from any merger, conversion, or consolidation to
which the Transferor shall be party, or (iii) succeeding to the business of the
Transferor substantially as a whole, which corporation in any of the foregoing
cases executes an agreement of assumption to perform every obligation of the
Transferor under this Agreement and all other Basic Documents, will be the
successor to the Transferor without the execution or filing of any document or
the taking of any further act on the part of any of the parties to this
Agreement, anything in this Agreement notwithstanding; provided, however, that
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 6.01 shall have been breached.
Section 6.04. Limitation on Liability of Transferor and Others. The
Transferor and any director or officer or employee or agent of the Transferor
may rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Transferor shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
Section 6.05. Transferor May Own Notes. The Transferor and any Affiliate
thereof may in its individual or any other capacity become the owner or pledgee
of Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4
Notes, the Class B Notes or the Class C Notes with the same rights as it would
have if it were not the Transferor or an Affiliate thereof, except as expressly
provided herein (including, without limitation, the definition of "Outstanding"
contained in the Indenture) or in any Basic Document. The Transferor agrees that
it shall not transfer any interest in Notes (including the Class D Notes) or any
rights hereunder without
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delivering an Opinion of Counsel that such transfer will not [cause the Issuer
to be taxable as a corporation for federal income tax purposes.]
Section 6.06. Tax Treatment. The Transferor has structured this Agreement,
the Indenture and any related agreement with the intention that the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class
B Notes [and the Class C Notes] qualify under applicable federal, state, and
local income and franchise tax law as indebtedness of the Transferor secured by
the Contracts and the Issuer shall be disregarded as a separate entity for such
purposes. The Transferor, the Servicer, and the Issuer agree to treat and to
take no action inconsistent with the treatment of the Class A-1 Notes, the Class
A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes [and the
Class C Notes] (or any beneficial interest therein) as such indebtedness for
purposes of federal, state, and local income and franchise tax law and for
purposes of any other tax imposed on or measured by income.
ARTICLE VII
THE SERVICER
Section 7.01. Representations of Servicer. The Servicer makes the following
representations on which the Issuer is deemed to have relied in acquiring the
Contracts. The representations speak as of the execution and delivery of the
Agreement (or as of the date a Person (other than the Trustee) becomes Servicer
pursuant to Sections 7.03 and 8.02, in the case of a successor to the Servicer)
and shall survive the transfer of the Contracts to the Issuer and the pledge
thereof to the Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is a corporation duly
organized, validly existing and in good standing under the laws of the
state if Utah and has the corporate power and authority to own its
properties and to conduct the business in which it is currently engaged,
and had at all relevant times, and has, the power, authority and legal
right to acquire, own, transfer and service the Contracts.
(b) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement have been duly
authorized by the Servicer by all necessary corporate action.
(c) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable in accordance with its
terms, except that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and the remedy
of specific performance and injunctive relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(d) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof shall not conflict
with, result in any
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breach of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time) a default under, the certificate of
incorporation or by-laws of the Servicer, or any material indenture,
agreement or other instrument to which the Servicer is a party or by which
it is bound; nor result in the creation or imposition of any material Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than this Agreement); nor violate any
material law or, to the best of the Servicer's knowledge, any material
order, rule or regulation applicable to the Servicer of any court or of any
Federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties.
(e) No Proceedings. To the Servicer's best knowledge, there are no
proceedings or investigations pending, or threatened, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties:
(i) asserting the invalidity of this Agreement, the Indenture, the Notes or
any of the other Basic Documents; (ii) seeking to prevent the issuance of
the Notes or the consummation of any of the transactions contemplated by
this Agreement, the Indenture or any of the other Basic Documents; (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by the Servicer of its obligations under, or the
validity or enforceability of, this Agreement, the Indenture, the Notes or
any of the other Basic Documents ; or (iv) relating to the Servicer and
which might adversely affect the Federal or state income tax attributes of
the Notes.
(f) No Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or of any Governmental Authority
required in connection with the execution and delivery by the Servicer of
this Agreement or any other Basic Document, the performance by the Servicer
of the transactions contemplated by this Agreement or any other Basic
Document and the fulfillment by the Servicer of the terms hereof or
thereof, have been obtained or have been completed and are in full force
and effect (other than approvals, authorizations, consents, orders or other
actions which if not obtained or completed or in full force and effect
would not have a material adverse effect on the Servicer or the Issuer or
upon the collectibility of any Contract or upon the ability of the Servicer
to perform its obligations under this Agreement).
Section 7.02. Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
(a) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Trustee, the Transferor and the Noteholders and any of the officers,
directors and agents of the Issuer, the Trustee and the Transferor from and
against any and all costs, expenses, losses, damages, claims and
liabilities, arising out of or resulting from the use, ownership or
operation by the Servicer or any Affiliate (other than the Transferor)
thereof of any Financed Equipment.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Trustee and the Transferor and their respective officers, directors and
agents from and against (i) any taxes that may at any time be asserted
against any such Person with respect to the
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transactions contemplated herein, including any sales, gross receipts,
general corporation, tangible personal property, privilege or license taxes
(but, in the case of the Issuer or the Transferor, not including any taxes
asserted with respect to, and as of the date of, the transfer of the
Contracts to the Issuer or the issuance and original sale of the Notes, or
Federal or other income taxes arising out of distributions on the Notes)
and (ii) costs and expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Trustee, the Transferor and the Noteholders and any of the officers,
directors and agents of the Issuer, the Trustee and the Transferor from and
against any and all costs, expenses, losses, claims, damages and
liabilities to the extent that any such cost, expense, loss, claim, damage
or liability arose out of, or was imposed upon any such Person through, the
negligence, willful misfeasance or bad faith of the Servicer in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement or on account
of the failure of the Servicer to be qualified to do business as a foreign
corporation or to have obtained a license or approval in any jurisdiction.
(d) The Servicer shall indemnify, defend and hold harmless the Trustee
and their respective officers, directors, employees and agents (which are
retained pursuant to the Indenture or this Agreement) from and against all
costs, expenses, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts and
duties herein, in the case of the Trustee, the Indenture, except to the
extent that any such cost, expense, loss, claim, damage or liability is
otherwise reimbursed.
(e) The Servicer shall pay any and all taxes levied or assessed upon
all or any part of the Trust Estate, other than any taxes asserted with
respect to, and as of the date of, the transfer of the Contracts to the
Issuer or the Transferor or the issuance and original sale of the Notes, or
Federal or other income taxes arising out of distributions on the Notes.
For purposes of this Section, in the event of the termination of the rights
and obligations of Advanta Bank Corp. (or any successor thereto pursuant to
Section 7.03) as Servicer pursuant to Section 8.01, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer (other than the Trustee)
pursuant to Section 8.02.
Indemnification under this Section shall survive the resignation or removal
of the Trustee or the termination of this Agreement. Indemnification under this
Section shall include reasonable fees and expenses of counsel and expenses of
litigation if the indemnitee prevails in any action for which indemnification is
sought. If the Servicer shall have made any indemnity payments pursuant to this
Section and the Person to or on behalf of whom such payments are made thereafter
collects any of such amounts from others, such Person shall promptly repay such
amounts to the Servicer, without interest.
Section 7.03. Merger or Consolidation of, or Assumption of the Obligations
of, Servicer. Any corporation (i) into which the Servicer may be merged or
consolidated, (ii)
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resulting from any merger or consolidation to which the Servicer shall be a
party or (iii) succeeding to the business of the Servicer, shall be the
successor to the Servicer hereunder without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding, and such corporation in any of the foregoing cases
shall execute an agreement of assumption, in a form reasonably satisfactory to
the Trustee, agreeing to perform every obligation of the Servicer hereunder. Any
corporation succeeding to the business of the Servicer by merger, consolidation
or otherwise shall be a corporation organized and existing under the laws of the
United States or any State and have a tangible net worth of at least
$20,000,000. The Servicer shall provide prompt written notice of the
effectiveness of any such event to the Issuer and the Trustee.
In addition to the provisions set forth in the preceding paragraph, if the
Servicer is Advanta Bank Corp. or an Affiliate thereof, the Servicer may
transfer all of its duties, obligations, rights and privileges as Servicer under
this Agreement to an Affiliate of Advanta Bank Corp. provided that (i) the then
Servicer shall give 30 days prior written notice of such change to the Trustee,
the Issuer and the entity assuming the servicer position shall execute an
agreement of assumption, in a form reasonably satisfactory to the Trustee
agreeing to perform every obligation of the Servicer hereunder and (ii) the
entity assuming the servicer position shall deliver to the Trustee written
evidence that the Rating Agency Condition has been satisfied. Upon the execution
and delivery to the Trustee of such written assumption and delivery of evidence
of the satisfaction of the Rating Agency Condition and delivery to the Trustee
of an Opinion of Counsel to the effect that all conditions precedent to such
assumption have been complied with and that such assumption is authorized and
permitted by this Agreement, the Affiliate of Advanta Bank Corp. shall become
the Servicer hereunder without any further act on the part of any of the parties
hereto and the entity serving as Servicer prior to such assumption shall be
relieved of all duties hereunder and shall cease to be the Servicer. Any
affiliate of Advanta Bank Corp. which becomes a Servicer under this paragraph
shall be required to have a tangible net worth of at least $20,000,000.
Section 7.04. Limitation on Liability of Servicer and Others. No directors,
officers, employees or agents of the Servicer shall be under any liability to
the Trustee, the Issuer or any of the Noteholders, except as provided in this
Agreement, for any action taken or for refraining from the taking of any action
pursuant to this Agreement or for errors in judgment. The Servicer and any
director or officer or employee or agent of the Servicer may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. Except as provided herein, the
Servicer shall not be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its duties to service the Trust Estate in
accordance with this Agreement and that in its opinion may involve it in any
expense or liability; provided, however, that the Servicer may take any such
action that is reasonable and that may be necessary or desirable in respect of
this Agreement and the rights and duties of the parties hereto and the interests
of the Trustee hereunder. In the event the Servicer takes such action, the
reasonably incurred legal expenses and costs of such action and any liabilities
resulting therefrom shall be expenses, costs and liabilities of the Trust
Estate, and the Servicer shall be entitled to be reimbursed therefor in
accordance with the terms hereof.
Section 7.05. Advanta Bank Corp. Not To Resign as Servicer. Except as
provided in Section 7.03, Advanta Bank Corp. shall not resign from the
obligations and duties hereby
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imposed on it as Servicer under this Agreement except upon determination that
the performance of its duties under this Agreement shall no longer be
permissible under applicable law (if it is also determined that such
determination may not be reversed). Notice of any such determination permitting
the resignation of Advanta Bank Corp. shall be communicated to the Trustee at
the earliest practicable time (and, if such communication is not in writing,
shall be confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee concurrently with or promptly after such notice. No
such resignation shall become effective until the Trustee or a successor
Servicer shall have assumed the responsibilities and obligations of Advanta Bank
Corp. in accordance with Section 8.02.
ARTICLE VIII
DEFAULT
Section 8.01. Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer (i) to deliver to the Trustee for
deposit in any of the Trust Accounts any required payment or (ii) to direct
the Trustee to make any required distribution therefrom in either case that
shall continue unremedied for a period of five Business Days after written
notice of such failure is received by the Servicer from the Trustee or
after discovery of such failure by an officer of the Servicer; or
(b) failure on the part of the Servicer duly to observe or to perform
in any material respect any other covenants or agreements of the Servicer
set forth in this Agreement or any other Basic Document, which failure
shall (i) materially and adversely affect the rights of holders of the
investor notes and (ii) continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given (A) to the Servicer by the Trustee or (B)
to the Servicer, and to the Trustee by the Holders of Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes and Class
C Notes evidencing not less than 25% of the Outstanding Amount of the Class
A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes
and Class C Notes; or
(c) an Insolvency Event occurs with respect to the Servicer;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Trustee, or the Holders of Class A-1 Notes, Class A-2
Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes and Class C Notes
evidencing not less than 50% of the Outstanding Amount of the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes and Class C
Notes, by notice then given in writing to the Servicer (and to the Trustee if
given by the Class A-1 Noteholders, Class A-2 Noteholders, Class A-3
Noteholders, Class A-4 Noteholders, Class B Noteholders or Class C Noteholders)
may terminate all the rights and obligations (other than the obligations set
forth in Section 7.02 hereof) of the Servicer under this Agreement (a "Servicer
Termination Event"). On or after the receipt by the Servicer of such
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written notice, all authority and power of the Servicer under this Agreement,
whether with respect to the Notes or the Contracts or otherwise, shall, without
further action, pass to and be vested in the Trustee or such successor Servicer
as may be appointed under Section 8.02; and, without limitation, the Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
predecessor Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement of the Contracts and related
documents, or otherwise. The predecessor Servicer shall cooperate with the
successor Servicer and the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer for administration by it of all
cash amounts that shall at the time be held by the predecessor Servicer for
deposit, or shall thereafter be received by it with respect to a Contract. All
reasonable costs and expenses (including reasonable attorneys' fees) incurred in
connection (x) with transferring the computer or other records to the successor
Servicer in the form requested and (y) amending this Agreement to reflect such
succession as Servicer pursuant to this Section shall be paid by the predecessor
Servicer upon presentation of reasonable documentation of such costs and
expenses. Upon receipt of notice in writing from the majority Noteholders or the
Servicer of the occurrence of a Servicer Default, the Trustee shall give notice
thereof to the Rating Agencies.
Section 8.02. Appointment of Successor.
(a) Upon the Servicer's receipt of notice of termination, pursuant to
Section 8.01 or the Servicer's resignation in accordance with the terms of
this Agreement, the predecessor Servicer shall continue to perform its
functions as Servicer under this Agreement, in the case of termination,
only until the date specified in such termination notice or, if no such
date is specified in a notice of termination, until receipt of such notice
and, in the case of resignation, until the earlier of (x) the date 45 days
from the delivery to the Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of the Servicer's termination
hereunder, the Trustee shall appoint a successor Servicer, and the
successor Servicer shall accept its appointment by a written assumption in
form acceptable to the Trustee (such acceptance not to be unreasonably
withheld). In the event that a successor Servicer has not been appointed at
the time when the predecessor Servicer has ceased to act as Servicer in
accordance with this Section, pending the appointment of and acceptance by
a successor Servicer, the Trustee without further action shall
automatically be appointed and serve as the successor Servicer and the
Trustee shall be entitled to the Servicing Fee and the Servicer's Yield.
Notwithstanding the above, the Trustee shall, if it shall be legally unable
so to act, appoint or petition a court of competent jurisdiction to
appoint, any established institution who has demonstrated its capability to
service the Contracts to the satisfaction of the Trustee, as the successor
to the Servicer under this Agreement, having a net worth of not less than
$20,000,000 and whose regular business shall include the servicing of
Contracts comparable with the Contracts, as the successor to the Servicer
under this Agreement.
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The Trustee, acting in its capacity as successor Servicer, and any
successor Servicer appointed by it, shall have no responsibility or obligation
(i) for any breach by any predecessor Servicer of any of its representations and
warranties, or (ii) any acts or omissions of Advanta Bank Corp. or any other
Servicer prior to its termination or resignation.
(b) Upon appointment, the successor Servicer (including the Trustee
acting as successor servicer) shall be the successor in all respects to the
predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities arising thereafter relating thereto placed on the
predecessor Servicer and shall be entitled to the Servicing Fee and the
servicer's yield accruing or collected, as the case may be, after the
successor Servicer becomes the Servicer, as set forth above, and all the
rights granted to the predecessor Servicer by the terms and provisions of
this Agreement.
(c) Subject to the Trustee's right to appoint a successor Servicer
pursuant to Section 8.02(a) after the Trustee has become the Servicer
pending the appointment of and acceptance by a successor Servicer, the
Servicer may not resign unless it is prohibited from serving as such by
law.
(d) Notwithstanding any other provision of this Agreement, neither the
Trustee nor any successor Servicer shall be deemed in default, breach or
violation of this Agreement as a result of the failure of Advanta Bank
Corp. or any Servicer (i) to cooperate with the Trustee or any successor
Servicer pursuant to Section 8.01, (ii) to deliver funds required to be
deposited to any Trust Account, or (iii) to deliver files or records
relative to the Contracts as may be requested by the Trustee or successor
Servicer.
Section 8.03. Notification to Noteholders. Upon any termination of, or
appointment of a successor to, the Servicer pursuant to this Article VIII, the
Trustee shall give prompt written notice thereof to the Noteholders and to the
Rating Agencies in the manner provided for in the Indenture.
Section 8.04. Waiver of Past Defaults. The Holders of the Class A-1 Notes,
the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes
and the Class C Notes, evidencing not less than a majority of the Outstanding
Amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes, the Class B Notes and the Class C Notes may, on behalf of all
Noteholders, waive in writing any default by the Servicer in the performance of
its obligations hereunder and its consequences, except a default in making any
required deposits to or payments from any of the Trust Accounts in accordance
with this Agreement. Upon any such waiver of a past default, such default shall
cease to exist, and any Servicer Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto.
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ARTICLE IX
OPTIONAL ACQUISITION
Section 9.01. Optional Acquisition of All Contracts. On any Payment Date
following any Calculation Date as of which the Aggregate Contract Principal
Balance is less than 10% of the Initial Aggregate Contract Principal Balance,
the Servicer shall have the option to require the Transferor to reacquire all of
the Contracts and the Transferor agrees, that if the Servicer elects to cause
the redemption of the remaining Notes, that the Transferor will reacquire all of
the remaining Contracts at a price sufficient to provide to the Issuer funds
sufficient to pay the redemption price and accrued interest to the redemption
date. Any such redemption of the Notes shall be as provided in Section 10.01 of
the Indenture.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment. The Agreement may be amended by the Transferor,
the Servicer and the Issuer, with the consent of the Trustee, but without the
consent of any of the Noteholders, to cure any ambiguity, to correct or
supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions in
this Agreement or of modifying in any manner the rights of the Noteholders;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel delivered to the Trustee, adversely affect in any material respect the
interests of any Noteholder.
This Agreement may also be amended from time to time by the Transferor, the
Servicer and the Issuer, with the consent of the Trustee, the consent of the
Holders of Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class
A-4 Notes, the Class B Notes and the Class C Notes evidencing not less than a
majority of the Outstanding Amount of the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes, the Class B Notes and the Class C
Notes for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders; provided, however, that no such amendment
shall (a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on Contracts or distributions that shall
be required to be made for the benefit of the Noteholders or (b) reduce the
aforesaid portion of the Outstanding Amount of the Class A-1 Notes, the Class
A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes and the
Class C Notes, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class
B Notes and the Class C Notes.
Prior to the execution of any such amendment or consent, the Servicer shall
furnish written notification of the substance of such amendment or consent to
each of the Rating Agencies. Promptly after the execution of any such amendment
or consent, the Servicer shall furnish written notification of the substance of
such amendment or consent to the Trustee.
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It shall not be necessary for the consent of Noteholders pursuant to this
Section to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement the Trustee shall
be entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Agreement. The
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Trustee's, as applicable, own rights, duties or immunities under
this Agreement or otherwise.
Section 10.02 Protection of Title to Trust Estate.
(a) The Transferor shall take all actions necessary (other than
delivery of the original Contracts), and the Issuer shall cooperate with
the Transferor, if applicable, to perfect, and maintain perfection of, the
interests of the Issuer and the Trustee in the Contracts. In addition,
without limiting the rights of the Trustee or the Issuer specified in the
immediately preceding sentence, the Transferor shall execute and file and
cause to be executed and filed such financing statements and continuation
statements, all in such manner and in such places as may be required by law
fully to perfect, maintain, and protect the interest of the Issuer and the
interest of the Trustee in the Contracts and in the proceeds thereof. The
Transferor shall deliver (or cause to be delivered) to the Trustee
file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) The Transferor shall not change its name, identity or corporate
structure in any manner that would make any financing statement or
continuation statement filed in accordance with paragraph (a) above or
otherwise seriously misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given the Trustee at least five days' prior
written notice thereof and, if applicable, shall have timely filed
appropriate amendments to any and all previously filed financing statements
or continuation statements (so that the interest of the Issuer or the
Trustee is not adversely affected).
(c) Each of the Transferor and the Servicer shall have an obligation to
give the Trustee at least 60 days' prior written notice of any relocation
of its principal executive office if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement and shall promptly, if applicable, file any such
amendment. The Servicer shall at all times maintain each office from which
it shall service Contracts, and its principal executive office, within the
United States of America.
(d) The Servicer shall maintain accounts and records as to each
Contract accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Contract, including payments
and Recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or Recoveries on (or with respect to) each
Contract and the amounts from time to time deposited in the Collection
Account in respect of such Contract.
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(e) The Servicer shall maintain its contract management system so that,
from and after the time of transfer under this Agreement of the Contracts,
the Servicer's contract management system (including any backup archives)
that refer to a Contract shall indicate clearly the interest of the Issuer
(which interest has been acquired from the Transferor) and the Trustee in
such Contract and that such Contract is owned by or has been pledged to the
Issuer and has been pledged to the Trustee. Indication of the Issuer's
interest (which interest has been acquired from the Transferor) and the
Trustee's interest in a Contract shall be deleted from or modified on the
Servicer's contract management system when, and only when, the related
Contract shall have been paid in full or reacquired.
(f) If at any time the Transferor or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest in
Contracts comparable with the Contracts, to any prospective purchaser,
lender or other transferee, the Servicer shall give to such prospective
purchaser, lender or other transferee computer tapes, records or printouts
(including any restored from backup archives) that, if they shall refer in
any manner whatsoever to any Contract, shall indicate clearly that such
Contract has been transferred and is owned by or has been pledged to the
Issuer and has been pledged to the Trustee.
(g) The Servicer shall permit the Trustee and its agents at any time
following reasonable notice and during normal business hours to inspect,
audit and make copies of and abstracts from the Servicer's records
regarding any Contract.
(h) Upon reasonable request, the Servicer shall furnish to the Trustee,
within five Business Days, a list of all Contracts (by contract number and
name of Obligor) then held by the Trustee, together with a reconciliation
of such list to the List of Contracts and to each of the Servicer's
Certificates furnished before such request indicating Contracts removed
from the lien of the Indenture.
(i) The Servicer shall deliver to the Trustee promptly after the
execution and delivery of this Agreement and of each amendment thereto, an
Opinion of Counsel either (A) stating that, in the opinion of such counsel,
all actions (other than delivering the original Contracts) have been taken
that are necessary fully to perfect the interests of the Trustee in the
Contracts, and reciting the details of such action or referring to prior
Opinions of Counsel in which such details are given, or (B) stating that,
in the opinion of such counsel, no such action shall be necessary to
perfect such interest.
Section 10.03. Notices. All demands, notices and communications upon or to the
Transferor, the Servicer, the Issuer, the Trustee or the Rating Agencies under
this Agreement shall be in writing, personally delivered or mailed by certified
mail, return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Transferor, to Advanta Bank Corp.,
__________________________________, (b) in the case of the Servicer, to Advanta
Bank Corp., ______________________________, (c) the case of the Issuer, to
Advanta Equipment Receivables Series 2000-__ LLC; (d) in the case of the
Trustee, Corporate Trust Office, (e) in the case of ________, to
________________________ and (f) in the case of ______________________, to
____________________________or, as
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to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
Section 10.04. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.04 and 7.03 and as provided
in the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Transferor or the Servicer.
Section 10.05. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Transferor, the Servicer, the
Issuer, the Trustee and the Noteholders, and nothing in this Agreement, whether
express or implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Trust Estate or under or in respect of
this Agreement or any covenants, conditions or provisions contained herein.
Section 10.06. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 10.07. Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 10.08. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
Section 10.09. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS, REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.01. Assignment to Trustee. The Transferor hereby acknowledges
and consents to any mortgage, pledge, assignment and grant of a security
interest by the Issuer to the Trustee pursuant to the Indenture for the benefit
of the Noteholders of all right, title and interest of the Issuer in, to and
under the Contracts and the other property constituting the Trust Estate and/or
the assignment of any or all of the Issuer's rights and obligations hereunder to
the Trustee.
Section 10.11. Nonpetition Covenants
(a) Notwithstanding any prior termination of this Agreement, the
Servicer (in its capacity as Transferor or Servicer) and the Trustee shall
not at any time with respect to the Issuer, acquiesce, petition or
otherwise invoke or cause the Issuer to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case
against the Issuer under any Federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator
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or other similar official of the Issuer or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the
Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer, the Issuer and the Trustee shall not at any time with respect to
the Transferor, acquiesce, petition or otherwise invoke or cause the
Transferor to invoke the process of any court or government authority for
the purpose of commencing or sustaining a case against the Transferor under
any Federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Transferor or any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the Transferor.
Section 10.12. Limitation of Liability of Trustee
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been acknowledged and accepted by ____________________ not in its
individual capacity but solely as Trustee, and in no event shall
____________________ have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
[Signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Transfer and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
ADVANTA EQUIPMENT RECEIVABLES
SERIES 2000-__ LLC
By:
----------------------------
Name:
Title:
ADVANTA BANK CORP.,
Transferor and Servicer,
By:
----------------------------
Name:
Title:
Acknowledged and Accepted:
-------------------------------,
not in its individual capacity
but solely as Trustee
By:
---------------------------
Name:
Title:
[Signature Page to Transfer and Servicing Agreement]
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SCHEDULE A
List of Contracts
(Deemed Incorporated)
A-1
56
SCHEDULE B
Location of Contract Files
B-1
57
SCHEDULE C
Servicer's Certificate
(to be provided)
C-1
58
SCHEDULE D
Officer's Certificate
(to be provided)
D-1