1
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
ADVANTA BUSINESS RECEIVABLES LLC
2
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
ADVANTA BUSINESS RECEIVABLES LLC
TABLE OF CONTENTS
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ARTICLE I.......................................................... 1
1. Act...................................................... 1
2. Additional Member........................................ 1
3. Admission Agreement...................................... 1
4. Affiliate................................................ 1
5. Articles of Organization................................. 1
6. Assets................................................... 1
7. Asset Pool Equity Interests.............................. 1
8. Assignee................................................. 1
9. Bankrupt Member.......................................... 1
10. Business Day............................................. 1
11. Capital Account.......................................... 1
12. Capital Contribution..................................... 2
13. Code..................................................... 2
14. Commitment............................................... 2
15. Company.................................................. 2
16. Company Liability........................................ 2
17. Company Minimum Gain..................................... 2
18. Company Nonrecourse Deductions........................... 2
19. Company Nonrecourse Liability............................ 2
20. Company Property......................................... 2
21. Contributing Members..................................... 2
22. Default Interest Rate.................................... 2
23. Delinquent Member........................................ 3
24. Distribution............................................. 3
25. Disposition (Dispose).................................... 3
26. Dissolution Event........................................ 3
27. Effective Date........................................... 3
28. GAAP Capital Account..................................... 3
29. Initial Capital Contribution............................. 3
30. Initial Members.......................................... 3
31. Majority-in-Interest..................................... 3
32. Management Right......................................... 3
33. Manager.................................................. 3
34. Managing Member.......................................... 3
35. Member................................................... 3
36. Member Minimum Gain...................................... 3
37. Member Nonrecourse Deductions............................ 4
38. Member Nonrecourse Liability............................. 4
39. Membership Interest...................................... 4
40. Money.................................................... 4
41. Net Losses............................................... 4
42. Net Profits.............................................. 4
43. Nonrecourse Liabilities.................................. 4
44. Notice................................................... 4
45. Offsettable Decrease..................................... 4
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46. Operating Agreement...................................... 5
47. Organization............................................. 5
48. Organization Expenses.................................... 5
49. Person................................................... 5
50. Proceeding............................................... 5
51. Property................................................. 5
52. Regulations.............................................. 5
53. Related Agreements....................................... 5
54. Related Company.......................................... 5
55. Related Person........................................... 5
56. Residual Financing Agreement............................. 5
57. Resignation.............................................. 5
58. Securitization Agreement................................. 5
59. Sharing Ratio............................................ 5
60. State.................................................... 5
61. Substitute Member........................................ 5
62. Taxable Year............................................. 5
63. Taxing Jurisdiction...................................... 6
64. Trustee.................................................. 6
ARTICLE II......................................................... 6
1. Organization............................................. 6
2. Agreement................................................ 6
3. Name..................................................... 6
4. Effective Date........................................... 6
5. Term..................................................... 6
6. Resident Agent and Office................................ 6
7. Principal Office......................................... 6
ARTICLE III........................................................ 6
ARTICLE IV......................................................... 9
1. Records to be Maintained................................. 9
2. Accounts................................................. 9
ARTICLE V.......................................................... 10
ARTICLE VI......................................................... 10
1. Management Rights........................................ 10
2. Liability of Members..................................... 10
3. Indemnification.......................................... 10
4. Representation and Warranties............................ 10
5. Conflicts of Interest.................................... 10
ARTICLE VII........................................................ 11
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1. Initial Manager............................................. 11
2. Term of Office as Manager................................... 11
3. Authority of Members to Bind the Company (General Powers)... 11
4. Forbidden Actions........................................... 11
5. Actions of the Manager...................................... 12
6. Compensation of Manager..................................... 12
7. Manager's Standard of Care and Indemnification.............. 12
8. Removal of Manager.......................................... 12
ARTICLE VIII.......................................................... 12
1. Capital Contributions....................................... 12
2. Additional Contributions.................................... 13
3. Enforcement of Commitments.................................. 13
4. Maintenance of Capital Accounts............................. 13
5. Contribution of Assets...................................... 14
6. Sale or Exchange of Interest................................ 14
7. Compliance with Section 704(b) of the Code.................. 14
8. Maintenance of GAAP Capital Accounts........................ 14
ARTICLE IX............................................................ 14
1. Allocations of Net Profits and Net Losses from Operations... 14
2. Company Minimum Gain Chargeback............................. 14
3. Member Minimum Gain Chargeback.............................. 15
4. Qualified Income Offset..................................... 15
5. Interim Distributions....................................... 15
6. Limitations on Distributions................................ 15
ARTICLE X............................................................. 15
1. Elections................................................... 15
2. Taxes of Taxing Jurisdictions............................... 15
3. Tax Matters Partner......................................... 16
4. Method of Accounting........................................ 16
ARTICLE XI............................................................ 16
1. Disposition................................................. 16
2. Dispositions Not in Compliance with this Article Void....... 16
ARTICLE XII........................................................... 16
1. Rights of Assignees......................................... 16
2. Admission or Substitute Members............................. 16
3. Admission of Additional Members............................. 17
4. Forbidden Transfers and Assignments......................... 17
ARTICLE XIII.......................................................... 17
1. Dissolution................................................. 17
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2. Effect of Dissolution.................................... 17
3. Distribution of Assets on Dissolution.................... 17
4. Winding Up and Certificate of Dissolution................ 17
ARTICLE XIV........................................................ 18
1. Operating Agreement may be Modified...................... 18
2. Amendment or Modification of Operating Agreement......... 18
ARTICLE XV......................................................... 18
1. Entire Agreement......................................... 18
2. No Partnership Intended for Non-tax Purposes............. 18
3. Rights of Creditors and Third Parties Under Operating
Agreement................................................ 18
EXHIBIT A INITIAL MEMBERS
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LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
ADVANTA BUSINESS RECEIVABLES LLC
This Limited Liability Company Operating Agreement of Advanta Business
Receivables LLC, a limited liability company organized pursuant to the Nevada
Limited Liability Company Act, is entered into and shall be effective as of the
Effective Date, by and among the Company and the entities executing this
Operating Agreement as Members.
ARTICLE I
DEFINITIONS
For purposes of this Operating Agreement (as defined below), unless the context
clearly indicates otherwise, the following terms shall have the following
meanings:
1. Act - The Nevada Limited Liability Company Act and all amendments to
the Act.
2. Additional Member - A Member other than an Initial Member or a
Substitute Member who has acquired a Membership Interest from the Company.
3. Admission Agreement - The Agreement between an Additional Member and
the Company described in Article XII.
4. Affiliate - An "affiliate" of, or a Person, "affiliated" with, a
specified Person, is (a) a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the specified Person, (b) a Person owning or controlling ten percent or
more of the outstanding voting securities of such specified Person, (c) any
officer, director, partner or general trustee of such specified Person and (d)
if such other Person is an officer, director or partner, any company for which
such Person acts in any such capacity.
5. Articles of Organization - The Articles of Organization as properly
adopted and amended from time to time by the Members and filed with the
Secretary of State.
6. Assets - Shall have the meaning set forth in Article III of this
Operating Agreement.
7. Asset Pool Equity Interests - Shall have the meaning set forth in
Article III of this Operating Agreement.
8. Assignee - A transferee of a Membership Interest who has not been
admitted as a Substituted Member.
9. Bankrupt Member - A Member who: (1) has become the subject of an
Order for Relief under the United States Bankruptcy Code, (2) has initiated,
either in an original Proceeding or by way of answer in any state insolvency or
receivership proceeding, an action for liquidation arrangement, composition,
readjustment, dissolution, or similar relief.
10. Business Day - Any day other than Saturday, Sunday or any legal
holiday observed in the State.
11. Capital Account - The account maintained for a Member or Assignee
determined in accordance with Article VIII.
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12. Capital Contribution - Any contribution of Property, services or the
obligation to contribute Property or services made by or on behalf of a Member
or Assignee.
13. Code - The Internal Revenue Code of 1986, as amended from time to
time.
14. Commitment - The Capital Contributions that a Member or Assignee is
obligated to make.
15. Company - Advanta Business Receivables LLC, a limited liability
company formed under the laws of the State of Nevada, and any successor limited
liability company.
16. Company Liability - Any enforceable debt or obligation for which the
Company is liable or which is secured by any Company Property.
17. Company Minimum Gain - An amount determined by first computing for
each Company Nonrecourse Liability any gain the Company would realize if it
disposed of the Company Property subject to that liability for no consideration
other than full satisfaction of the liability, and then aggregating the
separately computed gains. The amount of Company Minimum Gain includes such
minimum gain arising from a conversion, refinancing, or other change to a debt
instrument, only to the extent a Member is allocated a share of that minimum
gain. For any Taxable Year, the net increase or decrease in Company Minimum Gain
is determined by comparing the Company Minimum Gain on the last day of the
immediately preceding Taxable Year with the Minimum Gain on the last day of the
current Taxable Year. Notwithstanding any provision to the contrary contained
herein, Company Minimum Gain and increases and decreases in Company Minimum Gain
are intended to be computed in accordance with Section 704 of the Code and the
Regulations issued thereunder, as the same may be issued and interpreted from
time to time. A Member's share of Company Minimum Gain at the end of any Taxable
Year equals: the sum of Company Nonrecourse Deductions allocated to that Member
(and to that Member's predecessors-in-interest) up to that time and the
distribution made to that Member (and to that Member's predecessors-in-interest)
up to that time of proceeds of a Company Nonrecourse Liability allocable to an
increase in Company Minimum Gain minus the sum of that Member's (and that
Member's predecessors-in-interest) aggregate share of the net decreases in
Company Minimum Gain plus their aggregate share of decreases resulting from
revaluations of Company Property subject to one or more Company Nonrecourse
Liabilities.
18. Company Nonrecourse Deductions - The net increase if any, in the
amount of Company Minimum Gain during the Taxable Year. The Company Nonrecourse
Deductions shall consist first of depreciation or cost recovery deductions with
respect to each item of Company Property to the extent of the increase in
Company Minimum Gain attributable to Company Nonrecourse Liabilities secured by
such Company Property, with the remainder of any Company Nonrecourse Deductions
made up of a pro rata portion of the Company's other items of deduction, loss
and nondeductible expenditures (to the extent that such nondeductible
expenditures reduce Capital Accounts). Company Nonrecourse Deductions shall be
further determined in accordance with Regulation Section 1.704-2(c) and any
subsequent rule or regulation governing the determination of Company
Nonrecourse Deductions.
19. Company Nonrecourse Liability - A Company Liability to the extent
that no Member or Related Person bears the economic risk of loss (as defined in
Section 1.752-2 of the Regulations) with respect to the liability.
20. Company Property - Any Property owned by the Company.
21. Contributing Members - Those Members making contributions as a result
of the failure of a Delinquent Member to make the contributions required by the
Commitment as described in Article VIII.
22. Default Interest Rate - The higher of the legal rate or the
then-current prime rate quoted by the largest commercial bank in the
jurisdiction of the Principal Office plus three percent.
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23. Delinquent Member - A Member or Assignee who has failed to meet the
Commitment of that Member or Assignee.
24. Distribution - A transfer of Property to a Member on account of a
Membership Interest as described in Article IX.
25. Disposition (Dispose) - Any sale, assignment, transfer, exchange,
mortgage, pledge, grant, hypothecation, or other transfer, absolute or as
security or encumbrance (including dispositions by operation of law).
26. Dissolution Event - An event, the occurrence of which will result in
the dissolution of the Company under Article XIII.
27. Effective Date - May 15, 1997.
28. GAAP Capital Account - The capital account maintained by the Company
for each of the Members in accordance with generally accepted accounting
principles.
29. Initial Capital Contribution - The Capital Contribution agreed to be
made by the Initial Members as described in Article VIII.
30. Initial Members - Those persons identified on Exhibit A attached
hereto and made a part hereof by this reference who have executed the Operating
Agreement.
31. Majority-in-Interest - Shall mean, except when otherwise required by
the Act, Members holding not less than fifty-one percent (51%) of the
Membership Interest in the Company.
32. Management Right - The right of a Member to participate in the
management of the Company, including the rights to information and to consent
or approve actions of the Company.
33. Manager - As defined in Article VII hereof.
34. Managing Member - The Managing Member shall initially be Advanta
Leasing Receivables Corp. III.
35. Member - Initial Member, Substituted Member or Additional Member,
and, unless the context expressly indicates to the contrary, includes
Assignees.
36. Member Minimum Gain - An amount determined by first computing for
each Member Nonrecourse Liability any gain the Company would realize if it
disposed of the Company Property subject to that liability for no consideration
other than full satisfaction of the liability, and then aggregating the
separately computed gains. The amount of Member Minimum Gain includes such
minimum gain arising from a conversion, refinancing, or other change to a debt
instrument, only to the extent a Member is allocated a share of that minimum
gain. For any Taxable Year, the net increase or decrease in Member Minimum Gain
is determined by comparing the Member Minimum Gain on the last day of the
immediately preceding Taxable Year with the Minimum Gain on the last day of the
current Taxable Year. Notwithstanding any provision to the contrary contained
herein, Member Minimum Gain and increases and decreases in Member Minimum Gain
are intended to be computed in accordance with Section 704 of the Code and the
Regulations issued thereunder, as the same may be issued and interpreted from
time to time. A Member's share of Member Minimum Gain at the end of any Taxable
Year equals: the sum of Member Nonrecourse Deductions allocated to that Member
(and to that Member's predecessors-in-interest) up to that time and the
distribution made to that Member (and to that Member's predecessors-in-interest)
up to that time of proceeds of a Member Nonrecourse Liability allocable to an
increase in Company Minimum Gain minus the sum of that Member's
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(and that Member's predecessors-in-interest) aggregate share of the net
decreases in Member Minimum Gain plus their aggregate share of decreases
resulting from revaluations of Company Property subject to one or more Member
Nonrecourse Liabilities.
37. Member Nonrecourse Deductions - The net increase, if any, in the amount
of Member Minimum Gain during the Taxable year. The Member Nonrecourse
Deductions shall consist first of depreciation or cost recovery deductions with
respect to each item of Company Property to the extent of the increase in Member
Minimum Gain attributable to Member Nonrecourse Liabilities secured by such
Company Property, with the remainder of any Member Nonrecourse Deductions made
up of a pro rata portion of the Company's other items of deduction, loss and
nondeductible expenditures (to the extent that such nondeductible expenditures
reduce Capital Accounts). Member Nonrecourse Deductions shall be further
determined in accordance with Regulation Section 1.704-2(i)(2) and any
subsequent rule or regulation governing the determination of Member Nonrecourse
Deductions.
38. Member Nonrecourse Liability - Any Company Liability to the extent the
liability is nonrecourse under state law, and on which a Member or Related
Person bears the economic risk of loss under Section 17.752-2 of the
Regulations because, for example, the Member or Related Person is the creditor
or a guarantor.
39. Membership Interest - The rights of a Member or, in the case of an
Assignee, the rights of the assigning Member in Distributions (liquidating or
otherwise) and allocations of the profits, losses, gains, deductions, and
credits of the Company.
40. Money - Cash or other legal tender of the United States, or any
obligation that is immediately reducible to legal tender without delay or
discount. Money shall be considered to have a fair market value equal to its
face amount.
41. Net Losses - The loss and deductions of the Company determined in
accordance with accounting principles consistently applied from year to year
employed under the method of accounting adopted by the Company and as reported
separately or in the aggregate, as appropriate, on the tax return of the
Company filed for federal income tax purposes.
42. Net Profits - The income and gains of the Company determined in
accordance with accounting principles consistently applied from year to year
employed under the method of accounting adopted by the Company and as reported
separately or in the aggregate, as appropriate, on the tax return of the
Company filed for federal income tax purposes.
43. Nonrecourse Liabilities - Nonrecourse Liabilities include Company
Nonrecourse Liabilities and Member Nonrecourse Liabilities.
44. Notice - Notice shall be in writing. Notice to the Company shall be
considered given when mailed by first-class mail, postage prepaid, addressed to
the Manager in care of the Company at the address of Principal Office. Notice
as to a Member shall be considered given when mailed by first-class mail,
postage prepaid, addressed to the Member at the address reflected in the
Operating Agreement unless the Member has given the Company a Notice of a
different address.
45. Offsettable Decrease - Any allocation that unexpectedly causes or
increases a deficit in the Member's Capital Account as of the end of the taxable
year to which the allocation relates attributable to depletion allowances under
Section 1.704(b)(2)(iv)(k) of the Regulations, allocations of loss and
deductions under Sections 704(a)(2) or 706 of the Code or under Section 1,75 1-1
of the Regulations, or distributions that, as of the end of the year are
reasonably expected to be made to the extent they exceed the offsetting
increases to such Member's Capital Account that reasonably are expected to occur
during or (prior to) the taxable years in which such distributions are expected
to be made (other than increases pursuant to a Minimum Gain Chargeback).
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46. Operating Agreement -- This Limited Liability Company Operating
Agreement including all Admission Agreements and amendments adopted in
accordance with the Operating Agreement and the Act.
47. Organization -- A Person other than a natural person. Organization
includes, without limitation, corporations (both non-profit and other
corporations), partnerships (both limited and general), joint ventures, limited
liability companies, and unincorporated associations, but the item does not
include joint tenancies and tenancies by the entirety.
48. Organization Expenses -- Those expenses incurred in the organization
of the Company including the costs of preparation of the Operating Agreement
and Certificate.
49. Person -- An individual, trust, estate, or any incorporated or
unincorporated organization permitted to be a member of a limited liability
company under the laws of the State.
50. Proceeding -- Any administrative, judicial, or other adversary
proceeding, including, without limitation, litigation, arbitration,
administrative adjudication, mediation, and appeal or review of any of the
foregoing.
51. Property -- Any property, real or personal, tangible or intangible,
including money and any legal or equitable interest in such property, but
excluding services and promises to perform services in the future.
52. Regulations -- Except where the context indicates otherwise, the
permanent, temporary, proposed, or proposed and temporary regulations of the
Department of the Treasury under the Code as such regulations may be lawfully
changed from time to time.
53. Related Agreements -- Collectively, each Securitization Agreement and
each Residual Financing Agreement.
54. Related Company -- Shall have the meaning set forth in Article VII of
this Operating Agreement.
55. Related Person -- A person having a relationship to a Member that is
described in Section 1,752-4(b) of the Regulations.
56. Residual Financing Agreement -- Shall have the meaning set forth in
Article III of this Operating Agreement.
57. Resignation -- The act by which a Manager ceases to be a Manager.
58. Securitization Agreement -- Shall have the meaning set forth in
Article III of this Operating Agreement.
59. Sharing Ratio -- With respect to any Member, a fraction (expressed as
a percentage), the numerator of which is the total of the Member's initial
Capital Account and the denominator is the total of all initial Capital
Accounts of all Members and Assignees.
60. State -- the State of Nevada.
61. Substitute Member -- An Assignee who has been admitted to all of the
rights of membership pursuant to this Operating Agreement.
62. Taxable Year -- The taxable year of the Company as determined pursuant
to Section 706 of the Code.
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63. Taxing Jurisdiction - Any state, local, or foreign government that
collects tax, interest or penalties, however designated, on any Member's share
of the income or gain attributable to the Company.
64. Trustee - Shall have the meaning set forth in Article III of this
Operating Agreement.
ARTICLE II
FORMATION
1. Organization - The Members hereby organize the Company as a Nevada
limited liability company pursuant to the provisions of the Act.
2. Agreement - For and in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Members executing the
Operating Agreement hereby agree to the terms and conditions of the Operating
Agreement, as it may from time to time be amended according to its terms. It is
the express intention of the Members that the Operating Agreement shall be the
sole source of agreement of the parties, and, except to the extent a provision
of the Operating Agreement expressly incorporates federal income tax rules by
reference to sections of the Code or Regulations or is expressly prohibited or
ineffective under the Act, the Operating Agreement shall govern, event when
inconsistent with, or different than, the provisions of the Act or any other
law or rule. To the extent any provision of the Operating Agreement is
prohibited or ineffective under the Act, the Operating Agreement shall be
considered amended to the smallest degree possible in order to make the
Operating Agreement effective under the Act. In the event the Act is
subsequently amended or interpreted in such a way to make any provision of the
Operating Agreement that was formerly invalid valid, such provision shall be
considered to be valid from the effective date of such interpretation or
amendment.
3. Name - The name of the Company is Advanta Business Receivables LLC,
and all business of the Company shall be conducted under that name or under any
other name, but in any case, only to the extent permitted by applicable law.
4. Effective Date - The Operating Agreement shall become effective upon
the filing of the Articles of Organization of Advanta Business Receivables LLC
with the Secretary of State of the State.
5. Term - The Company shall be dissolved and its affairs wound up in
accordance with the Act and the Operating Agreement on December 31, 2050,
unless the term shall be extended by amendment to the Operating Agreement and
the Articles of Organization, or unless the Company shall be sooner dissolved
and its affairs wound up in accordance with the Act or the Operating Agreement.
6. Resident Agent and Office - The resident agent for the service of
process and the registered office shall be that Person and location reflected
in the Articles of Organization as filed in the office of the Secretary of
State. The Manager may, from time to time, change the resident agent or office
through appropriate filings with the Secretary of State. In the event the
resident agent ceases to act as such for any reason or the registered office
shall change, the Manager shall promptly designate a replacement resident agent
or file a notice of change of address as the case may be. If the Manager shall
fail to designate a replacement resident agent or change of address of the
registered office, any Member may designate a replacement resident agent or
file a notice of change of address.
7. Principal Office - The Principal Office of the Company shall be
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
ARTICLE III
NATURE OF BUSINESS
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The business in which the Company may engage and the powers which the
Company may exercise are restricted exclusively to the following:
1. to acquire from time to time all right, title and interest in and
to (i) receivables including but not limited to, lease contracts,
commercial loans or leases, loans to franchise operations, accounts
receivables, credit card receivables, insurance policy loans or premiums,
or installment sale or lease contracts or promissory notes, arising out of
or relating to, the purchase of lease of equipment, monies due thereunder,
equipment financed thereby or security interests therein, proceeds from
claims on insurance policies related thereto, or (ii) any participation
interest (including, without limitation, interest only strips) in or
security based on or backed by any of the foregoing and related rights and
other property appurtenant thereto (collectively, the "Assets");
2. to acquire, own, hold, service, sell, assign, pledge and
otherwise deal with the Assets, collateral securing the Assets, related
insurance policies, agreements with vendors or lessors or other originators
or servicers of Assets and any proceeds or further rights associated with
any of the foregoing;
3. to transfer from time to time Assets to trusts (the "Trusts"),
pursuant to one or more pooling and servicing agreements or other
agreements, to be entered into by, among other things, the Company, the
trustee named therein (the "Trustee"), and any entity acting as servicer of
the Assets;
4. to transfer from time to time Assets pursuant to one or more
receivables transfer agreements or other agreements ("Receivables Transfer
Agreement") to be entered into by, among other things, the Company, any
entity acting as placement agent, the Transferor of the Assets, and any
entity acting as servicer of the Assets;
5. to authorize, and cause the issuance of one or more series of
certificates or other securities issued pursuant to Securitization
Agreements or Receivables Transfer Agreements;
6. to authorize, issue, sell and deliver one or more series and
classes of bonds, notes or other evidences of indebtedness secured or
collateralized by one or more pools of Assets issued under an Indenture or
similar agreement (each, an "Indenture" and together with the Pooling
Agreements and Receivables Transfer Agreements, "Securitization
Agreements") or by certificates of any class issued by any Trust
established by the Company (collectively, the "Notes"), provided that the
Company shall have no liability under any Notes except to the extent of the
Assets or the certificates securing or collateralizing such Notes;
7. to acquire from a Trustee certificates issued by Trusts to which
the Company transferred Assets;
8. to hold and enjoy all of the rights and privileges of any
certificates issued to the Company under the Related Agreements and to hold
and enjoy all of the rights and privileges of any class of any series of
Notes, including any class of Notes or certificates which may be
subordinate to any other class of Notes or certificates, respectively;
9. to purchase Assets from and sell Assets to any Related Company
(as defined in Article EIGHT) or any third party in connection with
Securitization Agreements or Receivables Transfer Agreements;
10. to perform its obligations under each Securitization Agreement,
Receivables Transfer Agreement, Interim Agreement (as defined below) or
other agreement entered into by the Company;
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11. to invest proceeds from any Assets, and any other income as
determined by the Managing Members of the Company, including investing in
other Assets;
12. to enter from time to time into interim arrangements relating to
the Assets whereby assets are transferred to a custodian on behalf of the
entity providing financing, pursuant to one or more repurchase agreements
or other agreements (each, an "Interim Agreement") to be entered into by,
among others, the Company, the entity providing financing, the custodian
named therein and any entity acting as servicer of the Assets; provided,
however, that the Company shall have no liability under any Interim
Agreement except to the extent of the Assets funded thereby; and
13. to engage in any acts and activities and exercise any powers
permitted to companies under the laws of the State of Nevada which are
incidental to, or connected with, the foregoing, and necessary, suitable or
convenient to accomplish any of the foregoing.
Notwithstanding any other provision of this Operating Agreement and any
provision of law that otherwise so empowers the Company and subject to the
provisions of paragraph 4 of Article VII of this Operating Agreement, the
Company shall not, without the prior written consent of each of the Control
Party under any applicable Securitization Agreement (and any Supplements
thereto), do any of the following:
(i) (x) consolidate or merge with or into any other entity or
convey, transfer or assign any residual or subordinate interest to any
Related Company (as defined below), or dissolve or transfer its properties
and assets substantially as an entirety to any entity (other than pursuant
to a Securitization Agreement), or lend or advance any monies to, or make
an investment in, any person or amend or repeal its Operating Agreement or
these Articles of Organization or (y) engage in any other action that bears
on whether the separate legal identity of the Company and any Related
Company will be respected, including, without limitation (a) holding itself
out as being liable for the debts of any other party; (b) forming, or
causing to be formed, any subsidiaries; (c) acting other than in its
corporate name and through its duly authorized officers or agents; (d)
failing to hold appropriate meetings of the Members at least three times
per annum and otherwise as necessary to authorize all corporate action; and
(e) failing to hold meetings of the stockholders at least one time per
annum;
(ii) incur any indebtedness, or assume or guaranty any
indebtedness of any other entity, other than Notes and any Indebtedness to
a Related Company in connection with the acquisition of Assets;
(iii) consolidate or merge with or into any other entity or
convey or transfer its properties and assets substantially as an entirety
to any entity, unless
(A) the entity (if other than the Company) formed or surviving the
consolidation or merger or which acquires the properties and assets of the
Company is organized and existing under the laws of the State of Nevada,
expressly assumes the due and punctual payment of all obligations of the
Company, including those obligations of the Company under each Securitization
Agreement and has organizational documents containing provisions substantially
identical to the provisions of Articles Three, Six, Eight and Nine of the
Articles of Organization; and
(B) immediately after giving effect to the transaction, no default or
event of default has occurred and is continuing under any Securitization
Agreement; or
(iv) without the affirmative vote of 100% of the Members of the
Company (including an affirmative vote of each Non-Consolidated Member
Director required by Article SIXTH of the Articles of Organization), make
an assignment for the benefit of creditors, file a petition of bankruptcy,
petition or apply to any tribunal for the appointment of a custodian,
receiver
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or any trustee for it or for a substantial part of its property, commence
any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereinafter in effect, consent or acquiesce to
the entry of an order for relief, or in the filing of any such petition,
application, proceeding or appointment of or taking possession by the
custodian, receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or any substantial part of its property,
or admit its inability to pay its debts generally as they become due or
authorize any of the foregoing to be done or taken on behalf of the
Company;
(v) amend, alter, change or repeal Article III of this Operating
Agreement.
"Related Company" means any Member of the Company which is not a
Non-Consolidated Member, any Member of the Company other than a
Non-Consolidated Member or any entity other than this Company or a
Non-Consolidated Entity now or hereafter controlled directly or indirectly by,
or under direct or indirect common control with, Advanta Business Services
Corp.
In addition to the foregoing, the Company shall conduct its affairs in the
following manner:
(i) it shall not commingle the Company's assets with those of any
related Company;
(ii) it shall maintain separate records and books of account from
those of any direct or ultimate parent of any Related Company;
(iii) it shall conduct its business from an office separate from any
Related Company;
(iv) it shall maintain its assets separately from the accounts of any
other Person (including through the maintenance of a separate bank
account); and
(v) it shall pay from its assets all obligations and indebtedness of
any kind incurred by it, and shall not pay from its assets any obligations
or indebtedness of any other entity or person.
ARTICLE IV
ACCOUNTING AND RECORDS
1. Records to be Maintained - The Company shall maintain the following
records at its registered office:
1.1. A current list of the full name and last known business address
of each Member and each Manager, separately identifying the Members and Manager
in alphabetical order;
1.2. A copy of the Articles of Organization and all amendments
thereto, together with executed copies of any powers of attorney pursuant to
which any Certificates of Formation have been executed;
1.3 Copies of the Operating Agreement, including all amendments
thereto;
2. Accounts - The Manager shall maintain a record of Capital Account for
each Member in accordance with Article VIII.
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ARTICLE V
NAMES AND ADDRESSES OF MEMBERS
The names and addresses of the Initial Members are as reflected on Exhibit
A attached hereto and by this reference made a part hereof as if set forth
fully herein.
ARTICLE VI
RIGHTS AND DUTIES OF MEMBERS
1. Management Rights -- All Members (other than Assignees) who have not
resigned shall be entitled to vote on any matter submitted to a vote of the
Members. Notwithstanding the foregoing, the following actions require the
unanimous consent of the Members:
1.1. any amendment to this Operating Agreement;
1.2. the admission of Assignees to Management Rights; and
1.3. the continuation of the Company after a Dissolution Event.
2. Liability of Members -- Subject to Article XV hereof, no Member shall
be liable as such for the liabilities of the Company or any obligations of
another Member. The failure of a limited liability company to observe any
formalities or requirements relating to the exercise of its powers or
management of its business or affairs under this agreement or the Act shall not
be grounds for imposing personal liability on the members or manager for
liabilities of the limited liability company.
3. Indemnification -- The Company shall indemnify the Members, Manager,
and agents for all costs, losses, liabilities, and damages paid or accrued by
such Member, Manager, or agent in connection with the business of the Company,
as provided in the Articles of Organization and to the fullest extent provided
or allowed by the laws of the State.
4. Representations and Warranties -- Each Member, and in the case of an
Organization, the Person(s) executing the Operating Agreement on behalf of the
Organization, hereby represents and warrants to the Company and each other
Member that: (a) it is duly organized, validly existing, and in good standing
under the laws of its state of organization and that it has full organizational
power to execute and agree to the Operating Agreement to perform its
obligations hereunder; (b) that the Member is acquiring its interest in the
Company for the Member's own account as an investment and without an intent to
distribute the interest; (c) the Member acknowledges that the interests have not
been registered under the Securities Act of 1933, as amended, or any state
securities laws, and may not be resold or transferred by the Member without
appropriate registration or the availability of an exemption from such
requirements.
5. Conflicts of Interest.
5.1. A Member shall be entitled to enter into transactions that may be
considered to be competitive with, or a business opportunity that may be
beneficial to, the Company, it being expressly understood that some of the
Members may enter into transactions that are similar to the transactions into
which the Company may enter. Notwithstanding the foregoing, Members shall
account to the Company and hold as trustee for it any property, profit, or
benefit derived by the Member, without the consent of the other Members, in the
conduct and winding up of the Company business or from a use or appropriation
by the Member of Company property including information developed exclusively
for the Company and opportunities expressly offered to the Company.
5.2. A Member does not violate a duty or obligation to the Company
merely because the Member's conduct furthers the Member's own interest. A
Member may lend money to and transact other
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business with the Company. The rights and obligations of a Member who lends
money to or transacts business with the Company are the same as those of a
person who is not a Member, subject to other applicable law. No transaction
with the Company shall be voidable solely because a Member has a direct or
indirect interest in the transaction if either the transaction is fair to the
Company or the disinterested Manager or disinterested Members, in either case
knowing the material facts of the transaction and the Member's interest,
authorize, approve, or ratify the transaction.
ARTICLE VII
MANAGER
1. Initial Manager - The ordinary and usual decisions concerning the
business affairs of the Company shall be made by the Manager. There shall be one
Manager of the Company. At least two directors of the board of directors of the
Manager may not be directors, officers or employees of any Related Company,
other than any Related Company that is a special purpose "bankruptcy remote"
entity. The initial Manager shall be Advanta Leasing Receivables Corp. III, a
Nevada Corporation.
2. Term of Office as Manager - The Manager shall not have any
contractual right to such position. The Manager shall be elected annually.
3. Authority of Members to Bind the Company (General Powers) - The
Members hereby agree that only the Manager and authorized agents of the Company
shall have the authority to bind the Company. The Manager has the power, on
behalf of the Company, to do all things necessary or convenient to carry out
the business and of the Company.
4. Forbidden Actions - So long as the Company is liable for any
obligations under any Related Agreement, notwithstanding any other provision of
the Articles of Organization and any provision of law which otherwise so
empowers the Company, the Company shall not perform any act in contravention of
any of the following:
(a) The Company shall not (i) consolidate or merge with or into
any other entity or convey, transfer or assign any Asset Pool Equity Interest
to any Related Company, or transfer its properties and assets substantially as
an entirety to any entity (other that to a Trustee), or lend or advance any
monies to, or make an investment in, any person (other than a Related Company)
or amend or repeal this Operating Agreement or its Articles of Organization or
(ii) engage in any other activity that bears on whether the separate legal
identity of the Company will be respected, including, without limitation, (A)
holding itself out as being liable for the debts of any other party; (B)
forming, or causing to be formed, any subsidiaries; and (C) acting other than
in its Company name and through its Manager and authorized agents.
(b) The Company shall not incur any indebtedness, or assume or
guaranty any indebtedness of any other entity than as set forth in the Related
Agreements.
(c) The Company shall not consolidate or merge with or into any
other entity or convey or transfer its properties and assets substantially as an
entirety to any entity, unless:
(A) the entity (if other than the Company) formed or
surviving the consolidation or merger or which acquires the properties and
assets of the Company is organized and existing under the laws of the State of
Nevada, expressly assumes the due and punctual payment of all obligations of
the Company, including those obligations of the Company under any Related
Agreement; and
(B) immediately after giving effect to the transaction, no
default or event of default has occurred and is continuing under any Related
Agreement.
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(d) The Company shall not, without the affirmative vote of 100% of
the Members of the Company and the Manager, which shall be in the form of a
unanimous written consent of the Manager's Board of Directors, institute
proceedings to be adjudicated bankruptcy or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against it, or consent to,
or file a petition seeking, reorganization or relief under applicable federal
or state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other official) of
the Company or a substantial part of its property, or make any assignment for
the benefit of creditors, or admit in writing its inability to pay its debts
generally as they become due, or take corporate action in furtherance of any
such action.
(e) The Company's assets shall not be commingled with the assets of
any Member of the Company.
(f) The Company shall maintain separate records and books of account
from those of any Member of the Company.
(g) The Company shall conduct its business from an office separate
from any Member of the Company.
(h) The Company shall not conduct its business in such a manner as
to cause any of its Members to be in contravention of the restrictions against
dealing with Affiliates contained in their respective organizational documents.
For purposes of this Section, "Related Company" means the Members of
this Company or an entity other than this Company now or hereafter controlled
directly or indirectly by, or under director or indirect common control with, a
Member of this Company.
5. Actions of the Manager - Subject to the delegation of rights and
powers as provided for herein, the Manager shall have the sole right to manage
the business of the Company and shall have all powers and rights necessary,
appropriate or advisable to effectuate and carry out the purposes and business
of the Company. No member, by reason of its status as such, shall have any
authority to act for or bind the Company but shall have only the right to vote
on and approve the actions herein specified to be voted on or approved by the
Members.
6. Compensation of Manager - The Manager shall be reimbursed all
reasonable expenses incurred in managing the Company. Except as otherwise set
forth herein, the Manager shall receive no compensation.
7. Manager's Standard of Care and Indemnification - The Manager's duty
of care in the charge of the Manager's duties to the Company and the Members
shall be the same as a general partner's duty of care in the discharging of its
duties under applicable law.
8. Removal of Manager - The Manager may be removed by the affirmative
vote of a Majority of the Members. A Majority of Members may elect a new
Manager, subject to Section 1 of Article VII.
ARTICLE VIII
CONTRIBUTIONS AND CAPITAL ACCOUNTS
1. Capital Contributions - Each Initial Member shall make the Capital
Contribution described for that Member on Exhibit A at the time and on the
terms specified on Exhibit A and shall perform that Member's Commitment. If no
time for contribution is specified, the Capital Contributions shall be made upon
the filing of the Articles of Organization. The value of the Capital
Contributions shall be as set forth on Exhibit A. No interest shall accrue on
any Capital Contribution and no Member shall have the right to
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withdraw or be repaid any Capital Contribution except as provided in this
Operating Agreement. Each Additional Member shall make the Initial Capital
Contribution described in the Admission Agreement. The value of the Additional
Member's Initial Capital Contribution and the time for making such contribution
shall be set forth in the Admission Agreement.
2. Additional Contributions - In addition to the Initial Capital
Contributions and Commitments, the Manager may determine from time to time that
additional contributions are needed to enable the Company to conduct its
business. Upon making such a determination, the Manager shall give Notice to
all Members in writing at least two Business Days prior to the date on which
such contribution is due. Such Notice shall set forth the amount of additional
contribution needed, the purpose for which the contribution is needed, and the
date by which the Members should contribute. Each Member shall be entitled to
contribute a proportionate share of such additional contribution. Except to the
extent of a Member's unpaid Commitment, no Member shall be obligated to make
any such additional contributions. In the event any one or more Members do not
make their additional contribution, the other members shall be given the
opportunity to make the contributions. Each Additional Member shall make the
Capital Contribution to which such Member has agreed, at the time or times, and
upon the terms to which the Manager and the Additional Member agree.
3. Enforcement of Commitments - In the event any Member (a Delinquent
Member) fails to perform the Delinquent Member's Commitment, the Manager shall
give the Delinquent Member a Notice of the failure to meet the Commitment. If
the Delinquent Member fails to perform the Commitment (including any costs
associated with the failure to demand compliance with the Commitment and
interest on such obligation at the Default Interest Rate) within ten Business
Days of the giving of Notice, the Manager may take such action, including but
not limited to enforcing the Commitment in the court of appropriate
jurisdiction in the state in which the Principal Office is located or the state
of the Delinquent Member's address as reflected in the Operating Agreement. Each
Member expressly agrees to the jurisdiction of such courts but only for the
enforcement of Commitments. The Manager may elect to allow the other Members to
contribute the amount of the Commitment in proportion to such Members' sharing
ratios, with those Members who contribute (Contributing Members) to contribute
additional amounts equal to any amount of the Commitment not contributed. The
Contributing Members shall be entitled to treat the amounts contributed
pursuant to this section as a loan from the Contributing Members bearing
interest at the Default Interest Rate secured by the Delinquent Member's
interest in the Company. Until they are fully repaid, the Contributing Members
shall be entitled to all Distributions to which the Delinquent Member would
have been entitled. Notwithstanding the foregoing, no Commitment or other
obligation to make an additional contribution may be enforced by a creditor of
the Company unless the Member expressly consents to such enforcement or to the
assignment of the obligation to such creditor.
4. Maintenance of Capital Accounts - The Company shall establish and
maintain Capital Accounts for each Member and Assignee. Each Member's Capital
Account shall be increased by (1) the amount of any Money actually contributed
by the Member to the capital of the Company, (2) the fair market value of any
Property contributed, as determined by the Company and the contributing Member
at arm's-length at the time of contribution (net of liabilities assumed by the
Company or subject to which the Company takes such Property, within the meaning
of Section 752 of the Code), and (3) the Member's share of Net Profits and of
any separately allocated items of income or gain except adjustments of the Code
(including any gain and income from unrealized income with respect to accounts
receivable allocated to the Member to reflect the difference between the book
value and tax basis of assets contributed by the Member). Each Member's Capital
Account shall be decreased by (1) the amount of any money actually distributed
by the Company to the Member, (2) the fair market value of any Property
distributed to the Member, as determined by the Company and the contributing
Member at arm's-length at the time of contribution (net of liabilities of the
Company assumed by the Member or subject to which the Member takes such
Property, within the meaning of Section 752 of the Code), and (3) the Member's
share of Net Losses and of any separately allocated items of deduction or loss
(including any loss or deduction allocated to the Member to reflect the
difference between the book value and tax basis of assets contributed by the
Member).
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5. Contribution of Assets - If the Company at any time distributes any
of its assets in-kind to any Member, the Capital Account of each Member shall
be adjusted to account for that Member's allocable share (as determined under
Article IX below) of the Net Profits or Net Losses that would have been
realized by the Company had it sold the assets that were distributed at their
respective fair market values immediately prior to the distribution.
6. Sale or Exchange of Interest - In the event of a transfer of some or
all of a Membership Interest, the Capital Account of the transferring Member
shall become the Capital Account of the Assignee, to the extent it relates to
the portion of the Interest transferred, provided that if the transfer causes a
termination of the Company pursuant to Code Section 708(b)(1)(B), the Capital
Accounts for all Persons, including the transferee, shall be redetermined as of
the date of such termination. In such event, each Person's Capital Account shall
be equal to the net fair market value of his Membership Interest as of such
date. Subsequent to such redetermination, allocations of depreciation, cost
recovery deductions, gain and loss with respect to assets held by the Company
on the date of such determination shall be governed by the principles set forth
in Code Section 704(c) and the Regulations thereunder.
7. Compliance with Section 704(b) of the Code - The provisions of this
Article VIII as they relate to the maintenance of Capital Accounts are
intended, and shall be construed, and, if necessary, modified to cause the
allocations of profits, losses, income, gain and credit pursuant to Article IX
to have substantial economic effect under the Regulations promulgated under
Section 704(b) of the Code, in light of the distributions made pursuant to
Articles IX and XIII and the Capital Contributions made pursuant to this
Article VIII. In the event the Manager shall determine that it is prudent to
modify the manner in which the Capital Accounts, or any debits or credits
thereto, are computed in order to comply with such Regulations, the Manager may
make such modification, provided that it is not likely to have a material
effect on the amounts distributable to the Members and Assignees pursuant to
Article XIV upon the dissolution of the Company. The Manager shall adjust the
amount debited or credited to Capital Accounts with respect to (a) any Property
contributed to the Company or distributed to the Members and Assignees, and (b)
any liabilities which are secured by such contributed or distributed Property
or which are assumed by the Company or the Members and Assigns, in the event
the Manager shall determine such adjustments are necessary or appropriate
pursuant to Regulation Section 1.704-1(b)(2)(iv). The Manager also shall make
any appropriate modifications in the event unanticipated events might otherwise
cause this Operating Agreement not to comply with Regulation Section
1.704-1(b)(2)(iv). The Manager also shall make any appropriate modifications in
the event unanticipated events might otherwise cause this Operating Agreement
not to comply with Regulation Section 1.704-1(b). Notwithstanding anything
herein to the contrary, this Operating Agreement shall not be construed as
creating a deficit restoration obligation or otherwise personally obligating
any Member to make a Capital Contribution in excess of the Initial Contribution.
8. Maintenance of GAAP Capital Accounts - In addition to the Capital
Accounts required to be maintained pursuant to Section IV, the Company shall
establish and maintain GAAP Capital Accounts.
ARTICLE IX
ALLOCATIONS AND DISTRIBUTIONS
1. Allocations of Net Profits and Net Losses from Operations - Except as
may be required by Section 704(c) of the Code and Sections 2, 3 and 4 of this
Article IX, Net Profits, Net Losses, and other items of income, gain, loss,
deduction and credit shall be apportioned among the Members in proportion to
their Sharing Ratios.
2. Company Minimum Gain Chargeback - If there is a net decrease in
Company Minimum Gain for Taxable Year, each member must be allocated items of
income and gain for that Taxable Year equal to that Member's share of the net
decrease in Company Minimum Gain. A Member's share of the net decrease in
Company Minimum Gain is the amount of the total net decrease multiplied by the
Member's percentage share of the Company Minimum Gain at the end of the
immediately preceding Taxable Year. A Member's share of any decrease in Company
Minimum Gain resulting from a revaluation of Company Property equals the
increase in the Member's Capital Account attributable to the revaluation to the
extent the reduction in minimum gain is caused by the revaluation. A Member is
not subject to the Company Minimum Gain
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Chargeback Requirement to the extent the Member's share of the net decrease in
Company Minimum Gain is caused by a guarantee, refinancing, or other change in
the debt instrument causing it to become partially or wholly a recourse
liability or a Member Nonrecourse Liability, and the Member bears the economic
risk of loss (within the meaning of Section 1.752-2 of the Regulations) for the
newly guaranteed, refinanced, or otherwise changed liability.
3. Member Minimum Gain Chargeback - If during a Taxable year there is a
net decrease in Member Minimum Gain, any Member with a share of that Member
Minimum Gain (as determined under Section 1.704-2(i)(5) of the Regulations) as
of the beginning of that Taxable Year must be allocated items of income and
gain for that Taxable Year (and, if necessary, for succeeding Taxable Years)
equal to that Member's share of the net decrease in the Company Minimum Gain. A
Member's share of the net decrease in Member Minimum Gain is determined in
accordance with the Regulations. A Member is not subject to this Member
Minimum Gain Chargeback, however, to the extent the net decrease in Member
Minimum Gain arises because the liability ceases to be Member Nonrecourse
Liability due to a conversion, refinancing, or other change in the debt
instrument that causes it to become partially or wholly a Company Nonrecourse
Liability. The amount that would otherwise be subject to the Member Minimum
Gain Chargeback is added to the Member's share of Company Minimum Gain. In
addition, rules consistent with those applicable to Company Minimum Gain shall
be applied to determine the shares of Member Minimum Gain and Member Minimum
Gain Chargeback to the extent provided under the Regulations issued pursuant to
Section 704(b) of the Code.
4. Qualified Income Offset - In the event any Member, in such capacity,
unexpectedly receives an Offsettable Decrease, such Member will be allocated
items of income and gain (consisting of a pro rata portion of each item of
partnership income and gain for such year) in an amount and manner sufficient
to offset such Offsetable Decrease as quickly as possible. Any special
allocations of items of income or gain pursuant to this Section 4 shall be
taken into account in computing subsequent allocations of Net Profits pursuant
to this Section 4, so that the net amount of the Net Profits, Net Losses and
all other items allocated to each Member and Assignee pursuant to this Section
4 shall, to the extent possible, be equal to the net amount that would have
been allocated to each Member and Assignee pursuant to the provisions of this
Section 4 if such adjustments, allocations or distributions had not occurred.
5. Interim Distributions - From time to time, the Manager shall determine
in its reasonable judgment to what extent, if any, the Company's cash on hand
exceeds the current and anticipated needs, including, without limitation, needs
for operating expenses, debt service, acquisitions, reserves, and mandatory
Distributions, if any. To the extent such excess exists, the Manager may make
Distributions to the Members in accordance with their Sharing Ratios. Such
Distributions shall be in cash or Property (which need not be distributed
proportionately) or partly in both, as determined by the Manager.
6. Limitations on Distributions - No Distribution shall be declared and
paid unless, after the distribution is made, the assets of the Company are in
excess of all liabilities of the Company, except liabilities to Members on
account of their Capital Accounts.
ARTICLE X
TAXES
1. Elections - The Manager may make any tax elections for the Company
allowed under the Code or the tax laws of any state or other jurisdiction
having taxing jurisdiction over the Company.
2. Taxes of Taxing Jurisdiction - To the extent that the laws of any
Taxing Jurisdiction requires, each Member requested to do so by the Manager
will submit an agreement indicating that the Member will make timely income
tax payments to the Taxing Jurisdiction and that the Member accepts personal
jurisdiction of the Taxing Jurisdiction with regard to the collection of income
taxes attributable to the Member's income, and interest, and penalties assessed
on such income. If the Member fails to provide such agreement, the Company may
withhold and pay over to such Taxing Jurisdiction the amount of the penalty and
interest determined under the laws of the Taxing Jurisdiction with respect to
such income. Any such
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payments with respect to the income of a Member shall be treated as a
distribution for purposes of Article IX. The Manager may, where permitted by
the rules of any Taxing Jurisdiction, file a composite, combined or aggregate
tax return reflecting the income of the Company and pay the tax, interest and
penalties of some or all of the Members on such income to the Taxing
Jurisdiction, in which case the Company shall inform the Members of the amount
of such tax, interest and penalties so paid.
3. Tax Matters Partner - The Manager shall designate a Member as the tax
matters partner of the Company pursuant to Section 6231(a)(7) of the Code. Any
Member designated as tax matters partner shall take such action as may be
necessary to cause each other Member to become a notice partner within the
meaning of Section 6223 of the Code. Any Member who is designated tax matters
partner may not take any action contemplated by Sections 6222 through 6232 of
the Code without the consent of the Manager.
4. Method of Accounting - The records of the Company shall be maintained
in accordance with the method of accounting selected by the Manager.
ARTICLE XI
DISPOSITION OF MEMBERSHIP INTERESTS
1. Disposition - Any Member or Assignee may dispose of all or a portion
of the Member's or Assignee's Membership Interest upon compliance with this
Section 1. No Membership Interest shall be Disposed of:
1.1. if such disposition, alone or when combined with other
transactions, would result in a termination of the Company within the meaning
of Section 708 of the Code;
1.2. without an opinion of counsel satisfactory to the Manager that
such assignment is subject to an effective registration under, or exempt from
the registration requirements of, the applicable state and federal securities
laws;
1.3. unless and until the Company receives from the Assignee the
information and agreements that the Manager may reasonably require, including
but not limited to any taxpayer identification number and any agreement that
may be required by any Taxing Jurisdiction.
2. Dispositions Not in Compliance with this Article Void - Any attempted
Disposition of a Membership Interest, or any part thereof, not in compliance
with this Article is null and void ab initio.
ARTICLE XII
ADMISSION OF ASSIGNEES AND ADDITIONAL MEMBERS
1. Rights of Assignees - The Assignee of a Membership Interest has no
Management Rights or right to participate in the management of the business and
affairs of the Company or to become a Member. The Assignee is only entitled to
receive the Distributions and return of capital, and to be allocated the Net
Profits and Net Losses attributable the Membership Interest.
2. Admission or Substitute Members - An Assignee of a Membership
Interest shall be admitted as a Substitute Member and admitted to all the
rights of the Member who initially assigned the Membership Interest only with
the approval of all Members. The Members may grant or withhold the approval of
such admission for any in their sole and absolute discretion. If so admitted,
the Substitute Member has all the rights and powers and is subject to all the
restrictions and liabilities of the Member originally assigning the Membership
Interest. The admission of a Substitute Member, without more, shall not release
the Member originally assigning the Membership Interest from any liability to
Company that may existed prior to the approval.
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3. Admission of Additional Members - The Manager may permit the
admission of Additional Members and determine the Capital Contributions of such
Members; however, there may never be more than ninety-nine(99) Members at any
one time.
4. Forbidden Transfers and Assignments - A Membership Interest may not
be transferred or assigned to a Related Company. A Related Company may, however,
be admitted as an Additional Member.
ARTICLE XIII
DISSOLUTION AND WINDING UP
1. Dissolution - The Company shall be dissolved and its affairs wound up,
upon the first to occur of the following events:
1.1 the expiration of the term of the Company;
1.2 the unanimous written consent of all of the Members and the
Manager, by unanimous written consent of its Board of Directors;
1.3 the resignation of the Manager, unless the business of the
Company is continued with the consent of a Majority-in-Interest (as defined in
the Act) of the Members within 90 days after resignation of the Manager.
1.4 the death, insanity, retirement, resignation, expulsion,
bankruptcy or dissolution of a Member or the occurrence of any other event which
terminates the continued membership of a Member in the Company unless the
business of the Company is continued by the consent of a Majority-in-Interest
(as defined in the Act) of the remaining Members within 90 days following the
occurrence of any such event.
2. Effect of Dissolution - Upon dissolution, the Company shall cease
carrying on as distinguished from the winding up of the Company business, but
the Company is not terminated, but continues until the winding up of the affairs
of the Company is completed and the Certificate of Dissolution has been issued
by the Secretary of State.
3. Distribution of Assets on Dissolution - Upon the winding up of the
Company, the Company Property shall be distributed:
3.1 to creditors, including Members who are creditors, to the
extent permitted by law, in satisfaction of Company Liabilities;
3.2 to Members in accordance with positive Capital Account balances
taking into account all Capital Account adjustments for the Company's taxable
year in which the liquidation occurs. Liquidation proceeds shall be paid within
60 days of the end of the Company's taxable year or, if later, within 90 days
after the date of liquidation. Such distributions shall be in cash or Property
(which need not be distributed proportionately) or partly in both, as determined
by the Manager.
4. Winding Up and Certificate of Dissolution - The winding up of the
Company shall be completed when all debts, liabilities, and obligations of the
Company have been paid and discharged or reasonably adequate provision therefor
has been made, and all of the remaining property and assets of the Company have
been distributed to the members. Upon the completion of winding up of the
Company, a certificate of dissolution shall be delivered to the Secretary of
State for filing. The certificate of dissolution shall set forth the information
required by the Act.
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ARTICLE XIV
AMENDMENT
1. Operating Agreement may be Modified -- Except as otherwise provided in
the Articles of Organization, the Operating Agreement may be modified as
permitted in this Article XIV (as the same may from time to time be amended).
No Member or Manager shall have any vested rights in the Operating Agreement
which may not be modified through an amendment to the Operating Agreement.
2. Amendment or Modification of Operating Agreement -- The Operating
Agreement may be amended or modified from time to time only be a written
instrument adopted by the Manager, by unanimous written consent of its Board of
Directors, and executed by the unanimous consent of the Members.
ARTICLE XV
MISCELLANEOUS PROVISIONS
1. Entire Agreement -- The Operating Agreement represents the entire
agreement among all the Members and between the Members and the Company.
2. No Partnership Intended for Non-tax Purposes -- The Members have formed
the Company under the Act, and expressly do not intend hereby to form a
partnership under either the State Uniform Partnership Act nor the State Uniform
Limited Partnership Act.
The Members do not intend to be partners one to another, or partners as
to any third party. To the extent any Member, by word or action, represents to
another person that any other Member is a partner or that the Company is
partnership, the Member making such wrongful representation shall be liable to
any other Member who incurs personal liability by reason of such wrongful
representation.
3. Rights of Creditors and Third Parties Under Operating Agreement --
Except and only to the extent provided herein or by applicable statue, no such
creditor or third party shall have any rights under this Operating Agreement or
any agreement between the Company and any Member with respect to any Capital
Contribution or otherwise.
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IN WITNESS WHEREOF, the undersigned have hereunto executed this Operating
Agreement as of the Effective Date.
ADVANTA BUSINESS SERVICES CORP.
By: /s/ Illegible Signature
---------------------------
Title: CFO
ADVANTA LEASING RECEIVABLES CORP. III
By: /s/ Illegible Signature
---------------------------
Title: Treasurer
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EXHIBIT A
INITIAL MEMBERS
MEMBER MEMBERSHIP INTEREST
---------------------------------------- ---------------------
Advanta Leasing Receivables Corp. III 99%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Advanta Business Services Corp. 1%
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
20