1
EXHIBIT 4-k
========================================
SERIES A CAPITAL SECURITIES GUARANTEE AGREEMENT
Advanta Corp.
Dated as of December 17, 1996
========================================
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND INTERPRETATION -2-
SECTION 1.1 Definitions and Interpretation -2-
ARTICLE II TRUST INDENTURE ACT -5-
SECTION 2.1 Trust Indenture Act; Application -5-
SECTION 2.2 Lists of Holders of Securities -6-
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee -6-
SECTION 2.4 Periodic Reports to Capital Securities Guarantee Trustee -6-
SECTION 2.5 Evidence of Compliance with Conditions Precedent -7-
SECTION 2.6 Events of Default; Waiver -7-
SECTION 2.7 Event of Default; Notice -7-
SECTION 2.8 Conflicting Interests -7-
ARTICLE III POWERS, DUTIES AND RIGHTS OF CAPITAL
SECURITIES GUARANTEE TRUSTEE -8-
SECTION 3.1 Powers and Duties of the Capital Securities
Guarantee Trustee -8-
SECTION 3.2 Certain Rights of Capital Securities
Guarantee Trustee -10-
2
SECTION 3.3. Not Responsible for Recitals or Issuance of Series A
Capital Securities Guarantee -12-
ARTICLE IV CAPITAL SECURITIES GUARANTEE TRUSTEE -12-
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility -12-
SECTION 4.2 Appointment, Removal and Resignation of Capital
Securities Guarantee Trustee -13-
ARTICLE V GUARANTEE -14-
SECTION 5.1 Guarantee -14-
SECTION 5.2 Waiver of Notice and Demand -14-
SECTION 5.3 Obligations Not Affected -14-
SECTION 5.4 Rights of Holders -15-
SECTION 5.5 Guarantee of Payment -16-
SECTION 5.6 Subrogation -16-
SECTION 5.7 Independent Obligations -16-
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION -16-
SECTION 6.1 Limitation of Transactions -16-
SECTION 6.2 Ranking -17-
ARTICLE VII TERMINATION -17-
SECTION 7.1 Termination -17-
ARTICLE VIII INDEMNIFICATION -18-
SECTION 8.1 Exculpation -18-
SECTION 8.2 Indemnification -18-
ARTICLE IX MISCELLANEOUS -19-
SECTION 9.1 Successors and Assigns -19-
SECTION 9.2 Amendments -19-
SECTION 9.3 Notices -19-
SECTION 9.4 Exchange Offer -20-
SECTION 9.5 Benefit -21-
SECTION 9.6 Governing Law -21-
3
SERIES A CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Series A Capital
Securities Guarantee"), dated as of December 17, 1996 is executed and delivered
by Advanta Corp., a Delaware corporation (the "Guarantor"), and The Chase
Manhattan Bank, as trustee (sometimes referred to hereinafter as the "Capital
Securities Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Series A Capital Securities (as defined
herein) of Advanta Capital Trust I, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated
Declaration of Trust (the "Declaration"), dated as of December 17, 1996, among
the trustees of the Issuer, the Guarantor, as sponsor, and the holders from
time to time of undivided beneficial interests in the assets of the Issuer, the
Issuer (i) is issuing on the date hereof 100,000 capital securities, having an
aggregate liquidation amount of $100,000,000, such capital securities being
designated the 8.99% Series A Capital Securities (collectively the "Series A
Capital Securities") and (ii) in connection with an Exchange Offer (as defined
in the Declaration) will execute and deliver the Series B Capital Securities
Guarantee (as defined in the Declaration) for the benefit of Holders of the
Series B Capital Securities (as defined in the Declaration).
WHEREAS, as incentive for the Holders to purchase the
Series A Capital Securities, the Guarantor desires irrevocably and
unconditionally to agree, to the extent set forth in this Series A Capital
Securities Guarantee, to pay to the Holders of the Series A Capital Securities
the Guarantee Payments (as defined below), and the Guarantor agrees to make
certain other payments on the terms and conditions set forth herein.
WHEREAS, the Guarantor is executing and delivering a
guarantee agreement (the "Common Securities Guarantee"), for the benefit of the
holders of the Common Securities (as defined herein), the terms of which
provide that if an Event of Default (as defined in the Declaration) has
occurred and is continuing, the rights of holders of the Common Securities to
receive Guarantee Payments under the Common Securities Guarantee are
subordinated, to the extent and in the manner set forth in the Common
Securities Guarantee, to the rights of Holders of Series A Capital Securities
and the Series B Capital Securities to receive Guarantee Payments under this
Series A Capital Securities Guarantee and the Series B Capital Securities
Guarantee, as the case may be.
NOW, THEREFORE, in consideration of the purchase by
each Holder of Series A Capital Securities, which purchase the Guarantor hereby
acknowledges shall benefit the Guarantor, the Guarantor executes and delivers
this Series A Capital Securities Guarantee for the benefit of the Holders.
4
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Series A Capital Securities Guarantee, unless the context otherwise
requires:
(a) Capitalized terms used in this Series A
Capital Securities Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) Terms defined in the Declaration as at the
date of execution of this Series A Capital Securities Guarantee have the same
meaning when used in this Series A Capital Securities Guarantee unless
otherwise defined in this Series A Capital Securities Guarantee;
(c) a term defined anywhere in this Series A Capital Securities Guarantee
has the same meaning throughout;
(d) all references to "the Series A Capital
Securities Guarantee" or "this Series A Capital Securities Guarantee" are to
this Series A Capital Securities Guarantee as modified, supplemented or amended
from time to time;
(e) all references in this Series A Capital
Securities Guarantee to Articles and Sections are to Articles and Sections of
this Series A Capital Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has
the same meaning when used in this Series A Capital Securities Guarantee,
unless otherwise defined in this Series A Capital Securities Guarantee or
unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that
term in Rule 405 under the Securities Act of 1933, as amended, or any successor
rule thereunder.
"Business Day" shall mean any day other than a
Saturday or a Sunday, or a day on which banking institutions in New York, New
York or Wilmington, Delaware are authorized or required by law or executive
order to close.
5
"Capital Securities Guarantee Trustee" shall mean The
Chase Manhattan Bank, until a Successor Capital Securities Guarantee Trustee
has been appointed and has accepted such appointment pursuant to the terms of
this Series A Capital Securities Guarantee and thereafter means each such
Successor Capital Securities Guarantee Trustee.
"Common Securities" shall mean the securities
representing common undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" shall mean the office of the
Capital Securities Guarantee Trustee at which the corporate trust business of
the Capital Securities Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this
Agreement is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
"Covered Person" shall mean any Holder or beneficial
owner of Series A Capital Securities.
"Debentures" shall mean the series of subordinated
debt securities of the Guarantor designated the 8.99% Series A Junior
Subordinated Deferrable Interest Debentures due December 17, 2026 held by the
Property Trustee (as defined in the Declaration) of the Issuer.
"Event of Default" shall mean a default by the
Guarantor on any of its payment or other obligations under this Series A
Capital Securities Guarantee.
"Guarantee Payments" shall mean the following
payments or distributions, without duplication, with respect to the Series A
Capital Securities, to the extent not paid or made by the Issuer: (i) any
accumulated and unpaid Distributions (as defined in the Declaration) that are
required to be paid on such Series A Capital Securities to the extent the
Issuer has funds on hand legally available therefor at such time, (ii) the
redemption price, including all accumulated and unpaid Distributions to the
date of redemption (the "Redemption Price") to the extent the Issuer has funds
on hand legally available therefor at such time, with respect to any Series A
Capital Securities called for redemption by the Issuer, and (iii) upon a
voluntary or involuntary termination and liquidation of the Issuer (other than
in connection with the distribution of Debentures to the Holders in exchange
for Series A Capital Securities as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accumulated and unpaid
Distributions on the Series A Capital Securities to the date of payment, to the
extent the Issuer has funds on hand legally available therefor, and (b) the
amount of assets of the Issuer remaining available for distribution to Holders
in liquidation of the Issuer. If an Event of Default has occurred and is
continuing, no Guarantee Payments under the Common Securities Guarantee with
respect to the Common Securities or any guarantee payment under any Other
Common Securities Guarantees shall be made until the Holders of Series A
Capital Securities shall be paid in full the Guarantee Payments to which they
are entitled under this Series A Capital Securities Guarantee.
6
"Holder" shall mean any holder, as registered on the
books and records of the Issuer, of any Series A Capital Securities; provided,
however, that, in determining whether the holders of the requisite percentage
of Series A Capital Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of
the Guarantor.
"Indemnified Person" shall mean the Capital
Securities Guarantee Trustee, any Affiliate of the Capital Securities Guarantee
Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Capital
Securities Guarantee Trustee.
"Indenture" shall mean the Indenture dated as of
December 17, 1996 among the Guarantor (the "Debenture Issuer") and The Chase
Manhattan Bank, as trustee, pursuant to which the Debentures are to be issued
to the Property Trustee of the Issuer.
"Majority in liquidation amount of the Series A
Capital Securities" shall mean, except as provided by the Trust Indenture Act,
a vote by Holder(s) of Series A Capital Securities, voting separately as a
class, of more than 50% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Series A Capital Securities.
"Officers' Certificate" shall mean, with respect to
any person, a certificate signed by the Chairman, a Vice Chairman, the Chief
Executive Officer, the President, a Vice President or the Treasurer of the
Guarantor. Any Officers' Certificate delivered with respect to compliance with
a condition or covenant provided for in this Series A Capital Securities
Guarantee shall include:
(a) a statement that each officer signing the
Officers' Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a statement that each such officer has made
such examination or investigation as, in such officer's opinion, is necessary
to enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(c) a statement as to whether, in the opinion of
each such officer, such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the
same meaning as "Other Guarantees" in the Common Securities Guarantee.
7
"Other Debentures" shall mean all junior subordinated
debentures issued by the Guarantor from time to time and sold to trusts other
than the Issuer to be established by the Guarantor (if any), in each case
similar to the Issuer.
"Other Guarantees" shall mean all guarantees to be
issued by the Guarantor with respect to capital securities (if any) similar to
the Series A Capital Securities issued by trusts other than the Issuer to be
established by the Guarantor (if any), in each case similar to the Issuer.
"Person" shall mean a legal person, including any
individual, corporation, estate, partnership, joint venture, association, joint
stock company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Registration Rights Agreement" shall mean the
Registration Rights Agreement, dated as of December 11, 1996 by and among the
Guarantor, the Issuer and the Initial Purchasers named therein as such
agreement may be amended, modified or supplemented from time to time.
"Responsible Officer" shall mean, with respect to the
Capital Securities Guarantee Trustee, any officer within the Corporate Trust
Office of the Capital Securities Guarantee Trustee with direct responsibility
for the administration of this Series A Capital Securities Guarantee and also
means, with respect to a particular corporate trust matter, any other officer
to whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Successor Capital Securities Guarantee Trustee"
shall mean a successor Capital Securities Guarantee Trustee possessing the
qualifications to act as Capital Securities Guarantee Trustee under Section
4.1.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as amended.
"Trust Securities" shall mean the Common Securities
and the Series A Capital Securities and Series B Capital Securities,
collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Series A Capital Securities Guarantee is
subject to the provisions of the Trust Indenture Act that are required to be
part of this Series A Capital Securities Guarantee and shall, to the extent
applicable, be governed by such provisions; and
8
(b) if and to the extent that any provision of
this Series A Capital Securities Guarantee limits, qualifies or conflicts with
the duties imposed by Section 310 to 317, inclusive, of the Trust Indenture
Act, such imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Capital
Securities Guarantee Trustee (unless the Capital Securities Guarantee Trustee
is otherwise the registrar of the Capital Securities) with a list, in such form
as the Capital Securities Guarantee Trustee may reasonably require, of the
names and addresses of the Holders of the Series A Capital Securities ("List of
Holders") as of such date, (i) within one Business Day after June 1 and
December 1 of each year, and (ii) at any other time within 30 days of receipt
by the Guarantor of a written request for a List of Holders as of a date no
more than 14 days before such List of Holders is given to the Capital
Securities Guarantee Trustee; provided, that the Guarantor shall not be
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Capital Securities
Guarantee Trustee by the Guarantor. The Capital Securities Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new List
of Holders.
(b) The Capital Securities Guarantee Trustee
shall comply with its obligations under Sections 311(a), 311(b) and Section
312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee
Within 60 days after May 15 of each year, commencing
May 15, 1997, the Capital Securities Guarantee Trustee shall provide to the
Holders of the Series A Capital Securities such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Capital Securities
Guarantee Trustee shall also comply with the requirements of section 313(d) of
the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Capital Securities Guarantee Trustee
The Guarantor shall provide to the Capital Securities
Guarantee Trustee such documents, reports and information as required by
Section 314 (if any) and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act. Delivery of such reports, information
and documents to the Capital Securities Guarantee Trustee is for informational
purposes only and the Capital Securities Guarantee Trustee's receipt of such
shall not constitute constructive notice of any information contained therein
or determinable from information contained therein, including the Guarantor's
9
compliance with any of its covenants hereunder (as to which the Capital
Securities Guarantee Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Securities
Guarantee Trustee such evidence of compliance with any conditions precedent, if
any, provided for in this Series A Capital Securities Guarantee that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
14(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of
Series A Capital Securities may, by vote, on behalf of the Holders of all of
the Series A Capital Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Series A Capital Securities Guarantee, but no
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Capital Securities Guarantee Trustee
shall, within 90 days after the occurrence of a default with respect to this
Capital Securities Guarantee, mail by first class postage prepaid, to all
Holders of the Series A Capital Securities, notices of all defaults actually
known to a Responsible Officer of the Capital Securities Guarantee Trustee,
unless such defaults have been cured before the giving of such notice;
provided, that, except in the case of default in the payment of any Guarantee
Payment, the Capital Securities Guarantee Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors and/or Responsible Officers of the
Capital Securities Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the holders of the Series A
Capital Securities.
(b) The Capital Securities Guarantee Trustee
shall not be deemed to have knowledge of any Event of Default unless the
Capital Securities Guarantee Trustee shall have received written notice, or a
Responsible Officer of the Capital Securities Guarantee Trustee charged with
the administration of the Declaration shall have obtained actual knowledge, of
such Event of Default.
SECTION 2.8 Conflicting Interests
10
The Declaration shall be deemed to be specifically
described in this Series A Capital Securities Guarantee for the purposes of
clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Series A Capital Securities Guarantee
shall be held by the Capital Securities Guarantee Trustee for the benefit of
the Holders of the Series A Capital Securities, and the Capital Securities
Guarantee Trustee shall not transfer this Series A Capital Securities Guarantee
to any Person except a Holder of Series A Capital Securities exercising his or
her rights pursuant to Section 5.4(b) or to a Successor Capital Securities
Guarantee Trustee on acceptance by such Successor Capital Securities Guarantee
Trustee of its appointment to act as Successor Capital Securities Guarantee
Trustee. The right, title and interest of the Capital Securities Guarantee
Trustee shall automatically vest in any Successor Capital Securities Guarantee
Trustee, and such vesting and succession of title shall be effective whether or
not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a
Responsible Officer of the Capital Securities Guarantee Trustee has occurred
and is continuing, the Capital Securities Guarantee Trustee shall enforce this
Series A Capital Securities Guarantee for the benefit of the Holders of the
Series A Capital Securities.
(c) The Capital Securities Guarantee Trustee,
before the occurrence of any Event of Default and after the curing of all
Events of Default that may have occurred, shall undertake to perform only such
duties as are specifically set forth in this Series A Capital Securities
Guarantee, and no implied covenants shall be read into this Series A Capital
Securities Guarantee against the Capital Securities Guarantee Trustee. In case
an Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6) and is actually known to a Responsible Officer of the Capital
Securities Guarantee Trustee, the Capital Securities Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Series A Capital
Securities Guarantee, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(d) No provision of this Series A Capital
Securities Guarantee shall be construed to relieve the Capital Securities
Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
11
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of Default
that may have occurred:
(A) the duties and obligations of the
Capital Securities Guarantee Trustee shall be
determined solely by the express provisions of this
Series A Capital Securities Guarantee, and the
Capital Securities Guarantee Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this
Series A Capital Securities Guarantee, and no implied
covenants or obligations shall be read into this
Series A Capital Securities Guarantee against the
Capital Securities Guarantee Trustee; and
(B) in the absence of bad faith on the
part of the Capital Securities Guarantee Trustee, the
Capital Securities Guarantee Trustee may conclusively
rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Capital
Securities Guarantee Trustee and conforming to the
requirements of this Series A Capital Securities
Guarantee; provided, however, that in the case of any
such certificates or opinions that by any provision
hereof are specifically required to be furnished to
the Capital Securities Guarantee Trustee, the Capital
Securities Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they
conform to the requirements of this Series A Capital
Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall
not be liable for any error of judgment made in good faith by
a Responsible Officer of the Capital Securities Guarantee
Trustee, unless it shall be proved that the Capital Securities
Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made;
(iii) the Capital Securities Guarantee Trustee shall
not be liable with respect to any action taken or omitted to
be taken by it in good faith in accordance with the direction
of the Holders of a Majority in liquidation amount of the
Series A Capital Securities relating to the time, method and
place of conducting any proceeding for any remedy available to
the Capital Securities Guarantee Trustee, or exercising any
trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series A Capital Securities Guarantee; and
(iv) no provision of this Series A Capital Securities
Guarantee shall require the Capital Securities Guarantee
Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of
12
any of its duties or in the exercise of any of its rights or
powers, if the Capital Securities Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the
terms of this Series A Capital Securities Guarantee or
indemnity, reasonably satisfactory to the Capital Securities
Guarantee Trustee, against such risk or liability is not
reasonably assured to it.
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Securities Guarantee Trustee may
conclusively rely, and shall be fully protected in acting or
refraining from acting, upon any resolution, certificate,
statement instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed
by it to be genuine and to have been signed, sent or presented
by the proper party or parties.
(ii) Any direction or act of the Guarantor
contemplated by this Series A Capital Securities Guarantee may
be sufficiently evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this Series
A Capital Securities Guarantee, the Capital Securities
Guarantee Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any
action hereunder, the Capital Securities Guarantee Trustee
(unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon
receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Capital Securities Guarantee Trustee shall
have no duty to see to any recording, filing or registration
of any instrument (or any rerecording, refiling or
registration thereof).
(v) The Capital Securities Guarantee Trustee may
consult with counsel of its selection, and the advice or
opinion of such counsel with respect to legal matters shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such
counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Capital
Securities Guarantee Trustee shall have the right at any time
to seek instructions concerning the administration of this
Series A Capital Securities Guarantee from any court of
competent jurisdiction.
13
(vi) The Capital Securities Guarantee Trustee shall
be under no obligation to exercise any of the rights or powers
vested in it by this Series A Capital Securities Guarantee at
the request or direction of any Holder, unless such Holder
shall have provided to the Capital Securities Guarantee
Trustee such security and indemnity, reasonably satisfactory
to the Capital Securities Guarantee Trustee, against the
costs, expenses (including attorneys' fees and expenses and
the expenses of the Capital Securities Guarantee Trustee's
agents, nominees or custodians) and liabilities that might be
incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Capital Securities Guarantee Trustee; provided, that nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve
the Capital Securities Guarantee Trustee, upon the occurrence
of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Series A Capital
Securities Guarantee.
(vii) The Capital Securities Guarantee Trustee shall
not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Capital
Securities Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as
it may see fit.
(viii) The Capital Securities Guarantee Trustee may
execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents,
nominees, custodians or attorneys, and the Capital Securities
Guarantee Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(ix) Any action taken by the Capital Securities
Guarantee Trustee or its agents hereunder shall bind the
Holders of the Series A Capital Securities, and the signature
of the Capital Securities Guarantee Trustee or its agents
alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the
authority of the Capital Securities Guarantee Trustee to so
act or as to its compliance with any of the terms and
provisions of this Series A Capital Securities Guarantee, both
of which shall be conclusively evidenced by the Capital
Securities Guarantee Trustee's or its agent's taking such
action.
(x) Whenever in the administration of this Series A
Capital Securities Guarantee the Capital Securities Guarantee
Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or
14
right or taking any other action hereunder, the Capital
Securities Guarantee Trustee (i) may request instructions from
the Holders of a Majority in liquidation amount of the Series
A Capital Securities, (ii) may refrain from enforcing such
remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such
instructions.
(xi) The Capital Securities Guarantee Trustee shall
not be liable for any action taken, suffered, or omitted to be
taken by it in good faith, without negligence, and reasonably
believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Series A Capital
Securities Guarantee.
(b) No provision of this Series A Capital
Securities Guarantee shall be deemed to impose any duty or obligation on the
Capital Securities Guarantee Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it in any jurisdiction
in which it shall be illegal, or in which the Capital Securities Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Capital
Securities Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Series A Capital
Securities Guarantee
The recitals contained in this Series A Capital Securities
Guarantee shall be taken as the statements of the Guarantor, and the Capital
Securities Guarantee Trustee does not assume any responsibility for their
correctness. The Capital Securities Guarantee Trustee makes no representation
as to the validity or sufficiency of this Series A Capital Securities
Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Securities Guarantee Trustee that
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee
15
under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes
of this Section 4.1(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Capital Securities
Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a),
the Capital Securities Guarantee Trustee shall immediately resign in the manner
and with the effect set out in Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee
has or shall acquire any "conflicting interest" within the meaning of Section
310(b) of the Trust Indenture Act, the Capital Securities Guarantee Trustee and
Guarantor shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Capital Securities
Guarantee Trustee
(a) Subject to Section 4.2(b), the Capital
Securities Guarantee Trustee may be appointed or removed without cause at any
time by the Guarantor except during an Event of Default.
(b) The Capital Securities Guarantee Trustee
shall not be removed in accordance with Section 4.2(a) until a Successor
Capital Securities Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Capital Securities
Guarantee Trustee and delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee
shall hold office until a Successor Capital Securities Guarantee Trustee shall
have been appointed or until its removal or resignation. The Capital
Securities Guarantee Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by the Capital
Securities Guarantee Trustee and delivered to the Guarantor, which resignation
shall not take effect until a Successor Capital Securities Guarantee Trustee
has been appointed and has accepted such appointment by instrument in writing
executed by such Successor Capital Securities Guarantee Trustee and delivered
to the Guarantor and the resigning Capital Securities Guarantee Trustee.
16
(d) If no Successor Capital Securities Guarantee
Trustee shall have been appointed and accepted appointment as provided in this
Section 4.2 within 60 days after delivery of an instrument of removal or
resignation, the Capital Securities Guarantee Trustee resigning or being
removed may petition any court of competent jurisdiction for appointment of a
Successor Capital Securities Guarantee Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper, appoint a
Successor Capital Securities Guarantee Trustee.
(e) No Capital Securities Guarantee Trustee shall
be liable for the acts or omissions to act of any Successor Capital Securities
Guarantee Trustee.
(f) Upon termination of this Series A Capital
Securities Guarantee or removal or resignation of the Capital Securities
Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to the
Capital Securities Guarantee Trustee all amounts due to the Capital Securities
Guarantee Trustee accrued to the date of such termination, removal or
resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees
to pay in full to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by the Issuer), as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer may have or assert.
The Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of
this Series A Capital Securities Guarantee and of any liability to which it
applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Issuer or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor,
notice of redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of
the Guarantor under this Series A Capital Securities Guarantee shall in no way
be affected or impaired by reason of the happening from time to time of any of
the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any express or
implied agreement,
17
covenant, term or condition relating to the Series A Capital Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the
Issuer of all or any portion of the Distributions, Redemption Price,
Liquidation Distribution or any other sums payable under the terms of the
Series A Capital Securities or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the Series A
Capital Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum payable
that results from the extension of any interest payment period on the
Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of
diligence on the part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the terms of
the Series A Capital Securities, or any action on the part of the Issuer
granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings affecting,
the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency
in, the Series A Capital Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred;
(g) the consummation of the Exchange Offer; or
(h) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 5.3 that the obligations of the Guarantor
with respect to the Guarantee Payments shall be absolute and unconditional
under any and all circumstances.
There shall be no obligation of the Holders to give
notice to, or obtain consent of, the Guarantor with respect to the happening of
any of the foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation
amount of the Series A Capital Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Capital Securities Guarantee Trustee in respect of this Series A Capital
Securities Guarantee or exercising any trust or
18
power conferred upon the Capital Securities Guarantee Trustee under this Series
A Capital Securities Guarantee.
(b) If the Capital Securities Guarantee Trustee
fails to enforce such Series A Capital Securities Guarantee, any Holder of
Series A Capital Securities may institute a legal proceeding directly against
the Guarantor to enforce the Capital Securities Guarantee Trustee's rights
under this Series A Capital Securities Guarantee, without first instituting a
legal proceeding against the Issuer, the Capital Securities Guarantee Trustee
or any other person or entity. The Guarantor waives any right or remedy to
require that any action be brought first against the Issuer or any other person
or entity before proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Series A Capital Securities Guarantee creates a
guarantee of payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any)
rights of the Holders of Series A Capital Securities against the Issuer in
respect of any amounts paid to such Holders by the Guarantor under this Series
A Capital Securities Guarantee; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Series A Capital Securities Guarantee, if, at the time of
any such payment, any amounts are due and unpaid under this Series A Capital
Securities Guarantee. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount
in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of the Issuer with respect to the
Series A Capital Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Series A Capital Securities Guarantee notwithstanding the
occurrence of any event referred to in subsections (a) through (h), inclusive,
of Section 5.3 hereof.
19
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Capital Securities remain outstanding,
the Guarantor shall not (i) declare or pay any dividends or distributions on,
or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of the Guarantor's capital stock (which includes common and preferred
stock) or (ii) make any payment of principal, interest or premium, if any, on
or repay or repurchase or redeem any debt securities of the Guarantor
(including any Other Debentures) that rank pari passu with or junior in right
of payment to the Debentures or (iii) make any guarantee payments with respect
to any guarantee by the Guarantor of the debt securities of any subsidiary of
the Guarantor (including Other Guarantees) if such guarantee ranks pari passu
or junior in right of payment to the Debentures (other than (a) dividends or
distributions in shares of, or options, warrants, rights to subscribe for or
purchase shares of, common stock of the Guarantor, (b) any declaration of a
dividend in connection with the implementation of a stockholder's rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under the
Capital Securities Guarantee, (d) as a result of a reclassification of the
Guarantor's capital stock or the exchange or the conversion of one class or
series of the Guarantor's capital stock for another class or series of the
Guarantor's capital stock, (e) the purchase of fractional interests in shares
of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
and (f) purchases of common stock related to the issuance of common stock or
rights under any of the Guarantor's benefit plans for its directors, officers
or employees or any of the Guarantor's dividend reinvestment plans) if at such
time (i) there shall have occurred any event of which the Guarantor has actual
knowledge that (a) is, or with the giving of notice or the lapse of time, or
both, would be, an Event of Default and (b) in respect of which the Guarantor
shall not have taken reasonable steps to cure, (ii) if such Debentures are held
by the Property Trustee, the Guarantor shall be in default with respect to its
payment of any obligations under this Series A Capital Securities Guarantee or
(iii) the Guarantor shall have given notice of its election of the exercise of
its right to extend the interest payment period pursuant to Section 16.01 of
the Indenture and any such extension shall be continuing.
SECTION 6.2 Ranking
This Series A Capital Securities Guarantee will
constitute an unsecured obligation of the Guarantor and will rank (i)
subordinate and junior in right of payment to Senior Indebtedness (as defined
in the Indenture), to the same extent and in the same manner that the
Debentures are subordinated to Senior Indebtedness pursuant to the Indenture
(except as indicated below), it being understood that the terms of Article XV
of the Indenture shall apply to the obligations of the Guarantor under this
Series A Capital Securities Guarantee as if (x) such Article XV were set forth
herein in full and (y)
20
such obligations were substituted for the term "Securities" appearing in such
Article XV, except that with respect to Section 15.03 of the Indenture only,
the term "Senior Indebtedness" shall mean all liabilities of the Guarantor,
whether or not for money borrowed (other than obligations in respect of Other
Guarantees), (ii) pari passu with the most senior preferred or preference stock
now or hereafter issued by the Guarantor and with any Other Guarantee (as
defined herein) and any Other Common Securities Guarantee and any guarantee now
or hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any Affiliate of the Guarantor, and (iii) senior to the
Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Series A Capital Securities Guarantee shall
terminate (i) upon full payment of the Redemption Price (as defined in the
Declaration) of all Series A Capital Securities, or (ii) upon liquidation of
the Issuer, the full payment of the amounts payable in accordance with the
Declaration or the distribution of the Debentures to the Holders of all of the
Series A Capital Securities. Notwithstanding the foregoing, this Series A
Capital Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Series A Capital
Securities must restore payment of any sums paid under the Series A Capital
Securities or under this Series A Capital Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Guarantor or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Series A Capital Securities Guarantee and in a manner that
such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Series A Capital
Securities Guarantee or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to such acts
or omissions.
(b) An Indemnified Person shall be fully
protected in relying in good faith upon the records of the Guarantor and upon
such information, opinions, reports or statements presented to the Guarantor by
any Person as to matters the Indemnified Person reasonably believes are within
such other Person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the
21
Guarantor, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits, losses, or any other
facts pertinent to the existence and amount of assets from which Distributions
to Holders of Series A Capital Securities might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified
Person for, and to hold each Indemnified Person harmless against, any and all
loss, liability, damage, claim or expense incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against, or investigating, any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The
obligation to indemnify as set forth in this Section 8.2 shall survive the
termination of this Series A Capital Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this
Series A Capital Securities Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Series A Capital Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not
materially adversely affect the rights of Holders (in which case no consent of
Holders will be required), this Series A Capital Securities Guarantee may only
be amended with the prior approval of the Holders of a Majority in liquidation
amount of the Securities (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined). The provisions of
Section 12.2 of the Declaration with respect to meetings of Holders of the
Securities apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Series A Capital
Securities Guarantee shall be in writing, duly signed by the party giving such
notice, and shall be delivered, telecopied or mailed by first class mail, as
follows:
22
(a) If given to the Issuer, in care of the
Administrative Trustee at the Issuer's mailing address set forth below (or such
other address as the Issuer may give notice of to the Capital Securities
Guarantee Trustee and the Holders of the Series A Capital Securities):
Advanta Capital Trust I
c/o Advanta Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If given to the Capital Securities Guarantee
Trustee, at the Capital Securities Guarantee Trustee's mailing address set
forth below (or such other address as the Capital Securities Guarantee Trustee
may give notice of to the Holders of the Series A Capital Securities):
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trustee Administration
Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If given to the Guarantor, at the Guarantor's
mailing address set forth below (or such other address as the Guarantor may
give notice of to the Capital Securities Guarantee Trustee and the Holders of
the Series A Capital Securities):
Advanta Corp.
Welsh and ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(d) If given to any Holder of Series A Capital
Securities, at the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given
when received in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that if a notice or other document is
refused delivery or cannot be delivered because of a changed address of which
no notice was given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
23
SECTION 9.4 Exchange Offer
In the event an Exchange Offer Registration Statement
(as defined in the Registration Rights Agreement) becomes effective and the
Issuer issues any Series B Capital Securities in the Exchange Offer, the
Guarantor will enter into a new capital securities guarantee agreement, in
substantially the same form as this Series A Capital Securities Guarantee, with
respect to the Series B Capital Securities.
SECTION 9.5 Benefit
This Series A Capital Securities Guarantee is solely
for the benefit of the Holders of the Series A Capital Securities and, subject
to Section 3.1(a), is not separately transferable from the Series A Capital
Securities.
SECTION 9.6 Governing Law
THIS SERIES A CAPITAL SECURITIES GUARANTEE SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
THIS SERIES A CAPITAL SECURITIES GUARANTEE is
executed as of the day and year first above written.
ADVANTA CORP., as Guarantor
By: /s/
Name:
Title:
THE CHASE MANHATTAN BANK, as
Capital Securities Guarantee Trustee
By: /s/
Name:
Title: