0000893220-01-500723.txt : 20011009
0000893220-01-500723.hdr.sgml : 20011009
ACCESSION NUMBER: 0000893220-01-500723
CONFORMED SUBMISSION TYPE: SC TO-I/A
PUBLIC DOCUMENT COUNT: 3
FILED AS OF DATE: 20010928
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: ADVANTA CORP
CENTRAL INDEX KEY: 0000096638
STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141]
IRS NUMBER: 231462070
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC TO-I/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-38014
FILM NUMBER: 1748664
BUSINESS ADDRESS:
STREET 1: P.O. BOX 844
STREET 2: WELSH & MCKEAN ROADS
CITY: SPRING HOUSE
STATE: PA
ZIP: 19477
BUSINESS PHONE: 2154445051
MAIL ADDRESS:
STREET 1: C/O WELSH & MCKEAN ROADS
STREET 2: P.O. BOX 844
CITY: SPRING HOUSE
STATE: PA
ZIP: 19477-0844
FORMER COMPANY:
FORMER CONFORMED NAME: TEACHERS SERVICE ORGANIZATION INC
DATE OF NAME CHANGE: 19850812
FORMER COMPANY:
FORMER CONFORMED NAME: TSO FINANCIAL CORP
DATE OF NAME CHANGE: 19880306
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: ADVANTA CORP
CENTRAL INDEX KEY: 0000096638
STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141]
IRS NUMBER: 231462070
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC TO-I/A
BUSINESS ADDRESS:
STREET 1: P.O. BOX 844
STREET 2: WELSH & MCKEAN ROADS
CITY: SPRING HOUSE
STATE: PA
ZIP: 19477
BUSINESS PHONE: 2154445051
MAIL ADDRESS:
STREET 1: C/O WELSH & MCKEAN ROADS
STREET 2: P.O. BOX 844
CITY: SPRING HOUSE
STATE: PA
ZIP: 19477-0844
FORMER COMPANY:
FORMER CONFORMED NAME: TEACHERS SERVICE ORGANIZATION INC
DATE OF NAME CHANGE: 19850812
FORMER COMPANY:
FORMER CONFORMED NAME: TSO FINANCIAL CORP
DATE OF NAME CHANGE: 19880306
SC TO-I/A
1
w52124escto-ia.txt
AMENDMENT #3 FOR ADVANTA CORP.
1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
SCHEDULE TO
(RULE 14d-100)
(AMENDMENT NO. 3)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
ADVANTA CORP.
(NAME OF SUBJECT COMPANY)
ADVANTA CORP.
(NAME OF FILING PERSON (THE ISSUER))
CLASS B COMMON STOCK
(TITLE OF CLASS OF SECURITIES)
--------------
001-210-00794220
(CUSIP NUMBER OF CLASS OF SECURITIES)
-----------------
ELIZABETH H. MAI, ESQUIRE
SENIOR VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
ADVANTA CORP.
WELSH AND MCKEAN ROADS
SPRING HOUSE, PENNSYLVANIA 19477
(215) 657-4000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE FILING PERSON)
COPY TO:
JAY A. DUBOW, ESQ.
WOLF, BLOCK, SCHORR AND SOLIS-COHEN LLP
1650 ARCH STREET, 22ND FLOOR
PHILADELPHIA, PENNSYLVANIA 19103
(215) 977-2000
(NAME, ADDRESS AND TELEPHONE NUMBERS OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF FILING PERSON)
CALCULATION OF FILING FEE
-------------------------
TRANSACTION VALUATION* AMOUNT OF FILING FEE
$6,171,056 $1,234.21**
2
*Calculated solely for purposes of determining the filing fee. This amount
assumes that (i) $3,237,789 in cash will be paid pursuant to this offer, and
(ii) options to purchase 238,671 shares of Class B Common Stock of the Company
will be issued pursuant to this offer. The aggregate value of the options to
purchase Class B Common Stock was based on the average of the high and low
prices of the Company's Class B Common Stock on August 6, 2001. The amount of
the filing fee, calculated in accordance with Rule 0-11 of the Securities
Exchange Act of 1934, as amended, equals 1/50 of one percent of the value of the
transaction.
**Previously paid.
[X] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $1,234.21 Filing Party: Advanta Corp.
Form or Registration No.: Schedule TO Date Filed: August 9, 2001
[ ] Check the box if the filing relates solely to preliminary communications
made before commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which this
statement relates:
[ ] Third party tender offer subject to Rule 14d-1
[X] Issuer tender offer subject to Rule 13e-4
[ ] Going private transaction subject to Rule 13e-3
[ ] Amendment to Schedule 13D under Rule 13d-2
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
-2-
3
The filing of this Amendment No. 3 to Schedule TO shall not be construed
as an admission by Advanta Corp. that the Offer (as defined below) constitutes
an issuer tender offer for purposes of the Securities Exchange Act of 1934, as
amended, and the rules promulgated thereunder.
This Amendment No. 3 amends and supplements the Tender Offer Statement
on Schedule TO filed by Advanta Corp. (the "Company") with the Securities and
Exchange Commission (the "SEC") on August 9, 2001, as amended by Amendment No. 1
filed on August 31, 2001, and as amended by Amendment No. 2 filed on August
31, 2001, relating to an offer by the Company to repurchase "Eligible AMIP
Shares" from "eligible employees." "Eligible AMIP Shares" are shares of
restricted stock granted under the Advanta Management Incentive Program (the
"AMIP Program") that:
- are attributable to an eligible employee's 2001 target bonus (the
"2001 target bonus"); and
- have a weighted average value, as calculated for purposes of
determining the original number of shares granted (the "weighted
average value"), that is greater than $10.625 per share.
An "eligible employee" refers to any person: (1) who holds Eligible AMIP Shares,
at least some of which shares were granted before February 28, 2001; and (2)
who, as of the expiration of this offer, is employed by us and has not received
a notice of termination that is effective prior to the expiration of this offer.
The Company is making this offer upon the terms and subject to the conditions
described in the Offer to Repurchase dated August 9, 2001, as amended and
restated on September 28, 2001 (the "Offer to Repurchase") and the related
Letter of Transmittal, as amended (which together, as they may be amended or
supplemented from time to time, constitute the "offer"). All references in the
Schedule TO to the "Offer to Repurchase" shall mean the Offer to Repurchase as
amended and restated.
ITEM 12. EXHIBITS
Item 12 of the Schedule TO is hereby amended, supplemented and restated
as follows so as to amend Exhibit (a)(1) by replacing the Offer to Repurchase as
amended and restated August 31, 2001 with the Offer to Repurchase as amended and
restated September 28, 2001 and to add Exhibit (a)(10):
-3-
4
(a)(1) Offer to Repurchase, as amended and restated
September 28, 2001.
(a)(2) Form of Letter of Transmittal, as amended.
(a)(3) Form of Letter to Eligible Employees Regarding the
Offer.
(a)(4) Form of AMIP Personalized Decision Aid.
(a)(5) Form of AMIP Program Summary Guidelines.
(a)(6) Prospectus for Use with the Advanta Corp. 2000 Omnibus
Stock Incentive Plan.
(a)(7) Advanta Corp. Annual Report on Form 10-K for its fiscal
year ended December 31, 2000 filed with the Securities
and Exchange Commission on March 30, 2001 and
incorporated herein by reference.
(a)(8) Advanta Corp. Quarterly Reports on Form 10-Q for its
quarterly periods ended March 31, 2001 and June 30, 2001
filed with the Securities and Exchange Commission on May
15, 2001 and August 14, 2001 and incorporated herein by
reference.
(a)(9) E-Mail Correspondence to Eligible Employees dated August
31, 2001.
(a)(10) Correspondence to Eligible Employees dated
September 28, 2001.
(b) Not Applicable.
(d)(1) Advanta Corp. 2000 Omnibus Stock Incentive Plan, filed
as Exhibit 4(f) to the Company's Post-Effective
Amendment to its Registration Statement on Form S-8
(File No. 333-04469) filed with the Securities and
Exchange Commission on November 11, 2000 and
incorporated herein by reference.
(d)(2) Form of Option Agreement under the Advanta Corp. 2000
Omnibus Stock Incentive Plan.
(g) Not Applicable.
-4-
5
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule TO is true, complete and
correct.
Advanta Corp.
September 28, 2001 By: /s/ Elizabeth H. Mai
-----------------------------------
Name: Elizabeth H. Mai
Title: Senior Vice President, Secretary
and General Counsel
-5-
6
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
--------------------------------------------------------------------------------
(a)(1) Offer to Repurchase, dated August 9, 2001, as
amended August 31, 2001.
(a)(2)*** Form of Letter of Transmittal, as amended.
(a)(3)* Form of Letter to Eligible Employees Regarding
the Offer.
(a)(4)* Form of AMIP Personalized Decision Aid.
(a)(5)* Form of AMIP Program Summary Guidelines.
(a)(6)* Prospectus for use with the Advanta Corp. 2000
Omnibus Stock Incentive Plan.
(a)(7) Advanta Corp. Annual Report on Form 10-K for its
fiscal year ended December 31, 2000 filed with
the Securities and Exchange Commission on March
30, 2001 and incorporated herein by reference.
(a)(8) Advanta Corp. Quarterly Reports on Form 10-Q for
its quarterly periods ended March 31, 2001 and
June 30, 2001 filed with the Securities and
Exchange Commission on May 15, 2001 and August
14, 2001 and incorporated herein by reference.
(a)(9)** E-Mail Correspondence to Eligible Employees
dated August 31, 2001.
(a)(10) Correspondence to Eligible Employees
dated September 28, 2001.
(b) Not Applicable.
(d)(1)* Advanta Corp. 2000 Omnibus Stock Incentive Plan,
filed as Exhibit 4(f) to the Company's
Post-Effective Amendment to its Registration
Statement on Form S-8 (File No. 333-04469) filed
with the Securities and Exchange Commission on
November 11, 2000 and incorporated herein by
reference.
(d)(2)* Form of Option Agreement under the Advanta Corp.
2000 Omnibus Stock Incentive Plan.
(g) Not Applicable.
-6-
7
* Previously filed as an exhibit to the Schedule TO filed by Advanta Corp.
on August 9, 2001.
** Previously filed as an exhibit to Amendment No. 1 to the Schedule TO
filed by Advanta Corp. on August 31, 2001.
*** Previously filed as an exhibit to Amendment No. 2 to the Schedule TO
filed by Advanta Corp. on August 31, 2001.
-7-
EX-99.A.1
3
w52124eex99-a_1.txt
OFFER TO REPURCHASE AS AMENDED SEPT. 28TH 2001
1
EXHIBIT (a)(1)
ADVANTA CORP.
OFFER TO REPURCHASE ELIGIBLE SHARES OF RESTRICTED STOCK ISSUED
UNDER THE ADVANTA CORP. 2000 OMNIBUS STOCK INCENTIVE PLAN
===============================================================================
THIS OFFER AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, EASTERN TIME, ON FRIDAY, OCTOBER 5, 2001,
UNLESS ADVANTA EXTENDS THE OFFER
===============================================================================
Advanta Corp. is offering to repurchase "Eligible AMIP Shares" from
"eligible employees." "Eligible AMIP Shares" are shares of restricted stock
granted under the Advanta Management Incentive Program (the "AMIP Program")
that:
- are attributable to an eligible employee's 2001 target bonus (the
"2001 target bonus"); and
- have a weighted average value, as calculated for purposes of
determining the original number of shares granted (the "weighted
average value") that is greater than $10.625 per share.
An "eligible employee" refers to any person: (1) who holds Eligible AMIP Shares,
at least some of which shares were granted prior to February 28, 2001; and (2)
who, as of the expiration of this offer, is employed by us and has not received
a notice of termination that is effective on or prior to the expiration of this
offer. If you are an eligible employee and you tender your Eligible AMIP Shares,
in consideration we will: (1) in the event you earn a percentage of your 2001
target bonus, pay to you in cash the portion of your 2001 target bonus that
otherwise would have been payable in AMIP shares, and (2) regardless of whether
you earn any percentage of your 2001 target bonus, promptly grant to you options
to purchase a number of shares of our Class B Common Stock, at an exercise price
of $10.625 per share, that is equal to (A) the number of Eligible AMIP Shares
tendered by you and accepted by us for repurchase multiplied by their weighted
average value per share, (B) divided by $10.625. If you earn a percentage of
your 2001 target bonus, a percentage of the options equal to the percentage of
the 2001 target bonus awarded to you will vest on April 11, 2002, up to a
maximum of 100% of the options. Any options that do not vest on that date will
vest on the tenth anniversary of the date on which the related tendered Eligible
AMIP Shares were granted. The options will be exercisable for two years after
the date on which they vest. You must remain employed by us in order for the
options to vest and in order for you to be able to exercise the options after
they vest. The cash payment and the options are described fully in Section 10 of
this offer to repurchase. We will document the options by means of an option
agreement between us and you, a form of which is attached. The options will be
issued under the Advanta Corp. 2000 Omnibus Stock Incentive Plan (the "Omnibus
Plan"). The AMIP Program is administered under the Omnibus Plan.
Any portion of your 2001 target bonus that you previously elected to
receive in cash will not be affected in any way by whether you accept this
offer.
We are making this offer upon the terms and subject to the conditions
set forth in this offer to repurchase and in the related Letter of Transmittal
(which together, as they may be amended or supplemented from time to time,
constitute the "offer").
You may only tender either all or none of your Eligible AMIP Shares. We
will cancel all tendered Eligible AMIP Shares that we accept pursuant to this
offer.
This offer is not conditioned upon a minimum number of Eligible AMIP
Shares being tendered. This offer is subject to conditions that we describe in
Section 8 of this offer to repurchase. ALTHOUGH OUR BOARD OF DIRECTORS HAS
APPROVED THIS OFFER, NEITHER WE NOR OUR BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION AS TO WHETHER OR NOT YOU SHOULD TENDER YOUR ELIGIBLE AMIP SHARES.
YOU MUST MAKE YOUR OWN DECISION WHETHER TO TENDER YOUR ELIGIBLE AMIP SHARES.
Shares of our Class B Common Stock are quoted on the Nasdaq National
Market under the symbol "ADVNB." On August 3, 2001, the last reported sale price
of the Class B Common Stock on the Nasdaq National Market was $12.21 per share.
WE RECOMMEND THAT YOU OBTAIN CURRENT MARKET QUOTATIONS FOR OUR CLASS B COMMON
STOCK BEFORE DECIDING WHETHER TO TENDER YOUR ELIGIBLE AMIP SHARES.
You should direct questions about this offer or requests for assistance
or for additional copies of the offer to repurchase or the Letter of Transmittal
to the EXCHANGE PROGRAM INFORMATION LINE AT (215) 444-5205.
2
SUMMARY TERM SHEET
The following are answers to some of the questions that you may have
about this offer. We urge you to read carefully the remainder of this offer to
repurchase and the accompanying letter of transmittal because the information in
this summary is not complete and additional important information is contained
in the remainder of this offer to repurchase and the letter of transmittal. We
have included page references to the remainder of this offer to repurchase to
let you know where you can find a more complete description of the topics
covered in this summary.
- WHAT SECURITIES IS ADVANTA OFFERING TO REPURCHASE AND WHAT WILL I
RECEIVE IN EXCHANGE?
We are offering to repurchase all eligible AMIP shares from eligible
employees. If you are an eligible employee, in consideration for the repurchase
of your eligible AMIP shares, we will: (1) in the event you earn a percentage of
your 2001 target bonus, pay to you in cash the portion of your 2001 target bonus
that otherwise would have been payable in AMIP shares, and (2) grant to you new
options to purchase shares of our Class B Common Stock at an exercise price of
$10.625 per share. If you tender your eligible AMIP shares and we accept them
for repurchase, we will grant the new options promptly after the expiration of
the offer, subject to the vesting provisions described below, regardless of
whether you earn any percentage of your 2001 target bonus. Page 9.
- IF I TENDER MY ELIGIBLE AMIP SHARES, WHAT HAPPENS TO THE PORTION OF MY
2001 TARGET BONUS THAT I ELECTED TO RECEIVE IN CASH?
Nothing. This offer relates only to the tender of your eligible AMIP
shares. Any portion of your 2001 target bonus that you previously elected to
receive in cash is not affected in any way by whether you accept this offer. So,
if you earn a percentage of your 2001 target bonus, you still will receive the
part of the 2001 target bonus that you elected to receive in cash. For example,
if your 2001 target bonus is $20,000 and you elected to receive 50%, or $10,000,
of your 2001 target bonus in cash, assuming you earn 100% of your 2001 target
bonus, you will receive the $10,000 relating to that 50% cash election even if
you tender your eligible AMIP shares in the offer. Page 10.
- WHO QUALIFIES AS AN ELIGIBLE EMPLOYEE?
An "eligible employee" is any person who holds eligible AMIP shares, at
least some of which shares were granted before February 28, 2001, and who, as of
the date of expiration of the offer, is employed by us and has not received a
notice of termination that is effective on or before the expiration of this
offer. Page 9.
- WHAT ARE ELIGIBLE AMIP SHARES?
Eligible AMIP shares are AMIP shares attributable to an eligible
employee's 2001 target bonus that have a weighted average value, as calculated
for purposes of determining the original number of shares granted, that is
greater than $10.625 per share. Page 9.
-1-
3
- HOW IS THE WEIGHTED AVERAGE VALUE OF MY ELIGIBLE AMIP SHARES DETERMINED?
When you entered the applicable plan for 2001 under the AMIP Program, we
granted to you restricted shares of Class B Common Stock in an amount that
represented a value at the time of the grant equal to your 2001 target bonus
based on your then current base salary multiplied by the percentage of your then
current 2001 target bonus you elected to receive in AMIP shares. We valued the
shares granted to you at the 90-day trailing average stock price, as determined
in accordance with the provisions of the AMIP Program. If we later increased
your 2001 target bonus as a percentage of your base salary, you received an
additional grant of restricted shares in an amount representing the value of the
change in your 2001 target bonus. If you received additional shares of
restricted stock as a result of an increase in your 2001 target bonus, we
granted additional shares at the 90-day trailing average stock price in effect
at the time of the later grant, as determined in accordance with the provisions
of the AMIP Program. This could have been a different stock price than the one
that applied to your initial grant of restricted shares for your original 2001
target bonus.
We will calculate the weighted average value of your eligible AMIP
shares as follows: for each grant of restricted shares applicable to your 2001
target bonus, (1) we will multiply (X) the number of shares granted, by (Y) the
90-day trailing average stock price as determined in accordance with the AMIP
Program to obtain the value (V) for that particular grant; (2) we will add
together all of the values for all of the grants; then (3) we will divide the
sum of all values by the total number of shares in all grants. Pages 10-11.
For example, assume that upon entering the AMIP Program in 1999 your
base salary was $80,000, your 2001 target bonus was 25% of your salary and the
90-day trailing average stock price was $20.00 per share. If at that time you
elected to receive 100% of your 2001 bonus in AMIP shares, you would have been
granted 1,000 AMIP shares, calculated as follows: (1) $80,000 salary multiplied
by 25% target multiplied by 100% stock election, (2) divided by $20.00 share
price. If one year later your 2001 target bonus was increased to 40% of your
salary and the 90-day trailing average was $12.00, you would have been granted
an additional 1,000 AMIP shares as a result of the target bonus increase,
calculated as follows: (1) $80,000 salary multiplied by the 15% target increase
multiplied by 100% stock election, (2) divided by $12.00 share price. The
weighted average value of your shares would be $16.00 per share, calculated as
follows:
1,000 x $20.00 = $20,000(V1)
1,000 x $12.00 = $12,000(V2)
$20,000(V1) + $12,000(V2) = $32,000
$32,000 (sum of V1+V2) = $16.00 (weighted average value per share)
----------------------
2,000 (total # of shares)
-2-
4
- WHAT IS THE AMOUNT OF THE CASH PAYMENT THAT I WILL RECEIVE FOR MY
TENDERED ELIGIBLE AMIP SHARES?
Your actual bonus may range from 0% to 200% of your target bonus. The
actual percent of your target bonus that you earn will not be determined until
after the expiration date of this offer. To the extent your 2001 target bonus is
earned, we will pay your bonus entirely in cash, including the portion of your
2001 target bonus related to your eligible AMIP shares. For example, if your
2001 target bonus is $10,000, 50% of which you elected to receive in AMIP
Shares, and the Plan Administrative Committee of our board of directors and
management determine that under our annual bonus program you have earned 100% of
your 2001 target bonus, then, instead of the AMIP shares you would have
received, we will pay you $5,000 in cash. Any portion of your 2001 target bonus
that you previously elected to receive in cash is not affected in any way by
whether you accept this offer. Therefore, assuming the above facts, we would
also pay to you the 50% of your 2001 target bonus, or $5,000, that you
previously elected to receive in cash. If the Plan Administrative Committee and
management determine that you have earned some other percentage of your 2001
target bonus, which could be more than or less than 100%, we will pay you
entirely in cash the percentage of your 2001 target bonus that you earn,
including the portion that otherwise would have been paid to you in AMIP shares.
If the Plan Administrative Committee and management determine that you have not
earned any of the year 2001 target bonus, we will not pay you any cash on
account of the eligible AMIP shares that you tender. Pages 17-18.
- AM I GUARANTEED TO RECEIVE A CASH PAYMENT?
No. The cash payment will be made if, when and to the extent that we
would have granted accelerated vesting of your eligible AMIP shares in
accordance with the administrative guidelines for the AMIP Program. You will not
receive any cash for eligible AMIP shares that the Plan Administrative Committee
and management determine would not have been accelerated had you retained the
eligible AMIP shares. In other words, you will not receive any cash payment for
AMIP shares that would have been "frozen" and would have vested ten years after
the date of grant even if they had not been accelerated as a bonus payment.
Pages 17-18.
- IF I RECEIVE LESS THAN 100% OF MY 2001 TARGET BONUS AND I HAVE TENDERED
MY ELIGIBLE AMIP SHARES, WILL THE REMAINDER OF THE CASH BE "FROZEN" AND
PAID OUT TO ME ON THE 10TH ANNIVERSARY OF MY ENTERING THE AMIP PROGRAM?
No. If you tender your eligible AMIP shares and for your 2001
performance you receive no bonus payment or a bonus payment that is less than
100% of your 2001 target bonus, we will not pay to you the unearned portion of
your 2001 target bonus. See below for a discussion about when the new options
will vest if you earn less than 100% of your 2001 target bonus.
- WHEN WILL I RECEIVE MY CASH?
If you earn a percentage of your 2001 target bonus as described above,
we will pay to you an amount equal to that percentage of your 2001 target bonus
in cash, including the portion of your earned 2001 target bonus related to your
eligible AMIP shares, at the same time as other 2001 AMIP awards are paid under
our 2000 Omnibus Stock Incentive Plan. Page 17.
-3-
5
- HOW MANY OPTIONS WILL I RECEIVE FOR MY TENDERED ELIGIBLE AMIP SHARES?
We will grant you new options to purchase a number of shares of our
Class B Common Stock equal to (a) the number of eligible AMIP shares tendered by
you and accepted by us for repurchase multiplied by their weighted average value
per share, (b) divided by $10.625. This means that for every $1,062.50 of
weighted average value of eligible AMIP shares that you tender and we accept for
repurchase, you will receive 100 options. For example, if you tender and we
accept for repurchase 425 eligible AMIP shares with a weighted average value per
share of $15.00, we will grant you new options to purchase 600 shares of our
Class B Common Stock. However, we will not issue any options exercisable for
fractional shares. Instead, we will round down to the nearest whole number. For
example, if you tender 50 eligible AMIP shares with a weighted average value per
share of $20.00, a $1,000 value, that we accept for repurchase, you will receive
options exercisable for 94 shares. We will grant all of the new options under
our Omnibus Plan. The new options will be governed by the terms and conditions
of the Omnibus Plan and the terms and conditions contained in an option
agreement between you and us. If you tender your eligible AMIP shares and we
accept them for repurchase, we will grant the new options promptly after the
expiration of the offer, subject to the vesting provisions described below,
regardless of whether you earn any percentage of your 2001 target bonus. Page
18.
- WHEN WILL I RECEIVE MY NEW OPTIONS?
If we accept your eligible AMIP shares for exchange, we will grant the
new options promptly after the expiration of the offer. Page 18.
- WHAT WILL THE EXERCISE PRICE OF THE NEW OPTIONS BE?
The exercise price of each of the new options will be $10.625 per share
of Class B Common Stock. Page 18.
- WHEN WILL THE NEW OPTIONS VEST?
If you earn a percentage of your 2001 target bonus, a percentage of the
new options equal to the percentage of the 2001 target bonus awarded to you will
vest on April 11, 2002, up to a maximum of 100% of the new options. Any new
options that do not vest on that date will vest on the tenth anniversary of the
date on which the related tendered eligible AMIP shares were granted. For
example, assume that you receive 200 new options in exchange for your eligible
AMIP shares and that all of your eligible AMIP shares were originally granted to
you on January 1, 1998. If the Plan Administrative Committee and management
determine that you earn 75% of your 2001 target bonus, then 150 new options, or
75% of the 200 options, will be accelerated to vest on April 11, 2002 and the
remaining 50 options will vest on January 1, 2008. Even though the Plan
Administrative Committee and management may award you up to 200% of your 2001
target bonus, you will not receive additional options if you earn more than 100%
of your 2001 target bonus. No portion of the new options we grant will be
immediately exercisable. Page 18.
-4-
6
- IF I EARN LESS THAN 100% OF MY 2001 TARGET BONUS AND IF I HAVE HAD
MULTIPLE GRANTS OF ELIGIBLE AMIP SHARES, HOW WILL ADVANTA DETERMINE
WHICH OF MY NEW OPTIONS WILL BE ACCELERATED TO VEST ON APRIL 11, 2002
AND WHEN THE REMAINDER OF THE NEW OPTIONS VEST?
If you have had multiple grants of eligible AMIP shares and if you earn
less than 100% of your 2001 target bonus, we will use a first in, first out
calculation to determine which of your new options will be accelerated to vest
on April 11, 2002. This means that the new options that are related to your
oldest grants of eligible AMIP shares will be accelerated to vest first. For
example, if you receive 200 new options and if the Plan Administrative Committee
and management determine that you earn 75% of your 2001 target bonus, 150
options will be accelerated to vest on April 11, 2002. Assuming that one-fourth
of your eligible AMIP shares were issued on each of January 1, 1994, 1995, 1996
and 1999, the 150 options related to the eligible AMIP shares granted in 1994,
1995 and 1996 will be accelerated to vest on April 11, 2002. Subject to the
conditions contained in the Omnibus Plan and the option agreement, the 50
options related to the eligible AMIP shares granted in 1999 will not be
accelerated and will vest on January 1, 2009, 10 years following the grant of
the related eligible AMIP shares. Pages 18-19.
- AFTER THE NEW OPTIONS VEST, HOW LONG DO I HAVE TO EXERCISE THEM?
The new options will expire two years after the date on which they vest.
This means that you will have two years from the date on which the new options
vest in which to exercise them. For example, new options that are accelerated to
vest on April 11, 2002 will expire on April 11, 2004. If you do not remain
employed by Advanta Corp. or one of our subsidiaries, your options may expire
earlier than two years after they vest. Page 19.
- WHY ARE WE MAKING THE OFFER?
This offer to repurchase eligible AMIP shares in exchange for a
potential cash payment and new options is designed to restore the potential
value of your 2001 target bonus and reinforce our commitment to competitive
bonus opportunities. Without this offer to repurchase eligible AMIP shares from
eligible employees, our AMIP stock bonus program for the year 2001 would not
provide the full intended benefits because the program was designed before our
recent restructuring. By making this offer to repurchase eligible AMIP shares
from eligible employees for the potential cash payment and new options, we
believe your 2001 target bonus will have a greater potential value. Page 11.
- ARE THERE CONDITIONS TO THE OFFER?
The offer is not conditioned upon a minimum number of eligible AMIP
shares being tendered. However, a number of other events could occur which may
cause us to delay or terminate the offer. These events are described in Section
8. Pages 15-17.
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- ARE THERE ANY ELIGIBILITY REQUIREMENTS I MUST SATISFY TO RECEIVE THE
CASH AND THE NEW OPTIONS?
You must be an employee of Advanta Corp. or one of our subsidiaries from
the date of this offer through the expiration date of the offer to receive new
options as part of the consideration for the tender of your eligible AMIP
shares. You must be an employee of Advanta Corp. or one of our subsidiaries on
the date that bonuses for the 2001 performance year are paid and have earned a
percentage of your 2001 target bonus in order to receive any earned portion of
your 2001 target bonus, including the cash payment in lieu of eligible AMIP
shares described in this offer. Pages 9 & 20.
Your participation in the offer does not give you the right to remain in
the employ of Advanta Corp. or any of our subsidiaries nor does it guarantee
that any portion of your 2001 target bonus will be earned or paid in cash other
than as described in this offer to repurchase.
- IF I CHOOSE TO TENDER ELIGIBLE AMIP SHARES, DO I HAVE TO TENDER ALL OF
MY ELIGIBLE AMIP SHARES?
Yes. You must tender either all or none of your eligible AMIP shares. We
will not accept partial tenders of eligible AMIP shares. Page 10.
- WILL I HAVE TO PAY TAXES IF I TENDER MY ELIGIBLE AMIP SHARES IN THE
OFFER?
If you tender your eligible AMIP shares in the offer, we believe you
will not be required under current law to recognize income for federal income
tax purposes at the time of the issuance of the new options. However, if you
earn any portion of your 2001 target bonus, then our payment to you in cash as
described above will be fully taxable as ordinary income in the year it is paid.
Upon the exercise of all or any portion of your new options, you will have to
take into account as ordinary income for federal income tax purposes the excess
of the value of the stock acquired over the purchase price paid for the stock in
the year in which the exercise occurs. We recommend that you consult with your
own tax advisor to determine the specific tax consequences to you of tendering
eligible AMIP shares pursuant to the offer. Page 25.
- WHAT HAPPENS TO ELIGIBLE AMIP SHARES THAT I CHOOSE NOT TO TENDER OR THAT
ARE NOT ACCEPTED FOR REPURCHASE?
Nothing. Eligible AMIP shares that you choose not to tender or that we
do not accept for repurchase remain outstanding and remain subject to the terms
of the existing AMIP Program, including terms and conditions governing your
right to accelerated vesting.
- HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER ELIGIBLE AMIP SHARES IN
THE OFFER?
You have until 12:00 midnight, Eastern time, on Friday, October 5, 2001
to tender your eligible AMIP shares in the offer. Page 11.
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- CAN THE OFFER BE EXTENDED, AND IF SO, HOW WILL I BE NOTIFIED?
We may, in our discretion, extend the offer at any time, but we cannot
assure you that we will extend the offer or, if we extend it, for how long. If
we extend the offer, we will make an announcement of the extension to all
eligible employees no later than 9:00 a.m. on the first business day following
the previously scheduled expiration date. If we extend the offer, we may delay
the acceptance of any eligible AMIP shares that have been tendered. Pages 25-26.
- HOW DO I TENDER MY ELIGIBLE AMIP SHARES?
If you decide to tender your eligible AMIP shares, you must deliver,
before the offer expires, a properly completed and executed letter of
transmittal and any other documents required by the letter of transmittal to
Advanta Corp., Welsh and McKean Roads, Spring House, Pennsylvania 19477
Attention: Maryann Buchholz (facsimile number: (215) 444-6120). Pages 12-13.
- DURING WHAT PERIOD OF TIME MAY I WITHDRAW PREVIOUSLY TENDERED ELIGIBLE
AMIP SHARES?
You may withdraw your tendered eligible AMIP shares at any time before
12:00 midnight, Eastern time, on October 5, 2001; provided, however, that if the
offer is extended by us beyond that time, you may withdraw your tendered options
at any time until the extended expiration date. In addition, unless we terminate
the offer or accept your tendered eligible AMIP shares for repurchase before
12:00 midnight, Eastern time, on November 2, 2001, you may withdraw your
tendered eligible AMIP shares at any time after 12:00 midnight, Eastern time, on
November 2, 2001. Because we are not accepting partial tenders of eligible AMIP
shares, you may only withdraw all of the eligible AMIP shares you previously
tendered. To withdraw tendered eligible AMIP shares, you must deliver to us at
the address or facsimile number listed above a written notice of withdrawal
stating your name, the number of previously tendered eligible AMIP shares and
your desire to withdraw the tender of your eligible AMIP shares while you still
have the right to withdraw the tendered eligible AMIP shares. Once you have
withdrawn eligible AMIP shares, you may re-tender them only by again following
the delivery procedures described above. Pages 13-14.
- WHAT DO WE AND OUR BOARD OF DIRECTORS THINK OF THE OFFER?
Although our board of directors has approved this offer, neither we nor
our board of directors makes any recommendation as to whether or not you should
tender your eligible AMIP shares. You must make your own decision whether to
tender your eligible AMIP shares. For questions about tax implications or other
investment-related questions, you should talk to your own legal counsel,
accountant and/or financial advisor. Page 12.
- WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER?
For additional information or assistance, please call the Exchange
Program Information Line at (215) 444-5205.
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TABLE OF CONTENTS
Page
----
SUMMARY TERM SHEET 1
THE OFFER
1. Introduction 9
2. Determining the Weighted Average Value of Eligible AMIP Shares 10
3. Expiration Date 11
4. Purpose of the Offer 11
5. Procedures for Tendering Eligible AMIP Shares 12
6. Withdrawal Rights 13
7. Acceptance of Eligible AMIP Shares; Cash Payment
and Issuance of New Options 14
8. Conditions of the Offer 15
9. Price Range of Common Stock Underlying the New Options 17
10. Source and Amount of Consideration; Terms
of New Options 17
11. Information Concerning Advanta Corp. 21
12. Interests of Directors and Officers; Transactions
and Arrangements Concerning the Eligible AMIP Shares 23
13. Status of Eligible AMIP Shares Acquired by Us in the Offer;
Accounting Consequences of the Offer 24
14. Legal Matters; Regulatory Approvals 25
15. Material Federal Income Tax Consequences 25
16. Extension of Offer; Termination; Amendment 25
17. Fees and Expenses 26
18. Additional Information 26
19. Miscellaneous 27
SCHEDULE A Information Concerning the Directors and Executive Officers of
Advanta Corp.
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THE OFFER
1. INTRODUCTION
Advanta Corp. is offering to repurchase "Eligible AMIP Shares" from
"eligible employees." "Eligible AMIP Shares" are shares of restricted stock
granted under the Advanta Management Incentive Program (the "AMIP Program")
that:
- are attributable to an eligible employee's 2001 target bonus (the
"2001 target bonus"); and
- have a weighted average value, as calculated for purposes of
determining the original number of shares granted (the "weighted
average value") that is greater than $10.625 per share.
An "eligible employee" refers to any person: (1) who holds Eligible AMIP Shares,
at least some of which shares were granted prior to February 28, 2001; and (2)
who, as of the expiration of this offer, is employed by us and has not received
a notice of termination that is effective on or prior to the expiration of this
offer. If you are an eligible employee and you tender your Eligible AMIP Shares,
in consideration we will: (1) in the event you earn a percentage of your 2001
target bonus, pay to you in cash the portion of your 2001 target bonus that
otherwise would have been payable in AMIP shares (the "Cash Payment"), and (2)
regardless of whether you earn any percentage of your 2001 target bonus,
promptly grant to you options to purchase a number of shares of our Class B
Common Stock (the "New Options"), at an exercise price of $10.625 per share,
that is equal to (A) the number of Eligible AMIP Shares tendered by you and
accepted by us for repurchase multiplied by their weighted average value per
share, (B) divided by $10.625. If you earn a percentage of your 2001 target
bonus, a percentage of the New Options equal to the percentage of the 2001
target bonus awarded to you will vest on April 11, 2002, up to a maximum of 100%
of the New Options. Any New Options that do not vest on that date will vest on
the tenth anniversary of the date on which the related tendered Eligible AMIP
Shares were granted. The New Options will be exercisable for two years after the
date on which they vest. The Cash Payment and the New Options are described
fully in Section 10 of this offer to repurchase. We will document the New
Options by means of an option agreement between us and you, a form of which is
attached. The New Options will be issued under the Advanta Corp. 2000 Omnibus
Stock Incentive Plan (the "Omnibus Plan"). The AMIP Program is administered
under the Omnibus Plan.
You must be an employee of Advanta Corp. or one of our subsidiaries from
the date of this offer through the expiration date of this offer in order to
receive New Options as part of the consideration for the tender of your Eligible
AMIP Shares. You must be an employee of Advanta Corp. or one of our subsidiaries
in order for the New Options to vest and in order for you to have the right to
exercise them. You must be an employee of Advanta Corp. or one of our
subsidiaries on the date that bonuses for the 2001 performance year are paid and
have earned a percentage of your 2001 target bonus in order to receive the
earned portion of your 2001 target bonus, including the Cash Payment. Your
participation in the offer does not give you the right to remain in the employ
of Advanta Corp. or any of our subsidiaries nor does it guarantee that any
portion of your 2001 target bonus will be paid in cash or otherwise or that any
of the New Options will be accelerated to vest on April 11, 2002, except as
described in this offer to repurchase.
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We are making this offer upon the terms and subject to the conditions
set forth in this offer to repurchase and in the related Letter of Transmittal
(which together, as they may be amended or supplemented from time to time,
constitute the "offer").
You may only tender either all or none of your Eligible AMIP Shares. All
tendered Eligible AMIP Shares that we accept pursuant to this offer will be
cancelled.
Any portion of your 2001 target bonus that you previously elected to
receive in cash will not be affected in any way by whether you accept this
offer.
This offer is not conditioned upon a minimum number of Eligible AMIP
Shares being tendered. This offer is subject to conditions that we describe in
Section 8 of this offer to repurchase.
As of August 3, 2001, 17,359,944 shares of our Class B Common Stock were
issued and outstanding, of which 120,080 were Eligible AMIP Shares held by
eligible employees.
2. DETERMINING THE WEIGHTED AVERAGE VALUE OF ELIGIBLE AMIP SHARES
When you entered the applicable plan for 2001 under the AMIP Program, we
granted to you restricted shares of Class B Common Stock in an amount that
represented a value at the time of the grant equal to your 2001 target bonus
based on your then current base salary, multiplied by the percentage of your
then current 2001 target bonus you elected to receive in AMIP shares. We valued
the shares granted to you at the 90-day trailing average stock price, as
determined in accordance with the provisions of the AMIP Program. If we later
increased your target bonus as a percentage of your base salary, you received an
additional grant of restricted shares in an amount representing the value of the
change in your 2001 target bonus. If you received additional shares of
restricted stock as a result of an increase in your 2001 target bonus, we
granted additional shares at the 90-day trailing average stock price in effect
at the time of the later grant, as determined in accordance with the provisions
of the AMIP Program. This could have been a different stock price than the one
that applied to your initial grant of restricted shares for your original 2001
target bonus.
We will calculate the weighted average value of your eligible AMIP
shares as follows: for each grant of restricted shares applicable to your 2001
target bonus, (1) we will multiply (X) the number of shares granted, by (Y) the
90-day trailing average stock price as determined in accordance with the AMIP
Program to obtain the value (V) for that particular grant; (2) we will add
together all of the values for all of the grants; then (3) we will divide the
sum of all values by the total number of shares in all grants.
For example, assume that upon entering the AMIP Program in 1999 your
base salary was $80,000, your 2001 target bonus was 25% of your salary and the
90-day trailing average stock price was $20.00 per share. If at that time you
elected to receive 100% of your 2001 bonus in AMIP Shares, you would have been
granted 1,000 AMIP shares, calculated as follows: (1) $80,000 salary multiplied
by 25% target multiplied by 100% stock election, (2) divided by $20.00 share
price. If one year later your 2001 target bonus was increased to 40% of your
salary and the 90-day trailing average was $12.00, you would have been granted
an additional 1,000
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AMIP shares as a result of the target bonus increase, calculated as follows: (1)
$80,000 salary multiplied by the 15% target increase multiplied by 100% stock
election, (2) divided by $12.00 share price. The weighted average value of your
shares would be $16.00 per share, calculated as follows:
1,000 x $20.00 = $20,000(V1)
1,000 x $12.00 = $12,000(V2)
$20,000(V1) + $12,000(V2) = $32,000
$32,000 (sum of V1+V2) = $16.00 (weighted average value per share)
----------------------
2,000 (total # of shares)
3. EXPIRATION DATE
Upon the terms and subject to the conditions of the offer, we will
repurchase all outstanding Eligible AMIP Shares under the Omnibus Plan held by
eligible employees that are properly tendered and not validly withdrawn in
accordance with Section 6 before the "expiration date," as defined below. We
will not accept partial tenders of Eligible AMIP Shares. Therefore, you may only
tender either all or none of your Eligible AMIP Shares.
If you are an eligible employee and you properly tender all of your
Eligible AMIP Shares and if we accept your Eligible AMIP Shares for repurchase,
then, unless we terminate this offer pursuant to the terms and conditions of
this offer, you will be entitled to receive the consideration described in
Section 10 of this offer.
The term "expiration date" means 12:00 midnight, Eastern time, on
Friday, October 5, 2001, unless and until we, in our discretion, have extended
the period of time during which the offer will remain open, in which event the
term "expiration date" refers to the latest time and date at which the offer, as
so extended, expires. See Section 16 for a description of our rights to extend,
delay, terminate and amend the offer.
4. PURPOSE OF THE OFFER
This offer to repurchase Eligible AMIP Shares in exchange for the Cash
Payment and New Options is designed to restore the potential value of your 2001
target bonus and reinforce our commitment to competitive bonus opportunities.
Without this offer to repurchase Eligible AMIP Shares from eligible employees,
our AMIP stock bonus program for the year 2001 would not provide the full
intended benefits because the program was designed before our recent
restructuring. By making this offer to repurchase Eligible AMIP Shares from
eligible employees for the Cash Payment and New Options, we believe your 2001
target bonus will have a greater potential value.
Subject to the foregoing, and except as otherwise disclosed in this
offer or in our filings with the Securities and Exchange Commission, we
presently have no plans or proposals that relate to or would result in:
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(a) any extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving us or any of our subsidiaries;
(b) any purchase, sale or transfer of a material amount of our assets or
the assets of any of our subsidiaries;
(c) any material change in our present dividend rate or policy, or our
indebtedness or capitalization;
(d) any change in our present board of directors or management,
including a change in the number or term of directors, or to fill any existing
board vacancies or to change any executive officer's material terms of
employment;
(e) any other material change in our corporate structure or business;
(f) our common stock being delisted from or not being authorized for
quotation in an automated quotation system operated by a national securities
association;
(g) our common stock becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act");
(h) the suspension of our obligation to file reports pursuant to Section
15(d) of the Exchange Act;
(i) the acquisition by any person of any material amount of our
securities or the disposition of any material amount of our securities; or
(j) any change in our certificate of incorporation or bylaws, or any
actions which may impede the acquisition of control of us by any person.
Neither we nor our board of directors makes any recommendation as to
whether you should tender your Eligible AMIP Shares, nor have we authorized any
person to make any such recommendation. You are urged to evaluate carefully all
of the information in this offer to repurchase and to consult your own legal,
investment and/or tax advisors. You must make your own decision whether to
tender your Eligible AMIP Shares for repurchase.
5. PROCEDURES FOR TENDERING ELIGIBLE AMIP SHARES
PROPER TENDER OF ELIGIBLE AMIP SHARES. To validly tender your Eligible
AMIP Shares pursuant to the offer, you must, in accordance with the terms of the
Letter of Transmittal, properly complete, duly execute and deliver to us the
Letter of Transmittal, or a facsimile of the Letter of Transmittal, along with
any other required documents. Before the expiration date, we must receive the
Letter of Transmittal at the following address or facsimile number:
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Advanta Corp.
Welsh and McKean Roads
Spring House, Pennsylvania 19477
Attention: Maryann Buchholz
Facsimile No.: (215) 444-6120
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING LETTERS OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT YOUR ELECTION AND RISK. IF
YOU DELIVER BY MAIL, WE RECOMMEND THAT YOU USE REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED AND PROPERLY INSURE THE MATERIALS. IN ALL CASES, YOU SHOULD
ALLOW SUFFICIENT TIME TO ENSURE TIMELY DELIVERY.
DETERMINATION OF VALIDITY; REJECTION OF TENDERS; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. We will determine, in our reasonable
discretion, all questions as to form of documents and the validity, form,
eligibility, including time of receipt, and acceptance of any tender of Eligible
AMIP Shares. Our determination of these matters will be final and binding on all
parties. We reserve the right to reject any or all tenders of Eligible AMIP
Shares that we determine are not in appropriate form or that we determine are
unlawful to accept. Otherwise, we will accept properly and timely tendered
Eligible AMIP Shares that are not validly withdrawn. We also reserve the right
to waive any of the conditions of the offer or any defect or irregularity in any
tender with respect to any particular Eligible AMIP Shares or any particular
holder of Eligible AMIP Shares. No tender of Eligible AMIP Shares will be deemed
to have been properly made until all defects or irregularities have been cured
by the tendering holder of Eligible AMIP Shares or waived by us. Neither we nor
any other person is obligated to give you notice of any defects or
irregularities in your tender, nor will anyone incur any liability for failure
to give you any such notice.
OUR ACCEPTANCE CONSTITUTES AN AGREEMENT. Your tender of Eligible AMIP
Shares pursuant to the procedures described above constitutes your acceptance of
the terms and conditions of the offer. OUR ACCEPTANCE FOR REPURCHASE OF THE
ELIGIBLE AMIP SHARES TENDERED BY YOU PURSUANT TO THE OFFER WILL CONSTITUTE A
BINDING AGREEMENT BETWEEN US AND YOU UPON THE TERMS AND SUBJECT TO THE
CONDITIONS OF THE OFFER.
Subject to our rights to extend, terminate and amend the offer, we
currently expect that we will accept promptly after the expiration date all
properly tendered Eligible AMIP Shares that have not been validly withdrawn.
6. WITHDRAWAL RIGHTS
You may only withdraw your tendered Eligible AMIP Shares in accordance
with the provisions of this Section 6.
You may withdraw your tendered Eligible AMIP Shares at any time before
12:00 midnight, Eastern time, on October 5, 2001; provided, however, that if the
offer is extended by us beyond that time, you may withdraw your tendered
Eligible AMIP Shares at any time until the extended expiration date. In
addition, unless we terminate the offer or accept your tendered Eligible AMIP
Shares for repurchase before 12:00 midnight, Eastern time, on November 2,
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2001, you may withdraw your tendered Eligible AMIP Shares at any time after
12:00 midnight, Eastern time, on November 2, 2001.
To validly withdraw tendered Eligible AMIP Shares, a holder of Eligible
AMIP Shares must deliver to us at the address set forth in Section 5 of this
offer to repurchase a written notice of withdrawal, or a facsimile thereof,
stating the holder's name, the number of previously tendered Eligible AMIP
Shares and the holder's desire to withdraw the tender of Eligible AMIP Shares,
while the holder of Eligible AMIP Shares still has the right to withdraw the
tendered Eligible AMIP Shares. The notice of withdrawal must specify the name of
the holder of Eligible AMIP Shares who tendered the Eligible AMIP Shares to be
withdrawn and the number of Eligible AMIP Shares to be withdrawn. Because we are
not accepting partial tenders of Eligible AMIP Shares, you may only withdraw all
of the Eligible AMIP Shares held by you. Except as described in the following
sentence, the notice of withdrawal must be executed by the holder of Eligible
AMIP Shares who tendered the Eligible AMIP Shares to be withdrawn exactly as
such holder's name appears on the documents evidencing such Eligible AMIP
Shares. If the signature is by a trustee, executor, administrator, guardian,
attorney-in-fact or another person acting in a fiduciary or representative
capacity, the signer's full title and proper evidence of the authority of such
person to act in such capacity must be identified on the notice of withdrawal.
You may not rescind any withdrawal. Any Eligible AMIP Shares you
withdraw will thereafter be deemed not properly tendered for purposes of the
offer, unless you properly re-tender those Eligible AMIP Shares before the
expiration date by following the procedures described in Section 5 of this offer
to repurchase.
Neither we nor any other person is obligated to give you notice of any
defects or irregularities in any notice of withdrawal that you may submit, nor
will anyone incur any liability for failure to give you any such notice. We will
determine, in our discretion, all questions as to the form and validity,
including time of receipt, of notices of withdrawal. Our determination of these
matters will be final and binding.
7. ACCEPTANCE OF ELIGIBLE AMIP SHARES; CASH PAYMENT AND ISSUANCE OF NEW
OPTIONS
Upon the terms and subject to the conditions of this offer and promptly
following the expiration date, we will accept for repurchase and cancel Eligible
AMIP Shares properly tendered and not validly withdrawn before the expiration
date. If your properly tendered Eligible AMIP Shares are accepted for
repurchase, you will receive the consideration set forth in Section 10 of this
offer.
For purposes of the offer, we will be deemed to have accepted for
repurchase Eligible AMIP Shares that are validly tendered and not properly
withdrawn as, if and when we give oral or written notice to the holders of our
acceptance for repurchase of such Eligible AMIP Shares, which may be given by
e-mail. Subject to our rights to extend, terminate and amend the offer, we
currently expect that, promptly after the expiration date, we will:
- accept all properly tendered Eligible AMIP Shares that are not
validly withdrawn; and
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- send each tendering holder a letter indicating: (a) the amount
of the Cash Payment that would be paid if the eligible employee were to be
awarded a bonus for 2001 equal to 100% of the 2001 target bonus; and (b) the
number of New Options that we have awarded.
Under the current AMIP Program, your Eligible AMIP Shares will vest
automatically 10 years after you entered the AMIP Program, assuming you continue
to be employed by Advanta Corp. or one of its subsidiaries, even if we do not
accelerate vesting in accordance with the guidelines of the AMIP Program. If you
tender your Eligible AMIP Shares, your Eligible AMIP Shares will not be
available for vesting at any time. In addition, if you tender your Eligible AMIP
Shares, you will no longer have the rights of a shareholder of our Class B
Common Stock as to those Eligible AMIP Shares, including the right to receive
dividends.
If you tender your eligible AMIP shares and for the 2001 performance
year you receive no bonus payment or a bonus payment that is less than 100% of
your 2001 target bonus, we will not pay you in cash or otherwise the unearned
portion of your 2001 target bonus at any time in the future.
8. CONDITIONS OF THE OFFER
Notwithstanding any other provision of the offer, and in addition to,
and not in limitation of, our right to extend or amend the offer at any time in
our reasonable discretion, we will not be required to accept for payment, or pay
for, any Eligible AMIP Shares tendered, and we may terminate or amend the offer
or may postpone, subject to the requirements of the Exchange Act for prompt
payment for or return of the Eligible AMIP Shares, the acceptance for payment
of, and payment for, Eligible AMIP Shares tendered if at any time on or after
the date of this offer and on or before the expiration date of the offer (except
in the case of conditions involving the receipt of necessary governmental
approvals) any of the following shall have occurred or shall have been
determined in our reasonable judgment to have occurred and in any such case and
regardless of the circumstances (including any action or omission to act by us)
giving rise to those circumstances, the event, in our reasonable judgment, makes
it inadvisable to proceed with the offer or with the acceptance for payment or
payment:
- there shall have been threatened, instituted or pending any
action or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic or
foreign, or before any court or governmental, regulatory or administrative
authority, agency or tribunal, domestic or foreign, which, directly or
indirectly: (a) challenges the making of the offer, the acquisition of some or
all of the Eligible AMIP Shares pursuant to the offer or otherwise relates in
any manner to the offer; or (b) in our reasonable judgment, could materially and
adversely affect our business, financial or other condition, income, operations
or prospects, or otherwise materially impair in any way the contemplated future
conduct of our business or any of our affiliates or materially impair the
contemplated benefits of the offer to us; or
- there shall have been any action threatened, pending or taken,
or approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered, amended,
enforced, issued or deemed to be applicable to the offer or us or any of our
subsidiaries, by any court or any government or governmental,
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regulatory or administrative authority, agency or tribunal, domestic or foreign,
which, in our reasonable judgment, would or might directly or indirectly: (a)
make the acceptance for payment of, or payment for, some or all of the Eligible
AMIP Shares illegal or otherwise restrict or prohibit consummation of the offer;
(b) delay or restrict our ability, or render us unable, to accept for payment or
pay for some or all of the Eligible AMIP Shares; (c) materially impair the
contemplated benefits of the offer to us; or (d) materially affect our business,
financial or other condition, income, operations or prospects, or otherwise
materially impair in any way the contemplated future conduct of our business or
any of our affiliates; or
- there shall have occurred: (a) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States; (b) any general suspension of trading in, or limitation on prices for,
securities on any United States national securities exchange or in the
over-the-counter market; (c) the commencement of a war, armed hostilities or any
other national or international crisis directly or indirectly involving the
United States; (d) any limitation, whether or not mandatory, by any
governmental, regulatory or administrative agency or authority on, or any event
which, in our reasonable judgment, might affect, the extension of credit by
banks or other lending institutions in the United States; (e) any change in the
general political, market, economic or financial conditions in the United States
or abroad that could, in our reasonable judgment, have a material adverse effect
on our business, financial or other condition, income, operations or prospects;
or (f) in the case of any of the foregoing existing at the time of the
commencement of the offer, in our reasonable judgment, a material acceleration
or worsening thereof; or
- any change shall have occurred or shall have been threatened in
our business, financial or other condition, income, operations, or prospects,
which, in our reasonable judgment, is or may be materially adverse to us or any
of our affiliates, or any other event shall have occurred which, in our
reasonable judgment, materially impairs the contemplated benefits of the offer
to us; or
- any tender or exchange offer with respect to some or all of our
capital stock, other than this offer, or any merger, business combination or
acquisition proposal, disposition of assets, other than in the ordinary course
of business, or other similar transaction with or involving us or any of our
affiliates, other than the offer, shall have been proposed, announced or made by
any person or entity.
All of the foregoing conditions, other than those involving receipt of
necessary governmental approvals, will be satisfied or waived on or before the
expiration date. The foregoing conditions are for our sole benefit and may be
asserted by us regardless of the circumstances (including any action or inaction
by us) giving rise to any such condition. Any such condition may be waived by
us, in whole or in part, at any time and from time to time in our reasonable
discretion. Our failure at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right; the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts or circumstances; and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
Any determination by us concerning the events described in this Section 8 and
any related judgment by us regarding the inadvisability of proceeding with the
acceptance
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for payment or payment for any tendered Eligible AMIP Shares shall be final and
shall be binding on all parties.
9. PRICE RANGE OF COMMON STOCK UNDERLYING THE NEW OPTIONS
Our Class B Common Stock is traded on the Nasdaq National Market under
the symbol" ADVNB." The following table shows, for the periods indicated, the
high, low and closing sales prices for the last two years of our Class B Common
Stock as reported by the Nasdaq National Market.
Quarter Ended: High Low Close
-------------- ---- --- -----
September 1999 $19.13 $11.38 $11.75
December 1999 $15.88 $10.44 $14.06
March 2000 $15.50 $11.50 $14.48
June 2000 $15.13 $7.75 $8.50
September 2000 $10.19 $7.50 $8.14
December 2000 $8.38 $4.13 $7.19
March 2001 $14.00 $7.16 $13.69
June 2001 $14.00 $11.90 $13.97
As of August 3, 2001, the last reported sale price of our Class B Common
Stock, as reported by the Nasdaq National Market, was $12.21 per share, and
there were 17,359,944 shares outstanding.
WE RECOMMEND THAT YOU OBTAIN CURRENT MARKET QUOTATIONS FOR OUR CLASS B
COMMON STOCK BEFORE DECIDING WHETHER TO TENDER YOUR ELIGIBLE AMIP SHARES.
10. SOURCE AND AMOUNT OF CONSIDERATION; TERMS OF NEW OPTIONS
CONSIDERATION
CASH. As part of the consideration for Eligible AMIP Shares validly
tendered and accepted by us pursuant to this offer, if you earn a percentage of
your 2001 target bonus, we will make a Cash Payment to you in an amount equal to
the earned portion of the 2001 target bonus that otherwise would have been paid
in AMIP shares. The Plan Administrative Committee of the board of directors (the
"Plan Administrative Committee") and management may determine that an eligible
employee has earned between 0% and 200% of his or her 2001 target bonus. We will
pay to you in cash such portion of the 2001 target bonus that is related to your
Eligible AMIP Shares as the Plan Administrative Committee and management have
determined that you have earned. We will pay the Cash Payment out of our general
funds. To the extent you earn a percentage of your 2001 target bonus, as
described above, we will make the Cash Payment at the same time as other 2001
AMIP awards are paid under our Omnibus Plan. The Cash Payment will be made only
to the extent that the Plan Administrative Committee and management would have
granted accelerated vesting of your Eligible AMIP Shares in accordance with the
administrative guidelines for the AMIP Program. You will not receive cash
pursuant to this offer to the extent the Plan Administrative Committee and
management determine that vesting of
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some or all of your Eligible AMIP Shares would not have been accelerated had you
retained the Eligible AMIP Shares. In other words, you will not receive a Cash
Payment to the extent the Plan Administrative Committee and management determine
that some or all of your Eligible AMIP Shares would have been "frozen" and would
not have vested until ten years after the date of grant.
Any portion of your 2001 target bonus that you previously elected to
receive in cash will not be affected in any way by whether you accept this
offer.
If we receive and accept tenders of all outstanding Eligible AMIP Shares
held by eligible employees and if 100% of the eligible employees earn their 2001
target bonuses at a payout rate of 100% of the 2001 target bonuses, we will make
Cash Payments in the aggregate amount of $3,237,789.
OPTIONS. As part of the consideration for Eligible AMIP Shares validly
tendered and accepted by us pursuant to this offer, we will issue New Options to
purchase shares of our Class B Common Stock under the Omnibus Plan. We will
grant the New Options promptly after expiration of the offer, subject to the
vesting provisions described below, regardless of whether you earn any
percentage of your 2001 target bonus. If you tender your Eligible AMIP Shares
pursuant to this offer, you will receive a number of New Options that is equal
to (1) the number of Eligible AMIP Shares tendered by you and accepted by us for
repurchase multiplied by the weighted average value per share (as calculated for
purposes of determining the original number of shares granted - see Section 2 of
this offer to repurchase), (2) divided by $10.625. However, we will not issue
any options exercisable for fractional shares. Instead, we will round down to
the nearest whole number. Even though the Plan Administrative Committee and
management may award you up to 200% of your 2001 target bonus, you will not
receive additional options if you earn more than 100% of your 2001 target bonus.
If we receive and accept tenders of all outstanding Eligible AMIP Shares, we
will grant New Options to purchase a total of approximately 238,671 shares of
our Class B Common Stock and the Class B Common Stock issuable upon exercise of
the New Options will equal approximately 1.37% of the total shares of our Class
B Common Stock outstanding as of August 3, 2001.
TERMS OF NEW OPTIONS
The New Options will be issued under the Omnibus Plan. A new option
agreement will be entered into between us and each eligible employee who is
employed by Advanta Corp. or one of its subsidiaries on the expiration date of
this offer and whose tendered Eligible AMIP Shares are accepted for repurchase
by us in the offer. The exercise price of the New Options to be granted pursuant
to the offer will be $10.625 per share of Class B Common Stock. WE RECOMMEND
THAT YOU OBTAIN CURRENT MARKET QUOTATIONS FOR OUR CLASS B COMMON STOCK BEFORE
DECIDING WHETHER TO TENDER YOUR ELIGIBLE AMIP SHARES. If you earn a percentage
of your 2001 target bonus, a percentage of the New Options equal to the
percentage of the 2001 target bonus awarded to you will vest on April 11, 2002,
up to a maximum of 100% of the New Options. Any New Options that do not vest on
that date will vest on the tenth anniversary of the date on which the related
tendered Eligible AMIP Shares were granted. If you have had multiple grants of
Eligible AMIP Shares and if the Plan Administrative Committee and management
determine that you earn less than 100% of your 2001 target bonus, we will use a
first in, first out calculation to determine when your New Options will vest
other than on April 11, 2002. Using a
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first in, first out calculation means that the New Options that are related to
your oldest grants of Eligible AMIP Shares will be accelerated to vest first. No
portion of the New Options we grant will be immediately exercisable. Subject to
the provisions of the Omnibus Plan and your option agreement, the New Options
will expire two years after the date on which they vest.
TERMS OF THE OMNIBUS PLAN. The following description summarizes the
material terms of the Omnibus Plan and the options granted under the Omnibus
Plan.
General. The maximum number of shares of our Class B Common
Stock available for issuance pursuant to the exercise of options granted
under the Omnibus Plan is currently 20,000,000. The Omnibus Plan permits
the granting of non-qualified stock options (i.e., stock options that
are not incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code")). All options
subject to this offer are non-qualified stock options.
Administration. The Omnibus Plan is administered by the Plan
Administrative Committee of our board of directors and provides the
committee with broad discretion to fashion the terms of grants of
options, including type of option, number of shares subject to the
option and exercise price, as it deems appropriate. The committee also
selects the persons to whom options are granted.
Exercise Price. The exercise price of each non-qualified stock
option is generally the fair market value of the underlying stock on the
date of grant, unless otherwise provided in the document evidencing the
grant. As noted above, the exercise price of the New Options will be
$10.625 per share.
Vesting and Exercise. The Plan Administrative Committee may
determine at what time or times each option may be exercised and the
period of time, if any, after retirement, death, disability or
termination of employment during which options may be exercised. The
exercisability of options may be accelerated by the Plan Administrative
Committee in accordance with the terms of the Omnibus Plan.
Term. The Plan Administrative Committee may determine at what
time or times each non-qualified stock option expires.
Method of Exercising Options. After options have vested, the
option holder may exercise the options in accordance with the terms of
the Omnibus Plan and the option holder's option agreement by providing
to us (1) a written notice identifying the option and stating the number
of shares of Class B Common Stock that the option holder desires to
purchase and containing the acknowledgements set forth in the Omnibus
Plan and (2) payment in full of the option price per share for the
shares of Class B Common Stock then being acquired by certified or
cashier's check payable to the order of Advanta Corp. in full payment
for the shares of Class B Common Stock being purchased. We may also in
our discretion require full payment for taxes associated with the
exercise of options and provide for alternate means of exercise of the
options and of payment upon exercise.
Prohibition Against Transfer, Pledge and Attachment. The
options, and the rights and privileges conferred by them, are personal
to the option holder and may not be
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transferred, assigned, pledged or hypothecated in any way, whether by
operation of law or otherwise, and during the option holder's lifetime
shall be exercisable only by the option holder. The option holder may
transfer the options, and the rights and privileges conferred by them,
upon the option holder's death, either by will or under the laws of
descent and distribution. Notwithstanding the foregoing, the option
holder may transfer all or part of the options to the option holder's
immediate family members, to trusts for the benefit of the option holder
and/or such immediate family members and to partnerships or other
entities in which the option holder and/or such immediate family members
own all the equity interests; provided, however, the option holder may
not make such a transfer to any such person without our prior written
consent, which consent may be granted or denied in our sole discretion.
All such transferees shall be subject to all of the terms and conditions
of the options to the same extent as the option holder.
TERMINATION OF EMPLOYMENT. You must be an employee of Advanta Corp. or
one of our subsidiaries from the date of this offer through the expiration date
of this offer in order to receive New Options as part of the consideration for
the tender of your Eligible AMIP Shares. You must be an employee of Advanta
Corp. or one of our subsidiaries in order for the New Options to vest and in
order for you to have the right to exercise them. This means that if you die,
quit or we terminate your employment prior to the expiration date of this offer,
you will not receive any New Options for your cancelled Eligible AMIP Shares
that you tendered. Subject to the option agreement between you and us, after the
grant date of the New Options, if you cease to be an employee of Advanta for any
reason other than retirement, disability or death, then you shall have until the
earlier of (1) the expiration date of the New Options or (2) the date of
termination of your employment to exercise the New Options to the extent to
which you would otherwise have been entitled to exercise the New Options on or
prior to the date of termination. To the extent you are not entitled to exercise
the New Options before the date of your termination, such outstanding and
unexercised New Options shall immediately lapse and you shall have no further
rights with respect to them, effective as of the date of termination of your
employment.
After the date of grant of the New Options, if your employment with
Advanta Corp. is terminated due to your retirement, the New Options shall be
exercisable until the earlier of (1) the expiration date of the New Options, or
(2) two years from the date of your retirement to the extent to which you would
otherwise be entitled to exercise the New Options on or before the date of your
termination. After the date of grant of the New Options, if your employment with
Advanta Corp. is terminated due to disability or death, the options shall be
exercisable until the earlier of (1) the expiration date of the New Options, or
(2) 180 days from the date of disability or death to the extent to which you
would otherwise be entitled to exercise the New Options on or before the date of
your termination. To the extent your are not entitled to exercise any portion of
the New Options prior to the date of your termination due to retirement,
disability or death, the unexercised portion of the New Options shall
immediately lapse, effective as of the date of termination of your employment on
account of retirement, disability or death.
REGISTRATION OF NEW OPTION SHARES. All shares of our Class B Common
Stock issuable upon exercise of options under the Omnibus Plan, including the
shares that will be issuable upon exercise of New Options to be granted pursuant
to the offer, have been registered under the
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Securities Act of 1933, as amended, on a registration statement on Form S-8
filed with the Securities and Exchange Commission.
EFFECT OF CHANGE OF CONTROL. If we merge or are consolidated with, or
sell substantially all of our assets or stock to, another entity after the
Eligible AMIP Shares are accepted pursuant to this offer and before the
expiration date of the New Options, all of the New Options will become
immediately exercisable in full for those eligible employees who are employed by
us on the date of the change of control. Upon a change of control as defined in
the Omnibus Plan, we may take whatever action we deem necessary with respect to
outstanding New Options, including accelerating the expiration or termination
date to a date no earlier than 30 days after notice of such acceleration is
given to option holders, provided, however, that such accelerated expiration
date may not be earlier than the date as of which the New Options have become
fully vested and exercisable.
Our statements in this offer concerning the Omnibus Plan and the New
Options are merely summaries and are not complete. The statements are subject
to, and are qualified in their entirety by reference to, all provisions of the
Omnibus Plan and the form of option agreement under the Omnibus Plan, each of
which is filed as an exhibit to the Tender Offer Statement on Schedule TO, of
which this offer to repurchase is a part. See Section 18 for a discussion of how
to obtain copies of the Omnibus Plan and form of Option Agreement.
11. INFORMATION CONCERNING ADVANTA CORP.
Advanta Corp. is a Delaware corporation. We are a highly focused
financial services company which has been providing innovative financial
solutions since 1951. We leverage our direct marketing and information based
expertise to develop state-of-the-art data warehousing and statistical modeling
tools that identify potential customers and new target markets. Over the past
five years, we have used these distinctive capabilities to become one of the
nation's largest issuers of MasterCard(R)(1) business credit cards to small
businesses. In addition to our business credit card business, we make venture
capital investments through our affiliates, including Advanta Partners LP.
We own two depository institutions, or banks, Advanta National Bank and
Advanta Bank Corp. We fund and operate our business credit card business
primarily through Advanta Bank Corp.
Prior to January 23, 2001, we offered small ticket equipment leases to
small businesses. After a thorough review of strategic alternatives available to
the leasing business, our management determined that it was in the best
interests of our stockholders to cease originating leases and to continue to
service the existing lease portfolio, rather than sell the business or the
portfolio.
The financial statements set forth in pages 37 through 79 of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2001, pages 3 through
20 of our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2001, and pages 3 through 21 of our
--------------------------
(1) MasterCard(R) is a federally registered servicemark of MasterCard
International, Inc.
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Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2001 are
incorporated herein by reference. See Section 18 for a discussion of how to
obtain copies of these documents.
Our principal executive offices are located at Welsh and McKean Roads,
Spring House, Pennsylvania 19477. The telephone number at our executive offices
is (215) 657-4000.
ADVANTA CORP. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
INCOME STATEMENT DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
2000 1999 2001 2000
--------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
Revenues $ 293,181 $ 209,954 $ 142,669 $ 146,213
Income (loss) from continuing operations 11,192 41,334 (40,529) 23,039
Net income (loss) (156,684) 49,818 (36,606) (175,626)
--------------------------------------------------------------------------------------------------------------------
Basic income (loss) from continuing
operations per common share
Class A $ 0.39 $ 1.59 $ (1.61) $ 0.89
Class B 0.47 1.66 (1.58) 0.93
Combined 0.44 1.63 (1.59) 0.92
--------------------------------------------------------------------------------------------------------------------
Diluted income (loss) from
continuing operations per common
share
Class A $ 0.39 $ 1.58 $ (1.61) $ 0.88
Class B 0.46 1.65 (1.58) 0.91
Combined 0.44 1.62 (1.59) 0.90
--------------------------------------------------------------------------------------------------------------------
Basic net income (loss) per common share
Class A $ (6.28) $ 1.95 $ (1.46) $ (7.05)
Class B (6.21) 2.02 (1.43) (7.01)
Combined (6.24) 1.99 (1.44) (7.03)
--------------------------------------------------------------------------------------------------------------------
Diluted net income (loss) per common share
Class A $ (6.23) $ 1.94 $ (1.46) $ (6.94)
Class B (6.16) 2.00 (1.43) (6.91)
Combined (6.19) 1.98 (1.44) (6.92)
--------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
($ IN THOUSANDS, EXCEPT PER SHARE DATA) DECEMBER 31, DECEMBER 31, JUNE 30,
2000 1999 2001
--------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
Total assets $2,843,472 $3,538,560 $1,772,326
Total liabilities 2,302,570 2,848,929 1,261,379
Company-obligated mandatorily redeemable
preferred securities of subsidiary
trust holding solely subordinated
debentures of Advanta Corp. 100,000 100,000 100,000
Total stockholders' equity 440,902 589,631 410,947
--------------------------------------------------------------------------------------------------------------------
Book value per common share $ 17.06 $ 23.14 $ 15.63
--------------------------------------------------------------------------------------------------------------------
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COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
YEAR ENDED SIX MONTHS ENDED
($ IN THOUSANDS) DECEMBER 31, JUNE 30,
---------------------------------------------------------------------------------------------------------------
2000 1999 2001 2000
---------------------------------------------------------------------------------------------------------------
Income (loss) from
continuing operations $ 11,192 $ 41,334 $ (40,529) $ 23,039
Income tax expense (benefit) 0 (55,785) 16,880 0
--------- --------- --------- ---------
Earnings (loss) before
income tax expense (benefit) (A) 11,192 (14,451) (57,409) 23,039
Fixed charges:
Interest 86,508 80,800 50,395 41,738
One-third of all rentals 1,853 1,759 805 896
Preferred stock dividend
of subsidiary trust 8,990 8,990 4,495 4,495
--------- --------- --------- ---------
Total fixed charges 97,351 91,549 55,695 47,129
--------- --------- --------- ---------
Earnings (loss) before
income tax expense (benefit) and
fixed charges $ 108,543 $ 77,098 $ (1,714) $ 70,168
Ratio of earnings to
fixed charges (B) 1.11 x N/M (C) N/M (C) 1.49 x
(A) Earnings before income taxes in the six months ended June 30,
2001 include $41.8 million of unusual charges. Unusual charges
include severance, outplacement and other compensation costs
associated with restructuring our corporate functions
commensurate with the ongoing businesses as well as expenses
associated with exited businesses and asset impairments.
(B) For purposes of computing these ratios, "earnings" represent
income from continuing operations before income taxes plus fixed
charges. "Fixed charges" consist of interest expense, one-third
(the portion deemed representative of the interest factor) of
rental expense on operating leases, and preferred stock
dividends of subsidiary trust.
(C) The ratios calculated in the year ended December 31, 1999 and
the six months ending June 30, 2001 are less than 1.00 and
therefore, not meaningful. In order to achieve a ratio of 1.00,
earnings before income taxes and fixed charges would need to
increase by $14,451 for the year ended December 31, 1999 and
$57,409 for the six months ended June 30, 2001.
12. INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE ELIGIBLE AMIP SHARES
A list of our directors and executive officers is attached to this offer
to repurchase as Schedule A. As of August 3, 2001, our executive officers as a
group beneficially owned 35,168 Eligible AMIP Shares outstanding under the
Omnibus Plan, which represented approximately
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29.3% of the Eligible AMIP Shares outstanding under the Omnibus Plan as of that
date. Our non-employee directors own no Eligible AMIP Shares. As of August 3,
2001, our executive officers and non-employee directors as a group beneficially
owned 2,668,702 shares of Class B Common Stock, which represented 15.37% of the
Class B Common Stock outstanding as of that date. Our executive officers have
indicated that they intend to tender their Eligible AMIP Shares.
Under the terms of the Omnibus Plan, from time to time we grant to our
employees, including our executive officers, and our non-employee directors the
following awards: (1) options to purchase shares of our Class B Common Stock,
(2) restricted shares of our Class B Common Stock, (3) stock appreciation
rights, and (4) other performance-based awards. In addition to this offer to
repurchase Eligible AMIP Shares, we currently expect that we will adjust other
awards previously made under the Omnibus Plan to some of our employees,
including our executive officers, and our non-employee directors, to the extent
the awards were based on Class B Common Stock prices that were higher at the
time of grant than current prices, in order to recognize the contributions made
by those employees and directors and to provide them with continued incentives
to devote themselves to our success. In connection with these adjustments, on
August 22, 2001, we: (i) cancelled a total of approximately 237,748 options to
purchase shares of Class B Common Stock held by certain of our executive
officers and directors and awarded an aggregate of 59,437 shares of Class B
Common Stock, and (ii) cancelled a total of approximately 592,084 stock
appreciation rights and/or 27,413 shares of phantom stock held by certain of
our directors and awarded cash in the aggregate amount of $4,126,725 to be
distributed over a four-year period. We have also, from time to time, granted
restricted shares of Class B Common Stock to executives under the terms of
their employment agreements. Except as set forth above or elsewhere in this
offer to repurchase, neither Advanta Corp. nor, to our knowledge, any of
Advanta Corp.'s directors or executive officers is a party to any contract,
arrangement, understanding or relationship with any other person relating,
directly or indirectly, to the offer with respect to any of the securities of
Advanta Corp. (including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies, consents or authorizations).
On July 31, 2001, Arthur Bellis, one of our directors, purchased 10,600
shares of our Class B Common Stock on the open market at a price of $11.95 per
share.
Except as otherwise described above, there have been no transactions
with respect to our Eligible AMIP Shares or in our Class B Common Stock which
were effected during the past 60 days by Advanta Corp., or to our knowledge, by
any executive officer, director, affiliate or subsidiary of Advanta Corp. or an
associate of the any of the foregoing.
13. STATUS OF ELIGIBLE AMIP SHARES ACQUIRED BY US IN THE OFFER; ACCOUNTING
CONSEQUENCES OF THE OFFER
Eligible AMIP Shares we acquire pursuant to the offer will be cancelled
and returned to the pool of shares available for grants of shares under the
Omnibus Plan. To the extent such shares are not fully reserved for issuance upon
exercise of the New Options, the shares will be available for future awards to
employees and other eligible plan participants without further stockholder
action, except as required by applicable law or the rules of the Nasdaq National
Market or any other securities quotation system or any stock exchange on which
our common stock is then quoted or listed.
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We believe that, as a result of the transactions contemplated by the
offer, compensation expense in 2001 with respect to Eligible Employees whose
Eligible AMIP Shares are repurchased pursuant to the offer will not materially
change.
14. LEGAL MATTERS; REGULATORY APPROVALS
We are not aware of any license or regulatory permit that appears to be
material to our business that might be adversely affected by our repurchase of
Eligible AMIP Shares or the distribution of the Cash Payments and issuance of
New Options as contemplated by the offer, or of any approval or other action by
any government or governmental, administrative or regulatory authority or
agency, domestic or foreign, that would be required for the repurchase of the
Eligible AMIP Shares as contemplated by this offer. Should any such approval or
other action be required, we presently contemplate that we will seek such
approval or take such other action. We are unable to predict whether we may
determine that we are required to delay the acceptance of Eligible AMIP Shares
for repurchase pending the outcome of any such matter. We cannot assure you that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that the failure to obtain any such
approval or other action might not result in adverse consequences to our
business. Our obligation under the offer to accept tendered Eligible AMIP
Shares, to make the Cash Payments and to issue New Options is subject to
conditions, including the conditions described in Section 8.
15. MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material federal income tax
consequences of the repurchase of Eligible AMIP Shares pursuant to the offer.
This discussion is based on the Code, its legislative history, treasury
regulations thereunder and administrative and judicial interpretations thereof
as of the date of the offer, all of which are subject to change, possibly on a
retroactive basis. This summary does not discuss all of the tax consequences
that may be relevant to you in light of your particular circumstances, nor is it
intended to be applicable in all respects to all categories of persons to whom
this offer is made.
If you tender your Eligible AMIP Shares in the offer, we believe you
will not be required under current law to recognize income for federal income
tax purposes at the time of the issuance of the New Options. However, the Cash
Payment will be fully taxable as ordinary income in the year it is paid. Upon
the exercise of all or any portion of your New Options, you will have to take
into account as ordinary income for federal income tax purposes the excess of
the value of the stock acquired over the purchase price paid for the stock in
the year in which the exercise occurs.
WE RECOMMEND THAT YOU CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE
SPECIFIC FEDERAL, STATE AND LOCAL TAX CONSEQUENCES TO YOU OF PARTICIPATING IN
THE OFFER.
16. EXTENSION OF OFFER; TERMINATION; AMENDMENT
We expressly reserve the right, in our discretion, at any time and from
time to time, and regardless of whether or not any event set forth in Section 8
has occurred or is deemed by us to have occurred, to extend the period of time
during which the offer is open and thereby delay the
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acceptance for repurchase of any Eligible AMIP Shares by giving oral or written
notice of such extension to the eligible employees and making a public
announcement thereof.
We also expressly reserve the right, in our reasonable judgment, prior
to the expiration date to terminate or amend the offer and to postpone our
acceptance and cancellation of any options tendered for repurchase upon the
occurrence of any of the conditions specified in Section 8, by giving oral or
written notice of such termination or postponement to the eligible employees and
making a public announcement thereof. Our right to delay our acceptance and
cancellation of Eligible AMIP Shares tendered for repurchase is limited by Rule
13e-4(f)(5) promulgated under the Exchange Act, which requires that we must pay
the consideration offered or return the Eligible AMIP Shares tendered promptly
after termination or withdrawal of a tender offer.
We may amend the offer at any time and from time to time by making a
public announcement of the amendment. In the case of an extension, the amendment
must be issued no later than 9:00 a.m., Eastern time, on the next business day
after the last previously scheduled or announced expiration date. Any
announcement made pursuant to the offer will be disseminated promptly to
eligible employees in a manner reasonably designed to inform them of such
change. Any such announcement most likely would be made by e-mail.
If we materially change the terms of the offer or the information
concerning the offer, or if we waive a material condition of the offer, we will
extend the offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3)
under the Exchange Act. These rules require that the minimum period during which
an offer must remain open following material changes in the terms of the offer
or information concerning the offer, other than a change in price or a change in
percentage of securities sought, will depend on the facts and circumstances,
including the relative materiality of such terms or information.
17. FEES AND EXPENSES
We will not pay any fees or commissions to any broker, dealer or other
person for soliciting tenders of Eligible AMIP Shares pursuant to this offer.
18. ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a Tender Offer
Statement on Schedule TO, of which this offer is a part. This offer does not
contain all of the information contained in the Schedule TO and the exhibits to
the Schedule TO. We recommend that you review the Schedule TO, including its
exhibits, before making a decision on whether to tender your Eligible AMIP
Shares.
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the following public reference rooms maintained by the SEC at:
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
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28
You may obtain information on the operation of the SEC's public
reference rooms by calling the SEC at 1-800-SEC-0330. Our SEC filings also are
available to the public from the SEC's Internet website at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this offer the
information we file with the SEC. This means that we are permitted to disclose
information to you by referring you to other documents we have filed with the
SEC. The information incorporated by reference is considered to be part of this
offer, and information that we file with the SEC after the date of this offer
will automatically update and supersede this information.
We incorporate by reference in this offer all the documents listed below
and any filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this offer and before the expiration date of
the offer:
- Our Annual Report on Form 10-K for the year ended December 31,
2000;
- Our Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31 and June 30, 2001; and
- Our Current Reports on Form 8-K filed with the SEC on: January
9, January 23, February 5, February 26, March 1, March 8, March
14, April 10, April 25, June 28, July 25 and July 30, 2001.
We will deliver, without charge, to anyone receiving this offer, upon
written or oral request, a copy of any document incorporated by reference in
this offer but not delivered to you with this offer, excluding all exhibits to
those documents except any exhibit that has been specifically incorporated by
reference. Requests for these documents should be made to the following address
and phone number: Investor Relations Department, Advanta Corp., Welsh & McKean
Roads, P.O. Box 844, Spring House, Pennsylvania 19477, telephone (215) 657-4000.
To ensure delivery before the expiration date, any request for documents should
be made by Monday, October 1, 2001.
19. MISCELLANEOUS
FORWARD-LOOKING STATEMENTS. This offer and the information incorporated
herein by reference may contain forward-looking statements. These statements can
be identified by the use of forward-looking phrases such as "will likely
result," "may," "are expected to," "is anticipated," "estimate," "projected,"
"intends to," or other similar words. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those projected. Significant risks and uncertainties
include those factors discussed in this offer with respect to the trading market
for our Class B Common Stock and additional risks that may affect our future
performance and that are included elsewhere in this offer and in our other
filings with the Securities and Exchange Commission. When considering
forward-looking statements, you should keep in mind these risk factors and other
cautionary statements in this offer. You should not place undue reliance on any
forward-looking statement that speaks only as of the date made.
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The cautionary statements provided above are being made according to the
provisions of the Private Securities Litigation Reform Act of 1995 and with the
intention of obtaining the benefits of the "safe harbor" provisions of that act
for any such forward-looking information contained in the information
incorporated by reference herein. Please note that the safe harbor under the
Private Securities Litigation Reform Act of 1995 is not available with respect
to statements that are made in connection with this offer to repurchase.
COMPLIANCE WITH APPLICABLE LAW. We are not aware of any jurisdiction
where the making of the offer is not in compliance with applicable law. If we
become aware of any jurisdiction where the making of the offer is not in
compliance with any valid applicable law, we will make a good faith effort to
comply with such law. If, after such good faith effort, we cannot comply with
such law, the offer will not be made to, nor will tenders be accepted from or on
behalf of, the holders of Eligible AMIP Shares residing in that jurisdiction.
Advanta Corp.
September 28, 2001
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SCHEDULE A
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF ADVANTA CORP.
The directors and executive officers of Advanta Corp. and their
positions and offices as of September 28, 2001 are set forth in the following
table.
NAME POSITIONS AND OFFICES HELD
--------------------------------------------------------------------------------
Dennis Alter Chairman of the Board and Chief Executive
Officer
William A. Rosoff President and Vice Chairman of the Board
Philip M. Browne Senior Vice President and Chief Financial
Officer
Jeffrey D. Beck Vice President and Treasurer; and President,
Advanta Bank Corp.
David B. Weinstock Vice President and Chief Accounting Officer
Arthur P. Bellis Director
Robert Rock Director
Max Botel Director
Dana Becker Dunn Director
James E. Ksansnak Director
Ronald Lubner Director
Olaf Olafsson Director
Robert Blank Director
Michael Stolper Director
The address of each director and executive officer is: c/o Advanta Corp., Welsh
and McKean Roads, Spring House, Pennsylvania 19477.
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IMPORTANT
If you wish to tender your Eligible AMIP Shares, you must complete and
sign the Letter of Transmittal in accordance with its instructions, and mail,
fax or hand deliver it and any other required documents to us at Advanta Corp.,
Welsh and McKean Roads, Spring House, Pennsylvania 19477, Attention: Maryann
Buchholz (facsimile number: (215) 444-6120).
We are not making this offer to, nor will we accept any tender of
Eligible AMIP Shares from or on behalf of, holders of Eligible AMIP Shares in
any jurisdiction in which the offer or the acceptance of any tender of the
Eligible AMIP Shares would not be in compliance with the laws of that
jurisdiction. However, we may, at our discretion, take any actions necessary for
us to make this offer to holders of Eligible AMIP Shares in any such
jurisdiction.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR
BEHALF AS TO WHETHER OR NOT YOU SHOULD TENDER YOUR ELIGIBLE AMIP SHARES PURSUANT
TO THE OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT
OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFER OTHER
THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT OR IN THE
RELATED LETTER OF TRANSMITTAL. IF ANYONE MAKES ANY RECOMMENDATION OR
REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU MUST NOT RELY UPON THAT
RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US.
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OFFER TO REPURCHASE SHARES OF RESTRICTED STOCK ISSUED UNDER
THE ADVANTA CORP. 2000 OMNIBUS STOCK INCENTIVE PLAN
-----------------------
If you wish to tender your Eligible AMIP Shares, you must complete and
sign the Letter of Transmittal in accordance with its instructions, and mail,
fax or hand deliver it and any other required documents to us at Advanta Corp.,
Welsh and McKean Roads, Spring House, Pennsylvania 19477, Attn: Maryann Buchholz
(facsimile number: (215) 444-6120).
Any questions, requests for assistance or additional copies of any
documents referred to in the offer to repurchase may be directed to the Exchange
Program Information Line at (215) 444-5205.
-----------------------
September 28, 2001
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EX-99.A.10
4
w52124eex99-a_10.txt
CORRESPONDENCE TO ELIGIBLE EMP. 9/29/2001
1
Exhibit (a)(10)
Communication to Advanta Employees
September 28, 2001
Please find attached a revised version of the AMIP Exchange Offer to Repurchase
and Letter of Transmittal reflecting clarifying language that we have filed with
the SEC. None of the material terms of the offer has changed, but the language
is more detailed in certain sections. Language that has been changed is
highlighted in blue text.
As a reminder, the expiration date of the AMIP Exchange Program is 12:00
midnight, Friday, October 5, 2001. If you have already returned your Letter of
Transmittal (your election form) there is no need to return the attached
revised version. In the event that you do not submit a new Letter of
Transmittal, the terms of the first one will remain in effect. However, we will
not hold you to the representations in the original Letter of Transmittal
that you have "reviewed the Offer to Repurchase and the Letter of Transmittal"
or that we have advised you to consult with your own tax, financial, legal and
other advisors.
If you would like to participate in the offer and have not yet returned your
Letter of Transmittal, you may print, sign and return the attached. (Letters of
Transmittal cannot be accepted via e-mail.)
If you would like a paper copy of any of these documents, or have any
questions, please feel free to contact the Exchange Information
Line at 215-444-5205.
Best Regards,
John Walp
VP Human Resources