-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rtgr0oq+Ie8PufGLz3hlynkzVZuVx1c+0mbxAG/ie8aMwiB8wWRVFVDGPd+ncdIN VAUR6gSCKmrDY4PYLdpfLw== 0000950115-99-000360.txt : 19990318 0000950115-99-000360.hdr.sgml : 19990318 ACCESSION NUMBER: 0000950115-99-000360 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19990317 FILER: 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: S-3 SEC ACT: SEC FILE NUMBER: 333-74575 FILM NUMBER: 99567167 BUSINESS ADDRESS: STREET 1: P.O. BOX 844 STREET 2: WELSH & MCKEAN ROADS CITY: SPRING HOUSE STATE: PA ZIP: 19477 BUSINESS PHONE: 2156574000 MAIL ADDRESS: STREET 1: BRANDYWINE CORPORATE CENTER STREET 2: 650 NAAMANS ROAD CITY: CLAYMONT STATE: DE ZIP: 19703 FORMER COMPANY: FORMER CONFORMED NAME: TSO FINANCIAL CORP DATE OF NAME CHANGE: 19880306 FORMER COMPANY: FORMER CONFORMED NAME: TEACHERS SERVICE ORGANIZATION INC DATE OF NAME CHANGE: 19850812 S-3 1 REGISTRATION STATEMENT As filed with the Securities and Exchange Commission, via EDGAR, on March 17, 1999. Registration No. 333-____ ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- Advanta Corp. ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Delaware 23-1462070 ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation of Registrant) Identification Number) Welsh & McKean Roads SpringHouse, PA 19477 (215) 657-4000 --------------------------------------------------------------------------- (Address, including zip code, and telephone number, including area code, of Registrant principal executive offices) Elizabeth H. Mai, Esquire Senior Vice President, Secretary and General Counsel Advanta Corp. Welsh & McKean Roads SpringHouse, PA 19477 (215) 657-4000 ------------------------------------------------------------------------------ (Name, address, including zip code, and telephone number, including area code, of agent for service) Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement as determined by market conditions. If the only securities being registered on this Form are to be offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE ===================================================================================================================== Proposed maximum Proposed maximum Title of each class of Amount to be offering price aggregate offering Amount of securities to be registered registered (1) per unit (1)(2) price (1)(2) registration fee (3) - --------------------------------------------------------------------------------------------------------------------- RediReserve Certificates, Notes.... $300,000,000 100% $300,000,000 $83,400 =====================================================================================================================
(1) Pursuant to Rule 457 under the Securities Act, which permits the registration fee to be calculated on the basis of the maximum offering price of all the securities listed, the table does not specify by each class information as to the amount to be registered, proposed maximum offering price per unit or proposed maximum aggregate offering price. In no event will the aggregate initial offering price of the securities registered hereby exceed $300,000,000. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933. (3) Calculated pursuant to Rule 457(o) under the Securities Act. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Subject to Completion, Dated March 17, 1999 $300,000,000 Principal Amount of Senior Debt Securities [ADVANTA LOGO] RediReserve Variable Rate Certificates 91 Day Notes Six, 18 and 30 Month Notes One, Two, Three, Four, Five, Seven and Ten Year Notes We are offering the RediReserve Variable Rate Certificates ("RediReserve Certificates") and the Notes of Advanta Corp. ("Advanta"). The RediReserve Certificates do not have a maturity date but may be redeemed by the holder at any time. The Notes will be offered from time to time with maturities ranging from 91 days to ten years, at our option. We will establish interest rates on the RediReserve Certificates and the Notes from time to time in supplements to this prospectus. You should read this prospectus and the applicable prospectus supplement carefully before you invest. The RediReserve Certificates and the Notes offered in this prospectus are unsecured obligations of Advanta. Neither the RediReserve Certificates nor the Notes are insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. Unless otherwise indicated in the supplement to this prospectus, the RediReserve Certificates and the Notes are being sold by Advanta directly through employees of Advanta who, under Rule 3a4-1 of the Securities Exchange Act of 1934, as amended, are not deemed to be brokers. The RediReserve Certificates and the Notes will not be listed for sale on a securities exchange and we do not expect that any active trading market for these securities will develop or be sustained. An investment in the RediReserve Certificates or the Notes involves certain risks. You should consider carefully the risk factors and other information set forth in this prospectus before you decide to purchase these securities. See "Risk Factors" beginning on page 6. Advanta will receive all of the proceeds from the sale of the RediReserve Certificates and the Notes, from which it will pay underwriters' discounts and commissions, if any. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is _________ __, 1999. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. TABLE OF CONTENTS PAGE ---- SUMMARY OF THE OFFERING..................................... 3 HIGHLIGHTS OF TERMS OF SECURITIES OFFERED................... 5 RISK FACTORS................................................ 6 THE COMPANY................................................. 11 USE OF PROCEEDS............................................. 13 DESCRIPTION OF SECURITIES................................... 13 General................................................ 13 Provisions Relating to RediReserve Certificates........ 13 Provisions Relating to Notes........................... 16 Provisions Relating to All Securities.................. 17 A SPECIAL NOTE ABOUT CERTAIN OTHER ADVANTA DEBT SECURITIES NOT COVERED BY THIS PROSPECTUS............................ 20 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES............... 20 U.S. Holders........................................... 21 Backup Withholding and Information Reporting........... 21 PLAN OF DISTRIBUTION........................................ 22 WHERE YOU CAN FIND MORE INFORMATION -- INCORPORATION OF CERTAIN INFORMATION BY REFERENCE......... 24 LEGAL OPINIONS.............................................. 24 EXPERTS..................................................... 24 ------------------------ You should rely only on the information contained or incorporated by reference in this prospectus and any applicable prospectus supplement. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of the document. Our business, financial condition, results of operations and prospects may have changed since that date. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. All references to "we" or "us" or "our" or "Advanta" in this prospectus and any accompanying prospectus supplement mean only Advanta Corp., unless it is made clear that the term means Advanta Corp. and its consolidated subsidiaries. 2 SUMMARY OF THE OFFERING This summary highlights selected information about the securities offered in this prospectus. It does not contain all of the information that you may need to consider in making your investment decision. Read carefully this entire prospectus and the applicable prospectus supplement to understand all of the terms of this offering. Securities Offered This prospectus relates to $300,000,000 of RediReserve Certificates and Notes. The RediReserve Certificates and the Notes are sometimes collectively referred to in this prospectus as the "Securities". The RediReserve Certificates are payable on the demand of the holder. The Notes are offered from time to time with maturities of: o 91 days; o six, 18 and 30 months; and o one, two, three, four, five, seven and ten years. The buyer of each Note selects the maturity date at the time of purchase from among the maturities then offered by Advanta. The Securities are not insured, guaranteed or secured by any of our assets. In addition, we do not contribute funds to a separate account, commonly known as a sinking fund, to ensure repayment of the Securities upon maturity or interest when due. We will compound interest on the RediReserve Certificates daily and we will add the interest to the balance of a holder's RediReserve Certificate monthly. We will not pay interest by check, except upon a holder's redemption of the entire amount of a RediReserve Certificate. Upon a holder's redemption of the entire amount of a RediReserve Certificate, we will pay by check any accrued interest that has not previously been added to the principal balance of the RediReserve Certificate. We will not pay interest on any RediReserve Certificate for any day for which the end-of-the-day balance of that RediReserve Certificate is less than $100. Advanta may elect to charge a service fee of $10 for any statement period for each RediReserve Certificate that has an average end-of-the-day balance for the period of less than $100. Holders may obtain by draft funds held in the form of RediReserve Certificates, except as described under the sections of this prospectus titled "Description of Securities -- Redemption at Holder's Election" and " -- Redemption by Draft." We will compound interest on all Notes daily. We will pay interest on Notes with maturities of 91 days or six months only at maturity. On all other Notes, we will pay interest monthly, quarterly, semi-annually, annually or at maturity, at the holder's election. A table summarizing the terms of the Securities appears on page 5. Modification, Termination or Extension of Offering We reserve the right to change the terms of this offering or the terms of the Securities at any time. However, any modification will apply only to Securities offered after the date of the modification, except as described under "Description of Securities -- General." From time to time, the total amount of Securities we offer for sale may be increased. How to Contact Us Holders of RediReserve Certificates or Notes who have customer service inquiries and potential investors who would like to receive a copy of this prospectus may call us at 1-800-223-7074 or write us at the following address: Advanta Corp., Delaware Corporate Center - Second Floor, One Righter Parkway, Wilmington, Delaware 19803. 3 Our Principal Executive Office Our principal executive office is located at Welsh & McKean Roads, Spring House, Pennsylvania 19477-0844. The telephone number at our principal executive office is (215) 657-4000. Ratio of Earnings to Fixed Charges The following table sets forth the ratio of earnings to fixed charges of Advanta for the periods indicated:
Three Months Nine Months Year Ended December 31, Ended Ended ------------------------------------- September 30, 1998 September 30, 1998 1997 1996 1995 1994 1993 ------------------ ------------------ ----- ----- ----- ----- ----- (Unaudited) (Unaudited) Ratio of Earnings to Fixed Charges (A)...... 1.57x 3.85x 1.29x 1.97x 2.26x 2.71x 2.52x
- ------------------ (A) For purposes of computing these ratios, "earnings" represent income before income taxes plus fixed charges. "Fixed charges" consist of interest expense, one-third (the proportion deemed representative of the interest factor) of rental expenses on operating leases and preferred stock dividends of a subsidiary trust. 4 HIGHLIGHTS OF TERMS OF SECURITIES OFFERED | | RediReserve Variable Rate Certificates | Denomination of | Minimum initial purchase: $5,000 or other amount we specify Initial Purchase and | in a prospectus supplement; additional purchases in any Additional Purchases | amount. | Annual Interest Rate | The interest rate we pay on any particular RediReserve | Certificate depends on the tier into which the | end-of-the-day balance of that RediReserve Certificate | falls. Different interest rates and annual percentage yields | may apply to RediReserve Certificates depending upon which | of the following tiers, or ranges, the end-of-the-day | balance of a RediReserve Certificate falls: | | o $100.00 to $4,999.99 | o $5,000.00 to $24,999.99 | o $25,000.00 to $49,999.99 | o $50,000.00 and above | | We will not pay interest on a RediReserve Certificate for | any day on which the end-of-the-day balance of a RediReserve | Certificate is less than $100. Interest rates and annual | percentage yields for each tier may change from week to week | and will apply to outstanding RediReserve Certificates. We | will set interest rates for each tier each Sunday, and they | will be in effect through the following Saturday. We will | set interest rates at our discretion, however interest rates | for each one-week period commencing on Sunday will be at | least equal to the rate of the Thirteen Week U.S. Treasury | Bills auctioned on the immediately preceding Monday less one | percent. | Payment of Interest | Interest is compounded daily. We add accrued interest | monthly to the principal balance of each RediReserve | Certificate. Except as otherwise provided in this | prospectus, we will not pay interest by check. | Redemption by Holder | Holders may require redemption upon oral or written demand, | or by draft. Holders may cause redemption by draft utilizing | up to four drafts per statement period without any service | fee. We will charge a service fee of $15 for each draft in | excess of four in any statement period. | Redemption by Advanta | We may redeem on 30 days' notice. Form | Book-entry and non-negotiable. | A confirmation of the transaction will be issued, not a | promissory note. | Automatic Extension | Not applicable -- no fixed maturity. | | | | | | | | | | | | | |
91 Day, Six, 18 and 30 Month, and One, Two, Three, Four, Five, Seven and Ten Year Notes Denomination of Minimum purchase: $5,000 or other amount we specify in a Initial Purchase and prospectus supplement. Additional Purchases Annual Interest Rate We fix interest rates, from time to time, based on market conditions and our financial requirements. Once determined, the interest rate on each Note remains fixed until its maturity, but may change if the term of the Note is extended. If the term of a Note is extended, we will inform holders of any change in the interest rate in a supplement to this prospectus. Payment of Interest Interest is compounded daily. We pay interest on Notes with maturities of 91 days or six months only at maturity. On all other Notes, at the election of the holder, we pay interest monthly, quarterly, semi-annually, annually or at maturity. Redemption by Holder An individual holder may cause redemption after his or her total permanent disability, or his or her estate may cause redemption after his or her death. For Notes with joint holders, the election to cause redemption may be made by any holder after the death or total permanent disability of any holder. The redemption price is the principal amount plus accrued and unpaid interest up to but not including the date of redemption. Otherwise, holders have no right to redemption of their Notes prior to maturity. Redemption by Advanta We may not redeem until maturity. Form Book-entry and non-negotiable. A confirmation of the transaction will be issued, not a promissory note. Automatic Extension If we do not give notice of redemption at least seven Business Days prior to maturity and if redemption or conversion to another term is not requested by the holder within seven Business Days after the maturity date, then a Note with a principal amount of $2,500 or more will be extended automatically for a period equal to the original term if Notes of the same term and denomination are then being offered. A Note with a principal amount that is less than $2,500 at maturity will be redeemed automatically. Notes are extended at the rate we are offering on newly-issued Notes of the same term and denomination at their respective maturity dates. If Notes of the same term and denomination are not then being offered, a maturing Note will be redeemed unless the holder selects a Note with a term currently being offered.
The Securities are Advanta's unsecured debt obligations. We are not subject to state or federal regulations applicable to banks and savings and loan associations, including, among other things, regulations regarding the maintenance of reserves and the quality or condition of our assets. It is not expected that there will be a trading market for the Securities. See "Description of Securities -- Provisions Relating to All Securities -- Liquidity." The Securities are not insured or guaranteed by us or any of our subsidiaries or any other public or private entity. 5 RISK FACTORS Before you invest in any of the Securities offered in this prospectus, you should be aware that there are various risks, including those described below. You should consider carefully these risk factors together with all of the other information included in this prospectus and the applicable prospectus supplement before you decide to purchase any of the Securities. Some of the information in this prospectus may contain forward-looking statements. These statements can be identified by the use of forward-looking phrases such as "will likely result," "may," "are expected to," "is anticipated," "estimate," "projected," "intends to," or other similar words. These forward-looking statements are subject to certain risks and uncertainties, including those described below, that could cause actual results to differ materially from those projected, as described below. Additional risks that may affect our future performance are included elsewhere in this prospectus and in our other filings with the SEC. When considering forward-looking statements, you should keep in mind these risk factors and other cautionary statements in this prospectus. You should not place undue reliance on any forward-looking statement that speaks only as of the date made. Absence of Sinking Fund, Security, Insurance and Guarantees for Payment on Securities The Securities are not secured by any of our assets. We do not contribute funds to a separate account, commonly known as a sinking fund, to make interest or principal payments on the Securities. Further, no governmental or other entity insures or guarantees payment on the Securities if we do not have sufficient funds to make interest and/or principal payments. Therefore, if you invest in any of the Securities, you will have to rely solely upon Advanta Corp.'s revenues from operations and other sources of funds for repayment of principal at maturity or redemption and for payment of interest when due. Limited Events of Default; Absence of Provisions Relating to Highly Leveraged Transactions or a Change in Control The Securities are governed by a trust indenture which is an agreement between us and the trustee relating to certain aspects of the Securities. The indenture governing the Securities contains only limited events of default other than our failure to pay principal or interest on time. See "Description of Securities -- Provisions Relating to All Securities -- Events of Default." Further, the indenture provides only limited protection for holders of the Securities if we are purchased through what is known as a leveraged buy-out or if there is a change in control. A leveraged buy-out is a transaction where a buyer seeking to purchase Advanta relies on our credit and uses our assets as collateral to borrow funds to finance the purchase. Though the indenture requires a buyer to assume our obligations to holders of Securities under the indenture, the indenture does not prohibit the buyer from incurring additional debt through a leveraged buy-out which might be senior in right of repayment to that of the holders of the Securities. This type of transaction might adversely impact our liquidity and our ability or our successor's ability to make payments on the Securities. Non-Investment Grade Ratings of Our Debt May Adversely Affect Our Ability to Obtain Financing Our ability to access the capital markets for the sale of additional debt or equity securities could be adversely affected by non-investment grade ratings from rating agencies. Our debt is currently rated investment grade by one rating agency and below investment grade by four rating agencies. Continuation of a current below investment grade rating or a down-grade of any of the ratings of our debt may adversely impact, among other things, our access to the capital markets for the sale of additional debt or equity securities, the amount of collateral lenders will require that we pledge to secure future financing and our ability to raise funds on terms that we consider favorable to us. 6 Reduced Availability of Funding May Adversely Affect Our Ability to Fund Our Operations and Loan and Lease Portfolios Advanta Corp. and its subsidiaries depend on funds available under secured lending facilities, known as warehouse facilities, and asset-backed lending facilities, known as commercial paper conduit facilities, with institutional lenders to fund our operations. At December 31, 1998, Advanta Corp. and its subsidiaries had available over $770 million in unused warehouse lines and commercial paper conduit facilities. These lending facilities are subject to renewal or extension at the lender's option. The facilities also require us to comply with various covenants and restrictions which, if breached, could cause an early termination of the facility. There can be no assurance that the existing facilities will be extended or renewed and we cannot be certain that we will be able to replace the existing facilities on terms that are favorable to us when they expire. If we are unable to obtain additional lending facilities on terms similar to the existing facilities, it may have a material adverse effect on our ability to continue to fund our operations, including our ability to repay indebtedness, including the Securities. To generate cash for the funding of our operations we rely on our ability to aggregate and sell loans and leases as asset-backed securities through transactions known as securitizations. Our ability to complete securitizations is dependent upon: o general conditions in the securities markets; o specific conditions in the asset-backed security markets; and o the quality of our loan and lease portfolios. Adverse changes in these conditions or the quality of our loan and lease portfolios may adversely impact the timing of our securitization transactions and our ability to complete securitizations on terms that are satisfactory to us. Any substantial reduction in our ability to complete securitizations could adversely affect our results of operations and financial condition. Restrictions on Our Ability to Receive Funds From Our Bank and Insurance Subsidiaries May Adversely Affect Our Liquidity We conduct most of our business operations through our wholly-owned subsidiaries, including our insurance companies and our two depository subsidiaries, Advanta National Bank and Advanta Bank Corp. Our depository institutions and insurance companies are subject to significant state and federal regulation that, among other things, restrict our ability to receive dividends and loans from them. Among those restrictions are the following: o Banking regulations limit the amount of dividends that our depository subsidiaries may pay to us. o Insurance regulations in the State of Arizona, where our insurance subsidiaries are incorporated, restrict the amount of dividends that any of our insurance subsidiaries may distribute to us in any twelve-month period without the prior consent of the State of Arizona Department of Insurance. o Sections 23A and 23B of the Federal Reserve Act restrict the ability of our depository institutions to transfer funds to us and certain of our affiliates in the form of loans, extensions of credit, investments or purchases of assets. These regulations also require generally that transactions between our depository subsidiaries and us be on terms no less favorable to the depository subsidiaries than comparable transactions with unrelated third parties. Similarly, transfers of funds in any twelve-month period by any one depository subsidiary to us or to any single affiliate may not exceed 10% of the depository subsidiary's capital and surplus, and transfers to all affiliates in any twelve-month period may not exceed 20% of its capital and surplus. 7 o We must comply with certain collateral requirements when obtaining loans or other extensions of credit from our affiliated depository institutions. The limitations on our ability to obtain funds from our depository and insurance subsidiaries affect the amount of cash we may have available at any time and may adversely affect our financial condition, including our ability to make interest and/or principal payments on the Securities. Subordination of the Securities to Indebtedness of Subsidiaries According to state and federal regulations that govern our depository and insurance subsidiaries, our right to receive any distribution of assets from any of these subsidiaries if they liquidate their assets or undergo a reorganization or other similar transaction is subject to the prior claims of creditors of the subsidiary, unless we are recognized as a creditor of the subsidiary. Consequently, the Securities will be effectively junior in right of repayment to all of the existing and future liabilities of our depository and insurance subsidiaries. At December 31, 1998, our subsidiaries had total liabilities (excluding liabilities owed to us) of approximately $2 billion. The indenture does not limit the amount of secured or unsecured debt that we or any of our subsidiaries may incur. See "Description of Securities -- Provisions Relating to All Securities -- Aggregate Indebtedness." Regulation of the Banking and Financing Industries May Impact Our Profitability By Increasing the Cost of Doing Business Our banking and finance businesses in general, and our banking and insurance subsidiaries in particular, are subject to extensive federal and state regulation. Our lending activities are subject to regulation under various federal and state laws including the following: o the Truth-in-Lending Act; o the Equal Credit Opportunity Act; o the Home Mortgage Disclosure Act; o the Community Reinvestment Act; o the Electronic Funds Transfer Act; o the Real Estate Settlement Practices Act; and o the Fair Credit Reporting Act. Certain of these statutes and regulations also apply to our leasing activities. In addition, the subsidiaries through which we conduct our home equity lending businesses are required to be licensed, and are subject to regulation in various states as mortgage bankers, mortgage brokers, and originators, sellers and servicers of mortgage loans. We are also subject to examinations by federal and state regulatory authorities with respect to originating, processing, underwriting, selling and servicing home equity loans. Failure to comply with these statutory and regulatory requirements can lead to, among other remedies, termination or suspension of licenses, certain rights of rescission for mortgage loans, class action lawsuits and administrative enforcement actions. We have implemented systems and procedures for compliance with these requirements and we believe that we are in compliance in all material respects with applicable local, state and federal laws, rules and regulations. However, we cannot be certain that more restrictive laws, rules and regulations will not be adopted in the future that could make compliance more difficult or expensive. 8 Risks Associated with Maintaining Portfolios of Home Equity Loans and Making Loans to Non-Conforming Borrowers May Cause Uncertainty in Our Future Profitability Certain risks are associated with maintaining portfolios of home equity loans. These risks are inherent to every lender and involve potential increases in credit losses. Any material decline in real estate values reduces the ability of borrowers to use home equity to support borrowings. It also increases the loan-to-value ratios of loans previously made by us. The consequence is a weakening of collateral coverage and an increase in the possibility of a loss if a borrower defaults. In addition, we market home equity loans to borrowers who, for one reason or another, are not able, or do not wish, to obtain financing from more traditional sources. Loans made to these borrowers entail additional risks and uncertainties not present in traditional types of loans. As a result, we may experience higher delinquency rates and losses than those experienced by other lenders if adverse economic conditions occur. While we use underwriting standards and collection procedures designed to help overcome the higher credit risk associated with lending to these borrowers, we cannot be certain that these standards or procedures will offer adequate protection against this risk. We also regularly review our loan and lease portfolio to evaluate the adequacy of the reserves we establish for anticipated credit losses. This evaluation takes into account a number of factors including the credit quality of our loan portfolio, past experience, current economic conditions and changes in the composition of our loan portfolio. We believe that we establish adequate reserves for credit losses. However, if loans we manage experience higher delinquencies, foreclosures or losses than anticipated, our reserves could be inadequate and our results of operations or financial condition could be adversely affected. Risks Associated with Leasing Activities May Cause Uncertainty in Our Future Profitability There are risks inherent in our leasing activities which differ in certain respects from those existing in our mortgage and other businesses. Our equipment leases are generally secured by a lien on the leased equipment. However, it is possible that the value of the leased equipment will be impaired due to damage, destruction or technological obsolescence before the termination of the lease. The consequences of this impairment to the value of our collateral may adversely impact our financial results. Market Risk; Changes in Interest Rates May Adversely Affect Profitability Our profitability may be affected by fluctuations in interest rates, changes in economic conditions, shifts in consumer behavior and other factors. Any decline in interest rates could reduce the amounts that we can earn on our newly originated loans and leases. A decline in interest rates could also result in an increase in prepayments which could decrease the size of our loan portfolio if we are unsuccessful in originating new loans. Changes in economic conditions and shifts in customer behavior are difficult to predict, and our financial performance generally cannot be insulated from these forces. We continually analyze the impact of interest rate risk and attempt to reduce its impact on our profitability. Among other things, we: o enter into hedging transactions to reduce interest rate risk; o periodically securitize our loans and leases; o buy and sell assets; o alter the mix and term structure of our funding base; and o change our investment portfolio from time to time. Although we believe that these are effective methods of minimizing interest rate risk, there can be no assurance that they will reduce that risk in the future or that our financial condition would not be adversely affected by changes in interest rates or other economic conditions. 9 Litigation On January 22, 1999, Fleet Financial Group, Inc. and certain of its affiliates ("Fleet") filed a complaint against Advanta and certain of its affiliates relating to the transaction with Fleet that closed on February 20, 1998 in which Advanta contributed most of its consumer credit card business to a limited liability company controlled by Fleet. The complaint centers on post-closing adjustments to the transaction and other matters relating to the transaction with Fleet. We believe that the lawsuit is inappropriate and without merit. On February 16, 1999, we filed an answer to the complaint in which we denied all of the substantive allegations in the complaint and we filed counterclaims against Fleet seeking damages. Although we do not expect this lawsuit to have any material adverse impact on our business, because of the uncertainties of the legal process and the significant legal and other expenses associated with litigation, including the time and effort that will be spent by Advanta personnel involved in defending the litigation, there can be no assurance that this lawsuit will not have a material adverse impact on our operations or financial condition. Advanta and its subsidiaries are involved in other legal proceedings, claims and litigation arising in the ordinary course of our business. Although the ultimate resolution of these proceedings cannot be predicted, we believe that the resolution of these proceedings will not have a material adverse impact on our financial condition or results of operations. Competition May Impact Growth and Profitability We face intense competition from numerous other providers of financial services. Many of these companies are substantially larger and have more capital and other resources than we do. Although we believe we are generally competitive in most of the geographic areas in which we offer services, we cannot be certain that we will be able to market our services successfully. Our ability to grow our businesses and obtain adequate returns on loans may be adversely impacted by the competition that now exists or may develop in the future. Year 2000 Readiness Disclosure; Risk of Failure of Systems Due to Year 2000 Many existing computer programs use only two digits, instead of four, to identify a year in the date field. As a result, they may not recognize the upcoming change in the century. The "Year 2000 Issue" affects computer and information technology ("IT") systems, as well as non-IT systems which include embedded technology that have date sensitive programs that may not properly recognize the year 2000 or beyond. If the systems and products we use are not properly equipped to recognize the year 2000, our IT systems and non-IT systems could fail or create erroneous results. This could cause us to experience a temporary inability to process transactions, originate loans or leases, service the loans of third parties and engage in other normal business activities. Under these circumstances, the Year 2000 Issue could have a material adverse effect on our products, services, operations and financial results. We are engaging in an ongoing effort to assess the impact of the Year 2000 Issue on our operations and to implement appropriate responses and remedies in the event any of our computer systems and applications or those of third parties with whom we maintain significant business relationships are not compliant. We believe that the Year 2000 Issue will not pose significant operational problems for us and will not have a material adverse effect on our future financial condition, liquidity or results of operations. In addition, to date, we are not aware of any material third party business relationship, product or system with a Year 2000 problem that we believe would have a material adverse effect on us. However, we cannot be certain that the systems and products used by third parties with whom we maintain significant business relationships will be timely converted, or that a failure to convert by another company, or a conversion that is incompatible with our systems, would not result in a material adverse effect on our operations. 10 THE COMPANY Advanta is a highly focused financial services company which, at December 31, 1998, had 2,700 employees, over $12 billion in managed assets and $8.3 billion in assets serviced for third parties. We provide consumers and small businesses with innovative products and services including mortgages, equipment leases, business credit cards and insurance and deposit products. Advanta also provides a full range of services to the mortgage industry, including loan purchasing, contract servicing for third parties and securitization services. Advanta Mortgage Advanta Mortgage, a business unit of Advanta, capitalizes on numerous niche opportunities primarily in the home equity industry by offering a broad range of services to consumers, brokers and other originators of home equity loans throughout the country. Advanta Mortgage originates, purchases, securitizes, and services non-conforming first and second lien home equity loans, and home equity lines of credit, directly through subsidiaries of Advanta, including Advanta National Bank, Advanta Bank Corp. and Advanta Mortgage Corp. USA. Loan production is generated through multiple distribution channels. Home equity loans and home equity lines of credit are originated directly from consumers using targeted direct mail and direct response television and radio techniques, and through a branch office system of 56 branches throughout the country. First and second mortgage loans are also originated through a broker network, correspondent relationships and purchases from other financial institutions. In addition to servicing and managing the loans it originates, Advanta Mortgage contracts with third parties to service their home equity loans. Advanta bears no risk of credit loss on this portfolio. Advanta Business Services Advanta Business Services ("ABS"), a business unit of Advanta, offers flexible lease financing programs on small-ticket equipment and business credit cards to small businesses. Advanta Business Services is one of the nation's leading providers of these products to small businesses. The commercial equipment leasing business is generated primarily through third party referrals from manufacturers or distributors of equipment as well as independent brokers. Most contact with these referral sources is made through extensive direct marketing operations. The primary markets of the leasing business include office machinery, security systems and computers. ABS has also expanded its presence into additional market segments. The most significant of these are leasing programs for certain industrial and agricultural equipment and programs for leasing equipment to agencies of state and local governments. Additionally, ABS has expanded its National Accounts program which seeks referral business from larger distributors and manufacturers. The "Advanta Business Card" is marketed by ABS and issued by its affiliate, Advanta Bank Corp. Direct marketing techniques, primarily direct mail to prospective customers, are the source of new accounts. Advanta Insurance Companies Advanta's insurance subsidiaries make available, through unaffiliated insurance carriers, specialty credit related insurance products and services to Advanta's existing customer base. The focus of these products is on the customers' ability to repay their debt in the event of certain circumstances. These products include a combined credit life, disability and unemployment program, an accidental death program and equipment insurance. Enrollment in these programs is achieved through Advanta's direct mail or telemarketing distribution channels. The lending subsidiary of Advanta that extends the loan to Advanta's customers receives a percentage of the insurance premiums collected by the unaffiliated insurance carriers. 11 Depository Institutions Advanta owns two depository institutions, Advanta National Bank ("ANB") and Advanta Bank Corp. ("ABC"). ANB is a national banking association with its headquarters and sole branch currently located in Wilmington, Delaware. ABC is an FDIC-insured industrial loan corporation with its principal executive offices located in Salt Lake City, Utah. Advanta offers a range of insured deposit products through ANB and ABC. Bank deposit products offered through ANB include money market savings, retail certificates of deposit and large denomination certificates of deposit (certificates of $99,000 or more). Deposit products offered through ABC include retail certificates of deposit and large denomination certificates of deposit (certificates of $99,000 or more). Consumer deposit business is generated from repeat sales to existing depositors and from new depositors attracted by newspaper advertising and direct mail solicitations. ------------------------ Advanta was incorporated in Delaware in 1974 as Teachers Service Organization, Inc., the successor to a business originally founded in 1951. In January 1988, our name was changed from TSO Financial Corp. to Advanta Corp. How to Contact Us Holders of RediReserve Certificates or Notes who have customer service inquiries and potential investors who would like to receive a copy of this prospectus may call us at 1-800-223-7074 or write us at the following address: Advanta Corp., Delaware Corporate Center - Second Floor, One Righter Parkway, Wilmington, Delaware 19803. 12 USE OF PROCEEDS We will use the proceeds from the sale of the Securities for general corporate purposes, including the purchase of assets from, investments in and extensions of credit to, our subsidiaries and affiliates which will use the proceeds for general corporate purposes. We also may use the proceeds to finance future acquisitions, including without limitation acquisitions of mortgage, business card and equipment lease portfolios. Presently we have no specific plans for any proposed acquisitions. Proceeds also may be used to invest in income-producing securities and other assets. The amount of Securities offered from time to time and the precise amounts and timing of the applications of the proceeds will depend upon market conditions as well as our funding requirements and those of our subsidiaries and affiliates. In view of our current requirements, we expect to engage periodically in additional private or public financing of a character and amount to be determined in the future and as the need arises. DESCRIPTION OF SECURITIES General This offering relates to the RediReserve Certificates and the Notes. The Securities will be issued under an Indenture dated October 23, 1995 (the "Indenture") between Advanta and The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, as successor trustee (the "Trustee"). A copy of the Indenture is filed as an exhibit to the Registration Statement of which this prospectus is a part. The following statements are brief summaries of certain provisions of the Indenture, and are subject to the detailed provisions of the Indenture. You should refer to the Indenture for a complete statement of those provisions. Whenever this prospectus refers to particular provisions of the Indenture or terms defined in the Indenture, those provisions or definitions are incorporated by reference as part of the statements made in this prospectus, and the statements are qualified in their entirety by that reference. Parenthetical Section and Article references appearing below refer to Sections and Articles of the Indenture. The Indenture may be modified as described below. Additionally, Advanta reserves the right to terminate this offering, or modify the terms of the offering or the Securities, at any time, by an appropriate amendment or supplement to this prospectus. No modification will affect the rights of the holders of then outstanding Securities, except that, at Advanta's election: o the principal amount holders may be required to maintain in existing RediReserve Certificates may be increased or decreased, after 30 days' notice; o the minimum amount holders of RediReserve Certificates may withdraw may be increased or decreased, after 30 days' notice; and o certain service charges may be imposed or modified as described under "Description of Securities -- Provisions Relating to RediReserve Certificates -- Service Charges." The Securities are not secured by any collateral or lien. There are no provisions for a sinking fund. Provisions Relating to RediReserve Certificates Form; Non-negotiability and Statements: RediReserve Certificates are not negotiable and are not evidenced by any promissory note issued to the holder. Each purchaser of a RediReserve Certificate will receive a confirmation of the transaction that evidences ownership of the RediReserve Certificate, but this confirmation will not be a negotiable instrument, and the holder can not transfer rights of ownership in a RediReserve Certificate by mere endorsement and delivery of this confirmation to a purchaser. Each holder of a RediReserve Certificate will receive, at the end of each month during which there is any investment, withdrawal or payment or credit of interest, a statement indicating the transactions affecting the holder's RediReserve Certificate. 13 Advanta maintains a register to record the owner(s) of each outstanding RediReserve Certificate and may treat the person(s) whose name(s) is (are) so recorded as the owner(s) of the RediReserve Certificate for all purposes. Ownership of a RediReserve Certificate may be transferred on the register only by written notice to Advanta signed by the holder(s) or the duly authorized representative(s) of the holder(s) on a form to be supplied by Advanta. (Article Three) A holder may not pledge, assign or hypothecate any RediReserve Certificate as collateral for a loan or otherwise. Denomination and Minimum Purchase: As of the date of this prospectus, the minimum initial purchase of a RediReserve Certificate is $5,000. Additional purchases of RediReserve Certificates may be in any amount. From time to time, Advanta may in a prospectus supplement increase or decrease the minimum purchase amount or minimum balance required (as described below) for RediReserve Certificates. Interest on RediReserve Certificates: The interest rate we pay and the annual percentage yield ("APY") on any particular RediReserve Certificate depends on the tier into which the end-of-the-day balance of that RediReserve Certificate falls. Different interest rates and APYs may apply to RediReserve Certificates depending upon which of the following tiers the end-of-the-day balance of a RediReserve Certificate falls: o $100.00 to $4,999.99 o $5,000.00 to $24,999.99 o $25,000.00 to $49,999.99 o $50,000.00 and above We will not pay interest for any day on which the end-of-the-day balance of a RediReserve Certificate is less than $100. The interest rate and APY is determined separately for each RediReserve Certificate, regardless of the number of RediReserve Certificates a holder may own. The interest rates and APYs for each tier may change from week to week and will apply to outstanding RediReserve Certificates. We will set interest rates for each tier each Sunday, and they will be in effect through the following Saturday. We will set interest rates at our discretion, however interest rates for each one-week period commencing on Sunday will be at least equal to the rate of the Thirteen Week U.S. Treasury Bills auctioned on the immediately preceding Monday less one percent. The interest rates will be paid on the entire end-of-the-day balance of a RediReserve Certificate for each day the end-of-the-day balance of that RediReserve Certificate is $100 or more. Investors may inquire concerning the interest rates then being paid on outstanding RediReserve Certificates by writing or telephoning us at Advanta Corp., Delaware Corporate Center - Second Floor, One Righter Parkway, Wilmington, Delaware 19803, telephone 1-800-223-7074. Interest is compounded daily on a 365-day basis and is added monthly to the principal balance of a RediReserve Certificate. Except as noted below, we will not pay interest accrued during each monthly period by check. Instead, we will add the interest to the principal balance of the RediReserve Certificate. Interest accrues on the principal balance of each RediReserve Certificate up to but not including the date of redemption. If a holder redeems in full the entire amount of a RediReserve Certificate, we will pay by check all interest that is accrued and not previously added to the principal balance of that RediReserve Certificate as soon as practicable after redemption. Minimum Balance Requirement for RediReserve Certificates: We will not pay interest on a RediReserve Certificate for any day the end-of-the-day balance of that RediReserve Certificate is less than $100. Advanta may elect to charge a service fee of $10 for any statement period during that the average end-of-the-day balance of a RediReserve Certificate is less than $100. If a holder owns more than one RediReserve Certificate, the service fee may be charged for each RediReserve Certificate that has an average end-of-day balance of less than $100 during a statement period. We have the right to increase or decrease the minimum principal amount that must be maintained in a RediReserve Certificate. We may apply the increase or decrease, at our election, to RediReserve Certificates outstanding as of the date of the increase or decrease as well as to RediReserve Certificates issued after the increase or decrease. We must give the holders of 14 RediReserve Certificates that are outstanding as of the date of any increase in this service fee at least 30 days' advance written notice if we elect to increase the minimum principal amount that must be maintained in those RediReserve Certificates. Redemption at the Holder's Election: A holder may require redemption of all or a portion of a holder's RediReserve Certificate at any time subject to any established minimum redemption amount. Upon demand by the holder, the holder will be paid for the full amount of the RediReserve Certificate for which the holder requests redemption. This demand must be received by Advanta at our principal place of business or such other place as we may designate for this purpose. Advanta may delay payment on redemption of a newly purchased RediReserve Certificate for whatever time is necessary to assure that we have received the full purchase price of the RediReserve Certificate -- for example, until a check given to us in payment for the RediReserve Certificate clears. From time to time Advanta may establish, in its sole discretion, minimum amounts for redemptions of RediReserve Certificates. Advanta will give holders of RediReserve Certificates 30 days' notice before establishing any such minimum or increasing a previously established minimum redemption amount. A holder may redeem in full a RediReserve Certificate at any time regardless of the established minimum redemption amount. Redemption by Draft: Subject to any established minimum redemption amount, a holder may elect to make redemptions by draft payable to the order of any payee. At the request of a holder, Advanta will provide drafts drawn on it that will be payable through one of its subsidiary banks, or a successor bank. All authorized signers on a RediReserve Certificate must submit specimen signatures to Advanta and must agree to abide by our rules and regulations pertaining to RediReserve Certificates. Certain banks may not provide cash at the time of deposit of a draft, but will wait until they have received payment from Advanta's subsidiary bank. When a draft is presented to the subsidiary bank for payment, the subsidiary bank, as agent of the holder, will cause Advanta to redeem a sufficient amount from the holder's RediReserve Certificate to cover the amount of the draft. If a holder of more than one RediReserve Certificate wishes to redeem less than all of that holder's RediReserve Certificates, then the holder must direct Advanta as to which of the holder's RediReserve Certificates to redeem in whole or in part. Interest continues to accrue on the amount of a RediReserve Certificate covered by a draft until the draft is presented to the subsidiary bank for payment. The subsidiary bank will return a draft if the amount of collected funds in the holder's RediReserve Certificate is insufficient to cover the draft or if the signature(s) on the draft is (are) not, in our judgment, the same as the specimen signature(s) previously submitted to us. We reserve the right to charge a fee for the dishonor of a draft or for a stop payment order. Neither Advanta nor the subsidiary bank will return canceled drafts to the holders of RediReserve Certificates, although Advanta will provide a holder with copies of drafts requested by the holder upon payment of a service charge. Holders of RediReserve Certificates will receive statements as described under "Form; Non-negotiability and Statements" above, which will reflect draft transactions. Advanta will charge holders a $15 service fee for each draft presented in excess of four drafts during any statement period. Redemption at Advanta's Election: Advanta may, at its election, redeem any RediReserve Certificate either as a whole or, from time to time, in part, upon not less than 30 days' written notice to the holder, at the principal amount of the RediReserve Certificate without premium, plus interest accrued to the date of redemption and not previously added to the principal balance of the RediReserve Certificate. Accrued interest on a redeemed RediReserve Certificate will be paid as soon as practicable after redemption. Service Charges: Advanta will charge a service fee of $10 per statement period during which the average end-of-the-day balance of a RediReserve Certificate is less than $100. In addition, Advanta will charge a service fee of $15 per redemption draft in excess of four drafts per statement period on any RediReserve Certificate. Advanta also reserves the right to assess charges 15 for the dishonor of a draft or for a stop payment order and, upon 30 days' written notice to the holder, to assess charges for certain other services provided with respect to RediReserve Certificates, including but not limited to providing a holder with a copy of a canceled draft. Upon 30 days' written notice to the holder, Advanta also may increase any existing service charge. Provisions Relating to Notes Maturities: We may offer from time to time Notes which have maturities of 91 days, six months, one year, 18 months, two years, 30 months, or three, four, five, seven or ten years after their respective dates of issue. Form and Denominations: The Notes will be uncertificated and evidenced by a confirmation of book entry and a statement issued by Advanta to each holder. Confirmations and statements issued by Advanta are not negotiable instruments. No rights of ownership can be transferred by mere endorsement and delivery of a confirmation or statement. Advanta maintains a register to record the owner(s) of each outstanding Note and may treat the person(s) whose name(s) is (are) so recorded as the owner(s) of the Note for all purposes. Holders may transfer ownership of a Note on Advanta's register only by written notice to Advanta signed by the owner(s), or the owner's duly authorized representative, on a form to be supplied by Advanta. As of the date of this prospectus, the minimum denomination for the purchase of a Note is $5,000. Holders may not pledge, assign or hypothecate the Notes as collateral for a loan or otherwise. Holders may purchase Notes in minimum denominations to be determined, from time to time, by Advanta. Holders may not accumulate separate purchases to satisfy the minimum denomination requirements. Interest: From time to time, Advanta will fix the interest rates payable on the Notes based on market conditions and Advanta's financial requirements. Once determined, the rate of interest payable on a Note will remain fixed until the Note matures or is redeemed by the holder. Advanta will compound interest daily on all Notes. We will pay interest on 91 Day and Six Month Notes only at maturity. We will pay interest on One Year, 18 Month, Two Year, 30 Month, and Three, Four, Five, Seven and Ten Year Notes monthly, quarterly, semiannually, annually or at maturity, at the holder's election. A holder may change this election one time during the term of the Note, except that holders of One Year Notes may not change this election during the term of the One Year Note. Automatic Extension: If Advanta does not give notice of redemption of a Note at least seven Business Days prior to maturity, and if the Note is not redeemed or converted to another term at the request of the holder within seven Business Days after maturity, we will extend the Note automatically for a period equal to the original term if the Note has a principal amount of $2,500 or more and Notes of the same term and denomination are then being offered. As used in this prospectus, "Business Day" means any day that is not a Saturday, a Sunday, a federal banking holiday or other day on which Advanta is not open for business. If a Note is renewed as described above, except as otherwise described in a prospectus supplement, the Note will have the same provisions, including provisions relating to payment, except that the interest rate payable during any renewed term will be the interest rate, as of the renewal date, that is being offered by Advanta on Notes of the same term and denomination as the maturing Note. If Notes of the same term and denomination are not then being offered, the maturing Note will not renew and will be redeemed unless we receive instructions from the holder to renew the maturing Note with a new Note with a term that is currently being offered. Advanta will give each holder of a Note notice of the Note's maturity at least seven Business Days prior to the maturity date. If Advanta gives notice to a holder of Advanta's intention to redeem a Note at maturity, no interest will accrue after the date of maturity. Likewise, if a holder submits a written request for redemption within seven Business Days after its maturity date, no interest will accrue after the date of maturity. We will redeem automatically any Note with a principal amount that is less than $2,500 at maturity. No Redemption by Advanta: We have no right to redeem a Note prior to its maturity date as originally stated or as it may be extended. Redemption of a Note by Advanta at maturity requires 16 that we give notice of the redemption at least seven Business Days prior to the maturity date. The holder of a Note has no right to require us to redeem a Note except as described below. Redemption by the Holder on Death or Total Permanent Disability: We will redeem a Note at the election of an individual holder, following the total permanent disability of the holder, or at the election of his or her estate following his or her death, as established to our satisfaction. If two or more persons are joint holders of a Note, the election to redeem may be made by any holder after the death or total permanent disability of any holder, as established to our satisfaction. The redemption price, in the event of death or total permanent disability, is the principal amount of the Note plus accrued and unpaid interest up to but not including the date of redemption. We may modify the policy on redemption upon death or total permanent disability. Any modification of this policy will be set forth in a prospectus supplement. However, no modification will affect the right of redemption applicable to any Note that was purchased prior to the modification. Liquidity: Although holders have no contractual right to redeem a Note prior to maturity, except in the event of death or total permanent disability as described above, Advanta, in its sole discretion, may honor a written request for early redemption. Should Advanta elect to do so, we will impose a penalty that is the higher of: o 90 days' compounded interest at the actual rate of interest borne by the Note on the amount being redeemed; or o the "Economic Replacement Value." As used in this prospectus, "Economic Replacement Value" means the approximate cost, if any, that Advanta would incur to replace the money that is redeemed early by a holder. When we issue a Note, we plan to use the invested funds for the full term of the Note. When a holder redeems all or part of his or her Note early, we must replace those funds by issuing a new Note in the principal amount of, and with a maturity that is at least equal to, the remaining term of the redeemed Note. If current interest rates on Notes are higher than the rate on the redeemed Note, there is an additional cost, in the form of additional interest, that we must incur to replace those funds. To calculate the Economic Replacement Value for an early redeemed Note, Advanta will first determine the "Calculation Rate." The "Calculation Rate" means either (1) the interest rate, on the date of early redemption, that Advanta has posted for a Note with a maturity that matches exactly the remaining term of the Note that is being redeemed, or (2) if the remaining term of the Note that is being redeemed does not exactly match one of the maturities then offered by Advanta, the interest rate, on the date of early redemption, that Advanta has posted for a Note with a maturity that is the next longest. The amount, if any, by which the Calculation Rate exceeds the rate on the Note that is being redeemed is expressed as a percentage and is called the "Excess Spread." The Excess Spread, the principal amount being redeemed and the actual number of days remaining until maturity are used to calculate the Economic Replacement Value. This calculation is computed on a compounded basis, consistent with the interest method of the Note that is being redeemed. Under either calculation method, early redemption may result in a loss of principal. Provisions Relating to All Securities Interest Accrual Date: Interest on the Securities accrues from the date of purchase. The date of purchase is deemed to be the date Advanta receives funds that are received prior to 3:00 p.m., Eastern Time, on a Business Day, or the next Business Day if Advanta receives the funds on a non-Business Day or after 3:00 p.m., Eastern Time, on a Business Day. Interest Withholding: We will withhold 31% of any interest paid to any investor who has not provided Advanta with a fully executed Form W-9 or satisfactory equivalent. 17 Additional Interest: In addition to the interest rates payable as described above, Advanta may make such additional payments of interest, premiums or other benefits ("Additional Interest") on the Securities, in the amounts, in the form, on the terms and at the times as Advanta may determine from time to time. Advanta may modify or discontinue Additional Interest payments at any time. For example, Advanta may limit Additional Interest payments to only new investors, or to only current investors who are increasing or renewing their investments in the Securities. Also, Advanta may limit Additional Interest to only current or new investors residing in one or more states or localities where Advanta is authorized to sell the Securities. Aggregate Indebtedness and Additional Securities: The Indenture does not limit the amount of indebtedness that may be outstanding under the Indenture at any one time or the amount of any class of Securities that may be outstanding at any one time. Advanta has issued other Securities under the Indenture pursuant to prior registration statements. The aggregate principal amount of such Securities issued and outstanding at December 31, 1998 was approximately $145,559,000. Advanta may offer from time to time, under the Indenture, additional classes of securities with terms and conditions different from the Securities offered in this prospectus, except that no security issued under the Indenture may be senior to the Securities offered in this prospectus. If required by applicable laws and regulations, Advanta will supplement this prospectus if and when it decides to offer to the public any additional class of Security under the Indenture. Modification of Indenture: The Indenture may be modified by Advanta and the Trustee at any time with the consent of the holders of at least a majority in principal amount of the Securities then outstanding. However, no modification of the Indenture may be made that will: o affect the terms of payment or the principal of any Security, unless the holder of the Security consents; or o reduce the percentage of holders of Securities whose consent is required to modify the Indenture. Advanta and the Trustee may enter into supplemental indentures, without action by the holders of Securities, that add covenants or agreements of Advanta for the protection of the holders of Securities, that clarify any ambiguity or correct any defect in the Indenture, consistent with its terms, or that modify provisions of the Indenture provided that the modifications do not have a material adverse effect on the interest of the holders of outstanding Securities. (Article Nine) Place and Method of Payment: Principal and interest on the Securities will be payable at the office of Advanta, as it may be established from time to time, or at such other place as Advanta may designate for that purpose; provided, however, that payments may be made at the option of Advanta by check or draft mailed to the person entitled to the payments at his or her address appearing in the register that Advanta maintains for that purpose. (Sections 307 and 1002) Events of Default: An Event of Default is defined in the Indenture as being any of the following: o default in payment of principal on any of the Securities under the Indenture that has not been cured; o a default for 30 days in payment of any installment of interest on a Security; or o certain events of bankruptcy, insolvency or reorganization or default in the performance or breach of any covenant or warranty of Advanta in the Indenture and continuance of the default in performance or breach for a period of 60 days after notice of the default has been received by Advanta from the Trustee or from the holders of 25% in principal amount of the outstanding Securities. Advanta is required to file annually with the Trustee an officer's certificate as to the absence of certain defaults under the terms of the Indenture. The Indenture provides that the holders of a majority in aggregate principal amount of the applicable Securities then outstanding may, on behalf of all holders, waive any past default or Event of Default except in payment of principal or interest on the Securities and certain other specified covenants or provisions. (Article Five) 18 Subject to the provisions of the Indenture relating to the duties of the Trustee, if an Event of Default occurs and is continuing, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any of the holders of Securities, unless the holders of Securities have offered to the Trustee reasonable indemnity. (Section 601) Subject to such provisions for the indemnification of the Trustee, the holders of a majority in principal amount of the Securities at the time outstanding have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any power conferred on the Trustee. The Indenture contains certain limitations on the right of individual holders of Securities to institute legal proceedings in the event of Advanta's default. (Sections 507 and 512) Liquidity: We do not expect that there will be a trading market for the RediReserve Certificates or the Notes. Certain Covenants: Advanta has entered into certain covenants including a covenant that it will not consolidate or merge with or into any other corporation, unless the other corporation expressly assumes the obligations of Advanta under the Indenture. (Article Eight) The Indenture contains no covenants or other provisions to afford protection to holders of Securities in the event of a highly leveraged transaction or a change in the control of Advanta. Exchanges: Advanta, in its discretion, may offer and/or accept outstanding Securities in exchange for other Securities issued under the Indenture. (Section 305) Concerning the Trustee: The Trustee may resign at any time, may be removed by the holders of a majority of the principal amount of outstanding Securities or, upon the occurrence of certain contingencies relating generally to the insolvency of the Trustee or the Trustee's ineligibility to serve as such under the Trust Indenture Act of 1939, as amended, may be removed by Advanta or by a court of competent jurisdiction upon petition of a holder of Securities. However, no resignation or removal of the Trustee may become effective until a successor Trustee has accepted the appointment as provided in the Indenture. (Sections 607 and 608) The Trustee or one of its subsidiaries or affiliates currently serves as trustee under other indentures that govern other outstanding debt securities of Advanta or its affiliates, acts as transfer agent in connection with Advanta's dividend reinvestment program and is a counterparty to several interest rate swap transactions with Advanta. Advanta and its subsidiaries reserve the right to enter into additional banking relationships with the Trustee and its subsidiaries and affiliates in the future. Satisfaction and Discharge of Indenture: The Indenture may be discharged upon the payment of all RediReserve Certificates and Notes outstanding under the Indenture and any additional securities outstanding under the Indenture or upon deposit in trust of funds sufficient for such payment, plus compliance with certain formal procedures described in the Indenture. (Article Four) Reports: Advanta publishes annual reports containing audited financial statements and quarterly reports containing unaudited financial information for the first three quarters of each fiscal year. Advanta will send copies of such reports to any holder of Securities who requests them orally or in writing. Variations in Terms and Conditions: Advanta reserves the right from time to time to offer different Securities and to vary the terms and conditions of the offer, including, but not limited to, minimum balance requirements for RediReserve Certificates and minimum denominations, additional interest payments and service charges for all Securities, depending upon the state or locality where the purchaser resides, the purchaser's tenure as an investor with Advanta or whether an investor is increasing or renewing his or her investment in Securities. In addition, Advanta may vary certain terms and conditions of the RediReserve Certificates and/or Notes for its employees and the employees of its subsidiaries. Compliance With Rule 14e-1: Any purchase of Securities by Advanta will be accomplished in compliance with Section 14(e) of the Exchange Act and Rule l4e-1 promulgated under the Exchange Act, if applicable. 19 A SPECIAL NOTE ABOUT CERTAIN OTHER ADVANTA DEBT SECURITIES NOT COVERED BY THIS PROSPECTUS Advanta may from time to time offer notes (the "Value Notes") under a separate retail note program. If offered by Advanta, Value Notes would be offered on a continuous basis for sale through one or more agents, each of which would agree to use its reasonable efforts to solicit offers to purchase the Value Notes. While the Value Notes are expected to be comparable in many ways to the Notes described in this prospectus, rates on the Value Notes for comparable maturities and certain other terms and conditions of the Value Notes, may be different from those for the Notes described in this prospectus. The Value Notes are expected to be DTC eligible book-entry notes and, unlike the Notes (for which there is no secondary market), the agents may, from time to time, purchase and sell the Value Notes in the secondary market, although they would not be obligated to do so. The information provided in this section is meant only to avoid confusion between the Notes offered by this prospectus and any Value Notes that Advanta may offer in the future. The information provided in this section does not constitute an offer to sell or the solicitation of an offer to buy the Value Notes. The Value Notes may be issued only pursuant to a current prospectus relating to the Value Notes. UNITED STATES FEDERAL INCOME TAX CONSEQUENCES The following summary of the material United States federal income tax consequences of the purchase, ownership and disposition of the Securities is based upon laws, regulations, rulings and decisions now in effect, all of which are subject to change or possible differing interpretations, which could apply retroactively, so as to result in United States federal income tax consequences different from those discussed below. This summary deals only with Securities held as capital assets and does not purport to deal with persons in special tax situations, such as financial institutions, insurance companies, regulated investment companies, dealers in securities or currencies, persons holding Securities as a hedge against currency risks or as a position in a "straddle" for tax purposes, or persons whose functional currency is not the United States dollar. It also does not deal with holders other than original purchasers (except where otherwise specifically noted). Persons considering the purchase of the Securities should consult their own tax advisors concerning the application of United States federal income tax laws to their particular situations as well as any consequences of the purchase, ownership, and disposition of the Securities arising under the laws of any other taxing jurisdiction. As used herein, the term "U.S. Holder" means a beneficial owner of the Securities that is for United States federal income tax purposes: o a citizen or resident of the United States; o a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof; o an estate the income of which is subject to United States federal income taxation regardless of its source; o a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States fiduciaries having authority to control decisions of the trust; or o any other person whose income or gain in respect of the Securities is effectively connected with the conduct of a United States trade or business. 20 U.S. Holders Payments of Interest: Payments of interest on the Securities generally will be taxable to a U.S. Holder as ordinary interest income at the time such payments are accrued or are received, actually or constructively (in accordance with the U.S. Holder's regular method of tax accounting.) Holders of Notes with 91 day and 6 month maturities and holders of One Year Notes who wish to receive tax deferred status will have interest credited only at maturity or on the date of early withdrawal. Holders of other term Notes may elect to receive payments of interest at monthly, quarterly, semi-annual or annual intervals, or at maturity. The interest payment option election may be changed once during the term of the Note, except that holders of One Year Notes may not change this election during the term of the One Year Note. If no interest payment option is elected, interest will be credited to your account on December 31. All interest, credited or accrued, will be reported to the Internal Revenue Service as of December 31. With respect to tax-deferred Notes, interest will be both credited and paid only at maturity or upon early redemption and will be reported to the IRS for the year in which maturity or early redemption occurred. Disposition of Securities: Upon the sale, exchange or retirement of a Security, a U.S. Holder generally will recognize taxable gain or loss equal to the difference between the amount realized on the sale, exchange or retirement (other than amounts representing accrued and unpaid interest) and such U.S. Holder's adjusted tax basis in the Security. A U.S. Holder's adjusted tax basis in a Security generally will equal the U.S. Holder's initial investment in the Security increased by any original issue discount included in income (and accrued market discount, if any, if the U.S. Holder has included such market discount in income) and decreased by the amount of any principal payments, and in the case of a Security issued with original issue discount, any payments, other than qualified stated interest payments, received and amortizable bond premium taken with respect to such Security. The maximum capital gains rates for individuals with respect to gain recognized upon the disposition of capital assets held for more than one year is 20%. Thus, gain recognized by a Holder upon the disposition of a Security may be subject to the more favorable capital gains rates depending in part upon the Holder's holding period for the Security. Holders should consult their own tax advisors with respect to the tax consequences to them of the disposition of the Securities. The distinction between capital gain or loss is also relevant for purposes of, among other things, limitations on the deductibility of capital losses. If a U.S. Holder disposes of only a portion of a Security pursuant to a redemption or repayment, such disposition will be treated as a pro rata prepayment in retirement of a portion of a debt instrument. Generally, the resulting gain or loss would be calculated by assuming that the original Security being tendered consists of two instruments, one that is retired (or repaid), and one that remains outstanding. The adjusted issue price, the U.S. Holder's adjusted basis and the accrued but unpaid original issue discount of the Security, determined immediately before the disposition, would be allocated between these two instruments based on the portion of the instrument that is treated as retired by the pro rata prepayment. Backup Withholding and Information Reporting Backup withholding and information reporting requirements may apply to certain payments of principal, premium and interest on the Securities, and to payments of proceeds of the sale or redemption of the Securities, to certain non-corporate U.S. Holders. Advanta, its agent, a broker, the relevant Trustee or any paying agent, as the case may be, will be required to withhold from any payment a tax equal to 31 percent of such payment if the U.S. Holder fails to furnish or certify his or her correct taxpayer identification number (social security number or employer identification number) to the payor in the manner required, fails to certify that such U.S. Holder is not subject to backup withholding, or otherwise fails to comply with the applicable requirements of the backup withholding rules. Any amounts withheld under the backup withholding rules from a payment to a Holder may be credited against such Holder's United States federal income tax and may entitle such Holder to a refund, provided that the required information is furnished to the United States Internal Revenue Service. 21 The United States federal income tax discussion set forth above is included for general information only and may not be applicable depending upon a holder's particular situation. Holders should consult their own tax advisors with respect to the tax consequences to them of the ownership and disposition of the Securities, including the tax consequences under state, local, foreign and other tax laws and the possible effects of changes in federal or other tax laws. PLAN OF DISTRIBUTION Advanta may sell the Securities being offered in this prospectus (1) directly to purchasers; (2) through agents; (3) through underwriters; (4) through dealers; or (5) through a combination of any these methods of sale. Except as otherwise indicated in the prospectus supplement, Advanta will sell the Securities directly, without an underwriter or selling agent, and the Securities will be sold by employees of Advanta who, under Rule 3a4-1(a) of the Exchange Act, are deemed not to be brokers. In accordance with the provisions of Rule 3a4-1(a), employees of Advanta who sell Securities will not be compensated by commission, will not be associated with any broker or dealer and will limit their activities so that, among other things, they do not engage in oral solicitations of, and comply with certain specified limitations when responding to inquiries from, potential purchasers. The distribution of the Securities may be effected from time to time in one or more transactions: (1) at a fixed price or prices, which may be changed; (2) at market prices prevailing at the time of sale; (3) at prices related to the prevailing market prices; or (4) at negotiated prices. Offers to purchase Securities may be solicited directly by Advanta or by agents designated by Advanta from time to time. Any agent, which may be deemed to be an underwriter as that term is defined in the Securities Act, involved in the offer or sale of the Securities in respect of which this prospectus is delivered will be named, and any commissions payable by Advanta to that agent will be identified in the applicable prospectus supplement. Unless otherwise indicated in the prospectus supplement, any agent will be acting on a reasonable efforts basis. If Advanta uses an underwriter or underwriters in the sale of the Securities being offered in this prospectus, Advanta will execute an underwriting agreement with the underwriter(s) at the time of sale to it or them, and the name(s) of the underwriter(s) and the terms of the transaction will be included in the prospectus supplement, which will be used by the underwriter(s) to make resales of the Securities in respect of which this prospectus and the prospectus supplement are delivered to the public. If Advanta uses a dealer in the sale of the Securities being offered in this prospectus, Advanta will sell those Securities to the dealer, as principal. The dealer may then resell the Securities to the public at varying prices to be determined by the dealer at the time of resale. Certain of the underwriters, dealers or agents used by Advanta in any offering of Securities under this prospectus may be customers of, including borrowers from, engage in transactions with, and perform services for, Advanta or one or more of its affiliates in the ordinary course of business. Underwriters, dealers, agents and other persons may be entitled, under agreements which may be entered into with Advanta, to indemnification against certain civil liabilities, including liabilities under the Securities Act. If indicated in the applicable prospectus supplement, Advanta will authorize agents and underwriters to solicit offers by certain institutions to purchase Securities from Advanta at the public offering price set forth in the prospectus supplement pursuant to delayed delivery contracts ("Contracts") providing for payment and delivery on the date stated in the prospectus supplement. Each Contract will be for an amount not less than, and, unless Advanta otherwise agrees, the aggregate principal amount of Securities sold pursuant to Contracts shall be not less nor more than, 22 the respective amounts stated in the prospectus supplement. Institutions with whom Contracts, when authorized, may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and other institutions, but shall in all cases be subject to the approval of Advanta. Contracts will not be subject to any conditions except that the purchase by an institution of the Securities covered by its Contract shall not at the time of delivery be prohibited under the laws of any jurisdiction in the United States to which that institution is subject. A commission indicated in the prospectus supplement will be paid to underwriters and agents soliciting purchases of debt securities pursuant to Contracts accepted by Advanta. Until the distribution of the Securities is completed, rules of the SEC may limit the ability of the underwriters and certain selling group members, if any, to bid for and purchase the Securities. As an exception to these rules, the representatives of the underwriters, if any, are permitted to engage in certain transactions that stabilize the price of the Securities. Such transactions may consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of the Securities. If an underwriter creates a short position in the Securities in connection with the offering thereof (i.e., if the underwriter sells more Securities than are set forth on the cover page of the applicable prospectus supplement), the representatives of the underwriters may reduce that short position by purchasing Securities in the open market. The representatives of the underwriters also may elect to reduce any short position by exercising all or part of an over-allotment option, if applicable, described in the applicable prospectus supplement. The representatives of the underwriters also may impose a penalty bid on certain underwriters and selling group members. This means that if the representatives purchase Securities in the open market to reduce the underwriters' short position or to stabilize the price of the Securities, they may reclaim the amount of the selling concession from the underwriters and selling group members who sold those shares as part of the offering thereof. In general, purchases of a security for the purpose of stabilization or to reduce a syndicate short position could cause the price of the security to be higher than it might otherwise be in the absence of such purchases. The imposition of a penalty bid might have an effect on the price of a security to the extent that it discourages resales of the security by purchasers in the offering. Neither Advanta nor the underwriters, if any, makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Securities. In addition, neither Advanta nor the underwriters, if any, makes any representation that the representatives of the underwriters, if any, will engage in such transactions or that such transactions, once commenced, will not be discontinued without notice. Advanta may vary the terms and conditions of the offer by state, locality or as otherwise described under "Description of Securities Provisions Relating to All Securities Additional Interest" and " Variations in Terms and Conditions" in this prospectus. Further, Advanta may offer different Securities at different times depending on such factors as Advanta's liquidity requirements, the interest rate environment and other economic conditions. Advanta estimates that the total expenses it will incur in offering the Securities to which this prospectus relates, excluding underwriting discounts and commissions, if any, will be approximately $190,000. 23 WHERE YOU CAN FIND MORE INFORMATION -- INCORPORATION OF CERTAIN INFORMATION BY REFERENCE Advanta files annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file at the following public reference rooms maintained by the SEC at: Judiciary Plaza 7 World Trade Center 450 Fifth Street, N.W. 13th Floor Washington, D.C. 20549 New York, New York 10048
You may obtain information on the operation of the SEC's public reference rooms by calling the SEC at 1-800-SEC-0330. Advanta's SEC filings also are available to the public from the SEC's Internet website at http.//www.sec.gov. Advanta has filed a registration statement on Form S-3 with the SEC to register the Securities offered by this prospectus. This prospectus is part of the registration statement but, as permitted by SEC rules and regulations, this prospectus does not contain all the information that you can find in the registration statement or the exhibits to the registration statement. You should refer to the registration statement and to the exhibits filed with the registration statement for further information about Advanta, our consolidated subsidiaries and the Securities. The SEC allows us to "incorporate by reference" the information we file with them. This means that we are permitted to disclose certain information to you by referring you to other documents we have filed with the SEC. The information incorporated by reference is considered to be part of this prospectus, and information that we file with the SEC after the date of this prospectus will automatically update and supersede this information. We incorporate by reference in this prospectus all the documents listed below and any filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and before all the Securities offered by this prospectus have been sold or de-registered: o Advanta's Annual Report on Form 10-K for the fiscal year ended December 31, 1997; o Advanta's Current Reports on Form 8-K dated January 22, February 24, March 6, April 22, July 23, September 1, October 27, 1998, January 25, 1999, January 26, 1999 and March 3, 1999; and o Advanta's Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30, and September 30, 1998. We will deliver, without charge, to anyone receiving this prospectus, upon written or oral request, a copy of any document incorporated by reference in this prospectus but not delivered to you with this prospectus, excluding all exhibits to those documents except any exhibit that has been specifically incorporated by reference. Requests for these documents should be made to the following address and phone number: Investor Relations, Advanta Corp., Welsh & McKean Roads, P.O. Box 844, Spring House, Pennsylvania 19477, telephone: (215) 444-5335. LEGAL OPINIONS Wolf, Block, Schorr and Solis-Cohen LLP will pass upon certain matters relating to the Securities offered hereby as well as on the material United States federal income tax consequences of the purchase, ownership and disposition of the Securities. EXPERTS The consolidated financial statements incorporated by reference in this prospectus and elsewhere in the Registration Statement to the extent and for the periods indicated in their reports have been audited by Arthur Andersen LLP, independent public accountants, and are incorporated herein in reliance upon the authority of that firm as experts in giving such reports. 24 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.* Registration fees................................................. $ 83,400 Printing and engraving............................................ 10,000 Legal fees and expenses........................................... 75,000 Accountants' fees and expenses ................................... 3,000 Indenture Trustee's fees and expenses............................. 11,000 Miscellaneous..................................................... 7,600 -------- Total.......................................................... $190,000 * Estimated, other than registration fee. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law provides, inter alia, that under specified circumstances a corporation shall have the power to indemnify any person who is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, against expenses, attorneys' fees, judgments, fines and settlements. The By-Laws of the Company provide that the Company shall indemnify any director, officer, employee or agent of the Company to the fullest extent now or hereafter permitted by law in connection with any such action, suit or proceeding. The By-Laws further provide that the Board of Directors of the Company may, by resolution, indemnify any person other than a director, officer, employee or agent of the Company for liabilities incurred in connection with services rendered for or at the request of the Company or its subsidiaries. In addition, consistent with Section 102 of the Delaware General Corporation Law, the Company's Restated Certificate of Incorporation limits the personal liability of the Company's directors to the Company or its stockholders for monetary damages for certain breaches of fiduciary duty. The Company maintains director and officer liability insurance which would provide coverage against certain securities law liabilities. ITEM 16. EXHIBITS 3.1 Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 4.1 to Pre-Effective Amendment No. 1 to the Registrant's Registration Statement on Form S-3 (File No. 33-53475), filed June 19, 1994), as amended by the Certificate of Designations, Preferences, Rights and Limitations of the Registrant's 6 3/4% Convertible Class B Preferred Stock, Series 1995 (Stock Appreciation Income Linked Securities (SAILS)) (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K dated August 15, 1995, as further amended by the Certificate of Designations, Preferences, Rights and Limitations of the Registrant's Series A Junior Participating Preferred Stock (incorporated by reference to Exhibit 1 to the Registrant's Registration Statement on Form 8-A, dated March 17, 1997)). 3.2 By-Laws of the Registrant, as amended (incorporated by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K dated March 17, 1997). 4.1 Trust Indenture between Registrant and Mellon Bank, N.A., as original Trustee, and Instrument of Resignation, Appointment and Acceptance among Mellon Bank, N.A. and The Chase Manhattan Bank, as successor Trustee. II-1 5 Opinion of Wolf, Block, Schorr and Solis-Cohen LLP. 12 Computation of Ratio of Earnings to Fixed Charges. 23.1 Consent of Arthur Andersen LLP. 23.2 Consent of Wolf, Block, Schorr and Solis-Cohen LLP (included in Exhibit 5). 24 Power of Attorney (included on Signature Pages). 25 Form T-1, Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of a Corporation Designated to Act as Trustee. ITEM 17. UNDERTAKINGS. (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of the Securities offered (if the total dollar value of Securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of Prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that the undertakings set forth in clauses (i) and (ii) of this paragraph do not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration II-2 Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES AND POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Lower Gwynedd Township, Montgomery County, Commonwealth of Pennsylvania, on March 16, 1999. Advanta Corp. By: /s/ Olaf Olafsson ------------------------------------- Olaf Olafsson, President and Director KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Dennis Alter, William A. Rosoff, Olaf Olafsson, Philip M. Browne, John J. Calamari, Jeffrey D. Beck and Elizabeth H. Mai and each of them, jointly and II-3 severally, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same with all exhibits thereto, and other documents in connection therewith (including, without limitation, any related Registration Statement or amendment thereto filed in accordance with Rule 462 under the Securities Act of 1933, as amended), with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as she or he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their or his or her substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on March 16, 1999. Signature Title --------- ----- /s/ Dennis Alter Chief Executive Officer and Chairman of Board - ------------------------ Dennis Alter /s/ William A. Rosoff Vice Chairman and Director - ------------------------ William A. Rosoff /s/ Olaf Olafsson President and Director - ------------------------ Olaf Olafsson /s/ Philip Browne Senior Vice President and Chief Financial Officer - ------------------------ Philip Browne /s/ John J. Calamari Vice President, Finance and Chief Accounting Officer - ------------------------ John J. Calamari /s/ Arthur P. Bellis - ------------------------ Arthur P. Bellis Director /s/ Max Botel - ------------------------ Max Botel Director II-4 /s/ William C. Dunkelberg Director - ------------------------- William C. Dunkelberg Director - ------------------------- Dana Becker Dunn /s/ Robert C. Hall Director - ------------------------- Robert C. Hall /s/ James E. Ksansnak Director - ------------------------- James E. Ksansnak /s/ Ronald Lubner Director - ------------------------- Ronald Lubner /s/ Michael Stolper Director - ------------------------- Michael Stolper II-5 EXHIBIT INDEX
DOCUMENT METHOD OF FILING -------- ---------------- 3.1 Restated Certificate of Incorporation of the Registrant (incorporated Incorporated herein by reference to Exhibit 4.1 to Pre-Effective Amendment No. 1 to the by reference Registrant's Registration Statement on Form S-3 (File No. 33-53475), filed June 19, 1994), as amended by the Certificate of Designations, Preferences, Rights and Limitations of the Registrant's 6 3/4% Convertible Class B Preferred Stock, Series 1995 (Stock Appreciation Income Linked Securities (SAILS)) (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K dated August 15, 1995, as further amended by the Certificate of Designations, Preferences, Rights and Limitations of the Registrant's Series A Junior Participating Preferred Stock (incorporated by reference to Exhibit 1 to the Registrant's Registration Statement on Form 8-A, dated March 17, 1997)). 3.2 By-Laws of the Registrant, as amended (incorporated by reference to Incorporated herein Exhibit 3.1 of the Registrant's Current Report on Form 8-K dated by reference March 17, 1997). 4.1 Trust Indenture between Registrant and Mellon Bank, N.A., as original * Trustee, and Instrument of Resignation, Appointment and Acceptance among Mellon Bank, N.A. and The Chase Manhattan Bank, as successor Trustee. 5 Opinion of Wolf, Block, Schorr and Solis-Cohen LLP. * 12 Computation of Ratio of Earnings to Fixed Charges. * 23.1 Consent of Arthur Andersen LLP. * 23.2 Consent of Wolf, Block, Schorr and Solis-Cohen LLP (included in * Exhibit 5). 24 Power of Attorney (included on Signature Pages). * 25 Form T-1, Statement of Eligibility and Qualification Under the Trust * Indenture Act of 1939 of a Corporation Designated to Act as Trustee. - ---------------- * Electronically filed herewith.
EX-4.1 2 SENIOR INDENTURE ================================================================================ Advanta Corp., Issuer to Mellon Bank, N.A., Trustee --------------- SENIOR INDENTURE --------------- Dated as of October 23, 1995 Debt Securities ================================================================================ TABLE OF CONTENTS Recitals...................................................................................... 1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions................................................................. 2 Act......................................................................... 2 Additional Amounts.......................................................... 2 Affiliate................................................................... 2 Authorized Newspaper........................................................ 2 Board of Directors.......................................................... 2 Board Resolution............................................................ 3 Business Day................................................................ 3 Commission.................................................................. 3 Company..................................................................... 3 Company Request and Company Order........................................... 3 Corporate Trust Office...................................................... 3 Corporation................................................................. 3 Defaulted Interest.......................................................... 3 Depository.................................................................. 3 Event of Default............................................................ 3 Government Obligations...................................................... 3 Holder...................................................................... 4 Indenture................................................................... 4 Independent Public Accountants.............................................. 4 Indexed Security............................................................ 4 interest.................................................................... 4 Interest Payment Date....................................................... 4 Legal Holiday............................................................... 4 Maturity.................................................................... 4 Office or Agency............................................................ 4 Officers' Certificate....................................................... 4 Opinion of Counsel.......................................................... 4 Outstanding................................................................. 4 Paying Agent................................................................ 6 Person...................................................................... 6 Place of Payment............................................................ 6 Predecessor Security........................................................ 6 Redemption Date............................................................. 6 Redemption Price............................................................ 6 Regular Record Date......................................................... 6 Responsible Officer......................................................... 6 Security or Securities...................................................... 6 Security Register and Security Registrar.................................... 7 Special Record Date......................................................... 7 Stated Maturity............................................................. 7 Trust Indenture Act......................................................... 7 Trustee..................................................................... 7 Vice Chairman............................................................... 8 Vice President.............................................................. 8
Section 102. Compliance Certificates and Opinions......................................... 8 Section 103. Form of Documents Delivered to Trustee....................................... 8 Section 104. Acts of Holders.............................................................. 9 Section 105. Notices, etc. to Trustee and Company......................................... 9 Section 106. Notice to Holders of Securities; Waiver......................................10 Section 107. Conflict with Trust Indenture Act........................................... 10 Section 108. Effect of Headings and Table of Contents.................................... 10 Section 109. Successors and Assigns...................................................... 10 Section 110. Separability Clause......................................................... 10 Section 111. Benefits of Indenture....................................................... 11 Section 112. Governing Law............................................................... 11 Section 113. Legal Holidays.............................................................. 11 ARTICLE TWO SECURITIES FORMS Section 201. Forms Generally............................................................. 12 Section 202. Form of Trustee's Certificate of Authentication............................. 12 ARTICLE THREE THE SECURITIES Section 301. Amount Unlimited; Issuable in Series........................................ 13 Section 302. Denominations............................................................... 14 Section 303. Execution, Authentication, Delivery and Dating.............................. 15 Section 304. Temporary Securities........................................................ 16 Section 305. Registration, Transfer and Exchange......................................... 16 Section 306. Mutilated, Destroyed, Lost and Stolen Securities............................ 17 Section 307. Payment of Interest and Certain Additional Amounts; Rights to Interest and Certain Additional Amounts Preserved........................... 18 Section 308. Persons Deemed Owners....................................................... 19 Section 309. Cancellation................................................................ 19 ARTICLE FOUR SATISFACTION AND DISCHARGE Section 401. Satisfaction and Discharge of Indenture..................................... 20 Section 402. Application of Trust Money.................................................. 21
ARTICLE FIVE REMEDIES Section 501. Events of Default........................................................... 21 Section 502. Acceleration of Maturity; Rescission and Annulment.......................... 23 Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee............. 24 Section 504. Trustee May File Proofs of Claim............................................ 25 Section 505. Trustee May Enforce Claims without Possession of Securities................. 25 Section 506. Application of Money Collected.............................................. 25 Section 507. Limitations on Suits........................................................ 26 Section 508. Unconditional Right of Holders to Receive Principal and any Premium, Interest and Additional Amounts............................................. 26 Section 509. Restoration of Rights and Remedies.......................................... 27 Section 510. Rights and Remedies......................................................... 27 Section 511. Delay or Omission Not Waiver................................................ 27 Section 512. Control by Holders of Securities............................................ 27 Section 513. Waiver of Past Defaults..................................................... 27 Section 514. Waiver of Stay or Extension Laws............................................ 28 ARTICLE SIX THE TRUSTEE Section 601. Certain Rights of Trustee................................................... 28 Section 602. Not Responsible for Recitals or Issuance of Securities...................... 30 Section 603. May Hold Securities......................................................... 30 Section 604. Money Held in Trust......................................................... 30 Section 605. Compensation and Reimbursement.............................................. 30 Section 606. Corporate Trustee Required; Eligibility..................................... 31 Section 607. Resignation and Removal; Appointment of Successor........................... 31 Section 608. Acceptance of Appointment by Successor...................................... 32 Section 609. Merger, Conversion, Consolidation or Succession to Business................. 33 Section 610. Appointment of Authenticating Agent......................................... 33 ARTICLE SEVEN HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 701. Company to Furnish Trustee Names and Addresses of Holders................... 36 Section 702. Preservation of Information; Communications to Holders...................... 36 Section 703. Reports by Trustee.......................................................... 36 Section 704. Reports by Company.......................................................... 36 ARTICLE EIGHT CONSOLIDATION, MERGER AND SALES Section 801. Company May Consolidate, Etc., Only on Certain Terms........................ 38
Section 802. Successor Person Substituted for Company.................................... 39 ARTICLE NINE SUPPLEMENTAL INDENTURES Section 901. Supplemental Indentures without Consent of Holders.......................... 39 Section 902. Supplemental Indentures with Consent of Holders............................. 40 Section 903. Execution of Supplemental Indentures........................................ 41 Section 904. Effect of Supplemental Indentures........................................... 41 Section 905. Reference in Securities to Supplemental Indentures.......................... 41 ARTICLE TEN COVENANTS Section 1001. Payment of Principal and any Premium, Interest and Additional Amounts....... 41 Section 1002. Maintenance of Office or Agency............................................. 41 Section 1003. Money for Securities Payments to Be Held in Trust........................... 42 Section 1004. Additional Amounts.......................................................... 43 Section 1005. Corporate Existence......................................................... 43 Section 1006. Waiver of Certain Covenants................................................. 44 Section 1007. Company Statement as to Compliance; Notice of Certain Defaults.............. 44
ARTICLE ELEVEN REDEMPTION OF SECURITIES Section 1101. Applicability of Article.................................................... 44 Section 1102. Election to Redeem; Notice to Trustee....................................... 44 Section 1103. Selection by Trustee of Securities to be Redeemed........................... 45 Section 1104. Notice of Redemption........................................................ 45 Section 1105. Deposit of Redemption Price................................................. 46 Section 1106. Securities Payable on Redemption Date....................................... 46 Section 1107. Securities Redeemed in Part................................................. 46 ARTICLE TWELVE SINKING FUNDS Section 1201. Applicability of Article.................................................... 47 Section 1202. Satisfaction of Sinking Fund Payments with Securities....................... 47 Section 1203. Redemption of Securities for Sinking Fund................................... 47 ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS Section 1301. Applicability of Article.................................................... 48 ARTICLE FOURTEEN MEETINGS OF HOLDERS OF SECURITIES Section 1401. Purposes for Which Meetings May Be Called................................... 48 Section 1402. Call, Notice and Place of Meetings.......................................... 48 Section 1403. Persons Entitled to Vote at Meetings........................................ 49 Section 1404. Quorum; Action.............................................................. 49 Section 1405. Determination of Voting Rights; Conduct and Adjournment of Meetings......... 49 Section 1406. Counting Votes and Recording Action of Meetings............................. 50 ARTICLE FIFTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS Section 1501. Indenture and Securities Solely Corporate Obligations....................... 50
INDENTURE, dated as of October 23, 1995 (the "Indenture"), between Advanta Corp., a corporation duly organized and existing under the laws of the State of Delaware (hereinafter called the "Company"), having its principal executive office located at 650 Naamans Road, Claymont, Delaware 19703, and MELLON BANK, N.A., a national banking association duly organized and existing under the laws of the United States (hereinafter called the "Trustee"), having its Corporate Trust Office located at One Mellon Bank Center, Pittsburgh, PA 15258-0001. RECITALS The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (hereinafter called the "Securities"), unlimited as to principal amount, to bear such rates of interest, to mature at such time or times, to be issued in one or more series and to have such other provisions as shall be fixed as hereinafter provided. The Company has duly authorized the execution and delivery of this Indenture. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder that are required to be part of this Indenture and, to the extent applicable, shall be governed by such provisions. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions. Except as otherwise expressly provided in or pursuant to this Indenture or unless the context otherwise requires, for all purposes of this Indenture: (1) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation; and (4) the words "herein", "hereof", "hereto" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Certain terms used principally in certain Articles hereof are defined in those Articles. "Act", when used with respect to any Holders, has the meaning specified in Section 104. "Additional Amounts" means any additional amounts which are required hereby or by any Security, under circumstances specified herein or therein, to be paid by the Company in respect of certain taxes imposed on Holders specified therein and which are owing to such Holders. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control", when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have the meanings correlative to the foregoing. "Authorized Newspaper" means a newspaper, in the English language, customarily published on each day that is a Business Day in the place of publication, whether or not published on days that are Legal Holidays in the place of publication, and of general circulation in each place in connection with which the term is used or in the financial community of each such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any day that is a Business Day in the place of publication. "Board of Directors" means the board of directors of the Company or any committee of that board duly authorized to act generally or in any particular respect for the Company hereunder. 2 "Board Resolution" means a copy of one or more resolutions, certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, delivered to the Trustee. "Business Day", with respect to any Place of Payment or other location, means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a Legal Holiday in such Place of Payment or other location. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934 or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" and "Company Order" mean, respectively, a written request or order, as the case may be, signed in the name of the Company by the Chairman of the Board of Directors, a Vice Chairman, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. "Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of original execution of this Indenture is located at the address specified in the first paragraph of this instrument. "Corporation" includes corporations and, except for purposes of Article Eight, associations, companies and business trusts. "Defaulted Interest" has the meaning specified in Section 307. "Depository" means, with respect to any Security issuable or issued in the form of one or more global Securities, the Person designated as Depository by the Company in or pursuant to this Indenture, which Person must be, to the extent required by applicable law or regulation, a clearing agency registered under the Securities Exchange Act of 1934, as amended, and, if so provided with respect to any Security, any successor to such Person. "Event of Default" has the meaning specified in Section 501. "Government Obligations", with respect to any Security, means direct obligations of the United States of America and agencies and instrumentalities thereof, where the payment or payments thereunder are supported by the full faith and credit of the United States of America and which are not callable or redeemable at the option of the issuer or issuers thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such Government Obligation or a specific payment of interest on or principal of or other amount with respect to any such Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian in respect of the Government Obligation or the specific payment of interest on or principal of or other amount with respect to the Government Obligation evidenced by such depository receipt. 3 "Holder" means the Person in whose name a Security is registered in the Security Register. "Indenture" means this instrument as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and, with respect to any Security, by the terms and provisions of such Security established pursuant to Section 301 (as such terms and provisions may be amended pursuant to the applicable provisions hereof). "Independent Public Accountants" means accountants or a firm of accountants that, with respect to the Company and any other obligor under the Securities, are independent public accountants within the meaning of the Securities Act of 1933, as amended, and the rules and regulations promulgated by the Commission thereunder, who may be the independent public accountants regularly retained by the Company or who may be other independent public accountants. Such accountants or firm shall be entitled to rely upon any Opinion of Counsel as to the interpretation of any legal matters relating to the Indenture or certificates required to be provided hereunder. "interest", when used with respect to a Security which provides for payment of Additional Amounts pursuant to Section 1004, includes such Additional Amounts. "Interest Payment Date", with respect to any Security, means the Stated Maturity of an installment of interest on such Security. "Legal Holiday", with respect to any Place of Payment or other location, means a Saturday, a Sunday or a day on which banking institutions or trust companies in such Place of Payment or other location are not authorized or obligated to be open. "Maturity", with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as provided in or pursuant to this Indenture, whether at the Stated Maturity or by declaration of acceleration, notice of redemption, notice of option to elect repayment or otherwise, and includes Redemption Date. "Office or Agency", with respect to any Securities, means an office or agency of the Company maintained or designated in a Place of Payment for such Securities pursuant to Section 1002 or any other office or agency of the Company maintained or designated for such Securities pursuant to Section 1002 or, to the extent designated or required by Section 1002 in lieu of such office or agency, the Corporate Trust Office of the Trustee. "Officers' Certificate" means a certificate signed by the Chairman of the Board, a Vice Chairman, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or an Assistant Secretary of the Company, that complies with the requirements of Section 314(e) of the Trust Indenture Act and is delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be an employee of or counsel for the Company or other counsel who shall be reasonably acceptable to the Trustee, that complies with the requirements of Section 314(e) of the Trust Indenture Act. "Outstanding", when used with respect to any Securities, means, as of the date of determination, all such Securities theretofore issued under this Indenture, except: (i) any such Security theretofore canceled by the Trustee or the Security Registrar or delivered to the Trustee or the Security Registrar for cancellation; 4 (ii) any such Security or portions thereof for whose payment at the Maturity thereof money in the necessary amount has been theretofore deposited pursuant hereto with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities, provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and 5 (iii) any such Security in exchange for or in lieu of which other Securities have been issued pursuant to this Indenture, unless there shall have been presented to the Trustee proof satisfactory to it that such Security is held by a bona fide purchaser in whose hands such Security is a valid obligation of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder or are present at a meeting of Holders of Securities for quorum purposes, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor, shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in making any such determination or relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned which shall have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee (A) the pledgee's right so to act with respect to such Securities and (B) that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of, or any premium or interest on, or any Additional Amounts with respect to any Security on behalf of the Company. "Person" means any individual, Corporation, partnership, joint venture, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment", with respect to any Security, means the place or places where the principal of, or any premium or interest on, or any Additional Amounts with respect to such Security is payable as provided in or pursuant to this Indenture. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security issued under Section 306 in exchange for or in lieu of a lost, destroyed, mutilated or stolen Security shall be deemed to evidence the same debt as the lost, destroyed, mutilated or stolen Security. "Redemption Date", with respect to any Security or portion thereof to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", with respect to any Security or portion thereof to be redeemed, means the price at which it is to be redeemed as determined by or pursuant to this Indenture. "Regular Record Date" for the interest payable on any Security on any Interest Payment Date therefor means the date, if any, specified in or pursuant to this Indenture as the "Regular Record Date". "Responsible Officer" means an officer of the Trustee assigned to the Corporate Trust Office, including any Vice President, any trust officer or any other officer performing functions similar to those performed by the persons who at the time shall be such officers, and any other officer of the Trustee to whom a matter is referred because of his knowledge of and familiarity with the particular subject. "Security" or "Securities" means any Security or Securities, as the case may be, authenticated and delivered under this Indenture; provided, however, that, if at any time there is more than one Person acting as Trustee under this Indenture, "Securities", with respect to any such Person, shall mean Securities 6 authenticated and delivered under this Indenture, exclusive, however, of Securities of any series as to which such Person is not Trustee; and further provided, however, that if uncertificated Securities are issued the "Security" or "Securities" means any Security or Securities, as the case may be, registered in the Security Register. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Special Record Date" for the payment of any Defaulted Interest on any Security means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity", with respect to any Security or any installment of principal thereof or interest thereon or any Additional Amounts with respect thereto, means the date established by or pursuant to this Indenture as the fixed date on which the principal of such Security or such installment of principal or interest is or such Additional Amounts are due and payable. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, and any reference herein to the Trust Indenture Act or a particular provision thereof shall mean such Act or provision, as the case may be, as amended or replaced from time to time or as supplemented from time to time by rules or regulations adopted by the Commission under or in furtherance of the purposes of such Act or provision, as the case may be. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such with respect to one or more series of Securities pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean each Person who is then a Trustee hereunder; provided, however, that if at any time there is more than one such Person, "Trustee" shall mean each such Person and as used with respect to the Securities of any series shall mean the Trustee with respect to the Securities of such series. 7 "Vice Chairman", when used with respect to the Company or the Trustee, means any vice chairman, whether or not designated by a number or a word or words added before or after the title "Vice Chairman". "Vice President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "Vice President". Section 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents or any of them is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Section 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture or any Security, they may, but need not, be consolidated and form one instrument. 8 Section 104. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by or pursuant to this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments or so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 315 of the Trust Indenture Act) conclusive in favor of the Trustee and the Company and any agent of the Trustee or the Company, if made in the manner provided in this Section. The record of any meeting of Holders of Securities shall be proved in the manner provided in Section 1406. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any reasonable manner which the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section 104. (c) The ownership and principal amount of Securities held by any Person, and the date of the commencement and the date of the termination of holding the same, shall be proved by the Security Register. (d) If the Company shall solicit from the Holders of any Securities any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may at its option (but is not obligated to), by Board Resolutions, fix in advance a record date for the determination of Holders of Securities entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of Securities of record at the close of business on such record date shall be deemed to be Holders for the purpose of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders of Securities shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date. (e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee, any Security Registrar, any Paying Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Security. Section 105. Notices, etc. to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, or 9 (2) the Company by the Trustee or any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to the attention of its Treasurer at the address of its principal office specified in the first paragraph of this instrument (with a copy to Five Horsham Business Center, 300 Welsh Road, Horsham, Pennsylvania 19004, Attention: Secretary) or at any other address previously furnished in writing to the Trustee by the Company. Section 106. Notice to Holders of Securities; Waiver. Except as otherwise expressly provided in or pursuant to this Indenture, where this Indenture provides for notice to Holders of Securities of any event, such notice shall be sufficiently given to Holders of Securities if in writing and mailed, first-class postage prepaid, to each Holder of a Security affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such Notice. In any case where notice to Holders of Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder of a Security shall affect the sufficiency of such notice with respect to other Holders of Securities given as provided herein. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given or provided. In the case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders of Securities shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 107. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with any duties under any required provision of the Trust Indenture Act imposed hereon by Section 318(c) thereof, such required provision shall control. Section 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. Section 110. Separability Clause. In case any provision in this Indenture, or any Security shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 10 Section 111. Benefits of Indenture. Nothing in this Indenture or any Security, express or implied, shall give to any Person, other than the parties hereto, any Security Registrar, any Paying Agent and their successors hereunder and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 112. Governing Law. This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of Delaware applicable to agreements made or instruments entered into and, in each case, performed in said state. Section 113. Legal Holidays. In any case where any Interest Payment Date, Stated Maturity or Maturity of any Security, shall be a Legal Holiday at any Place of Payment, then (notwithstanding any other provision of this Indenture, or any Security other than a provision in any Security that specifically states that such provision shall apply in lieu of this Section 113) payment need not be made at such Place of Payment on such date, but may be made on the next succeeding day that is a Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or at the Stated Maturity or Maturity, and no interest shall accrue on the amount payable on such date or at such time for the 11 period from and after such Interest Payment Date or Stated Maturity or Maturity, as the case may be. ARTICLE TWO SECURITIES FORMS Section 201. Forms Generally. Each Security, issued pursuant to this Indenture shall be, (i) in the case of certificated Securities, in the form established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, shall have such appropriate insertions, omissions, substitutions and other variations as are required or permitted by or pursuant to this Indenture or any indenture supplemental hereto and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing such Security as evidenced by their execution of such Security and (ii) in the case of uncertificated Securities, established by or pursuant a Board Resolution providing that such Securities shall fulfill all requirements of state law wherever sold. Unless otherwise provided in or pursuant to this Indenture, certificated Securities shall be issuable in registered form without coupons. In the case of certificated Securities, Definitive Securities shall be printed, lithographed or engraved or produced by any combination of these methods on a steel engraved border or steel engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing such Securities, as evidenced by their execution of such Securities. Section 202. Form of Trustee's Certificate of Authentication. In the case of certificated Securities, subject to Section 610, the Trustee's certificate of authentication shall be in substantially the following form: This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. MELLON BANK, N.A., as Trustee By ---------------------------------- Authorized Signer 12 ARTICLE THREE THE SECURITIES Section 301. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be issued under this Indenture is unlimited. The Securities may be issued in one or more series. With respect to any Securities to be (i) authenticated and delivered hereunder in the case of certificated Securities or (ii) registered in the Security Register in the case of uncertificated Securities, there shall be established in or pursuant to a Board Resolution and set forth in a Company Order, or established in one or more indentures supplemental hereto, (1) the title of such Securities and the series in which such Securities shall be included; (2) any limit upon the aggregate principal amount of the Securities of such title or the Securities of such series which may be issued under this Indenture (except for Securities authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of, other Securities of such series pursuant to Section 304, 305, 306, 905 or 1107 or the terms of such Securities); (3) the date or dates, or the method or methods, if any, by which such date or dates shall be determined, on which the principal of such Securities is payable; (4) the rate or rates at which such Securities shall bear interest, if any, or the method or methods, if any, by which such rate or rates are to be determined, the date or dates, if any, from which such interest shall accrue or the method or methods, if any, by which such date or dates are to be determined, the Interest Payment Dates, if any, on which such interest shall be payable and the Regular Record Date, if any, for the interest payable on Securities on any Interest Payment Date, the manner in which interest is to be paid, whether and under what circumstances Additional Amounts on such Securities or any of them shall be payable, and the basis upon which interest shall be calculated if other than that of a 360-day year of twelve 30-day months; the place or places where the principal of, any premium and interest on or any Additional Amounts with respect to such Securities shall be payable, any of such Securities may be surrendered for registration of transfer, any of such Securities may be surrendered for exchange and notices or demands to or upon the Company in respect of such Securities and this Indenture may be served; 13 (5) whether any of such Securities are to be redeemable at the option of the Company and, if so, the period or periods within which, the price or prices at which and the other terms and conditions upon which such Securities may be redeemed, in whole or in part, at the option of the Company; (6) whether the Company is obligated to redeem or purchase any of such Securities pursuant to any sinking fund or at the option of any Holder thereof and, if so, the period or periods within which, the price or prices at which and the other terms and conditions upon which such Securities shall be redeemed or purchased, in whole or in part, pursuant to such obligation; (7) the denominations in which any of such Securities shall be issuable; (8) any deletions from, modifications of or additions to the Events of Default or covenants of the Company with respect to any of such Securities, whether or not such Events of Default or covenants are consistent with the Events of Default or covenants set forth herein; (9) if not the Trustee, the identity of each Paying Agent or Authenticating Agent with respect to such Securities; (10) if not the Company, the identity of each Security Registrar with respect to such Securities; (11) whether such Securities shall be automatically extended, and if so, the period or periods within which notice may be given that such extension should not occur automatically, and the terms of any such extended Security; (12) whether the Securities will be certificated or uncertificated; (13) provisions relating to seniority; and (14) any other terms of such Securities (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series shall be substantially identical except as to denomination and the rate or rates of interest, if any, and Maturity, the date from which interest, if any, shall accrue and except as may otherwise be provided by the Company in or pursuant to the Board Resolution and set forth in the Company Order or in any indenture or indentures supplemental hereto pertaining to such series of Securities. All Securities of any one series need not be issued at the same time and, unless otherwise so provided by the Company, a series may be reopened for issuances of additional Securities of such series or to establish additional terms of such series of Securities. If any of the terms of the Securities of any series shall be established by action taken by or pursuant to a Board Resolution, the Board Resolution shall be delivered to the Trustee at or prior to the delivery of the Company Order setting forth the terms of such series. Section 302. Denominations. Unless otherwise provided in or pursuant to this Indenture, Securities shall be issuable in registered form without coupons in such minimum denominations as may be determined from time to time by Company Order. 14 Section 303. Execution, Authentication, Delivery and Dating. Securities in certificated form shall be executed on behalf of the Company by its Chairman of the Board, one of its Vice Chairmen, its President, its Treasurer or one of its Vice Presidents under its corporate seal reproduced thereon and attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver to the Trustee (i) with respect to Securities in certificated form, the certificates representing such Securities for authentication, together with the Board Resolution and Officers' Certificate or supplemental indenture with respect to such Securities referred to in Section 301 and a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order and subject to the provisions hereof shall authenticate and deliver such Securities and (ii) with respect to Securities in uncertificated form, the Board Resolution and Officers' Certificate or supplemental indenture with respect to such Securities referred to in Section 301. In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Article Six hereof) shall be fully protected in relying upon an Opinion of Counsel substantially to the effect that: (a) the form or forms and terms of such Securities have been established in conformity with the provisions of this Indenture; (b) all conditions precedent to the authentication and delivery of such Securities have been complied with and that such Securities when completed by appropriate insertion and executed and delivered by the Company to the Trustee for authentication pursuant to this Indenture, and authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute legally valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting the enforcement of creditors' rights generally, and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); (c) all laws and requirements in respect of the execution and delivery by the Company of such Securities have been complied with; and (d) as to such other matters as the Trustee may reasonably request. If all the Securities of any series are not to be issued at one time, it shall not be necessary to deliver an Opinion of Counsel and an Officers' Certificate at the time of issuance of each Security, but such opinion and certificate, with appropriate modifications, shall be delivered at or before the time of issuance of the first Security of such series. After any such first delivery, any separate request by the Company that the Trustee authenticate Securities of such series for original issue will be deemed to be a certification by the Company that all conditions precedent provided for in this Indenture relating to authentication and delivery of such Securities continue to have been complied with. 15 The Trustee shall not be required to authenticate or to cause an Authenticating Agent to authenticate any Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee or if the Trustee, being advised by counsel, determines that such action may not lawfully be taken. Each certificated Security shall be dated the date of its authentication. No certificated Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for in Section 202 or 610 executed by or on behalf of the Trustee by the manual signature of one of its authorized officers or by an Authenticating Agent. Such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder Section 304. Temporary Securities. Pending the preparation of definitive certificated Securities, the Company may execute and deliver to the Trustee and, upon Company Order, the Trustee shall authenticate and deliver, in the manner provided in Section 303, temporary Securities in lieu thereof which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued, in registered form with such appropriate insertions, omissions, substitutions and other variations as the officers of the Company executing such Securities may determine, as conclusively evidenced by their execution of such Securities. Such temporary Securities may be in global form. Except in the case of temporary Securities in global form, which shall be exchanged in accordance with the provisions thereof, if temporary Securities are issued, the Company shall cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities of the same series and containing terms and provisions that are identical to those of any temporary Securities, such temporary Securities shall be exchangeable for such definitive Securities upon surrender of such temporary Securities at an Office or Agency for such Securities, without charge to any Holder thereof. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of authorized denominations of the same series and containing identical terms and provisions. Unless otherwise provided in or pursuant to this Indenture with respect to a temporary global Security, until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. Section 305. Registration, Transfer and Exchange. With respect to the Securities of each series the Company shall cause to be kept a register (each such register being herein sometimes referred to as the "Security Register") at an Office or Agency for such series in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of the Securities of such series and of transfers of the Securities of such series. At such times as the Trustee shall not be the Security Registrar, it shall have the right to examine the Security Register at all reasonable times. The Company is hereby initially appointed as Security Registrar for each series of Securities. Upon surrender for registration of transfer of any certificated Security of any series at any Office or Agency for such series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series denominated as authorized in or pursuant to this Indenture, of a like aggregate principal amount bearing a number not contemporaneously outstanding and containing identical terms and provisions. 16 At the option of the Holder, certificated Securities of any series may be exchanged for other Securities of the same series containing identical terms and provisions, in any authorized denominations, and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at any Office or Agency for such series. Whenever any certificated Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company evidencing the same debt and entitling the Holders thereof to the same benefits under this Indenture as the Securities surrendered upon such registration of transfer or exchange. Every certificated Security presented or surrendered for registration of transfer or for exchange or redemption shall (if so required by the Company or the Security Registrar for such Security) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar for such Security duly executed by the Holder thereof or his attorney duly authorized in writing. The Company reserves the right to assess a service charge for any registration of transfer or exchange, or redemption of Securities, and the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 905 or 1107 not involving any transfer. Except as otherwise provided in or pursuant to this Indenture, the Company shall not be required (i) to issue, register the transfer of or exchange any Securities during a period beginning at the opening of business 15 days before the day of the selection for redemption of Securities of like tenor and the same series under Section 1103 and ending at the close of business on the day of the mailing of the relevant notice of redemption, or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except in the case of any Security to be redeemed in part, the portion thereof not to be redeemed, or (iii) to issue, register the transfer of or exchange any Security which, in accordance with its terms, has been surrendered for repayment at the option of the Holder, except the portion, if any, of such Security not to be so repaid. Section 306. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security is surrendered to the Trustee, subject to the provisions of this Section 306, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series containing identical terms and of like principal amount and bearing a number not contemporaneously outstanding. If there be delivered to the Company and to the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security, and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and, upon the Company's request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Security a new Security of the same series containing identical terms and of like principal amount and bearing a number not contemporaneously outstanding. Notwithstanding the foregoing provisions of this Section 306, in case any mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. 17 Upon the issuance of any new Security under this Section 306, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security, issued pursuant to this Section in lieu of any destroyed, lost or stolen Security, shall constitute a separate obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. Section 307. Payment of Interest and Certain Additional Amounts; Rights to Interest and Certain Additional Amounts Preserved. Unless otherwise provided in or pursuant to this Indenture, any interest on and any Additional Amounts with respect to any Security which shall be payable, and are punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Security (or one or more Predecessor Securities) is registered as of the close of business on the Regular Record Date for such interest. Unless otherwise provided in or pursuant to this Indenture, any interest on and any Additional Amounts with respect to any Security which shall be payable, but shall not be punctually paid or duly provided for, on any Interest Payment Date for such Security (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder thereof on the relevant Regular Record Date by virtue of having been such Holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Person in whose name such Security (or a Predecessor Security thereof) shall be registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on such Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when so deposited to be held in trust for the benefit of the Person entitled to such Defaulted Interest as in this Clause provided. Thereupon, the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to the Holder of such Security (or a Predecessor Security thereof) at his address as it appears in the Security Register not less than 10 days prior to such Special Record Date. The Trustee may, in its discretion, in the name and at the expense of the Company cause a similar notice to be published at least once in an Authorized Newspaper of general circulation in the City of Philadelphia, Pennsylvania, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Person in whose name such Security (or a Predecessor Security thereof) shall be registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). 18 (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Security may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such payment shall be deemed practicable by the Trustee. At the option of the Company, interest on Securities that bear interest may be paid by mailing a check to the address of the Person entitled thereto as such address shall appear in the Security Register. Subject to the foregoing provisions of this Section 307 and Section 305, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 308. Persons Deemed Owners. Prior to (i) due presentment of a certificated Security for registration of transfer and (ii) acceptance of duly authorized written induction to transfer an uncertificated Security, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered in the Security Register as the owner of such Security for all purposes including without limitation for the purpose of receiving payment of principal of, any premium and (subject to Sections 305 and 307) interest on and any Additional Amounts with respect to such Security and for all other purposes whatsoever, whether or not any payment with respect to such Security shall be overdue, and neither the Company, nor the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary. No holder of any beneficial interest in any global Security held on its behalf by a Depository shall have any rights under this Indenture with respect to such global Security, and such Depository may be treated by the Company, the Trustee, and any agent of the Company or the Trustee as the owner of such global Security for all purposes whatsoever. None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Section 309. Cancellation. All certificated Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities, as well as Securities surrendered directly to the Trustee for any such purpose, shall be canceled promptly by the Trustee. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be canceled promptly by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by or pursuant to this Indenture. All canceled Securities held by the Trustee shall be destroyed by the Trustee, unless by a Company Order the Company directs their return to it in a timely manner. 19 ARTICLE FOUR SATISFACTION AND DISCHARGE Section 401. Satisfaction and Discharge of Indenture. Upon the direction of the Company by a Company Order, this Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and any right to receive Additional Amounts), and the Trustee, on receipt of a Company Order, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or (B) all Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) if redeemable at the option of the Company, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose, money and/or Government Obligations which through the payment of interest and principal in respect thereof in accordance with their terms, without consideration of any reinstatement thereof, will provide not later than the opening of business on the due dates of any payment of principal and any premium, interest and Additional Amounts with respect thereto, or a combination thereof, money in an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, including the principal of, any premium and interest on, and any Additional Amounts with respect to such Securities, to the date of such deposit (in the case of Securities which have become due and payable) or to the Maturity thereof, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with; and 20 (4) the Company has delivered to the Trustee a certificate of Independent Public Accountants certifying as to the sufficiency of the amounts deposited pursuant to subclause (B) of Clause (1) of this Section 401 for payment of the principal and any premium, interest and Additional Amounts with respect thereto on the dates such payments are due. In the event there are Securities of two or more series hereunder, the Trustee shall be required to execute an instrument acknowledging satisfaction and discharge of this Indenture only if requested to do so with respect to Securities of all series as to which it is Trustee and if the other conditions thereto are met. In the event there are two or more Trustees hereunder, then the effectiveness of any such instrument shall be conditioned upon receipt of each such instrument from all Trustees hereunder. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 605, the obligations of the Trustee to any Authenticating Agent under Section 610 and, if money and/or Government Obligations shall have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive. In the event that, subsequent to the date a discharge is effected pursuant to this Section 401, Additional Amounts in excess of those established as of the date such discharge is effected become payable in respect of any Securities, in order to preserve the benefits of the discharge established hereunder, the Company shall deposit or cause to be deposited in accordance with provisions of this Section 401, within ten business days prior to the earlier to occur of (i) one year after the existence of such excess Additional Amounts is established and (ii) the date the first payment in respect of any portion of such excess Additional Amounts becomes due, such additional funds as are necessary to satisfy the provisions of this Section 401 as if a discharge were being effected as of the date of such subsequent deposit. For purposes of this paragraph, the existence of excess Additional Amounts shall be deemed to have been established as of the date the governmental authority imposing the tax, assessment or other governmental charge resulting in the Additional Amounts first publishes the legislation, regulation or other enactment adopting such tax, assessment or other governmental charge. Failure to comply with the requirements of this paragraph shall result in the termination of the benefits of the discharge established by this Section 401. Section 402. Application of Trust Money. Subject to the provisions of the last paragraph of Section 1003, all money and Government Obligations deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal, premium, interest and Additional Amounts for whose payment such money has or Government Obligations have been deposited with or received by the Trustee; but such money and Government Obligations need not be segregated from other funds except to the extent required by law. ARTICLE FIVE REMEDIES Section 501. Events of Default. "Event of Default", wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such 21 Event of Default and whether it shall be voluntary or be effected by operation of law pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest on or any Additional Amounts payable in respect of any Security of such series when such interest becomes or such Additional Amounts become due and payable, and continuance of such default for a period of 30 days; or (2) default in the payment of the principal of and any premium on any Security of such series when it becomes due and payable at its Maturity; or (3) default in the deposit of any sinking fund payment, when and as due by the terms of a Security of such series; or (4) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture or the Securities (other than a covenant or warranty a default in the performance or the breach of which is elsewhere in this Section specifically dealt with or which has been expressly included in this Indenture solely for the benefit of a series of Securities other than such series), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of such series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (5) the entry by a court having competent jurisdiction of: 22 (a) a decree or order for relief in respect of the Company in an involuntary proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (b) a decree or order adjudging the Company to be insolvent, or approving a petition seeking reorganization, arrangement, adjustment or composition of the Company and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (c) a final and non-appealable order appointing a custodian, receiver, liquidator, assignee, trustee or other similar official of the Company or of any substantial part of the property of the Company, as the case may be, or ordering the winding up or liquidation of the affairs of the Company; or (6) the commencement by the Company of a voluntary proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or of a voluntary proceeding seeking to be adjudicated insolvent or the consent by the Company to the entry of a decree or order for relief in an involuntary proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or to the commencement of any insolvency proceedings against it, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any applicable law, or the consent by the Company to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or similar official of the Company or any substantial part of the property of the Company or the making by the Company of an assignment for the benefit of creditors, or the taking of corporate action by the Company in furtherance of any such action; or (7) any other Event of Default provided in or pursuant to this Indenture with respect to Securities of such series. Section 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of such series may declare the principal of all the Securities of such series, or such lesser amount as may be provided for in the Securities of such series, to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal or such lesser amount shall become immediately due and payable. At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of not less than a majority in principal amount of the Outstanding Securities of such series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (1) the Company has paid or deposited with the Trustee a sum of money sufficient to pay (A) all overdue installments of any interest on and any Additional Amounts with respect to all Securities of such series, (B) the principal of and any premium on any Securities of such 23 series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates borne by or provided for in such Securities, (C) to the extent that payment of such interest is lawful, interest upon overdue installments of any interest and Additional Amounts at the rate or rates borne by or provided for in such Securities, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Securities of such series, other than the non-payment of the principal of, any premium and interest on, and any Additional Amounts with respect to Securities of such series which shall have become due solely by such declaration of acceleration, shall have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if (1) default is made in the payment of any installment of interest on or any Additional Amounts with respect to any Security when such interest or Additional Amounts shall have become due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of or any premium on any Security at its Maturity, the Company shall, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount of money then due and payable with respect to such Securities with interest upon the overdue principal, any premium and, to the extent that payment of such interest shall be legally enforceable, upon any overdue installments of interest and Additional Amounts at the rate or rates borne by or provided for in such Securities, and, in addition thereto, such further amount of money as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay the money it is required to pay the Trustee pursuant to the preceding paragraph forthwith upon the demand of the Trustee, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the money so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated. If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or such Securities or in aid of the exercise of any power granted herein or therein, or to enforce any other proper remedy. 24 Section 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of any overdue principal, premium, interest or Additional Amounts) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount, or such lesser amount as may be provided for in the Securities of such series, of the principal and any premium, interest and Additional Amounts owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents or counsel) and of the Holders of Securities allowed in such judicial proceeding, and (ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder of Securities to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders of Securities, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 605. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder of a Security any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder of a Security in any such proceeding. Section 505. Trustee May Enforce Claims without Possession of Securities. All rights of action and claims under this Indenture or any of the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery or judgment, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, shall be for the ratable benefit of each and every Holder of a Security in respect of which such judgment has been recovered. Section 506. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, or any premium, interest or Additional Amounts, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee and any predecessor Trustee under Section 605; 25 SECOND: To the payment of the amounts then due and unpaid upon the Securities for principal and any premium, interest and Additional Amounts in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the aggregate amounts due and payable on such Securities for principal and any premium, interest and Additional Amounts, respectively; THIRD: The balance, if any, to the Person or Persons entitled thereto. Section 507. Limitations on Suits. No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of such series; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities of such series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of such series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture or any Security to affect, disturb or prejudice the rights of any other such Holders or Holders of Securities of any other series, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. Section 508. Unconditional Right of Holders to Receive Principal and any Premium, Interest and Additional Amounts. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of, any premium and (subject to Sections 305 and 307) interest on, and any Additional Amounts with respect to such Security, on the respective Stated Maturity or Maturities therefor specified in such Security (or, in the case of redemption, on the Redemption Date or, in the case of repayment at the option of such Holder if provided in or pursuant to this Indenture, on the date such repayment is due) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. 26 Section 509. Restoration of Rights and Remedies. If the Trustee or any Holder of a Security has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case the Company, the Trustee and each such Holder shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and each such Holder shall continue as though no such proceeding had been instituted. Section 510. Rights and Remedies. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to each and every Holder of a Security is intended to be exclusive of any other right or remedy, and every right and remedy, to the extent permitted by law, shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to any Holder of a Security may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by such Holder, as the case may be. Section 512. Control by Holders of Securities. The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Securities of such series, provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture or with the Securities of any series, (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and (3) such direction is not unduly prejudicial to the rights of the other Holders of Securities of such series not joining in such action. Section 513. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series on behalf of the Holders of all the Securities of such series may waive any past default hereunder with respect to such series and its consequences, except a default 27 (1) in the payment of the principal of, any premium or interest on, or any Additional Amounts with respect to any Security of such series, or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Section 514. Waiver of Stay or Extension Laws. The Company covenants that (to the extent that it may lawfully do so) it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company expressly waives (to the extent that it may lawfully do so) all benefit or advantage of any such law and covenant that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE Section 601. Certain Rights of Trustee. Subject to Sections 315(a) through 315(d) of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or a Company Order (in each case, other than delivery of any Security to the Trustee for authentication and delivery pursuant to Section 303 which shall be sufficiently evidenced as provided therein) and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence shall be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; 28 (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by or pursuant to this Indenture at the request or direction of any of the Holders of Securities of any series pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, coupon or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine, during business hours and upon reasonable notice, the books, records and premises of the Company, personally or by agent or attorney; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. 29 Section 602. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the Trustee's certificate of authentication, shall be taken as the statements of the Company and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility and Qualification on Form T-1 supplied to the Company are true and accurate, subject to the qualifications set forth therein. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof. Section 603. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other Person that may be an agent of the Trustee or the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 310(b) and 311 of the Trust Indenture Act, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other Person. Section 604. Money Held in Trust. Except as provided in Section 402 and Section 1003, money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law and shall be held uninvested. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. Section 605. Compensation and Reimbursement. The Company agrees: (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by the Trustee hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to the Trustee's negligence or bad faith; and (3) to indemnify the Trustee and its agents for, and to hold them harmless against, any loss, liability or expense incurred without negligence or bad faith on their part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending themselves against any claim or liability in connection with the exercise or performance of any of their powers or duties hereunder. As security for the performance of the obligations of the Company under this Section 605, the Trustee shall have a lien prior to the Securities of any series upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of, and premium or interest on or any Additional Amounts with respect to Securities. 30 Section 606. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder that is a Corporation permitted by the Trust Indenture Act to act as trustee under an indenture qualified under the Trust Indenture Act and that has a combined capital and surplus (computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 606, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Section 607. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee pursuant to Section 608. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 608 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to such series. (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and the Company. (d) If at any time: (1) the Trustee shall fail to comply with the obligations imposed upon it under Section 310(b) of the Trust Indenture Act with respect to Securities of any series after written request therefor by the Company or any Holder of a Security of such series who has been a bona fide Holder of a Security of such series for at least six months, or (2) the Trustee shall cease to be eligible under Section 606 and shall fail to resign after written request therefor by the Company or any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company, by or pursuant to a Board Resolution, may remove the Trustee with respect to all Securities or the Securities of such series, or (ii) subject to Section 315(e) of the Trust Indenture Act, any Holder of a Security who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities of such series and the appointment of a successor Trustee or Trustees. 31 (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by or pursuant to a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 608. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 608, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders of Securities and accepted appointment in the manner required by Section 608, any Holder of a Security who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Securities, of such series as their names and addresses appear in the Security Register. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. Section 608. Acceptance of Appointment by Successor. (a) Upon the appointment hereunder of any successor Trustee with respect to all Securities, such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties hereunder of the retiring Trustee; but, on the request of the Company or such successor Trustee, such retiring Trustee, upon payment of its charges, shall execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and, subject to Section 1003, shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its claim, if any, provided for in Section 605. (b) Upon the appointment hereunder of any successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and such successor Trustee shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, such successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring 32 Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust, that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee and that no Trustee shall be responsible for any notice given to, or received by, or any act or failure to act on the part of any other Trustee hereunder, and, upon the execution and delivery of such supplemental indenture, the resignation or removal of the retiring Trustee shall become effective to the extent provided therein, such retiring Trustee shall have no further responsibility for the exercise of rights and powers or for the performance of the duties and obligations vested in the Trustee under this Indenture with respect to the Securities of that or those series to which the appointment of such successor Trustee relates other than as hereinafter expressly set forth, and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or such successor Trustee, such retiring Trustee, upon payment of its charges with respect to the Securities of that or those series to which the appointment of such successor relates and subject to Section 1003 shall duly assign, transfer and deliver to such successor Trustee, to the extent contemplated by such supplemental indenture, the property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any Person appointed hereunder as a successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section 608, as the case may be. (d) No Person shall accept its appointment hereunder as a successor Trustee unless at the time of such acceptance such successor Person shall be qualified and eligible under this Article. Section 609. Merger, Conversion, Consolidation or Succession to Business. Any Corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any Corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated but not delivered by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. Section 610. Appointment of Authenticating Agent. The Trustee may appoint one or more Authenticating Agents acceptable to the Company with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of that or those series issued upon original issue, exchange, registration of transfer, partial redemption or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. 33 Each Authenticating Agent shall be acceptable to the Company and, except as provided in or pursuant to this Indenture, shall at all times be a corporation that would be permitted by the Trust Indenture Act to act as trustee under an indenture qualified under the Trust Indenture Act, is authorized under applicable law and by its charter to act as an Authenticating Agent and has a combined capital and surplus (computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 610, it shall resign immediately in the manner and with the effect specified in this Section 610. Any Corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, provided such Corporation shall be otherwise eligible under this Section 610, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of Securities of the series with respect to which such Authenticating Agent shall serve, as their names and addresses appear in the Security Register. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section 610. The Company agrees to pay each Authenticating Agent from time to time reasonable compensation for its services under this Section 610. If the Trustee makes such payments, it shall be entitled to be reimbursed for such payments, subject to the provisions of Section 605. The provisions of Sections 308, 602 and 603 shall be applicable to each Authenticating Agent. If an Authenticating Agent is appointed with respect to one or more series of Securities pursuant to this Section 610, the Securities of such series may have endorsed thereon, in addition to or in lieu of the Trustee's certificate of authentication, an alternate certificate of authentication in the following form: This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. MELLON BANK, N.A., As Trustee By ----------------------------------- As Authenticating Agent By ----------------------------------- Authorized Signatory 34 If all of the Securities of any series may not be originally issued at one time, and if the Trustee does not have an office capable of authenticating Securities upon original issuance located in a Place of Payment where the Company wishes to have Securities of such series authenticated upon original issuance, the Trustee, if so requested in writing (which writing need not be accompanied by or contained in an Officers' Certificate by the Company), shall appoint in accordance with this Section 610 an Authenticating Agent having an office in a Place of Payment designated by the Company with respect to such series of Securities. 35 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 701. Company to Furnish Trustee Names and Addresses of Holders. In accordance with Section 312(a) of the Trust Indenture Act, the Company shall furnish or cause to be furnished to the Trustee (a) semi-annually with respect to Securities of each series on April 30 and October 31 of each year or upon such other dates as are set forth in or pursuant to the Board Resolution or indenture supplemental hereto authorizing such series, a list, in each case in such form as the Trustee may reasonably require, of the names and addresses of Holders as of the applicable date, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished, provided, however, that such times as the Trustee is the Security Registrar no such list shall be required to be furnished. Section 702. Preservation of Information; Communications to Holders. The Trustee shall comply with the obligations imposed upon it pursuant to Section 312 of the Trust Indenture Act. Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company, the Trustee, any Paying Agent or any Security Registrar shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Securities in accordance with Section 312 of the Trust Indenture Act, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 312(b) of the Trust Indenture Act. Section 703. Reports by Trustee. (a) Within 60 days after July 31 of each year commencing with the first July 31 following the first issuance of Securities pursuant to Section 301, if required by Section 313(a) of the Trust Indenture Act, the Trustee shall transmit, in accordance with Section 313 of the Trust Indenture Act, a brief report dated as of such July 31 with respect to any of the events specified in said Section 313(a) which may have occurred since the later of the immediately preceding September 15 and the date of this Indenture. (b) The Trustee shall transmit the reports required by Section 313(b) of the Trust Indenture Act at the times specified therein. (c) Reports pursuant to this Section shall be transmitted in the manner and to the Persons required by Sections 313(c) and 313(d) of the Trust Indenture Act. Section 704. Reports by Company. 36 The Company, pursuant to Section 314(a) of the Trust Indenture Act, shall: (1) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company, as the case may be, with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (3) transmit within 30 days after the filing thereof with the Trustee, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section 704 as may be required by rules and regulations prescribed from time to time by the Commission. 37 ARTICLE EIGHT CONSOLIDATION, MERGER AND SALES Section 801. Company May Consolidate, Etc., Only on Certain Terms. Nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of the Company with or into any other Person or Persons (whether or not affiliated with the Company), or successive consolidations or mergers in which the Company or its successor or successors shall be a party or parties, or shall prevent any conveyance, transfer or lease of the property of the Company as an entirety or substantially as an entirety, to any other Person (whether or not affiliated with the Company); provided, however, that: (1) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a Corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia and shall expressly assume, by an indenture (or indentures, if at such time there is more than one Trustee) supplemental hereto, executed by the successor Person and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of, any premium and interest on and any Additional Amounts with respect to all the Securities and the performance of every other covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no event which, after notice or lapse of time, would become an Event of Default, shall have occurred and be continuing; (3) either the Company or the successor Person shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, stating that such consolidation, merger, conveyance, transfer or lease and such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. 38 Section 802. Successor Person Substituted for Company. Upon any consolidation or merger or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety to any Person in accordance with Section 801, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and thereafter, except in the case of a lease to another Person, the predecessor Person shall be released from all obligations and covenants under this Indenture, and the Securities. ARTICLE NINE SUPPLEMENTAL INDENTURES Section 901. Supplemental Indentures without Consent of Holders. Without the consent of any Holders of Securities, the Company (when authorized by or pursuant to a Board Resolution) and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities; or (2) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (as shall be specified in such supplemental indenture or indentures) or to surrender any right or power herein conferred upon the Company; or (3) to facilitate the issuance of Securities in uncertificated form, provided any such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect; or (4) to establish the form or terms of Securities of any series as permitted by Sections 201 and 301; or (5) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 608; or (6) to cure any ambiguity or to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not adversely affect the interests of the Holders of Securities of any series in any material respect; or (7) to add to, delete from or revise the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue, authentication and delivery of Securities, as herein set forth; or (8) to add any additional Events of Default with respect to all or any series of Securities (as shall be specified in such supplemental indenture); or 39 (9) to secure the Securities pursuant to Section 1006 or otherwise; or (10) to amend or supplement any provision contained herein or in any supplemental indenture, provided that no such amendment or supplement shall materially adversely affect the interests of the Holders of any Securities then Outstanding. Section 902. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company (when authorized by or pursuant to a Company's Board Resolution), and the Trustee may enter into one or more indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture, without the consent of the Holder of each Outstanding Security affected thereby, shall (1) change the Stated Maturity of the principal of, or any premium or installment of interest on or any Additional Amounts with respect to, any Security, or reduce the principal amount thereof or the rate of interest thereon or any Additional Amounts with respect thereto, or any premium payable upon the redemption thereof or otherwise, or change the obligation of the Company to pay Additional Amounts pursuant to Section 1004 (except as contemplated by Section 801(1) and permitted by Section 901(1)), or adversely affect the right of repayment at the option of any Holder as contemplated by Article Thirteen, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date or, in the case of repayment at the option of the Holder, on or after the date for repayment), or (2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or reduce the requirements of Section 1404 for quorum or voting, or (3) modify any of the provisions of this Section 902, or Section 513 or Section 1006, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which shall have been included expressly and solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. It shall not be necessary for any Act of Holders of Securities under this Section 902 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. 40 Section 903. Execution of Supplemental Indentures. As a condition to executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trust created by this Indenture, the Trustee shall be entitled to receive, and (subject to Article Six hereof) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of a Security theretofore or thereafter issued hereunder shall be bound thereby. Section 905. Reference in Securities to Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. ARTICLE TEN COVENANTS Section 1001. Payment of Principal and any Premium, Interest and Additional Amounts. The Company covenants and agrees for the benefit of the Holders of the Securities of each series that it will duly and punctually pay the principal of, any premium and interest on and any Additional Amounts with respect to the Securities of such series in accordance with the terms thereof and this Indenture. Section 1002. Maintenance of Office or Agency. The Company shall maintain in each Place of Payment for any series of Securities an Office or Agency where Securities of such series may be presented or surrendered for payment, where Securities of such series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of such series relating thereto and this Indenture may be served. The Company may also from time to time designate one or more other Offices or Agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an Office or Agency in each Place of Payment for Securities of any series for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other Office or Agency. Unless otherwise provided in or pursuant to this Indenture, the Company hereby designates as the Place of Payment for each series The City of Horsham, 41 and initially appoints its offices in the City of Horsham, Pennsylvania as the Office or Agency for such purpose. Pursuant to Section 301(9) of this Indenture, the Company may subsequently appoint a place or places in The City of Philadelphia or its immediate vicinity where such Securities may be payable. Section 1003. Money for Securities Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it shall, on or before each due date of the principal of, any premium or interest on or Additional Amounts with respect to any of the Securities of such series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum of money sufficient to pay the principal or any premium, interest or Additional Amounts so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and shall promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for any series of Securities, it shall, on or prior to each due date of the principal of, any premium or interest on or any Additional Amounts with respect to any Securities of such series, deposit with any Paying Agent a sum of money sufficient to pay the principal or any premium, interest or Additional Amounts so becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company shall cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent shall: (1) hold all sums held by it for the payment of the principal of, any premium or interest on or any Additional Amounts with respect to Securities of such series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as provided in or pursuant to this Indenture; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities of such series) in the making of any payment of principal, any premium or interest on or any Additional Amounts with respect to the Securities of such series; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same terms as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Except as otherwise provided herein or pursuant hereto, any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, any premium or interest on or any Additional Amounts with respect to any Security of any series and remaining unclaimed for two years after such principal or any such premium or interest or any such Additional Amounts shall have become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust 42 money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in an Authorized Newspaper in each Place of Payment for such series or to be mailed to Holders of Securities of such series, or both, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing nor shall it be later than two years after such principal and any premium or interest or Additional Amounts shall have become due and payable, any unclaimed balance of such money then remaining will be repaid to the Company. Section 1004. Additional Amounts. If any Securities of a series provide for the payment of Additional Amounts, the Company agrees to pay to the Holder of any such Security Additional Amounts as provided therein. Whenever in this Indenture there is mentioned, in any context, the payment of the principal of or any premium or interest on, or in respect of, any Security of any series or the net proceeds received on the sale or exchange of any Security of any series, such mention shall be deemed to include mention of the payment of Additional Amounts provided by the terms of such series established hereby or pursuant hereto to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to such terms, and express mention of the payment of Additional Amounts (if applicable) in any provision hereof shall not be construed as excluding Additional Amounts in those provisions hereof where such express mention is not made. Except as otherwise provided in or pursuant to this Indenture, if the Securities of a series provide for the payment of Additional Amounts, at least 10 days prior to the first Interest Payment Date with respect to such series of Securities (or if the Securities of such series shall not bear interest prior to Maturity, the first day on which a payment of principal is made), and at least 10 days prior to each date of payment of principal or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers' Certificate, the Company shall furnish to the Trustee and the principal Paying Agent or Paying Agents, if other than the Trustee, an Officers' Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of or interest on the Securities of such series shall be made to Holders of Securities of such series who are United States Aliens without withholding for or on account of any tax, assessment or other governmental charge described in the Securities of such series. If any such withholding shall be required, then such Officers' Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Securities, and the Company agrees to pay to the Trustee or such Paying Agent the Additional Amounts required by the terms of such Securities. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense (including reasonable fees and expenses) reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers' Certificate furnished pursuant to this Section 1004. Section 1005. Corporate Existence. Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and its rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of its business and that the loss thereof is not disadvantageous in any material respect to the Holders. 43 Section 1006. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any term, provision or condition set forth in Section 1002, 1004, 1006 or 1007 with respect to the Securities of any series if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities of such series, by Act of such Holders, either shall waive such compliance in such instance or generally shall have waived compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. Section 1007. Company Statement as to Compliance; Notice of Certain Defaults. (a) The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year, a written statement (which need not be contained in or accompanied by an Officers' Certificate) signed by the principal executive officer, the principal financial officer or the principal accounting officer of the Company, stating that (1) a review of the activities of the Company during such year and of its performance under this Indenture has been made under his or her supervision, and (2) to the best of his or her knowledge, based on such review, (A) the Company has complied with all the conditions and covenants imposed on it under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such condition or covenant, specifying each such default known to him or her and the nature and status thereof, and (B) no event has occurred and is continuing which is, or after notice or lapse of time or both would become, an Event of Default, or, if such an event has occurred and is continuing, specifying each such event known to him and the nature and status thereof. (b) The Company shall deliver to the Trustee, within five days after the occurrence thereof, written notice of any event which after notice or lapse of time or both would become an Event of Default pursuant to clause (4) of Section 501. ARTICLE ELEVEN REDEMPTION OF SECURITIES Section 1101. Applicability of Article. Redemption of Securities of any series at the option of the Company as permitted or required by the terms of such Securities shall be made in accordance with the terms of this Article, except as otherwise permitted or required by the terms of such Securities. Section 1102. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company of the Securities of any series, with the same issue date, interest rate, Stated Maturity and other terms, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed. 44 Section 1103. Selection by Trustee of Securities to be Redeemed. If less than all the Securities of any series with the same issue date, interest rate, Stated Maturity and other terms are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions of the principal amount of Securities of such series; provided, however, that no such partial redemption shall reduce the portion of the principal amount of a Security of such series not redeemed to less than the minimum denomination for a Security of such series established herein or pursuant hereto. The Trustee shall promptly notify the Company and the Security Registrar (if other than itself) in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal of such Securities which has been or is to be redeemed. Section 1104. Notice of Redemption. Notice of redemption shall be given in the manner provided in Section 106, not less than 30 nor more than 60 days prior to the Redemption Date, unless a shorter period is specified in the Securities to be redeemed, to the Holders of Securities to be redeemed. Failure to give notice by mailing in the manner herein provided to the Holder of any Securities designated for redemption as a whole or in part, or any defect in the notice to any such Holder, shall not affect the validity of the proceedings for the redemption of any other Securities or portion thereof. Any notice that is mailed to the Holder of any Securities in the manner herein provided shall be conclusively presumed to have been duly given, whether or not such Holder receives the notice. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amount) of the particular Security or Securities to be redeemed, (4) in case any certificated Security is to be redeemed in part only, the notice which relates to such Security shall state that on and after the Redemption Date, upon surrender of such Security, the Holder of such Security will receive, without charge, a new Security or Securities of authorized denominations for the principal amount thereof remaining unredeemed, (5) that, on the Redemption Date, the Redemption Price shall become due and payable upon each such Security or portion thereof to be redeemed, and, if applicable, that interest thereon shall cease to accrue on and after said date, 45 (6) the place or places where such Securities are to be surrendered for payment of the Redemption Price and any accrued interest and Additional Amounts pertaining thereto, (7) that the redemption is for a sinking fund, if such is the case, (8) the CUSIP number, if any (or any other numbers used by a Depository to identify such Securities). A notice of redemption published as contemplated by Section 106 need not identify particular Securities to be redeemed. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. Section 1105. Deposit of Redemption Price. On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) any accrued interest on and Additional Amounts with respect thereto, all the Securities or portions thereof which are to be redeemed on that date. Section 1106. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with any accrued interest and Additional Amounts to the Redemption Date; provided, however, that installments of interest on Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the Regular Record Dates therefor according to their terms and the provisions of Section 307. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium, until paid, shall bear interest from the Redemption Date at the rate prescribed therefor in the Security. Section 1107. Securities Redeemed in Part. Any certificated Security which is to be redeemed only in part shall be surrendered at any Office or Agency for such Security (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series, containing identical terms and provisions, of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. 46 ARTICLE TWELVE SINKING FUNDS Section 1201. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series, except as otherwise permitted or required by the terms of such Securities. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of such series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series. Section 1202. Satisfaction of Sinking Fund Payments with Securities. The Company may, in satisfaction of all or any part of any sinking fund payment with respect to the Securities of any series to be made pursuant to the terms of such Securities (1) deliver Outstanding Securities of such series (other than any of such Securities previously called for redemption or any of such Securities in respect of which cash shall have been released to the Company), and (2) apply as a credit Securities of such series which have been redeemed either at the election of the Company pursuant to the terms of such series of Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, provided that such series of Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. If as a result of the delivery or credit of Securities of any series in lieu of cash payments pursuant to this Section 1202, the principal amount of Securities of such series to be redeemed in order to exhaust the aforesaid cash payment shall be less than $100,000, the Trustee need not call Securities of such series for redemption, except upon Company Request, and such cash payment shall be held by the Trustee or a Paying Agent and applied to the next succeeding sinking fund payment, provided, however, that the Trustee or such Paying Agent shall at the request of the Company from time to time pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery by the Company to the Trustee of Securities of that series purchased by the Company having an unpaid principal amount equal to the cash payment requested to be released to the Company. Section 1203. Redemption of Securities for Sinking Fund. Not less than 45 days prior to each sinking fund payment date for any series of Securities (unless a shorter notice shall be satisfactory to the Trustee), the Company shall deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing mandatory sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting of Securities of that series pursuant to Section 1202, and the optional amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, and will also deliver to the Trustee any Securities to be so credited and not theretofore delivered. If such Officers' Certificate shall specify an optional amount to be added in cash to the next ensuing mandatory sinking fund payment, the Company shall thereupon be obligated to pay the amount therein specified. Not less than 40 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner 47 specified in Section 1103 and cause notice of the redemption thereof to be given not less than 30 nor more than 40 days prior to the sinking fund payment date in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1106 and 1107. ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS Section 1301. Applicability of Article. Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity shall be repaid in accordance with the terms of the Securities of such series. The repayment of any principal amount of Securities pursuant to such option of the Holder to require repayment of Securities before their Stated Maturity, for purposes of Section 309, shall not, in the case of certificated Securities, operate as a payment, redemption or satisfaction of the indebtedness represented by such Securities unless and until the Company, at its option, shall deliver or surrender the same to the Trustee with a directive that such Securities be canceled. ARTICLE FOURTEEN MEETINGS OF HOLDERS OF SECURITIES Section 1401. Purposes for Which Meetings May Be Called. A meeting of Holders of Securities of any series may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Securities of such series. Section 1402. Call, Notice and Place of Meetings. (a) The Trustee may at any time call a meeting of Holders of Securities of any series for any purpose specified in Section 1401, to be held at such time and at such place in The City of Philadelphia as the Trustee shall determine. Notice of every meeting of Holders of Securities of any series, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 106, not less than 21 nor more than 180 days prior to the date fixed for the meeting. (b) In case at any time the Company (by or pursuant to a Board Resolution) or the Holders of at least 10% in principal amount of the Outstanding Securities of any series shall have requested the Trustee to call a meeting of the Holders of Securities of such series for any purpose specified in Section 1401, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Securities of such series in the amount above specified, as the case may be, may determine the time and the place in The City of Philadelphia and may call such meeting for such purposes by giving notice thereof as provided in subsection (a) of this Section 1402. 48 Section 1403. Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of Holders of Securities of any series, a Person shall be (1) a Holder of one or more Outstanding Securities of such series, or (2) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities of such series by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders of Securities of any series shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. Section 1404. Quorum; Action. The Persons entitled to vote a majority in principal amount of the Outstanding Securities of a series shall constitute a quorum for a meeting of Holders of Securities of such series. In the absence of a quorum within 30 minutes after the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Securities of such series, be dissolved. In any other case the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 1402(a), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Securities of such series which shall constitute a quorum. Except as limited by the proviso to Section 902, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in principal amount of the Outstanding Securities of that series; provided, however, that, except as limited by the proviso to Section 902, any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other action which this Indenture expressly provides may be made, given or taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Securities of a series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Securities of such series. Any resolution passed or decision taken at any meeting of Holders of Securities of any series duly held in accordance with this Section 1404 shall be binding on all the Holders of Securities of such series, whether or not such Holders were present or represented at the meeting. Section 1405. Determination of Voting Rights; Conduct and Adjournment of Meetings. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities of such series in regard to proof of the holding of Securities of such series and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 104 and the appointment of any proxy shall be proved in the manner specified in Section 104. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 104 or other proof. 49 (b) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities as provided in Section 1402(b), in which case the Company or the Holders of Securities of the series calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series represented at the meeting. (c) At any meeting, each Holder of a Security of such series or proxy shall be entitled to one vote for each $1,000 principal amount of Securities of such series held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security of such series or proxy. (d) Any meeting of Holders of Securities of any series duly called pursuant to Section 1402 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series represented at the meeting; and the meeting may be held as so adjourned without further notice. Section 1406. Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders of Securities of any series shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities of such series or of their representatives by proxy and the principal amounts and account numbers of the Outstanding Securities of such series held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record, at least in triplicate, of the proceedings of each meeting of Holders of Securities of any series shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 1402 and, if applicable, Section 1404. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. ARTICLE FIFTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS Section 1501. Indenture and Securities Solely Corporate Obligations. No recourse for the payment of the principal of or premium, if any, or interest or Additional Amounts on any Security, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental indenture or, in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any 50 successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of the Securities. * * * * * 51 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed, all as of the day and year first above written. [SEAL] Advanta Corp. Attest: /s/ Linda Morris By /s/ David Wesselink - ------------------------------ ----------------------------------- Name: David Wesselink Title: [SEAL] MELLON BANK, N.A., as Trustee Attest: /s/ By /s/ B.M. Schessler - ------------------------------ ----------------------------------- Name: B.M. Schessler Title: Vice President 52 ADVANTA CORP. SENIOR INVESTMENT NOTE PROGRAM ------------------------------------- INSTRUMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE among Mellon Bank, N.A. as Trustee, and THE CHASE MANHATTAN BANK, as Successor Trustee ------------------------- Dated as of July 31, 1997 ------------------------------------- INSTRUMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE INSTRUMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE entered into as of July 31, 1997, among Advanta Corp., a corporation organized and existing under the laws of the State of Delaware (the "Company"), having its principal office at Welsh & McKean Roads, Spring House, PA 19477, Mellon Bank, N.A., a national banking association, having its principal corporate trust office at Two Mellon Bank Center, Pittsburgh, PA 15258 ("Mellon"), as Trustee, and THE CHASE MANHATTAN BANK, a corporation organized and existing under the laws of the State of New York ("Chase"), having its corporate trust office at 450 West 3rd Street, New York, New York 10001, as successor Trustee. W I T N E S S E T H: WHEREAS, the Company heretofore executed and delivered to Mellon, as Trustee, its Indenture dated as of October 23, 1995 (the "Original Indenture"), to provide for the issuance of securities issued and to be issued in accordance with the provisions of the Original Indenture, as supplemented and amended from time to time, (the "Indenture"); and WHEREAS, as of June 30, 1997, securities in the amount of $177,103,000 were outstanding under the Indenture; and WHEREAS, Section 607(b) of the Indenture provides that the trustee under the Indenture may at any time resign and be discharged of the trusts created by the Indenture by giving written notice to the Company, addressed and mailed to the Company at its principal office; and WHEREAS, Section 607(e) of the Indenture provides that a successor Trustee may be appointed, in the manner provided in said Section 607(c), in case the Trustee under the Indenture shall resign, by the Company to fill the vacancy in the Office Of Trustee under the Indenture by an instrument executed by order of the Board of Directors of the Company; and WHEREAS, Section 607(f) of the Indenture further provides that the Company shall mail notice of any appointment of a successor Trustee made by it pursuant to said Section 607(f) in the manner provided in Section 607(f); and WHEREAS, Section 608(d) of the Indenture provides that any Trustee under the Indenture shall at all times satisfy the requirements set forth in Article Six; and WHEREAS, Section 608(a) of the Indenture provides that any successor Trustee shall execute, acknowledge and deliver to its predecessor Trustee, and also to the Company an instrument accepting such appointment under the Indenture; and -1- WHEREAS, Mellon desires to resign as Trustee under the Indenture; and WHEREAS, the Company desires to appoint Chase as successor Trustee under the Indenture; and WHEREAS, Chase is willing to accept such appointment as successor Trustee under the Indenture; and WHEREAS, as of the date of these presents, no successor Trustee under the Indenture has been appointed by the security holders; and WHEREAS, by resolution of the Board of Directors of the Company adopted on June 26, 1997, the undersigned officers of the Company were authorized, directed and ordered to execute and deliver this instrument; NOW THEREFORE, THIS INSTRUMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE, WITNESSETH: That for and in consideration, of the premises, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby covenanted, declared and decreed by the Company, Mellon and Chase, as follows: FIRST: The Company, as soon as practicable after the execution and delivery of these presents and the Registration Statement on Form S-3 (No. 333-28291) registering additional securities for issuance pursuant to the Indenture has been declared effective by the Securities and Exchange Commission, will cause the notice required pursuant to the provisions of Section 607(f) of the Indenture to be mailed as therein required. SECOND: Chase hereby represents that it is a bank eligible under the provisions of Section 606 of the Indenture and Section 310(a) of the Trust Indenture Act of 1939, as amended to be appointed successor Trustee under the Indenture. THIRD: Effective at the close of business on the date hereof, Mellon hereby resigns and, by written notice to the Company dated May 23, 1997, as required by Section 607(b), has given notice of its resignation as Trustee under the Indenture and as agent of the Company where notices and demands to or upon the Company in respect of the securities issued in accordance with the Indenture or in respect of the Indenture may be served. FOURTH: The Company hereby accepts the foregoing resignations and appoints Chase as successor Trustee under the Indenture and as the office or agency of the Company in the borough of Manhattan, City and State of New York, where notices and demands to or upon the Company in respect of the securities issued in accordance with the Indenture or in respect of the Indenture may be served, with all the estates, properties, rights, powers, trusts, duties and obligations of Mellon under the Indenture as provided in the Indenture, such appointment to be effective at the close of business on the date hereof. -2- FIFTH: Chase hereby accepts its appointment as successor Trustee under the Indenture, effective at the close of business on the date hereof, and assumes all the estates, properties, rights, powers, trusts, duties and obligations of the Trustee thereunder as provided in the Indenture, and Chase also accepts, effective at the close of business on the date hereof, its appointment as agent of the Company where notices and demands to or upon the Company in respect of the securities issued in accordance with the Indenture or in respect of the Indenture may be served, subject to all the terms and provisions therein contained. SIXTH: The Company and Chase hereby request Mellon to confirm, assign, transfer and set over to Chase, as its successor in trust under the Indenture, all the rights, powers, trusts, duties and obligations of Mellon, as Trustee, and to assign, transfer and deliver to Chase, as successor Trustee, any and all money and other property subject to the lien of the Indenture held by Mellon as Trustee under the Indenture. SEVENTH: Pursuant to the request of Chase and the Company hereby made, Mellon hereby confirms, assigns, transfers and sets over to Chase, as its successor in trust under the Indenture, all the rights, powers, trusts, duties and obligations and hereby does assign, transfer and deliver to Chase as such successor Trustee any and all money and other property subject to the lien of the Indenture held by Mellon as Trustee under the Indenture. EIGHTH: The Company, for the purpose of more fully and certainly vesting in and confirming to Chase as successor Trustee under the Indenture said rights, powers, trusts, duties and obligations, at the request of Chase, joins in the execution hereof. NINTH: The Company, Mellon and Chase hereby agree, upon reasonable request of any of them, to execute, acknowledge and deliver such further instruments of conveyance and further assurance and to do such other things as may reasonably be required for more fully and certainly vesting in and confirming to Chase all the right, title and interest of Mellon, as Trustee, in and to the estates held in trust under the Indenture, and to such rights, powers, trusts, duties and obligations of Chase, as Trustee. Mellon agrees to provide whatever reasonable assistance Chase may require for the orderly transfer of this trusteeship and the foregoing agency appointments, including furnishing Chase with a list of security holders and such other documentation from Mellon's files as Chase may reasonably require and providing Chase with any explanation of Mellon's services under the Indenture that Chase may consider necessary or advisable in connection with its administration as successor Trustee and of such agency appointments. TENTH: This instrument may be executed in any number of counterparts, each of which, when so executed and delivered, shall be an original, but all such counterparts shall together constitute but one and the same instrument. ELEVENTH: Terms not otherwise defined in this instrument of Resignation, Appointment and Acceptance shall have the definitions given thereto in the Indenture. -3- TWELFTH: This Instrument of Resignation, Appointment and Acceptance shall be construed in accordance with and governed by the laws of the State of New York. IN WITNESS WHEREOF, the Company has caused this Instrument to be signed and acknowledged by one of its authorized officers, its corporate seal to be affixed hereunto, and the same to be attested by its Secretary or one of its Assistant Secretaries; Mellon has caused this instrument to be executed and acknowledged by one of its authorized officers, its corporate seal to be affixed hereunto, and the same to be attested by one of its authorized officers; and Chase has caused this Instrument to be executed and acknowledged by one of its authorized officers, its corporate seal to be affixed hereunto, and the same to be attested by one of its Senior Trust Officers, as of the date first set forth above. -4- Advanta Corp. By: /s/ Jeffrey D. Beck ----------------------------- Name: Jeffrey D. Beck Title: Vice President and Treasurer [Seal] Attest: /s/ Linda C. Morris - ------------------------------------------ Name: Linda C. Morris Title: Vice President and Assistant Secretary The Chase Manhattan Bank By: ------------------------------ Name: Title: [Seal] Attest: - ------------------------------------------ Name: Title: Mellon Bank, N.A. By: ------------------------------ Name: Title: [Seal] Attest: - ----------------------------------------- Name: Title: -5- Advanta Corp. By: ------------------------------ Name: Title: [Seal] Attest: - ----------------------------------------- Name: Title: The Chase Manhattan Bank By: /s/ Sheik Wiltshire ------------------------------ Name: Sheik Wiltshire Title: Second Vice President [Seal] Attest: /s/ Francine Springer - ------------------------------------------ Name: Francine Springer Title: Trust Officer Mellon Bank, N.A. By: ------------------------------ Name: Title: [Seal] Attest: - ------------------------------------------ Name: Title: -6- Advanta Corp. By: ------------------------------ Name: Title: [Seal] Attest: - ------------------------------------------ Name: Title: The Chase Manhattan Bank By: ------------------------------ Name: Title: [Seal] Attest: - ------------------------------------------ Name: Title: Mellon Bank, N.A. By: /s/ Marvin Kirstead ----------------------------- Name: Marvin Kirstead Title: Assistant Vice President [Seal] Attest: /s/ John Sohier - ------------------------------------------ Name: John Sohier Title: Assistant Officer -7- EX-5 3 OPINION LAW OFFICES WOLF, BLOCK, SCHORR AND SOLIS-COHEN LLP TWELFTH FLOOR PACKARD BUILDING 111 SOUTH 15TH STREET PHILADELPHIA, PA 19102-2678 (215) 977-2000 FACSIMILE: (215) 977-2334 (215) 977-2000 March 16, 1999 Advanta Corp. Welsh and McKean Roads P.O. Box 844 Spring House, PA 19477 Re: Registration Statement on Form S-3 ---------------------------------- Ladies and Gentlemen: As special counsel to Advanta Corp., a Delaware corporation (the "Company"), we have assisted in the preparation of a Registration Statement on Form S-3 (together with all exhibits thereto and documents incorporated by reference therein, the "Registration Statement") in the form proposed to be filed with the Securities and Exchange Commission (the "Commission"). The Registration Statement relates to the issuance and sale from time to time, pursuant to Rule 415 of the General Rules and Regulations promulgated under the Securities Act of 1933, as amended (the "Securities Act"), of up to $300,000,000 aggregate principal amount of RediReserve Variable Rate Certificates which will be payable at the demand of the holder (the "RediReserve Certificates") and Notes with 91 Day, Six, Eighteen and Thirty Month and One, Two, Three, Four, Five, Seven and Ten Year maturities (collectively with the RediReserve Certificates, the "Securities"), all of which will be uncertificated. This opinion is being delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-K promulgated under the Securities Act. In connection with the opinions expressed herein, we have examined, among other things, the originals or copies, certified or otherwise identified to our satisfaction, of the Restated Certificate of Incorporation and Bylaws of the Company, the Registration Statement, resolutions of the Board of Directors of the Company Advanta Corp. March 16, 1999 Page 2 with respect to the Registration Statement and the authorization of the securities registered thereby and the authorization of the filing of an additional registration statement (the "Additional Registration Statement") for the purpose of registering for issuance and sale an additional amount of Securities pursuant to Rule 462 under the Securities Act (the "Additional Securities," and collectively with the Securities, the "Offered Securities"), the Indenture, dated October 23, 1995, between the Company and The Chase Manhattan Bank, as successor trustee (the "Indenture"), and such other documents as we have deemed necessary or appropriate for the purpose of rendering this opinion. In our examination, we have assumed without independent verification (i) the legal capacity of all natural persons, (ii) the genuineness of all signatures, (iii) the authenticity of all documents submitted to us as originals, (iv) the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies and the authenticity of the originals of such documents, and (v) the power and authority of all persons other than the Company signing such documents to execute, deliver and perform such documents, and the valid authorization, execution and delivery of such documents by such other persons. As to any facts material to the opinions expressed herein which were not independently established or verified, we have relied upon oral or written statements and representations of officers or other representatives of the Company. We are admitted to practice in the Commonwealth of Pennsylvania and the State of Delaware and we do not express any opinion as to the laws of any other jurisdiction other than the federal laws of the United States of America to the extent referred to specifically herein. The Offered Securities may be issued from time to time on a delayed or continuous basis, and this opinion is limited to the laws, including applicable rules and regulations, in effect on the date hereof, and to the facts in existence on the date hereof. We assume no obligation to update such opinion. Based upon and subject to the foregoing, and such examinations of law and such other matters as we have deemed relevant under the circumstances, it is our opinion that: 1. The Indenture has been duly authorized by the Board of Directors of the Company, has been duly executed and delivered by the Company and is a valid and binding agreement, enforceable against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and other similar laws now or hereafter in effect relating to or affecting the rights of creditors generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). Advanta Corp. March 16, 1999 Page 3 2. When and if the definitive terms of any Offered Securities and of their issue and sale have been duly established in accordance with the Board Resolutions, the Board Resolutions and an Officer's Certificate (as defined in the Indenture) or a supplemental indenture with respect to such Offered Securities are delivered to the Trustee under the Indenture in accordance with the terms of the Indenture, the consideration for such Offered Securities approved by the Executive Committee of the Company's Board of Directors in accordance with the Board Resolutions has been received by the Company, and such Offered Securities have been registered in the "Security Register" (as defined in the Indenture) in accordance with the provisions of the Indenture, so as not to violate any applicable law or agreement or instrument then binding on the Company, such Offered Securities will be duly authorized, legal and valid binding obligations of the Company, enforceable in accordance with their terms and entitled to the benefits provided in the Indenture, subject to applicable bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and other similar laws now or hereafter in effect relating to or affecting the rights of creditors generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement and to the incorporation by reference of this opinion as an exhibit to the Additional Registration Statement. We also consent to the reference to our firm under the heading "Legal Opinions" in the prospectus and any prospectus supplements constituting a part of the Registration Statement and to the incorporation by reference of such references to our firm in the Additional Registration Statement. In giving this consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission. Advanta Corp. March 16, 1999 Page 4 Very truly yours, WOLF, BLOCK, SCHORR AND SOLIS-COHEN LLP EX-12 4 COMPUTATION OF RATIO OF EARNINGS Exhibit 12 ADVANTA Corp. and Subsidiaries Statements setting forth details of computation of ratio of earnings to fixed charges COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES (Dollars in thousands)
For The Years Ended December 31, Three Months Ended Nine Months Ended --------------------------------------------------- September 30, 1998 September 30, 1998 1997 1996 1995 1994 1993 ------------------- ------------------ -------- -------- -------- -------- --------- (unaudited) (unaudited) Net earnings $15,025 $443,282 $71,625 $175,657 $136,677 $106,063 $ 77,920 Federal and state income taxes 6,439 (11,013) 24,905 89,104 75,226 59,144 45,335 Earnings before income taxes 21,464 432,269 96,530 264,761 211,903 165,207 123,255 Fixed charges: Interest 39,165 142,936 324,558 269,700 166,032 94,758 79,303 One-third of all rentals 583 2,006 3,492 2,834 1,641 1,809 1,591 Preferred stock dividend of subsidiary trust 2,248 6,743 8,990 350 0 0 0 Total fixed charges 41,996 151,685 337,040 272,884 167,673 96,567 80,894 Earnings before income taxes and fixed charges $63,460 583,954 433,570 537,645 379,576 261,774 204,149 Ratio of earnings to fixed charges (1) 1.51x 3.85x 1.29x 1.97x 2.26x 2.71x 2.52x
(1) For purposes of computing these ratios, "earnings" represent income before income taxes plus fixed charges. "Fixed charges" consist of interest expense, one-third (the proportion deemed representative of the interest factor) of rental expense on operating leases and preferred stock dividends of a subsidiary trust. EX-23.1 5 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS EXHIBIT 23.1 ARTHUR ANDERSEN LLP CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Form S-3 Registration Statement of our reports dated February 27, 1998 included in Advanta Corp.'s Form 10-K for the year ended December 31, 1997 and to all references to our Firm included in this Form S-3 Registration Statement. /s/ Arthur Andersen LLP Philadelphia, PA March 15, 1999 EX-25 6 FORM T-1 ------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________ ---------------------------------------- THE CHASE MANHATTAN BANK --------------------------------------------------- (Exact name of trustee as specified in its charter) New York 13-4994650 ------------------------ ------------------- (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 Park Avenue New York, New York 10017 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 --------------------------------------------------------- (Name, address and telephone number of agent for service) Advanta Corp. --------------------------------------------------- (Exact name of obligor as specified in its charter) Delaware 23-1462070 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) Welsh & McKean Roads Spring House, PA 19477 --------------------------------------- ---------- Address of principal executive offices) (Zip Code) ---------------------------------------------------- Senior Investment Notes and RediReserve Certificates ---------------------------------------------------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551. Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 8th day of March, 1999. THE CHASE MANHATTAN BANK By /s/ Sheik Wiltshire --------------------------------------------- /s/ Sheik Wiltshire, Assistant Vice President -3- Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1998, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts in Millions ----------- ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin .............. $ 11,951 Interest-bearing balances ....................................... 4,551 Securities: Held to maturity securities...................................... 1,740 Available for sale securities.................................... 48,537 Federal funds sold and securities purchased under agreements to resell .......................................... 29,730 Loans and lease financing receivables: Loans and leases, net of unearned income.... $127,379 Less: Allowance for loan and lease losses... 2,719 Less: Allocated transfer risk reserve....... 0 -------- Loans and leases, net of unearned income, allowance, and reserve........................................ 124,660 Trading Assets ....................................................... 51,549 Premises and fixed assets (including capitalized leases).............. 3,009 Other real estate owned .............................................. 272 Investments in unconsolidated subsidiaries and associated companies... 300 Customers' liability to this bank on acceptances outstanding ......... 1,329 Intangible assets .................................................... 1,429 Other assets ......................................................... 13,563 -------- TOTAL ASSETS ......................................................... $292,620 ======== - 4 - LIABILITIES Deposits In domestic offices ............................................. $ 98,760 Noninterest-bearing ............................................. $ 39,071 Interest-bearing ................................................ 59,689 In foreign offices, Edge and Agreement, subsidiaries and IBF's .. 75,403 Noninterest-bearing ............................................. $ 3,877 Interest-bearing ................................................ 71,526 Federal funds purchased and securities sold under agreements to repurchase ........................................ 34,471 Demand notes issued to the U.S. Treasury ............................. 1,000 Trading liabilities .................................................. 41,589 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less ................... 3,781 With a remaining maturity of more than one year through three years............................................ 213 With a remaining maturity of more than three years............... 104 Bank's liability on acceptances executed and outstanding.............. 1,329 Subordinated notes and debentures .................................... 5,408 Other liabilities .................................................... 12,041 TOTAL LIABILITIES .................................................... 274,099 -------- EQUITY CAPITAL Perpetual preferred stock and related surplus......................... 0 Common stock ......................................................... 1,211 Surplus exclude all surplus related to preferred stock)............... 10,441 Undivided profits and capital reserves ............................... 6,287 Net unrealized holding gains (losses) on available-for-sale securities ................................... 566 Cumulative foreign currency translation adjustments .................. 16 TOTAL EQUITY CAPITAL ................................................. 18,521 -------- TOTAL LIABILITIES AND EQUITY CAPITAL ................................. $292,620 ======== I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) THOMAS G. LABRECQUE ) DIRECTORS WILLIAM B. HARRISON, JR. ) -5- -----END PRIVACY-ENHANCED MESSAGE-----