Revolving Credit And Competitive Loan Agreement

CONFORMED COPY ================================================================================


ADVANTA CORP.
ADVANTA NATIONAL BANK
ADVANTA NATIONAL BANK USA


_________________________________________


REVOLVING CREDIT AND
COMPETITIVE LOAN AGREEMENT


Dated as of July 26, 1996


__________________________________________


NATIONSBANC CAPITAL MARKETS, INC.,
as Syndication Agent,


PNC BANK, NATIONAL ASSOCIATION,
as Documentation Agent


and


THE CHASE MANHATTAN BANK,
as Agent


================================================================================


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TABLE OF CONTENTS


Page
----
ARTICLE I


Definitions; Construction
-------------------------


SECTION 1.01. Certain Definitions . . . . . . . . . . . . . . . . . . . . 1


SECTION 1.02. Construction . . . . . . . . . . . . . . . . . . . . . . . 28


SECTION 1.03. GAAP/RAP . . . . . . . . . . . . . . . . . . . . . . . . . 29


ARTICLE II


The Credits
-----------


SECTION 2.01. Revolving Loans . . . . . . . . . . . . . . . . . . . . . . 29


SECTION 2.02. Extension of Expiration Date . . . . . . . . . . . . . . . 30


SECTION 2.03. Competitive Loans . . . . . . . . . . . . . . . . . . . . . 33


SECTION 2.04. The Notes . . . . . . . . . . . . . . . . . . . . . . . . . 37


SECTION 2.05. Making of Revolving Loans . . . . . . . . . . . . . . . . . 38


SECTION 2.06. Facility Fee; Utilization Fee . . . . . . . . . . . . . . . 39


SECTION 2.07. Termination; Reduction or Increase . . . . . . . . . . . . 40


SECTION 2.08. Interest Rates; Maturity Periods; Transactional Amounts . . 44


SECTION 2.09. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . 48


SECTION 2.10. Interest Payment Dates . . . . . . . . . . . . . . . . . . 48


SECTION 2.11. Pro Rata Treatment; Payments Generally . . . . . . . . . . 49


SECTION 2.12. Additional Compensation in Certain Circumstances . . . . . 50


SECTION 2.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 54


SECTION 2.14. Funding by Branch, Subsidiary or Affiliate . . . . . . . . 57 3


ARTICLE III


Letters of Credit
Page
---- SECTION 3.01. Committed L/C Commitment . . . . . . . . . . . . . . . . . 58


SECTION 3.02. Procedure for Issuance of Committed L/C . . . . . . . . . . 58


SECTION 3.03. Committed L/C Participations . . . . . . . . . . . . . . . 59


SECTION 3.04. Competitive L/C's . . . . . . . . . . . . . . . . . . . . . 60


SECTION 3.05. Procedure for Competitive L/C Issuance . . . . . . . . . . 61


SECTION 3.06. Fees, Commissions and Other Charges . . . . . . . . . . . . 64


SECTION 3.07. Reimbursement Obligation . . . . . . . . . . . . . . . . . 64


SECTION 3.08. Obligations Absolute . . . . . . . . . . . . . . . . . . . 65


SECTION 3.09. L/C Payments . . . . . . . . . . . . . . . . . . . . . . . 66


SECTION 3.10. Applications; Uniform Customs;
Securities Affiliates of Banks . . . . . . . . . . . . . 66


ARTICLE IV


Representations and Warranties
------------------------------


SECTION 4.01. Organization and Qualification . . . . . . . . . . . . . . 67


SECTION 4.02. Corporate Power and Authorization . . . . . . . . . . . . . 67


SECTION 4.03. Audited Annual Financial Statements . . . . . . . . . . . . 67


SECTION 4.04. Consolidating Financial Statements . . . . . . . . . . . . 68


SECTION 4.05. Bank Financial Statements . . . . . . . . . . . . . . . . . 68


SECTION 4.06. Absence of Material Adverse Changes . . . . . . . . . . . . 68


SECTION 4.07. Litigation and Regulatory Proceedings . . . . . . . . . . . 68 4
3


Page
---- SECTION 4.08. No Conflicting Laws or Agreements;
Consents and Approvals . . . . . . . . . . . . . . . . . 69


SECTION 4.09. Execution and Binding Effect . . . . . . . . . . . . . . . 69


SECTION 4.10. Employee Benefits . . . . . . . . . . . . . . . . . . . . . 70


SECTION 4.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 70


SECTION 4.12. Regulation U . . . . . . . . . . . . . . . . . . . . . . . 71


SECTION 4.13. Environmental Matters . . . . . . . . . . . . . . . . . . . 71


SECTION 4.14. Investment Company; Bank Holding
Company; Public Utility Holding Company . . . . . . . . . 72


SECTION 4.15. Capitalization of Insured Subsidiaries . . . . . . . . . . 72


SECTION 4.16. Absence of Undisclosed Liabilities . . . . . . . . . . . . 73


SECTION 4.17. Absence of Events of Default . . . . . . . . . . . . . . . 73


SECTION 4.18. Title to Property . . . . . . . . . . . . . . . . . . . . . 73


SECTION 4.19. Subsidiaries and Other Investments . . . . . . . . . . . . 73


SECTION 4.20. Compliance with Laws . . . . . . . . . . . . . . . . . . . 74


SECTION 4.21. Accurate and Complete Disclosure . . . . . . . . . . . . . 74


ARTICLE V


Conditions of Lending
---------------------


SECTION 5.01. Closing Date . . . . . . . . . . . . . . . . . . . . . . . 75


SECTION 5.02. Conditions to All Credit Extensions . . . . . . . . . . . . 77


ARTICLE VI


Affirmative Covenants
---------------------


SECTION 6.01. Basic Reporting Requirements . . . . . . . . . . . . . . . 78


SECTION 6.02. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 84


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4


Page
---- SECTION 6.03. Payment of Taxes and Other
Potential Charges and Priority Claims . . . . . . . . . . 84


SECTION 6.04. Preservation of Existence and Franchises . . . . . . . . . 85


SECTION 6.05. Maintenance of Properties/Business . . . . . . . . . . . . 85


SECTION 6.06. Avoidance of Other Conflicts . . . . . . . . . . . . . . . 86


SECTION 6.07. Capitalization of Insured Subsidiaries . . . . . . . . . . 86


SECTION 6.08. Financial Accounting Practices . . . . . . . . . . . . . . 86


SECTION 6.09. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 86


SECTION 6.10. Continuation of or Change in Business . . . . . . . . . . . 87


SECTION 6.11. Consolidated Tax-Return . . . . . . . . . . . . . . . . . . 87


SECTION 6.12. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . 87


ARTICLE VII


Negative Covenants
------------------


SECTION 7.01. Financial Covenants . . . . . . . . . . . . . . . . . . . . 88


SECTION 7.02. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 88


SECTION 7.03. Mergers, Acquisitions, etc. . . . . . . . . . . . . . . . . 92


SECTION 7.04. Dispositions of Properties . . . . . . . . . . . . . . . . 94


SECTION 7.05. Dealings with Affiliates . . . . . . . . . . . . . . . . . 94


SECTION 7.06. Limitation on other Restrictions on
Dividends by Subsidiaries, etc. . . . . . . . . . . . . . 96


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ARTICLE VIII


Events of Default


Page
---- SECTION 8.01. Events of Default . . . . . . . . . . . . . . . . . . . . . 98


ARTICLE IX


The Agent
---------


SECTION 9.01. Appointment . . . . . . . . . . . . . . . . . . . . . . . . 102


SECTION 9.02. Exercise of Powers . . . . . . . . . . . . . . . . . . . . 103


SECTION 9.03. Delegation of Duties . . . . . . . . . . . . . . . . . . . 103


SECTION 9.04. Exculpatory Provisions . . . . . . . . . . . . . . . . . . 103


SECTION 9.05. Reliance by Agent . . . . . . . . . . . . . . . . . . . . . 104


SECTION 9.06. Notice of Default . . . . . . . . . . . . . . . . . . . . . 105


SECTION 9.07. Non-Reliance on Agent and Other Banks . . . . . . . . . . . 105


SECTION 9.08. Indemnification . . . . . . . . . . . . . . . . . . . . . . 106


SECTION 9.09. Agent In Its Individual Capacity . . . . . . . . . . . . . 107


SECTION 9.10. Successor Agent . . . . . . . . . . . . . . . . . . . . . . 107


SECTION 9.11. Calculations . . . . . . . . . . . . . . . . . . . . . . . 108


SECTION 9.12. Holders of Notes . . . . . . . . . . . . . . . . . . . . . 108


SECTION 9.13. Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . 109


SECTION 9.14. Funding by Agent . . . . . . . . . . . . . . . . . . . . . 109


SECTION 9.15. The Syndication Agent and the Documentation Agent . . . . . 109


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6


ARTICLE X


Miscellaneous


Page
---- SECTION 10.01. Holidays . . . . . . . . . . . . . . . . . . . . . . . . . 110


SECTION 10.02. Records . . . . . . . . . . . . . . . . . . . . . . . . . . 110


SECTION 10.03. Amendments and Waivers . . . . . . . . . . . . . . . . . . 112


SECTION 10.04. No Implied Waiver; Cumulative Remedies . . . . . . . . . . 112


SECTION 10.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 112


SECTION 10.06. Expenses; Taxes; Indemnity . . . . . . . . . . . . . . . . 113


SECTION 10.07. Severability . . . . . . . . . . . . . . . . . . . . . . . 115


SECTION 10.08. Prior Understandings . . . . . . . . . . . . . . . . . . . 115


SECTION 10.09. Duration; Survival . . . . . . . . . . . . . . . . . . . . 115


SECTION 10.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 116


SECTION 10.11. Limitation on Payments . . . . . . . . . . . . . . . . . . 116


SECTION 10.12. Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . 116


SECTION 10.13. Sharing of Collections . . . . . . . . . . . . . . . . . . 117


SECTION 10.14. Successors and Assigns; Participations; Assignments . . . . 118


SECTION 10.15. Governing Law; Submission to Jurisdiction;
Waiver of Jury Trial; Limitation of Liability . . . . . . 124


EXHIBITS AND SCHEDULES


Exhibit A Form of Revolving Credit Note Exhibit B Form of Competitive Note Exhibit C Form of Loan Request Exhibit D-1 Form of Competitive Bid Request Exhibit D-2 Form of Competitive Bid Exhibit D-3 Form of Competitive Bid Confirmation Exhibit E-1 Form of Competitive L/C Request Exhibit E-2 Form of Competitive L/C Offer


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Exhibit E-3 Form of Competitive L/C Confirmation Exhibit F Guaranty and Suretyship Agreement Exhibit G Form of Assignment Supplement Exhibit H Form of Commitment Assumption Exhibit I Administrative Questionnaire


Schedule 2.01 Bank Commitments Schedule 4.06 Material Adverse Changes Schedule 4.10 Plan Information Schedule 4.13(d) Environmental Matters Schedule 4.16 Liabilities Disclosures Schedule 4.19 Subsidiaries and Other Investments Schedule 7.02(a) Existing Liens


9
REVOLVING CREDIT AND COMPETITIVE LOAN AGREEMENT


This CREDIT AGREEMENT, dated as of July 26,
1996, by and among ADVANTA CORP., a Delaware
corporation (hereinafter called the "Company"),
ADVANTA NATIONAL BANK, a national banking association
("ANB"), ADVANTA NATIONAL BANK USA, a national
banking association ("AUS", and, together with the
Company and ANB, the "Borrowers"), the lenders
parties hereto from time to time (hereinafter each
called a "Bank" and collectively called the "Banks,"
as further defined below), THE CHASE MANHATTAN BANK,
as agent for the Banks under this Agreement
(hereinafter in such capacity called the "Agent"),
NATIONSBANC CAPITAL MARKETS, INC., as syndication
agent and PNC BANK, NATIONAL ASSOCIATION, as
documentation agent.


Preliminary Statement


WHEREAS, the Borrowers have requested and the Banks and the Agent are willing to make available to the Borrowers, upon all of the terms and conditions herein set forth, a revolving credit and competitive loan facility;


NOW THEREFORE, in consideration of their mutual agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows:


ARTICLE I


Definitions; Construction


SECTION 1.01. Certain definitions. In addition to other words and terms defined elsewhere in this Agreement, as used herein the following words and terms shall have the following meanings, respectively, unless the context hereof otherwise clearly requires:


"Active Subsidiary" shall mean any Subsidiary of the Company which has, at the time of determination, engaged in any business activity or operations whatsoever (except for any activity related exclusively to the continuation or 10
2


preservation of its corporate existence), either directly or indirectly and either individually or together with one or more other such Subsidiaries, for or at any time during the Rolling Period immediately preceding the date of determination.


"Administrative Questionnaire" shall mean an Administrative Questionnaire in the form of Exhibit I hereto.


"Affected Bank" shall have the meaning set forth in Section 2.08(e) hereof.


"Affiliate" of a Person (the "Specified Person") shall mean (a) any Person which directly or indirectly controls, or is controlled by, or is under common control with, the Specified Person or (b) any director or executive officer (or, in the case of a Person which is not a corporation, any individual having analogous powers) of the Specified Person or of a Person which is an Affiliate of the Specified Person within the meaning of the preceding clause (a). For purposes of the preceding sentence, "control" of a Person includes the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.


"Agreement" shall mean this Credit Agreement as amended, modified or supplemented from time to time.


"Applicable Facility Fee Percentage" shall mean, in respect of either Tranche for any day, (i) .085% for any such day during which the Applicable Rating Level is 1; (ii) .10% for any such day during which the Applicable Rating Level is 2; (iii) .125% for any such day during which the Applicable Rating Level is 3; (iv) .15% for any such day during which the Applicable Rating Level is 4; (v) .225% for any such day during which the Applicable Rating Level is 5; and (vi) .35% for any such day during which the Applicable Rating Level is 6. Each change in the Applicable Facility Fee Percentage resulting from a change of the Applicable Rating Level shall become effective on the effective date of such change in the Applicable Rating Level.


"Applicable Margin" for a Borrower shall mean, for any day, the percentage set forth below which corresponds to such Borrower's Rating Level in effect on any such day.


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3


Each change in a Borrower's Applicable Margin for any Revolving Loan which results from a change in such Borrower's Rating Level shall become effective on the effective date of such change in the Borrower's Rating Level.


Rating Level Percentage
------------ ----------

1 .165%
2 .20%
3 .225%
4 .25%
5 .375%
6 .75%


"Applicable Rating Level" shall mean, in respect of either Tranche on any day, the Rating Level of the Borrower under such Tranche that has the lowest (i.e., numerically highest) Rating Level on such day.


"Applicable Utilization Fee Percentage" of a Borrower shall mean, for any day, (i) .05% for any such day during which such Borrower's Rating Level is 1, 2 or 3; (ii) .10% for any such day during which such Borrower's Rating Level is 4 or 5; and (iii) .25% for any such day during which such Borrower's Rating Level is 6. Each change in a Borrower's Applicable Utilization Fee Percentage resulting from a change of such Borrower's Rating Level shall become effective on the effective date of such change in the Borrower's Rating Level.


"Application" shall mean, with respect to each Letter of Credit, an application in such form as the relevant L/C Issuer may specify from time to time requesting such L/C Issuer to issue such Letter of Credit.


"Assignment Supplement" shall have the meaning assigned to such term in Section 10.14(c) hereof.


"Assets" of any Person at any time shall mean the assets of such Person at such time, determined and consolidated in accordance with GAAP.


12
4


"Bank" shall mean any of the lenders listed on the signature pages hereof, subject to the provisions of Section 2.07 and Section 10.14 hereof pertaining to Persons becoming or ceasing to be "Banks" hereunder.


"Base Rate" shall mean, for any day, the interest rate per annum equal to the higher of: (A) the Prime Rate for such day and (B) the Federal Funds Effective Rate for such day plus 1/2 of l%. As used herein "Prime Rate" shall mean that rate of interest per annum publicly announced from time to time by The Chase Manhattan Bank as its Prime Rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective on the date such change is publicly announced as being effective. "Federal Funds Effective Rate" for any day, as used herein, shall mean the rate per annum (rounded upward to the nearest 1/100 of l%) determined by the Agent (which determination shall, in the absence of manifest error, be conclusive) to be the rate per annum announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight Federal funds transactions arranged by Federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the "Federal Funds Effective Rate" as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day under circumstances that are temporary, the "Federal Funds Effective Rate" for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced. Each change in the Base Rate due to a change in the Prime Rate or in the Federal Funds Effective Rate shall be effective on the effective date of such change in the Prime Rate or Federal Funds Effective Rate.


"Base Rate Borrowing" shall mean a Borrowing comprised of Base Rate Loans.


"Base Rate Loan" shall mean any Loan bearing interest at the Base Rate in accordance with the provisions of Article II.


"Base Rate Option" shall mean the option of a Borrower hereunder to have Revolving Loans bear interest at the Base Rate.


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5


"Borrowing" shall mean a group of Loans within a single Tranche of a single Type made by the Banks within such Tranche (or, in the case of a Competitive Borrowing, by the Bank or Banks within a Tranche whose Competitive Bids have been accepted pursuant to Section 2.03(d)) on a single date and as to which a single Interest Period is in effect.


"Borrowing Date" shall mean any day (which shall be a Business Day) on which Loans are to be made hereunder.


"Business Day" shall mean any day other than a Saturday, Sunday, public holiday under the laws of the State of New York or other day on which banking institutions are authorized or obligated to close in New York.


"Call Reports" shall mean Consolidated Reports of Condition and Income prepared in accordance with rules prescribed by the Federal Financial Institutions Examination Council or any successor thereto.


"CERCLIS" shall mean the Comprehensive Environmental Response, Compensation and Liability Information System List, as the same may be amended from time to time.


"Change of Control" shall mean that (a) any person or group (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the date hereof) other than Dennis Alter or his estate shall own directly or indirectly, beneficially or of record, shares representing more than 25% of the aggregate ordinary voting power represented by the issued and outstanding capital s ...