10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

[X] Quarterly report under section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2003 or

[  ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to _____

Commission File Number 0-14120

Advanta Corp.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 23-1462070
(I.R.S. Employer
Identification No.)

Welsh and McKean Roads, P.O. Box 844, Spring House, PA 19477
(Address of Principal Executive Offices) (Zip Code)

(215) 657-4000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]  No [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [X]  No [  ]

Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [  ]  No [  ]

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class A
Common Stock, $.01 par value Outstanding at August 4, 2003
9,864,385 shares

Class B
Common Stock, $.01 par value Outstanding at August 4, 2003
17,389,454 shares

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		CONSOLIDATED BALANCE SHEETS (Unaudited)
		CONSOLIDATED INCOME STATEMENTS (Unaudited)
		CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)
		CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II — OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Ex. 10 - Lease Agreement
Ratio of Earnings to Fixed Charges
302 Certification (CEO)
302 Certification (CFO)
906 Certification (CEO)
906 Certification (CFO)

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
	Consolidated Balance Sheets (Unaudited)		3
	Consolidated Income Statements (Unaudited)		4
	Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)		5–6
	Consolidated Statements of Cash Flows (Unaudited)		7
	Notes to Consolidated Financial Statements (Unaudited)		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			42
Item 4. Controls and Procedures			43
PART II – OTHER INFORMATION
Item 1. Legal Proceedings			43
Item 4. Submission of Matters to a Vote of Security Holders			43
Item 6. Exhibits and Reports on Form 8-K			44

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ITEM 1. FINANCIAL STATEMENTS

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

			June 30,			December 31,
(In thousands, except share data)			2003			2002
ASSETS
Cash			$	44,919		$	14,834
Federal funds sold				280,902			332,257
Restricted interest-bearing deposits				77,880			79,449
Investments available for sale				201,049			171,222
Receivables, net:
		Held for sale		158,557			177,065
		Other		282,483			278,282
Total receivables, net				441,040			455,347
Accounts receivable from securitizations				831,191			198,238
Premises and equipment, net				18,592			25,496
Other assets				294,828			277,658
Assets of discontinued operations, net				90,075			127,112
Total assets			$	2,280,476		$	1,681,613
LIABILITIES
Deposits			$	1,205,001		$	714,028
Debt				319,428			315,886
Other liabilities				329,188			230,386
Total liabilities				1,853,617			1,260,300
Commitments and contingencies
Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely subordinated debentures of Advanta Corp.				100,000			100,000
STOCKHOLDERS’ EQUITY
Class A preferred stock, $1,000 par value:
	Authorized, issued and outstanding – 1,010 shares in 2003 and 2002			1,010			1,010
Class A voting common stock, $.01 par value:
	Authorized – 200,000,000 shares; issued – 10,041,017 shares in 2003 and 2002			100			100
Class B non-voting common stock, $.01 par value:
	Authorized – 200,000,000 shares; issued – 20,471,162 shares in 2003 and 20,326,289 shares in 2002			205			204
Additional paid-in capital				245,071			243,910
Deferred compensation				(16,235	)		(17,837	)
Unearned ESOP shares				(10,606	)		(10,831	)
Accumulated other comprehensive income				328			186
Retained earnings				153,504			147,205
Less: Treasury stock at cost, 154,632 Class A common shares and 3,197,614 Class B common shares in 2003; 2,896,112 Class B common shares in 2002				(46,518	)		(42,634	)
Total stockholders’ equity				326,859			321,313
Total liabilities and stockholders’ equity			$	2,280,476		$	1,681,613

See Notes to Consolidated Financial Statements

3

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS (Unaudited)

			Three Months Ended						Six Months Ended
			June 30,						June 30,
(In thousands, except per share data)			2003			2002			2003			2002
Interest income:
	Receivables		$	18,914		$	21,007		$	36,387		$	41,483
	Investments			2,163			2,576			4,089			5,846
	Other interest income			4,373			2,652			7,965			5,312
Total interest income				25,450			26,235			48,441			52,641
Interest expense:
	Deposits			7,419			6,023			13,640			12,288
	Debt			5,692			6,346			10,741			13,132
	Other borrowings			0			0			1			59
Total interest expense				13,111			12,369			24,382			25,479
Net interest income				12,339			13,866			24,059			27,162
Provision for credit losses				9,265			11,341			18,711			22,041
Net interest income after provision for credit losses				3,074			2,525			5,348			5,121
Noninterest revenues:
	Securitization income			31,752			30,023			61,362			59,670
	Servicing revenues			9,873			8,143			19,900			16,085
	Other revenues, net			24,929			22,999			50,361			40,877
Total noninterest revenues				66,554			61,165			131,623			116,632
Expenses:
	Operating expenses			57,195			49,887			112,717			98,845
	Minority interest in income of consolidated subsidiary			2,220			2,220			4,440			4,440
Total expenses				59,415			52,107			117,157			103,285
Income before income taxes				10,213			11,583			19,814			18,468
Income tax expense				3,932			4,459			7,628			7,110
Income from continuing operations				6,281			7,124			12,186			11,358
Loss, net, on discontinuance of mortgage and leasing businesses, net of tax				(1,968	)		(8,610	)		(1,968	)		(8,610	)
Net income (loss)			$	4,313		$	(1,486	)	$	10,218		$	2,748
Basic income from continuing operations per common share
		Class A	$	0.25		$	0.27		$	0.47		$	0.41
		Class B		0.27			0.29			0.52			0.46
		Combined		0.26			0.28			0.50			0.44
Diluted income from continuing operations per common share
		Class A	$	0.24		$	0.26		$	0.46		$	0.40
		Class B		0.26			0.27			0.51			0.44
		Combined		0.26			0.27			0.49			0.42
Basic net income (loss) per common share
		Class A	$	0.16		$	(0.07	)	$	0.39		$	0.07
		Class B		0.19			(0.05	)		0.44			0.12
		Combined		0.18			(0.06	)		0.42			0.10
Diluted net income (loss) per common share
		Class A	$	0.16		$	(0.06	)	$	0.38		$	0.08
		Class B		0.18			(0.05	)		0.43			0.11
		Combined		0.18			(0.06	)		0.41			0.10
Basic weighted average common shares outstanding
		Class A		9,151			9,144			9,168			9,138
		Class B		14,893			16,176			14,854			16,239
		Combined		24,044			25,320			24,022			25,377
Diluted weighted average common shares outstanding
		Class A		9,151			9,150			9,168			9,144
		Class B		15,445			17,640			15,329			17,312
		Combined		24,596			26,790			24,497			26,456

See Notes to Consolidated Financial Statements

4

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)

($ in thousands)

					Class A		Class A		Class B			Additional
		Comprehensive			Preferred		Common		Common			Paid-In
		Income (Loss)			Stock		Stock		Stock			Capital
Balance at December 31, 2001					$	1,010	$	100	$	179		$	223,362
Net income (loss)		$	(24,182	)
Other comprehensive income (loss):
	Change in unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of $577		(1,073	)
Comprehensive income (loss)		$	(25,255	)
Preferred and common cash dividends declared
Exercise of stock options										1			362
Stock option exchange program stock distribution
Issuance of restricted stock										28			22,529
Amortization of deferred compensation
Forfeitures of restricted stock										(4	)		(2,275	)
Stock buyback
ESOP shares committed to be released													(68	)
Balance at December 31, 2002					$	1,010	$	100	$	204		$	243,910
Net income (loss)		$	10,218
Other comprehensive income (loss):
	Change in unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of $(76)		142
Comprehensive income (loss)		$	10,360
Preferred and common cash dividends declared
Exercise of stock options										1			849
Stock option exchange program stock distribution
Issuance of restricted stock										1			1,538
Amortization of deferred compensation
Forfeitures of restricted stock										(1	)		(1,149	)
Stock buyback
ESOP shares committed to be released													(77	)
Balance at June 30, 2003					$	1,010	$	100	$	205		$	245,071

See Notes to Consolidated Financial Statements

5

($ in thousands)

		Deferred			Accumulated
		Compensation			Other									Total
		& Unearned			Comprehensive			Retained			Treasury			Stockholders’
		ESOP Shares			Income (Loss)			Earnings			Stock			Equity
Balance at December 31, 2001		$	(11,359	)	$	1,259		$	179,370		$	(27,622	)	$	366,299
Net income (loss)									(24,182	)					(24,182	)
Other comprehensive income (loss):
	Change in unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of $577					(1,073	)								(1,073	)
Comprehensive income (loss)
Preferred and common cash dividends declared									(7,983	)					(7,983	)
Exercise of stock options															363
Stock option exchange program stock distribution												542			542
Issuance of restricted stock			(22,557	)											0
Amortization of deferred compensation			2,842												2,842
Forfeitures of restricted stock			1,941												(338	)
Stock buyback												(15,554	)		(15,554	)
ESOP shares committed to be released			465												397
Balance at December 31, 2002		$	(28,668	)	$	186		$	147,205		$	(42,634	)	$	321,313
Net income (loss)									10,218						10,218
Other comprehensive income (loss):
	Change in unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of $(76)					142									142
Comprehensive income (loss)
Preferred and common cash dividends declared									(3,919	)					(3,919	)
Exercise of stock options															850
Stock option exchange program stock distribution												183			183
Issuance of restricted stock			(1,539	)											0
Amortization of deferred compensation			2,152												2,152
Forfeitures of restricted stock			989												(161	)
Stock buyback												(4,067	)		(4,067	)
ESOP shares committed to be released			225												148
Balance at June 30, 2003		$	(26,841	)	$	328		$	153,504		$	(46,518	)	$	326,859

See Notes to Consolidated Financial Statements

6

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

			Six Months Ended
			June 30,
($ in thousands)			2003			2002
OPERATING ACTIVITIES – CONTINUING OPERATIONS
Net income			$	10,218		$	2,748
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
		Loss, net, on discontinuance of mortgage and leasing businesses, net of tax		1,968			8,610
		Investment securities losses		1,766			2,093
		Depreciation and amortization		4,217			4,026
		Provision for credit losses		18,711			22,041
		Provision for interest and fee losses		5,013			2,945
		Change in deferred origination costs, net of deferred fees		8,546			(1,435	)
		Change in receivables held for sale		(279,261	)		(130,991	)
		Proceeds from sale of receivables held for sale		299,376			115,000
		Change in accounts receivable from securitizations		(632,953	)		(1,688	)
		Change in other assets and other liabilities		89,753			17,951
	Net cash provided by (used in) operating activities			(472,646	)		41,300
INVESTING ACTIVITIES – CONTINUING OPERATIONS
	Change in federal funds sold and restricted interest-bearing deposits			52,924			43,024
	Purchase of investments available for sale			(314,625	)		(191,490	)
	Proceeds from sales of investments available for sale			246,686			162,337
	Proceeds from maturing investments available for sale			36,564			69,226
	Change in receivables not held for sale			(38,078	)		(32,636	)
	Sales (purchases) of premises and equipment, net			2,820			(3,526	)
Net cash provided by (used in) investing activities				(13,709	)		46,935
FINANCING ACTIVITIES – CONTINUING OPERATIONS
	Change in demand and savings deposits			(3,519	)		(3,434	)
	Proceeds from issuance of time deposits			561,659			153,936
	Payments for maturing time deposits			(71,629	)		(178,723	)
	Proceeds from issuance of debt			50,621			55,955
	Payments on redemption of debt			(50,224	)		(88,010	)
	Change in other borrowings			0			(32,317	)
	Proceeds from exercise of stock options			850			351
	Cash dividends paid			(3,919	)		(4,067	)
	Stock buyback			(4,067	)		(4,297	)
Net cash provided by (used in) financing activities				479,772			(100,606	)
DISCONTINUED OPERATIONS
	Net cash provided by operating activities			10,109			2,169
	Net cash provided by investing activities			26,559			0
Net cash provided by discontinued operations				36,668			2,169
Net increase (decrease) in cash				30,085			(10,202	)
Cash at beginning of period				14,834			20,952
Cash at end of period			$	44,919		$	10,750

See Notes to Consolidated Financial Statements

7

ADVANTA CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS EXCEPT PER SHARE DATA, UNLESS OTHERWISE NOTED)

June 30, 2003
(Unaudited)

In these notes to consolidated financial statements, “we”, “us”, and “our” refer to Advanta Corp. and its subsidiaries, unless the context otherwise requires.

Note 1) Basis of Presentation

Advanta Corp. (collectively with its subsidiaries, “Advanta”) has prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. We have condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States pursuant to such rules and regulations. In the opinion of management, the statements include all adjustments (which include normal recurring adjustments) required for a fair statement of financial position, results of operations and cash flows for the interim periods presented. These financial statements should be read in conjunction with the financial statements and notes thereto included in our latest annual report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results for the full year.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant changes in the near term relate to the accounting for the fair value of venture capital investments, allowance for receivable losses, securitization income, business credit card rewards programs, litigation contingencies, income taxes, and discontinued operations.

Certain prior period balances have been reclassified to conform to the current period presentation.

8

Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” defines a fair value based method of accounting for employee stock compensation plans, whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. However, it permits entities to continue to measure compensation cost for those plans using the intrinsic value based method of accounting prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” whereby compensation cost is the excess, if any, of the quoted market price of the stock at the grant date or other measurement date over the amount an employee must pay to acquire the stock. We have elected to continue with the accounting methodology in Opinion No. 25 and, as a result, have provided pro forma disclosures of compensation expense for stock option plans, net of related tax effects, net income and earnings per share and other disclosures, as if the fair value based method of accounting had been applied. Had compensation cost for these plans been determined using the fair value method, our compensation expense for stock option plans, net of related tax effects, net income (loss) and net income (loss) per common share would have changed to the following pro forma amounts:

			Three Months Ended					Six Months Ended
			June 30,					June 30,
			2003		2002			2003		2002
Compensation expense for stock option plans, net of related tax effects
	As reported		$	0	$	0		$	0	$	0
	Pro forma			603		787			1,216		1,540
Net income (loss)
	As reported		$	4,313	$	(1,486	)	$	10,218	$	2,748
	Pro forma			3,710		(2,273	)		9,002		1,208
Basic net income (loss) per common share
	As reported
		Class A	$	0.16	$	(0.07	)	$	0.39	$	0.07
		Class B		0.19		(0.05	)		0.44		0.12
		Combined		0.18		(0.06	)		0.42		0.10
	Pro forma
		Class A	$	0.14	$	(0.10	)	$	0.34	$	0.01
		Class B		0.16		(0.08	)		0.39		0.06
		Combined		0.15		(0.09	)		0.37		0.04
Diluted net income (loss) per common share
	As reported
		Class A	$	0.16	$	(0.06	)	$	0.38	$	0.08
		Class B		0.18		(0.05	)		0.43		0.11
		Combined		0.18		(0.06	)		0.41		0.10
	Pro forma
		Class A	$	0.14	$	(0.09	)	$	0.33	$	0.02
		Class B		0.16		(0.08	)		0.38		0.05
		Combined		0.15		(0.08	)		0.36		0.04

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Note 2) Recently Issued Accounting Standards

In November 2002, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” which modifies the recognition and disclosure requirements of a company’s guarantee arrangements. Effective January 1, 2003, we adopted this interpretation, which requires a company that enters into or modifies existing guarantee arrangements to recognize a liability for the fair value of the obligation undertaken in issuing the guarantee. The adoption of this interpretation did not have a material impact on our financial position or results of operations.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities – An Interpretation of ARB No. 51.” This interpretation requires a company to consolidate a variable interest entity if the company has variable interests that give it a majority of the expected losses or a majority of the expected residual returns of the entity. The consolidation requirements apply to all variable interest entities created after January 31, 2002. In addition, public companies must apply the consolidation requirements to variable interest entities that existed prior to February 1, 2003 and remain in existence as of the beginning of annual or interim periods beginning after June 15, 2003. The adoption of this interpretation did not have a material effect on our financial position or results of operations since qualifying special-purpose entities, as defined in SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities – a Replacement of FASB Statement No. 125” (“SFAS 140”), are exempt from the consolidation requirements of this interpretation.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (“SFAS 150”). SFAS 150 establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. Our adoption of this standard will result in a reclassification of our company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely subordinated debentures of Advanta Corp. (the “capital securities”) to liabilities, and payments on the capital securities, currently classified as minority interest in income of consolidated subsidiary, to be reclassified to interest expense. We do not expect the adoption of this standard to impact net income.

In June 2003, the FASB issued an exposure draft that would amend SFAS 140. The changes and clarifications in the proposed statement would prevent derecognition by transferors that may continue to retain effective control of transferred assets by providing financial support other than a subordinated retained interest or making decisions about beneficial interests. They would also help to ensure that special purpose entities will not qualify for the exception to FASB Interpretation No. 46 if any party involved is in a position to enhance or protect the value of its own subordinated interest by providing financial support for or making decisions about reissuing beneficial interests. For public entities, this proposed statement would apply prospectively to transfers of assets occurring after the beginning of the first interim period after the issuance of the final statement. Management is

10

still evaluating any potential impact this proposed statement, if finalized in its current form, may have on our financial position or results of operations.

Note 3) Receivables

Receivables on the balance sheet, including those held for sale, consisted of the following:

			June 30,			December 31,
			2003			2002
Business credit card receivables			$	442,769		$	445,083
Other receivables				23,309			25,589
		Gross receivables		466,078			470,672
Add: Deferred origination costs, net of deferred fees				22,288			30,834
Less: Allowance for receivable losses
	Business credit cards			(45,914	)		(44,466	)
	Other receivables			(1,412	)		(1,693	)
		Total allowance		(47,326	)		(46,159	)
Receivables, net			$	441,040		$	455,347

Note 4) Allowance for Receivable Losses

The following table presents activity in the allowance for receivable losses for the periods presented:

			Six Months Ended
			June 30,
			2003			2002
Beginning balance			$	46,159		$	41,971
Provision for credit losses				18,711			22,041
Provision for interest and fee losses				5,013			2,945
Gross principal charge-offs:
	Business credit cards			(19,442	)		(21,188	)
	Other receivables			(28	)		(13	)
		Total gross principal charge-offs		(19,470	)		(21,201	)
Principal recoveries:
	Business credit cards			1,479			2,195
Net principal charge-offs				(17,991	)		(19,006	)
Interest and fee charge-offs:
	Business credit cards			(4,566	)		(2,945	)
Ending balance			$	47,326		$	45,006

Prior to October 1, 2002, the billing and recognition of interest and fees was discontinued when the related receivable became 90 days past due or when the account was classified as fraudulent, bankrupt, deceased, hardship or credit counseling. Effective October 1, 2002, we continue to bill and recognize interest and fees on accounts when they become 90 days past due, and an additional allowance for receivable losses is established for the additional billings estimated to be uncollectible through a provision for interest and fee losses. The billing and recognition of interest and fees is still discontinued when the account is classified as fraudulent, bankrupt, deceased, hardship or credit counseling. Provision for interest and fee losses are recorded as direct reductions to interest and fee income.

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Note 5) Securitization Activities

Accounts receivable from securitizations consisted of the following:

	June 30,		December 31,
	2003		2002
Retained interests in securitizations	$	156,373	$	113,422
Accrued interest and fees on securitized receivables, net		58,926		56,171
Amounts due from the trust		615,892		28,645
Total accounts receivable from securitizations	$	831,191	$	198,238

On July 21, 2003, we received $600 million of receivables from the securitization trust after the note holders in the Series 2000-B business credit card securitization had been paid in full with accumulated principal collections on the securitized receivables and the noteholders’ claim on the receivables had been released.

The following represents business credit card securitization data and the key assumptions used in estimating the fair value of retained interests in securitizations at the time of each new securitization or replenishment if quoted market prices were not available.

		Three Months Ended						Six Months Ended
		June 30,			June 30,			June 30,			June 30,
		2003			2002			2003			2002
Average securitized receivables			$2,290,671			$1,638,410			$2,231,572			$1,627,096
Securitization income			31,752			30,023			61,362			59,670
Discount accretion			4,373			2,652			7,965			5,312
Interchange income			23,521			17,215			43,925			32,870
Servicing revenues			9,873			8,143			19,900			16,085
Proceeds from new securitizations			226,851			110,000			299,376			115,000
Proceeds from collections reinvested in revolving-period securitizations			710,553			915,671			1,768,945			1,819,439
Cash flows received on retained interests			84,702			48,611			133,002			100,005
Key assumptions:
	Discount rate		12.1% - 14.6	%		9.0% - 15.0	%		11.4% - 14.6	%		9.0% - 15.0	%
	Monthly payment rate		18.8% - 21.0	%		18.2% - 21.0	%		18.8% - 21.0	%		18.2% - 21.0	%
	Loss rate		8.6% -   9.7	%		9.6% - 12.8	%		8.6% - 10.3	%		9.6% - 12.8	%
	Finance charge yield, net of interest paid to note holders		14.3% - 15.0	%		14.9% - 15.9	%		14.3% - 15.0	%		14.9% - 15.9	%

Beginning in the fourth quarter of 2002, our interest yield assumption includes both finance charge and late fee yield. Previously, the interest yield assumption included only finance charge yield.

There were no purchases of delinquent accounts during the three or six months ended June 30, 2003 or 2002.

The following assumptions were used in estimating the fair value of retained interests in business credit card securitizations at June 30, 2003 and December 31,

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2002 if quoted market prices were not available. The assumptions listed represent weighted averages of assumptions used for each securitization.

	June 30,			December 31,
	2003			2002
Discount rate		12.1% - 13.8	%		11.4% - 14.0	%
Monthly payment rate		18.8% - 21.0	%		19.3% - 21.0	%
Loss rate		8.6% -   9.4	%		9.4% - 10.3	%
Interest yield, net of interest earned by note holders		15.0	%		15.0	%

In addition to the assumptions identified above, management also considered qualitative factors such as the impact of the current economic environment on the performance of the business credit card receivables sold and the potential volatility of the current market for similar instruments in assessing the fair value of retained interests in business credit card securitizations.

We have prepared sensitivity analyses of the valuations of retained interests in securitizations estimated using the assumptions identified above. The sensitivity analyses show the hypothetical effect on the fair value of those assets of two unfavorable variations from the expected levels for each key assumption, independently from any change in another key assumption. The following are the results of those sensitivity analyses on the valuation at June 30, 2003.

Effect on fair value of the following hypothetical changes in key assumptions:
	Discount rate increased by 2%	$	(2,055	)
	Discount rate increased by 4%		(4,027	)
	Monthly payment rate at 110% of base assumption		(1,465	)
	Monthly payment rate at 125% of base assumption		(2,786	)
	Loss rate at 110% of base assumption		(4,278	)
	Loss rate at 125% of base assumption		(10,695	)
	Interest yield, net of interest earned by note holders, decreased by 1%		(5,004	)
	Interest yield, net of interest earned by note holders, decreased by 2%		(10,007	)

The objective of these hypothetical analyses is to measure the sensitivity of the fair value of the retained interests to changes in assumptions. The methodology used to calculate the fair value in the analyses is a discounted cash flow analysis, the same methodology used to estimate the fair value of the retained interests when quoted market prices are not available at each reporting date. These estimates do not factor in the impact of simultaneous changes in other key assumptions. The above scenarios do not reflect management’s expectation regarding the future direction of these rates, and they depict only certain possibilities out of a large set of possible scenarios.

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Managed receivable data

Our managed business credit card receivable portfolio is comprised of both owned and securitized business credit card receivables. Performance on a managed receivable portfolio basis is useful and relevant because we retain interests in the securitized receivables and, therefore, we have a financial interest in and exposure to the performance of the securitized receivables. Credit quality data on the managed business credit card receivable portfolio is as follows:

		June 30,		December 31,		June 30,
		2003(1)		2002(1)		2002
Owned business credit card receivables		$	442,769	$	445,083	$	443,377
Securitized business credit card receivables			2,365,176		2,149,147		1,744,669
Total managed receivables			2,807,945		2,594,230		2,188,046
Receivables 30 days or more delinquent:
	Owned		25,839		23,406		28,739
	Securitized		150,380		136,128		115,500
	Total managed		176,219		159,534		144,239
Receivables 90 days or more delinquent:
	Owned		13,184		11,959		14,703
	Securitized		76,459		69,335		58,836
	Total managed		89,643		81,294		73,539
Nonaccrual receivables:
	Owned		7,091		4,729		21,111
	Securitized		42,162		27,688		83,313
	Total managed		49,253		32,417		104,424
Accruing receivables past due 90 days or more:
	Owned		11,741		10,535		0
	Securitized		67,804		61,045		0
	Total managed		79,545		71,580		0
Net principal charge-offs for the six months ended June 30 and twelve months ended December 31:
	Owned		17,963		37,400		18,993
	Securitized		92,060		156,282		76,762
	Total managed		110,023		193,682		95,755

(1) See Note 4 for a discussion of the change in income billing practice effective October 1, 2002.

Note 6) Selected Balance Sheet Information

Other assets consisted of the following:

	June 30,		December 31,
	2003		2002
Current and deferred income taxes, net	$	79,752	$	84,684
Amounts due from transfer of consumer credit card business		70,545		70,545
Investment in Fleet Credit Card Services, L.P.		34,642		34,000
Cash surrender value of insurance contracts		22,824		24,437
Intangible assets		3,953		3,085
Other assets		83,112		60,907
Total other assets	$	294,828	$	277,658

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Other liabilities consisted of the following:

	June 30,		December 31,
	2003		2002
Amounts due to the securitization trust	$	91,244	$	3,255
Accounts payable and accrued expenses		29,225		33,486
Business credit card rewards		20,454		16,416
Accrued interest payable		15,245		5,641
Other(1)		173,020		171,588
Total other liabilities	$	329,188	$	230,386

(1) A substantial portion of other liabilities represents our litigation reserves.

Note 7) Deposits

Deposit accounts consist of the following:

	June 30,		December 31,
	2003		2002
Demand deposits	$	3,792	$	6,561
Money market savings		1,631		2,380
Time deposits of $100,000 or less		624,417		441,611
Time deposits of more than $100,000		575,161		263,476
Total deposits	$	1,205,001	$	714,028

Time deposit maturities are as follows:

Year Ended December 31,
2003	$	593,876
2004		534,612
2005		61,823
2006		9,068
2007		199

Note 8) Commitments and Contingencies

On January 22, 1999, Fleet Financial Group, Inc. (“Fleet”) and certain of its affiliates filed a lawsuit against Advanta Corp. and certain of its subsidiaries in Delaware Chancery Court. Fleet’s allegations, which we deny, center around Fleet’s assertions that we failed to complete certain post-closing adjustments to the value of the assets and liabilities we contributed to Fleet Credit Card Services, L.P. in connection with the transfer of our consumer credit card business to Fleet Credit Card Services, L.P. (the “Consumer Credit Card Transaction”) in 1998. We filed an answer to the complaint, and we also filed a countercomplaint against Fleet for damages we believe have been caused by certain actions of Fleet. As a result of related litigation with Fleet, $70.1 million of our reserves in connection with this litigation were funded in an escrow account in February 2001. On January 22, 2003, the trial court issued a decision ruling on all but one of the remaining issues, and ordered further briefing on the remaining outstanding issue. In the year ended December 31, 2002, we recognized a $43.0 million pretax loss on the transfer of our consumer credit card business, representing the estimated impact of implementing the court’s decisions. This amount represented the amount in excess of the reserves we had been carrying for the litigation, which was based on our expectations of the outcome of the litigation. In 2003, we provided for interest on the liability at a rate consistent with the estimation methodology used effective December 31, 2002. We estimate that the court’s decisions will have a favorable impact to our liquidity since we would recoup approximately $8 million in cash from the escrow account funded in February 2001, after payment of amounts due to Fleet. The court’s ruling on the remaining outstanding issue and/or the ultimate resolution of any issues that may be appealed could reduce or eliminate the charge to our earnings,

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although there can be no assurance as to the potential benefit, if any, to earnings at this time.

In an ongoing element of Fleet’s disputes with us, Fleet has claimed $508 million of tax deductions from its partnership with us in connection with the Consumer Credit Card Transaction, which are required under the law to be allocated solely to Advanta. As required, we reported these deductions on our 1998 corporate tax return. However, we have not used or booked the benefit from most of these deductions because for tax purposes we have a very substantial net operating loss carryforward. The deductions are attributable to deductions for bad debt reserves that we expensed in computing our book income or loss before the Consumer Credit Card Transaction, but which were not deductible by Advanta for tax purposes until after the closing of the transaction in 1998. The tax law requires “built in losses” like these to be deducted by the party who contributed the assets to the partnership, in this case, Advanta. The Internal Revenue Service agents who have examined the returns at issue have to ensure that both parties do not obtain the deductions and therefore, following standard practice, proposed to disallow the deductions to both parties until there is a final resolution. The deductions, as well as the allocation of a gain from the sale of a partnership asset of approximately $47 million, are now before the IRS Regional Office of Appeals.

On January 15, 2003, Fleet filed a complaint in Rhode Island Superior Court seeking a declaratory judgment that we indemnify Fleet under the applicable partnership agreement for any damage Fleet incurs by not being entitled to the $508 million of tax deductions. Fleet is also seeking a declaratory judgment that it should not indemnify us for any damages that we incur due to any allocation to Advanta of the $47 million gain on the sale of a partnership asset. Fleet’s claim for indemnification appears to be brought by Fleet in the hope that we will advise the IRS that we will agree with a substantial part of Fleet’s tax position. On February 28, 2003, we filed a motion to dismiss the complaint. We believe that the indemnification provision in the partnership agreement does not indemnify Fleet for damages incurred related to the tax deductions and that the lawsuit is frivolous, having no legal basis whatsoever. We do not expect this lawsuit or the tax issues discussed above to have a material adverse effect on our financial condition or results of operations.

On December 5, 2000, a former executive of Advanta obtained a jury verdict against us in the United States District Court for the Eastern District of Pennsylvania, in connection with various claims against Advanta related to the executive’s termination of employment. In September 2001, the District Court Judge issued orders denying both parties’ post-trial motions and a judgment in the amount of approximately $6 million was entered against Advanta. On July 8, 2002, the Court of Appeals partially reversed the judgment. On May 6, 2003, the District Court entered an amended judgment in the amount of approximately $4.7 million plus interest from December 7, 2000, and on May 12, 2003, we paid the amended judgment in full. On May 29, 2003, the parties settled the former executive’s claims for attorneys’ fees and costs, resulting in the resolution of this litigation. The amended judgment and settlement payments had no impact on our operating results, due to the reserves we had established in connection with this litigation.

On July 26, 2001, Chase Manhattan Mortgage Corporation (“Chase”) filed a complaint against Advanta Corp. and certain of its subsidiaries in the United States District Court for the District of Delaware alleging, among other things, that we breached our contract with Chase in connection with the Mortgage Transaction. Chase claims that we misled Chase concerning the value of certain of the assets sold to Chase. In September 2001, we filed an answer to the complaint in which we denied all of the substantive allegations of the complaint and asserted a counterclaim against

16

Chase for breach of contract relating to funds owed by Chase to us in connection with the transaction. The matter is in discovery and the parties extended the discovery period. The trial was originally scheduled to begin in January 2004. In the second quarter of 2003, the parties further extended the discovery period and the scheduled date for trial to begin was moved to April 2004. We believe that the lawsuit is without merit and will vigorously defend Advanta in this litigation. We do not expect this lawsuit to have any impact on our continuing business and, based on the complete lack of merit, we do not anticipate that the lawsuit will have a material adverse impact on our financial position or future operating results.

In addition to the cases described above, Advanta Corp. and its subsidiaries are involved in class action lawsuits, other litigation, claims and legal proceedings arising in the ordinary course of business or discontinued operations, including litigation arising from our operation of the mortgage business prior to our exit from that business in the first quarter of 2001.

Management believes that the aggregate loss, if any, resulting from these actions will not have a material adverse effect on our financial position or results of our operations based on the level of litigation reserves we have established and our current expectations regarding the ultimate resolutions of these existing actions. Our litigation reserves are estimated based on the status of litigation and our assessment of the ultimate resolution of each action after consultation with our attorneys. However, due to the inherent uncertainty in litigation and since the ultimate resolutions of our litigation, claims and other legal proceedings are influenced by factors outside of our control, it is reasonably possible that our estimated liability under these proceedings may change or that actual results will differ from our estimates.

In February 2003, we entered into an operating lease agreement for additional office space to be used for certain business card operations and general business purposes. The minimum lease payments on the lease are $566 thousand in 2003, $1.4 million in 2004, $1.7 million in 2005, $1.8 million in each of the years 2006 through 2008 and $3.6 million thereafter.

Note 9) Capital Stock

The Board of Directors of Advanta Corp. has authorized management to purchase up to 3.0 million shares of Advanta Corp. common stock. We repurchased 693,300 shares of our Class B Common Stock in the year ended December 31, 2001 and 1,554,759 shares of our Class B Common Stock in the year ended December 31, 2002. In the six months ended June 30, 2003, we repurchased 154,632 shares of our Class A Common Stock and 315,250 shares of our Class B Common Stock.

Cash dividends per share of common stock declared during the three months ended June 30, 2003 and 2002 were $0.063 for Class A Common Stock and $0.076 for Class B Common Stock. Cash dividends per share of common stock declared during the six months ended June 30, 2003 and 2002 were $0.126 for Class A Common Stock and $0.151 for Class B Common Stock.

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Note 10) Segment Information

	Advanta
	Business		Venture
	Cards		Capital			Other(1)			Total
Three months ended June 30, 2003
Interest income	$	23,007	$	1		$	2,442		$	25,450
Interest expense		11,269		135			1,707			13,111
Noninterest revenues (losses), net		66,283		(1,242	)		1,513			66,554
Pretax income (loss) from continuing operations		12,647		(2,434	)		0			10,213
Total assets		1,329,072		12,695			938,709			2,280,476
Three months ended June 30, 2002
Interest income	$	23,358	$	0		$	2,877		$	26,235
Interest expense		8,775		181			3,413			12,369
Noninterest revenues (losses), net		61,087		(31	)		109			61,165
Pretax income (loss) from continuing operations		14,562		(779	)		(2,200	)		11,583
Total assets		625,633		18,129			921,061			1,564,823
Six months ended June 30, 2003
Interest income	$	43,761	$	1		$	4,679		$	48,441
Interest expense		22,003		275			2,104			24,382
Noninterest revenues (losses), net		131,232		(1,852	)		2,243			131,623
Pretax income (loss) from continuing operations		23,624		(3,810	)		0			19,814
Six months ended June 30, 2002
Interest income	$	46,136	$	2		$	6,503		$	52,641
Interest expense		17,546		386			7,547			25,479
Noninterest revenues (losses), net		119,226		(2,610	)		16			116,632
Pretax income (loss) from continuing operations		28,306		(4,214	)		(5,624	)		18,468

(1) Other includes investment and other activities not attributable to reportable segments. Total assets in the “Other” segment include assets of discontinued operations.

Note 11) Selected Income Statement Information

	Three Months Ended						Six Months Ended
	June 30,						June 30,
Other Revenues	2003			2002			2003			2002
Interchange income	$	29,289		$	22,737		$	55,427		$	42,930
Business credit card rewards		(7,534	)		(3,023	)		(11,666	)		(5,027	)
Investment securities gains (losses), net		(1,158	)		534			(1,766	)		(2,093	)
Balance transfer fees		865			486			2,216			780
Cash advance fees		616			883			1,371			1,691
Other fee revenues		1,644			1,854			3,047			3,118
Other		1,207			(472	)		1,732			(522	)
Total other revenues, net	$	24,929		$	22,999		$	50,361		$	40,877

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	Three Months Ended				Six Months Ended
	June 30,				June 30,
Operating Expenses	2003		2002		2003		2002
Salaries and employee benefits	$	18,891	$	16,533	$	36,882	$	33,664
Amortization of deferred origination costs, net		12,973		12,410		27,157		24,432
External processing		5,005		4,082		9,625		8,259
Marketing		4,444		3,653		7,371		5,564
Professional fees		3,284		3,412		6,718		7,247
Equipment		2,533		2,466		5,927		5,067
Occupancy		2,473		1,687		4,262		3,298
Fraud		1,036		694		1,951		1,435
Credit		997		1,622		2,182		3,295
Insurance		976		297		1,727		1,114
Postage		902		831		1,804		1,622
Telephone		772		1,111		1,846		1,738
Other		2,909		1,089		5,265		2,110
Total operating expenses	$	57,195	$	49,887	$	112,717	$	98,845

Note 12) Discontinued Operations

The components of the gain (loss) on discontinuance of our mortgage and leasing businesses for the three and six months ended June 30, 2003 and 2002 were as follows:

	Three and Six Months Ended
	June 30, 2003						June 30, 2002
				Advanta						Advanta
	Advanta			Leasing			Advanta			Leasing
	Mortgage			Services			Mortgage			Services
Pretax gain (loss) on discontinuance of mortgage and leasing businesses	$	(2,600	)	$	(600	)	$	(25,300	)	$	11,300
Income tax (expense) benefit		1,001			231			9,740			(4,350	)
Gain (loss) on discontinuance of mortgage and leasing businesses, net of tax	$	(1,599	)	$	(369	)	$	(15,560	)	$	6,950

In the three months ended June 30, 2003, we recorded a $2.6 million pretax loss on discontinuance of the mortgage business for an increase in our estimated future costs of mortgage business-related contingent liabilities, primarily due to a lengthening of the anticipated timeframe of the resolution for those contingent liabilities, including an extension of the discovery process and a delay in the scheduled trial date in the litigation with Chase Manhattan Mortgage Corporation.

In the three months ended June 30, 2002, we revised our estimate of costs related to our exit from the mortgage business by $25.3 million, comprised of $7.5 million for a litigation settlement related to a mortgage loan servicing agreement termination fee collected in December 2000, and $17.8 million primarily related to an increase in our estimated future costs of mortgage business-related contingent liabilities. The $17.8 million charge related primarily to an increase in our estimated future costs of mortgage business-related contingent liabilities in connection with (1) contingent liabilities and litigation costs arising from the operation of the mortgage business prior to the Mortgage Transaction that were not assumed by the buyer, and (2) costs related to Advanta’s litigation with Chase Manhattan Mortgage Corporation in connection with the Mortgage Transaction. The

19

changes in estimates reflected the legal and consulting fees and other costs that we expected to incur based on the levels of contingent liabilities and expense rates, and considered the status of the discovery process associated with the Mortgage Transaction litigation.

In the three months ended June 30, 2003, we adjusted our estimate of operating results of the leasing segment over the remaining life of the lease portfolio and recorded a $600 thousand pretax loss on leasing discontinuance. The decrease in estimated operating results was principally associated with an unfavorable sales tax assessment, partially offset by favorable credit performance on the leasing portfolio.

In the three months ended June 30, 2002, we recorded an $11.3 million pretax gain on leasing discontinuance representing a revision in the estimated operating results of the leasing segment over the remaining life of the lease portfolio due primarily to favorable credit performance. The leasing portfolio performed favorably as compared to the expectations and assumptions established in 2001. This improvement was the result of successfully obtaining a replacement vendor to service leased equipment for a former leasing vendor that had filed for bankruptcy protection, and operational improvements in the leasing collections area.

Per share data was as follows:

		Three Months Ended June 30,
		Advanta						Advanta Leasing
		Mortgage						Services
		2003			2002			2003			2002
Basic gain (loss), net, on discontinuance of mortgage and leasing businesses, net of tax, per common share
	Class A	$	(0.07	)	$	(0.61	)	$	(0.02	)	$	0.27
	Class B		(0.07	)		(0.61	)		(0.02	)		0.27
	Combined		(0.07	)		(0.61	)		(0.02	)		0.27
Diluted gain (loss), net, on discontinuance of mortgage and leasing businesses, net of tax, per common share
	Class A	$	(0.07	)	$	(0.58	)	$	(0.02	)	$	0.26
	Class B		(0.07	)		(0.58	)		(0.02	)		0.26
	Combined		(0.07	)		(0.58	)		(0.02	)		0.26

		Six Months Ended June 30,
		Advanta						Advanta Leasing
		Mortgage						Services
		2003			2002			2003			2002
Basic gain (loss), net, on discontinuance of mortgage and leasing businesses, net of tax, per common share
	Class A	$	(0.07	)	$	(0.61	)	$	(0.02	)	$	0.27
	Class B		(0.07	)		(0.61	)		(0.02	)		0.27
	Combined		(0.07	)		(0.61	)		(0.02	)		0.27
Diluted gain (loss), net, on discontinuance of mortgage and leasing businesses, net of tax, per common share
	Class A	$	(0.07	)	$	(0.59	)	$	(0.02	)	$	0.26
	Class B		(0.07	)		(0.59	)		(0.02	)		0.26
	Combined		(0.07	)		(0.59	)		(0.02	)		0.26

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The components of assets of discontinued operations, net, were as follows:

	June 30,			December 31,
	2003			2002
Lease receivables, net	$	66,348		$	40,064
Other assets		29,049			91,686
Liabilities		(5,322	)		(4,638	)
Assets of discontinued operations, net	$	90,075		$	127,112

We are continuing to service the existing lease portfolio. At June 30, 2003, there were $53 million of securitized leases outstanding, and we had retained interests in leasing securitizations of $27 million. At December 31, 2002, there were $152 million of securitized leases outstanding, and we had retained interests in leasing securitizations of $57 million. At June 30, 2003, the fair value of the retained interests in leasing securitizations was estimated using a 12% discount rate on future cash flows, a loss rate of 3.7% and a weighted average life of 0.9 years. At December 31, 2002, the fair value of the retained interests in leasing securitizations was estimated using a 12% discount rate on future cash flows, loss rates ranging from 5.0% to 5.4% and a weighted average life of 0.9 years.

In June 2003, we exercised a clean-up call option on a leasing securitization transaction with $46 million of securitized leases outstanding, resulting in an increase in on-balance sheet lease receivables and a decrease in retained interests in leasing securitizations. Both on-balance sheet lease receivables and retained interests in leasing securitizations are classified as assets of discontinued operations in the consolidated balance sheets. In addition, in May 2003, we sold two buildings formerly used in our mortgage business that were classified as assets from discontinued operations on the consolidated balance sheet. Proceeds from the sale were approximately $27 million.

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Note 13) Calculation of Earnings Per Share

The following table shows the calculation of basic earnings per common share and diluted earnings per common share.

			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2003			2002			2003			2002
Income from continuing operations			$	6,281		$	7,124		$	12,186		$	11,358
	Less: Preferred A dividends			0			0			(141	)		(141	)
Income from continuing operations available to common shareholders				6,281			7,124			12,045			11,217
Loss, net, on discontinuance of mortgage and leasing businesses, net of tax				(1,968	)		(8,610	)		(1,968	)		(8,610	)
Net income (loss) available to common shareholders				4,313			(1,486	)		10,077			2,607
	Less: Class A dividends declared			(579	)		(576	)		(1,155	)		(1,150	)
	Less: Class B dividends declared			(1,303	)		(1,295	)		(2,623	)		(2,775	)
Undistributed net income (loss)			$	2,431		$	(3,357	)	$	6,299		$	(1,318	)
Basic income from continuing operations per common share
		Class A	$	0.25		$	0.27		$	0.47		$	0.41
		Class B		0.27			0.29			0.52			0.46
		Combined(1)		0.26			0.28			0.50			0.44
Diluted income from continuing operations per common share
		Class A	$	0.24		$	0.26		$	0.46		$	0.40
		Class B		0.26			0.27			0.51			0.44
		Combined(1)		0.26			0.27			0.49			0.42
Basic net income (loss) per common share
		Class A	$	0.16		$	(0.07	)	$	0.39		$	0.07
		Class B		0.19			(0.05	)		0.44			0.12
		Combined(1)		0.18			(0.06	)		0.42			0.10
Diluted net income (loss) per common share
		Class A	$	0.16		$	(0.06	)	$	0.38		$	0.08
		Class B		0.18			(0.05	)		0.43			0.11
		Combined(1)		0.18			(0.06	)		0.41			0.10
Basic weighted average common shares outstanding
		Class A		9,151			9,144			9,168			9,138
		Class B		14,893			16,176			14,854			16,239
		Combined		24,044			25,320			24,022			25,377
Dilutive effect of:
		Options Class B		218			828			168			588
		Restricted shares Class A		0			6			0			6
		Restricted shares Class B		334			636			307			485
Diluted weighted average common shares outstanding
		Class A		9,151			9,150			9,168			9,144
		Class B		15,445			17,640			15,329			17,312
		Combined		24,596			26,790			24,497			26,456
Antidilutive shares
		Options Class B		1,663			1,133			2,197			1,360
		Restricted shares Class B		113			1,708			127			1,843

(1) Combined represents net income available to common shareholders divided by the combined total of Class A and Class B weighted average common shares outstanding.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this Form 10-Q, “Advanta”, “we”, “us”, and “our” refer to Advanta Corp. and its subsidiaries, unless the context otherwise requires.

OVERVIEW

Income from continuing operations included the following business segment results ($ in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2003			2002			2003			2002
Pretax income (loss):
Advanta Business Cards	$	12,647		$	14,562		$	23,624		$	28,306
Venture Capital		(2,434	)		(779	)		(3,810	)		(4,214	)
Other(1)		0			(2,200	)		0			(5,624	)
Total pretax income		10,213			11,583			19,814			18,468
Income tax expense		(3,932	)		(4,459	)		(7,628	)		(7,110	)
Income from continuing operations	$	6,281		$	7,124		$	12,186		$	11,358

(1) Other includes investment and other activities not attributable to the Advanta Business Cards or Venture Capital segments.

For the three months ended June 30, 2003, we reported income from continuing operations of $6.3 million or $0.26 per combined diluted common share, compared to income from continuing operations of $7.1 million or $0.27 per combined diluted common share for the same period of 2002. The decrease in income from continuing operations for the three months ended June 30, 2003 as compared to the same period of 2002 is the result of a decrease in Advanta Business Cards net income and higher unrealized losses on our venture capital investments, partially offset by the reduction in net interest expense on excess liquidity not attributable to the Advanta Business Cards or Venture Capital segments. For the six months ended June 30, 2003, we reported income from continuing operations of $12.2 million or $0.49 per combined diluted common share, compared to income from continuing operations of $11.4 million or $0.42 per combined diluted share for the same period of 2002. The increase in income from continuing operations for the six months ended June 30, 2003 as compared to the same period of 2002 is the result of the reduction in net interest expense on excess liquidity not attributable to the Advanta Business Cards or Venture Capital segments and lower unrealized losses on our venture capital investments. These favorable variances are partially offset by a decrease in Advanta Business Cards net income.

For the three months ended June 30, 2003, we recorded an after-tax loss on the discontinuance of our mortgage and leasing businesses of $2.0 million, or $0.08 per combined diluted common share. For the three months ended June 30, 2002, we recorded an after-tax loss on the discontinuance of our mortgage and leasing businesses of $8.6 million, or $0.32 per combined diluted common share.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

23

statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. We have identified accounting for the fair value of venture capital investments, allowance for receivable losses, securitization income, business credit card rewards programs, litigation contingencies, income taxes, and discontinued operations as our most critical accounting policies and estimates in that they require management’s most difficult, subjective or complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. Changes in such estimates could have a material impact on our financial condition or results of operations. These accounting policies are described in our Annual Report on Form 10-K for the year ended December 31, 2002.

ADVANTA BUSINESS CARDS

Advanta Business Cards originated, directly and through the use of third parties, new accounts as follows:

	2003		2002
Three months ended June 30		36,162		62,258
Six months ended June 30		90,093		104,549

Our originations in 2002 and 2003 have included a broad array of competitively-priced offerings and products, including promotional pricing and rewards programs, designed to selectively attract and retain more higher credit quality customers and to respond to the competitive environment in the credit card industry. In the second quarter of 2003, we enhanced our targeting and decision models to assist us in identifying prospective customers that are interested in an active relationship with Advanta, rather than only a promotional balance transfer. We expect this will result in acquiring a higher level of active customers, but may result in somewhat lower growth in the second half of 2003 as compared to the growth rate experienced in the six months ended June 30, 2003.

Pretax income for Advanta Business Cards consisted of the following components ($ in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2003			2002			2003			2002
Net interest income on owned interest-earning assets	$	11,738		$	14,583		$	21,758		$	28,590
Noninterest revenues		66,283			61,087			131,232			119,226
Provision for credit losses		(9,555	)		(11,100	)		(18,963	)		(21,600	)
Operating expenses		(55,819	)		(50,008	)		(110,403	)		(97,910	)
Pretax income	$	12,647		$	14,562		$	23,624		$	28,306

Net interest income on owned interest-earning assets decreased by $2.8 million in the three months ended June 30, 2003 as compared to the same period of 2002 and decreased by $6.8 million for the six months ended June 30, 2003 as compared to the same period of 2002. The decreases were due primarily to decreases in the average yield earned on our business credit card receivables, partially offset by increases in average owned business credit card receivables of $34 million for the three months ended June 30, 2003 and $76 million for the six months ended June 30, 2003 as compared to the same periods of 2002. The decreases in yields are a result of the competitively-priced offerings and products.

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The increases in noninterest revenues in both periods are comprised of increased interchange income, servicing revenues and other fee revenues due to higher transaction volume and growth in average owned and securitized receivables, and increased securitization income. An increased volume of securitized receivables, a decrease in the floating interest rates earned by note holders and a decreased net principal charge-off rate on securitized receivables more than offset a decrease in yield on securitized receivables, resulting in increases in securitization income in both the three and six months ended June 30, 2003 as compared to the same periods of 2002.

The decreases in provision for credit losses in the three and six months ended June 30, 2003 as compared to the same periods of 2002 reflect estimates of a lower level of inherent losses in the portfolio, based on delinquency and net principal charge-off trends and the current composition of the portfolio as compared to estimates as of June 30, 2002, partially offset by the increases in average owned business credit card receivables. The increase in operating expenses in both periods resulted from growth in owned and securitized receivables. In addition, operating expenses reflect an increase in the amortization of deferred origination costs in both periods due to the number and timing of new account originations.

VENTURE CAPITAL

The components of pretax loss for our venture capital segment for the three and six months ended June 30, 2003 and 2002 were as follows ($ in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2003			2002			2003			2002
Net interest expense	$	(134	)	$	(181	)	$	(274	)	$	(384	)
Realized gains (losses), net		197			0			197			(47	)
Unrealized losses		(1,439	)		(31	)		(2,049	)		(2,563	)
Operating expenses		(1,058	)		(567	)		(1,684	)		(1,220	)
Pretax loss	$	(2,434	)	$	(779	)	$	(3,810	)	$	(4,214	)

As shown in the table above, pretax loss of our venture capital segment is comprised primarily of net realized and unrealized losses on our venture capital investments, which reflect the market conditions for those investments in each respective period, and operating expenses. The estimated fair value of our venture capital investments was $11.3 million at June 30, 2003 and $13.5 million at December 31, 2002. Operating expenses for the three and six months ended June 30, 2003 include approximately $410 thousand of lease termination costs paid in June 2003 relating to office space formerly used in our venture capital operations.

INTEREST INCOME AND EXPENSE

Interest income decreased by $785 thousand to $25.5 million for the three months ended June 30, 2003 as compared to the same period of 2002 and decreased by $4.2 million to $48.4 million for the six months ended June 30, 2003 as compared to the same period of 2002. The decrease in interest income for both periods was due primarily to a decrease in the average yield earned on our investments and receivables as a result of the prevailing interest rate environment and the competitively-priced offers described below. Partially offsetting these decreases were increases in average owned business credit card receivables and investments. The average owned business card receivables increased $34 million for the three months ended June 30, 2003 and $76 million for the six months ended June 30, 2003 as compared to the same periods of 2002. Average investments increased $170

25

million for the three months ended June 30, 2003 and $89 million for the six months ended June 30, 2003 as compared to the same periods of 2002.

In 2002 and 2003, our marketing campaigns have included a broad array of competitively-priced offerings and products, including promotional pricing and rewards programs, designed to selectively attract and retain more higher credit quality customers and to respond to the competitive environment. These competitively-priced offers have resulted in a decline in yields on our business credit card receivable portfolio and are anticipated to result in lower credit losses in future periods. We expect yields for the remaining two quarters of 2003 to be relatively consistent with or higher than those experienced in the six months ended June 30, 2003, due in part to the expiration of promotional pricing periods on a portion of the business credit card portfolio that we anticipate will offset or exceed the decline in yields created by new offers at promotional rates.

For the three months ended June 30, 2003, interest expense increased by $742 thousand to $13.1 million as compared to the same period of 2002. The increase in interest expense for the three months ended June 30, 2003 was due primarily to an increase of $457 million in our average deposits and debt, partially offset by a decrease in our average cost of funds. Interest expense decreased by $1.1 million for the six months ended June 30, 2003 to $24.4 million as compared to the same period of 2002. The decrease in interest expense for the six months ended June 30, 2003 was due primarily to a decrease in our average cost of funds, partially offset by an increase of $316 million in average deposits and debt. Our average cost of funds decreased to 3.71% for the three months ended June 30, 2003 from 5.29% in the same period of 2002, and decreased to 3.93% for the six months ended June 30, 2003 from 5.57% in the same period of 2002. The decrease in our average cost of funds in both periods is primarily a result of the prevailing interest rate environment.

The following tables provide an analysis of interest income and expense data, average balance sheet data, net interest spread and net interest margin for both continuing and discontinued operations. The net interest spread represents the difference between the yield on interest-earning assets and the average rate paid on interest-bearing liabilities. The net interest margin represents the difference between the yield on interest-earning assets and the average rate paid to fund interest-earning assets. Interest income includes late fees on business credit card receivables. Average receivables include deferred origination costs, net of deferred fees.

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INTEREST RATE ANALYSIS AND AVERAGE BALANCES
($ in thousands)

		Three Months Ended June 30,
		2003							2002
		Average				Average			Average				Average
		Balance		Interest		Rate			Balance		Interest		Rate
Owned receivables:
	Business credit cards(1)	$	506,200	$	18,634		14.76	%	$	472,010	$	20,706		17.60	%
	Other receivables		23,448		281		4.81			28,483		288		4.06
Total owned receivables			529,648		18,915		14.32			500,493		20,994		16.82
Investments(2)			660,999		2,170		1.31			491,060		2,573		2.10
Retained interests in securitizations			157,801		4,373		11.08			88,403		2,652		12.00
Interest-earning assets of discontinued operations			39,043		1,412		14.47			49,991		1,074		8.59
Total interest-earning assets(3)			1,387,491	$	26,870		7.76	%		1,129,947	$	27,293		9.69	%
Noninterest-earning assets			739,807							445,984
Total assets		$	2,127,298						$	1,575,931
Deposits		$	1,076,572	$	7,836		2.92	%	$	640,219	$	6,733		4.22	%
Debt			318,368		5,059		6.37			298,187		5,652		7.60
Other borrowings			55		0		1.62			0		0		0.00
Total interest-bearing liabilities(4)			1,394,995	$	12,895		3.71	%		938,406	$	12,385		5.29	%
Noninterest-bearing liabilities			306,032							170,542
Total liabilities			1,701,027							1,108,948
Company-obligated mandatorily preferred securities of subsidiary trust holding solely subordinate debentures of Advanta Corp.			100,000							100,000
Stockholders’ equity			326,271							366,983
Total liabilities and stockholders’ equity		$	2,127,298						$	1,575,931
Net interest spread							4.05	%						4.40	%
Net interest margin							4.04	%						5.29	%

(1)	Interest income includes late fees for owned business credit cards receivables of $1.5 million for the three months ended June 30, 2003 and $1.6 million for the three months ended June 30, 2002.
(2)	Interest and average rate for tax-free securities are computed on a tax equivalent basis using a statutory rate of 35%.
(3)	Includes assets held and available for sale and non-accrual receivables.
(4)	Includes funding of assets for both continuing and discontinued operations.

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		Six Months Ended June 30,
		2003							2002
		Average				Average			Average				Average
		Balance		Interest		Rate			Balance		Interest		Rate
Owned receivables:
	Business credit cards(1)	$	510,800	$	35,796		14.13	%	$	434,934	$	40,824		18.93	%
	Other receivables		24,150		592		4.94			28,338		624		4.44
Total owned receivables			534,950		36,388		13.72			463,272		41,448		18.04
Investments(2)			618,286		4,102		1.33			529,644		5,867		2.22
Retained interests in securitizations			145,969		7,965		10.91			88,525		5,312		12.00
Interest-earning assets of discontinued operations			40,407		2,689		13.31			52,251		2,233		8.55
Total interest-earning assets(3)			1,339,612	$	51,144		7.68	%		1,133,692	$	54,860		9.74	%
Noninterest-earning assets			631,373							461,113
Total assets		$	1,970,985						$	1,594,805
Deposits		$	942,634	$	14,444		3.09	%	$	632,724	$	13,774		4.39	%
Debt			318,322		10,124		6.41			304,867		12,261		8.11
Other borrowings			139		1		1.67			7,113		66		1.86
Total interest-bearing liabilities(4)			1,261,095	$	24,569		3.93	%		944,704	$	26,101		5.57	%
Noninterest-bearing liabilities			285,793							182,871
Total liabilities			1,546,888							1,127,575
Company-obligated mandatorily preferred securities of subsidiary trust holding solely subordinate debentures of Advanta Corp.			100,000							100,000
Stockholders’ equity			324,097							367,230
Total liabilities and stockholders’ equity		$	1,970,985						$	1,594,805
Net interest spread							3.75	%						4.17	%
Net interest margin							4.00	%						5.12	%

(1)	Interest income includes late fees for owned business credit card receivables of $3.0 million for the six months ended June 30, 2003 and $4.4 million for the six months ended June 30, 2002.
(2)	Interest and average rate for tax-free securities are computed on a tax equivalent basis using a statutory rate of 35%.
(3)	Includes assets held and available for sale and non-accrual receivables.
(4)	Includes funding of assets for both continuing and discontinued operations.

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PROVISION AND ALLOWANCE FOR RECEIVABLE LOSSES

For the three months ended June 30, 2003, provision for credit losses decreased by $2.1 million to $9.3 million as compared to the same period in 2002. For the six months ended June 30, 2003, provision for credit losses decreased by $3.3 million to $18.7 million as compared to the same period in 2002. The decrease in provision for credit losses in both periods reflects a reduction in our estimate of losses inherent in the portfolio as of June 30, 2003, based on the improvement of delinquency and principal charge-off trends and the current composition of the portfolio as compared to our estimate as of June 30, 2002. This favorable impact was partially offset by increases in average owned business credit card receivables of $34 million for the three months ended June 30, 2003 and $76 million for the six months ended June 30, 2003 as compared to the same periods of 2002.

For the three months ended June 30, 2003, provisions for interest and fee losses, which are recorded as direct reductions to interest and fee income, increased by $911 thousand to $2.4 million as compared to the same period in 2002. For the six months ended June 30, 2003, provisions for interest and fee losses increased by $2.1 million to $5.0 million as compared to the same period in 2002. The increases in both periods were due to a change in income billing practice effective October 1, 2002 and the increases in average owned business credit card receivables in those periods. Prior to October 1, 2002, the billing and recognition of interest and fees was discontinued when the related receivable became 90 days past due or when the account was classified as fraudulent, bankrupt, deceased, hardship or credit counseling. Effective October 1, 2002, we continue to bill and recognize interest and fees on accounts when they become 90 days past due, and an additional allowance for receivable losses is established for the additional billings estimated to be uncollectible through a provision for interest and fee losses. The billing and recognition of interest and fees is still discontinued when the account is classified as fraudulent, bankrupt, deceased, hardship or credit counseling.

The allowance for receivable losses on business credit card receivables was $45.9 million at June 30, 2003, or 10.4% of owned receivables, which was relatively consistent with the allowance of $44.5 million, or 10.0% of owned receivables at December 31, 2002.

The improvement in the net principal charge-off rate for the six months ended June 30, 2003 as compared to the same period of 2002 is the result of the composition of the portfolio during those periods and enhancements in the collections area of operations. In June 2000, we ceased origination of business credit card accounts with Fair, Isaac and Company (“FICO”) credit scores of less than 661. We estimate that principal charge-offs for accounts with FICO credit scores of less than 661 at origination reached their peak in the first quarter of 2002, based on the average age of that segment of the portfolio. Although charge-off levels are not always predictable since they are impacted by the economic environment and other factors beyond our control, and there may be month-to-month or quarterly variations in losses or delinquencies, we anticipate that owned and managed principal charge-off rates for the period from July 1, 2003 to December 31, 2003 will be approximately the same or slightly higher than those experienced in the six months ended June 30, 2003, but lower than rates experienced in the period from July 1, 2002 to December 31, 2002. This expectation is based on the current composition of the portfolio that reflects our strategic initiative to selectively attract and retain more higher credit quality customers, enhancements in the collections area of operations made in 2002, and the current level of delinquencies.

In January 2003, the bank regulatory agencies issued guidance on account management and loss allowance for credit card lending. The guidance describes the agencies’

29

expectations for prudent risk management practices for credit card activities, particularly with regard to credit line management, over-limit accounts, and workouts. It also addresses income recognition and loss allowance practices for credit card lending. Based on our understanding of the guidance as currently implemented by the regulatory agencies, we do not expect it to have a material adverse effect on our financial condition or our results of operations. However, similar to other examination guidance, this guidance provides wide discretion to the bank regulatory agencies in how the guidance is applied generally or with respect to any particular institution. Accordingly, our account management or loss allowance practices could change in the future.

The following table provides credit quality data as of and for the year-to-date periods indicated for our on-balance sheet, or owned, receivable portfolio including a summary of allowances for receivable losses, delinquencies, nonaccrual receivables, accruing receivables past due 90 days or more, and net principal charge-offs. Consolidated data includes business credit cards and other receivables.

		June 30,			December 31,			June 30,
	($ in thousands)	2003(1)			2002(1)			2002
CONSOLIDATED – OWNED
Allowance for receivable losses		$	47,326		$	46,159		$	45,006
Receivables 30 days or more delinquent			27,228			25,197			30,211
Receivables 90 days or more delinquent			13,953			12,755			15,367
Nonaccrual receivables			7,860			5,525			21,775
Accruing receivables past due 90 days or more			11,741			10,535			0
As a percentage of gross receivables:
	Allowance for receivable losses		10.2	%		9.8	%		9.6	%
	Receivables 30 days or more delinquent		5.8			5.4			6.4
	Receivables 90 days or more delinquent		3.0			2.7			3.3
	Nonaccrual receivables		1.7			1.2			4.6
	Accruing receivables past due 90 days or more		2.5			2.2			0.0
Net principal charge-offs		$	17,991		$	37,416		$	19,006
As a percentage of average gross receivables (annualized):
	Net principal charge-offs		6.7	%		7.5	%		8.2	%
BUSINESS CREDIT CARDS – OWNED
Allowance for receivable losses		$	45,914		$	44,466		$	43,777
Receivables 30 days or more delinquent			25,839			23,406			28,739
Receivables 90 days or more delinquent			13,184			11,959			14,703
Nonaccrual receivables			7,091			4,729			21,111
Accruing receivables past due 90 days or more			11,741			10,535			0
As a percentage of gross receivables:
	Allowance for receivable losses		10.4	%		10.0	%		9.9	%
	Receivables 30 days or more delinquent		5.8			5.3			6.5
	Receivables 90 days or more delinquent		3.0			2.7			3.3
	Nonaccrual receivables		1.6			1.1			4.8
	Accruing receivables past due 90 days or more		2.7			2.4			0.0
Net principal charge-offs		$	17,963		$	37,400		$	18,993
As a percentage of average gross receivables (annualized):
	Net principal charge-offs		7.0	%		7.9	%		8.7	%

(1) See Note 4 to the consolidated financial statements for a discussion of the change in income billing practice effective October 1, 2002.

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SECURITIZATION INCOME

Advanta Business Cards recognized securitization income as follows ($ in thousands):

	2003		2002
Three months ended June 30	$	31,752	$	30,023
Six months ended June 30		61,362		59,670

An increased volume of securitized receivables, a decrease in the floating interest rates earned by note holders and a decreased net principal charge-off rate on securitized receivables more than offset a decrease in yield on securitized receivables, resulting in increases in securitization income in both the three and six months ended June 30, 2003 as compared to the same periods of 2002. These fluctuations in yields and rates are similar to those experienced in owned business credit card receivables as discussed in the “Interest Income and Expense” and “Provision and Allowance for Receivable Losses” sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Managed Receivable Data

In addition to evaluating the financial performance of the Advanta Business Cards segment under generally accepted accounting principles (GAAP), we evaluate Advanta Business Cards’ performance on a managed basis. Our managed receivable portfolio is comprised of both owned and securitized business credit card receivables. We sell business credit card receivables through securitizations accounted for as sales under GAAP. We continue to own and service the accounts that generate the securitized receivables. Managed data presents performance as if the securitized receivables had not been sold. We believe that performance on a managed basis provides useful supplemental information because we retain interests in the securitized receivables and, therefore, we have a financial interest in and exposure to the performance of the securitized receivables. Revenue and credit data on the managed portfolio provides additional information useful in understanding the performance of the retained interests in securitizations. The following tables provide managed data for Advanta Business Cards and a reconciliation of the managed data to the most directly comparable GAAP financial measures ($ in thousands):

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INCOME STATEMENT MEASURES AND STATISTICS

									Advanta
	Advanta								Business
	Business		GAAP			Securitization			Cards		Managed
	Cards GAAP		Ratio(3)			Adjustments			Managed		Ratio(3)
Three Months Ended June 30, 2003:
Interest income	$	23,007		13.86	%	$	89,819		$	112,826		16.14	%
Interest expense		11,269		6.79			9,684			20,953		3.00
Net interest income		11,738		7.07			80,135			91,873		13.14
Noninterest revenues		66,283		39.93			(33,550	)		32,733		4.68
Provision for credit losses		9,555		5.76			46,585	(2)		56,140		8.03
Risk-adjusted revenues(1)		68,466		41.24			0			68,466		9.79
Average business credit card interest-earning assets		664,001					2,132,870			2,796,871
Net principal charge-offs		9,555		5.76			46,585			56,140		8.03
Three Months Ended June 30, 2002:
Interest income	$	23,358		16.67	%	$	77,326		$	100,684		19.08	%
Interest expense		8,775		6.26			9,376			18,151		3.44
Net interest income		14,583		10.41			67,950			82,533		15.64
Noninterest revenues		61,087		43.60			(30,174	)		30,913		5.86
Provision for credit losses		11,100		7.92			37,776	(2)		48,876		9.26
Risk-adjusted revenues(1)		64,570		46.09			0			64,570		12.24
Average business credit card interest-earning assets		560,413					1,550,007			2,110,420
Net principal charge-offs		9,694		6.92			37,776			47,470		9.00
Six Months Ended June 30, 2003:
Interest income	$	43,761		13.33	%	$	176,914		$	220,675		16.09	%
Interest expense		22,003		6.70			19,205			41,208		3.01
Net interest income		21,758		6.63			157,709			179,467		13.09
Noninterest revenues		131,232		39.96			(65,649	)		65,583		4.78
Provision for credit losses		18,963		5.77			92,060	(2)		111,023		8.10
Risk-adjusted revenues(1)		134,027		40.81			0			134,027		9.77
Average business credit card interest-earning assets		656,769					2,085,603			2,742,372
Net principal charge-offs		17,963		5.47			92,060			110,023		8.02
Six Months Ended June 30, 2002:
Interest income	$	46,136		17.63	%	$	156,969		$	203,105		19.70	%
Interest expense		17,546		6.70			18,435			35,981		3.49
Net interest income		28,590		10.92			138,534			167,124		16.21
Noninterest revenues		119,226		45.55			(61,772	)		57,454		5.57
Provision for credit losses		21,600		8.25			76,762	(2)		98,362		9.54
Risk-adjusted revenues(1)		126,216		48.22			0			126,216		12.24
Average business credit card interest-earning assets		523,459					1,538,571			2,062,030
Net principal charge-offs		18,993		7.26			76,762			95,755		9.29

(1)	Risk-adjusted revenues represent net interest income and noninterest revenues, less provision for credit losses.
(2)	Includes the amount by which the credit losses would have been higher had the securitized receivables remained as owned and the provision for credit losses on securitized receivables been equal to actual reported charge-offs.
(3)	Ratios are as a percentage of average business credit card interest-earning assets.

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BALANCE SHEET MEASURES AND STATISTICS

	Advanta							Advanta
	Business		GAAP			Securitization		Business		Managed
	Cards GAAP		Ratio(2)			Adjustments		Cards Managed		Ratio(2)
As of June 30, 2003(1)
Number of business credit card accounts		788,470					N/A		788,470
Ending business credit card receivables	$	442,769				$	2,365,176	$	2,807,945
Receivables 90 days or more delinquent		13,184		2.98	%		76,459		89,643		3.19	%
Receivables 30 days or more delinquent		25,839		5.84			150,380		176,219		6.28
Nonaccrual receivables		7,091		1.60			42,162		49,253		1.75
Accruing receivables past due 90 days or more		11,741		2.65			67,804		79,545		2.83
As of December 31, 2002(1)
Number of business credit card accounts		780,326					N/A		780,326
Ending business credit card receivables	$	445,083				$	2,149,147	$	2,594,230
Receivables 90 days or more delinquent		11,959		2.69	%		69,335		81,294		3.13	%
Receivables 30 days or more delinquent		23,406		5.26			136,128		159,534		6.15
Nonaccrual receivables		4,729		1.06			27,688		32,417		1.25
Accruing receivables past due 90 days or more		10,535		2.37			61,045		71,580		2.76
As of June 30, 2002
Number of business credit card accounts		710,071					N/A		710,071
Ending business credit card receivables	$	443,377				$	1,744,669	$	2,188,046
Receivables 90 days or more delinquent		14,703		3.32	%		58,836		73,539		3.36	%
Receivables 30 days or more delinquent		28,739		6.48			115,500		144,239		6.59
Nonaccrual receivables		21,111		4.76			83,313		104,424		4.77
Accruing receivables past due 90 days or more		0		0.00			0		0		0.00

(1)	See Note 4 to the consolidated financial statements for a discussion of the change in income billing practice effective October 1, 2002.
(2)	Ratios are as a percentage of ending business credit card receivables.

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SERVICING REVENUES

Advanta Business Cards recognized servicing revenue as follows ($ in thousands):

	2003		2002
Three months ended June 30	$	9,873	$	8,143
Six months ended June 30		19,900		16,085

The increase in servicing revenue in both the three and six months ended June 30, 2003 as compared to the same periods of 2002 was due to increased volume of securitized business credit card receivables.

OTHER REVENUES

	Three Months Ended						Six Months Ended
	June 30,						June 30,
($ in thousands)	2003			2002			2003			2002
Interchange income	$	29,289		$	22,737		$	55,427		$	42,930
Business credit card rewards		(7,534	)		(3,023	)		(11,666	)		(5,027	)
Investment securities gains (losses), net		(1,158	)		534			(1,766	)		(2,093	)
Balance transfer fees		865			486			2,216			780
Cash advance fees		616			883			1,371			1,691
Other fee revenues		1,644			1,854			3,047			3,118
Other		1,207			(472	)		1,732			(522	)
Total other revenues, net	$	24,929		$	22,999		$	50,361		$	40,877

Interchange income includes interchange fees on both owned and securitized business credit cards. The increase in interchange income in the three and six months ended June 30, 2003 as compared to the same periods of 2002 was primarily due to higher transaction volume related to the increase in average business credit card accounts and receivables. The average interchange rate was 2.1% in each of the three and six months ended June 30, 2003 and 2002.

The increases in business credit card rewards in the three and six months ended June 30, 2003 as compared to the same periods of 2002 were due primarily to the increase in average owned and securitized business credit card accounts in the cash-back rewards programs and the corresponding transaction activity in those accounts, partially offset by a change in redemption terms of certain bonus mile reward programs in the first quarter of 2003 that decreased the anticipated costs of future reward redemptions in those bonus mile reward programs by approximately $867 thousand.

Investment securities gains (losses), net, primarily represent decreases in valuations of venture capital investments reflecting the market conditions for the investments. Investment securities gains for the three and six months ended June 30, 2002 also include $0.5 million of realized gains on other investments.

An increase in the volume of balance transfer promotional offers included in our marketing campaigns has resulted in a higher volume of balance transfers and therefore, balance transfer fees have increased in the three and six months ended June 30, 2003 as compared to the same periods of 2002.

Other revenues for the three months ended June 30, 2002 included charges of $600 thousand related to valuation adjustments on other receivables held for sale. The

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same period of 2003 included the benefit of a reversal of a lower of cost or market valuation adjustment on other receivables held for sale of $550 thousand, based on the valuation in an agreement of sale dated July 2003. Other revenues also included an estimate of the earnings allocable to our partnership interest in Fleet Credit Card Services, L.P. of $500 thousand for the three months ended June 30, 2003 and $1.0 million for the six months ended June 30, 2003.

OPERATING EXPENSES

	Three Months Ended				Six Months Ended
	June 30,				June 30,
($ in thousands)	2003		2002		2003		2002
Salaries and employee benefits	$	18,891	$	16,533	$	36,882	$	33,664
Amortization of deferred origination costs, net		12,973		12,410		27,157		24,432
External processing		5,005		4,082		9,625		8,259
Marketing		4,444		3,653		7,371		5,564
Professional fees		3,284		3,412		6,718		7,247
Equipment		2,533		2,466		5,927		5,067
Occupancy		2,473		1,687		4,262		3,298
Fraud		1,036		694		1,951		1,435
Credit		997		1,622		2,182		3,295
Insurance		976		297		1,727		1,114
Postage		902		831		1,804		1,622
Telephone		772		1,111		1,846		1,738
Other		2,909		1,089		5,265		2,110
Total operating expenses	$	57,195	$	49,887	$	112,717	$	98,845

Salaries and employee benefits, external processing, fraud, postage and other expenses have increased in the three and six months ended June 30, 2003 as compared to the same periods of 2002 due primarily to growth in owned and securitized business credit card receivables. We expect salaries and employee benefits to continue to increase in the remainder of 2003 as we make investments in initiatives to acquire and retain relationships with high credit quality customers.

Amortization of deferred origination costs, net, increased in the three and six months ended June 30, 2003 as compared to the same periods of 2002 due to an increase in the number and timing of new account originations, partially offset by a decrease in the average acquisition cost per account. We originated a significant volume of new accounts in the fourth quarter of 2002, and expect to have increased amortization expense through the third quarter of 2003 as those costs amortize over the privilege period of one year.

Professional fees decreased in the three and six months ended June 30, 2003 as compared to the same periods of 2002 primarily due to a decrease in the use of external consultants. We expect professional fees to increase in the remaining quarters of 2003 as compared to the three months ended June 30, 2003, due to the expected use of consultants in certain initiatives to acquire and retain relationships with high credit quality customers.

Equipment expense increased in the six months ended June 30, 2003 as compared to the same period of 2002 due to an increase in technology costs, including a licensing fee, and the growth in owned and securitized business credit card receivables.

Occupancy expense increased in both the three and six months ended June 30, 2003 as compared to the same periods of 2002 due to additional office space that we began

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leasing in March 2003. Rental expense on the new office space was $413 thousand in the three months ended June 30, 2003 and $550 thousand in the six months ended June 20, 2003. In addition, occupancy expense in 2003 included approximately $410 thousand of lease termination costs paid in June 2003 relating to office space formerly used in our venture capital operations.

Marketing expense increased in the three and six months ended June 30, 2003 as compared to the same periods of 2002 due to Advanta’s sponsorship and advertising costs associated with tennis events in 2003 and increased origination activities in new markets for our retail note program. Marketing expense has also increased in the six months ended June 30, 2003 as compared to the same period of 2002 due to our initiatives to enhance and maintain our relationships with existing high credit quality business credit card customers, including marketing programs to stimulate usage, enhance customer loyalty and retain existing accounts, and the development of programs to acquire new customers.

Credit expense decreased in the three and six months ended June 30, 2003 as compared to the same periods of 2002 due to a shift in the types of recoveries. There was an increase in the proportion of total recoveries collected through sales of pools of charged-off accounts and a decrease in the proportion collected through outsourced individual account recovery efforts.

Insurance expense increased in the three and six months ended June 30, 2003 as compared to the same periods of 2002 due to an increase in directors’ and officers’ professional liability insurance costs. In addition, insurance expense in the three and six months ended June 30, 2002 included a $382 thousand reduction of our estimated liability related to worker’s compensation insurance.

The decrease in telephone expense in the three months ended June 30, 2003 as compared to the same period of 2002 was caused by a reduction in contract rate charged by one of our service providers that was effective February 2003.

Other operating expenses in the three and six months ended June 30, 2002 included a $1.1 million decrease in litigation reserves resulting from a reduction of damages in a jury verdict.

LITIGATION CONTINGENCIES

Advanta Corp. and its subsidiaries are involved in class action lawsuits, other litigation, claims and legal proceedings arising in the ordinary course of business or discontinued operations, including litigation arising from our operation of the mortgage business prior to our exit from that business in the first quarter of 2001. See discussion in Note 8 to the consolidated financial statements. Management believes that the aggregate loss, if any, resulting from these actions will not have a material adverse effect on our financial position or results of our operations based on the level of litigation reserves we have established and our current expectations regarding the ultimate resolutions of these existing actions. Our litigation reserves are estimated based on the status of litigation and our assessment of the ultimate resolution of each action after consultation with our attorneys. However, due to the inherent uncertainty in litigation and since the ultimate resolutions of these proceedings are influenced by factors outside of our control, it is reasonably possible that our estimated liability under these proceedings may change or that actual results will differ from our estimates.

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INCOME TAXES

Income tax expense on income from continuing operations was as follows ($ in thousands):

	2003		2002
Three months ended June 30	$	3,932	$	4,459
Six months ended June 30		7,628		7,110

Our effective tax rate was 38.5% for both the three and six months ended June 30, 2003 and 2002. See Note 8 to the consolidated financial statements for a discussion of tax matters currently before the Internal Revenue Service Regional Office of Appeals.

DISCONTINUED OPERATIONS

In the three months ended June 30, 2003, we recorded an after-tax loss on the discontinuance of our mortgage and leasing businesses of $2.0 million. The components of this loss include a $2.6 million pretax loss on mortgage discontinuance, a $600 thousand pretax loss on leasing discontinuance, and a tax benefit of $1.2 million. The $2.6 million pretax loss on mortgage discontinuance was the result of an increase in our estimated future costs of mortgage business-related contingent liabilities, primarily due to a lengthening of the anticipated timeframe of the resolution for those contingent liabilities, including an extension of the discovery process and a delay in the scheduled trial date in the litigation with Chase Manhattan Mortgage Corporation. The $600 thousand pretax loss on leasing discontinuance was principally associated with an unfavorable sales tax assessment and represents a decrease in our estimate of operating results of the leasing segment over the remaining life of the lease portfolio. The impact of the unfavorable sales tax assessment was partially offset by favorable credit performance on the leasing portfolio.

In the three months ended June 30, 2002, we recorded an after-tax loss on the discontinuance of our mortgage and leasing businesses of $8.6 million. The components of this loss include a pretax charge of $7.5 million for a litigation settlement related to a mortgage loan servicing agreement termination fee collected in December 2000, a $17.8 million pretax charge primarily related to an increase in our estimated costs of mortgage business-related contingent liabilities, an $11.3 million pretax gain on leasing discontinuance, and a tax benefit of $5.4 million. The $17.8 million charge related primarily to an increase in our estimated 2002 and future costs of mortgage business-related contingent liabilities in connection with (1) contingent liabilities and litigation costs arising from the operation of the mortgage business prior to the Mortgage Transaction that were not assumed by the buyer, and (2) costs related to Advanta’s litigation with Chase Manhattan Mortgage Corporation in connection with the Mortgage Transaction. The change in estimate reflected the legal and consulting fees and other costs that we expected to incur based on the levels of contingent liabilities and expense rates, and considered the status of the discovery process associated with the Mortgage Transaction litigation. The $11.3 million pretax gain on leasing discontinuance represented a revision in the estimated operating results of the leasing segment over the remaining life of the lease portfolio due primarily to favorable credit performance. The leasing portfolio performed favorably as compared to the expectations and assumptions established in 2001. This improvement was the result of successfully obtaining a replacement vendor to service leased equipment for a former leasing vendor that

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had filed for bankruptcy protection, and operational improvements in the leasing collections area.

MARKET RISK SENSITIVITY

We are exposed to equity price risk on the equity securities in our investments available for sale portfolio. A significant portion of our equity securities at June 30, 2003 represented venture capital investments. We typically do not attempt to reduce or eliminate the market exposure on equity investments. A 20% adverse change in equity prices would result in an approximate $3.6 million decrease in the fair value of our equity investments as of June 30, 2003. A 20% adverse change would have resulted in an approximate $4.1 million decrease in fair value as of December 31, 2002.

We measure our interest rate risk using a rising rate scenario and a declining rate scenario. Net interest income is estimated using a third party software model that uses standard income modeling techniques. We also measure the effect of interest rate risk on our managed net interest income, which includes net interest income on owned assets and net interest income on securitized receivables. The measurement of managed net interest income in addition to net interest income on owned assets is meaningful because our securitization income fluctuates with yields on securitized receivables and interest rates earned by note holders. Both increasing and decreasing rate scenarios assume an instantaneous shift in rates and measure the corresponding change in expected net interest income as compared to a base case scenario. As of June 30, 2003 and December 31, 2002, we estimated that our owned net interest income and managed net interest income would change as follows over a twelve-month period:

		June 30,			Dec. 31,
		2003			2002
Estimated percentage increase (decrease) in owned net interest income:
	Assuming 200 basis point increase in interest rates		16	%		16	%
	Assuming 200 basis point decrease in interest rates		(4	)%		3	%
Estimated percentage increase (decrease) in managed net interest income:
	Assuming 200 basis point increase in interest rates		(2	)%		(4	)%
	Assuming 200 basis point decrease in interest rates		5	%		9	%

Our business credit card receivables include interest rate floors that cause our managed net interest income to rise in the declining rate scenario. Our managed net interest income decreases in a rising rate scenario due to the portion of the business credit card portfolio that is effectively at a fixed rate because of the nature of the pricing of the accounts. Changes in the composition of our balance sheet, the current interest rate environment and the lower average interest rate on our deposit portfolio have also impacted the results of the owned and managed net interest income sensitivity analyses at June 30, 2003 as compared to December 31, 2002.

The above estimates of net interest income sensitivity alone do not provide a comprehensive view of our exposure to interest rate risk. The quantitative risk information is limited by the parameters and assumptions utilized in generating the results. These analyses are useful only when viewed within the context of the parameters and assumptions used. The above rate scenarios in no way reflect

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management’s expectation regarding the future direction of interest rates, and they depict only two possibilities out of a large set of possible scenarios.

LIQUIDITY, CAPITAL RESOURCES AND ANALYSIS OF FINANCIAL CONDITION

Our goal is to maintain an adequate level of liquidity, for both long-term and short-term needs, through active management of both assets and liabilities. Since Advanta Corp.’s debt rating is not investment grade, our access to unsecured, institutional debt is limited. However, we do have access to a diversity of funding sources as described below, and had a high level of liquidity at June 30, 2003. At June 30, 2003, we had $281 million of federal funds sold, $159 million of receivables held for sale, and $157 million of investments, which could be sold to generate additional liquidity. Components of funding were as follows ($ in thousands):

	June 30, 2003					December 31, 2002
	Amount		%			Amount		%
Off-balance sheet securitized receivables(1)	$	2,291,372		54	%	$	2,172,266		60	%
Deposits		1,205,001		28			714,028		19
Debt and other borrowings		319,428		8			315,886		9
Capital securities		100,000		2			100,000		3
Equity		326,859		8			321,313		9
Total	$	4,242,660		100	%	$	3,623,493		100	%

(1) Includes both off-balance sheet business credit card receivables and off-balance sheet lease receivables related to discontinued operations. Excludes our ownership interest in the investor principal balance of securitizations (subordinated trust assets) that are held on-balance sheet and classified as retained interests in securitizations or assets of discontinued operations.

At June 30, 2003, we had a $280 million committed commercial paper conduit facility that provides off-balance sheet funding, all of which was unused at June 30, 2003. At December 31, 2002, $330 million of business credit card receivables were securitized through this facility. In June 2003, this facility was renewed through June 14, 2004.

In the six months ended June 30, 2003, we completed two public business credit card securitizations. The revolving period for those securitizations extend to the following dates:

	Investor Principal
	Balance at		Scheduled End of
($ in thousands)	June 30, 2003		Revolving Period
Series 2003-A	$	400,000	May 2005
Series 2003-B		300,000	September 2005

When a business credit card securitization series is in its revolving period, principal collections on securitized receivables allocated to that series are used to purchase additional receivables to replenish receivables that have been repaid. In contrast, when a series of our securitization trust starts its amortization period, principal collections are held in the trust until the payment date of the notes. As principal is collected on securitized receivables in a series during its amortization period, we need to replace that amount of funding. Our $157 million Series 2000-A business credit card securitization started its scheduled amortization period in February 2003 and the note holders were paid in full in

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April 2003. Our $600 million Series 2000-B business credit card securitization started its scheduled amortization period in April 2003 and completed amortization in June 2003. Note holders in the Series 2000-B securitization were paid in full in July 2003. Balances of accounts receivable from securitizations and amounts due to the securitization trust at June 30, 2003 have increased as compared to December 31, 2002, primarily as a result of principal collections of receivables allocated to Series 2000-B during its amortization period. The increases in these assets were primarily funded through an increase in deposits. We anticipate completing one or more public business credit card securitizations in the remainder of 2003 under similar terms and conditions as the public securitizations completed in the six months ended June 30, 2003.

We continue to offer unsecured debt securities of Advanta Corp., in the form of RediReserve Certificates and Investment Notes, to retail investors through our retail note program. We change the interest rates we offer frequently, depending on market conditions and our funding needs. The rates also vary depending on the size of each investment. At June 30, 2003, $319 million of RediReserve Certificates and Investment Notes were outstanding with interest rates ranging from 1.49% to 11.56%. In 2002, we began to lengthen the maturities of our unsecured debt securities to enhance our liquidity management and to take advantage of the lower interest rate environment. Debt maturing in one year or less totaled $176 million at June 30, 2003, as compared to $207 million at December 31, 2002 and $228 million at June 30, 2002.

The Board of Directors of Advanta Corp. has authorized management to purchase up to 3.0 million shares of Advanta Corp. common stock. As of December 31, 2002, we had repurchased 2,248,059 shares of our Class B Common Stock. In the six months ended June 30, 2003, we repurchased 154,632 shares of our Class A Common Stock and 315,250 shares of our Class B Common Stock. We intend to continue to make purchases under the remaining unused authorization when we believe it is prudent to do so while we analyze evolving capital requirements.

Our bank subsidiaries are subject to regulatory capital requirements and other regulatory provisions that restrict their ability to lend and/or pay dividends to Advanta Corp. and its affiliates. Advanta Bank Corp issues and funds our business credit cards and is the servicer of our discontinued leasing business. Prior to our exit from the mortgage business in the first quarter of 2001, Advanta National Bank issued and funded a large portion of our mortgage business. Advanta National Bank’s operations are currently not material to our consolidated operating results. Our insurance subsidiaries are also subject to certain capital and dividend rules and regulations as prescribed by state jurisdictions in which they are authorized to operate. Management believes that these restrictions, for both bank and insurance subsidiaries, will not have an adverse effect on Advanta Corp.’s ability to meet its cash obligations due to the current levels of liquidity and diversity of funding sources.

In 2000, Advanta Bank Corp. entered into agreements with its bank regulatory agencies, primarily relating to the bank’s subprime lending operations. These agreements imposed temporary deposit growth limits at Advanta Bank Corp. and required prior regulatory approval of cash dividends. In April 2002, the agreements were removed and, as a result, the restrictions in the agreements on deposit growth and payment of cash dividends are no longer applicable. In connection with removing the agreements, Advanta Bank Corp. reached an understanding with its regulators, reflecting continued progress in our ongoing efforts to enhance Advanta Bank Corp.’s practices and procedures. Effective October 2002, the understanding was revised. The revised understanding replaces the provisions of the prior understanding and provides for the bank to enhance

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certain of its internal planning and monitoring processes. The revised understanding is consistent with the manner in which Advanta Bank Corp. is currently operating its business and includes no restrictions expected to have any impact on our financial results.

At June 30, 2003, Advanta Bank Corp.’s combined total capital ratio (combined Tier I and Tier II capital to risk-weighted assets) was 12.68% as compared to 18.46% at December 31, 2002. In each case, Advanta Bank Corp. had capital in excess of levels a bank is required to maintain to be classified as “well-capitalized” under the regulatory framework for prompt corrective action. Advanta Bank Corp.’s combined total capital ratio at June 30, 2003 was lower than the ratio at December 31, 2002 due to the amortization of the 2000-B securitization discussed above and the corresponding increase in on-balance sheet assets. Based on the planned level of securitizations, we expect on-balance sheet assets and deposits to be lower at September 30, 2003 and December 31, 2003 than on-balance sheet assets at June 30, 2003. We expect Advanta Bank Corp’s capital ratios at September 30, 2003 and December 31, 2003 to be higher than the ratio at June 30, 2003, due to the expected decrease in on-balance sheet assets.

In February 2003, we entered into an operating lease agreement for additional office space to be used for certain business card operations and general business purposes. The minimum lease payments on the lease are $566 thousand in 2003, $1.4 million in 2004, $1.7 million in 2005, $1.8 million in each of the years 2006 through 2008 and $3.6 million thereafter.

In May 2003, we sold two buildings formerly used in our mortgage business that were classified as assets from discontinued operations on the consolidated balance sheet. The proceeds of approximately $27 million from the sale of the buildings increased our liquidity position. In addition, we sold two lots of real estate for book value of $4.6 million.

In June 2003, we exercised a clean-up call option on a leasing securitization transaction with $46 million of securitized leases outstanding, resulting in an increase in on-balance sheet lease receivables and a decrease in retained interests in leasing securitizations. Both on-balance sheet lease receivables and retained interests in leasing securitizations are classified as assets of discontinued operations in the consolidated balance sheets. The net impact on liquidity and assets of discontinued operations from the exercise of the clean-up call option was not material.

Advanta Corp. and its subsidiaries are involved in class action lawsuits, other litigation, claims and legal proceedings arising in the ordinary course of business or discontinued operations, including litigation arising from our operation of the mortgage business prior to our exit from that business in the first quarter of 2001. Management believes that the aggregate loss, if any, resulting from existing litigation, claims and other legal proceedings will not have a material adverse effect on our liquidity or capital resources based on our current expectations regarding the ultimate resolutions of these actions and amounts held in escrow in connection with certain litigation. However, due to the inherent uncertainty in litigation and since the ultimate resolutions of these proceedings are influenced by factors outside of our control, it is reasonably possible that the estimated cash flow related to these proceedings may change or that actual results will differ from our estimates.

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FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. These forward-looking statements may 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 or phrases. The most significant among these risks and uncertainties are:

(1)	our managed net interest income;
(2)	competitive pressures;
(3)	political, social and/or general economic conditions that affect the level of new account originations, customer spending, delinquencies and charge-offs;
(4)	factors affecting fluctuations in the number of accounts or receivable balances including the retention of cardholders after promotional pricing periods have expired;
(5)	interest rate fluctuations;
(6)	the level of expenses;
(7)	the timing of the securitizations of our receivables;
(8)	factors affecting the value of investments that we hold;
(9)	the effects of government regulation, including restrictions and limitations imposed by banking laws, regulators, examinations, and agreements between our bank subsidiaries and their regulators;
(10)	effect of, and changes in, tax laws, rates, regulations and policies;
(11)	relationships with customers, significant vendors and business partners;
(12)	difficulties or delays in the development, production, testing and marketing of products or services;
(13)	the amount and cost of financing available to us;
(14)	the ratings on our debt and the debt of our subsidiaries;
(15)	revisions to estimates associated with the discontinuance of our mortgage and leasing businesses;
(16)	the impact of litigation;
(17)	the proper design and operation of our disclosure controls and procedures; and
(18)	the ability to attract and retain key personnel.

Additional risks that may affect our future performance are set forth elsewhere in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, 2002 and in our other filings with the Securities and Exchange Commission.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this item is set forth in “Item 2-Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report on Form 10-Q. See “Market Risk Sensitivity.”

42

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, rather than absolute, assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

An evaluation was performed by management with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2003, our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. There have been no changes in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The legal proceedings and claims described under the heading captioned “Commitments and Contingencies” in Note 8 of the Notes to Consolidated Financial Statements set forth in Part I, Item 1 of this Quarterly Report are hereby incorporated by reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)	Advanta Corp. held its Annual Meeting of Stockholders on June 5, 2003.
(b)	Not required.
(c)	The following proposal was submitted to a vote of stockholders.

     The election of four directors to hold office until the 2006 Annual Meeting of Stockholders.

NOMINEES	VOTES FOR		VOTES WITHHELD
Robert H. Rock		8,046,267		622,769
Olaf Olafsson		8,368,630		300,406
William A Rosoff		8,365,143		303,893
Michael Stolper		8,087,093		581,943

(d) Not required.

43

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits – The following exhibits are being filed with this report on Form 10-Q.

Exhibit
Number	Description of Document
10	Agreement of Lease, dated February 27, 2003, between Advanta Shared Services Corp. and Liberty Property Limited Partnership (without exhibits) and Guaranty of Advanta Corp.
12	Consolidated Computation of Ratio of Earnings to Fixed Charges
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

(b) (1)	A Current Report on Form 8-K, dated April 24, 2003, was filed by Advanta setting forth the financial highlights of Advanta’s results of operations for the three months ended March 31, 2003.
(b) (2)	A Current Report on Form 8-K, dated June 5, 2003, was filed by Advanta announcing the results of its Annual Stockholders’ Meeting including the re-election of four incumbent directors.

44

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Advanta Corp. (Registrant)
August 13, 2003	By	/s/ Philip M. Browne
	Senior Vice President and
	Chief Financial Officer
August 13, 2003	By	/s/ David B. Weinstock
	Vice President and
	Chief Accounting Officer

45

	EXHIBIT INDEX
		Manner of
Exhibit	Description	Filing
10	Agreement of Lease, dated February 27, 2003, between Advanta Shared Services Corp. and Liberty Property Limited Partnership (without exhibits) and Guaranty of Advanta Corp.	*
12	Consolidated Computation of Ratio of Earnings to Fixed Charges	*
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	*
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	*
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	*
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	*

* Filed electronically herewith.

46 EX-10 3 w89158exv10.txt EX. 10 - LEASE AGREEMENT EXHIBIT 10 AGREEMENT OF LEASE BETWEEN LIBERTY PROPERTY LIMITED PARTNERSHIP ("LANDLORD") AND ADVANTA SHARED SERVICES CORP. ("TENANT") FOR 700 DRESHER ROAD PENNSYLVANIA BUSINESS CAMPUS HORSHAM, PENNSYLVANIA 19044 LEASE AGREEMENT (Multi-Tenant Office)

INDEX SECTION PAGE - ----- ------- ---- 1. Summary of Terms and Certain Definitions............................................... 1 2. Premises............................................................................... 2 3. Acceptance of Premises................................................................. 2 4. Use; Compliance........................................................................ 2 5. Term................................................................................... 2 6. Minimum Annual Rent.................................................................... 2 7. Operation of Property; Payment of Expenses............................................. 3 8. Signs.................................................................................. 5 9. Alterations and Fixtures............................................................... 5 10. Mechanics' Liens....................................................................... 5 11. Landlord's Right to Relocate Tenant; Right of Entry.................................... 5 12. Damage by Fire or Other Casualty....................................................... 6 13. Condemnation........................................................................... 6 14. Non-Abatement of Rent.................................................................. 6 15. Indemnification of Landlord............................................................ 6 16. Waiver of Claims....................................................................... 7 17. Quiet Enjoyment........................................................................ 7 18. Assignment and Subletting.............................................................. 7 19. Subordination; Mortgagee's Rights...................................................... 7 20. Recording; Tenant's Certificate........................................................ 8 21 Surrender; Abandoned Property.......................................................... 8 22. Curing Tenant's Defaults............................................................... 8 23. Defaults - Remedies.................................................................... 8 24. Representations of Tenant.............................................................. 10 25. Liability of Landlord.................................................................. 10 26. Interpretation; Definitions............................................................ 10 27. Notices................................................................................ 11 28. Security Deposit....................................................................... 11 29. PA Additional Remedies................................................................. R-1 30. Delivery of Possession; No Improvements by Landlord; Obligations Before Commencement Date; Completion by Tenant................................................ R-1 31. Multiple Option to Extend Term......................................................... R-2 32. Guaranty............................................................................... R-4 33. Generator.............................................................................. R-5 34. Furniture.............................................................................. R-6 35. Parking................................................................................ R-6 36. Brokers................................................................................ R-6 37. Additional Provisions Relating to Premises............................................. R-6 38. Additional Provisions Relating to Use; Compliance...................................... R-6 39. Additional Provisions Relating to Operation of Property; Payment of Expenses........... R-7 40. Additional Provisions Relating to Signs................................................ R-13 41. Additional Provisions Relating to Alterations and Fixtures............................. R-13 42. Additional Provisions Relating to Mechanics' Liens..................................... R-14 43. Additional Provisions Relating Landlord's Right to Relocate Tenant; Right of Entry..... R-14 44. Additional Provisions Relating to Damage by Fire or Other Casualty..................... R-15 45. Additional Provisions Relating to Condemnation......................................... R-15 46. Additional Provisions Relating to Non-Abatement of Rent................................ R-16 47. Landlord's Indemnification of Tenant................................................... R-16 48. Additional Provisions Relating to Waiver of Claims..................................... R-16 49. Additional Provisions Relating to Assignment and Subletting............................ R-16 50. Additional Provisions Relating to Subordination; Mortgagee's Rights.................... R-17 51. Additional Provisions Relating to Recording; Tenant's Certificate...................... R-18 52. Additional Provisions Relating to Surrender; Abandoned Property........................ R-19 53. Additional Provisions Relating to Curing Tenant's Defaults............................. R-19 54. Additional Provisions Relating to Defaults - Remedies.................................. R-19 55. Landlord's Representation Regarding Authority.......................................... R-21 56. Additional Provisions Relating to Liability of Landlord................................ R-21 57. Additional Provisions Relating to Interpretation; Definitions.......................... R-21 58. Additional Provisions Relating to Notices.............................................. R-21

i 59. Additional Provisions Relating to Tenant Estoppel Certificate.......................... R-22 60. Additional Provisions Relating to Building Rules....................................... R-22 61. Representations and Warranties of Landlord............................................. R-22 ii THIS LEASE AGREEMENT is made by and between LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership ("LANDLORD") with its address at 125 Witmer Road, Horsham, PA 19044, and ADVANTA SHARED SERVICES CORP., a Delaware corporation ("TENANT") with an address at Welsh and McKean Roads, Spring House, PA 19477, and is dated as of the date on which this lease has been fully executed by Landlord and Tenant. 1. SUMMARY OF TERMS AND CERTAIN DEFINITIONS. (a) "PREMISES": Approximate rentable square feet: 110,000 (Section 2) Suite: (b) "BUILDING": Approximate rentable square feet: 110,000 (Section 2) Address: 700 Dresher Road, Horsham, PA 19044 (c) "TERM": Ninety (90) months plus any partial month from the Commencement Date until the first day of the first full calendar month during the Term. (i) "POSSESSION DATE": The date of this Lease. (ii) "COMMENCEMENT DATE": The earlier of (a) 90 days after the Possession Date, or (b) the date Tenant occupies the Premises for the conduct of its business. (iii) "EXPIRATION DATE": See Section 5 (d) MINIMUM RENT (Section 6) & OPERATING EXPENSES (Section 7) (i) "MINIMUM ANNUAL RENT":

MONTH OF TERM ANNUAL MONTHLY - ------------- ------ ------- 1-12 $ 970,904.66 $ 80,908.72 13-24 $1,642,622.00 $136,885.16 25-36 $1,744,301.90 $145,358.49 37-48 $1,782,389.30 $148,532.44 49-60 $1,820,476.70 $151,706.39 61-72 $1,858,564.10 $154,880.34 73-84 $1,896,651.50 $158,054.29 85-90 -- $160,168.36

(ii) ESTIMATED "ANNUAL OPERATING EXPENSES": $0.00 (zero and 00/100 Dollars), payable in monthly installments of $0.00 (zero and 00/100 Dollars), subject to adjustment (Section 7(a)) (e) "PROPORTIONATE SHARE": 100% (Ratio of approximate rentable square feet in the Premises to approximate rentable square feet in the Building). (f) "USE" (Section 4):General office purposes and uses incidental or accessory thereto in the Office Portion (as hereinafter defined) and general warehouse purposes, general office purposes and uses incidental or accessory thereto in the Warehouse Portion (as hereinafter defined). (g) "SECURITY DEPOSIT" (Section 28):$0.00 (Zero and 00/100 Dollars). (h) CONTENTS: This lease consists of the Index, pages 1 through 11 containing Sections 1 through 28 and the following, all of which are attached hereto and made a part of this lease: Rider with Sections 29 through 61. Exhibits: "A" - Plan showing Premises "B" - Commencement Certificate "C" - Building Rules "D" - Cleaning Schedule "E" - Estoppel Certificate "F" - Plans "G" - Specifications "H" - Guaranty "I" - List of Furniture "J" - Parking Area Expansion Plan "K" - Monument Signage "L" - Building Signage "M" - Form of Landlord Subordination 2 2. PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises as shown on attached Exhibit "A" within the Building (the Building and the lot on which it is located, the "PROPERTY"), together with the non-exclusive right with Landlord and other occupants of the Building to use all areas and facilities provided by Landlord for the use of all tenants in the Property including any lobbies, hallways, driveways, sidewalks and parking, loading and landscaped areas (the "COMMON AREAS"). 3. ACCEPTANCE OF PREMISES. Tenant has examined and knows the condition of the Property, the zoning, streets, sidewalks, parking areas, curbs and access ways adjoining it, visible easements, any surface conditions and the present uses, and Tenant accepts them in the condition in which they now are, without relying on any representation, covenant or warranty by Landlord. Tenant and its agents shall have the right, at Tenant's own risk, expense and responsibility, at all reasonable times prior to the Commencement Date, to enter the Premises for the purpose of taking measurements and installing its furnishings and equipment; provided that the Premises are vacant and Tenant obtains Landlord's prior written consent. 4. USE; COMPLIANCE. (a) PERMITTED USE. Tenant shall occupy and use the Premises for and only for the Use specified in Section 1(f) above and in such a manner as is lawful, reputable and will not create any nuisance or otherwise interfere with any other tenant's normal operations or the management of the Building. Without limiting the foregoing, such Use shall exclude any use that would cause the Premises or the Property to be deemed a "place of public accommodation" under the Americans with Disabilities Act (the "ADA") as further described in the Building Rules (defined below). All Common Areas shall be subject to Landlord's exclusive control and management at all times. Tenant shall not use or permit the use of any portion of the Common Areas for other than their intended use. (b) COMPLIANCE. From and after the Commencement Date, Tenant shall comply promptly, at its sole expense, (including making any alterations or improvements) with all laws (including the ADA), ordinances, notices, orders, rules, regulations and requirements regulating the Property during the Term which impose any duty upon Landlord or Tenant with respect to Tenant's use, occupancy or alteration of, or Tenant's installations in or upon, the Property including the Premises, (as the same may be amended, the "LAWS AND REQUIREMENTS") and the building rules attached as Exhibit "C", as amended by Landlord from time to time, (the "BUILDING RULES"). Provided, however, that Tenant shall not be required to comply with the Laws and Requirements with respect to the footings, foundations, structural steel columns and girders forming a part of the Property unless the need for such compliance arises out of Tenant's use, occupancy or alteration of the Property, or by any act or omission of Tenant or any employees, agents, contractors, licensees or invitees ("AGENTS") of Tenant. With respect to Tenant's obligations as to the Property, other than the Premises, at Landlord's option and at Tenant's expense, Landlord may comply with any repair, replacement or other construction requirements of the Laws and Requirements and Tenant shall pay to Landlord all costs thereof as additional rent. (c) ENVIRONMENTAL. Tenant shall comply, at its sole expense, with all Laws and Requirements as set forth above, all manufacturers' instructions and all requirements of insurers relating to the treatment, production, storage, handling, transfer, processing, transporting, use, disposal and release of hazardous substances, hazardous mixtures, chemicals, pollutants, petroleum products, toxic or radioactive matter (the "RESTRICTED ACTIVITIES"). Tenant shall deliver to Landlord copies of all Material Safety Data Sheets or other written information prepared by manufacturers, importers or suppliers of any chemical and all notices, filings, permits and any other written communications from or to Tenant and any entity regulating any Restricted Activities. (d) NOTICE. If at any time during or after the Term, Tenant becomes aware of any inquiry, investigation or proceeding regarding the Restricted Activities or becomes aware of any claims, actions or investigations regarding the ADA, Tenant shall give Landlord written notice, within 5 days after first learning thereof, providing all available information and copies of any notices. 5. TERM. The Term of this lease shall commence on the Commencement Date and shall end at 11:59 p.m. on the last day of the Term (the "EXPIRATION DATE"), without the necessity for notice from either party, unless sooner terminated in accordance with the terms hereof. At Landlord's request, Tenant shall confirm the Commencement Date and Expiration Date by executing a lease commencement certificate in the form attached as Exhibit "B". 6. MINIMUM ANNUAL RENT. Tenant agrees to pay to Landlord the Minimum Annual Rent in equal monthly installments in the amount set forth in Section 1(d) (as increased at the beginning of each lease year as set forth in Section 1(d)), in advance, on the first day of each calendar month during the Term, without notice, demand or setoff, at Landlord's address designated at the beginning of this lease unless Landlord designates otherwise; provided that rent for the first full month shall be paid at the signing of this lease. If the Commencement Date falls on a day other than the first day of a calendar month, the rent shall be apportioned pro rata on a per diem basis for the period from the Commencement Date until the first day of the following calendar month and shall be paid on or before the Commencement Date. As used in this lease, the term "LEASE YEAR" means the period from the Commencement Date 2 through the succeeding 12 full calendar months (including for the first lease year any partial month from the Commencement Date until the first day of the first full calendar month) and each successive 12 month period thereafter during the Term. 7. OPERATION OF PROPERTY; PAYMENT OF EXPENSES. (a) PAYMENT OF OPERATING EXPENSES. Tenant shall pay to Landlord the Annual Operating Expenses in equal monthly installments in the amount set forth in Section 1(d) (prorated for any partial month), from the Commencement Date and continuing throughout the Term on the first day of each calendar month during the Term, as additional rent, without notice, demand or setoff, provided that the monthly installment for the first full month shall be paid at the signing of this lease. Landlord shall apply such payments to the annual operating costs to Landlord of operating and maintaining the Property during each calendar year of the Term, which costs may include by way of example rather than limitation: insurance premiums, fees, impositions, costs for repairs, maintenance, service contracts, management and administrative fees, governmental permits, overhead expenses, costs of furnishing water, sewer, gas, fuel, electricity, other utility services, janitorial service, trash removal, security services, landscaping and grounds maintenance, and the costs of any other items attributable to operating or maintaining any or all of the Property excluding any costs which under generally accepted accounting principles are capital expenditures; provided, however, that annual operating costs also shall include the annual amortization (over an assumed useful life often years) of the costs (including financing charges) of building improvements made by Landlord to the Property that are required by any governmental authority or for the purpose of reducing operating expenses or directly enhancing the safety of tenants in the Building generally. The amount of the Annual Operating Expenses set forth in Section 1(d) represents Landlord's estimate of Tenant's share of the estimated operating costs during the first calendar year of the Term on an annualized basis; from time to time Landlord may adjust such estimated amount if the estimated operating costs increase. Tenant's obligation to pay the Annual Operating Expenses pursuant to this Section 7 shall survive the expiration or termination of this lease. (i) COMPUTATION OF TENANT'S SHARE OF ANNUAL OPERATING COSTS. After the end of each calendar year of the Term, Landlord shall compute Tenant's share of the annual operating costs described above incurred during such calendar year by (A) calculating an appropriate adjustment, using generally accepted accounting principles, to avoid allocating to Tenant or to any other tenant (as the case may be) those specific costs which Tenant or any other tenant has agreed to pay; (B) calculating an appropriate adjustment, using generally accepted accounting principles, to avoid allocating to any vacant space those specific costs which were not incurred for such space; and (C) multiplying the adjusted annual operating costs by Tenant's Proportionate Share. (ii) RECONCILIATION. By April 30th of each year (and as soon as practical after the expiration or termination of this lease or at any time in the event of a sale of the Property), Landlord shall provide Tenant with a statement of the actual amount of such annual operating costs for the preceding calendar year or part thereof. Landlord or Tenant shall pay to the other the amount of any deficiency or overpayment then due from one to the other or, at Landlord's option, Landlord may credit Tenant's account for any overpayment. Tenant shall have the right to inspect the books and records used by Landlord in calculating the annual operating costs within 60 days of receipt of the statement during regular business hours after having given Landlord at least 48 hours prior written notice; provided, however, that Tenant shall make all payments of additional rent without delay, and that Tenant's obligation to pay such additional rent shall not be contingent on any such right. (b) IMPOSITIONS. As used in this lease the term "impositions" refers to all levies, taxes (including sales taxes and gross receipt taxes) and assessments, which are applicable to the Term, and which are imposed by any authority or under any law, ordinance or regulation thereof, or pursuant to any recorded covenants or agreements, and the reasonable cost of contesting any of the foregoing, upon or with respect to the Property or any part thereof, or any improvements thereto. Tenant shall pay to Landlord with the monthly payment of Minimum Annual Rent any imposition imposed directly upon this lease or the Rent (defined in Section 7(g)) or amounts payable by any subtenants or other occupants of the Premises, or against Landlord because of Landlord's estate or interest herein, (i) Nothing herein contained shall be interpreted as requiring Tenant to pay any income, excess profits or corporate capital stock tax imposed or assessed upon Landlord, unless such tax or any similar tax is levied or assessed in lieu of all or any part of any imposition or an increase in any imposition. (ii) If it shall not be lawful for Tenant to reimburse Landlord for any of the impositions, the Minimum Annual Rent shall be increased by the amount of the portion of such imposition allocable to Tenant, unless prohibited by law. (c) INSURANCE. (i) PROPERTY. Landlord shall keep in effect insurance against loss or damage to the Building or the Property by fire and such other casualties as may be included within fire, extended coverage and special form insurance covering the full replacement 3 cost of the Building (but excluding coverage of Tenant's personal property in, and any alterations by Tenant to, the Premises), and such other insurance as Landlord may reasonably deem appropriate or as may be required from time-to-time by any mortgagee. (ii) LIABILITY. Tenant, at its own expense, shall keep in effect comprehensive general public liability insurance with respect to the Premises and the Property, including contractual liability insurance, with such limits of liability for bodily injury (including death) and property damage as reasonably may be required by Landlord from time-to-time, but not less than a combined single limit of $1,000,000 per occurrence and a general aggregate limit of not less than $2,000,000 (which aggregate limit shall apply separately to each of Tenant's locations if more than the Premises); however, such limits shall not limit the liability of Tenant hereunder. The policy of comprehensive general public liability insurance also shall name Landlord and Landlord's agent as insured parties with respect to the Premises, shall be written on an "occurrence" basis and not on a "claims made" basis, shall provide that it is primary with respect to any policies carried by Landlord and that any coverage carried by Landlord shall be excess insurance, shall provide that it shall not be cancelable or reduced without at least 30 days prior written notice to Landlord and shall be issued in form satisfactory to Landlord. The insurer shall be a responsible insurance carrier which is authorized to issue such insurance and licensed to do business in the state in which the Property is located and which has at all times during the Term a rating of no less than A VII in the most current edition of Best's Insurance Reports. Tenant shall deliver to Landlord on or before the Commencement Date, and subsequently renewals of, a certificate of insurance evidencing such coverage and the waiver of subrogation described below. (iii) WAIVER OF SUBROGATION. Landlord and Tenant shall have included in their respective property insurance policies waivers of their respective insurers' right of subrogation against the other party. If such a waiver should be unobtainable or unenforceable, then such policies of insurance shall state expressly that such policies shall not be invalidated if, before a casualty, the insured waives the right of recovery against any party responsible for a casualty covered by the policy. (iv) INCREASE OF PREMIUMS. Tenant agrees not to do anything or fail to do anything which will increase the cost of Landlord's insurance or which will prevent Landlord from procuring policies (including public liability) from companies and in a form satisfactory to Landlord. If any breach of the preceding sentence by Tenant causes the rate of fire or other insurance to be increased, Tenant shall pay the amount of such increase as additional rent promptly upon being billed. (d) REPAIRS AND MAINTENANCE; COMMON AREAS; BUILDING MANAGEMENT. (i) Tenant at its sole expense shall maintain the Premises in a neat and orderly condition. (ii) Landlord, shall make all necessary repairs to the Premises, the Common Areas and any other improvements located on the Property, provided that Landlord shall have no responsibility to make any repair until Landlord receives written notice of the need for such repair. Landlord shall operate and manage the Property and shall maintain all Common Areas and any paved areas appurtenant to the Property in a clean and orderly condition. Landlord reserves the right to make alterations to the Common Areas from time to time. (iii) Notwithstanding anything herein to the contrary, repairs and replacements to the Property including the Premises made necessary by Tenant's use, occupancy or alteration of, or Tenant's installation in or upon the Property or by any act or omission of Tenant or its Agents shall be made at the sole expense of Tenant to the extent not covered by any applicable insurance proceeds paid to Landlord. Tenant shall not bear the expense of any repairs or replacements to the Property arising out of or caused by any other tenant's use, occupancy or alteration of, or any other tenant's installation in or upon, the Property or by any act or omission of any other tenant or any other tenant's Agents. (e) UTILITIES. (i) Landlord will furnish the Premises with electricity, heating and air conditioning for the normal use and occupancy of the Premises as general offices between 8:00 a.m. and 6:00 p.m., Monday through Friday (legal holidays excepted). If Tenant shall require electricity or install electrical equipment including but not limited to electrical heating, refrigeration equipment, electronic data processing machines, or machines or equipment using current in excess of 110 volts, which will in any way increase the amount of electricity usually furnished for use as general office space, or if Tenant shall attempt to use the Premises in such a manner that the services to be furnished by Landlord would be required during periods other than or in addition to business hours referred to above, Tenant will obtain Landlord's prior written approval and will pay for the resulting additional direct expense, including the expense resulting from the installation of such equipment and meters, as additional rent promptly upon being billed. Landlord shall not be responsible or liable for any interruption in utility service, nor shall such interruption affect the continuation or validity of this lease. 4 (ii) If at any time utility services supplied to the Premises are separately metered, the cost of installing Tenant's meter and the cost of such separately metered utility service shall be paid by Tenant promptly upon being billed. (f) JANITORIAL SERVICES. Landlord will provide Tenant with trash removal and janitorial services pursuant to a cleaning schedule attached as Exhibit "D". (g) "RENT." The term "RENT" as used in this lease means the Minimum Annual Rent, Annual Operating Expenses and any other additional rent or sums payable by Tenant to Landlord pursuant to this lease, all of which shall be deemed rent for purposes of Landlord's rights and remedies with respect thereto. Tenant shall pay al] Rent to Landlord within 30 days after Tenant is billed, unless otherwise provided in this lease, and interest shall accrue on all sums due but unpaid. 8. SIGNS. Landlord, at Landlord's expense, will place Tenant's name and suite number on the Building standard sign and on or beside the entrance door to the Premises. Except for signs which are located wholly within the interior of the Premises and not visible from the exterior of the Premises, no signs shall be placed on the Property without the prior written consent of Landlord. All signs installed by Tenant shall be maintained by Tenant in good condition and Tenant shall remove all such signs at the termination of this lease and shall repair any damage caused by such installation, existence or removal. 9. ALTERATIONS AND FIXTURES. (a) Subject to Section 10, Tenant shall have the right to install its trade fixtures in the Premises, provided that no such installation or removal thereof shall affect any structural portion of the Property nor any utility lines, communications lines, equipment or facilities in the Building serving any tenant other than Tenant. At the expiration or termination of this lease and at the option of Landlord or Tenant, Tenant shall remove such installation(s) and, in the event of such removal, Tenant shall repair any damage caused by such installation or removal; if Tenant, with Landlord's written consent, elects not to remove such installation(s) at the expiration or termination of this lease, all such installations shall remain on the Property and become the property of Landlord without payment by Landlord. (b) Except for non-structural changes which do not exceed $5000 in the aggregate. Tenant shall not make or permit to be made any alterations to the Premises without Landlord's prior written consent. Tenant shall pay the costs of any required architectural/engineering reviews. In making any alterations, (i) Tenant shall deliver to Landlord the plans, specifications and necessary permits, together with certificates evidencing that Tenant's contractors and subcontractors have adequate insurance coverage naming Landlord and Landlord's agent as additional insureds, at least 10 days prior to commencement thereof, (ii) such alterations shall not impair the structural strength of the Building or any other improvements or reduce the value of the Property or affect any utility lines, communications lines, equipment or facilities in the Building serving any tenant other than Tenant, (iii) Tenant shall comply with Section 10 and (iv) the occupants of the Building and of any adjoining property shall not be disturbed thereby. All alterations to the Premises by Tenant shall be the property of Tenant until the expiration or termination of this lease; at that time all such alterations shall remain on the Property and become the property of Landlord without payment by Landlord unless Landlord gives written notice to Tenant to remove the same, in which event Tenant will remove such alterations and repair any resulting damage. At Tenant's request prior to Tenant making any alterations, Landlord shall notify Tenant in writing, whether Tenant is required to remove such alterations at the expiration or termination of this lease. 10. MECHANICS' LIENS. Tenant shall pay promptly any contractors and materialmen who supply labor, work or materials to Tenant at the Property and shall take all steps permitted by law in order to avoid the imposition of any mechanic's lien upon all or any portion of the Property. Should any such lien or notice of lien be filed for work performed for Tenant other than by Landlord, Tenant shall bond against or discharge the same within 5 days after Tenant has notice that the lien or claim is filed regardless of the validity of such lien or claim. Nothing in this lease is intended to authorize Tenant to do or cause any work to be done or materials to be supplied for the account of Landlord, all of the same to be solely for Tenant's account and at Tenant's risk and expense. Throughout this lease the term "MECHANIC'S LIEN" is used to include any lien, encumbrance or charge levied or imposed upon all or any portion of, interest in or income from the Property on account of any mechanic's, laborer's, materialman's or construction lien or arising out of any debt or liability to or any claim of any contractor, mechanic, supplier, materialman or laborer and shall include any mechanic's notice of intention to file a lien given to Landlord or Tenant, any stop order given to Landlord or Tenant, any notice of refusal to pay naming Landlord or Tenant and any injunctive or equitable action brought by any person claiming to be entitled to any mechanic's lien. 11. LANDLORD'S RIGHT TO RELOCATE TENANT; RIGHT OF ENTRY. (a) Landlord may cause Tenant to relocate from the Premises to a comparable space ("RELOCATION SPACE") within the Building by giving written notice to Tenant at least 60 days in advance, provided that Landlord shall pay for all reasonable costs of 5 such relocation. Such a relocation shall not terminate, modify or otherwise affect this lease except that "Premises" shall refer to the Relocation Space rather than the old location identified in Section 1(a). (b) Tenant shall permit Landlord and its Agents to enter the Premises at all reasonable times following reasonable notice (except in the event of an emergency), for the purpose of inspection, maintenance or making repairs, alterations or additions as well as to exhibit the Premises for the purpose of sale or mortgage and, during the last 12 months of the Term, to exhibit the Premises to any prospective tenant. Landlord will make reasonable efforts not to inconvenience Tenant in exercising the foregoing rights, but shall not be liable for any loss of occupation or quiet enjoyment thereby occasioned. 12. DAMAGE BY FIRE OR OTHER CASUALTY. (a) If the Premises or Building shall be damaged or destroyed by fire or other casualty, Tenant promptly shall notify Landlord and Landlord, subject to the conditions set forth in this Section 12, shall repair such damage and restore the Premises to substantially the same condition in which they were immediately prior to such damage or destruction, but not including the repair, restoration or replacement of the fixtures or alterations installed by Tenant. Landlord shall notify Tenant in writing, within 30 days after the date of the casualty, if Landlord anticipates that the restoration will take more than 180 days from the date of the casualty to complete; in such event, either Landlord or Tenant may terminate this lease effective as of the date of casualty by giving written notice to the other within 10 days after Landlord's notice. Further, if a casualty occurs during the last 12 months of the Term or any extension thereof, Landlord may cancel this lease unless Tenant has the right to extend the Term for at least 3 more years and does so within 30 days after the date of the casualty. (b) Landlord shall maintain a 12 month rental coverage endorsement or other comparable form of coverage as part of its fire, extended coverage and special form insurance. Tenant will receive an abatement of its Minimum Annual Rent and Annual Operating Expenses to the extent the Premises are rendered untenantable as determined by the carrier providing the rental coverage endorsement. 13. CONDEMNATION. (a) TERMINATION. If (i) all of the Premises are taken by a condemnation or otherwise for any public or quasi-public use, (ii) any part of the Premises is so taken and the remainder thereof is insufficient for the reasonable operation of Tenant's business or (iii) any of the Property is so taken, and, in Landlord's opinion, it would be impractical or the condemnation proceeds are insufficient to restore the remainder of the Property, then this lease shall terminate and all unaccrued obligations hereunder shall cease as of the day before possession is taken by the condemnor. (b) PARTIAL TAKING. If there is a condemnation and this lease has not been terminated pursuant to this Section, (i) Landlord shall restore the Building and the improvements which are a part of the Premises to a condition and size as nearly comparable as reasonably possible to the condition and size thereof immediately prior to the date upon which the condemnor took possession and (ii) the obligations of Landlord and Tenant shall be unaffected by such condemnation except that there shall be an equitable abatement of the Minimum Annual Rent according to the rental value of the Premises before and after the date upon which the condemnor took possession and/or the date Landlord completes such restoration. (c) AWARD. In the event of a condemnation affecting Tenant, Tenant shall have the right to make a claim against the condemnor for moving expenses and business dislocation damages to the extent that such claim does not reduce the sums otherwise payable by the condemnor to Landlord. Except as aforesaid and except as set forth in (d) below, Tenant hereby assigns all claims against the condemnor to Landlord. (d) TEMPORARY TAKING. No temporary taking of the Premises shall terminate this lease or give Tenant any right to any rental abatement. Such a temporary taking will be treated as if Tenant had sublet the Premises to the condemnor and had assigned the proceeds of the subletting to Landlord to be applied on account of Tenant's obligations hereunder. Any award for such a temporary taking during the Term shall be applied first, to Landlord's costs of collection and, second, on account of sums owing by Tenant hereunder, and if such amounts applied on account of sums owing by Tenant hereunder should exceed the entire amount owing by Tenant for the remainder of the Term, the excess will be paid to Tenant. 14. NON-ABATEMENT OF RENT. Except as otherwise expressly provided as to damage by fire or other casualty in Section 12(b) and as to condemnation in Section 13(b), there shall be no abatement or reduction of the Rent for any cause whatsoever, and this lease shall not terminate, and Tenant shall not be entitled to surrender the Premises. 15. INDEMNIFICATION OF LANDLORD. Subject to Sections 7(c)(iii) and 16, Tenant will protect, indemnify and hold harmless Landlord and its Agents from and against any and all claims, actions, damages, liability and expense (including fees of attorneys, investigators 6 and experts) in connection with loss of life, personal injury or damage to property in or about the Premises or arising out of the occupancy or use of the Premises by Tenant or its Agents or occasioned wholly or in part by any act or omission of Tenant or its Agents, whether prior to, during or after the Term, except to the extent such loss, injury or damage was caused by the negligence of Landlord or its Agents. In case any action or proceeding is brought against Landlord and/or its Agents by reason of the foregoing, Tenant, at its expense, shall resist and defend such action or proceeding, or cause the same to be resisted and defended by counsel (reasonably acceptable to Landlord and its Agents) designated by the insurer whose policy covers such occurrence or by counsel designated by Tenant and approved by Landlord and its Agents. Tenant's obligations pursuant to this Section 15 shall survive the expiration or termination of this lease. 16. WAIVER OF CLAIMS. Landlord and Tenant each hereby waives all claims for recovery against the other for any loss or damage which may be inflicted upon the property of such party even if such loss or damage shall be brought about by the fault or negligence of the other party or its Agents; provided, however, that such waiver by Landlord shall not be effective with respect to any liability of Tenant described in Sections 4(c) and 7(d)(iii). 17. QUIET ENJOYMENT. Landlord covenants that Tenant, upon performing all of its covenants, agreements and conditions of this lease, shall have quiet and peaceful possession of the Premises as against anyone claiming by or through Landlord, subject, however, to the exceptions, reservations and conditions of this lease. 18. ASSIGNMENT AND SUBLETTING. (a) LIMITATION. Tenant shall not transfer this lease, voluntarily or by operation of law, without the prior written consent of Landlord which shall not be withheld unreasonably. However, Landlord's consent shall not be required in the event of any transfer by Tenant to an affiliate of Tenant which is at least as creditworthy as Tenant as of the date of this lease and provided Tenant delivers to Landlord the instrument described in Section (c)(iii) below, together with a certification of such creditworthiness by Tenant and such affiliate. Any transfer not in conformity with this Section 18 shall be void at the option of Landlord, and Landlord may exercise any or all of its rights under Section 23. A consent to one transfer shall not be deemed to be a consent to any subsequent transfer. "Transfer" shall include any sublease, assignment, license or concession agreement, change in ownership or control of Tenant, mortgage or hypothecation of this lease or Tenant's interest therein or in all or a portion of the Premises. (b) OFFER TO LANDLORD. Tenant acknowledges that the terms of this lease, including the Minimum Annual Rent, have been based on the understanding that Tenant physically shall occupy the Premises for the entire Term. Therefore, upon Tenant's request to transfer all or a portion of the Premises, at the option of Landlord, Tenant and Landlord shall execute an amendment to this lease removing such space from the Premises, Tenant shall be relieved of any liability with respect to such space and Landlord shall have the right to lease such space to any party, including Tenant's proposed transferee. (c) CONDITIONS. Notwithstanding the above, the following shall apply to any transfer, with or without Landlord's consent: (i) As of the date of any transfer, Tenant shall not be in default under this lease nor shall any act or omission have occurred which would constitute a default with the giving of notice and/or the passage of time. (ii) No transfer shall relieve Tenant of its obligation to pay the Rent and to perform all its other obligations hereunder. The acceptance of Rent by Landlord from any person shall not be deemed to be a waiver by Landlord of any provision of this lease or to be a consent to any transfer. (iii) Each transfer shall be by a written instrument in form and substance satisfactory to Landlord which shall (A) include an assumption of liability by any transferee of all Tenant's obligations and the transferee's ratification of and agreement to be bound by all the provisions of this lease, (B) afford Landlord the right of direct action against the transferee pursuant to the same remedies as are available to Landlord against Tenant and (C) be executed by Tenant and the transferee. (iv) Tenant shall pay, within 10 days of receipt of an invoice which shall be no less than $250, Landlord's reasonable attorneys' fees and costs in connection with the review, processing and documentation of any transfer for which Landlord's consent is requested. 19. SUBORDINATION; MORTGAGEE'S RIGHTS. (a) This lease shall be subordinate to any first mortgage or other primary encumbrance now or hereafter affecting the Premises. Although the subordination is self-operative, within 10 days after written request, Tenant shall execute and deliver any further instruments confirming such subordination of this lease and any further instruments of attornment that may be desired by any such mortgagee or Landlord. However, any mortgagee may at any time subordinate its mortgage to this lease, without Tenant's consent, 7 by giving written notice to Tenant, and thereupon this lease shall be deemed prior to such mortgage without regard to their respective dates of execution and delivery, provided, however, that such subordination shall not affect any mortgagee's right to condemnation awards, casualty insurance proceeds, intervening liens or any right which shall arise between the recording of such mortgage and the execution of this lease. (b) It is understood and agreed that any mortgagee shall not be liable to Tenant for any funds paid by Tenant to Landlord unless such funds actually have been transferred to such mortgagee by Landlord. (c) Notwithstanding the provisions of Sections 12 and 13 above, Landlord's obligation to restore the Premises after a casualty or condemnation shall be subject to the consent and prior rights of Landlord's first mortgagee. 20. RECORDING; TENANT'S CERTIFICATE. Tenant shall not record this lease or a memorandum thereof without Landlord's prior written consent. Within 10 days after Landlord's written request from time to time: (a) Tenant shall execute, acknowledge and deliver to Landlord a written statement certifying the Commencement Date and Expiration Date of this lease, that this lease is in full force and effect and has not been modified and otherwise as set forth in the form of estoppel certificate attached as Exhibit "E" or with such modifications as may be necessary to reflect accurately the stated facts and/or such other certifications as may be requested by a mortgagee or purchaser. Tenant understands that its failure to execute such documents may cause Landlord serious financial damage by causing the failure of a financing or sale transaction. (b) Tenant shall furnish to Landlord, Landlord's mortgagee, prospective mortgagee or purchaser reasonably requested financial information. 21. SURRENDER; ABANDONED PROPERTY. (a) Subject to the terms of Sections 9(b), 12(a) and 13(b), at the expiration or termination of this lease, Tenant promptly shall yield up in the same condition, order and repair in which they are required to be kept throughout the Term, the Premises and all improvements thereto, and all fixtures and equipment servicing the Building, ordinary wear and tear excepted. (b) Upon or prior to the expiration or termination of this lease, Tenant shall remove any personal property from the Property. Any personal property remaining thereafter shall be deemed conclusively to have been abandoned, and Landlord, at Tenant's expense, may remove, store, sell or otherwise dispose of such property in such manner as Landlord may see fit and/or Landlord may retain such property as its property. If any part thereof shall be sold, then Landlord may receive and retain the proceeds of such sale and apply the same, at its option, against the expenses of the sale, the cost of moving and storage and any Rent due under this lease. (c) If Tenant, or any person claiming through Tenant, shall continue to occupy the Premises after the expiration or termination of this lease or any renewal thereof, such occupancy shall be deemed to be under a month-to-month tenancy under the same terms and conditions set forth in this lease, except that the monthly installment of the Minimum Annual Rent during such continued occupancy shall be double the amount applicable to the last month of the Term. Anything to the contrary notwithstanding, any holding over by Tenant without Landlord's prior written consent shall constitute a default hereunder and shall be subject to all the remedies available to Landlord. 22. CURING TENANT'S DEFAULTS. If Tenant shall be in default in the performance of any of its obligations hereunder, Landlord, without any obligation to do so, in addition to any other rights it may have in law or equity, may elect to cure such default on behalf of Tenant after written notice (except in the case of emergency) to Tenant. Tenant shall reimburse Landlord upon demand for any sums paid or costs incurred by Landlord in curing such default, including interest thereon from the respective dates of Landlord's incurring such costs, which sums and costs together with interest shall be deemed additional rent. 23. DEFAULTS - REMEDIES. (a) DEFAULTS. It shall be an event of default: (i) If Tenant does not pay in full when due any and all Rent; (ii) If Tenant fails to observe and perform or otherwise breaches any other provision of this lease; 8 (iii) If Tenant abandons the Premises, which shall be conclusively presumed if the Premises remain unoccupied for more than 10 consecutive days, or removes or attempts to remove Tenant's goods or property other than in the ordinary course of business; or (iv) If Tenant becomes insolvent or bankrupt in any sense or makes a general assignment for the benefit of creditors or offers a settlement to creditors, or if a petition in bankruptcy or for reorganization or for an arrangement with creditors under any federal or state law is filed by or against Tenant, or a bill in equity or other proceeding for the appointment of a receiver for any of Tenant's assets is commenced, or if any of the real or personal property of Tenant shall be levied upon; provided, however, that any proceeding brought by anyone other than Landlord or Tenant under any bankruptcy, insolvency, receivership or similar law shall not constitute a default until such proceeding has continued unstayed for more than 60 consecutive days. (b) REMEDIES. Then, and in any such event, Landlord shall have the following rights: (i) To charge a late payment fee equal to the greater of $100 or 5% of any amount owed to Landlord pursuant to this lease which is not paid within 5 days after the due date. (ii) To enter and repossess the Premises, by breaking open locked doors if necessary, and remove all persons and all or any property therefrom, by action at law or otherwise, without being liable for prosecution or damages therefor, and Landlord may, at Landlord's option, make alterations and repairs in order to relet the Premises and relet all or any part(s) of the Premises for Tenant's account. Tenant agrees to pay to Landlord on demand any deficiency that may arise by reason of such reletting. In the event of reletting without termination of this lease, Landlord may at any time thereafter elect to terminate this lease for such previous breach. (iii) To accelerate the whole or any part of the Rent for the balance of the Term, and declare the same to be immediately due and payable. (iv) To terminate this lease and the Term without any right on the part of Tenant to save the forfeiture by payment of any sum due or by other performance of any condition, term or covenant broken. (c) GRACE PERIOD. Notwithstanding anything hereinabove stated, neither party will exercise any available right because of any default of the other, except those remedies contained in subsection (b)(i) of this Section, unless such party shall have first given 10 days written notice thereof to the defaulting party, and the defaulting party shall have failed to cure the default within such period; provided, however, that: (i) No such notice shall be required if Tenant fails to comply with the provisions of Sections 10 or 20(a), in the case of emergency as set forth in Section 22 or in the event of any default enumerated in subsections (a)(iii) and (iv) of this Section. (ii) Landlord shall not be required to give such 10 days notice more than 2 times during any 12 month period. (iii) If the default consists of something other than the failure to pay money which cannot reasonably be cured within 10 days, neither party will exercise any right if the defaulting party begins to cure the default within the 10 days and continues actively and diligently in good faith to completely cure said default. (iv) Tenant agrees that any notice given by Landlord pursuant to this Section which is served in compliance with Section 27 shall be adequate notice for the purpose of Landlord's exercise of any available remedies. (d) NON-WAIVER; NON-EXCLUSIVE. No waiver by Landlord of any breach by Tenant shall be a waiver of any subsequent breach, nor shall any forbearance by Landlord to seek a remedy for any breach by Tenant be a waiver by Landlord of any rights and remedies with respect to such or any subsequent breach. Efforts by Landlord to mitigate the damages caused by Tenant's default shall not constitute a waiver of Landlord's right to recover damages hereunder. No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy provided herein or by law, but each shall be cumulative and in addition to every other right or remedy given herein or now or hereafter existing at law or in equity. No payment by Tenant or receipt or acceptance by Landlord of a lesser amount than the total amount due Landlord under this lease shall be deemed to be other than on account, nor shall any endorsement or statement on any check or payment be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of Rent due, or Landlord's right to pursue any other available remedy. 9 (e) COSTS AND ATTORNEYS' FEES. If either party commences an action against the other party arising out of or in connection with this lease, the prevailing party shall be entitled to have and recover from the losing party attorneys' fees, costs of suit, investigation expenses and discovery costs, including costs of appeal. 24. REPRESENTATIONS OF TENANT. Tenant represents to Landlord and agrees that: (a) The word "TENANT" as used herein includes the Tenant named above as well as its successors and assigns, each of which shall be under the same obligations and liabilities and each of which shall have the same rights, privileges and powers as it would have possessed had it originally signed this lease as Tenant. Each and every of the persons named above as Tenant shall be bound jointly and severally by the terms, covenants and agreements contained herein. However, no such rights, privileges or powers shall inure to the benefit of any assignee of Tenant immediate or remote, unless Tenant has complied with the terms of Section 18 and the assignment to such assignee is permitted or has been approved in writing by Landlord. Any notice required or permitted by the terms of this lease may be given by or to any one of the persons named above as Tenant, and shall have the same force and effect as if given by or to all thereof. (b) If Tenant is a corporation, partnership or any other form of business association or entity, Tenant is duly formed and in good standing, and has full corporate or partnership power and authority, as the case may be, to enter into this lease and has taken all corporate or partnership action, as the case may be, necessary to carry out the transaction contemplated herein, so that when executed, this lease constitutes a valid and binding obligation enforceable in accordance with its terms. Tenant shall provide Landlord with corporate resolutions or other proof in a form acceptable to Landlord, authorizing the execution of this lease at the time of such execution. 25. LIABILITY OF LANDLORD. The word "LANDLORD" as used herein includes the Landlord named above as well as its successors and assigns, each of which shall have the same rights, remedies, powers, authorities and privileges as it would have had it originally signed this lease as Landlord. Any such person or entity, whether or not named herein, shall have no liability hereunder after it ceases to hold title to the Premises except for obligations already accrued (and, as to any unapplied portion of Tenant's Security Deposit, Landlord shall be relieved of all liability therefor upon transfer of such portion to its successor in interest) and Tenant shall look solely to Landlord's successor in interest for the performance of the covenants and obligations of the Landlord hereunder which thereafter shall accrue. Neither Landlord nor any principal of Landlord nor any owner of the Property, whether disclosed or undisclosed, shall have any personal liability with respect to any of the provisions of this lease or the Premises, and if Landlord is in breach or default with respect to Landlord's obligations under this lease or otherwise, Tenant shall look solely to the equity of Landlord in the Property for the satisfaction of Tenant's claims. Notwithstanding the foregoing, no mortgagee or ground lessor succeeding to the interest of Landlord hereunder (either in terms of ownership or possessory rights) shall be (a) liable for any previous act or omission of a prior landlord, (b) subject to any rental offsets or defenses against a prior landlord or (c) bound by any amendment of this lease made without its written consent, or by payment by Tenant of Minimum Annual Rent in advance in excess of one monthly installment. 26. INTERPRETATION; DEFINITIONS. (a) CAPTIONS. The captions in this lease are for convenience only and are not a part of this lease and do not in any way define, limit, describe or amplify the terms and provisions of this lease or the scope or intent thereof. (b) ENTIRE AGREEMENT. This lease represents the entire agreement between the parties hereto and there are no collateral or oral agreements or understandings between Landlord and Tenant with respect to the Premises or the Property. No rights, easements or licenses are acquired in the Property or any land adjacent to the Property by Tenant by implication or otherwise except as expressly set forth in the provisions of this lease. This lease shall not be modified in any manner except by an instrument in writing executed by the parties. The masculine (or neuter) pronoun and the singular number shall include the masculine, feminine and neuter genders and the singular and plural number. The word "INCLUDING" followed by any specific item(s) is deemed to refer to examples rather than to be words of limitation. Both parties having participated fully and equally in the negotiation and preparation of this lease, this lease shall not be more strictly construed, nor any ambiguities in this lease resolved, against either Landlord or Tenant. (c) COVENANTS. Each covenant, agreement, obligation, term, condition or other provision herein contained shall be deemed and construed as a separate and independent covenant of the party bound by, undertaking or making the same, not dependent on any other provision of this lease unless otherwise expressly provided. All of the terms and conditions set forth in this lease shall apply through out the Term unless otherwise expressly set forth herein. (d) INTEREST. Wherever interest is required to be paid hereunder, such interest shall be at the highest rate permitted under law but not in excess of 15% per annum. 10 (e) SEVERABILITY; GOVERNING LAW. If any provisions of this lease shall be declared unenforceable in any respect, such unenforceability shall not affect any other provision of this lease, and each such provision shall be deemed to be modified, if possible, in such a manner as to render it enforceable and to preserve to the extent possible the intent of the parties as set forth herein. This lease shall be construed and enforced in accordance with the laws of the state in which the Property is located. (f) "MORTGAGE" AND "MORTGAGEE." The word "mortgage" as used herein includes any lien or encumbrance on the Premises or the Property or on any part of or interest in or appurtenance to any of the foregoing, including without limitation any ground rent or ground lease if Landlord's interest is or becomes a leasehold estate. The word "mortgagee" as used herein includes the holder of any mortgage, including any ground lessor if Landlord's interest is or becomes a leasehold estate. Wherever any right is given to a mortgage, that right may be exercised on behalf of such mortgagee by any representative or servicing agent of such mortgagee. (g) "PERSON." The word "person" is used herein to include a natural person, a partnership, a corporation, an association and any other form of business association or entity. 27. NOTICES. Any notice or other communications under this lease shall be in writing and addressed to Landlord or Tenant at their respective addresses specified at the beginning of this lease, except that after the Commencement Date Tenant's address shall be at the Premises, (or to such other address as either may designate by notice to the other) with a copy to any mortgagee or other party designated by Landlord. Each notice or other communication shall be deemed given if sent by prepaid overnight delivery service or by certified mail, return receipt requested, postage prepaid or in any other manner, with delivery in any case evidenced by a receipt, and shall be deemed received on the day of actual receipt by the intended recipient or on the business day delivery is refused. The giving of notice by Landlord's attorneys, representatives and agents under this Section shall be deemed to be the acts of Landlord; however, the foregoing provisions governing the date on which a notice deemed to have been received shall mean and refer to the date on which a party to this lease, and not its counsel or other recipient to which a copy of the notice may be sent, is deemed to have received the notice. 28. SECURITY DEPOSIT. At the time of signing this lease, Tenant shall deposit with Landlord the Security Deposit to be retained by Landlord as cash security for the faithful performance and observance by Tenant of the provisions of this lease. Tenant shall not be entitled to any interest whatever on the Security Deposit. Landlord shall have the right to commingle the Security Deposit with its other funds. Landlord may use the whole or any part of the Security Deposit for the payment of any amount as to which Tenant is in default hereunder or to compensate Landlord for any loss or damage it may suffer by reason of Tenant's default under this lease. If Landlord uses all or any portion of the Security Deposit as herein provided, within 10 days after written demand therefor, Tenant shall pay Landlord cash in amount equal to that portion of the Security Deposit used by Landlord. If Tenant shall comply fully and faithfully with all the provisions of this lease, the Security Deposit shall be returned to Tenant after the Expiration Date and surrender of the Premises to Landlord. IN WITNESS WHEREOF, and in consideration of the mutual entry into this lease and for other good and valuable consideration, and intending to be legally bound, Landlord and Tenant have executed this lease. LANDLORD: LIBERTY PROPERTY LIMITED PARTNERSHIP Date Signed: By: Liberty Property Trust Sole General Partner February 27, 2003 By: /s/ Ward J. Fitzgerald ------------------------------------------- Ward J. Fitzgerald Senior Vice President and Regional Director TENANT: Date Signed: ADVANTA SHARED SERVICES CORP. February 26, 2003 By: /s/ MARCIA M. WILF -------------------------------------------- Name: MARCIA M. WILF Title: Vice President, Corporate Administration Attest: /s/ Liane Browne ---------------- Name: Liane Browne [Corporate Seal] Title: Asst. Secretary 11 RIDER 29. PA Additional Remedies. (a) When this lease and the Term or any extension thereof shall have been terminated on account of any default by Tenant, which remains uncured after the expiration of any applicable notice and/or cure period, or when the Term or any extension thereof shall have expired, Tenant hereby authorizes any attorney of any court of record of the Commonwealth of Pennsylvania to appear for Tenant and for anyone claiming by, through or under Tenant and to confess judgment against all such parties, and in favor of Landlord, in ejectment and for the recovery of possession of the Premises, for which this lease or a true and correct copy hereof shall be good and sufficient warrant. AFTER THE ENTRY OF ANY SUCH JUDGMENT A WRIT OF POSSESSION MAY BE ISSUED THEREON WITHOUT FURTHER NOTICE TO TENANT AND WITHOUT A HEARING. If for any reason after such action shall have been commenced it shall be determined and possession of the Premises remain in or be restored to Tenant, Landlord shall have the right for the same default and upon any subsequent default(s) or upon the termination of this lease or Tenant's right of possession as herein set forth, to again confess judgment as herein provided, for which this lease or a true and correct copy hereof shall be good and sufficient warrant. (b) The warrant to confess judgment set forth above shall continue in full force and effect and be unaffected by amendments to this lease or other agreements between Landlord and Tenant even if any such amendments or other agreements increase Tenant's obligations or expand the size of the Premises. Tenant waives any procedural errors in connection with the entry of any such judgment or in the issuance of any one or more writs of possession or execution or garnishment thereon. (c) EXCEPT AS OTHERWISE SET FORTH IN THIS LEASE, TENANT KNOWINGLY AND EXPRESSLY WAIVES ANY RIGHT, INCLUDING, WITHOUT LIMITATION, UNDER ANY APPLICABLE STATUTE, WHICH TENANT MAY HAVE TO RECEIVE A NOTICE TO QUIT PRIOR TO LANDLORD COMMENCING AN ACTION FOR REPOSSESSION OF THE PREMISES. ADVANTA SHARED SERVICES CORP. By:/s/ Marcia M. Wilf ------------------ Name: Marcia M. Wilf Title: Vice President, Corporate Administration 30. Delivery of Possession; No Improvements by Landlord; Obligations Before Commencement Date; Completion by Tenant. (a) The Premises shall be delivered by Landlord to Tenant on the Possession Date and accepted by Tenant broom clean in "as is" "where is" condition (including the existing furniture therein) and Landlord shall have no obligations whatsoever to improve the Premises for Tenant's use or occupancy. R-1 (b) Prior to the Commencement Date, Tenant shall abide by the terms and conditions of this lease as if the Term of this lease had already commenced, except that Tenant shall have no obligation to pay the Minimum Annual Rent or any portion thereof until the Commencement Date. (c) The Premises shall be completed by Tenant and its contractor(s), at Tenant's sole expense, in accordance with plans to be prepared by Tenant, approved by Landlord and attached hereto as Exhibit "F" (the "Plans") and specifications to be prepared by Tenant, approved by Landlord and attached hereto as Exhibit "G" (the "Specifications"). Landlord shall respond to a written request for approval of the Plans and Specifications within 10 days after receipt thereof and if Landlord fails to timely respond thereto, such approval be deemed granted if Landlord fails to respond to a second written request therefor pursuant to the procedure set forth in Section 41(e) below within three (3) business days after Landlord's receipt of such second written request. In connection with the alterations Tenant intends to make to the Premises in accordance with the Plans and Specifications (the "Tenant Improvements"), Tenant shall comply with Sections 9 and 10 of this lease and the following conditions: (i) Prior to commencement of construction of the Tenant Improvements, Tenant shall deliver to Landlord a certificate of insurance for Tenant's general contractor evidencing adequate insurance coverage and naming Landlord and Landlord's agent as additional insureds. (ii) Prior to commencement of construction, Tenant shall deliver to Landlord a true and correct copy of a Waiver of Liens filed by Tenant's general contractor with the Prothonotary of Montgomery County. (iii) In addition to the right of Landlord and its Agents to inspect the Premises set forth in Section 11 of this lease, Landlord and its Agents shall have the right to conduct a walk-through inspection of the Premises as completed by Tenant. (iv) The warranties from Tenant's contractor(s) shall be for the benefit of Landlord as well as Tenant and Tenant shall deliver such warranties to Landlord upon receipt. (v) All construction shall be done in a good and workmanlike manner and shall comply at the time of completion with all Laws and Requirements. Tenant shall deliver to Landlord copies of all certificates of occupancy, permits and licenses required to be issued by any authority in connection with Tenant's construction. (d) Within 30 days after the later of (i) the Commencement Date, or (ii) receipt by Landlord of bona fide invoices therefor, Landlord shall reimburse Tenant for the lesser of (A) all documented out-of-pocket costs incurred by Tenant in connection with the design and construction of the Tenant Improvements, or (B) $1,183,882.00. 31. Multiple Option to Extend Term (a) Provided that Landlord has not given Tenant notice of default more than two (2) times in the immediately preceding twelve (12) month period, that there then exists no event of default by Tenant under the lease nor any event that with the giving of notice and/or the passage R-2 of time would constitute a default, and that Tenant or Tenant's affiliates or outsource contractors in the ordinary course of Tenant's business are the primary occupants of the Premises, Tenant shall have the right and option to extend the Term of the lease for three (3) additional periods of twenty-four (24) months each, exercisable by giving Landlord prior written notice, at least nine (9) months in advance of the Expiration Date or the first or second extended Expiration Date, as the case may be, of Tenant's election to extend the Term; it being agreed that time is of the essence and that this option is personal to Tenant and any assignee for whom Landlord's consent is not required under Section 18(a) and is non-transferable to any other assignee or sublessee (regardless of whether any such assignment or sublease was made with or without Landlord's consent) or other party. (b) Such extension(s) shall be under the same terms and conditions as provided in the lease except as follows: (i) the first additional period shall begin on the initial Expiration Date and thereafter the Expiration Date shall be deemed to be the date which is twenty-four (24) months after the initial Expiration Date; (ii) the second additional period shall begin on the Expiration Date of the first additional period and thereafter the Expiration Date shall be deemed to be the date which is twenty-four (24) months after the Expiration Date of the first additional period; (iii) the third additional period shall begin on the Expiration Date of the second additional period and thereafter the Expiration Date shall be deemed to be the date which is twenty-four (24) months after the Expiration Date of the second additional period; (iv) there shall be no further options to extend; (v) The Minimum Annual Rent for each year of each additional term shall be equal to the greater of (i) the Minimum Annual Rent payable under the lease in the lease year immediately preceding the additional period, or (ii) 90% of the fair market rental value of the Premises and annual increases in fair market rental value (collectively, the "FMR") applicable at the time Tenant exercises such option (but in no event prior to nine (9) months before the additional period commences). (vi) Unless Landlord accepts as Tenant's Minimum Annual Rent obligation for each year of the additional period an amount equal to the Minimum Annual Rent payable under the lease in the lease year immediately prior to the commencement of such additional period (the "Prior Rent Alternative"), within fifteen (15) days after Landlord receives notice of Tenant's exercise of this option to extend the Term, but in no event prior to nine (9) months before the commencement of each additional period, Landlord will give notice to Tenant (the "Rent Notice") of Landlord's opinion of the FMR and comparing the FMR to the Minimum Annual Rent payable under the lease in the immediately preceding lease year and specifically advising Tenant that if Tenant does not object thereto in writing within thirty (30) days thereafter, the FMR shall be deemed accepted as the Minimum Annual Rent due for each lease year of the additional period. If Tenant does not respond to the Rent Notice within thirty (30) days after receiving it, Landlord's opinion of the FMR shall be deemed accepted as the Minimum Annual R-3 Rent due for each lease year of the additional period. If, during such thirty (30) day period, Tenant gives Landlord notice that Tenant contests Landlord's determination of FMR (an "Objection Notice"), which notice must contain therein Tenant's opinion of the FMR, the parties will attempt to arrive at a mutually agreeable Minimum Annual Rent for each lease year of the additional period, which, in no event, shall be less than the Prior Rent Alternative. If the parties come to an agreement, they will execute an amendment to the lease establishing the Minimum Annual Rent for each lease year of the additional period. If the parties fail to come to an agreement, the Minimum Annual Rent for each lease year of the additional period shall be determined as set forth in subsection (vii) below. (vii) For purposes of this Section 31, if Landlord does not accept the Prior Rent Alternative as the Minimum Annual Rent for the additional period and if Landlord and Tenant cannot agree as to the Minimum Annual Rent for each lease year of the additional period within thirty (30) days after Landlord's receipt of the Objection Notice, the FMR shall be determined by appraisal. Within ten (10) days after the expiration of such thirty (30) day period, Landlord and Tenant shall give written notice to the other setting forth the name and address of an appraiser designated by the party giving notice. All appraisers selected shall be members of the American Institute of Real Estate Appraisers and shall have had at least ten (10) years continuous experience in the business of appraising office buildings in the greater Philadelphia, Pennsylvania area. If either party shall fail to give notice of such designation within the time period provided, then the party who has designated its appraiser (the "Designating Party") shall notify the other party (the "Non-Designating Party") in writing that the Non-Designating Party has an additional ten (10) days to give notice of its designation, otherwise the appraiser, if any, designated by the Designating Party shall conclusively determine the FMR. If two appraisers have been designated, such appraisers shall attempt to agree upon the FMR. If the two appraisers do not agree on the FMR within twenty (20) days of their designation, the two appraisers shall designate a third appraiser. If the two appraisers shall fail to agree upon the identity of a third appraiser within five (5) business days following the end of such twenty (20) day period, then either Landlord or Tenant may apply to the American Arbitration Association, or any successor thereto having jurisdiction, for the settlement of the dispute as to the designation of the third appraiser and the American Arbitration Association shall designate a third appraiser in accordance with the Real Estate Valuation Arbitration Rules of the American Arbitration Association. The three appraisers shall conduct such hearings as they may deem appropriate, shall make their determination of the FMR in writing and shall give notice to Landlord and Tenant of such determination within twenty (20) days after the appointment of the third appraiser. If the three appraisers cannot agree upon the FMR, each appraiser shall submit in writing to Landlord and Tenant the FMR as determined by such appraiser. The FMR for the purposes of this paragraph shall be equal to the arithmetic average of the two closest FMR submitted by the appraisers. Each party shall pay its own fees and expenses in connection with any appraiser selected by such party under this paragraph, and the parties shall share equally all other expenses and fees of the arbitration, including the fees and expenses charged by the third appraiser. The FMR determined in accordance with the provisions of this Section shall be final and binding upon Landlord and Tenant. 32. Guaranty. To induce Landlord to execute this lease, Advanta Corp., a Delaware corporation ("Guarantor"), shall deliver to Landlord, in the form attached hereto as Exhibit "H", its guaranty of Tenant's obligations under this lease (the "Guaranty"). If Guarantor fails to R-4 deliver such guaranty to Landlord, simultaneously with delivery of this lease to Landlord as executed by Tenant, Landlord shall have no obligation to enter into this lease and Tenant shall have no rights or interests in the Premises or under this lease. It shall be an event of default under this lease if any of the events enumerated in Section 23(a)(iv) of this lease shall happen to Guarantor or any other guarantor of Tenant's obligations under this lease. 33. Generator. Tenant shall have the right to install, maintain and repair a generator (the "Generator") on the Property at the location shown as "Generator Location" on Exhibit "A" attached hereto under and subject to the following conditions: (a) Tenant shall comply with all Laws and Requirements and shall obtain, and deliver to Landlord written evidence of, any approval(s) required thereunder and copies of all permits and approvals therefor. (b) Tenant shall obtain Landlord's prior approval of the specifications for the Generator, such approval not to be unreasonably withheld, conditioned or delayed. Tenant shall enclose the Generator and concrete pad on which it will be located with screening reasonably satisfactory to Landlord and otherwise in a manner reasonably satisfactory to Landlord. Tenant shall pay all costs incurred by Landlord in connection with the Generator, including without limitation, all architectural, engineering, contractors' and legal fees, such fees not to exceed $1,000 unless due to unusual circumstances. (c) Tenant shall comply with the provisions of Sections 9(b)(i) through (iv) of the Lease. (d) At least 3 business days prior to installation or removal, Tenant shall notify Landlord of the date and time of the installation or removal. Tenant shall install or remove the Generator only if Landlord has had the opportunity to be present with Tenant at the installation or removal as set forth in the preceding sentence. (e) Tenant shall maintain the Generator in a safe, good and orderly condition. The installation, maintenance, repair and removal of the Generator shall be performed at Tenant's sole expense in a manner which will not impair the integrity of, damage or adversely affect the warranty applicable to, any portion of the Property. (f) No later than the expiration or sooner termination of the Term, at Tenant's sole expense, Tenant shall remove the Generator and repair any resulting damage, including without limitation, damage to landscaping or paving. Tenant shall comply with all Laws and Requirements in connection with the removal of the Generator and shall deliver to Landlord copies of all required permits and approvals in connection with such removal. (g) Tenant's indemnification of Landlord pursuant to Section 15 of the Lease also applies to the Generator and Tenant's use of any portion of the Property therefor. Without limiting the foregoing, Tenant solely shall be responsible for any damages or injury to persons or property, including the Property, caused by or in any way relating to the Generator, except to the extent such damages or injury are caused by the negligence of Landlord or its Agents. R-5 34. Furniture. Landlord represents and warrants to Tenant that Landlord is the owner of the furniture listed on Exhibit "I" attached hereto (the "Furniture") which is located in the Premises, free and clear of any claim thereto by VerticalNet, Inc., the prior tenant of the Premises ("Prior Tenant"). The lease of the Premises includes the right of Tenant to use the Furniture. The Furniture will be accepted by Tenant in its "as is" "where is" condition and without representation or warranty, express or implied, as to its condition, merchantability or fitness for a particular purpose. Tenant shall comply with all Laws and Requirements in connection with the installation and use of the Furniture in the Premises. During the Term, Tenant shall maintain the Furniture in its present condition, reasonable wear and tear excepted, and upon the expiration or earlier termination of this lease shall surrender the Furniture to Landlord in such condition, subject to Tenant's right (a) to move and reconfigure the Furniture within the Premises, (b) to dispose of broken Furniture, and (c) to cause Landlord, upon 30 days' prior written notice to Landlord, to remove some or all of the Furniture from the Premises. 35. Parking. Tenant shall have the exclusive right to use all of the parking spaces on the Property. There are presently approximately 534 parking spaces on the Property. Subject to Tenant's compliance with all Laws and Requirements, Tenant shall have the right, at its sole cost and expense, to expand the parking lot(s) appurtenant to the Property in accordance with the Parking Area Expansion Plan attached hereto as Exhibit "J". 36. Brokers. The parties agree that they have dealt with no brokers in connection with this lease, except for Trinity Capital Advisors, LLC, whose commission shall be paid by Landlord pursuant to separate agreement. Each party agrees to indemnify and hold the other harmless from any and all claims for commissions or fees in connection with the Premises and this lease from any other real estate brokers or agents with whom they may have dealt. 37. Additional Provisions Relating to Premises. The Premises consists of approximately 12,935 rentable square feet of office space on the first floor of the Building and approximately 71,628 rentable square feet of office space on the second floor of the Building (collectively, the "Office Portion") and approximately 25,437 rentable square feet of warehouse space on the second floor of the Premises (the "Warehouse Portion"). 38. Additional Provisions Relating to Use; Compliance. (a) The first sentence of subsection 4(a) is deleted and the following is substituted therefor: "Landlord represents to Tenant that the Property is zoned BC (Business Campus District). Tenant has been given the opportunity to examine the Zoning Code of Horsham Township and has satisfied itself that the Zoning Code will permit use of the Property for the Use. Tenant shall occupy and use the Office Portion for and only for general office purposes and uses incidental or accessory thereto and the Warehouse Portion for and only for general office or warehouse purposes and uses incidental or accessory thereto and in such a manner as is lawful and will not create any nuisance or otherwise interfere with the exercise of Landlord's rights or the performance of Landlord's obligations under this lease." R-6 (b) It is agreed that Tenant's compliance obligations under subsection 4(b) shall not include any duty imposed upon Landlord or Tenant by Laws and Requirements which is mandated for office buildings, generally, and the need for which does not arise out of Tenant's particular manner of use of the Property or Tenant's alteration of or installations in or upon the Property. Landlord represents that, to the best of its knowledge, the Property complies with all ADA requirements existing on the date of this lease, except any such requirements applicable to Tenant's particular use or manner of use of the Premises. If the Property does not so comply, such compliance shall be at Landlord's sole cost and expense. (c) It is agreed that Tenant's responsibilities pursuant to subsection 4(c) shall be limited to Restricted Activities performed by or on behalf of Tenant. Tenant shall indemnify, defend and hold harmless Landlord, its directors, officers, partners and employees, from and against all claims, damages or losses (including, without limitation, cleanup costs, penalties, fines and reasonable counsel, engineering and other professional or expert fees and costs) arising from Restricted Activities by Tenant or its Agents. Landlord shall indemnify, defend and hold harmless Tenant, its directors, officers, partners and employees, from and against all claims, damages or losses (including, without limitation, cleanup costs, penalties, fines and reasonable counsel, engineering and other professional or expert fees and costs) arising from any Restricted Activities which occurred on the Premises prior to the date of this lease and any Restricted Activities by Landlord or its Agents. (d) On the third (3rd) line of subsection 4(d), delete "5 days after first learning thereof" and substitute therefor "5 business days after an officer of Tenant first learns thereof". 39. Additional Provisions Relating to Operation of Property; Payment of Expenses. (a) Section 7(a)(ii) is deleted in its entirety and the following is substituted therefor: "(ii) Notwithstanding anything to the contrary herein contained, Tenant's Proportionate Share of operating expenses for calendar year 2003 (the "Base Year") is included in Tenant's Minimum Annual Rent and there shall be no reconciliation of operating expenses for calendar year 2003, except for snow removal expenses incurred by Landlord on and after the Commencement Date in excess of $0.10 per rentable square foot. For every calendar year thereafter, Tenant shall pay to Landlord the amount by which (A) Tenant's Proportionate Share of (1) operating expenses for such year plus (2) snow removal expenses in excess of $0.20 per rentable square foot, exceeds Tenant's Proportionate Share of operating expenses for the Base Year on an annualized basis (the "Base Year Operating Expenses"). By April 30, 2004, Landlord shall provide Tenant with a statement of Base Year Operating Expenses. Commencing on the first day after the Base Year, Landlord may require Tenant to pay estimated Annual Operating Expenses pursuant to Section 1(d)(ii) and thereafter adjust from time to time the amount thereof if the estimated Annual Operating Expenses increase above Base Year Operating Expenses and Landlord may also invoice Tenant separately from time to time for Tenant's Proportionate Share of any extraordinary or unanticipated operating expenses, rather than waiting until the year-end reconciliation. By April 30, 2005 and by April 30 of each year thereafter (and as soon as practical after the expiration or termination of this lease or, at Landlord's option, after a sale of the Property), Landlord shall provide Tenant with a statement of the operating expenses for the preceding calendar year or part thereof, the Base Year R-7 Operating Expenses and the estimated Annual Operating Expenses paid by Tenant hereunder for such calendar year. Within 30 days after delivery of the statement to Tenant, Landlord or Tenant shall pay to the other the amount of any overpayment or deficiency due from one to the other or, at Landlord's option, Landlord may credit Tenant's account for any overpayment. Tenant shall have the right to inspect the books and records used by Landlord in calculating the annual operating costs within 1 year of receipt of the statement during regular business hours after having given Landlord at least 48 hours prior written notice; provided, however, that Tenant shall make all payments of additional rent without delay, and that Tenant's obligation to pay such additional rent shall not be contingent on any such right. Tenant shall have the right to make any payment required pursuant to this subsection 7(a)(ii) "under protest" and, if Tenant makes payment of such sums under protest, such payment shall not be regarded as a voluntary payment, and there shall survive the right on the part of Tenant to institute suit for the recovery of such sum. Notwithstanding the foregoing to the contrary, if such suit is not commenced within six (6) months after the payment under protest has been made, the cause of action shall be deemed wholly lost. If Tenant commences such suit within the required time period, and it shall be adjudged that there was no legal obligation on the part of Tenant to pay such sum or any part thereof, Tenant shall be entitled to recover such sum or so much thereof as it was not legally required to pay under the provisions of this Lease." (b) Notwithstanding any provision of subsection 7(a) to the contrary, it is agreed that the following categories of expense shall not be included in Annual Operating Expenses: (i) Depreciation and amortization of the Building and the Property; (ii) Salaries and benefits of officers of Landlord or of any affiliates of Landlord, or of any management personnel above the level of Senior Property Manager, except for "Tenant Services"; (iii) Debt service payments on any indebtedness applicable to the Building or the Property, including any mortgage debt or ground rents payable under any ground lease; (iv) Fines and penalties incurred by Landlord, except to the extent caused by Tenant; (v) Tort claims and expenses of the investigation and defense thereof; (vi) Amounts in excess of fair market rates in respect of any transaction with, or provision of any item or service by, Landlord or any affiliate of Landlord; (vii) Management fees in excess of five percent (5%) of the sum of Minimum Annual Rent and Additional Rent; (viii) Costs associated with withdrawal from a "multi-employer plan"; (ix) Any improvements required under the lease to the extent to be performed hereunder at Landlord's cost; R-8 (x) The cost of acquisition of the Property or construction or renovation of the Building; (xi) Costs associated with the refinancing of any of Landlord's debt; (xii) Reserves for future expenditures or liabilities which would be incurred subsequent to the then current lease years; (xiii) Any bad debt loss, rent loss, or reserves for bad debt or rent loss; (xiv) Except as otherwise expressly provided in this lease, any and all legal and other fees, audit fees, inspection fees, appraisal fees, leasing commissions, advertising expenses, promotional costs, and other costs incurred in connection with the acquisition, development, leasing, and ownership of the Property; (xv) Except to the extent that such fall within the scope of subsection 7(d)(iii) and except for the payment of Landlord's commercially reasonable deductible (currently $50,000), the costs of repairing or restoring any portion of the Building and the Property damaged or destroyed by any casualty or peril, whether insured or uninsured, and costs of restoration following a taking by condemnation or eminent domain; (xvi) Costs associated with the clean up, remediation, and removal of any hazardous wastes or substances and all other costs of causing the Property to comply with applicable Laws and Requirements except as otherwise expressly set forth in this lease; (xvii) The additional premium charged for rent insurance for coverage in excess of twelve (12) months, unless such longer coverage period is then considered reasonable by industry standards; (xviii) Administrative and overhead expenses (other than as part of "Tenant Services"); and (xix) Costs associated with causing the Property to comply with applicable laws, codes, regulations or ordinances, to the extent the Property was not in compliance (or if not in compliance properly "grandfathered" such that no alteration, modification, addition, improvement, replacement or other action was required or would thereafter be required in order to effect compliance) as of the date of this lease. Furthermore, the provisions of subsection 7(a) notwithstanding, annual operating costs shall not include the annual amortization (or any other measure of cost) of building improvements made by the Landlord for the purpose of reducing operating expenses except to the extent such improvements actually reduce operating expenses. Anything in this Article 7 contained to the contrary notwithstanding, any and all expenditures incurred by Landlord and passed through to Tenant shall be incurred in a commercially reasonable manner consistent with the operation, maintenance and management of other first class office properties in the suburban Philadelphia office market. R-9 (c) In computing Tenant's obligations on account of Annual Operating Expenses, Tenant shall be entitled to a credit for the following: (i) Net recoveries by Landlord from any third party as a result of any act, omission, default, or negligence of such third parties, or as a result of a breach or default by such parties under the provisions of applicable agreements which have caused Landlord to incur such costs and expenses; but only to the extent that such recoveries are of money which has been charged to Tenant as part of Annual Operating Expenses; (ii) Recoveries by Landlord from insurance policies, to the extent that the proceeds thereof reimburse Landlord for costs and expenses which were, in fact, included in Tenant's Annual Operating Expenses. (d) The following additional clause is added at the end of subsection 7(b)(i): "and, in each such instance, only to the extent that the same would be payable if the Property were the only property owned by Landlord." (e) Impositions. The following provisions are hereby inserted at the end of subsection 7(b): For the purposes of this subsection 7(b), Tenant's Proportionate Share of a municipal assessment (but not a real estate tax) shall only include those installments thereof becoming due during the Term. If any assessments may be paid in installments over a period of years, such assessments shall, for the purposes of subsection 7(b), be deemed to be payable over the longest number of years permitted by the assessing authority, and only the installments coming due during the Term, together with any interest or carrying charges due, will be included within the Impositions payable by Tenant. With regard to real estate taxes, Landlord agrees to take advantage of opportunities to pay such taxes during the discount period. Any provision of this subsection 7(b) to the contrary notwithstanding, Tenant's obligation hereunder shall not include any franchise, estate, succession, or inheritance taxes, nor any penalties imposed for late payment of any real estate tax, assessment or other Imposition (except for penalties on taxes which Landlord has not paid as a result of a bona fide contest or for which it has not received payment from Tenant) and shall in no event include any real estate tax or assessment attributable solely to a period occurring prior to the Commencement Date. Provided Tenant then leases more than 75% of the Building and provided Tenant is not then in default under this Lease beyond applicable notice and/or cure periods, Tenant shall have the right to require Landlord, at Tenant's sole cost and expense, to contest or appeal the real estate taxes and tax assessments relating to the Property. In lieu thereof, Landlord may authorize Tenant to prosecute such appeal or contest, provided that Tenant shall provide to Landlord for its reasonable review and approval prior to filing any applications, affidavits and like supporting documentation required in connection with such effort, Landlord shall have reasonably approved such contest or appeal and Tenant shall consult with Landlord as requested in connection with such process, and if undertaken, such contest or appeal shall be prosecuted with diligence and in good faith and at Tenant's sole cost and expense. Landlord shall reasonably cooperate with Tenant (including signing applications, affidavits and the like, if so requested) subject to and in R-10 accordance with the conditions set forth in this paragraph. Tenant acknowledges and agrees that Landlord's "reasonable review and approval", as such term is used herein, shall mean and refer to Landlord's good faith consideration of the reasonableness of Tenant's proposed contest or appeal, and the accuracy of information set forth in such documentation as shall have been prepared by Tenant and submitted to Landlord for its review. In no event shall impositions include fees, charges or assessments in connection with the initial construction or development of the Property or Landlord's redevelopment thereof, including, without limitation, development fees, tap-in fees or other initial assessments or payments due and payable to the local municipality or to a governmental or quasi-governmental agency or authority in connection with the initial planning, approval or development of the Property. The foregoing notwithstanding, Tenant acknowledges and agrees that the Impositions for which Tenant is responsible hereunder shall include real estate taxes which shall be levied based upon Montgomery County's assessment of the Property as improved with the Buildings and other improvements contemplated in this Lease. Upon Tenant's request, Landlord shall provide to Tenant copies of real estate tax bills and any correspondence received by Landlord regarding real estate taxes and assessments with respect to the Property. (f) In subsection 7(c)(ii), in the sixth and seventh lines thereof, the phrase "as insured parties" is replaced with the phrase "as additional insureds." In the seventh line thereof, after the word "Premises," add "only, as expressly distinguished, for purposes hereof, from the balance of the Property." In subsection 7(c)(ii), the following amendments are hereby made to the requirements regarding Tenant's liability insurance: In the ninth line of the printed form paragraph 7(c)(ii), at the end of the printed line, after the word "issued in form," add "reasonably". Notwithstanding anything to the contrary contained in Section 7(c)(ii), so long as (i) Advanta Shared Services Corp. or an affiliate of Advanta Shared Services Corp. or Advanta Corp. is the tenant under this lease and (ii) Advanta Corp. is the Guarantor, (A) Tenant may self-insure its obligations hereunder, provided that the net worth of Tenant or Guarantor is not less than $100,000,000, and (B) any insurance required to be carried by Tenant pursuant to Section 7(c)(ii) may be carried under a blanket policy of insurance covering other locations of Advanta Corp. or its affiliates, provided, however, such blanket policy shall provide that an amount not less than the aggregate amount of insurance required to be carried by Tenant pursuant to Section 7(c)(ii) shall apply separately to the Property notwithstanding the aggregate limit of the blanket policy. Landlord, as an operating expense, shall keep in effect comprehensive general public liability insurance with respect to the Property, including contractual liability insurance, which insurance shall provide combined single limit per occurrence coverage of not less than Two Million Dollars ($2,000,000) for property damage and bodily injury or death to one or more persons, with endorsements for contractual liability. The insurer shall be a responsible insurance R-11 carrier which is authorized to issue such insurance and licensed to do business in the Commonwealth of Pennsylvania, and which has, at all times during the Term, a rating of not less than A VII in the most current edition of Best's Insurance Reports. Landlord shall deliver to Tenant on or before the Commencement Date and subsequently upon request by Tenant from time to time, but not more often than once every twelve (12) months, current certificates of insurance evidencing the aforesaid comprehensive general public liability insurance coverage, the property and casualty insurance coverage required of Landlord under Section 7(c) of the Lease, and the waiver of subrogation or other policy provision required by subsection 7(c)(iii). In the event that Landlord shall request that Tenant increase its limits of insurance as provided in Paragraph 7(c)(ii) of the Lease, Tenant agrees to do so provided that the increased limits requested by Landlord are consistent with limits of insurance then being required of tenants of other first class office properties in the suburban Philadelphia office market, and further, that Landlord shall likewise increase the limits of insurance it is then carrying to such levels as are then being required of Tenant by Landlord. (g) In subsection 7(d)(ii), it is agreed that the written notice required may be given by telefacsimile transmission addressed to Landlord's property manager. Also with regard to such subsection, it is agreed that Landlord will at all times maintain the Common Areas (including parking areas) of the Property consistent with the standards generally observed at other first class office buildings in the suburban Philadelphia office market. Also with regard to such subsection, it is agreed that Landlord will make no alterations to the Common Areas (except in the event of an emergency or if required by Laws and Requirements) which will result in material interference with Tenant's ability to use the Premises for the normal operation of its business, twenty-four (24) hours per day, seven (7) days per week, three hundred sixty-five (365) days per year. (h) With regard to subsection 7(d)(iii), it is agreed that the phrase "Tenant's use, occupancy" shall be limited to the use or occupancy of the Office Portion for other than normal business office use and the Warehouse Portion for normal warehouse use, and is not intended to create additional responsibility on the part of Tenant for repairs or replacements that would have been necessary solely as a result of Tenant's use of the Office Portion for normal business office purposes and the Warehouse Portion for normal warehouse purposes. (i) Notwithstanding the provisions of subsection 7(e)(i) to the contrary, it is agreed that Tenant may use the Premises and the Property twenty-four (24) hours per day, seven (7) days per week, three hundred sixty-five (365) days per year. (j) Subsection 7(e)(ii) is hereby deleted in its entirety and replaced with the following: "(ii) Electric service to the Property (including the Premises and the Common Areas) is separately metered and shall be paid by Tenant directly to the utility company providing such service commencing on the Commencement Date and continuing throughout the Term. Water and sewer service to the Property shall be an operating expense of the Property as to which Tenant shall pay Tenant's Proportionate Share. If, as a result of any cause within Landlord's reasonable control (except for damage by fire or other casualty, which is dealt with R-12 elsewhere in this Lease), utility service to the Premises is interrupted resulting in a portion of the Premises being rendered untenantable (such untenantability to be determined without consideration of the operation of Tenant's generator) for a period of in excess of three (3) consecutive business days, commencing on the fourth consecutive day of such untenantability, Tenant's obligations to pay Rent shall abate in proportion to that portion of the Premises so rendered untenantable. Such abatement shall continue until the day on which Landlord has cured the untenantability." (k) With respect to subsection 7(f), it is agreed and understood that as part of Annual Operating Expenses Landlord shall only be required to provide trash removal and janitorial services to the Office Portion; provided, however, if the trash from the Office Portion is stored in the Warehouse Portion, Landlord shall remove the Office Portion trash from the Warehouse Portion as part of the services provided for in Exhibit "D". To the extent that Tenant desires Landlord to provide such services to the Warehouse Portion or to the extent Tenant desires a higher level of services than provided for in Exhibit "D", Tenant may provide for same at Tenant's sole expense or may request Landlord to provide same as part of Annual Operating Expenses in which event Annual Operating Expenses will be increased accordingly; provided, however, if Landlord is required to provide such services in the Base Year, the Minimum Annual Rent payable hereunder in each lease year shall be increased by the agreed-upon cost of such services during the Base Year. 40. Additional Provisions Relating to Signs. Landlord, at Landlord's expense, will place Tenant's name and logo on the existing monument sign on Dresher Road as shown on Exhibit "K" attached hereto. Landlord will permit Tenant to install, at Tenant's sole cost and expense, an identification sign (including Tenant's name and logo) on the two story section of the Building in the form shown and described on Exhibit "L" attached hereto, provided Tenant obtains all required approvals under the Laws and Requirements. In addition to Tenant's obligations set forth in Section 8 as to removal of signs and the repair of any damage caused by the installation, existence or removal thereof, Tenant shall restore the wall to which such exterior sign is affixed to substantially the condition existing prior to the installation of such sign which may include repairing of the wall to create uniformity of color. 41. Additional Provisions Relating to Alterations and Fixtures. (a) With respect to subsection 9(a), Tenant shall have the right, without Landlord's consent, to finance and to secure trade fixtures, furnishings, equipment, machinery, signs and other personal property (excluding physical alterations and leasehold improvements to the Building). If Tenant shall acquire trade fixtures, equipment, machinery or other goods and effects subject to a purchase money security interest, or shall lease any of the same, or if any institutional lender provides Tenant with financing, the proceeds of which are intended to enable Tenant to use and occupy the Premises or to operate Tenant's business thereon, and such financing is secured in whole or in part by a lien on or security interest in such goods, equipment, machinery or fixtures, Landlord shall, upon request from Tenant, execute a subordination of any right it may have to distrain upon or secure a lien against such goods, equipment, machinery or fixtures for Tenant's failure to pay minimum rent or any additional rent or any other event of default under the terms, covenants, conditions and provisions of this lease, in substantially the form attached hereto as Exhibit "M". R-13 (b) In the first sentence of subsection 9(b), the amount "$5,000.00 in the aggregate" is hereby replaced with the amount "$50,000.00 per lease year." (c) In subsection 9(b), in the second sentence thereof, the word "reasonable" is inserted before the word "costs." (d) In subsection 9(b), Tenant shall not be required to have plans prepared by an architect or engineer in connection with any proposed alterations or improvements for which professionally prepared plans are not required in order to obtain the necessary governmental permits and/or approvals. In such cases, Landlord will accept accurately prepared plans prepared by Tenant's personnel or contractors. (e) In subsection 9(b), with regard to alterations to the Premises which require Landlord's approval, Landlord agrees that it will not unreasonably withhold, delay or condition its approval, provided such alterations will not, in Landlord's reasonable opinion, adversely impact the structure of the Building or the operating systems of the Building. Otherwise, Landlord may withhold its approval in its complete discretion. In the event Landlord fails to respond to a written request for approval within 10 business days after receipt thereof, Tenant shall send Landlord a second written request therefor which shall state that if no objection is made by Landlord within 5 business days after receipt thereof, such request shall be deemed approved by Landlord. If Landlord fails to respond within such 5 business day period, Landlord shall be deemed to have approved such request. (f) With regard to subsection 9(b), it is agreed that Tenant shall not be required to obtain Landlord's approval with regard to the painting or wallpapering of interior wall surfaces within the Premises, provided that Tenant notifies Landlord in writing prior to performing any such work and any such painting or wallpapering can be covered with one (1) coat of primer and one (1) coat of white paint, without additional sealing or painting. 42. Additional Provisions Relating to Mechanics' Liens. In Section 10, in the fourth line thereof, the phrase "within 5 days after Tenant has notice" is hereby replaced with the phrase "within 30 days after Tenant has received written notice." 43. Additional Provisions Relating Landlord's Right to Relocate Tenant; Right of Entry. (a) Subsection 11(a) is deleted in its entirety. (b) With regard to subsection 11(b), in the third line thereof, the time period of 12 months" is hereby changed to "9 months". (c) With regard to subsection 11(b), it is agreed that Landlord's right to exhibit the Premises for the purpose of sale or mortgage or for the purpose of leasing to a prospective tenant shall be restricted to normal business hours; and, with respect to any entry by Landlord (except in the case of an emergency), Tenant shall have the right to have its personnel accompany R-14 Landlord and any prospective mortgagee, purchaser, or tenant while on the Premises for such purpose. 44. Additional Provisions Relating to Damage by Fire or Other Casualty. (a) In subsection 12(a), in the second line thereof, after the phrase "shall repair such damage and restore the Premises," the following phrase is hereby inserted: "at its own cost and expense (except for payment as an operating expense of Tenant's proportionate share of Landlord's commercially reasonable deductible [currently $50,000] and such other amounts if the provisions of subsection 7(d)(iii) are applicable)". (b) The last sentence of subsection 12(a) is deleted and replaced with the following: If a casualty occurs during the last 12 months of the Term, as the same may have been extended, Landlord will give notice to Tenant if, in Landlord's reasonable opinion, the restoration of the damage will not be substantially completed prior to that period of time which is 1/2 of the time interval elapsing between the date of the casualty and the end of the Term. If Landlord gives such notice to Tenant, and, within 10 days thereafter, Landlord does not receive notice from Tenant that Tenant releases Landlord from any obligation to restore the damage, Landlord may cancel this Lease unless Tenant has the right to extend the Term for at least 3 more years and does so within 30 days after the date of the casualty. (c) Notwithstanding any provision of subsection 12(a) to the contrary, if the Premises are damaged or destroyed by fire or other casualty and the restoration of such damage has not been substantially completed on or before 365 days after it has occurred, Tenant shall have the right to terminate this Lease effective 60 days after giving written notice of such termination to Landlord; provided that if Landlord substantially completes the restoration within such 60 day period, Tenant's notice of termination shall be null and void. (d) In subsection 12(b), the last sentence is hereby deleted and the following sentence is substituted therefor: "Tenant will receive an abatement of its minimum annual rent and operating expenses to the extent and for so long as the Premises are rendered untenantable, in whole or in part, for the normal conduct of Tenant's business and to the extent not, in fact, used for the conduct of Tenant's business." 45. Additional Provisions Relating to Condemnation. (a) In subsection 13(a)(ii), after the phrase "the reasonable operation of Tenant's business," the following phrase is hereby inserted: "in Tenant's reasonable opinion." (b) In subsection 13(a)(iii), on the fourth (4th) line after "Property", add "or in the event access to the Property is taken, or in the event a material portion of the parking area of the Property is taken and the remainder thereof is insufficient for the reasonable operation of Tenant's business". R-15 (c) In the event of a partial taking, if Landlord's work of restoring of the Premises results in a portion of the Premises being rendered untenantable, Tenant's obligations to pay Rent shall abate in proportion to that portion of the Premises which is so rendered untenantable. The amount of such abatement shall be adjusted to reflect that portion of the Premises rendered so untenantable from time-to-time. (d) With regard to subsection 13(c), in addition to having the right to make a claim against a condemnor for moving expenses and business dislocation damages, Tenant shall have the right to make a claim against a condemnor for any alterations to the Premises made by Tenant at Tenant's expense, to the extent that Tenant loses the value of such alterations for the balance of the Term. 46. Additional Provisions Relating to Non-Abatement of Rent. In Section 14, in the first line thereof, after the phrase "expressly provided," the following phrase is hereby inserted: "as to interruption of utility services by Landlord in subsection 7(e)(ii).......". 47. Landlord's Indemnification of Tenant. Subject to Sections 7(c)(iii) and 16, Landlord will protect, indemnify, and hold harmless Tenant and its Agents from and against any and all claims, actions, damages, liability, and expense (including fees of attorneys, investigators, and experts) in connection with loss of life, personal injury, or damage to property caused to any person in or about the Property (other than the Premises) occasioned wholly or in part by the negligence of Landlord or its Agents, except to the extent such loss, injury, or damage was caused by the negligence of Tenant or its Agents. In case any action or proceeding is brought against Tenant and/or its Agents by reason of the foregoing, Landlord, at its expense, shall resist and defend such action or proceeding, or cause the same to be resisted and defended by counsel (reasonably acceptable to Tenant and its Agents) designated by the insurer whose policy covers such occurrence or by counsel designated by Landlord and approved by Tenant and its Agents. Landlord's obligations pursuant to this Section shall survive the expiration or termination of this Lease. Nothing contained in this Section 47 shall be construed to be in derogation of Tenant's obligation to maintain the liability insurance policy specified in subsection 7(c)(ii); nor in derogation of any rights which Landlord and Landlord's agent may have under such liability insurance policy. 48. Additional Provisions Relating to Waiver of Claims. In Section 16, add to the end of the Section "and such waiver by Tenant shall not be effective with respect to any liability of Landlord described in Section 38(c) of this Rider". 49. Additional Provisions Relating to Assignment and Subletting. (a) Notwithstanding any provision of Section 18 or this Rider Section 49 to the contrary: (i) Landlord's consent shall not be required with regard to an assignment of Tenant's rights under this lease to an assignee which is reputable and which will utilize the Premises only for permitted uses provided herein, provided that Tenant remains liable for its obligations under this lease after such assignment, and, both immediately before and R-16 immediately after the assignment, either Tenant or its assignee is as creditworthy as Tenant was on the date of this lease; (ii) none of (A) a change in the ownership of the stock of Tenant, (B) the sale of all or substantially all of Tenant's assets; (C) a merger, consolidation or other business combination of, with or involving Tenant, or (D) any other corporate reorganization of Tenant (items (A) - (D) within this Subsection 49(a) being hereinafter referred to as "Corporate Transactions"; the purchaser of all or substantially all of Tenant's assets, or the surviving entity following any one or more of the remaining Corporate Transactions described herein, as assignee of this lease, being herein sometimes referred to as a "Corporate Assignee") shall require Landlord's prior approval, as long as Tenant's or the Corporate Assignee's creditworthiness after the Corporate Transaction equals or exceeds Tenant's creditworthiness as of the date of this lease and Tenant remains liable for its obligations under this lease after such assignment; and (iii) Landlord's consent shall not be required with regard to an assignment of this lease or a sublease of the Premises to any entity controlled by, controlling or under common control with Tenant or Guarantor, provided that Tenant remains liable for its obligations under this lease and Guarantor remains liable for its obligations under the Guaranty after such assignment or sublease. (iv) With respect to any assignment as to which Landlord's consent is not required hereunder, upon Tenant's request, Landlord shall agree in writing to recognize the assignee as the Tenant under this lease; provided however, that (A) Tenant acknowledges in writing that it remains liable for its obligations under this lease after such assignment, and (B) Guarantor acknowledges in writing that it remains liable for its obligations under the Guaranty after such assignment. (b) Nothing in this Lease shall limit or prohibit the initial public offering or subsequent trading of Tenant's or Guarantor's stock on a recognized securities exchange, or any change in stock ownership or control resulting therefrom. (c) Subsection 18(c)(i) is hereby amended to read in its entirety as follows: (i) As a condition of the effectiveness of any Transfer, Tenant shall not be in default under this lease, or if in default, Tenant shall have cured such default, and no other default shall exist. (d) In subsection 18(c)(iii), in the first line thereof, after the phrase "form and substance," the word "reasonably" is inserted, and in the second line thereof, after the phrase "all Tenant's obligations," the following phrase is hereby inserted: "thereafter accruing." (e) In subsection 18(c)(iv), in the first line thereof, the word "for" is inserted before the phrase "Landlord's reasonable attorneys' fees." 50. Additional Provisions Relating to Subordination; Mortgagee's Rights. The first two sentences of subsection 19(a) are hereby deleted and the following are substituted therefor: R-17 " Landlord represents and warrants to Tenant that the Premises is not subject to any mortgage or ground lease as of the date of this lease. This lease shall be subordinate to any first mortgage or other primary encumbrance hereafter affecting the Premises, subject to the express condition that so long as no Event of Default shall exist and remain uncured, Tenant's rights under this lease, including, but without limitation, Tenant's right of possession of the Premises, shall not be disturbed by the holder of such mortgage or by any purchaser upon foreclosure thereof. Although the subordination and non-disturbance is self-operative, within 10 days after written request, Tenant shall execute and deliver any further instruments confirming such subordination and non-disturbance and any further instruments of attornment in commercially reasonable form that may be desired by any such mortgagee or Landlord pursuant to a Non-Disturbance Agreement from such mortgagee or encumbrance holder in a commercially reasonably form. Upon request of Tenant, Landlord shall use reasonable efforts to obtain a non-disturbance agreement from the holder of any first mortgage or ground lease affecting the Premises." 51. Additional Provisions Relating to Recording; Tenant's Certificate. (a) Within ten (10) business days after Landlord's receipt of a written request therefor from Tenant, but in no event more frequently than two (2) times in any lease year, Landlord agrees to execute and deliver to Tenant a written statement certifying, to the best of Landlord's knowledge, whether Tenant is or is not in default of any of its obligations under the lease. Landlord's certificate shall also confirm whether any late charges, interest or other unpaid sums have accrued to Tenant's account which remain unpaid up to the date of such certificate, and any such late charges, interest or other unpaid sums not so accrued and reported shall for all purposes be deemed waived by Landlord. Landlord shall not be deemed to be in default of its obligation to furnish such certificate within the aforesaid time period, unless Tenant has given Landlord a notice of noncompliance after such time period has expired and Landlord shall have failed to furnish such certificate on or before two (2) business days after Landlord's receipt of such notice of noncompliance. (b) In the second sentence of subsection 20(a), the phrase "10 days" is hereby deleted, and the phrase "10 business days" is inserted in lieu thereof. The last sentence of subsection 20(a) is deleted in its entirety. (c) With regard to subsection 20(b), it is agreed that such financial information to be furnished by Tenant shall (in the absence of a further agreement by Tenant) be limited to a verbal report from Tenant's Chief Financial Officer regarding EBITA (earnings before interest, taxes, depreciation and amortization), as well as an audited consolidated balance sheet of Tenant and Guarantor (or, if Tenant and Guarantor do not file consolidated reports, an audited, if available, or unaudited balance sheet of Tenant and Guarantor), each as of the end of Tenant's last fiscal year; except that, at any time that the shares of Tenant or Guarantor are listed on a nationally recognized stock exchange, such financial information shall consist, as the case may be, of Tenant's or Guarantor's most recent annual and quarterly reports as filed with the Securities and Exchange Commission. Landlord agrees that any financial information furnished by Tenant to Landlord which is not filed with a governmental agency shall be held as confidential and shall not be exhibited to anyone other than Landlord's mortgagee, prospective mortgagee, or prospective purchaser. If Landlord shares such information with any of the foregoing parties, R-18 Landlord shall in any event first advise such parties in writing of the confidentiality of such information. 52. Additional Provisions Relating to Surrender; Abandoned Property. (a) The following language is hereby added at the end of subsection 21(a): "and also excepting damage by fire or other casualty and any repairs and replacements required to be performed by Landlord under the terms of this Lease." (b) In subsection 21(c), in the first line thereof, prior to the phrase "shall continue to occupy," the following phrase is hereby inserted: "without the prior written consent of Landlord." (c) In subsection 21(c), in the fourth line thereof, the word "double" is replaced with the phrase "one hundred seventy-five percent (175%) of'." 53. Additional Provisions Relating to Curing Tenant's Defaults. (a) In Section 22, the paragraph caption "Curing Tenant's Defaults" is hereby deleted, and the caption "Curing Defaults" is hereby inserted in lieu thereof (b) In the third line of Section 22, after the word "after," insert "thirty (30) days prior written." In the case of an emergency, Landlord shall first attempt to contact Tenant by telephone before exercising self-help remedies. (c) In the second sentence of Section 22, after the word "any" in the third line of the paragraph, insert "reasonable,". (d) The following additional paragraph is hereby added to Section 22: "Without limitation of Tenant's rights and remedies under this lease, in the case of an emergency, then Tenant, without any obligation so to do, may elect to exercise the remedy of self-help to address and remedy such condition. Landlord shall reimburse Tenant upon demand for any reasonable sums paid or costs incurred by Tenant in remedying such condition, including interest thereon from the respective dates of Tenant's incurring such costs, which sums and costs together with interest shall be due and payable by Landlord to Tenant within ten (10) days next following invoicing therefor by Tenant. In the case of an emergency, Tenant shall first attempt to contact by telephone Landlord's property manager before exercising self-help remedies." 54. Additional Provisions Relating to Defaults - Remedies. (a) Subsection 23(a)(iii) is hereby restated in its entirety as follows: "(iii) If Tenant abandons the Premises or if Tenant vacates the Premises without having given Landlord at least thirty (30) days' prior notice and without having made adequate provisions for maintenance and security of the Premises; or". R-19 (b) In subsection 23(b)(ii), in the first line thereof, the phrase "by breaking open locked doors if necessary" is replaced by the phrase "pursuant to lawful process." (c) In subsection 23(c), the parties agree that Tenant shall be entitled to 30 days written notice of defaults consisting of something other than the failure to pay money. (d) In subsection 23(c)(i), the parties agree that Tenant shall be entitled to written notice and a grace period of two (2) business days from receipt within which to cure any purported default under Section 20(a). (e) Subsection 23(c)(ii) shall be limited to defaults consisting of the failure of Tenant to pay money due to Landlord. (f) In the subsection 23(c)(iii), the term "10 days" is hereby deleted in the first and second lines, and the term "30 days" is inserted in lieu thereof in each instance. At the end of Section 23(c)(iii), change the period to a comma and insert "within an additional period of time not to exceed 90 days." (g) Subsection 23(c)(iv) is deleted and the following is substituted therefor: "Any notice given by either party pursuant to this Section which is served in compliance with Section 27 shall be adequate notice for the purpose of such party's exercise of any available remedies under the terms of this lease." (h) The first three (3) sentences of subsection 23(d) are hereby restated in their entirety as follows: "No waiver by either party of a breach by the other shall be a waiver of any subsequent breach, nor shall any forbearance by a party to seek a remedy for any breach by the other party be a waiver by such forbearing party of any rights and remedies with respect to such or any subsequent breach. Efforts by a party to mitigate the damages caused by the other party's default shall not constitute a waiver of the mitigating party's right to recover damages hereunder. No right or remedy herein conferred upon or reserved to either party is intended to be exclusive of any other right or remedy provided herein or by law, but each shall be cumulative and in addition to every other right or remedy given herein or now or hereafter existing at law or in equity." (i) If Landlord accelerates Tenant's obligations under this lease pursuant to the provisions of subsection 23(b)(iii), payment from Tenant to Landlord of the accelerated obligations which would not have been due at the time of payment, but for Tenant's default and the resulting acceleration, shall be discounted to present values as of the date of such payment using the prime rate of interest (the "Prime Rate") as published in The Wall Street Journal (or any successor publication thereto) on the day before the date that payment is made, or, if The Wall Street Journal (or any successor publication thereto) is not published on the last mentioned date, using the prime rate of interest as published in the immediately preceding edition of The Wall Street Journal (or any successor publication thereto). Payments by Tenant shall first be applied to Landlord's reasonable out-of-pocket costs directly associated with Tenant's default and Landlord's acceleration; next to late charges previously accrued and unpaid; next to interest accrued; next to Tenant's obligation that would have been due from Tenant as of the date of R-20 payment had acceleration not occurred; and last to Tenant's obligations which would not have been due at the date of payment, but for the acceleration. The definition of "Term" as used in this Section 23(b)(iii) shall mean and include only the then current term hereof during which the default occurs, unless prior to such default occurring, Tenant shall have caused the Term hereof to be extended in accordance with the provisions of this Lease. (j) If Tenant defaults under the terms of this lease resulting in Landlord recovering possession of the Premises, then Landlord agrees to use reasonable efforts to relet the Premises in mitigation of Landlord's damages. Landlord shall have no obligation to relet the Premises or any portion thereof in preference to other space available for lease in the Building or in any other building owned by Landlord or its affiliates. 55. Landlord's Representation Regarding Authority. Landlord is a duly formed Pennsylvania limited partnership in good standing, and has full partnership power and authority to enter into this lease and has taken all partnership action necessary to carry out the transaction contemplated herein, so that when executed, this lease constitutes a valid and binding obligation in accordance with its terms. 56. Additional Provisions Relating to Liability of Landlord. (a) The first sentence of Section 25 is hereby restated in its entirety as follows: "The word "Landlord" as used herein includes the Landlord named above as well as its successors and assigns, each of which shall be under the same obligations and liabilities accruing after it acquires its interest in the Property and each of which shall have the same rights, remedies, powers, authorities, and privileges as it would have had if it originally signed this Lease as Landlord." (b) The following language is added at the end of the second sentence of Section 25: "(provided, except in the event of a successor in interest to Landlord which acquired its interest by reason of an execution sale or a deed in lieu of foreclosure, Landlord's successor in interest, in writing, expressly assumes this Lease and agrees to perform all obligations thereafter accruing hereunder". (c) The last clause of the third sentence is hereby amended to read "....Tenant shall look solely to the equity of Landlord in the Property and the rents, issues, profits and sales proceeds therefrom for the satisfaction of Tenant's claims". 57. Additional Provisions Relating to Interpretation; Definitions. In subsection 26(d), on the second (2nd) line, change 15%" to "12%". 58. Additional Provisions Relating to Notices. (a) The following language is hereby deleted from the first sentence of Section 27: "except that after the Commencement Date Tenant's address shall be at the Premises,". R-21 (b) The following language is hereby added at the end of the first sentence of Section 27: "in writing upon not less than thirty (30) days' notice." (c) The last sentence of Section 27 is hereby restated in its entirety as follows: The giving of notice by either party's attorneys, representatives, and agents under this Section shall be deemed to be the acts of such party; however, the foregoing provisions governing the date on which a notice is deemed to have been received shall mean and refer to the date on which a party to this lease, and not its counsel or other recipient to which a copy of the notice may be sent, is deemed to have received the notice. 59. Additional Provisions Relating to Tenant Estoppel Certificate. (a) In the first numbered paragraph of the Tenant Estoppel Certificate, the phrase "to Tenant's knowledge" is inserted before the phrase "the Lease is in full force and effect." (b) In the third numbered paragraph of the Tenant Estoppel Certificate, the following phrase is added at the end of the sentence: "to Tenant's knowledge." (c) In the sixth numbered paragraph of the Tenant Estoppel Certificate, in the penultimate line thereof, the phrase "to Tenant's knowledge" is inserted before the phrase "at the present time." (d) In the eighth numbered paragraph of the Tenant Estoppel Certificate, the phrase "to Tenant's knowledge" is inserted before the word "involuntary." 60. Additional Provisions Relating to Building Rules. (a) In the event of any inconsistency between the Building Rules and the Lease (including the Rider to the Lease), the Lease shall prevail. (b) Notwithstanding any provision of Building Rule 6 to the contrary, it is agreed that Tenant shall have no obligation to spackle nail holes in walls or to repair a hole in the back of a door which resulted from the installation of a coat hook. (c) Notwithstanding the prohibition contained in Building Rule 7, it is agreed that Tenant may change locks on doors, provided that, at all times, Landlord is supplied with the means of access to all portions of the Premises. (d) The provisions of Building Rule 20 notwithstanding, Landlord agrees to use reasonable efforts to enforce the Building Rules in a reasonable, uniform and nondiscriminatory matter. 61. Representations and Warranties of Landlord. Landlord represents and warrants to Tenant as follows: (a) Landlord is the owner of the Property in fee simple and there are no outstanding leases with respect to the Property. R-22 (b) There are no covenants, easements or restrictions recorded against the Property which require approval by any third party as a condition to the installation of the Generator pursuant to Section 33 of this lease or the signs pursuant to Sections 8 and 40 of this lease. (c) There are currently no assessments payable for public improvements to the Property and Landlord has received no written notice that any such public improvements have been proposed by any governmental authority having jurisdiction over the Property. R-23 CORPORATE GUARANTY THIS GUARANTY is made this 26th day of February, 2003, by ADVANTA CORP., a Delaware corporation, having a principal address at Welsh and McKean Roads, Spring House, PA 19477. BACKGROUND: A. LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership ("Landlord") with offices at 125 Witmer Road, Horsham, PA 19044, is about to enter into a certain lease (the "Lease") with ADVANTA SHARED SERVICES CORP., a Delaware corporation ("Tenant"), for space in Landlord's building located at 700 Dresher Road, Horsham, PA (the "Premises"). B. Guarantor is the sole shareholder of Tenant and therefore benefits directly from the Lease. C. Landlord has agreed to grant, execute and deliver the Lease to Tenant in consideration, among other things, of the covenants and obligations made and assumed by Guarantor as herein set forth. AGREEMENT: In order to induce Landlord to execute the Lease and in further consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration paid by Landlord to Guarantor, intending to be legally bound hereby, Guarantor irrevocably and unconditionally agrees as follows: 1. Guarantor hereby guarantees, upon receipt of written demand from Landlord, the full and prompt payment of all rent and additional rent and any and all other sums payable by Tenant under the Lease, and the due and punctual performance of all of Tenant's other obligations thereunder. 2. Guarantor hereby guarantees, upon receipt of written demand from Landlord, the due and punctual payment in full of (a) any and all loss, damages or expenses payable by Tenant pursuant to the Lease, incurred by Landlord and arising out of any default by Tenant in performing any of its obligations under the Lease, including but not limited to, all attorneys' fees which Landlord incurs as the result of the default of Tenant, and (b) all costs and expenses, including attorney's fees, incurred by Landlord in the enforcement of this Guaranty. 3. Landlord may, in its sole discretion, without notice to Guarantor and without in any way affecting or terminating any of Guarantor's obligations and liabilities hereunder, from time to time, (a) waive compliance with the terms of the Lease or any default thereunder; (b) modify or supplement any of the provisions of the Lease; (c) grant any extension or renewal of the terms of the Lease; (d) effect any release, compromise or settlement in connection therewith; (e) assign or otherwise transfer any or all of Landlord's interest in the Lease; or (f) accept or discharge any other person as a guarantor of any or all of the Tenant's obligations under the provisions of the Lease. 4. Guarantor's obligations hereunder (a) shall be unconditional, irrespective of any circumstance which might otherwise constitute a discharge of a guarantor or Tenant at law or in equity; (b) shall be primary; (c) shall not be conditioned upon Landlord's pursuit of any remedy which it has against Tenant or any other person; and (d) shall survive and shall not be diminished, impaired or delayed in connection with (i) any bankruptcy, insolvency, reorganization, liquidation or similar proceeding relating to Tenant, its properties or creditors or (ii) any transfer, assignment or termination of Tenant's interest under the Lease. 5. All rights and remedies of Landlord under this Guaranty, the Lease, or by law are separate and cumulative, and the exercise of one shall not limit or prejudice the exercise of any other such rights or remedies. Any waivers or consents by Guarantor as set forth in this Guaranty shall not be deemed exclusive of any additional waivers or consents by Guarantor which may exist in law or equity. 6. Guarantor hereby waives trial by jury in any action brought by Landlord under or by virtue of this Guaranty. This covenant is made by Guarantor as a further inducement to Landlord to enter into the Lease. 7. Guarantor agrees to deliver to Landlord a written instrument, duly executed and acknowledged, certifying (a) that this Guaranty is in full force and effect, (b) that, to the best of Guarantor's knowledge, Landlord is not in default in the performance of any of its obligations under the Lease, and (c) any other fact or, to the best of Guarantor's knowledge, any other condition reasonably requested by Landlord or its assignees or by any mortgagee or prospective mortgagee or their assignees or by any purchaser of the property which is the subject of the Lease or any interest in such property including, but not limited to, stating that it is understood that such written instrument may be relied upon by any of the foregoing parties. The foregoing instrument shall be furnished within ten (10) days after receipt of Landlord's written request which may be made at any time and from time to time and shall be addressed to Landlord and any mortgagee, prospective mortgagee, purchaser or other party specified by Landlord. 8. Guarantor, at any time and from time to time after Landlord's written request, agrees to promptly furnish to Landlord's mortgagee, prospective mortgagee, assignee or purchaser financial information available to the public through governmental filings by Guarantor as a public company and Guarantor's most recent Annual Report. 9. In the event Guarantor pays any sum to or for the benefit of Landlord pursuant to this Guaranty, then until the full payment and performance of all obligations of Tenant under the Lease and Guarantor under this Guaranty, Guarantor shall have no right of contribution, indemnification, exoneration, reimbursement, subrogation or other right or remedy against or with respect to Tenant, any other guarantor, or any collateral, whether real, personal or mixed, 2 securing the obligations of Tenant to Landlord, and Guarantor hereby waives and releases all and any such rights which it may now or hereafter have until the full payment and performance of all obligations due under the Lease and this Guaranty. 10. This Guaranty shall be binding upon Guarantor, and Guarantor's heirs, administrators, executors, successors and assigns, and shall inure to the benefit of Landlord and its heirs, successors and assigns. Without limiting the generality of the preceding sentence, Guarantor specifically agrees that this Guaranty may be (a) freely assigned by Landlord and (b) enforced by Landlord's mortgagee. 11. The liability of the Guarantor hereunder, if more than one, shall be joint and several. For purposes of this instrument the singular shall be deemed to include the plural, and the neuter shall be deemed to include the masculine and feminine, as the context may require. 12. If any provision of this Guaranty is held to be invalid or unenforceable by a court of competent jurisdiction, the other provisions of this Guaranty shall remain in full force and effect and shall be liberally construed in favor of Landlord in order to effect the provisions of this Guaranty. 13. Guarantor agrees that this Guaranty shall be governed by and construed according to the laws of the State in which the Premises are located and that Guarantor is subject to the jurisdiction of the Court of the County or relevant political subdivision in which the Premises are located. IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed, under seal, as of the day and year first above written. GUARANTOR: ADVANTA CORP. Attest: /s/ Liane Browne By: /s/ Marcia M. Wilf ---------------- -------------------- Name: Liane Browne Name: Marcia M. Wilf Title: Asst. Secretary Title Vice President, Corporate Administration (CORPORATE SEAL) 3 COMMONWEALTH OF PENNSYLVANIA : : SS COUNTY OF Montogmery : On this 26th day of February, 2003, before me, the subscriber, a notary public in and for the State and County aforesaid, personally appeared Marcia M. Wilf, who acknowledged himself/herself to be the Vice Pres Corp Admin of ADVANTA CORP., a Delaware corporation, and that s/he as such officer, being authorized to do so, executed the same for the purpose therein contained by signing the name of the corporation by himself/herself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. /s/ Patricia D. Kelly --------------------- Notary Public My Commission Expires: (Notarial Seal) EX-12 4 w89158exv12.txt RATIO OF EARNINGS TO FIXED CHARGES . . . Exhibit 12 ADVANTA CORP. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

THREE MONTHS ENDED SIX MONTHS ENDED ($ IN THOUSANDS) JUNE 30, JUNE 30, - --------------------------------------------------------------------------------------------------------------------- 2003 2002 2003 2002 - --------------------------------------------------------------------------------------------------------------------- Income from continuing operations $ 6,281 $ 7,124 $12,186 $11,358 Income tax expense 3,932 4,459 7,628 7,110 - --------------------------------------------------------------------------------------------------------------------- Earnings before income taxes 10,213 11,583 19,814 18,468 Fixed charges: Interest 13,111 12,369 24,382 25,479 One-third of all rentals 664 437 1,304 923 Preferred stock dividend of subsidiary trust 2,248 2,248 4,495 4,495 - --------------------------------------------------------------------------------------------------------------------- Total fixed charges 16,023 15,054 30,181 30,897 - --------------------------------------------------------------------------------------------------------------------- Earnings before income taxes and fixed charges $26,236 $26,637 $49,995 $49,365 Ratio of earnings to fixed charges(1) 1.64 x 1.77 x 1.66 x 1.60 x

(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 portion deemed representative of the interest factor) of rental expense on operating leases, and preferred stock dividends of subsidiary trust. EX-31.1 5 w89158exv31w1.txt 302 CERTIFICATION (CEO) Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Dennis Alter, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Advanta Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) (Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986); (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ Dennis Alter - ---------------- Dennis Alter Chief Executive Officer Date: August 13, 2003 - 2 - EX-31.2 6 w89158exv31w2.txt 302 CERTIFICATION (CFO) Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Philip M. Browne, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Advanta Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) (Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986); (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and - 1 - 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ Philip M. Browne - -------------------- Philip M. Browne Chief Financial Officer Date: August 13, 2003 - 2 - EX-32.1 7 w89158exv32w1.txt 906 CERTIFICATION (CEO) EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Advanta Corp. (the "Company") on Form 10-Q for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Dennis Alter, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Dennis Alter - -------------------------- Dennis Alter Chief Executive Officer August 13, 2003 EX-32.2 8 w89158exv32w2.txt 906 CERTIFICATION (CFO) EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Advanta Corp. (the "Company") on Form 10-Q for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Philip M. Browne, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Philip M. Browne - ----------------------- Philip M. Browne Chief Financial Officer August 13, 2003 -----END PRIVACY-ENHANCED MESSAGE-----

EX-10

EXHIBIT 10

                               AGREEMENT OF LEASE

                                    BETWEEN

                      LIBERTY PROPERTY LIMITED PARTNERSHIP
                                  ("LANDLORD")

                                      AND
                         ADVANTA SHARED SERVICES CORP.
                                   ("TENANT")

                                      FOR

                                700 DRESHER ROAD
                          PENNSYLVANIA BUSINESS CAMPUS
                          HORSHAM, PENNSYLVANIA 19044



                                LEASE AGREEMENT
                             (Multi-Tenant Office)



INDEX                                         SECTION                                                  PAGE
- -----                                         -------                                                  ----
                                                                                                 
  1.      Summary of Terms and Certain Definitions...............................................         1
  2.      Premises...............................................................................         2
  3.      Acceptance of Premises.................................................................         2
  4.      Use; Compliance........................................................................         2
  5.      Term...................................................................................         2
  6.      Minimum Annual Rent....................................................................         2
  7.      Operation of Property; Payment of Expenses.............................................         3
  8.      Signs..................................................................................         5
  9.      Alterations and Fixtures...............................................................         5
 10.      Mechanics' Liens.......................................................................         5
 11.      Landlord's Right to Relocate Tenant; Right of Entry....................................         5
 12.      Damage by Fire or Other Casualty.......................................................         6
 13.      Condemnation...........................................................................         6
 14.      Non-Abatement of Rent..................................................................         6
 15.      Indemnification of Landlord............................................................         6
 16.      Waiver of Claims.......................................................................         7
 17.      Quiet Enjoyment........................................................................         7
 18.      Assignment and Subletting..............................................................         7
 19.      Subordination; Mortgagee's Rights......................................................         7
 20.      Recording; Tenant's Certificate........................................................         8
 21       Surrender; Abandoned Property..........................................................         8
 22.      Curing Tenant's Defaults...............................................................         8
 23.      Defaults - Remedies....................................................................         8
 24.      Representations of Tenant..............................................................        10
 25.      Liability of Landlord..................................................................        10
 26.      Interpretation; Definitions............................................................        10
 27.      Notices................................................................................        11
 28.      Security Deposit.......................................................................        11
 29.      PA Additional Remedies.................................................................       R-1
 30.      Delivery of Possession; No Improvements by Landlord; Obligations Before
          Commencement Date; Completion by Tenant................................................       R-1
 31.      Multiple Option to Extend Term.........................................................       R-2
 32.      Guaranty...............................................................................       R-4
 33.      Generator..............................................................................       R-5
 34.      Furniture..............................................................................       R-6
 35.      Parking................................................................................       R-6
 36.      Brokers................................................................................       R-6
 37.      Additional Provisions Relating to Premises.............................................       R-6
 38.      Additional Provisions Relating to Use; Compliance......................................       R-6
 39.      Additional Provisions Relating to Operation of Property; Payment of Expenses...........       R-7
 40.      Additional Provisions Relating to Signs................................................      R-13
 41.      Additional Provisions Relating to Alterations and Fixtures.............................      R-13
 42.      Additional Provisions Relating to Mechanics' Liens.....................................      R-14
 43.      Additional Provisions Relating Landlord's Right to Relocate Tenant; Right of Entry.....      R-14
 44.      Additional Provisions Relating to Damage by Fire or Other Casualty.....................      R-15
 45.      Additional Provisions Relating to Condemnation.........................................      R-15
 46.      Additional Provisions Relating to Non-Abatement of Rent................................      R-16
 47.      Landlord's Indemnification of Tenant...................................................      R-16
 48.      Additional Provisions Relating to Waiver of Claims.....................................      R-16
 49.      Additional Provisions Relating to Assignment and Subletting............................      R-16
 50.      Additional Provisions Relating to Subordination; Mortgagee's Rights....................      R-17
 51.      Additional Provisions Relating to Recording; Tenant's Certificate......................      R-18
 52.      Additional Provisions Relating to Surrender; Abandoned Property........................      R-19
 53.      Additional Provisions Relating to Curing Tenant's Defaults.............................      R-19
 54.      Additional Provisions Relating to Defaults - Remedies..................................      R-19
 55.      Landlord's Representation Regarding Authority..........................................      R-21
 56.      Additional Provisions Relating to Liability of Landlord................................      R-21
 57.      Additional Provisions Relating to Interpretation; Definitions..........................      R-21
 58.      Additional Provisions Relating to Notices..............................................      R-21


                                       i



                                                                                                 
 59.      Additional Provisions Relating to Tenant Estoppel Certificate..........................      R-22
 60.      Additional Provisions Relating to Building Rules.......................................      R-22
 61.      Representations and Warranties of Landlord.............................................      R-22



                                       ii



         THIS LEASE AGREEMENT is made by and between LIBERTY PROPERTY LIMITED
PARTNERSHIP, a Pennsylvania limited partnership ("LANDLORD") with its address at
125 Witmer Road, Horsham, PA 19044, and ADVANTA SHARED SERVICES CORP., a
Delaware corporation ("TENANT") with an address at Welsh and McKean Roads,
Spring House, PA 19477, and is dated as of the date on which this lease has been
fully executed by Landlord and Tenant.

1.       SUMMARY OF TERMS AND CERTAIN DEFINITIONS.

         (a)      "PREMISES":      Approximate rentable square feet:  110,000
                  (Section 2)      Suite:

         (b)      "BUILDING":      Approximate rentable square feet:  110,000
                  (Section 2)      Address:  700 Dresher Road, Horsham, PA 19044

         (c)      "TERM": Ninety (90) months plus any partial month from the
Commencement Date until the first day of the first full calendar month during
the Term.

                  (i)      "POSSESSION DATE": The date of this Lease.

                  (ii)     "COMMENCEMENT DATE": The earlier of (a) 90 days after
the Possession Date, or (b) the date Tenant occupies the Premises for the
conduct of its business.

                  (iii)    "EXPIRATION DATE": See Section 5

         (d)      MINIMUM RENT (Section 6) & OPERATING EXPENSES (Section 7)

                  (i)      "MINIMUM ANNUAL RENT":



MONTH OF TERM       ANNUAL            MONTHLY
- -------------       ------            -------
                              
     1-12         $  970,904.66     $ 80,908.72
    13-24         $1,642,622.00     $136,885.16
    25-36         $1,744,301.90     $145,358.49
    37-48         $1,782,389.30     $148,532.44
    49-60         $1,820,476.70     $151,706.39
    61-72         $1,858,564.10     $154,880.34
    73-84         $1,896,651.50     $158,054.29
    85-90                    --     $160,168.36


                  (ii)     ESTIMATED "ANNUAL OPERATING EXPENSES": $0.00 (zero
and 00/100 Dollars), payable in monthly installments of $0.00 (zero and 00/100
Dollars), subject to adjustment (Section 7(a))

         (e)      "PROPORTIONATE SHARE": 100% (Ratio of approximate rentable
square feet in the Premises to approximate rentable square feet in the
Building).



         (f)      "USE" (Section 4):General office purposes and uses incidental
                                    or accessory thereto in the Office Portion
                                    (as hereinafter defined) and general
                                    warehouse purposes, general office purposes
                                    and uses incidental or accessory thereto in
                                    the Warehouse Portion (as hereinafter
                                    defined).

                  (g)      "SECURITY DEPOSIT" (Section 28):$0.00 (Zero and
00/100 Dollars).

                  (h)      CONTENTS: This lease consists of the Index, pages 1
through 11 containing Sections 1 through 28 and the following, all of which are
attached hereto and made a part of this lease:

                            Rider with Sections 29 through 61.

                            Exhibits:    "A" -    Plan showing Premises

                                         "B" -    Commencement Certificate

                                         "C" -    Building Rules

                                         "D" -    Cleaning Schedule

                                         "E" -    Estoppel Certificate

                                         "F" -    Plans

                                         "G" -    Specifications

                                         "H" -    Guaranty

                                         "I" -    List of Furniture

                                         "J" -    Parking Area Expansion Plan

                                         "K" -    Monument Signage

                                         "L" -    Building Signage

                                         "M" -    Form of Landlord Subordination

                                       2



2.       PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the Premises as shown on attached Exhibit "A" within the Building
(the Building and the lot on which it is located, the "PROPERTY"), together with
the non-exclusive right with Landlord and other occupants of the Building to use
all areas and facilities provided by Landlord for the use of all tenants in the
Property including any lobbies, hallways, driveways, sidewalks and parking,
loading and landscaped areas (the "COMMON AREAS").

3.       ACCEPTANCE OF PREMISES. Tenant has examined and knows the condition of
the Property, the zoning, streets, sidewalks, parking areas, curbs and access
ways adjoining it, visible easements, any surface conditions and the present
uses, and Tenant accepts them in the condition in which they now are, without
relying on any representation, covenant or warranty by Landlord. Tenant and its
agents shall have the right, at Tenant's own risk, expense and responsibility,
at all reasonable times prior to the Commencement Date, to enter the Premises
for the purpose of taking measurements and installing its furnishings and
equipment; provided that the Premises are vacant and Tenant obtains Landlord's
prior written consent.

4.       USE; COMPLIANCE.

         (a) PERMITTED USE. Tenant shall occupy and use the Premises for and
only for the Use specified in Section 1(f) above and in such a manner as is
lawful, reputable and will not create any nuisance or otherwise interfere with
any other tenant's normal operations or the management of the Building. Without
limiting the foregoing, such Use shall exclude any use that would cause the
Premises or the Property to be deemed a "place of public accommodation" under
the Americans with Disabilities Act (the "ADA") as further described in the
Building Rules (defined below). All Common Areas shall be subject to Landlord's
exclusive control and management at all times. Tenant shall not use or permit
the use of any portion of the Common Areas for other than their intended use.

         (b) COMPLIANCE. From and after the Commencement Date, Tenant shall
comply promptly, at its sole expense, (including making any alterations or
improvements) with all laws (including the ADA), ordinances, notices, orders,
rules, regulations and requirements regulating the Property during the Term
which impose any duty upon Landlord or Tenant with respect to Tenant's use,
occupancy or alteration of, or Tenant's installations in or upon, the Property
including the Premises, (as the same may be amended, the "LAWS AND
REQUIREMENTS") and the building rules attached as Exhibit "C", as amended by
Landlord from time to time, (the "BUILDING RULES"). Provided, however, that
Tenant shall not be required to comply with the Laws and Requirements with
respect to the footings, foundations, structural steel columns and girders
forming a part of the Property unless the need for such compliance arises out of
Tenant's use, occupancy or alteration of the Property, or by any act or omission
of Tenant or any employees, agents, contractors, licensees or invitees
("AGENTS") of Tenant. With respect to Tenant's obligations as to the Property,
other than the Premises, at Landlord's option and at Tenant's expense, Landlord
may comply with any repair, replacement or other construction requirements of
the Laws and Requirements and Tenant shall pay to Landlord all costs thereof as
additional rent.

         (c) ENVIRONMENTAL. Tenant shall comply, at its sole expense, with all
Laws and Requirements as set forth above, all manufacturers' instructions and
all requirements of insurers relating to the treatment, production, storage,
handling, transfer, processing, transporting, use, disposal and release of
hazardous substances, hazardous mixtures, chemicals, pollutants, petroleum
products, toxic or radioactive matter (the "RESTRICTED ACTIVITIES"). Tenant
shall deliver to Landlord copies of all Material Safety Data Sheets or other
written information prepared by manufacturers, importers or suppliers of any
chemical and all notices, filings, permits and any other written communications
from or to Tenant and any entity regulating any Restricted Activities.

         (d) NOTICE. If at any time during or after the Term, Tenant becomes
aware of any inquiry, investigation or proceeding regarding the Restricted
Activities or becomes aware of any claims, actions or investigations regarding
the ADA, Tenant shall give Landlord written notice, within 5 days after first
learning thereof, providing all available information and copies of any notices.

5.       TERM. The Term of this lease shall commence on the Commencement Date
and shall end at 11:59 p.m. on the last day of the Term (the "EXPIRATION DATE"),
without the necessity for notice from either party, unless sooner terminated in
accordance with the terms hereof. At Landlord's request, Tenant shall confirm
the Commencement Date and Expiration Date by executing a lease commencement
certificate in the form attached as Exhibit "B".

6.       MINIMUM ANNUAL RENT. Tenant agrees to pay to Landlord the Minimum
Annual Rent in equal monthly installments in the amount set forth in Section
1(d) (as increased at the beginning of each lease year as set forth in Section
1(d)), in advance, on the first day of each calendar month during the Term,
without notice, demand or setoff, at Landlord's address designated at the
beginning of this lease unless Landlord designates otherwise; provided that rent
for the first full month shall be paid at the signing of this lease. If the
Commencement Date falls on a day other than the first day of a calendar month,
the rent shall be apportioned pro rata on a per diem basis for the period from
the Commencement Date until the first day of the following calendar month and
shall be paid on or before the Commencement Date. As used in this lease, the
term "LEASE YEAR" means the period from the Commencement Date

                                       2



through the succeeding 12 full calendar months (including for the first lease
year any partial month from the Commencement Date until the first day of the
first full calendar month) and each successive 12 month period thereafter during
the Term.

7.       OPERATION OF PROPERTY; PAYMENT OF EXPENSES.

         (a) PAYMENT OF OPERATING EXPENSES. Tenant shall pay to Landlord the
Annual Operating Expenses in equal monthly installments in the amount set forth
in Section 1(d) (prorated for any partial month), from the Commencement Date and
continuing throughout the Term on the first day of each calendar month during
the Term, as additional rent, without notice, demand or setoff, provided that
the monthly installment for the first full month shall be paid at the signing of
this lease. Landlord shall apply such payments to the annual operating costs to
Landlord of operating and maintaining the Property during each calendar year of
the Term, which costs may include by way of example rather than limitation:
insurance premiums, fees, impositions, costs for repairs, maintenance, service
contracts, management and administrative fees, governmental permits, overhead
expenses, costs of furnishing water, sewer, gas, fuel, electricity, other
utility services, janitorial service, trash removal, security services,
landscaping and grounds maintenance, and the costs of any other items
attributable to operating or maintaining any or all of the Property excluding
any costs which under generally accepted accounting principles are capital
expenditures; provided, however, that annual operating costs also shall include
the annual amortization (over an assumed useful life often years) of the costs
(including financing charges) of building improvements made by Landlord to the
Property that are required by any governmental authority or for the purpose of
reducing operating expenses or directly enhancing the safety of tenants in the
Building generally. The amount of the Annual Operating Expenses set forth in
Section 1(d) represents Landlord's estimate of Tenant's share of the estimated
operating costs during the first calendar year of the Term on an annualized
basis; from time to time Landlord may adjust such estimated amount if the
estimated operating costs increase. Tenant's obligation to pay the Annual
Operating Expenses pursuant to this Section 7 shall survive the expiration or
termination of this lease.

                  (i) COMPUTATION OF TENANT'S SHARE OF ANNUAL OPERATING COSTS.
After the end of each calendar year of the Term, Landlord shall compute Tenant's
share of the annual operating costs described above incurred during such
calendar year by (A) calculating an appropriate adjustment, using generally
accepted accounting principles, to avoid allocating to Tenant or to any other
tenant (as the case may be) those specific costs which Tenant or any other
tenant has agreed to pay; (B) calculating an appropriate adjustment, using
generally accepted accounting principles, to avoid allocating to any vacant
space those specific costs which were not incurred for such space; and (C)
multiplying the adjusted annual operating costs by Tenant's Proportionate Share.

                  (ii) RECONCILIATION. By April 30th of each year (and as soon
as practical after the expiration or termination of this lease or at any time in
the event of a sale of the Property), Landlord shall provide Tenant with a
statement of the actual amount of such annual operating costs for the preceding
calendar year or part thereof. Landlord or Tenant shall pay to the other the
amount of any deficiency or overpayment then due from one to the other or, at
Landlord's option, Landlord may credit Tenant's account for any overpayment.
Tenant shall have the right to inspect the books and records used by Landlord in
calculating the annual operating costs within 60 days of receipt of the
statement during regular business hours after having given Landlord at least 48
hours prior written notice; provided, however, that Tenant shall make all
payments of additional rent without delay, and that Tenant's obligation to pay
such additional rent shall not be contingent on any such right.

         (b) IMPOSITIONS. As used in this lease the term "impositions" refers to
all levies, taxes (including sales taxes and gross receipt taxes) and
assessments, which are applicable to the Term, and which are imposed by any
authority or under any law, ordinance or regulation thereof, or pursuant to any
recorded covenants or agreements, and the reasonable cost of contesting any of
the foregoing, upon or with respect to the Property or any part thereof, or any
improvements thereto. Tenant shall pay to Landlord with the monthly payment of
Minimum Annual Rent any imposition imposed directly upon this lease or the Rent
(defined in Section 7(g)) or amounts payable by any subtenants or other
occupants of the Premises, or against Landlord because of Landlord's estate or
interest herein,

                  (i) Nothing herein contained shall be interpreted as requiring
Tenant to pay any income, excess profits or corporate capital stock tax imposed
or assessed upon Landlord, unless such tax or any similar tax is levied or
assessed in lieu of all or any part of any imposition or an increase in any
imposition.

                  (ii) If it shall not be lawful for Tenant to reimburse
Landlord for any of the impositions, the Minimum Annual Rent shall be increased
by the amount of the portion of such imposition allocable to Tenant, unless
prohibited by law.

         (c) INSURANCE.

                  (i) PROPERTY. Landlord shall keep in effect insurance against
loss or damage to the Building or the Property by fire and such other casualties
as may be included within fire, extended coverage and special form insurance
covering the full replacement

                                       3



cost of the Building (but excluding coverage of Tenant's personal property in,
and any alterations by Tenant to, the Premises), and such other insurance as
Landlord may reasonably deem appropriate or as may be required from time-to-time
by any mortgagee.

                  (ii) LIABILITY. Tenant, at its own expense, shall keep in
effect comprehensive general public liability insurance with respect to the
Premises and the Property, including contractual liability insurance, with such
limits of liability for bodily injury (including death) and property damage as
reasonably may be required by Landlord from time-to-time, but not less than a
combined single limit of $1,000,000 per occurrence and a general aggregate limit
of not less than $2,000,000 (which aggregate limit shall apply separately to
each of Tenant's locations if more than the Premises); however, such limits
shall not limit the liability of Tenant hereunder. The policy of comprehensive
general public liability insurance also shall name Landlord and Landlord's agent
as insured parties with respect to the Premises, shall be written on an
"occurrence" basis and not on a "claims made" basis, shall provide that it is
primary with respect to any policies carried by Landlord and that any coverage
carried by Landlord shall be excess insurance, shall provide that it shall not
be cancelable or reduced without at least 30 days prior written notice to
Landlord and shall be issued in form satisfactory to Landlord. The insurer shall
be a responsible insurance carrier which is authorized to issue such insurance
and licensed to do business in the state in which the Property is located and
which has at all times during the Term a rating of no less than A VII in the
most current edition of Best's Insurance Reports. Tenant shall deliver to
Landlord on or before the Commencement Date, and subsequently renewals of, a
certificate of insurance evidencing such coverage and the waiver of subrogation
described below.

                  (iii) WAIVER OF SUBROGATION. Landlord and Tenant shall have
included in their respective property insurance policies waivers of their
respective insurers' right of subrogation against the other party. If such a
waiver should be unobtainable or unenforceable, then such policies of insurance
shall state expressly that such policies shall not be invalidated if, before a
casualty, the insured waives the right of recovery against any party responsible
for a casualty covered by the policy.

                  (iv) INCREASE OF PREMIUMS. Tenant agrees not to do anything or
fail to do anything which will increase the cost of Landlord's insurance or
which will prevent Landlord from procuring policies (including public liability)
from companies and in a form satisfactory to Landlord. If any breach of the
preceding sentence by Tenant causes the rate of fire or other insurance to be
increased, Tenant shall pay the amount of such increase as additional rent
promptly upon being billed.

         (d) REPAIRS AND MAINTENANCE; COMMON AREAS; BUILDING MANAGEMENT.

                  (i) Tenant at its sole expense shall maintain the Premises in
a neat and orderly condition.

                  (ii) Landlord, shall make all necessary repairs to the
Premises, the Common Areas and any other improvements located on the Property,
provided that Landlord shall have no responsibility to make any repair until
Landlord receives written notice of the need for such repair. Landlord shall
operate and manage the Property and shall maintain all Common Areas and any
paved areas appurtenant to the Property in a clean and orderly condition.
Landlord reserves the right to make alterations to the Common Areas from time to
time.

                  (iii) Notwithstanding anything herein to the contrary, repairs
and replacements to the Property including the Premises made necessary by
Tenant's use, occupancy or alteration of, or Tenant's installation in or upon
the Property or by any act or omission of Tenant or its Agents shall be made at
the sole expense of Tenant to the extent not covered by any applicable insurance
proceeds paid to Landlord. Tenant shall not bear the expense of any repairs or
replacements to the Property arising out of or caused by any other tenant's use,
occupancy or alteration of, or any other tenant's installation in or upon, the
Property or by any act or omission of any other tenant or any other tenant's
Agents.

         (e) UTILITIES.

                  (i) Landlord will furnish the Premises with electricity,
heating and air conditioning for the normal use and occupancy of the Premises as
general offices between 8:00 a.m. and 6:00 p.m., Monday through Friday (legal
holidays excepted). If Tenant shall require electricity or install electrical
equipment including but not limited to electrical heating, refrigeration
equipment, electronic data processing machines, or machines or equipment using
current in excess of 110 volts, which will in any way increase the amount of
electricity usually furnished for use as general office space, or if Tenant
shall attempt to use the Premises in such a manner that the services to be
furnished by Landlord would be required during periods other than or in addition
to business hours referred to above, Tenant will obtain Landlord's prior written
approval and will pay for the resulting additional direct expense, including the
expense resulting from the installation of such equipment and meters, as
additional rent promptly upon being billed. Landlord shall not be responsible or
liable for any interruption in utility service, nor shall such interruption
affect the continuation or validity of this lease.

                                       4



                  (ii) If at any time utility services supplied to the Premises
are separately metered, the cost of installing Tenant's meter and the cost of
such separately metered utility service shall be paid by Tenant promptly upon
being billed.

         (f) JANITORIAL SERVICES. Landlord will provide Tenant with trash
removal and janitorial services pursuant to a cleaning schedule attached as
Exhibit "D".

         (g) "RENT." The term "RENT" as used in this lease means the Minimum
Annual Rent, Annual Operating Expenses and any other additional rent or sums
payable by Tenant to Landlord pursuant to this lease, all of which shall be
deemed rent for purposes of Landlord's rights and remedies with respect thereto.
Tenant shall pay al] Rent to Landlord within 30 days after Tenant is billed,
unless otherwise provided in this lease, and interest shall accrue on all sums
due but unpaid.

8.       SIGNS. Landlord, at Landlord's expense, will place Tenant's name and
suite number on the Building standard sign and on or beside the entrance door to
the Premises. Except for signs which are located wholly within the interior of
the Premises and not visible from the exterior of the Premises, no signs shall
be placed on the Property without the prior written consent of Landlord. All
signs installed by Tenant shall be maintained by Tenant in good condition and
Tenant shall remove all such signs at the termination of this lease and shall
repair any damage caused by such installation, existence or removal.

9.       ALTERATIONS AND FIXTURES.

         (a) Subject to Section 10, Tenant shall have the right to install its
trade fixtures in the Premises, provided that no such installation or removal
thereof shall affect any structural portion of the Property nor any utility
lines, communications lines, equipment or facilities in the Building serving any
tenant other than Tenant. At the expiration or termination of this lease and at
the option of Landlord or Tenant, Tenant shall remove such installation(s) and,
in the event of such removal, Tenant shall repair any damage caused by such
installation or removal; if Tenant, with Landlord's written consent, elects not
to remove such installation(s) at the expiration or termination of this lease,
all such installations shall remain on the Property and become the property of
Landlord without payment by Landlord.

         (b) Except for non-structural changes which do not exceed $5000 in the
aggregate. Tenant shall not make or permit to be made any alterations to the
Premises without Landlord's prior written consent. Tenant shall pay the costs of
any required architectural/engineering reviews. In making any alterations, (i)
Tenant shall deliver to Landlord the plans, specifications and necessary
permits, together with certificates evidencing that Tenant's contractors and
subcontractors have adequate insurance coverage naming Landlord and Landlord's
agent as additional insureds, at least 10 days prior to commencement thereof,
(ii) such alterations shall not impair the structural strength of the Building
or any other improvements or reduce the value of the Property or affect any
utility lines, communications lines, equipment or facilities in the Building
serving any tenant other than Tenant, (iii) Tenant shall comply with Section 10
and (iv) the occupants of the Building and of any adjoining property shall not
be disturbed thereby. All alterations to the Premises by Tenant shall be the
property of Tenant until the expiration or termination of this lease; at that
time all such alterations shall remain on the Property and become the property
of Landlord without payment by Landlord unless Landlord gives written notice to
Tenant to remove the same, in which event Tenant will remove such alterations
and repair any resulting damage. At Tenant's request prior to Tenant making any
alterations, Landlord shall notify Tenant in writing, whether Tenant is required
to remove such alterations at the expiration or termination of this lease.

10.      MECHANICS' LIENS. Tenant shall pay promptly any contractors and
materialmen who supply labor, work or materials to Tenant at the Property and
shall take all steps permitted by law in order to avoid the imposition of any
mechanic's lien upon all or any portion of the Property. Should any such lien or
notice of lien be filed for work performed for Tenant other than by Landlord,
Tenant shall bond against or discharge the same within 5 days after Tenant has
notice that the lien or claim is filed regardless of the validity of such lien
or claim. Nothing in this lease is intended to authorize Tenant to do or cause
any work to be done or materials to be supplied for the account of Landlord, all
of the same to be solely for Tenant's account and at Tenant's risk and expense.
Throughout this lease the term "MECHANIC'S LIEN" is used to include any lien,
encumbrance or charge levied or imposed upon all or any portion of, interest in
or income from the Property on account of any mechanic's, laborer's,
materialman's or construction lien or arising out of any debt or liability to or
any claim of any contractor, mechanic, supplier, materialman or laborer and
shall include any mechanic's notice of intention to file a lien given to
Landlord or Tenant, any stop order given to Landlord or Tenant, any notice of
refusal to pay naming Landlord or Tenant and any injunctive or equitable action
brought by any person claiming to be entitled to any mechanic's lien.

11.      LANDLORD'S RIGHT TO RELOCATE TENANT; RIGHT OF ENTRY.

         (a) Landlord may cause Tenant to relocate from the Premises to a
comparable space ("RELOCATION SPACE") within the Building by giving written
notice to Tenant at least 60 days in advance, provided that Landlord shall pay
for all reasonable costs of

                                       5



such relocation. Such a relocation shall not terminate, modify or otherwise
affect this lease except that "Premises" shall refer to the Relocation Space
rather than the old location identified in Section 1(a).

         (b) Tenant shall permit Landlord and its Agents to enter the Premises
at all reasonable times following reasonable notice (except in the event of an
emergency), for the purpose of inspection, maintenance or making repairs,
alterations or additions as well as to exhibit the Premises for the purpose of
sale or mortgage and, during the last 12 months of the Term, to exhibit the
Premises to any prospective tenant. Landlord will make reasonable efforts not to
inconvenience Tenant in exercising the foregoing rights, but shall not be liable
for any loss of occupation or quiet enjoyment thereby occasioned.

12.      DAMAGE BY FIRE OR OTHER CASUALTY.

         (a) If the Premises or Building shall be damaged or destroyed by fire
or other casualty, Tenant promptly shall notify Landlord and Landlord, subject
to the conditions set forth in this Section 12, shall repair such damage and
restore the Premises to substantially the same condition in which they were
immediately prior to such damage or destruction, but not including the repair,
restoration or replacement of the fixtures or alterations installed by Tenant.
Landlord shall notify Tenant in writing, within 30 days after the date of the
casualty, if Landlord anticipates that the restoration will take more than 180
days from the date of the casualty to complete; in such event, either Landlord
or Tenant may terminate this lease effective as of the date of casualty by
giving written notice to the other within 10 days after Landlord's notice.
Further, if a casualty occurs during the last 12 months of the Term or any
extension thereof, Landlord may cancel this lease unless Tenant has the right to
extend the Term for at least 3 more years and does so within 30 days after the
date of the casualty.

         (b) Landlord shall maintain a 12 month rental coverage endorsement or
other comparable form of coverage as part of its fire, extended coverage and
special form insurance. Tenant will receive an abatement of its Minimum Annual
Rent and Annual Operating Expenses to the extent the Premises are rendered
untenantable as determined by the carrier providing the rental coverage
endorsement.

13.      CONDEMNATION.

         (a) TERMINATION. If (i) all of the Premises are taken by a condemnation
or otherwise for any public or quasi-public use, (ii) any part of the Premises
is so taken and the remainder thereof is insufficient for the reasonable
operation of Tenant's business or (iii) any of the Property is so taken, and, in
Landlord's opinion, it would be impractical or the condemnation proceeds are
insufficient to restore the remainder of the Property, then this lease shall
terminate and all unaccrued obligations hereunder shall cease as of the day
before possession is taken by the condemnor.

         (b) PARTIAL TAKING. If there is a condemnation and this lease has not
been terminated pursuant to this Section, (i) Landlord shall restore the
Building and the improvements which are a part of the Premises to a condition
and size as nearly comparable as reasonably possible to the condition and size
thereof immediately prior to the date upon which the condemnor took possession
and (ii) the obligations of Landlord and Tenant shall be unaffected by such
condemnation except that there shall be an equitable abatement of the Minimum
Annual Rent according to the rental value of the Premises before and after the
date upon which the condemnor took possession and/or the date Landlord completes
such restoration.

         (c) AWARD. In the event of a condemnation affecting Tenant, Tenant
shall have the right to make a claim against the condemnor for moving expenses
and business dislocation damages to the extent that such claim does not reduce
the sums otherwise payable by the condemnor to Landlord. Except as aforesaid and
except as set forth in (d) below, Tenant hereby assigns all claims against the
condemnor to Landlord.

         (d) TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this lease or give Tenant any right to any rental abatement. Such a
temporary taking will be treated as if Tenant had sublet the Premises to the
condemnor and had assigned the proceeds of the subletting to Landlord to be
applied on account of Tenant's obligations hereunder. Any award for such a
temporary taking during the Term shall be applied first, to Landlord's costs of
collection and, second, on account of sums owing by Tenant hereunder, and if
such amounts applied on account of sums owing by Tenant hereunder should exceed
the entire amount owing by Tenant for the remainder of the Term, the excess will
be paid to Tenant.

14.      NON-ABATEMENT OF RENT. Except as otherwise expressly provided as to
damage by fire or other casualty in Section 12(b) and as to condemnation in
Section 13(b), there shall be no abatement or reduction of the Rent for any
cause whatsoever, and this lease shall not terminate, and Tenant shall not be
entitled to surrender the Premises.

15.      INDEMNIFICATION OF LANDLORD. Subject to Sections 7(c)(iii) and 16,
Tenant will protect, indemnify and hold harmless Landlord and its Agents from
and against any and all claims, actions, damages, liability and expense
(including fees of attorneys, investigators

                                       6



and experts) in connection with loss of life, personal injury or damage to
property in or about the Premises or arising out of the occupancy or use of the
Premises by Tenant or its Agents or occasioned wholly or in part by any act or
omission of Tenant or its Agents, whether prior to, during or after the Term,
except to the extent such loss, injury or damage was caused by the negligence of
Landlord or its Agents. In case any action or proceeding is brought against
Landlord and/or its Agents by reason of the foregoing, Tenant, at its expense,
shall resist and defend such action or proceeding, or cause the same to be
resisted and defended by counsel (reasonably acceptable to Landlord and its
Agents) designated by the insurer whose policy covers such occurrence or by
counsel designated by Tenant and approved by Landlord and its Agents. Tenant's
obligations pursuant to this Section 15 shall survive the expiration or
termination of this lease.

16.      WAIVER OF CLAIMS. Landlord and Tenant each hereby waives all claims for
recovery against the other for any loss or damage which may be inflicted upon
the property of such party even if such loss or damage shall be brought about by
the fault or negligence of the other party or its Agents; provided, however,
that such waiver by Landlord shall not be effective with respect to any
liability of Tenant described in Sections 4(c) and 7(d)(iii).

17.      QUIET ENJOYMENT. Landlord covenants that Tenant, upon performing all of
its covenants, agreements and conditions of this lease, shall have quiet and
peaceful possession of the Premises as against anyone claiming by or through
Landlord, subject, however, to the exceptions, reservations and conditions of
this lease.

18.      ASSIGNMENT AND SUBLETTING.

         (a) LIMITATION. Tenant shall not transfer this lease, voluntarily or by
operation of law, without the prior written consent of Landlord which shall not
be withheld unreasonably. However, Landlord's consent shall not be required in
the event of any transfer by Tenant to an affiliate of Tenant which is at least
as creditworthy as Tenant as of the date of this lease and provided Tenant
delivers to Landlord the instrument described in Section (c)(iii) below,
together with a certification of such creditworthiness by Tenant and such
affiliate. Any transfer not in conformity with this Section 18 shall be void at
the option of Landlord, and Landlord may exercise any or all of its rights under
Section 23. A consent to one transfer shall not be deemed to be a consent to any
subsequent transfer. "Transfer" shall include any sublease, assignment, license
or concession agreement, change in ownership or control of Tenant, mortgage or
hypothecation of this lease or Tenant's interest therein or in all or a portion
of the Premises.

         (b) OFFER TO LANDLORD. Tenant acknowledges that the terms of this
lease, including the Minimum Annual Rent, have been based on the understanding
that Tenant physically shall occupy the Premises for the entire Term. Therefore,
upon Tenant's request to transfer all or a portion of the Premises, at the
option of Landlord, Tenant and Landlord shall execute an amendment to this lease
removing such space from the Premises, Tenant shall be relieved of any liability
with respect to such space and Landlord shall have the right to lease such space
to any party, including Tenant's proposed transferee.

         (c) CONDITIONS. Notwithstanding the above, the following shall apply to
any transfer, with or without Landlord's consent:

                  (i) As of the date of any transfer, Tenant shall not be in
default under this lease nor shall any act or omission have occurred which would
constitute a default with the giving of notice and/or the passage of time.

                  (ii) No transfer shall relieve Tenant of its obligation to pay
the Rent and to perform all its other obligations hereunder. The acceptance of
Rent by Landlord from any person shall not be deemed to be a waiver by Landlord
of any provision of this lease or to be a consent to any transfer.

                  (iii) Each transfer shall be by a written instrument in form
and substance satisfactory to Landlord which shall (A) include an assumption of
liability by any transferee of all Tenant's obligations and the transferee's
ratification of and agreement to be bound by all the provisions of this lease,
(B) afford Landlord the right of direct action against the transferee pursuant
to the same remedies as are available to Landlord against Tenant and (C) be
executed by Tenant and the transferee.

                  (iv) Tenant shall pay, within 10 days of receipt of an invoice
which shall be no less than $250, Landlord's reasonable attorneys' fees and
costs in connection with the review, processing and documentation of any
transfer for which Landlord's consent is requested.

19.      SUBORDINATION; MORTGAGEE'S RIGHTS.

         (a) This lease shall be subordinate to any first mortgage or other
primary encumbrance now or hereafter affecting the Premises. Although the
subordination is self-operative, within 10 days after written request, Tenant
shall execute and deliver any further instruments confirming such subordination
of this lease and any further instruments of attornment that may be desired by
any such mortgagee or Landlord. However, any mortgagee may at any time
subordinate its mortgage to this lease, without Tenant's consent,

                                       7



by giving written notice to Tenant, and thereupon this lease shall be deemed
prior to such mortgage without regard to their respective dates of execution and
delivery, provided, however, that such subordination shall not affect any
mortgagee's right to condemnation awards, casualty insurance proceeds,
intervening liens or any right which shall arise between the recording of such
mortgage and the execution of this lease.

         (b) It is understood and agreed that any mortgagee shall not be liable
to Tenant for any funds paid by Tenant to Landlord unless such funds actually
have been transferred to such mortgagee by Landlord.

         (c) Notwithstanding the provisions of Sections 12 and 13 above,
Landlord's obligation to restore the Premises after a casualty or condemnation
shall be subject to the consent and prior rights of Landlord's first mortgagee.

20.      RECORDING; TENANT'S CERTIFICATE. Tenant shall not record this lease or
a memorandum thereof without Landlord's prior written consent. Within 10 days
after Landlord's written request from time to time:

         (a) Tenant shall execute, acknowledge and deliver to Landlord a written
statement certifying the Commencement Date and Expiration Date of this lease,
that this lease is in full force and effect and has not been modified and
otherwise as set forth in the form of estoppel certificate attached as Exhibit
"E" or with such modifications as may be necessary to reflect accurately the
stated facts and/or such other certifications as may be requested by a mortgagee
or purchaser. Tenant understands that its failure to execute such documents may
cause Landlord serious financial damage by causing the failure of a financing or
sale transaction.

         (b) Tenant shall furnish to Landlord, Landlord's mortgagee, prospective
mortgagee or purchaser reasonably requested financial information.

21.      SURRENDER; ABANDONED PROPERTY.

         (a) Subject to the terms of Sections 9(b), 12(a) and 13(b), at the
expiration or termination of this lease, Tenant promptly shall yield up in the
same condition, order and repair in which they are required to be kept
throughout the Term, the Premises and all improvements thereto, and all fixtures
and equipment servicing the Building, ordinary wear and tear excepted.

         (b) Upon or prior to the expiration or termination of this lease,
Tenant shall remove any personal property from the Property. Any personal
property remaining thereafter shall be deemed conclusively to have been
abandoned, and Landlord, at Tenant's expense, may remove, store, sell or
otherwise dispose of such property in such manner as Landlord may see fit and/or
Landlord may retain such property as its property. If any part thereof shall be
sold, then Landlord may receive and retain the proceeds of such sale and apply
the same, at its option, against the expenses of the sale, the cost of moving
and storage and any Rent due under this lease.

         (c) If Tenant, or any person claiming through Tenant, shall continue to
occupy the Premises after the expiration or termination of this lease or any
renewal thereof, such occupancy shall be deemed to be under a month-to-month
tenancy under the same terms and conditions set forth in this lease, except that
the monthly installment of the Minimum Annual Rent during such continued
occupancy shall be double the amount applicable to the last month of the Term.
Anything to the contrary notwithstanding, any holding over by Tenant without
Landlord's prior written consent shall constitute a default hereunder and shall
be subject to all the remedies available to Landlord.

22.      CURING TENANT'S DEFAULTS. If Tenant shall be in default in the
performance of any of its obligations hereunder, Landlord, without any
obligation to do so, in addition to any other rights it may have in law or
equity, may elect to cure such default on behalf of Tenant after written notice
(except in the case of emergency) to Tenant. Tenant shall reimburse Landlord
upon demand for any sums paid or costs incurred by Landlord in curing such
default, including interest thereon from the respective dates of Landlord's
incurring such costs, which sums and costs together with interest shall be
deemed additional rent.

23.      DEFAULTS - REMEDIES.

         (a) DEFAULTS. It shall be an event of default:

                  (i) If Tenant does not pay in full when due any and all Rent;

                  (ii) If Tenant fails to observe and perform or otherwise
breaches any other provision of this lease;

                                       8



                  (iii) If Tenant abandons the Premises, which shall be
conclusively presumed if the Premises remain unoccupied for more than 10
consecutive days, or removes or attempts to remove Tenant's goods or property
other than in the ordinary course of business; or

                  (iv) If Tenant becomes insolvent or bankrupt in any sense or
makes a general assignment for the benefit of creditors or offers a settlement
to creditors, or if a petition in bankruptcy or for reorganization or for an
arrangement with creditors under any federal or state law is filed by or against
Tenant, or a bill in equity or other proceeding for the appointment of a
receiver for any of Tenant's assets is commenced, or if any of the real or
personal property of Tenant shall be levied upon; provided, however, that any
proceeding brought by anyone other than Landlord or Tenant under any bankruptcy,
insolvency, receivership or similar law shall not constitute a default until
such proceeding has continued unstayed for more than 60 consecutive days.

         (b) REMEDIES. Then, and in any such event, Landlord shall have the
following rights:

                  (i) To charge a late payment fee equal to the greater of $100
or 5% of any amount owed to Landlord pursuant to this lease which is not paid
within 5 days after the due date.

                  (ii) To enter and repossess the Premises, by breaking open
locked doors if necessary, and remove all persons and all or any property
therefrom, by action at law or otherwise, without being liable for prosecution
or damages therefor, and Landlord may, at Landlord's option, make alterations
and repairs in order to relet the Premises and relet all or any part(s) of the
Premises for Tenant's account. Tenant agrees to pay to Landlord on demand any
deficiency that may arise by reason of such reletting. In the event of reletting
without termination of this lease, Landlord may at any time thereafter elect to
terminate this lease for such previous breach.

                  (iii) To accelerate the whole or any part of the Rent for the
balance of the Term, and declare the same to be immediately due and payable.

                  (iv) To terminate this lease and the Term without any right on
the part of Tenant to save the forfeiture by payment of any sum due or by other
performance of any condition, term or covenant broken.

         (c) GRACE PERIOD. Notwithstanding anything hereinabove stated, neither
party will exercise any available right because of any default of the other,
except those remedies contained in subsection (b)(i) of this Section, unless
such party shall have first given 10 days written notice thereof to the
defaulting party, and the defaulting party shall have failed to cure the default
within such period; provided, however, that:

                  (i) No such notice shall be required if Tenant fails to comply
with the provisions of Sections 10 or 20(a), in the case of emergency as set
forth in Section 22 or in the event of any default enumerated in subsections
(a)(iii) and (iv) of this Section.

                  (ii) Landlord shall not be required to give such 10 days
notice more than 2 times during any 12 month period.

                  (iii) If the default consists of something other than the
failure to pay money which cannot reasonably be cured within 10 days, neither
party will exercise any right if the defaulting party begins to cure the default
within the 10 days and continues actively and diligently in good faith to
completely cure said default.

                  (iv) Tenant agrees that any notice given by Landlord pursuant
to this Section which is served in compliance with Section 27 shall be adequate
notice for the purpose of Landlord's exercise of any available remedies.

         (d) NON-WAIVER; NON-EXCLUSIVE. No waiver by Landlord of any breach by
Tenant shall be a waiver of any subsequent breach, nor shall any forbearance by
Landlord to seek a remedy for any breach by Tenant be a waiver by Landlord of
any rights and remedies with respect to such or any subsequent breach. Efforts
by Landlord to mitigate the damages caused by Tenant's default shall not
constitute a waiver of Landlord's right to recover damages hereunder. No right
or remedy herein conferred upon or reserved to Landlord is intended to be
exclusive of any other right or remedy provided herein or by law, but each shall
be cumulative and in addition to every other right or remedy given herein or now
or hereafter existing at law or in equity. No payment by Tenant or receipt or
acceptance by Landlord of a lesser amount than the total amount due Landlord
under this lease shall be deemed to be other than on account, nor shall any
endorsement or statement on any check or payment be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of Rent due, or Landlord's right to
pursue any other available remedy.

                                       9



         (e) COSTS AND ATTORNEYS' FEES. If either party commences an action
against the other party arising out of or in connection with this lease, the
prevailing party shall be entitled to have and recover from the losing party
attorneys' fees, costs of suit, investigation expenses and discovery costs,
including costs of appeal.

24.      REPRESENTATIONS OF TENANT. Tenant represents to Landlord and agrees
that:

         (a) The word "TENANT" as used herein includes the Tenant named above as
well as its successors and assigns, each of which shall be under the same
obligations and liabilities and each of which shall have the same rights,
privileges and powers as it would have possessed had it originally signed this
lease as Tenant. Each and every of the persons named above as Tenant shall be
bound jointly and severally by the terms, covenants and agreements contained
herein. However, no such rights, privileges or powers shall inure to the benefit
of any assignee of Tenant immediate or remote, unless Tenant has complied with
the terms of Section 18 and the assignment to such assignee is permitted or has
been approved in writing by Landlord. Any notice required or permitted by the
terms of this lease may be given by or to any one of the persons named above as
Tenant, and shall have the same force and effect as if given by or to all
thereof.

         (b) If Tenant is a corporation, partnership or any other form of
business association or entity, Tenant is duly formed and in good standing, and
has full corporate or partnership power and authority, as the case may be, to
enter into this lease and has taken all corporate or partnership action, as the
case may be, necessary to carry out the transaction contemplated herein, so that
when executed, this lease constitutes a valid and binding obligation enforceable
in accordance with its terms. Tenant shall provide Landlord with corporate
resolutions or other proof in a form acceptable to Landlord, authorizing the
execution of this lease at the time of such execution.

25.      LIABILITY OF LANDLORD. The word "LANDLORD" as used herein includes the
Landlord named above as well as its successors and assigns, each of which shall
have the same rights, remedies, powers, authorities and privileges as it would
have had it originally signed this lease as Landlord. Any such person or entity,
whether or not named herein, shall have no liability hereunder after it ceases
to hold title to the Premises except for obligations already accrued (and, as to
any unapplied portion of Tenant's Security Deposit, Landlord shall be relieved
of all liability therefor upon transfer of such portion to its successor in
interest) and Tenant shall look solely to Landlord's successor in interest for
the performance of the covenants and obligations of the Landlord hereunder which
thereafter shall accrue. Neither Landlord nor any principal of Landlord nor any
owner of the Property, whether disclosed or undisclosed, shall have any personal
liability with respect to any of the provisions of this lease or the Premises,
and if Landlord is in breach or default with respect to Landlord's obligations
under this lease or otherwise, Tenant shall look solely to the equity of
Landlord in the Property for the satisfaction of Tenant's claims.
Notwithstanding the foregoing, no mortgagee or ground lessor succeeding to the
interest of Landlord hereunder (either in terms of ownership or possessory
rights) shall be (a) liable for any previous act or omission of a prior
landlord, (b) subject to any rental offsets or defenses against a prior landlord
or (c) bound by any amendment of this lease made without its written consent, or
by payment by Tenant of Minimum Annual Rent in advance in excess of one monthly
installment.

26.      INTERPRETATION; DEFINITIONS.

         (a) CAPTIONS. The captions in this lease are for convenience only and
are not a part of this lease and do not in any way define, limit, describe or
amplify the terms and provisions of this lease or the scope or intent thereof.

         (b) ENTIRE AGREEMENT. This lease represents the entire agreement
between the parties hereto and there are no collateral or oral agreements or
understandings between Landlord and Tenant with respect to the Premises or the
Property. No rights, easements or licenses are acquired in the Property or any
land adjacent to the Property by Tenant by implication or otherwise except as
expressly set forth in the provisions of this lease. This lease shall not be
modified in any manner except by an instrument in writing executed by the
parties. The masculine (or neuter) pronoun and the singular number shall include
the masculine, feminine and neuter genders and the singular and plural number.
The word "INCLUDING" followed by any specific item(s) is deemed to refer to
examples rather than to be words of limitation. Both parties having participated
fully and equally in the negotiation and preparation of this lease, this lease
shall not be more strictly construed, nor any ambiguities in this lease
resolved, against either Landlord or Tenant.

         (c) COVENANTS. Each covenant, agreement, obligation, term, condition or
other provision herein contained shall be deemed and construed as a separate and
independent covenant of the party bound by, undertaking or making the same, not
dependent on any other provision of this lease unless otherwise expressly
provided. All of the terms and conditions set forth in this lease shall apply
through out the Term unless otherwise expressly set forth herein.

         (d) INTEREST. Wherever interest is required to be paid hereunder, such
interest shall be at the highest rate permitted under law but not in excess of
15% per annum.

                                       10



         (e) SEVERABILITY; GOVERNING LAW. If any provisions of this lease shall
be declared unenforceable in any respect, such unenforceability shall not affect
any other provision of this lease, and each such provision shall be deemed to be
modified, if possible, in such a manner as to render it enforceable and to
preserve to the extent possible the intent of the parties as set forth herein.
This lease shall be construed and enforced in accordance with the laws of the
state in which the Property is located.

         (f) "MORTGAGE" AND "MORTGAGEE." The word "mortgage" as used herein
includes any lien or encumbrance on the Premises or the Property or on any part
of or interest in or appurtenance to any of the foregoing, including without
limitation any ground rent or ground lease if Landlord's interest is or becomes
a leasehold estate. The word "mortgagee" as used herein includes the holder of
any mortgage, including any ground lessor if Landlord's interest is or becomes a
leasehold estate. Wherever any right is given to a mortgage, that right may be
exercised on behalf of such mortgagee by any representative or servicing agent
of such mortgagee.

         (g) "PERSON." The word "person" is used herein to include a natural
person, a partnership, a corporation, an association and any other form of
business association or entity.

27.      NOTICES. Any notice or other communications under this lease shall be
in writing and addressed to Landlord or Tenant at their respective addresses
specified at the beginning of this lease, except that after the Commencement
Date Tenant's address shall be at the Premises, (or to such other address as
either may designate by notice to the other) with a copy to any mortgagee or
other party designated by Landlord. Each notice or other communication shall be
deemed given if sent by prepaid overnight delivery service or by certified mail,
return receipt requested, postage prepaid or in any other manner, with delivery
in any case evidenced by a receipt, and shall be deemed received on the day of
actual receipt by the intended recipient or on the business day delivery is
refused. The giving of notice by Landlord's attorneys, representatives and
agents under this Section shall be deemed to be the acts of Landlord; however,
the foregoing provisions governing the date on which a notice deemed to have
been received shall mean and refer to the date on which a party to this lease,
and not its counsel or other recipient to which a copy of the notice may be
sent, is deemed to have received the notice.

28.      SECURITY DEPOSIT. At the time of signing this lease, Tenant shall
deposit with Landlord the Security Deposit to be retained by Landlord as cash
security for the faithful performance and observance by Tenant of the provisions
of this lease. Tenant shall not be entitled to any interest whatever on the
Security Deposit. Landlord shall have the right to commingle the Security
Deposit with its other funds. Landlord may use the whole or any part of the
Security Deposit for the payment of any amount as to which Tenant is in default
hereunder or to compensate Landlord for any loss or damage it may suffer by
reason of Tenant's default under this lease. If Landlord uses all or any portion
of the Security Deposit as herein provided, within 10 days after written demand
therefor, Tenant shall pay Landlord cash in amount equal to that portion of the
Security Deposit used by Landlord. If Tenant shall comply fully and faithfully
with all the provisions of this lease, the Security Deposit shall be returned to
Tenant after the Expiration Date and surrender of the Premises to Landlord.

                  IN WITNESS WHEREOF, and in consideration of the mutual entry
into this lease and for other good and valuable consideration, and intending to
be legally bound, Landlord and Tenant have executed this lease.

                              LANDLORD:
                              LIBERTY PROPERTY LIMITED PARTNERSHIP
Date Signed:                  By: Liberty Property Trust Sole General Partner

February 27, 2003             By: /s/ Ward J. Fitzgerald
                                 -------------------------------------------
                                  Ward J. Fitzgerald
                                  Senior Vice President and Regional Director

                              TENANT:
Date Signed:                  ADVANTA SHARED SERVICES CORP.

February 26, 2003             By: /s/ MARCIA M. WILF
                                 --------------------------------------------
                                 Name: MARCIA M. WILF
                                 Title: Vice President, Corporate Administration

Attest: /s/ Liane Browne
        ----------------
Name:  Liane Browne                        [Corporate Seal]
Title: Asst. Secretary

                                       11



                                      RIDER

29.      PA Additional Remedies.

         (a)      When this lease and the Term or any extension thereof shall
have been terminated on account of any default by Tenant, which remains uncured
after the expiration of any applicable notice and/or cure period, or when the
Term or any extension thereof shall have expired, Tenant hereby authorizes any
attorney of any court of record of the Commonwealth of Pennsylvania to appear
for Tenant and for anyone claiming by, through or under Tenant and to confess
judgment against all such parties, and in favor of Landlord, in ejectment and
for the recovery of possession of the Premises, for which this lease or a true
and correct copy hereof shall be good and sufficient warrant. AFTER THE ENTRY OF
ANY SUCH JUDGMENT A WRIT OF POSSESSION MAY BE ISSUED THEREON WITHOUT FURTHER
NOTICE TO TENANT AND WITHOUT A HEARING. If for any reason after such action
shall have been commenced it shall be determined and possession of the Premises
remain in or be restored to Tenant, Landlord shall have the right for the same
default and upon any subsequent default(s) or upon the termination of this lease
or Tenant's right of possession as herein set forth, to again confess judgment
as herein provided, for which this lease or a true and correct copy hereof shall
be good and sufficient warrant.

         (b)      The warrant to confess judgment set forth above shall continue
in full force and effect and be unaffected by amendments to this lease or other
agreements between Landlord and Tenant even if any such amendments or other
agreements increase Tenant's obligations or expand the size of the Premises.
Tenant waives any procedural errors in connection with the entry of any such
judgment or in the issuance of any one or more writs of possession or execution
or garnishment thereon.

         (c)      EXCEPT AS OTHERWISE SET FORTH IN THIS LEASE, TENANT KNOWINGLY
AND EXPRESSLY WAIVES ANY RIGHT, INCLUDING, WITHOUT LIMITATION, UNDER ANY
APPLICABLE STATUTE, WHICH TENANT MAY HAVE TO RECEIVE A NOTICE TO QUIT PRIOR TO
LANDLORD COMMENCING AN ACTION FOR REPOSSESSION OF THE PREMISES.

                              ADVANTA SHARED SERVICES CORP.

                              By:/s/ Marcia M. Wilf
                                 ------------------
                                 Name: Marcia M. Wilf
                                 Title: Vice President, Corporate Administration

30.      Delivery of Possession; No Improvements by Landlord; Obligations Before
Commencement Date; Completion by Tenant.

         (a)      The Premises shall be delivered by Landlord to Tenant on the
Possession Date and accepted by Tenant broom clean in "as is" "where is"
condition (including the existing furniture therein) and Landlord shall have no
obligations whatsoever to improve the Premises for Tenant's use or occupancy.

                                      R-1



         (b)      Prior to the Commencement Date, Tenant shall abide by the
terms and conditions of this lease as if the Term of this lease had already
commenced, except that Tenant shall have no obligation to pay the Minimum Annual
Rent or any portion thereof until the Commencement Date.

         (c)      The Premises shall be completed by Tenant and its
contractor(s), at Tenant's sole expense, in accordance with plans to be prepared
by Tenant, approved by Landlord and attached hereto as Exhibit "F" (the "Plans")
and specifications to be prepared by Tenant, approved by Landlord and attached
hereto as Exhibit "G" (the "Specifications"). Landlord shall respond to a
written request for approval of the Plans and Specifications within 10 days
after receipt thereof and if Landlord fails to timely respond thereto, such
approval be deemed granted if Landlord fails to respond to a second written
request therefor pursuant to the procedure set forth in Section 41(e) below
within three (3) business days after Landlord's receipt of such second written
request. In connection with the alterations Tenant intends to make to the
Premises in accordance with the Plans and Specifications (the "Tenant
Improvements"), Tenant shall comply with Sections 9 and 10 of this lease and the
following conditions:

                  (i)      Prior to commencement of construction of the Tenant
Improvements, Tenant shall deliver to Landlord a certificate of insurance for
Tenant's general contractor evidencing adequate insurance coverage and naming
Landlord and Landlord's agent as additional insureds.

                  (ii)     Prior to commencement of construction, Tenant shall
deliver to Landlord a true and correct copy of a Waiver of Liens filed by
Tenant's general contractor with the Prothonotary of Montgomery County.

                  (iii)    In addition to the right of Landlord and its Agents
to inspect the Premises set forth in Section 11 of this lease, Landlord and its
Agents shall have the right to conduct a walk-through inspection of the Premises
as completed by Tenant.

                  (iv)     The warranties from Tenant's contractor(s) shall be
for the benefit of Landlord as well as Tenant and Tenant shall deliver such
warranties to Landlord upon receipt.

                  (v)      All construction shall be done in a good and
workmanlike manner and shall comply at the time of completion with all Laws and
Requirements. Tenant shall deliver to Landlord copies of all certificates of
occupancy, permits and licenses required to be issued by any authority in
connection with Tenant's construction.

         (d)      Within 30 days after the later of (i) the Commencement Date,
or (ii) receipt by Landlord of bona fide invoices therefor, Landlord shall
reimburse Tenant for the lesser of (A) all documented out-of-pocket costs
incurred by Tenant in connection with the design and construction of the Tenant
Improvements, or (B) $1,183,882.00.

31.      Multiple Option to Extend Term

         (a)      Provided that Landlord has not given Tenant notice of default
more than two (2) times in the immediately preceding twelve (12) month period,
that there then exists no event of default by Tenant under the lease nor any
event that with the giving of notice and/or the passage

                                      R-2



of time would constitute a default, and that Tenant or Tenant's affiliates or
outsource contractors in the ordinary course of Tenant's business are the
primary occupants of the Premises, Tenant shall have the right and option to
extend the Term of the lease for three (3) additional periods of twenty-four
(24) months each, exercisable by giving Landlord prior written notice, at least
nine (9) months in advance of the Expiration Date or the first or second
extended Expiration Date, as the case may be, of Tenant's election to extend the
Term; it being agreed that time is of the essence and that this option is
personal to Tenant and any assignee for whom Landlord's consent is not required
under Section 18(a) and is non-transferable to any other assignee or sublessee
(regardless of whether any such assignment or sublease was made with or without
Landlord's consent) or other party.

         (b)      Such extension(s) shall be under the same terms and conditions
as provided in the lease except as follows:

                  (i)      the first additional period shall begin on the
initial Expiration Date and thereafter the Expiration Date shall be deemed to be
the date which is twenty-four (24) months after the initial Expiration Date;

                  (ii)     the second additional period shall begin on the
Expiration Date of the first additional period and thereafter the Expiration
Date shall be deemed to be the date which is twenty-four (24) months after the
Expiration Date of the first additional period;

                  (iii)    the third additional period shall begin on the
Expiration Date of the second additional period and thereafter the Expiration
Date shall be deemed to be the date which is twenty-four (24) months after the
Expiration Date of the second additional period;

                  (iv)     there shall be no further options to extend;

                  (v)      The Minimum Annual Rent for each year of each
additional term shall be equal to the greater of (i) the Minimum Annual Rent
payable under the lease in the lease year immediately preceding the additional
period, or (ii) 90% of the fair market rental value of the Premises and annual
increases in fair market rental value (collectively, the "FMR") applicable at
the time Tenant exercises such option (but in no event prior to nine (9) months
before the additional period commences).

                  (vi)     Unless Landlord accepts as Tenant's Minimum Annual
Rent obligation for each year of the additional period an amount equal to the
Minimum Annual Rent payable under the lease in the lease year immediately prior
to the commencement of such additional period (the "Prior Rent Alternative"),
within fifteen (15) days after Landlord receives notice of Tenant's exercise of
this option to extend the Term, but in no event prior to nine (9) months before
the commencement of each additional period, Landlord will give notice to Tenant
(the "Rent Notice") of Landlord's opinion of the FMR and comparing the FMR to
the Minimum Annual Rent payable under the lease in the immediately preceding
lease year and specifically advising Tenant that if Tenant does not object
thereto in writing within thirty (30) days thereafter, the FMR shall be deemed
accepted as the Minimum Annual Rent due for each lease year of the additional
period. If Tenant does not respond to the Rent Notice within thirty (30) days
after receiving it, Landlord's opinion of the FMR shall be deemed accepted as
the Minimum Annual

                                      R-3



Rent due for each lease year of the additional period. If, during such thirty
(30) day period, Tenant gives Landlord notice that Tenant contests Landlord's
determination of FMR (an "Objection Notice"), which notice must contain therein
Tenant's opinion of the FMR, the parties will attempt to arrive at a mutually
agreeable Minimum Annual Rent for each lease year of the additional period,
which, in no event, shall be less than the Prior Rent Alternative. If the
parties come to an agreement, they will execute an amendment to the lease
establishing the Minimum Annual Rent for each lease year of the additional
period. If the parties fail to come to an agreement, the Minimum Annual Rent for
each lease year of the additional period shall be determined as set forth in
subsection (vii) below.

                  (vii)    For purposes of this Section 31, if Landlord does not
accept the Prior Rent Alternative as the Minimum Annual Rent for the additional
period and if Landlord and Tenant cannot agree as to the Minimum Annual Rent for
each lease year of the additional period within thirty (30) days after
Landlord's receipt of the Objection Notice, the FMR shall be determined by
appraisal. Within ten (10) days after the expiration of such thirty (30) day
period, Landlord and Tenant shall give written notice to the other setting forth
the name and address of an appraiser designated by the party giving notice. All
appraisers selected shall be members of the American Institute of Real Estate
Appraisers and shall have had at least ten (10) years continuous experience in
the business of appraising office buildings in the greater Philadelphia,
Pennsylvania area. If either party shall fail to give notice of such designation
within the time period provided, then the party who has designated its appraiser
(the "Designating Party") shall notify the other party (the "Non-Designating
Party") in writing that the Non-Designating Party has an additional ten (10)
days to give notice of its designation, otherwise the appraiser, if any,
designated by the Designating Party shall conclusively determine the FMR. If two
appraisers have been designated, such appraisers shall attempt to agree upon the
FMR. If the two appraisers do not agree on the FMR within twenty (20) days of
their designation, the two appraisers shall designate a third appraiser. If the
two appraisers shall fail to agree upon the identity of a third appraiser within
five (5) business days following the end of such twenty (20) day period, then
either Landlord or Tenant may apply to the American Arbitration Association, or
any successor thereto having jurisdiction, for the settlement of the dispute as
to the designation of the third appraiser and the American Arbitration
Association shall designate a third appraiser in accordance with the Real Estate
Valuation Arbitration Rules of the American Arbitration Association. The three
appraisers shall conduct such hearings as they may deem appropriate, shall make
their determination of the FMR in writing and shall give notice to Landlord and
Tenant of such determination within twenty (20) days after the appointment of
the third appraiser. If the three appraisers cannot agree upon the FMR, each
appraiser shall submit in writing to Landlord and Tenant the FMR as determined
by such appraiser. The FMR for the purposes of this paragraph shall be equal to
the arithmetic average of the two closest FMR submitted by the appraisers. Each
party shall pay its own fees and expenses in connection with any appraiser
selected by such party under this paragraph, and the parties shall share equally
all other expenses and fees of the arbitration, including the fees and expenses
charged by the third appraiser. The FMR determined in accordance with the
provisions of this Section shall be final and binding upon Landlord and Tenant.

32.      Guaranty. To induce Landlord to execute this lease, Advanta Corp., a
Delaware corporation ("Guarantor"), shall deliver to Landlord, in the form
attached hereto as Exhibit "H", its guaranty of Tenant's obligations under this
lease (the "Guaranty"). If Guarantor fails to

                                      R-4



deliver such guaranty to Landlord, simultaneously with delivery of this lease to
Landlord as executed by Tenant, Landlord shall have no obligation to enter into
this lease and Tenant shall have no rights or interests in the Premises or under
this lease. It shall be an event of default under this lease if any of the
events enumerated in Section 23(a)(iv) of this lease shall happen to Guarantor
or any other guarantor of Tenant's obligations under this lease.

33.      Generator. Tenant shall have the right to install, maintain and repair
a generator (the "Generator") on the Property at the location shown as
"Generator Location" on Exhibit "A" attached hereto under and subject to the
following conditions:

         (a)      Tenant shall comply with all Laws and Requirements and shall
obtain, and deliver to Landlord written evidence of, any approval(s) required
thereunder and copies of all permits and approvals therefor.

         (b)      Tenant shall obtain Landlord's prior approval of the
specifications for the Generator, such approval not to be unreasonably withheld,
conditioned or delayed. Tenant shall enclose the Generator and concrete pad on
which it will be located with screening reasonably satisfactory to Landlord and
otherwise in a manner reasonably satisfactory to Landlord. Tenant shall pay all
costs incurred by Landlord in connection with the Generator, including without
limitation, all architectural, engineering, contractors' and legal fees, such
fees not to exceed $1,000 unless due to unusual circumstances.

         (c)      Tenant shall comply with the provisions of Sections 9(b)(i)
through (iv) of the Lease.

         (d)      At least 3 business days prior to installation or removal,
Tenant shall notify Landlord of the date and time of the installation or
removal. Tenant shall install or remove the Generator only if Landlord has had
the opportunity to be present with Tenant at the installation or removal as set
forth in the preceding sentence.

         (e)      Tenant shall maintain the Generator in a safe, good and
orderly condition. The installation, maintenance, repair and removal of the
Generator shall be performed at Tenant's sole expense in a manner which will not
impair the integrity of, damage or adversely affect the warranty applicable to,
any portion of the Property.

         (f)      No later than the expiration or sooner termination of the
Term, at Tenant's sole expense, Tenant shall remove the Generator and repair any
resulting damage, including without limitation, damage to landscaping or paving.
Tenant shall comply with all Laws and Requirements in connection with the
removal of the Generator and shall deliver to Landlord copies of all required
permits and approvals in connection with such removal.

         (g)      Tenant's indemnification of Landlord pursuant to Section 15 of
the Lease also applies to the Generator and Tenant's use of any portion of the
Property therefor. Without limiting the foregoing, Tenant solely shall be
responsible for any damages or injury to persons or property, including the
Property, caused by or in any way relating to the Generator, except to the
extent such damages or injury are caused by the negligence of Landlord or its
Agents.

                                      R-5



34.      Furniture. Landlord represents and warrants to Tenant that Landlord is
the owner of the furniture listed on Exhibit "I" attached hereto (the
"Furniture") which is located in the Premises, free and clear of any claim
thereto by VerticalNet, Inc., the prior tenant of the Premises ("Prior Tenant").
The lease of the Premises includes the right of Tenant to use the Furniture. The
Furniture will be accepted by Tenant in its "as is" "where is" condition and
without representation or warranty, express or implied, as to its condition,
merchantability or fitness for a particular purpose. Tenant shall comply with
all Laws and Requirements in connection with the installation and use of the
Furniture in the Premises. During the Term, Tenant shall maintain the Furniture
in its present condition, reasonable wear and tear excepted, and upon the
expiration or earlier termination of this lease shall surrender the Furniture to
Landlord in such condition, subject to Tenant's right (a) to move and
reconfigure the Furniture within the Premises, (b) to dispose of broken
Furniture, and (c) to cause Landlord, upon 30 days' prior written notice to
Landlord, to remove some or all of the Furniture from the Premises.

35.      Parking. Tenant shall have the exclusive right to use all of the
parking spaces on the Property. There are presently approximately 534 parking
spaces on the Property. Subject to Tenant's compliance with all Laws and
Requirements, Tenant shall have the right, at its sole cost and expense, to
expand the parking lot(s) appurtenant to the Property in accordance with the
Parking Area Expansion Plan attached hereto as Exhibit "J".

36.      Brokers. The parties agree that they have dealt with no brokers in
connection with this lease, except for Trinity Capital Advisors, LLC, whose
commission shall be paid by Landlord pursuant to separate agreement. Each party
agrees to indemnify and hold the other harmless from any and all claims for
commissions or fees in connection with the Premises and this lease from any
other real estate brokers or agents with whom they may have dealt.

37.      Additional Provisions Relating to Premises. The Premises consists of
approximately 12,935 rentable square feet of office space on the first floor of
the Building and approximately 71,628 rentable square feet of office space on
the second floor of the Building (collectively, the "Office Portion") and
approximately 25,437 rentable square feet of warehouse space on the second floor
of the Premises (the "Warehouse Portion").

38.      Additional Provisions Relating to Use; Compliance.

         (a)      The first sentence of subsection 4(a) is deleted and the
following is substituted therefor:

                  "Landlord represents to Tenant that the Property is zoned BC
(Business Campus District). Tenant has been given the opportunity to examine the
Zoning Code of Horsham Township and has satisfied itself that the Zoning Code
will permit use of the Property for the Use. Tenant shall occupy and use the
Office Portion for and only for general office purposes and uses incidental or
accessory thereto and the Warehouse Portion for and only for general office or
warehouse purposes and uses incidental or accessory thereto and in such a manner
as is lawful and will not create any nuisance or otherwise interfere with the
exercise of Landlord's rights or the performance of Landlord's obligations under
this lease."

                                      R-6



         (b)      It is agreed that Tenant's compliance obligations under
subsection 4(b) shall not include any duty imposed upon Landlord or Tenant by
Laws and Requirements which is mandated for office buildings, generally, and the
need for which does not arise out of Tenant's particular manner of use of the
Property or Tenant's alteration of or installations in or upon the Property.
Landlord represents that, to the best of its knowledge, the Property complies
with all ADA requirements existing on the date of this lease, except any such
requirements applicable to Tenant's particular use or manner of use of the
Premises. If the Property does not so comply, such compliance shall be at
Landlord's sole cost and expense.

         (c)      It is agreed that Tenant's responsibilities pursuant to
subsection 4(c) shall be limited to Restricted Activities performed by or on
behalf of Tenant. Tenant shall indemnify, defend and hold harmless Landlord, its
directors, officers, partners and employees, from and against all claims,
damages or losses (including, without limitation, cleanup costs, penalties,
fines and reasonable counsel, engineering and other professional or expert fees
and costs) arising from Restricted Activities by Tenant or its Agents. Landlord
shall indemnify, defend and hold harmless Tenant, its directors, officers,
partners and employees, from and against all claims, damages or losses
(including, without limitation, cleanup costs, penalties, fines and reasonable
counsel, engineering and other professional or expert fees and costs) arising
from any Restricted Activities which occurred on the Premises prior to the date
of this lease and any Restricted Activities by Landlord or its Agents.

         (d)      On the third (3rd) line of subsection 4(d), delete "5 days
after first learning thereof" and substitute therefor "5 business days after an
officer of Tenant first learns thereof".

39.      Additional Provisions Relating to Operation of Property; Payment of
Expenses.

         (a)      Section 7(a)(ii) is deleted in its entirety and the following
is substituted therefor:

                  "(ii)    Notwithstanding anything to the contrary herein
contained, Tenant's Proportionate Share of operating expenses for calendar year
2003 (the "Base Year") is included in Tenant's Minimum Annual Rent and there
shall be no reconciliation of operating expenses for calendar year 2003, except
for snow removal expenses incurred by Landlord on and after the Commencement
Date in excess of $0.10 per rentable square foot. For every calendar year
thereafter, Tenant shall pay to Landlord the amount by which (A) Tenant's
Proportionate Share of (1) operating expenses for such year plus (2) snow
removal expenses in excess of $0.20 per rentable square foot, exceeds Tenant's
Proportionate Share of operating expenses for the Base Year on an annualized
basis (the "Base Year Operating Expenses"). By April 30, 2004, Landlord shall
provide Tenant with a statement of Base Year Operating Expenses. Commencing on
the first day after the Base Year, Landlord may require Tenant to pay estimated
Annual Operating Expenses pursuant to Section 1(d)(ii) and thereafter adjust
from time to time the amount thereof if the estimated Annual Operating Expenses
increase above Base Year Operating Expenses and Landlord may also invoice Tenant
separately from time to time for Tenant's Proportionate Share of any
extraordinary or unanticipated operating expenses, rather than waiting until the
year-end reconciliation. By April 30, 2005 and by April 30 of each year
thereafter (and as soon as practical after the expiration or termination of this
lease or, at Landlord's option, after a sale of the Property), Landlord shall
provide Tenant with a statement of the operating expenses for the preceding
calendar year or part thereof, the Base Year

                                      R-7



Operating Expenses and the estimated Annual Operating Expenses paid by Tenant
hereunder for such calendar year. Within 30 days after delivery of the statement
to Tenant, Landlord or Tenant shall pay to the other the amount of any
overpayment or deficiency due from one to the other or, at Landlord's option,
Landlord may credit Tenant's account for any overpayment. Tenant shall have the
right to inspect the books and records used by Landlord in calculating the
annual operating costs within 1 year of receipt of the statement during regular
business hours after having given Landlord at least 48 hours prior written
notice; provided, however, that Tenant shall make all payments of additional
rent without delay, and that Tenant's obligation to pay such additional rent
shall not be contingent on any such right. Tenant shall have the right to make
any payment required pursuant to this subsection 7(a)(ii) "under protest" and,
if Tenant makes payment of such sums under protest, such payment shall not be
regarded as a voluntary payment, and there shall survive the right on the part
of Tenant to institute suit for the recovery of such sum. Notwithstanding the
foregoing to the contrary, if such suit is not commenced within six (6) months
after the payment under protest has been made, the cause of action shall be
deemed wholly lost. If Tenant commences such suit within the required time
period, and it shall be adjudged that there was no legal obligation on the part
of Tenant to pay such sum or any part thereof, Tenant shall be entitled to
recover such sum or so much thereof as it was not legally required to pay under
the provisions of this Lease."

         (b)      Notwithstanding any provision of subsection 7(a) to the
contrary, it is agreed that the following categories of expense shall not be
included in Annual Operating Expenses:

                  (i)      Depreciation and amortization of the Building and the
Property;

                  (ii)     Salaries and benefits of officers of Landlord or of
any affiliates of Landlord, or of any management personnel above the level of
Senior Property Manager, except for "Tenant Services";

                  (iii)    Debt service payments on any indebtedness applicable
to the Building or the Property, including any mortgage debt or ground rents
payable under any ground lease;

                  (iv)     Fines and penalties incurred by Landlord, except to
the extent caused by Tenant;

                  (v)      Tort claims and expenses of the investigation and
defense thereof;

                  (vi)     Amounts in excess of fair market rates in respect of
any transaction with, or provision of any item or service by, Landlord or any
affiliate of Landlord;

                  (vii)    Management fees in excess of five percent (5%) of the
sum of Minimum Annual Rent and Additional Rent;

                  (viii)   Costs associated with withdrawal from a
"multi-employer plan";

                  (ix)     Any improvements required under the lease to the
extent to be performed hereunder at Landlord's cost;

                                      R-8



                  (x)      The cost of acquisition of the Property or
construction or renovation of the Building;

                  (xi)     Costs associated with the refinancing of any of
Landlord's debt;

                  (xii)    Reserves for future expenditures or liabilities which
would be incurred subsequent to the then current lease years;

                  (xiii)   Any bad debt loss, rent loss, or reserves for bad
debt or rent loss;

                  (xiv)    Except as otherwise expressly provided in this lease,
any and all legal and other fees, audit fees, inspection fees, appraisal fees,
leasing commissions, advertising expenses, promotional costs, and other costs
incurred in connection with the acquisition, development, leasing, and ownership
of the Property;

                  (xv)     Except to the extent that such fall within the scope
of subsection 7(d)(iii) and except for the payment of Landlord's commercially
reasonable deductible (currently $50,000), the costs of repairing or restoring
any portion of the Building and the Property damaged or destroyed by any
casualty or peril, whether insured or uninsured, and costs of restoration
following a taking by condemnation or eminent domain;

                  (xvi)    Costs associated with the clean up, remediation, and
removal of any hazardous wastes or substances and all other costs of causing the
Property to comply with applicable Laws and Requirements except as otherwise
expressly set forth in this lease;

                  (xvii)   The additional premium charged for rent insurance for
coverage in excess of twelve (12) months, unless such longer coverage period is
then considered reasonable by industry standards;

                  (xviii)  Administrative and overhead expenses (other than as
part of "Tenant Services"); and

                  (xix)    Costs associated with causing the Property to comply
with applicable laws, codes, regulations or ordinances, to the extent the
Property was not in compliance (or if not in compliance properly "grandfathered"
such that no alteration, modification, addition, improvement, replacement or
other action was required or would thereafter be required in order to effect
compliance) as of the date of this lease.

                  Furthermore, the provisions of subsection 7(a)
notwithstanding, annual operating costs shall not include the annual
amortization (or any other measure of cost) of building improvements made by the
Landlord for the purpose of reducing operating expenses except to the extent
such improvements actually reduce operating expenses.

                  Anything in this Article 7 contained to the contrary
notwithstanding, any and all expenditures incurred by Landlord and passed
through to Tenant shall be incurred in a commercially reasonable manner
consistent with the operation, maintenance and management of other first class
office properties in the suburban Philadelphia office market.

                                      R-9



         (c)      In computing Tenant's obligations on account of Annual
Operating Expenses, Tenant shall be entitled to a credit for the following:

                  (i)      Net recoveries by Landlord from any third party as a
result of any act, omission, default, or negligence of such third parties, or as
a result of a breach or default by such parties under the provisions of
applicable agreements which have caused Landlord to incur such costs and
expenses; but only to the extent that such recoveries are of money which has
been charged to Tenant as part of Annual Operating Expenses;

                  (ii)     Recoveries by Landlord from insurance policies, to
the extent that the proceeds thereof reimburse Landlord for costs and expenses
which were, in fact, included in Tenant's Annual Operating Expenses.

         (d)      The following additional clause is added at the end of
subsection 7(b)(i): "and, in each such instance, only to the extent that the
same would be payable if the Property were the only property owned by Landlord."

         (e)      Impositions. The following provisions are hereby inserted at
the end of subsection 7(b):

                  For the purposes of this subsection 7(b), Tenant's
Proportionate Share of a municipal assessment (but not a real estate tax) shall
only include those installments thereof becoming due during the Term. If any
assessments may be paid in installments over a period of years, such assessments
shall, for the purposes of subsection 7(b), be deemed to be payable over the
longest number of years permitted by the assessing authority, and only the
installments coming due during the Term, together with any interest or carrying
charges due, will be included within the Impositions payable by Tenant. With
regard to real estate taxes, Landlord agrees to take advantage of opportunities
to pay such taxes during the discount period.

                  Any provision of this subsection 7(b) to the contrary
notwithstanding, Tenant's obligation hereunder shall not include any franchise,
estate, succession, or inheritance taxes, nor any penalties imposed for late
payment of any real estate tax, assessment or other Imposition (except for
penalties on taxes which Landlord has not paid as a result of a bona fide
contest or for which it has not received payment from Tenant) and shall in no
event include any real estate tax or assessment attributable solely to a period
occurring prior to the Commencement Date.

                  Provided Tenant then leases more than 75% of the Building and
provided Tenant is not then in default under this Lease beyond applicable notice
and/or cure periods, Tenant shall have the right to require Landlord, at
Tenant's sole cost and expense, to contest or appeal the real estate taxes and
tax assessments relating to the Property. In lieu thereof, Landlord may
authorize Tenant to prosecute such appeal or contest, provided that Tenant shall
provide to Landlord for its reasonable review and approval prior to filing any
applications, affidavits and like supporting documentation required in
connection with such effort, Landlord shall have reasonably approved such
contest or appeal and Tenant shall consult with Landlord as requested in
connection with such process, and if undertaken, such contest or appeal shall be
prosecuted with diligence and in good faith and at Tenant's sole cost and
expense. Landlord shall reasonably cooperate with Tenant (including signing
applications, affidavits and the like, if so requested) subject to and in

                                      R-10



accordance with the conditions set forth in this paragraph. Tenant acknowledges
and agrees that Landlord's "reasonable review and approval", as such term is
used herein, shall mean and refer to Landlord's good faith consideration of the
reasonableness of Tenant's proposed contest or appeal, and the accuracy of
information set forth in such documentation as shall have been prepared by
Tenant and submitted to Landlord for its review.

                  In no event shall impositions include fees, charges or
assessments in connection with the initial construction or development of the
Property or Landlord's redevelopment thereof, including, without limitation,
development fees, tap-in fees or other initial assessments or payments due and
payable to the local municipality or to a governmental or quasi-governmental
agency or authority in connection with the initial planning, approval or
development of the Property. The foregoing notwithstanding, Tenant acknowledges
and agrees that the Impositions for which Tenant is responsible hereunder shall
include real estate taxes which shall be levied based upon Montgomery County's
assessment of the Property as improved with the Buildings and other improvements
contemplated in this Lease.

                  Upon Tenant's request, Landlord shall provide to Tenant copies
of real estate tax bills and any correspondence received by Landlord regarding
real estate taxes and assessments with respect to the Property.

         (f)      In subsection 7(c)(ii), in the sixth and seventh lines
thereof, the phrase "as insured parties" is replaced with the phrase "as
additional insureds." In the seventh line thereof, after the word "Premises,"
add "only, as expressly distinguished, for purposes hereof, from the balance of
the Property."

                  In subsection 7(c)(ii), the following amendments are hereby
made to the requirements regarding Tenant's liability insurance:

                  In the ninth line of the printed form paragraph 7(c)(ii), at
the end of the printed line, after the word "issued in form," add "reasonably".

                  Notwithstanding anything to the contrary contained in Section
7(c)(ii), so long as (i) Advanta Shared Services Corp. or an affiliate of
Advanta Shared Services Corp. or Advanta Corp. is the tenant under this lease
and (ii) Advanta Corp. is the Guarantor, (A) Tenant may self-insure its
obligations hereunder, provided that the net worth of Tenant or Guarantor is not
less than $100,000,000, and (B) any insurance required to be carried by Tenant
pursuant to Section 7(c)(ii) may be carried under a blanket policy of insurance
covering other locations of Advanta Corp. or its affiliates, provided, however,
such blanket policy shall provide that an amount not less than the aggregate
amount of insurance required to be carried by Tenant pursuant to Section
7(c)(ii) shall apply separately to the Property notwithstanding the aggregate
limit of the blanket policy.

                  Landlord, as an operating expense, shall keep in effect
comprehensive general public liability insurance with respect to the Property,
including contractual liability insurance, which insurance shall provide
combined single limit per occurrence coverage of not less than Two Million
Dollars ($2,000,000) for property damage and bodily injury or death to one or
more persons, with endorsements for contractual liability. The insurer shall be
a responsible insurance

                                      R-11



carrier which is authorized to issue such insurance and licensed to do business
in the Commonwealth of Pennsylvania, and which has, at all times during the
Term, a rating of not less than A VII in the most current edition of Best's
Insurance Reports. Landlord shall deliver to Tenant on or before the
Commencement Date and subsequently upon request by Tenant from time to time, but
not more often than once every twelve (12) months, current certificates of
insurance evidencing the aforesaid comprehensive general public liability
insurance coverage, the property and casualty insurance coverage required of
Landlord under Section 7(c) of the Lease, and the waiver of subrogation or other
policy provision required by subsection 7(c)(iii).

                  In the event that Landlord shall request that Tenant increase
its limits of insurance as provided in Paragraph 7(c)(ii) of the Lease, Tenant
agrees to do so provided that the increased limits requested by Landlord are
consistent with limits of insurance then being required of tenants of other
first class office properties in the suburban Philadelphia office market, and
further, that Landlord shall likewise increase the limits of insurance it is
then carrying to such levels as are then being required of Tenant by Landlord.

         (g)      In subsection 7(d)(ii), it is agreed that the written notice
required may be given by telefacsimile transmission addressed to Landlord's
property manager. Also with regard to such subsection, it is agreed that
Landlord will at all times maintain the Common Areas (including parking areas)
of the Property consistent with the standards generally observed at other first
class office buildings in the suburban Philadelphia office market. Also with
regard to such subsection, it is agreed that Landlord will make no alterations
to the Common Areas (except in the event of an emergency or if required by Laws
and Requirements) which will result in material interference with Tenant's
ability to use the Premises for the normal operation of its business,
twenty-four (24) hours per day, seven (7) days per week, three hundred
sixty-five (365) days per year.

         (h)      With regard to subsection 7(d)(iii), it is agreed that the
phrase "Tenant's use, occupancy" shall be limited to the use or occupancy of the
Office Portion for other than normal business office use and the Warehouse
Portion for normal warehouse use, and is not intended to create additional
responsibility on the part of Tenant for repairs or replacements that would have
been necessary solely as a result of Tenant's use of the Office Portion for
normal business office purposes and the Warehouse Portion for normal warehouse
purposes.

         (i)      Notwithstanding the provisions of subsection 7(e)(i) to the
contrary, it is agreed that Tenant may use the Premises and the Property
twenty-four (24) hours per day, seven (7) days per week, three hundred
sixty-five (365) days per year.

         (j)      Subsection 7(e)(ii) is hereby deleted in its entirety and
replaced with the following:

                  "(ii)    Electric service to the Property (including the
Premises and the Common Areas) is separately metered and shall be paid by Tenant
directly to the utility company providing such service commencing on the
Commencement Date and continuing throughout the Term. Water and sewer service to
the Property shall be an operating expense of the Property as to which Tenant
shall pay Tenant's Proportionate Share. If, as a result of any cause within
Landlord's reasonable control (except for damage by fire or other casualty,
which is dealt with

                                      R-12



elsewhere in this Lease), utility service to the Premises is interrupted
resulting in a portion of the Premises being rendered untenantable (such
untenantability to be determined without consideration of the operation of
Tenant's generator) for a period of in excess of three (3) consecutive business
days, commencing on the fourth consecutive day of such untenantability, Tenant's
obligations to pay Rent shall abate in proportion to that portion of the
Premises so rendered untenantable. Such abatement shall continue until the day
on which Landlord has cured the untenantability."

         (k)      With respect to subsection 7(f), it is agreed and understood
that as part of Annual Operating Expenses Landlord shall only be required to
provide trash removal and janitorial services to the Office Portion; provided,
however, if the trash from the Office Portion is stored in the Warehouse
Portion, Landlord shall remove the Office Portion trash from the Warehouse
Portion as part of the services provided for in Exhibit "D". To the extent that
Tenant desires Landlord to provide such services to the Warehouse Portion or to
the extent Tenant desires a higher level of services than provided for in
Exhibit "D", Tenant may provide for same at Tenant's sole expense or may request
Landlord to provide same as part of Annual Operating Expenses in which event
Annual Operating Expenses will be increased accordingly; provided, however, if
Landlord is required to provide such services in the Base Year, the Minimum
Annual Rent payable hereunder in each lease year shall be increased by the
agreed-upon cost of such services during the Base Year.

40.      Additional Provisions Relating to Signs. Landlord, at Landlord's
expense, will place Tenant's name and logo on the existing monument sign on
Dresher Road as shown on Exhibit "K" attached hereto. Landlord will permit
Tenant to install, at Tenant's sole cost and expense, an identification sign
(including Tenant's name and logo) on the two story section of the Building in
the form shown and described on Exhibit "L" attached hereto, provided Tenant
obtains all required approvals under the Laws and Requirements. In addition to
Tenant's obligations set forth in Section 8 as to removal of signs and the
repair of any damage caused by the installation, existence or removal thereof,
Tenant shall restore the wall to which such exterior sign is affixed to
substantially the condition existing prior to the installation of such sign
which may include repairing of the wall to create uniformity of color.

41.      Additional Provisions Relating to Alterations and Fixtures.

         (a)      With respect to subsection 9(a), Tenant shall have the right,
without Landlord's consent, to finance and to secure trade fixtures,
furnishings, equipment, machinery, signs and other personal property (excluding
physical alterations and leasehold improvements to the Building). If Tenant
shall acquire trade fixtures, equipment, machinery or other goods and effects
subject to a purchase money security interest, or shall lease any of the same,
or if any institutional lender provides Tenant with financing, the proceeds of
which are intended to enable Tenant to use and occupy the Premises or to operate
Tenant's business thereon, and such financing is secured in whole or in part by
a lien on or security interest in such goods, equipment, machinery or fixtures,
Landlord shall, upon request from Tenant, execute a subordination of any right
it may have to distrain upon or secure a lien against such goods, equipment,
machinery or fixtures for Tenant's failure to pay minimum rent or any additional
rent or any other event of default under the terms, covenants, conditions and
provisions of this lease, in substantially the form attached hereto as Exhibit
"M".

                                      R-13



         (b)      In the first sentence of subsection 9(b), the amount
"$5,000.00 in the aggregate" is hereby replaced with the amount "$50,000.00 per
lease year."

         (c)      In subsection 9(b), in the second sentence thereof, the word
"reasonable" is inserted before the word "costs."

         (d)      In subsection 9(b), Tenant shall not be required to have plans
prepared by an architect or engineer in connection with any proposed alterations
or improvements for which professionally prepared plans are not required in
order to obtain the necessary governmental permits and/or approvals. In such
cases, Landlord will accept accurately prepared plans prepared by Tenant's
personnel or contractors.

         (e)      In subsection 9(b), with regard to alterations to the Premises
which require Landlord's approval, Landlord agrees that it will not unreasonably
withhold, delay or condition its approval, provided such alterations will not,
in Landlord's reasonable opinion, adversely impact the structure of the Building
or the operating systems of the Building. Otherwise, Landlord may withhold its
approval in its complete discretion.

                  In the event Landlord fails to respond to a written request
for approval within 10 business days after receipt thereof, Tenant shall send
Landlord a second written request therefor which shall state that if no
objection is made by Landlord within 5 business days after receipt thereof, such
request shall be deemed approved by Landlord. If Landlord fails to respond
within such 5 business day period, Landlord shall be deemed to have approved
such request.

         (f)      With regard to subsection 9(b), it is agreed that Tenant shall
not be required to obtain Landlord's approval with regard to the painting or
wallpapering of interior wall surfaces within the Premises, provided that Tenant
notifies Landlord in writing prior to performing any such work and any such
painting or wallpapering can be covered with one (1) coat of primer and one (1)
coat of white paint, without additional sealing or painting.

42.      Additional Provisions Relating to Mechanics' Liens.

                  In Section 10, in the fourth line thereof, the phrase "within
5 days after Tenant has notice" is hereby replaced with the phrase "within 30
days after Tenant has received written notice."

43.      Additional Provisions Relating Landlord's Right to Relocate Tenant;
Right of Entry.

         (a)      Subsection 11(a) is deleted in its entirety.

         (b)      With regard to subsection 11(b), in the third line thereof,
the time period of 12 months" is hereby changed to "9 months".

         (c)      With regard to subsection 11(b), it is agreed that Landlord's
right to exhibit the Premises for the purpose of sale or mortgage or for the
purpose of leasing to a prospective tenant shall be restricted to normal
business hours; and, with respect to any entry by Landlord (except in the case
of an emergency), Tenant shall have the right to have its personnel accompany

                                      R-14



Landlord and any prospective mortgagee, purchaser, or tenant while on the
Premises for such purpose.

44.      Additional Provisions Relating to Damage by Fire or Other Casualty.

         (a)      In subsection 12(a), in the second line thereof, after the
phrase "shall repair such damage and restore the Premises," the following phrase
is hereby inserted: "at its own cost and expense (except for payment as an
operating expense of Tenant's proportionate share of Landlord's commercially
reasonable deductible [currently $50,000] and such other amounts if the
provisions of subsection 7(d)(iii) are applicable)".

         (b)      The last sentence of subsection 12(a) is deleted and replaced
with the following:

                  If a casualty occurs during the last 12 months of the Term, as
the same may have been extended, Landlord will give notice to Tenant if, in
Landlord's reasonable opinion, the restoration of the damage will not be
substantially completed prior to that period of time which is 1/2 of the time
interval elapsing between the date of the casualty and the end of the Term. If
Landlord gives such notice to Tenant, and, within 10 days thereafter, Landlord
does not receive notice from Tenant that Tenant releases Landlord from any
obligation to restore the damage, Landlord may cancel this Lease unless Tenant
has the right to extend the Term for at least 3 more years and does so within 30
days after the date of the casualty.

         (c)      Notwithstanding any provision of subsection 12(a) to the
contrary, if the Premises are damaged or destroyed by fire or other casualty and
the restoration of such damage has not been substantially completed on or before
365 days after it has occurred, Tenant shall have the right to terminate this
Lease effective 60 days after giving written notice of such termination to
Landlord; provided that if Landlord substantially completes the restoration
within such 60 day period, Tenant's notice of termination shall be null and
void.

         (d)      In subsection 12(b), the last sentence is hereby deleted and
the following sentence is substituted therefor:

                  "Tenant will receive an abatement of its minimum annual rent
and operating expenses to the extent and for so long as the Premises are
rendered untenantable, in whole or in part, for the normal conduct of Tenant's
business and to the extent not, in fact, used for the conduct of Tenant's
business."

45.      Additional Provisions Relating to Condemnation.

         (a)      In subsection 13(a)(ii), after the phrase "the reasonable
operation of Tenant's business," the following phrase is hereby inserted: "in
Tenant's reasonable opinion."

         (b)      In subsection 13(a)(iii), on the fourth (4th) line after
"Property", add "or in the event access to the Property is taken, or in the
event a material portion of the parking area of the Property is taken and the
remainder thereof is insufficient for the reasonable operation of Tenant's
business".

                                      R-15



         (c)      In the event of a partial taking, if Landlord's work of
restoring of the Premises results in a portion of the Premises being rendered
untenantable, Tenant's obligations to pay Rent shall abate in proportion to that
portion of the Premises which is so rendered untenantable. The amount of such
abatement shall be adjusted to reflect that portion of the Premises rendered so
untenantable from time-to-time.

         (d)      With regard to subsection 13(c), in addition to having the
right to make a claim against a condemnor for moving expenses and business
dislocation damages, Tenant shall have the right to make a claim against a
condemnor for any alterations to the Premises made by Tenant at Tenant's
expense, to the extent that Tenant loses the value of such alterations for the
balance of the Term.

46.      Additional Provisions Relating to Non-Abatement of Rent. In Section 14,
in the first line thereof, after the phrase "expressly provided," the following
phrase is hereby inserted: "as to interruption of utility services by Landlord
in subsection 7(e)(ii).......".

47.      Landlord's Indemnification of Tenant. Subject to Sections 7(c)(iii) and
16, Landlord will protect, indemnify, and hold harmless Tenant and its Agents
from and against any and all claims, actions, damages, liability, and expense
(including fees of attorneys, investigators, and experts) in connection with
loss of life, personal injury, or damage to property caused to any person in or
about the Property (other than the Premises) occasioned wholly or in part by the
negligence of Landlord or its Agents, except to the extent such loss, injury, or
damage was caused by the negligence of Tenant or its Agents. In case any action
or proceeding is brought against Tenant and/or its Agents by reason of the
foregoing, Landlord, at its expense, shall resist and defend such action or
proceeding, or cause the same to be resisted and defended by counsel (reasonably
acceptable to Tenant and its Agents) designated by the insurer whose policy
covers such occurrence or by counsel designated by Landlord and approved by
Tenant and its Agents. Landlord's obligations pursuant to this Section shall
survive the expiration or termination of this Lease. Nothing contained in this
Section 47 shall be construed to be in derogation of Tenant's obligation to
maintain the liability insurance policy specified in subsection 7(c)(ii); nor in
derogation of any rights which Landlord and Landlord's agent may have under such
liability insurance policy.

48.      Additional Provisions Relating to Waiver of Claims. In Section 16, add
to the end of the Section "and such waiver by Tenant shall not be effective with
respect to any liability of Landlord described in Section 38(c) of this Rider".

49.      Additional Provisions Relating to Assignment and Subletting.

         (a)      Notwithstanding any provision of Section 18 or this Rider
Section 49 to the contrary:

                  (i)      Landlord's consent shall not be required with regard
to an assignment of Tenant's rights under this lease to an assignee which is
reputable and which will utilize the Premises only for permitted uses provided
herein, provided that Tenant remains liable for its obligations under this lease
after such assignment, and, both immediately before and

                                      R-16



immediately after the assignment, either Tenant or its assignee is as
creditworthy as Tenant was on the date of this lease;

                  (ii)     none of (A) a change in the ownership of the stock of
Tenant, (B) the sale of all or substantially all of Tenant's assets; (C) a
merger, consolidation or other business combination of, with or involving
Tenant, or (D) any other corporate reorganization of Tenant (items (A) - (D)
within this Subsection 49(a) being hereinafter referred to as "Corporate
Transactions"; the purchaser of all or substantially all of Tenant's assets, or
the surviving entity following any one or more of the remaining Corporate
Transactions described herein, as assignee of this lease, being herein sometimes
referred to as a "Corporate Assignee") shall require Landlord's prior approval,
as long as Tenant's or the Corporate Assignee's creditworthiness after the
Corporate Transaction equals or exceeds Tenant's creditworthiness as of the date
of this lease and Tenant remains liable for its obligations under this lease
after such assignment; and

                  (iii)    Landlord's consent shall not be required with regard
to an assignment of this lease or a sublease of the Premises to any entity
controlled by, controlling or under common control with Tenant or Guarantor,
provided that Tenant remains liable for its obligations under this lease and
Guarantor remains liable for its obligations under the Guaranty after such
assignment or sublease.

                  (iv)     With respect to any assignment as to which Landlord's
consent is not required hereunder, upon Tenant's request, Landlord shall agree
in writing to recognize the assignee as the Tenant under this lease; provided
however, that (A) Tenant acknowledges in writing that it remains liable for its
obligations under this lease after such assignment, and (B) Guarantor
acknowledges in writing that it remains liable for its obligations under the
Guaranty after such assignment.

         (b)      Nothing in this Lease shall limit or prohibit the initial
public offering or subsequent trading of Tenant's or Guarantor's stock on a
recognized securities exchange, or any change in stock ownership or control
resulting therefrom.

         (c)      Subsection 18(c)(i) is hereby amended to read in its entirety
as follows:

                  (i)      As a condition of the effectiveness of any Transfer,
Tenant shall not be in default under this lease, or if in default, Tenant shall
have cured such default, and no other default shall exist.

         (d)      In subsection 18(c)(iii), in the first line thereof, after the
phrase "form and substance," the word "reasonably" is inserted, and in the
second line thereof, after the phrase "all Tenant's obligations," the following
phrase is hereby inserted: "thereafter accruing."

         (e)      In subsection 18(c)(iv), in the first line thereof, the word
"for" is inserted before the phrase "Landlord's reasonable attorneys' fees."

50.      Additional Provisions Relating to Subordination; Mortgagee's Rights.
The first two sentences of subsection 19(a) are hereby deleted and the following
are substituted therefor:

                                      R-17



                  " Landlord represents and warrants to Tenant that the Premises
is not subject to any mortgage or ground lease as of the date of this lease.
This lease shall be subordinate to any first mortgage or other primary
encumbrance hereafter affecting the Premises, subject to the express condition
that so long as no Event of Default shall exist and remain uncured, Tenant's
rights under this lease, including, but without limitation, Tenant's right of
possession of the Premises, shall not be disturbed by the holder of such
mortgage or by any purchaser upon foreclosure thereof. Although the
subordination and non-disturbance is self-operative, within 10 days after
written request, Tenant shall execute and deliver any further instruments
confirming such subordination and non-disturbance and any further instruments of
attornment in commercially reasonable form that may be desired by any such
mortgagee or Landlord pursuant to a Non-Disturbance Agreement from such
mortgagee or encumbrance holder in a commercially reasonably form. Upon request
of Tenant, Landlord shall use reasonable efforts to obtain a non-disturbance
agreement from the holder of any first mortgage or ground lease affecting the
Premises."

51.      Additional Provisions Relating to Recording; Tenant's Certificate.

         (a)      Within ten (10) business days after Landlord's receipt of a
written request therefor from Tenant, but in no event more frequently than two
(2) times in any lease year, Landlord agrees to execute and deliver to Tenant a
written statement certifying, to the best of Landlord's knowledge, whether
Tenant is or is not in default of any of its obligations under the lease.
Landlord's certificate shall also confirm whether any late charges, interest or
other unpaid sums have accrued to Tenant's account which remain unpaid up to the
date of such certificate, and any such late charges, interest or other unpaid
sums not so accrued and reported shall for all purposes be deemed waived by
Landlord. Landlord shall not be deemed to be in default of its obligation to
furnish such certificate within the aforesaid time period, unless Tenant has
given Landlord a notice of noncompliance after such time period has expired and
Landlord shall have failed to furnish such certificate on or before two (2)
business days after Landlord's receipt of such notice of noncompliance.

         (b)      In the second sentence of subsection 20(a), the phrase "10
days" is hereby deleted, and the phrase "10 business days" is inserted in lieu
thereof. The last sentence of subsection 20(a) is deleted in its entirety.

         (c)      With regard to subsection 20(b), it is agreed that such
financial information to be furnished by Tenant shall (in the absence of a
further agreement by Tenant) be limited to a verbal report from Tenant's Chief
Financial Officer regarding EBITA (earnings before interest, taxes, depreciation
and amortization), as well as an audited consolidated balance sheet of Tenant
and Guarantor (or, if Tenant and Guarantor do not file consolidated reports, an
audited, if available, or unaudited balance sheet of Tenant and Guarantor), each
as of the end of Tenant's last fiscal year; except that, at any time that the
shares of Tenant or Guarantor are listed on a nationally recognized stock
exchange, such financial information shall consist, as the case may be, of
Tenant's or Guarantor's most recent annual and quarterly reports as filed with
the Securities and Exchange Commission. Landlord agrees that any financial
information furnished by Tenant to Landlord which is not filed with a
governmental agency shall be held as confidential and shall not be exhibited to
anyone other than Landlord's mortgagee, prospective mortgagee, or prospective
purchaser. If Landlord shares such information with any of the foregoing
parties,

                                      R-18



Landlord shall in any event first advise such parties in writing of the
confidentiality of such information.

52.      Additional Provisions Relating to Surrender; Abandoned Property.

         (a)      The following language is hereby added at the end of
subsection 21(a): "and also excepting damage by fire or other casualty and any
repairs and replacements required to be performed by Landlord under the terms of
this Lease."

         (b)      In subsection 21(c), in the first line thereof, prior to the
phrase "shall continue to occupy," the following phrase is hereby inserted:
"without the prior written consent of Landlord."

         (c)      In subsection 21(c), in the fourth line thereof, the word
"double" is replaced with the phrase "one hundred seventy-five percent (175%)
of'."

53.      Additional Provisions Relating to Curing Tenant's Defaults.

         (a)      In Section 22, the paragraph caption "Curing Tenant's
Defaults" is hereby deleted, and the caption "Curing Defaults" is hereby
inserted in lieu thereof

         (b)      In the third line of Section 22, after the word "after,"
insert "thirty (30) days prior written." In the case of an emergency, Landlord
shall first attempt to contact Tenant by telephone before exercising self-help
remedies.

         (c)      In the second sentence of Section 22, after the word "any" in
the third line of the paragraph, insert "reasonable,".

         (d)      The following additional paragraph is hereby added to Section
22:

                  "Without limitation of Tenant's rights and remedies under this
lease, in the case of an emergency, then Tenant, without any obligation so to
do, may elect to exercise the remedy of self-help to address and remedy such
condition. Landlord shall reimburse Tenant upon demand for any reasonable sums
paid or costs incurred by Tenant in remedying such condition, including interest
thereon from the respective dates of Tenant's incurring such costs, which sums
and costs together with interest shall be due and payable by Landlord to Tenant
within ten (10) days next following invoicing therefor by Tenant. In the case of
an emergency, Tenant shall first attempt to contact by telephone Landlord's
property manager before exercising self-help remedies."

54.      Additional Provisions Relating to Defaults - Remedies.

         (a)      Subsection 23(a)(iii) is hereby restated in its entirety as
follows:

                  "(iii)   If Tenant abandons the Premises or if Tenant vacates
the Premises without having given Landlord at least thirty (30) days' prior
notice and without having made adequate provisions for maintenance and security
of the Premises; or".

                                      R-19



         (b)      In subsection 23(b)(ii), in the first line thereof, the phrase
"by breaking open locked doors if necessary" is replaced by the phrase "pursuant
to lawful process."

         (c)      In subsection 23(c), the parties agree that Tenant shall be
entitled to 30 days written notice of defaults consisting of something other
than the failure to pay money.

         (d)      In subsection 23(c)(i), the parties agree that Tenant shall be
entitled to written notice and a grace period of two (2) business days from
receipt within which to cure any purported default under Section 20(a).

         (e)      Subsection 23(c)(ii) shall be limited to defaults consisting
of the failure of Tenant to pay money due to Landlord.

         (f)      In the subsection 23(c)(iii), the term "10 days" is hereby
deleted in the first and second lines, and the term "30 days" is inserted in
lieu thereof in each instance. At the end of Section 23(c)(iii), change the
period to a comma and insert "within an additional period of time not to exceed
90 days."

         (g)      Subsection 23(c)(iv) is deleted and the following is
substituted therefor: "Any notice given by either party pursuant to this Section
which is served in compliance with Section 27 shall be adequate notice for the
purpose of such party's exercise of any available remedies under the terms of
this lease."

         (h)      The first three (3) sentences of subsection 23(d) are hereby
restated in their entirety as follows:

                  "No waiver by either party of a breach by the other shall be a
waiver of any subsequent breach, nor shall any forbearance by a party to seek a
remedy for any breach by the other party be a waiver by such forbearing party of
any rights and remedies with respect to such or any subsequent breach. Efforts
by a party to mitigate the damages caused by the other party's default shall not
constitute a waiver of the mitigating party's right to recover damages
hereunder. No right or remedy herein conferred upon or reserved to either party
is intended to be exclusive of any other right or remedy provided herein or by
law, but each shall be cumulative and in addition to every other right or remedy
given herein or now or hereafter existing at law or in equity."

         (i)      If Landlord accelerates Tenant's obligations under this lease
pursuant to the provisions of subsection 23(b)(iii), payment from Tenant to
Landlord of the accelerated obligations which would not have been due at the
time of payment, but for Tenant's default and the resulting acceleration, shall
be discounted to present values as of the date of such payment using the prime
rate of interest (the "Prime Rate") as published in The Wall Street Journal (or
any successor publication thereto) on the day before the date that payment is
made, or, if The Wall Street Journal (or any successor publication thereto) is
not published on the last mentioned date, using the prime rate of interest as
published in the immediately preceding edition of The Wall Street Journal (or
any successor publication thereto). Payments by Tenant shall first be applied to
Landlord's reasonable out-of-pocket costs directly associated with Tenant's
default and Landlord's acceleration; next to late charges previously accrued and
unpaid; next to interest accrued; next to Tenant's obligation that would have
been due from Tenant as of the date of

                                      R-20



payment had acceleration not occurred; and last to Tenant's obligations which
would not have been due at the date of payment, but for the acceleration. The
definition of "Term" as used in this Section 23(b)(iii) shall mean and include
only the then current term hereof during which the default occurs, unless prior
to such default occurring, Tenant shall have caused the Term hereof to be
extended in accordance with the provisions of this Lease.

         (j)      If Tenant defaults under the terms of this lease resulting in
Landlord recovering possession of the Premises, then Landlord agrees to use
reasonable efforts to relet the Premises in mitigation of Landlord's damages.
Landlord shall have no obligation to relet the Premises or any portion thereof
in preference to other space available for lease in the Building or in any other
building owned by Landlord or its affiliates.

55.      Landlord's Representation Regarding Authority. Landlord is a duly
formed Pennsylvania limited partnership in good standing, and has full
partnership power and authority to enter into this lease and has taken all
partnership action necessary to carry out the transaction contemplated herein,
so that when executed, this lease constitutes a valid and binding obligation in
accordance with its terms.

56.      Additional Provisions Relating to Liability of Landlord.

         (a)      The first sentence of Section 25 is hereby restated in its
entirety as follows:

                  "The word "Landlord" as used herein includes the Landlord
named above as well as its successors and assigns, each of which shall be under
the same obligations and liabilities accruing after it acquires its interest in
the Property and each of which shall have the same rights, remedies, powers,
authorities, and privileges as it would have had if it originally signed this
Lease as Landlord."

         (b)      The following language is added at the end of the second
sentence of Section 25:

                  "(provided, except in the event of a successor in interest to
Landlord which acquired its interest by reason of an execution sale or a deed in
lieu of foreclosure, Landlord's successor in interest, in writing, expressly
assumes this Lease and agrees to perform all obligations thereafter accruing
hereunder".

         (c)      The last clause of the third sentence is hereby amended to
read "....Tenant shall look solely to the equity of Landlord in the Property and
the rents, issues, profits and sales proceeds therefrom for the satisfaction of
Tenant's claims".

57.      Additional Provisions Relating to Interpretation; Definitions. In
subsection 26(d), on the second (2nd) line, change 15%" to "12%".

58.      Additional Provisions Relating to Notices.

         (a)      The following language is hereby deleted from the first
sentence of Section 27: "except that after the Commencement Date Tenant's
address shall be at the Premises,".

                                      R-21



         (b)      The following language is hereby added at the end of the first
sentence of Section 27: "in writing upon not less than thirty (30) days'
notice."

         (c)      The last sentence of Section 27 is hereby restated in its
entirety as follows:

                  The giving of notice by either party's attorneys,
representatives, and agents under this Section shall be deemed to be the acts of
such party; however, the foregoing provisions governing the date on which a
notice is deemed to have been received shall mean and refer to the date on which
a party to this lease, and not its counsel or other recipient to which a copy of
the notice may be sent, is deemed to have received the notice.

59.      Additional Provisions Relating to Tenant Estoppel Certificate.

         (a)      In the first numbered paragraph of the Tenant Estoppel
Certificate, the phrase "to Tenant's knowledge" is inserted before the phrase
"the Lease is in full force and effect."

         (b)      In the third numbered paragraph of the Tenant Estoppel
Certificate, the following phrase is added at the end of the sentence: "to
Tenant's knowledge."

         (c)      In the sixth numbered paragraph of the Tenant Estoppel
Certificate, in the penultimate line thereof, the phrase "to Tenant's knowledge"
is inserted before the phrase "at the present time."

         (d)      In the eighth numbered paragraph of the Tenant Estoppel
Certificate, the phrase "to Tenant's knowledge" is inserted before the word
"involuntary."

60.      Additional Provisions Relating to Building Rules.

         (a)      In the event of any inconsistency between the Building Rules
and the Lease (including the Rider to the Lease), the Lease shall prevail.

         (b)      Notwithstanding any provision of Building Rule 6 to the
contrary, it is agreed that Tenant shall have no obligation to spackle nail
holes in walls or to repair a hole in the back of a door which resulted from the
installation of a coat hook.

         (c)      Notwithstanding the prohibition contained in Building Rule 7,
it is agreed that Tenant may change locks on doors, provided that, at all times,
Landlord is supplied with the means of access to all portions of the Premises.

         (d)      The provisions of Building Rule 20 notwithstanding, Landlord
agrees to use reasonable efforts to enforce the Building Rules in a reasonable,
uniform and nondiscriminatory matter.

61.      Representations and Warranties of Landlord. Landlord represents and
warrants to Tenant as follows:

         (a)      Landlord is the owner of the Property in fee simple and there
are no outstanding leases with respect to the Property.

                                      R-22



         (b)      There are no covenants, easements or restrictions recorded
against the Property which require approval by any third party as a condition to
the installation of the Generator pursuant to Section 33 of this lease or the
signs pursuant to Sections 8 and 40 of this lease.

         (c)      There are currently no assessments payable for public
improvements to the Property and Landlord has received no written notice that
any such public improvements have been proposed by any governmental authority
having jurisdiction over the Property.

                                      R-23



                               CORPORATE GUARANTY

         THIS GUARANTY is made this 26th day of February, 2003, by ADVANTA
CORP., a Delaware corporation, having a principal address at Welsh and McKean
Roads, Spring House, PA 19477.

                                   BACKGROUND:

         A.       LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited
partnership ("Landlord") with offices at 125 Witmer Road, Horsham, PA 19044, is
about to enter into a certain lease (the "Lease") with ADVANTA SHARED SERVICES
CORP., a Delaware corporation ("Tenant"), for space in Landlord's building
located at 700 Dresher Road, Horsham, PA (the "Premises").

         B.       Guarantor is the sole shareholder of Tenant and therefore
benefits directly from the Lease.

         C.       Landlord has agreed to grant, execute and deliver the Lease to
Tenant in consideration, among other things, of the covenants and obligations
made and assumed by Guarantor as herein set forth.

                                   AGREEMENT:

         In order to induce Landlord to execute the Lease and in further
consideration of the sum of Ten Dollars ($10.00) and other good and valuable
consideration paid by Landlord to Guarantor, intending to be legally bound
hereby, Guarantor irrevocably and unconditionally agrees as follows:

         1.       Guarantor hereby guarantees, upon receipt of written demand
from Landlord, the full and prompt payment of all rent and additional rent and
any and all other sums payable by Tenant under the Lease, and the due and
punctual performance of all of Tenant's other obligations thereunder.

         2.       Guarantor hereby guarantees, upon receipt of written demand
from Landlord, the due and punctual payment in full of (a) any and all loss,
damages or expenses payable by Tenant pursuant to the Lease, incurred by
Landlord and arising out of any default by Tenant in performing any of its
obligations under the Lease, including but not limited to, all attorneys' fees
which Landlord incurs as the result of the default of Tenant, and (b) all costs
and expenses, including attorney's fees, incurred by Landlord in the enforcement
of this Guaranty.

         3.       Landlord may, in its sole discretion, without notice to
Guarantor and without in any way affecting or terminating any of Guarantor's
obligations and liabilities hereunder, from time to time, (a) waive compliance
with the terms of the Lease or any default thereunder; (b)




modify or supplement any of the provisions of the Lease; (c) grant any extension
or renewal of the terms of the Lease; (d) effect any release, compromise or
settlement in connection therewith; (e) assign or otherwise transfer any or all
of Landlord's interest in the Lease; or (f) accept or discharge any other person
as a guarantor of any or all of the Tenant's obligations under the provisions of
the Lease.

         4.       Guarantor's obligations hereunder (a) shall be unconditional,
irrespective of any circumstance which might otherwise constitute a discharge of
a guarantor or Tenant at law or in equity; (b) shall be primary; (c) shall not
be conditioned upon Landlord's pursuit of any remedy which it has against Tenant
or any other person; and (d) shall survive and shall not be diminished, impaired
or delayed in connection with (i) any bankruptcy, insolvency, reorganization,
liquidation or similar proceeding relating to Tenant, its properties or
creditors or (ii) any transfer, assignment or termination of Tenant's interest
under the Lease.

         5.       All rights and remedies of Landlord under this Guaranty, the
Lease, or by law are separate and cumulative, and the exercise of one shall not
limit or prejudice the exercise of any other such rights or remedies. Any
waivers or consents by Guarantor as set forth in this Guaranty shall not be
deemed exclusive of any additional waivers or consents by Guarantor which may
exist in law or equity.

         6.       Guarantor hereby waives trial by jury in any action brought by
Landlord under or by virtue of this Guaranty. This covenant is made by Guarantor
as a further inducement to Landlord to enter into the Lease.

         7.       Guarantor agrees to deliver to Landlord a written instrument,
duly executed and acknowledged, certifying (a) that this Guaranty is in full
force and effect, (b) that, to the best of Guarantor's knowledge, Landlord is
not in default in the performance of any of its obligations under the Lease, and
(c) any other fact or, to the best of Guarantor's knowledge, any other condition
reasonably requested by Landlord or its assignees or by any mortgagee or
prospective mortgagee or their assignees or by any purchaser of the property
which is the subject of the Lease or any interest in such property including,
but not limited to, stating that it is understood that such written instrument
may be relied upon by any of the foregoing parties. The foregoing instrument
shall be furnished within ten (10) days after receipt of Landlord's written
request which may be made at any time and from time to time and shall be
addressed to Landlord and any mortgagee, prospective mortgagee, purchaser or
other party specified by Landlord.

         8.       Guarantor, at any time and from time to time after Landlord's
written request, agrees to promptly furnish to Landlord's mortgagee, prospective
mortgagee, assignee or purchaser financial information available to the public
through governmental filings by Guarantor as a public company and Guarantor's
most recent Annual Report.

         9.       In the event Guarantor pays any sum to or for the benefit of
Landlord pursuant to this Guaranty, then until the full payment and performance
of all obligations of Tenant under the Lease and Guarantor under this Guaranty,
Guarantor shall have no right of contribution, indemnification, exoneration,
reimbursement, subrogation or other right or remedy against or with respect to
Tenant, any other guarantor, or any collateral, whether real, personal or mixed,

                                       2



securing the obligations of Tenant to Landlord, and Guarantor hereby waives and
releases all and any such rights which it may now or hereafter have until the
full payment and performance of all obligations due under the Lease and this
Guaranty.

         10.      This Guaranty shall be binding upon Guarantor, and Guarantor's
heirs, administrators, executors, successors and assigns, and shall inure to the
benefit of Landlord and its heirs, successors and assigns. Without limiting the
generality of the preceding sentence, Guarantor specifically agrees that this
Guaranty may be (a) freely assigned by Landlord and (b) enforced by Landlord's
mortgagee.

         11.      The liability of the Guarantor hereunder, if more than one,
shall be joint and several. For purposes of this instrument the singular shall
be deemed to include the plural, and the neuter shall be deemed to include the
masculine and feminine, as the context may require.

         12.      If any provision of this Guaranty is held to be invalid or
unenforceable by a court of competent jurisdiction, the other provisions of this
Guaranty shall remain in full force and effect and shall be liberally construed
in favor of Landlord in order to effect the provisions of this Guaranty.

         13.      Guarantor agrees that this Guaranty shall be governed by and
construed according to the laws of the State in which the Premises are located
and that Guarantor is subject to the jurisdiction of the Court of the County or
relevant political subdivision in which the Premises are located.

         IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed, under seal, as of the day and year first above written.

                                              GUARANTOR:

                                              ADVANTA CORP.

Attest: /s/ Liane Browne                      By: /s/ Marcia M. Wilf
        ----------------                          --------------------
        Name: Liane Browne                        Name: Marcia M. Wilf
        Title: Asst. Secretary                    Title Vice President,
                                                        Corporate Administration

(CORPORATE SEAL)

                                       3



COMMONWEALTH OF PENNSYLVANIA :
                             :        SS
COUNTY OF Montogmery :

         On this 26th day of February, 2003, before me, the subscriber, a notary
public in and for the State and County aforesaid, personally appeared Marcia M.
Wilf, who acknowledged himself/herself to be the Vice Pres Corp Admin of ADVANTA
CORP., a Delaware corporation, and that s/he as such officer, being authorized
to do so, executed the same for the purpose therein contained by signing the
name of the corporation by himself/herself as such officer.

         IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                               /s/ Patricia D. Kelly
                                               ---------------------
                                               Notary Public

My Commission Expires:
                                               (Notarial Seal)

EX-12

                                                                               .
                                                                               .
                                                                               .
Exhibit 12

                         ADVANTA CORP. AND SUBSIDIARIES
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES



                                                                THREE MONTHS ENDED                SIX MONTHS ENDED
($ IN THOUSANDS)                                                     JUNE 30,                          JUNE 30,
- ---------------------------------------------------------------------------------------------------------------------
                                                               2003            2002            2003            2002
- ---------------------------------------------------------------------------------------------------------------------
                                                                                                  
Income from continuing operations                            $ 6,281         $ 7,124         $12,186          $11,358
Income tax expense                                             3,932           4,459           7,628            7,110
- ---------------------------------------------------------------------------------------------------------------------
Earnings before income taxes                                  10,213          11,583          19,814           18,468
Fixed charges:
  Interest                                                    13,111          12,369          24,382           25,479
  One-third of all rentals                                       664             437           1,304              923
  Preferred stock dividend of subsidiary trust                 2,248           2,248           4,495            4,495
- ---------------------------------------------------------------------------------------------------------------------
  Total fixed charges                                         16,023          15,054          30,181           30,897
- ---------------------------------------------------------------------------------------------------------------------
Earnings before income taxes and fixed charges               $26,236         $26,637         $49,995          $49,365
Ratio of earnings to fixed charges(1)                           1.64 x          1.77 x          1.66 x           1.60 x


(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 portion deemed representative of the
         interest factor) of rental expense on operating leases, and preferred
         stock dividends of subsidiary trust.

EX-31.1

Exhibit 31.1

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
           PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dennis Alter, certify that:

         1.       I have reviewed this quarterly report on Form 10-Q of Advanta
                  Corp.;

         2.       Based on my knowledge, this report does not contain any untrue
                  statement of a material fact or omit to state a material fact
                  necessary to make the statements made, in light of the
                  circumstances under which such statements were made, not
                  misleading with respect to the period covered by this report;

         3.       Based on my knowledge, the financial statements, and other
                  financial information included in this report, fairly present
                  in all material respects the financial condition, results of
                  operations and cash flows of the registrant as of, and for,
                  the periods presented in this report;

         4.       The registrant's other certifying officer(s) and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-15(e) and 15d-15(e)) for the registrant and have:

                  (a)      Designed such disclosure controls and procedures, or
                           caused such disclosure controls and procedures to be
                           designed under our supervision, to ensure that
                           material information relating to the registrant,
                           including its consolidated subsidiaries, is made
                           known to us by others within those entities,
                           particularly during the period in which this report
                           is being prepared;

                  (b)      (Paragraph omitted pursuant to SEC Release Nos.
                           33-8238 and 34-47986);

                  (c)      Evaluated the effectiveness of the registrant's
                           disclosure controls and procedures and presented in
                           this report our conclusions about the effectiveness
                           of the disclosure controls and procedures, as of the
                           end of the period covered by this report based on
                           such evaluation; and

                  (d)      Disclosed in this report any change in the
                           registrant's internal control over financial
                           reporting that occurred during the registrant's most
                           recent fiscal quarter (the registrant's fourth fiscal
                           quarter in the case of an annual report) that has
                           materially affected, or is reasonably likely to
                           materially affect, the registrant's internal control
                           over financial reporting; and



         5.       The registrant's other certifying officer(s) and I have
                  disclosed, based on our most recent evaluation of internal
                  control over financial reporting, to the registrant's auditors
                  and the audit committee of the registrant's board of directors
                  (or persons performing the equivalent functions):

                  (a)      All significant deficiencies and material weaknesses
                           in the design or operation of internal control over
                           financial reporting which are reasonably likely to
                           adversely affect the registrant's ability to record,
                           process, summarize and report financial information;
                           and

                  (b)      Any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal control over
                           financial reporting.


By: /s/ Dennis Alter
- ----------------
Dennis Alter
Chief Executive Officer
Date: August 13, 2003




                                     - 2 -

EX-31.2

Exhibit 31.2

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
           PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Philip M. Browne, certify that:

         1.       I have reviewed this quarterly report on Form 10-Q of Advanta
                  Corp.;

         2.       Based on my knowledge, this report does not contain any untrue
                  statement of a material fact or omit to state a material fact
                  necessary to make the statements made, in light of the
                  circumstances under which such statements were made, not
                  misleading with respect to the period covered by this report;

         3.       Based on my knowledge, the financial statements, and other
                  financial information included in this report, fairly present
                  in all material respects the financial condition, results of
                  operations and cash flows of the registrant as of, and for,
                  the periods presented in this report;

         4.       The registrant's other certifying officer(s) and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-15(e) and 15d-15(e)) for the registrant and have:

                  (a)      Designed such disclosure controls and procedures, or
                           caused such disclosure controls and procedures to be
                           designed under our supervision, to ensure that
                           material information relating to the registrant,
                           including its consolidated subsidiaries, is made
                           known to us by others within those entities,
                           particularly during the period in which this report
                           is being prepared;

                  (b)      (Paragraph omitted pursuant to SEC Release Nos.
                           33-8238 and 34-47986);

                  (c)      Evaluated the effectiveness of the registrant's
                           disclosure controls and procedures and presented in
                           this report our conclusions about the effectiveness
                           of the disclosure controls and procedures, as of the
                           end of the period covered by this report based on
                           such evaluation; and

                  (d)      Disclosed in this report any change in the
                           registrant's internal control over financial
                           reporting that occurred during the registrant's most
                           recent fiscal quarter (the registrant's fourth fiscal
                           quarter in the case of an annual report) that has
                           materially affected, or is reasonably likely to
                           materially affect, the registrant's internal control
                           over financial reporting; and

                                     - 1 -



         5.       The registrant's other certifying officer(s) and I have
                  disclosed, based on our most recent evaluation of internal
                  control over financial reporting, to the registrant's auditors
                  and the audit committee of the registrant's board of directors
                  (or persons performing the equivalent functions):

                  (a)      All significant deficiencies and material weaknesses
                           in the design or operation of internal control over
                           financial reporting which are reasonably likely to
                           adversely affect the registrant's ability to record,
                           process, summarize and report financial information;
                           and

                  (b)      Any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal control over
                           financial reporting.



By: /s/ Philip M. Browne
- --------------------
Philip M. Browne
Chief Financial Officer
Date: August 13, 2003


                                     - 2 -

EX-32.1

EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Quarterly Report of Advanta Corp. (the
"Company") on Form 10-Q for the period ending June 30, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Dennis
Alter, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

         (1)      the Report fully complies with the requirements of Section
                  13(a) or 15(d) of the Securities Exchange Act of 1934; and

         (2)      the information contained in the Report fairly presents, in
                  all material respects, the financial condition and result of
                  operations of the Company.

/s/ Dennis Alter
- --------------------------
Dennis Alter
Chief Executive Officer
August 13, 2003

EX-32.2

EXHIBIT 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Quarterly Report of Advanta Corp. (the
"Company") on Form 10-Q for the period ending June 30, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Philip
M. Browne, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

         (1)      the Report fully complies with the requirements of Section
                  13(a) or 15(d) of the Securities Exchange Act of 1934; and

         (2)      the information contained in the Report fairly presents, in
                  all material respects, the financial condition and result of
                  operations of the Company.

/s/ Philip M. Browne
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Philip M. Browne
Chief Financial Officer
August 13, 2003