-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, pV4skKNKo2v4KC4DEc6HxJhSH8DfhCedP7Ca8OKaLnFWGTSSWYo0icNl++M7/l7S NFL8sHLXT+0Hx4Z4OH6lvw== 0000893220-94-000288.txt : 19940613 0000893220-94-000288.hdr.sgml : 19940613 ACCESSION NUMBER: 0000893220-94-000288 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19940610 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANTA CORP CENTRAL INDEX KEY: 0000096638 STANDARD INDUSTRIAL CLASSIFICATION: 6141 IRS NUMBER: 231462070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-53475 FILM NUMBER: 94533749 BUSINESS ADDRESS: STREET 1: 650 NAAMANS RD STREET 2: BRANDYWINE CORPORATE CENTER CITY: CLAYMONT STATE: DE ZIP: 19703 BUSINESS PHONE: 2156574000 MAIL ADDRESS: STREET 1: BRANDYWINE CORPORATE CENTER STREET 2: 650 NAAMANS ROAD CITY: CLAYMONT STATE: DE ZIP: 19703 FORMER COMPANY: FORMER CONFORMED NAME: TSO FINANCIAL CORP DATE OF NAME CHANGE: 19880306 FORMER COMPANY: FORMER CONFORMED NAME: TEACHERS SERVICE ORGANIZATION INC DATE OF NAME CHANGE: 19850812 S-3/A 1 PRE-EFFECTIVE AMENDMENT TO S-3 ADVANTA CORP. 1 As Filed with the Securities and Exchange Commission on June 10, 1994 Registration No. 33-53475 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- PRE-EFFECTIVE AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- ADVANTA CORP. (Exact Name of Registrant as specified in its Charter) Delaware 23-1462070 (State of Incorporation) (I.R.S. Employer Identification No.)
Brandywine Corporate Center 650 Naamans Road Claymont, Delaware 19703 (302) 791-4400 (Address and telephone number of principal executive office) --------------- GENE S. SCHNEYER, ESQ. Advanta Corp. Five Horsham Business Center 300 Welsh Road P. O. Box 749 Horsham, Pennsylvania 19044-0749 (215) 657-4000 (Name, address and telephone number of agent for service) --------------- Approximate date of commencement of proposed sale to the public: As soon as practicable after the Registration Statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or reinvestment plans, please check the following box: / / If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933, check the following box: / x / --------------- The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. 2 PROSPECTUS Subject to Completion, Dated June 10, 1994 ADVANTA CORP. 18,000 Shares of Class B Common Stock This Prospectus relates to 18,000 shares of Class B Common Stock, par value $.01 per share (the "Class B Common Stock"), of Advanta Corp. (the "Company"), which may be offered by Adizes Institute, Inc. (the "Selling Shareholder") from time to time, by registered securities brokers and/or dealers, as may be directed by the Selling Shareholder or its representatives. The Class B Common Stock is quoted on the National Association of Securities Dealers Automated Quotation National Market System (the "NASDAQ-NMS") under the symbol ADVNB and is the non-voting class of common stock of the Company. On June 8, 1994, the last reported sale price of the Company's Class B Common Stock was $34.25 per share, as reported on the NASDAQ-NMS. Investment in the shares involves material risks. See "Investment Considerations." The Selling Shareholder will bear all commissions, discounts and other compensation paid to brokers or dealers in connection with the sale of the shares. Other offering expenses, estimated at $1,600 will be borne by the Company. See "Plan of Distribution." THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Date of this Prospectus is ,1994. 1 3 TABLE OF CONTENTS
Page ---- Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Incorporation of Certain Information by Reference . . . . . . . . . . . . . . . . . . . . . 3 The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Investment Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Selling Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
No person is authorized to give any information or to make any representation not contained in this Prospectus, and any information or representation not contained herein must not be relied upon as having been authorized by the Company or the Selling Shareholder. This Prospectus does not constitute an offer of any securities other than the Class B Common Stock to which it relates or an offer to any person in any jurisdiction where such offer would be unlawful. Neither the delivery of this Prospectus nor any sales made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date hereof. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of the Commission: Seven World Trade Center, 13th Floor, New York, N.Y. 10048; and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may also be obtained at prescribed rates from the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company has filed with the Commission a registration statement (herein together with all amendments and exhibits thereto called the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Class B Common Stock offered hereby. This Prospectus does not contain all of the information set forth in the Registration Statement. For further information with respect to the Company and the Class B Common Stock offered hereby, reference is made to the Registration Statement. Statements contained in this Prospectus concerning the provisions of certain documents are not necessarily complete and, in each instance, reference is made to the copy of such document filed as an exhibit to the Registration Statement, each statement being qualified in all respects by such reference. Copies of all or any part of the Registration Statement, including exhibits thereto, may be obtained, upon payment of the prescribed fees, at the offices of the Commission as set forth above. 2 4 INCORPORATION OF CERTAIN INFORMATION BY REFERENCE As required by the Commission, the following documents previously filed by the Company (Commission File No. 0-14120) with the Commission under the Exchange Act are incorporated in this Prospectus by reference: 1. The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993; 2. The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994; 3. The Company's Current Reports on Form 8-K dated January 26, 1994 and April 19, 1994; and 4. The description of the Company's Class B Common Stock which is contained in the Registration Statement on Form 8-A filed on April 23, 1992 by the Company to register such securities under Section 12 of the Exchange Act, File No. 0- 14120, including any amendments or reports filed for the purpose of updating such description. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Prospectus and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modified or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom a copy of this Prospectus is delivered, upon written or oral request, a copy of any document incorporated herein by reference (other than exhibits to such document which are not specifically incorporated by reference in such document). Requests for such documents should be directed to: Investor Relations Department, Advanta Corp., Five Horsham Business Center, P.O. Box 749, Horsham, Pennsylvania, 19044, telephone (215) 784-5335. THE COMPANY The Company is a highly focused direct marketer of select consumer financial services. The Company primarily originates and services credit cards and mortgage loans. Other businesses include equipment leasing, credit insurance and deposit products. Most of the Company's credit card receivables, bank deposits and mortgage loan receivables are held by Colonial National Bank USA ("Colonial National"), a nationally-chartered bank located in Claymont, Delaware. At March 31, 1994, the Company's assets under management totaled approximately $6.3 billion. The Company was incorporated in Delaware in 1974 as Teachers Service Organization, Inc., the successor to a business originally founded in 1951. In January 1988, the Company's name was changed from TSO Financial Corp. to Advanta Corp. The Company's principal executive office is located at Brandywine Corporate Center, 650 Naamans Road, Claymont, Delaware 19703. Its principal operating offices are located at Five Horsham Business Center, 300 Welsh Road, Horsham, Pennsylvania 19044. The Company's telephone numbers at its principal executive and operating offices are, respectively, (302) 791-4400 and (215) 657-4000. References to the Company in this Prospectus include its consolidated subsidiaries unless the context otherwise requires. 3 5 INVESTMENT CONSIDERATIONS In addition to the other information in this Prospectus, investors should carefully consider the following factors, among others, in connection with an investment in the Class B Common Stock: LIMITED AVAILABILITY OF BANK AND INSURANCE COMPANY ASSETS; IMPACT ON LIQUIDITY. Banking regulations limit the amount of dividends that a bank may pay. Further, because of regulatory considerations, Colonial National does not intend to make loans to the Company. In addition, Arizona insurance regulations restrict the amount of dividends which an insurance company may distribute without the prior consent of the Director of Insurance. The limited availability to the Company of dividends from Colonial National and the Company's insurance subsidiaries affects the Company's liquidity. For the reasons described above, dividends from Colonial National and the Company's insurance subsidiaries are not expected, for the foreseeable future, to be the Company's major source of liquidity in satisfying its obligations to creditors or in providing a source of dividend payments to stockholders. The Company currently depends on the public sale of debt securities as its primary source of liquidity at the holding company level. RISKS ASSOCIATED WITH MAINTAINING PORTFOLIOS OF CREDIT CARD RECEIVABLES AND MORTGAGE LOANS. There are certain risks associated with maintaining portfolios of credit card receivables and mortgage loans. The primary risks involve the possibility of future economic downturns causing an increase in credit losses, and interest rate fluctuations. These risks are inherent to every lender. The Company believes its credit loss experience is generally comparable to industry averages. With respect to interest rate fluctuations, the Company pursues a disciplined interest rate risk management, which includes computer simulations of various scenarios, that it believes will enable it to readily adjust to most market variations. REGULATION. The banking and finance businesses in general are the subject of extensive regulation at both the state and federal levels. Numerous legislative and regulatory proposals are advanced each year which, if adopted, could adversely affect the Company's profitability or the manner in which the Company conducts its activities. In addition, the outcome of pending litigation against other credit card issuers concerning the legality of certain credit card fees and charges may adversely impact the Company's business. COMPETITION. As a marketer of credit products, the Company faces intense competition from numerous providers of financial services. Although the Company believes it is generally competitive, there can be no assurance that its ability to market its services successfully or to obtain adequate yields on its loans will not be affected by the nature of the competition that now exists or may develop. For example, competition in the credit card industry is increasing as large corporate enterprises such as AT&T, General Motors Corp., General Electric Co. and Ford Motor Co. have recently entered the market, and other large nonbank organizations are expected to enter the market as well. Since many of these credit cards have only recently been introduced, the Company cannot assess the aggregate effect of these competitors upon the Company's credit card business. In seeking investment funds from the public, the Company faces competition from banks, savings institutions, money market funds, credit unions and a wide variety of private and public entities that sell debt securities, some of which are publicly traded. Many of the competitors are larger and have more capital and other resources than the Company. There can be no assurance that competition from these other borrowers will not increase the Company's cost of funds. 4 6 PRICE DIFFERENTIAL BETWEEN CLASSES OF COMMON STOCK. Since adoption of an amendment to the Company's Certificate of Incorporation in 1992, the Company has had two classes of common stock. Class A Common Stock has voting rights, while Class B Common Stock, although carrying certain rights and privileges lacking in the Class A Common Stock, is non-voting. See "Description of Capital Stock - Class A Common Stock and Class B Common Stock." Since the dual class structure was established, the Class A Common Stock and the Class B Common Stock generally have traded at disparate market prices. This differential has been as much as $8.50. There can be no assurance that the price differential between the Class A Common Stock and the Class B Common Stock will be reduced or eliminated or as to the extent or continuation of any such price differential in the future. SELLING SHAREHOLDER Pursuant to an agreement (the "AII Agreement"), dated as of July 1, 1992, between the Company and Adizes Institute, Inc. (the "Selling Shareholder"), the Company agreed, subject to the terms and conditions contained in the AII Agreement and in consideration for certain consulting services performed by the Selling Shareholder between July 1992 and the date hereof, to sell directly to AII, from time to time, an aggregate of 18,000 shares of Class B Common Stock at an offering price of $11.00 per share. The shares of Class B Common Stock being offered by the Selling Shareholder pursuant to this Prospectus consist of the shares acquired by the Selling Shareholder under the AII Agreement. Prior to its acquisition of the shares pursuant to the AII Agreement, the Selling Shareholder beneficially owned no shares of the Company's Class A or Class B Common Stock. The 18,000 shares of Class B Common Stock being offered pursuant to this Prospectus are offered for the account of the Selling Shareholder. Subsequent to the completion of the offering, the Selling Shareholder will own no shares of the Company's Class A or Class B Common Stock. PLAN OF DISTRIBUTION The Selling Shareholder presently intends that any sales of the shares covered by this Prospectus will be effected at the then market price, to or through registered brokers and/or dealers, including dealers making a market in the Company's Class A and/or Class B Common Stock. Although no agreements, arrangements or understandings are in place regarding any such sales, and the brokers or dealers to or through whom such sales may be made have not been identified, the Selling Shareholder anticipates that it will pay normal broker's commissions on any such sales effected through brokers, and will receive the normal dealer's market price for any such shares sold to dealers. Such brokers or dealers and any other participating brokers or dealers may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales and their commissions or discounts and other compensation may be regarded as underwriter's compensation. DESCRIPTION OF CAPITAL STOCK CLASS A COMMON STOCK AND CLASS B COMMON STOCK Voting. The authorized capital of the Company includes 200,000,000 shares of Class A Common Stock, par value $.01 per share, of which 17,274,349 shares were outstanding on March 31, 1994. All outstanding shares are fully paid and non-assessable. The holders of the Company's Class A Common Stock are entitled to one vote per share; to receive such dividends, in conjunction with dividends to holders of the Company's Class B Common Stock, as legally may be declared by the Board of Directors, after dividends are paid to holders of preferred stock as described below; and upon liquidation, to receive any net assets of the Company after the liquidation rights of all holders of preferred stock, if any, have been satisfied. There are no preemptive, conversion, cumulative voting, or redemption rights applicable to the Class A Common Stock. 5 7 The authorized capital of the Company includes 200,000,000 shares of Class B Common Stock, par value $.01 per share, of which 22,733,843 shares were outstanding on March 31, 1994. All outstanding shares are fully paid and non-assessable. The holders of the Company's Class B Common Stock are entitled to the same rights as the holders of the Company's Class A Common Stock, except that the holders of Class B Common Stock may not vote (i) in the election of directors, (ii) on an amendment to the Company's Certificate of Incorporation (including an amendment to increase the authorized shares of Class B Common Stock), (iii) on a proposed merger or consolidation, (iv) on a proposed dissolution of the Company, or (v) on any other matter except to the extent described below or as required under the General Corporation Law of the State of Delaware. Holders of Class B Common Stock are entitled to vote on proposals to change the par value of the Class B Common Stock or to alter or change the powers, preferences or special rights of the shares of Class B Common Stock, including the dividend and Class B protection features described below, which proposals may affect them adversely. Holders of the Class B Common Stock are also entitled to the additional rights described in the following subsections. Dividends and Other Distributions. Any cash dividend with respect to either Class A Common Stock or Class B Common Stock, must be accompanied by a dividend on the other class of common stock. The Board of Directors may, however, in its discretion, declare a dividend per share with respect to the Class B Common Stock which is up to 20% higher (but under no circumstances lower) than the dividend declared with respect to the Class A Common Stock. In all other respects the dividends and other distributions, including the per share consideration in the event of a merger or consolidation, with respect to Class A Common Stock and Class B Common Stock are equal, except that dividends or other distributions payable in shares of common stock may be made only as follows: (i) in shares of Class B Common Stock to the holders of both Class A Common Stock and Class B Common Stock, (ii) in shares of Class A Common Stock to the holders of Class A Common Stock and in shares of Class B Common Stock to the holders of Class B Common Stock, or (iii) in any other authorized class or series of capital stock to the holders of both classes of common stock. Neither the Class A Common Stock nor the Class B Common Stock may be split, subdivided or combined unless the other is proportionately split, subdivided or combined. Although it is the present intention of the Board to maintain a higher dividend on the Class B Common Stock, the Board of Directors is not required to declare a higher dividend on the Class B Common Stock and the amount of future dividends, if any, on each class of common stock will depend on circumstances existing at the time, including the sufficiency of funds legally available for the payment of dividends. Class B Protection. Because of the existence of the two classes of common stock, one class with voting rights and the other with non-voting rights, voting rights disproportionate to equity ownership could be acquired through acquisitions of Class A Common Stock. The Board of Directors was advised that, while either class of common stock might trade at a premium relative to the other, the non-voting or lesser-voting common stocks of public companies with dual class capital structures frequently trade at a discount from the full voting common stocks of such companies. The Company therefore adopted the "Class B Protection" features described below as a means of helping to reduce or eliminate the economic reasons for the Class A Common Stock and Class B Common Stock to trade at disparate market prices, and to give holders of Class B Common Stock the opportunity to participate in any premium paid in the future for a significant block (10% or more) of the Class A Common Stock by a buyer who has not acquired a proportionate share of the Class B Common Stock. Although the Company adopted the "Class B Protection" features and has paid a higher dividend on the Class B Common Stock in an attempt to minimize any price differential between the classes of common stock, the Class A Common Stock and the 6 8 Class B Common Stock in fact generally have traded at disparate market prices. On June 8, 1994 the last reported sale price on the NASDAQ-NMS for the Class A Common Stock was $37.375 per share and the last reported sale price on the NASDAQ-NMS for the Class B Common Stock was $34.25 per share. During the period in which the two classes of common stock have existed, this differential has been as much as $8.50. The Company adopted the division of the common stock into two classes with the expressed expectation that the Company generally would issue shares of Class B Common Stock rather than Class A Common Stock in the future to raise equity, to finance acquisitions or pursuant to incentive compensation plans, even if the market price per share of the Class B Common Stock was lower at the relevant time than the market price per share of Class A Common Stock. There can be no assurance that the price differential between the Class A Common Stock and the Class B Common Stock will be reduced or eliminated or as to the extent or continuation of any such price differential in the future. If after April 24, 1992, the effective date of the Certificate of Amendment to the Company's Restated Certificate of Incorporation, any person or group acquires (other than upon issuance or sale by the Company, by operation of law, by will or the laws of descent and distribution, by gift, or by foreclosure of a bona fide loan) beneficial ownership of shares of Class A Common Stock constituting 10% or more of the then issued and outstanding shares of Class A Common Stock (any person or group making such acquisition being defined as a "Significant Stockholder"), and such person or group does not then own shares of Class B Common Stock constituting an equal or greater percentage of all then issued and outstanding shares of Class B Common Stock, such Significant Stockholder must, within a 90-day period beginning the day after becoming a Significant Stockholder, commence a public tender offer to acquire additional shares of Class B Common Stock (a "Class B Protection Transaction"). For purposes of this provision, the terms "beneficial ownership" and "group" have the same meanings as used in Regulation 13D promulgated under the Exchange Act. The Class B Protection feature does not change the ability of Dennis Alter or any member of his family or other management stockholder to transfer a significant voting interest in the Company to another person or group by the sale of their voting shares to such person or group. However, such person or group may also be required to purchase a proportionate amount of Class B Common Stock either concurrently from such stockholder or other persons or pursuant to a Class B Protection Transaction, as described below. In a Class B Protection Transaction, the Significant Stockholder must offer to acquire from the holders of the Class B Common Stock that number of shares of additional Class B Common Stock (the "Additional Shares") determined by (i) multiplying the percentage of issued and outstanding shares of Class A Common Stock beneficially owned by such Significant Stockholder which were acquired after April 24, 1992 by the total number of shares of Class B Common Stock outstanding on the date such person or group became a Significant Stockholder, and (ii) subtracting therefrom the total number of shares of Class B Common Stock beneficially owned by such Significant Stockholder on such date which were acquired after the initial distribution of Class B Common Stock to stockholders on May 5, 1992 pursuant to the Certificate of Amendment to the Company's Restated Certificate of Incorporation (including shares acquired on such date at or prior to the time such person or group became a Significant Stockholder). The Significant Stockholder must acquire all shares validly tendered or, if the number of shares tendered exceeds the number determined pursuant to such formula, a pro rata amount from each tendering holder. The offer price for any shares of Class B Common Stock required to be purchased by the Significant Stockholder pursuant to a Class B Protection Transaction is the greater of (i) the highest price per share paid by the Significant Stockholder for any share of Class A Common Stock in the six-month period ending on the date such person or group became a Significant Stockholder or (ii) the highest price of a share of Class A Common Stock or Class B Common Stock (whichever is higher) as reported on the NASDAQ-NMS (or such other quotation system or securities exchange constituting the principal trading market for either class of common stock) on the date such person or group became a Significant Stockholder. 7 9 A Class B Protection Transaction is also required each time a Significant Stockholder acquires an additional 10% of the then issued and outstanding Class A Common Stock (other than upon issuance or sale by the Company, by operation of law, by will or the laws of descent and distribution, by gift, or by foreclosure of a bona fide loan) after the last acquisition by such person or group which triggered the requirement for a Class B Protection Transaction, if such Significant Stockholder does not then beneficially own shares of Class B Common Stock acquired after the initial distribution of Class B Common Stock to stockholders on May 5, 1992 constituting an equal or greater percentage of all then issued and outstanding shares of Class B Common Stock. Such Significant Stockholder would be required to offer to buy that number of Additional Shares prescribed by the formula set forth above, even if a previous Class B Protection Transaction resulted in fewer shares of Class B Common Stock being tendered than such previous offer included. The requirement to engage in a Class B Protection Transaction is satisfied by making the requisite offer and purchasing validly tendered shares, even if the number of shares tendered is less than the number of shares included in the required offer. The penalty applicable to any Significant Stockholder that fails to make the required offer, or to purchase shares validly tendered (after proration, if any), is to automatically suspend the voting rights of the shares of Class A Common Stock owned by such Significant Stockholder until consummation of an offer as required or until divestiture of the shares of Class A Common Stock that triggered the offer requirement. To the extent that the voting power of any shares of Class A Common Stock is so suspended, such shares will not be included in the determination of aggregate voting shares for any purpose. Neither the Class B Protection Transaction requirement nor the related penalty applies to any increase in percentage ownership of Class A Common Stock resulting solely from a change in the total amount of Class A Common Stock outstanding. The Class B Protection provision does not prevent any person or group from acquiring a significant or controlling interest in the Company, provided such person or group acquires a proportionate percentage of the Class B Common Stock. If a Class B Protection Transaction is prescribed, the purchase price required to be paid in such offer may be higher than the price at which a Significant Stockholder might otherwise be able to acquire an identical amount of Class B Common Stock. Such requirement, therefore, could make an acquisition of a significant or controlling interest in the Company more expensive and, if a Class B Protection Transaction is required, more time consuming, than if such requirement did not exist. Consequently, a person or group might be deterred from acquiring a significant or controlling interest in the Company as a result of such requirement. Moreover, by restricting the ability of an acquiror to acquire a significant interest in the Class A Common Stock by paying a "control premium" for such stock without acquiring, or paying a similar premium for, Class B Common Stock, the Class B Protection provision should reduce or eliminate the economic reasons for the Class A Common Stock and Class B Common Stock to trade at disparate market prices. Convertibility. Except as described below, neither the Class A Common Stock nor the Class B Common Stock is convertible into another class of common stock or any other security of the Company. The Class B Common Stock could be converted into Class A Common Stock on a share-for-share basis by resolution of the Board of Directors if, as a result of the existence of the Class B Common Stock, the Class A Common Stock or the Class B Common Stock or both become excluded from quotation on the NASDAQ-NMS, or, if such shares are then listed on a national securities exchange, from trading on the principal national securities exchange on which the shares are then traded. 8 10 In addition, if at any time, as a result of additional issuances by the Company of Class B Common Stock, repurchases by the Company of Class A Common Stock or a combination of such issuances and repurchases, the number of outstanding shares of Class A Common Stock as reflected on the stock transfer books of the Company falls below 10% of the aggregate number of outstanding shares of Class A Common Stock and Class B Common Stock, then, immediately upon the occurrence of such event, all the outstanding shares of Class B Common Stock will be automatically converted into shares of Class A Common Stock, on a share-for-share basis. For purposes of the immediately preceding sentence, any shares of Class A Common Stock or Class B Common Stock repurchased by the Company will no longer be deemed "outstanding" from and after the date of repurchase. The Company has no present intention to repurchase any shares of its common stock. In view of the absence of a present intention by the Company to purchase any shares of common stock and the substantial number of shares of Class B Common Stock that would be required to be issued to reach the 10% threshold, the Company believes it unlikely that this provision will be triggered in the foreseeable future. CLASS A PREFERRED STOCK The authorized capital stock of the Company includes 1,010 shares of Class A Preferred Stock, par value $1,000 per share. All of such shares are held by J. R. Alter, the Company's founder. The Class A Preferred Stock is entitled to one-half of a vote per share on all matters on which stockholders are entitled to vote. No dividends may be declared or paid on the Company's outstanding common stock unless and until non-cumulative dividends of $140 per share, payable as and when declared, which are required to be paid on the Class A Preferred Stock for the applicable year (a total of $141,400) have been paid. The holder of the Class A Preferred Stock is not otherwise entitled to participate in the earnings or profits of the Company. Upon the liquidation of the Company, the holder of the Class A Preferred Stock is entitled to receive $1,000 per share ($1,010,000 in the aggregate) before any distributions are made to the holders of the Company's common stock. CLASS B PREFERRED STOCK The authorized capital of the Company also includes 1,000,000 shares of Class B Preferred Stock, par value $.01 per share, none of which is currently outstanding. The Company has no present plans to issue any shares of such stock. Class B Preferred Stock may be issued pursuant to resolutions of the Company's Board of Directors from time to time without any action of the stockholders. Such resolutions may authorize issuances in one or more series, and may fix and determine dividend and liquidation preferences, voting rights, conversion privileges, redemption terms, and other privileges and rights of the shares of each series so authorized. CERTAIN PROVISIONS IN THE CERTIFICATE OF INCORPORATION The Company's Certificate of Incorporation, as amended, contains certain provisions which may be deemed to be "anti-takeover" in nature in that such provisions may deter, discourage or make more difficult the assumption of control of the Company by another entity or person through a tender offer, merger, proxy contest or other transaction or series of transactions. One of these provisions is the authorization of 1,000,000 shares of Class B Preferred Stock which the Board of Directors of the Company may issue without stockholder approval for any proper corporate purpose. There are currently no plans or arrangements for the issuance of such shares. 9 11 The Company's Certificate of Incorporation, as amended, does not provide for cumulative voting by stockholders. This means that a significant minority stockholder would not necessarily be able to elect one or more designees to the Company's Board of Directors. The Company's Certificate of Incorporation, as amended, also provides that the members of the Board of Directors of the Company are classified in three classes. The term of each class runs for three years and expires at successive annual meetings of stockholders. Assuming the classes have a relatively equal number of directors, it would take a minimum of two annual meetings of stockholders to change the majority of the Board of Directors. The overall effect of the foregoing provisions may be to deter a future takeover that a majority of the stockholders might view to be in their best interests. In addition, these provisions may make it more difficult to remove incumbent management. EXPERTS The consolidated financial statements and schedules incorporated by reference in this Prospectus and elsewhere in the Registration Statement have been audited by Arthur Andersen & Co., independent public accountants, as indicated in their reports with respect thereto, and are incorporated herein in reliance upon the authority of said firm as experts in giving said reports. 10 12 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.* Securities and Exchange Commission Registration fee . . . . . . . $ 100 Printing and engraving . . . . . . . . . . . . . . . . . . . . . . -- Blue Sky fees and expenses . . . . . . . . . . . . . . . . . . . . -- Accounting services . . . . . . . . . . . . . . . . . . . . . . . 1,250 Legal fees & expenses . . . . . . . . . . . . . . . . . . . . . . -- Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 250 ------ Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,600
------ * All amounts shown are estimates, other than the registration fee. The Selling Shareholder will pay its own personal attorney's fees, brokerage discounts and other expenses, if any. ITEM 16. EXHIBITS. *4.1 Restated Certificate of Incorporation of Registrant. ------ *Filed herewith. II-1 13 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Pre-Effective Amendment No. 1 to Form S-3 Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Horsham Township, Montgomery County, Commonwealth of Pennsylvania, on the 9th day of June, 1994. Advanta Corp. By: /s/ Gene S. Schneyer ------------------------------------- Gene S. Schneyer, Vice President and Secretary Pursuant to the requirements of the Securities Act, this Pre-Effective Amendment No. 1 to Form S-3 Registration Statement has been signed by the following persons in the capacities indicated on June 9, 1994. * - -------------------------------------------- Dennis Alter Chairman of the Board, Chief Executive Officer and Director * - -------------------------------------------- Richard A. Greenawalt President, Chief Operating Officer and Director * - -------------------------------------------- David D. Wesselink Senior Vice President and Chief Financial Officer * - -------------------------------------------- John J. Calamari Vice President, Finance, and Chief Accounting Officer II-2 14 * - ----------------------------------------- Alex W. "Pete" Hart Executive Vice Chairman and Director * - ----------------------------------------- Arthur P. Bellis, Director - ----------------------------------------- Max Botel, Director * - ----------------------------------------- Richard J. Braemer, Director * - ----------------------------------------- Anthony P. Brenner, Director * - ----------------------------------------- William C. Dunkelberg, Director * - ----------------------------------------- Ronald J. Naples, Director * - ----------------------------------------- Phillip A. Turberg, Director * - ----------------------------------------- Warren W. Kantor, Vice Chairman and Director * By: /s/ Gene S. Schneyer ------------------------------------ Gene S. Schneyer Attorney-in-Fact pursuant to a power of attorney previously filed as part of this Registration Statement. II-3 15 EXHIBIT INDEX ITEM *4.1. Restated Certificate of Incorporation of Registrant. ------- *Filed herewith. II-4 EX-4.1 2 RESTATED CERTIFICATE OF INCORPORATION 1 RESTATED CERTIFICATE OF INCORPORATION OF ADVANTA CORP. --------------------------------------- Advanta Corp., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), hereby certifies as follows: 1. The Corporation was originally incorporated under the name "Teachers Service Organization, Inc." on September 11, 1974. The Corporation's name was changed to "TSO Financial Corp." on May 16, 1985 and to its present name, "Advanta Corp.", on January 27, 1988. 2. The text of the Corporation's Restated Certificate of Incorporation as heretofore amended or supplemented is hereby restated to read in its entirety as follows: FIRST: The name of the corporation is Advanta Corp. SECOND: The address of its registered office in the State of Delaware is 32 Lockerman Square, Suite L-100, City of Dover 19901, County of Kent. The name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. THIRD: The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The aggregate number of shares of all classes of capital stock which the Corporation shall have authority to issue is: Four Hundred Million (400,000,000) shares of common stock ("Common Stock"), consisting of Two Hundred Million (200,000,000) shares of Class A Common Stock, par value $0.01 per share ("Class A Common Stock"), amounting in the aggregate to Two Million Dollars ($2,000,000), and Two Hundred Million (200,000,000) shares of Class B Common Stock, par value $0.01 per share ("Class B Common Stock"), amounting in the aggregate to Two Million Dollars ($2,000,000). One Thousand Ten (1,010) Shares of Class A Preferred Stock, par value $1,000 per share ("Class A Preferred Stock"), amounting in the aggregate to One Million Ten Thousand Dollars ($1,010,0000), and One Million (1,000,000) shares of Class B Preferred Stock, par value $0.01 per share ("Class B Preferred Stock"), amounting in the aggregate to Ten Thousand Dollars ($10,000). Terms of the Class A Common Stock and Class B Common Stock. The powers, preferences and rights of the Class A Common Stock and Class B Common 2 Stock, and the qualifications, limitations or restrictions thereof, shall be in all respects identical, except as otherwise required by law or expressly provided in this Restated Certificate of Incorporation, as amended. (a) Voting. At each annual or special meeting of stockholders, each holder of Class A Common Stock shall be entitled to one (1) vote in person or by proxy for each share of Class A Common Stock standing in such person's name on the stock transfer records of the Corporation in connection with the election of directors and all other actions submitted to a vote of stockholders; holders of Class B Common Stock shall not vote on any matters except as otherwise provided by this Restated Certificate of Incorporation, as amended, and the Delaware General Corporation Law. (b) Dividends and Other Distributions. The record holders of the Common Stock shall be entitled to receive such dividends and other distributions in cash, stock or property of the Corporation as may be declared thereon by the Board of Directors out of funds legally available therefor. Each share of Class A Common Stock and each share of Class B Common Stock shall have identical rights with respect to dividends and distributions (including distributions in connection with any recapitalization, and upon liquidation, dissolution or winding up of the Corporation); provided, that in the case of regular cash dividends the payment per share of Class B Common Stock may be up to twenty percent (20%) higher (but in no event less) than the payment per share of Class A Common Stock; and provided, further, that dividends or other distributions payable on the Common Stock in shares of Common Stock shall be made to all holders of Common Stock and may be made only as follows: (i) in shares of Class B Common Stock to the record holders of Class A Common Stock and to the record holders of Class B Common Stock; (ii) in shares of Class A Common Stock to the record holders of Class A Common Stock and in shares of Class B Common Stock to the record holders of Class B Common Stock; or (iii) in any other authorized class or series of capital stock to the holders of both classes of Common Stock. (c) Convertibility. Except as described below, neither the Class A Common Stock nor the Class B Common Stock shall be convertible into another class of Common Stock or any other security of the Corporation. (1) All outstanding shares of Class B Common Stock may be converted into shares of Class A Common Stock on a share-for-share basis by resolution of the Board of Directors if, as a result of the existence of the Class B Common Stock, either the Class A Common Stock or Class B Common Stock is, or both are, excluded from quotation on the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or, if such shares are listed on a national securities exchange, from trading on the principal national securities exchange on which such securities are traded. (2) All outstanding shares of Class B Common Stock shall be immediately converted into shares of Class A Common Stock on a share-for-share basis if at any time the number of outstanding shares of Class A Common Stock as reflected on the stock transfer records of the Corporation falls below 10% of the aggregate number of 2 3 outstanding shares of Class A Common Stock and Class B Common Stock. For purposes of the immediately preceding sentence, any shares of Class A Common Stock and Class B Common Stock repurchased or otherwise acquired by the Corporation shall no longer be deemed "outstanding" from and after the date of repurchase. (3) In the event of any conversion of the Class B Common Stock pursuant to subsection (c)(1) or (c)(2), certificates which formerly represented outstanding shares of Class B Common Stock will thereafter be deemed to represent a like number of shares of Class A Common Stock and all shares of Common Stock authorized by this Restated Certificate of Incorporation shall be deemed to be shares of Class A Common Stock. (d) Class B Protection. (1) If, from and after the Effective Time, any person or group acquires (other than upon issuance or sale by the Corporation, by operation of law, by will or the laws of descent and distribution, by gift, or by foreclosure of a bona fide loan) beneficial ownership of shares of Class A Common Stock constituting 10% or more of the then issued and outstanding shares of Class A Common Stock (such acquisition making such person or group a "Significant Stockholder"), and such person or group does not then own shares of Class B Common Stock acquired after the initial distribute of Class B Common Stock by the Corporation (the "Distribution") constituting an equal or greater percentage of all then issued and outstanding shares of Class B Common Stock, such Significant Stockholder must, within a 90-day period beginning the day after becoming a Significant Stockholder, commence a public tender offer in compliance with all applicable laws and regulations to acquire additional shares of Class B Common Stock (a "Class B Protection Transaction") as provided in this subsection (d) of this Article FOURTH. (2) In a Class B Protection Transaction, the Significant Stockholder must offer to acquire from the holders of the Class B Common Stock that number of shares of additional Class B Common Stock that number of shares of additional Class B Common Stock (the "Additional Shares") determined by (i) multiplying the percentage of issued and outstanding shares of Class A Common Stock beneficially owned by such Significant Stockholder which were acquired after the Effective Time by the total number of shares of Class B Common Stock issued and outstanding on the date such person or group became a Significant Stockholder, and (ii) subtracting therefrom the total number of shares of Class B Common Stock beneficially owned by such Significant Stockholder on such date which were acquired after the Distribution (including shares acquired on such date at or prior to the time such person or group became a Significant Stockholder). The Significant Stockholder must acquire all shares validly tendered; provided, however, that if the number of shares of Class B Common Stock tendered to the Significant Stockholder exceeds the number of shares required to be acquired pursuant to the formula set forth in this paragraph (2), the number of shares of Class B Common Stock acquired from each tendering holder shall be pro rata in proportion to the total number of shares of Class B Common Stock tendered by all tendering holders. (3) The offer price for any shares of Class B Common Stock required to be purchased by the Significant Stockholder pursuant to a Class B Protection Transaction 3 4 is the greater of (i) the highest price per share paid by the Significant Stockholder for any share of Class A Common Stock in the six-month period ending on the date such person or group became a Significant Stockholder or (ii) the highest bid price of a share of Class A Common Stock or Class B Common Stock (whichever is higher) on the NASDAQ National Market System (or such other quotation system or securities exchange constituting the principal trading market for either class of Common Stock) on the date such person or group became a Significant Stockholder. For purposes of paragraph (4) below, the applicable date for the calculations required by the preceding sentence shall be the date on which the Significant Shareholder becomes required to engage in a Class B Protection Transaction. In the event that the Significant Stockholder has acquired Class A Common Stock in the six-month period ending on the date such person or group becomes a Significant Stockholder for consideration other than cash, the value of such consideration per share of Class A Common Stock shall be as determined in good faith by the Board of Directors. (4) A Class B Protection Transaction shall also be required to be effected each time a Significant Stockholder acquires shares of Class A Common Stock constituting an additional 10% or more of the then issued and outstanding Class A Common Stock (other than upon issuance or sale by the Corporation, by operation of law, by will or the laws of descent and distribution, by gift, or by foreclosure of a bona fide loan) subsequent to the last acquisition of Class A Common Stock which triggered the requirement for a Class B Protection Transaction, if such Significant Stockholder does not then beneficially own shares of Class B Common Stock acquired after the Distribution constituting an equal or greater percentage of all issued and outstanding shares of Class B Common Stock. Such Significant Stockholder shall be required to offer to buy through a public tender offer that number of Additional Shares prescribed by the formula set forth in paragraph (2) above, and must acquire all shares validly tendered or a pro rata portion thereof, as specified in such paragraph (2) above, at the price determined pursuant to paragraph (3) above, even if a previous Class B Protection Transaction resulted in fewer shares of Class B Common Stock being tendered than such previous offer included. (5) The requirement to engage in a Class B Protection Transaction is satisfied by making the requisite offer and purchasing validly tendered shares, even if the number of shares tendered is less than the number of shares included in the required offer. (6) If any Significant Stockholder fails to make an offer required by this subsection (d) of Article FOURTH, or to purchase shares validly tendered and not withdrawn (after proration, if any ), such Significant Stockholder shall not be entitled to vote any shares of Class A Common Stock beneficially owned by such Significant Stockholder and acquired by such Significant Stockholder after the Effective Time unless and until such requirements are complied with or unless and until all shares of Class A Common Stock causing such offer requirement to be effective are no longer beneficially owned by such Significant Stockholder. To the extent that the voting power of any shares of Class A Common Stock is so suspended, such shares will not be included in the 4 5 determination of aggregate voting shares for any purpose under this Restated Certificate of Incorporation or the Delaware General Corporation Law. (7) The Class B Protection Transaction requirement shall not apply to any increase in percentage ownership of Class A Common Stock resulting solely from a change in the total amount of Class A Common Stock outstanding; provided, that any acquisition after such change which results in any person or group owning 10% or more of the Class A Common Stock (or an additional 10% or more of the Class A Common Stock subsequent to the last acquisition which triggered the requirement for a Class B Protection Transaction) excluding, with respect to the numerator but not the denominator for the calculation of such percentage, shares of Class A Common Stock held by such Significant Stockholder immediately after the Effective Time (or immediately after the last acquisition which triggered the requirement for a Class B Protection Transaction, as the case may be), shall be subject to any Class B Protection Transaction requirement that would be imposed with respect to a Significant Stockholder pursuant to this subsection (d) of Article FOURTH. (8) All calculations with respect to percentage ownership of issued and outstanding shares of either class of Common Stock will be based upon the numbers of issued and outstanding shares reported by the Corporation on the last filed of (i) the Corporation's most recent Annual Report on Form 10-K, (ii) its most recent Quarterly Report on Form 10-Q, or (iii) if any, its most recent Current Report on Form 8-K. (9) For purposes of this subsection (d) of Article FOURTH, the term "person" means a natural person, company, government, or political subdivision, agency or instrumentality of a government, or other entity. "Beneficial ownership" shall be determined pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any successor regulation. The formation or existence of a "group" shall be determined pursuant to Rule 13d-5(b) under the Exchange Act or any successor regulation. (e) Merger and Consolidation. In the event of a merger or consolidation of the Corporation with or into another entity (whether or not the Corporation is the surviving entity), the holders of Class B Common Stock shall be entitled to receive the same amount and form of consideration per share as the per share consideration, if any, received by any holder of the Class A Common Stock in such merger or consolidation. (f) Subdivision of Shares. If the Corporation shall in any manner split, subdivide or combine the outstanding shares of Class A Common Stock or Class B Common Stock, the outstanding shares of the other such class of Common Stock shall be proportionally split, subdivided or combined in the same manner and on the same basis as the outstanding shares of the other class of Common Stock have been split, subdivided or combined. (g) Power to Sell and Purchase Shares. The Board of Directors shall have the power to cause the Corporation to issue and sell all or any part of any class of stock 5 6 herein or hereafter authorized to such persons, firms, associations or corporations, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not greater consideration could be received upon the issue or sale of the same number of shares of another class, and as otherwise permitted by law. The Board of Directors shall have the power to cause the corporation to purchase any class of stock herein or hereafter authorized from such persons, firms, associations or corporations, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not less consideration could be paid upon the purchase of the same number of shares of another class, and as otherwise permitted by law. (h) Increase or Decrease in Number of Shares. The number of authorized shares of Class B Common Stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of a majority of the votes which may be collectively cast by holders of the Class A Common Stock and Class A Preferred Stock. Terms of the Preferred Stock. The following are the designations, powers, preferences and rights of the preferred stock and the qualifications, limitations and restrictions thereof: Holders of Class A Preferred Stock shall be entitled to one-half of a vote per share on all matters on which stockholders are entitled to vote. Non-cumulative dividends of One Hundred Forty Dollars ($140) per year shall be payable, as and when declared, from the earnings and profits of the Corporation on each share of Class A Preferred Stock outstanding. Holders of Class A Preferred Stock otherwise shall not be entitled to participate in the earnings and profits of the corporation. No dividends may be declared or paid on the Corporation's outstanding Common Stock at any time unless all dividends required to be paid on the Class A Preferred Stock pursuant to the foregoing provision for such year have been declared and paid in full. In the event of the liquidation, dissolution, or winding up, either voluntary or involuntary, of the Corporation, holders of the Class A Preferred Stock shall be entitled to receive One Thousand Dollars ($1,000) per share, before any distribution may be made to the holders of Common Stock of the Corporation. If, upon any liquidation, dissolution, or winding up of the Corporation, the amount so payable is not paid in full to the holders of the Class A Preferred Stock, the holders of Class A Preferred Stock shall share ratably in any such distribution of assets in proportion to the full amounts to which they are entitled. The consolidation or merger of the Corporation into or with any other corporation or corporations shall not be a liquidation, dissolution or winding up of the Corporation within the meaning of the foregoing provisions. The Board of Directors may issue in one or more series, up to 1,000,000 shares of Class B Preferred Stock, par value $0.01 per share, with full, limited, multiple, fractional or no voting rights, with such designations, preferences, qualifications, 6 7 privileges, limitations, restrictions, options, conversion rights, and other special relative rights as shall be fixed from time to time by resolution of the Board of Directors. The holders of Class B Preferred Stock shall not be entitled to vote as a class with the holders of any other class of capital stock of the Corporation on any matters except as otherwise provided in this Restated Certificate of Incorporation, as the Board of Directors shall provide upon the issuance thereof, or as specified by law. FIFTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter or repeal the By-Laws of the Corporation. SIXTH: The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors consisting of not less than three nor more than fifteen directors, the exact number of the directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors. At the 1986 annual meeting of stockholders, the directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. At the 1986 annual meeting of stockholders, Class I directors shall be elected for a one-year term, Class II directors for a two-year term and Class III directors for a three-year term. At each succeeding annual meeting of stockholders beginning in 1986, successors to the class of directors whose term expires at that annual meeting shall be elected for a three-year term. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director. A director shall hold office until the annual meeting for the year in which his term expires and until his successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. Any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, and any other vacancy may be filled by a majority of the Board of Directors then in office, although less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor. Stockholders shall not be entitled to cumulate their vote in the election of directors. Any amendment to these provisions regarding the election of directors shall require the affirmative vote of the holders of at least 75% of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote in the election of directors. 7 8 SEVENTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all of the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. EIGHTH: A director of this corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. Neither the amendment nor repeal of this paragraph, nor the adoption of any provision of the certificate of incorporation inconsistent herewith, shall eliminate or reduce the effect of this paragraph in respect of any matter which occurs, or any cause of action, suit or claim which accrues or arises, prior to such amendment, repeal or adoption of an inconsistent provision. 8 9 3. That the foregoing Restated Certificate of Incorporation was duly adopted in accordance with Section 245 of the General Corporation Law of the State of Delaware and only restates and integrates, and does not further amend, the provisions of the corporation's certificate of incorporation as theretofore amended or supplemented, and that there is no discrepancy between those provisions and the provisions of the foregoing Restated Certificate of Incorporation. IN WITNESS WHEREOF, Advanta Corp. has caused its corporate seal to be affixed hereto and this Restated Certificate of Incorporation to be executed in its corporate name this 11th day of May, 1994. Advanta Corp. By /s/ Dennis Alter ------------------- Dennis Alter Chairman of the Board [Seal] Attest: By /s/ Gene S. Schneyer ----------------------- Gene S. Schneyer Secretary
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