Document:

exv4w3

 

Exhibit 4.3

 

ADVANTA BUSINESS CARD MASTER TRUST

as Issuer

and

DEUTSCHE BANK TRUST COMPANY AMERICAS

as Indenture Trustee

CLASS D(2006-D2) TERMS DOCUMENT

dated as of June 8, 2006

to

ADVANTASERIES INDENTURE SUPPLEMENT

dated as of November 1, 2004

to

INDENTURE

dated as of August 1, 2000

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I
Definitions and Other Provisions of General Application
	 	 	 
	 	 	 
	 	 	 	 
	Section 1.01	 	Definitions
	 	 	1	 
	 	 	 
	 	 	 	 
	Section 1.02	 	Governing Law
	 	 	4	 
	 	 	 
	 	 	 	 
	Section 1.03	 	Counterparts
	 	 	4	 
	 	 	 
	 	 	 	 
	Section 1.04	 	Ratification of Master Indenture and AdvantaSeries Indenture Supplement
	 	 	4	 
	 	 	 
	 	 	 	 
	ARTICLE II
The Class D(2006-D2) Asset Backed Notes
	 	 	 
	 	 	 
	 	 	 	 
	Section 2.01	 	Creation and Designation
	 	 	5	 
	 	 	 
	 	 	 	 
	Section 2.02	 	Interest Payment; Margin Percentage
	 	 	5	 
	 	 	 
	 	 	 	 
	Section 2.03	 	Determination of One-Month LIBOR
	 	 	5	 
	 	 	 
	 	 	 	 
	Section 2.04	 	Required Deposits of Available Principal Collections to the Principal Funding Account; Payment of Principal
	 	 	6	 
	 	 	 
	 	 	 	 
	Section 2.05	 	Holders’ Rights to Payments of Interest and Principal
	 	 	7	 
	 	 	 
	 	 	 	 
	Section 2.06	 	Cash Collateral Account
	 	 	7	 
	 	 	 
	 	 	 	 
	Section 2.07	 	Spread Account
	 	 	7	 
	 	 	 
	 	 	 	 
	Section 2.08	 	Delivery and Payment for the Class
D(2006-D2) Notes; Form and Denomination
	 	 	7	 
	 	 	 
	 	 	 	 
	Section 2.09	 	Manner of Payment of Class D(2006-D2) Notes
	 	 	8	 
	 	 	 
	 	 	 	 
	Section 2.10	 	Monthly Servicing Fee
	 	 	8	 
	 	 	 
	 	 	 	 
	Section 2.11	 	Additional Requirements for Registration of and Limitations on Transfer and Exchange of Class D(2006-D2) Notes
	 	 	8	 

i

 

     CLASS D(2006-D2) TERMS DOCUMENT, dated as of June 8, 2006 (the “Terms Document”),
between WILMINGTON TRUST COMPANY, as Owner Trustee of ADVANTA BUSINESS CARD MASTER TRUST, a common
law trust organized and existing under the laws of the State of Delaware (herein, the
“Issuer” or the “Trust”), and DEUTSCHE BANK TRUST COMPANY AMERICAS (formerly known
as Bankers Trust Company), a banking corporation organized and existing under the laws of the State
of New York, not in its individual capacity, but solely as indenture trustee (herein, together with
its successors in the trusts thereunder as provided in the Master Indenture, the “Indenture
Trustee”) under the Master Indenture, dated as of August 1, 2000, as amended by Amendment No. 1
to the Master Indenture, dated as of May 9, 2006 (as amended and supplemented from time to time,
the “Master Indenture”), between the Issuer and the Indenture Trustee. This Terms Document
supplements the AdvantaSeries Indenture Supplement, dated as of November 1, 2004 (as amended and
supplemented from time to time, the “AdvantaSeries Indenture Supplement”) between the
Issuer and the Indenture Trustee, which supplements the Indenture.

     Pursuant to this Terms Document, the Issuer shall create a new tranche of Class D Notes and
shall specify the principal terms thereof.

ARTICLE I

Definitions and Other Provisions of General Application

     Section 1.01 Definitions. For all purposes of this Terms Document, except as
otherwise expressly provided or unless the context otherwise requires:

               (1) the terms defined in this Article have the meanings assigned to them in this Article, and
include the plural as well as the singular;

               (2) all other terms used herein which are defined in the AdvantaSeries Indenture Supplement or
the Master Indenture, either directly or by reference therein, have the meanings assigned to them
therein;

               (3) all accounting terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles and, except as otherwise herein expressly
provided, the term “generally accepted accounting principles” with respect to any computation
required or permitted hereunder means such accounting principles as are generally accepted in the
United States of America at the date of such computation;

               (4) all references in this Terms Document to designated “Articles,” “Sections” and other
subdivisions are to the designated Articles, Sections and other subdivisions of this Terms
Document;

               (5) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to
this Terms Document as a whole and not to any particular Article, Section or other subdivision;

- 1 -

 

               (6) in the event that any term or provision contained herein shall conflict with or be
inconsistent with any term or provision contained in the AdvantaSeries Indenture Supplement, the
Master Indenture or the Transfer and Servicing Agreement, the terms and provisions of this Terms
Document shall be controlling;

               (7) each capitalized term defined herein shall relate only to the Class D(2006-D2) Notes and
no other Tranche of Notes issued by the Issuer; and

               (8) “including” and words of similar import will be deemed to be followed by “without
limitation.”

     “Accumulation Amount” shall mean, for any Payment Date occurring during the
Accumulation Period, $3,125,000; provided, however, that if the Accumulation Period Length is
determined to be less than 8 months pursuant to Section 2.04(b), the Accumulation Amount for each
Payment Date with respect to the Accumulation Period will be equal to (i) the Outstanding Principal
Balance of the Class D(2006-D2) Notes divided by (ii) the Accumulation Period Length.

     “Accumulation Deposit Amount” means, for any Payment Date occurring during the
Accumulation Period, an amount equal to the sum of the Accumulation Amount for such Payment Date
and any existing Accumulation Shortfall.

     “Accumulation Period” shall mean, unless a Pay Out Event shall have occurred prior
thereto, the period commencing at the close of business on September 30, 2010 or such later date as
is determined in accordance with Section 2.04(b), and ending on the first to occur of (a) the
commencement of the Early Amortization Period, (b) the payment in full of the Outstanding Principal
Balance of the Class D(2006-D2) Notes and (c) the Class D(2006-D2) Final Maturity Date.

     “Accumulation Period Factor” shall mean, for the purpose of calculating the
Accumulation Period Length for the Class D(2006-D2) Notes, with respect to any Monthly Period, a
fraction, the numerator of which is equal to the sum of the initial invested amounts (or, if no
initial invested amount is defined in the applicable Indenture Supplement, then the initial
principal balance) of all outstanding Series, and the denominator of which is equal to the sum of
(a) the Initial Principal Balance of Class D(2006-D2) Notes, (b) the initial invested amounts (or,
if no initial invested amount is defined in the applicable Indenture Supplement, then the initial
principal balance) of all other Outstanding Classes and Tranches (without duplication) (other than
the Class D(2006-D2) Notes) which are not expected to be in their revolving periods, and (c) the
initial invested amounts (or, if no initial invested amount is defined in the applicable Indenture
Supplement, then the initial principal balance) of all other Outstanding Classes and Tranches
(without duplication) (other than the Class D(2006-D2) Notes) which are not allocating Shared
Principal Collections to other Series and are in their revolving periods; provided, however, that
this definition may be changed at any time if the Rating Agency Condition is satisfied.

- 2 -

 

     “Accumulation Period Length” means the number of whole months such that the sum of the
Accumulation Period Factors for each month during such period will be equal to or greater than the
Required Accumulation Factor Number; provided, however, that the Accumulation Period Length will
not be determined to be less than one month; provided further, however, that the determination of
the Accumulation Period Length may be changed at any time if the Rating Agency Condition is
satisfied.

     “Accumulation Shortfall” shall mean (a) on the first Payment Date during the
Accumulation Period, zero and (b) on each subsequent Payment Date during the Accumulation Period,
the excess, if any, of the Accumulation Deposit Amount for the previous Payment Date over the
amount deposited into the Principal Funding Account pursuant to Section 2.04(b) for the previous
Payment Date.

     “Class D(2006-D2) Final Maturity Date” means May 20, 2014.

     “Class D(2006-D2) Margin Percentage” means 2.25%, unless another percentage is
selected by the Transferor in accordance with Section 2.02(b).

     “Class D(2006-D2) Note” means any Note substantially in the form set forth in Exhibit
A-4 to the AdvantaSeries Indenture Supplement, designated therein as a Class D(2006-D2) Asset
Backed Note and duly executed and authenticated in accordance with the Master Indenture.

     “Class D(2006-D2) Noteholder” means a Person in whose name a Class D(2006-D2) Note is
registered in the Note Register.

     “Class D(2006-D2) Note Interest Rate” means a rate per annum equal to the sum of (a)
the Class D(2006-D2) Margin Percentage and (b) One-Month LIBOR as determined by the Indenture
Trustee on the related LIBOR Determination Date with respect to each Interest Period.

     “Class D(2006-D2) Termination Date” means the earliest to occur of (a) the Principal
Payment Date on which the Outstanding Principal Balance of the Class D(2006-D2) Notes is paid in
full, (b) the Class D(2006-D2) Final Maturity Date and (c) the date on which the Indenture is
discharged and satisfied pursuant to Article XI thereof.

     “Closing Date” means June 8, 2006.

     “Expected Final Principal Payment Date” means June 20, 2011.

     “Initial Principal Balance” means $25,000,000.

     “Interest Payment Date” means the scheduled due date of any payment of interest on the
Class D(2006-D2) Notes, which shall be each Payment Date. The first Interest Payment Date shall be
July 20, 2006.

     “LIBOR Determination Date” shall mean (1) with respect to the first Interest Payment
Date, (i) June 6, 2006 for the period from and including the Closing Date to but

- 3 -

 

excluding June 20, 2006, and on June 16, 2006 for the period from and including June 20, 2006
to but excluding July 20, 2006 and (2) with respect to any Interest Payment Date after the first
Interest Payment Date, the second London Business Day prior to the commencement of the related
Interest Period.

     “London Business Day” means any Business Day on which dealings in deposits in United
States Dollars are transacted in the London interbank market.

     “One-Month Index Maturity” means a maturity of one month commencing on the related
LIBOR Determination Date.

     “One-Month LIBOR” means, for any Interest Period, the London interbank offered rate
for one month United States dollar deposits determined by the Indenture Trustee on the LIBOR
Determination Date for such Interest Period in accordance with the provisions of Section 2.03.

     “Paying Agent” means Deutsche Bank Trust Company Americas.

     “Reference Banks” means three major banks in the London interbank market selected by
the Servicer.

     “Required Accumulation Factor Number” shall be equal to a fraction, rounded upwards to
the nearest whole number, the numerator of which is one and the denominator of which is equal to
the lowest monthly principal payment rate on the Accounts, expressed as a decimal, for the twelve
months preceding the date of such calculation; provided, however, that this definition may be
changed at any time if the Rating Agency Condition is satisfied.

     “Telerate Page 3750” means the display page currently so designated on the Moneyline
Telerate Service (or such other page as may replace that page on that service for the purpose of
displaying comparable rates or prices).

     Section 1.02 Governing Law. THIS TERMS DOCUMENT WILL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATION LAW, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

     Section 1.03 Counterparts. This Terms Document may be executed in any number of
counterparts, each of which so executed will be deemed to be an original, but all such counterparts
will together constitute but one and the same instrument.

     Section 1.04 Ratification of Master Indenture and AdvantaSeries Indenture Supplement.
As supplemented by this Terms Document, each of the Master Indenture and the AdvantaSeries
Indenture Supplement is in all respects ratified and confirmed and

- 4 -

 

the Master Indenture as so
supplemented by the AdvantaSeries Indenture Supplement and this Terms Document shall be read, taken
and construed as one and the same instrument.

[END OF ARTICLE I]

ARTICLE II

The Class D(2006-D2) Asset Backed Notes

     Section 2.01 Creation and Designation. There is hereby created a tranche of Class D
Notes to be issued pursuant to the Master Indenture and the AdvantaSeries Indenture Supplement to
be known as the “AdvantaSeries Class D(2006-D2) Asset Backed Notes.”

     Section 2.02 Interest Payment; Margin Percentage.

     (a) For each Interest Payment Date, the amount of interest due and payable with respect to the
Class D(2006-D2) Notes shall be an amount equal to the product of (i)(A) a fraction, the numerator
of which is the actual number of days in the related Interest Period and the denominator of which
is 360, multiplied by (B) the Note Interest Rate in effect with respect to the related Interest
Period, multiplied by (ii) the Outstanding Principal Balance of the Class D(2006-D2) Notes
determined as of the Record Date preceding the related Interest Payment Date. Any interest on the
Class D(2006-D2) Notes will be calculated on the basis of the actual number of days in the related
Interest Period and a 360-day year.

     (b) The Transferor may change the Class D(2006-D2) Margin Percentage upon satisfaction of the
Rating Agency Condition and without the prior consent of any Noteholder, so long as all of the
Class D(2006-D2) Notes are held by the Transferor or an Affiliate of the Transferor; provided,
however, that the Class D(2006-D2) Margin Percentage shall not exceed 2.25% at any time.

     Section 2.03 Determination of One-Month LIBOR.

     (a) On each LIBOR Determination Date, the Indenture Trustee shall determine One-Month LIBOR on
the basis of the rate for deposits in United States dollars having a One-Month Index Maturity
which appears on Telerate Page 3750 as of 11:00 a.m., London time, on such date. If such rate does
not appear on Telerate Page 3750, One-Month LIBOR for that LIBOR Determination Date shall be
determined on the basis
of the rates at which deposits in United States dollars, having a One-Month Index Maturity and
in an amount of not less than $1,000,000, are offered by the Reference Banks at approximately 11:00
a.m., London time, on that day to prime banks in the London interbank market. The Indenture
Trustee shall request the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two (2) such quotations are provided, One-Month LIBOR for that
LIBOR Determination Date shall be the arithmetic mean of the quotations. If fewer than two (2)
quotations are provided as requested, One-Month LIBOR for that LIBOR Determination Date will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in

- 5 -

 

United States dollars to
leading European banks having a One-Month Index Maturity and in an amount of not less than U.S.
$1,000,000; provided, that, if the banks selected by the Servicer are not quoting such rates,
One-Month LIBOR in effect for the applicable Interest Period will be the same as One-Month LIBOR
for the immediately preceding Interest Period.

     (b) The Note Interest Rate applicable to the then current and the immediately preceding
Interest Periods may be obtained by telephoning the Indenture Trustee at its corporate trust office
at (800) 735-7777 or such other telephone number as shall be designated by the Indenture Trustee
for such purpose by prior written notice by the Indenture Trustee to each Noteholder from time to
time.

     (c) On each LIBOR Determination Date, the Indenture Trustee shall send to the Transferor, by
facsimile or electronic transmission, notification of One-Month LIBOR for the following Interest
Period.

     Section 2.04 Required Deposits of Available Principal Collections to the Principal Funding
Account; Payment of Principal. With respect to any Payment Date, the amount to be deposited in
the Principal Funding Sub-Account pursuant to Section 4.16 of the AdvantaSeries Indenture
Supplement will be the amount determined pursuant to clause (a), (b) or (c) below for such Payment
Date, as applicable, or if more than one such clause is applicable, the highest amount determined
pursuant to any one of such clauses; provided, however, in no case shall the amount required to be
deposited exceed the Class D(2006-D2) Adjusted Invested Amount (calculated immediately before
giving effect to such deposit but after giving effect to any Investor Charge-Offs and any
reallocations of principal on such date).

     (a) Revolving Period. On each Payment Date during the Revolving Period, the required
deposit to the Principal Funding Sub-Account for the Class D(2006-D2) Notes will be zero.

     (b) Accumulation Period. On each Payment Date during the Accumulation Period, the
required deposit to the Principal Funding Sub-Account for the Class D(2006-D2) Notes will be the
Accumulation Deposit Amount for such Payment Date. The Accumulation Period is scheduled to
commence at the close of business on September
30, 2010; provided, however, that, if the Accumulation Period Length is less than 8 months,
the date on which the Accumulation Period actually commences will be delayed to the close of
business on the last day of the month prior to the month that is the number of whole months prior
to the Expected Final Principal Payment Date which is at least equal to the Accumulation Period
Length and, as a result, the number of Monthly Periods in the Accumulation Period will at least
equal the Accumulation Period Length. On the Determination Date twelve (12) months prior to the
Expected Final Principal Payment Date and each Determination Date thereafter until the Accumulation
Period begins, the Servicer shall determine the Accumulation Period Length.

     (c) Early Amortization Period. On each Payment Date during an Early Amortization
Period, the required deposit to the Principal Funding Sub-Account for the

- 6 -

 

Class D(2006-D2) Notes
will be the Adjusted Invested Amount for the Class D(2006-D2) Notes as of the close of business on
the last day of the preceding Monthly Period (after taking into account any reductions or increases
occurring on such date).

     (d) Distributions to Paying Agent. On each Principal Payment Date, the Indenture
Trustee, acting in accordance with written instructions from the Servicer, shall withdraw from the
Principal Funding Sub-Account for the Class D(2006-D2) Notes and distribute to the Paying Agent for
payment to the Class D(2006-D2) Noteholders the amounts deposited into the Principal Funding
Sub-Account for the Class D(2006-D2) Notes pursuant to this Section 2.04.

     Section 2.05 Holders’ Rights to Payments of Interest and Principal.

     (a) Any installment of interest or principal, if any, payable on any Class D(2006-D2) Note
which is punctually paid or duly provided for by the Issuer and the Indenture Trustee on the
applicable Interest Payment Date or Principal Payment Date shall be paid by the Paying Agent to the
Person in whose name such Class D(2006-D2) Note is registered on the Record Date, by wire transfer
of immediately available funds to such Person’s account as has been designated by written
instructions received by the Paying Agent from such Person not later than the close of business on
the third Business Day preceding the date of payment or, if no such account has been so designated,
by check mailed first-class, postage prepaid to such Person’s address as it appears on the Note
Register on such Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of Cede & Co., payment shall be made by wire transfer in immediately
available funds to the account designated by such nominee.

     (b) The right of the Class D(2006-D2) Noteholders to receive payments from the Issuer will
terminate on the first Business Day following the Class D(2006-D2) Termination Date.

     Section 2.06 Cash Collateral Account. In accordance with Section 4.22(a) of the
AdvantaSeries Indenture Supplement, on or prior to the Closing Date, the Transferor shall deposit,
cause to be deposited or
maintain funds in the Cash Collateral Account such that immediately after giving effect to the
issuance of the Class D(2006-D2) Notes, the amount on deposit in the Cash Collateral Account for
the AdvantaSeries is at least equal to the Required Cash Collateral Account Amount.

     Section 2.07 Spread Account. In accordance with Section 4.24(a) of the AdvantaSeries
Indenture Supplement, on or prior to the Closing Date, the Transferor shall deposit, cause to be
deposited or maintain funds in the Spread Account such that immediately after the issuance of the
Class D(2006-D2) Notes, the ratio of the amount on deposit in the Spread Account to the Required
Spread Account Amount is equal to or greater than the same ratio immediately preceding such
issuance.

     Section 2.08 Delivery and Payment for the Class D(2006-D2) Notes; Form and
Denomination.

- 7 -

 

     (a) The Issuer shall execute and issue, and the Indenture Trustee shall authenticate, the
Class D(2006-D2) Notes in accordance with Section 2.03 of the Master Indenture. The Indenture
Trustee shall deliver the Class D(2006-D2) Notes to or upon the order of the Issuer when so
authenticated. The Class D(2006-D2) Notes initially shall be Definitive Notes and not Book-Entry
Notes. Following the Closing Date, if the Transferor or an Affiliate of the Transferor holds the
Class D(2006-D2) Notes, upon written direction of the Transferor, the Class D(2006-D2) Notes may be
converted into Book-Entry Notes. Any such conversion to book-entry registration is conditioned
upon the delivery by the Transferor to the Issuer and the Indenture Trustee of a Tax Opinion with
respect to such conversion.

     (b) The Class D(2006-D2) Notes will be issued in minimum denominations of $500,000 and
integral multiples of that amount.

     Section 2.09 Manner of Payment of Class D(2006-D2) Notes. Except as provided in
Section 11.02 of the Master Indenture with respect to a final distribution, distributions to Class
D(2006-D2) Noteholders hereunder shall be made by (i) check mailed to each Class D(2006-D2)
Noteholder (at such Noteholder’s address as it appears in the Note Register), except that with
respect to any Class D(2006-D2) Notes registered in the name of the nominee of a Clearing Agency,
the Transferor or an Affiliate of the Transferor, such payment shall be made in immediately
available funds and (ii) without presentation or surrender of any Class D(2006-D2) Note or the
making of any notation thereon.

     Section 2.10 Monthly Servicing Fee. In accordance with Section 3.01(a) of the AdvantaSeries Indenture Supplement, with respect
to the July 20, 2006 Payment Date, the AdvantaSeries Monthly Servicing Fee allocated to the Class
D(2006-D2) Notes shall be $31,945.

     Section 2.11 Additional Requirements for Registration of and Limitations on Transfer and
Exchange of Class D(2006-D2) Notes.

     (a) Registration of transfer of the Class D(2006-D2) Notes shall be effected only if such
transfer is exempt from the registration requirements under the Securities Act. Each initial Class
D(2006-D2) Noteholder, other than the Transferor or an Affiliate of the Transferor, and each
subsequent transferee agrees with the Issuer, the Transferor and the Indenture Trustee that: (i)
such Class D(2006-D2) Noteholder or subsequent transferee, as the case may be, shall deliver, at
its expense, to the Transferor, the Servicer and the Indenture Trustee on or before the acquisition
of such Class D(2006-D2) Notes, an investment letter substantially in the form annexed hereto as
Exhibit A or such other form as the Issuer and the Transferor may determine, executed by the
initial Class D(2006-D2) Noteholder or such transferee, as the case may be, with respect to the
purchase by such Person of such Class D(2006-D2) Note and (ii) all of the statements made by such
Class D(2006-D2) Noteholder in its investment letter shall be true and correct as of the date made.
None of the Issuer, the Transferor, the Servicer, the Seller, the Indenture Trustee or the
Transfer Agent and Registrar is obligated to register or qualify the Class D(2006-D2) Notes under
the Securities Act or any other securities law

- 8 -

 

or to take any action not otherwise required under
the Master Indenture or the Class D(2006-D2) Terms Document to permit the transfer of the Class
D(2006-D2) Notes without registration or qualification. Any Class D(2006-D2) Noteholder desiring
to effect a transfer of unregistered Class D(2006-D2) Notes shall, and does hereby agree to,
indemnify the Issuer, the Transferor (unless the transferor of the Class D(2006-D2) Notes is the
Transferor), the Servicer, the Seller, the Indenture Trustee and the Transfer Agent and Registrar
against any liability that may result if the transfer is not exempt from such registration or
qualification or is not made in accordance with such federal and state laws and no registration of
transfer shall be made until such letter is so delivered. If the Class D(2006-D2) Notes are
converted to Book-Entry Notes pursuant to Section 2.08(a), the Transferor, upon written notice to
the Issuer and the Indenture Trustee, may direct that the requirement of the delivery of an
investment letter upon a transfer of Class D(2006-D2) Notes be modified or rescinded.

     (b) Class D(2006-D2) Notes issued upon registration or transfer of, or Class D(2006-D2) Notes
issued in exchange for Class D(2006-D2) Notes shall bear restrictive legends regarding securities
laws similar to those contained in the form of the Class D(2006-D2) Note attached as Exhibit A-4 to
the AdvantaSeries Indenture Supplement, unless, if the Transferor or an Affiliate of the Transferor
is still the holder of the Class D(2006-D2) Notes, the Transferor provides written direction to the
Issuer, the Servicer, the Indenture Trustee and the Transfer Agent and Registrar that it is
modifying such legend and provides to such Persons a copy of such legend as modified, and in all
other cases, the Issuer, the Transferor, the Servicer, the Indenture Trustee and the Transfer
Agent and Registrar receive an Opinion of Counsel, satisfactory to each of them, to the effect
that such legend may be removed or modified.

     (c) If so requested by the Transferor, the Indenture Trustee will make available to any
prospective purchaser of Class D(2006-D2) Notes who so requests, a copy of a letter provided to the
Indenture Trustee by or on behalf of the Transferor relating to the transferability of such
Tranche.

     (d) Any sale, conveyance, assignment, hypothecation, pledge, participation or other transfer
of the Class D(2006-D2) Notes by the Transferor or an Affiliate of the Transferor to a
non-affiliated third party is conditioned upon the delivery by the Transferor to the Issuer and the
Indenture Trustee of a Tax Opinion with respect to such sale, conveyance, assignment,
hypothecation, pledge, participation or other transfer.

[END OF ARTICLE II]

- 9 -

 

     IN WITNESS WHEREOF, the undersigned have caused this Terms Document to be duly executed and
delivered by their respective duly authorized officers on the day and year first above written.

	 	 	 	 	 
	 	 	WILMINGTON TRUST COMPANY,
	 	 	as Owner Trustee of

	 	 	ADVANTA BUSINESS CARD MASTER TRUST
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Roseline K. Maney
	 

	 	 	 	 
	 

	 	Name:
	 	Roseline K. Maney
	 

	 	Title:
	 	Vice President
	 
	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS,
	 	 	as Indenture Trustee

	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jenna Kaufman
	 

	 	 	 	 
	 

	 	Name:

Title:
	 	Jenna Kaufman

Vice President
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Eva Aryeetey
	 

	 	 	 	 
	 

	 	Name:

Title:
	 	Eva Aryeetey

Assistant Vice President

[Signature Page to Class D(2006-D2) Terms Document]

 

 

EXHIBIT A

FORM OF INVESTMENT LETTER

[DATE]

Advanta Business Receivables Corp.

2215 B Renaissance Drive, Suite 5

Las Vegas, NV 89119

Advanta Bank Corp.

11850 South Election Road

Draper, Utah

Deutsche Bank Trust Company Americas

60 Wall Street

New York, NY 10005

	 	Re: 	 	Purchase of Advanta Business Card Master Trust
AdvantaSeries, Class D(2006-D2) Asset Backed Notes

Dear Sirs:

          The undersigned proposes to purchase the AdvantaSeries Class D(2006-D2) Notes (the “Class
D(2006-D2) Notes”) identified below issued by Advanta Business Card Master Trust (the “Issuer”),
pursuant to (i) the AdvantaSeries Class D(2006-D2) Terms Document (the “Terms Document”), dated as
of June 8, 2006, between the Issuer and Deutsche Bank Trust Company Americas (formerly known as
Bankers Trust Company), as indenture trustee (the “Indenture Trustee), (ii) the AdvantaSeries
Indenture Supplement (the “Indenture Supplement”), dated as of November 1, 2004, among the Issuer,
Advanta Business Receivables Corp., as transferor (the “Transferor”), Advanta Bank Corp., as
servicer (the “Servicer”), and the Indenture Trustee and (iii) the Master Indenture (the “Master
Indenture”), dated as of August 1, 2000, as amended by Amendment No. 1 to the Master Indenture,
dated as of May 9, 2006, among the Issuer, the Transferor, the Servicer and the Indenture Trustee.
Terms used and not otherwise defined herein shall have the respective meanings given them in the
Terms Document, the Indenture Supplement or the Master Indenture. In connection with our proposed
purchase of such notes we acknowledge, represent, warrant and agree that:

     1. the Class D(2006-D2) Notes have not been and will not be registered under the Securities
Act or any state or other applicable securities law and the Class D(2006-D2) Notes, or any interest
or participation therein, may not be offered, sold, pledged or otherwise transferred unless
registered pursuant to, or exempt from registration under, the Securities Act of 1933, as amended
(the “Securities Act”), and any other applicable securities laws;

A-1

 

     2. the Class D(2006-D2) Notes will be reoffered, resold, pledged or otherwise transferred only
to a Person (a) which is the Transferor or an Affiliate of the Transferor, (b)(i) which we
reasonably believe is a “qualified institutional buyer” (“QIB”) (as defined in Rule 144A (“Rule
144A”) under the Securities Act of 1933, as amended (the “Securities Act”)) that will be purchasing
such Class D(2006-D2) Notes in compliance with Rule 144A for its own account or for the account of
a QIB, and (ii) which is made aware that such reoffer, resale, pledge or other transfer is being
made in reliance on Rule 144(A) or (c) which is an institutional “Accredited Investor” (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act);

     3. none of the Issuer, the Transferor, the Servicer, the Owner Trustee, the Indenture Trustee,
or any person representing any of them has made any representation to us with respect to the Issuer
or the offering or sale of any of the Class D(2006-D2) Notes, or any interest or participation
therein, other than [the information contained in the accompanying Private Placement Memorandum,
which has been delivered to us and upon which we are relying in making our investment decision with
respect to the Class D(2006-D2) Notes]. We have had access to such financial and other information
concerning the Issuer and the Class D(2006-D2) Notes as we have deemed necessary in connection with
our decision to purchase such notes;

     4. we have such knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Class D(2006-D2) Notes, or any interest or
participation therein, and we (and any account for which we are purchasing under paragraph (6)
below) are able to bear the economic risk of an investment in the Class D(2006-D2) Notes;

     5. the Class D(2006-D2) Notes will bear a legend to the following effect:

     “THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW. THE HOLDER HEREOF, BY
PURCHASING THIS NOTE, AGREES THAT THIS NOTE, OR ANY INTEREST OR PARTICIPATION HEREIN, MAY BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND
OTHER APPLICABLE LAWS AND ONLY TO (A) THE TRANSFEROR OR AN AFFILIATE OF THE TRANSFEROR, (B)(I) TO A
PERSON WHICH THE HOLDER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (“QIB”) (AS
DEFINED IN RULE 144A (“RULE 144A”) UNDER THE SECURITIES ACT) THAT WILL BE PURCHASING SUCH CLASS
D(2006-D2) NOTES, OR INTEREST OR PARTICIPATION THEREIN, IN COMPLIANCE WITH RULE 144A FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB, AND (II) WHICH IS MADE AWARE THAT SUCH REOFFER, RESALE, PLEDGE
OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144(A) OR (C) WHICH IS AN INSTITUTIONAL
“ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT).
THIS NOTE WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER EXCEPT UPON PRESENTATION OF EVIDENCE

A-2

 

SATISFACTORY TO THE TRANSFER AGENT AND REGISTRAR THAT THE RESTRICTIONS ON TRANSFER SET FORTH
IN THE MASTER INDENTURE AND THE CLASS D(2006-D2) TERMS DOCUMENT HAVE BEEN COMPLIED WITH. THIS NOTE
MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL THE REQUIREMENTS OF
THE MASTER INDENTURE AND THE CLASS D(2006-D2) TERMS DOCUMENT CONCERNING TRANSFER HAVE BEEN
SATISFIED. THE ADVANTASERIES CLASS D(2006-D2) NOTES ARE ALSO SUBJECT TO THE DELIVERY OF AN
INVESTMENT LETTER. RESTRICTIONS ON TRANSFER ARE SET FORTH IN THE MASTER INDENTURE AND THE CLASS
D(2006-D2) TERMS DOCUMENT, COPIES OF WHICH ARE AVAILABLE FROM THE INDENTURE TRUSTEE.

     BEFORE PURCHASING THIS NOTE, PURCHASERS SHOULD CONSULT COUNSEL WITH RESPECT TO THE
AVAILABILITY AND CONDITIONS OF EXEMPTION FROM THE RESTRICTIONS ON RESALE OR TRANSFER. NEITHER THE
ISSUER NOR THE SELLER OF THIS NOTE HAS AGREED TO REGISTER THIS NOTE UNDER THE SECURITIES ACT, TO
QUALIFY THIS NOTE UNDER THE SECURITIES LAWS OF ANY STATE OR JURISDICTION OR TO PROVIDE REGISTRATION
RIGHTS TO ANY PURCHASER.

     AS SET FORTH HEREIN, THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF.”

     Any portion of this legend may be removed or modified if the Transferor, the Servicer and the
Indenture Trustee and the Transfer Agent and Registrar have received an Opinion of Counsel, in form
and substance satisfactory to them, to the effect that such paragraph may be removed or modified;

     6. we are acquiring the Class D(2006-D2) Notes, or any interest or participation therein, for
our own account or as a fiduciary or agent for one or more investor accounts for which we have sole
investment discretion with respect to each such account and for which we have full power to make
the acknowledgements, representations, warranties and agreements contained herein on behalf of each
of those accounts and not with a view to or for sale in connection with any distribution thereof in
violation of the Securities Act, subject to any requirements of law that the disposition of our
property or the property of such investor account or accounts be at all times within our or their
control and subject to our or their ability to resell those Class D(2006-D2) Notes, or any interest
or participation therein, as described herein and as provided in the Master Indenture and the Class
D(2006-D2) Terms Document;

     7. we will comply with all applicable federal and state securities laws, rules and regulations
in connection with any subsequent reoffer, resale, pledge or other transfer of the Class D(2006-D2)
Notes, or any interest or participation therein, by us;

     8. registration of transfer of any Class D(2006-D2) Note, or any interest or participation
therein, will require delivery of an investment letter and will otherwise be

A-3

 

subject in all respects to the restrictions applicable thereto contained in the Master
Indenture and the Class D(2006-D2) Terms Document;

     9. by our acceptance of the Class D(2006-D2) Notes, or any interest or participation therein,
we agree to treat the Class D(2006-D2) Notes for federal, state and local income and franchise tax
purposes as indebtedness of the Transferor and to take no action inconsistent therewith; and

     10. the Issuer, the Transferor, the Servicer, the Owner Trustee, the Indenture Trustee and
others will rely on the truth and accuracy of the foregoing representations, warranties and
covenants and we agree that if any of the foregoing representations, warranties and covenants
deemed to have been made by us are no longer accurate, we shall promptly notify the Issuer, the
Transferor, the Servicer, the Owner Trustee and the Indenture Trustee. We further agree to
indemnify the Issuer, the Transferor, the Servicer, the Owner Trustee, the Indenture Trustee and
the Transfer Agent and Registrar against any liability that may result if the transfer is not
exempt from registration or qualification or is not made in accordance with federal and state laws
and the requirements of the Master Indenture and the Class D(2006-D2) Terms Document.

	 	 	 	 	 
	 

	 	Very truly yours,
	 	 
	 
	 	 	 	 
	 

	 	[NAME OF INVESTOR]	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 
	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

ADVANTASERIES CLASS D(2006-D2) NOTES TO BE PURCHASED:

U.S.$[•] aggregate principal amount of AdvantaSeries Class D(2006-D2) Asset Backed Notes

A-4Exhibit 4.3 

SECURED CONVERTIBLE
PROMISSORY NOTE 

THIS SECURITY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), NOR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND THIS
SECURITY MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF IT
UNDER THE ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE MAKER THAT SUCH
SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT. THIS SECURITY MAY NOT BE
TRANSFERRED EXCEPT UPON THE CONDITIONS SPECIFIED IN THIS NOTE AND THE SECURITIES PURCHASE
AGREEMENT, DATED MAY __, 2006 (THE “PURCHASE AGREEMENT”), AND NO TRANSFER OF
THIS SECURITY SHALL BE VALID OR EFFECTIVE UNLESS AND UNTIL SUCH CONDITIONS SHALL HAVE BEEN
COMPLIED WITH. THE TRANSFERABILITY OF THIS SECURITY IS SUBJECT TO THE TRANSFER
RESTRICTIONS SET FORTH HEREIN AND IN THE PURCHASE AGREEMENT, A COPY OF WHICH WILL BE
PROVIDED TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO THE MAKER. 

MSO HOLDINGS, INC. 

SECURED CONVERTIBLE
PROMISSORY NOTE 

THIS SENIOR SECURED NOTE IS MADE AND
DELIVERED PURSUANT TO THE PURCHASE AGREEMENT AND SUBJECT TO THE TERMS AND CONDITIONS
THEREOF. THIS SECURED NOTE IS SECURED BY THE COLLATERAL DESCRIBED IN A CERTAIN SECURITY
AGREEMENT, DATED AS OF EVEN DATE HEREWITH (THE “SECURITY AGREEMENT”). 

		
	$_______________	May 9, 2006 

        FOR
VALUE RECEIVED, MSO Holdings, Inc., a Delaware corporation (the “Maker”),
promises to pay to the order of ______________________ or its registered assigns (the
“Holder”), upon written request to Maker by the Holder, on the date which shall
be the earlier of (i) the closing of a Qualified Financing (as defined below), or (ii)
January 1, 2008, provided that the Holder must make such written request to Maker at least
ninety (90) days in advance if such request is made pursuant to subsection (ii) above (the
“Maturity Date”), the principal amount of _________________ Dollars ($______),
together with all accrued and unpaid interest thereon, unless this Secured Convertible
Promissory Note (this “Note”) is sooner converted into capital stock of the
Maker in accordance with the terms set forth herein. All capitalized terms used but not
defined herein shall have the meaning set forth in the Purchase Agreement. 

    1.    Interest
Rate. The unpaid balance of the principal amount of this Note           shall accrue
simple interest (the “Interest”) at a rate of 10% per           annum (the
“Interest Rate”). Interest shall begin accruing as of the           date hereof
and continue through the Maturity Date or the date of conversion of           this Note
into capital stock of the Maker, whichever shall occur first. Interest           shall
accrue on a monthly basis and shall be computed on the basis of a 365-day           year,
for the actual number of days involved.  

    2.    Prepayment.
The Maker may prepay any outstanding principal or accrued           Interest under this
Note at any time without penalty upon written notice to the           Holder, provided
that the Holder is provided at least five (5) business days to           exercise its
conversion rights set forth in Section 3(b) below prior to the date           of such
prepayment.  

    3.    Conversion
into Capital Stock.  

        (a)    Optional
Conversion at Qualified Financing. If after the date of this           Note the Maker
issues and sells equity securities to investors (the           “Investors”) in
a bona fide arms length transaction that results in           aggregate gross proceeds of
new money to the Maker of at least $2,000,000           (excluding the conversion of any
indebtedness) (a “Qualified           Financing”), and this Note is not then
repaid in full, then at the option           of the Holder, the outstanding principal
balance and all unpaid accrued Interest           on this Note, or any portion thereof,
may be converted by the Holder at the           closing of such Qualified Financing into
that number of shares of the equity           security sold to such Investors in the
Qualified Financing determined by           dividing the amount of principal of, and
accrued interest on, this Note by           eighty percent (80%) of the price per share
paid by such Investors in the           Qualified Financing. Upon such conversion the
Holder shall be entitled to all of           the contractual rights of the Investors
granted in connection with the Qualified           Financing on the same terms and
conditions as the Investors and, by acceptance           of this Note, agrees to enter
into the contracts evidencing such rights.           Promptly after the date of the
request from the Holder to convert this Note in           accordance with this Section
3(a), Holder shall surrender this Note to Maker for           cancellation in exchange
for a certificate representing the applicable number of           shares of equity
securities issued in the Qualified Financing; provided,           however, that in the
event that the Holder elects to convert only a portion of           the principal of, or
accrued interest on, this Note, upon such surrender, Maker           shall issue to the
Holder a new note with the same terms as contained herein,           except that such
note shall be issued as of the date of the conversion and the           original
principal amount thereof shall be equal to the principal and interest           on this
Note not so converted.  

        (b)    Mandatory
Conversion at Qualified Financing. Notwithstanding the           foregoing, in the
event that a majority in interest of the holders of the notes           issued pursuant
to the Purchase Agreement elect pursuant to the foregoing           Section 3(a) to
convert their notes, then all of the principal of, and accrued           interest on this
Note shall automatically convert on the basis provided in such           Section as of
the closing of such Qualified Financing. In such event, Maker           shall give the
Holder notice of such closing. Promptly after the receipt of such           notice,
Holder shall surrender this Note to Maker for cancellation in exchange           for a
certificate representing the applicable number of shares of equity           securities
issued in the Qualified Financing.  

        (c)    Voluntary
Conversion to Series A-1 Convertible Preferred Stock. At any           time after the
date of this Note, the Holder may request that payment be made in           whole or in
part in a number of shares of Maker’s Series A-1 Preferred           Stock,
determined by dividing the outstanding principal amount of this Note,           plus any
accrued Interest, in each case to the extent the Holder desires to           convert the
same, by $0.25 per share (subject to adjustment for stock splits,           reverse stock
splits, stock dividends, recapitalizations, combinations and the           like) (the
“Series A-1 Conversion Price”). Promptly after the date of           the
request from the Holder to convert this Note in accordance with this Section
          3(c), Holder shall surrender this Note to Maker for cancellation in exchange
for           a certificate representing the applicable number of shares of Series A-1
          Preferred Stock; provided, however, that in the event that the Holder elects to
          convert only a portion of the principal of, or accrued interest on, this Note,
          upon such surrender, Maker shall issue to the Holder a new note with the same
          terms as contained herein, except that such note shall be issued as of the date
          of the conversion and the original principal amount thereof shall be equal to
          the principal and interest on this Note not so converted.  

2 

    4.    Reservation
of Conversion Shares. Maker shall at all times reserve and           keep available,
solely for issuance or delivery upon the conversion of this           Note, the shares of
its capital stock issuable upon such conversion pursuant to           Sections 2 and 3 of
this Note (the “Conversion Shares”) (and the           common shares of Maker
into which the Conversion Shares may be converted)           receivable upon the
conversion of this Note, free and clear of all restrictions           on sale or transfer
and free and clear of all preemptive rights); provided,           however, that the
Holder acknowledges and agrees that the Series A-1 Preferred           Stock issuable
upon conversion of this Note under Section 3 hereof shall not be           authorized or
reserved until such time as the waiting period applicable to the           definitive
Information Statement has expired and the Amended and Restated           Certificate of
Incorporation is filed with the Secretary of State of the State           of Delaware.  

    5.    Fully
Paid Stock; Taxes. Maker agrees that the securities represented by           each and
every certificate for Conversion Shares delivered on the conversion of           this
Note shall, at the time of such delivery, be validly issued and           outstanding,
fully paid and non-assessable. Maker further covenants and agrees           that it will
pay, when due and payable, all federal and state stamp, original           issue or
similar taxes, if any, which are payable in respect of the issuance of           this
Note and/or any Conversion Shares or certificates therefor.  

    6.    Security
Interest. This Note shall be senior in lien priority to all           other
Obligations (existing or future and as defined in the Security Agreement)           of
the Maker (other than Permitted Liens (as defined in the Security Agreement))
          and shall be secured by a first priority perfected lien and security interest
in           the Collateral (as defined in the Security Agreement).  

    7.    Events
of Default. This Note shall become due and payable upon any of the
          following events, herein called “Events of Default”:  

        (a)    failure
of the Maker to pay the principal amount, interest or any other amounts           due
under this Note as and when due;  

        (b)    a
material breach by the Maker, or the material failure by the Maker to perform,
          any representation, warranty, covenant or agreement made by the Maker in this
          Note, the Purchase Agreement, the Security Agreement, the Intercreditor
          Agreement or any related instrument, document or agreement (subject to any
          applicable cure periods);  

        (c)    Maker’s
application for, or Maker’s consent to, the appointment of a           receiver,
trustee or liquidator for the Maker or any of its properties;  

        (d)    filing
by the Maker of a voluntary petition in bankruptcy or a petition or an           answer
seeking reorganization or an arrangement with creditors; or  

3 

        (e)    the
entry against the Maker of a court order approving a petition filed against           it
under the federal bankruptcy laws by a creditor other than the Holder, which
          order shall not have been vacated or set aside or otherwise terminated within
          sixty (60) days; or  

        (f)    Maker
is liquidated, dissolved or ceases to operate its business.  

Upon the occurrence of an Event of
Default or an event that, with notice or lapse of time or both, would become an Event of
Default, Maker shall immediately give notice thereof to the Holder, specifying the nature
of the Event of Default. Upon the occurrence and during the continuance of an Event of
Default, the outstanding principal amount hereof shall bear interest at the rate of 14%
per annum.  

    8.    Transferability.
Subject to compliance with applicable federal and state           securities laws, this
Note shall be transferable solely in accordance with terms           and restrictions of
the Purchase Agreement. In no event may the Holder assign           this Note separate
from an assignment of its rights under the Security           Agreement. Any such
transfer shall be effected by the presentation of this Note           to the Maker for
transfer, accompanied by a duly completed and executed           Assignment Form in the
form attached hereto as Exhibit A, and an opinion of           counsel of the Holder in
form reasonably satisfactory to the Maker that the           transfer may be properly
made under an exemption from registration under the           Securities Act and
applicable state securities laws. Any transfer made in           violation of this
Section 7 shall be void.  

    9.    Replacement
of Note. Upon receipt of evidence reasonably satisfactory to           Maker of the
loss, theft, destruction or mutilation of this Note, and of           indemnity in form
and amount reasonably satisfactory to Maker, if lost, stolen           or destroyed, and
upon surrender and cancellation of this Note, if mutilated,           and upon
reimbursement of Maker’s reasonable incidental expenses, Maker           shall
execute and deliver to the Holder a new Note of like date, tenor and
          denomination.  

    10.    Holder
Not a Shareholder. This Note does not confer upon the Holder any           right to
vote or to consent or to receive notice as a shareholder of Maker, as           such, in
respect of any matters whatsoever, or any other rights or liabilities           as a
shareholder, prior to the conversion hereof into capital stock of Maker as
          provided herein.  

    11.    Waivers.
Maker waives presentment for payment, demand, notice of           non-payment, notice of
protest or protest of this Note, and Holder’s           diligence in collection or
bringing suit.  

    12.    No
Waiver by Holder. Acceptance by Holder of any payment in an amount           less
than the amount then due shall be deemed an acceptance on account only, and
          Maker’s failure to pay the entire amount then due shall be and continue to
          be a default. Upon the occurrence of any Event of Default, neither the failure
          of Holder promptly to exercise its right to declare the outstanding principal
          and accrued but unpaid interest hereunder to be immediately due and payable,
nor           the failure of Holder to demand strict performance of any other obligation
of           Maker hereunder, shall constitute a waiver of any such rights, nor a waiver
of           such rights in connection with any future default on the part of Maker
          hereunder.  

    13.    Severability.
Wherever possible, each provision of this Note shall be           interpreted in such
manner as to be effective and valid under applicable law,           but if any provision
of this Note shall be prohibited by or invalid under such           law, such provision
shall be ineffective to the extent of such prohibition or           invalidity without
invalidating the remainder of such provision or the remaining           provisions of
this Note.  

4 

    14.    Notices.
Any notice, request or other communication required or permitted           hereunder
shall be in writing, and shall be deemed delivered upon personal           delivery or
facsimile transmission, one (1) business day after being sent via a           reputable
nationwide overnight courier services, or two (2) business days after           deposit
in the mail addressed as follows:  

	 	
If
to the Maker:  

	 	
MSO
Holdings, Inc.
2333 Waukegan Road, Suite 175
Bannockburn, Illinois 60015
Attn: Chief
Executive Officer
Facsimile: (847) 267-1728 

	 	
With
copies to: 

	 	
Foley
& Lardner, LLP
402 W. Broadway, Suite 2300
San Diego, California 92101
Attention: Adam
C. Lenain, Esq.
Facsimile No.: (619) 234-3510 

	 	
If
to the Holder: 

	 	________________________

________________________
________________________
Attention:________________

Facsimile No.:_____________
 

Either party may change by notice the
address to which notices to it are to be addressed by giving notice of such change in the
manner prescribed by this Section. 

    15.    Successors
and Assigns. All covenants, agreements and undertakings in           this Note by or
on behalf of any of the parties shall bind and inure to the           benefit of the
respective successors and assigns of the parties.  

    16.    Governing
Law. This Note shall be governed by, construed under and           interpreted and
enforced in accordance with laws of the State of Delaware,           without giving
effect to principles of choice of law.  

    17.    No
Trial By Jury. MAKER AND HOLDER EACH WAIVE THEIR RESPECTIVE RIGHTS TO           A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
          NOTE OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS,
          TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY
          CLAIMS.  

5 

    18.    Remedies.
The Maker stipulates that the remedies at law of the Holder in           the event of any
default or threatened default by the Maker in the performance           of or compliance
with any of the terms of this Note are not and will not be           adequate, and that
such terms may be specifically enforced by a decree for the           specific
performance of any agreement contained herein or by an injunction           against a
violation of any of the terms hereof or otherwise.  

    19.    Amendments.
The terms and provisions of this Note may not be modified,           altered or amended
except by a writing executed by Maker and the holder of a           majority in principal
amount of all of the Notes issued pursuant to the Purchase           Agreement.  

    20.    Headings.
The descriptive headings of the several paragraphs of this Note           are inserted
for purposes of reference only, and shall not affect the meaning or
          construction of any of the provisions hereof.  

[Remainder of Page
Intentionally Left Blank]  

6 

        IN
WITNESS WHEREOF, the Maker has executed this Note and has delivered it to the Holder, on
the day and year first above written. 

		
		MSO Holdings, Inc.
		

By:____________________________________
		       Steven Straus
		       Its President

EXHIBIT A  

ASSIGNMENT 

        FOR
VALUED RECEIVED, the undersigned Holder of the attached Senior Secured Note (the
“Note”) issued by MSO Holdings, Inc. (the “Maker”) hereby sells,
assigns and transfers unto the persons below, all right, title and interest of the
undersigned in and to the obligations evidenced by the Note, and does hereby irrevocably
constitute and appoint _______________________ attorney-in-fact to transfer the Note on
the books of the Maker with full power of substitution in the premises. 

Dated:_________________________ 

Signature:________________________ 

Fill in for new Registration of Note:

________________________________
Name of Noteholder 

			
	Address of Noteholder:	_________________________	
		_________________________	
		_________________________	

A-1

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