EXHIBIT 4.1
IP HOLDINGS LLC,
as Issuer
and
WILMINGTON TRUST COMPANY,
as Trustee
SECOND AMENDED AND RESTATED
INDENTURE
Dated as of July 1, 2005
$63,000,000
IP HOLDINGS LLC ASSET-BACKED NOTES
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT.............................................1
GRANTING CLAUSES..................................................1
ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION...........................................3
Section 1.1. Definitions.......................................3
Section 1.2. Acts of Noteholders...............................3
Section 1.3. Notices, etc. to Trustee, Issuer and IPHM.........4
Section 1.4. Notices to Noteholders; Waiver....................4
Section 1.5. Effect of Headings and Table of Contents..........5
Section 1.6. Successors and Assigns............................5
Section 1.7. Severability......................................5
Section 1.8. Benefits of Indenture.............................5
Section 1.9. Governing Law.....................................5
Section 1.10. Counterparts.....................................5
Section 1.11. Consents.........................................6
Section 1.12. Effective Date...................................6
ARTICLE II. NOTE FORM.............................................6
Section 2.1. Form Generally....................................6
Section 2.2. Form of Note......................................6
ARTICLE III. THE NOTES...........................................12
Section 3.1. Designation of Notes; Certain Related
Provisions...........................................12
Section 3.2. Denominations....................................12
Section 3.3. Execution, Authentication, Delivery and
Dating...............................................12
Section 3.4. Registration, Registration of Transfer
and Exchange.........................................13
Section 3.5. Limitation on Transfer and Exchange..............14
Section 3.6. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, Lost or Stolen
Notes................................................15
Section 3.7. Payment of Principal and Interest................16
Section 3.8. Persons Deemed Owners............................16
Section 3.9. Cancellation.....................................16
i
ARTICLE IV. DELIVERY OF THE NOTES................................17
ARTICLE V. SATISFACTION AND DISCHARGE............................17
Section 5.1. Satisfaction and Discharge of Indenture..........17
Section 5.2. Application of Trust Money.......................18
Section 5.3. Discharge of Security Interest...................18
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES.......................19
Section 6.1. Events of Default................................19
Section 6.2. Acceleration of Maturity, Rescission and
Annulment............................................20
Section 6.3. Remedies.........................................22
Section 6.4. Trustee May File Claim...........................22
Section 6.5. Trustee May Enforce Claims Without
Possession of Notes..................................23
Section 6.6. Allocation of Money Collected....................24
Section 6.7. Limitation on Suits..............................24
Section 6.8. Unconditional Right of Noteholders to
Receive Principal and Interest.......................25
Section 6.9. Restoration of Rights and Remedies...............25
Section 6.10. Rights and Remedies Cumulative..................26
Section 6.11. Delay or Omission Not Waiver....................26
Section 6.12. Control by Noteholders..........................26
Section 6.13. Waiver of Past Defaults.........................26
Section 6.14. Undertaking for Costs...........................27
Section 6.15. Waiver of Stay or Extension Laws................27
Section 6.16. Sale of Collateral..............................27
Section 6.17. Action on Notes.................................28
ARTICLE VII. THE TRUSTEE; RESIGNATION OF TRUSTEE AND
SUCCESSOR TRUSTEE....................................29
Section 7.1. Certain Duties and Responsibilities of
Trustee..............................................29
Section 7.2. Notice of Default, Cure or Waiver................30
Section 7.3. Certain Rights of Trustee........................30
Section 7.4. Not Responsible for Recitals or Issuance
of Notes.............................................31
Section 7.5. May Hold Notes...................................32
Section 7.6. Money Held in Trust..............................32
Section 7.7. Compensation and Reimbursement...................32
Section 7.8. Corporate Trustee Requirement Eligibility........33
ii
Section 7.9. Resignation and Removal; Appointment of
Successor............................................33
Section 7.10. Acceptance of Appointment by Successor..........34
Section 7.11. Merger, Conversion, Consolidation or
Succession to Business of Trustee....................35
Section 7.12. Co-trustees and Separate Trustees...............35
Section 7.13. Rights of Trustee in Capacity of
Payment Agent, Transfer Agent or Registrar...........36
ARTICLE VIII. CONSOLIDATION AND MERGER...........................37
ARTICLE IX. SUPPLEMENTAL INDENTURES..............................37
Section 9.1. Supplemental Indentures Only with
Consent of Noteholders...............................37
Section 9.2. Execution of Supplemental Indentures.............38
Section 9.3. Effect of Supplemental Indentures................38
Section 9.4. Reference in Notes to Supplemental
Indenture............................................38
Section 9.5. Solicitation of Holders of Notes.................38
ARTICLE X. REDEMPTION OF NOTES...................................39
Section 10.1. Redemption at the Option of the Issuer..........39
Section 10.2. Notice of Redemption by the Issuer..............40
Section 10.3. Deposit of the Redemption Price.................41
Section 10.4. Notes Payable on Redemption Date; Less
than All Notes to be Redeemed........................41
Section 10.5. Defeasance......................................41
ARTICLE XI. REPRESENTATIONS, WARRANTIES AND COVENANTS............42
Section 11.1. Payment of Principal and Interest...............42
Section 11.2. Maintenance of Office or Agency.................42
Section 11.3. Money for Note Payments to Be Held in
Trust................................................43
Section 11.4. Continued Existence; Observance of
Organizational Documents.............................43
Section 11.5. Protection of Collateral........................43
Section 11.6. Biennial Opinion as to Collateral...............45
Section 11.7. Negative Covenants..............................46
Section 11.8. Statement as to Compliance......................47
Section 11.9. Inspection......................................47
Section 11.10. Limited Purpose................................48
Section 11.11. Issuer Ownership...............................48
Section 11.12. Enforcement of Transaction Documents...........48
iii
Section 11.13. Representations and Warranties.................48
Section 11.14. Certain Affirmative Covenants..................51
Section 11.15. Submission to Jurisdiction.....................53
Section 11.16. Representations with Respect to Assets.........53
Section 11.17. Survival of Indenture Representations
and Warranties.......................................56
ARTICLE XII. ACCOUNTS, ACCOUNTINGS AND RELEASES..................57
Section 12.1. Collection of Money.............................57
Section 12.2. Accounts........................................57
Section 12.3. Release of Assets...............................60
Section 12.4. Accounting by Trustee to Issuer and the
Noteholders..........................................61
Section 12.5. Collateral......................................61
Section 12.6. Opinion of Counsel..............................62
ARTICLE XIII. APPLICATION OF MONIES..............................62
Section 13.1. Disbursements of Monies out of
Collection Account...................................62
Section 13.2. Disbursement of Monies out of the
Liquidity Reserve Account............................64
Section 13.3. Advertising Reserve Account.....................65
Section 13.4. Disbursements of Monies out of the
Lockbox Account......................................65
Section 13.5. Disbursement of Monies out of the
Renewal Reserve Account..............................66
Section 13.6. Disbursement of Monies out of Prepaid
Fee and Royalty Account..............................66
Section 13.7. Eligible Investments............................66
ARTICLE XIV. COVENANTS OF IP HOLDINGS AND MANAGEMENT
CORPORATION..........................................67
Section 14.1. Continued Existence; Organizational
Documents............................................67
Section 14.2. Negative Covenant...............................67
Section 14.3. No Bankruptcy Petition..........................67
APPENDIX A Standard Definitions
EXHIBIT A Form of Assignment of Note
EXHIBIT B Form of Servicer's Report
EXHIBIT C Form of Investment Letter
EXHIBIT D Substitute Form W-9
iv
EXHIBIT E Assets
EXHIBIT E-1: Trademarks
EXHIBIT E-1A: Registered Trademarks
EXHIBIT E-1B: Unregistered Trademarks
EXHIBIT E-1C: Additional Registrations and Pending Applications
EXHIBIT E-2: Licenses
EXHIBIT E-3: Copyrights
EXHIBIT E-4: Patents
EXHIBIT E-5: Pending Intent-to-Use Applications
EXHIBIT F Claims
v
This SECOND AMENDED AND RESTATED INDENTURE (as amended from time to
time as permitted hereby, this "Indenture") is dated as of July 1, 2005, is by
and between IP HOLDINGS LLC, a Delaware limited liability company (together with
its permitted successors and assigns, the "Issuer"), and WILMINGTON TRUST
COMPANY, a Delaware banking corporation (together with its permitted successors
and assigns, the "Trustee") and amends and restates in its entirety the Amended
and Restated Indenture, dated as of April 1, 2004 (the "First Amended and
Restated Indenture"), by the parties hereto, which amended and restated in its
entirety, the Indenture, dated as of August 20, 2002 (the "Original Indenture"),
by the parties hereto.
PRELIMINARY STATEMENT
The Issuer duly authorized the execution and delivery of the Original
Indenture to provide for the issuance of a single class of 7.93% IP Holdings LLC
Asset-Backed Notes (as the same may be amended pursuant to the terms hereof, the
"Original Notes").
The Issuer duly authorized the execution and delivery of the First
Amended and Restated Indenture to provide for the issuance of a subordinate
class of Floating Rate IP Holdings LLC Subordinate Asset-Backed Notes (as the
same may be amended pursuant to the terms hereof, the "Subordinate Notes").
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for the issuance of a single class of 8.45% IP Holdings LLC
Asset-Backed Notes (the "Notes"), and for the exchange of the Original Notes and
the Subordinate Notes for the Notes.
All covenants and agreements made by the Issuer herein are for the
benefit and security of the Noteholders. The Issuer is entering into this
Indenture, and the Trustee is accepting the trust created hereby, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged.
GRANTING CLAUSES
The Issuer hereby Grants to the Trustee for the exclusive benefit of
the Holders of the Notes a Lien upon and a security interest in all of the
Issuer's right, title and interest, whether now owned or hereafter acquired,
(but none of the obligations) in and to the following (collectively, the
"Collateral"), subject, however, in each case, to any applicable Lien:
(a) the Assets;
(b) all cash, securities, instruments and other property held from
time to time in the Collection Account, the Liquidity Reserve Account, the
Revenue Reduction Account, the Prepaid Fee and Royalty Account and the Renewal
Reserve Account or otherwise transferred to the Trustee hereunder (but excluding
any amounts payable to or deposited in the Advertising Reserve Account);
(c) the Contribution Agreement, the ▇▇▇ ▇▇▇▇▇ Contribution
Agreement, the Management Agreement, the Back-Up Management Agreement and the
Servicing Agreement, in each case as the same may be modified, amended,
supplemented or restated from time to time;
(d) all books and records concerning the foregoing property
(including without limitation all tapes, disks and related items containing any
such information); and
(e) all proceeds of the foregoing of any nature whatsoever,
including without limitation proceeds and the conversion, voluntary or
involuntary, of any thereof.
Such Grants are only made, however, in trust, solely to secure (i)
the Notes equally and ratably, except as otherwise may be provided in this
Indenture, without prejudice, priority or distinction among the Notes by reason
of differences in time of authentication or delivery or otherwise, (ii) the
payment of all other sums payable under this Indenture, and (iii) compliance
with the provisions of this Indenture, all as provided in this Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Issuer shall not, other than as required by applicable law,
be released from any of its obligations under any of the Collateral, and the
Trustee and the Holders shall have no obligation or liability under any
Collateral by reason of or arising out of the assignment hereunder, nor shall
the Trustee or the Holders be required or obligated in any manner to perform or
fulfill any obligations of the Issuer under or pursuant to any of the Collateral
or such other documents or to make any payment, subject, however, to any
applicable Liens, or to make any inquiry as to the nature or sufficiency of any
payment received by them, or present or file any claim, or take any action to
collect or enforce the payment of any amounts which may have been assigned to
them or to which they may be entitled at any time or times.
The Issuer does hereby warrant and represent that (i) except for
Liens described in Exhibit B to the Contribution Agreement and Exhibit B to the
▇▇▇ ▇▇▇▇▇ Contribution Agreement, it has not permitted and hereby covenants that
it will not permit, the creation of any Lien other than the Lien of this
Indenture with respect to any part of the Collateral, so long as this Indenture
shall remain in effect, to anyone other than the Trustee, and (ii) the
representations and warranties of the Issuer contained in this Indenture are
true and correct.
The Trustee acknowledges such ▇▇▇▇▇, accepts the trusts hereunder in
accordance with the provisions of this Indenture and agrees to perform the
duties herein required. So long as any Note remains Outstanding, the Trustee
shall act for the benefit of the Noteholders as their interests may appear to
the extent provided herein.
The Trustee agrees to maintain in its possession each item of
Collateral constituting a contract or chattel paper under the UCC delivered to
it unless and until such item of Collateral is released from the lien hereof
pursuant to Article V or Section 12.3 hereof.
All things necessary to make this Indenture a valid agreement of the
Issuer in accordance with its terms have been done. The Trustee hereby
acknowledges receipt of the Original Note and the Subordinate Note in connection
with the authentication and delivery of the Note.
2
ARTICLE I..
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1. Definitions
(a) Except as otherwise expressly provided herein or unless the
context otherwise requires, the capitalized terms used in this Indenture shall
have the respective meanings specified in the Second Amended and Restated
Standard Definitions set forth as Appendix A hereto, which is incorporated
herein by reference. The definitions of such terms are equally applicable both
to the singular and plural forms of such terms.
(b) All references in this instrument to designated "Articles,"
"Sections," "Subsections" and other subdivisions are to the designated Articles,
Sections, Subsections and other subdivisions of this instrument as originally
executed or if amended or supplemented, as so amended and supplemented. The
words "herein," "hereof," "hereunder" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section, Subsection
or other subdivision.
Section 1.2. Acts of Noteholders
(a) If, at any time, there is more than one Holder of the Notes, any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by the Noteholders shall,
unless otherwise expressly provided herein, be taken by the Holders of 51% of
the aggregate Note Principal Balance of Notes Outstanding (the "Majority
Holders") and, whether to be taken by all or less than all of the Holders, may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Noteholders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee, and, where it is herein expressly required, to the Issuer. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 7.1) conclusive in favor of
the Trustee and the Issuer, if made in the manner provided in this Section 1.2.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Trustee reasonably
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
3
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind the Holder of every
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be done by
the Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
Section 1.3. Notices, etc. to Trustee, Issuer and IPHM
(a) Except as otherwise provided, any request, demand,
authorization, direction, notice, consent, waiver or Act of Noteholders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with
(1) the Trustee by any Noteholder, by the Issuer or by IPHM shall
be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its
Corporate Trust Office; or
(2) the Issuer or IPHM by the Trustee or by any Noteholder shall
be sufficient for every purpose hereunder if in writing and
mailed, registered mail return receipt requested or by
overnight courier or hand delivery, to the Issuer addressed to
it at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the
Manager at the same address or at any other address previously
furnished in writing to the Trustee by the Issuer.
(b) Without duplication, a party to this Indenture sending or
delivering a notice of any kind hereunder shall also provide a copy of the
notice in any manner authorized herein to each Noteholder at the Noteholder's
address as it appears on the Note Register upon receiving such address from the
Trustee or the Noteholder and, in any event, each such party shall also in
similar fashion send a copy of such notice to PartnerRe New Solutions Inc., at
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-6352.
Section 1.4. Notices to Noteholders; Waiver
Where this Indenture provides for notice to Noteholders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed by registered mail return receipt requested
or by overnight courier or hand delivery, to each Noteholder, at its address as
it appears on the Note Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice. Any notice
which is mailed in the manner herein provided shall be deemed effective upon
receipt or refusal.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by the Noteholders shall be filed with the Trustee,
but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
4
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to the Noteholders when such notice is required to
be given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be reasonably satisfactory to the Trustee shall be deemed
to be a sufficient giving of such notice.
Section 1.5. Effect of Headings and Table of Contents
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
Section 1.6. ..Successors and Assigns
All covenants and agreements in this Indenture by the Issuer shall
bind its successors and assigns, whether so expressed or not.
Section 1.7. Severability
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.8. Benefits of Indenture
Nothing in this Indenture or in the Notes, expressed or implied,
shall give to any Person, other than the parties hereto, and any of their
successors hereunder and the Noteholders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 1.9. Governing Law
This Indenture and each Note shall be construed in accordance with
and governed by the laws of the State of New York applicable to agreements made
and to be performed therein without reference to its conflicts of laws rules.
Section 1.10. Counterparts
This Indenture may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
5
Section 1.11. Consents
Any consent of any of the parties hereto required pursuant to this
Indenture shall not be unreasonably withheld or delayed.
Section 1.12. Effective Date
This Indenture shall not be effective until the Closing Date of the
Notes.
ARTICLE II
NOTE FORM
Section 2.1. Form Generally
The Notes and the certificate of authentication shall be in
substantially the form set forth in Section 2.2 with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon, as may be
required to comply with the rules of any securities exchange on which the Notes
may be listed, or as may, consistently herewith, be determined by the officers
executing such Notes, as evidenced by their execution of the Notes. Any portion
of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
Section 2.2. Form of Note
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS AND THE ISSUER HAS
NOT BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE
"INVESTMENT COMPANY ACT"), AND THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE OR
OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS EXCEPT IN A TRANSACTION THAT IS EXEMPTED UNDER
THE SECURITIES ACT (INCLUDING TRANSFER MADE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A")) AND APPLICABLE STATE SECURITIES LAWS.
EACH HOLDER OF THIS NOTE MUST BE, AND BY VIRTUE OF HOLDING THIS NOTE SHALL BE
DEEMED TO HAVE REPRESENTED THAT IT IS, AN INSTITUTIONAL ACCREDITED INVESTOR
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) and (7) UNDER THE SECURITIES ACT
AND THAT IS WAS NOT FORMED TO PURCHASE NOTES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE ON THE PAYMENT DATES AND IN THE AMOUNTS
DESCRIBED HEREIN. ACCORDINGLY, THE OUTSTANDING NOTE PRINCIPAL BALANCE OF THIS
NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF AND MAY BE
ASCERTAINED ONLY BY OBTAINING A CONFIRMATION THEREOF FROM THE TRUSTEE NAMED
HEREIN OR ITS SUCCESSOR.
6
The Notes may not be acquired or transferred to an employee benefit
plan subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), a plan described in Section 4975(e)(1) of the Code, or any entity
deemed to hold plan assets of a benefit plan or plan unless the acquiror or the
transferee represents that its acquisition and holding of the Notes will at all
times be exempt from the prohibited transaction provisions of ERISA and Section
4975 of the Code under PTE 84-14, PTE 90-1, PTE 91-38, PTE 95-60 or PTE 96-23 or
a similar exemption.
The Trustee and the Note Registrar shall not permit a transfer of a
Note if such transfer would result in the Issuer having more than eight (8)
registered Noteholders as shown in the Note Register or five (5) registered
Noteholders excluding the initial Noteholder and its direct transferees.
The Purchaser is not a partnership, grantor trust or S corporation of
which (i) substantially all of the value of the interest of a person owning an
interest in such entity is attributable to the entity's (direct or indirect)
interest in the Note, and (ii) a principal purpose of the use of the tiered
arrangement is to permit the Issuer to satisfy the 100-person limitation in
paragraph (h)(1)(ii) of Section 1.7704-1 of the Treasury Regulations.
No. [___] Initial Note Principal Balance
of the Notes: $[ ]
Initial Note Principal
Balance of this Note:
$[ ]
7
8.45% IP HOLDINGS LLC
ASSET-BACKED NOTES
ISSUE DATE: July 22, 2005
LEGAL MATURITY DATE: August 22, 2015
IP HOLDINGS LLC, a limited liability company duly organized and
existing under the laws of the State of Delaware (the "Issuer," which term
includes any successor entity under the Indenture referred to below), for value
received, hereby promises to pay to [PAYEE], or registered assigns (the
"Payee"), the principal sum of [ Dollars ($ )] payable on each Payment Date in
distributions of principal and interest as set forth in the Indenture, but in no
event less than the amounts set forth in the amortization schedule attached
hereto on each Payment Date. This Note shall be a limited obligation of the
Issuer, payable solely from and to the extent of the Collateral subject to the
Lien of the Indenture (defined below). This Note shall bear interest on the
outstanding unpaid principal balance at a rate equal to the Note Interest Rate
per annum, determined on the basis of a 360 day year of twelve 30-day months;
provided, however, that interest on any amount of principal or interest that is
not timely paid when due shall accrue interest until paid at a rate per annum
equal to 2% per annum in excess of the Note Interest Rate then in effect to the
extent allowed by law (the "Default Rate"); and, provided, further, that if a
Default shall have occurred under, and as defined in, the Indenture, interest
shall accrue from that time forward at the Default Rate, to the extent allowed
by law, until such Default is cured. All unpaid principal of and accrued
interest on the Notes shall be due and payable on August 22, 2015. The interest
and principal so payable on any Payment Date shall, as provided in the
Indenture, be paid to the Person in whose name this Note is registered in the
Note Register on the Record Date for such Payment Date which shall be the close
of business on the last day of the month prior to such Payment Date (whether or
not a Business Day).
The principal of and interest on this Note are payable solely by wire
transfer to the Person whose name appears as the Registered Holder of this Note
on the Note Register on the Record Date for the Payment Date, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for any
purpose.
This Note is one of a duly authorized issue of Notes of the Issuer
designated as its 8.45% IP Holdings LLC Asset-Backed Notes (the "Notes") issued
under a Second Amended and Restated Indenture, dated as of July 1, 2005 (herein,
called the "Indenture"), by and between the Issuer and Wilmington Trust Company,
as trustee (the "Trustee"), which term includes any successor Trustee under the
Indenture, to which Indenture reference is hereby made for a statement of the
respective rights thereunder of the Issuer, the Trustee and the Holders of the
Notes, and the terms upon which the Notes are, and are to be, authenticated and
8
delivered. All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture. Certain provisions of the
Indenture are described in this Note.
As provided in the Indenture, the Notes are secured by and payable
solely from Assets (the "Assets") conveyed to the Issuer by its present and
former members, proceeds thereof and other amounts, if any, held by the Trustee
as security for the Notes, (the "Collateral") described in the Indenture. The
Notes are equally and ratably secured by the Collateral pledged therefor to the
extent provided by the Indenture.
Unless earlier declared due and payable by reason of an Event of
Default, the Notes are payable at the time and in the manner provided in the
Indenture and are redeemable at the option of the Issuer before such time in
whole or in part, on either a Payment Date or on the first Business Day of any
calendar month if there is no Payment Date occurring in such calendar month. The
Notes shall be redeemed at a Redemption Price equal to the Note Principal
Balance or portion thereof to be redeemed, plus accrued interest thereon to the
Redemption Date, plus the Redemption Premium in the amount established under the
Indenture (unless the redemption is an Extraordinary Optional Redemption or a
Liquidity Reserve Fund Redemption, in which case no Redemption Premium shall be
payable). If an Event of Default (as defined in the Indenture) shall occur and
be continuing, the principal of all the Notes may become or be declared due and
payable in the manner and with the effect provided in the Indenture.
The Issuer may remove all or a portion of the Assets relating to any
or all Primary Marks from the Lien of the Indenture in accordance with Section
12.3 of the Indenture upon giving notice to the Trustee and delivering the
Release Price of the Assets to be removed to the Trustee. Any such election to
remove Assets shall be deemed to be an exercise of the option to redeem Notes as
provided in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note may be registered on the Note
Register of the Issuer, upon surrender of this Note for registration of transfer
at the office or agency of the Trustee in the United States of America, duly
endorsed by, or accompanied by a written instrument of transfer in form and
content satisfactory to the Issuer and the Trustee duly executed by, the Holder
hereof or its attorney duly authorized in writing, and thereupon one or more new
Notes, of authorized denominations and for the same aggregate Initial Note
Principal Balance, shall be issued to the designated transferee or transferees.
Prior to due presentment for registration of transfer of this Note,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for the purpose
of receiving payment as herein provided and for all other purposes whether or
not this Note be overdue, and neither the Issuer, the Trustee, nor any such
agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer subject to procedures and approvals set forth in the
9
Indenture. The Indenture also contains provisions permitting the Noteholders to
waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults and their consequences under the Indenture. Any such
consent or waiver shall be conclusive and binding upon the Noteholder and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent or waiver is made upon this Note.
The Notes are issuable only in registered form without coupons in
such authorized denominations as provided in Section 3.2 of the Indenture and
subject to certain limitations therein set forth. The Notes are exchangeable for
Notes of a like Initial Note Principal Balance of a different authorized
denomination, as requested by the Holder surrendering same.
This Note and the Indenture shall be governed by and construed in
accordance with the laws of the State of New York without reference to its
conflicts of laws rules.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note in
accordance with the Indenture at the times, place and rate, and in the coin or
currency, herein prescribed.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its President or a Vice President.
IP HOLDINGS LLC
By: IP Holdings and Management
Corporation, its Manager
By: ________________________
Name:
Title:
10
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes referred to in the within mentioned Indenture.
Dated:
[TRUSTEE], not in its individual capacity, but solely
as Trustee
By ________________________
Authorized Signatory
11
ARTICLE III.
THE NOTES
Section 3.1. Designation of Notes; Certain Related Provisions
The Notes shall be designated generally as the "IP Holdings LLC
Asset-Backed Notes" of the Issuer.
The Notes and all accrued interest thereon shall be due and payable
on the Legal Maturity Date to the extent not paid before such date.
All calculations of interest on the Notes are to be determined on
the basis of a 360-day year of twelve 30-day months.
The aggregate Initial Note Principal Balance of the Notes that may
be authenticated and delivered hereunder is limited to $63,000,000, except for
Notes issued and delivered upon registration of transfer of, or in exchange for,
or in lieu of, other Notes, pursuant to Sections 3.4, 3.6 or 10.4 hereof.
The Notes are limited obligations of the Issuer, payable solely from
and to the extent of the Collateral subject to the Lien of the Indenture.
Section 3.2. Denominations
The Notes are available in a minimum denomination of $2,500,000 and
integral multiples of $1,000 in excess thereof.
Section 3.3. Execution, Authentication, Delivery and Dating
The Original Notes and the Subordinate Notes are hereby exchanged
for Notes issued pursuant to this Indenture. For the avoidance of doubt, the
indebtedness evidenced by the Original Notes and the Subordinate Notes remains
outstanding and is consolidated with the indebtedness evidenced by the Notes
issued hereunder.
The Notes shall be executed on behalf of the Issuer by the President
or one of its Vice Presidents which may be in facsimile form or otherwise
reproduced thereon. The signature of any of these officers on the Notes may be
manual or facsimile. The Notes may be printed, lithographed, typewritten,
mimeographed or otherwise produced. The Notes need not be sealed.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication or delivery of such Notes or did not hold
such offices at the date of authentication or delivery of such Notes.
12
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Notes executed by the Issuer together
with an Issuer Order authorizing authentication thereof to the Trustee for
authentication; and the Trustee shall authenticate and deliver such Notes as in
this Indenture, provided, having an aggregate Initial Note Principal Balance not
in excess of the amount stated in Section 3.1, and not otherwise.
Each Note shall bear on its face the Issue Date and the Legal
Maturity Date and be dated as of the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein,
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Note shall be conclusive evidence, and
the only evidence, that such Note has been duly authenticated and delivered
hereunder. Each Holder shall provide the Trustee for recordation in the Note
Register its mailing address for notices under the Indenture.
Section 3.4. Registration, Registration of Transfer and Exchange
The Trustee is hereby appointed as registrar of the Notes (the "Note
Registrar"), as agent of the Issuer for transfer of the Notes (the "Transfer
Agent") and as the agent of the Issuer for the payment of the Notes (the "Paying
Agent") and the Trustee accepts such appointments. The Trustee in its capacity
as the Note Registrar shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Notes and the registration of transfers of
Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Trustee to be maintained as provided in Section 11.2, the
Issuer shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Notes of any
authorized denominations and of a like principal amount.
At the option of the Holder, Notes may be exchanged for other Notes
of any authorized denominations and of a like principal amount, upon surrender
of the Notes to be exchanged at such office or agency. Whenever any Notes are so
surrendered for exchange, the Issuer shall execute, and the Trustee shall
authenticate and deliver the Notes which the Noteholder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
entitled to the same benefits and subject to all the terms and conditions of
this Indenture, as the Notes surrendered upon such registration of such transfer
or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall (if so required by the Issuer or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form and content
13
satisfactory to the Issuer and the Trustee duly executed, by the Holder thereof
or his attorney duly authorized in writing. The form of assignment set forth at
Exhibit A hereof shall be deemed to be satisfactory for purposes of the last
preceding sentence. Concurrently with any transfer, the transferring Holder
shall provide the Trustee for recordation in the Note Register the mailing
address of such transferee for service of any notices to be delivered pursuant
to this Indenture and the payment of amounts due to such transferee.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Trustee may require payment
of a sum sufficient to cover any expense, tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 10.4 not involving any
registration of transfer.
Prior to any sale or other disposition of any Note the Holder
transferring such Note will, at its election, either endorse thereon the amount
of principal paid thereon and the last date to which interest has been paid
thereon or surrender such Note to the Trustee in exchange for a new Note or
Notes pursuant to this Section.
Section 3.5. Limitation on Transfer and Exchange
The Notes have not been registered or qualified under the Securities
Act or the securities laws of any state. No transfer of any Note shall be made
unless such transfer is made pursuant to an effective registration statement
under the Securities Act and registration or qualification under applicable
state securities laws or is exempt from such registration or qualification. In
the event that a transfer is to be made in reliance upon an exemption from the
Securities Act and applicable state securities laws, the Issuer shall require,
in order to assure compliance with the Securities Act, that the prospective
transferee certify to the Issuer and the Trustee in writing the facts
surrounding the transfer in the form of the investment letter described in
Exhibit C hereto or such other form as the Issuer may agree to accept, in its
sole discretion (each such letter, an "Investment Letter"). Neither the Issuer
nor the Trustee is obligated to register or qualify the Issuer or Notes (or any
offering or sale thereof) under the Securities Act or any other securities law.
While not conceding that the Issuer is an investment company within
the meaning of the Investment Company Act, in no event shall the transfer of a
Note be permitted if the transfer would cause the loss to the Issuer of a
necessary exemption under the Investment Company Act of 1940, as amended.
The Notes may not be acquired or transferred to an employee benefit
plan subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), a plan described in Section 4975(e)(1) of the Code, or any entity
deemed to hold plan assets of a benefit plan or plan unless the acquiror or the
transferee represents that its acquisition and holding of the Notes will at all
times be exempt from the prohibited transaction provisions of ERISA and Section
4975 of the Code under PTE 84-14, PTE 90-1, PTE 91-38, PTE 95-60 or PTE 96-23 or
a similar exemption.
14
The Trustee and the Note Registrar shall not permit a transfer of a
Note if such transfer would result in the Issuer having more than eight (8)
registered Noteholders as shown in the Note Register or five (5) registered
Noteholders excluding the initial Noteholder and its direct transferees.
Further, if its absence will be deemed adverse to the Issuer pursuant
to an opinion of counsel to that effect, each Purchaser of a Note other than the
initial purchaser of the Notes will be required to represent that it is not a
partnership, grantor trust or S corporation of which (i) substantially all of
the value of the interest of a person owning an interest in such entity is
attributable to the entity's (direct or indirect) interest in a Note, and (ii) a
principal purpose of the use of the tiered arrangement is to permit the Issuer
to satisfy the 100-person limitation in paragraph (h)(1)(ii) of Section 1.7704-1
of the Treasury Regulations.
The Issuer and the Trustee shall have no liability to the Noteholders
or otherwise arising from a transfer of any such Note in reliance upon the
Investment Letter delivered in connection therewith.
Section 3.6. Mutilated, Destroyed, Lost or Stolen Notes
If (i) any mutilated Note is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, and (ii) there is delivered to the Trustee such security or
indemnity as may be required by the Trustee to indemnify and hold the Issuer and
the Trustee harmless (which in the case of any Holder that is, or is a
subsidiary of, a bank or other institutional buyer with a net worth of at least
$50,000,000, and whose claims paying ability or long-term debt is rated at least
investment grade or better by a Rating Agency, need only be such bank's or
institutional buyer's unsecured written promise of indemnity), then, in the
absence of notice to the Issuer or the Note Registrar that such Note has been
acquired by a bona fide purchaser, the Issuer shall execute and upon its request
the Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Note, a new Note of the same tenor and
principal amount, bearing a number not contemporaneously outstanding; provided,
however, that if any such mutilated, destroyed, lost or stolen Note shall have
become or shall be about to become due and payable the Issuer in its discretion
may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Issuer or
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto, but no
service charge may be imposed in connection therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
15
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 3.7. Payment of Principal and Interest
The principal of and interest on the Notes are payable by wire
transfer in immediately available funds to the account specified in directions
delivered at least five (5) Business Days prior to such Payment Date by a
Registered Holder to the Person whose name appears as the Registered Holder of
such Note on the Record Date on the Note Register. Such payment shall be in such
coin or currency of the United States of America as at the time of tender is
legal tender for the payment of public and private debts. Payments pursuant to
Section 13.1 shall be made to each Noteholder based on the Percentage Interests
represented by Notes held by such Noteholder. Upon the final payment in full of
any Note, the Holder shall promptly surrender such Note at the Corporate Trust
Office of the Trustee.
To prevent backup withholding on payments made with respect to the
Notes, each Noteholder is required to provide the Trustee with (i) the
Noteholder's correct TIN by completing the form at Exhibit D (Substitute Form
W-9), certifying that the TIN provided on the Substitute Form W-9 is correct (or
that such Noteholder is awaiting a TIN) and that (A) such Noteholder is exempt
from backup withholding, (B) the Noteholder has not been notified by the IRS
that the Noteholder is subject to backup withholding as a result of failure to
report all interest or dividends or (C) the IRS has notified the Noteholder that
the Noteholder is no longer subject to backup withholding, or (ii) if
applicable, an adequate basis for exemption. A Foreign Noteholder may qualify as
an exempt recipient by submitting to the Trustee a properly completed IRS Form
W-8BEN or W-8ECI, as applicable, signed under penalties of perjury, attesting to
that Noteholder's exempt status.
Section 3.8. Persons Deemed Owners
Prior to due presentment for registration of transfer of any Note,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
Person in whose name any Note is registered as the owner of such Note for the
purpose of receiving payments of principal of and interest on such Note (subject
to Section 3.7) and for all other purposes whatsoever, whether or not such Note
be overdue, and neither the Issuer, the Trustee nor any agent of the Issuer or
the Trustee shall be affected by notice to the contrary.
Section 3.9. Cancellation
All Notes surrendered to the Trustee following payment or for
registration of transfer or exchange (including Notes surrendered to any Person
other than the Trustee which shall be delivered to the Trustee) shall be
promptly canceled and destroyed by the Trustee in accordance with its customary
procedures.
16
ARTICLE IV.
DELIVERY OF THE NOTES
The Notes shall be executed by the Issuer and delivered to the
Trustee for authentication and thereupon the same shall be authenticated and
delivered by the Trustee upon Issuer Order, and upon delivery to the Trustee of
the following:
(a) a certificate, certified by the Issuer, authorizing the
execution and delivery of this Indenture and the Notes;
(b) either (i) a certificate or other official document evidencing
the due authorization, approval or consent of any government body or bodies, at
the time having jurisdiction in the premises, and that the authorization,
approval or consent of no other governmental body is required for valid issuance
of the Notes, or (ii) an Opinion of Counsel that no such authorization, approval
or consent of any governmental body is required;
(c) an Officer's Certificate from the Issuer stating that the Issuer
is not, as of the Issue Date, in Default under this Indenture and that the
issuance of the Notes will not result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, the Issuer's
organizational documents or any indenture, mortgage, deed of trust or other
agreement or instrument to which the Issuer is a party or by which it is bound,
or any order of any court or administrative agency entered in any proceeding to
which the Issuer is a party or by which it may be bound or to which it may be
subject; and that all conditions precedent provided in this Indenture relating
to the authentication and delivery of the Notes have been complied with;
(d) duly executed copies of all Transaction Documents; and
(e) such other documents as the Trustee may reasonably require.
ARTICLE V.
SATISFACTION AND DISCHARGE
Section 5.1. Satisfaction and Discharge of Indenture
This Indenture shall cease to be of further effect (except as to any
surviving rights of indemnification, payment of fees and registration of
transfer and exchange or payment) with respect to the Notes and the Trustee, on
demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Notes and shall pay, assign, transfer and deliver to the Issuer upon Issuer
Order all cash, securities and all other property held by it as part of the
Collateral (except for amounts required to pay and discharge the entire
indebtedness of the Notes), when
(a) either:
17
(i) all Notes theretofore authenticated and delivered (other than
(i) Notes which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 3.6, and
(ii) Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
Issuer and thereafter repaid to the Issuer or discharged from
such trust, as provided in Section 11.3) have been delivered
to the Trustee for cancellation; or
(ii) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Issuer has
irrevocably deposited or caused to be deposited with the
Trustee, in trust for the purpose, an amount sufficient to pay
and discharge the entire indebtedness on such Notes together
with all accrued interest thereon not theretofore delivered to
the Trustee for cancellation;
(b) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(c) the Issuer has delivered to the Trustee an Officer's Certificate
stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture with respect to the Notes have been
complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the Issuer's obligations in Sections 3.4, 3.6, 7.7, 11.2 and 11.3, the Trustee's
obligations hereunder and the Paying Agent's obligations in Section 5.2 and the
rights and immunities of the Trustee under this Indenture shall survive until
the Notes are no longer Outstanding. Thereafter, the obligations of the Issuer
in Section 7.7 and the Trustee in Section 5.2 and the rights and immunities of
the Trustee under this Indenture shall survive the discharge of this Indenture
or the earlier resignation or removal of the Trustee.
Section 5.2. Application of Trust Money
All monies deposited with the Paying Agent pursuant to Section 12.1
shall be held in trust and applied by it, in accordance with the provisions of
the Notes and this Indenture, to the payment, to the Persons entitled thereto,
of the principal and interest for whose payment such money has been deposited
with the Paying Agent and such money shall be segregated from all other funds as
required herein or required by law.
Section 5.3. Discharge of Security Interest
Upon satisfaction and discharge of the Indenture as specified in
Section 5.1, the Trustee shall execute a release of the Collateral provided by
and at the expense of the Issuer. Further, on demand of and at the expense of
the Issuer and upon being supplied with instruments appropriate for the purpose,
the Trustee shall execute and the Issuer shall file all documents (including
without limitation UCC Form 3) necessary to discharge all liens, mortgages,
chattel mortgages and other security interests filed with any governmental board
or body with respect to the Collateral, and the Trustee shall otherwise
cooperate in any way reasonably necessary to restore full unencumbered title in
the Collateral to the Issuer or its designee.
18
ARTICLE VI.
EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Events of Default
"Event of Default" wherever used herein means any one of the
following events (whatever the reason for such Event of Default and without
regard to whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and
when used with respect to the Notes shall mean the same occurring at any time
while there are Notes Outstanding (except that no event of default under the
Management Agreement or the Back-Up Management Agreement shall, in and of
itself, constitute an Event of Default):
(1) the Issuer shall fail to comply with Section 11.7(iii)(a) of
this Indenture or IPHM shall fail to comply with Section 14.2
of this Indenture;
(2) failure by the Issuer to make payments of principal of and
interest on the Notes as and when due pursuant to the terms
and provisions of the Notes and this Indenture;
(3) default in the performance by, or breach of any covenant of,
the Issuer in any Transaction Document to which it is a party
(not referenced in clause (1) or clause (2) above) and
continuance of such default or breach for a period of thirty
(30) days after the earlier of (A) the date on which an
officer of the Managing Member of the Issuer first has actual,
personal knowledge (or, in the exercise of reasonable care,
should have known) of such default or breach and (B) the date
on which written notice, specifying in reasonable detail, such
default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder shall have
been given to the Issuer;
(4) a failure of any representation or warranty of the Issuer in
this Indenture to be true and correct as and when made, which
failure has a material adverse effect on the interests of the
Noteholders and which, if susceptible of being cured, remains
uncured after the earlier of (A) thirty (30) days after the
date on which an officer of the Managing Member of the Issuer
first has actual, personal knowledge (or, in the exercise of
reasonable care, should have known) of such failure and (B)
19
the date which is thirty (30) days after written notice,
specifying in reasonable detail, such breach and requiring it
to be remedied and stating that such notice is a "Notice of
Default" hereunder shall have been given to the Issuer;
provided, however, any such failure of a representation or
warranty as to an Asset that is set forth in Section 11.16
hereof shall not result in an Event of Default unless the cure
or payment of the Release Price for such Asset by the Issuer
is required in accordance with Section 12.3 of this Indenture
and is not achieved as and when required;
(5) the entry of a decree or order for relief by a court having
jurisdiction in respect of the Issuer in an involuntary case
under the federal bankruptcy laws, as now or hereafter in
effect, or any other present or future federal or state
bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or of any
substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Issuer and the
continuance of any such decree or order unstayed and in effect
for a period of 90 consecutive days;
(6) the commencement by the Issuer of a voluntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any
other present or future federal or state bankruptcy,
insolvency or similar law, or the consent by the Issuer to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar
official of the Issuer or any substantial part of its property
or the making by the Issuer of an assignment for the benefit
of creditors or the failure by the Issuer generally to pay its
debts as such debts become due or the taking of partnership
action by the Issuer in furtherance of any of the foregoing;
or
(7) any Note remains Outstanding on the first Payment Date
following the Payment Date on which the DSCR is 1.0 or less
(as set forth in the related Servicer Report).
Section 6.2. Acceleration of Maturity, Rescission and Annulment
If an Event of Default of the kind specified in clauses (5), (6) and
(7) of Section 6.1 occurs, the unpaid principal amount of all of the Notes shall
automatically become immediately due and payable without notice, presentment or
demand of any kind. If an Event of Default (other than an Event of Default of
the kind specified in clauses (5), (6) and (7) of Section 6.1) occurs and is
continuing of which a Responsible Officer of the Trustee has actual knowledge,
then and in every such case the Trustee or Majority Holders pursuant to an Act
20
▇▇▇ declare the principal of all of the Notes to be immediately due and payable,
by a notice in writing to the Issuer (and to the Trustee if given by Noteholders
and upon any such declaration (in accordance with this sentence or the preceding
sentence)) that the Notes shall become immediately due and payable together with
accrued and unpaid interest and a Redemption Premium.
At any time after such a declaration of acceleration has been made,
but before any Sale of the Collateral has been made or a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Majority Holders by an Act and evidenced by a written
notice delivered to the Issuer and the Trustee, may rescind and annul such
declaration and its consequence if:
(i) the Issuer has paid or deposited with the Trustee a sum sufficient
to pay:
(1) all overdue installments of interest on all Notes;
(2) the principal of any of the Notes which has become due other
than by such declaration of acceleration and interest thereon
at the Default Rate (to the extent permitted by applicable
law);
(3) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest on the Notes at
the rate specified therefor in the Notes;
(4) in connection with the preservation of the Collateral and
enforcement of its rights all sums paid or advanced by the
Noteholders hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its
agents and counsel; and
(5) all Events of Default, other than the nonpayment of the
principal of the Notes which have become due solely by such
acceleration, have been cured or waived as provided in Section
6.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Subsequent to any such declaration of acceleration and so long as
such declaration and its consequences has not been rescinded and annulled, prior
to the exercise by the Trustee of the remedies set forth in Section 6.3 the
Trustee shall give the Issuer and the Noteholders ten (10) days notice of its
intention to take such actions.
21
Section 6.3. Remedies
If an Event of Default shall have occurred and be continuing, the
Trustee may, and by an Act of the Majority Holders and subject to Article VII
herein pursuant to specific instruction shall, do one or more of the following:
(a) institute Proceedings for the collection of all amounts then payable on the
Notes or under this Indenture, whether by declaration or otherwise, enforce any
judgment obtained, and collect from the Collateral securing the Notes (including
any amounts in the Liquidity Reserve Account, the Renewal Reserve Account and
the Prepaid Fee and Royalty Account) the monies adjudged due;
(b) sell the Collateral or any portion thereof or rights or interest
therein, at one or more Sales called and conducted in any manner permitted by
law;
(c) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to any portion of the
Collateral securing the Notes; and
(d) exercise any remedies of a secured party under the Uniform
Commercial Code or other applicable law and take any other appropriate action to
protect and enforce the rights and remedies of the Trustee or the Holders of the
Notes hereunder;
provided, however, that if there is more than one Holder of Outstanding Notes
and if less than all of the Holders of Outstanding Notes have approved a Sale of
the Collateral and if the proceeds of any such Sale will be less than the amount
required to retire all of the Outstanding Notes in full, then, in any such
event, the Trustee may not sell or otherwise liquidate any of the Collateral
unless after consultation with an independent accounting firm or another Person
approved by Act of the Majority Holders of national reputation in the field of
appraisal of assets of the type constituting the Collateral, such Person
provides the Trustee with a written report that the proceeds of such Sale
reflect a reasonable approximation of the fair market value of the Collateral.
The Trustee shall have no liability for any public Sale or private Sale
conducted in reliance upon the advice, with respect to the commercial
reasonableness of the sale, of a Person of national reputation in the field of
appraisal. In the event that the Trustee does not sell or otherwise liquidate
the Collateral, it shall continue to hold such Collateral and make distributions
therefrom pursuant to Article XIII hereof.
Section 6.4. Trustee May File Claim
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial Proceeding, relating to the Issuer or any other obligor upon the Notes
or the property of the Issuer or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
22
of whether the Trustee shall have made any demand on the Issuer for the payment
of overdue principal or interest) shall be entitled and empowered, to intervene
in such proceeding or otherwise:
(i) to file and prove a claim for all amounts owing and unpaid in
respect of the Notes and to file such other papers or documents and
take such other action including participating as a member, voting
or otherwise, in any committee of creditors appointed in the matter,
as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Noteholders allowed in such judicial Proceeding;
(ii) to petition for lifting of the automatic stay and thereupon to
foreclose upon the Collateral as elsewhere provided herein; and
(iii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such judicial Proceeding is hereby authorized by each
Noteholder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Noteholder in any such Proceeding.
Section 6.5. Trustee May Enforce Claims Without Possession of Notes
All rights of actions and claims under this Indenture or the Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Notes or the production thereof in any Proceeding relating thereto, and any
such Proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the benefit of the
Holders of the Notes in respect of which such judgment has been recovered
applied to payments on the Notes in the order set forth in Section 6.6.
23
Section 6.6. Allocation of Money Collected
If the Notes have been declared due and payable following an Event
of Default and such declaration and its consequences have not been rescinded and
annulled, any money collected by the Trustee with respect to the Notes pursuant
to this Article (and any funds then held or thereafter received by the Paying
Agent) shall be applied in the following order, at the date or dates fixed by
the Paying Agent:
FIRST: To the payment of all amounts due the Trustee;
SECOND: To the payment of all amounts due the Servicer under the
Servicing Agreement, including all earned and due but unpaid Senior Servicing
Fees and Servicer Costs;
THIRD: To the payment of all reasonable costs and expenses incurred
by any Noteholder in connection with the enforcement of its rights hereunder or
under the Notes, ratably, without preference or priority of any kind;
FOURTH: To the payment of accrued interest on and the Note Principal
Balance of the Notes, including interest at the Default Rate (to the extent such
interest has been collected by the Paying Agent or a sum sufficient therefor has
been so collected and payment thereof is legally enforceable at the rate
prescribed therefor in the Notes or in this Indenture) on overdue installments
of principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes;
FIFTH: To the payment of all earned and due but unpaid fees and
expenses of the Manager and the Back-Up Manager, if any;
SIXTH: To the payment of all earned and due but unpaid Junior
Servicing Fee;
SEVENTH: To the payment of all earned and due but unpaid Structuring
Fee amounts.
EIGHTH: To the payment of any surplus to or at the written direction
of the Issuer or any other person legally entitled thereto.
Section 6.7. Limitation on Suits
No Holder shall have any right to institute any Proceeding, judicial
or otherwise, with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(2) the Holders of 25% or more of the aggregate Note Principal
Balance of the Outstanding Notes shall have made written
request to the Trustee to institute Proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
24
(3) such Holder or Holders have offered to the Trustee indemnity
satisfactory to it (which, in the case of a holder that is, or
is a subsidiary of, a bank or other institutional buyer with a
net worth of at least $50,000,000 and whose claims paying
ability or long-term debt is rated at least investment grade
or better by a Rating Agency need only be such bank's or
institutional buyer's unsecured written promise of indemnity)
against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any
such Proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60 day period by the Majority
Holders;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided.
Section 6.8. Unconditional Right of Noteholders to Receive Principal and
Interest
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on such Note as such principal and
interest becomes due and payable and to institute suit for the enforcement of
any such payment, and such right shall not be impaired without the consent of
such Holder; provided, however, that neither the Holder of any Note nor the
Trustee shall, if requested by the Noteholders, petition or otherwise invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
Section 6.9. Restoration of Rights and Remedies
If the Trustee or any Noteholder has instituted any Proceeding to
enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Person who instituted the Proceeding, then and in every such case the
Issuer, the Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
25
positions hereunder, and thereafter all rights and remedies of the Trustee and
the Noteholders shall continue as though no such Proceeding has been instituted.
Section 6.10. Rights and Remedies Cumulative
No right or remedy herein conferred upon or reserved to the Trustee
or to the Noteholders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.11. Delay or Omission Not Waiver
No delay or omission of the Trustee or of any Noteholder to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Noteholders, or any of them, may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the
Noteholder or Noteholders, as the case may be.
Section 6.12. Control by Noteholders
The Majority Holders shall have the right to direct the decision
whether to conduct, and the time, method and place of conducting, any Proceeding
for any remedy available to the Trustee with respect to the Notes or exercising
any trust or power conferred on the Trustee with respect to the Notes; provided
that:
(1) such direction shall not be in conflict with any rule of law
or with this Indenture; and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction;
provided, however, that, subject to Section 7.1, the Trustee
need not take any action which it determines might involve it
in liability or be unjustly prejudicial to the Noteholders not
consenting.
Section 6.13. Waiver of Past Defaults
The Noteholders may waive any past Default with respect to the Notes
hereunder and its consequences, except a Default
(1) described in Sections 6.1(5) and (6), or
26
(2) in respect of a covenant or provision hereof which under
Article IX cannot be modified or amended without the consent
of the Holder of each Outstanding Note affected thereby.
Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture. Upon receipt of notice of such waiver, the Trustee
shall transmit by mail to the Issuer and the Servicer notice of such waiver
specifying the date on which the Default was waived promptly after the
occurrence of such waiver.
Section 6.14. Undertaking for Costs
All parties to the Indenture and each Noteholder by its acceptance of
a Note shall be deemed to have agreed that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorney's fees against
any party litigant in such suit, having due regard to the merits and good faith
of the claims or defenses made by such party litigant; but the provisions of
this Section 6.14 shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Noteholder, or the Majority Holders or to any suit
instituted by any Noteholder for the enforcement of the payment of principal of
or interest on any Notes on or after the Legal Maturity Date (or, in the case of
redemption of Notes, on or after the applicable Redemption Date).
Section 6.15. Waiver of Stay or Extension Laws
The Issuer covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance by the Issuer under this Indenture; and the Issuer (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
Section 6.16. Sale of Collateral
(a) The power to effect any sale (a "Sale") of any portion of the
Collateral pursuant to Section 6.3 shall not be exhausted by any one or more
Sales as to any portion of the Collateral remaining unsold, but shall continue
unimpaired until the entire Collateral securing the Notes shall have been sold
or all amounts payable under this Indenture with respect thereto shall have been
paid. Any Sale conducted hereunder shall be completed in accordance with the
applicable terms and provisions of the New York State Uniform Commercial Code.
The Trustee may from time to time postpone any Sale by public announcement made
at the time and place of such Sale. It is hereby expressly agreed that the
Trustee is not limited to any amount fixed by law as compensation for any Sale,
so long as the same shall be reasonable.
27
(b) Any Noteholder may bid for and acquire any portion of the
Collateral securing the Notes in connection with any Sale thereof. In lieu of
paying cash for the entire purchase price therefor, such Noteholder, after
deducting the costs, charges and expenses (including reasonable attorney's fees
and expenses) incurred by the Trustee in connection with such Sale may make
settlement for any portion of the purchase price remaining by crediting against
amounts owing on the Notes held by it or other amounts owing to such Noteholder
secured by this Indenture, the portion of the net proceeds of such Sale to which
such Noteholder would be entitled hereunder.
(c) The Issuer covenants and agrees that ten (10) Business Days
prior notice of a Sale of the entirety of the Collateral by a public Sale is a
commercially reasonable notice.
(d) The Trustee shall execute and deliver an appropriate instrument
of conveyance transferring its interest in any portion of the Collateral in
connection with a Sale thereof, which Sale shall be at the expense of the
Issuer. In addition, the Servicer is hereby irrevocably appointed the agent and
attorney-in-fact of the Issuer to cause the transfer and conveyance of the
Issuer's interest in any portion of the Collateral in connection with a Sale
thereof pursuant to the terms of this Indenture, and to take all action
necessary to effect such Sale. No purchaser or transferee at such a sale shall
be bound to ascertain the Servicer's or the Trustee's authority, inquire into
the satisfaction of any conditions precedent or see to the application of any
monies.
(e) Any amounts received by the Noteholders in connection with a
public or private sale pursuant this Section shall be deemed to be conclusive
and binding upon the parties hereto and the Noteholders shall have no liability
in respect hereto.
Section 6.17. Action on Notes
The Noteholder's right to seek and recover judgment on the Notes or
under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture. Neither
the lien of this Indenture nor any rights or remedies of the Noteholders shall
be impaired by the recovery of any judgment by the Noteholders against the
Issuer or by the levy of any execution under such judgment upon any portion of
the Collateral or upon any of the assets of the Issuer.
28
ARTICLE VII.
THE TRUSTEE; RESIGNATION OF TRUSTEE AND SUCCESSOR TRUSTEE
Section 7.1. Certain Duties and Responsibilities of Trustee
(a) Except during the continuance of an Event of Default, the
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
(b) In case an Event of Default has occurred and is continuing and
is actually known to a Responsible Officer of the Trustee, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the
pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of a majority of aggregate
Note Principal Balance of Outstanding Notes relating to the
time, method and place of conducting any Proceeding for any
remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture with
respect to the Notes;
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that repayment of such
funds or indemnity satisfactory to it against such risk or
liability is not reasonably assured to it (which, in the case
of a Holder that is, or is a subsidiary of, a bank or other
institutional buyer with a net worth of at least $50,000,000
and whose long-term debt or claims paying ability is rated at
least investment grade by a Rating Agency need only be such
bank's or institutional buyer's unsecured written promise of
indemnity), provided, that nothing herein contained shall
excuse the Trustee for failure to perform its duties as
Trustee under this Indenture;
29
(5) the Trustee shall not be charged with knowledge of any default
hereunder or unless one of its Responsible Officers has actual
knowledge thereof;
(6) the Trustee shall have no obligation to ascertain whether any
payment of interest on an overdue installment of interest is
legally enforceable; and
(7) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the
case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Indenture.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) The Trustee is hereby authorized to execute the Servicing
Agreement and the Security Agreements.
Section 7.2. Notice of Default, Cure or Waiver
Promptly after the occurrence of any Default actually known to a
Responsible Officer of Trustee, the Trustee shall transmit to all Holders, as
their names and addresses appear on the Note Register, notice of such Default
hereunder known to the Trustee.
Section 7.3. Certain Rights of Trustee
Subject to Section 7.1:
(a) the Trustee may conclusively rely and shall be fully protected
in acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other obligation, paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
30
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer Order;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate of the Issuer;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the written request or
direction of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Trustee security or indemnity satisfactory
to it (which, in the case of a holder that is, or is a subsidiary of, a bank or
other institutional buyer with a net worth of at least $50,000,000 and whose
claims paying ability or long-term debt is rated at least investment grade or
better by a Rating Agency need only be such bank's or institutional buyer's
unsecured written promise of indemnity) against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document, but the Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it may see
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuer, personally or by agent, attorney, custodian or nominee; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys,
custodians or nominees and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent, attorney, custodian or
nominee appointed with due care by it hereunder.
Except as otherwise agreed in writing, the Trustee shall not be
responsible for the payment of any interest on amounts deposited with it
hereunder.
Section 7.4. Not Responsible for Recitals or Issuance of Notes
(a) The recitals contained herein and in the Notes, except the
certificates of authentication on the Notes, shall be taken as the statements of
the Issuer, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to the validity, adequacy or condition of
the Collateral or any part thereof, or as to the title of the Issuer thereto or
as to the security afforded thereby or hereby, or as to the validity or
genuineness of any securities at any time pledged and deposited with the Trustee
31
hereunder or as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Issuer of the Notes or the proceeds thereof or of any money paid to the Issuer
upon Issuer Order.
(b) Except as otherwise expressly provided herein and without
limiting the generality of the foregoing, the Trustee shall have no
responsibility or liability for or with respect to the existence or validity of
any Collateral or validity of the assignment of any portion of the Collateral to
the Trustee or of any intervening assignment.
(c) The Trustee shall not have any obligation or liability under any
Collateral by reason of or arising out of this Indenture or the granting of a
security interest in such Collateral hereunder or the receipt by the Trustee of
any payment relating to any Collateral pursuant thereto, nor shall the Trustee
be required or obligated in any manner to perform or fulfill any of the
obligations of the Issuer under or pursuant to any Collateral, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it, or the sufficiency of any performance by any party,
under any Collateral.
Section 7.5. May Hold Notes
The Trustee, Note Registrar or any other agent of the Issuer, in its
individual or any other capacity, may become the owner or pledgee of Notes and
if operative, may otherwise deal with the Issuer with the same rights it would
have if it were not Trustee, Note Registrar or such other agent.
Section 7.6. Money Held in Trust
Money held by the Trustee in trust hereunder shall be segregated
from other funds held by the Trustee. The Trustee shall be under no liability
for interest on any money received by it hereunder except as otherwise agreed in
writing with the Issuer.
Section 7.7. Compensation and Reimbursement
The Issuer agrees:
(1) to pay the Trustee in accordance with a separate fee agreement
and such fees in accordance with Section 13.1 hereof, as
reasonable compensation for all services rendered by it
hereunder (which Trustee Fee shall not be limited by any
provision of law in regard to the compensation of a trustee of
an express trust);
(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its written request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture
32
(including the reasonable compensation and the expenses and
disbursements of the Trustee's agents and counsel), except any
such expense, disbursement or advance as may be attributable
to its negligence or bad faith; and
(3) to indemnify the Trustee its officers, directors, employees
and agents for, and to hold them harmless against, any loss,
liability, obligation, damage, penalty, tax, claim, action,
investigation, proceeding, cost, disbursement or expense
incurred without negligence or bad faith on their part,
arising out of or in connection with the acceptance or
administration of this trust and performance hereunder,
including the reasonable costs and expenses of defending
itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties
hereunder.
The provisions of this Section 7.7 shall survive any expiration or
termination of this Indenture.
Section 7.8. Corporate Trustee Requirement Eligibility
There shall at all times be a Trustee hereunder which shall (a) be a
depository institution, banking corporation or trust company organized and doing
business under the laws of the United States of America or of any state,
authorized under such laws to exercise corporate trust powers and (b) meet the
requirements of an Eligible Financial Institution. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
Section 7.9. Resignation and Removal; Appointment of Successor
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time by giving written notice
thereof to the Issuer and the Noteholders. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Majority
Holders, delivered to the Trustee and to the Issuer.
(d) If at any time:
33
(1) the Trustee shall cease to be eligible under Section 7.8 and
shall fail to resign after written request therefor by the
Issuer or by the Majority Holders; or
(2) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee
or of its property shall be appointed or any public officer
shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or
liquidation;
then, in any such case, (i) the Issuer by a Board Resolution may remove the
Trustee, or (ii) subject to Section 6.14, any Noteholder who has been a bona
fide Holder of a Note for at least two months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Issuer, by a Board Resolution, shall promptly appoint a successor Trustee
that meets the requirements set forth in Section 7.8 and is approved by an Act
of the Majority Holders. If no successor Trustee shall have been so appointed by
the Issuer within 30 days after such resignation or removal, any Noteholder who
has been a bona fide Holder of Notes for at least two months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Issuer shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Notes as their names and addresses appear in the Note Register. Each
notice shall include the name of the successor Trustee and the address of its
corporate trust office.
Section 7.10. Acceptance of Appointment by Successor
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer and the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the Issuer
or the successor Trustee, such retiring Trustee shall, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee, and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder. Upon request of any such successor Trustee, the Issuer shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts. The predecessor
Trustee shall not be liable for the actions or the failure to act of any
successor Trustee hereunder, but each retiring Trustee shall remain liable for
its actions or failure to act during its tenure as Trustee hereunder.
34
No successor Trustee shall accept its appointment unless at the time
of such acceptance, such successor Trustee shall be qualified and eligible under
this Article.
Section 7.11. Merger, Conversion, Consolidation or Succession to Business
of Trustee
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided, such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
Section 7.12. Co-trustees and Separate Trustees
At any time or times, for the purpose of meeting the legal
requirements of any jurisdiction in which any portion of the Collateral may at
the time be located, the Issuer and the Trustee shall have power to appoint,
and, upon the written request of the Trustee or of the Holders of Notes
representing at least 25% of the aggregate Note Principal Balance of Outstanding
Notes, the Issuer shall for such purpose join with the Trustee in the execution,
delivery and performance of all instruments and agreements necessary or proper
to appoint, one or more Persons approved by the Trustee either to act as
co-trustee, jointly with the Trustee, of all or any part of such Collateral, or
to act as separate trustee of any such property, in either case with such powers
as may be provided in the instrument of appointment, and to vest in such Person
or Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If the
Issuer does not join in such appointment within 15 days after the receipt by it
of a request to do so, or in case an Event of Default has occurred and is
continuing, the Trustee alone shall have power to make such appointment.
Should any written instrument from the Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Issuer.
Every co-trustee or separate trustee shall, to the extent permitted
by law, but to such extent only, be appointed subject to the following terms,
namely:
(1) The Notes shall be authenticated and delivered and all rights,
powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held
by, or required to be deposited or pledged with, the Trustee
hereunder, shall be exercised solely by the Trustee.
35
(2) The rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by
such appointment shall be conferred or imposed upon and
exercised or performed by the Trustee or by the Trustee and
such co-trustee or separate trustee jointly, as shall be
provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of
any jurisdiction in which any particular act is to be
performed, the Trustee shall be incompetent or unqualified to
perform such act, in which event such rights, powers, duties
and obligations shall be exercised and performed by such
co-trustee or separate trustee.
(3) The Trustee at any time, by an instrument in writing executed
by it, with the concurrence of the Issuer evidenced by a Board
Resolution, may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section,
and, in case an Event of Default has occurred and is
continuing, the Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate
trustee without the concurrence of the Issuer. Upon the
written request of the Trustee, the Issuer shall join with the
Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate
such resignation or removal. A successor to any co-trustee or
separate trustee that has so resigned or been removed may be
appointed in the manner provided in this Section.
(4) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the
Trustee or any other such trustee hereunder nor shall the
Trustee be liable by reason of any act or omission of any
co-trustee or separate trustee hereunder, so long as such
co-trustee or separate trustee has been appointed by the
Trustee with due care.
(5) Any Act of Noteholders delivered to the Trustee shall be
deemed to have been delivered to each such co-trustee and
separate trustee.
Section 7.13. Rights of Trustee in Capacity of Payment Agent, Transfer
Agent or Registrar
In the event that the Trustee is also acting as Paying Agent or
Transfer Agent or Registrar hereunder, the rights and protections afforded to
the Trustee pursuant to this Article VII shall also be afforded to the Paying
Agent, Transfer Agent and Registrar and to any successor serving in any such
capacity.
36
ARTICLE VIII.
CONSOLIDATION AND MERGER
The Issuer shall not consolidate or merge with or into any other
Person or convey or transfer its properties and assets substantially as an
entirety to any Person.
ARTICLE IX.
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures Only with Consent of Noteholders
With the written consent of the Noteholders by Act of the Noteholders
delivered to the Issuer and the Trustee, the Issuer, when authorized by a Board
Resolution, and the Trustee may enter into one or more supplemental indentures
for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or modifying in any manner
the rights of the Holders of the Notes under this Indenture; provided, however,
no such supplemental indenture shall, without the consent of all of the
Noteholders:
(1) reduce the Note Principal Balance of any Note or the Note
Interest Rate thereon or change the amount or priority or time
of any payment on any Note or any place of payment where, or
the coin or currency in which, any Note or the interest
thereon is payable, or impair the right to institute suit for
the enforcement of any such payment; or
(2) modify or release the Collateral in any material respect
except as otherwise permitted herein; or
(3) modify or alter the definition of the term "Outstanding"; or
(4) modify or alter the provisions of the proviso to Section 6.3;
or
(5) modify any of the provisions of this Section 9.1, except to
increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Note; or
(6) permit the creation of any Lien ranking prior to or on a
parity with the Lien of this Indenture with respect to any
part of the Collateral, or, except as permitted under this
Indenture, terminate the Lien of this Indenture on any
property at any time subject hereto or, except as permitted
under this Indenture, deprive the Holder of any Note of the
security afforded by the Lien of this Indenture.
37
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Issuer shall, if requested
by any Noteholder, mail to the each of the Holders of the Notes, a notice
setting forth in general terms the substance of such supplemental indenture
together with a copy of such supplemental indenture. Any failure of the Issuer
to mail such notice and copy, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
Section 9.2. Execution of Supplemental Indentures
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to be
supplied with, and prior to executing any supplemental indenture pursuant to
Section 9.1, the Trustee shall require an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own duties, immunities,
rights or indemnities under this Indenture or otherwise.
Section 9.3. Effect of Supplemental Indentures
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
Section 9.4. Reference in Notes to Supplemental Indenture
Notes issued and delivered after the execution of any supplemental
indenture pursuant to this Article may, and if required by the Issuer shall,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Issuer shall so determine, new Notes so
modified as to conform, in the opinion of the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Trustee in exchange for Outstanding Notes.
Section 9.5. Solicitation of Holders of Notes
(a) Solicitation. The Issuer shall provide each Noteholder
(irrespective of the amount of Notes then owned by it) with sufficient
information, at least five (5) Business Days in advance of the date a decision
is required, to enable such Holder to make an informed and considered decision
with respect to any proposed amendment, waiver or consent in respect of any of
the provisions hereof or of the Notes. The Issuer shall deliver to the Servicer
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Indenture and the Servicer shall
38
deliver copies of the same to each Noteholder promptly following the date on
which it is executed and delivered by the Issuer; provided, however, nothing in
this Section 9.5(a) shall, in the absence of affirmative consent of a
Noteholder, be construed as deemed consent.
(b) Payment. The Issuer will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any Noteholder as
consideration for or as an inducement to the entering into by any Noteholder of
any waiver or amendment of any of the terms and provisions hereof or of the
Notes unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each Noteholder then Outstanding even if
such Noteholder did not consent to such waiver or amendment.
ARTICLE X.
REDEMPTION OF NOTES
Section 10.1. Redemption at the Option of the Issuer
(a) The Notes are redeemable (1) at the option of the Issuer or (2)
pursuant to the provisions of Section 12.3(d), in whole, or in part at only one
time during the term hereof, at the Redemption Price on any Redemption Date with
such option, unless deemed exercised hereunder, to be exercised by delivery of
an Issuer Order to the Trustee; provided, that (i) no Event of Default has
occurred and remains uncured and (ii) except in the case of an Extraordinary
Optional Redemption, the Redemption Date must be the first available Redemption
Date for which the Trustee can give a proper Redemption Notice after receipt of
such Issuer Order by the Trustee; provided, further, that any redemption in part
pursuant to clause (1) above is in an amount equal to 50% of the Note Principal
Balance outstanding on the Redemption Date. Note Principal Payments shall not
constitute payments to redeem Notes and the reduction in the Note Principal
Balance of any Note with any such payment shall not be a redemption of such Note
within the meaning and for any purposes of this Indenture.
(b) In the event that there is to be a payment of the Release Price
for an Asset as described in Section 12.3(c) of this Indenture, upon such
payment, the affected Asset shall be released from the Lien of this Indenture.
The Release Price of the affected Asset shall be deposited in the Collection
Account by the Trustee upon receipt and shall be applied to the redemption of
Notes on the next ensuing Redemption Date for which a proper Redemption Notice
can be given in a principal amount equal to the excess, if any, of (i) the total
of Initial Asset Values of all affected Assets over (ii) the total of the
Amortization Amounts of the affected Assets. Deposit of such Release Price in
the Collection Account shall be deemed to be an exercise of the option to redeem
Notes on such Redemption Date in such principal amount and at the Redemption
Price.
(c) In accordance with Section 13.2(b) of this Indenture, specified
funds are to be withdrawn from the Liquidity Reserve Account and applied to the
redemption of Notes. Such funds shall be set aside by the Trustee in the
Collection Account and applied to the redemption of Notes on the next ensuing
39
Redemption Date for which a proper Redemption Notice can be given in a principal
amount equal, as nearly as practicable, to the amount of the funds available
after withdrawing therefrom all funds needed to pay accrued interest on the
Notes to be redeemed to the applicable Redemption Date plus the related
Redemption Premium, if applicable. The Issuer shall be deemed to have elected
any such redemption.
(d) Installments of interest and principal due on or prior to a
Redemption Date shall continue to be payable to the Holders of Notes called for
redemption as of the relevant Record Dates according to their terms and the
provisions of Section 3.7. Except as otherwise specifically provided herein, the
election of the Issuer to redeem any Notes pursuant to this Section shall be
evidenced by an Issuer Order directing the Trustee to make the payment of the
Redemption Price on all of the Notes to be redeemed from monies deposited with
the Trustee pursuant to Section 10.3 or otherwise available to the Trustee in
accordance with this Indenture for the purpose of redeeming Notes.
Section 10.2. Notice of Redemption by the Issuer
Notice of redemption pursuant to Section 10.1, if not waived in
writing by a Noteholder delivered to the Trustee, shall be given by U.S.
registered mail, return receipt requested, or by nationally recognized overnight
private mail delivery service, postage prepaid, mailed not less than 30 days or
more than 60 days prior to the applicable Redemption Date to each Holder of
Notes whose Notes are to be redeemed, at its address in the Note Register. It
shall be assumed for purposes of this Indenture that the Trustee can and will
mail a notice of redemption 5 days after receipt of an Issuer Order to redeem
Notes or a deemed election by the Issuer to redeem Notes.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the principal amount of Notes to be redeemed;
(3) a pro forma Redemption Price for each Note redeemed,
calculated as of the date of the notice of redemption;
(4) that on the Redemption Date, the Redemption Price shall become
due and payable upon each Note called for redemption, and that
interest thereon shall cease to accrue on such date; and
(5) the place where such Notes to be redeemed are to be
surrendered on or within 30 days after the Redemption Date,
which shall be the office or agency of the Issuer to be
maintained as provided in Section 11.2.
40
Notice of redemption of Notes shall be given by the Issuer or, at the
Issuer's request, by the Trustee in the name and at the expense of the Issuer.
Failure to give notice of redemption, or any defect therein, to any Holder of
any Note selected for redemption shall not impair or affect the validity of the
redemption of any other Note.
Section 10.3. Deposit of the Redemption Price
On or before 1:00 P.M. (New York City time) on the Business Day
immediately preceding any Redemption Date, the Issuer shall remit to the Trustee
for deposit into the Collection Account an amount of monies sufficient to pay
the Redemption Price of all Notes which are to be redeemed on such Redemption
Date (less any portion of such payment set aside from monies in the Collection
Account or the Liquidity Reserve Account for the Notes to be redeemed).
Section 10.4. Notes Payable on Redemption Date; Less than All Notes to be
Redeemed
(a) Notice of redemption having been given as provided in Section
10.2, the Notes to be redeemed shall, on the applicable Redemption Date, become
due and payable at the Redemption Price and on such Redemption Date such Notes
shall cease to bear interest on the portion of the Notes actually redeemed. On
the Redemption Date, the Holders of such Notes shall be paid the Redemption
Price by the Trustee from funds available to the Trustee pursuant to Section
10.3, Section 13.2 or otherwise; provided, however, that installments of
principal and interest which are due on or prior to the Redemption Date shall be
payable to the Holders of such Notes registered as such on the relevant Record
Dates according to their terms and the provisions of Section 3.7.
(b) If a Holder of any Note called in whole or in part for
redemption shall not be so paid due to a failure of the Trustee to remit funds
timely deposited by the Issuer, the Issuer shall have no liability as a result
of such failure and the principal amount thereof shall, until paid, continue to
bear interest from the Redemption Date at the related Note Interest Rate until
payment of principal is made.
(c) If less than the principal amount of all Notes Outstanding are
to be redeemed on any Redemption Date, such Notes shall be redeemed pro rata
from available funds as nearly as practicable in the judgment of the Trustee,
observing in the process authorized denominations in accordance with Section 3.2
of this Indenture and shall be applied in installments of principal payable on
the affected Note in the reverse order of maturity in accordance with the
schedule attached to such Note.
Section 10.5. Defeasance
(a) If, on any Payment Date, there is held by the Trustee Defeasance
Collateral (which may include the balance on deposit in the Liquidity Reserve
Account, to the extent it is invested in cash and Defeasance Collateral, if so
elected by the Issuer), and in such principal amounts bearing interest at such
rates and with such maturities as will provide, according to verification by a
nationally recognized firm of independent certified public accountants,
sufficient funds to pay (1) all scheduled principal of and interest (if Notes
41
are to be redeemed before the Maturity Date), on the Notes to the Redemption
Date or the Maturity Date as shall be elected by the Issuer, and (2) all
Defeasance Expenses (in cash) due to the Noteholders, the Trustee and the
Servicer, then upon written notice from the Issuer to the Trustee and to the
Noteholders, the Trustee and the Noteholders shall cease to be entitled to any
benefit or security under this Indenture except for the right to receive payment
of the funds so held and other rights which by their nature cannot be satisfied
prior to or simultaneously with termination of the lien hereof, the security
interests created by this Indenture (except in such funds and investments) shall
terminate, and the Issuer and the Trustee shall execute and deliver such
instruments as may be necessary to discharge the Trustee's lien and security
interests created hereunder for the benefit of the Trustee and the Noteholders.
Upon such defeasance, the funds and investments required to pay the Notes and to
pay the Defeasance Expenses shall be irrevocably set aside for that purpose, and
money held for defeasance shall be invested only as provided above in this
section and applied by the Trustee to the retirement of the Notes and payment of
the Defeasance Expenses. Any funds or property held by the Trustee and not
required for payment or redemption of Notes and payment of Defeasance Expenses
shall be distributed to the order of the Issuer upon such indemnification, if
any, as the Trustee may reasonably require. If any Notes are to be defeased to a
Redemption Date before the Maturity Date, the Notes to be defeased shall be
subject to redemption on such Redemption Date at the Redemption Price, and the
Trustee shall be deemed to have been instructed to distribute and shall
distribute a notice of redemption of such Notes as and when required hereunder.
(b) Upon defeasance of all of the Notes Outstanding, the Issuer
shall pay to the Servicer, a fee in the amount of 0.25% per annum of the
aggregate Note Principal Balance of Outstanding Notes.
ARTICLE XI.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 11.1. Payment of Principal and Interest
The Issuer shall duly and punctually pay the principal of and
interest on the Notes, subject to and in accordance with the terms of the Notes
and this Indenture.
Section 11.2. Maintenance of Office or Agency
The Issuer shall maintain an office or agency within the United
States of America where Notes may be presented or surrendered for payment, where
Notes may be surrendered for registration of transfer or exchange and where
notices in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Trustee its office or agency for each of said
purposes. The Issuer shall give prompt written notice to the Trustee of the
location, and of any change in the location, of any such office or agency. If at
any time the Issuer shall fail to maintain any such office or agency or shall
42
fail to furnish the Trustee with the address thereof, such presentations,
surrenders or exchanges may be made or served at the Corporate Trust Office. As
of the date hereof, on the Issue Date, and at all times since its formation, the
chief executive office and place of business of the Issuer is and has been
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Section 11.3. Money for Note Payments to Be Held in Trust
Subject to any applicable escheat law, any money deposited with the
Trustee in trust for payment to the Noteholders on any Payment Date and
remaining unclaimed for three years after such payment has become due and
payable shall be paid to the Issuer on Issuer Request; and any Noteholder with a
right to or interest in such money shall thereafter, as an unsecured general
creditor, look only to the Issuer for payment thereof, and all liability of the
Trustee with respect to such trust money, shall thereupon cease; provided,
however, that the Trustee, before being required to make any such repayment,
shall at the expense of the Issuer send by first class mail to each Noteholder
with a right to or interest in monies due and payable but not claimed, at the
last address as shown on the Note Register for such Noteholders, and cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the city in which
the Trustee's Office is located, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 60 days from
the date of such publication, any unclaimed balance of such money then remaining
shall be repaid to the Issuer. The Trustee may also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
each Noteholder whose right to or interest in monies due and payable but not
claimed is determinable from the records of the Trustee, at the last address as
shown on the Note Register for such Noteholder).
Section 11.4. Continued Existence; Observance of Organizational Documents
The Issuer shall keep in full effect its existence, rights and
franchises as a limited liability company under the laws of the State of
Delaware, shall operate in accordance with, and subject to the limitations set
forth in, its Organizational Documents and shall obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which the failure to be so qualified shall have a material adverse effect on the
validity and enforceability of this Indenture or the Notes.
Section 11.5. Protection of Collateral
(a) The Issuer covenants to file or cause to be filed all UCC
Financing Statements and any related forms necessary or desirable to be filed
with respect to the Collateral in the United States Patent and Trademark Office
of the United States within ten (10) Business Days of the applicable Closing
Date and in the United States Copyright Office within thirty (30) days of the
applicable Closing Date.
(b) The Issuer shall from time to time execute and deliver to the
Trustee, the Servicer and such other parties as the Issuer shall deem
appropriate all such supplements and amendments hereto and all such financing
43
statements, continuation statements, instruments of further assurance and other
instruments, and shall take such other action as is necessary or advisable to:
(i) ensure a first priority, perfected security interest in all or
any portion of the Collateral;
(ii) maintain or preserve the lien of this Indenture or carry out
the purposes hereof;
(iii) protect the validity of any ▇▇▇▇▇ made by this Indenture;
(iv) enforce any of the Collateral or, where appropriate, any
security interest in the Collateral and the proceeds thereof;
(v) preserve and defend the Issuer's title to the Collateral and
the rights of the Noteholders therein against the claims of
all persons and parties subject to the rights of licensees
under the Licenses; or
(vi) record or register the Issuer's ownership of all of the
Trademarks of record in the Territory;
but in the foregoing cases of items (i) through (v), only to the extent the same
can be achieved by recordation or filing under the laws of the Covered
Jurisdictions, and in the foregoing case of item (vi), only to the extent the
same can be achieved by recordation or filing under the laws of the Territory.
(c) For avoidance of doubt, the Issuer agrees that:
(i) In the event that, on any Payment Date following any Closing
Date, the DSCR is less than 1.6 to 1.0 (i.e., 160%), it shall,
promptly, but in no event more than 180 days, (i) cause the
recordation of its title to the Primary ▇▇▇▇ ▇▇▇▇▇ and the
Primary ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ in all jurisdictions in which such
title has not previously been recorded and (ii) file in all
jurisdictions in which a filing can be made to perfect the
lien of the Indenture on the Primary ▇▇▇▇ ▇▇▇▇▇, the Primary
▇▇▇▇ ▇▇▇▇▇▇'▇ and the Primary ▇▇▇▇ ▇▇▇ ▇▇▇▇▇;
(ii) In the event that the aggregate Individual Asset Earned Income
for Assets related to the Primary ▇▇▇▇ ▇▇▇▇▇ in a single
jurisdiction exceeds $10,000 in any single fiscal year of the
Issuer, the Issuer shall, on or before the first Payment Date
following such fiscal year, cause the recordation of its title
to such Primary ▇▇▇▇ ▇▇▇▇▇ in such jurisdiction unless such
title has been previously been recorded therein;
44
(iii) In the event that the aggregate Individual Asset Earned Income
for Assets related to the Primary ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ in a single
jurisdiction exceeds $10,000 in any single fiscal year of the
Issuer, the Issuer shall, on or before the first Payment Date
following such fiscal year, cause the recordation of its title
to such Primary ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ in such jurisdiction unless
such title has been previously been recorded therein; and
(iv) In the event that the aggregate Individual Asset Earned Income
for Assets related to either the Primary ▇▇▇▇ ▇▇▇▇▇, the
Primary ▇▇▇▇ ▇▇▇▇▇▇'▇ or the Primary ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ (but, for
the avoidance of doubt, not in the case where such income is
taken in the aggregate for all Primary Marks) in a single
jurisdiction exceeds $250,000 in any single fiscal year of the
Issuer, the Issuer shall, on or before the first Payment Date
following such fiscal year, cause a filing to be made in such
jurisdiction, to the extent legally possible, to perfect the
lien of the Indenture on such Primary Mark and, if it is
customary practice in such jurisdiction, deliver to the
Trustee and Noteholders a customary opinion of counsel in such
jurisdiction confirming that such filing was sufficient to
perfect such lien to the extent the same can be accomplished
by filing.
Section 11.6. Biennial Opinion as to Collateral
On or before August 22nd in each second succeeding calendar year,
commencing in 2007, the Issuer shall furnish to the Trustee, and to the
Noteholders an Opinion of Counsel (which shall be independent counsel) either
(i) stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of any
requisite documents as is necessary to maintain the lien and security interest
created by this Indenture and the perfection and priority thereof as the same
originally existed under and in accordance with this Indenture and reciting the
details of such action or (ii) stating that in the opinion of such counsel no
such action is necessary to maintain such lien and security interest; but in
each of the foregoing cases, only to the extent the same can be achieved under
the law of the United States or any state within the United States or the law of
Canada or (if and to the extent such opinions are customarily given in Material
Jurisdictions other than the United States and Canada) any other Material
Jurisdiction, as applicable. Such Opinion of Counsel shall also describe the
recording, filing, re-recording and refiling of such requisite documents that
shall, in the opinion of such counsel, be required to maintain the lien and
security interest of this Indenture and the perfection and priority thereof
until August 22, 2015 in the second succeeding calendar year, based upon the
state of the law and facts in existence at the time of delivering the opinion.
45
Section 11.7. .Negative Covenants
The Issuer shall not:
(i) sell, transfer, exchange or otherwise dispose of any of the
Collateral (except as expressly permitted by the Management
Agreement or this Indenture); or
(ii) claim any credit on, or make any deduction from, the principal
or interest payable in respect of the Notes by reason of the
payment of any taxes levied or assessed upon any of the
Collateral; or
(iii) amend (a) either Section 7, Section 8(g) or Section 25 of its
Limited Liability Company Agreement or (b) any Transaction
Document without receiving approval thereof by Act of the
Noteholders (which may not be unreasonably withheld); or
(iv) (a) permit the validity or effectiveness of this Indenture to
be impaired, or permit this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or
obligations of this Indenture, except as may be expressly
permitted hereby and thereby, (b) permit any lien, charge,
security interest, mortgage or other encumbrances, other than
the Lien of this Indenture and Licenses, to be created on or
extended to or otherwise arise upon or burden the Collateral
or any part thereof or any interest therein or the proceeds
thereof or incur any indebtedness other than the Notes, or (c)
permit this Indenture not to constitute a valid first priority
security interest in the Collateral to the extent the same can
be achieved by filing under the laws of the Covered
Jurisdictions, as applicable; or
(v) change the state of its organization without thirty days'
prior written notice to the Trustee, accompanied by such
evidence of actions to be taken as shall be necessary to
continue the perfection of the lien on the Collateral to the
extent the same can be achieved by filing under the laws of
the Covered Jurisdictions, as applicable; or
(vi) (i) institute, or consent to the institution of, bankruptcy or
insolvency proceedings in respect to the Issuer, or file a
petition seeking or consenting to reorganization or relief
under any applicable federal or state law relating to
bankruptcy, or seek or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Issuer or any substantial part
of its assets, or make any assignment for the benefit of
creditors, or admit in writing its inability to pay its debts
46
generally as they become due, or take any corporate action in
furtherance of any such action; or (ii) consolidate, merge,
dissolve or liquidate, in whole or in part; or
(vii) except for Indebtedness as may be expressly permitted under
this Indenture, incur, assume or guaranty any Indebtedness
except for such Indebtedness as has been approved by the
Noteholders; or
(viii) except as contemplated in the Management Agreement, enter
into any material amendment or supplement to or modification
of the Assets or grant any material waiver or consent under
the Assets; or
(ix) issue any bonds, notes or other obligations other than the
Notes.
Section 11.8. Statement as to Compliance
The Issuer shall deliver to the Trustee, the Noteholders and the
Servicer, on or before each January 31 (commencing January 31, 2006), a written
statement signed by the President or a Vice President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the Issuer
stating, as to each signer thereof, that
(1) a review of the activities of the Issuer during the preceding
calendar year (or such lesser period in the case of the first
such statement) and of performance under this Indenture has
been made under his supervision; and
(2) the Issuer has fulfilled all its obligations in all material
respects under this Indenture throughout such period, or, if
there has been a default in the fulfillment of any such
obligation, specifying each such Default known to him and the
nature and status thereof.
Section 11.9. Inspection
At any time and from time to time, the Issuer shall permit the
Trustee, the Servicer and the Noteholders, or their respective agents or
representatives, during regular business hours and without charge: (i) to
examine and make copies of and abstracts from the books and records (financial
and corporate) of the Issuer, and (ii) to visit the offices and properties of
the Issuer for the purpose of reviewing and examining such books and records and
discussing matters relating thereto and to the performance of the Issuer under
this Indenture with any of the officers or employees of the Issuer having
knowledge of such matters or with the Issuer's outside auditors.
47
Section 11.10. Limited Purpose
The Issuer shall not engage in any business other than the
transactions permitted by its Organizational Documents.
Section 11.11. Issuer Ownership
The Issuer agrees that its books and records will reflect its
ownership of the Collateral, subject to the liens and security interests created
by this Indenture.
Section 11.12. Enforcement of Transaction Documents
The Issuer shall take all actions necessary, and diligently pursue
all remedies available to it, to enforce the obligations of each other party to
a Transaction Document to secure its and the Noteholders' rights thereunder,
provided, that prior to taking any action in the name of the Noteholders, it
shall receive the written consent of the Noteholders.
Section 11.13. Representations and Warranties
The Issuer, as of the date hereof and as of each Closing Date,
hereby represents and warrants the following:
(a) Except for the interests created by Licenses, the Issuer is the
owner of all of the Collateral free of liens and encumbrances, the Issuer has
not assigned any interest or participation in any Collateral, and the Issuer has
full right to Grant such Collateral to the Trustee for the benefit of the
Noteholders.
(b) The Issuer has Granted a security interest in all of its right,
title, and interest in the Collateral to the Noteholders.
(c) The Notes have not been registered under the Securities Act nor
pursuant to the securities or blue sky laws of any State.
(d) The Trustee will, upon proper filing and/or recording of UCC
financing statements, copyright documents and trademark documents, as
applicable, in the Covered Jurisdictions by the Issuer or the Servicer on the
Issuer's behalf, have a perfected first priority security interest in each item
of Collateral, free from any lien, security interest encumbrance or other right,
title or interest of any Person, except for any Lien created by this Indenture
and the Licenses, but in all cases only to the extent the same can be achieved
by filing under the laws of the Covered Jurisdictions, as applicable.
(e) The Issuer has its chief executive office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(f) The Issuer, (i) is a limited liability company, duly organized,
validly existing in good standing under the laws of Delaware; (ii) has requisite
power and authority and all licenses and permits to own and operate its
48
properties to carry on its business as now conducted, and to enter into and
perform its obligations under each Transaction Document to which it is a party
and the transactions contemplated thereby, including, the issuance and sale of
the Notes and the performance of its obligations thereunder; and (iii) has been
duly qualified and is authorized to do business and, if applicable, is in good
standing as a foreign corporation (or is exempt from such requirements) and has
obtained all necessary licenses and approvals in each jurisdiction where the
failure to be so qualified would have a material adverse effect on its ability
to conduct its business.
(g) Each Transaction Document (other than the Notes) to which the
Issuer is a party has been duly authorized and, when executed and delivered by
the Issuer will constitute valid, binding and enforceable obligations of the
Issuer in accordance with its terms, subject, as to the enforcement of remedies,
to bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforceability of creditors' rights generally applicable in the
event of the bankruptcy, insolvency or reorganization of the Issuer and to
general principles of equity.
(h) No event has occurred and is continuing that constitutes a
Default or an Event of Default under, and as defined in, this Indenture, the
Servicing Agreement or any other Transaction Document. Neither the execution and
delivery of any Transaction Document by the Issuer, the consummation of the
transactions contemplated thereby nor the satisfaction of the terms and
conditions of the Transaction Documents (i) conflicts with or results in any
breach or violation of any provision of the Organizational Documents of the
Issuer, or any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having applicability to the Issuer,
or any of its properties, including regulations issued by an administrative
agency or other governmental authority having supervisory powers over the
Issuer; or (ii) constitutes a default by the Issuer under or a breach of any
provision of this Indenture or any contract, agreement, mortgage or other
instrument to which it is a party or by which it or any of its properties are or
may be bound or affected or (iii) results in the creation or imposition of any
lien upon any of the properties or assets of the Issuer pursuant to the terms of
any mortgage, deed of trust, contract, agreement, charter instrument, by-law or
other instrument.
(i) The Notes have been duly and validly authorized by the Issuer
and, when duly and validly executed in accordance with this Indenture, will be
validly issued and outstanding and entitled to the benefits of this Indenture
and will constitute valid and legally binding obligations of the Issuer,
enforceable against the Issuer in accordance with their terms, subject, as to
the enforcement of remedies, to bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforceability of creditors'
rights generally applicable in the event of the bankruptcy, insolvency or
reorganization of the Issuer and to general principles of equity.
(j) The Issuer had at all relevant times and now has full power and
authority to originate, own and, has full power and authority to Grant the
Collateral, has duly authorized such Grant by all necessary action, and does not
require any member approval, or approval or consent of any trustee or holders of
any indebtedness or obligations of the Issuer other than such as have been
obtained.
49
(k) There is no pending action, suit, proceeding or investigation,
including, but not limited to, any such proceeding or investigation resulting
from the ownership or use of any of the Collateral, against or affecting the
Issuer before any administrative agency, arbitrator or governmental body or, to
the best knowledge of the Issuer, any threatened action or proceeding, including
but not limited to any such proceeding or investigation resulting from the
ownership or use of any of the Collateral, against or affecting the Issuer
before any of the foregoing which, if decided adversely to the Issuer, would
materially affect (i) the condition (financial or otherwise), business,
properties, prospects, profits or operations of the Issuer, (ii) the ability of
the Issuer to perform its obligations under, or the validity or enforceability
of, any Transaction Document to which it is a party or (iii) the Noteholders'
ability to foreclose or otherwise enforce their interest in the Collateral as
contemplated under this Indenture and the Servicing Agreement. This Issuer is
not subject to any order of any court, governmental authority or agency or
arbitration board of tribunal.
(l) No consent, approval, authorization, order of, or filing,
registration, application with any court or other governmental authority in
respect of the Issuer is necessary or required under the law of the United
States or any state within the United States (or other Covered Jurisdictions in
the case of filings to perfect the Lien of the Indenture) in connection with the
authorization, execution, delivery or performance by the Issuer of this
Indenture or any other Transaction Document to which it is a party or any of the
other documents or transactions contemplated thereby, including without
limitation, the pledge of the Collateral to the Noteholders, the servicing of
the Collateral, or the offer, issue, sale, delivery or performance of the Notes,
other than that consent, approval, authorization, order, filing, registration or
qualification which has been, or will be promptly, made or obtained in the
United States (or the other Covered Jurisdictions in the case of filings to
perfect the Lien of the Indenture); provided that no representation is made with
respect to filings of qualifications under the "Blue Sky" laws of the various
states within the United States.
(m) None of the transactions contemplated herein (including, without
limitation thereof, the use of the proceeds from the sale of the Notes) will
result in a violation of Section 7 of the Securities Exchange Act, or any
regulations thereto, including, without limitation, Regulations T, U and X of
the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II;
provided that the Issuer is not responsible for any such violation that results
from the status of a Noteholder. The Issuer does not own or intend to carry or
purchase, and no proceeds from the sale of the Notes will be used by the Issuer
to purchase, any "margin stock" within the meaning of said Regulation U.
(n) The representations and warranties of the Issuer in each of the
Servicing Agreement, the Note Purchase Agreement, the 2005 Note Purchase
Agreement, this Indenture and the other Transaction Documents to which it is a
party are true and correct and are hereby incorporated by reference as if each
such representation and warranty were specifically made herein.
(o) The Issuer is not a party to any contract or agreement, or
subject to any charter or other legal restriction, which materially and
adversely affects its business as contemplated in the Transaction Documents. The
50
Issuer has not agreed to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its properties or any of the Collateral, other
than as otherwise set forth in this Indenture, whether now owned or hereafter
acquired, to be subject to a lien not permitted by this Indenture.
(p) For so long as any of the Notes are Outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, the Issuer will cause to be provided to the Noteholders and any
prospective purchaser of Notes designated by a Holder of such Notes, upon the
request of such Holder or prospective purchaser, the information required to be
provided to such Holder or prospective purchaser by Rule 144A(d)(4) under the
Securities Act.
(q) The Issuer does not intend to treat the Notes and related
transactions as being a "reportable transaction" (within the meaning of Treasury
Regulation Section 1.6011-4). In the event the Issuer determines to take any
action inconsistent with such intention, it will promptly notify the Noteholders
hereof. If the Issuer so notifies the Noteholders, the Issuer acknowledges that
one or more of the Noteholders may treat its Notes as part of a transaction that
is subject to Treasury Regulations 301.6112-1, and that such Noteholder or
Noteholders, as applicable, will maintain the lists and other records required
by such Treasury Regulation.
(r) The Issuer is not (i) a country, territory, organization, person
or entity name on an OFAC list; (ii) a Person that resides or has a place of
business in a country or territory named on such lists or which is designated as
a Non-Cooperative Jurisdiction by the Financial Action Task Force on Money
Laundering ("FATF"), or whose subscription funds are transferred from or through
such a jurisdiction; (iii) a "Foreign Shell Lender" within the meaning of the
USA PATRIOT Act, i.e., a foreign bank that does not have a physical presence in
any country and that is not affiliated with a bank that has a physical presence
and an acceptable level of regulation and supervision; or (iv) a person or
entity that resides in or is organized under the laws of a jurisdiction
designated by the United States Secretary of this Treasury under Section 311 or
312 of the USA PATRIOT Act as warranting special measures due to money
laundering.
Section 11.14. Certain Affirmative Covenants
(a) The Issuer agrees that any Person, designated in writing by a
Noteholder may, upon reasonable prior written notice, consult with proper
officials of the Issuer and (subject to consent by the Servicer under the
Servicing Agreement) the Servicer at such times during normal business hours and
as often as such Person may reasonably request regarding the information
required to be furnished pursuant to the Servicing Agreement or regarding the
performance of the Issuer's covenants and agreements contained in this Indenture
or any of the Transaction Documents to which it is a party.
(b) The Issuer will comply in all material respects with all
requirements of law applicable to the Issuer relating to the performance of its
obligations under this Indenture and the Notes.
51
(c) The Issuer agrees to furnish the Noteholders copies of each of
the Transaction Documents and any documents to be furnished pursuant to the
terms of the Transaction Documents and such other information and documents
relating to the Notes and the Collateral any Noteholder may reasonably request.
(d) The Issuer will pay or cause to be paid all present and future
recording and filing fees, and all legal, financial and miscellaneous
out-of-pocket expenses and costs incurred by the Issuer in connection with the
negotiation of and consummation of the transactions contemplated by this
Indenture and the issuance and sale of the Notes. The Issuer further agrees that
it will pay or cause to be paid, promptly upon demand, any reasonable out of
pocket expense incurred by the Noteholders in connection with the making of
amendment to, or the giving of any release, consent or waiver in respect of,
this Indenture and any document executed pursuant hereto or thereto, whether or
not consummated, including the reasonable fees and disbursements of counsel for
the Noteholders in connection therewith. The obligations of the Issuer under the
preceding sentences shall be subject to the priority of distributions set forth
in Section 13.1 hereof and shall survive the termination of this Indenture, the
transfer of any Note or portion thereof or interest therein by a Noteholder and
the payment of any Note.
(e) The Issuer will add to Schedule 1 to the Second Amended and
Restated Standard Definitions, included herein as Appendix A, a description of
and required information pertaining to: (i) each separate and identifiable Asset
in which it has ownership rights but which was not listed thereon at a Closing
Date (whether or not it was in existence on a Closing Date) promptly after the
jurisdiction in which it generates income for the Issuer becomes a Material
Jurisdiction and (ii) without duplication, each separate and identifiable Asset
not listed on such Schedule 1 at a Closing Date promptly after the same is
conveyed to the Issuer pursuant to Section 2.2(b) of the Contribution Agreement
or Section 2.2(b) of the ▇▇▇ ▇▇▇▇▇ Contribution Agreement.
(f) The Issuer will promptly following the conveyance of an Asset to
the Issuer (or Release of an Asset) or upon the loss, sale or defeasance of an
Asset from the Issuer, update the schedules and exhibits attached to the
Transaction Documents, with copies to the Servicer, Trustee and Noteholders.
(g) The Issuer will comply with, and obey the terms and provisions
of, its Organizational Documents and will not take any action which it is
prohibited from taking under its Organizational Documents.
(h) The Issuer will maintain, or be a subject insured party under,
insurance of the type that is customarily maintained by business entities of the
same type and scale as the Issuer.
(i) For so long as any of the Notes remain Outstanding, the Issuer
will not (x) merge or consolidate with or into any other entity or engage in any
other business combination with any other entity or (y) sell or transfer all or
substantially all of its assets other than in conformity with the Transaction
Documents.
52
(j) The Issuer shall seek to enter into Licenses in the future that
permit the Obligors thereunder to be audited with respect to performance under
such Licenses.
(k)..The Issuer shall notify the Noteholders of any litigation in
which the Issuer is a party, promptly upon the Issuer's receipt of notice of the
filing of such litigation, in writing by delivery by a reputable courier service
or by registered mail (return receipt requested), all charges prepaid.
Section 11.15. Submission to Jurisdiction
THIS INDENTURE SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW
YORK AND ITS VALIDITY, CONSTRUCTION AND EFFECT SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS WHOLLY PERFORMED THEREIN.
THE VENUE FOR ANY AMOUNT, SUIT OR PROCEEDING ARISING FROM OR BASED UPON THIS
INDENTURE SHALL BE THE APPROPRIATE STATE AND FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK IN THE STATE OF NEW YORK. ACCORDINGLY, THE ISSUER AGREES THAT
ANY ACTION, SUIT OR PROCEEDING ARISING FROM OR BASED ON THIS INDENTURE SHALL BE
COMMENCED IN AND DETERMINED BY THOSE APPROPRIATE STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK; THE PARTIES HEREBY
WAIVE ANY OBJECTION TO THE PROPRIETY OR CONVENIENCE OF VENUE IN SUCH COURTS OR
TO THE JURISDICTION OF THE COURTS OVER EITHER PARTY AND AGREE THAT ANY JUDGMENT
ENTERED THEREIN MAY BE ENFORCED WITH NO FURTHER DEFENSE OR OFFSET IN ANY
JURISDICTION IN WHICH THE DEFENDANT IS A CITIZEN, RESIDES OR OWNS PROPERTY.
Section 11.16. Representations with Respect to Assets. On and as of the
date of this Indenture, and on and as of each date on which an Asset becomes
subject to the Lien of this Indenture, the Issuer represents with respect to
such Asset which the Issuer pledges to the Trustee hereunder, that:
(a) Payments After a Closing Date. No monies or other contingent
compensation shall be payable after a Closing Date to any person, firm or
corporation with respect to any exploitation of the Assets which occurred prior
to a Closing Date.
(b) No Defaults. The execution and implementation of this Indenture
shall not result in the breach of any conditions or constitute a default (with
or without notice or the lapse of time, or both) under any license or agreement
constituting a portion of the Assets pledged hereunder or to which any of the
Assets pledged hereunder is subject. Neither the Issuer nor, to the Issuer's
knowledge, any person, firm or corporation associated with or deriving rights
through or from the Issuer, is in breach or is in default of any applicable
agreement constituting a portion of the Assets which the Issuer pledges to the
Trustee or to which any of such Assets are subject on the date of execution of
this Indenture.
53
(c) Advances. No advances or other charges heretofore received by
the Issuer in connection with the Assets which the Issuer pledges to the Trustee
remain recoupable at any time from and after a Closing Date from any License
Income earned at any time either before or after the date of this Indenture,
except as listed on Exhibit C to the Contribution Agreement or on Exhibit C to
the ▇▇▇ ▇▇▇▇▇ Contribution Agreement.
(d) Non-Contravention. Neither the Issuer's exercise of any of the
rights, licenses, privileges and properties regarding the Assets pledged
hereunder nor the Issuer's right, title and interest in and to the Assets
pledged hereunder will violate or infringe on any common law or statutory rights
of any person, firm or corporation, except such violations or infringements
outside the First Stage Covered Jurisdictions as would not have a material
adverse effect on the business of the Issuer.
(e) [RESERVED].
(f) Exhibits and Schedules Accurate. All of the information set
forth in the exhibits and schedules attached hereto and the Second Amended and
Restated Standard Definitions is complete and accurate in all material respects.
No information supplied in writing by, or on behalf of, the Issuer in connection
with the transactions contemplated by this Indenture, in each case as of each
Closing Date or on a future date on which an Asset becomes subject to the Lien
of this Indenture, as the case may be, contains any untrue statement of a
material fact or omits a material fact necessary to make the statements
contained therein or herein, in light of the circumstances under which they were
made, not misleading.
(g) Ownership of the Trademarks.
(i) Exhibit E-1A contains a true and complete list of all
registrations and pending applications for the Trademarks in
the First Stage Territory owned by the Issuer, with the
exception of intent-to-use applications filed within the
United States, all of which registrations exist, are
subsisting and are validly registered except as provided
therein and all of which applications are validly pending.
Exhibit E-1B contains a true and complete list of all
registrations and pending applications in the Second Stage
Territory. Exhibit E-1C contains a true and complete list of
additional registrations and pending applications owned by
▇▇▇▇▇▇ and not in the First Stage Territory. All of the
Trademarks set forth in Exhibit E-1A, except to the extent
otherwise provided therein, are currently in use on the goods
set forth in the registrations for Trademarks in the First
Stage Covered Jurisdictions.
(ii) Notwithstanding anything contained in Exhibit F, (i) the
Issuer owns all right, title and interest in and to the
Trademarks related to and including the Primary ▇▇▇▇ ▇▇▇▇▇▇'▇,
the Primary ▇▇▇▇ ▇▇▇▇▇ and the Primary ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ for use
in the First Stage Territory; (ii) the Issuer has the full and
exclusive right, subject to the related Licenses, to use and
54
to license the use of the Trademarks related to and including
the Primary ▇▇▇▇ ▇▇▇▇▇▇'▇, the Primary ▇▇▇▇ ▇▇▇▇▇ and the
Primary ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ in the First Stage Territory; and (iii)
the consummation of the transactions contemplated by the
Transaction Documents will not alter or impair any of the
foregoing such rights. The use by the Issuer in the First
Stage Territory of the Trademarks related to and including the
Primary ▇▇▇▇ ▇▇▇▇▇▇'▇, the Primary ▇▇▇▇ ▇▇▇▇▇ and the Primary
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ will not infringe on the rights of any Person,
except such infringements outside the First Stage Covered
Jurisdictions as would not have a material adverse effect on
the business of the Issuer.
(iii) Except as provided in Exhibit F, no claim has been asserted
against the Issuer or any Affiliate thereof by any Person to
the use of, and the Issuer has no knowledge of the use by any
person (other than the licensees under the Licenses) of, any
of the Trademarks related to and including the Primary ▇▇▇▇
▇▇▇▇▇▇'▇, the Primary ▇▇▇▇ ▇▇▇▇▇ and the Primary ▇▇▇▇ ▇▇▇
▇▇▇▇▇ in the First Stage Territory, and there is no valid
basis for such claim with respect to the Trademarks or for any
person (other than the licensees under the Licenses) to use
any of the Trademarks related to and including the Primary
▇▇▇▇ ▇▇▇▇▇▇'▇, the Primary ▇▇▇▇ ▇▇▇▇▇ and the Primary ▇▇▇▇ ▇▇▇
▇▇▇▇▇ in the First Stage Territory, except such claims or uses
outside the First Stage Covered Jurisdictions as would not
have a material adverse effect on the business of the Issuer.
(iv) Each of the Trademarks related to and including the Primary
▇▇▇▇ ▇▇▇▇▇▇'▇, the Primary ▇▇▇▇ ▇▇▇▇▇ and the Primary ▇▇▇▇ ▇▇▇
▇▇▇▇▇ is valid, subsisting and enforceable in the First Stage
Territory, with the exception of such Trademarks the lack of
enforceability of which outside the First Stage Covered
Jurisdictions would not have a material adverse effect on the
business of the Company. There is vested in the Issuer title
to the Trademarks related to and including the Primary ▇▇▇▇
▇▇▇▇▇▇'▇, the Primary ▇▇▇▇ ▇▇▇▇▇ and the Primary ▇▇▇▇ ▇▇▇
▇▇▇▇▇ and related Trademarks for use in the First Stage
Territory, free and clear of all Liens (other than such Liens
with respect to the Licenses and such Liens as may arise from
actions or inactions of the Issuer).
(h) Additional Representations with Respect to the Licenses.
(i) Exhibit E-2 lists all licenses and other agreements relating
to the use of any of the Trademarks, respectively, in the
Territory. All of the Licenses are valid and in full force and
effect, except as set forth in Exhibit E-2, there are no
existing defaults (or events that, with notice or lapse of
time or both, would constitute a default) by any party
thereunder. No claim has been asserted by any Person
challenging or questioning the validity or effectiveness of
any of the Licenses and there is no valid basis for any such
55
claim. The Issuer has not, other than pursuant to the
Licenses, licensed or authorized any other Person to use the
Primary ▇▇▇▇ ▇▇▇▇▇▇'▇, the Primary ▇▇▇▇ ▇▇▇▇▇ or the Primary
▇▇▇▇ ▇▇▇ ▇▇▇▇▇, or any related Trademarks, respectively, in
the First Stage Territory, or granted to any other Person any
other right with respect thereto. Except for the Licenses, no
agreement to which the Issuer is a party or by which its
assets are bound restricts or in any way affects the Primary
▇▇▇▇ ▇▇▇▇▇▇'▇, the Primary ▇▇▇▇ ▇▇▇▇▇ or the Primary ▇▇▇▇ ▇▇▇
▇▇▇▇▇, or any related Trademarks, respectively, or the right
to use thereof in the First Stage Territory. There is vested
in the Issuer title to all of the Licenses free and clear of
all Liens (other than such liens with respect to the Licenses
and such Liens as may arise from actions or inactions of the
Issuer).
(ii) The Issuer has considered the activities of all of the
licensees under the Licenses and has verified that the
products manufactured, sold or offered for sale under the
Trademarks by such licensees meet the quality control
standards set forth in such Licenses and all other such
standards promulgated by the Issuer.
(iii) No License is a Defaulted Contract Asset.
(iv) All required consents, assignment and/or assumption agreements
or notices, if any, have been obtained or delivered in the
manner required by each License.
(v) To the Issuer's best knowledge, the Obligors under Canadian
Licenses have not sold products bearing the trademarks covered
by such Licenses in the United States.
Section 11.17. Survival of Indenture Representations and Warranties
The Issuer hereby agrees that each representation and warranty made
by it in the Original Indenture and the First Amended and Restated Indenture
shall survive notwithstanding the exchange and cancellation of the Original
Notes and the Subordinate Notes and the issuance of the Notes. Each of the
representations and warranties of the Issuer in the Original Indenture and the
First Amended and Restated Indenture are true and correct as of the date thereof
and are hereby incorporated by reference.
56
ARTICLE XII.
ACCOUNTS, ACCOUNTINGS AND RELEASES
Section 12.1. Collection of Money
Except as otherwise expressly provided herein, the Trustee shall be
forwarded all money and other property payable to or receivable by the Issuer
pursuant to the Collateral from the Servicer as provided in Section 2.2(c) of
the Servicing Agreement and as otherwise provided in this Indenture. The Trustee
shall hold all such money and property so received by it as part of the
Collateral, shall deposit the same into the Collection Account, and shall apply
it as provided in this Indenture.
Section 12.2. Accounts
(a) Liquidity Reserve Account. The Issuer shall establish with the
Trustee and the Trustee shall maintain a segregated trust account (the
"Liquidity Reserve Account"), which shall be in the name of the Trustee "as
trustee on behalf of the Holders of the IP Holdings LLC Asset-Backed Notes," and
which shall be in an Eligible Financial Institution, for the receipt of funds
deposited into the Liquidity Reserve Account. On or before the applicable
Closing Date, the Issuer shall deposit or cause to be deposited into the
Liquidity Reserve Account an amount equal to the related Initial Liquidity
Reserve Deposit Amount, such that the total amount on deposit therein shall
equal $3,210,000. Thereafter, the Trustee shall deposit to the Liquidity Reserve
Account the amounts referred to in Section 13.1. If the bank with which the
Liquidity Reserve Account is held ceases to be an Eligible Financial
Institution, the Trustee shall within five (5) days of obtaining actual
knowledge of such cessation and the identity of the replacement Eligible
Financial Institution selected by the Issuer, transfer the Liquidity Reserve
Account to an account maintained with a replacement Eligible Financial
Institution selected by the Issuer (unless an Event of Default shall have
occurred and not been waived, in which case, such Eligible Financial Institution
shall be selected by the Trustee). The Issuer shall promptly (within two
Business Days) notify the Trustee of any such selection. Funds in the Liquidity
Reserve Account shall not be commingled with any other monies. All payments to
be made from time to time by the Trustee to the Noteholders out of funds in the
Liquidity Reserve Account pursuant to this Indenture shall be made by the
Trustee as Paying Agent. Funds on deposit in the Liquidity Reserve Account shall
be invested in Eligible Investments at the written direction of the Issuer. On
the day preceding each Payment Date, any interest or other earnings realized on
funds on deposit in the Liquidity Reserve Account shall be transferred and
credited to the Collection Account. The maximum permissible maturity or, if
applicable, the latest redemption date of any Eligible Investments made with
amounts on deposit in the Liquidity Reserve Account shall be not later than the
Business Day preceding the next succeeding Payment Date or Redemption Date. All
monies deposited from time to time in the Liquidity Reserve Account pursuant to
this Indenture shall be held by the Trustee as part of the Collateral for the
exclusive benefit of the Holders as herein provided. Monies in the Liquidity
Reserve Account shall be subject to withdrawal pursuant to this Indenture,
including Section 13.2 of this Indenture.
57
(b) Collection Account. The Issuer shall establish with the Trustee
and the Trustee shall maintain a segregated trust account (the "Collection
Account") which shall be in the name of the Trustee "as trustee on behalf of the
Holders of the IP Holdings LLC Asset-Backed Notes," and which shall be in an
Eligible Financial Institution, for the receipt of, and there shall be deposited
into the Collection Account, payments to be deposited therein as provided
herein. If the bank with which the Collection Account is maintained ceases to be
an Eligible Financial Institution, the Trustee shall transfer the Collection
Account to an account maintained with an Eligible Financial Institution selected
by the Issuer (unless an Event of Default shall have occurred and not been
waived, in which case, such Eligible Financial Institution shall be selected by
the Trustee). The Collection Account shall relate solely to the transactions
contemplated in this Indenture, and funds in such account shall not be
commingled with any other monies. All payments to be made from time to time by
the Trustee to the Noteholders out of funds in the Collection Account pursuant
to this Indenture shall be made by the Trustee as Paying Agent. Funds on deposit
in the Collection Account shall be invested in Eligible Investments at the
written direction of the Issuer. The maximum permissible maturity or, if
applicable, the latest redemption date of any Eligible Investments made with
amounts on deposit in the Collection Account shall be not later than the
Business Day preceding the next succeeding Payment Date or a Redemption Date, as
applicable. All monies deposited from time to time in the Collection Account
pursuant to this Indenture shall be held by the Trustee as part of the related
Collateral as herein provided. Monies in the Collection Account shall be subject
to withdrawals pursuant to this Indenture, including Section 13.1 and Section
10.3 of this Indenture. The Paying Agent agrees to make withdrawals from the
Collection Account upon direction from the Servicer as set forth in Section
2.2(d) of the Servicing Agreement.
(c) Lockbox Account The Trustee is hereby authorized to establish
and maintain with an Eligible Financial Institution in Delaware, which may be
the Wilmington Trust Company, in the name of the Trustee "as trustee for benefit
of the Holders of the IP Holdings LLC Asset-Backed Notes", from time to time,
such sub-accounts, sub-ledger accounts and lockbox accounts (collectively, the
"Lockbox Account") as part of, for the purposes of administering the payments
to, the Collection Account, remitted by the obligated parties under the
Collateral. All of the Trustee's rights, powers, immunities, indemnities and
protections afforded herein shall also be afforded to it with respect to its
administration of the Lockbox Account. The Eligible Financial Institution at
which the Lockbox Account is established shall be under standing instructions
from the Trustee to the effect that funds on deposit in the Lockbox Account if
any, shall be deposited into the Collection Account pursuant to Section 13.4 of
this Indenture.
(d) Revenue Reduction Account. The Issuer shall establish with the
Trustee and the Trustee shall maintain a segregated trust account (the "Revenue
Reduction Account") which shall be in the name of the Trustee "as trustee on
behalf of the Holders of the IP Holdings LLC Asset-Backed Notes," and which
shall be in an Eligible Financial Institution. All payments relating to the
Issuer Revenue Reduction Cure shall be deposited by the Issuer into the Revenue
Reduction Account. If the bank with which the Revenue Reduction Account is held
ceases to be an Eligible Financial Institution, the Trustee shall within five
(5) days of obtaining actual knowledge of such cessation and the identity of the
58
replacement Eligible Financial Institution selected by the Issuer, transfer the
Revenue Reduction Account to an account maintained with a replacement Eligible
Financial Institution selected by the Issuer (unless an Event of Default shall
have occurred and not been waived, in which case, such Eligible Financial
Institution shall be selected by the Trustee). The Issuer shall promptly (within
two Business Days) notify the Trustee of any such selection. Funds in the
Revenue Reduction Account shall not be commingled with any other monies. All
moneys deposited from time to time in the Revenue Reduction Account pursuant to
this Indenture shall be held by the Trustee as part of the related Collateral as
herein provided. Any interest or other earnings realized on funds on deposit in
the Revenue Reduction Account shall be transferred and credited to the
Collection Account within one Business Day of receipt by the Trustee.
Investments on deposit in the Revenue Reduction Account, which were specifically
intended by the Issuer to be liquidated in order to effect an Issuer Revenue
Reduction Cure, shall be liquidated and transferred pursuant to a direction of
the Servicer by the Trustee to the Collection Account on each Payment Date as
may be necessary to pay the Issuer's obligations in connection with an Issuer
Revenue Reduction.
(e) Renewal Reserve Account. The Issuer shall establish with the
Trustee and the Trustee shall maintain a segregated trust account (the "Renewal
Reserve Account"), which shall be in the name of the Trustee "as trustee on
behalf of the Holders of the IP Holdings LLC Asset-Backed Notes," and which
shall be in an Eligible Financial Institution, for the receipt of funds
deposited into the Renewal Reserve Account. The Trustee shall deposit to the
Renewal Reserve Account the amounts referred to in Section 13.1(a)(xi). If the
bank with which the Renewal Reserve Account is held ceases to be an Eligible
Financial Institution, the Trustee shall within five (5) days of obtaining
actual knowledge of such cessation and the identity of the replacement Eligible
Financial Institution selected by the Issuer, transfer the Renewal Reserve
Account to an account maintained with a replacement Eligible Financial
Institution selected by the Issuer (unless an Event of Default shall have
occurred and not been waived, in which case, such Eligible Financial Institution
shall be selected by the Trustee). The Issuer shall promptly (within two
Business Days) notify the Trustee of any such selection. Funds in the Renewal
Reserve Account shall not be commingled with any other monies. All payments to
be made from time to time by the Trustee to the Noteholders out of funds in the
Renewal Reserve Account pursuant to this Indenture shall be made by the Trustee
as Paying Agent. Funds on deposit in the Renewal Reserve Account shall be
invested in Eligible Investments at the written direction of the Issuer. On the
day preceding each Payment Date, any interest or other earnings realized on
funds on deposit in the Renewal Reserve Account shall be transferred and
credited to the Collection Account. The maximum permissible maturity or, if
applicable, the latest redemption date of any Eligible Investments made with
amounts on deposit in the Renewal Reserve Account shall be not later than the
Business Day preceding the next succeeding Payment Date or Redemption Date. All
monies deposited from time to time in the Renewal Reserve Account pursuant to
this Indenture shall be held by the Trustee as part of the Collateral for the
exclusive benefit of the Holders as herein provided. Monies in the Renewal
Reserve Account shall be subject to withdrawal pursuant to this Indenture.
59
(f) Prepaid Fee and Royalty Account. The Issuer shall establish with
the Trustee and the Trustee shall maintain a segregated trust account (the
"Prepaid Fee and Royalty Account"), which shall be in the name of the Trustee
"as trustee on behalf of the Holders of the IP Holdings LLC Asset-Backed Notes,"
and which shall be in an Eligible Financial Institution, for the receipt of
funds deposited into the Prepaid Fee and Royalty Account. The Trustee shall
deposit to the Prepaid Fee and Royalty Account the amounts referred to in
Section 13.1(a). If the bank with which the Prepaid Fee and Royalty Account is
held ceases to be an Eligible Financial Institution, the Trustee shall within
five (5) days of obtaining actual knowledge of such cessation and the identity
of the replacement Eligible Financial Institution selected by the Issuer,
transfer the Prepaid Fee and Royalty Account to an account maintained with a
replacement Eligible Financial Institution selected by the Issuer (unless an
Event of Default shall have occurred and not been waived, in which case, such
Eligible Financial Institution shall be selected by the Trustee). The Issuer
shall promptly (within two Business Days) notify the Trustee of any such
selection. Funds in the Prepaid Fee and Royalty Account shall not be commingled
with any other monies. All payments to be made from time to time by the Trustee
to the Noteholders out of funds in the Prepaid Fee and Royalty Account pursuant
to this Indenture shall be made by the Trustee as Paying Agent. Funds on deposit
in the Prepaid Fee and Royalty Account shall be invested in Eligible Investments
at the written direction of the Issuer. On the day preceding each Payment Date,
any interest or other earnings realized on funds on deposit in the Prepaid Fee
and Royalty Account shall be transferred and credited to the Collection Account.
The maximum permissible maturity or, if applicable, the latest redemption date
of any Eligible Investments made with amounts on deposit in the Prepaid Fee and
Royalty Account shall be not later than the Business Day preceding the next
succeeding Payment Date or Redemption Date. All monies deposited from time to
time in the Prepaid Fee and Royalty Account pursuant to this Indenture shall be
held by the Trustee as part of the Collateral for the exclusive benefit of the
Holders as herein provided. Monies in the Prepaid Fee and Royalty Account shall
be subject to withdrawal pursuant to this Indenture.
Section 12.3. Release of Assets
(a) If at any time the Issuer, the Servicer or any Noteholder has
actual knowledge (or if the Trustee has received notice) that a Release Event
with respect to any particular Asset has occurred, the party discovering such
event shall notify the other parties.
(b) Upon receipt of notification or upon actual knowledge of a
Release Event described in clause (a) of this Section 12.3, and if the Asset
DSCR Test is not met, the Issuer shall exercise commercially reasonable efforts
to eliminate or otherwise cure such Release Event.
(c) If the Issuer fails or is unable to eliminate or cure the
Release Event within 60 days of actual knowledge thereof, then the Issuer shall
pay the Release Price of the affected Asset on the Business Day next preceding
the Redemption Date next following the expiration of such 60 day period. Upon
payment of the Release Price of such Asset (as determined by the Servicer, which
shall also be the Redemption Price of the Notes) to the Collection Account, the
60
Asset shall be released from the Lien of this Indenture. The Release Price for
the release of the affected Asset shall be deposited in the Collection Account
and shall be applied to the redemption of Notes on such Redemption Date in
accordance with Section 10.1 of this Indenture. The Issuer's obligation to pay
any Release Price shall be limited to funds available therefor under the
Contribution Agreement or this Indenture.
(d) The Issuer, may, with the prior written consent of the
Noteholders, such consent to be given in the Noteholders' sole discretion,
obtain a release of Asset(s) from the Lien of this Indenture by providing at
least 45 days' prior written notice (the "Issuer's Notice") to the Trustee and
the Noteholders setting forth (i) the Asset(s) to be released, (ii) the
Redemption Date on which such Asset(s) will be released and (iii) an estimate of
the Release Price to be deposited on the Redemption Date specified in such
notice. Upon payment to the Collection Account of the Release Price of such
Asset(s) (which shall also be the Redemption Price for the Notes), the Asset(s)
specified in the Issuer's Notice shall be released from the Lien of this
Indenture. The Release Price for the release of such Asset(s) shall be applied
to the redemption of Notes on such Redemption Date in accordance with Section
10.1 of this Indenture.
Section 12.4. Accounting by Trustee to Issuer and the Noteholders
Within five (5) Business Days following each Payment Date and
Redemption Date, the Trustee shall render to the Issuer and the Servicer an
accounting (the "Trustee Report"), certified by an authorized officer of the
Trustee, of:
(i) the aggregate funds deposited in the Collection Account, the
Liquidity Reserve Account, the Revenue Reduction Account, the
Renewal Reserve Account and the Prepaid Fee and Royalty Account
subsequent to the immediately preceding Payment Date or Redemption
Date, as applicable;
(ii) the amount of principal and the amount of interest paid to the
Holders of the Notes;
(iii) any funds remaining in the Collection Account, the Liquidity Reserve
Account, the Revenue Reduction Account, the Renewal Reserve Account
and the Prepaid Fee and Royalty Account after payments of interest
and principal as set forth pursuant to clause (ii) above; and
(iv) any discrepancy between the aggregate amount of principal remaining
on the Notes after giving effect to the principal payment on the
Notes on such Payment Date and the aggregate amount of principal
remaining on the Notes as set forth on the Servicer's Report.
Section 12.5. Collateral
(a) The Trustee may, and when required by the provisions of Articles
V, X and XII of this Indenture or otherwise hereunder shall, execute instruments
to release property from the Lien of this Indenture, or convey the Trustee's
interest in the same, in a manner and under circumstances which are not in
61
violation of the provisions of this Indenture. No party relying upon an
instrument executed by the Trustee as provided in this Article XII shall be
bound to ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any monies.
(b) At the written request and expense of the Issuer and upon being
supplied by the Issuer with appropriate forms therefor, the Trustee shall, at
such time as there are no Notes Outstanding and all amounts due under this
Indenture have been paid and the Lien of the Indenture has been discharged in
accordance with Section 5.1 hereof, release the Collateral from the Lien of this
Indenture and promptly deliver all Collateral held by it to the Issuer.
Section 12.6. Opinion of Counsel
The Trustee shall be entitled to receive at least ten (10) days'
notice of any action to be taken pursuant to Section 12.5(a), accompanied by
copies of any instruments involved, and the Servicer and the Noteholders shall
also be entitled to receive, upon request, an Opinion of Counsel, in form and
substance satisfactory to the Trustee, outlining the steps required to complete
such action and stating that such action is permitted hereunder. The Trustee
shall be entitled to rely conclusively on any such Opinion of Counsel as to the
opinions expressed therein.
ARTICLE XIII.
APPLICATION OF MONIES
Section 13.1. Disbursements of Monies out of Collection Account
(a) On each Payment Date, the Trustee, shall, first, upon direction
of the Manager withdraw funds from the Collection Account and transfer such
funds to the Advertising Reserve Account in accordance with Section 13.3 hereof,
shall, second, in accordance with the Servicer's Report, withdraw any
Nonrecurring Fees or Prepaid Royalty Amounts from the Collection Account and
transfer the same to the Prepaid Fee and Royalty Account, and shall, third,
pursuant to the Servicer's Report, withdraw funds from the Collection Account,
and pay the following amounts from such funds in the following order of priority
in all cases to the extent of the remaining Available Funds (except in the case
of 13.1(a)(xi)) in the Collection Account on such Payment Date:
(i) to the Trustee, the Trustee Fee and all Trustee Costs up to $1,000
(the "Capped Trustee Costs");
(ii) to the Back-Up Manager, if then engaged, (A) the Back-Up Management
Fee and, to the extent not previously distributed, the Back-Up
Management Fee due on each prior Payment Date and (B) the Back-Up
Manager Costs up to $1,000 (the "Capped Back-Up Manager Costs") and,
to the extent not previously distributed, the amount of Back-Up
Manager Costs outstanding on each prior Payment Date;
62
(iii) to the Manager, (A) the Management Fee and, to the extent not
previously distributed, the Management Fee due on each prior Payment
Date and (B) the Manager Costs up to $1,000 (the "Capped Manager
Costs") and, to the extent not previously distributed, the Manager
Costs outstanding on each prior Payment Date;
(iv) to the Servicer, (A) the Senior Servicing Fee and to the extent not
previously distributed, the Senior Servicing Fee due on each prior
Payment Date and (B) to the Servicer, the Servicer Costs up to
$1,000 (the "Capped Services Costs") and to the extent not
previously distributed, the amount of Servicer Costs outstanding on
each prior Payment Date;
(v) to the Noteholders, interest accrued on the Notes for the related
Interest Period plus any accrued interest thereon remaining unpaid
from any previous Interest Period, and interest on such overdue
interest to the date such payment is made, at the Note Interest
Rate, but only to the extent that payment of such interest on
interest shall be legally enforceable;
(vi) to the Noteholders, the amount referred to in clause (i) of the
definition of the term "Note Principal Payment" for such Payment
Date in reduction of the Note Principal Balance of the Notes;
(vii) to the Manager for application in accordance with Licenses all
Advertising Royalties received and on deposit in the Collection
Account;
(viii) to the Trustee, the Back-Up Manager, the Manager and the Servicer,
in that order of priority, the positive difference, if any, for such
Payment Date, between the Trustee Costs and the Capped Trustee
Costs, the Bank-Up Manager Costs and the Capped Back-Up Manager
Costs, the Manager Costs and the Capped Manager Costs and the
Servicer Costs and the Capped Servicer Costs, respectively;
(ix) to the Liquidity Reserve Account, the Liquidity Reserve Deposit
Amount, if any;
(x) upon the occurrence of the Renewal Trigger Event until the earliest
to occur of (A) the date the Renewal Trigger Event has been cured
and is no longer continuing, (B) the receipt by the Trustee and the
Noteholders of a Non-Cure Notice or (C) the expiration of the
Renewal Cure Period, to the Renewal Reserve Account, the Renewal
Reserve Deposit Amount;
63
(xi) if amounts on deposit in the Renewal Reserve Account are withdrawn
therefrom in accordance with the provisions of Section 13.5(a), such
amounts shall be applied in reduction of the Note Principal Balance;
(xii) on each Payment Date after the Payment Date disbursement made
pursuant to clause (xi) above, and prior to the date the Noteholders
deliver a written notice to the Trustee stating that the Issuer has
cured the Renewal Trigger Event, an amount equal to the applicable
Quarterly Reserve Cap Amount shall be applied to reduce the Note
Principal Balance of the Notes; provided, however, that the sum of
the amounts disbursed pursuant to clause (xi) above and this clause
(xii) shall not exceed $26,250,000;
(xiii) to the Servicer, the Junior Servicing Fee and to the extent not
previously distributed, the Junior Servicing Fee due on each prior
Payment Date;
(xiv) to the Structuring Agent, the Structuring Fee; and
(xv) to the Issuer or such party as the Issuer may direct, all remaining
Available Funds.
(b) The foregoing provisions of this Section 13.1 notwithstanding,
any monies deposited in the Collection Account for purposes of redeeming Notes
pursuant to Article X shall, subject to Section 11.3, remain in the Collection
Account until paid for the purpose of such redemption.
Section 13.2. Disbursement of Monies out of the Liquidity Reserve Account
(a) (i) In the event that on any Payment Date Available Funds in the
Collection Account are not sufficient to make the payments specified
in clauses (i) through (vi) of Section 13.1(a), the Paying Agent,
shall, on such Payment Date, (x) withdraw funds from the Liquidity
Reserve Account, to the extent funds are available therein and (y)
apply the funds so withdrawn to such payments due on such Payment
Date pursuant to and in the order of clauses (i) through (vi) of
Section 13.1(a).
(ii) On each Payment Date on which the Notes are being amortized in
connection with Section 13.1(a)(xi) or (xii), the Trustee shall
withdraw the Liquidity Reserve Withdrawal Amount from the Liquidity
Reserve Account and deposit such amount into the Collection Account.
(iii)In connection with a Management Transition, the Trustee shall
withdraw amounts from the Liquidity Reserve Account to pay related
Management Transition Expenses up to but not in excess of the
Management Transition Expense Cap Amount. The Trustee shall
64
thereupon disburse such amounts in payment of such Management
Transition Expenses in accordance with a written direction of the
Issuer that is approved in writing by an Act of Noteholders.
(b) On the Payment Date on or after which (i) the amount on deposit
in the Liquidity Reserve Account, together with all other funds available to the
Trustee is equal to or greater than the sum of (x) the Redemption Price of all
Notes Outstanding on the next Redemption Date for which a proper Redemption
Notice can be given plus (y) all other obligations of the Company under this
Indenture that will be due and owing from such Payment Date through such
Redemption Date, and (ii) all payments to be made on such date pursuant to
Section 13.1(a) hereof have been paid or funds for their payment have been
reserved and are on deposit with the Trustee, the Trustee may, at the direction
of the Issuer, on such date, withdraw funds from the Liquidity Reserve Account
and transfer them to the Collection Account to redeem all of the Notes then
Outstanding pursuant to Section 10.1 of this Indenture.
(c) At such time as no Notes remain Outstanding and the Lien of this
Indenture has been discharged in accordance with Section 5.1 hereof, upon the
request of the Issuer, the Trustee shall withdraw from the Liquidity Reserve
Account any excess funds remaining after payment of all other amounts required
under this Indenture and remit any such excess to or at the direction of the
Issuer.
Section 13.3. Advertising Reserve Account
(a) Prior to any other disbursements from the Collection Account,
the Trustee shall withdraw from the Collection Account and set aside in a
separate trust account which the Issuer hereby establishes with the Trustee, the
"Advertising Reserve Account," the advertising and marketing expenses for
advertising contributions collected from the Issuer's Licensees that, pursuant
to the provisions of the applicable contract, require mandatory expense of their
advertising contribution (the "Advertising Cost Reimbursement"). Any such
deposit shall be based upon a written instruction from the Manager. Amounts on
deposit in the Advertising Reserve Account shall be paid out by the Trustee on
each Payment Date as directed by the Manager in a writing that also certifies
that all such amounts paid out to the Manager on the immediately preceding
Payment Date have been fully applied as required.
(b) At such time as no Notes remain Outstanding and the Lien of this
Indenture has been discharged in accordance with Section 5.1 hereof, upon the
request of the Issuer, the Trustee shall withdraw from the Advertising Reserve
Account any excess funds remaining after payment of all other amounts required
under this Indenture and remit any such excess to or at the direction of the
Issuer.
Section 13.4. Disbursements of Monies out of the Lockbox Account
Collateral funds on deposit in the Lockbox Account which are
collected funds at the end of each Business Day shall be swept to and deposited
in the Collection Account at such time.
65
Section 13.5. Disbursement of Monies out of the Renewal Reserve Account
(a) Upon the earlier to occur of (i) receipt by the Trustee and the
Noteholders of a Non-Cure Notice from the Issuer or (ii) the failure of the
Issuer to have cured the Renewal Trigger Event on or before the expiration of
the Renewal Cure Period, then all amounts on deposit in the Renewal Reserve
Account shall be withdrawn therefrom and deposited into the Collection Account
for application in accordance with Section 13.1(a)(xi).
(b) If the Issuer cures the Renewal Trigger Event, upon receipt by
the Trustee of written notice from the Noteholders stating that such cure has
been effected, provided no Event of Default shall have occurred and has not been
waived, the Trustee shall withdraw funds on deposit in the Renewal Reserve
Account and deposit the same in the Collection Account.
Section 13.6. Disbursement of Monies out of Prepaid Fee and Royalty
Account
(a) On each Payment Date, the Trustee, shall (x) withdraw any
Nonrecurring Release Amounts and the Prepaid Release Amounts from the Prepaid
Fee and Royalty Account, as set forth in the Servicer's report, to the extent
funds are available therein, and (y) deposit such funds in the Collection
Account for application to payments due on such Payment Date in accordance with
Section 13.1(a).
(b) At such time as no Notes remain Outstanding, all amounts due
under this Indenture have been paid and the Lien of this Indenture has been
discharged in accordance with Section 5.1 hereof, upon the request of the
Issuer, the Trustee shall withdraw from the Prepaid Fee and Royalty Account any
excess funds remaining after payment of all other amounts required under this
Indenture and remit any such excess to or at the direction of the Issuer.
Section 13.7. Eligible Investments
Upon an Issuer Order, the Trustee shall invest the funds in the
Collection Account, the Lockbox Account, the Revenue Reduction Account, the
Liquidity Reserve Account, the Renewal Reserve Account and the Prepaid Fee and
Royalty Account and in Eligible Investments; provided, however, that, unless the
Issuer and the Trustee shall receive an opinion of counsel selected by the
Issuer to the effect that the limitation is not necessary for the Issuer to
avoid registration under the Investment Company Act, at no time may the Issuer
allow the total aggregate principal amount of the Tested Securities to exceed
the Investment Company Act Limit. In the event, at the close of each Business
Day, the Trustee has not received an Issuer Order, or is not in possession of a
standing Issuer Order, the Trustee may invest such funds in the type of Eligible
Investment specified in clause (i) or clause (v) of the definition of Eligible
Investments. No Eligible Investment shall mature later than the Business Day
preceding the next following Payment Date.
Any income or other realized gain from Eligible Investments in the
Collection Account, the Liquidity Reserve Account, the Revenue Reduction
Account, the Renewal Reserve Account or the Prepaid Fee and Royalty Account
shall be transferred and credited to the Collection Account. The Trustee shall
66
not be liable for any loss incurred on any funds invested in Eligible
Investments pursuant to the provisions of this Section 13.7.
The Trustee shall have no liability in respect of losses incurred as
a result of the liquidation of any Eligible Investment prior to its stated
maturity or the failure of the Issuer to provide timely written investment
direction.
ARTICLE XIV.
COVENANTS OF IP HOLDINGS AND MANAGEMENT CORPORATION
Section 14.1. Continued Existence; Organizational Documents
IP Holdings and Management Corporation ("IPHM") shall keep in full
effect its existence, rights and franchises as a special purpose corporation
under the laws of the State of Delaware, shall operate in accordance with, and
subject to the limitations set forth in, its Organizational Documents and shall
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which the failure to be so qualified shall have a material
adverse effect on IPHM.
Section 14.2. Negative Covenant
IPHM shall not amend its Organizational Documents without receiving
approval thereof by Act of the Noteholders (which may not be unreasonably
withheld).
Section 14.3. No Bankruptcy Petition.
The Trustee and the Noteholders by entering into this Agreement
covenants and agrees that, prior to the date which is one year and one day after
the payment in full of the Notes, it will not institute against, or join any
other Person in instituting, against IPHM, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any federal or state bankruptcy or similar law.
67
IN WITNESS WHEREOF, the Issuer and Trustee have caused this Indenture
to be duly executed by their respective officers thereunto duly authorized and
their respective seals, duly attested, to be hereunto affixed, all as of the day
and year first above written.
IP HOLDINGS LLC, as Issuer
By: IP Holdings and Management Corporation, as
Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as
Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Financial Services Officer
[SECOND AMENDED AND RESTATED INDENTURE]
IN WITNESS WHEREOF, IP Holdings and Management Corporation hereby
joined this Indenture but solely for purposes of Article XIV of this Indenture
in consideration of the benefit to be derived by the Issuer and therefore IP
Holdings and Management Corporation, which is the Manager of the Issuer, from
this Indenture and the issuance and sale of the Notes.
IP HOLDINGS AND MANAGEMENT CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
[SECOND AMENDED AND RESTATED INDENTURE]