EXHIBIT 4.1
MASTER INDENTURE
between
SPIEGEL CREDIT CARD MASTER NOTE TRUST
Issuer,
and
THE BANK OF NEW YORK
Indenture Trustee
Dated as of [____________], 2000
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS........................................................................... 2
Section 1.1. Definitions.......................................................... 2
Section 1.2. Other Definitional Provisions........................................ 3
ARTICLE II THE NOTES............................................................................. 4
Section 2.1. Form Generally....................................................... 4
Section 2.2. Denominations........................................................ 4
Section 2.3. Execution, Authentication and Delivery............................... 5
Section 2.4. Authenticating Agent................................................. 5
Section 2.5. Registration of and Limitations on Transfer and
Exchange of Notes.................................................... 6
Section 2.6. Mutilated, Destroyed, Lost or Stolen Notes........................... 8
Section 2.7. Persons Deemed Owners................................................ 9
Section 2.8. Appointment of Paying Agent.......................................... 9
Section 2.9. Access to List of Noteholders' Names
and Addresses........................................................ 10
Section 2.10. Cancellation......................................................... 11
Section 2.11. [Reserved]
Section 2.12. New Issuances........................................................ 11
Section 2.13. Book-Entry Notes..................................................... 13
Section 2.14. Notices to Clearing Agency or Foreign Clearing Agency................ 14
Section 2.15. Definitive Notes..................................................... 14
Section 2.16. Global Note.......................................................... 15
Section 2.17. Meetings of Noteholders.............................................. 15
Section 2.18. Uncertificated Classes............................................... 15
ARTICLE III REPRESENTATIONS AND COVENANTS OF ISSUER............................................... 15
Section 3.1. Payment of Principal and Interest.................................... 15
Section 3.2. Maintenance of Office or Agency...................................... 16
Section 3.3. Money for Note Payments to Be Held in Trust.......................... 16
Section 3.4. Existence............................................................ 17
Section 3.5. Protection of Collateral............................................. 17
Section 3.6. Opinions as to Collateral............................................ 18
Section 3.7. Performance of Obligations; Servicing of
Receivables.......................................................... 19
Section 3.8. Negative Covenants................................................... 20
Section 3.9. Statements as to Compliance.......................................... 21
Section 3.10. Issuer May Consolidate, Etc., Only on
Certain Terms........................................................ 22
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TABLE OF CONTENTS
(Continued)
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Section 3.11. Successor Substituted................................................ 24
Section 3.12. No Other Business.................................................... 24
Section 3.13. [Reserved]
Section 3.14. Servicer's Obligations............................................... 24
Section 3.15. Investments.......................................................... 24
Section 3.16. Capital Expenditures................................................. 24
Section 3.17. Removal of Administrator............................................. 24
Section 3.18. Restricted Payments.................................................. 25
Section 3.19. Notice of Events of Default.......................................... 25
Section 3.20. Further Instruments and Acts......................................... 25
ARTICLE IV SATISFACTION AND DISCHARGE............................................................ 25
Section 4.1. Satisfaction and Discharge of this Indenture......................... 25
Section 4.2. Application of Issuer Money.......................................... 27
ARTICLE V PAY OUT EVENTS, DEFAULTS AND REMEDIES................................................. 27
Section 5.1. Pay Out Events....................................................... 27
Section 5.2. Events of Default.................................................... 27
Section 5.3. Acceleration of Maturity; Rescission and Annulment................... 29
Section 5.4. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee................................................. 30
Section 5.5. Remedies; Priorities................................................. 32
Section 5.6. Optional Preservation of the Collateral.............................. 33
Section 5.7. Limitation on Suits.................................................. 34
Section 5.8. Unconditional Rights of Noteholders to Receive
Principal and Interest............................................... 35
Section 5.10. Rights and Remedies Cumulative....................................... 35
Section 5.11. Delay or Omission Not Waiver......................................... 35
Section 5.12. Rights of Noteholders to Direct Indenture Trustee.................... 35
Section 5.13. Waiver of Past Defaults.............................................. 36
Section 5.14. Undertaking for Costs................................................ 36
Section 5.16. Sale of Receivables.................................................. 37
Section 5.17. Action on Notes...................................................... 37
ARTICLE VI THE INDENTURE TRUSTEE................................................................. 38
Section 6.1. Duties of the Indenture Trustee...................................... 38
Section 6.2. Notice of Pay Out Event or Event of Default.......................... 40
Section 6.3. Rights of Indenture Trustee.......................................... 40
Section 6.4. Not Responsible for Recitals or Issuance of Notes.................... 41
Section 6.5. May Hold Notes....................................................... 42
Section 6.6. Money Held in Trust.................................................. 42
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TABLE OF CONTENTS
(Continued)
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Section 6.7. Compensation, Reimbursement and Indemnification...................... 42
Section 6.8. Replacement of Indenture Trustee..................................... 43
Section 6.9. Successor Indenture Trustee by Merger................................ 44
Section 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.................................................... 44
Section 6.11. Eligibility; Disqualification........................................ 46
Section 6.12. Preferential Collection of Claims Against............................ 46
Section 6.13. Tax Returns.......................................................... 46
Section 6.14. Representations and Covenants of the Indenture Trustee............... 46
ARTICLE VII NOTEHOLDERS' LIST AND REPORTS
BY INDENTURE TRUSTEE AND ISSUER....................................................... 47
Section 7.1. Issuer to Furnish Indenture Trustee Names and
Addresses of Noteholders............................................. 47
Section 7.2. Preservation of Information; Communications to Noteholders........... 48
Section 7.3. Reports by Issuer.................................................... 48
Section 7.4. Reports by Indenture Trustee......................................... 49
ARTICLE VIII ALLOCATION AND APPLICATION OF COLLECTIONS............................................. 49
Section 8.1. Collection of Money.................................................. 49
Section 8.2. Rights of Noteholders................................................ 49
Section 8.3. Establishment of Collection Account and
Excess Funding Account............................................... 50
Section 8.4. Collections and Allocations.......................................... 52
Section 8.5. Shared Principal Collections......................................... 55
Section 8.6. Excess Finance Charge Collections.................................... 55
Section 8.7. Allocation of Collateral to Series or Groups......................... 56
Section 8.8. Release of Collateral; Eligible Loan Documents....................... 56
Section 8.9. Opinion of Counsel................................................... 57
ARTICLE IX DISTRIBUTIONS AND REPORTS TO NOTEHOLDERS.............................................. 58
ARTICLE X SUPPLEMENTAL INDENTURES............................................................... 58
Section 10.1. Supplemental Indentures Without Consent of Noteholders............... 58
Section 10.2. Supplemental Indentures with Consent of
Noteholders.......................................................... 60
Section 10.3. Execution of Supplemental Indentures................................. 61
Section 10.4. Effect of Supplemental Indenture..................................... 62
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TABLE OF CONTENTS
(Continued)
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Section 10.5. Conformity With Trust Indenture Act.................................. 62
Section 10.6. Reference in Notes to Supplemental Indentures........................ 62
ARTICLE XI TERMINATION........................................................................... 62
Section 11.1. Termination of Issuer................................................ 62
Section 11.2. Final Distribution................................................... 62
Section 11.3. Issuer's Termination Rights.......................................... 63
ARTICLE XII MISCELLANEOUS......................................................................... 64
Section 12.1. Compliance Certificates and Opinions etc............................. 64
Section 12.2. Form of Documents Delivered to Indenture Trustee..................... 65
Section 12.3. Acts of Noteholders.................................................. 66
Section 12.4. Notices, Etc. to Indenture Trustee and Issuer........................ 66
Section 12.5. Notices to Noteholders; Waiver....................................... 67
Section 12.6. Alternate Payment and Notice Provisions.............................. 67
Section 12.7. Conflict with Trust Indenture Act.................................... 68
Section 12.8. Effect of Headings and Table of Contents............................. 68
Section 12.9. Successors and Assigns............................................... 68
Section 12.10. Separability......................................................... 68
Section 12.11. Benefits of Indenture................................................ 68
Section 12.12. Legal Holidays....................................................... 68
Section 12.13. GOVERNING LAW........................................................ 68
Section 12.14. Counterparts......................................................... 68
Section 12.15. Issuer Obligation.................................................... 69
Section 12.16. No Petition.......................................................... 69
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RECONCILIATION AND TIE BETWEEN TRUST INDENTURE
ACT OF 1939 AND INDENTURE PROVISIONS/1/
Trust Indenture
Act Section Indenture Section
--------------- -----------------
310(a)(1)................................ 6.11
(a)(2)................................ 6.11
(a)(3)................................ 6.10
(a)(4)................................ Not Applicable
(a)(5)................................ 6.11
(b)................................... 6.8, 6.11
(c)................................... Not Applicable
311(a)................................... 6.12
(b)................................... 6.12
(c)................................... Not Applicable
312(a)................................... 7.1, 7.2(a)
(b)................................... 7.2(b)
(c)................................... 7.2(c)
313(a)................................... 7.4
(b)................................... 7.4
(c)................................... 7.3, 7.4
(d)................................... 7.4
314(a)................................... 3.9, 7.3(a)
(b)................................... 3.6
(c)(1)................................ 8.9, 12.1(a)
(c)(2)................................ 8.9, 12.1(a)
(c)(3)................................ 8.9, 12.1(a)
(d)(1)................................ 8.9, 12.1(b)
(d)(2)................................ Not Applicable
(d)(3)................................ Not Applicable
(e)................................... 12.1(a)
315(a)................................... 6.1(b)
(b)................................... 6.2
(c)................................... 6.1(c)
(d)................................... 6.1(d)
(d)(1)................................ 6.1(d)
(d)(2)................................ 6.1(d)
(d)(3)................................ 6.1(d)
(e)................................... 5.14
316(a)(1)(A)............................. 5.12
316(a)(1)(B)............................. 5.13
316(a)(2)................................ Not Applicable
316(b)................................... 5.8
317(a)(1)................................ 5.4
317(a)(2)................................ 5.4(d)
_________
/1/ This reconciliation and tie shall not, for any purpose, be deemed to be
part of the within indenture.
317(b)................................... 5.4(a)
318(a)................................... 12.7
MASTER INDENTURE, dated as of _______ __, 2000 (the "Indenture"),
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between Spiegel Credit Card Master Note Trust, a trust organized under the
laws of the State of Illinois (the "Issuer"), and The Bank of New York, a
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New York banking corporation, as indenture trustee (the "Indenture
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Trustee"). This Indenture may be supplemented at any time and from time to
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time by an indenture supplement in accordance with Article X (an "Indenture
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Supplement," and together with this Indenture and any amendments, the
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"Agreement"). If a conflict exists between the terms and provisions of this
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Indenture and any Indenture Supplement, the terms and provisions of the
Indenture Supplement shall be controlling with respect to the related
Series.
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for an issue of its asset backed notes as provided in
this Indenture. 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 Indenture Trustee is accepting the trusts
created hereby, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged.
Simultaneously with the delivery of this Indenture, the Issuer is
entering into a Transfer and Servicing Agreement with Spiegel Credit
Corporation III, a Delaware corporation, as Seller, and First Consumers
National Bank, a national banking association, as Servicer, pursuant to
which (a) the Seller will convey to the Issuer all of its right, title and
interest in, to and under (i) the Collateral Certificate, which the Seller
will have received from Spiegel Master Trust, and (ii) on and after the SMT
Termination Date, the Receivables, which the Seller will have received from
First Consumers National Bank pursuant to a Receivables Purchase Agreement
and (b) the Servicer will agree to service the Receivables and make
collections thereon on behalf of the Noteholders.
Under the Receivables Purchase Agreement and the Transfer and
Servicing Agreement, Receivables arising in the Accounts from time to time
will be conveyed thereunder to the Issuer.
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee, for the benefit of
the Holders of the Notes, all of the Issuer's right, title and interest,
whether now owned or hereafter acquired, in, to and under (a) the
Collateral Certificate, (b) the Receivables, (c) Recoveries related to and
all money, instruments, investment property and other property distributed
or distributable in respect of (together with all earnings, dividends,
distributions, income, issues, and profits relating to) the Receivables
pursuant to the terms of the Transfer and Servicing Agreement, this
Indenture and any Indenture Supplement; (d) all Permitted Investments and
all money, investment property,
instruments and other property on deposit from time to time in, credited to
or related to the Collection Account, the Series Accounts and the Excess
Funding Account (including any subaccounts of any such account), and in all
interest, dividends, earnings, income and other distributions from time to
time received, receivable or otherwise distributed or distributable thereto
or in respect thereof (including any accrued discount realized on
liquidation of any investment purchased at a discount); (e) all rights,
remedies, powers, privileges and claims of the Issuer under or with respect
to any Series Enhancement and the Transfer and Servicing Agreement (whether
arising pursuant to the terms of the Transfer and Servicing Agreement or
otherwise available to the Issuer at law or in equity), including the
rights of the Issuer to enforce the Transfer and Servicing Agreement, and
to give or withhold any and all consents, requests, notices, directions,
approvals, extensions or waivers under or with respect to the Transfer and
Servicing Agreement to the same extent as the Issuer could but for the
assignment and security interest granted to the Indenture Trustee for the
benefit of the Noteholders; (f) all proceeds of any Credit Insurance
policies relating to the Receivables; (g) all proceeds of any derivative
contracts between the Issuer or FCNB and a counterparty, as described in
any Indenture Supplement; (h) all money, accounts, general intangibles,
chattel paper, instruments, documents, goods, investment property, deposit
accounts, certificates of deposit, letters of credit, and advices of credit
consisting of, arising from or related to the foregoing; (i) all other
property of the Issuer; (j) all present and future claims, demands, causes
and choses in action in respect of any or all of the foregoing and all
payments on or under and all proceeds of every kind and nature whatsoever
in respect of any or all of the foregoing, including all proceeds,
products, rents, receipts or profits of the conversion, voluntary or
involuntary, into cash or other property, all cash and non-cash proceeds,
and other property consisting of, arising from or relating to all or any
part of any of the foregoing; and (k) any proceeds of the foregoing
(collectively, the "Collateral").
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LIMITED RECOURSE
The obligation of the Issuer to make payments of principal, interest
and other amounts in respect of the Notes is limited by recourse only to
the Collateral.
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
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Capitalized terms used herein are defined in Annex A.
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Section 1.2. Other Definitional Provisions.
-----------------------------
(a) All terms defined directly or by reference in this Indenture
shall have the defined meanings when used in any certificate or other
document delivered pursuant hereto unless otherwise defined therein. For
purposes of this Indenture and all such certificates and other documents,
unless the context otherwise requires: (i) accounting terms not otherwise
defined in this Indenture, and accounting terms partly defined in this
Indenture to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles; (ii) terms
defined in Article 9 of the UCC as in effect in the State of Illinois and
not otherwise defined in this Indenture are used as defined in that
Article; (iii) any reference to each Rating Agency shall only apply to any
specific rating agency if such rating agency is then rating any outstanding
Series; (iv) references to any amount as on deposit or outstanding on any
particular date means such amount at the close of business on such day; (v)
the words "hereof," "herein" and "hereunder" and words of similar import
refer to this Indenture (or the certificate or other document in which they
are used) as a whole and not to any particular provision of this Indenture
(or such certificate or document); (vi) references to any Section, Schedule
or Exhibit are references to Sections, Schedules and Exhibits in or to this
Indenture (or the certificate or other document in which the reference is
made), and references to any paragraph, Section, clause or other
subdivision within any Section or definition refer to such paragraph,
subsection, clause or other subdivision of such Section or definition;
(vii) the term "including" means "including without limitation"; (viii)
references to any law or regulation refer to that law or regulation as
amended from time to time and include any successor law or regulation; (ix)
references to any Person include that Person's successors and assigns; and
(x) headings are for purposes of reference only and shall not otherwise
affect the meaning or interpretation of any provision hereof.
(b) Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes
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"indenture security holder" means a Noteholder
-------------------------
"indenture to be qualified" means this Indenture
-------------------------
"indenture trustee" or "institutional trustee" means the Indenture
----------------- ---------------------
Trustee
"obligor" on the indenture securities means the Issuer and any other
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obligor on the indenture securities
3
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission
rule have the meanings assigned to them by such definitions.
ARTICLE II
THE NOTES
Section 2.1. Form Generally. Any Series or Class of Notes, together
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with the Indenture Trustee's certificate of authentication related thereto,
may be issued in bearer form (the "Bearer Notes") with attached interest
------------
coupons and a special coupon (collectively, the "Coupons") or in fully
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registered form (the "Registered Notes") and shall be in substantially the
----------------
form of an exhibit to the related Indenture Supplement with such
appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture or such Indenture Supplement,
and may have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon, as may, consistently herewith,
be determined by the officers executing such Notes, as evidenced by their
execution of such 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. The terms of any Notes set forth in an exhibit to the
related Indenture Supplement are part of the terms of this Indenture, as
applicable.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, all as determined
by the officers executing such Notes, as evidenced by their execution of
such Notes.
Each Note will be dated the Closing Date and each Definitive Note will
be dated as of the date of its authentication.
Section 2.2. Denominations. Except as otherwise specified in the
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related Indenture Supplement and the Notes, each class of Notes of each
Series shall be issued in fully registered form in minimum amounts of
$1,000 and in integral multiples of $1,000 in excess thereof (except that
one Note of each Class may be issued in a different amount, so long as such
amount exceeds the applicable minimum denomination for such Class), and
shall be issued upon initial issuance as one or more Notes in an aggregate
original principal amount equal to the applicable Collateral Amount for
such Class or Series.
Section 2.3. Execution, Authentication and Delivery. Each Note shall
--------------------------------------
be executed by manual or facsimile signature on behalf of the Issuer by an
Authorized Officer.
Notes bearing the manual or facsimile signature of an individual who
was, at the time when such signature was affixed, authorized to sign on
behalf of the Issuer shall
4
not be rendered invalid, notwithstanding the fact that such individual
ceased to be so authorized prior to the authentication and delivery of such
Notes or does not hold such office at the date of issuance of such Notes.
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 to the
Indenture Trustee for authentication and delivery, and the Indenture
Trustee shall authenticate at the written direction of the Issuer and
deliver such Notes as provided in this Indenture or the related Indenture
Supplement and not otherwise.
No Note shall be entitled to any benefit under this Indenture or the
applicable Indenture Supplement 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 or in the related Indenture
Supplement executed by or on behalf of the Indenture Trustee by the manual
signature of a duly authorized signatory, and such certificate upon any
Note shall be conclusive evidence, and the only evidence, that such Note
has been duly authenticated and delivered hereunder.
Section 2.4. Authenticating Agent.
--------------------
(a) The Indenture Trustee may appoint one or more authenticating
agents with respect to the Notes which shall be authorized to act on behalf
of the Indenture Trustee in authenticating the Notes in connection with the
issuance, delivery, registration of transfer, exchange or repayment of the
Notes. Whenever reference is made in this Indenture to the authentication
of Notes by the Indenture Trustee or the Indenture Trustee's certificate of
authentication, such reference shall be deemed to include authentication on
behalf of the Indenture Trustee by an authenticating agent and a
certificate of authentication executed on behalf of the Indenture Trustee
by an authenticating agent. Each authenticating agent must be acceptable to
the Issuer and the Servicer.
(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without
the execution or filing of any power or any further act on the part of the
Indenture Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving written
notice of resignation to the Indenture Trustee, the Issuer and the
Servicer. The Indenture Trustee may at any time terminate the agency of an
authenticating agent by giving notice of termination to such authenticating
agent and to the Issuer and the Servicer. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time an
authenticating agent shall cease to be acceptable to the Indenture Trustee
or the Issuer and the Servicer, the Indenture Trustee may promptly appoint
a successor authenticating agent. Any successor authenticating agent upon
acceptance of its
5
appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally
named as an authenticating agent. No successor authenticating agent shall
be appointed unless acceptable to the Issuer and the Servicer.
(d) The Issuer agrees to pay to each authenticating agent from time
to time reasonable compensation for its services under this Section 2.4.
-----------
(e) The provisions of Sections 6.1 and 6.4 shall be applicable to any
------------ ---
authenticating agent.
(f) Pursuant to an appointment made under this Section 2.4, the Notes
-----------
may have endorsed thereon, in lieu of or in addition to the Indenture
Trustee's certificate of authentication, an alternative certificate of
authentication in substantially the following form:
"This is one of the Notes described in the within-mentioned Agreement.
____________________________
____________________________
as Authenticating Agent
for the Indenture Trustee
By: ________________________
"Authorized Signatory"
Section 2.5. Registration of and Limitations on Transfer and Exchange
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of Notes. The Issuer shall cause to be kept a register (the "Note
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Register") in which the Issuer shall provide for the registration of Notes
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and the registration of transfers of Notes. The Indenture Trustee initially
shall be the transfer agent and registrar (in such capacity, the "Transfer
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Agent and Registrar") for the purpose of registering Notes and transfers of
-------------------
Notes as herein provided. Upon any resignation of any Transfer Agent and
Registrar, the Issuer shall promptly appoint a successor or, if it elects
not to make such an appointment, assume the duties of Transfer Agent and
Registrar.
If a Person other than the Indenture Trustee is appointed by the
Issuer as Transfer Agent and Registrar, the Issuer will give the Indenture
Trustee prompt written notice of the appointment of a Transfer Agent and
Registrar and of the location, and any change in the location, of the
Transfer Agent and Registrar and Note Register. The Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to
6
conclusively rely upon a certificate executed on behalf of the Transfer
Agent and Registrar by an officer thereof as to the names and addresses of
the Noteholders and the principal amounts and numbers of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Transfer Agent and Registrar, to be maintained as provided
in Section 3.2, if the requirements of Section 8-401 of the UCC are met as
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certified by the Administrator to the Indenture Trustee, the Issuer shall
execute, and upon receipt of such surrendered Note the Indenture Trustee
shall authenticate and deliver to the Noteholder, in the name of the
designated transferee or transferees, one or more new Notes (of the same
Series and Class) in any authorized denominations of like aggregate
principal amount.
At the option of a Noteholder, Notes may be exchanged for other Notes
(of the same Series and Class) in any authorized denominations and of like
aggregate principal amount, upon surrender of such Notes to be exchanged at
the office or agency of the Transfer Agent and Registrar. Whenever any
Notes are so surrendered for exchange, if the requirements of Section 8-401
of the UCC are met as certified by the Administrator to the Indenture
Trustee, the Issuer shall execute, and upon receipt of such surrendered
Note the Indenture Trustee shall authenticate and deliver to the
Noteholder, 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 evidence the same obligations, evidence the same debt, and be
entitled to the same rights and privileges under this Indenture, as the
Notes surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in a form satisfactory to the Indenture Trustee duly
executed by, the Noteholder thereof or its attorney-in-fact duly authorized
in writing, and by such other documents as the Indenture Trustee may
reasonably require.
Any Note held by the Seller at any time after the date of its initial
issuance may be transferred or exchanged only upon the delivery to the
Owner Trustee and the Indenture Trustee of a Tax Opinion dated as of the
date of such transfer or exchange, as the case may be, with respect to such
transfer or exchange.
The registration of transfer of any Note shall be subject to the
additional requirements, if any, set forth in the related Indenture
Supplement.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Issuer and the Transfer Agent and Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer
or exchange of such Notes.
7
All Notes surrendered for registration of transfer and exchange shall
be canceled by the Issuer and delivered to the Indenture Trustee for
subsequent destruction without liability on the part of either. The
Indenture Trustee shall destroy the Global Note upon its exchange in full
for Definitive Notes and shall deliver a certificate of destruction to the
Seller. Such certificate shall also state that a certificate or
certificates of each Foreign Clearing Agency referred to in the applicable
Indenture Supplement was received with respect to each portion of the
Global Note exchanged for Definitive Notes.
The preceding provisions of this Section 2.5 notwithstanding, the
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Issuer shall not be required to make, and Transfer Agent and Registrar need
not register, transfers or exchanges of Notes for a period of twenty (20)
days preceding the due date for any payment with respect to the Note.
If and so long as any Series of Notes are listed on the Luxembourg
Stock Exchange and such exchange shall so require, the Issuer shall appoint
a co-transfer agent and co-registrar in Luxembourg or another European
city. Any reference in this Indenture to the Transfer Agent and Registrar
shall include any co-transfer agent and co-registrar unless the context
otherwise requires. The Indenture Trustee will enter into any appropriate
agency agreement with any co-transfer agent and co-registrar not a party to
this Indenture, which will implement the provisions of this Indenture that
relate to such agent. [The Issuer initially appoints [__________________]
at its office located at [_____________________], as Transfer Agent and
Registrar for each Series of Notes listed on the Luxembourg Stock
Exchange.]
Section 2.6. Mutilated, Destroyed, Lost or Stolen Notes. If (a) any
------------------------------------------
mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (b) in case of destruction, loss, or theft there is
delivered to the Indenture Trustee such security or indemnity as may be
required by it to hold the Issuer, the Noteholders and the Indenture
Trustee harmless, then, in the absence of notice to the Issuer, the
Transfer Agent and Registrar or the Indenture Trustee that such Note has
been acquired by a protected purchaser (as defined in Section 8-303 of the
UCC as in effect in the State of Illinois), the Issuer shall execute, and
the Indenture Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Note, a replacement
Note of like tenor (including the same date of issuance) 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 within seven (7) days shall be due and payable, or shall
have been selected or called for redemption, instead of issuing a
replacement Note, the Issuer may pay such Note without surrender thereof,
except that any mutilated Note shall be surrendered. If, after the delivery
of such replacement Note or payment of a destroyed, lost or stolen Note
pursuant to the proviso to the preceding sentence, a protected purchaser
(as defined in Section 8-303 of the UCC as in effect in the State of
Illinois) of the original Note in lieu of which such
8
replacement Note was issued presents for payment such original Note, the
Issuer and the Indenture Trustee shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a
protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or
expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section 2.6, the
-----------
Issuer may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including
the fees and expenses of the Indenture Trustee or the Transfer Agent and
Registrar) connected therewith.
Every replacement Note issued pursuant to this Section 2.6 in
-----------
replacement of any mutilated, destroyed, lost or stolen Note shall
constitute complete and indefeasible evidence of an obligation of the
Trust, as if originally issued, whether or not the mutilated, destroyed,
lost or stolen Note shall be found at any time, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and
all other Notes duly issued hereunder.
The provisions of this Section 2.6 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 2.7. Persons Deemed Owners. Prior to due presentment for
---------------------
registration of transfer of any Note, the Issuer, the Seller, the Indenture
Trustee and any agent of the Issuer, the Seller or the Indenture Trustee
shall treat the Person in whose name any Note is registered as the owner of
such Note for the purpose of receiving distributions pursuant to the terms
of the applicable Indenture Supplement and for all other purposes
whatsoever, whether or not such Note is overdue, and neither the Issuer,
the Seller, the Indenture Trustee nor any agent of the Issuer, the Seller
or the Indenture Trustee shall be affected by any notice to the contrary.
Section 2.8. The Appointment of Paying Agent.
-------------------------------
(a) The Issuer reserves the right at any time to vary or terminate
the appointment of a Paying Agent for the Notes, and to appoint additional
or other Paying Agents, provided that it will at all times maintain the
Indenture Trustee as a Paying Agent.
If and so long as any Notes are listed on the Luxembourg Stock
Exchange and such exchange shall so require, the Indenture Trustee will
appoint a co-paying agent in
9
Luxembourg or another European city. The Indenture Trustee will enter into
any appropriate agency agreement with any co-paying agent not a party to
this Indenture, which will implement the provisions of this Indenture that
relate to such agent. [The Issuer initially appoints [___________________],
at its office located at [___________________], as Paying Agent for each
Series of Notes listed on the Luxembourg Stock Exchange.]
Notice of all changes in the identity or specified office of a Paying
Agent will be delivered promptly to the Noteholders by the Indenture
Trustee.
(b) The Indenture Trustee shall cause each Paying Agent (other than
itself) to execute and deliver to the Indenture Trustee an instrument in
which such Paying Agent shall agree with the Indenture Trustee that such
Paying Agent will hold all sums, if any, held by it for payment to the
Noteholders in trust for the benefit of the Noteholders entitled thereto
until such sums shall be paid to such Noteholders and shall agree, and if
the Indenture Trustee is the Paying Agent it hereby agrees, that it shall
comply with all requirements of the Code regarding the withholding by the
Indenture Trustee of payments in respect of federal income taxes due from
the Note Owners.
Section 2.9. Access to List of Noteholders' Names and Addresses.
--------------------------------------------------
(a) The Issuer will furnish or cause to be furnished to the Indenture
Trustee, the Servicer or the Paying Agent, within five (5) Business Days
after receipt by the Issuer of a written request therefor from the
Indenture Trustee, the Servicer or the Paying Agent, respectively, a list
of the names and addresses of the Noteholders. Unless otherwise provided in
the related Indenture Supplement, the Holders of not less than 10% of the
Outstanding Amount of any Series (the "Applicants") may apply in writing to
----------
the Indenture Trustee, and if such application states that the Applicants
desire to communicate with other Noteholders of any Series with respect to
their rights under this Indenture or under the Notes and is accompanied by
a copy of the communication which such Applicants propose to transmit, then
the Indenture Trustee, after having been adequately indemnified by such
Applicants for its costs and expenses, shall afford or shall cause the
Transfer Agent and Registrar to afford such Applicants access during normal
business hours to the most recent list of Noteholders held by the Indenture
Trustee and shall give the Servicer notice that such request has been made,
within five (5) Business Days after the receipt of such application. Such
list shall be as of a date no more than forty-five (45) days prior to the
date of receipt of such Applicants' request.
(b) Every Noteholder, by receiving and holding a Note, agrees that
none of the Issuer, the Indenture Trustee, the Transfer Agent and Registrar
and the Servicer or any of their respective agents and employees shall be
held accountable by reason of the disclosure of any such information as to
the names and addresses of the Noteholders hereunder, regardless of the
sources from which such information was derived.
10
Section 2.10. Cancellation. All Notes surrendered for payment,
------------
registration of transfer, exchange or redemption shall, if surrendered to
any Person other than the Indenture Trustee, be delivered to the Indenture
Trustee and shall be promptly canceled by it. The Issuer may at any time
deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in
any lawful manner whatsoever, and all Notes so delivered shall be promptly
canceled by the Indenture Trustee. No Notes shall be authenticated in lieu
of or in exchange for any Notes canceled as provided in this Section 2.10,
------------
except as expressly permitted by this Indenture. All canceled Notes held by
the Indenture Trustee shall be destroyed unless the Issuer shall direct by
a timely order that they be returned to it.
Section 2.11. [Reserved]
--------
Section 2.12. New Issuances.
-------------
(a) Pursuant to one or more Indenture Supplements, the Seller may
from time to time direct the Owner Trustee, on behalf of the Issuer, to
issue one or more new Series of Notes (a "New Issuance"). The Notes of all
------------
outstanding Series shall be equally and ratably entitled as provided herein
to the benefits of this Indenture without preference, priority or
distinction, all in accordance with the terms and provisions of this
Indenture and the applicable Indenture Supplement except, with respect to
any Series or Class, as provided in the related Indenture Supplement.
Interest on and principal of the Notes of each outstanding Series shall be
paid as specified in the Indenture Supplement relating to such outstanding
Series.
(b) On or before the Closing Date relating to any new Series of
Notes, the parties hereto will execute and deliver an Indenture Supplement
which will specify the Principal Terms of such Series. The terms of such
Indenture Supplement may modify or amend the terms of this Indenture solely
as applied to such new Series. The obligation of the Owner Trustee to
execute, on behalf of the Issuer, the Notes of any Series and of the
Indenture Trustee to authenticate such Notes (other than any Series issued
pursuant to an Indenture Supplement dated as of the date hereof) and to
execute and deliver the related Indenture Supplement is subject to the
satisfaction of the following conditions:
(i) on or before the fifth day immediately preceding the Closing
Date the Seller shall have given the Owner Trustee, the Indenture
Trustee, the Servicer and each Rating Agency notice (unless such
notice requirement is otherwise waived) of such issuance and the
Closing Date;
(ii) the Seller shall have delivered to the Owner Trustee and the
Indenture Trustee any related Indenture Supplement, in form
satisfactory to the Owner Trustee and the Indenture Trustee, executed
by each party hereto (other than the Indenture Trustee);
11
(iii) the Seller shall have delivered to the Owner Trustee and
the Indenture Trustee any related Enhancement Agreement executed by
the Seller and the Series Enhancer;
(iv) the Rating Agency Condition shall have been satisfied with
respect to such issuance;
(v) such issuance will not result in any Adverse Effect and
the Seller shall have delivered to the Owner Trustee and the Indenture
Trustee an Officer's Certificate, dated the Closing Date to the effect
that the Seller reasonably believes that such issuance will not, based
on the facts known to such officer at the time of such certification,
have an Adverse Effect;
(vi) the Seller shall have delivered to the Owner Trustee and
the Indenture Trustee (with a copy to each Rating Agency) (A) an
Opinion of Counsel, dated the Closing Date with respect to such
issuance, to the effect that, except as otherwise stated in the
related Indenture Supplement, the Notes of the new Series will be
characterized as debt for federal income tax purposes and (B) a Tax
Opinion, dated the Closing Date with respect to such issuance; and
(vii) the Aggregate Principal Balance shall not be less than the
Minimum Aggregate Principal Receivables as of the Closing Date and
after giving effect to such issuance and the Seller Amount shall
exceed the Minimum Seller Amount.
(c) Upon satisfaction of the above conditions, pursuant to Section
-------
2.3, the Owner Trustee, on behalf of the Issuer, shall execute and the
---
Indenture Trustee shall upon written direction of the Issuer authenticate
and deliver the Notes of such Series as provided in this Indenture and the
applicable Indenture Supplement.
(d) The Issuer may direct the Indenture Trustee in writing to deposit
the net proceeds from any New Issuance in the Excess Funding Account. The
Issuer may also specify that on any Transfer Date the proceeds from the
sale of any new Series may be withdrawn from the Excess Funding Account and
treated as Shared Principal Collections.
Section 2.13. Book-Entry Notes. Unless otherwise provided in any
----------------
related Indenture Supplement, the Notes, upon original issuance, shall be
issued in the form of typewritten or printed Notes representing the Book-
Entry Notes to be delivered to the depository specified in such Indenture
Supplement which shall be the Clearing Agency or Foreign Clearing Agency,
by or on behalf of such Series.
12
The Notes of each Series shall, unless otherwise provided in the
related Indenture Supplement, initially be registered in the Note Register
in the name of the nominee of the Clearing Agency or Foreign Clearing
Agency for such Book-Entry Notes and shall be delivered to the Indenture
Trustee or, pursuant to such Clearing Agency's or Foreign Clearing Agency's
instructions held by the Indenture Trustee's agent as custodian for the
Clearing Agency or Foreign Clearing Agency.
Unless and until Definitive Notes are issued under the limited
circumstances described in Section 2.15, no Note Owner shall be entitled to
------------
receive a Definitive Note representing such Note Owner's interest in such
Note. Unless and until Definitive Notes have been issued to the Note Owners
pursuant to Section 2.15:
------------
(a) the provisions of this Section 2.13 shall be in full force and
------------
effect with respect to each such Series;
(b) the Indenture Trustee shall be entitled to deal with the Clearing
Agency or Foreign Clearing Agency and the Clearing Agency Participants for
all purposes of this Indenture (including the payment of principal of and
interest on the Notes of each such Series) as the authorized
representatives of the Note Owners;
(c) to the extent that the provisions of this Section 2.13 conflict
------------
with any other provisions of this Indenture, the provisions of this Section
-------
2.13 shall control with respect to each such Series;
----
(d) the rights of Note Owners of each such Series shall be exercised
only through the Clearing Agency or Foreign Clearing Agency and the
applicable Clearing Agency Participants and shall be limited to those
established by law and agreements between such Note Owners and the Clearing
Agency or Foreign Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the depository agreement applicable to a Series, unless and
until Definitive Notes of such Series are issued pursuant to Section 2.15,
------------
the initial Clearing Agency shall make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Notes to such Clearing Agency Participants;
and
(e) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of the Holders of Notes representing
a specified percentage of the Outstanding Amount, the Clearing Agency or
Foreign Clearing Agency shall be deemed to represent such percentage only
to the extent that they have received instructions to such effect from the
Note Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the
Notes and has delivered such instructions to the Indenture Trustee.
13
Section 2.14. Notices to Clearing Agency or Foreign Clearing Agency.
-----------------------------------------------------
Whenever a notice or other communication to the Noteholders is required
under this Indenture, unless and until Definitive Notes shall have been
issued to Note Owners pursuant to Section 2.15, the Indenture Trustee shall
------------
give all such notices and communications specified herein to be given to
Noteholders to the Clearing Agency or Foreign Clearing Agency, as
applicable, and shall have no obligation to the Note Owners.
Section 2.15. Definitive Notes. If (i) (a) the Seller advises the
----------------
Indenture Trustee in writing that the Clearing Agency is no longer willing
or able to discharge properly its responsibilities as Clearing Agency with
respect to the Book-Entry Notes of a given Series and (b) the Indenture
Trustee or Issuer is unable to locate and reach an agreement on
satisfactory terms with a qualified successor, (ii) the Seller, at its
option, advises the Indenture Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency with respect to
such Series or (iii) after the occurrence of a Servicer Default, Note
Owners of Notes evidencing more than 50% of the Outstanding Amount (or such
other percentage as specified in the related Indenture Supplement) of such
Series advise the Indenture Trustee and the applicable Clearing Agency
through the applicable Clearing Agency Participants in writing that the
continuation of a book-entry system is no longer in the best interests of
the Note Owners of such Series, the Clearing Agency shall notify all Note
Owners of such Series of the occurrence of such event and of the
availability of Definitive Notes to Note Owners of such Series requesting
the same. Upon surrender to the Indenture Trustee of the Notes of such
Series, accompanied by registration instructions from the applicable
Clearing Agency, the Issuer shall execute and the Indenture Trustee shall
authenticate Definitive Notes of such Series and shall recognize the
registered holders of such Definitive Notes as Noteholders under this
Indenture. Neither the Issuer nor the Indenture Trustee shall be liable for
any delay in delivery of such instructions, and the Issuer and the
Indenture Trustee may conclusively rely on, and shall be fully protected in
relying on, such instructions. Upon the issuance of Definitive Notes of
such Series, all references herein to obligations imposed upon or to be
performed by the applicable Clearing Agency or Foreign Clearing Agency
shall be deemed to be imposed upon and performed by the Indenture Trustee,
to the extent applicable with respect to such Definitive Notes, and the
Indenture Trustee shall recognize the registered holders of the Definitive
Notes of such Series as Noteholders of such Series hereunder. Definitive
Notes will be transferable and exchangeable at the offices of the Transfer
Agent and Registrar.
Section 2.16. Global Note. If specified in the related Indenture
-----------
Supplement for any Series, Notes may be initially issued in the form of a
single temporary Global Note (the "Global Note") in bearer form, without
-----------
interest coupons, in the denomination of the Initial Collateral Amount and
substantially in the form attached to the related Indenture Supplement.
Unless otherwise specified in the related Indenture Supplement, the
provisions of this Section 2.16 shall apply to such Global Note. The Global
------------
Note will be authenticated by the Indenture Trustee upon the same
conditions, in substantially the
14
same manner and with the same effect as the Definitive Notes. The Global
Note may be exchanged in the manner described in the related Indenture
Supplement for Registered Notes or Bearer Notes in definitive form. Except
as otherwise specifically provided in the Indenture Supplement, any Notes
that are issued in bearer form pursuant to this Indenture shall be issued
in accordance with the requirements of Code section 163(f)(2).
Section 2.17. Meetings of Noteholders. To the extent provided by the
-----------------------
Indenture Supplement for any Series issued in whole or in part in Bearer
Notes, the Servicer or the Indenture Trustee may at any time call a meeting
of the Noteholders of such Series, to be held at such time and at such
place as the Servicer and the Indenture Trustee, as the case may be, shall
determine, for the purpose of approving a modification or amendment to, or
obtaining a waiver of, any covenant or condition set forth in this
Indenture with respect to such Series or in the Notes of such Series,
subject to Article X.
---------
Section 2.18. Uncertificated Classes. Notwithstanding anything to the
----------------------
contrary contained in this Article II or in Article XI, unless otherwise
---------- ----------
specified in any Indenture Supplement, any provisions contained in this
Article II and in Article XI relating to the registration, form, execution,
---------- ----------
authentication, delivery, presentation, cancellation and surrender of Notes
shall not be applicable to any uncertificated Notes, provided, however,
-------- -------
that, except as otherwise specifically provided in the Indenture
Supplement, any such uncertificated Notes shall be issued in "registered
form" within the meaning of Code section 163(f)(1).
ARTICLE III
REPRESENTATIONS AND COVENANTS OF ISSUER
Section 3.1. Payment of Principal and Interest.
---------------------------------
(a) The Issuer will duly and punctually pay principal and interest in
accordance with the terms of the Notes as specified in the relevant
Indenture Supplement.
(b) The Noteholders of a Series as of the Record Date in respect of a
Distribution Date shall be entitled to the interest accrued and payable and
principal payable on such Distribution Date as specified in the related
Indenture Supplement. All payment obligations under a Note are discharged
to the extent such payments are made to the Noteholder of record.
15
Section 3.2. Maintenance of Office or Agency. The Issuer will
-------------------------------
maintain an office or agency within the State of [New York] and such other
locations as may be set forth in an Indenture Supplement where Notes may be
presented or surrendered for payment, where Notes may be surrendered for
registration of transfer or exchange and where notices and demands to or
upon the Issuer in respect of the Notes and this Indenture may be served.
The Issuer hereby initially appoints the Indenture Trustee at its Corporate
Trust Office to serve as its agent for the foregoing purposes. The Issuer
will give prompt written notice to the Indenture Trustee and the
Noteholders 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 fail to furnish the Indenture Trustee with the
address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office, and the Issuer hereby
appoints the Indenture Trustee at its Corporate Trust Office as its agent
to receive all such presentations, surrenders, notices and demands.
Section 3.3. Money for Note Payments to Be Held in Trust. As
-------------------------------------------
specified in Section 8.3(a) and (b) herein and in the related Indenture
-------------- ---
Supplement, all payments of amounts due and payable with respect to the
Notes which are to be made from amounts withdrawn from the Collection
Account and the Excess Funding Account shall be made on behalf of the
Issuer by the Indenture Trustee or by the Paying Agent, and no amounts so
withdrawn from the Collection Account or the Excess Funding Account shall
be paid over to or at the direction of the Issuer except as provided in
this Section 3.3 and in the related Indenture Supplement.
-----------
The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in
which such Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to
the provisions of this Section 3.3, that such Paying Agent, in acting as
-----------
Paying Agent, is an express agent of the Issuer and, further, that such
Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give a Responsible Officer of the Indenture Trustee
written notice of any default by the Issuer (or any other obligor upon
the Notes) of which it has actual knowledge in the making of any
payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to
the Indenture Trustee all sums so held in trust by such Paying Agent;
16
(iv) immediately resign as a Paying Agent and forthwith pay
to the Indenture Trustee all sums held by it in trust for the payment
of Notes if at any time it ceases to meet the standards required to be
met by a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect
to the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order
direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by such Paying Agent;
and upon such payment by any Paying Agent to the Indenture Trustee, such
Paying Agent shall be released from all further liability with respect to
such sums.
Section 3.4. Existence. The Issuer will keep in full effect its
---------
existence, rights and franchises as a common law trust under the laws of
the State of Illinois (unless it becomes, or any successor Issuer hereunder
is or becomes, organized under the laws of any other State or of the United
States of America, in which case the Issuer will keep in full effect its
existence, rights and franchises under the laws of such other jurisdiction)
and will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Indenture, the Notes, the
Collateral and each other related instrument or agreement.
Section 3.5. Protection of Collateral. The Issuer will from time to
------------------------
time prepare, or cause to be prepared, execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other
instruments, and will take such other action necessary or advisable to:
(a) grant more effectively all or any portion of the Collateral as
security for the Notes;
(b) maintain or preserve the lien (and the priority thereof) of this
Indenture or to carry out more effectively the purposes hereof;
(c) perfect, publish notice of, or protect the validity of any Grant
made or to be made under this Indenture;
17
(d) enforce any of the Collateral; or
(e) preserve and defend title to the Collateral securing the Notes
and the rights therein of the Indenture Trustee and the Noteholders secured
thereby against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement
or other instrument required pursuant to this Section 3.5.
-----------
The Issuer shall pay or cause to be paid any taxes levied on all or
any part of the Receivables securing the Notes.
Section 3.6. Opinions as to Collateral.
-------------------------
(a) On the Closing Date relating to any new Series of Notes, the
Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken to
perfect the lien and security interest of this Indenture, including with
respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to
the execution and filing of any financing statements and continuation
statements, as are so necessary and reciting the details of such action, or
stating that, in the opinion of such counsel, no such action is necessary
to maintain the perfection of such lien and security interest.
(b) On or before May 30 in each calendar year, beginning in 2001, the
Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken to
perfect the lien and security interest of this Indenture, including with
respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as is so necessary and reciting the
details of such action or stating that in the opinion of such counsel no
such action is necessary to maintain the perfection of such lien and
security interest. Such Opinion of Counsel shall also describe the
recording, filing, rerecording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation
statements that will, in the opinion of such counsel, be required to
maintain the perfection of the lien and security interest of this Indenture
until May 30 in the following calendar year.
18
Section 3.7. Performance of Obligations; Servicing of Receivables.
----------------------------------------------------
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under
any instrument or agreement included in the Collateral or that would result
in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any such instrument or
agreement, except as expressly provided in this Indenture, the Transfer and
Servicing Agreement or such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such
duties by a Person identified to the Indenture Trustee in an Officer's
Certificate of the Issuer shall be deemed to be action taken by the Issuer.
Initially, the Issuer has contracted with the Administrator to assist the
Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other
Transaction Documents and in the instruments and agreements relating to the
Collateral, including but not limited to filing or causing to be filed all
UCC financing statements and continuation statements required to be filed
by the terms of this Indenture and the Transfer and Servicing Agreement in
accordance with and within the time periods provided for herein and
therein.
(d) If the Issuer shall have knowledge of the occurrence of a
Servicer Default under the Transfer and Servicing Agreement, the Issuer
shall cause the Indenture Trustee to promptly notify the Rating Agencies
thereof, and shall cause the Indenture Trustee to specify in such notice
the action, if any, being taken with respect to such default. If a Servicer
Default shall arise from the failure of the Servicer to perform any of its
duties or obligations under the Transfer and Servicing Agreement with
respect to the Receivables, the Issuer shall take all reasonable steps
available to it to remedy such failure.
(e) On and after the receipt by the Servicer of a Termination Notice
pursuant to Section 7.1 of the Transfer and Servicing Agreement, the
-----------
Servicer shall continue to perform all servicing functions under this
Indenture until the date specified in the Termination Notice or until a
date mutually agreed upon by the Servicer and the Indenture Trustee. As
promptly as possible after the giving of a Termination Notice to the
Servicer, the Indenture Trustee shall appoint a Successor Servicer, and
such Successor Servicer shall accept its appointment by a written
assumption in a form acceptable to the Indenture Trustee. In the event that
a Successor Servicer has not been appointed and accepted its appointment at
the time when the Servicer ceases to act as Servicer, the Indenture Trustee
in accordance with Section 7.2 of the Transfer and Servicing Agreement
-----------
without further action shall automatically be appointed the
19
Successor Servicer. The Indenture Trustee may delegate any of its servicing
obligations to an Affiliate or agent in accordance with Section 3.1(b) and
--------------
Section 5.7 of the Transfer and Servicing Agreement. Notwithstanding the
-----------
foregoing, the Indenture Trustee shall, if it is legally unable so to act,
petition at the expense of the Servicer a court of competent jurisdiction
to appoint any established institution qualifying as an Eligible Servicer
as the Successor Servicer hereunder. The Indenture Trustee shall give
prompt notice to each Rating Agency and each Series Enhancer upon the
appointment of a Successor Servicer. Upon its appointment, the Successor
Servicer shall be the successor in all respects to the Servicer with
respect to servicing functions under this Indenture and shall be subject to
all the responsibilities, duties and liabilities relating thereto placed on
the Servicer by the terms and provisions hereof, and all references in this
Indenture to the Servicer shall be deemed to refer to the Successor
Servicer. In connection with any Termination Notice, the Indenture Trustee
will review any bids which it obtains from Eligible Servicers and shall be
permitted to appoint any Eligible Servicer submitting such a bid as a
Successor Servicer for servicing compensation, subject to the limitations
set forth in Section 7.2 of the Transfer and Servicing Agreement.
-----------
(f) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees (i) that it will not,
without the prior written consent of the Indenture Trustee and the Holders
of Notes representing more than 50% of the Outstanding Amount of each
Series, amend, modify, waive, supplement, terminate or surrender, or agree
to any amendment, modification, supplement, termination, waiver or
surrender of, the terms of any Collateral (except to the extent otherwise
provided in the Transfer and Servicing Agreement) or the Transaction
Documents (except to the extent otherwise provided in the Transaction
Documents), or waive timely performance or observance by the Servicer or
the Seller under the Transfer and Servicing Agreement; and (ii) that any
such amendment shall not (A) increase or reduce in any manner the amount
of, or accelerate or delay the timing of, collections of payments on the
Receivables or distributions that are required to be made for the benefit
of the Noteholders or (B) reduce the aforesaid percentage of the Notes that
is required to consent to any such amendment, without the consent of the
Holders of all the Outstanding Notes. If any such amendment, modification,
supplement or waiver shall be so consented to by the Indenture Trustee and
such Noteholders, the Issuer agrees, promptly following a request by the
Indenture Trustee to do so, to execute and deliver, in its own name and at
its own expense, such agreements, instruments, consents and other documents
as the Indenture Trustee may deem necessary or appropriate in the
circumstances.
20
Section 3.8. Negative Covenants. So long as any Notes are
------------------
Outstanding, the Issuer will not:
(a) sell, transfer, exchange, or otherwise dispose of any part of the
Collateral unless directed to do so by the Indenture Trustee, except as
expressly permitted by this Indenture and any Indenture Supplement, the
Receivables Purchase Agreement, the Trust Agreement or the Transfer and
Servicing Agreement;
(b) claim any credit on, or make any deduction from, the principal
and interest payable in respect of the Notes (other than amounts properly
withheld from such payments under the Code or applicable state law) or
assert any claim against any present or former Noteholder by reason of the
payment of any taxes levied or assessed upon any part of the Collateral;
(c) incur, assume, guarantee or otherwise become liable, directly or
indirectly, for any indebtedness other than incurred under the Notes and
this Indenture;
(d) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Notes under this
Indenture except as may be expressly permitted hereby, (B) permit any Lien,
charge, excise, claim, security interest, mortgage or other encumbrance
(other than the lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the Collateral or any part thereof or any
interest therein or the proceeds thereof or (C) permit the lien of this
Indenture not to constitute a valid first priority security interest (other
than with respect to a tax, mechanics, or similar lien) in the Collateral;
or
(e) voluntarily dissolve or liquidate in whole or in part.
Section 3.9. Statements as to Compliance. The Issuer will deliver to
---------------------------
the Indenture Trustee, within 120 days after the end of each fiscal year of
the Issuer at the end of which any Notes are outstanding (commencing within
120 days after the end of the fiscal year 2000), an Officer's Certificate
stating, as to the Authorized Officer signing such Officer's Certificate,
that
(i) a review of the activities of the Issuer during the 12-
month period ending at the end of such fiscal year and of performance
under this Indenture has been made under such Authorized Officer's
supervision, and
(ii) to the best of such Authorized Officer's knowledge,
based on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the
21
compliance of any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and status
thereof.
Section 3.10. Issuer May Consolidate, Etc., Only on Certain Terms.
---------------------------------------------------
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(1) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger (the "Surviving Person")
----------------
(i) is organized and existing under the laws of the United States
of America or any state or the District of Columbia, (ii) is not
subject to regulation as an "investment company" under the
Investment Company Act and (iii) expressly assumes, by an
indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in a form satisfactory to the Indenture
Trustee, the obligation to make due and punctual payment of the
principal of and interest on all Notes and the performance of
every covenant of this Indenture on the part of the Issuer to be
performed or observed;
(2) immediately after giving effect to such
transaction, no Event of Default or Pay Out Event shall have
occurred and be continuing;
(3) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each
stating that (i) such consolidation or merger and such
supplemental indenture comply with this Section 3.10, (ii) all
------------
conditions precedent in this Section 3.10 provided for relating
------------
to such transaction have been complied with (including any filing
required by the Exchange Act), and (iii) such supplemental
indenture is duly authorized, executed and delivered and is
valid, binding and enforceable against the Surviving Person;
(4) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(5) the Issuer shall have received a Tax Opinion with
respect to such consolidation or merger; and
(6) any action that is necessary to maintain the lien
and security interest created by this Indenture shall have been
taken.
For the avoidance of doubt, this Section 3.10 shall not apply to the
------------
transfer of the Receivables and other assets to the Issuer on the SMT
Termination Date.
22
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Collateral, substantially as an
entirety to any Person, unless:
(1) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of
which is hereby restricted (the "Acquiring Person") (A) is a
----------------
United States citizen or a Person organized and existing under
the laws of the United States of America or any state, or the
District of Columbia, (B) expressly assumes, by an indenture
supplemental hereto, executed and delivered to the Indenture
Trustee, in form satisfactory to the Indenture Trustee, the
obligation to make due and punctual payments of the principal of
and interest on all Notes and the performance of every covenant
of this Indenture on the part of the Issuer to be performed or
observed, (C) expressly agree by means of such supplemental
indenture that all right, title and interest so conveyed or
transferred shall be subject and subordinate to the rights of
Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agree to indemnify, defend and
hold harmless the Issuer against and from any loss, liability or
expense arising under or related to this Indenture and the Notes
and (E) expressly agree by means of such supplemental indenture
that such Person (or if a group of Persons, then one specified
Person) shall make all filings with the Commission (and any other
appropriate Person) required by the Exchange Act in connection
with the Notes;
(2) immediately after giving effect to such transaction, no
Event of Default or Pay Out Event shall have occurred and be
continuing;
(3) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(4) the Issuer shall have received a Tax Opinion with
respect to such transaction;
(5) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been
taken; and
(6) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each
stating that (i) such conveyance or transfer and such
supplemental indenture comply with this Section 3.10, (ii) all
------------
conditions precedent herein provided for relating to such
transaction have been complied with (including any
23
filing required by the Exchange Act), and (iii) such supplemental
indenture is duly authorized, executed and delivered and is
valid, binding and enforceable against the Acquiring Person.
Section 3.11. Successor Substituted. Upon any consolidation or
---------------------
merger, or any conveyance or transfer of the properties and assets of the
Issuer substantially as an entirety in accordance with Section 3.10, the
------------
Surviving Person or the Acquiring Person, as the case may be, shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein. In the event of any such conveyance or
transfer, the Person named as the Issuer in the first paragraph of this
Indenture or any successor which shall theretofore have become such in the
manner prescribed in this Section 3.11 shall be released from its
------------
obligations under this Indenture as issued immediately upon the
effectiveness of such conveyance or transfer, provided that the Issuer
shall not be released from any obligations or liabilities to the Indenture
Trustee or the Noteholders arising prior to such effectiveness.
Section 3.12. No Other Business. The Issuer shall not engage in any
-----------------
business other than (i) purchasing, owning and managing the Trust Assets
and the proceeds thereof in the manner contemplated by this Indenture and
the other Transaction Documents, (ii) issuing and making payments in
respect of the Notes and (iii) all activities related thereto.
Section 3.13. [Reserved].
Section 3.14. Servicer's Obligations. The Issuer shall cause the
----------------------
Servicer to comply with all of its obligations under the Transaction
Documents.
Section 3.15. Investments. Except as contemplated by this Indenture
-----------
or the Transfer and Servicing Agreement, the Issuer shall not own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
Section 3.16. Capital Expenditures. The Issuer shall not make any
--------------------
expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personalty).
Section 3.17. Removal of Administrator. So long as any Notes are
------------------------
outstanding, the Issuer shall not remove the Administrator without cause
unless the Rating Agency Condition shall have been satisfied in connection
with such removal.
24
Section 3.18. Restricted Payments. The Issuer shall not, directly or
-------------------
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a
combination thereof, to the Owner Trustee or any owner of a beneficial
interest in the Issuer or otherwise with respect to any ownership or equity
interest or security in or of the Issuer or to the Servicer, (ii) redeem,
purchase, retire or otherwise acquire for value any such ownership or
equity interest or security or (iii) set aside or otherwise segregate any
amounts for any such purpose; provided, however, that the Issuer may make,
-------- -------
or cause to be made, (x) distributions as contemplated by, and to the
extent funds are available for such purpose under, the Transaction
Documents and (y) payments to the Indenture Trustee pursuant to Section
-------
6.7. The Issuer will not, directly or indirectly, make payments to or
---
distributions from the Collection Account except in accordance with the
Transaction Documents.
Section 3.19. Notice of Events of Default. The Issuer agrees to give
---------------------------
a Responsible Officer of the Indenture Trustee and the Rating Agencies
prompt written notice of each Event of Default hereunder and, immediately
after obtaining knowledge of any of the following occurrences, written
notice of each default on the part of the Servicer or the Seller of its
obligations under the Transfer and Servicing Agreement and each default on
the part of a Seller of its obligations under the Receivables Purchase
Agreement, as applicable.
Section 3.20. Further Instruments and Acts. Upon request of the
----------------------------
Indenture Trustee, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of this Indenture. This
--------------------------------------------
Indenture shall cease to be of further effect with respect to the Notes
except as to (a) rights of registration of transfer and exchange, (b)
substitution of mutilated, destroyed, lost or stolen Notes, (c) the rights
of Noteholders to receive payments of principal thereof and interest
thereon, (d) Sections 3.3, 3.7, 3.8, 3.11, 3.12 and 12.16, (e) the rights
------------ --- --- ---- ---- -----
and immunities of the Indenture Trustee hereunder, including the rights of
the Indenture Trustee under Section 6.7, and the obligations of the
-----------
Indenture Trustee under Section 4.2, and (f) the rights of Noteholders as
-----------
beneficiaries hereof with respect to the property so deposited with the
Indenture Trustee and payable to all or any of them, and the Indenture
Trustee, on written 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 when:
(i) either
25
(A) all Notes theretofore authenticated and delivered
(other than (1) Notes which have been destroyed, lost or
stolen and which have been replaced, or paid as provided in
Section 2.6, and (2) Notes for whose full 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 3.3)
have been delivered to the Indenture Trustee for
cancellation; or
(B) all Notes not theretofore delivered to the
Indenture Trustee for cancellation:
(1) have become due and payable;
(2) will become due and payable at the Series Termination
Date for such Class or Series of Notes; or
(3) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of
notice of redemption by the Indenture Trustee in the name, and at the
expense, of the Issuer;
(4) and the Issuer, in the case of (1), (2) or (3) above,
has irrevocably deposited or caused to be irrevocably deposited with
the Indenture Trustee cash or direct obligations of or obligations
guaranteed by the United States of America (which will mature prior to
the date such amounts are payable), in trust for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness on such
Notes not theretofore delivered to the Indenture Trustee for
cancellation when due at the Series Termination Date for such Class or
Series of Notes or the Redemption Date (if Notes shall have been
called for redemption pursuant to the related Indenture Supplement),
as the case may be;
(ii) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer; and
(iii) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the Indenture
Trustee) an Independent Certificate from a firm of certified public accountants,
each meeting the applicable requirements of Section 12.1(a) and each stating
that all conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
26
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer to the Indenture Trustee under Section 6.7 and of the
-----------
Indenture Trustee to the Noteholders under Section 4.2 shall survive.
-----------
Section 4.2. Application of Issuer Money. All monies deposited with the
---------------------------
Indenture Trustee pursuant to Section 4.1 shall be held in trust and applied by
-----------
it, in accordance with the provisions of the Notes, this Indenture and the
applicable Indenture Supplement, to make payments, either directly or through
any Paying Agent, as the Indenture Trustee may determine, to the Noteholders and
for the payment in respect of which such monies have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest; but such monies need not be segregated from other funds except to the
extent required herein or in the Transfer and Servicing Agreement or required by
law.
ARTICLE V
PAY OUT EVENTS, DEFAULTS AND REMEDIES
Section 5.1. Pay Out Events. If any one of the following events (each, a
--------------
"Trust Pay Out Event") shall occur:
--------------------
(a) the occurrence of a Servicer Default which would have an Adverse
Effect;
(b) the occurrence of an Insolvency Event relating to the Seller or FCNB;
(c) a Transfer Restriction Event shall occur; or
(d) the Issuer shall become subject to regulation by the Commission as an
"investment company" within the meaning of the Investment Company Act;
then a Pay Out Event with respect to all Series of Notes shall occur without any
notice or other action on the part of the Indenture Trustee or the Noteholders
immediately upon the occurrence of such event.
Upon the occurrence of a Pay Out Event, payment on the Notes of each Series
will be made in accordance with the terms of the related Indenture Supplement.
Section 5.2. Events of Default. "Event of Default," wherever used herein,
means with respect to any Series any one of the following events (whatever the
reason for such Event of Default and 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):
27
(a) default in the payment of the principal of any Note of that Series, if
and to the extent not previously paid, when the same becomes due and payable on
its Series Termination Date; or
(b) default in the payment of any interest on any Note of that Series when
the same becomes due and payable, and such default shall continue for a period
of thirty-five (35) days; or
(c) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer in an involuntary case
under any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, conservator,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
the Issuer or ordering the winding-up or liquidation of the Issuer's affairs,
and such decree or order shall remain unstayed and in effect for a period of
sixty (60) consecutive days; or
(d) the commencement by the Issuer of a voluntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or hereafter in
effect, or the consent by the Issuer to the entry of an order for relief in an
involuntary case under any such law, or the consent by the Issuer to the
appointment of or the taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator or similar official of the Issuer,
or the making by the Issuer of any general assignment for the benefit of
creditors, or the failure by the Issuer generally to pay, or the admission in
writing by the Issuer of its inability to pay, its debts as such debts become
due, or the taking of action by the Issuer in furtherance of any of the
foregoing; or
(e) default in the observance or performance of any covenant or agreement
of the Issuer made in this Indenture made in respect of the Notes of such Series
(other than a covenant or agreement, a default in the observance or performance
of which is elsewhere in this Section 5.2 specifically dealt with) (all of such
covenants and agreements in the Indenture which are not expressly stated to be
for the benefit of a particular Series being deemed to be in respect of the
Notes of all Series for this purpose) and such default shall continue or not be
cured for a period of sixty (60) days after there shall have been given, by
registered or certified mail, return receipt requested to the Issuer by the
Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of
Notes representing at least 25% of the Outstanding Amount of all Series, a
written notice specifying such default and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder and, as a result of
such default, the interests of the Holders of the Notes are materially and
adversely affected and continue to be materially and adversely affected during
the 60-day period; or
(f) any additional events specified in the Indenture Supplement related to
such Series.
28
The Issuer shall deliver to a Responsible Officer of the Indenture Trustee,
within five (5) days after the occurrence thereof, written notice in the form of
an Officer's Certificate of any event which with the giving of notice and the
lapse of time would become an Event of Default, its status and what action the
Issuer is taking or proposes to take with respect thereto.
Section 5.3. Acceleration of Maturity; Rescission and Annulment. If an
--------------------------------------------------
Event of Default described in paragraph (a), (b) or (e) of Section 5.2 should
------------ --- --- -----------
occur and be continuing with respect to a Series, then and in every such case
the Indenture Trustee or the Holders of Notes representing more than 50% of the
Outstanding Amount of such Series may declare all the Notes of such Series to be
immediately due and payable, by a notice in writing to the Issuer (and to a
Responsible Officer of the Indenture Trustee if declared by Noteholders), and
upon any such declaration the unpaid principal amount of such Notes, together
with accrued and unpaid interest thereon through the date of acceleration, shall
become immediately due and payable.
If an Event of Default described in paragraph (c) or (d) of Section 5.2
------------- --- -----------
should occur and be continuing, then the unpaid principal of the Notes, together
with accrued and unpaid interest thereon through the date of acceleration, shall
automatically become due and payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided, the
Holders of Notes representing more than 50% of the Outstanding Amount of such
Series, by written notice to the Issuer and a Responsible Officer of the
Indenture Trustee, may rescind and annul such declaration and its consequences;
provided, that:
(a) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(i) all payments of principal of and interest on all Notes and all
other amounts that would then be due hereunder or upon such Notes if the
Event of Default giving rise to such acceleration had not occurred; and
(ii) all sums paid or advanced by the Indenture Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the principal of
the Notes that has become due solely by such acceleration, have been cured or
waived as provided in Section 5.13.
29
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
Section 5.4. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if (i) default is made in the payment of any
interest on any Note when the same becomes due and payable, and such default
continues for a period of thirty-five (35) days following the date on which such
interest became due and payable, or (ii) default is made in the payment of
principal of any Note, if and to the extent not previously paid, when the same
becomes due and payable on the Series Termination Date, the Issuer will, upon
demand of the Indenture Trustee, pay to it, for the benefit of the Holders of
the Notes of the affected Series, the whole amount then due and payable on such
Notes for principal and interest, with interest upon the overdue principal, and,
to the extent payment at such rate of interest shall be legally enforceable,
interest upon overdue installments of interest, as specified in the related
Indenture Supplement, and in addition thereto will pay such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may institute a Proceeding for the collection of the sums so due and
unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon such Notes and collect
in the manner provided by law out of the property of the Issuer or other obligor
upon such Notes, wherever situated, the moneys adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture Trustee
may, as more particularly provided in Section 5.5, in its discretion, proceed to
protect and enforce its rights and the rights of the Noteholders of the affected
Series, by such appropriate Proceedings as the Indenture Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Indenture Trustee by this Indenture or by
law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes of the affected Series, or any Person having or claiming
an ownership interest in the Collateral, Proceedings under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or in case a
receiver, conservator, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator, custodian or other similar official shall have
30
been appointed for or taken possession of the Issuer or its property or such
other obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes of such Series, or to the
creditors or property of the Issuer or such other obligor, the Indenture
Trustee, irrespective of whether the principal of any Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Indenture Trustee shall have made any demand pursuant to the
provisions of this Section 5.4, shall be entitled and empowered, by intervention
in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes of
such Series and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation to the
Indenture Trustee and each predecessor Indenture Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by the
Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence or willful misconduct) and of the Noteholders of
such Series allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes of such Series in any election
of a trustee, a standby trustee or Person performing similar functions
in any such Proceedings; (iii) to collect and receive any moneys or
other property payable or deliverable on any such claims and to
distribute all amounts received with respect to the claims of the
Noteholders of such Series and of the Indenture Trustee on their
behalf; and
(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the
Indenture Trustee or the Holders of Notes of such Series allowed in
any judicial Proceedings relative to the Issuer, its creditors and its
property;
and any trustee, receiver, conservator, liquidator, custodian, assignee,
sequestrator or other similar official in any such Proceeding is hereby
authorized by each of such Noteholders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Indenture Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Indenture Trustee, each predecessor Indenture Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Indenture Trustee and each predecessor Indenture
Trustee except as a result of negligence or willful misconduct.
31
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for 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 Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
benefit of the Holders of the Notes of the affected Series as provided herein.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes of the affected Series, and it
shall not be necessary to make any such Noteholder a party to any such
Proceedings.
Section 5.5. Remedies; Priorities.
---------------------
(a) If an Event of Default shall have occurred and be continuing with
respect to any Series, and the Notes of such Series have been accelerated
pursuant to Section 5.3, the Indenture Trustee may do one or more of the
following (subject to Sections 5.6 and 12.16):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes
of the affected Series or under this Indenture with respect thereto,
whether by declaration or otherwise, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such Notes moneys
adjudged due;
(ii) take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee and the Holders of the Notes
of the affected Series;
(iii) cause the Issuer to sell Principal Receivables and the related
Finance Charge Receivables (or interests therein) in an amount equal to the
Collateral Amount of the accelerated Series in accordance with Section
5.16;
32
provided, however, that the Indenture Trustee may not exercise the remedy
-----------------
described in subparagraph (iii) above unless (A) (1) the Holders of Notes
representing 100% of the Outstanding Amount of the affected Series consent in
writing thereto, (2) the Indenture Trustee determines that any proceeds of such
exercise distributable to the Noteholders of the affected Series are sufficient
to discharge in full all amounts then due and unpaid upon the Notes for
principal and interest and is directed to exercise this remedy by at the
direction of Holders of Notes representing more than 50% of the Outstanding
Amount of such Series, or (3) the Indenture Trustee determines that the
Collateral may not continue to provide sufficient funds for the payment of
principal of and interest on the Notes as they would have become due if the
Notes had not been declared due and payable, and the Indenture Trustee obtains
the consent of the Holders of Notes representing at least 66-2/3% of the
Outstanding Amount of each Class of such Series and (B) the Indenture Trustee
has obtained an Opinion of Counsel to the effect that the exercise of such
remedy (1) will not cause the Issuer or any portion thereof to be deemed to be
an association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes and (2) complies with applicable federal and state
securities laws. In determining such sufficiency or insufficiency with respect
to clause (A)(2) and (3), the Indenture Trustee may, but need not, obtain and
conclusively rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Collateral for such purpose.
The remedies provided in this Section 5.5(a) are the exclusive remedies
--------------
provided to the Noteholders with respect to the Collateral and each of the
Noteholders (by their acceptance of their respective interests in the Notes) or
the Indenture Trustee hereby expressly waive any other remedy that might have
been available under the applicable UCC.
(b) The Indenture Trustee may, upon notification to the Issuer, fix a
record date and payment date for any payment to Noteholders of the affected
Series pursuant to this Section 5.5. At least fifteen (15) days before such
------------
record date, the Indenture Trustee shall mail or send by facsimile to each such
Noteholder a notice that states the record date, the payment date and the amount
to be paid.
Section 5.6. Optional Preservation of the Collateral. If the Notes of any
---------------------------------------
Series have been declared to be due and payable under Section 5.3 following an
-----------
Event of Default and such declaration and its consequences have not been
rescinded and annulled, and the Indenture Trustee has not received directions
from the Noteholders pursuant to Section 5.12, the Indenture Trustee may, but
------------
need not, elect to maintain possession of the portion of the Collateral which
secures such Notes and apply proceeds of the Collateral to make payments on such
Notes to the extent such proceeds are available therefor. It is the desire of
the parties hereto and the Noteholders that there be at all times sufficient
funds for the payment of principal of and interest on the Notes, and the
Indenture Trustee shall take such desire into account when determining whether
33
or not to maintain possession of the Collateral. In determining whether to
maintain possession of the Collateral, the Indenture Trustee may, but need not,
obtain and conclusively rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Assets for such purpose.
Section 5.7. Limitation on Suits. No Noteholder shall have any right to
-------------------
institute any proceedings, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(a) the Holders of Notes representing not less than 25% of the Outstanding
Amount of each affected Series have made written request to the Indenture
Trustee to institute such proceeding in its own name as indenture trustee;
(b) such Noteholder or Noteholders has previously given written notice to
the Indenture Trustee of a continuing Event of Default;
(c) such Noteholder or Noteholders has offered to the Indenture Trustee
indemnity satisfactory to it against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Indenture Trustee for sixty (60) days after its receipt of such
request and offer of indemnity has failed to institute any such Proceeding; and
(e) no direction inconsistent with such written request has been given to
the Indenture Trustee during such 60-day period by the Holders of Notes
representing more than 50% of the Outstanding Amount of such Series;
it being understood and intended that no one or more Noteholders of the affected
Series 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 Noteholders of such Series or to obtain or to seek to obtain
priority or preference over any other Noteholders of such Series or to enforce
any right under this Indenture, except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two (2) or more groups of Noteholders
of such affected Series, each representing no more than 50% of the Outstanding
Amount of such Series, the Indenture Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
34
Section 5.8. Unconditional Rights of Noteholders to Receive Principal and
------------------------------------------------------------
Interest. Notwithstanding any other provision in this Indenture, each Noteholder
--------
shall have the right which is absolute and unconditional to receive payment of
the principal of and interest in respect of 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 Noteholder.
Section 5.9. Restoration of Rights and Remedies. If the Indenture 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, or
has been determined adversely to the Indenture Trustee or to such Noteholder,
then and in every such case the Issuer, the Indenture Trustee and the Noteholder
shall, subject to any determination in such Proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Indenture Trustee and the Noteholders shall continue as
though no such Proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative. No right, remedy, power or
------------------------------
privilege herein conferred upon or reserved to the Indenture Trustee or to the
Noteholders is intended to be exclusive of any other right, remedy, power or
privilege, and every right, remedy, power or privilege shall, to the extent
permitted by law, be cumulative and in addition to every other right, remedy,
power or privilege given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or exercise of any right or remedy shall not
preclude any other further assertion or the exercise of any other appropriate
right or remedy.
Section 5.11. Delay or Omission Not Waiver. No failure to exercise and no
----------------------------
delay in exercising, on the part of the Indenture Trustee or of any Noteholder
or other Person, any right or remedy occurring hereunder upon any Event of
Default shall impair any such right or remedy or constitute a waiver thereof of
any such Event of Default or an acquiescence therein. Every right and remedy
given by this Article V or by law to the Indenture Trustee or to the Noteholders
---------
may be exercised from time to time, and as often as may be deemed expedient, by
the Indenture Trustee or by the Noteholders, as the case may be.
Section 5.12. Rights of Noteholders to Direct Indenture Trustee. The
-------------------------------------------------
Holders of Notes representing more than 50% of the Outstanding Amount of any
affected Series shall have the right to direct in writing the time, method and
place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to such Series or exercising any trust or power conferred
on the Indenture Trustee with respect to such Series; provided, however, that
-------- -------
subject to Section 6.1:
-----------
(a) Indenture Trustee shall have the right to decline any such direction
if the Indenture Trustee, after being advised by counsel, determines that the
action so directed is in conflict with any rule of law or with this Indenture,
and
35
(b) the Indenture Trustee shall have the right to decline any such
direction if the Indenture Trustee in good faith shall, by a Responsible Officer
of the Indenture Trustee, determine that the Proceedings so directed would be
illegal or involve the Indenture Trustee in personal liability or be unjustly
prejudicial to the Noteholders not parties to such direction.
Section 5.13. Waiver of Past Defaults. Prior to the declaration of the
------ -- -------------
acceleration of the maturity of the Notes of the affected Series as provided in
Section 5.3, Holders of Notes representing more than 50% of the Outstanding
-----------
Amount of the Notes of such Series may, on behalf of all such Noteholders, waive
in writing any past default with respect to such Notes and its consequences,
except a default:
(a) in the payment of the principal or interest in respect of any Note of
such Series, or
(b) in respect of a covenant or provision hereof that under Section 10.2
------------
cannot be modified or amended without the consent of the Noteholder of each
Outstanding Note affected.
Upon any such written 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; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs. All parties to this Indenture agree,
---------------------
and each Noteholder by its acceptance thereof 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 Indenture
Trustee for any action taken, suffered or omitted by it as Indenture 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 attorneys' fees, against any party litigant (other than the
Indenture Trustee) 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 5.14 shall not apply to any suit instituted by the Indenture
------------
Trustee, to any suit instituted by any Noteholder, or group of Noteholders (in
compliance with Section 5.8), holding Notes representing more than 10% of the
-----------
Outstanding Amount of the affected Series, or to any suit instituted by any
Noteholder for the enforcement of the payment of the principal or interest in
respect of any Note on or after the Distribution Date on which any of such
amounts was due (or, in the case of redemption, on or after the applicable
Redemption Date).
36
Section 5.15. 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 adversely affect the covenants or the performance of 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 Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.16. Sale of Receivables.
-------------------
(a) The method, manner, time, place and terms of any sale of Receivables
pursuant to Section 5.5(a)(iii) shall be commercially reasonable. The Indenture
------------------
Trustee may from time to time postpone any sale by public announcement made at
the time and place of such sale. The Indenture Trustee hereby expressly waives
its right to any amount fixed by law as compensation for any sale.
(b) The Indenture Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the Issuer in connection with any sale of Receivables
pursuant to Section 5.5(a)(iii). No purchaser or transferee at any such sale
------------------
shall be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
(c) In its exercise of the foreclosure remedy pursuant to Section
-------
5.5(a)(iii), the Indenture Trustee shall solicit bids for the sale of Principal
-----------
Receivables and the related Finance Charge Receivables (or interests therein) in
any amount equal to the Collateral Amount of the affected Series of Notes at the
time of sale. The Seller or any of its affiliates shall be entitled to
participate in, and to receive from the Indenture Trustee a copy of each other
bid submitted in connection with, such bidding process; provided that (i) at
--------
least one participant other than the Seller and any of its affiliates must
submit at bona fide offer, and (ii) the Seller and any of its affiliates are
prohibited from bidding an amount which exceeds fair value for the transferred
assets. The Indenture Trustee shall sell such Receivables (or interests therein)
to the bidder with the highest cash purchase offer. The proceeds of any such
sale shall be applied as specified in the applicable Indenture Supplement.
Section 5.17. Action on Notes. The Indenture Trustee's right to seek and
---------------
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking or obtaining of or application for any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee 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. Any
37
money or property collected by the Indenture Trustee shall be applied as
specified in the applicable Indenture Supplement.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.1. Duties of the Indenture Trustee.
-------------------------------
(a) If an Event of Default has occurred and is continuing and a Trustee
Officer shall have actual knowledge or written notice of such Event of Default,
the Indenture Trustee shall exercise 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
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture 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
Indenture Trustee; and
(ii) in the absence of bad faith or negligence on its part, the
Indenture 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 Indenture Trustee and conforming to the
requirements of this Indenture; provided, however, the Indenture Trustee,
-------- -------
upon receipt of any resolutions, certificates, statements, opinions,
reports, documents, orders or other instruments furnished to the Indenture
Trustee which are specifically required to be furnished pursuant to any
provision of this Indenture or any Indenture Supplement, shall examine them
to determine whether they substantially conform to the requirements of this
Indenture or any Indenture Supplement.
(c) In case a Pay Out Event has occurred and is continuing and a Trustee
Officer shall have actual knowledge or written notice of such Pay Out Event, the
Indenture 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
such person's own affairs.
(d) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
38
(i) this Section (d) shall not be construed to limit the effect of
-----------
Section (a) of this Section 6.1;
----------- -----------
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Trustee Officer, unless it shall be proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the Indenture and/or the direction of the Holders of Notes
or for exercising any trust or power conferred upon the Indenture Trustee,
under this Indenture. The Indenture Trustee shall not be liable for any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Servicer, the Seller or the Trust in
compliance with the terms of this Indenture or any Indenture Supplement.
(e) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur any liability, financial or
otherwise, 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.
(f) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to Sections (a), (b), (c) and (d) of this Section
------------ --- --- --- -------
6.1.
---
(g) Except as expressly provided in this Indenture, the Indenture Trustee
shall have no power to vary the Collateral, including by (i) accepting any
substitute payment obligation for a Receivable initially transferred to the
Trust under the Transfer and Servicing Agreement, (ii) adding any other
investment, obligation or security to the Trust or (iii) withdrawing from the
Issuer any Receivable (except as otherwise provided in the Transfer and
Servicing Agreement).
(h) The Indenture Trustee shall have no responsibility or liability for
investment losses on Permitted Investments (other than Permitted Investments on
which the institution acting as Indenture Trustee is an obligor). The Indenture
Trustee shall have no obligation to invest and reinvest any cash held in the
absence of timely and specific written investment direction from the Issuer. In
no event shall the Indenture Trustee be liable for the selection of investments
or for investment losses incurred thereon. The Indenture Trustee shall have no
liability in respect of losses incurred as a result of the liquidation of any
investment prior to its stated maturity or the failure of the Issuer to provide
timely written investment direction.
39
(i) The Indenture Trustee shall notify each Rating Agency (i) of any
change in any rating of the Notes by any other Rating Agency of which a
Responsible Officer of the Indenture Trustee has actual knowledge, and (ii)
immediately of the occurrence of any Event of Default or Pay Out Event of which
a Responsible Officer of the Indenture Trustee has actual knowledge of or has
actual notice from the Servicer of potential Pay Out Events or Events of
Default.
(j) For all purposes under this Indenture, the Indenture Trustee shall not
be deemed to have notice or knowledge of any Event of Default, Pay Out Event or
Servicer Default unless a Trustee Officer assigned to and working in the
Corporate Trust Office of the Indenture Trustee has actual knowledge thereof or
has received written notice thereof. For purposes of determining the Indenture
Trustee's responsibility and liability hereunder, any reference to an Event of
Default, Pay Out Event or Servicer Default shall be construed to refer only to
such event of which the Indenture Trustee is deemed to have notice as described
in this Section 6.1(j).
--------------
Section 6.2. Notice of Pay Out Event or Event of Default. Upon the
-------------------------------------------
occurrence of any Pay Out Event or Event of Default of which a Trustee Officer
has actual knowledge or has received written notice thereof, the Indenture
Trustee shall transmit by mail to all Noteholders as their names and addresses
appear on the Note Register and the Rating Agencies, notice of such Pay Out
Event or Event of Default hereunder known to the Indenture Trustee within thirty
(30) days after it occurs or within ten (10) Business Days after it receives
such notice or obtains actual notice, if later.
Section 6.3. Rights of Indenture Trustee. Except as otherwise provided in
---------------------------
Section 6.1:
-----------
(a) the Indenture Trustee may conclusively rely and shall fully be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, note or other paper or document reasonably believed by it to be
genuine and to have been signed or presented by the proper party or parties;
(b) whenever in the administration of this Indenture the Indenture Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Indenture Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, conclusively rely upon an Officer's Certificate of the Issuer. The
Issuer shall provide a copy of such Officer's Certificate to the Noteholders at
or prior to the time the Indenture Trustee receives such Officer's Certificate;
(c) as a condition to the taking, suffering or omitting of any action by
it hereunder, the Indenture Trustee may consult with counsel and the advice of
such
40
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;
(d) the Indenture Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture or to honor the request or
direction of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Indenture 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 Indenture Trustee at the written
direction of one or more of the Noteholders and at the expense of the Issuer, in
its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Indenture Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Issuer and the Servicer, personally or by
agent or attorney;
(f) the Indenture 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 Indenture Trustee shall not be
responsible for any (i) misconduct or negligence on the part of any agent,
attorney, custodians or nominees appointed with due care by it hereunder or (ii)
the supervision of such agents, attorneys, custodians or nominees after such
appointment with due care;
(g) the Indenture Trustee shall not be liable for any actions taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights conferred upon the Indenture Trustee by this
Indenture; and
(h) in the event that the Indenture Trustee is also acting as Paying Agent
and Transfer Agent and Registrar, the rights and protections afforded to the
Indenture Trustee pursuant to this Article VI shall also be afforded to such
----------
Paying Agent and Transfer Agent and Registrar.
Section 6.4. Not Responsible for Recitals or Issuance of Notes. The
-------------------------------------------------
recitals contained herein and in the Notes, except the certificate of
authentication of the Indenture Trustee, shall be taken as the statements of the
Issuer, and the Indenture Trustee assumes no responsibility for their
correctness. The Indenture Trustee makes no representation as to the validity or
sufficiency of the Agreement, the Notes, or any related document. The Indenture
Trustee shall not be accountable for the use or application by the Issuer of the
proceeds from the Notes.
41
Section 6.5. May Hold Notes. The Indenture Trustee shall not in its
--------------
individual capacity, but may in a fiduciary capacity, become the owner or
pledgee of Notes and may otherwise deal with the Issuer with the same rights it
would have if it were not Indenture Trustee, Paying Agent, Transfer Agent and
Registrar or such other agent. Any Paying Agent, Transfer Agent and Registrar or
any other agent of the Issuer, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with the Issuer with
the same rights it would have if it were not Indenture Trustee, Paying Agent,
Transfer Agent and Registrar or such other agent.
Section 6.6. Money Held in Trust. Money held by the Indenture Trustee in
-------------------
trust hereunder need not be segregated from other funds held by the Indenture
Trustee in trust hereunder except to the extent required herein or required by
law. The Indenture Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed upon in writing by the
Indenture Trustee and the Issuer.
Section 6.7. Compensation, Reimbursement and Indemnification. The Servicer
-----------------------------------------------
shall pay to the Indenture Trustee from time to time reasonable compensation for
all services rendered by the Indenture Trustee and the Authenticating Agent
under this Agreement (which compensation shall not be limited by any law on
compensation of a trustee of an express trust). The Servicer shall reimburse the
Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by
it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Issuer shall direct the Servicer to indemnify,
defend and hold harmless, and the Servicer shall indemnify the Indenture Trustee
and its officers, directors, employees and agents against any and all loss,
liability, expense, damage or claim (including the fees of either in-house
counsel or outside counsel) incurred by it in connection with the administration
of this trust and the performance of its duties hereunder and under any other
Transaction Document. The Indenture Trustee shall notify the Issuer and the
Servicer promptly of any claim for which it may seek indemnity. Failure by the
Indenture Trustee to so notify the Issuer and the Servicer shall not relieve the
Issuer or the Servicer of its obligations hereunder unless such loss, liability
or expense could have been avoided with such prompt notification and then only
to the extent of such loss, expense or liability which could have been so
avoided. The Servicer shall defend any claim against the Indenture Trustee, the
Indenture Trustee may have separate counsel and, if it does, the Servicer shall
pay the fees and expenses of such counsel. Neither the Issuer nor the Servicer
need reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee's own willful
misconduct or negligence.
The Servicer's payment obligations to the Indenture Trustee pursuant to
this Section 6.7 shall survive the discharge of this Indenture or earlier
-----------
resignation or
42
removal of the Indenture Trustee. When the Indenture Trustee incurs expenses
after the occurrence of a Default specified in Section 5.2(c) or (d) with
-------------- ---
respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
federal or state bankruptcy, insolvency or similar law.
Notwithstanding anything herein to the contrary, the Indenture Trustee's
right to enforce any of the Servicer's payment obligations pursuant to this
Section 6.7 shall be subject to the provisions of Section 12.16.
----------- -------------
Section 6.8. Replacement of Indenture Trustee. No resignation or removal of
--------------------------------
the Indenture Trustee and no appointment of a successor Indenture Trustee shall
become effective until the acceptance of appointment by the successor Indenture
Trustee pursuant to this Section 6.8. The Indenture Trustee may resign at any
-----------
time by giving thirty (30) days written notice to the Issuer. The Holders of
Notes representing more than 50% of the Outstanding Amount of all Series may
remove the Indenture Trustee by so notifying the Indenture Trustee in writing
and may appoint a successor Indenture Trustee. The [Administrator] shall remove
the Indenture Trustee upon written notice if:
(i) the Indenture Trustee fails to comply with Section 6.11;
------------
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver of the Indenture Trustee or of its property shall be
appointed, or any public officer takes charge of the Indenture Trustee or
its property or its affairs for the purpose of rehabilitation, conservation
or liquidation; or
(iv) the Indenture Trustee otherwise becomes legally unable to act.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the
office of Indenture Trustee for any reason (the Indenture Trustee in such event
being referred to herein as the retiring Indenture Trustee), the Administrator
shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, the Servicer and to the Issuer.
Thereupon the resignation or removal of the retiring Indenture Trustee shall
become effective, and the successor Indenture Trustee shall have all the rights,
powers and duties of the Indenture Trustee under this Indenture. The successor
Indenture Trustee shall mail a notice of its succession to Noteholders. The
retiring Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee, subject to the payment of
any an all amounts then due and owing to the Indenture Trustee.
43
If a successor Indenture Trustee does not take office within sixty (60)
days after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of Notes representing more than 50%
of the Outstanding Amount of all Series may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
------------
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section 6.8, the Issuer's obligations under Section 6.7 shall continue for the
----------- -----------
benefit of the retiring Indenture Trustee.
Section 6.9. Successor Indenture Trustee by Merger. If the Indenture
-------------------------------------
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; provided that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11. The Indenture Trustee shall provide the Rating
------------
Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion,
consolidation or transfer to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor Indenture Trustee and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes in the name of the successor to the Indenture Trustee; and in all such
cases such certificates shall have the full force which it is anywhere in the
Notes or in this Indenture provided that the certificate of the Indenture
Trustee shall have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
---------------------------------------------------------
Trustee.
-------
(a) Notwithstanding any other provisions of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Collateral may at the time be located, the Indenture Trustee
shall have the power and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Collateral, and to vest in such
Person or Persons, in such capacity and for the benefit of the Noteholders, such
title to the Collateral, or any part hereof, and, subject to the other
provisions of this Section 6.10, such powers, duties, obligations, rights and
------------
trusts as the
44
Indenture Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 6.11 and no notice to Noteholders of the
------------
appointment of any co-trustee or separate trustee shall be required under
Section 6.8.
-----------
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised or
performed by the Indenture Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Indenture Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed the Indenture Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Collateral or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee, but solely at the
direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder;
(iii) the Indenture Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee; and
(iv) The Indenture Trustee shall not be liable for any act or
failure to act on the part of any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
----------
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Indenture
45
on its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Indenture Trustee, to the extent permitted by law, without the appointment of a
new or successor trustee.
Section 6.11. Eligibility; Disqualification. The Indenture Trustee shall at
-----------------------------
all times satisfy the requirements of TIA (S)310(a). The Indenture Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition and either its long-term
unsecured debt shall be rated at least Baa3 by Moody's and BBB- by Standard &
Poor's or its short-term debt shall be rated at least P-2 by Moody's or A-2 by
Standard & Poor's. The Indenture Trustee shall comply with TIA (S)310(b),
including the optional provision permitted by the second sentence of TIA
(S)310(b)(9); provided, however, that there shall be excluded from the operation
of TIA (S)310(b)(1) any indenture or indentures under which other securities of
the Issuer are outstanding if the requirements for such exclusion set forth in
TIA (S)310(b)(1) are met.
Section 6.12. Preferential Collection of Claims Against. The Indenture
-----------------------------------------
Trustee shall comply with TIA (S)311(a), excluding any creditor relationship
listed in TIA (S)311(b). An Indenture Trustee who has resigned or been removed
shall be subject to TIA (S)311(a) to the extent indicated.
Section 6.13. Representations and Covenants of the Indenture Trustee. The
------------------------------------------------------
Indenture Trustee represents, warrants and covenants that:
(i) the Indenture Trustee is a banking corporation duly organized
and validly existing under the laws of the State of New York;
(ii) The Indenture Trustee has full power and authority to deliver
and perform this Indenture and has taken all necessary action to authorize
the execution, delivery and performance by it of this Indenture and other
Transaction Documents to which it is a party; and
(iii) Each of this Indenture and the other Transaction Documents to
which it is a party has been duly executed and delivered by the Indenture
Trustee and constitutes its legal, valid and binding obligation in
accordance with its terms.
Section 6.14. Custody of the Collateral. The Indenture Trustee shall hold
-------------------------
such of the Trust Estate as consists of instruments, deposit accounts,
negotiable documents, money, goods, letters of credit, and advices of credit in
the State of Illinois. The Indenture Trustee shall hold such of the Trust Estate
as constitutes investment property through a securities intermediary, which
securities intermediary shall agree with the Indenture Trustee that (a) such
investment property shall at all times be credited to a
46
securities account of the Indenture Trustee, (b) such securities intermediary
shall treat the Indenture Trustee as 48 entitled to exercise the rights that
comprise each financial asset credited to such securities account, (c) all
property credited to such securities account shall be treated as a financial
asset, (d) such securities intermediary shall comply with entitlement orders
originated by the Indenture Trustee without the further consent of any other
person or entity, (e) such securities intermediary will not agree with any
person or entity other than the Indenture Trustee to comply with entitlement
orders originated by such other person or entity, (f) such securities accounts
and the property credited thereto shall not be subject to any lien, security
interest, or right of set-off in favor of such securities intermediary or anyone
claiming through it (other than the Indenture Trustee), and (g) such agreement
shall be governed by the laws of the State of Illinois. Terms used in the
preceding sentence that are defined in the Illinois UCC and not otherwise
defined herein shall have the meaning set forth in the Illinois UCC. Except as
permitted by this Section 6.14, the Indenture Trustee shall not hold any part of
------------
the Trust Estate through an agent or a nominee.
ARTICLE VII
NOTEHOLDERS' LIST AND REPORTS BY
INDENTURE TRUSTEE AND ISSUER
Section 7.1. Issuer to Furnish Indenture Trustee Names and Addresses of
----------------------------------------------------------
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
-----------
Trustee (a) upon each transfer of a Note, a list, in such form as the Indenture
Trustee may reasonably require, of the names, addresses and taxpayer
identification numbers of the Noteholders as they appear on the Note Register as
of such Record Date, and (b) at such other times, as the Indenture Trustee may
request in writing, within ten (10) days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than ten (10)
days prior to the time such list is furnished; provided, however, that for so
-------- -------
long as the Indenture Trustee is the Transfer Agent and Registrar, the Indenture
Trustee shall furnish to the Issuer such list in the same manner prescribed in
clause (b) above.
Section 7.2. Preservation of Information; Communications to Noteholders.
----------------------------------------------------------
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained in
the most recent list furnished to the Indenture Trustee as provided in Section
-------
7.1 and the names, addresses and taxpayer identification numbers of the
---
Noteholders received by the Indenture Trustee in its capacity as Transfer Agent
and Registrar. The Indenture Trustee may destroy any list furnished to it as
provided in Section 7.1 upon receipt of a new list so furnished.
-----------
47
(b) Noteholders may communicate, pursuant to TIA (S)312(b), with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Transfer Agent and Registrar
shall have the protection of TIA (S)312(c).
Section 7.3. Reports by Issuer.
-----------------
(a) The Issuer shall:
(i) file with the Indenture Trustee, within fifteen (15) days after
the Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Issuer may be
required to file with the Commission pursuant to Section 13 or 15(d) of the
---------- -----
Exchange Act;
(ii) file with the Indenture Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the Commission
such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA (S)313(c)) such
summaries of any information, documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a) as may
--------------
be required by rules and regulations prescribed from time to time by the
Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
(c) Delivery of such reports, information and documents to the Indenture
Trustee is for informational purposes only and the Indenture Trustee's receipt
of such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Issuer's compliance with any of the covenants hereunder.
Section 7.4. Reports by Indenture Trustee. If required by TIA (S)313(a),
----------------------------
within sixty (60) days after each March 31 beginning with March 31, 2001, the
Indenture Trustee shall mail to each Noteholder as required by TIA (S)313(c) a
brief report dated as of such date that complies with TIA (S)313(a). The
Indenture Trustee also shall comply with TIA (S)313(b).
48
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 8.1. Collection of Money. Except as otherwise expressly provided
-------------------
herein and in the related Indenture Supplement, the Indenture Trustee may demand
payment or delivery of, and shall receive and collect, directly and without
intervention or assistance of any fiscal agent or other intermediary, all money
and other property payable to or receivable by the Indenture Trustee pursuant to
this Indenture. The Indenture Trustee shall hold all such money and property
received by it in trust for the Noteholders and shall apply it as provided in
this Indenture. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or performance under the Transfer
and Servicing Agreement or any other Transaction Document, the Indenture Trustee
may, and upon the written request of the Holders of Notes representing a
majority of the Outstanding Amount of the affected Series shall, subject to
Sections 6.1(e) and 6.3(d) take such action as may be appropriate to enforce
--------------- ------
such payment or performance, including the institution and prosecution of
appropriate Proceedings. Any such action shall be without prejudice to any right
to claim a Pay Out Event or a Default or Event of Default under this Indenture
and to proceed thereafter as provided in Article V.
---------
Section 8.2. Rights of Noteholders. The Collateral shall secure the rights
---------------------
of the Holders of the Notes of each Series to receive the portion of Collections
allocable to the Noteholders of such Series pursuant to this Indenture and the
related Indenture Supplement, funds and other property credited to the
Collection Account and the Excess Funding Account (or any subaccount thereof)
allocable to the Noteholders of such Series pursuant to this Indenture and such
Indenture Supplement, funds and other property credited to any related Series
Account and funds available pursuant to any related Series Enhancement, it being
understood that, except as specifically set forth in the Indenture Supplement
with respect thereto, the Notes of any Series or Class shall not be secured by
any interest in any Series Account or Series Enhancement pledged for the benefit
of any other Series or Class.
Section 8.3. Establishment of Collection Account and Excess Funding
------------------------------------------------------
Account.
-------
(a) The Servicer, for the benefit of the Noteholders, shall establish and
maintain with the Indenture Trustee or its nominee in the name of the Indenture
Trustee, on behalf of the Issuer, a Qualified Account (including any subaccount
thereof) bearing
49
a designation clearly indicating that the funds and other property credited
thereto are held for the benefit of the Noteholders (the "Collection Account").
The Indenture Trustee shall possess all right, title and interest in all monies,
instruments, investment property, documents, certificates of deposit and other
property credited from time to time to the Collection Account and in all
proceeds, earnings, income, revenue, dividends and distributions thereof for the
benefit of the Noteholders.
The Collection Account shall be under the sole dominion and control of the
Indenture Trustee for the benefit of the Noteholders. Except as expressly
provided in this Indenture and the Transfer and Servicing Agreement, the
Servicer agrees that it shall have no right of setoff or banker's lien against,
and no right to otherwise deduct from, any funds held in the Collection Account
for any amount owed to it by the Indenture Trustee, the Issuer, any Noteholder
or any Series Enhancer. If, at any time, the Collection Account ceases to be a
Qualified Account and the same is actually known to a Responsible Officer of the
Indenture Trustee, the Indenture Trustee (or the Servicer on its behalf) shall
within ten (10) Business Days (or such longer period, not to exceed thirty (30)
calendar days, as to which each Rating Agency may consent) establish a new
Collection Account meeting the conditions specified above, transfer any monies,
documents, instruments, investment property, certificates of deposit and other
property to such new Collection Account and from the date such new Collection
Account is established, it shall be the "Collection Account." Pursuant to the
------------------
authority granted to the Servicer in Section 3.1(b) of the Transfer and
--------------
Servicing Agreement, the Servicer shall have the power, revocable by the
Indenture Trustee, to make withdrawals and payments from the Collection Account
and to instruct the Indenture Trustee in writing to make withdrawals and
payments from the Collection Account for the purposes of carrying out the
Servicer's or the Indenture Trustee's duties hereunder and under the Transfer
and Servicing Agreement, as applicable. The Servicer shall reduce deposits into
the Collection Account payable by the Seller on any Deposit Date to the extent
the Seller is entitled to receive funds from the Collection Account on such
Deposit Date.
Funds on deposit in the Collection Account (other than investment earnings
and amounts deposited pursuant to Section 2.6, 6.1, or 7.1 of the Transfer and
----------- --- ---
Servicing Agreement or Section 11.2 of this Indenture) shall at the written
------------
direction of the Servicer be invested by the Indenture Trustee or its nominee in
Permitted Investments selected by the Servicer. All such Permitted Investments
shall be held by the Indenture Trustee for the benefit of the Noteholders
pursuant to Section 6.14 and 6.1(h). Investments of funds representing
------------ ------
Collections collected during any Monthly Period shall be invested in Permitted
Investments that will mature so that such funds will be available no later than
the close of business on each monthly Transfer Date following such Monthly
Period in amounts sufficient to the extent of such funds to make the required
distributions on the following Distribution Date. No such Permitted Investment
shall be disposed of prior to its maturity; provided, however, that the
-------- -------
Indenture Trustee may sell, liquidate or dispose of any such Permitted
Investment before its maturity, at
50
the written direction of the Servicer, if such sale, liquidation or disposal
would not result in a loss of all or part of the principal portion of such
Permitted Investment or if, prior to the maturity of such Permitted Investment,
a default occurs in the payment of principal, interest or any other amount with
respect to such Permitted Investment. Unless directed by the Servicer in
writing, funds deposited in the Collection Account on a Transfer Date with
respect to the immediately succeeding Distribution Date are not required to be
invested overnight. On each Distribution Date, all interest and other investment
earnings (net of losses and investment expenses) on funds on deposit in the
Collection Account shall be treated as Collections of Finance Charge Receivables
with respect to the last day of the related Monthly Period, except as otherwise
specified in any Indenture Supplement. The Indenture Trustee shall bear no
responsibility or liability for any losses resulting from investment or
reinvestment of any funds in accordance with this Section 8.3 nor for the
selection of Permitted Investments in accordance with the provisions of this
Indenture and any Indenture Supplement.
(b) The Servicer, for the benefit of the Noteholders, shall establish and
maintain with the Indenture Trustee or its nominee in the name of the Indenture
Trustee, on behalf of the Issuer, a Qualified Account (including any subaccounts
thereof) bearing a designation clearly indicating that the funds and other
property credited thereto are held for the benefit of the Noteholders (the
"Excess Funding Account"). The Indenture Trustee shall possess all right, title
----------------------
and interest in all monies, instruments, investment property, documents,
certificates of deposit and other property credited from time to time to the
Excess Funding Account and in all proceeds, dividends distributions, earnings,
income and revenue thereof for the benefit of the Noteholders. The Excess
Funding Account shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Noteholders. Except as expressly provided in this
Indenture and the Transfer and Servicing Agreement, the Servicer agrees that it
shall have no right of setoff or banker's lien against, and no right to
otherwise deduct from, any funds and other property held in the Excess Funding
Account for any amount owed to it by the Indenture Trustee, the Issuer, any
Noteholder or any Series Enhancer. If, at any time, the Excess Funding Account
ceases to be a Qualified Account and the same is actually known to a Responsible
Officer of the Indenture Trustee, the Indenture Trustee (or the Servicer on its
behalf) shall within ten (10) Business Days (or such longer period, not to
exceed thirty (30) calendar days, as to which each Rating Agency may consent)
establish a new Excess Funding Account meeting the conditions specified above,
transfer any monies, documents, instruments, investment property, certificates
of deposit and other property to such new Excess Funding Account and from the
date such new Excess Funding Account is established, it shall be the "Excess
------
Funding Account."
---------------
Funds on deposit in the Excess Funding Account shall at the written
direction of the Servicer be invested by the Indenture Trustee in Permitted
Investments selected by the Servicer. All such Permitted Investments shall be
held by the Indenture Trustee or its nominee (including any securities
intermediary) for the benefit of the Noteholders pursuant to Section 6.14 and
------------
6.1(h). Funds on deposit in the Excess Funding Account
------
51
on any Distribution Date will be invested in Permitted Investments that will
mature so that such funds will be available no later than the close of business
on the next succeeding Transfer Date. No such Permitted Investment shall be
disposed of prior to its maturity; provided, however, that the Indenture Trustee
-------- -------
may sell, liquidate or dispose of an Permitted Investment before its maturity,
at the written direction of the Servicer, if such sale, liquidation or disposal
would not result in a loss of all or part of the principal portion of such
Permitted Investment or if, prior to the maturity of such Permitted Investment,
a default occurs in the payment of principal, interest or any other amount with
respect to such Permitted Investment. Unless directed by the Servicer in
writing, funds deposited in the Excess Funding Account on a Transfer Date with
respect to the immediately succeeding Distribution Date are not required to be
invested overnight. On each Distribution Date, all interest and other investment
earnings (net of losses and investment expenses) on funds on deposit in the
Excess Funding Account shall be treated as Collections of Finance Charge
Receivables with respect to the last day of the related Monthly Period except as
otherwise specified in the related Indenture Supplement.
Section 8.4. Collections and Allocations. From and after the SMT
---------------------------
Termination Date:
(a) Collections. The Servicer will apply or will instruct the Indenture
-----------
Trustee in writing to apply all funds on deposit in the Collection Account as
described in this Article VIII and in each Indenture Supplement. Except as
------------
otherwise provided below, the Servicer shall deposit Collections into the
Collection Account as promptly as possible after the Date of Processing of such
Collections, but in no event later than the second Business Day following the
Date of Processing. Subject to the express terms of any Indenture Supplement,
but notwithstanding anything else in this Indenture or the Transfer and
Servicing Agreement to the contrary, for so long as any of the following
conditions are satisfied: (i) FCNB remains the Servicer; (ii) no Pay Out Event
has occurred; or (iii) (A) FCNB maintains a long or short term rating which is
satisfactory to each Rating Agency, or (B) the Servicer delivers to the
Indenture Trustee a letter of credit or other guaranty covering the risk that
the Servicer will not deposit Collections in the Collection Account as required
herein and the Rating Agency Condition shall be satisfied with respect to such
arrangement, the Servicer need not make the daily deposits of Collections into
the Collection Account as provided in the preceding sentence, but may make a
single deposit in the Collection Account in immediately available funds not
later than 1:00 p.m., New York City time, on the Distribution Date following the
Monthly Period with respect to which such deposit relates. Subject to the first
proviso in Section 8.5, but notwithstanding anything else in this Indenture or
-----------
the Transfer and Servicing Agreement to the contrary, with respect to any
Monthly Period, whether the Servicer is required to make deposits of Collections
pursuant to the first or the second preceding sentence, (i) the Servicer will
only be required to deposit Collections into the Collection Account up to the
aggregate amount of Collections required to be deposited into any Series Account
or, without duplication, distributed on or prior to the related
52
Distribution Date to Noteholders or to any Series Enhancer pursuant to the terms
of any Indenture Supplement or Enhancement Agreement, but the Servicer shall
account for Collections as if the full deposit had been made and (ii) if at any
time prior to such Distribution Date the amount of Collections deposited in the
Collection Account exceeds the amount required to be deposited pursuant to
clause (i) above, the Servicer will be permitted to withdraw the excess from the
----------
Collection Account and pay such amount to the Holder of the Seller Interest.
Subject to the immediately preceding sentence, the Servicer may retain its
Servicing Fee with respect to a Series and shall not be required to deposit it
in the Collection Account.
(b) Series and Seller Allocations. Finance Charge Collections, Collections
-----------------------------
of Principal Receivables and Defaulted Receivables will be allocated to each
Series of Notes and to the Holders of the Seller Interest in accordance with
this Article VIII and each Indenture Supplement, and amounts so allocated to any
------------
Series will not, except as specified in the related Indenture Supplement, be
available to the Noteholders of any other Series. All Finance Charge
Collections, Collections of Principal Receivables and Defaulted Receivables not
so allocated to any Series of Notes shall be allocated and (in the case of
Collections) paid to the Holder of the Seller Interest, except as otherwise
provided in Section 8.4(g).
--------------
(c) Allocation of Collections Between Finance Charge Receivables and
----------------------------------------------------------------
Principal Receivables. On each Business Day, the Servicer shall allocate
---------------------
Collections processed on the Accounts as Finance Charge Collections, or, in the
case of Discount Option Receivables, Collections as set forth in Section 2.8(b)
--------------
of the Transfer and Servicing Agreement. In addition all Collections which
constitute Net Recoveries, investment earnings (net of investment expenses and
losses) on the Collection Account and the Excess Funding Account and Merchant
Fees deposited into the Collection Account pursuant to Section 3.8 of the
-----------
Transfer and Servicing Agreement shall be treated as Finance Charge Collections
and allocated accordingly. The balance of the Collections processed on any
Business Day shall be allocated to Principal Receivables.
(d) Allocation of Collections of Recoveries and Defaulted Accounts. On each
--------------------------------------------------------------
Determination Date, the Servicer shall calculate the Investor Default Amount and
the amount of Net Recoveries, if any, for the preceding Monthly Period with
respect to each Series. On or before the Transfer Date next following such
Determination Date, the Servicer shall deposit the amount of Net Recoveries, if
any, in the Collection Account and allocate such amount as provided above.
(e) Adjustments for Miscellaneous Credits. The Servicer shall be obligated
-------------------------------------
to reduce or adjust, as the case may be, on a net basis, the aggregate amount of
Principal Receivables used to calculate the Seller Amount as provided in this
Section 8.4(e) (a "Credit Adjustment") with respect to any Principal Receivable
-------------- -----------------
(i) which was created in respect of merchandise refused or returned by the
Obligor thereunder, (ii) which is reduced by the Servicer by any rebate, refund,
chargeback or adjustment, (iii) as to
53
which the Obligor thereunder has asserted a counterclaim or defense and either
(x) the Servicer has agreed such counterclaim or defense is valid or (y) a final
nonappealable judgment or decree has been entered in favor of such Obligor in
respect of such counterclaim or defense by a court or arbitral body having
jurisdiction thereof, or (iv) which the Servicer has determined was created
through a fraudulent or counterfeit charge, but only if and to the extent such
fraudulent or counterfeit charges are not included as charge-offs under the
Charge Account Guidelines.
In the event that the exclusion of the amount of a Credit Adjustment from
the calculation of the Seller Amount would cause the Seller Amount to be less
than the Minimum Seller Amount, Seller shall make a deposit, no later than the
Business Day following the Date of Processing of such Credit Adjustment, in the
Collection Account in immediately available funds, in an amount equal to the
Shortfall Amount, after giving effect to such exclusion. Such deposit shall be
applied in accordance with this Article VIII and the Indenture Supplements and
------------
treated as a Principal Collection for all purposes hereof and thereof.
(f) Net Payments. So long as FCNB is the Servicer and FCNB, as Servicer, is
------------
making daily deposits to the Collection Account in accordance with Section
8.4(a), FCNB, acting as Servicer and as agent for the Holder of the Seller
Interest, may make a net payment to the Collection Account on each Deposit Date
in the amount of all Collections received by the Servicer since the previous
Deposit Date, minus all amounts payable to the Holder of the Seller Interest on
or before such day in accordance with this Article VIII and the Indenture
------------
Supplements.
(g) Unallocated Principal Collections; Excess Funding Account. On each
---------------------------------------------------------
Business Day, Principal Collections allocable to the Seller Interest in an
amount equal to the Shortfall Amount shall be deposited in the Excess Funding
Account. Thereafter, amounts in the Excess Funding Account shall be treated as
Shared Principal Collections to the extent that, after giving effect to the
application of such amount as Shared Principal Collections to the extent
provided in any Supplement, the Seller Amount would equal or exceed the minimum
Seller Amount. Shared Principal Collections shall be allocated to outstanding
Series pro rata based on the Principal Shortfall, if any, for each such Series
and the Servicer shall pay any remaining Shared Principal Collections on such
Business Day to the holder of the Seller Interest.
(h) Allocation of Deposit Obligations. If the Seller or the Servicer shall
---------------------------------
fail to make any Deposit Obligation, the amount thereof shall first be allocated
to reduce the Seller Amount until the Seller Amount equals the Minimum Seller
Amount. Any remaining shortfall shall be allocated to each Series ratably based
upon a fraction the numerator of which is the Allocation Percentage used by such
Series to allocate Finance Charge Collections and the denominator of which is
the sum of all such numerators of all Series outstanding (such allocated amount,
the "Series Share" of such shortfall). The Series Share of each series that
------------
specifies a Minimum Seller Percentage greater than zero
54
shall be allocated to reduce the Minimum Seller Amount and any Collections
otherwise allocable to the Seller Amount shall be available on a ratable basis
to such Series to cover any shortfalls arising from such failure. The Series
Share of each Series that specifies a Minimum Seller Percentage of zero shall be
allocated to such series.
Section 8.5. Shared Principal Collections. On each Distribution Date, (1)
----------------------------
the Servicer shall allocate Shared Principal Collections (as described below) to
each Principal Sharing Series, pro rata, in proportion to the Principal
Shortfalls, if any, with respect to each such Series and (2) the Servicer shall
withdraw from the Collection Account and pay to the Holders of the Seller
Interest an amount equal to the excess, if any, of (x) the aggregate amount for
all outstanding Series of Collections of Principal Receivables which the related
Indenture Supplements specify are to be treated as "Shared Principal
----------------
Collections" for such Distribution Date over (y) the aggregate amount for all
-----------
outstanding Series which the related Indenture Supplements specify are
"Principal Shortfalls" for such Series and for such Distribution Date. The
--------------------
Seller may, at its option, instruct the Indenture Trustee in writing to deposit
Shared Principal Collections which are otherwise payable to the Holders of the
Seller Interest pursuant to the provisions set forth above into the Excess
Funding Account.
Section 8.6. Excess Finance Charge Collections. On each Distribution Date,
---------------------------------
(a) the Servicer shall allocate Excess Finance Charge Collections (as described
below) to each Excess Allocation Series, pro rata, in proportion to the Finance
Charge Shortfalls (as described below), if any, with respect to each such Series
and (b) the Servicer shall withdraw from the Collection Account and pay to the
Holders of the Seller Interest an amount equal to the excess, if any, of (x) the
aggregate amount for all outstanding Series of Collections of Finance Charge
Receivables which the related Supplements specify are to be treated as "Excess
------
Finance Charge Collections" for such Distribution Date over (y) the aggregate
--------------------------
amount for all outstanding Series which the related Supplements specify are
"Finance Charge Shortfalls" for such Series and such Distribution Date;
-------------------------
provided, however, that the sharing of Excess Finance Charge Collections among
-------- -------
Series will continue only until such time, if any, at which the Seller shall
deliver to the Indenture Trustee an Officer's Certificate to the effect that, in
the reasonable belief of the Seller, the continued sharing of Excess Finance
Charge Collections among Series would have adverse regulatory implications with
respect to the Seller. Notwithstanding the foregoing, a Group of Series may
specify in their related Indenture Supplements that Excess Finance Charge
Collections from such Series shall be allocated as provided above but only among
the Series in such Group.
Section 8.7. Allocation of Collateral to Series or Groups. To the extent so
--------------------------------------------
provided in the Indenture Supplement for any Series or in an Indenture
Supplement otherwise executed pursuant to Section 10.1, Receivables conveyed to
------------
the Issuer pursuant to Section 2.1 of the Transfer and Servicing Agreement and
-----------
Receivables conveyed to the Issuer pursuant to Section 2.9 of the Transfer and
-----------
Servicing Agreement and all Collections received with respect thereto may be
allocated or applied in whole
55
or in part to one or more Series or Groups as may be provided in such Indenture
Supplement; provided, however, that any such allocation or application shall be
-------- -------
effective only upon satisfaction of the following conditions:
(i) on or before the fifth Business Day immediately preceding such
allocation, the Servicer shall have given the Indenture Trustee and each
Rating Agency written notice of such allocation;
(ii) the Rating Agency Condition shall have been satisfied with
respect to such allocation; and
(iii) the Servicer shall have delivered to the Indenture Trustee an
Officer's Certificate, dated the date of such allocation, to the effect
that the Servicer reasonably believes that such allocation will not have an
Adverse Effect.
Any such Indenture Supplement may provide that (i) such allocation to one
or more particular Series or Groups may terminate upon the occurrence of certain
events specified therein and (ii) that upon the occurrence of any such event,
such assets and any Collections with respect thereto, shall be reallocated to
other Series or Groups or to all Series, all as shall be provided in such
Indenture Supplement.
Section 8.8. Release of Collateral; Eligible Loan Documents.
----------------------------------------------
(a) Upon the written direction of the Issuer, the Indenture Trustee may,
and when required by the provisions of this Indenture shall, execute instruments
to release property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances which are
not inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Indenture Trustee as provided in this Article VIII
------------
shall be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
(b) In order to facilitate the servicing of the Receivables by the
Servicer, the Indenture Trustee upon Issuer Order shall authorize the Servicer
to execute in the name and on behalf of the Indenture Trustee instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
other comparable instruments with respect to the Receivables (and the Indenture
Trustee shall execute any such documents on written request of the Servicer),
subject to the obligations of the Servicer under the Transfer and Servicing
Agreement.
(c) The Indenture Trustee shall, at such time as there are no Notes
outstanding, release and transfer, without recourse, all of the Collateral that
secured the Notes (other than any cash held for the payment of the Notes
pursuant to Section 4.2).
-----------
56
The Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.9(c) only upon receipt of an Issuer Order accompanied
--------------
by an Officer's Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA (S)314(c) and 314(d)(1) meeting
the applicable requirements of Section 12.1.
------------
(d) Notwithstanding anything to the contrary in this Indenture, the
Transfer and Servicing Agreement and the Trust Agreement, immediately prior to
the release of any portion of the Collateral or any funds on deposit in the
Series Accounts pursuant to this Indenture, the Indenture Trustee shall at the
written request of the Issuer remit to the Seller for its own account any funds
that, upon such release, would otherwise be remitted to the Issuer.
Section 8.9. Opinion of Counsel. The Indenture Trustee shall receive at
------------------
least seven (7) days notice when requested by the Issuer to take any action
pursuant to Section 8.8(a), accompanied by copies of any instruments involved,
--------------
and the Indenture Trustee shall also require, as a condition to such action, an
Opinion of Counsel, in form and substance reasonably satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such action
will not materially and adversely impair the security for the Notes or the
rights of the Noteholders in contravention of the provisions of this Indenture;
provided, however, that such Opinion of Counsel shall not be required to express
-------- -------
an opinion as to the fair value of the Collateral. The Indenture Trustee and
counsel rendering any such opinion may conclusively rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE IX
DISTRIBUTIONS AND REPORTS TO NOTEHOLDERS
Distributions shall be made to, and reports shall be provided to,
Noteholders as set forth in the applicable Indenture Supplement. The identity of
the Noteholders with respect to distributions and reports shall be determined
according to the immediately preceding Record Date.
57
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 10.1. Supplemental Indentures Without Consent of Noteholders.
------------------------------------------------------
(a) Without the consent of the Holders of any Notes but with prior notice
to the Rating Agencies with respect to the Notes of all Series, the Issuer and
the Indenture Trustee, when authorized by an Issuer Order, at any time and from
time to time, may enter into one or more indentures supplemental hereto (which
shall conform to the provisions of the TIA as in force at the date of the
execution thereof), in form satisfactory to the Indenture Trustee, for any of
the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with Section 3.11,
------------
of another person to the Issuer, and the assumption by any such successor
of the covenants of the Issuer contained herein and in the Notes;
(iii) to add to the covenants of the Issuer, for the benefit of
the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property
to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture that may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided that such action shall
--------
not adversely affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor indenture trustee with respect to the
Notes and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts hereunder
by more than one indenture trustee, pursuant to the requirements of Article
-------
VI;
--
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification
of this Indenture
58
under the TIA or under any similar federal statute hereafter enacted and to
add to this Indenture such other provisions as may be expressly required by
the TIA;
(viii) to provide for the issuance of one or more new Series of
Notes, in accordance with the provisions of Section 2.12; or
(ix) to provide for the termination of any interest rate swap
agreement or other form of credit enhancement or maturity guarantee
agreement in accordance with the provisions of the related Indenture
Supplement.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any Noteholders of any Series then
Outstanding but upon satisfaction of the Rating Agency Condition with respect to
the Notes of all Series, enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Notes under this Indenture; provided,
--------
however that the Seller shall have delivered to the Owner Trustee and the
-------
Indenture Trustee an Officer's Certificate, dated the date of any such action,
stating that all requirements for such amendments contained in the Agreement
have been met and the Seller reasonably believes that such action will not have
an Adverse Effect. Additionally, notwithstanding the preceding sentence, the
Issuer and the Indenture Trustee, when authorized by an Issuer Order, may,
without the consent of any Noteholders of any Series then Outstanding or the
Series Enhancers for any Series, enter into an indenture or indentures
supplemental hereto to add, modify or eliminate such provisions as may be
necessary or advisable in order to enable all or a portion of the Issuer (i) to
qualify as, and to permit an election to be made to cause the Issuer to be
treated as, a "financial asset securitization investment trust" as described in
the provisions of Section 860L of the Code, and (ii) to avoid the imposition of
state or local income or franchise taxes imposed on the Issuer's property or its
income; provided, however, that (i) the Seller delivers to the Indenture Trustee
-------- -------
and the Owner Trustee an Officer's Certificate to the effect that the proposed
amendments meet the requirements set forth in this Section 10.1(b), (ii) the
---------------
Rating Agency Condition will have been satisfied and (iii) such amendment does
not affect the rights, duties, protections, indemnities, immunities or
obligations of the Indenture Trustee or the Owner Trustee hereunder. The
amendments which the Seller may make without the consent of Noteholders pursuant
to the preceding sentence may include the addition of a sale of Receivables.
59
Section 10.2. Supplemental Indentures with Consent of Noteholders. The
---------------------------------------------------
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to the Rating Agencies and with the consent of the Holders of
Notes representing more than 50% of the Outstanding Amount of each adversely
affected Series, by Act of such Holders delivered to the Issuer and the
Indenture Trustee, enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to, changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the rights
of such Noteholders under this Indenture; provided, however that no such
-------- -------
supplemental indenture shall, without the consent of the Holder of each
outstanding Note affected thereby:
(a) change the due date of any installment of principal of or interest
on any Note, or reduce the principal amount thereof, the interest rate specified
thereon or the redemption price with respect thereto or change any place of
payment where, or the coin or currency in which, any Note or any interest
thereon is payable;
(b) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due on the
---------
Notes on or after the respective due dates thereof (or, in the case of
redemption, on or after the Redemption Date);
(c) reduce the percentage of the Outstanding Amount of any Series the
consent of the Holders of which is required for any such supplemental indenture,
or the consent of the Holders of which is required for any waiver of compliance
with certain provisions of this Indenture or certain defaults hereunder and
their consequences as provided for in this Indenture;
(d) reduce the percentage of the Outstanding Amount of any Series, the
consent of the Holders of which is required to direct the Indenture Trustee to
sell or liquidate the Collateral if the proceeds of such sale would be
insufficient to pay the principal amount and accrued but unpaid interest on the
outstanding Notes of such Series;
(e) decrease the percentage of the Outstanding Amount required to
amend the sections of this Indenture which specify the applicable percentage of
the Outstanding Amount of the Notes of any Series necessary to amend the
Indenture or any Transaction Documents which require such consent;
(f) modify or alter the provisions of this Indenture prohibiting the voting
of Notes held by the Issuer, any other Obligor on the Notes, a Seller or any
affiliate thereof; or
60
(g) 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 for any
Notes or, except as otherwise permitted or contemplated herein, terminate the
Lien of this Indenture on any such Collateral at any time subject hereto or
deprive the Holder of any Note of the security provided by the Lien of this
Indenture.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
-------
10.2 to approve the particular form of any proposed supplemental indenture, but
----
it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of any
Supplement Indenture pursuant to this Section 10.2, the Indenture Trustee shall
------------
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates written notice setting forth in general terms the substance of
such Supplement Indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
Section 10.3. Execution of Supplemental Indentures. In executing, or
------------------------------------
permitting the additional trusts created by, any supplemental indenture
permitted by this Article X or the modification thereby of the trusts created by
---------
this Indenture, the Indenture Trustee shall be entitled to receive, and shall be
fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture and stating that all requisite consents have been obtained or that no
consents are required and stating that such supplemental indenture or
modification constitutes the legal, valid and binding obligation of the Issuer
in accordance with its terms. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
Section 10.4. Effect of Supplemental Indenture. Upon the execution of any
--------------------------------
supplemental indenture under this Article X, 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. This Section 10.4
does not apply to Indenture Supplements.
61
Section 10.5. Conformity With Trust Indenture Act. Every amendment of this
-----------------------------------
Indenture and every supplemental indenture executed pursuant to this Article X
shall conform to the requirements of the TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.
Section 10.6. Reference in Notes to Supplemental Indentures. Notes
---------------------------------------------
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article X may, and if required by the Indenture Trustee shall,
---------
bear a notation in form approved by the Indenture 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 Indenture Trustee and
the Issuer, to any such supplemental indenture may be prepared and executed by
the Issuer and authenticated and delivered by the Indenture Trustee in exchange
for the outstanding Notes.
ARTICLE XI
TERMINATION
Section 11.1. Termination of Issuer. The Issuer and the respective
---------------------
obligations and responsibilities of the Indenture Trustee created hereby (other
than the obligation of the Indenture Trustee to make payments to Noteholders as
hereinafter set forth) shall terminate, except with respect to the duties
described in Section 11.2(b), as provided in the Trust Agreement.
Section 11.2. Final Distribution.
------------------
(a) The Servicer shall give the Indenture Trustee at least thirty (30) days
prior written notice of the Distribution Date on which the Noteholders of any
Series or Class may surrender their Notes for payment of the final distribution
on and cancellation of such Notes (or, in the event of a final distribution
resulting from the application of Section 2.6 of the Transfer and Servicing
Agreement, notice of such Distribution Date promptly after the Servicer has
determined that a final distribution will occur, if such determination is made
less than thirty (30) days prior to such Distribution Date). Such notice shall
be accompanied by an Officer's Certificate setting forth the information
specified in Section 3.5 of the Transfer and Servicing Agreement covering the
period during the then-current calendar year through the date of such notice.
Not later than the fifth day of the month in which the final distribution in
respect of such Series or Class is payable to Noteholders, the Indenture Trustee
shall provide notice to Noteholders of such Series or Class specifying (i) the
date upon which final payment of such Series or Class will be made upon
presentation and surrender of Notes of such Series or Class at the office or
offices therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such payment date is not
applicable, payments being made only upon presentation and surrender of such
Notes at the office or offices therein specified (which in the case of Bearer
Notes shall be outside the
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇). The Indenture Trustee shall give such notice to the Transfer
Agent and Registrar and the Paying Agent at the time such notice is given to
Noteholders.
(b) Notwithstanding a final distribution to the Noteholders of any Series
or Class (or the termination of the Issuer), except as otherwise provided in
this paragraph, all funds then on deposit in the Collection Account and any
Series Account allocated to such Noteholders shall continue to be held in trust
for the benefit of such Noteholders and the Paying Agent or the Indenture
Trustee shall pay such funds to such Noteholders upon surrender of their Notes,
if certificated (and any excess shall be paid in accordance with the terms of
any Enhancement Agreement). In the event that all such Noteholders shall not
surrender their Notes for cancellation within six (6) months after the date
specified in the notice from the Indenture Trustee described in paragraph (a),
the Indenture Trustee shall give a second notice to the remaining such
Noteholders to surrender their Notes for cancellation and receive the final
distribution with respect thereto (which surrender and payment, in the case of
Bearer Notes, shall be outside the United States). If within one year after the
second notice all such Notes shall not have been surrendered for cancellation,
the Indenture Trustee may take appropriate steps, or may appoint an agent to
take appropriate steps, to contact the remaining such Noteholders concerning
surrender of their Notes, and the cost thereof shall be paid out of the funds in
the Collection Account or any Series Account held for the benefit of such
Noteholders. The Indenture Trustee and, upon the written request of the
Servicer, the Paying Agent shall pay to the Issuer any monies held by them for
the payment of principal or interest that remains unclaimed for two (2) years.
After payment to the Issuer, Noteholders entitled to the money must look to the
Issuer for payment as general creditors unless an applicable abandoned property
law designates another Person.
Section 11.3. Issuer's Termination Rights. Upon the termination of the
---------------------------
Issuer pursuant to the terms of the Trust Agreement and upon the written
direction of the Issuer, the Indenture Trustee shall assign and convey to the
Holders of the Seller Interest or any of their designees, without recourse,
representation or warranty, all right, title and interest of the Issuer in the
Receivables, whether then existing or thereafter created, all Recoveries related
thereto all monies due or to become due and all amounts received or receivable
with respect thereto (including all moneys then held in the Collection Account
or any Series Account) and all proceeds thereof, except for amounts held by the
Indenture Trustee pursuant to Section 11.2(b). The Indenture Trustee shall
---------------
execute and deliver such instruments of transfer and assignment, in each case
without recourse, as shall be reasonably requested in writing by the Holders of
the Seller Interest to vest in the Holders of the Seller Interest or any of
their designees all right, title and interest which the Indenture Trustee had in
the Collateral and such other property.
63
ARTICLE XII
MISCELLANEOUS
Section 12.1. Compliance Certificates and Opinions etc.
----------------------------------------
(a) Upon any application or request by the Issuer to the Indenture Trustee
to take any action under any provision of this Indenture, the Issuer shall
furnish to the Indenture Trustee (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section 12.1, except that, in the case of any such application or request
------------
as to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) Other than with respect to the release of any Receivables in Removed
Accounts, whenever any property or investment property is to be released from
the lien of this Indenture, the Issuer shall also furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value (within ninety (90) days of
such release) of the property or securities proposed to be released and stating
that in the opinion of such person the proposed
64
release will not impair the security under this Indenture in contravention of
the provisions hereof.
(i) Notwithstanding Section 2.11 or any other provision of this
------------
Section 12.1, the Issuer may (A) collect, liquidate, sell or otherwise
------------
dispose of Receivables as and to the extent permitted or required by the
Transaction Documents and (B) make cash payments out of the Series Accounts
as and to the extent permitted or required by the Transaction Documents.
Section 12.2. Form of Documents Delivered to Indenture Trustee. In any case
------------------------------------------------
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of a Responsible Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or opinion is
based are erroneous. Any such certificate of a Responsible Officer or Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Servicer, a Seller, the Issuer or the Administrator, stating that the
information with respect to such factual matters is in the possession of the
Servicer, a Seller, the Issuer or the Administrator, unless such Responsible
Officer or Counsel has actual knowledge that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two (2) or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to conclusively rely upon the
truth and
65
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
----------
Section 12.3. Acts of Noteholders.
-------------------
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Noteholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Noteholders in person or by their agents duly
appointed in writing and satisfying any requisite percentages as to minimum
number or dollar value of outstanding principal amount represented by such
Noteholders; and, except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are delivered to the
Indenture Trustee, and, where it is hereby 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 conclusive in favor of the Indenture Trustee and
the Issuer, if made in the manner provided in this Section 12.3.
------------
(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 Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder (and any
transferee thereof) of every Note issued upon the registration thereof in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Indenture Trustee or the Issuer in reliance thereon,
whether or not notation of such action is made upon such Note.
Section 12.4. Notices, Etc. to Indenture Trustee and Issuer. Any request,
---------------------------------------------
demand, authorization, direction, notice, consent, waiver or Act of Noteholders
or other documents provided or permitted by the Agreement to be made upon, given
or furnished to, or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to a Trustee Officer, by facsimile transmission or by other means
acceptable to the Indenture Trustee to or with the Indenture Trustee at its
Corporate Trust Office; or
(b) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed, first-class
postage
66
prepaid, to the Issuer addressed to it and received by it c/o Bankers Trust
Company, Four Albany Street, 10th Floor, New York, New York 10006, Attn:
Structured Finance Group, or at any other address previously furnished in
writing to the Indenture Trustee by the Issuer. A copy of each notice to the
Issuer shall be sent in writing and mailed, first-class postage prepaid, to the
[Administrator at ].
Section 12.5. Notices to Noteholders; Waiver. Where the 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 or certified mail or first class postage prepaid or national
overnight courier service to each Noteholder affected by such event, 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. In
any case where notice to Noteholders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any particular
Noteholder shall affect the sufficiency of such notice with respect to other
Noteholders, and any notice which is mailed in the manner herein provided shall
conclusively be presumed to have been duly given.
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 Noteholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In the event that, 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 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 satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to any Rating Agency, failure to
give such notice shall not affect any other rights or obligations created
hereunder and shall not under any circumstance constitute a Default or Event of
Default.
Section 12.6. Alternate Payment and Notice Provisions. Notwithstanding any
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provision of this Indenture or any of the Notes to the contrary, the Issuer,
with the prior written consent of the Indenture Trustee, may enter into any
agreement with any Holder of a Note providing for a method of payment, or notice
by the Indenture Trustee or any Paying Agent to such Holder, that is different
from the methods provided for in this Indenture for such payments or notices.
The Issuer will furnish to the Indenture Trustee a copy of each such agreement
and the Indenture Trustee will cause payments to be made and notices to be given
in accordance with such agreements.
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Section 12.7. Conflict with Trust Indenture Act. If any provision hereof
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limits, qualifies or conflicts with another provision hereof that is required to
be included in this indenture by any of the provisions of the TIA, such required
provision shall control.
The provisions of TIA (S)(S)310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 12.8. Effect of Headings and Table of Contents. The Article and
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Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 12.9. Successors and Assigns. All covenants and agreements in this
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Indenture by the Issuer shall bind its successors and assigns, whether so
expressed or not.
Section 12.10. Separability. In case any provision in this Indenture or in
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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 12.11. Benefits of Indenture. Nothing in this Indenture or in the
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Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, the Servicer and the
Seller, any benefit.
Section 12.12. Legal Holidays. In any case where the date on which any
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payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 12.13. GOVERNING LAW. THIS INDENTURE AND EACH NOTE SHALL BE
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CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
Section 12.14. Counterparts. This Indenture may be executed in any number
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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.
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Section 12.15. Issuer Obligation. No recourse may be taken, directly or
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indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles V, VI and VII of the Trust Agreement.
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Section 12.16. No Petition. The Indenture Trustee, by entering into this
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Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Issuer, the Seller or the
Servicer, or join in instituting against the Issuer, the Seller or the Servicer,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal or state
bankruptcy or similar law.
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized and attested, all as of the day and year first above written.
SPIEGEL CREDIT CARD MASTER NOTE TRUST,
as Issuer
By: Bankers Trust Company, not in its individual
capacity, but solely as Owner Trustee
By: ___________________________
Name:
Title:
THE BANK OF NEW YORK, as Indenture Trustee
By: ___________________________
Name:
Title:
Acknowledged and Accepted:
FIRST CONSUMERS NATIONAL BANK,
as Servicer
By: ___________________________
Name:
Title:
Acknowledged and Accepted:
SPIEGEL CREDIT CORPORATION III,
as Seller
By: ___________________________
Name:
Title:
[Signature Page to Indenture]
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ANNEX A
to
MASTER INDENTURE
DEFINITIONS
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