EXHIBIT 10.15
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AMENDED AND RESTATED INDENTURE
among
MICROFINANCIAL INCORPORATED,
as Servicer,
MFI FINANCE CORP. I,
as Issuer,
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Indenture Trustee,
and
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
as Back-up Servicer
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Dated as of September 1, 2001
TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS
Section 1.01 Definitions ......................................................................... 2
Section 1.02 Usage of Terms ...................................................................... 21
Section 1.03 Legal Holidays ...................................................................... 21
ARTICLE TWO
THE NOTES
Section 2.01 Form Generally ...................................................................... 23
Section 2.02 Series; Denomination ................................................................ 23
Section 2.03 Execution, Authentication, Delivery and Dating ...................................... 24
Section 2.04 [Reserved] .......................................................................... 25
Section 2.05 Registration, Registration of Transfer and Exchange ................................. 25
Section 2.06 Limitation on Transfer and Exchange ................................................. 26
Section 2.07 Mutilated, Destroyed, Lost or Stolen Note ........................................... 27
Section 2.08 Payment of Principal and Interest; Principal and Interest Rights Preserved .......... 27
Section 2.09 Persons Deemed Owner ................................................................ 29
Section 2.10 Cancellation ........................................................................ 29
Section 2.11 Tax Treatment ....................................................................... 29
ARTICLE THREE
[reserved]
ARTICLE FOUR
ISSUANCE OF NOTES; SUBSTITUTIONS OF COLLATERAL
Section 4.01 Conditions to Initial Issuance of Notes ............................................. 31
Section 4.02 Issuances of Additional Series of Notes ............................................. 32
Section 4.03 Security for Notes .................................................................. 35
Section 4.04 Substitution, Removal and Purchase of Contracts in Trust Estate ..................... 36
Section 4.05 Requirements for All Contracts in Trust Estate ...................................... 37
Section 4.06 Releases ............................................................................ 38
Section 4.07 Trust Estate ........................................................................ 39
Section 4.08 Notice of Release ................................................................... 39
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ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01 Satisfaction and Discharge of Indenture ............................................. 40
Section 5.02 Application of Trust Money .......................................................... 40
ARTICLE SIX
DEFAULTS AND REMEDIES
Section 6.01 Events of Default ................................................................... 42
Section 6.02 Acceleration of Stated Maturity Date; Rescission and Annulment ...................... 43
Section 6.03 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee ........... 44
Section 6.04 Remedies ............................................................................ 44
Section 6.05 Optional Preservation of Trust Estate ............................................... 45
Section 6.06 Indenture Trustee May File Proofs of Claim .......................................... 45
Section 6.07 Indenture Trustee May Enforce Claims Without Possession of Notes .................... 46
Section 6.08 Application of Money Collected Following an Event of Default ........................ 46
Section 6.09 Limitation on Suits ................................................................. 48
Section 6.10 Unconditional Right of Noteholders to Receive Principal and Interest ................ 48
Section 6.11 Restoration of Rights and Remedies .................................................. 48
Section 6.12 Rights and Remedies Cumulative ...................................................... 49
Section 6.13 Delay or Omission; Not Waiver ....................................................... 49
Section 6.14 Control by Noteholders .............................................................. 49
Section 6.15 Waiver of Certain Events by Less than All Noteholders ............................... 49
Section 6.16 Undertaking for Costs ............................................................... 50
Section 6.17 Waiver of Stay or Extension Laws .................................................... 50
Section 6.18 Sale of Trust Estate ................................................................ 50
Section 6.19 Action on Notes ..................................................................... 51
ARTICLE SEVEN
THE INDENTURE TRUSTEE
Section 7.01 Certain Duties and Responsibilities ................................................. 52
Section 7.02 Notice of Default and Other Events .................................................. 53
Section 7.03 Certain Rights of Indenture Trustee ................................................. 54
Section 7.04 Not Responsible for Recitals or Issuance of Notes ................................... 54
Section 7.05 May Hold Notes ...................................................................... 55
Section 7.06 Money Held in Trust ................................................................. 55
Section 7.07 Compensation and Reimbursement ...................................................... 55
Section 7.08 Corporate Trustee Required; Eligibility ............................................. 56
Section 7.09 Resignation and Removal; Appointment of Successor ................................... 56
Section 7.10 Acceptance of Appointment by Successor .............................................. 57
Section 7.11 Merger, Conversion, Consolidation or Succession to Business of Indenture Trustee .... 58
Section 7.12 Co-Indenture Trustees and Separate Indenture Trustees ............................... 58
Section 7.13 Rights with Respect to the Servicer ................................................. 59
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Section 7.14 Appointment of Authenticating Agent ................................................ 59
Section 7.15 Indenture Trustee to Hold Contracts ................................................ 61
Section 7.16 Money for Note Payments to Be Held in Trust ........................................ 61
ARTICLE EIGHT
THE NOTE INSURANCE POLICIES
Section 8.01 Payments under the Note Insurance Policies ......................................... 63
ARTICLE NINE
AMENDMENTS; SUPPLEMENTAL INDENTURES
Section 9.01 Amendments and Supplemental Indentures without Consent of Noteholders .............. 64
Section 9.02 Amendments or Supplemental Indentures with Consent of Noteholders .................. 65
Section 9.03 Execution of Amendments and Supplemental Indentures ................................ 66
Section 9.04 Effect of Amendments and Supplemental Indentures ................................... 66
Section 9.05 Reference in Notes to Amendments and Supplemental Indentures ....................... 66
Section 9.06 Certain Amendments ................................................................. 66
ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01 Redemption at the Option of the Issuer; Election to Redeem ........................... 67
Section 10.02 Notice to Indenture Trustee; Deposit of Redemption Price ............................. 67
Section 10.03 Notice of Redemption by the Issuer ................................................... 67
Section 10.04 Notes Payable on Redemption Date ..................................................... 68
Section 10.05 Release of Series Contracts .......................................................... 68
ARTICLE ELEVEN
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 11.01 Representations and Warranties ....................................................... 69
Section 11.02 Covenants ............................................................................ 71
Section 11.03 Other Matters as to the Issuer ....................................................... 75
ARTICLE TWELVE
ACCOUNTS AND ACCOUNTINGS
Section 12.01 Collection of Money .................................................................. 77
Section 12.02 Collection Account; Redemption Account ............................................... 77
Section 12.03 Cash Collateral Account .............................................................. 80
Section 12.04 Reports by Indenture Trustee to the Note Insurer and Noteholders ..................... 81
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ARTICLE THIRTEEN
PROVISIONS OF GENERAL APPLICATION
Section 13.01 General Provisions ................................................................... 83
Section 13.02 Acts of Noteholders .................................................................. 83
Section 13.03 Notices, etc., to Indenture Trustee, the Note Insurer, Issuer and Servicer ........... 83
Section 13.04 Notices to Noteholders; Waiver ....................................................... 84
Section 13.05 Effect of Headings and Table of Contents ............................................. 84
Section 13.06 Successors and Assigns ............................................................... 84
Section 13.07 Separability ......................................................................... 85
Section 13.08 Benefits of Indenture ................................................................ 85
Section 13.09 Governing Law ........................................................................ 85
Section 13.10 Counterparts ......................................................................... 85
Section 13.11 Compliance Certificates and Opinions ................................................. 85
Section 13.12 Consent to Jurisdiction .............................................................. 86
EXHIBITS
A-1 Form of Class A Note
A-2 Form of Class B Note
B-1 Form of Class A Supplement to Indenture
B-2 Form of Class B Supplement to Indenture
C Form of Investment Letter
D Form of MFI Certificate
E Form of Note Insurance Policy
F Form of Release Request
G Form of Certificate of Issuer
H Form of Noteholder Certification
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This AMENDED AND RESTATED INDENTURE, dated as of September 1, 2001
(this "Indenture"), is among MFI Finance Corp. I, as Issuer (the "Issuer"),
MicroFinancial Incorporated, as Servicer (the "Servicer"), and ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, as Indenture Trustee (in such capacity, the
"Indenture Trustee") and as Back-up Servicer (in such capacity, the "Back-up
Servicer").
PRELIMINARY STATEMENT
The Issuer duly authorized the execution and delivery of this
Indenture as of March 1, 2000 to provide for the issuance of the Issuer's Notes
issuable as provided in this Indenture. This Indenture is being amended and
restated in its entirety pursuant to the Consent (as defined below). All
covenants and agreements made by the Issuer, the Servicer, the Indenture Trustee
and the Back-up Servicer herein are for the benefit and security of the Holders
of the Notes and, to the extent set forth herein, the Note Insurer. The Issuer,
the Servicer, the Indenture Trustee and the Back-up Servicer have entered into
this Indenture, and the Indenture Trustee has accepted the trusts created
hereby, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of the
Issuer, the Servicer, the Indenture Trustee and the Back-up Servicer in
accordance with its terms have been done.
GRANTING CLAUSE
To secure the payment of the principal of and interest on the Notes in
accordance with their terms, the payment of all of the sums payable under this
Indenture (other than sums payable to the Issuer) and the performance of the
covenants contained in this Indenture, the Issuer hereby Grants to the Indenture
Trustee, solely in trust and as collateral security as provided in this
Indenture, for the benefit of the Holders of the Notes and the Note Insurer, any
and all of the Issuer's right, title and interest in, to and under the following
and any and all benefits accruing to the Issuer from: (a) the Contracts and the
Receivables and all payments received or receivable on or with respect to the
Contracts and the Receivables and due after the applicable Cut-Off Date
(including Servicing Charges); (b) the Equipment; (c) each Insurance Policy
related to the Contracts and any Insurance Proceeds related thereto; (d) the
Contract Acquisition Agreement; (e) the Servicing Agreement; (f) all amounts
from time to time on deposit in the Collection Account, the Cash Collateral
Account and the Redemption Account (including any Eligible Investments and other
property in such accounts); (g) the Contract Files; (h) the Note Insurance
Policies (provided, that the right and interest of the Holders of a Series of
Notes in and to the Note Insurance Policies is limited to the Note Insurance
Policy issued in respect of such Series of Notes; provided, further, that the
Holders of the Class B Notes shall have no right, title and interest in or to
the Note Insurance Policies); (i) amounts on deposit in the Operating Account
that constitute proceeds of the foregoing and (j) proceeds of the foregoing
(including, but not by way of limitation, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and every
kind, and other forms of obligations and receivables which at any time
constitute all or part or are included in the proceeds of any of the foregoing),
in each case above whether now owned or hereafter acquired, except that the
Holders of the Class B Notes shall have no right, title and interest in proceeds
of the Note Insurance Policies (all of the foregoing being hereinafter referred
to as the "Collateral" or "Trust Estate"). The foregoing Grant does not
constitute and is not intended to result in a creation or an assumption by the
Indenture Trustee, any Noteholder or the Note Insurer of any obligation of the
Issuer, the Company, the Servicer or any other Person in connection with the
Trust Estate or under any agreement or instrument relating thereto.
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The Indenture Trustee acknowledges its acceptance on behalf of the
Noteholders and the Note Insurer of all right, title and interest previously
held by the Issuer in, to and under the Trust Estate, and declares that it shall
maintain such right, title and interest in accordance with the provisions hereof
and agrees to perform the duties herein required to the best of its ability to
the end that the interests of the Noteholders and the Note Insurer may be
adequately and effectively protected.
ARTICLE ONE
DEFINITIONS
SECTION 1.01 DEFINITIONS.
Except as otherwise expressly provided herein or in the applicable
Supplement, or unless the context otherwise requires, the following terms have
the respective meanings set forth below for all purposes of this Indenture, and
the definitions of such terms are equally applicable both to the singular and
plural forms of such terms. Each capitalized term used and not otherwise defined
herein shall have the meaning assigned thereto in the Servicing Agreement or in
the Contract Acquisition Agreement.
"Accrual Date": With respect to any Series of Notes, the date upon
which interest begins accruing on such Notes, as specified in such Notes and the
applicable Supplement.
"Accrual Period": With respect to any Series of Notes, (i) for each
Payment Date other than an Initial Payment Date, the period beginning on and
including the Payment Date in the immediately preceding calendar month and
ending on and including the day before the Payment Date for the current month,
and (ii) for the Initial Payment Date, the period beginning on and including the
Accrual Date and ending on and including the day before the Initial Payment
Date.
"Acquisition Date": Any Delivery Date or date of substitution of a
Substitute Contract, as the context may require.
"Act": With respect to any Noteholder, the meaning specified in
Section 13.02.
"Additional Contract": Each Contract acquired by the Issuer on an
Acquisition Date other than the Initial Delivery Date.
"Additional Principal Amount": The amount, if any, payable to the
Holders of the Class A Notes pursuant to Section 12.02(d)(x) hereof.
"Additional Servicer Fee": The amount, if any, of the fee payable in
accordance with Section 6.02 of the Servicing Agreement to a successor Servicer
appointed pursuant to Section 6.02 of the Servicing Agreement that is in excess
of the Servicer Fee.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control," when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
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"Aggregate IPB": The aggregate of the Implicit Principal Balances of
all Series Contracts for all Outstanding Series of Class A Notes.
"Aggregate Initial IPB": The sum of all Series Initial IPB for all
Outstanding Series of Class A Notes.
"Agreement Regarding Operating Account": The Agreement Regarding
Operating Account, dated as of September [1], 2001, among the Indenture Trustee,
▇▇▇▇▇ Fargo Bank, National Association, as indenture trustee under an indenture
with MFI Finance II, LLC, Fleet National Bank, as agent under the Credit
Agreement and as depository bank, the Company, the Servicer, the Issuer and MFI
Finance II, LLC.
"Amended Contract Schedule": With respect to any Series Contract
Schedule, the list of Contracts amending such Series Contract Schedule pursuant
to any acquisition, removal, substitution, repurchase or modification of
Contracts in accordance with the terms hereof and the Contract Acquisition
Agreement, and accompanied by a MFI Certificate and a Company Certificate.
"Annualized Default Rate": Unless otherwise specified in any
applicable Supplement, for any Determination Date, the product (stated as a
percentage) of (a) twelve and (b) a fraction, the numerator of which is equal to
(i) the sum of the Implicit Principal Balances of all Contracts that have become
Defaulted Contracts during the related Due Period minus (ii) the amount of
Recoveries, Residual Proceeds and Servicing Charges received during such Due
Period, and the denominator of which is the Aggregate IPB as of the first day of
such Due Period.
"Authenticating Agent": Initially, the Indenture Trustee, and
thereafter, any entity appointed by the Indenture Trustee pursuant to Section
7.14 hereof.
"Back-up Servicer": ▇▇▇▇▇ Fargo Bank Minnesota, National Association.
"Back-up Servicer Fee": With respect to each Series of Class A Notes,
the fee payable on each Payment Date to the Back-up Servicer in consideration
for the Back-up Servicer's performance of its duties pursuant to this Indenture
and the Servicing Agreement as Back-up Servicer, in an amount (except as
otherwise provided in an applicable Supplement) equal to the product of (i)
one-twelfth of the applicable Back-up Servicer Fee Rate and (ii) the Outstanding
Principal Amount of such Series of Notes immediately following the preceding
Payment Date.
"Back-up Servicer Fee Rate": With respect to each Series of Class A
Notes, the rate per annum specified in the applicable Supplement.
"Benefit Plan Investor": The meaning specified in 29 C.F.R. Section
2510.3-101.
"Board of Directors": Either the board of directors of the Issuer or
of the Servicer, as the context may require, or any duly authorized committee of
such Board.
"Board Resolution": A copy of a resolution certified by the Secretary
or an Assistant Secretary of the Issuer, the Servicer or the Company to have
been duly adopted by its Board of Directors and to be in full force and effect
on the date of such certification and delivered to the Indenture Trustee.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in New York City or in the city in which the
principal place of business of the Issuer or the Servicer or the
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Corporate Trust Office of the Indenture Trustee under this Indenture is located
are authorized or obligated by law or executive order to remain closed.
"Calculation Date": The last day of a Due Period, except that, with
respect to any calculation of the Series Initial IPB, the Calculation Date shall
mean the close of business on the related Cut-Off Date.
"Cash Collateral Account": The trust account or accounts created and
maintained pursuant to Section 12.03 hereof.
"Cash Collateral Account Factor": The meaning specified in the
applicable Supplement.
"Cash Collateral Account Required Balance": As of any determination
date, the sum of all Series Cash Collateral Account Required Balances.
"Change of Control": (a) Either or both Key Employees (i) die, (ii)
are unable to work for a period of six consecutive months, or (iii) cease to be
employed in an executive capacity by the Reported Companies; and (b) such
condition exists for a period of ninety days without approval by the Controlling
Party of a replacement for such Key Employee.
"Class": With respect to each Series of Notes, the designation of
either Class A or Class B (but not both), respectively, with the specific senior
or subordinated rights related to such designation as are identified in this
Indenture and in the applicable Supplement for such Class.
"Class A Notes": Each of the Series 2000-1 Notes and Series 2000-2
Notes (while each remains Outstanding) and any subsequently issued Series of
Notes bearing the designation of Class A.
"Class A Note Interest Rate": With respect to each Series of Class A
Notes, the annual rate at which interest accrues on the Class A Notes of such
Series, as specified in such Notes and in the applicable Supplement.
"Class A Principal Distribution Amount": Except as otherwise set forth
in the applicable Supplement, as to each Series of Class A Notes,
(a) as of each Payment Date prior to the Stated Maturity Date
for such Series, an amount equal to either:
(i) the Targeted Principal Distribution Amount for
such Series for such Payment Date, or
(ii) if the amounts available in the Collection Account
and the Cash Collateral Account (including any
Reinvestment Income in such accounts) after
payment of all amounts required by clauses (i)
through (v) of Section 12.02(d) hereof are less
than the Targeted Principal Distribution Amounts
for all Series of Class A Notes, an amount equal
to the product of
(A) the total funds available for payment of
principal on the Class A Notes, in
accordance with the priorities set forth
in Section 12.02(d) hereof, and
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(B) the applicable Pro Rata Share (computed
under clause (a) of such term) for such
Series of Class A Notes;
(b) on and after the Stated Maturity of such Series of Class A
Notes, an amount equal to the Outstanding Principal Amount
of the Class A Notes of such Series as of such date.
"Class B Notes": All or any Series of Class B Notes Outstanding as of
any date.
"Class B Note Interest Rate": With respect to each Series of Class B
Notes, the annual rate at which interest accrues on the Class B Notes of such
Series, as specified in such Notes and in the applicable Supplement.
"Class B Principal Distribution Amount": Except as otherwise set forth
in the related Supplement, with respect to each Payment Date and each Series of
Class B Notes, (a) as of each Payment Date prior to the Stated Maturity of such
Notes, an amount equal to all funds then available to be distributed in
accordance with the priorities set forth in Section 12.02(d)(xiii) hereof and if
more than one Series of Class B Notes are Outstanding, the Pro Rata Share of
such funds, and (b) as of the Stated Maturity of each Series of Class B Notes,
an amount equal to the Outstanding Principal Amount of such Class B Notes as of
such date.
"Code": The Internal Revenue Code of 1986.
"Collateral": The meaning specified in the Granting Clause of this
Indenture.
"Collateralization Percentage": For each Series of Class A Notes, the
meaning specified in the applicable Supplement.
"Collection Account": The meaning specified in Section 12.02(a)
hereof.
"Company": Leasecomm Corporation.
"Company Certificate": The meaning specified in the Contract
Acquisition Agreement.
"Concentration Limits": The meaning specified in the Contract
Acquisition Agreement.
"Consent": Means the Consent dated as of August 31, 2001, among the
Issuer, the Company, MicroFinancial Incorporated, as servicer, ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, as Indenture Trustee and Back-up Servicer, the
Note Insurer and the Noteholders referred to therein, consenting to the
amendment and restatement of the Indenture and the First Amendment to the
Servicing Agreement.
"Consolidated Net Deficit": With respect to any period, the
consolidated net deficit of the Reported Companies for such period.
"Consolidated Net Income": With respect to any period, the
consolidated net income of the Reported Companies for such period, without
giving effect to (i) any gain or loss arising from any write-up of assets and
(ii) any extraordinary or nonrecurring gains.
"Contract": Each Lease Contract or Rental Contract.
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"Contract Acquisition Agreement": The Contract Acquisition Agreement,
dated as of March 1, 2000, between the Issuer and the Company.
"Contract Assets": The meaning specified in the Contract Acquisition
Agreement.
"Contract File": The meaning specified in the Contract Acquisition
Agreement.
"Controlling Party": The Note Insurer or, if (i) a Note Insurer
Default has occurred and is continuing or (ii) 124 days have elapsed since the
date on which all amounts owing to the Note Insurer under all applicable Note
Insurance Agreements have been paid in full, all Note Insurance Agreements have
been terminated and all Note Insurance Policies have been surrendered to the
Note Insurer for cancellation, the Majority Holders.
"Corporate Trust Office": The principal corporate trust office of the
Indenture Trustee at ▇▇▇ ▇▇▇▇▇▇ and Marquette Avenue, MAC N9311-161,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address as the Indenture Trustee
may designate from time to time by notice to the Note Insurer, the Noteholders
and the Issuer, or the principal corporate trust office of any successor
Indenture Trustee.
"Credit Agreement": The Fourth Amended and Restated Revolving Credit
Agreement, dated as of August 22, 2000, among the lenders party thereto, Fleet
National Bank (formerly known as BankBoston, N.A.), as agent, and the Company,
as amended from time to time or any credit agreement entered into by the Company
or MicroFinancial as substitution therefor.
"Customer": The lessee or obligor under each related Contract,
including any guarantor of such Person.
"Customer Prepayment Amount": The meaning specified in Section
4.04(d)(ii).
"Cut-Off Date": With respect to the Delivery Date for any Series of
Class A Notes, the meaning specified in the applicable Supplement and, with
respect to any Contracts acquired by the Issuer and Granted by the Issuer
hereunder on any Acquisition Date that is not a Delivery Date, the Calculation
Date immediately preceding such Acquisition Date.
"Default": Any occurrence or circumstance which with notice or the
lapse of time or both would become an Event of Default.
"Defaulted Contract": A Contract shall become a Defaulted Contract at
the earlier to occur of (a) the Calculation Date as of which such Contract has
been delinquent for a period of 181 or more days and (b) the date as of which
the Servicer determines in good faith in accordance with its customary practices
that it shall not make a Servicer Advance with respect to such Contract, that a
prior Servicer Advance with respect to such Contract is unrecoverable or that
the remaining Scheduled Payments under the related Contract are uncollectible.
"Delinquency Rate": For any Determination Date, the percentage
equivalent of a fraction, the numerator of which is the sum of the Implicit
Principal Balances as of the last day of the related Due Period of all Contracts
that are Delinquent Contracts (and that are more than 30 days past due) as of
such date, and the denominator of which is the Aggregate IPB as of the last day
of such Due Period.
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"Delinquent Contract": For any Determination Date, any Contract (a) as
to which the entire amount of the Scheduled Payment was not received when due
and which remains unpaid in whole or in part as of the last day of the related
Due Period and (b) which is not a Defaulted Contract.
"Delivery Date": The date on which the Notes of a Series are first
executed, authenticated and delivered, as specified in the related Supplement,
including the Initial Delivery Date in the case of the first Series of Notes
issued hereunder.
"Determination Date": The fourth Business Day preceding each Payment
Date.
"Discount Rate": With respect to a Series of Class A Notes, unless
otherwise specified in the related Supplement, the rate equal to the sum of the
applicable Class A Note Interest Rate, the Trustee Fee Rate, the Back-up
Servicer Fee Rate and the applicable Note Insurer Premium Rate.
"Dollar(s)": Lawful money of the United States of America.
"Due Date": With respect to each Contract, each date on which a
Scheduled Payment is due from a Customer thereunder.
"Due Period": As to any Determination Date or Payment Date, the period
beginning on the first day and ending on the last day of the calendar month
preceding the month in which such Determination Date or Payment Date occurs.
"Electronic Ledgers": The electronic master records of all contracts
of the Company or the Servicer similar to and including the Contracts.
"Eligible Contract": The meaning specified in the Contract Acquisition
Agreement.
"Eligible Investments": Any and all of the following:
(a) direct obligations of, and obligations fully guaranteed by,
the United States of America, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, the
Federal Home Loan Banks or any agency or instrumentality of
the United States of America the obligations of which are
backed by the full faith and credit of the United States of
America;
(b) (i) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by or federal funds sold by any
depository institution or trust company (including the
Indenture Trustee or its agent acting in their respective
commercial capacities) incorporated under the laws of the
United States of America or any State thereof and subject to
supervision and examination by federal and/or state
authorities, so long as at the time of such investment or
contractual commitment providing for such investment, such
depository institution or trust company has a short term
unsecured debt rating in one of the two highest available
rating categories of S & P and the highest available rating
category of Moody's and provided that each such investment
has an original maturity of no more than 365 days, and (ii)
any other demand or time deposit or deposit which is fully
insured by the Federal Deposit Insurance Corporation;
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(c) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (a) above
and entered into with a depository institution or trust
company (acting as a principal) rated "A" or higher by S &
P, rated A2 or higher by Moody's; provided, however, that
collateral transferred pursuant to such repurchase
obligation must be of the type described in clause (a) above
and must (i) be valued weekly at current market price plus
accrued interest, (ii) pursuant to such valuation, equal, at
all times, 105% of the cash transferred by the Indenture
Trustee in exchange for such collateral and (iii) be
delivered to the Indenture Trustee or, if the Indenture
Trustee is supplying the collateral, an agent for the
Indenture Trustee, in such a manner as to accomplish
perfection of a security interest in the collateral by
possession of certificated securities;
(d) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United
States of America or any State thereof which has a long term
unsecured debt rating in the highest available rating
category of each of the Rating Agencies at the time of such
investment;
(e) commercial paper having an original maturity of less than
365 days and issued by an institution having a short term
unsecured debt rating in the highest available rating
category of each of the Rating Agencies at the time of such
investment;
(f) a guaranteed investment contract approved by each of the
Rating Agencies and the Controlling Party and issued by an
insurance company or other corporation having a long term
unsecured debt rating in the highest available rating
category of each of the Rating Agencies at the time of such
investment;
(g) money market funds having ratings in one of the two highest
available rating categories of S & P and the highest
available rating category of Moody's at the time of such
investment which invest only in other Eligible Investments;
any such money market funds which provide for demand
withdrawals being conclusively deemed to satisfy any
maturity requirement for Eligible Investments set forth in
this Indenture; and
(h) any other investment approved by the Controlling Party and
each Rating Agency.
Each of the Eligible Investments may be purchased by the Indenture
Trustee or through an Affiliate of the Indenture Trustee.
"Equipment": The equipment leased or rented or purportedly leased or
rented to the Customers pursuant to the Contracts, together with any replacement
parts, additions or repairs thereof, and any accessories incorporated therein or
affixed thereto.
"ERISA": The Employee Retirement Income Security Act of 1974.
"Event of Default": The meaning specified in Section 6.01 hereof.
"Existing Indebtedness": The meaning specified in the Contract
Acquisition Agreement.
8
"Expected Rental Termination Date": With respect to each Rental
Contract, the Due Date occurring in the last month of the period corresponding
to the multiple of monthly payments used to determine the price paid by the
Company to purchase such Contract.
"Final Due Date": With respect to (a) each Lease Contract, the final Due
Date thereunder and (b) each Rental Contract, the Expected Rental Termination
Date.
"Final Payment Date": With respect to any Note of a Series, the date on
which the final principal payment on such Note is made as therein or herein
provided, whether at the Stated Maturity Date or by acceleration or redemption.
"Floor Percentage": For each Series of Class A Notes, the meaning
specified in the applicable Supplement.
"Grant": To grant, bargain, warrant, alienate, remise, release, convey,
assign, transfer, mortgage, pledge, create and grant a security interest in and
right of set-off against, deposit, set over and confirm. A Grant of the
Contracts, the Receivables or of any other instrument shall include all rights,
powers and options (but none of the obligations) of the Granting party
thereunder, including, without limitation, the immediate and continuing right to
claim, collect, receive and receipt for payments in respect of the Contracts and
the related Receivables, or any other payment due thereunder, to give and
receive notices and other communications, to make waivers or other agreements,
to exercise all rights and options, to bring proceedings in the name of the
Granting party or otherwise, and generally to do and receive anything which the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"Guaranty Amounts": Any and all amounts paid by the individual guarantor
indicated on the applicable Contract.
"Holder" or "Noteholder": The Person in whose name a Note is registered
in the Note Register.
"Implicit Principal Balance" or "IPB": With respect to any Contract and
any date of determination, the present value of the remaining stream of
Scheduled Payments (or, in the case of a Rental Contract, the present value of
the expected remaining stream of Scheduled Payments, assuming that such stream
of Scheduled Payments will terminate at the related Expected Rental Termination
Date) due with respect to such Contract after the applicable Calculation Date
(reduced by the applicable Servicer Fee but not reduced by any Additional
Servicer Fee) calculated by discounting such Scheduled Payments (assuming such
Scheduled Payments are received on the last day of the related Due Period) to
such Calculation Date at an annual rate equal to the applicable Discount Rate,
at the same frequency as the Payment Dates; except that on the Calculation Date,
(a) on or immediately following the deposit into the Collection Account of
Insurance Proceeds equal to the outstanding Implicit Principal Balance of the
related Contract or the Purchase Price, or on or immediately following the
delivery of a Substitute Contract, (b) on or immediately following the date that
a Contract has become a Defaulted Contract or a Terminated Rental Contract, or
(c) immediately preceding the Final Due Date of a Contract, the Implicit
Principal Balance of the related Receivable shall be zero. To the extent that
the Final Due Date of any Series Contract is later than the Stated Maturity Date
of the last maturing Notes of the related Series of Notes, any Scheduled Payment
due on such Contract after the Calculation Date immediately preceding such
Stated Maturity Date shall not be taken into account in calculating the Implicit
Principal Balance of such Contract.
9
"Indenture": This Amended and Restated Indenture, as supplemented by any
Supplements then in effect, in the form originally executed and, if from time to
time further supplemented or amended in accordance with the applicable
provisions hereof, as so supplemented or amended.
"Indenture Trustee": ▇▇▇▇▇ Fargo Bank Minnesota, National Association,
until a successor Person shall have become the Indenture Trustee pursuant to the
applicable provisions of this Indenture, and thereafter "Indenture Trustee"
shall mean such successor Person.
"Independent": When used with respect to any specified Person means such
a Person, who since the time of appointment and for at least five years prior
thereto (a) is in fact independent of the Issuer, (b) does not have any direct
financial interest or any material indirect financial interest in the Issuer or
in any Affiliate of the Issuer, (c) is not connected with the Issuer as an
officer, employee, shareholder, promoter, underwriter, trustee, partner,
director, customer, supplier or person performing similar functions, (d) is not
a person controlling or under common control with any such stockholder,
customer, supplier or other person and (e) is not a member of the immediate
family of any such stockholder, director, officer, employee, customer, supplier
or other person. For the purposes of this definition, an "Affiliate" of a person
or an entity controlling, controlled by, or under common control with such first
person or entity and the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of management,
policies or activities of a person or entity, whether through ownership of
voting securities, by contract or otherwise; provided that, solely with respect
to the Articles of Organization of the Issuer, any Person owning more than 5% of
the equity interest in an entity shall be deemed to have control of such entity.
Whenever it is herein provided that any Independent Person's opinion or
certificate shall be furnished to the Indenture Trustee, such Person shall be
appointed by an Issuer Order and approved by the Indenture Trustee in the
exercise of reasonable care, and such opinion or certificate shall state that
the signer has read this definition and that the signer is Independent within
the meaning hereof.
"Independent Accountants": Any firm of independent certified public
accountants of recognized national standing satisfactory to the Controlling
Party.
"Initial Cash Collateral Account Deposit": The amount, if any, required
to be deposited by the Issuer into the Cash Collateral Account in connection
with the issuance of any new Series of Class A Notes, as specified in the
applicable Supplement.
"Initial Delivery Date": Means March 21, 2000.
"Initial Payment Date": The meaning specified in the applicable
Supplement.
"Insurance Policy": With respect to an item of Equipment and the related
Contract, any insurance policy maintained by the Customer pursuant to the
related Contract that covers physical damage to the Equipment or general
liability (including policies procured by the Company or the Servicer, if any,
on behalf of the Customer).
"Insurance Proceeds": With respect to an item of Equipment and the
related Contract, any amount received pursuant to an Insurance Policy, net of
any costs of collecting such amounts not otherwise reimbursed.
"Insurer": Any insurance company or other insurer providing any
Insurance Policy.
"Interest Calculation Convention": The meaning specified in the
applicable Supplement.
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"Interest Deficiency Draw Amount": Has the meaning set forth in Section
8.01 and the applicable Note Insurance Policy.
"Investment Letter": The meaning specified in Section 2.06.
"Issuer": MFI Finance Corp. I.
"Issuer Order" and "Issuer Request": A written order or request signed
in the name of the Issuer by its Chairman of the Board, its President, or any
Vice President, and delivered to the Indenture Trustee.
"Key Employee": Each of ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
"Lease Contracts": Lease contracts and all rights with respect thereto,
including all guaranties and other agreements or arrangements of whatever
character from time to time supporting or securing payment of any lease contract
and all rights with respect to any agreements or arrangements with the vendors,
dealers or manufacturers of the Equipment to the extent specifically related to
any lease contract, which contracts are identified on either a Series Contract
Schedule delivered to the Indenture Trustee and the Note Insurer on a Delivery
Date or on an Amended Contract Schedule delivered to the Indenture Trustee and
the Note Insurer on an Acquisition Date; provided that, from and after the date
on which a Lease Contract is repurchased, removed or substituted by the Company
or the Issuer in accordance with Section 4.04 hereof, such repurchased, removed
or replaced Lease Contract shall no longer constitute a Lease Contract for
purposes of the Transaction Documents.
"Lien": The meaning specified in the Contract Acquisition Agreement.
"Loss and Damage Waiver Fee": With respect to a Contract, the aggregate
monthly fees payable by the Customer under such Contract in lieu of such
Customer obtaining an Insurance Policy.
"Majority Holders": If any Class A Notes are then Outstanding, the
Holders of not less than 51% of Outstanding Principal Amount of all Class A
Notes of all Series then Outstanding; otherwise, the Holders of not less than
51% of Outstanding Principal Amount of all Class B Notes of all Series then
Outstanding.
"MFI Certificate": An MFI Certificate, substantially in the form
attached hereto as Exhibit D.
"Monthly Servicer's Report": The report prepared by the Servicer
pursuant to Section 4.01 of the Servicing Agreement.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc.
"Net Worth Requirement": The requirement that the consolidated Tangible
Net Worth of the Reported Companies must be at least equal to $90,000,000 plus
50.00% of the aggregate amount of Consolidated Net Income of the Reported
Companies for each of the fiscal quarters ending after June 30, 2001, but
without deducting therefrom any amount of Consolidated Net Deficit for any of
such fiscal quarters. All such amounts shall be calculated in accordance with
generally accepted accounting principles except as otherwise specified herein.
"Nonrecoverable Advance": The meaning specified in the Servicing
Agreement.
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"Noteholder" or "Holder": The Person in whose name a Note is registered
in the Note Register.
"Note Insurance Agreement": With respect to each Series of Class A
Notes, the applicable Note Insurance Agreement, dated as of the related
Transaction Documents Date, among the Note Insurer, the Issuer, the Company, the
Servicer, the Back-up Servicer and the Indenture Trustee.
"Note Insurance Policy": Each note guaranty insurance policy issued by
the Note Insurer insuring each Series of Class A Notes in accordance with the
terms thereof, the form of which is attached hereto as Exhibit E.
"Note Insurer": Ambac Assurance Corporation.
"Note Insurer Default": The occurrence and continuance of any one or
more of the following events:
(a) the failure by the Note Insurer to make a payment under a Note
Insurance Policy in accordance with its terms;
(b) the Superintendent of Insurance of the State of New York (or any
Person succeeding to the duties of such Superintendent) (the
"Superintendent") shall apply for an order (i) pursuant to
Section 7402 of the New York Insurance Law (or any successor
provision thereto), directing him to rehabilitate the Note
Insurer, (ii) pursuant to section 7404 of the New York Insurance
Law (or any successor provision thereto), directing him to
liquidate the business of the Note Insurer or (iii) pursuant to
Section 7416 of the New York Insurance Law (or any successor
provision thereto), dissolving the corporate existence of the
Note Insurer and, in each case, such application shall not be
dismissed or withdrawn during a period of 60 consecutive days or
a court of competent jurisdiction enters an order granting the
relief sought;
(c) the Superintendent shall determine that the Note Insurer is
insolvent within the meaning of Section 1309 of the New York
Insurance Law or any successor section;
(d) the Note Insurer shall commence a voluntary case or other
proceeding seeking rehabilitation, liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit
of creditors; or
(e) an involuntary case or other proceeding shall be commenced
against the Note Insurer seeking rehabilitation, liquidation,
reorganization or other relief with respect to it or its debts
under bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it
or any substantial part of its property and such case or
proceeding is not dismissed or otherwise terminated within a
period of 60 consecutive days or a court of competent
jurisdiction enters an order granting the relief sought in such
case or proceeding.
"Note Insurer Premium": With respect to each Series of Class A Notes,
the fee payable on each Payment Date to the Note Insurer, in an amount equal to
the product of (i) one-twelfth of the applicable Note Insurer Premium Rate and
(ii) the Outstanding Principal Amount of such Series of Class A Notes
immediately
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following the preceding Payment Date; provided that, with respect to the Initial
Payment Date for each Series of Class A Notes issued pursuant to this Indenture,
the Note Insurer Premium shall equal the amount specified in the applicable
Supplement.
"Note Insurer Premium Rate": With respect to each Series of Class A
Notes, the meaning specified in the applicable Supplement.
"Note Interest Rate": With respect to each Series of Class A Notes, the
Class A Note Interest Rate, and, with respect to each Series of Class B Notes,
the Class B Note Interest Rate.
"Note Principal Balance Deficiency": has the meaning set forth in
Section 8.01 and the related Note Insurance Policy.
"Note Purchase Agreement": With respect to each Series of Notes, the
meaning specified in the applicable Supplement.
"Note Register" and "Note Registrar": The respective meanings specified
in Section 2.05 hereof.
"Note" or "Notes": Any one or all Outstanding Notes of all Series and
Classes, or, as the context may require, of a specific Series and Class.
"Officer's Certificate": A certificate signed by the Chairman of the
Board, the President, a Vice President, the Treasurer, the Controller, an
Assistant Controller or the Secretary of the company on whose behalf the
certificate is delivered, and delivered to the Indenture Trustee, which
certificate shall comply with the applicable requirements of Section 13.11
hereof. Unless otherwise specified, any reference in this Indenture to an
Officer's Certificate shall be to an Officer's Certificate of the Issuer.
"Operating Account": The bank account maintained by MicroFinancial
Incorporated in the name of Leasecomm Corporation at Fleet National Bank or any
bank account substituted therefor.
"Opinion of Counsel": A written opinion of counsel who may, except as
otherwise expressly provided in this Indenture, be counsel for the Issuer and
who shall be reasonably satisfactory to the Indenture Trustee and the
Controlling Party and which opinion shall comply with the applicable
requirements of Section 13.11 hereof.
"Outstanding": With respect to Notes of any Series, as of any date of
determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(a) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(b) Notes for whose payment money in the necessary amount has been
theretofore irrevocably deposited with the Indenture Trustee or
any Paying Agent (other than the Issuer) in trust for the
Holders of such Notes (provided, however, that if such Notes are
to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or any provision therefor,
satisfactory to the Indenture Trustee, has been made, in
accordance with Article Ten hereof); and
13
(c) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture, unless
proof satisfactory to the Indenture Trustee is presented that
any such Notes are held by a bona fide purchaser;
provided, that for purposes of disbursing payments from the Note Insurance
Policies and in determining whether the Holders of the requisite Outstanding
Principal Amount of Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Notes owned by the Issuer or any
other obligor upon the Notes or any Affiliate of the Issuer or such other
obligor shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Indenture Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent, or waiver, only
Notes which the Indenture Trustee knows to be so owned shall be so disregarded.
"Outstanding Principal Amount": With respect to any Outstanding Note,
Class of Notes or Series of Notes (including, for purposes of accruing interest
thereon, any Notes called for redemption but not yet redeemed), the unpaid
principal amount of such Note or all Notes of such Class or Series, as
applicable.
"Paying Agent": The Indenture Trustee or any other Person that meets the
eligibility standards for the Indenture Trustee specified in Section 7.08 hereof
and is authorized by the Issuer pursuant to Section 7.16 hereof to pay the
principal of, or interest on, any Notes on behalf of the Issuer.
"Payment Date": For each Series of Notes, the sixteenth day of each
calendar month (or if such day is not a Business Day, the next succeeding
Business Day) commencing on the Initial Payment Date for such Series.
"Person": Any individual, corporation, partnership, association,
joint-stock company, limited liability company, limited liability partnership,
statutory or common law trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Placement Agent": The meaning specified in the applicable Supplement.
"Preference Claim": The meaning specified in Section 8.01.
"Prepayment Differential": The meaning specified in Section 4.04(d)(ii).
"Priority Reimbursement Limit": means $350,000, provided that if any
additional Series of Class A Notes are issued after September 30, 2001 such that
more than 3 Series of Class A Notes are then Outstanding, such limit shall
increase by $150,000 for each additional Series of Class A Notes issued.
"Private Placement Memorandum" or "Final Private Placement Memorandum":
The Private Placement Memorandum related to any direct or indirect offering of a
Series of Notes and having the date specified in the applicable Supplement.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Pro Rata Share": With respect to:
(a) any distribution of the Class A Principal Distribution Amount on
any Series of Class A Notes on any Payment Date, a fraction
(expressed as a decimal), the numerator of which is the
14
Targeted Principal Distribution Amount scheduled to be paid on
such Series of Class A Notes on such Payment Date, and the
denominator of which is the aggregate Targeted Principal
Distribution Amounts in respect of all Series of Class A Notes
on such Payment Date;
(b) any distribution of interest on any Series of Class A Notes on
any Payment Date, a fraction (expressed as a decimal), the
numerator of which is the amount of interest scheduled to be
paid on such Series of Class A Notes on such Payment Date and
the denominator of which is the amount of interest scheduled to
be paid on all Series of Class A Notes on such Payment Date;
(c) any payments of Additional Principal Amounts on any Payment
Date, a fraction (expressed as a decimal), the numerator of
which is the decline in the related Series IPB since the
Calculation Date preceding the Trigger Event, and the
denominator of which is the decline in the Aggregate IPB since
the Calculation Date preceding the Trigger Event;
(d) any distribution of interest on any Series of Class B Notes on
any Payment Date, a fraction (expressed as a decimal), the
numerator of which is the amount of interest scheduled to be
paid on such Series of Class B Notes on such Payment Date and
the denominator of which is the amount of interest scheduled to
be paid on all Series of Class B Notes on such Payment Date; and
(e) any distribution of the Class B Principal Distribution Amount on
any Series of Class B Notes on any Payment Date, a fraction
(expressed as a decimal), the numerator of which is the
Outstanding Principal Amount of such Series of Class B Notes,
and the denominator of which is the aggregate Outstanding
Principal Amount of all Series of Class B Notes.
"Purchase Price": With respect to any Contract repurchased by the
Company pursuant to Section 3.03 of the Contract Acquisition Agreement or
removed by the Issuer pursuant to Section 4.04(d) hereof, the sum of (a)(i) in
the case of a Lease Contract, the Implicit Principal Balance (computed without
giving effect to clauses (b) and (c) of the definition of Implicit Principal
Balance) of such Contract on the Calculation Date on or immediately preceding
the date as of which the Contract is removed or repurchased, (ii) in the case of
a Rental Contract, the greater of (A) the Implicit Principal Balance (computed
without giving effect to clauses (b) and (c) of the definition of Implicit
Principal Balance) of such Rental Contract on the Calculation Date on or
immediately preceding the date as of which the Contract is removed or
repurchased and (B) the scheduled termination fee payable pursuant to such
Rental Contract, (b) any Scheduled Payments with respect to such Contract due on
or prior to such Calculation Date but not received through such Calculation
Date, and (c) with respect to the related Equipment, the greater of (i) the
amount, if any, recorded in the books and records of the Company as the
"unguaranteed residual" and (ii) the fair market value of the Issuer's interest
in such Equipment at the time of such repurchase or removal.
"Rating Agency": With respect to any Series of Notes and any date of
determination, each nationally recognized statistical rating organization which
has been requested by the Issuer to provide a rating for such Series of Notes
and which, as of such date of determination, is so rating such Series of Notes.
"Rating Agency Condition" means, with respect to any action and a Series
of Notes, that each Rating Agency with respect to such Series shall have been
given ten Business Days (or such shorter period as is acceptable to such Rating
Agency) prior notice thereof and that no Rating Agency shall have notified the
Issuer, the Servicer, the Indenture Trustee or the Note Insurer in writing that
such action will result in a qualification,
15
reduction or withdrawal of its then-current rating, whether explicit or implied
(including any notice to the Note Insurer regarding the "shadow rating"), of
such Series of Notes.
"Receivable": With respect to any Contract, all of and the right to
receive all of (a) the Scheduled Payments, (b) any prepayments made with respect
of such Contract, (c) any Guaranty Amounts, (d) any Insurance Proceeds, (e) any
Residual Proceeds, (f) any Recoveries and (g) any Servicing Charges.
"Record Date": The close of business on the last day of the calendar
month preceding the applicable Payment Date, whether or not a Business Day,
except that, with respect to an Initial Payment Date, the Record Date shall be
the related Delivery Date.
"Recoveries": For any Due Period during which or occurring after the
date on which any Contract becomes a Defaulted Contract and with respect to such
Defaulted Contract, all payments that the Servicer received from or on behalf of
a Customer during such Due Period in respect of such Defaulted Contract or from
liquidation or re-leasing of the related Equipment, including but not limited to
Scheduled Payments, Guaranty Amounts, and Insurance Proceeds, as reduced by (a)
any unreimbursed Servicer Advances with respect to such Contract and (b) any
out-of-pocket expenses reasonably incurred by the Servicer in enforcing such
Defaulted Contract.
"Redemption Account": The meaning specified in Section 12.02(e) hereof.
"Redemption Date": A date fixed pursuant to Section 10.01 hereof.
"Redemption Price": With respect to any Series of Notes being redeemed
pursuant to Article Ten hereof, and as of the related Redemption Date, the
Outstanding Principal Amount of such Series of Notes, together with, in each
case, interest accrued and unpaid thereon to but excluding the related
Redemption Date at the applicable Note Interest Rate (exclusive of installments
of interest and principal maturing on or prior to such date, payment of which
shall have been made or duly provided for to the Holder of such Note on the
applicable Record Date or as otherwise provided in this Indenture).
"Redemption Record Date": With respect to any redemption of Notes, a
date fixed pursuant to Section 10.01 hereof.
"Registered Holder": The Person whose name appears on the Note Register
on the applicable Record Date or Redemption Record Date.
"Reinvestment Income": Any interest or other earnings earned on all or
part of the Trust Estate.
"Rental Contract": Each contract in respect of (i) a residential or
commercial security monitoring agreement or (ii) an equipment rental agreement
with an unspecified term related to point of sale bankcard equipment or such
other personal property as is approved in advance by the Controlling Party, and
all rights with respect thereto, including all guaranties and other agreements
or arrangements of whatever character from time to time supporting or securing
payment of any rental contract and all rights with respect to any agreements or
arrangements with the vendors, dealers or manufacturers of the related Equipment
or the provider of any monitoring service to the extent specifically related to
any rental contract, which contracts are identified on either a Series Contract
Schedule delivered to the Indenture Trustee and the Note Insurer on a Delivery
Date or on an Amended Contract Schedule delivered to the Indenture Trustee and
the Note Insurer on an Acquisition Date; provided that, from and after the date
on which a Rental Contract is repurchased, removed or substituted
16
by the Company or the Issuer in accordance with Section 4.04 hereof, such
repurchased, removed or replaced Rental Contract shall no longer constitute a
Rental Contract for purposes of the Transaction Documents.
"Reported Companies": MicroFinancial Incorporated and its consolidated
subsidiaries.
"Required Collateralization Amount": With respect to a Series of Class A
Notes, as of any date of determination, the greater of
(a) the related Collateralization Percentage multiplied by the
Series IPB, and
(b) the related Floor Percentage multiplied by the Series Initial
IPB.
"Required Prepayment Amount": The meaning specified in Section
4.04(d)(ii).
"Residual Proceeds": With respect to a Contract that is not a Defaulted
Contract and the related Equipment, the net proceeds (excluding Insurance
Proceeds) of any sale, re-lease or re-rental (including any lease or rental
renewal and any periodic payment accrued on a Rental Contract after its Expected
Rental Termination Date) or other disposition of such Equipment.
"Responsible Officer": When used with respect to the Indenture Trustee,
any officer assigned to the Corporate Trust Department (or any successor
thereto), including any Vice President, Senior Trust Officer, Trust Officer,
Assistant Trust Officer, any Assistant Secretary, any Trust Officer or any other
Officer of the Indenture Trustee customarily performing functions similar to
those performed by any of the above designated officers and having direct
responsibility for the administration of this Indenture, and also, with respect
to a particular matter, any other officer, to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"Sale": The meaning specified in Section 6.18 hereof.
"Scheduled Payment": With respect to any Contract and any Due Period
starting on or before the Final Due Date for such Contract, the periodic
payment, including, if so specified in the applicable Supplement, any payments
pursuant to any "PUT" (Purchase Upon Termination) clause or balloon payment
provision (but excluding any amounts in respect of Servicing Charges), as set
forth in such Contract, due from the Customer in such Due Period, calculated
without regard to any modification granted pursuant to Section 3.01(b)(v) of the
Servicing Agreement.
"Securities Act": The Securities Act of 1933, as amended.
"Series": A separate Series of Notes issued pursuant to this Indenture,
which Series may be comprised of either Class A Notes or Class B Notes (but not
both Class A Notes and Class B Notes), with the specific terms identified in the
applicable Supplement.
"Series Cash Collateral Account Required Balance": Except as otherwise
set forth in the related Supplement, with respect to a Series of Class A Notes
then Outstanding, as of any determination date, an amount equal to the sum of
(a) the Initial Cash Collateral Account Deposit for such Series and (b) the
product of
17
(i) the positive excess, if any, of the Required Collateralization
Amount for such Series minus the difference between
(A) the Series IPB, and
(B) the Outstanding Principal Amount of such Series of
Notes, after giving effect to any payments of principal expected to
occur on the Payment Date occurring on or immediately after such
determination date; and
(ii) the related Cash Collateral Account Factor;
provided, that, if a Trigger Event has occurred, the Series Cash Collateral
Account Required Balance shall be an amount equal to zero.
"Series Contracts": With respect to each Series of Class A Notes, the
Contracts listed on the related Series Contract Schedule, including any
Substitute Contracts.
"Series Contract Schedule": For each Series of Class A Notes, the list
of Contracts and Receivables attached to the applicable Supplement for such
Series of Notes, together with and as amended by all related Amended Contract
Schedules, each of which shall include with respect to each Contract as of the
related Acquisition Date: (a) a number identifying the Contract, (b) the
Implicit Principal Balance of the related Receivable, (c) the identity of the
Customer, (d) the State of the Customer's billing address, (e) the original and
remaining term, (f) the Scheduled Payment, (g) the frequency with which
Scheduled Payments are due, (h) the zip code of the Customer's billing address,
(i) the amount of any Loss and Damage Waiver Fee, (j) whether such Contract is a
Lease Contract or a Rental Contract and whether the terms of such Contract
include a PUT clause or any balloon payment, (k) the equipment type, and (l) any
additional items specified in the related Supplement.
"Series Initial IPB": With respect to any Series of Class A Notes, the
aggregate Implicit Principal Balance of the related Series Contracts as
calculated on the close of business on the related Cut-Off Date.
"Series IPB": With respect to any Series of Class A Notes, as of any
determination date, the sum of the Implicit Principal Balances of all related
Series Contracts, as of such determination date.
"Servicer": MicroFinancial Incorporated or any successor Servicer
appointed pursuant to Section 6.02 of the Servicing Agreement.
"Servicer Advance": The meaning set forth in Section 3.04 of the
Servicing Agreement.
"Servicer Event of Default": The meaning specified in Section 6.01(a) of
the Servicing Agreement.
"Servicer Fee": With respect to each Contract (other than Defaulted
Contracts or Contracts that are extended beyond their Final Due Date, as to
which there is no Servicer Fee) and each Due Period, $3.00 per Scheduled Payment
becoming due during such Due Period.
"Servicing Agreement": The Servicing Agreement, dated as of March 1,
2000, among the Servicer, the Issuer, the Back-up Servicer and the Indenture
Trustee, as amended from time to time.
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"Servicing Charges": For any Due Period, the sum of (a) all late payment
charges paid by Customers on Contracts that are Delinquent Contracts after
payment in full of any Scheduled Payments due in a prior or current Due Period,
(b) all Loss and Damage Waiver Fees, (c) any termination fees payable with
respect to a Rental Contract and other prepayment penalties and (d) any other
incidental charges or fees received from a Customer, including but not limited
to, late fees, collection fees, and returned check charges in excess of any
Scheduled Payment.
"Servicing Officers": The persons listed on a certificate of the
Servicer from time to time delivered by the Servicer to the Issuer and the
Indenture Trustee.
"S & P": Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"State": Any state of the United States of America and, in addition, the
District of Columbia and Puerto Rico.
"Stated Maturity Date": With respect to any Series of Notes, the meaning
specified in the applicable Supplement.
"Substitute Contract": The meaning specified in the Contract Acquisition
Agreement.
"Supplement": A Supplement to this Indenture, substantially in the form
of Exhibit B-1 or B-2 attached hereto, pursuant to which a Series of Notes is
issued.
"Tangible Net Worth": The sum, with respect to the Reporting Companies,
on a consolidated basis, of (a) the capital stock, (b) additional paid-in
capital (less accrued dividends), (c) retained earnings and (d) subordinated
debt less (x) net organizational costs and net good will, (y) treasury stock and
(z) 25% of debt issue costs.
"Targeted Balance": Except as otherwise set forth in the related
Supplement, for any Payment Date and any Series of Class A Notes, the amount
indicated under the column "Targeted Balance" on Schedule B to the applicable
Supplement for such Payment Date.
"Targeted Principal Distribution Amount": Except as otherwise set forth
in the related Supplement, with respect to a Payment Date and a Series of Class
A Notes,
(a) for any Payment Date prior to the applicable Stated Maturity
Date, if the Aggregate IPB equals or exceeds the aggregate
Targeted Balance for all Outstanding Series of Class A Notes, an
amount equal to the Outstanding Principal Amount of the Class A
Notes of such Series as of such Payment Date (before giving
effect to distributions on such date) minus the amount of the
applicable Targeted Balance for the Class A Notes of such Series
for such Payment Date;
(b) for any Payment Date prior to the applicable Stated Maturity
Date, if the Aggregate IPB is less than the aggregate Targeted
Balance for all Outstanding Series of Class A Notes, an amount
equal to the Outstanding Principal Amount of the Class A Notes
of such Series minus the lesser of
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(i) the amount of the applicable Targeted Balance for the
Class A Notes of such Series for such Payment Date, and
(ii) the applicable Series IPB, and
(c) for any Payment Date on or after the applicable Stated Maturity
Date, an amount equal to the Outstanding Principal Amount of the
Class A Notes of such Series for such Payment Date.
"Terminated Rental Contract": A Rental Contract that has been terminated
by the related Customer prior to the related Expected Rental Termination Date.
"Transaction Documents": This Indenture, the Servicing Agreement, the
Contract Acquisition Agreement, the Agreement Regarding Operating Account, the
Consent and, with respect a particular Series of Notes, the related Supplement,
the related Notes, the related Note Purchase Agreement(s) and, if applicable,
the related Note Insurance Agreement and the related Note Insurance Policy.
"Transaction Documents Date": With respect to each Series of Notes, the
meaning specified in the applicable Supplement.
"Transition Cost": Any documented expenses reasonably incurred by a
successor Servicer or the Indenture Trustee in connection with a transfer of
servicing from the Servicer to a successor Servicer as successor Servicer
pursuant to Section 6.02 of the Servicing Agreement, but not to exceed $75,000
in the aggregate.
"Trigger Event": The occurrence of any one or more of the following
events, unless waived in writing by the Controlling Party:
(a) in any Due Period, the average of the Annualized Default Rates
for the three consecutive prior Due Periods equals or exceeds
7.00%;
(b) for any Due Period, the Annualized Default Rate equals or
exceeds 21.00%;
(c) in any Due Period, the average of the Delinquency Rates for the
three consecutive prior Due Periods equals or exceeds 14.50%;
(d) the Net Worth Requirement is not met and such failure to meet
the Net Worth Requirement remains uncured for a period of thirty
days after delivery of the financial statements reflecting such
failure or after the date on which such financial statements
were required to have been delivered;
(e) a Change of Control;
(f) an Event of Default;
(g) a Servicer Event of Default;
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(h) any failure on the part of the Company duly to observe or
perform in any material respect any covenants or agreements of
the Company set forth in Section 3.03 of the Contract
Acquisition Agreement; or
(i) the occurrence of any other event designated as an additional
Trigger Event in any Supplement then in effect.
"Trust Estate": The meaning specified in the Granting Clause of this
Indenture.
"Trustee Fee": With respect to each Series of Class A Notes, the fee
payable on each Payment Date to the Indenture Trustee in consideration for the
Indenture Trustee's performance of its duties pursuant to this Indenture as
Indenture Trustee, in an amount (except as otherwise provided in an applicable
Supplement) equal to the product of one-twelfth of the Trustee Fee Rate and the
Outstanding Principal Amount of such Series of Class A Notes immediately
following the preceding Payment Date.
"Trustee Fee Rate": The meaning specified in the applicable Supplement
with respect to a Series of Class A Notes.
"Vice President": With respect any entity, any vice president, whether
or not designated by a number or a word or words added before or after the title
"vice president."
"Withdrawn Collateral": The meaning specified in Section 5.01(b) hereof.
SECTION 1.02 USAGE OF TERMS.
(a) With respect to all terms in this Indenture, the singular
includes the plural and the plural the singular; words importing any gender
include the other genders; references to a "writing" include printing, typing,
lithography and other means of reproducing words in a tangible form; references
to agreements and other contractual instruments and statutes and other laws
include all subsequent amendments thereto or changes therein entered into in
accordance with their respective terms and not prohibited by this Indenture;
references to Persons include their permitted successors and assigns; the term
"including" means "including without limitation" and, unless the context
requires otherwise, the term "or" means "and/or." The words "herein," "hereof,"
"hereunder" and other words of similar import when not related to a specific
subdivision of this Indenture, refer to this Amended and Restated Indenture as a
whole and not to any particular Article, Section, Subsection or other
subdivision of this Indenture or any Supplement.
(b) All references in this Amended and Restated Indenture designated
"Articles," "Sections," "Subsections" and other subdivisions are to the
designated Articles, Sections, Subsections and other subdivisions of this
Amended and Restated Indenture as originally executed, or if amended or
supplemented, as so amended and supplemented, and all references in a Supplement
to the designated "Articles," "Sections," "Subsections" and other subdivisions
are to the designated Articles, Sections, Subsections and other subdivisions of
such Supplement.
SECTION 1.03 LEGAL HOLIDAYS.
In any case in which the date of any Payment Date or the Stated Maturity
Date of any Note shall not be a Business Day, then (notwithstanding any other
provision of a Note or this Indenture) payment of principal or interest need not
be made on such date, but may be made on the next succeeding Business Day with
the same
21
force and effect as if made on the nominal date of any such Stated Maturity Date
or Payment Date and, assuming such payment is actually made on such subsequent
Business Day, no additional interest shall accrue on the amount so paid for the
period from and after any such nominal date.
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ARTICLE TWO
THE NOTES
SECTION 2.01 FORM GENERALLY.
Each Series of Class A Notes issued hereunder and the certificates of
authentication affixed thereto shall be substantially in the form set forth in
Exhibit A-1 hereto and each Series of Class B Notes issued hereunder and the
certificates of authentication affixed thereto shall be substantially in the
form set forth in Exhibit A-2 hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and the applicable 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, such determination to be conclusively evidenced
by their execution of the Notes.
The definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any manner acceptable to the Indenture Trustee and the initial purchasers of the
Notes, all as determined by the officers executing such Notes, such
determination to be conclusively evidenced by their execution of such Notes.
SECTION 2.02 SERIES; DENOMINATION.
(a) This Indenture provides for the issuance by the Issuer from time
to time of one or more Series of Notes consisting of either Class A Notes or
Class B Notes (but not both Class A Notes and Class B Notes of the same series).
Each Note in a Series shall bear upon the face thereof the designation selected
for the Series and Class to which it belongs. Notwithstanding the foregoing, any
Series of Notes issued, authenticated and outstanding before August 1, 2001
shall be deemed Class A Notes whether or not so indicated on their face. All
Notes in a Series shall be identical except for differences in registration
information and denomination.
Each Series of Class A Notes issued under this Indenture shall be in all
respects equally and ratably secured with all other Series of Class A Notes by
the Collateral Granted by the Issuer on the Initial Delivery Date and from time
to time thereafter (provided, that (a) each Note Insurance Policy is and is to
be issued specific to a Series of Class A Notes and the Holders of Notes of any
other Series shall have no right or interest in the Note Insurance Policy issued
in respect of such other Series of Class A Notes and (b) all cash amounts shall
be applied by the Trustee in accordance with the express provisions hereof) and
shall be entitled to the benefits hereof without preference, priority or
distinction on account of the actual time or times of authentication and
delivery, all in accordance with the terms and provisions of this Indenture and
the applicable Supplement.
Each Series of Class B Notes issued under this Indenture shall be in all
respects equally and ratably secured with all other Series of Class B Notes by
the Collateral Granted by the Issuer on the Initial Delivery Date and from time
to time thereafter (although the Class B Notes are not secured by the Note
Insurance Policies or any proceeds therefrom, and are not entitled to any
benefit to be derived therefrom), and shall be entitled to the benefits hereof
without preference, priority or distinction on account of the actual time or
times of authentication and delivery, all in accordance with the terms and
provisions of this Indenture and the applicable Supplement.
23
The rights of the Holders of the Class B Notes to receive payments of
principal and interest in respect of the Class B Notes on any Payment Date,
Stated Maturity Date or Redemption Date shall be subordinated to the rights of
the Holders of Class A Notes to receive payments of principal and interest in
respect of the Class A Notes on such Payment Date, Stated Maturity Date or
Redemption Date and certain other payments as set forth in Sections 6.08 and
12.02(d).
The Supplement with regard to a Series of Notes shall establish, without
limitation, the following terms and provisions of such Series, each of which the
Issuer shall determine in authorizing the issuance of any Series:
(i) designation of the Series and the Class thereof;
(ii) the applicable Delivery Date, Initial Payment Date,
Accrual Date, Transaction Documents Date, and, if applicable, the
schedules to be attached to such Supplement containing the Targeted
Balances with respect to such Series of Notes the Series Contract
Schedule, Cut-Off Date and the date of the related Private Placement
Memorandum;
(iii) the maximum aggregate principal amount of Notes of such
Series that may be issued;
(iv) the related Note Interest Rate or the method for
determining the related Note Interest Rate and the Interest Calculation
Convention;
(v) if applicable, the amount of any Initial Cash Collateral
Account Deposit;
(vi) with respect to any Series of Class A Notes, the Note
Insurance Policy number;
(vii) the Stated Maturity Date for such Series;
(viii) any additional Trigger Events, if applicable, for such
Series; and
(ix) any additional conditions to the issuance of Notes of
such Series (including conditions, if applicable, to issuing notes of
such Series in more than one closing) or additional defined terms
related to such Series.
(b) The aggregate principal amount of Notes of each Class and Series
which may be authenticated and delivered under this Indenture is specified in
the applicable Supplement, except for Notes authenticated and delivered upon
registration of transfer or in exchange for or in lieu of, other Notes pursuant
to Sections 2.05, 2.07 or 9.05 hereof. The Class A Notes shall be issuable only
as registered Notes without coupons in minimum denominations of $500,000 and
integral multiples of $0.01 in excess thereof and the Class B Notes shall be
issuable only as registered Notes without coupons in minimum denominations of
$1,000,000 and integral multiples of $0.01 in excess thereof; provided, that the
foregoing shall not restrict or prevent the transfer in accordance with Sections
2.05 and 2.06 hereof of any Note with a remaining Outstanding Principal Amount
of less than its original minimum denomination.
SECTION 2.03 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
(a) The Notes shall be manually executed on behalf of the Issuer by
its President, Treasurer or one of its Vice Presidents. Notes bearing the manual
signatures of individuals who were at any time the proper
24
officers of the Issuer shall bind the Issuer, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication or delivery of such Notes or did not hold offices at the date of
authentication or delivery of such Notes.
(b) Each Note shall bear on its face the applicable Delivery Date
and be dated as of the date of its authentication.
(c) No Note shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee or by any Authenticating Agent by the manual
signature of one of its authorized officers, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
SECTION 2.04 [RESERVED]
SECTION 2.05 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Issuer shall cause to be kept at an office or agency to be
maintained by the Issuer in accordance with Section 11.02(m) hereof a register
(the "Note Register"), in which, subject to such reasonable regulations as it
may prescribe, the Issuer shall provide for the registration of Notes and the
registration of transfers of Notes. ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, Sixth Street and Marquette Avenue, MAC N9311-161, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, is hereby appointed "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. The Indenture
Trustee shall have the right to examine the Note Register at all reasonable
times and to rely conclusively upon a Certificate of the Note Registrar as to
the names and addresses of the Holders of the Notes and the principal amounts
and numbers of such Notes as held.
(b) Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 11.02(m)
hereof and subject to the conditions set forth in Section 2.06 hereof, the
Issuer shall execute, and the Indenture Trustee or its agent shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Notes of any authorized denominations, and of a like aggregate
principal amount, Class, Series and Stated Maturity Date.
(c) At the option of the Holder, Notes of a Series may be exchanged
for other Notes of such Series of any authorized denominations and of a like
aggregate principal amount, Class and Stated Maturity Date, upon surrender of
the Notes to be exchanged at such office or agency. Whenever any Notes are so
surrendered for exchange, the Issuer shall execute, and the Indenture Trustee or
its agent shall authenticate and deliver, the Notes which the Noteholder making
the exchange is entitled to receive.
(d) All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of such transfer or exchange.
(e) Every Note presented or surrendered for registration of transfer
or exchange shall (if so required by the Issuer or the Note Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Note Registrar duly executed, by the Holder
thereof or his attorney duly authorized in writing.
25
(f) No service charge shall be made to a Holder for any registration
of transfer or exchange of Notes, but the Issuer 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 Notes, other than
exchanges pursuant to Section 2.05 or 9.05 hereof not involving any registration
of transfer.
SECTION 2.06 LIMITATION ON TRANSFER AND EXCHANGE.
(a) The Notes have not been registered or qualified under the
Securities Act or the securities laws of any state. No transfer of any Note
shall be made unless that transfer is made in a transaction which does not
require registration or qualification under the Securities Act or under
applicable state securities or "Blue Sky" laws. In the event that a transfer is
to be made, such Noteholder's prospective transferee shall deliver to the
Indenture Trustee either (i) an investment letter substantially in the form set
forth on Exhibit C hereto (the "Investment Letter") or (ii) an opinion of
counsel that the transfer is exempt from such registration or qualification
under the Securities Act (which opinion shall not be at the expense of the
Issuer, the Indenture Trustee, the Servicer or the Trust Estate). Neither the
Issuer nor the Indenture Trustee is obligated to register or qualify the Notes
under the Securities Act or any other securities law. Any such Holder desiring
to effect such transfer shall, and does hereby agree to, indemnify the Indenture
Trustee, the Note Insurer and the Issuer against any liability, cost or expense
(including attorneys' fees) that may result if the transfer is not so exempt or
is not made in accordance with such federal and state laws. MicroFinancial
Incorporated (whether or not acting as Servicer) shall provide to the Indenture
Trustee the information required to be delivered to Holders and prospective
transferees of Notes in connection with resales of the Notes to permit
compliance with Rule 144A promulgated under the Securities Act in connection
with such resales and, promptly upon its receipt thereof, the Indenture Trustee
shall furnish such information to any Holder or any prospective transferee
designated by a Holder.
(b) No acquisition or transfer of a Class A Note or any interest
therein may be made to any Benefit Plan Investor or to any Person who is
directly or indirectly purchasing the Class A Notes or an interest therein on
behalf of, as named fiduciary of, as trustee of, or with assets of, such a
Benefit Plan Investor unless the Indenture Trustee is provided with evidence
that establishes to the reasonable satisfaction of the Indenture Trustee that
(i) either no "prohibited transaction" under ERISA or the Code will occur in
connection with such prospective acquirer's or transferee's acquisition and
holding of the Notes or that the acquisition and holding of the Notes by such
prospective acquirer or transferee is subject to a statutory or administrative
exemption, and (ii) that the prospective acquirer's or transferee's acquisition
and holding will not subject the Issuer, the Servicer or the Indenture Trustee
to any obligation or liability (including obligations or liabilities under ERISA
or Section 4975 of the Code) in addition to those explicitly undertaken in the
Transaction Documents. In the absence of a change in applicable law, the
delivery of an executed Investment Letter shall be deemed to provide
satisfactory evidence of compliance with this Section 2.06(b).
(c) No acquisition or transfer of a Class B Note or any interest
therein may be made to any Benefit Plan Investor or to any Person who is
directly or indirectly purchasing the Class B Notes or an interest therein on
behalf of, as named fiduciary of, as trustee of, or with assets of, such a
Benefit Plan Investor.
(d) The Indenture Trustee shall have no liability to the Trust
Estate or any Noteholder arising from a transfer of any such Note in reliance
upon a certification described in this Section 2.06.
26
SECTION 2.07 MUTILATED, DESTROYED, LOST OR STOLEN NOTE.
If (i) any mutilated Note is surrendered to the Note Registrar, or the
Indenture Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, and (ii) there is delivered to the Indenture Trustee and
the Note Insurer such security or indemnity as may be required by the Indenture
Trustee to save the Issuer, the Indenture Trustee and the Note Insurer or any
agent of any of them harmless (it being understood that the unsecured written
undertaking of any domestic institutional Holder shall be deemed to be
sufficient for such purposes), then, in the absence of notice to the Issuer or
the Note Registrar that such Note has been acquired by a bona fide purchaser,
the Issuer shall execute and, upon its request, the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a new Note of the same Series, initial principal
amount and Stated Maturity Date, bearing a number not contemporaneously
outstanding. If after the delivery of such new Note, a bona fide purchaser of
the original Note in lieu of which such new Note was issued presents for payment
such original Note, the Note Insurer, the Issuer and the Indenture Trustee shall
be entitled to recover such new Note from the Person to whom it was delivered or
any Person taking therefrom, except a bona fide purchaser, and shall be entitled
to recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expenses incurred by the Note Insurer, the Issuer or the
Indenture Trustee or any agent of any of them in connection therewith. If any
such mutilated, destroyed, lost or stolen Note shall have become or shall be
about to become due and payable, or shall have become subject to redemption in
full, in lieu of issuing a new Note, the Issuer may pay such Note without
surrender thereof, except that any mutilated Note shall be surrendered.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer 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 Notes, other than
exchanges pursuant to Section 2.05 or 9.05 hereof not involving any registration
of transfer.
Every new Note issued pursuant to this Section 2.07, in lieu of any
destroyed, lost or stolen Note, shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder. Upon the issuance of any new Note under this
Section, the Indenture Trustee or Note Registrar may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.08 PAYMENT OF PRINCIPAL AND INTEREST; PRINCIPAL AND
INTEREST RIGHTS PRESERVED.
(a) Unless otherwise specified in the applicable Supplement, for
each applicable Accrual Period, the Notes of each Series shall accrue interest
on the Outstanding Principal Amount thereof (as of the first day of the related
Accrual Period) from and including the first day to and including the last day
of such Accrual Period at the related Note Interest Rate and using the related
Interest Calculation Convention. Accrued interest shall be due and payable in
arrears on each Payment Date, with each payment of interest calculated as
described above on the Outstanding Principal Amount of the Notes immediately
following the making of payments on the preceding Payment Date or on the
applicable Delivery Date, if there has not been a preceding Payment Date;
provided, however, that the payment of interest on the Class B Notes is
subordinate to the payment of interest and principal on the Class A Notes and to
certain other payments in accordance with Sections 6.08 and 12.02(d) hereof. In
making any such interest payment, if the interest calculation with respect
27
to a Note shall result in a portion of such payment being less than $0.01, then
such payment shall be decreased to the nearest whole cent, and no subsequent
adjustment shall be made in respect thereof.
(b) The principal of each Note shall be payable in installments
ending no later than the applicable Stated Maturity Date thereof unless such
Note becomes due and payable at an earlier date by declaration of acceleration,
call for redemption or otherwise. All reductions in the principal amount of a
Note effected by payments of installments of principal made on any Payment Date
shall be binding upon all future Holders of such Note and of any Note issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof, whether or not such payment is noted on such Note. Each installment of
principal payable on the Class A Notes shall be in an amount equal to the Class
A Principal Distribution Amount and the Additional Principal Amount, if any,
available to be paid in accordance with the priorities of Sections 6.08 and
12.02(d) hereof. Each installment of principal payable on the Class B Notes
shall be in an amount equal to the Class B Principal Distribution Amount
available to be paid in accordance with the priorities of Sections 6.08 and
12.02(d) hereof. All payments of the Class B Principal Distribution Amount shall
be subordinate to the payments of principal and interest on the Class A Notes
and to certain other payments in accordance with Sections 6.08 and 12.02(d)
hereof. The principal payable on the Notes of the Class of each Series shall be
paid in accordance with the terms of the applicable Supplement or, if not
specified therein, then on each Payment Date beginning on the applicable Initial
Payment Date and ending on the applicable Final Payment Date, and with respect
to all of the Notes of the Class of a Series, on a pro rata basis based upon the
ratio that the Outstanding Principal Amount of a Note bears to the Outstanding
Principal Amount of all Notes of such Class of a Series; provided, that if as a
result of such proration a portion of such principal would be less than $0.01,
then such payment shall be increased to the nearest whole cent, and such portion
shall be deducted from the next succeeding principal payment.
(c) The principal of and interest on the Notes are payable by check
mailed by first-class mail to the Person whose name appears as the Registered
Holder of such Note on the Note Register at the address of such Person as it
appears on the Note Register except that such payment shall be by wire transfer
in immediately available funds to the account specified in the Note Purchase
Agreement (or such alternative account specified in writing to the Indenture
Trustee by any Registered Holder at least five Business Days prior to the Record
Date for the Payment Date on which wire transfers will commence), in such coin
or currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts. All payments on the Notes
shall be paid without any requirement of presentment. The Issuer shall notify
the Person in whose name a Note is registered at the close of business on the
Record Date next preceding the Payment Date on which the Issuer expects that the
final installment of principal of such Note will be paid that the Issuer expects
that such final installment will be paid on such Payment Date. Such notice shall
be mailed no later than the tenth day prior to such Payment Date and shall
specify the place where such Note may be surrendered. Funds representing any
such checks returned undeliverable shall be held in accordance with Section 7.16
hereof. Each Noteholder shall surrender its Note to the Indenture Trustee
promptly following payment of the final installment of principal of such Note.
Each Holder of Notes does by its acceptance of a Note agree to indemnify the
Indenture Trustee, the Note Insurer and the Issuer against any liability, cost
or expenses (including attorneys' fees) that may result if such Noteholder fails
to so deliver such Note.
(d) Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Notes, if the Notes have become or
been declared due and payable following an Event of Default and such
acceleration of maturity and its consequences have not been rescinded and
annulled, then payments of principal of and interest on such Notes shall be made
in accordance with Section 6.08 hereof.
28
SECTION 2.09 PERSONS DEEMED OWNER.
Prior to due presentment for registration of transfer of any Note, the
Issuer, the Note Insurer, the Indenture Trustee and any agent of the Issuer, the
Note Insurer 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
payments of principal of and interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Issuer, the
Note Insurer, the Indenture Trustee nor any agent of the Issuer, the Note
Insurer or the Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.10 CANCELLATION.
All Notes surrendered to the Indenture Trustee for payment, registration
of transfer or exchange (including Notes surrendered to any Person other than
the Indenture Trustee which shall be delivered to the Indenture Trustee) 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 disposed of by the Indenture Trustee as is
customary with its standard practice.
SECTION 2.11 TAX TREATMENT.
The Issuer has structured this Indenture and the Notes with the
intention that the Notes of each Class and each Series qualify under applicable
tax laws as indebtedness secured by the Trust Estate. The Issuer, the Indenture
Trustee, the Servicer, the Note Insurer and each Noteholder, by acceptance of
its Note (and any Person that is a beneficial owner of any interest in a Note,
by virtue of such Person's acquisition of a beneficial interest therein) agree
to report the transactions contemplated hereby in accordance with such stated
intentions unless and until determined to the contrary by an applicable taxing
authority.
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ARTICLE THREE
[reserved]
30
ARTICLE FOUR
ISSUANCE OF NOTES; SUBSTITUTIONS OF COLLATERAL
SECTION 4.01 CONDITIONS TO INITIAL ISSUANCE OF NOTES.
The Series of Notes to be issued on the Initial Delivery Date may be
executed by the Issuer and delivered to the Indenture Trustee for
authentication, and thereupon, the same shall be authenticated and delivered by
the Indenture Trustee upon Issuer Order and upon receipt by the Indenture
Trustee of the following:
(a) an executed Company Certificate and MFI Certificate, each with
the related Series Contract Schedule attached thereto;
(b) the original manually executed counterpart of each Contract and,
except as otherwise provided in the Transaction Documents, all other items
included in the Contract File with respect to each Contract;
(c) a Board Resolution of each of the Issuer, the Servicer and the
Company authorizing, as applicable, the execution, delivery and performance of
the Transaction Documents and the transactions contemplated hereby and by the
other Transaction Documents, certified by the Secretary or an Assistant
Secretary of the Issuer, the Servicer or the Company, as applicable;
(d) a copy of an officially certified document, dated not more than
30 days prior to the Initial Delivery Date, evidencing the due organization and
good standing of each of the Issuer, the Servicer and the Company in their
respective States of incorporation;
(e) copies of the Articles of Organization and By-Laws of each of
the Issuer, the Servicer and the Company, certified by the Secretary or an
Assistant Secretary of the Issuer, the Servicer and the Company, as applicable;
(f) (i) evidence of filing with the Secretary of State of the State
(and with the relevant county, if required by the applicable state law) of the
Company's chief executive office of UCC-1 financing statements executed by the
Company, as debtor, and naming the Issuer as secured party, the Indenture
Trustee for the benefit of the Noteholders and the Note Insurer as assignee and
the Contract Assets as collateral; and (ii) evidence of filing with the
Secretary of State of the State (and with the relevant county, if required by
the applicable state law) of the Issuer's chief executive office of UCC-1
financing statements executed by the Issuer, as debtor, and naming the Indenture
Trustee for the benefit of the Noteholders and the Note Insurer as secured
party, and the Trust Estate as collateral;
(g) a certificate listing the Servicing Officers of the Servicer as
of the Initial Delivery Date;
(h) an executed copy of a Supplement for the Series of Notes to be
issued on the Initial Delivery Date and an executed copy of the Servicing
Agreement, the Contract Acquisition Agreement and the applicable Note Purchase
Agreement;
(i) a Note Insurance Policy for the Series of Notes being issued on
such date;
(j) evidence of the deposit by the Issuer of the Initial Cash
Collateral Account Deposit;
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(k) evidence of the deposit by the Issuer into the Collection
Account of any amounts due and paid on the Contracts since the applicable
Cut-off Date;
(l) an executed Officer's Certificate of each of the Issuer and the
Company certifying that all of the terms of the Contract Acquisition Agreement
have been complied with;
(m) favorable opinions of counsel (i) to the effect that the Notes
of such Series will be characterized as debt for tax purposes, (ii) regarding
the security interest of the Indenture Trustee in the Trust Estate, (iii)
regarding true sale and the nonconsolidation matters of the Issuer and the
Company in the event of a bankruptcy of the Company, and (iv) regarding certain
basic corporate matters and that the Issuer is not required to be registered as
an "investment company" under the Investment Company Act of 1940; and
(n) such other documents as are required by the applicable Note
Purchase Agreement or as the Indenture Trustee or the Note Insurer may
reasonably require.
SECTION 4.02 ISSUANCES OF ADDITIONAL SERIES OF NOTES.
(a) Additional Series of Class A Notes or Class B Notes may be
issued by the Issuer in accordance with the terms of this Indenture, provided,
however, that if a previously issued Series is then Outstanding, any additional
Series of Notes shall not have a Stated Maturity Date any earlier than the
Stated Maturity Date for such Outstanding Series of Notes. In addition, all
additional Series of Notes must be approved in writing by the Controlling Party;
provided that nothing herein shall obligate the Note Insurer to issue any Note
Insurance Policy for any Class A Notes, rather such obligation shall arise only
under a written commitment issued by the Note Insurer, at the sole and absolute
discretion of the Note Insurer, to issue a Note Insurance Policy.
(b) On or before the Delivery Date relating to any new Series of
Class A Notes, the parties hereto shall execute and deliver a Supplement
specifying the terms applicable to such new Series of Class A Notes. The terms
set forth in such Supplement may modify or amend, subject to Article Nine
hereof, the terms of this Indenture solely as applied to such new Series of
Class A Notes; provided that any additional Trigger Events specified in such
Supplement shall be Trigger Events for all purposes for all Series so long as
any Notes of the Series adding such Trigger Event remain Outstanding. Each new
Series of Class A Notes shall be executed by the Issuer and delivered to the
Indenture Trustee for authentication, and thereupon, the same shall be
authenticated and delivered by the Indenture Trustee upon Issuer Order and the
fulfillment of the following conditions to issuance:
(i) the Issuer shall have delivered or caused to be
delivered to the Indenture Trustee the original manually executed
counterpart of each Contract to be made a part of the Trust Estate on
such Delivery Date, and, except as otherwise provided in the Transaction
Documents, all other items included in the related Contract File, and an
Officer's Certificate of the Issuer certifying that all of the terms of
the Contract Acquisition Agreement have been complied with;
(ii) the Issuer shall have delivered to the Indenture Trustee
an executed Company Certificate and MFI Certificate, subjecting all
Series Contracts of such Series to the provisions of the Transaction
Documents, and providing a Series Contract Schedule with respect to all
Series Contracts;
(iii) on or before the tenth Business Day immediately
preceding the Delivery Date for the Class A Notes to be issued (unless
the parties to be notified agree to a shorter time period), the Issuer
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shall have given the Indenture Trustee, the Servicer, the Note Insurer
and each Rating Agency notice of such issuance and the applicable
Delivery Date;
(iv) the Issuer shall have delivered to the Indenture Trustee
the related Supplement, executed by each party hereto (including the
Note Insurer, as an acknowledgment party) other than the Indenture
Trustee;
(v) the Issuer shall have delivered to the Indenture Trustee
an Officers' Certificate of the Issuer certifying (A) that such issuance
will not result in the occurrence of a Trigger Event or an Event of
Default under this Indenture and the Issuer is not in Default under this
Indenture, (B) that the issuance of the Class A Notes applied for will
not result in a breach of any of the terms, conditions or provisions of,
or constitute a default under, any agreement or instrument to which the
Issuer is a party or by which it is bound, or any order of any court or
administrative agency entered in any proceeding to which the Issuer is a
party or by which it may be bound or to which it may be subject, and (C)
that all conditions precedent provided in this Indenture relating to the
execution and delivery of the additional Series of Class A of Notes
applied for have been complied with;
(vi) to the extent not previously filed or delivered, the
Issuer shall file (and deliver copies thereof to the Indenture Trustee)
(a) UCC-1 financing statements naming the Company, as debtor, the
Issuer, as secured party, the Indenture Trustee for the benefit of the
Noteholders and the Note Insurer, as assignee and the Contract Assets as
collateral for filing with the Secretary of State of the State (and with
the relevant county, if required by the applicable state law) in which
the Company is organized and, if applicable, of the Company's chief
executive office; and (b) UCC-1 financing statements naming the Issuer,
as debtor, the Indenture Trustee for the benefit of the Noteholders and
the Note Insurer as secured party, and the Trust Estate as collateral
for filing with the Secretary of State of the State (and with the
relevant county, if required by the applicable state law) in which the
Issuer is organized and, if applicable, of the Issuer's chief executive
office;
(vii) the Issuer shall have delivered to the Indenture Trustee
an Officers' Certificate certifying that attached thereto are true and
correct copies of (a) letters from S & P and ▇▇▇▇▇'▇ confirming that the
Notes of such Series have been rated "AAA" by S & P and "Aaa" by
▇▇▇▇▇'▇, as applicable, and (b) letters from each Rating Agency
confirming that the rating on each other Series of Class A Notes has not
been or will not be withdrawn or downgraded on the applicable Delivery
Date as a result of such issuance;
(viii) the Issuer shall have delivered or caused to be
delivered to the Indenture Trustee a financial guaranty insurance policy
issued by the Note Insurer with respect to the payment of principal and
interest of such new Series of Class A Notes in form and substance
substantially the same as the Note Insurance Policy issued by the Note
Insurer with respect to the Class A Notes issued on the Initial Delivery
Date, and evidence that the rating of the Note Insurer shall not have
been downgraded, qualified or withdrawn;
(ix) the Issuer shall have delivered to the Indenture Trustee
favorable opinions of counsel (i) to the effect that the Class A Notes
of such Series will be characterized as debt for tax purposes and that
the issuance of such Series will not adversely affect the
characterization of any other Notes of any Outstanding Series as debt
for tax purposes, (ii) confirming the status of the security interest of
the Indenture Trustee in the Trust Estate, (iii) confirming true sale
and the nonconsolidation matters of the Issuer and the Company or the
Servicer in the event of a bankruptcy of the Company or the
33
Servicer, and (iv) confirming basic corporate matters and that the
Issuer is not required to be registered as an "investment company" under
the Investment Company Act of 1940;
(x) the Issuer shall have delivered to the Indenture Trustee
evidence of the deposit by the Issuer into the Collection Account of any
amounts due and paid under the Contracts of such Series of Notes since
the related Cut-off Date and evidence of the deposit by the Issuer of
any applicable amounts to the Cash Collateral Account;
(xi) the Issuer shall have delivered to the relevant party or
parties such other documents, certificates, instruments, opinions, or
other items as may be required by the terms of the Supplement creating
such Series of Notes or as may be required by the Note Insurer; and
(xii) the Indenture Trustee shall have received from each of
the Note Insurer and the Issuer an officer's certificate certifying that
no Note Insurer Default has occurred and is continuing with respect to
any outstanding Series of Notes.
Upon satisfaction of the above conditions, the Indenture Trustee shall
execute the Supplement and shall authenticate and deliver to or upon the order
of the Issuer the applicable Class A Notes, and provide notice to all existing
Noteholders of the issuance of such Series of Class A Notes.
(c) On or before the Delivery Date relating to any Series of Class B
Notes, the parties hereto shall execute and deliver a Supplement specifying the
terms of such new Series of Class B Notes. The terms set forth in such
Supplement may modify or amend, subject to Article Nine hereof, the terms of
this Indenture solely as applied to such new Series of Class B Notes. Each new
Series of Class B Notes may be executed by the Issuer and delivered to the
Indenture Trustee for authentication, and thereupon, the same shall be
authenticated and delivered by the Indenture Trustee upon Issuer Order and the
fulfillment of the following conditions to issuance:
(i) on or before the tenth Business Day immediately
preceding the Delivery Date for such Series (unless the parties to be
notified agree to a shorter period), the Issuer shall have given the
Indenture Trustee, the Servicer, the Note Insurer and each Rating Agency
notice of such issuance and the applicable Delivery Date;
(ii) the Issuer shall have delivered to the Indenture Trustee
the related Supplement for such Series of Class B Notes executed by each
party thereto other than the Indenture Trustee;
(iii) the Issuer shall have delivered to the Indenture Trustee
an Officers' Certificate of the Issuer to the effect that (A) such
issuance will not result in the occurrence of a Trigger Event or a
Default under this Indenture and the Issuer is not in Default under this
Indenture, (B) the issuance of the Class B Notes applied for will not
result in a breach of any of the terms, conditions or provisions of, or
constitute a Default under, any agreement or instrument to which the
Issuer is a party or by which it is bound, or any order of any court or
administrative agency entered in any proceeding to which the Issuer is a
party or by which it may be bound or to which it may be subject, and (C)
all conditions precedent provided in this Indenture relating to the
execution and delivery of the additional Series of Class B Notes applied
for have been complied with;
34
(iv) the Issuer shall have delivered to the Indenture
Trustee, letters from the Rating Agencies that such issuance will not
result in the qualification, withdrawal or downgrade of the rating on
any then-Outstanding Series or Class of Notes; and
(v) the Issuer shall have delivered to the Indenture
Trustee, an opinion of counsel (a) regarding the classification of the
Class B Notes as debt for tax purposes and that such issuance will not
adversely affect the characterization of the Notes of any Outstanding
Series as debt for tax purposes and confirming that the Issuer is not
required to be registered as an "investment company" under the
Investment Company Act of 1940;
(vi) the Indenture Trustee shall have received from each of
the Note Insurer and the Issuer an officer's certificate certifying that
no Note Insurer Default has occurred and is continuing with respect to
any outstanding Series of Class A Notes.
Upon satisfaction of the above conditions, the Indenture Trustee shall
execute the Supplement and authenticate and deliver to or upon the order of the
Issuer the applicable Class B Notes, and provide notice to the Note Insurer and
all existing Noteholders of the issuance of such Series of Class B Notes.
SECTION 4.03 SECURITY FOR NOTES.
(a) The Issuer and the Company shall file UCC-1 financing statements
described in Sections 4.01(f) and 4.02(b)(vi) hereof in accordance with such
Sections. In addition, as soon as practicable but no later than 30 days after
the Initial Delivery Date and any subsequent Delivery Date or Acquisition Date,
as the case may be, the Issuer and the Company shall file with respect to all
Contracts Granted to the Indenture Trustee on such date as to which the original
cost of the underlying Equipment was in excess of $10,000, UCC assignments
assigning to the Indenture Trustee on behalf of the Holders of the Notes and the
Note Insurer, the Company's security interest in the Equipment under such
Contracts. From time to time, the Servicer shall take or cause to be taken such
actions and execute such documents as are necessary to perfect and protect the
Indenture Trustee's and the Note Insurer's respective interests in the Contracts
and the Equipment owned by the Issuer (provided that, with respect to financing
statements filed regarding Equipment, the original cost of such Equipment was in
excess of $10,000) against all other Persons, including, without limitation, the
filing of financing statements, amendments thereto and continuation statements,
the execution of transfer instruments and the making of notations on or taking
possession of all records or documents of title.
(b) If any change in either the Company's or the Issuer's name,
identity, structure or the location of its principal place of business, chief
executive office or jurisdiction of organization occurs, then the Issuer shall,
or the Issuer shall cause the Company, to deliver 30 days prior written notice
of such change or relocation to the Servicer, the Note Insurer and the Indenture
Trustee and no later than the effective date of such change or relocation, the
Servicer shall file such amendments or statements as may be required to preserve
and protect the Indenture Trustee's and the Note Insurer's respective interests
in the Trust Estate.
(c) During the term of this Indenture, the Issuer shall maintain
each of its chief executive office, principal place of business and jurisdiction
of organization in one of the States of the United States.
(d) The Servicer agrees to pay all reasonable costs and
disbursements in connection with the perfection and the maintenance of
perfection, as against all third parties, of the Indenture Trustee's and the
Note Insurer's respective right, title and interest in and to the Trust Estate
(other than with respect to the Equipment related to a Contract the original
cost of which was less than $10,000).
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(e) The Indenture Trustee shall hold the original manually executed
counterpart of each Contract at its office in the State of Minnesota, and at any
such new address in the State of Minnesota as the Indenture Trustee shall inform
the Servicer, the Issuer and the Note Insurer in writing from time to time. The
Indenture Trustee shall hold each Contract for the benefit of Noteholders and
the Note Insurer, and maintain accurate records pertaining to each Contract to
maintain a current inventory thereof. The Indenture Trustee may, if requested by
the Servicer in writing in the form attached hereto as Exhibit F for purposes of
servicing a Contract, temporarily release to the Servicer such Contract. Any
Contract temporarily released from the custody of the Indenture Trustee to the
Servicer or its agents shall have stamped on it prior to delivery a legend to
the effect that the Contract is subject to a security interest in favor of ▇▇▇▇▇
Fargo Bank Minnesota, National Association, as Indenture Trustee. The Servicer
shall promptly return the Contract to the Indenture Trustee when the need
therefor no longer exists.
SECTION 4.04 SUBSTITUTION, REMOVAL AND PURCHASE OF CONTRACTS IN TRUST
ESTATE.
(a) Notice of Breach of Representation or Warranty. If at any time
the Issuer, the Servicer or the Indenture Trustee obtains knowledge (within the
meaning of 7.01(e) hereof, in the case of the Indenture Trustee), discovers or
is notified by the Company, the Issuer, the Note Insurer or the Servicer that
any of the representations and warranties of the Company in the Contract
Acquisition Agreement were incorrect at the time as of which such
representations and warranties were made, then the Person discovering, or
obtaining knowledge or receiving notification of such defect, omission, or
circumstance shall promptly notify the other parties to this Indenture and the
Note Insurer.
(b) Mandatory Repurchase or Substitution Upon Breach of Certain
Representations or Warranties. In the event that any representation or warranty
of the Company in the Contract Acquisition Agreement was incorrect as of the
date made and the interests of the Note Insurer or the Holders of any Notes are
materially and adversely affected thereby, or if the Company is otherwise
required to take action under Section 3.03 of the Contract Acquisition Agreement
with respect to such a breach, the Issuer shall require the Company, pursuant to
the Contract Acquisition Agreement, to eliminate or otherwise cure the
circumstance or condition which has caused such breach within 30 days of
discovery or notice thereof by or to the Issuer, the Company or the Servicer. If
the Company fails or the Company or the Servicer is unable to cure such
circumstance or condition in accordance with the Contract Acquisition Agreement,
then the Issuer shall require the Company, pursuant to the Contract Acquisition
Agreement, to substitute a Substitute Contract for or to repurchase at the
Purchase Price, each affected Contract within the time specified in Section 3.03
of the Contract Acquisition Agreement. The proceeds of any such repurchase shall
be remitted by or on behalf of the Issuer to the Servicer for deposit by the
Servicer in the Collection Account pursuant to Section 3.03 of the Servicing
Agreement.
(c) Indenture Trustee to Act. If the Issuer fails to enforce the
purchase or substitution obligations of the Company under the Contract
Acquisition Agreement in accordance with clause (b) above, the Indenture Trustee
is hereby appointed attorney-in-fact to act on behalf of and in the name of the
Issuer to require such purchase or substitution.
(d) Prohibition on Voluntary Repurchase or Substitution; Mandatory
Deposits or Substitutions related to Prepaid Contracts; De Minimis Exception to
Prohibition.
(i) Except as set forth in subclause (iii) below, no party
to this Indenture or the Contract Acquisition Agreement may purchase,
remove or otherwise release any Contract from the Trust Estate, unless
such purchase, removal or release is required by this Indenture.
36
(ii) In addition to the mandatory repurchase or substitution
required pursuant to clauses (b) and (c) of this Section 4.04, a
Contract shall be removed from the Trust Estate if the Servicer permits
any Customer to prepay or terminate a Contract in accordance with
Section 3.09 of the Servicing Agreement and all amounts paid by the
Customer in respect thereof (the "Customer Prepayment Amount") are
remitted to the Indenture Trustee for deposit to the Collection Account.
Unless otherwise specified by the terms of such Contract, the Servicer
may permit the Customer Prepayment Amount to be less than the Purchase
Price for such Contract (the "Required Prepayment Amount"), and cause
the release of the related Contract and related Equipment, only if the
differential between the Required Prepayment Amount and the Customer
Prepayment Amount (such differential, the "Prepayment Differential") is
remitted by the Issuer to the Indenture Trustee for deposit to the
Collection Account; and provided further that the amount of such
Prepayment Differential shall be deemed to be a voluntary repurchase
subject to the limitations and restrictions of subclauses (iii) and (iv)
below. At the option of the Issuer, in lieu of remitting the Customer
Prepayment Amount and the Prepayment Differential to the Indenture
Trustee, such removal may instead be effected by the substitution of a
Substitute Contract in accordance with subclause (iii) below, provided
that such substitution shall be deemed to be a voluntary removal subject
to the limitations and restrictions of this Section 4.04(d).
(iii) In addition to the mandatory repurchases and
substitutions required under clauses (b), (c) and (d)(ii) of this
Section 4.04, the Issuer may also, at its option, voluntarily (A)
repurchase at the Purchase Price any Defaulted Contract or Delinquent
Contract and (B) substitute a Substitute Contract for any Defaulted
Contract, Delinquent Contract or prepaid or early terminated Contract.
Any such Substitute Contract shall meet the same requirements as those
specified in Section 3.04 of the Contract Acquisition Agreement for
substitutions by the Company upon the breach of a representation or
warranty. The sum of (x) the Purchase Price for all repurchased or
removed Contracts paid by the Company or the Issuer, (y) the aggregate
IPB of all Substitute Contracts delivered by the Company or the Issuer
and (z) the aggregate Prepayment Differential paid by the Issuer in
respect of all prepaid or early terminated Contracts, shall not exceed
10% of the Aggregate Initial IPB. It is intended that Customer
Prepayment Amounts not be included in calculating such 10% limitation.
SECTION 4.05 REQUIREMENTS FOR ALL CONTRACTS IN TRUST ESTATE.
(a) The Issuer shall comply with the requirements relating to the
acquisition of Contracts as set forth in the Contract Acquisition Agreement
(including compliance with the Eligibility Criteria and Concentration Limits set
forth therein) within the time periods set forth therein. On or prior to the
Business Day preceding each Acquisition Date, the Indenture Trustee will review
the related Contract in accordance with paragraph (b) below. The Indenture
Trustee shall confirm, by execution and delivery of a certificate of the
Indenture Trustee to the Issuer, the Noteholders and the Note Insurer, that the
Indenture Trustee has received the manually executed original of each Contract.
In the case of any Substitute Contracts acquired by the Issuer, the Issuer shall
provide (x) to the Indenture Trustee on the applicable date of delivery the
items listed in (i) and (ii) below and (y) to the Note Insurer the item listed
in (i) below:
(i) an Officer's Certificate of each of the Company and the
Issuer, each such Officer's Certificate having attached thereto an
Amended Contract Schedule and subjecting such Substitute Contract to the
provisions thereof and hereof and providing with respect to the
Substitute Contract the information required to supplement the related
Series Contract Schedule; and
37
(ii) the original manually executed counterpart of the
Contract relating to such Substitute Contract and, if applicable, all or
any of the other items included in the Contract File.
The Issuer shall also provide to the Indenture Trustee and the Note Insurer, at
the end of each calendar quarter, evidence that any necessary financing
statements have been filed in accordance with Sections 4.01(f), 4.02(b)(vi) and
4.03 hereof with respect to all such Substitute Contracts acquired during such
period.
(b) Upon receipt of each Contract, the Indenture Trustee shall
confirm that (i) each such Contract is the original manually executed
counterpart of such Contract; (ii) each such Contract has been executed by the
Customer named thereon; and (iii) each such Contract is identified on the
applicable Series Contract Schedule delivered therewith by Contract number and
Customer name. If, upon such examination of the Contracts, the Indenture Trustee
determines that any such Contract does not satisfy the requirements set forth
above or in clause (a) hereof, or is unable to confirm that the requirements
have been met, the Indenture Trustee shall promptly notify the Issuer, the
Servicer and the Note Insurer by telephone or telecopy and shall deliver an
exception report to each such party setting forth any missing or defective items
with respect to such Contracts.
(c) Within forty-five days after each Acquisition Date, the
Indenture Trustee shall review any exception report delivered in accordance with
paragraph (b) above and shall verify that it has possession of any missing items
noted thereon. The Indenture Trustee shall send such verification report and
notice of any defects to the Issuer, the Company and the Note Insurer within
such forty-five days and shall take any appropriate action under the Contract
Acquisition Agreement.
SECTION 4.06 RELEASES OF INDIVIDUAL OR SERIES CONTRACTS IN TRUST
ESTATE.
(a) The Issuer shall be entitled to obtain a release from the lien
of this Indenture for any individual Contract and the related Contract Assets at
any time (i) after a payment by the Company or the Issuer of the Purchase Price
of the Contract and the related Contract Assets, (ii) after a Substitute
Contract is substituted for such Contract and the related Contract Assets, (iii)
twelve months after the Final Due Date of a Contract that is not a Defaulted
Contract and for which the IPB of such Contract has been reduced to zero or (iv)
with respect to Defaulted Contracts, upon request of the Servicer, subject to
the requirements set forth below. Notwithstanding the foregoing, (y) in the case
of a Defaulted Contract, such Contract and the related Equipment shall be
released from the lien of this Indenture only following the sale, lease or other
disposition of the related Equipment in accordance with Section 3.01(b)(i) of
the Servicing Agreement, provided that the related Recovery and Residual
Proceeds shall not be released from the lien of this Indenture and (z) no
release may be effected pursuant to clause (iii) above if a Trigger Event or
Event of Default shall have occurred and be continuing. In order to effect such
release, the Issuer shall deliver to the Indenture Trustee and the Note Insurer
an Officer's Certificate substantially in the form attached hereto as Exhibit G
(A) identifying the Receivable and the related Contract and Equipment to be
released, (B) requesting the release thereof, (C) setting forth the amount
deposited in the Collection Account with respect thereto, in the event that the
subject Contract and the related Equipment are being released from the lien of
this Indenture pursuant to (i) or (iii) above, and (D) certifying that the
amount deposited in the Collection Account (1) equals the Purchase Price of the
Contract, in the event that the subject Contract and the related Equipment are
being released from the lien of this Indenture pursuant to (i) above or (2)
equals the entire amount of Insurance Proceeds or Recoveries received with
respect to such Contract and related Equipment in the event of a release from
the lien of this Indenture pursuant to subclause (y) above.
38
(b) In addition, in connection with any permitted redemption or
other retirement of a Series of Notes, the Issuer shall be entitled to obtain on
the date that is six (6) months after such redemption or retirement a release
from the lien of the Indenture for any of the related Series Contracts and
related Contract Assets (except in the case in which a Series of Notes is
redeemed with the proceeds from a new Series of Notes) so long as (i) if any
Series of Class B Notes is then outstanding, the Rating Agency Condition is
satisfied for each such Series (or for any series of notes secured by such
Series) taking into account such release and (ii) if any Series of Class A Notes
remains Outstanding, then the sum of (A) the amount of funds then held in the
Cash Collateral Account and (B) the Aggregate IPB of the Contracts remaining in
the Trust Estate after giving effect to such release, equals or exceeds the sum
of (y) the Required Collateralization Amount for each Series of Class A Notes
then Outstanding plus (z) the Outstanding Principal Amount of all Series of
Class A Notes.
(c) Upon satisfaction of the conditions specified in subsection (a)
or (b), as applicable, the Indenture Trustee shall release from the lien of this
Indenture and deliver to or upon the order of the Issuer (or to or upon the
order of the Company if it has satisfied its obligations under Section 4.04
hereof and Section 3.04 of the Contract Acquisition Agreement with respect to a
Contract) the Contract and all related Contract Assets described in the Issuer's
request for release.
(d) Notwithstanding the foregoing, releases of Contract Assets in
connection with satisfaction and discharge of this Indenture shall be governed
by Section 5.01.
▇▇▇▇▇▇▇ ▇.▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇.
The Indenture Trustee may, and when required by the provisions of
Articles Four, Five, Six and Twelve hereof 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 Four
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.
SECTION 4.08 NOTICE OF RELEASE.
The Indenture Trustee shall be entitled to receive at least 10 days'
notice of any action to be taken pursuant to Section 4.06 hereof, accompanied by
copies of any instruments involved.
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ARTICLE FIVE
SATISFACTION AND DISCHARGE
SECTION 5.01 SATISFACTION AND DISCHARGE OF INDENTURE.
(a) Following payment in full of (i) all of the Notes of each Series
issued hereunder, (ii) the fees and charges of the Indenture Trustee, (iii) all
other obligations of the Issuer under this Indenture and each other Transaction
Document and (iv) all amounts owing to the Note Insurer under each Note
Insurance Agreement, and the release by the Indenture Trustee of the Trust
Estate in accordance with Section 5.01(b) hereof, this Indenture shall be
discharged and the Indenture Trustee shall provide notice of such discharge to
each of the Rating Agencies.
(b) Upon payment in full of the amounts referred to in clauses (i)
through (iv) of Section 5.01(a) hereof, the Issuer may submit to the Indenture
Trustee an Officer's Certificate requesting the release to the Issuer or its
designee of a stated amount of the funds on deposit in the Cash Collateral
Account and some or all of the other Trust Estate (collectively, the "Withdrawn
Collateral"), accompanied by an Opinion of Counsel reasonably acceptable to the
Controlling Party to the effect that, after the release of the Withdrawn
Collateral, there will remain an amount in the Cash Collateral Account or
otherwise subject to this Indenture at least equal to the payments of interest
previously made on the Outstanding Notes and the Class A Principal Distribution
Amounts and Class B Principal Distribution Amounts that are subject to recapture
as preferential transfers pursuant to Section 547 of the Bankruptcy Code or,
alternatively, to the effect that no such payments are subject to recapture. In
rendering such Opinion of Counsel, such counsel may rely as to factual matters,
including, without limitation, the date on which funds were received and the
source of funds, upon an Officer's Certificate. Promptly after receipt of such
Officer's Certificate, Opinion of Counsel and authorization to release from the
Controlling Party, the Indenture Trustee shall release the Withdrawn Collateral
from the lien of this Indenture, and deliver the Withdrawn Collateral to the
Issuer or its designee. The Issuer shall be entitled to deliver more than one
such Officer's Certificate and Opinion of Counsel until the entire Trust Estate
is released and delivered to the Issuer or its designee. Notwithstanding the
foregoing, the Controlling Party may waive the requirement that the Issuer
deliver such Officer's Certificate and/or Opinion of Counsel and authorize the
Indenture Trustee by written direction to release all or a portion of the Cash
Collateral Account or other items of the Trust Estate from the lien of this
Indenture upon payment in full of the amounts referred to in clauses (i) through
(iv) of Section 5.01(a) hereof. Notwithstanding termination of this Indenture,
the Indenture Trustee shall remain obligated to make claims under the Note
Insurance Policy with respect to any Preference Claim.
(c) In connection with the discharge of this Indenture and the
release of the Trust Estate, the Indenture Trustee shall release from the lien
of this Indenture and deliver to or upon the order of the Issuer all property
remaining in the Trust Estate and shall execute and file, at the expense of the
Issuer, UCC financing statements evidencing such discharge and release.
SECTION 5.02 APPLICATION OF TRUST MONEY.
Subject to the last paragraph of Section 7.16 hereof, all monies held by
the Indenture Trustee pursuant to Section 5.01 hereof shall be held in trust and
if invested, shall be invested in Eligible Investments of the type described in
clause (a) or (g) of the definition thereof, and applied by the Indenture
Trustee, in accordance with the provisions of the Notes and this Indenture, to
the payment, either directly or through any Paying Agent as the Indenture
Trustee may determine, to the Persons entitled thereto, of the principal and
interest for whose
40
payment such money has been deposited with the Indenture Trustee; such money
shall be segregated from other funds to the extent required in this Indenture
and to the extent required by law.
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ARTICLE SIX
DEFAULTS AND REMEDIES
Section 6.01 Events of Default.
"Event of Default" wherever used herein means any one of the following
events:
(a) default in the payment of any interest due on any Class A Note
on any Payment Date, and if there are no Class A Notes Outstanding, default
in the payment of any interest upon any Class B Notes on any Payment Date;
(b) default in the payment in full of the principal of any Class A
Note due on or before its Stated Maturity Date, and if there are no Class A
Notes Outstanding, default in the payment in full of the principal of any
Class B Notes due on or before its Stated Maturity Date;
(c) default in the payment of any other amounts when due hereunder
(including any reimbursement payments due to the Note Insurer) on the
applicable due date therefor;
(d) default in the performance of any covenant of the Issuer, or
breach of any representation or warranty of the Issuer, in this Indenture,
the Contract Acquisition Agreement, any Note Insurance Agreement or the
Servicing Agreement (other than a covenant or warranty default in the
performance of which or breach of which is elsewhere in this Section
specifically dealt with) which default or breach has a material adverse
effect on the Noteholders or the Note Insurer, and continuance of such
default or breach for a period of 30 days after the earlier of the Issuer's
receipt of written notice of such default or the date on which the Issuer
obtains actual knowledge thereof;
(e) the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer under the United States
Bankruptcy Code or any other applicable federal or state bankruptcy,
insolvency, reorganization, liquidation or other similar law now or hereafter
in effect or any arrangement with creditors or appointing a receiver,
liquidator, assignee, trustee, or sequestrator (or other similar official)
for the Issuer or for any substantial part of its property, or ordering the
winding up or liquidation of the Issuer's affairs, and the continuance of any
such decree or order unstayed and in effect for a period of 60 consecutive
days;
(f) the institution by the Issuer of proceedings to be adjudicated
a bankrupt or insolvent, or the consent by the Issuer to the institution of
bankruptcy or insolvency proceedings against the Issuer, or the filing by the
Issuer of a petition or answer or consent seeking reorganization or relief
under the United States Bankruptcy Code or any other applicable federal or
state bankruptcy insolvency, reorganization, liquidation or other similar law
now or hereafter in effect, or the consent by the Issuer to the filing of any
such petition or to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or other similar
official) of the Issuer or of any substantial part of the Issuer's property,
or the making by the Issuer of any assignment for the benefit of creditors, or
the admission by it in writing of its inability, or the failure by it
generally, to pay its debts as they become due, or the taking of corporate
action by the Issuer in furtherance of any such action;
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(g) the payment by the Note Insurer of any amounts under any Note
Insurance Policy pursuant to Section 8.01 hereof; or
(h) the Issuer or the Trust Estate is required to register as an
"investment company" pursuant to the Investment Company Act of 1940, as
amended.
SECTION 6.02 ACCELERATION OF STATED MATURITY DATE; RESCISSION AND
ANNULMENT.
If an Event of Default shall have occurred and be continuing, then, and
in every such case, the Indenture Trustee shall, at the direction of the
Controlling Party, declare the principal of all the Notes to be immediately
due and payable, by notice given in writing to the Issuer (and to the
Indenture Trustee if given by Noteholders); provided, that the Note Insurer,
if the Note Insurer is the Controlling Party, shall not declare the
Outstanding Principal Amount of all of the Notes immediately due and payable
unless the Note Insurer shall have endorsed the Note Insurance Policies to
provide coverage for any shortfall in the payment of accelerated principal and
any interest due on the Outstanding Class A Notes covered by such Note
Insurance Policy on the date established for redemption thereof pursuant to
such acceleration, and upon any such declaration, such principal shall become
immediately due and payable without any presentment, demand, protest or other
notice of any kind (except such notices as shall be expressly required by the
provisions of this Indenture), all of which are hereby expressly waived.
At any time after such a declaration of acceleration has been made, but
before any Sale of the Trust Estate has been made or a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
provided hereinafter in this Article, the Controlling Party, by written notice
to the Issuer and the Indenture Trustee, may rescind and annul such
declaration and its consequences (except that in the case of a payment default
on the Class A Notes or, if no Class A Notes are Outstanding, the Class B
Notes, the consent of all the Noteholders of such Class shall be required to
rescind and annul such a declaration and its consequences) if:
(a) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay
(i) all overdue installments of interest on all Class A
Notes or, if no Class A Notes are Outstanding, all Class B Notes;
(ii) the principal of any Class A Notes or, if no Class A
Notes are Outstanding, all Class B Notes, which have become due
otherwise than by such declaration of acceleration and interest thereon
at the rate borne by such Notes from the time such principal first
became due until the date when paid; and
(iii) all sums paid or advanced, together with interest
thereon, by the Indenture Trustee, the Note Insurer or any Noteholder
hereunder or by the Note Insurer under any Note Insurance Agreement or
any Note Insurance Policy, and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, the Note Insurer
and the Noteholders, their agents and counsel incurred in connection
with the enforcement of this Indenture to the date of such payment or
deposit; and
(b) all Events of Default have been cured or waived as provided in
Section 6.15 hereof, other than the nonpayment of the principal on any of the
Class A Notes or, if no Class A Notes are Outstanding, the Class B Notes,
which have become due solely by such declaration of acceleration.
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No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 6.03 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE.
The Issuer covenants that if an Event of Default shall have occurred and
be continuing and any of the Notes have been declared due and payable and such
declaration has not been rescinded and annulled, the Issuer shall, upon demand
of the Indenture Trustee and at the direction of the Controlling Party, pay to
the Indenture Trustee, for the benefit of the Holders of the Notes and the
Note Insurer, the whole amount then due and payable on the Notes for principal
and interest, with interest upon the overdue principal at the rate borne by
the Notes and, in addition thereto, 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,
the Note Insurer and their respective agents and counsel.
If the Issuer fails to pay such amount forthwith upon such demand, the
Indenture Trustee, in its own name and as Indenture Trustee of an express
trust shall, at the direction of the Controlling Party, institute Proceedings
for the collection of the sums so due and unpaid, and prosecute such
Proceeding to judgment or final decree, and enforce the same against the
Issuer and collect the monies adjudged or decreed to be payable in the manner
provided by law out of the property of the Issuer, wherever situated.
If an Event of Default shall have occurred and be continuing, the
Indenture Trustee shall, at the direction of the Controlling Party proceed, to
protect and enforce its rights and the rights of such Controlling Party by
such appropriate Proceedings as the Indenture Trustee, at the direction of the
Controlling Party, 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.
SECTION 6.04 REMEDIES.
If an Event of Default shall have occurred and be continuing, the
Indenture Trustee shall, at the direction of the Controlling Party, do one or
more of the following as the Controlling Party shall direct:
(a) institute Proceedings for the collection of all amounts then
due and payable on the Notes or under this Indenture, whether by declaration
or otherwise, enforce any judgment obtained, and collect from the Issuer the
monies adjudged due;
(b) take possession of and sell the Trust Estate securing the Notes
or any portion thereof or rights or interest therein, at one or more Sales
called and conducted in any manner permitted by law;
(c) institute any Proceedings from time to time for the complete or
partial foreclosure of the lien created by this Indenture with respect to the
Trust Estate securing the Notes;
(d) during the continuance of a default under a Contract, exercise
any of the rights of the lessor under such Contract;
(e) exercise any remedies of a secured party under the UCC or any
applicable law and take any other appropriate action to protect and enforce
the rights and remedies of the Indenture Trustee, the Note Insurer or the
Holders of the Notes hereunder; and
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(f) institute proceedings against the Note Insurer for the
collection of any amounts then due and payable under any Note Insurance
Policy, whether by declaration or otherwise, enforce any judgment obtained,
and collect from the Note Insurer the monies adjudged due;
provided, that without the consent of the Note Insurer, or, if a Note Insurer
Default has occurred and is continuing, all the Holders of Outstanding Class A
Notes, the Indenture Trustee may not sell or otherwise liquidate any portion
of the Trust Estate unless the proceeds of such Sale or liquidation
distributable to the Noteholders are sufficient to discharge in full the
amounts then due and unpaid upon the Notes for principal and interest together
with all amounts owed to the Note Insurer under the Note Insurance Agreements.
SECTION 6.05 OPTIONAL PRESERVATION OF TRUST ESTATE.
If (i) an Event of Default shall have occurred and be continuing with
respect to the Notes and (ii) no Notes have been declared due and payable, or
such declaration and its consequences have been annulled and rescinded, the
Indenture Trustee shall, at the direction of the Controlling Party, elect, by
giving written notice of such election to the Issuer, to take possession of
and retain the Trust Estate securing the Notes intact, collect or cause the
collection of the proceeds thereof and make and apply all payments and
deposits and maintain all accounts in respect of such Notes in accordance with
the provisions of Article Twelve of this Indenture. If the Indenture Trustee
is unable to or is stayed from giving such notice to the Issuer for any reason
whatsoever, such election shall be effective as of the time of such
determination or request, as the case may be, notwithstanding any failure to
give such notice, and the Indenture Trustee shall give such notice upon the
removal or cure of such inability or stay (but shall have no obligation to
effect such removal or cure). Any such election may be rescinded with respect
to any portion of the Trust Estate securing the Notes remaining at the time of
such rescission by written notice to the Indenture Trustee and the Issuer from
the Controlling Party.
SECTION 6.06 INDENTURE TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, conservatorship,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial Proceeding relating to the Issuer or any other
obligor upon any of the Notes or the property of the Issuer or of such other
obligor or their creditors, the Indenture Trustee (irrespective of whether the
principal of any of the 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 on the Issuer for the payment of
overdue principal or interest) shall be entitled and empowered, to intervene
in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes issued hereunder 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 the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee, its agents and counsel and any other amounts due the Indenture
Trustee under Section 7.07 hereof) and of the Note Insurer and the Noteholders
allowed in such judicial Proceeding, and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same,
and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such judicial Proceeding is hereby authorized by the
Note Insurer and each Noteholder to make such payments to the
45
Indenture Trustee, and in the event that the Indenture Trustee shall consent
to the making of such payments directly to the Note Insurer or the
Noteholders, to pay to the Indenture Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee, its agents and counsel, and any other amounts due the Indenture
Trustee under Section 7.07 hereof.
Nothing contained in this Indenture shall be deemed to authorize the
Indenture Trustee to authorize or consent to or accept or adopt on behalf of
the Note Insurer or any Noteholder any plan of reorganization, arrangement,
adjustment or composition affecting the Note Insurer or any of the Notes or
the rights of any Holder thereof, or to authorize the Indenture Trustee to
vote in respect of the claim of the Note Insurer or any Noteholder in any such
Proceeding.
SECTION 6.07 INDENTURE TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
NOTES.
(a) In all 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 of the Noteholders, and it shall not be
necessary to make any Noteholder a party to any such Proceedings.
(b) All rights of actions and claims under this Indenture or any of
the Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any Proceeding
relating thereto, and any such Proceedings instituted by the Indenture Trustee
shall be brought in its own name as Indenture Trustee of an express trust, and
any recovery whether by judgment, settlement or otherwise shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and counsel,
be for the Note Insurer and the ratable benefit of the Holders of the Notes.
SECTION 6.08 APPLICATION OF MONEY COLLECTED FOLLOWING AN EVENT OF
DEFAULT.
If the Notes have been declared due and payable following an Event of
Default and such declaration has not been rescinded or annulled, any money
collected by the Indenture Trustee with respect to the Notes pursuant to this
Article Six or otherwise and any other money that may be held thereafter by
the Indenture Trustee as security for the Notes shall be applied in the
following order, at the date or dates fixed by the Indenture Trustee and, in
case of the distribution of such money on account of principal or interest,
with no requirement of presentment, provided that each Noteholder shall
surrender its Note promptly following payment in full thereof; provided that
if there are insufficient funds to make the payments of interest or principal
specified in clause Fifth and Sixth below, then the amount available to be
paid pursuant to such clause and at such level of priority will be allocated
to each Series of Notes based on the applicable pro rata share; provided
further, that proceeds of a claim under a Note Insurance Policy shall be used
only to pay interest and principal on the applicable Series of Class A Notes
in the manner set forth in clauses Fifth and Sixth below:
FIRST: To the payment to the Indenture Trustee of the Trustee Fee then
due, and any reasonable costs and expenses incurred by it in connection with
enforcing the remedies provided for in this Article Six;
SECOND: To the payment of all amounts due the Servicer, including any
amounts due to a successor Servicer that has been appointed pursuant to Section
6.02 of the Servicing Agreement, pursuant to Section 3.08 of the Servicing
Agreement and Section 12.02(d)(i) hereof and to pay the Servicer the amount
necessary to reimburse the Servicer for any other unrecovered Servicer
Advances;
46
THIRD: To the payment to the Back-up Servicer of the Back-up
Servicer Fee and any Transition Costs then due;
FOURTH: To the payment to the Note Insurer of the Note Insurer
Premium then due;
FIFTH: To the payment of the amounts then due and unpaid upon
the Class A Notes of each Series for interest, with interest (to the extent
that payment thereof is legally enforceable at the respective rate or rates
prescribed therefor in the Notes) on overdue interest, in the proportion in
which the Outstanding Principal Amount of each Series of Class A Notes
represents of the Outstanding Principal Amount of all Series of Class A Notes,
without preference or priority of any kind, according to the amounts due and
payable on the Class A Notes for interest;
SIXTH: To the payment of the remaining Outstanding Principal
Amount of the Class A Notes, in the proportion in which the Outstanding
Principal Amount of each Series of Class A Notes represents of the Outstanding
Principal Amount of all Series of Class A Notes, without preference or
priority of any kind;
SEVENTH: To the payment to the Note Insurer of (a) any amounts
previously paid by the Note Insurer under any of the Note Insurance Policies
and not theretofore repaid, together with interest thereon, and (b) any other
amounts due under the Note Insurance Agreements and amounts necessary to
reimburse the Note Insurer for any costs or expenses incurred by it in
connection with any enforcement action with respect to this Indenture, the
Note Insurance Agreements or the Notes;
EIGHTH: To reimburse the Class A Noteholders, pro rata, for any
reasonable costs or expenses incurred by them in connection with any
enforcement action with respect to this Indenture or the Class A Notes;
NINTH: To the payment to the Indenture Trustee and the Back-up
Servicer, any other amounts due to the Indenture Trustee or the Back-up
Servicer as expressly provided herein and in the Servicing Agreement;
TENTH: To the payment to the Servicer of any other amounts due
the Servicer as expressly provided herein and in the Servicing Agreement;
ELEVENTH: To the payment of the amounts then due and unpaid upon
the Class B Notes for interest, with interest (to the extent such interest has
been collected by the Indenture Trustee or a sum sufficient therefor has been
so collected and payment thereof is legally enforceable at the respective rate
or rates prescribed therefor in the Class B Notes) on overdue interest, in the
proportion in which the Outstanding Principal Amount of each Series of Class B
Notes represents of the Outstanding Principal Amount of all Series of Class B
Notes, without preference or priority of any kind, according to the amounts
due and payable on the Class B Notes for interest;
TWELFTH: To the payment of the remaining Outstanding Principal
Amount of the Class B Notes, in the proportion in which the Outstanding
Principal Amount of each Series of Class B Notes represents of the Outstanding
Principal Amount of all Series of Class B Notes, without preference or
priority of any kind; and
THIRTEENTH: To the payment of any surplus to or at the written
direction of the Issuer or any other person legally entitled thereto.
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SECTION 6.09 LIMITATION ON SUITS.
No Holder of any Note shall have any right to institute any Proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment
of a receiver or trustee, or for any other remedy hereunder for so long as a
Note Insurer Default has not occurred, and if a Note Insurer Default has
occurred, unless
(a) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(b) the Majority Holders shall have made written request to the
Indenture Trustee to institute Proceedings in respect of such Event of Default
in its own name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of security or indemnity has failed to institute any
such Proceedings; and
(e) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Majority
Holders; it being understood and intended that no one or more Holders of Notes
shall have any right in any manner whatever by virtue of, or by availing of,
any provision of this Indenture to affect, disturb or prejudice the rights of
any other Holders of Notes, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all the Holders of Notes.
SECTION 6.10 UNCONDITIONAL RIGHT OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment of the principal and interest on such Note as such principal and
interest becomes due and payable and to institute any Proceeding for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
SECTION 6.11 RESTORATION OF RIGHTS AND REMEDIES.
If the Indenture Trustee, the Note Insurer or any Noteholder has
instituted any Proceeding to enforce any right or remedy under this Indenture
and such Proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Indenture Trustee, the Note Insurer or to
such Noteholder, then, and in every case, the Issuer, the Indenture Trustee,
the Note Insurer and the Noteholders 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, the Note Insurer and the Noteholders shall continue as though no such
Proceeding had been instituted.
SECTION 6.12 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section
2.07 hereof, no right or remedy herein conferred upon or reserved to the
Indenture Trustee, the Note Insurer or to the Noteholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition
48
to every other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 6.13 DELAY OR OMISSION; NOT WAIVER.
No delay or omission of the Indenture Trustee, the Note Insurer or of
any Holder of any Note to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or any acquiescence therein. Every right and remedy
given by this Article Six or by law to the Indenture Trustee, the Note Insurer
or to the Noteholders may be exercised from time to time, and as often as may
be deemed expedient, by the Indenture Trustee, the Note Insurer or by the
Noteholders, as the case may be, subject in each case, however, to the right
of the Controlling Party to control any such right and remedy except as
provided in Section 6.14 hereof.
SECTION 6.14 CONTROL BY NOTEHOLDERS.
The Controlling Party shall have the right to direct the time, method
and place of conducting any Proceeding for any remedy available to the
Indenture Trustee or exercising any trust or power conferred on the Indenture
Trustee; provided that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture including, without limitation, any provision hereof which
expressly provides for approval by a greater percentage of Outstanding
Principal Amount of all Notes;
(b) any direction to the Indenture Trustee by the Holders of Class
A Notes (or Class B Notes if no Class A Notes remain Outstanding) to undertake
a private sale of the Trust Estate shall be by the Holders of all Outstanding
Notes of such Class, unless the condition set forth in Section 6.18(b)(ii)(y)
or (z) (as applicable) are met;
(c) the Indenture Trustee may take any other action deemed proper
by the Indenture Trustee which is not inconsistent with such direction;
provided that, subject to Section 7.01 hereof, the Indenture Trustee need not
take any action which a Responsible Officer or Officers of the Indenture
Trustee in good faith determines might involve it in personal liability or be
unjustly prejudicial to the Noteholders not consenting; and
(d) the Indenture Trustee has been furnished reasonable indemnity
against costs, expenses and liabilities which it might incur in connection
therewith as provided in Section 7.01(f) hereof.
SECTION 6.15 WAIVER OF CERTAIN EVENTS BY LESS THAN ALL NOTEHOLDERS.
The Controlling Party may on behalf of the Holders of all the Notes
waive any past Default, Event of Default or Trigger Event hereunder and its
consequences, except:
(a) a Default described in Sections 6.01(a), (b), (d), (e) or (f)
hereof, or
(b) in respect of a covenant or provision hereof which under
Article Nine hereof cannot be modified or amended without the consent of the
Holder of each Outstanding Note affected.
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Upon any such waiver, such Default, Event of Default or Trigger Event
shall cease to exist, and any Event of Default or other consequence 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,
Event of Default or Trigger Event or impair any right consequent thereon.
SECTION 6.16 UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Note by its
acceptance of such Note shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the 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 in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 6.16 shall not apply to any suit
instituted by the Indenture Trustee or the Note Insurer, or to any suit
instituted by the Majority Holders, or to any suit instituted by any Noteholder
for the enforcement of the payment of the principal of or interest on any Note
on or after the Stated Maturity Date expressed in such Note.
SECTION 6.17 WAIVER OF STAY OR EXTENSION LAWS.
The Issuer covenants (to the extent that it may lawfully do so) that it
shall not, at any time, insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance 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 shall not hinder, delay or impede the
execution of any power herein granted to the Indenture Trustee, but shall
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 6.18 SALE OF TRUST ESTATE.
(a) The power to effect any sale (a "Sale") of any portion of the
Trust Estate pursuant to Section 6.04 hereof shall not be exhausted by any one
or more Sales as to any portion of the Trust Estate remaining unsold, but
shall continue unimpaired until the entire Trust Estate securing the Notes
shall have been sold or all amounts payable on the Notes and under this
Indenture with respect thereto shall have been paid. The Indenture Trustee
may from time to time postpone any Sale by public announcement made at the
time and place of such Sale.
(b) To the extent permitted by applicable law, the Indenture
Trustee shall not, in any private Sale, sell to a third party (i) the Trust
Estate unless the provisions of Section 6.04 are satisfied, or (ii) any
portion thereof, unless:
(x) the Controlling Party consents in writing to or directs
the Indenture Trustee to make such Sale; or
(y) if a Note Insurer Default has occurred, the proceeds of
such Sale would not be less than the sum of all amounts due to the
Indenture Trustee hereunder and the Outstanding Principal Amount of all
Class A Notes and interest due or to become due thereon on the Payment
Date next succeeding such Sale; or
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(z) if there are no Class A Notes Outstanding, the proceeds
of such Sale would not be less than the sum of all amounts due to the
Indenture Trustee hereunder and the Outstanding Principal Amount of all
Class B Notes and interest due or to become due thereon on the Payment
Date next succeeding such Sale.
(c) The Indenture Trustee, the Note Insurer or the Noteholders may
bid for and acquire any portion of the Trust Estate in connection with a
public Sale thereof, and in lieu of paying cash therefor, any Noteholder may
make settlement for the purchase price by crediting against amounts owing on
the Notes of such Holder or other amounts owing to such Holder secured by this
Indenture, that portion of the net proceeds of such Sale to which such Holder
would be entitled, after deducting the reasonable costs, charges and expenses
incurred by the Indenture Trustee, the Note Insurer or the Noteholders in
connection with such Sale. The Notes need not be produced in order to
complete any such Sale, or in order for the net proceeds of such Sale to be
credited against the Notes. The Indenture Trustee, the Note Insurer or the
Noteholders may hold, lease, operate, manage or otherwise deal with any
property so acquired in any manner permitted by law.
(d) The Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the Trust
Estate in connection with a Sale thereof. In addition, the Indenture Trustee
is hereby irrevocably appointed the agent and attorney-in-fact of the Issuer
to transfer and convey its interest in any portion of the Trust Estate in
connection with a Sale thereof, and to take all action necessary to effect
such Sale. No purchaser or transferee at such a 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.
(e) The method, manner, time, place and terms of any Sale of all or
any portion of the Trust Estate shall be commercially reasonable.
SECTION 6.19 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, obtaining or
application of any other relief under or with respect to this Indenture.
Neither the lien of this Indenture nor any rights or remedies of the 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 Trust Estate or upon any of the
assets of the Issuer.
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ARTICLE SEVEN
THE INDENTURE TRUSTEE
SECTION 7.01 CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default known to
the Indenture Trustee as provided in subsection (e) below:
(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; but in the case of any
such certificates or opinions, which by any provision hereof are
specifically required to be furnished to the Indenture Trustee, the
Indenture Trustee shall be under a duty to examine the same and to
determine whether or not they conform to the requirements of this
Indenture.
(b) In the event that an Event of Default known to the Indenture
Trustee as provided in subsection (e) below shall have occurred and be
continuing, the Indenture Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and shall use the same degree of care and
skill in its exercise, as a reasonable person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(c) 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 or bad faith, except
that:
(i) this subsection (c) shall not be construed to limit the
effect of subsection (a) of this Section;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Indenture
Trustee, unless it shall be proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Controlling Party or the Holders of
Notes representing such percentage of Outstanding Principal Amount as
may be required by the terms hereof, in accordance with Section 6.14
hereof relating to the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee,
under this Indenture, the Contract Acquisition Agreement or the
Servicing Agreement; and
(iv) no provision of this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that
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repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it, provided that nothing
contained in this Indenture shall excuse the Indenture Trustee for
failure to perform its duties as Indenture Trustee under this Indenture.
(d) Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Indenture Trustee shall be subject to the
provisions of this Section 7.01.
(e) For all purposes under this Indenture, the Indenture Trustee
shall not be deemed to have notice of any Event of Default described in
Section 6.01(e) or 6.01(f) hereof or any Default described in Section 6.01(d)
hereof or of any Trigger Event unless a Responsible Officer assigned to and
working in the Indenture Trustee's corporate trust department has actual
knowledge thereof or unless written notice of any event which is in fact such
an Event of Default, Default or Trigger Event is received by the Indenture
Trustee at the Corporate Trust Office, and such notice references any of the
Notes generally, the Issuer, the Trust Estate or this Indenture.
(f) The Indenture Trustee shall be under no obligation to institute
any suit, or to take any remedial proceeding under this Indenture, or to enter
any appearance or in any way defend in any suit in which it may be made
defendant, or to take any steps in the execution of the trusts hereby created
or in the enforcement of any rights and powers hereunder until it shall be
indemnified to its satisfaction against any and all costs and expenses,
outlays and counsel fees and other reasonable disbursements and against all
liability, except liability that is adjudicated, in connection with any action
so taken.
(g) Notwithstanding any extinguishment of all right, title and
interest of the Issuer in and to the Trust Estate following an Event of
Default and a consequent declaration of acceleration of the maturity of any of
the Notes, whether such extinguishment occurs through a Sale of the Trust
Estate to another person or the acquisition of the Trust Estate by the
Indenture Trustee, the rights of the Noteholders shall continue to be governed
by the terms of this Indenture.
(h) Notwithstanding anything to the contrary contained herein, the
provisions of subsections (e) through (g), inclusive, of this Section 7.01
shall be subject to the provisions of subsections (a) through (c), inclusive,
of this Section 7.01.
(i) The Indenture Trustee shall provide the reports and accountings
as required pursuant to Section 12.04 hereof.
SECTION 7.02 NOTICE OF DEFAULT AND OTHER EVENTS.
Promptly after the occurrence of any Default, Trigger Event or Note
Insurer Default known to the Indenture Trustee (within the meaning of Section
7.01(e) hereof) which is continuing, within one Business Day of obtaining such
knowledge, the Indenture Trustee shall transmit by telephonic or telegraphic
communication confirmed by mail to the Note Insurer and by mail to all Holders
of Notes, as their names and addresses appear on the Note Register, notice of
such Default, Trigger Event or Note Insurer Default known to the Indenture
Trustee.
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SECTION 7.03 CERTAIN RIGHTS OF INDENTURE TRUSTEE.
Except as otherwise provided in Section 7.01,
(a) the Indenture Trustee may rely and shall 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 obligation, paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein shall
be sufficiently evidenced by an Issuer Request or Issuer Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) 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, rely upon an Officer's Certificate;
(d) the Indenture Trustee may consult with counsel and the written
advice of such counsel selected by the Indenture Trustee with due care or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon;
(e) the Indenture Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at 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;
(f) unless so directed by the Controlling Party and the
requirements of clause (e) above are met, 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, 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, upon reasonable notice and at reasonable times personally or by
agent or attorney; and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys.
SECTION 7.04 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
(a) The recitals contained in this Indenture and in the Notes,
except the certificates of authentication on the Notes, shall be taken as the
statements of the Issuer, and the Indenture Trustee assumes no responsibility
for their correctness. The Indenture Trustee makes no representations as to
the validity or condition of the Trust Estate or any part thereof, or as to
the title of the Issuer thereto or as to the security afforded thereby or
hereby, or as to the validity or genuineness of any securities at any time
pledged and deposited with the Indenture Trustee hereunder or as to the
validity or sufficiency of this Indenture or any of the Notes. The Indenture
Trustee shall not be accountable for the use or application by the Issuer of
any of
54
the Notes or the proceeds thereof or of any money paid to the Issuer or upon
Issuer Order under any provisions hereof.
(b) Except as otherwise expressly provided herein and without
limiting the generality of the foregoing, the Indenture Trustee shall have no
responsibility or liability for or with respect to the validity of any
Equipment or Contract, the perfection of any security interest (whether as of
the date hereof or at any future time), the maintenance of or the taking of
any action to maintain such perfection, the validity of the assignment of any
portion of the Trust Estate to the Indenture Trustee or of any intervening
assignment, the review of any Contract (it being understood that the Indenture
Trustee has not reviewed and does not intend to review the substance or form
of any such Contract), the performance or enforcement of any Contract, the
validity and sufficiency of the Note Insurance Policies, the compliance by the
Issuer or the Servicer with any covenant or the breach by the Issuer or the
Servicer of any warranty or representation made hereunder or in any related
document or the accuracy of any such warranty or representation, any
investment of monies in the Collection Account or any loss resulting
therefrom, the acts or omissions of the Issuer, the Servicer, the Note Insurer
or any Customer, any action of the Servicer taken in the name of the Indenture
Trustee, or the validity of the Servicing Agreement or the Contract Acquisition
Agreement.
(c) Except as otherwise expressly provided herein, the Indenture
Trustee shall not have any obligation or liability under any Contract by
reason of or arising out of this Indenture or the granting of a security
interest in such Contract hereunder or the receipt by the Indenture Trustee of
any payment relating to any Contract pursuant hereto, nor shall the Indenture
Trustee be required or obligated in any manner to perform or fulfill any of
the obligations of the Issuer under or pursuant to any Contract, or to make
any payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it, or the sufficiency of any performance by any party,
under any Contract.
SECTION 7.05 MAY HOLD NOTES.
The Indenture Trustee, the Servicer, any Paying Agent, the Note
Registrar, any Authenticating Agent or any other agent of the Issuer, in its
individual or any other capacity, may become the owner or pledgee of Notes,
and, if operative, may otherwise deal with the Issuer with the same rights it
would have if it were not Indenture Trustee, Servicer, Paying Agent, Note
Registrar, Authenticating Agent or such other agent.
SECTION 7.06 MONEY HELD IN TRUST.
Money and investments held in trust by the Indenture Trustee or any
Paying Agent hereunder shall be held in one or more trust accounts hereunder
but need not be segregated from other funds except to the extent required in
this Indenture or required by law. The Indenture Trustee or any Paying Agent
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Issuer or otherwise specifically provided
in this Indenture.
SECTION 7.07 COMPENSATION AND REIMBURSEMENT.
The Issuer agrees:
(a) to pay the Indenture Trustee monthly its fee for all services
rendered by it hereunder as Indenture Trustee, in the amount of the Trustee
Fee (which compensation shall not otherwise be limited by any provision of law
in regard to the compensation of a trustee of an express trust), and to pay to
the Back-up
55
Servicer its fee for all services rendered hereunder and under the Servicing
Agreement as Back-up Servicer, in the amount of the Back-up Servicer Fee;
(b) except as otherwise expressly provided herein, to reimburse the
Indenture Trustee or the Back-up Servicer upon its request for all reasonable
out-of-pocket expenses, disbursements and advances incurred or made by the
Indenture Trustee or the Back-up Servicer in accordance with any provision of
this Indenture or the Servicing Agreement (including the reasonable
compensation and the expenses and disbursements of the Indenture Trustee's and
Back-up Servicer's agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(c) to indemnify and hold harmless the Trust Estate and the
Indenture Trustee from and against any loss, liability, expense, damage or
injury (other than those attributable to a Noteholder in its capacity as an
investor in any of the Notes) sustained or suffered pursuant to this Indenture
by reason of any acts, omissions or alleged acts or omissions arising out of
activities of the Trust or the Indenture Trustee (including without limitation
any violation of any applicable laws by the Issuer as a result of the
transactions contemplated by this Indenture), including, but not limited to,
any judgment, award, settlement, reasonable attorneys' fees and other expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim; provided, that the Issuer shall not indemnify the
Indenture Trustee if such loss, liability, expense, damage or injury is due to
the Indenture Trustee's gross negligence or willful misconduct, willful
misfeasance or bad faith in the performance of duties. Any indemnification
pursuant to this Section shall only be payable from the assets of the Issuer
and shall not be payable from the assets of the Trust Estate. The provisions
of this indemnity shall run directly to and be enforceable by an injured
Person subject to the limitations hereof and this indemnification agreement
shall survive the termination of this Indenture.
SECTION 7.08 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $100,000,000 (or a lesser amount with the approval of the Controlling
Party and the Rating Agencies), subject to supervision or examination by
federal or state authority and having an office within the United States of
America, not affiliated (within the meaning of Rule 3a-7 under the Investment
Company Act) with the Issuer or any other Person involved in the organization
or operation of the Issuer, and which shall have a commercial paper or other
short-term rating of the highest short term rating categories by each of the
Rating Agencies, or otherwise acceptable to each of the Rating Agencies and
the Controlling Party. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Indenture Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 7.09 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor
Indenture Trustee under Section 7.10 hereof.
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(b) The Indenture Trustee may resign at any time by giving 30 days'
written notice thereof to the Issuer, the Note Insurer and to each Noteholder.
If an instrument of acceptance by a successor Indenture Trustee shall not have
been delivered to the Indenture Trustee within 30 days after the giving of
such notice of resignation, the resigning Indenture Trustee may petition any
court of competent jurisdiction for the appointment of a successor Indenture
Trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and may prescribe, appoint a successor Indenture Trustee.
(c) The Indenture Trustee may be removed by the Controlling Party
at any time if one of the following events have occurred:
(i) the Indenture Trustee shall cease to be eligible under
Section 7.08 hereof and shall fail to resign after written request
therefor by the Issuer, the Note Insurer or any Noteholder, or
(ii) the Indenture Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent or a receiver of the
Indenture Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Indenture Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, or
(iii) the Indenture Trustee has failed to perform its duties
in this Indenture or has breached any representation or warranty made in
this Indenture.
(d) If the Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the
Indenture Trustee for any cause with respect to any of the Notes, the Issuer
by a Board Resolution, shall promptly appoint a successor Indenture Trustee
satisfactory to the Controlling Party. If no successor Indenture Trustee
shall have been so appointed by the Issuer within 30 days of notice of removal
or resignation and shall have accepted appointment in the manner hereinafter
provided, then the Controlling Party may appoint a successor Indenture
Trustee. If the Note Insurer is the Controlling Party and has failed to
appoint a successor Indenture Trustee within 90 days after succeeding to the
right to so appoint a successor Indenture Trustee, then the Majority Holders
may petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee with respect to the Notes.
(e) The Issuer shall give notice in the manner provided in Section
13.04 hereof of each resignation and each removal of the Indenture Trustee and
each appointment of a successor Indenture Trustee with respect to the Notes to
the Noteholders and the Rating Agencies. Each notice shall include the name
of the successor Indenture Trustee and the address of its Corporate Trust
Office.
SECTION 7.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer and the retiring Indenture Trustee an
instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Indenture Trustee shall become effective and such
successor Indenture Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the
retiring Indenture Trustee but, on request of the Issuer or the successor
Indenture Trustee, such retiring Indenture Trustee shall, upon payment of its
reasonable out-of-pocket costs and expenses, execute and deliver an instrument
transferring to such successor Indenture Trustee all the rights, powers and
trusts of the retiring Indenture Trustee, and shall duly assign, transfer and
deliver to such successor Indenture Trustee all property and money held by
such retiring Indenture Trustee hereunder, subject nevertheless to its lien,
if any, provided for in Section 7.07 hereof. Upon request of any such
successor Indenture Trustee, the Issuer shall
57
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Indenture Trustee all such rights, powers and
trusts.
No successor Indenture Trustee shall accept its appointment unless at
the time of such acceptance such successor Indenture Trustee shall be eligible
under this Article.
SECTION 7.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF INDENTURE TRUSTEE.
Any Person into which the Indenture Trustee may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Indenture Trustee shall be a party,
or any corporation succeeding to all or substantially all of the corporate
trust business of the Indenture Trustee, shall be the successor of the
Indenture Trustee hereunder, provided that such Person shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, and
notice thereof shall be provided by the Indenture Trustee to the Noteholders
and the Rating Agencies. In case any Notes have been authenticated, but not
delivered, by the Indenture Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Indenture Trustee may adopt
such authentication and deliver the Notes so authenticated with the same
effect as if such successor Indenture Trustee had itself authenticated such
Notes.
SECTION 7.12 CO-INDENTURE TRUSTEES AND SEPARATE INDENTURE TRUSTEES.
At any time or times, for the purpose of meeting the legal requirements
of any jurisdiction in which any of the Trust Estate may at the time be
located, the Issuer, the Controlling Party and the Indenture Trustee shall
have power to appoint, and, upon the written request of the Indenture Trustee,
the Controlling Party or of the Holders representing at least 25% in
Outstanding Principal Amount of all Class A Notes (or Class B Notes if no
Class A Notes remain Outstanding), the Issuer shall for such purpose join with
the Indenture Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint, one or more Persons
approved by the Indenture Trustee and meeting the requirements of Section 7.08
hereof, either to act as co-Indenture Trustee, jointly with the Indenture
Trustee of all or any part of such Trust Estate, or to act as separate
Indenture Trustee of any such property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If
the Issuer does not join in such appointment within 15 days after the receipt
by it of a request so to do, or in case an Event of Default shall have
occurred and be continuing, the Indenture Trustee alone shall have power to
make such appointment.
Should any written instrument from the Issuer be reasonably required by
any co-Indenture Trustee or separate Indenture Trustee so appointed for more
fully confirming to such co-Indenture Trustee or separate Indenture Trustee
such property, title, right or power, any and all such instruments shall, on
request, be executed, acknowledged and delivered by the Issuer.
Every co-Indenture Trustee or separate Indenture Trustee shall, to the
extent permitted by law, but to such extent only, be appointed subject to the
following terms:
(a) the Notes shall be authenticated and delivered by, and all
rights, powers, duties and obligations under this Indenture in respect of the
custody of securities, cash and other personal property held by, or
58
required to be deposited or pledged with, the Indenture Trustee under this
Indenture, shall be exercised solely by the Indenture Trustee;
(b) the rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee by this Indenture in respect of any property
covered by such appointment shall be conferred or imposed upon and exercised
or performed by the Indenture Trustee or by the Indenture Trustee and such
co-Indenture Trustee or separate Indenture Trustee jointly, as shall be
provided in the instrument appointing such co-Indenture Trustee or separate
Indenture Trustee, except to the extent that under any law of any jurisdiction
in which any particular act is to be performed, the Indenture Trustee shall be
incompetent or unqualified to perform such act, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
co-Indenture Trustee or separate Indenture Trustee;
(c) the Indenture Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Issuer evidenced by a Board
Resolution, may accept the resignation of or remove any co-Indenture Trustee
or separate Indenture Trustee, appointed under this Section, and, in case an
Event of Default shall have occurred and be continuing, the Indenture Trustee
shall have power to accept the resignation of, or remove, any such
co-Indenture Trustee or separate Indenture Trustee without the concurrence of
the Issuer. Upon the written request of the Indenture Trustee, the Issuer
shall join with the Indenture Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to
effectuate such resignation or removal. A successor to any co-Indenture
Trustee or separate Indenture Trustee that has so resigned or been removed may
be appointed in the manner provided in this Section;
(d) no co-Indenture Trustee or separate Indenture Trustee hereunder
shall be personally liable by reason of any act or omission of the Indenture
Trustee or any other such Indenture Trustee hereunder nor shall the Indenture
Trustee be liable by reason of any act or omission of any co-Indenture Trustee
or separate Indenture Trustee selected by the Indenture Trustee with due care
or appointed in accordance with directions to the Indenture Trustee pursuant
to Section 6.14; and
(e) any Act of Noteholders delivered to the Indenture Trustee shall
be deemed to have been delivered to each such co-Indenture Trustee and
separate Indenture Trustee.
SECTION 7.13 RIGHTS WITH RESPECT TO THE SERVICER.
The Indenture Trustee's rights and obligations with respect to the
Servicer and the Back-up Servicer shall be governed by the Servicing
Agreement.
SECTION 7.14 APPOINTMENT OF AUTHENTICATING AGENT.
The Indenture Trustee may appoint an Authenticating Agent or Agents with
respect to the Notes which shall be authorized to act on behalf of the
Indenture Trustee to authenticate Notes issued upon original issue or upon
exchange, registration of transfer or pursuant to Section 2.05 hereof, and
Notes so authenticated shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the
Indenture Trustee hereunder. Wherever reference is made in this Indenture to
the authentication and delivery of Notes by the Indenture Trustee or the
Indenture Trustee's certificate of authentication or the delivery of Notes to
the Indenture Trustee for authentication, such reference shall be deemed to
include authentication and delivery 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 and delivery of the Notes to
the Authenticating Agent on behalf of the Indenture Trustee. Each
Authenticating Agent shall be acceptable to
59
the Issuer, the Note Insurer and the Noteholders and shall at all times be a
corporation having a combined capital and surplus of not less than the
equivalent of $50,000,000 and subject to supervision or examination by Federal
or state authority or the equivalent foreign authority, in the case of an
Authenticating Agent who is not organized and doing business under the laws of
the United States of America, any state thereof or the District of Columbia.
If such Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any corporation succeeding to the corporate agency
or corporate trust business of such Authenticating Agent, shall continue to be
an Authenticating Agent without the execution or filing of any paper or any
further act on the part of the Indenture Trustee or such Authenticating Agent;
provided, that such corporation shall be otherwise eligible under this
Section.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Indenture Trustee, the Note Insurer and to the Issuer. The
Indenture Trustee may at any time terminate the agency of an Authenticating
Agent by giving written notice thereof to such Authenticating Agent, the Note
Insurer and to the Issuer. Upon receiving such a notice of resignation or
upon such a termination, or in case at any time such Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
the Indenture Trustee may appoint a successor Authenticating Agent which shall
be acceptable to the Issuer and the Controlling Party and shall mail written
notice of such appointment by first-class mail, postage prepaid, to all
Holders of Notes, if any, with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Note Register. Any
successor Authenticating Agent upon acceptance of its 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 eligible under the
provisions of this Section.
The Indenture Trustee may pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section and the
Indenture Trustee shall be entitled to be reimbursed for such payments,
subject to the provisions of Section 7.07 hereof.
If an appointment is made pursuant to this Section, the Notes may have
endorsed thereon, in addition to the Indenture Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
This is one of the Notes described in the within-mentioned Indenture.
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
As Indenture Trustee
By:
------------------------------
as Authenticating Agent
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By:
--------------------------------
Authorized Officer
SECTION 7.15 INDENTURE TRUSTEE TO HOLD CONTRACTS.
The Indenture Trustee hereby acknowledges receipt of (subject to any
exceptions as may be noted by the Indenture Trustee to the Servicer and the
Controlling Party pursuant to Section 4.05 hereof) and shall hold each
Contract, together with any documents relating thereto that may from time to
time be delivered to the Indenture Trustee, until such time as such Contract
is released from the lien of this Indenture pursuant to the terms of this
Indenture.
Except as set forth in Section 4.05 hereof, the Indenture Trustee shall
be under no duty or obligation to inspect, review or examine the Contracts and
other documents to determine that the same are genuine, enforceable or
appropriate for the represented purpose or that they have actually been
recorded or that they are other than what they purport to be on their face.
SECTION 7.16 MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
The Indenture Trustee shall execute and deliver, and if there is any
Paying Agent other than the Indenture Trustee, the Issuer shall cause each
Paying Agent other than the Indenture Trustee to execute and deliver to the
Indenture Trustee and the Controlling Party an instrument in which such Paying
Agent shall agree with the Indenture Trustee that, subject to the provisions
of this Section, such Paying Agent shall:
(a) hold all sums held by it for the payment of principal or
interest on Notes in trust for the benefit of the Noteholders entitled thereto
and the Note Insurer until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Indenture Trustee, the Note Insurer and the
Noteholders notice of any Default by the Issuer (or any other obligor upon the
Notes) in the making of any payment of principal or interest; and
(c) 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.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
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 Indenture
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 money.
Any money deposited with the Indenture Trustee or any Paying Agent in
trust for the payment of the principal or interest on any Note and remaining
unclaimed for three years after such principal or interest has become due and
payable shall be paid to the Issuer on Issuer Request or to the Note Insurer
if such payment had been made by the Note Insurer; and the Holder of such Note
shall thereafter, as an unsecured general creditor, and subject to any
applicable statute of limitations, look only to the Issuer for payment
thereof, and all liability of the Indenture Trustee, such Paying Agent or the
Note Insurer with respect to such trust money or the related Note, shall
thereupon cease; provided, that the Indenture Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Issuer cause to be published once, in
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a newspaper published in the English language, customarily published on each
Business Day and of general circulation in the city in which the Corporate
Trust Office is located, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
shall be repaid to the Issuer; and provided further, that any amounts held
that are proceeds of a claim made under a Note Insurance Policy shall be
returned to the Note Insurer, and the Noteholders shall look only to the Note
Insurer for such payments. The Indenture Trustee may also adopt and employ,
at the expense of the Issuer, any other reasonable means of notification of
such repayment (including, but not limited to, mailing notice of such
repayment to Noteholders whose right to or interest in monies due and payable
but not claimed is determinable from the records of any Paying Agent, at the
last address as shown on the Note Register for each such Noteholder).
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ARTICLE EIGHT
THE NOTE INSURANCE POLICIES
SECTION 8.01 PAYMENTS UNDER THE NOTE INSURANCE POLICIES.
With respect to any applicable Series of Class A Notes, if on the close
of business on the fourth Business Day prior to any Payment Date, the funds on
deposit in the Collection Account and available to be distributed on such
Payment Date pursuant to Section 12.02(d) hereof (after taking into account
any transfers from the Cash Collateral Account in accordance with Section
12.03 and any amounts payable pursuant to Section 12.02(d)(i) through (iv)
hereof) are not sufficient to make the payment of interest due on the
Outstanding Class A Notes of the applicable Series on such Payment Date in
accordance with Section 12.02(d)(v) hereof, the Indenture Trustee shall, no
later than 10:00 a.m. (Central Time), on the third Business Day immediately
preceding such Payment Date make a claim under the applicable Note Insurance
Policy in an amount equal to such insufficiency (the "Interest Deficiency Draw
Amount"). In addition, with respect to any applicable Series of Class A
Notes, if on the close of business on the fourth Business Day immediately
prior to the related Stated Maturity Date the funds on deposit in the
Collection Account (after taking into account any transfers from the Cash
Collateral Account in accordance with Section 12.03 and any amounts payable
pursuant to Section 12.02(d)(i) through (v) hereof) are not sufficient to pay
the entire Outstanding Principal Amount of all Class A Notes of the applicable
Series (after giving effect to the application of funds available to pay the
Pro Rata Share of the Class A Principal Distribution Amount of each such
Outstanding Series in accordance with Section 12.02(d)(vi) hereof), the
Indenture Trustee shall, no later than 10:00 a.m. (Central Time), on the third
Business Day immediately preceding such Payment Date, make a claim under the
applicable Note Insurance Policy in an amount equal to such insufficiency (the
"Note Principal Balance Deficiency"). Proceeds of claims on the Note
Insurance Policies shall be deposited in the Collection Account or the
Redemption Account, as applicable, by 11:00 a.m. (Central Time) on the later
of (i) the second Business Day after receipt by the Note Insurer of notice of
such claim and (ii) the Business Day immediately preceding such Payment Date
and used solely to pay amounts due in respect of interest on the applicable
Class A Notes on each Payment Date prior to the Stated Maturity Date and
principal of and interest on the applicable Class A Notes at the Stated
Maturity Date.
In addition, on any day that the Indenture Trustee has actual knowledge
or receives notice that any amount previously paid to a Holder of a Class A
Note has been subsequently recovered from such Noteholder pursuant to a final
order of a court of competent jurisdiction that such payment constitutes an
avoidable preference within the meaning of any applicable bankruptcy law to
such Noteholder (a "Preference Claim"), the Indenture Trustee shall make a
claim within one Business Day upon the relevant Note Insurance Policy for the
full amount of such Preference Claim in accordance with the terms of such Note
Insurance Policy. Any proceeds of any such Preference Claim received by the
Indenture Trustee shall be paid to the related Class A Noteholders.
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ARTICLE NINE
AMENDMENTS; SUPPLEMENTAL INDENTURES
SECTION 9.01 AMENDMENTS AND SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
NOTEHOLDERS.
The Issuer, the Servicer, the Back-up Servicer and the Indenture
Trustee, with the written consent of the Controlling Party, at any time and
from time to time, may enter into one or more amendments or indentures
supplemental hereto, in form satisfactory to the Indenture Trustee, for any of
the following purposes, provided that any such amendment or supplement, as
evidenced by an Opinion of Counsel if requested by the Indenture Trustee, will
not have a material adverse effect on any Noteholder:
(a) 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; or
(b) to evidence the succession of another Person to the Issuer, and
the assumption by such successor of the covenants of the Issuer herein and in
the Notes contained, in accordance with Section 11.02(o) hereof; or
(c) to add to the covenants of the Issuer, for the benefit of the
Note Insurer or the Holders of all Notes, or to surrender any right or power
herein conferred upon the Issuer; or
(d) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee; or
(e) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provisions with
respect to matters or questions arising under this Indenture, which shall not
be inconsistent with the provisions of this Indenture, provided that such
action shall not adversely affect the interests of the Holders of the Notes;
or
(f) to evidence the succession of the Indenture Trustee pursuant to
Article Seven hereof; or
(g) to add events to the list of Events of Default; or
(h) to substitute one or more Contracts in accordance with Section
4.04 hereof and to add Additional Contracts; or
(i) so long as, as of the date of such amendment, no Note Insurer
Default has occurred and is continuing with respect to any Series of Class A
Notes then Outstanding and the Rating Agency Condition has been met with
respect to all Series then Outstanding, to amend the definition of
"Collateralization Percentage," or "Trigger Event"; or
(j) as may be necessary to effectuate the issuance of any
additional Series of Notes in accordance with the terms of this Indenture and
the related Supplement; provided that any such amendment does not modify this
Indenture in a manner described in paragraphs (a)(i) through (a)(viii) of
Section 9.02 hereof.
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The Indenture Trustee is hereby authorized to join in the execution of
any such amendment or supplemental indenture and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Indenture Trustee shall not be obligated to enter into any such amendment or
supplemental indenture that affects the Indenture Trustee's own rights,
duties, liabilities or immunities under this Indenture or otherwise.
Promptly after the execution by the Issuer, the Servicer, the Back-up
Servicer and the Indenture Trustee of any amendment or supplemental indenture,
and the consent thereto by the Note Insurer, pursuant to this Section, the
Issuer shall mail to the Rating Agencies and each Noteholder a copy of such
amendment or supplemental indenture.
SECTION 9.02 AMENDMENTS OR SUPPLEMENTAL INDENTURES WITH CONSENT OF
NOTEHOLDERS.
(a) With the prior written consent of (i) the Note Insurer, unless
a Note Insurer Default shall have occurred and be continuing, and (ii) (A) the
Majority Holders, or (B) in respect of matters relating only to discrete
Series of Notes the Holders of not less than 51% of the Outstanding Principal
Amount of such Series of Notes, by Act of said Holders delivered to the Issuer
and the Indenture Trustee and written notice thereof delivered to the Rating
Agencies, the Issuer, the Servicer, the Back-up Servicer and the Indenture
Trustee may enter into amendments 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. Notwithstanding the
foregoing, no such amendment or supplemental indenture shall, without the
consent of the Holders of each Outstanding Note:
(i) change the Stated Maturity Date of any Note or the due
date of any installment of principal of, or any installment of interest
on, any Note, or reduce the principal amount thereof or the Note
Interest Rate or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such
payment; or
(ii) reduce the percentage in Outstanding Principal Amount of
Notes, the consent of the Holders of which is required for any such
amendment or supplemental indenture, or the consent of the Holders of
which is required for any waiver of compliance with certain provisions
of this Indenture or Events of Default or their consequences; or
(iii) impair or adversely affect the Trust Estate except as
otherwise expressly permitted herein; or
(iv) modify or alter the proviso to the definition of the
term "Outstanding" or "Outstanding Principal Amount"; or
(v) modify or alter the provisions of the proviso to
Section 6.04 hereof; or
(vi) modify any of the provisions of this Section 9.02,
except to increase the percentage of Holders required for any
modification or waiver or to provide that certain other provisions of
this Indenture cannot be modified or waived without the consent of each
Holder of each Outstanding Note affected thereby; or
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(vii) 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
Trust Estate or terminate the lien of this Indenture on any property at
any time subject hereto or deprive the Holder of any Note of the
security afforded by the lien of this Indenture; or
(viii) modify any of Sections 4.02, 6.01(a) or (b), 6.02, 6.03,
6.18, or 12.02(d) hereof.
(b) The Indenture Trustee is hereby authorized to join in the
execution of any supplemental indenture pursuant to clause (a) above and to
make any further appropriate agreements and stipulations that may be therein
contained, but the Indenture Trustee 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. Promptly after the
execution by the Issuer, the Servicer, the Back-up Servicer and the Indenture
Trustee of any supplemental indenture pursuant to this Section, the Issuer
shall mail to the Holders of the Notes, the Note Insurer and the Rating
Agencies a copy of such supplemental indenture.
SECTION 9.03 EXECUTION OF AMENDMENTS AND SUPPLEMENTAL INDENTURES.
In executing any amendment or supplemental indenture permitted by this
Article or the modifications thereby of the trusts created by this Indenture,
the Indenture Trustee shall be entitled to receive upon request, and (subject
to Section 7.01 hereof) shall be fully protected in relying in good faith
upon, an Opinion of Counsel reasonably acceptable to the Indenture Trustee
stating that the execution of such amendment or supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but
shall not be obligated to, enter into any such amendment or supplemental
indenture which affects the Indenture Trustee's own duties or immunities under
this Indenture or otherwise.
SECTION 9.04 EFFECT OF AMENDMENTS AND SUPPLEMENTAL INDENTURES.
Upon the execution of any amendment or supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
amendment or supplemental indenture shall form a part of this Indenture for
all purposes; and every Holder of Notes theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
SECTION 9.05 REFERENCE IN NOTES TO AMENDMENTS AND SUPPLEMENTAL
INDENTURES.
Notes authenticated and delivered after the execution of any amendment
or supplemental indenture pursuant to this Article 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 amendment or 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
amendment or supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Notes.
SECTION 9.06 CERTAIN AMENDMENTS. If any party to this Indenture is
unable to sign any amendment due to its dissolution, winding up or comparable
circumstances, then the consent of the Majority Holders shall be sufficient to
allow an amendment that otherwise meets the requirements of this Article Nine
to become effective without such party's signature; provided, however, that no
such amendment shall impose on the party that is unable to provide a signature
any obligation or liability in excess of what is then currently imposed
hereunder prior to such amendment.
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ARTICLE TEN
REDEMPTION OF NOTES
SECTION 10.01 REDEMPTION AT THE OPTION OF THE ISSUER; ELECTION TO
REDEEM.
Except as may be otherwise specified in the related Supplement, the
Issuer shall have the option to redeem all of the Outstanding Notes of any
Series at any time after the Outstanding Principal Amount of such Series of
Notes is less than 10% of the original Outstanding Principal Amount of such
Series of Notes as of the related Delivery Date, in each case at the
applicable Redemption Price plus any fees due hereunder and all amounts due to
the Note Insurer under the related Note Insurance Agreement. Notwithstanding
the foregoing, no Series of Class B Notes shall be redeemed while any Series
of Class A Notes remains Outstanding without the consent of the Controlling
Party. With respect to any permitted redemption of a Series of Class A Notes,
the Note Insurer shall have the same option to redeem any such Series of Notes
in the absence of the exercise thereof by the Issuer.
The Issuer or the Note Insurer, as the case may be, shall set the
Redemption Date and the Redemption Record Date for a Series of Notes and give
notice thereof to the Indenture Trustee pursuant to Section 10.02 hereof.
Installments of interest and principal that are due
regarding a Series of Notes on or prior to the related Redemption Date shall
continue to be payable to the Holders of such Notes called for redemption as
of the relevant Record Dates according to their terms and the provisions of
Section 2.08 hereof. The election of the Issuer or the Note Insurer to redeem
any Notes pursuant to this Section shall be evidenced by a Board Resolution or
written notice from the Note Insurer, respectively, directing the Indenture
Trustee to make the payment of the Redemption Price on all of the Notes to be
redeemed from monies deposited with the Indenture Trustee pursuant to Section
10.02 hereof.
SECTION 10.02 NOTICE TO INDENTURE TRUSTEE; DEPOSIT OF REDEMPTION PRICE.
In the case of any redemption pursuant to Section 10.01 hereof, the
Issuer or the Note Insurer, as applicable, shall, at least 15 days prior to
the related Redemption Date, notify the Indenture Trustee and the Holders of
the Series of Notes to be redeemed of such Redemption Date and shall deposit
into the Redemption Account on such notification date an amount equal to the
Redemption Price of all Notes to be redeemed on such Redemption Date plus any
fees due hereunder and all amounts due to the Note Insurer under the related
Note Insurance Agreement.
SECTION 10.03 NOTICE OF REDEMPTION BY THE ISSUER.
Upon receipt of such notice and such deposit set forth in Section 10.02
above, the Indenture Trustee shall provide notice of redemption pursuant to
Section 10.01 hereof by first-class mail, postage prepaid, mailed no later
than the Business Day following the date on which such deposit was made, to
each Holder of Notes whose Notes are to be redeemed, at his address in the
Note Register.
All notices of redemption shall state:
(a) the applicable Redemption Date;
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(b) the applicable Redemption Price; and
(c) that on such Redemption Date, the Redemption Price will become
due and payable upon each such Note in the related Series, and that interest
thereon shall cease to accrue on such date.
Notice of redemption of a Series of Notes shall be given by the
Indenture Trustee in the name and at the expense of the Issuer or the Note
Insurer, as applicable. Failure to give notice of redemption, or any defect
therein, to any Holder of any Note selected for redemption shall not impair or
affect the validity of the redemption of any other Note.
SECTION 10.04 NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as provided in Section 10.03
hereof, the Series of Notes to be redeemed shall, on the applicable Redemption
Date, become due and payable at the Redemption Price and on such Redemption
Date (unless the Issuer or the Note Insurer, as applicable, shall default in
the payment of the Redemption Price) such Notes shall cease to bear interest.
The Holders of such Notes shall be paid the Redemption Price by the Paying
Agent on behalf of the Issuer; provided, that installments of principal and
interest that are due regarding such Series of Notes on or prior to such
Redemption Date shall be payable to the Holders of such Notes registered as
such on the relevant Record Dates according to their terms and the provisions
of Section 2.08 hereof.
If the Holders of any Note called for redemption shall not be so paid,
the principal and premium, if any, on such Series of Notes shall, until paid,
bear interest from the applicable Redemption Date at the related Note Interest
Rate.
SECTION 10.05 RELEASE OF SERIES CONTRACTS.
In connection with any redemption permitted under this Article Ten, the
Issuer or the Note Insurer, as the case may be, shall be permitted to obtain a
release of the related Series Contracts, (a) to the extent provided in Section
4.06(b) hereof, as modified by any Supplement then in effect, and (b) so long
as the applicable Redemption Price shall have been deposited into the
Redemption Account as required by Section 10.02, and any applicable Insurance
Policy has been terminated with respect to such Series or the Note Insurer
otherwise consents to such release.
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ARTICLE ELEVEN
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 11.01 REPRESENTATIONS AND WARRANTIES.
The Issuer hereby makes the following representations and warranties for
the benefit of the Indenture Trustee, the Note Insurer and the Noteholders on
which the Indenture Trustee relies in accepting the Trust Estate in trust and
in authenticating the Notes. Such representations and warranties are made as
of the Initial Delivery Date and, except as specifically provided herein, each
additional Delivery Date, and shall survive the Grant of the Trust Estate to
the Indenture Trustee.
(a) Organization and Good Standing. The Issuer is a corporation
duly organized, validly existing and in good standing under the laws of its
State of incorporation and each other State where the nature of its business
requires it to qualify, except to the extent that the failure to so qualify
would not in the aggregate materially adversely affect the Trust Estate or the
ability of the Issuer to perform its obligations under the Transaction
Documents. The Issuer has not operated under any other names and does not
have any trade names, fictitious names or "doing business as" names. The
Issuer has no subsidiaries;
(b) Authorization. The Issuer has the power, authority and legal
right to execute, deliver and perform under the terms of the Transaction
Documents and the execution, delivery and performance of the Transaction
Documents have been duly authorized by the Issuer by all necessary corporate
action;
(c) Binding Obligation. Assuming the due authorization, execution
and delivery by each other party thereto, each of (i) this Indenture, (ii) the
applicable Note Insurance Agreement, (iii) the Servicing Agreement, (iv) the
Contract Acquisition Agreement, (v) the Notes then Outstanding and (vi) the
Note Purchase Agreement constitutes a legal, valid and binding obligation of
the Issuer, enforceable against the Issuer in accordance with its terms except
(A) as such enforcement may be subject to or limited by applicable bankruptcy,
conservatorship, insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to certain equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought, whether a proceeding at law or in
equity;
(d) No Violation. The consummation of the transactions
contemplated by the terms of the Transaction Documents will not conflict with,
result in any breach of any of the terms and provisions of or constitute
(with or without notice, lapse of time or both) a default under the
organizational documents or bylaws of the Issuer, or any indenture, agreement,
mortgage, deed of trust or other instrument to which the Issuer is a party or
by which it is bound, or in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of such indenture, agreement, mortgage,
deed of trust or other such instrument, other than any Lien created or imposed
pursuant to the terms of the Transaction Documents, or violate any law or, any
material order, rule or regulation applicable to the Issuer of any court or of
any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Issuer or any of its
properties.
(e) No Proceedings. There are no Proceedings or investigations to
which the Issuer, or any of the Issuer's Affiliates, is a party pending, or,
to the knowledge of the Issuer, threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality (A)
asserting the
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invalidity of the Transaction Documents, (B) seeking to prevent the issuance
of any of the Notes or the consummation of any of the transactions
contemplated by the Transaction Documents or (C) seeking any determination or
ruling that would materially and adversely affect the performance by the
Issuer of its obligations under, or the validity or enforceability of, the
Transaction Documents.
(f) Approvals. All approvals, authorizations, consents, orders or
other actions of any Person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of the
Transaction Documents and with the valid and proper authorization, issuance
and sale of the Notes pursuant to this Indenture (except approvals of State
securities officials under any applicable securities or "blue sky" laws), have
been or will be taken or obtained on or prior to the applicable Delivery Date.
(g) Place of Business. The Issuer's principal place of business
and chief executive office is located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(h) Transfer and Assignment. This Agreement creates a valid and
continuing security interest (as defined in the UCC) in the Receivables and
the Contracts in favor of the Indenture Trustee. Upon the delivery to the
Indenture Trustee of the Contracts and the filing of the financing statements
described in Sections 4.01(f) and 4.02(b)(vi) hereof, the Indenture Trustee
for the benefit of the Noteholders shall have a first priority perfected
security interest in the Receivables and the Contracts and in the identifiable
proceeds thereof, except for Liens permitted under Section 11.02(a) and
limited to the extent set forth in Section 9-315 of the UCC as in effect in
the applicable jurisdiction, and such security interest is enforceable as such
as against creditors of and purchasers from the Issuer. The Issuer has caused
or will have caused, within ten days of the Delivery Date, the filing of all
appropriate financing statements (including, without limitation, UCC filings
pursuant to Sections 4.01 and 4.02 hereof, but excluding any UCC filings with
respect to Equipment except as otherwise provided herein) in the proper filing
office in the appropriate jurisdictions under applicable law in order to
perfect the security interest in the Trust Estate granted to the Indenture
Trustee hereunder. Other than the security interest granted to the Indenture
Trustee pursuant to this Agreement, the Issuer has not pledged, assigned,
sold, granted a security interest in, or otherwise conveyed any of the Trust
Estate. The Issuer has not authorized the filing of and is not aware of any
financing statements against the Issuer that include a description of
collateral covering the Trust Estate other than any financing statement
relating to the security interest granted to the Indenture Trustee hereunder
or that has been terminated. The Issuer is not aware of any judgment or tax
lien filings against it.
(i) Parent of the Issuer. The Company is the registered owner of
all of the issued and outstanding common stock of the Issuer, all of which
common stock has been validly issued, is fully paid and nonassessable and is
owned of record.
(j) Contract Acquisition Agreement. As of the Initial Delivery
Date, the Issuer has entered into the Contract Acquisition Agreement with the
Company relating to its acquisition of the Contracts and the related Contract
Assets, and the representations and warranties made by the Company relating to
the Contracts and the related Contract Assets have been validly assigned to
and are for the benefit of the Issuer, the Indenture Trustee, the Note Insurer
and the Noteholders and such representations and warranties are true and
correct in all material respects.
(k) Bulk Transfer Laws. The transfer, assignment and conveyance of
the Contracts, the Equipment and the Receivables by the Company to the Issuer
pursuant to the Contract Acquisition Agreement or by the Issuer pursuant to
this Indenture is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
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(l) The Contracts. The Issuer hereby restates and makes each of
the representations and warranties with respect to the Contracts and the related
Contract Assets that are made by the Company in Section 3.01 of the Contract
Acquisition Agreement in each case as of the date as of which the related
representation or warranty speaks. In addition, the Issuer hereby represents and
warrants that: (i) the Issuer has taken or has caused to be taken all steps
necessary to perfect its security interest against the Customers in the
Equipment securing the Contracts to the extent the original cost of such
Equipment was in excess of $10,000; (ii) each Contract constitutes "tangible
chattel paper" within the meaning of the UCC as in effect in the jurisdiction in
which each of the Company and the Issuer is organized and the jurisdiction in
which such Contract is located; (iii) the Issuer owns and has good and
marketable title to the Contracts free and clear of any Lien, claim or
encumbrance of any Person, except for Liens permitted under Section 11.02(a) and
limited to the extent set forth in Section 9-315 of the UCC as in effect in the
applicable jurisdiction; (iv) the executed original of each Contract has been
delivered to the Indenture Trustee; and (v) none of the Contracts has any marks
or notations indicating that it has been pledged, assigned or otherwise conveyed
to any Person other than the Indenture Trustee.
SECTION 11.02 COVENANTS.
The Issuer hereby makes the following covenants for the benefit of the
Indenture Trustee, the Note Insurer and the Noteholders, on which the Indenture
Trustee relies in accepting the Trust Estate in trust and in authenticating the
Notes. Such covenants are made as of the Initial Delivery Date, but shall
survive the Grant of the Trust Estate to the Indenture Trustee.
(a) No Liens. Except for the conveyances and grant of security
interests hereunder, the Issuer will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on,
any Collateral now existing or hereafter created, or any interest therein,
prior to the termination of this Indenture pursuant to Section 5.01 hereof; the
Issuer will notify the Indenture Trustee of the existence of any Lien on any
Collateral immediately upon discovery thereof and shall pay or cause to be paid
all taxes, fees, assessments, governmental charges and levies when due or
payable or levied against its property, including any property that is part of
the Collateral; and the Issuer shall defend the right, title and interest of the
Indenture Trustee in, to and under the Trust Estate now existing or hereafter
created, against all claims of third parties claiming through or under the
Issuer; provided, that nothing in this Section 11.02(a) shall prevent or be
deemed to prohibit the Issuer from suffering to exist upon any of the Trust
Estate any Liens for municipal or other local taxes and other governmental
charges if such taxes or governmental charges shall not at the time be due and
payable or if the Issuer shall currently be contesting the validity thereof in
good faith by appropriate proceedings and shall have set aside on its books
adequate reserves with respect thereto.
(b) Delivery of Collections. The Issuer agrees to hold in trust
and promptly pay to the Servicer all amounts received by the Issuer in respect
of the Trust Estate (other than amounts distributed to or for the benefit of
the Issuer pursuant to Article Twelve hereof).
(c) Obligations with Respect to Contracts. The Issuer shall duly
fulfill all obligations on its part to be fulfilled under or in connection
with each Contract and shall do nothing to impair the rights of the Indenture
Trustee (for the benefit of the Noteholders and the Note Insurer) in the
Receivables, the Contracts and any other assets comprising the Trust Estate.
As long as there is no event of default under the applicable Contract, the
Issuer shall do nothing to disturb the Customer's quiet enjoyment of the
related Equipment and the Customer's unrestricted use thereof for its intended
purpose.
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(d) Compliance with Law. The Issuer shall comply, in all material
respects, with all acts, rules, regulations, orders, decrees and directions of
any governmental authority applicable to the Contracts or any part thereof;
provided, that the Issuer may contest any act, regulation, order, decree or
direction in any reasonable manner which shall not materially and adversely
affect the rights of the Indenture Trustee (for the benefit of the Noteholders
and the Note Insurer) in the Receivables, the Contracts and the related
Equipment. The Issuer shall comply, in all material respects, with all
requirements of law applicable to the Issuer.
(e) Preservation of Security Interest. The Issuer shall execute
and file such continuation statements and any other documents which may be
required by law to fully preserve and protect the interest of the Indenture
Trustee (for the benefit of the Noteholders and the Note Insurer) in the Trust
Estate; provided, that the Issuer shall not be required to file financing
statements or any related agreements or documentation with respect to any
Equipment the original cost of which was not in excess of $10,000.
(f) Maintenance of Office, etc. The Issuer shall not, without
providing 30 days notice to the Indenture Trustee and the Controlling Party
and without filing such amendments to any previously filed financing
statements or any new filings as the Indenture Trustee or the Controlling
Party may require or as may be required in order to maintain the Indenture
Trustee's perfected security interest in the Trust Estate, (a) change the
location of its principal executive office or its jurisdiction of
organization, or (b) change its name, identity or corporate structure in any
manner which would make any financing statement or continuation statement
filed by the Issuer in accordance with the Servicing Agreement or this
Indenture seriously misleading within the meaning of Article 9-506 of any
applicable enactment of the UCC.
(g) Further Assurances. Except as set forth in Section 11.02(e),
the Issuer shall make, execute or endorse, acknowledge, and file or deliver to
the Indenture Trustee from time to time such schedules, confirmatory
assignments, conveyances, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such
further steps relating to the Trust Estate, as the Indenture Trustee may
request and reasonably require.
(h) Notice of Liens. The Issuer shall notify the Indenture Trustee
and the Controlling Party promptly after becoming aware of any Lien on any
Collateral, except for any Liens for municipal or other local taxes if such
taxes shall not at the time be due or payable without penalty or if the Issuer
or the related customer shall currently be contesting the validity thereof in
good faith by appropriate proceedings and the Issuer shall have set aside on
its books adequate reserves with respect thereto.
(i) Activities of the Issuer. The Issuer (i) shall engage in only
(A) the acquisition, ownership, leasing, selling and pledging of the property
acquired by the Issuer pursuant to the Contract Acquisition Agreement, and
causing the issuance of, receiving and selling the Notes issued pursuant to
this Indenture and (B) the exercise of any powers permitted to corporations
under the corporate law of the State of its incorporation which are incidental
to the foregoing or necessary to accomplish the foregoing and the Issuer shall
incur no debt other than trade payables and expense accruals in connection
with its operations in the normal course of business and other than as
contemplated by the Transaction Documents; (ii) shall (A) maintain its books,
records and cash management accounts separate from the books and records and
cash management accounts of any other Person and in accordance with generally
accepted accounting principles (except as otherwise permitted under the
Transaction Documents with respect to the Operating Account), (B) maintain
separate bank accounts and, except for a limited period of time between
receipt by the Company or the Servicer of certain payments on the Contracts
and the underlying proceeds as specified in the Servicing Agreement and the
Agreement Regarding Operating Account, or as otherwise provided in the
Transaction Documents, ensure that no funds or assets of the Issuer shall be
commingled with those of the Company, the Servicer or any other
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Person, (C) keep in full effect its existence, rights and franchises as a
corporation under the laws of its State of incorporation, and shall obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect
the validity and enforceability of this Indenture, including all of its
licenses, permits, governmental approvals, rights and privileges necessary in
the normal conduct of its business as now conducted or presently proposed to
be conducted; (D) observe all procedures required by its Articles of
Organization, its by-laws and the laws of the State of its incorporation; (E)
maintain its good standing under the laws of the State of its incorporation,
(F) keep correct and complete books and records of account and minutes of
meeting and other proceedings of its board of directors and shareholders, (G)
obtain proper authorization from its board of directors or shareholders, as
appropriate and act solely in its own name and through its duly authorized
officers and agents in the conduct of its business, (H) reflect in its
financial statements that the Contract Assets have been sold and assigned to
the Issuer and that the Contract Assets have been Granted by the Issuer to the
Indenture Trustee and that the assets of the Issuer are not available to pay
the creditors of the Company, (I) maintain a separate telephone number and
stationery reflecting a separate address and identity from that of the
Company; and (iii) shall not (A) dissolve or liquidate in whole or in part,
(B) own any subsidiary or lend or advance any moneys to, or make an investment
in, any Person, (C) make any capital expenditures, (D)(1) commence any case,
proceeding or other action under any existing or future bankruptcy, insolvency
or similar law seeking to have an order for relief entered with respect to it,
or seeking reorganization, arrangement, adjustment, wind-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, (2)
seek appointment of a receiver, trustee, custodian or other similar official
for it or any part of its assets, (3) make a general assignment for the
benefit of creditors, or (4) take any action in furtherance of, or consenting
or acquiescing in, any of the foregoing, (E) guarantee (directly or
indirectly), endorse or otherwise become contingently liable (directly or
indirectly) for the obligations of, or own or purchase any stock, obligations
or securities of or any other interest in, or make any capital contribution
to, any other Person, (F) merge or consolidate with any other Person except as
provided in subsection (o) of this Section 11.02, (G) engage in any other
action that bears on whether the separate legal identity of the Issuer shall
be respected, including without limitation (1) holding itself out as being
liable for the debts of any other party or (2) acting other than in its
corporate name and through its duly authorized officers or agents, or (H)
create, incur, assume, or in any manner become liable in respect of, any
indebtedness other than as contemplated by the Transaction Documents and other
than trade payables and expense accruals incurred in the ordinary course of
business and which are incidental to its business purpose. The Issuer shall
not amend any article in its Articles of Organization that deals with any
matter discussed above without the prior written consent of the Controlling
Party. On or before April 15 of each year, so long as any of the Notes are
Outstanding, the Issuer shall furnish to each Noteholder, the Indenture
Trustee and the Note Insurer, an Officer's Certificate confirming that the
Issuer has complied with its obligations under this Section 11.02(i).
(j) Directors. The Issuer agrees that at all times, at least two
of the directors of the Issuer (or two persons, one of whom is serving as both
a director and an executive officer) shall be Independent; provided, that such
Independent directors may serve in similar capacities for other "special
purpose corporations" formed by the Company and its Affiliates. The Issuer's
Articles of Organization shall at all times provide that such Independent
directors shall have a fiduciary duty to the Holders of the Notes and will
always require unanimous consent of the board of directors of the Issuer to
file any bankruptcy petition on behalf of the Issuer.
(k) Preservation of the Equipment. The Issuer warrants that it is
the lawful owner and possessor of the Equipment or has a valid perfected
security interest therein and that it will warrant and defend such Equipment
against all Persons, claims and demands whatsoever. The Issuer shall not
assign, sell, pledge, or exchange, or in any way encumber or otherwise dispose
of the Equipment, except as permitted under this Indenture.
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(l) Taxable Income from the Contracts. The Issuer shall treat the
Notes issued by it as debt and shall treat the Contracts as owned by it for
federal, state and local income tax purposes, and the affiliated group of
which the Issuer is a member within the meaning of section 1504 of the Code
and the Issuer and such affiliated group shall report and include in the
computation of the Issuer's gross income for such tax purposes the rental and
other income from the Contracts, and shall deduct the interest paid or accrued
with respect to the Notes in accordance with its applicable method of
accounting for such purposes.
(m) Maintenance of Office or Agency. The Issuer shall maintain an
office or agency within the United States of America where Notes may be
presented or surrendered following payment in full, where Notes may be
surrendered for registration of transfer or exchange and where notices and
demand to or upon the Issuer in respect of the Notes and this Indenture may be
served. The Issuer hereby initially appoints the Indenture Trustee as the
Paying Agent and its Corporate Trust Office as the office for each of said
purposes. The Issuer shall give 30 days prior written notice to the Indenture
Trustee, the Note Insurer and the Noteholders of any change in the identity of
the Paying Agent or 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 Indenture
Trustee, and the Issuer hereby irrevocably appoints the Indenture Trustee its
agent to receive all such presentations, surrenders, notices and demands.
(n) Enforcement of Servicing Agreement and Contract Acquisition
Agreement. The Issuer shall take all actions necessary, and diligently pursue
all remedies available to it, to the extent commercially reasonable, to
enforce the obligations of the Servicer under the Servicing Agreement and the
Company under the Contract Acquisition Agreement and to secure its rights
thereunder.
(o) Issuer May Consolidate, etc., Only on Certain Terms. The
Issuer shall not consolidate or merge with or into any other Person or convey
or transfer its properties and assets substantially as an entirety to any
Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger or which acquires by conveyance
or transfer the properties and assets of the Issuer substantially as an
entirety shall be a Person organized and existing as a limited purpose
corporation under the laws of the United States of America or any State
thereof and shall have expressly assumed, by an indenture supplemental
hereto, executed and delivered to the Indenture Trustee and the Note
Insurer, in form and substance reasonably satisfactory to the Indenture
Trustee, the Majority Holders and the Note Insurer, the obligation to
make due and punctual payments of the principal of and interest on all
of the Notes and to perform every covenant of the Transaction Documents
on the part of the Issuer to be performed or observed;
(ii) the Rating Agency Condition shall have been met;
(iii) immediately after giving effect to such transaction, no
Event of Default or Default shall have occurred and be continuing;
(iv) the Issuer shall have delivered to the Indenture Trustee
and the Note Insurer an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation, merger, conveyance or transfer and
such Supplement comply with this Article Eleven and that all conditions
precedent herein provided for relating to such transaction have been
complied with and an Opinion of
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Counsel, for the benefit of the Indenture Trustee, the Note Insurer and
the Noteholders, confirming the enforceability of documents in
connection with such consolidation, merger, conveyance or transfer;
(v) such consolidation, merger, conveyance or transfer shall
be on such terms as shall fully preserve the lien and security of this
Indenture, the perfection and priority thereof and the rights and powers
of the Indenture Trustee, the Note Insurer and the Holders of the Notes
under the Transaction Documents;
(vi) the surviving corporation shall be a "special purpose
entity"; i.e., shall have an organizational charter substantially
similar to the Articles of Organization of the Issuer including specific
limitations on the business purposes, and provisions for independent
directors; and
(vii) the Controlling Party shall have given its prior written
consent, which consent shall not be unreasonably withheld or delayed.
(p) 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 11.02(o) hereof, the Person formed by
or surviving such consolidation or merger (if other than the Issuer) or the
Person to which such conveyance or transfer is made 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 Article
shall be released from its liabilities as obligor and maker on all the Notes and
from its obligations under this Indenture and may be dissolved, wound-up and
liquidated at any time thereafter.
(q) Use of Proceeds. The proceeds from the sale of the Notes shall
be used by the Issuer (i) to pay the Existing Indebtedness, (ii) to pay the
expenses associated with this transaction, and (iii) for general corporate
purposes. None of the transactions contemplated in this Indenture, the Contract
Acquisition Agreement or the Servicing Agreement (including the use of the
proceeds from the sale of the Notes) will result in a violation of Section 7 of
the Securities and Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto, including Regulations T, U and X of the Board of Governors of
the Federal Reserve System, 12 C.F.R., Chapter II. The Issuer does not own or
intend to carry or purchase any "margin stock" within the meaning of said
Regulation U, including margin securities originally issued by it.
(r) Notice of Trigger Events. Upon the Issuer's obtaining knowledge
of the occurrence of any Trigger Event, the Issuer shall within one Business Day
of obtaining such knowledge notify the Note Insurer, the Indenture Trustee, the
Rating Agencies and the Noteholders of such occurrence.
SECTION 11.03 OTHER MATTERS AS TO THE ISSUER.
(a) Limitation on Liability of Directors, Officers, or Employees of
the Issuer. The directors, officers, any incorporator, agents, subscriber to
the capital stock, stockholder, or employees of the Issuer shall not be under
any liability to the Trust Estate, the Note Insurer, the Indenture Trustee, the
Noteholders, the Company, the Servicer, the Back-up Servicer or any other Person
hereunder or pursuant to any document delivered hereunder, it being expressly
understood that all such liability is expressly waived and released as a
condition of, and as consideration for, the execution of this Indenture and the
issuance of the Notes.
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(b) Parties Shall Not Institute Insolvency Proceedings. During the
term of this Indenture and for one year and one day after the termination
hereof, none of the parties hereto, the Noteholders, the Note Insurer or any
Affiliate thereof shall file any involuntary petition or otherwise institute or
orchestrate, or cooperate in the institution or orchestration of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or
other proceeding under any federal or state bankruptcy or similar law against
the Issuer.
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ARTICLE TWELVE
ACCOUNTS AND ACCOUNTINGS
SECTION 12.01 COLLECTION OF MONEY.
Except as otherwise expressly provided herein, 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, upon request from the
Servicer, provide the Servicer with sufficient information regarding the amount
of collections with respect to the Contracts received by the Indenture Trustee
in the accounts held in the name of the Indenture Trustee to permit the Servicer
to perform its duties under the Servicing Agreement. The Indenture Trustee shall
hold all such money and property so received by it as part of the Trust Estate
and shall apply it as provided in this Indenture. If any Contract becomes a
Defaulted Contract, the Indenture Trustee, upon Issuer or Servicer request may
and, upon the request of the Controlling Party, shall take such action as may be
appropriate to enforce the payment by or performance of the related Customer,
including the institution and prosecution of appropriate Proceedings. Any such
action shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and to proceed thereafter as provided in Article
Six hereof.
SECTION 12.02 COLLECTION ACCOUNT; REDEMPTION ACCOUNT.
(a) Prior to the Initial Delivery Date, the Indenture Trustee shall
open and maintain a trust account at its Corporate Trust Office (the "Collection
Account") in the name of the Indenture Trustee for the benefit of the
Noteholders and the Note Insurer, for the receipt of (i) payments with respect
to the Contract Assets remitted to the Indenture Trustee by the Servicer or
received directly by the Indenture Trustee, (ii) amounts transferred from the
Cash Collateral Account in accordance with Section 12.03(d) hereof, (iii) with
respect to the Class A Notes, proceeds of claims made under any of the Note
Insurance Policies, in accordance with Article Eight hereof, upon receipt, and
(iv) any Reinvestment Income and (v) any other amounts required by the terms of
this Indenture to be so deposited. Funds in the Collection Account shall not be
commingled with any other monies. All payments to be made from time to time by
the Issuer to the Noteholders out of funds in the Collection Account pursuant to
this Indenture shall be made by the Indenture Trustee or the Paying Agent of the
Issuer. All monies deposited from time to time in the Collection Account
pursuant to this Indenture shall be held by the Indenture Trustee as part of the
Trust Estate as herein provided.
(b) Upon Issuer Order, the Indenture Trustee shall invest the funds
in the Collection Account in Eligible Investments; provided, that all monies on
deposit in the Collection Account pursuant to Section 12.02(a)(iii) hereof shall
remain uninvested. The Issuer Order shall specify the Eligible Investments in
which the Indenture Trustee shall invest, shall state that the same are Eligible
Investments and shall further specify the percentage of funds to be invested in
each Eligible Investment. No such Eligible Investment shall mature later than
the second Business Day preceding the next following Payment Date and shall not
be sold or disposed of prior to its maturity; provided that Eligible Investments
of the type described in clause (a) of the definition of Eligible Investments
may mature on the Business Day immediately preceding such Payment Date. In the
absence of an Issuer Order, the Indenture Trustee shall invest funds in the
Collection Account in Eligible Investments described in clause (g) of the
definition thereof. Eligible Investments shall be made in the name of the
Indenture Trustee for the benefit of the Noteholders and the Note Insurer. The
Indenture Trustee shall provide to the Servicer and the Note Insurer monthly
written confirmation of such investments, describing the
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Eligible Investments in which such amounts have been invested. Any funds not so
invested must be insured by the Federal Deposit Insurance Corporation.
(c) Any income or other gain from investments in Eligible
Investments as outlined in (b) above shall be credited to the Collection Account
and any loss resulting from such investments shall be charged to such account;
provided, that the Issuer shall make or cause to be made no later than the
applicable Payment Date a deposit to the Collection Account to the extent of any
losses therein. The Indenture Trustee shall not be liable for any loss incurred
on any funds invested in Eligible Investments pursuant to the provisions of this
Section 12.02 (other than in its capacity as obligor under any Eligible
Investment).
(d) On each Payment Date if either no Default or Event of Default
shall have occurred and be continuing or a Default or Event of Default shall
have occurred and be continuing but the entire Outstanding Principal Amount of
all Notes shall not have been declared due and payable pursuant to Section 6.02
hereof, after making all transfers and deposits to the Collection Account
referred to in Section 12.02(a) hereof, the Indenture Trustee shall withdraw
from the Collection Account all funds then on deposit therein, including the
Reinvestment Income, and shall make the following disbursements in the following
order in accordance with the provisions of and instructions on the Monthly
Servicer's Report; provided that (x) the proceeds of claims under any of the
Note Insurance Policies shall be used solely to pay interest and principal due
under paragraphs (v) and (vi) of this Section 12.02(d) in accordance with the
terms of the applicable Note Insurance Policy; (y) the Indenture Trustee shall
withdraw from the Collection Account and make interest payments based on the
Outstanding Principal Amount of all Class A Notes even if it shall not have
received the Monthly Servicer's Report; and (z) if there are insufficient funds
to make the payments of interest or principal specified in clause (v) or (vi)
below, then the amount available to be paid pursuant to such clause shall be
allocated to each Series of Notes based on the applicable Pro Rata Share,
provided that proceeds of a claim under any Note Insurance Policy to pay any
Outstanding Principal Amount upon the Stated Maturity Date of a Series of Class
A Notes shall be used solely to pay such Outstanding Principal Amount after
giving effect to the application of funds available to pay the Pro Rata Share of
the Class A Principal Distribution Amount of each Outstanding Series:
(i) to pay to the Servicer: (A) the Servicer Fee then due
for all Notes; (B) any amounts received from Customers to pay the taxes
described in Section 3.07 of the Servicing Agreement, to the extent
deposited in the Collection Account; (C) all amounts received in respect
of Receivables as to which the Servicer has made an unrecovered Servicer
Advance, to the extent of such Servicer Advance; and (D) the amount
necessary to reimburse the Servicer for any Nonrecoverable Advance
(provided that such Nonrecoverable Advance was a permissible Servicer
Advance when made);
(ii) to pay to the Indenture Trustee the Trustee Fee then due
for all Notes;
(iii) to pay to the Back-up Servicer the Back-up Servicer Fee
then due for all Notes and any Transition Costs incurred by it; provided
that reimbursement for Transition Costs at this priority shall not
exceed $75,000 in the aggregate;
(iv) to pay to the Note Insurer the Note Insurer Premium then
due for all Series of Class A Notes;
(v) to pay the interest due on that Payment Date on all
Outstanding Class A Notes and any overdue interest, to be applied as
provided in Section 2.08 hereof;
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(vi) to pay the Class A Principal Distribution Amount on all
Outstanding Class A Notes, to be applied to the payment of Note
principal as provided in Section 2.08 hereof;
(vii) to deposit into the Cash Collateral Account an amount
necessary to bring the balance therein to an amount equal to the Cash
Collateral Account Required Balance;
(viii) to pay to a successor Servicer after a successor
Servicer has been appointed, the Additional Servicer Fee, if any, and to
pay any successor Servicer, the Note Insurer or the Indenture Trustee,
any Transition Costs incurred by such person and not previously
reimbursed; provided that reimbursement for Transition Costs at this
priority shall not exceed $75,000 in the aggregate;
(ix) to pay to the Note Insurer, any amounts previously paid
by the Note Insurer under any Note Insurance Policy and not heretofore
repaid, together with interest thereon in accordance with the applicable
Note Insurance Agreement;
(x) on and after the first Payment Date following the
initial occurrence of a Trigger Event, apply any remaining funds to the
payment of Note principal on all Outstanding Class A Notes, in the
amount of the Pro Rata Share for each such Series of Outstanding Class A
Notes;
(xi) to pay to the following Persons, sequentially in the
following order, any other amounts expressly provided for in any
Transaction Document then due and unpaid: the Class A Noteholders, the
Servicer, the Note Insurer, the Indenture Trustee and the Back-up
Servicer; provided that reimbursement for such amounts at this priority
shall not exceed, on a cumulative basis, the Priority Reimbursement
Limit;
(xii) to pay the interest due on that Payment Date on all
Outstanding Class B Notes and any overdue interest and interest thereon,
to be applied as provided in Section 2.08 hereof;
(xiii) to pay the Class B Principal Distribution Amount due on
that Payment Date on all Outstanding Class B Notes, to be applied to the
payment of Note principal as provided in Section 2.08 hereof;
(xiv) to the Noteholders, the Servicer, the Note Insurer, the
Indenture Trustee and the Back-up Servicer, any other amounts expressly
provided for in any Transaction Document then due and not paid above;
and
(xv) to remit any excess funds to or at the direction of the
Issuer in accordance with the instructions on the Monthly Servicer's
Report.
(e) Prior to the Initial Delivery Date, the Issuer shall cause the
Indenture Trustee to open and maintain a trust account at the Corporate Trust
Office (the "Redemption Account") in the name of the Indenture Trustee for the
benefit of Noteholders and the Note Insurer, for the receipt of the Redemption
Price of any Notes to be redeemed in accordance with Article Ten hereof. On any
Redemption Date, the Indenture Trustee shall withdraw the applicable Redemption
Price from the Redemption Account and the Paying Agent shall remit the
Redemption Price to the applicable Noteholders in accordance with Section 10.04
hereof. Moneys in the Redemption Account shall be invested in the name of the
Indenture Trustee for the benefit of the Noteholders and the Note Insurer in
Eligible Investments that mature no later than two Business Days prior to the
relevant Redemption Date. Any monies deposited in the Redemption Account for
purposes of redeeming Notes pursuant
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to Article Ten hereof shall, subject to Section 7.16 hereof, remain in the
Redemption Account until used to redeem such Notes.
SECTION 12.03 CASH COLLATERAL ACCOUNT.
(a) Prior to the Initial Delivery Date, the Issuer shall cause the
Indenture Trustee to open and maintain a trust account at the Corporate Trust
Office (the "Cash Collateral Account") in the name of the Indenture Trustee for
the benefit of the relevant Noteholders and the Note Insurer, for the receipt of
(i) the Initial Cash Collateral Account Deposit required to be made with respect
to a Series of Notes and (ii) deposits pursuant to Section 12.02(d)(vii). Monies
received in the Cash Collateral Account shall be invested at the written
direction of the Issuer in Eligible Investments during the term of this
Indenture, and any income or other gain realized from such investment, shall be
held by the Indenture Trustee in the Cash Collateral Account as part of the
Trust Estate as security for the Notes subject to disbursement and withdrawal as
herein provided. Monies shall be subject to withdrawal in accordance with
Section 12.03(d) hereof.
(b) Upon Issuer Order, all or a portion of the Cash Collateral
Account shall be invested and reinvested at the Issuer's written direction in
one or more Eligible Investments. In the absence of an Issuer Order, the
Indenture Trustee shall invest funds in the Cash Collateral Account in Eligible
Investments described in clause (g) of the definition thereof. Eligible
Investments shall be made in the name of the Indenture Trustee for the benefit
of the relevant Noteholders and the Note Insurer. All income or other gain from
such investments shall be credited to such Cash Collateral Account and any loss
resulting from such investments shall be charged to such Cash Collateral
Account; provided, that the Issuer shall make or cause to be made on any
Determination Date a deposit to the Cash Collateral Account to the extent of any
losses therein caused as a result of the Issuer's investment instructions. No
Eligible Investment shall mature later than the Business Day preceding the next
following Determination Date and shall not be sold or disposed of prior to its
maturity. The Indenture Trustee shall provide to the Servicer and the Note
Insurer monthly written confirmation of such investments, describing the
Eligible Investments in which such amounts have been invested. Any funds not so
invested must be insured by the Federal Deposit Insurance Corporation.
(c) If any amounts invested as provided in Section 12.03(b) hereof
shall be needed for disbursement from the Cash Collateral Account as set forth
in Section 12.03(d) hereof, the Indenture Trustee shall cause such investments
of such Cash Collateral Account to be sold or otherwise converted to cash to the
credit of such Cash Collateral Account. The Indenture Trustee shall not be
liable for any investment loss resulting from investment of money in the Cash
Collateral Account in any Eligible Investment in accordance with the terms
hereof (other than in its capacity as obligor under any Eligible Investment).
(d) Disbursements from the Cash Collateral Account shall be made, to
the extent funds therefor are available, only as follows:
(i) in the event that the amount in the Collection Account
at 10:00 a.m. Central Time on the Determination Date immediately
preceding any Payment Date is less than the sum of (1) the amounts
required to be paid from the Collection Account on such Payment Date
pursuant to clauses (i) through (v) of Section 12.02(d) hereof plus (2)
the Class A Principal Distribution Amount determined in accordance with
clauses (a)(i) and (b) of the definition thereof, the Indenture Trustee
shall withdraw funds from the Cash Collateral Account on or prior to
4:00 p.m. Central Time on such Determination Date to the extent
necessary to make such payments on such Payment Date and deposit such
funds into the Collection Account;
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(ii) subject to subparagraph (iii) of this Section 12.03(d),
in the event that on any Payment Date the balance in the Cash Collateral
Account equals an amount greater than the Cash Collateral Account
Required Balance (after giving effect to the distributions required
under Section 12.03(d)(i) and Section 12.02(d)(i) through (vi) hereof on
such Payment Date), the Indenture Trustee shall withdraw funds in the
Cash Collateral Account in such amount so that the remaining amount in
the Cash Collateral Account after such withdrawal will equal the Cash
Collateral Account Required Balance, and deposit such funds into the
Collection Account for disbursement in accordance with the provisions of
Section 12.02(d) hereof; and
(iii) in the event that on any Payment Date a Trigger Event
has occurred, the Indenture Trustee shall withdraw all funds from the
Cash Collateral Account and deposit such funds into the Collection
Account for disbursement in accordance with the provisions of Section
12.02(d) hereof.
SECTION 12.04 REPORTS BY INDENTURE TRUSTEE TO THE NOTE INSURER AND
NOTEHOLDERS.
(a) On each Payment Date, the Indenture Trustee shall account to
each Holder of Notes on which payments of principal and interest are then being
made the amount which represents principal and the amount which represents
interest, and shall contemporaneously advise the Issuer and the Note Insurer of
all such payments. The Indenture Trustee shall satisfy its obligations under
this Section 12.04 by delivering the Monthly Servicer's Report to each Holder of
the Notes, the Note Insurer, the Issuer, the Rating Agencies and the Placement
Agent, provided, however, that with respect to (a) the Note Insurer, the Issuer,
the Rating Agencies, the Placement Agent and (b) each Noteholder that elects to
execute and deliver to the Indenture Trustee a Noteholder Certification in the
form of Exhibit H hereto, and except as otherwise provided in a Supplement, the
Indenture Trustee may, in lieu of physical delivery, make available each month,
via the Indenture Trustee's internet website with the use of a password, the
Monthly Servicer's Report and, with the consent or at the direction of the
Issuer, such other information regarding the Notes and/or the Contracts as the
Indenture Trustee may have in its possession. The Indenture Trustee or its agent
shall provide a password to each Noteholder, the Issuer, each Rating Agency and
the Placement Agent; provided that prior to a Noteholder receiving a password,
the Noteholder shall deliver to the Indenture Trustee or its agent a Noteholder
Certification in the form of Exhibit H hereto. The Indenture Trustee shall
deliver a copy of the Monthly Servicer's Report by facsimile to the Holder of
any Note acquired prior to December 1, 2000 and to any Noteholder that has
either not elected to provide the Noteholder Certification or otherwise requests
delivery of a hard copy. The Indenture Trustee will make no representations or
warranties as to the accuracy or completeness of the Monthly Servicer Reports or
other documents made available on its internet website and will assume no
responsibility therefor.
The Indenture Trustee's internet website shall be initially located at
"▇▇▇.▇▇▇▇▇▇.▇▇▇" or at such other address as shall be specified by the Indenture
Trustee from time to time in writing to the parties hereto, the Noteholders and
the Rating Agencies. In connection with providing access to the Indenture
Trustee's internet website, the Indenture Trustee may require registration and
the acceptance of a disclaimer. The Indenture Trustee shall not be liable for
the dissemination of information in accordance with this Agreement unless such
information shall have first been provided to it by the responsible party.
(b) On or before the 15th day prior to any Final Payment Date the
Indenture Trustee shall provide notice to the Note Insurer, the Rating Agencies
and the Holders of the applicable Series of Notes of the Final Payment Date for
such Notes. Such notice shall include (1) a statement that interest shall cease
to accrue as of the last day preceding the date on which the Final Payment Date
occurs, and (2) shall specify the place or places at which the Notes of such
Series are to be surrendered following payment thereof.
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(c) At least annually, or as otherwise required by law, the
Indenture Trustee shall distribute to Noteholders any information returns or
other tax information or statements as are required by applicable tax law to be
distributed to the Noteholders. The Servicer shall prepare or cause to be
prepared all such information for distribution by the Indenture Trustee to the
Noteholders.
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ARTICLE THIRTEEN
PROVISIONS OF GENERAL APPLICATION
SECTION 13.01 GENERAL PROVISIONS.
All of the provisions of this Article shall apply to this Indenture, as
supplemented by each Supplement.
SECTION 13.02 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 an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the 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 (subject to Section 7.01 hereof)
conclusive in favor of the Indenture Trustee and the Issuer, if made in the
manner provided in this Section 13.02.
(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 Note shall bind the Holder of every
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Issuer in reliance thereon, whether or not notation
of such action is made upon such Note.
SECTION 13.03 NOTICES, ETC., TO INDENTURE TRUSTEE, THE NOTE INSURER,
ISSUER AND SERVICER.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with any party hereto shall be
sufficient for every purpose hereunder if in writing and telecopied or mailed,
first-class postage prepaid and addressed to the appropriate address below:
(a) to the Indenture Trustee at Sixth Street and Marquette Avenue,
MAC N9311-161, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: Corporate Trust Services/Asset-Backed Administration, or at any other
address previously furnished in writing to the Issuer, the Note Insurer, the
Noteholders and the Servicer; or
(b) to the Note Insurer at Ambac Assurance Corporation, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, or at any
other address previously furnished in writing by the Note Insurer to the
Indenture Trustee, the Noteholders, the Servicer and the Issuer; or
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(c) to the Issuer at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, or at any other address
previously furnished in writing to the Indenture Trustee, the Note Insurer, the
Noteholders and the Servicer by the Issuer; or
(d) to the Servicer at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, or at any other address
previously furnished in writing to the Indenture Trustee, the Note Insurer, the
Noteholders and the Issuer.
(e) to each of (i) S & P, Attention: Asset Backed Surveillance
Group, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ and
(ii) ▇▇▇▇▇'▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
SECTION 13.04 NOTICES TO NOTEHOLDERS; WAIVER.
Where this Indenture provides for notice to Noteholders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Noteholder affected by such event, at his 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 in which 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 case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to 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.
SECTION 13.05 EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 13.06 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Issuer shall bind
its successors and assigns, whether so expressed or not. There shall be no
assignment hereof, except in accordance with the provisions of Section 7.10
hereof.
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SECTION 13.07 SEPARABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 13.08 BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto, the Noteholders, and any
Paying Agent which may be appointed pursuant to the provisions hereof, and any
of their successors hereunder, any benefit or any legal or equitable right,
remedy or claim under this Indenture or under the Notes.
SECTION 13.09 GOVERNING LAW.
THE INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED THEREIN, WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS OF ANY STATE THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF A
STATE OTHER THAN NEW YORK.
SECTION 13.10 COUNTERPARTS.
The Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument. Delivery of an
executed counterpart of a signature page to this Indenture by telecopier shall
be as effective as delivery of manually executed counterpart of this Indenture.
SECTION 13.11 COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application, order or request by the Issuer or the Servicer to
the Indenture Trustee to take any action under any provision of this Indenture
for which a specific request is required under this Indenture, the Issuer or the
Servicer, as applicable, shall furnish to the Indenture Trustee an Officer's
Certificate of the Issuer or the Servicer, as applicable, stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, except that in the case of any such
application or request as to which the furnishing of a different certificate is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(b) 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;
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(c) a statement that, in the opinion of each such individual, such
individual has made such examination or investigation as is necessary to enable
such individual to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 13.12 CONSENT TO JURISDICTION.
(a) The parties hereto hereby irrevocably submit to the
non-exclusive jurisdiction of the United States District Court for the Southern
District of New York and any court in the State of New York Located in the City
and County of New York, and any appellate court from any thereof, in any action,
suit or proceeding brought against or by it in connection with this Agreement or
for recognition or enforcement of any judgment relating thereto, and the parties
hereto hereby irrevocably and unconditionally agree that all claims in respect
of any such action or proceeding may be heard or determined in such New York
state court or, to the extent permitted by law, in such federal court. The
parties agree that a final nonappealable judgment in any such action, suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. To the extent
permitted by applicable law, the parties hereby waive and agree not to assert by
way of motion, as a defense or otherwise in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such courts,
that the suit, action or proceeding is brought in an inconvenient forum, that
the venue of the suit, action or proceeding is improper or that the related
documents or the subject matter thereof may not be litigated in or by such
courts.
(b) To the extent permitted by applicable law, the parties shall not
seek and hereby waive the right to any review of the judgment of any such court
by any court of any other jurisdiction which may be called upon to grant an
enforcement of such judgment.
(c) Service on any party hereto may be made by mailing or delivering
copies of the summons and complaint and other process which may be served in any
suit, action or proceeding to such party at its address listed in herein or in
the other Transaction Documents. Such address may be changed by the applicable
party or parties by written notice to each of the other parties hereto.
(d) Nothing contained in this Agreement shall limit or affect any
party's right to serve process in any other manner permitted by law or to start
legal proceedings relating to its rights under other agreements or against any
other party or its properties in the courts of any jurisdiction.
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IN WITNESS WHEREOF, the Issuer, the Servicer, the Indenture Trustee and
the Back-up Servicer have caused this Indenture to be duly executed by their
respective officers thereunto duly authorized as of the date and year first
above written.
MFI FINANCE CORP. I, as Issuer
By:
---------------------------------------
Name:
Title:
MICROFINANCIAL INCORPORATED, as
Servicer
By:
---------------------------------------
Name:
Title:
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Indenture Trustee
By:
---------------------------------------
Name:
Title:
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Back-up Servicer
By:
---------------------------------------
Name:
Title:
Acknowledged and Agreed to:
AMBAC ASSURANCE CORPORATION
By:
-------------------------
Name:
Title: