Exhibit 10.19
INDENTURE
among
MICROFINANCIAL INCORPORATED,
as Servicer,
MFI FINANCE II, LLC,
as Issuer,
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Indenture Trustee,
and
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
as Back-up Servicer
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................................................................... 17
Section 1.03 Legal Holidays................................................................... 17
ARTICLE TWO THE NOTES
Section 2.01 Form Generally................................................................... 18
Section 2.02 Series; Denomination............................................................. 18
Section 2.03 Execution, Authentication, Delivery and Dating................................... 19
Section 2.04 [Reserved]....................................................................... 19
Section 2.05 Registration, Registration of Transfer and Exchange.............................. 19
Section 2.06 Limitation on Transfer and Exchange.............................................. 20
Section 2.07 Mutilated, Destroyed, Lost or Stolen Note........................................ 21
Section 2.08 Payment of Principal and Interest; Principal and Interest Rights Preserved....... 21
Section 2.09 Persons Deemed Owner............................................................. 23
Section 2.10 Cancellation..................................................................... 23
Section 2.11 Tax Treatment.................................................................... 23
ARTICLE THREE [reserved]
ARTICLE FOUR ISSUANCE OF NOTES; SUBSTITUTIONS OF COLLATERAL
Section 4.01 Conditions to Initial Issuance of Notes.......................................... 25
Section 4.02 Issuances of Additional Series of Notes.......................................... 26
Section 4.03 Security for Notes............................................................... 28
Section 4.04 Substitution, Removal and Purchase of Contracts in Trust Estate.................. 29
Section 4.05 Requirements for All Contracts in Trust Estate................................... 30
Section 4.06 Releases of Individual or Series Contracts in Trust Estate....................... 31
Section 4.07 Trust Estate..................................................................... 32
Section 4.08 Notice of Release................................................................ 32
ARTICLE FIVE SATISFACTION AND DISCHARGE
Section 5.01 Satisfaction and Discharge of Indenture.......................................... 33
Section 5.02 Application of Trust Money....................................................... 33
ARTICLE SIX DEFAULTS AND REMEDIES
Section 6.01 Events of Default................................................................ 34
Section 6.02 Acceleration of Stated Maturity Date; Rescission and Annulment................... 34
Section 6.03 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee........ 35
Section 6.04 Remedies......................................................................... 36
Section 6.05 Optional Preservation of Trust Estate............................................ 37
Section 6.06 Indenture Trustee May File Proofs of Claim....................................... 37
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Section 6.07 Indenture Trustee May Enforce Claims Without Possession of Notes................. 38
Section 6.08 Application of Money Collected Following an Event of Default..................... 38
Section 6.09 Limitation on Suits.............................................................. 39
Section 6.10 Unconditional Right of Noteholders to Receive Principal and Interest............. 39
Section 6.11 Restoration of Rights and Remedies............................................... 40
Section 6.12 Rights and Remedies Cumulative................................................... 40
Section 6.13 Delay or Omission; Not Waiver.................................................... 40
Section 6.14 Control by Noteholders........................................................... 40
Section 6.15 Waiver of Certain Events by Less than All Noteholders............................ 41
Section 6.16 Undertaking for Costs............................................................ 41
Section 6.17 Waiver of Stay or Extension Laws................................................. 41
Section 6.18 Sale of Trust Estate............................................................. 42
Section 6.19 Action on Notes.................................................................. 42
ARTICLE SEVEN THE INDENTURE TRUSTEE
Section 7.01 Certain Duties and Responsibilities.............................................. 43
Section 7.02 Notice of Default and Other Events............................................... 44
Section 7.03 Certain Rights of Indenture Trustee.............................................. 45
Section 7.04 Not Responsible for Recitals or Issuance of Notes................................ 45
Section 7.05 May Hold Notes................................................................... 46
Section 7.06 Money Held in Trust.............................................................. 46
Section 7.07 Compensation and Reimbursement................................................... 46
Section 7.08 Corporate Trustee Required; Eligibility.......................................... 47
Section 7.09 Resignation and Removal; Appointment of Successor................................ 47
Section 7.10 Acceptance of Appointment by Successor........................................... 48
Section 7.11 Merger, Conversion, Consolidation or Succession to Business of Indenture Trustee. 49
Section 7.12 Co-Indenture Trustees and Separate Indenture Trustees............................ 49
Section 7.13 Rights with Respect to the Servicer.............................................. 50
Section 7.14 Appointment of Authenticating Agent.............................................. 50
Section 7.15 Indenture Trustee to Hold Contracts.............................................. 52
Section 7.16 Money for Note Payments to Be Held in Trust...................................... 52
ARTICLE EIGHT[Reserved]
ARTICLE NINE AMENDMENTS; SUPPLEMENTAL INDENTURES
Section 9.01 Amendments and Supplemental Indentures without Consent of Noteholders............ 55
Section 9.02 Amendments or Supplemental Indentures with Consent of Noteholders................ 56
Section 9.03 Execution of Amendments and Supplemental Indentures.............................. 57
Section 9.04 Effect of Amendments and Supplemental Indentures................................. 57
Section 9.05 Reference in Notes to Amendments and Supplemental Indentures..................... 57
Section 9.06 Certain Amendments............................................................... 57
ARTICLE TEN REDEMPTION OF NOTES
Section 10.01 Redemption at the Option of the Issuer; Election to Redeem....................... 58
Section 10.02 Notice to Indenture Trustee; Deposit of Redemption Price......................... 58
Section 10.03 Notice of Redemption by the Issuer............................................... 58
Section 10.04 Notes Payable on Redemption Date................................................. 59
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Section 10.05 Release of Series Assets......................................................... 59
ARTICLE ELEVEN REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 11.01 Representations and Warranties................................................... 60
Section 11.02 Covenants........................................................................ 62
Section 11.03 Other Matters as to the Issuer................................................... 66
ARTICLE TWELVE ACCOUNTS AND ACCOUNTINGS
Section 12.01 Collection of Money.............................................................. 68
Section 12.02 Collection Account; Collection Account........................................... 68
Section 12.03 Cash Collateral Account.......................................................... 70
Section 12.04 Reserve Account.................................................................. 71
Section 12.05 Reports by Indenture Trustee to the Noteholders.................................. 72
ARTICLE THIRTEEN PROVISIONS OF GENERAL APPLICATION
Section 13.01 General Provisions............................................................... 74
Section 13.02 Acts of Noteholders.............................................................. 74
Section 13.03 Notices, etc., to Indenture Trustee, Issuer and Servicer......................... 74
Section 13.04 Notices to Noteholders; Waiver................................................... 75
Section 13.05 Effect of Headings and Table of Contents......................................... 75
Section 13.06 Successors and Assigns........................................................... 75
Section 13.07 Separability..................................................................... 75
Section 13.08 Benefits of Indenture............................................................ 75
Section 13.09 Governing Law.................................................................... 76
Section 13.10 Counterparts..................................................................... 76
Section 13.11 Compliance Certificates and Opinions............................................. 76
Section 13.12 Consent to Jurisdiction.......................................................... 77
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EXHIBITS
A Form of Note
B Form of Supplement to Indenture
C Form of Investment Letter
D Form of MFC II Certificate
E Form of Release Request
F Form of Certificate of the Issuer
G Form of Noteholder Certification
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This INDENTURE, dated as of September 1, 2001 (this "Indenture"), is
among MFI Finance II, LLC, 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 has duly authorized the execution and delivery of this
Indenture to provide for the issuance of the Issuer's Notes as provided in this
Indenture. 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. The Issuer, the Servicer, the Indenture
Trustee and the Back-up Servicer are entering into this Indenture, and the
Indenture Trustee is accepting the trusts created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
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, 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; (b) the Equipment;
(c) each Insurance Policy related to the Contracts and the related Equipment and
all Insurance Proceeds related thereto; (d) the Contract Acquisition Agreement;
(e) each Underlying Note; (f) each Underlying Note Purchase Agreement; (g) the
Servicing Agreement; (h) all amounts from time to time on deposit in the
Collection Account, the Cash Collateral Account, and the Reserve Account
(including any Eligible Investments and other property in such accounts); (i)
the Contract Files; (j) all amounts on deposit in the Operating Account that
constitute proceeds of the foregoing and (k) all proceeds of the foregoing
(including, but not by way of limitation, all cash proceeds, accounts, accounts
receivable, payment intangibles, instruments, 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 or
arising (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 or any
Noteholder of any obligation of the Issuer, the Originator, the Servicer or any
other Person in connection with the Trust Estate or under any agreement or
instrument relating thereto.
The Indenture Trustee acknowledges its acceptance on behalf of the
Noteholders 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 may be adequately and effectively protected.
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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.
"Account Administration Fee": The fee payable on each Payment Date to
be shared by the Indenture Trustee and Back-up Servicer in consideration for the
performance of their duties pursuant to this Indenture and the Servicing
Agreement, in an amount equal to the sum of (a) the product of one-twelfth of
the applicable Account Administration Fee Rate and the Outstanding Principal
Amount of the Notes immediately following the preceding Payment Date and (b)
accrued but unpaid custodial fees with respect to the Contracts at the rates
established from time to time by the Indenture Trustee; provided that any
monthly minimum or maximum dollar amounts for a Series shall be as specified in
the applicable Supplement; and provided further that, with respect to the
Initial Payment Date for each Series of Notes, the Account Administration Fee
for such Payment Date shall be pro rated, as specified in the applicable
Supplement.
"Account Administration Fee Rate": With respect to each Series of
Notes, the rate per annum specified in the applicable Supplement.
"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 and (i) 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) 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
Noteholders pursuant to Section 12.02(d)(vi) hereof.
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"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.
"Aggregate DCB": The aggregate of the Discounted Contract Balances of
all Series Assets for all Outstanding Series of Notes.
"Aggregate Initial DCB": The sum of all Series Initial DCB for all
Outstanding Series of 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 Corp. I, Fleet National Bank, as agent under the Credit
Agreement and as depository bank, the Originator, the Servicer, the Issuer and
MFI Corp. I.
"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 MFC II Certificate and an Originator
Certificate.
"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.
"Benefit Plan Investor": The meaning specified in 29
C.F.R.Section 2510.3-101.
"Board of Directors" or "Board of Managers": Either the board of
directors or board of managers 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 Originator to have
been duly adopted by its Board of Directors or Board of Managers, as applicable,
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 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 DCB, the Calculation Date shall
mean the close of business on the related Cut-Off Date.
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"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 Majority
Holders of a replacement for such Key Employee.
"Code": The Internal Revenue Code of 1986.
"Collateral": The meaning specified in the Granting Clause of this
Indenture.
"Collateralization Percentage": The meaning specified in the applicable
Supplement.
"Collection Account": The meaning specified in Section 12.02(a) hereof.
"Concentration Limits": The meaning specified in the Contract
Acquisition Agreement.
"Contract": Each lease contract 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 such 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 such lease contract, which contract is identified on either a
Series Contract Schedule delivered to the Indenture Trustee on a Delivery Date
or on an Amended Contract Schedule delivered to the Indenture Trustee on an
Acquisition Date; provided that, from and after the date on which a Contract is
repurchased, removed or substituted by the Originator or the Issuer in
accordance with Section 4.04 hereof, such repurchased, removed or replaced
Contract shall no longer constitute a Contract for purposes of the Transaction
Documents.
"Contract Acquisition Agreement": The Contract Acquisition Agreement,
dated as of September 1, 2001, between the Issuer and the Originator.
"Contract Assets": The meaning specified in the Contract Acquisition
Agreement.
"Contract File": The meaning specified in the Contract Acquisition
Agreement.
"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 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,
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N.A.), as agent, and the Originator, as amended from time to time or any credit
agreement entered into by the Originator 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
Notes, including the Initial Delivery Date, 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.
"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.
"Discounted Contract Balance" or "DCB": With respect to:
(a) any Contract and any date of determination, the present value
of the remaining stream of Scheduled Payments 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 Discounted Contract Balance
of the related Contract or the Purchase Price, or on or
immediately following the delivery of a Substitute Contract or
(b) on or immediately following the date that a Contract has
become a Defaulted Contract, the Discounted Contract 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,
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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
Discounted Contract Balance of such Contract;
(b) any Underlying Note, the then Outstanding Principal Amount of
such Underlying Note.
"Discount Rate": With respect to a Series of Notes, unless otherwise
specified in the related Supplement, the rate equal to the sum of the applicable
Note Interest Rate and the Account Administration Fee 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 Originator 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 ▇▇▇▇▇'▇ 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;
(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
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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 Majority Holders 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 Majority Holders and any
applicable 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.
"Final Due Date": With respect to (a) each Contract, the final Due Date
thereunder and (b) each Underlying Note, the stated maturity thereof.
"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.
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"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.
"Indenture": This Indenture, as supplemented by Supplements, 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,
member, manager, director, customer, supplier or person performing similar
functions, (d) is not a person controlling or under common control with any such
member, stockholder, customer, supplier or other person and (e) is not a member
of the immediate family of any such member, manager, 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 Majority
Holders.
"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 Notes, as specified in the applicable
Supplement.
8
"Initial Delivery Date": The date on which the first Series of Notes
are executed, authenticated and delivered.
"Initial Payment Date": The meaning specified in the applicable
Supplement.
"Initial Reserve Account Deposit": The amount, if any, required to be
deposited by the Issuer into the Reserve Account in connection with the issuance
of any new Series of Notes, as 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 Originator 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.
"Investment Letter": The meaning specified in Section 2.06.
"Issuer": MFI Finance II, LLC.
"Issuer Order" and "Issuer Request": A written order or request signed
in the name of the Issuer by its President, or any Vice President, and delivered
to the Indenture Trustee.
"Key Employee": Each of ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
"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": Holders of Notes representing at least 51% in
Outstanding Principal Amount of all Notes of all Series.
"MFC II Certificate": An MFC II 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.
"Nonrecoverable Advance": The meaning specified in the Servicing
Agreement.
9
"Noteholder" or "Holder": The Person in whose name a Note is registered
in the Note Register.
"Note Interest Rate": With respect to each Series of Notes, the meaning
specified in the applicable Supplement.
"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.
"Notes": Collectively, all Outstanding Series of Notes or all
Outstanding Notes of any one Series, as the context may require.
"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 Majority
Holders and which opinion shall comply with the applicable requirements of
Section 13.11 hereof.
"Originator": Leasecomm Corporation.
"Originator Certificate": The meaning specified in the Contract
Acquisition Agreement.
"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
(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;
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provided, that for purposes of 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 Underlying Note or
any Outstanding Note 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 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).
"Principal Distribution Amount": Except as otherwise set forth in the
applicable Supplement, as to any Series of Notes,
(a) as of each Payment Date prior to the Stated Maturity Date of
such Series,
(i) the applicable Targeted Principal Distribution Amount
for such Series for such Payment Date, or
(ii) if the amounts available in the Collection Account,
the Cash Collateral Account and the Reserve Account
(including any Reinvestment Income) after payment of
all amounts required by clauses (i) through (iii) of
Section 12.02(d) hereof are less than the Targeted
Principal Distribution Amounts for all Series of
Notes, an amount equal to the product of
(A) the total funds available for payment of
principal on all Series of 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 with respect
to the Targeted Principal Distribution
Amount (computed without giving effect to
this subclause (ii)) for such Series of
Notes;
(b) on and after the Stated Maturity Date of such Series, an
amount equal to the Outstanding Principal Amount of the Notes
of such Series as of such date.
"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 Principal Distribution Amount on any
Series of Notes on any Payment Date, a fraction (expressed as
a decimal), the numerator of which is the Targeted Principal
Distribution Amount scheduled to be paid on such Series of
Notes on such Payment Date, and the denominator of which is
the aggregate Targeted Principal Distribution Amounts in
respect of all Series of Notes on such Payment Date;
(b) any distribution of interest on any Series of 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 Notes on such Payment Date and the
denominator of which is the amount of interest scheduled to be
paid on all Series of Notes on such Payment Date; and
(c) any payments of Additional Principal Amounts, with respect to
any Series, on any Payment Date, a fraction (expressed as a
decimal), the numerator of which is the decline in the related
Series DCB since the Calculation Date preceding the Trigger
Event, and the denominator of which is the decline in the
Aggregate DCB since the Calculation Date preceding the Trigger
Event.
"Purchase Price": With respect to any Contract repurchased by the
Originator 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) the
Discounted Contract Balance (computed without giving effect to clause (b) of the
definition of Discounted Contract Balance) of such Contract on the Calculation
Date on or immediately preceding the date as of which the Contract is removed or
repurchased, (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 Originator 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": 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
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acceptable to such Rating Agency) prior notice thereof and that no Rating Agency
shall have notified the Issuer, the Servicer or the Indenture Trustee in writing
that such action will result in a qualification, reduction or withdrawal of its
then-current rating, whether explicit or implied, 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 of any Notes, the Record
Date shall be the date of issuance of such Notes.
"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 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.
"Reported Companies": MicroFinancial Incorporated and its consolidated
subsidiaries.
"Required Collateralization Amount": With respect to a Series of Notes,
as of any date of determination, the related Collateralization Percentage
multiplied by the Series DCB (calculated without giving effect to subclause (b)
of the definition of "Discounted Contract Balance"); provided, that, if a
Trigger Event has occurred, the Required Collateralization Amount shall be
reduced to zero.
"Required Prepayment Amount": The meaning specified in Section
4.04(d)(ii).
"Required Reserve Amount": As of any determination date, the sum of all
Series Required Reserve Amounts.
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"Reserve Account": The trust account or accounts created and maintained
pursuant to Section 12.04 hereof.
"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) 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 a Due Period and a 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,
with the specific terms identified in the applicable Supplement.
"Series Assets": With respect to each Series of Notes, the Series
Contracts and the Series Underlying Notes.
"Series Cash Collateral Account Required Balance": With respect to a
Series of Notes then Outstanding, as of any determination date, an amount equal
to the sum of (a) the Initial Cash Collateral Account Deposit and (b) the
product of
(i) the positive excess, if any, of the Required Collateralization
Amount for such Series minus the difference between
(A) the Series DCB, 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.
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"Series Contracts": With respect to each Series of Notes, the Contracts
listed on the related Series Contract Schedule, including any Substitute
Contracts.
"Series Contract Schedule": For each Series of 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
Discounted Contract 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 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 DCB": With respect to any Series of Notes, the
aggregate Discounted Contract Balance of the related Series Assets as calculated
on the close of business on the related Cut-Off Date.
"Series DCB": With respect to any Series of Notes, as of any
determination date, the sum of the Discounted Contract Balances of all related
Series Assets, as of such determination date.
"Series Required Reserve Amount": With respect to a Series of Notes,
the meaning specified in the applicable Supplement.
"Series Underlying Notes": With respect to each Series of Notes, the
Underlying Note(s), if any, described in the related Supplement.
"Servicer": MicroFinancial Incorporated.
"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 September
1, 2001, among the Servicer, the Issuer, the Back-up Servicer and the Indenture
Trustee, as amended from time to time.
"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, and (c) any other incidental
charges or fees received from a Customer, including but not limited to, late
fees, collection fees, prepayment penalties 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.
15
"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 attached hereto, pursuant to which a Series of Notes is issued.
"Targeted Balance": With reference to any Series of Notes, the meaning
set forth in the applicable Supplement.
"Targeted Principal Distribution Amount": With respect to each Payment
Date and each Series of Notes, the amount specified in the applicable
Supplement.
"Transaction Documents": This Indenture, the Servicing Agreement, the
Contract Acquisition Agreement, the Agreement Regarding Operating Account and,
with respect a particular Series of Notes, the related Supplement, the related
Notes, the related Note Purchase Agreement(s) and the related Underlying Note
and Underlying Note Purchase Agreement, if any.
"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, the Back-up Servicer or the Indenture Trustee in connection
with a transfer of servicing from the Servicer to a successor Servicer pursuant
to Section 6.02 of the Servicing Agreement.
"Trigger Event": The occurrence of any one or more of the following
events, unless waived in writing by the Majority Holders:
(a) a "trigger event" under any Underlying Indenture that is not
cured or waived within ten Business Days;
(b) an "event of default" under any Underlying Indenture that is
not cured or waived within ten Business Days, provided that no
cure period shall apply if the event of default is
attributable to a payment default on an Underlying Note or a
bankruptcy of the issuer of such note;
(c) a "servicer event of default" under any Underlying Indenture
that is not cured or waived within ten Business Days;
(d) an Event of Default;
(e) a Servicer Event of Default; or
(f) the occurrence of any other event designated as an additional
Trigger Event in any Supplement then in effect.
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"Trust Estate": The meaning specified in the Granting Clause of this
Indenture.
"Underlying Indenture": With respect to each any Underlying Note, the
indenture, trust agreement or similar agreement related thereto, as further
identified in the related Supplement.
"Underlying Note": A subordinated note or certificate identified in a
Supplement hereto that is secured by contract assets, issued by a special
purpose, bankruptcy remote entity and acquired by the Issuer pursuant to an
Underlying Note Purchase Agreement.
"Underlying Note Purchase Agreement": With respect to each Underlying
Note, the meaning specified in the applicable Supplement.
"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.
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."
All references in this Indenture designated "Articles," "Sections,"
"Subsections" and other subdivisions are to the designated Articles, Sections,
Subsections and other subdivisions of this 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. The words "herein," "hereof," "hereunder"
and other words of similar import when not related to a specific subdivision of
this Indenture, refer to this Indenture as a whole and not to any particular
Article, Section, Subsection or other subdivision of this Indenture or any
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 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 Notes issued hereunder and the certificates of
authentication affixed thereto shall be substantially in the form set forth in
Exhibit A 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. Each Note in a Series shall bear
upon the face thereof the designation selected for the Series to which it
belongs. All Notes of a Series shall be identical except for differences in
registration information and denomination.
Each Series of Notes issued under this Indenture shall be in all
respects equally and ratably secured with all other Series of Notes by the
Collateral Granted by the Issuer on the Initial Delivery Date and from time to
time thereafter 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.
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;
(ii) the applicable Delivery Date, Initial Payment Date,
Accrual Date, Transaction Documents Date, the schedules to be attached
to such Supplement containing the Targeted Balances with respect to
such Series of Notes and the Series Contract Schedule, the Series
Underlying Note and related Underlying Indenture and Underlying Note
Purchase Agreement if applicable, and if applicable, the date of the
related Private Placement Memorandum, and the applicable Cut-Off Date;
(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;
18
(v) the amount of any Initial Cash Collateral Account
Deposit and Initial Reserve Account Deposit;
(vi) the Stated Maturity Date for such Series;
(vii) any additional Trigger Events, if applicable, for
such Series; and
(viii) any additional conditions to the issuance of Notes of
such Series (including any conditions to issuing original principal
amounts in more than one closing) or additional defined terms related
to such Series.
(b) The aggregate principal amount of Notes of each 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 2.04, 2.05, 2.07 or 9.05 hereof. The 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 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,6th Street and Marquette Avenue, MAC N9303-121, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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
19
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, 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 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.
(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 2.04 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 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.
20
(b) No acquisition or transfer of a Note or any interest therein
may be made to any "Benefit Plan Investor"(as defined in 29 C.F.R.
Section 2510.3-101) or to any Person who is directly or indirectly purchasing
the Notes or an interest therein on behalf of, as named fiduciary of, as trustee
of, or with assets of, such a Benefit Plan Investor.
(c) 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.
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 such
security or indemnity as may be required by the Indenture Trustee to save the
Issuer and the Indenture Trustee 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 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 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 and on any
21
interest accrued in a prior accrual period but remaining unpaid (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. 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. In
making any such interest payment, if the interest calculation with respect 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. Prior to the Stated Maturity Date for a Series
of Notes, the installment of principal due and payable on such Series of Notes
shall be an amount equal to the Principal Distribution Amount and the Additional
Principal Amount, if any, computed for such Payment Date, but only to the extent
there are funds available to be paid in accordance with the priorities of
Sections 12.02(d) or 6.08 hereof. Unless otherwise specified in an applicable
Supplement, installments of principal due and payable on the Notes of each
Series shall be paid beginning on the applicable Initial Payment Date and ending
on the applicable Final Payment Date, and with respect to all of the Notes
within 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 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. 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.
(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 prior to 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 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
22
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.
SECTION 2.09 PERSONS DEEMED OWNER.
Prior to due presentment for registration of transfer of any Note, the
Issuer, the Indenture Trustee and any agent of the Issuer 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 Indenture Trustee nor any agent of the
Issuer 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 qualify under applicable tax laws as indebtedness
secured by the Trust Estate. The Issuer, the Indenture Trustee, the Servicer 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.
23
ARTICLE THREE
[reserved]
24
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 Originator Certificate and MFC II Certificate,
each with the related Series Contract Schedule attached thereto;
(b) the original Series Underlying Note(s), registered in the name
of the Indenture Trustee, 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
Originator 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 Originator, 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 Originator in
their respective States of organization;
(e) copies of the Articles of Organization, By-Laws, Certificate
of Formation and Limited Liability Company Agreements, as applicable, of each of
the Issuer, the Servicer and the Originator, certified by the Secretary or an
Assistant Secretary of the Issuer, the Servicer and the Originator, as
applicable;
(f) (i) copies of UCC-1 financing statements naming the
Originator, as debtor, the Issuer as secured party, the Indenture Trustee for
the benefit of the Noteholders 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 Originator is
organized and, if applicable, of the Originator's chief executive office; and
(ii) copies of UCC-1 financing statements naming the Issuer, as debtor, the
Indenture Trustee for the benefit of the Noteholders 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;
(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, the applicable Underlying Note
Purchase Agreement and Underlying Indenture and the applicable Note Purchase
Agreement;
25
(i) evidence of the deposit by the Issuer of the Initial Cash
Collateral Account Deposit and Initial Reserve Account Deposit, if any;
(j) 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;
(k) an executed Officer's Certificate of each of the Issuer and
the Originator certifying that all of the terms of the Contract Acquisition
Agreement have been complied with;
(l) 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
Originator in the event of a bankruptcy of the Originator, and (iv) regarding
certain basic company matters and that the Issuer is not required to be
registered as an "investment company" under the Investment Company Act of 1940;
and
(m) such other documents as are required by the applicable Note
Purchase Agreement or as the Indenture Trustee may reasonably require.
SECTION 4.02 ISSUANCES OF ADDITIONAL SERIES OF NOTES.
(a) Additional Series of Notes may be issued by the Issuer in
accordance with the terms of this Indenture, provided, however, that if the
Series delivered on the Initial Delivery Date is then Outstanding, any
additional Series of Notes shall not have a Stated Maturity Date any earlier
than the Stated Maturity Date for such initial Series of Notes.
(b) On or before the Delivery Date relating to any new Series of
Notes, the parties hereto shall execute and deliver a Supplement specifying the
terms applicable to such new Series of 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 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 related to
such Supplement are Outstanding. Each new Series of 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 Originator Certificate and MFC II Certificate,
subjecting all Series Assets 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 Series to be issued (unless the
parties to be notified agree to a shorter time period), the Issuer
26
shall have given the Indenture Trustee, the Servicer 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 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 Series 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 Notes applied for have been complied with;
(vi) to the extent not previously filed or delivered, the
Issuer shall have delivered to the Indenture Trustee (A) copies of
UCC-1 financing statements naming the Originator, as debtor, the Issuer
as secured party, the Indenture Trustee for the benefit of the
Noteholders 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
Originator is organized and, if applicable, of the Originator's chief
executive office; and (B) copies of UCC-1 financing statements naming
the Issuer, as debtor, the Indenture Trustee for the benefit of the
Noteholders 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) a letter from Moody's confirming that
the Notes of such Series have been rated by Moody's (and any other
applicable Rating Agency) at least as high as the rating on any
Outstanding Series of Notes then rated it and (b) letters from each
applicable Rating Agency confirming that its rating on each other
Outstanding Series of 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 to the Indenture
Trustee favorable opinions of counsel (i) to the effect that the Notes
of such Series will be characterized as debt for tax purposes, that the
issuance of such Series will not adversely affect the characterization
of the Notes of any Outstanding Series as debt for tax purposes and
will not result in a re-issuance (or deemed re-issuance) of such Notes
that is taxable to the Holders thereof 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 Originator or the
Servicer in the event of a bankruptcy of the Originator or the
Servicer, and (iv) confirming basic company matters and that the Issuer
is not required to be registered as an "investment company" under the
Investment Company Act of 1940;
(ix) 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
27
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 and the Reserve Account; and
(x) 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.
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 Notes, and provide notice to all existing
Noteholders of the issuance of such Series of Notes.
SECTION 4.03 SECURITY FOR NOTES.
(a) The Issuer and the Originator 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 Originator 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, the Originator'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 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 Originator'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 Originator, to deliver 30 days prior written
notice of such change or relocation to the Servicer 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 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 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).
(e) The Indenture Trustee shall hold the original manually
executed counterpart of each Contract and each Underlying Note 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 and the Issuer in writing from
time to time. The Indenture Trustee shall hold each Contract for the benefit of
Noteholders, 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 E for purposes of
servicing a
28
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 Originator, the Issuer or the Servicer that any of the
representations and warranties of the Originator 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.
(b) Mandatory Repurchase or Substitution Upon Breach of Certain
Representations or Warranties. In the event that any representation or warranty
of the Originator in the Contract Acquisition Agreement was incorrect as of the
date made and the interests of the Holders of any Notes are materially and
adversely affected thereby, or if the Originator 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 Originator, 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 Originator or the Servicer. If the Originator
fails or the Originator or the Servicer is unable to cure such circumstance or
condition in accordance with the Contract Acquisition Agreement, then the Issuer
shall require the Originator, 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 Originator 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.
(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.
29
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 Originator upon the breach of a representation or
warranty. The sum of (x) the Purchase Price for all repurchased or
removed Contracts paid by the Originator or the Issuer, (y) the
aggregate DCB of all Substitute Contracts delivered by the Originator
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 DCB. 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 and the Noteholders, 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:
(i) an Officer's Certificate of each of the Originator
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
(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.
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The Issuer shall also provide to the Indenture Trustee, 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 and the
Servicer 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 and the Originator 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 Originator 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 DCB 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 an Officer's
Certificate substantially in the form attached hereto as Exhibit F (A)
identifying the Contract Assets 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.
(b) In addition, except in the case in which a Series of Notes is
redeemed with the proceeds from a new Series of Notes, the Issuer shall be
entitled, in connection with any permitted redemption or other retirement of a
Series of Notes to obtain a release from the lien of the Indenture for any of
the related Series Assets to the extent that, after giving effect to such
release, the sum of (i) the amount of funds then held in
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the Cash Collateral Account and the Reserve Account and (ii) the Aggregate DCB
of the Contracts and Underlying Notes 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 Notes (after giving effect to such
payment of principal) plus (z) the Outstanding Principal Amount of all Series of
Notes (after giving effect to such payment of principal).
(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 Originator 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 Series 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, and
(iii) all other obligations of the Issuer under this Indenture and each other
Transaction Document, 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 (iii) 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, the Reserve Account and some or all of the other Trust Estate
(collectively, the "Withdrawn Collateral"), accompanied by an Opinion of Counsel
reasonably acceptable to the Majority Holders to the effect that, after the
release of the Withdrawn Collateral, there will remain an amount in the Cash
Collateral Account and the Reserve Account, collectively, or otherwise subject
to this Indenture at least equal to the payments of interest previously made on
the Outstanding Notes and the 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 Majority Holders, 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 Majority Holders 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, the Reserve 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.
(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 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 Note on any
Payment Date;
(b) the failure to have paid in full the principal of any Note as
of its Stated Maturity Date;
(c) default in the payment of any other amounts due hereunder 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 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), 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 or any Underlying 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 or any Underlying 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 company
action by the Issuer in furtherance of any such action; or
(g) 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.
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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
Majority Holders, 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).
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 Majority Holders, 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 Notes, the
consent of all the Noteholders 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 Notes;
(ii) the principal of any Notes, which has 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 or any Noteholder hereunder, and the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee 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
Notes which has become due solely by such declaration of acceleration.
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 Majority Holders,
pay to the Indenture Trustee, for the benefit of the Noteholders, 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 and its 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 Majority Holders, 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.
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If an Event of Default shall have occurred and be continuing, the
Indenture Trustee shall, at the direction of the Majority Holders proceed, to
protect and enforce its rights and the rights of such Majority Holders by such
appropriate Proceedings as the Indenture Trustee, at the direction of the
Majority Holders, 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 Majority Holders, do one or
more of the following as the Majority Holders 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; and
(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 or the Holders of the Notes
hereunder.
provided, that without the consent of all the Holders of Outstanding 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.
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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 Majority Holders, 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
Majority Holders.
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 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 each
Noteholder to make such payments to the Indenture Trustee, and in the event that
the Indenture Trustee shall consent to the making of such payments directly to
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 any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting 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 any Noteholder in any
such Proceeding.
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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 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:
FIRST: To reimburse the Indenture Trustee for any reasonable costs or
expenses incurred by it in connection with enforcing the remedies provided for
in this Article Six;
SECOND: To pay to the Servicer: (A) the Servicer Fee then due; (B) any
amounts received from customers to pay the taxes described in 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 Servicer
Advance (provided that such nonrecoverable Servicer Advance was a permissible
Servicer Advance when made);
THIRD: To the payment to the Indenture Trustee and the Back-up Servicer
of (A) the Account Administration Fee then due, and (B) any Transition Costs
incurred by it and not previously reimbursed; provided that aggregate
reimbursement for Transition Costs at this priority shall not exceed $75,000;
FOURTH: To the payment of the amounts then due and unpaid upon the
Notes 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;
FIFTH: To the payment of the remaining Outstanding Principal Amount of
the Notes;
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SIXTH: To pay to a successor Servicer after a successor Servicer has
been appointed pursuant to Section 6.02 of the Servicing Agreement, the
Additional Servicer Fee, if any;
SEVENTH: To reimburse the Noteholders, for any reasonable costs or
expenses incurred by them in connection with any enforcement action with respect
to this Indenture or the Notes;
EIGHTH: To the payment to the Servicer, the Indenture Trustee, the
Back-up Servicer and the Noteholders, pro rata, any other amounts due to such
Person as expressly provided herein and in the Servicing Agreement including any
reasonable Transition Costs incurred and not previously reimbursed;
NINTH: To the payment of any surplus to or at the written direction of
the Issuer or any other person legally entitled thereto.
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 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.
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SECTION 6.11 RESTORATION OF RIGHTS AND REMEDIES.
If the Indenture Trustee or any Noteholder has instituted any
Proceeding to enforce any right or remedy under this Indenture and such
Proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Indenture Trustee or to such Noteholder, then, and
in every case, the Issuer, the Indenture Trustee 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 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 or to the Noteholders is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 6.13 DELAY OR OMISSION; NOT WAIVER.
No delay or omission of the Indenture Trustee 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 or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee or by the Noteholders, as the case may be, subject in each
case, however, to the right of the Majority Holders to control any such right
and remedy except as provided in Section 6.14 hereof.
SECTION 6.14 CONTROL BY NOTEHOLDERS.
The Majority Holders 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 Noteholders to
undertake a private sale of the Trust Estate shall be by the Holders of all
Outstanding Notes, unless the condition set forth in Section 6.18(b)(ii) hereof
is 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
40
(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 Majority Holders 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), (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.
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 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.
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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 or any portion thereof unless either (i) the provisions of Section 6.04
are satisfied or (ii) the Holders of all Outstanding Notes consent in writing to
or direct the Indenture Trustee to make such Sale.
(c) The Indenture Trustee 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 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 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 Majority Holders 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
43
believing that 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 12.05 hereof.
SECTION 7.02 NOTICE OF DEFAULT AND OTHER EVENTS.
Promptly after the occurrence of any Default or Trigger Event 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 facsimile transmission confirmed by mail
to all Holders of Notes, as their names and addresses appear on the Note
Register, notice of such Default or Trigger Event 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 or Board of Managers, as appropriate, 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 Majority Holders 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
45
of 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 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 or any Customer, any action of the
Servicer taken in the name of the Indenture Trustee, or the validity of the
Servicing Agreement, the Contract Acquisition Agreement or any Underlying Note
Purchase 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 and the Back-up Servicer a
monthly fee for all services rendered by such Persons hereunder, in the
aggregate amount of the Account Administrator 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);
46
(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 Majority Holders 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 Majority Holders. 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.
(b) The Indenture Trustee may resign at any time by giving 30 days
written notice thereof to the Issuer and to each Noteholder. If an instrument of
acceptance by a successor Indenture Trustee shall not
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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 Majority Holders
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 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 Majority Holders. 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
Majority Holders may appoint a successor Indenture Trustee. If the Majority
Holders have 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 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.
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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 Majority Holders and the Indenture Trustee shall have power to
appoint, and, upon the written request of the Indenture Trustee, the Majority
Holders or of the Holders representing at least 25% in Outstanding Principal
Amount of all Notes, 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 required to
be deposited or pledged with, the Indenture Trustee under this Indenture, shall
be exercised solely by the Indenture Trustee;
49
(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.
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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 the Issuer 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 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 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 Majority
Holders 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.
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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
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
Majority Holders pursuant to Section 4.05 hereof) and shall hold each Contract
and each Underlying Note, 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 Majority Holders 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
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided;
(b) give the Indenture Trustee 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
52
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; 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 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 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. 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).
53
ARTICLE EIGHT
[RESERVED]
54
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 Majority Holders, 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 affect 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
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, 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.
55
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
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 (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
(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
56
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 Noteholders 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.
57
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 of
Notes 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.
The Issuer 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 to redeem any Notes pursuant to this Section shall be evidenced by
a Board Resolution 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
shall, at least 15 days prior to the related Redemption Date, (i) notify the
Indenture Trustee and the Holders of the Series of Notes to be redeemed of such
Redemption Date and (ii) deposit into the Collection 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.
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;
(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.
58
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. 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 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 ASSETS.
In connection with any redemption permitted under this Article Ten, the
Issuer shall be permitted to obtain a release of the related Series Assets, to
the extent provided in Section 4.06(b) hereof, after the applicable Redemption
Price shall have been deposited into the Collection Account as required by
Section 10.02.
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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 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 limited liability
company duly organized, validly existing and in good standing under the laws of
its State of formation 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 company action;
(c) Binding Obligation. Assuming the due authorization, execution and
delivery by each other party thereto, each of (i) this Indenture, (ii) the
Servicing Agreement, (iii) the Contract Acquisition Agreement, (iv) the
Underlying Note Purchase 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
60
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 and Jurisdiction of Organization. The Issuer's
principal place of business and chief executive office is located at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Issuer is organized as a
single-member limited liability company in the State of Delaware.
(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) Sole Member of the Issuer. The Company is the sole initial equity
member of the Issuer, holding a 100% capital, voting and profits interest in the
Issuer.
(j) Contract Acquisition Agreement. As of the Initial Delivery Date, the
Issuer has entered into the Contract Acquisition Agreement with the Originator
relating to its acquisition of the Contracts and the related Contract Assets,
and the representations and warranties made by the Originator 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 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 Originator 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.
61
(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 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 and Underlying Notes. The Issuer
shall duly fulfill all obligations on its part to be fulfilled under or in
connection with each Contract and Underlying Note and shall do nothing to impair
the rights of the Indenture Trustee (for the benefit of the Noteholders) in the
Receivables, the Contracts, the Underlying Notes 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, the Underlying Notes 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) in the Receivables, the Contracts, the related Equipment and the
Underlying Notes. 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) 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, Jurisdiction of Organization etc. The Issuer
shall not, without providing 30 days notice to the Indenture Trustee and the
Majority Holders and without filing such amendments to any previously filed
financing statements or any new filings as the Indenture Trustee or the Majority
Holders 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 organizational 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
Majority Holders 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 the Underlying
Note Purchase Agreements, and causing the issuance of, receiving and selling the
Notes issued pursuant to this Indenture and (B) the exercise of any powers
permitted to limited liability companies under the limited liability company law
of the State of its formation 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 Originator or the Servicer of certain payments on
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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 Originator, the Servicer or any
other Person, (C) keep in full effect its existence, rights and franchises as a
limited liability company under the laws of its State of formation, and shall
obtain and preserve its qualification to do business as a foreign limited
liability company 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
Certificate of Formation, its Limited Liability Company Agreement and the laws
of the State of its formation (E) maintain its good standing under the laws of
the State of its formation, (F) keep correct and complete books and records of
account and minutes of meeting and other proceedings of its board of managers
and members, (G) obtain proper authorization from its members or managers, 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 Series Assets have been sold and assigned to the Issuer and
that the Series 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
Originator, (I) maintain a separate telephone number and stationery reflecting a
separate address and identity from that of the Originator; 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 company 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 Certificate of Formation or Limited Liability Company
Agreement that deals with any matter discussed above without the prior written
consent of the Majority Holders. On or before April 15 of each year, so long as
any of the Notes are Outstanding, the Issuer shall furnish to each Noteholder
and the Indenture Trustee, an Officer's Certificate confirming that the Issuer
has complied with its obligations under this Section 11.02(i).
(j) Managers. The Issuer agrees that at all times, at least two of the
managers of the Issuer (or two persons, one of whom is serving as both a manager
and an executive officer) shall be Independent; provided, that such Independent
managers may serve in similar capacities for other "special purpose entities"
formed by the Originator and its Affiliates. The Issuer's Limited Liability
Company Agreement shall at all times provide that such Independent managers
shall have a fiduciary duty to the Holders of the Notes and will always require
unanimous consent of the managers of the Issuer to file any bankruptcy petition
on behalf of the Issuer.
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(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.
(l) Taxable Income from the Contracts and Underlying Notes. The Issuer
shall treat the Notes issued by it as debt and shall treat the Contracts and
Underlying Notes 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 payments of
principal and interest received on the Underlying Notes, 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 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, the Originator under
the Contract Acquisition Agreement and the issuer of any Underlying Note under
any Underlying Note, Underlying Note Purchase Agreement, or Underlying
Indenture, 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 entity 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, in form and substance reasonably
satisfactory to the Indenture Trustee and the Majority Holders, 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;
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(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 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
Counsel, for the benefit of the Indenture Trustee 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 and the Noteholders under the Transaction
Documents;
(vi) the surviving entity shall be a "special purpose entity"; i.e.,
shall have organizational documents substantially similar to the
Certificate of Formation and Limited Liability Company Agreement of the
Issuer including specific limitations on the business purposes, and
provisions for independent managers; and
(vii) the Majority Holders 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 company purposes. None
of the transactions contemplated in this Indenture, the Contract Acquisition
Agreement, the Underlying Note Purchase Agreements 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 Indenture Trustee, the Rating Agencies and
the Noteholders of such occurrence.
SECTION 11.03 OTHER MATTERS AS TO THE ISSUER.
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(a) Limitation on Liability of Managers, Officers or Employees of the
Issuer. The managers, officers, any organizer, agents, member or employees of
the Issuer shall not be under any liability to the Trust Estate, the Indenture
Trustee, the Noteholders, the Originator, 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.
(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 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 Majority Holders, 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; COLLECTION 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, for the receipt of (i) payments with respect to the Series Assets
remitted to the Indenture Trustee by the Servicer or received directly by the
Indenture Trustee, (ii) amounts transferred from the Cash Collateral Account and
the Reserve Account in accordance with Sections 12.03(d) and 12.04(d) hereof,
(iii) any Reinvestment Income and (iv) 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. 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.
The Indenture Trustee shall provide to the Servicer 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.
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(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 amounts withdrawn from the Reserve Account
pursuant to Section 12.04(d) hereof shall be used solely for the payment of any
amounts due under Section 12.02(d)(iii) and, upon the occurrence of certain
bankruptcy related Trigger Events, Section 12.02(d)(iv) hereof; provided further
that (y) the Indenture Trustee shall withdraw from the Collection Account and
make interest payments based on the Outstanding Principal Amount of each Series
of 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 (iii) or (iv) 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:
(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 and the Back-up Servicer, (A)
the Account Administration Fee then due for all Notes and (B) Transition
Costs incurred by such person and not previously reimbursed; provided that
cumulative aggregate reimbursement of Transition Costs at this priority
shall not exceed $75,000;
(iii) to pay the interest due on that Payment Date on all Series of
Outstanding Notes and any overdue interest, to be applied as provided in
Section 2.08 hereof;
(iv) to pay the Principal Distribution Amount on all Series of
Outstanding Notes, to be applied to the payment of Note principal as
provided in Section 2.08 hereof;
(v) to deposit into each of the Cash Collateral Account and the
Reserve Account (pro rata based upon the ratio that the Cash Collateral
Account Required Balance or Required Reserve Amount, as applicable, bears
to the sum of the Cash Collateral Account Required Balance and the
Required Reserve Amount), an amount necessary to bring the balances
therein to an amount equal to the Cash Collateral Account Required Balance
and the Required Reserve Amount, respectively;
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(vi) 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 Series of Outstanding Notes, in the amount of the
Pro Rata Share for each Series;
(vii) to pay to a successor Servicer after a successor Servicer has
been appointed pursuant to Section 6.02 of the Servicing Agreement, the
Additional Servicer Fee, if any, and to pay any successor Servicer any
Transition Costs incurred by it and not previously reimbursed;
(xi) to pay to the following Persons, pro rata, any other amounts
expressly provided for in any Transaction Document then due and unpaid
including, without limitation, any custodial fees due to the Indenture
Trustee and not paid pursuant to clause (ii) above: the Noteholders, the
Servicer, the Indenture Trustee and the Back-up Servicer; and
(xii) 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) The Collection Account may also be used to hold 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 Collection Account and the Paying Agent shall remit the
Redemption Price to the applicable Noteholders in accordance with Section 10.04
hereof. Moneys in the Collection Account in respect of the Redemption Price
shall be invested in the name of the Indenture Trustee for the benefit of the
Noteholders in Eligible Investments that mature no later than two Business Days
prior to the relevant Redemption Date. Any monies deposited in the Collection
Account for purposes of redeeming Notes pursuant to Article Ten hereof shall,
subject to Section 7.16 hereof, remain in the Collection 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, for the receipt of (i) the Initial Cash
Collateral Account Deposit, if any, made with respect to a Series of Notes and
(ii) deposits pursuant to Section 12.02(d)(v). 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. 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
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its maturity. The Indenture Trustee shall provide to the Servicer 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) if 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
(iii) of Section 12.02(d) hereof plus (2) the 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;
(ii) subject to subparagraph (iii) of this Section 12.03(d), if 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 (iv) 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) if 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 RESERVE ACCOUNT.
(a) Prior to the Initial Delivery Date, the Issuer shall cause the
Indenture Trustee to open and maintain a segregated trust account at the
Corporate Trust Office (the "Reserve Account") in the name of the Indenture
Trustee for the benefit of Noteholders, for the receipt of (i) the Initial
Reserve Account Deposit and (b) deposits pursuant to Section 12.02(d)(v) hereof.
(b) Monies on deposit in the Reserve Account shall be invested at the
written direction of the Issuer in one or more Eligible Investments during the
term of this Indenture. In the absence of an Issuer Order, the Indenture Trustee
shall invest funds in the Reserve 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. All
income or other gain from such investments shall be credited
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to such Reserve Account and shall be held by the Indenture Trustee in the
Reserve Account as part of the Trust Estate as security for the Notes subject to
disbursement and withdrawal as herein provided. Any loss resulting from such
investments shall be charged to such Reserve Account; provided that the Issuer
shall make or cause to be made on any Determination Date a deposit to the
Reserve 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 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 12.04(b) hereof shall
be needed for disbursement from the Reserve Account as set forth in Section
12.04(d) hereof, the Indenture Trustee shall cause such investments of such
Reserve Account to be sold or otherwise converted to cash to the credit of such
Reserve Account. The Indenture Trustee shall not be liable for any investment
loss resulting from investment of money in the Reserve 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 Reserve Account shall be made, to the extent
funds therefor are available, only as follows:
(i) if the amount in the Collection Account at the close of business
on the Determination Date immediately preceding any Payment Date (after
giving effect to deposits from the Cash Collateral Account as provided in
Section 12.03(d) hereof) is less than the sum of the amounts required to
be paid from the Collection Account on such Payment Date pursuant to
clauses (i) through (iii) of Section 12.02(d) hereof, the Indenture
Trustee shall withdraw funds from the Reserve Account on or prior to 4:00
p.m. Central Time on such Determination Date to the extent necessary to
make payments pursuant to clause (iii) of Section 12.02(d) on such Payment
Date and deposit such funds into the Collection Account for disbursement
in accordance with Section 12.02(d) hereof.
(ii) in addition, on each Payment Date (after giving effect to
payments pursuant to Section 12.04(d)(i) hereof), amounts on deposit in
the Reserve Account in excess of the Required Reserve Amount shall be
transferred to the Collection Account for disbursement on such Payment
Date in accordance with Section 12.02(d) hereof.
(iii) if on any Payment Date a Trigger Event related to a bankruptcy
of the Issuer or its affiliates has occurred, the Indenture Trustee shall
withdraw all amounts on deposit in the Reserve Account on or prior to 4:00
p.m. Central Time on such Determination Date (up to the then Outstanding
Principal Amount of the Notes) and deposit such funds in the Collection
Account for disbursement in accordance with Section 12.02(d)(iv) hereof.
SECTION 12.05 REPORTS BY INDENTURE TRUSTEE TO THE 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 of all such payments. The
Indenture Trustee shall satisfy its obligations under this Section 12.05 by
delivering the Monthly Servicer's Report to each Noteholder, the Issuer, the
Rating Agencies and the Placement Agent or otherwise making
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it available as described herein. The Indenture Trustee may 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 G hereto. The Indenture Trustee shall
deliver a copy of the Monthly Servicer's Report by facsimile to any Noteholder
that has either failed 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 such
documents 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) Indenture Trustee to also deliver or make available as described
above, any Monthly Servicer's Reports or equivalent received by it with respect
to any Underlying Notes.
(c) On or before the 15th day prior to any Final Payment Date the
Indenture Trustee shall provide notice to 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.
(d) 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, 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 ▇▇▇ ▇▇▇▇▇▇ and Marquette Avenue, MAC
N9311-161, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, or at any
other address previously furnished in writing to the Issuer, the Noteholders
and the Servicer; or
(b) to the Issuer at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, or at any other address
previously furnished in writing to the Indenture Trustee, the Noteholders and
the Servicer by the Issuer; or
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(c) to the Servicer at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, or at any other address
previously furnished in writing to the Indenture Trustee, the Noteholders and
the Issuer; or
(d) to Moody's at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Facsimile: (212)
553-7820.
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.
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.
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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;
(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.
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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 II, LLC, as Issuer
By:
------------------------------------
Name:
Title:
MICROFINANCIAL INCORPORATED, as Servicer
By:
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Name:
Title:
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Indenture Trustee
By:
------------------------------------
Name:
Title:
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Back-up Servicer
By:
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Name:
Title:
