EXHIBIT 10.11
INDENTURE OF TRUST
Dated as of ▇▇▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ FRANCHISEE LOAN FUNDING 1998-A LLC,
as Issuer
and
BANKERS TRUST COMPANY,
as Indenture Trustee
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND ASSUMPTIONS
Section 1.1. Definitions..................................................... 3
Section 1.2. Construction.................................................... 3
ARTICLE II
THE NOTES
Section 2.1. Authorization of Notes: Notes to Constitute Full
Recourse Obligations.......................................... 4
Section 2.2. Forms of Notes.................................................. 5
Section 2.3. Authorized Principal Amount..................................... 5
Section 2.4. Date of Notes; Denominations.................................... 5
Section 2.5. Execution, Authentication, and Delivery......................... 6
Section 2.6. Transfer and Registry; Exchange; Negotiability.................. 6
Section 2.7. Regulations With Respect to Exchanges and Transfers............. 10
Section 2.8. Mutilated, Destroyed, Stolen or Lost Notes...................... 10
Section 2.9. Medium of Payment; Payment of Interest; Payment of Principal.... 11
Section 2.10. Persons Deemed Noteholders...................................... 12
Section 2.11. Cancellation.................................................... 13
Section 2.12. Access to List of Noteholders' Names and Addresses.............. 13
Section 2.13. Acts of Noteholders............................................. 13
Section 2.14. Certain Tax Matters............................................. 14
ARTICLE III
ISSUANCE OF NOTES
Section 3.1. Conditions to Authentication and Delivery of Notes
on the Closing Date........................................... 14
Section 3.2. Transfer of Indenture Trust Estate.............................. 16
ARTICLE IV
COVENANTS OF THE ISSUER
Section 4.1. Payment of Principal, Interest and Loan Yield
Maintenance Amount............................................ 16
Section 4.2. Maintenance of Existence........................................ 16
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Section 4.3. Protection of Indenture Trust Estate............................ 17
Section 4.4. [Reserved]...................................................... 17
Section 4.5. Books of Account................................................ 17
Section 4.6. Performance of Obligations...................................... 18
Section 4.7. Negative Covenants.............................................. 18
Section 4.8. Availability of Information..................................... 19
Section 4.9. Protection of Security; Power to Issue Notes and Grant
Indenture Trust Estate; Indenture to Constitute Contract...... 20
Section 4.10. Annual Statement as to Compliance............................... 24
Section 4.11. Maintenance of Offices or Agency................................ 24
Section 4.12. Further Assurances.............................................. 25
Section 4.13. Money for Payments to Be Held in Trust.......................... 25
ARTICLE V
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 5.1. Collection of Money............................................. 25
Section 5.2. Distribution Account............................................ 25
Section 5.3. Reserve Account................................................. 28
Section 5.4. Investment of Funds............................................. 28
Section 5.5. Repayment to the Issuer from the Accounts....................... 28
Section 5.6. Reports to the Noteholders...................................... 29
Section 5.7. Write-Down Amounts.............................................. 29
Section 5.8. Optional Redemption............................................. 29
ARTICLE VI
[RESERVED]
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default............................................... 30
Section 7.2. Acceleration of Maturity........................................ 31
Section 7.3. Enforcement of Remedies......................................... 32
Section 7.4. Application of Money Collected Upon Acceleration................ 34
Section 7.5. Unconditional Rights of Noteholders to Receive Principal
and Interest.................................................. 34
Section 7.6. Restoration of Rights and Remedies.............................. 34
Section 7.7. Rights and Remedies Cumulative.................................. 35
Section 7.8. Delay or Omission not to Constitute a Waiver.................... 35
Section 7.9. Control By Majority-In-Interest................................. 35
Section 7.10. Waiver of Past Events of Default................................ 36
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Section 7.11. Undertaking for Costs........................................... 36
Section 7.12. Issuer Waiver of Stay or Extension Laws......................... 36
Section 7.13. Sale of Indenture Trust Estate.................................. 37
Section 7.14. Action on Notes................................................. 37
ARTICLE VIII
RELEASE, SATISFACTION AND DISCHARGE
Section 8.1. Satisfaction and Discharge of Indenture......................... 38
Section 8.2. Application of Trust Money...................................... 38
Section 8.3. Release of Indenture Trust Estate............................... 38
ARTICLE IX
THE INDENTURE TRUSTEE
Section 9.1. Certain Duties and Responsibilities............................. 39
Section 9.2. Notice of Events of Default..................................... 41
Section 9.3. Certain Rights of the Indenture Trustee......................... 41
Section 9.4. Not Responsible for Recitals or Issuance of Notes............... 43
Section 9.5. May Hold Notes.................................................. 43
Section 9.6. Money Held in Trust............................................. 44
Section 9.7. Compensation and Reimbursement.................................. 44
Section 9.8. Indenture Trustee Eligibility................................... 45
Section 9.9. Resignation and Removal; Appointment of Successor............... 46
Section 9.10. Acceptance of Appointment by Successor.......................... 47
Section 9.11. Merger, Conversion, Consolidation or Succession to Business
of Indenture Trustee.......................................... 48
Section 9.12. Co-trustees and Separate Indenture Trustees..................... 48
Section 9.13. ▇▇▇▇▇▇ Act...................................................... 49
Section 9.14. Tax Reporting................................................... 50
ARTICLE X
AMENDMENTS
Section 10.1. Amendments Without Consent of Noteholders....................... 50
Section 10.2. Amendments with Consent of Noteholders and Third Parties........ 51
Section 10.3. Execution of Amendments......................................... 52
Section 10.4. Effect of Amendment............................................. 52
Section 10.5. Reference in Notes to Amendments................................ 53
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ARTICLE XI
MISCELLANEOUS
Section 11.1. Compliance Certificates......................................... 53
Section 11.2. Form of Documents Delivered to Indenture Trustee................ 54
Section 11.3. Notices, Etc. to Parties........................................ 55
Section 11.4. Notices and Information to Noteholders; Waiver.................. 56
Section 11.5. Effect of Headings and Table of Contents........................ 56
Section 11.6. Successors and Assigns.......................................... 56
Section 11.7. Severability.................................................... 56
Section 11.8. Legal Holidays.................................................. 56
Section 11.9. Recording of Indenture.......................................... 57
Section 11.10. Limited Obligations............................................. 57
Section 11.11. Governing Law................................................... 57
Section 11.12. Counterparts.................................................... 57
EXHIBITS
EXHIBIT A-1 - Form of Class A-1 Note
EXHIBIT A-2 - Form of Class A-2 Note
EXHIBIT A-3 - Form of Class A-X Note
EXHIBIT A-4 - Form of Class B Note
EXHIBIT A-5 - Form of Class C Note
EXHIBIT A-6 - Form of Class D Note
EXHIBIT A-7 - Form of Class E Note
EXHIBIT A-8 - Form of Class F Note
EXHIBIT B - Form of Authentication Order
EXHIBIT C - Form of Confidentiality Agreement
EXHIBIT D - Form of Transferee Certificate
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INDENTURE OF TRUST (herein, as amended or supplemented from time to
time as permitted hereby, this or the "INDENTURE"), dated as of August 1, 1998,
by and between ▇▇▇▇▇▇▇▇ FRANCHISEE LOAN FUNDING 1998-A LLC, a limited liability
company organized under the laws of the State of Delaware (the "ISSUER"), and
BANKERS TRUST COMPANY, a New York banking corporation, as trustee (together with
its permitted successors in the trusts hereunder, the "INDENTURE TRUSTEE").
W I T N E S S E T H:
- - - - - - - - - --
WHEREAS, on the Closing Date (as such term and such other capitalized
terms used herein and not otherwise defined are defined in Appendix A hereof),
the Issuer proposes to issue its ▇▇▇▇▇▇▇▇ Franchisee Loan Notes, Series 1998-A,
pursuant to this Indenture;
WHEREAS, as security for the Notes, the Issuer proposes to pledge and
assign the Indenture Trust Estate;
WHEREAS, the Issuer has duly authorized the execution and delivery of
this Indenture to provide for the issuance, payment, administration and securing
of the Notes for the benefit of the Holders thereof;
WHEREAS, the Issuer and the Indenture Trustee agree that the Indenture
Trustee be appointed under this Indenture and be charged with and accept the
trusts and duties set forth in this Indenture in connection with the issuance,
payment, administration and securing of the Notes under this Indenture for the
benefit of the Holders of the Notes;
WHEREAS, the Indenture Trustee has duly authorized the execution and
delivery of this Indenture and is duly authorized to accept the trusts and to
perform its obligations under this Indenture;
WHEREAS, all things necessary to make this Indenture a valid agreement
of the Issuer and the Indenture Trustee in accordance with its terms have been
done; and
WHEREAS, all things necessary to make the Notes, when executed and
delivered by the Issuer and authenticated by the Indenture Trustee and issued as
in this Indenture provided, the valid, binding and legal obligations of the
Issuer according to the import thereof, have been done and performed.
GRANTING CLAUSE
NOW, THEREFORE, in order to secure the payment of the principal of,
interest on, Loan Yield Maintenance Amounts, if any, and all other amounts
payable with respect to the Notes to be issued pursuant to this Indenture, and
in order to secure the performance and observance of all the covenants and
conditions contained herein and in such Notes, and in order to declare the terms
and conditions upon which the Notes are
executed, authenticated, issued, delivered, secured and accepted by all Persons
who shall from time to time be or become Holders thereof, and for and in
consideration of the mutual covenants contained herein, of acceptance by the
Indenture Trustee of the trusts hereby created, and of the purchase and
acceptance of the Notes by the Holders thereof, the Issuer has executed and
delivered this Indenture and by these presents, the Issuer does hereby pledge,
bargain, sell, warrant, alienate, remise, convey, assign, transfer, create and
▇▇▇▇▇ ▇ ▇▇▇▇ upon and a security interest in and a right of set-off against
(collectively, "GRANT") unto the Indenture Trustee, its successor or successors
and its or their assigns forever, in trust and as collateral security for the
benefit of the Holders of the Notes, the Issuer's entire right, title, interest
and estate, whether now owned or hereafter acquired, in, to and under (i) the
Certificate of Beneficial Ownership; (ii) the present and continuing exclusive
right, power and authority to make claim for, collect, receive and make receipt
for any of the sums, amounts, income, revenues, issues, profits and proceeds
under, on account of or with respect to, the Certificate of Beneficial
Ownership; (iii) all moneys and securities from time to time held by the
Indenture Trustee in any Account created under the terms of this Indenture and
all interest, profits, proceeds, or other income derived from such moneys and
securities; (iv) the present and continuing exclusive right, power and authority
to give and receive notices and other communications, to make waivers or other
agreements in respect of, or to make claims for and demand performance on, under
or pursuant to the Certificate of Beneficial Ownership, to bring actions and
proceedings thereunder or for the enforcement thereof, and to exercise all
remedies, powers, privileges and options and to do any and all things which the
Issuer is or may become entitled to do under or in respect of the Certificate of
Beneficial Ownership; and (v) all income, revenues, issues, products, revisions,
substitutions, replacements, profit and proceeds of and from all of the
foregoing (collectively, the "INDENTURE TRUST ESTATE").
TO HAVE AND TO HOLD IN TRUST all and singular the Indenture Trust
Estate whether now or hereafter acquired, unto the Indenture Trustee and its
successor or successors and its or their assigns forever for the benefit of the
Holders of the Notes, but:
IN TRUST NEVERTHELESS, upon the terms, trusts and conditions
hereinafter set forth for the equal and proportionate benefit, security and
protection of all present and future Holders of the Notes without preference,
privilege, priority or distinction as to the lien or otherwise of any of the
Notes over any of the other Notes, except as otherwise may be provided in this
Indenture (including, without limitation, Article V hereof), subject to the
priority payment rights of the Holders of the Notes;
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns (i)
shall pay, or cause to be paid, the principal of, interest on, and Loan Yield
Maintenance Amounts, if any, payable with respect to the Notes due or to become
due thereon, at the times and in the manner mentioned in the Notes, or shall
provide, as permitted hereby, for the payment thereof, (ii) shall keep, perform
and observe all the covenants and conditions pursuant to the terms of this
Indenture to be kept, performed and observed by it, and (iii) shall pay or cause
to be paid to the Indenture Trustee all sums
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of money due or to become due to it and any other fiduciary appointed hereunder
in accordance with the terms and provisions hereof, then upon the final payment
thereof this Indenture, all rights of the Holders of the Notes under this
Indenture and the rights hereby granted for the benefit thereof shall cease,
terminate and be void; otherwise this Indenture shall be and remain in full
force and effect.
The Indenture Trustee, for itself and its successors and assigns,
hereby declares that it shall hold all the estate, right, title and interest in
any property received by it under this Indenture, including, without limitation,
the Indenture Trust Estate, in trust for the benefit of all present and future
Holders of the Notes, subject to the terms of this Indenture. The Indenture
Trustee acknowledges the Grant of the Indenture Trust Estate hereunder, accepts
the trusts hereunder in accordance with the provisions hereof and agrees to
perform fully the duties herein required of it to the end that the interests of
the Holders of the Notes may be adequately and effectively protected in
accordance with the provisions of this Indenture.
THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that
all Notes issued and secured hereunder are to be issued, authenticated and
delivered and all said property, rights and interests and other amounts hereby
assigned and pledged, are to be dealt with and disposed of under, upon and
subject to the terms, conditions, stipulations, covenants, agreements, trusts,
uses and purposes as hereinafter expressed, and the Issuer has agreed and
covenanted, and does hereby agree and covenant with the Indenture Trustee and
with the respective Holders of the Notes, as follows:
ARTICLE I
DEFINITIONS AND ASSUMPTIONS
SECTION 1.1. DEFINITIONS. For all purposes of this Indenture,
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except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in Appendix A hereto, which is hereby incorporated by
reference herein. All other capitalized terms used herein shall have the
meanings specified herein.
SECTION 1.2. CONSTRUCTION. In this Indenture, unless the context
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otherwise requires:
(a) The terms "hereby," "hereof," "hereto," "herein," "hereunder" and
any similar terms, as used in this Indenture, refer to this Indenture, and
the term "hereafter" shall mean after, and the term "heretofore" shall mean
before, the date of the execution and delivery of this Indenture.
(b) Words of the masculine gender shall mean and include correlative
words of the feminine and neuter genders and words importing the singular
number shall mean and include the plural number and vice versa.
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(c) Words importing persons shall include firms, associations,
limited liability companies, partnerships (including limited partnerships),
trusts, corporations and other legal entities, including public bodies, as
well as natural persons.
(d) Any headings preceding the texts of the several Articles and
Sections of this Indenture, and any table of contents appended to copies
hereof, shall be solely for convenience of reference and shall not
constitute a part of this Indenture, nor shall they affect its meaning,
construction or effect.
(e) The term "related" when used with reference to a Payment Date and
either an Accrual Period, Prepayment Period, Due Period or an Accounting
Date shall mean the Accrual Period, Prepayment Period, Due Period or
Accounting Date immediately preceding such Payment Date.
(f) All references to any time of any date (e.g., 11:00 a.m.) shall
refer to such time on such day in New York City, New York.
ARTICLE II
THE NOTES
SECTION 2.1. AUTHORIZATION OF NOTES: NOTES TO CONSTITUTE FULL
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RECOURSE OBLIGATIONS.
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(a) The Notes issuable hereunder shall be issued as registered Notes,
without coupons, in eight Classes authorized by the Issuer on the Closing Date.
The Notes of all Classes shall be known and entitled generally as the "▇▇▇▇▇▇▇▇
Franchisee Loan Notes, Series 1998-A." The Notes of each Class shall have such
further particular designation as the Issuer may adopt for each Class, and each
Note issued hereunder shall bear upon the face thereof the designation so
adopted for the Class to which it belongs. The Indenture Trustee is hereby
authorized and directed to authenticate and deliver on the Closing Date eight
Classes of Notes of the Issuer, which shall be designated "▇▇▇▇▇▇▇▇ Franchisee
Loan Notes, Series 1998-A, Class ▇-▇," "▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Loan Notes, Series
1998-A, Class ▇-▇," "▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Loan Notes, Series 1998-A, Class A-X,"
"▇▇▇▇▇▇▇▇ Franchisee Loan Notes, Series 1998-A, Class B," "▇▇▇▇▇▇▇▇ Franchisee
Loan Notes, Series 1998-A, Class C," "▇▇▇▇▇▇▇▇ Franchisee Loan Notes, Series
1998-A, Class D," "▇▇▇▇▇▇▇▇ Franchisee Loan Notes, Series 1998-A, Class E," and
"▇▇▇▇▇▇▇▇ Franchisee Loan Notes, Series 1998-A, Class F," respectively.
(b) The Notes shall constitute full recourse obligations of the
Issuer. The Notes when issued shall not constitute direct or indirect
indebtedness or obligations of, nor are they guaranteed by, the Indenture
Trustee. The Indenture Trustee shall not be liable to the Holders of the Notes
for the payment of the principal thereof, interest thereon, or Loan Yield
Maintenance Amounts, if any, payable thereon or for any liability
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under this Indenture. Neither the Notes nor the Loans are insured by any
governmental agency.
SECTION 2.2. FORMS OF NOTES. The Notes and the Indenture Trustee's
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certificate of authentication shall be in substantially the forms set forth in
EXHIBIT A attached hereto, with necessary or appropriate variations, omissions
and insertions, as permitted or required by this Indenture and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistent herewith, be determined by the
Authorized Officers of the Issuer executing such Notes, as evidenced by their
execution of such Notes. Definitive Notes, if any, shall be typewritten,
photocopied, printed, lithographed or engraved or produced by any combination of
these methods (with or without steel engraved borders), all as determined by the
Authorized Officers of the Issuer executing such Notes, as evidenced by their
execution of such Notes.
SECTION 2.3. AUTHORIZED PRINCIPAL AMOUNT. The Initial Aggregate
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Principal Amount of the Notes, other than the Class A-X Notes, that may be
authenticated and delivered under this Indenture is $190,266,110 and the Initial
Aggregate Notional Amount of the Class A-X Notes that may be authenticated and
delivered under this Indenture is $201,339,779, except for Notes authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu
of, Notes pursuant to Section 2.6, 2.7, 2.8 or 10.5 hereof. Except for such
differences among the Class A-X Notes and the other Notes as are expressly
provided for herein and differences to reflect the subordination of: the Class F
Notes to all other Classes of Notes; the Class E Notes to the Class D Notes, the
Class C Notes, the Class B Notes, and the Class A Notes; the Class D Notes to
the Class C Notes, the Class B Notes and the Class A Notes; the Class C Notes to
the Class B Notes and the Class A Notes; and the Class B Notes to the Class A
Notes, all Notes Outstanding shall be identical in all respects other than the
maturity thereof, the interest rate thereon and the denominations thereof. All
Notes issued under this Indenture shall in all respects be equally and ratably
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.
SECTION 2.4. DATE OF NOTES; DENOMINATIONS
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(a) Notes which are authenticated and delivered by the Indenture
Trustee to or upon the order of the Issuer on the Closing Date shall be dated as
of the Closing Date. All other Notes which are authenticated for any other
purpose hereunder shall be dated the date of their authentication. The Notes,
other than the Class A-X Notes, issued in fully registered, certificated form
shall be issued in minimum denominations of $100,000, with respect to the Class
▇-▇, ▇▇▇▇▇ ▇-▇, Class B, Class C, Class D, Class E and Class F Notes and in
integral multiples of $1,000 in excess thereof; provided, however, that one Note
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in each such Class of Notes may be issued in a different
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denomination. The Class A-X Notes issued in fully registered, certificated form
shall be issued in minimum percentage interests of 10%.
(b) Notes issued upon transfer, exchange or replacement of other
Notes shall be issued in authorized denominations reflecting the Initial
Aggregate Principal Amount or Initial Aggregate Notional Amount, as the case may
be, of the Notes so transferred, exchanged or replaced, but shall represent only
the then current Aggregate Outstanding Principal Amount or Outstanding Notional
Amount, as the case may be, of the Notes so transferred, exchanged or replaced.
In the event that any Note is divided into more than one Note in accordance with
the provisions hereof, the principal amount or notional amount, as the case may
be, of such Note shall be proportionately divided among the Notes delivered in
exchange therefor.
SECTION 2.5. EXECUTION, AUTHENTICATION, AND DELIVERY
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(a) Each Note shall be executed on behalf of the Issuer with the
manual or facsimile signature of an Authorized Officer of the Issuer.
(b) Notes bearing the manual or facsimile signature of individuals
who were at any time Authorized 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 and delivery of such Notes or did not hold
such offices at the date of such Notes.
(c) At any time and from time to time after the execution and
delivery of this Indenture, the Issuer may deliver Notes executed by the Issuer
to the Indenture Trustee for authentication. Upon a written order from the
Issuer in the form of EXHIBIT B hereto, the Indenture Trustee shall authenticate
and deliver such Notes as provided in this Indenture and not otherwise. 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 of such Note set forth in EXHIBIT A
hereto executed by the Indenture Trustee by the manual signature of an
Authorized Officer of the Indenture Trustee, 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 2.6. TRANSFER AND REGISTRY; EXCHANGE; NEGOTIABILITY
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(a) Notes of each Class will be represented initially by beneficial
interests in a single global Note in definitive, fully registered form without
coupons deposited with a custodian for, and registered in the name of, The
Depository Trust Company ("DTC"). Beneficial interests in such global Note will
trade in DTC's same-day funds settlement system. Beneficial interests in such
global Note will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its participants. Bankers Trust Company
or its affiliate may serve as custodian for DTC. Beneficial owners of the
global Note may obtain certificated Notes in exchange for their beneficial
interests in the
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global Note upon request in accordance with DTC's and the Registrar's
procedures. In addition, certificated Notes shall be transferred to all
beneficial owners in exchange for their beneficial interests in the global Note
if (i) the Issuer notifies the Indenture Trustee in writing that DTC is
unwilling or unable to act as a depositary for the global Note and the Issuer is
unable to locate a qualified successor within 90 days or (ii) the Issuer, at its
option, notifies the Indenture Trustee in writing that it elects to change the
issuance of Notes in the form of certificated Notes under the Indenture. In
addition, application may be made to have the Class E Notes and the Class F
Notes designated as eligible for trading on The PORTAL Market of The Nasdaq
Stock Market, Inc.
(b) (i) Each Note in registered and certificated form shall be
transferable only upon the books of the Issuer (the "REGISTER"), which
shall be kept for that purpose at the office of the Person acting as
registrar of the Issuer (the "REGISTRAR"). The Indenture Trustee is hereby
designated as the initial Registrar. Subject to the provisions of
paragraph (c) of this Section 2.6, the transfers of any Note may be
effected on the books of the Issuer by the Holder thereof in person or by
its attorney duly authorized in writing, upon surrender thereof together
with a written instrument of transfer satisfactory to the Registrar duly
executed by the Holder or its duly authorized attorney. Upon the transfer
of any such Note, the Issuer shall issue in the name of the transferee a
new Note or Notes of the same aggregate principal or notional amount,
Class, interest rate and maturity as the surrendered Note.
(ii) At the option of the Holder, Notes may be exchanged for
other Notes of any authorized denominations, and of a like aggregate
principal or notional amount, Class, interest rate and maturity, 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 shall authenticate and deliver, the Notes which the
Noteholder making the exchange is entitled to receive.
(iii) 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 transfer or exchange.
(iv) Every Note presented or surrendered for registration of
transfer or exchanged shall (if so required by the Issuer or the Indenture
Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Issuer and the Indenture Trustee duly
executed, by the Holder thereof or its attorney duly authorized in writing.
(v) Each Note shall bear a legend substantially to the following
effect:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT"), OR
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ANY STATE SECURITIES LAW AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) TO THE ISSUER, (B) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, (C) FOR SO LONG
AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
1933 ACT ("RULE 144A") TO A PERSON THE TRANSFEROR REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, OR (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT, SUBJECT
TO THE ISSUER'S, THE REGISTRAR'S AND THE INDENTURE TRUSTEE'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (B)
OR (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE REGISTRAR, AND THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF
THE RESALE RESTRICTIONS REFERRED TO ABOVE. NEITHER THE ISSUER NOR THE
INDENTURE TRUSTEE IS OBLIGATED TO REGISTER THE NOTES UNDER THE 1933
ACT OR ANY STATE SECURITIES OR BLUE SKY LAWS. TRANSFER OF THIS NOTE
IS SUBJECT TO ADDITIONAL TRANSFER RESTRICTIONS CONTAINED IN SECTION
2.6 OF THE INDENTURE.
(c) No Note (or any interest therein) may be Transferred (including,
without limitation, by pledge or hypothecation) except in accordance with the
following additional restrictions:
(i) No Transfer of a Note or any beneficial interest therein may
be made to any Person unless such Transfer is (A) to the Issuer, (B)
pursuant to an effective registration statement under the 1933 Act, (C) for
so long as the Notes are eligible for resale pursuant to Rule 144A under
the 1933 Act to a Person the transferor reasonably believes is a "qualified
institutional buyer" as defined in Rule 144A that purchases for its own
account or for the account of a qualified institutional buyer to whom
notice is given that the Transfer is being made in reliance on Rule 144A,
or (D) pursuant to another available exemption from the registration
requirements of the 1933 Act and any applicable state securities and
8
blue sky laws or is made in accordance with said Act and state laws. The
Holder of a Note desiring to effect a Transfer of a Note shall indemnify
the Issuer, the Indenture Trustee, the Registrar, the Servicer, the
Servicing Advisor, the Depositor and the Seller against any liability that
may result if the Transfer is not so exempt or is not made in accordance
with such federal and state laws.
(ii) Once definitive Notes have been issued, the Notes may not be
Transferred, directly or indirectly, to any Person unless (A) the
transferee of the Note certifies in a certificate to the Issuer and the
Indenture Trustee, in substantially the form set forth as EXHIBIT D hereto,
that such Person is a Qualified Institutional Buyer as defined in Rule 144A
under the 1933 Act or (B) the transferee delivers to the Indenture Trustee
and the Issuer an Opinion of Counsel that such Transfer is permitted
pursuant to clauses (i)(B) or (i)(D) above.
(iii) No Note may be Transferred if, as a result of such Transfer,
there would be registered record owners of Notes in denominations or
percentage interests of less than the minimum denominations or percentage
interests set forth in Section 2.4 hereto.
(iv) Each Transferee of a Senior Note will be deemed to
represent, warrant and covenant that (i) it is not a Plan or an entity
whose underlying assets are Plan assets or (ii) it is an "insurance company
general account" as such term is defined in ptce 95-60 and no assets of any
Plan with respect to which the aggregate amount of such general account's
reserves and liabilities for the contracts held by or on behalf of such
Plan and all other such plans maintained by the same employer (and its
affiliates as defined in Section V(a)(1) of ptce 95-60) or by the same
employee organization exceeds or will exceed 10% of the total of all
reserves and liabilities of such general account (determined in accordance
with ptce 95-60, exclusive of separate account liabilities, plus any
applicable surplus) or (iii) its purchase and holding of the Senior Note is
otherwise covered by a Prohibited Transaction Class Exemption issued by the
Department of Labor. Each Transferee of the Class A-X, Class E and Class F
Notes will be deemed to represent, warrant and covenant that (i) no part of
the funds being used to purchase such Notes constitutes assets of a Benefit
Plan Investor or (ii) it is an "insurance company general account" as such
term is defined in ptce 95-60 and (1) no assets of any Benefit Plan
Investor with respect to which the aggregate amount of such general
account's reserves and liabilities for the contracts held by or on behalf
of such Benefit Plan Investor and all other such plans maintained by the
same employer (and its affiliates as defined in Section V(a)(1) of ptce 95-
60) or by the same employee organization exceeds or will exceed 10% of the
total of all reserves and liabilities of such general account (determined
in accordance with ptce 95-60, exclusive of separate account liabilities,
plus any applicable surplus) and (2) the assets of such general account
held with respect to all Benefit Plan Investors do not, and will not during
the entire period that the purchaser or transferee holds such Notes, equal
or exceed 25% of such reserves and liabilities.
9
(v) None of the Notes may be Transferred to the Issuer or the
Depositor.
(vi) The Indenture Trustee may require an Opinion of Counsel to
be delivered to it in connection with any Transfer of the Notes pursuant to
clauses (i)(B) or (i) (D) above. All Opinions of Counsel required in
connection with any Transfer shall be by counsel reasonably acceptable to
the Indenture Trustee. None of the Issuer, the Registrar or the Indenture
Trustee is obligated to register the Notes under the 1933 Act or any other
securities law. Any Transfer in violation of the provisions of this
Section 2.6 shall be void ab initio.
SECTION 2.7. REGULATIONS WITH RESPECT TO EXCHANGES AND TRANSFERS.
---------------------------------------------------
In all cases in which the privilege of exchanging or transferring Notes is
exercised, the Issuer shall execute and the Indenture Trustee shall authenticate
and deliver Notes in accordance with the provisions of this Indenture. For
every such exchange or registration of transfer of Notes, whether temporary or
definitive, the Issuer and the Indenture Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge required to be paid
with respect to such exchange or registration of transfer. The Indenture
Trustee shall not be required to exchange or register any such transfer of Notes
without the receipt of full payment of all amounts referred to in the preceding
sentence. Neither the Issuer nor the Indenture Trustee shall be required to
register the transfer of or exchange Notes for a period beginning on the Record
Date next preceding a Payment Date and ending on such Payment Date.
SECTION 2.8. MUTILATED, DESTROYED, STOLEN OR LOST NOTES
------------------------------------------
(a) In case any Note shall become mutilated or be destroyed, stolen
or lost, the Issuer shall execute by its Authorized Officer, and thereupon the
Indenture Trustee shall authenticate and deliver, a new Note or Notes of like
aggregate principal or notional amount, Class, interest rate and maturity as the
Note so mutilated, destroyed, stolen or lost, in exchange and substitution for
such mutilated Note, upon surrender and cancellation of such mutilated Note or
in lieu of and substitution for the Note destroyed, stolen or lost, upon (x)
filing with the Indenture Trustee evidence satisfactory to the Issuer and the
Indenture Trustee that such Note has been destroyed, stolen or lost and proof of
ownership thereof, (y) furnishing the Issuer and Indenture Trustee with such
security or indemnity as may be requested by either of them to save each of them
harmless and (z) payment of any tax or governmental charge the Issuer and
Indenture Trustee may incur. All Notes so surrendered to the Indenture Trustee
shall be cancelled by it and destroyed in accordance with its customary
practice. Any new Notes issued pursuant to this Section 2.8 in substitution for
Notes alleged to be destroyed, stolen or lost shall constitute original
additional contractual obligations on the part of the Issuer, whether or not the
Notes so alleged to be destroyed, stolen or lost shall be found at any time, or
be enforceable by anyone, and shall be equally secured by, and entitled to equal
and proportionate benefits with all other Notes issued under the Indenture.
10
(b) Notwithstanding the foregoing provisions of this Section 2.8, in
the event any such Note shall have matured, and no default has occurred which is
then continuing in the payment of the principal of, interest on, or Loan Yield
Maintenance Amounts, if any, of the Notes, the Issuer may authorize the payment
of such amounts (upon surrender thereof as provided in Section 2.9) instead of
issuing a substitute Note; provided, that security or indemnification is
---------
furnished as above provided in this Section 2.8.
(c) The provisions of this Section 2.8 are exclusive and shall
preclude (to the extent lawful) all of the rights and remedies with respect to
the payment of mutilated, lost, stolen or destroyed Notes, including those
granted by any law or statute now existing or hereafter enacted.
SECTION 2.9. MEDIUM OF PAYMENT; PAYMENT OF INTEREST; PAYMENT OF
--------------------------------------------------
PRINCIPAL
---------
(a) The Notes shall be payable, with respect to interest, principal
and Loan Yield Maintenance Amounts, if any, in lawful currency of the United
States of America and shall be payable by check mailed by first class mail to
the Person entitled thereto at such Person's address as it appears on the
Register on the applicable Record Date except that payments to Holders having
Notes having an Initial Aggregate Principal Amount of $500,000 or greater, or
Holders of Class A-X Notes having percentage interests of 10% or greater, shall
be made in immediately available funds or otherwise to an account at a banking
institution in the United States; provided, that such Holder has provided its
--------
wire transfer instructions to the Indenture Trustee no later than five Business
Days prior to the relevant Payment Date.
(b) Each Note shall bear interest at the applicable Note Rate on the
Outstanding Principal Amount or Outstanding Notional Amount, as the case may be,
thereof from and including the Cut-Off Date. Interest on each Class of Notes
will be due on each Payment Date, commencing on September 15, 1998, in an
amount equal to the interest accrued in the applicable Accrual Period at the
related Note Rate on the Aggregate Outstanding Principal Amount or Aggregate
Notional Amount, as the case may be, of such Class of Notes as of the Business
Day immediately preceding such Payment Date. Interest on the Notes shall be
calculated on the basis of a 360-day year consisting of 12 months of 30 days
each. Interest on the Notes for the Accrual Period relating to a Payment Date
is payable on each Payment Date from and after the Closing Date, until payment
in full of the Aggregate Outstanding Principal Amount thereof (or reduction in
full of the Aggregate Notional Amount thereof) shall have been made, whether at
stated maturity or otherwise.
(c) (i)(i) Payments of principal to be made on any Class of Notes
will be allocated pro rata among the Notes of such Class based upon their
respective Percentage Interests.
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(ii) No principal is payable in respect of the Class A-X Notes;
payments in reduction of the Aggregate Outstanding Principal Amounts of the
Notes, other than the Class A-X Notes, will proportionately reduce the
Aggregate Notional Amount of the Class A-X Notes. All reductions in the
Outstanding Principal Amount of a Note effected by payments of installments
of principal of a Note made on any Payment Date shall be binding upon all
future Holders of the 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. The Notes are subject to redemption at
the option of the Issuer prior to Maturity as set forth in Section 5.8
hereof.
(iii) Whenever the entire remaining unpaid Outstanding Principal
Amount of any Note shall become due and payable (or the Aggregate Notional
Amount of any Note shall be reduced to zero) on the next Payment Date, the
Indenture Trustee shall notify the Person in whose name such Note is
registered as of the close of business on the Record Date prior to such
Payment Date that such final installment is expected to be paid on such
Payment Date. Such notice shall be given by the Indenture Trustee in the
name and at the expense of the Issuer by first-class mail, postage prepaid,
mailed no later than the Servicer's Report Date prior to such Payment Date.
Such notice shall set forth the following information: the fact of such
expectation of payment in full, restating the requirement set forth in this
Indenture that such payment shall be payable only upon presentation of such
Note (or in the case of mutilated, destroyed, lost or stolen Notes, a
certificate to that effect and an indemnity as provided in Section 2.8
hereof) on or after the Payment Date therefor at the Trust Office of the
Indenture Trustee for payment, the place where such Notes are to be
surrendered for payment and that no interest shall accrue on such Notes for
any period after the Accrual Period immediately preceding such Payment
Date.
(iv) The final installment of principal of, interest on, and Loan
Yield Maintenance Amounts, if any, with respect to any Note made on any
Payment Date shall be payable, subject to Section 2.8(b) hereof, only upon
presentation of such Note (or in the case of mutilated, destroyed, lost or
stolen Notes, a certificate to that effect and an indemnity as provided in
Section 2.8 hereof) on or after the Payment Date therefor at the Trust
Office of the Indenture Trustee for payment.
SECTION 2.10. PERSONS DEEMED NOTEHOLDERS. The Issuer, the
--------------------------
Indenture Trustee, and the Registrar may deem and treat the Person in whose name
any Note shall be registered upon the Register as the absolute owner of such
Note, whether such Note shall be overdue or not, for the purpose of receiving
payment of, or on account of, the principal of, interest on and Loan Yield
Maintenance Amount, if any, with respect to such Note and for all other
purposes, and all such payments so made to any such Holder or upon its order
shall be valid and effective to satisfy and discharge the liability upon such
Note to the extent of the sum or sums so paid, and none of the Issuer, the
Indenture Trustee or the Registrar shall be affected by any notice to the
contrary.
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SECTION 2.11. CANCELLATION. All Notes surrendered upon payment of
------------
the final installment pursuant to Section 2.9(c) hereof after notation of
payment or otherwise surrendered for registration of transfer or exchange shall
be delivered to the Indenture Trustee and shall be promptly cancelled by it.
The Issuer may at any time deliver to the Indenture Trustee for cancellation any
Notes previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Indenture Trustee. No Notes shall be authenticated in lieu of
or in exchange for any Notes cancelled as provided in this Section 2.11, except
as expressly permitted by this Indenture. All cancelled Notes shall be
delivered to the Indenture Trustee and shall be destroyed by the Indenture
Trustee in accordance with any standard policy adopted by the Indenture Trustee.
SECTION 2.12. ACCESS TO LIST OF NOTEHOLDERS' NAMES AND ADDRESSES.
--------------------------------------------------
The Registrar will furnish or cause to be furnished to the Indenture Trustee,
the Issuer or any Noteholder promptly after receipt by the Registrar of a
request therefor from the Indenture Trustee, the Issuer or such Noteholder in
writing, a list, in such form as the Indenture Trustee, the Issuer or such
Noteholder may reasonably require, of the names and addresses of the Noteholders
as of the most recent Record Date. Every Noteholder, by receiving and holding
Notes, agrees with the Issuer, the Registrar and the Indenture Trustee that none
of the Issuer, the Registrar or the Indenture Trustee shall be held accountable
by reason of the disclosure of any such information as to the names and
addresses of the Noteholders hereunder, regardless of the source from which such
information was derived.
SECTION 2.13. 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 required, to the Issuer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and conclusive in favor of the
Indenture Trustee and the Issuer if made in the manner provided in this Section
2.13.
(b) The fact and date of the execution by any Noteholder of any such
instrument or writing may be proven in any reasonable manner which the Indenture
Trustee deems sufficient.
(c) The ownership of Notes shall be proven by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Noteholder shall bind every Holder of Notes issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof,
in respect of anything done,
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or omitted to be done by the Indenture Trustee or the Issuer in reliance
thereon, whether or not notation of such action is made upon such Notes.
(e) Any Notes held by Affiliates of the Issuer shall be disregarded
for the purposes of calculating the Majority-in-Interest or any other Percentage
Interest in respect of any act of the Noteholders.
(f) The Indenture Trustee may require such additional proof of any
matter referred to in this Section 2.13 as it shall deem necessary.
SECTION 2.14. CERTAIN TAX MATTERS. The parties hereto agree that
-------------------
it is their mutual intent that, for all applicable tax purposes, the Notes shall
constitute indebtedness. Further, each party hereto, and the Noteholders (by
receiving and holding a Note), hereby covenants to every other party hereto and
the Noteholders to treat the Notes as indebtedness for all applicable tax
purposes in all tax filings, reports and returns and otherwise. All successors
and assigns of the parties hereto shall be bound by the provisions hereof.
ARTICLE III
ISSUANCE OF NOTES
SECTION 3.1. CONDITIONS TO AUTHENTICATION AND DELIVERY OF NOTES ON
-----------------------------------------------------
THE CLOSING DATE. Following execution and delivery of this Indenture by the
----------------
Issuer and the Indenture Trustee on the Closing Date, the Notes shall be
executed by the Authorized Officer of the Issuer and delivered to the Indenture
Trustee for authentication and delivery together with the written order required
pursuant to Section 2.5 hereof, and, thereupon, the Notes shall be
authenticated. Following such authentication, the Indenture Trustee will
deliver the Notes to be authenticated to the Noteholders upon receipt by the
Indenture Trustee of the following:
(a) A computer printout of the List of Loans relating to the
Certificate of Beneficial Ownership, certified by an Authorized Officer of
the Servicer;
(b) A certificate from the Custodian, pursuant to Section 2.12(b) of
the Servicing Agreement, stating that the Loan Files of the Loans relating
to the Certificate of Beneficial Ownership are in the possession of the
Custodian and the documents listed in clauses (i), (ii), (iii), (iv) and
(vi) of the definition of "Loan File" are contained therein;
(c) A copy of an officially certified document, dated not more than
30 days prior to the Closing Date (and, if available, confirmed on the
Business Day prior to the Closing Date by telegram, telephone or other
similar means), evidencing the due organization and good standing of the
Issuer;
14
(d) A certificate of an Authorized Officer of the Issuer dated as of
the Closing Date, certifying to the Indenture Trustee that: (a) the Issuer
is not in Default under the Indenture; (b) the issuance of such Notes will
not result in any breach of any of the terms, conditions or provisions of,
or constitute a default under any indenture, mortgage, deed of trust or
other agreement or instrument to which the Issuer is a party or by which it
or its property 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 or its property may be bound or may be subject; (c) the Issuer is the
owner of the Certificate of Beneficial Ownership Granted to the Indenture
Trustee; the Issuer has not assigned any interest or participation in the
Certificate of Beneficial Ownership; and the Issuer has the right to Grant
the Certificate of Beneficial Ownership to the Indenture Trustee; (d) the
Issuer has Granted to the Indenture Trustee all of its right, title, and
interest in the Certificate of Beneficial Ownership; (e) other than liens
created under or pursuant to the Indenture, the Indenture Trust Estate is
free and clear of any pledge, charge or encumbrance thereon or with respect
thereto created by or through the Issuer, and all action on the part of the
Issuer to that end has been duly and validly taken; and (f) all conditions
precedent provided in the Indenture relating to the issuance,
authentication and delivery of such Notes to be complied with by the Issuer
have been complied with;
(e) A fully executed copy of each of the following agreements:
(i) this Indenture;
(ii) the Loan Sale and Purchase Agreement;
(iii) the Certificate Purchase Agreement;
(iv) the Pooling Agreement; and
(v) the Servicing Agreement.
(f) A certificate of an Authorized Officer of the Issuer, dated as of
the date of authentication of such Notes, that the Issuer has filed or
caused to be filed financing statements on Form UCC-1 in the appropriate
filing offices executed by the Issuer, as debtor, and naming the Indenture
Trustee as secured party, and identifying the Indenture Trust Estate as
collateral;
(g) Copies of resolutions of the Board of Directors of the sole
member of the Issuer approving the execution, delivery and performance of
the Basic Documents and the transactions contemplated thereby, certified by
an officer of the sole member of the Issuer;
15
(h) A copy of an officially certified document, dated not more than
30 days prior to the date of authentication of such Notes, evidencing the
due organization and good standing of the Issuer in the State of its
organization;
(i) The certified Certificate of Formation of the Issuer;
(j) A copy of the Limited Liability Company Agreement of the Issuer,
certified by an Authorized Officer of the Issuer;
(k) A certificate of the Indenture Trustee, signed by an Authorized
Officer of the Indenture Trustee, to the effect that no Authorized Officer
of the Indenture Trustee has received written notice of any adverse
security interest in the Indenture Trust Estate other than the lien of this
Indenture; and
(l) Evidence that each Class of Notes has received from each of the
Rating Agencies the respective rating specified on the cover page of the
Offering Circular.
SECTION 3.2. TRANSFER OF INDENTURE TRUST ESTATE. On the Closing
----------------------------------
Date, the Issuer shall deliver to the Indenture Trustee the Certificate of
Beneficial Ownership to be held by the Indenture Trustee in safekeeping and make
such filings under the Uniform Commercial Code as may be required to perfect the
lien of the Indenture Trustee on the Indenture Trust Estate.
ARTICLE IV
COVENANTS OF THE ISSUER
SECTION 4.1. PAYMENT OF PRINCIPAL, INTEREST AND LOAN YIELD
---------------------------------------------
MAINTENANCE AMOUNT. The Issuer shall duly and punctually pay the principal of,
------------------
interest on, and the Loan Yield Maintenance Amount, if any, with respect to the
Notes in accordance with the terms of the Notes and this Indenture.
SECTION 4.2. MAINTENANCE OF EXISTENCE
------------------------
(a) Except as permitted by Section 4.2(c), the Issuer shall keep in
full effect its existence, rights and franchises as a special purpose limited
liability company under the laws of the State of its organization. The Issuer
at all times shall hold itself out as being a special purpose limited liability
company and an entity with an existence separate from that of the Seller, the
Depositor, any Noteholder or any other Person, and shall keep books and records
separate from those of the Seller, the Depositor, any Noteholder or any other
Person.
(b) Except as permitted by Section 4.2(c), the Issuer or any
permitted successor hereunder will obtain and preserve its qualification in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability
16
of this Indenture, the Notes, the Loan Sale and Purchase Agreement, the
Certificate Purchase Agreement, the Servicing Agreement or any of the Loan
Documents.
(c) Any Person into which the Issuer hereunder may be merged or with
which it may be consolidated on an involuntary basis, or any Person resulting
from any such merger or consolidation to which the Issuer hereunder shall be a
party, shall be the successor Issuer under this Indenture without the execution
or filing of any paper, instrument or further act to be done on the part of the
parties hereto, anything herein, or in any agreement relating to such merger or
consolidation, by which any such successor Issuer may seek not to retain certain
powers, rights and privileges theretofore obtaining for any period of time
following such merger or consolidation, to the contrary notwithstanding.
Notification of any successor entity shall be given promptly to the Indenture
Trustee in writing.
SECTION 4.3. PROTECTION OF INDENTURE TRUST ESTATE. The Issuer will
------------------------------------
from time to time execute and deliver or cause to be delivered all amendments
hereto and all such financing statements, continuation statements, instruments
of further assurance and other instruments, and will take all such other action
as shall be necessary or advisable to:
(i) Grant more effectively all or any portion of the Indenture
Trust Estate to the Indenture Trustee;
(ii) maintain or preserve the lien (and the priority thereof) of
this Indenture or carry out more effectively the purposes hereof;
(iii) perfect, publish notice of, or protect the validity of any
Grant made or to be made by this Indenture;
(iv) preserve and defend title to the Indenture Trust Estate and the
rights of the Indenture Trustee and the Noteholders in such Indenture Trust
Estate against the claims of all Persons and parties; and
(v) pay any and all taxes levied or assessed upon all or any part
of the Indenture Trust Estate.
SECTION 4.4. [RESERVED.]
SECTION 4.5. BOOKS OF ACCOUNT. The Issuer covenants that the books
----------------
record and account of the Issuer shall at all times upon reasonable notice (but
in no event more frequently than once per calendar month unless a Default has
occurred) be subject to the inspection of the Indenture Trustee, holders of a
Majority-in-Interest of the Notes and any of their respective agents and
attorneys in accordance with the terms of this Indenture.
17
SECTION 4.6. PERFORMANCE OF OBLIGATIONS. The Issuer shall
--------------------------
punctually perform and observe all of its obligations and agreements under the
terms of this Indenture and the Notes. The Issuer will not take any action,
and, subject to the provisions of the Servicing Agreement, will use its best
efforts not to permit any action to be taken by others, which would release any
Person's covenants or obligations under any instrument included in the Indenture
Trust Estate, or which would result in the hypothecation, subordination,
termination or discharge of, or impair the validity or effectiveness of, any
such instrument, except as expressly provided in this Indenture or as
contemplated by the Servicing Agreement or the Loan Documents.
SECTION 4.7. NEGATIVE COVENANTS. Except as expressly permitted by
------------------
any of its organizational documents, this Indenture or contemplated by the
Servicing Agreement and the Loan Documents, the Issuer will not:
(a) sell, Transfer, exchange or otherwise dispose of any of the
Indenture Trust Estate;
(b) claim any credit on or make any deduction from the principal,
interest, or Loan Yield Maintenance Amount, if any, payable in respect of
the Notes (other than amounts required to be withheld from such payments
under the Code or any other applicable state or federal law) or assert any
claim against any present or former Noteholder by reason of the payment of
any taxes levied or assessed upon any of the Indenture Trust Estate;
(c) engage in any business or activity or create, incur, assume,
guarantee or in any manner become liable on any debt other than in
connection with, or relating to, the issuance of the Notes pursuant to this
Indenture;
(d) amend the Certificate of Formation, the Limited Liability Company
Agreement or any of its other organizational documents without the prior
written consent of Holders of a Majority-in-Interest of the Notes and
written confirmation from each Rating Agency that the rating assigned to
the Notes will not be lowered or removed as a result of such amendment, or
take any actions which would jeopardize its status as a special purpose
limited liability company;
(e) dissolve or liquidate in whole or in part;
(f) consolidate with or merge into any other Person or convey,
transfer or lease substantially all of its assets as an entirety to any
Person unless, subject to the prior written consent of the Holders of a
Majority-in-Interest of the Notes, the Person formed by such consolidation
or into which the Issuer has been merged or the Person which acquires
substantially all of the assets of the Issuer as an entirety is an
organization organized under the laws of the United States of America or a
State, can lawfully perform the obligations of the Issuer hereunder and
executes and delivers to the Indenture Trustee an agreement, in form and
substance reasonably satisfactory to the Indenture Trustee, which contains
an assumption by
18
such successor entity of the due and punctual performance and observance of
each representation, warranty, covenant and obligation to be made,
performed or observed by the Issuer under this Indenture; and unless such
consolidation, merger, conveyance, transfer or lease does not result in a
lowering or withdrawal of any rating which is then assigned to the Notes;
or
(g) (i) permit the validity or effectiveness of this Indenture to be
impaired or permit the lien of this Indenture with respect to the Indenture
Trust Estate to be subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations under this
Indenture, the Loans or the Collateral, (ii) permit any lien, pledge,
charge, adverse claim, security interest, mortgage or other encumbrance
(other than liens created under or pursuant to this Indenture) to be
created on or extend to or otherwise arise upon or burden the Indenture
Trust Estate or any part thereof or any interest therein or the proceeds
thereof or (iii) permit the lien of this Indenture not to constitute a
perfected security interest in the Indenture Trust Estate.
SECTION 4.8. AVAILABILITY OF INFORMATION. Upon request of any
---------------------------
Noteholder to the Issuer, the Indenture Trustee or the Servicer in the manner
set forth below, the Issuer or Indenture Trustee shall provide, or, with respect
to items in the possession of the Servicer, the Issuer shall cause the Servicer
to provide, such Noteholder or any such potential transferee of such Noteholder
that is a "qualified institutional buyer" within the meaning of Rule 144A with
such financial and other information required to permit compliance with the
requirements of Rule 144A in connection with the resale by a Noteholder of any
Notes. Such information shall include, without limitation, the Basic Documents
and additional documents as follows:
(a) All Servicer's Certificates delivered to the Indenture Trustee
since the initial issuance of the Notes;
(b) All officer's certificates and accountants' reports delivered or
caused to be delivered annually by the Servicer or the Servicing Advisor to
the Indenture Trustee since the initial issuance of the Notes; and
(c) The most recent available compliance certificates, operating
statements and financial statements of the related Borrowers collected by
the Servicer.
The Indenture Trustee shall, to the extent it has in its possession (or shall
make a written request to the Servicer to) make available, upon reasonable
advance notice and at the expense of the requesting party, copies of the above
items to any direct or beneficial Holder of Notes and to prospective transferees
of Notes; provided, that the Indenture Trustee will require (x) in the case of a
---------
direct or beneficial Holder of Notes, a confidentiality agreement in the form of
EXHIBIT C hereto executed by the requesting party generally to the effect that
such party is a direct or beneficial Holder of Notes, as applicable, is
requesting the information solely for use in evaluating such party's investment
in the Notes and will otherwise keep such information confidential and (y) in
19
the case of a prospective transferee, the designation of the requesting party as
a prospective transferee by a Holder and a confidentiality agreement in the form
of EXHIBIT C hereto executed by the requesting party generally to the effect
that such party is a prospective transferee of Notes, is requesting the
information solely for use in evaluating a possible investment in Notes and will
otherwise keep such information confidential.
SECTION 4.9. PROTECTION OF SECURITY; POWER TO ISSUE NOTES AND GRANT
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INDENTURE TRUST ESTATE; INDENTURE TO CONSTITUTE CONTRACT. The Issuer warrants
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and covenants for the benefit of the Indenture Trustee and the Noteholders that:
(a) The Issuer is, and at all times during the term of this Indenture
will be, a special purpose limited liability company duly organized and
validly existing in good standing under the laws of the State of Delaware;
Issuer has filed and at all times during the term of this Indenture will
file all required tax returns; and the Issuer is, and at all times during
the term of this Indenture will be, duly qualified and in good standing
under the laws of each jurisdiction where such qualification is necessary
except where the failure to be so qualified will not have a material
adverse effect on the Issuer or its ability to perform its obligations
under this Indenture or any other documents or transactions contemplated
hereunder or the validity or enforceability of the Certificate of
Beneficial Ownership or the Loans.
(b) The Issuer holds, and at all times during the term of this
Indenture will hold, all necessary licenses, certificates, franchises and
permits from all governmental authorities, the lack of which, singly or in
the aggregate, would materially and adversely affect its ability to perform
its obligations under this Indenture or any other documents or transactions
contemplated hereunder or the validity or enforceability of the Certificate
of Beneficial Ownership or the Loans.
(c) The Issuer is in compliance with all material laws, rules,
regulations and orders applicable to Issuer and the Indenture Trust Estate.
The Issuer has, and at all times during the term of this Indenture will
have, all requisite power and authority to own its properties, to execute
and deliver this Indenture and all documents and transactions contemplated
hereunder, to perform all of its obligations under this Indenture and any
other documents or transactions contemplated hereunder, to issue the Notes
and to Grant the Indenture Trust Estate in the manner and to the extent
provided herein. The Issuer has all requisite power and authority to
acquire, own, sell and convey the Certificate of Beneficial Ownership to
the Indenture Trustee as part of the Indenture Trust Estate.
(d) This Indenture, the Notes, the other Basic Documents to which the
Issuer is a party and all other documents and instruments required or
contemplated hereby and thereby to be executed and delivered by the Issuer
have been duly authorized, executed and delivered by the Issuer and,
assuming the due execution
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and delivery by the other party or parties hereto and thereto, if any,
constitute legal, valid and binding agreements enforceable against the
Issuer in accordance with their respective terms subject, as to the
enforcement of remedies, to bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforceability of
creditors' rights generally applicable in the event of the bankruptcy,
insolvency or reorganization of the Issuer and to general principles of
equity.
(e) The execution, delivery and performance by the Issuer of this
Indenture, the Notes, the other Basic Documents to which the Issuer is a
party and any other documents and transactions in connection herewith and
therewith to which the Issuer is a party do not and will not (i) violate
any of the provisions of the Certificate of Formation, the Limited
Liability Company Agreement or any of the organizational documents of the
Issuer; (ii) violate any provision of any law, governmental rule or
regulation currently in effect applicable to the Issuer or any material
portion of its properties or by which the Issuer or any material portion of
its properties may be bound or affected, (iii) violate any judgment,
decree, writ, injunction, award, determination or order currently in effect
applicable to the Issuer or its properties or by which the Issuer or any
material portion of its properties are bound or affected, (iv) conflict
with, or result in a breach of, or constitute a default under, any of the
provisions of any indenture, mortgage, deed of trust, contract or other
instrument to which the Issuer is a party or by which it is bound or (v)
except for the Grant hereunder, result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any such
indenture, mortgage, deed of trust, contract or other instrument.
(f) Except for the filing of financing statements (and assignments
thereof) and continuation statements, no consent, approval, order or
authorization of, and no filing with or notice to, any court or other
governmental authority in respect of the Issuer is required in connection
with the authorization, execution, delivery or performance by the Issuer of
this Indenture, the Notes or any of the other documents or transactions
contemplated hereunder.
(g) The Issuer is not in default under any material agreement,
contract, instrument or indenture to which the Issuer is a party or by
which it or its properties is or are bound, or with respect to any order of
any court, administrative agency, arbitrator or governmental body which
would have a material adverse effect on the transactions contemplated
hereunder; and no event has occurred which with notice or lapse of time or
both would constitute such a default with respect to any such agreement,
contract, instrument or indenture, or with respect to any such order of any
court, administrative agency, arbitrator or governmental body.
(h) There is no pending or, to the best of the Issuer's knowledge,
threatened action, suit, proceeding or investigation before any court,
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administrative agency, arbitrator or governmental body against or, to the
Issuer's knowledge, affecting the Issuer which, if decided adversely, would
materially and adversely affect (i) the condition (financial or otherwise)
of the Issuer, (ii) the ability of the Issuer to perform its obligations
under, or the validity or enforceability of, this Indenture or any other
documents or transactions contemplated under this Indenture or (iii) the
Indenture Trust Estate.
(i) No document, certificate or report furnished or required to be
furnished by the Issuer pursuant to this Indenture contains or will contain
when furnished any untrue statement of a material fact.
(j) Other than liens created under or pursuant to this Indenture, the
Indenture Trust Estate is and will be free and clear of any pledge, charge
or encumbrance thereon or with respect thereto created by or through the
Issuer, and all action on the part of the Issuer to that end has been duly
and validly taken.
(k) The Issuer shall at all times, to the extent permitted by law,
defend, preserve and protect the Grant of the Indenture Trust Estate and
all the rights of Noteholders under this Indenture against all claims and
demands of all Persons whomsoever claiming by, through or under the Issuer
(except claims and demands of the Indenture Trustee under or pursuant to
this Indenture).
(l) The Issuer shall not be or become an "investment company" or at
any time be under the "control" of an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended (or any
successor or amendatory statute), or shall be otherwise exempt from the
requirements of the Investment Company Act of 1940, as amended, and the
rules and regulations thereunder (taking into account not only the general
definition of the term "investment company," but also any available
exceptions to such general definition).
(m) The Issuer shall furnish to the Indenture Trustee, the
Noteholders and the Rating Agencies copies of the form of each proposed
amendment to the Limited Liability Company Agreement or Certificate of
Formation at least ten (10) Business Days prior to the proposed date of
adoption of any such proposed amendment.
(n) The Issuer shall at all times hold itself out to the public,
including creditors of any of its members or managers, and conduct its
affairs as a separate and distinct entity from the Seller, the Depositor,
or any other Person and under the Issuer's own name.
(o) The Issuer shall at all times be responsible for the payment of
all its obligations and indebtedness, shall at all times maintain records,
books of account and funds separate from the Seller, the Depositor, or any
other Person and shall observe all customary formalities of independent
existence.
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(p) The Issuer shall make its books and records and the Register
reasonably available to the Indenture Trustee at the Issuer's expense, and,
upon prior written request, the Noteholders at their own expense, for
purposes of inspection and copying during the Issuer's normal business
hours (but in no event more frequently than once per calendar month, unless
a Default has occurred and is continuing, in which case, the Indenture
Trustee will have access at its discretion), and shall at the Issuer's
expense furnish, or cause to be furnished, to the Indenture Trustee or any
Noteholder, promptly after receipt by the Issuer of a request therefor from
the Indenture Trustee or such Noteholder in writing, a list of the names
and addresses of the Noteholders as of the Record Date immediately
preceding such request.
(q) As long as any Note is Outstanding, the Issuer shall not issue,
incur, assume or guarantee any indebtedness except for such indebtedness as
may be incurred by the Issuer pursuant to this Indenture and related
documents or instruments.
(r) The Issuer shall act solely through its authorized officers or
agents.
(s) The Issuer shall maintain separate corporate records and books of
account from both the Seller and the Depositor.
(t) The financial statements and books and records of the Issuer
prepared after the Closing Date shall reflect the separate existence of the
Seller and the Issuer.
(u) The Issuer shall maintain its assets separately from the assets
of the Seller (including through the maintenance of separate bank
accounts), the Issuer's funds and assets, and records relating thereto,
have not been, are not and will not be commingled with those of the Seller
and the separate creditors of the Seller will be entitled to be satisfied
out of the Seller's assets prior to any value in the Seller becoming
available to the Seller's stockholders.
(v) The Issuer shall be operated such that the Issuer would not be
substantively consolidated in the trust estate of the Seller in the event
of a bankruptcy of the Seller, such that the separate existence of the
Issuer and the Seller would be disregarded in the event of a bankruptcy or
insolvency of the Seller.
(w) The Issuer shall not act as an agent of the Seller in any
capacity, but instead presents itself to the public as an entity separate
from the Seller.
(x) The Issuer has not and will not guaranty the obligations of the
Seller or any other Person nor will it hold itself out or permit itself to
be held out as having agreed to pay or as being liable for the debts of the
Seller, the Issuer or any other Person, and has not received, nor will it
accept any credit or financing from any
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Person who is relying upon the availability of the assets of the Seller to
satisfy the claims of such creditor.
(y) All transactions between the Issuer, on the one hand, and the
Seller on the other hand (including, without limitation, transactions
governed by intercompany agreements and contracts for other services and
facilities, such as payroll, purchasing, accounting, legal and personnel
services and office space) will be on terms and conditions (including,
without limitation, terms relating to amounts to be paid thereunder) which
are believed by each such party thereto to be both fair and reasonable and
comparable to those available on an arms-length basis from persons who are
not affiliates.
(z) The Issuer's sole member shall have at least one director who is
an Independent Director, and the affirmative vote of such Independent
Director shall be necessary for the filing of any voluntary petition with
respect to the Issuer under the Bankruptcy Laws.
(aa) To the extent such compliance with the requirements of any
provision of this Section 4.9 involves questions of law, the Issuer shall
be deemed in such compliance if it is acting in accordance with an Opinion
of Counsel as to such requirements.
SECTION 4.10. ANNUAL STATEMENT AS TO COMPLIANCE. On or before 90
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days after December 31, 1998, and on or before 90 days after the end of each
fiscal year of the Issuer thereafter, the Issuer shall deliver to the Indenture
Trustee and to the Rating Agencies a written statement with respect to the
Notes, signed by two Authorized Officers of the Issuer, stating, as to each
signer thereof, that:
(1) a review of the fulfillment by the Issuer during such year of its
obligations under this Indenture has been made under such Authorized
Officer's supervision; and
(2) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has fulfilled all its obligations under this Indenture
throughout such year, or, if there has been a Default in the fulfillment of
any such obligation, specifying each such Default known to such Authorized
Officer and the nature and status thereof.
SECTION 4.11. MAINTENANCE OF OFFICES OR AGENCY. For the limited
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purposes of establishing a location to surrender or exchange Notes, the Issuer
will maintain an office or agency, which may be changed in the discretion of the
Issuer, within the United States of America at which Notes may be presented or
surrendered for payment, Notes may be surrendered for registration of transfer
or exchange. For such limited purposes the Issuer hereby initially appoints the
Indenture Trustee at its corporate trust office such office or agency. The
Issuer will give prompt written notice to the Indenture Trustee of the location,
and of any change in the location, of any such office or
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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 and surrenders may be made at the Trust Office of the
Indenture Trustee, and the Issuer hereby appoints the Indenture Trustee at its
corporate trust office its agent to receive all such presentations and
surrenders.
SECTION 4.12. FURTHER ASSURANCES. The Issuer will execute and
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deliver, or cause to be executed and delivered, all such additional instruments
and do, or cause to be done, all such additional actions as (i) may be necessary
or proper, consistent with the Granting Clause hereof, to carry out the purposes
of this Indenture and to make subject to the lien hereof any property intended
so to be subject, (ii) may be necessary or proper to transfer to any successor
trustee the estate, powers, instruments and funds held in trust hereunder and to
confirm the lien of this Indenture with respect to the Notes, or (iii) the
Indenture Trustee may reasonably request for any of the foregoing purposes. The
Issuer hereby authorizes the Indenture Trustee (at the expense of the Issuer and
without creating any obligation or duty on the Indenture Trustee with respect
thereto), upon failure of the Issuer to do so after request by the Indenture
Trustee, to execute and file all such financing statements, continuation
statements and other documents as the Indenture Trustee may deem necessary or
advisable to make or keep effective the lien of this Indenture or any
supplemental indenture and the priority thereof.
SECTION 4.13. MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided
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in Section 5.2(c), all payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the Distribution Account
pursuant to Section 5.2(c) shall be made on behalf of the Issuer by the
Indenture Trustee, and no amounts so withdrawn from the Distribution Account for
payments of Notes shall be paid over to the Issuer except as provided in Section
5.2(c).
ARTICLE V
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 5.1. COLLECTION OF MONEY. Except as otherwise expressly
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provided herein and in the Servicing Agreement, the Indenture Trustee may demand
payment or delivery of, and shall receive and collect, directly and without
intervention or assistance from any fiscal agent or other intermediary, pursuant
to the terms hereof, all money and other property payable to or receivable by
the Indenture Trustee pursuant to this Indenture, including all payments due on
the Certificate of Beneficial Ownership, in accordance with the respective terms
and conditions thereof. Except as otherwise expressly provided herein, the
Indenture Trustee shall hold all such money and property received by it as part
of the Indenture Trust Estate and shall apply it as provided in this Indenture.
SECTION 5.2. DISTRIBUTION ACCOUNT
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(a) On or prior to the Closing Date, the Indenture Trustee shall
establish and thereafter maintain a separate trust account in the corporate
trust department under the sole control of the Indenture Trustee entitled
"Bankers Trust Company, in trust for the benefit of the holders of the ▇▇▇▇▇▇▇▇
Franchisee Loan Funding 1998-A LLC, ▇▇▇▇▇▇▇▇ Franchisee Loan Notes, Series 1998-
A--Distribution Account" and referred to herein as the "Distribution Account."
The Indenture Trustee shall make withdrawals from the Distribution Account and
the subaccounts thereof only as provided in this Indenture. Moneys on deposit
in the Distribution Account shall be invested in accordance with Section 5.4
hereof.
(b) Not later than 10:00 a.m., New York time, on the Business Day
immediately preceding each Payment Date, the Servicer shall be required,
pursuant to the Servicing Agreement, to remit from the Collection Account to the
Distribution Account all Available Funds on deposit in the Collection Account.
(c) On each Payment Date, Available Funds (excluding Yield
Maintenance Available Funds) on deposit in the Distribution Account will be
distributed in the following descending order of priority; provided, however,
that Available Funds constituting funds transferred from the Reserve Account
shall only be available to make the payments specified in clauses (i) through
(xv) below:
(i) to the Indenture Trustee and the Certificate Trustee, all
accrued and unpaid fees and reimbursable expenses due and payable to the
Indenture Trustee and the Certificate Trustee;
(ii) to the Servicer, an amount equal to the unpaid Servicing Fee
due and payable on such Payment Date;
(iii) pro rata in proportion to the aggregate amount to be
distributed pursuant to this clause, (1) to the Holders of the Class A-1
Notes, the Class A-1 Interest Distribution, (2) to the Holders of the Class
A-2 Notes, the Class A-2 Interest Distribution and (3) to the Holders of
the Class A-X Notes, the Class A-X Distribution;
(iv) to the Holders of the Class A-1 Notes, an amount up to the
Optimal Principal Amount until the Aggregate Outstanding Principal Amount
of the Class A-1 Notes is reduced to zero;
(v) to the Holders of the Class A-2 Notes, an amount up to the
remaining Optimal Principal Amount until the Aggregate Outstanding
Principal Amount of the Class A-2 Notes is reduced to zero;
(vi) to the Holders of the Class B Notes, the Class B Interest
Distribution;
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(vii) to the Holders of the Class B Notes, an amount up to the
remaining Optimal Principal Amount until the Aggregate Outstanding
Principal Amount of the Class B Notes is reduced to zero;
(viii) to the Holders of the Class C Notes, the Class C Interest
Distribution;
(ix) to the Holders of the Class C Notes, an amount up to the
remaining Optimal Principal Amount until the Aggregate Outstanding
Principal Amount of the Class C Notes is reduced to zero;
(x) to the Holders of the Class D Notes, the Class D Interest
Distribution;
(xi) to the Holders of the Class D Notes, an amount up to the
remaining Optimal Principal Amount until the Aggregate Outstanding
Principal Amount of the Class D Notes is reduced to zero;
(xii) to the Holders of the Class E Notes, the Class E Interest
Distribution;
(xiii) to the Holders of the Class E Notes, an amount up to the
remaining Optimal Principal Amount until the Aggregate Outstanding
Principal Amount of the Class E Notes is reduced to zero;
(xiv) to the Holders of the Class F Notes, the Class F Interest
Distribution;
(xv) to the Holders of the Class F Notes, an amount up to the
remaining Optimal Principal Amount until the Aggregate Outstanding
Principal Amount of the Class F Notes is reduced to zero; and
(xvi) to the Issuer, any remaining amounts, which shall be released
from the lien of this Indenture.
(d) On each Payment Date, Yield Maintenance Available Funds on
deposit in the Distribution Account will be distributed as follows:
(i) the Loan Yield Maintenance Amount collected in the Prepayment
Period attributable to each prepaid or Defaulted Loan shall be distributed
to the Holders of each of the Class A-1, Class A-2, Class B, Class C, Class
D, Class E and Class F Notes in an amount for each such Class equal to the
product of (i) a fraction, the numerator of which is the amount distributed
as principal to such Class on such Payment Date, and the denominator of
which is the total amount distributed as principal to all Classes of Notes
on such Payment Date, (ii) the Base
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Interest Fraction for the related principal prepayment and such Class of
Notes and (iii) the collected Loan Yield Maintenance Amount.
(ii) any remaining Yield Maintenance Available Funds shall be paid
to the Holders of the Class A-X Notes.
(e) On each Payment Date, all amounts remaining in the Distribution
Account, including Investment Income but excluding Early Payments, after payment
of the distributions specified in paragraphs (c) and (d) above, shall be
released from the lien of this Indenture and paid to the Issuer.
SECTION 5.3. RESERVE ACCOUNT
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(a) On or prior to the Closing Date, the Indenture Trustee shall
establish and thereafter maintain a separate trust account in its corporate
trust department under the sole control of the Indenture Trustee, which shall be
entitled "Bankers Trust Company, in trust for the benefit of the holders of the
▇▇▇▇▇▇▇▇ Franchisee Loan Funding 1998-A LLC Notes, Series 1998-A--Reserve
Account" and referred to herein as the "Reserve Account." The Indenture Trustee
shall make deposits into and withdrawals from the Reserve Account only as
provided in this Indenture.
(b) On Closing Date, the Issuer shall deposit in the Reserve Account,
from the proceeds of the offering of the Notes, the Reserve Deposit Amount.
(c) On each Payment Date, the Indenture Trustee shall withdraw from
the Reserve Account and deposit into the Distribution Account any amounts
required to make the distributions specified under Section 5.2(c)(i) through
(xv) hereof.
SECTION 5.4. INVESTMENT OF FUNDS. Amounts on deposit in the
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Distribution Account or Reserve Account shall, if and to the extent then
permitted by law, be invested by the Indenture Trustee in Eligible Investments
at the written direction of an Authorized Officer of the Issuer. Net income or
gain received and collected from such investments shall be credited and losses
charged to the applicable Account. All investments shall mature on the Business
Day next preceding the following Payment Date and shall be held until required
to be liquidated to provide moneys required to be applied from the Distribution
Account or Reserve Account, as the case may be, as provided in the Indenture.
SECTION 5.5. REPAYMENT TO THE ISSUER FROM THE ACCOUNTS. After
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payment in full of the principal of, interest on, Loan Yield Maintenance
Amounts, if any, and all other amounts due and payable with respect to the Notes
and the payment of all fees, reimbursable charges and expenses of or other
amounts owed to the Issuer, the Indenture Trustee and the Registrar and all
other amounts required to be paid hereunder, all amounts remaining in the
Distribution Account shall be paid to the Issuer on its written order.
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SECTION 5.6. REPORTS TO THE NOTEHOLDERS. On each Payment Date, the
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Indenture Trustee will furnish to the Issuer, the Rating Agencies and the
Noteholders a statement (which statement shall be based upon information
furnished by the Servicer to the Indenture Trustee in the Servicer's Certificate
delivered pursuant to Section 3.1(a) of the Servicing Agreement) setting forth
the following information:
(i) The Aggregate Outstanding Principal Amount or Aggregate
Notional Amount of each Class of Notes and the Issuer Balance, before
giving effect to the payment of principal on such Payment Date;
(ii) The Note Rate in respect of each Class of Notes as of such
Payment Date and the Interest Distribution payable in respect of each Class
of Notes as of such Payment Date;
(iii) An itemized statement of the amounts payable pursuant to
Section 5.2(c) hereof on such Payment Date;
(iv) The aggregate amount of Loan Yield Maintenance Amounts, if any,
payable as of such Payment Date;
(v) The Servicing Fees payable to the Servicer as of such Payment
Date;
(vi) With respect to each of the amounts specified in paragraph
(iii) above, the amounts actually distributed on such Payment Date; and
(vii) The Aggregate Outstanding Principal Amounts or Aggregate
Notional Amount of each Class of Notes and the Issuer Balance, after giving
effect to the payment of principal in respect of principal on such Payment
Date.
SECTION 5.7. WRITE-DOWN AMOUNTS. In the event any Net Loss is
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incurred in respect of a Liquidated Loan, the sum of the Aggregate Outstanding
Principal Amount of the Notes and the Issuer Balance will be greater than the
Aggregate Outstanding Principal Amount of the Loans (such excess, if any, the
"WRITE-DOWN AMOUNT"). The amount of such Write-down Amount shall be allocated
on the immediately following Payment Date, prior to making any distributions on
such Payment Date, first to the Issuer Balance until the Issuer Balance is
reduced to zero and then shall be allocated among the Holders of the Notes in
inverse order of the priority of distributions in respect of principal set forth
in Section 5.2(c).
SECTION 5.8. OPTIONAL REDEMPTION. The Seller may cause the Issuer
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to redeem, at its option, all of the Outstanding Notes on any Payment Date if
the Aggregate Outstanding Principal Amount of the Loans is less than 1% of the
Initial Aggregate Principal Amount thereof, upon written notice to the Indenture
Trustee at least 45 days prior to the date of such redemption, which notice
shall specify the date of such redemption, the redemption price, the date the
interest on the Notes redeemed shall stop
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accruing and the place for surrender of Notes to be redeemed. The Seller may
cause the Issuer to redeem all, and not less than all, of the Notes by
depositing with the Indenture Trustee the Aggregate Outstanding Principal Amount
of the Notes and accrued but unpaid interest thereon as of the date of
redemption (which shall be the following Payment Date), for payment to Holders
of Notes on the following Payment Date. The Issuer shall cause the Indenture
Trustee to give notice of such redemption in the name and at the expense of the
Issuer to Holders of Notes not less than five nor more than 25 days prior to the
date of such redemption.
ARTICLE VI
[RESERVED]
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1. EVENTS OF DEFAULT. Each of the events described in
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clauses (a) through (l) below shall constitute an "EVENT OF DEFAULT" with
respect to the Notes (whatever the reason for such Event of Default and whether
it be voluntary or involuntary or effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(a) (i) The Issuer shall fail to make any required payment of
principal on the Notes when the same becomes due and payable or (ii) the
Issuer shall fail to make any required payment of principal on the Notes at
the maturity thereof; or
(b) The Issuer shall fail to make any required payment of interest on
the Notes when the same becomes due and payable; or
(c) The Issuer shall fail to make any payment of Loan Yield
Maintenance Amount, if any, with respect to the Notes when the same becomes
due and payable (it being understood that Loan Yield Maintenance Amount is
only due and payable to the extent actually received and held in the
Distribution Account as Yield Maintenance Available Funds); or
(d) The Issuer shall fail to observe or perform in any material
respect any of the covenants of the Issuer under Section 4.2(b), 4.3, 4.5,
4.6, 4.8, 4.9 or 4.10 hereof, which failure has continued for a period of
30 days after it obtains knowledge thereof; or
(e) The Issuer shall fail to observe or perform in any material
respect the covenants of the Issuer under Section 4.2(a) or 4.7 hereof; or
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(f) Any representation or warranty of the Issuer set forth in Section
4.9 of this Indenture shall prove to be false in any material respect as of
the date when made; or
(g) The Issuer shall make an assignment for the benefit of creditors
or is generally not paying its debts as such debts become due; or
(h) The Issuer shall petition or apply to any tribunal for, or
consent to, the appointment of, or taking possession by, a trustee,
receiver, custodian, liquidator or similar official of the Issuer, or of
any substantial part of the assets of the Issuer, or commence a voluntary
case under the bankruptcy law of the United States or any proceedings
relating to the Issuer under the bankruptcy law of any other jurisdiction,
or any such petition or application shall be filed, or any such proceedings
commenced, against the Issuer and the Issuer by any act shall indicate its
approval thereof, consent thereto or acquiescence therein; or
(i) Any order, judgment or decree shall be entered appointing any
such trustee, receiver, custodian, liquidator or similar official, or
approving the petition in any such proceedings and such order, judgment or
decree shall remain unstayed and in effect for more than 60 days; or
(j) Any order, judgment or decree shall be entered in any proceedings
against the Issuer decreeing the dissolution of the Issuer and such order,
judgment or decree shall be remain unstayed and in effect for more than 60
days; or
(k) A final judgment in an amount in excess of $100,000 shall be
rendered against the Issuer, and within 60 days after entry thereof, such
judgment shall not be discharged or execution thereof stayed pending
appeal, or within 90 days after the expiration of any such stay, such
judgment shall not be discharged; or
(l) The Issuer shall assign or delegate any of its duties or rights
hereunder, except as specifically permitted hereunder.
SECTION 7.2. ACCELERATION OF MATURITY
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(a) Upon the occurrence and continuance of an Event of Default, (i)
if such event is an Event of Default specified in clause (g), (h), (i) or (j) of
Section 7.1, all of the Notes at the time outstanding shall automatically become
immediately due and payable at par together with interest accrued thereon and
all accrued and unpaid Loan Yield Maintenance Amounts, to the extent paid as a
result of the prepayment of a Loan or Loans or the acceleration of a Defaulted
Loan or Defaulted Loans, without presentment, demand, protest or notice of any
kind, all of which are hereby waived by the Issuer, and (ii) if such event is
any other Event of Default, the Indenture Trustee may, and, upon the written
request of the Holders of a Majority-in-Interest of the Notes (by notice in
writing to the Issuer and the Indenture Trustee), the Indenture Trustee shall,
declare all of the Notes to be, and all of the Notes shall thereupon be and
become, immediately due and
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payable together with all accrued and unpaid interest thereon and all accrued
and unpaid Loan Yield Maintenance Amounts, to the extent paid as a result of the
prepayment of a Loan or Loans or the acceleration of a Defaulted Loan or
Defaulted Loans, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Issuer.
(b) At any time after an acceleration pursuant to Section 7.2(a), but
before any judgment or decree for the payment of moneys due shall have been
obtained or entered, unless the same has been discharged, and before the Notes
have matured by their terms, or as otherwise provided herein, if all overdue
payments of principal, Loan Yield Maintenance Amount, if any, and interest upon
such Notes, together with the reasonable and proper charges, expenses and
liabilities of the Indenture Trustee, the Holders of such Notes and their
respective agents and attorneys and all other sums then payable by the Issuer
under this Indenture (except the principal of, Loan Yield Maintenance Amount, if
any, and interest accrued since the next preceding Payment Date on such Notes or
due and payable solely by virtue of such declaration) shall either be paid by or
for the account of the Issuer or provisions satisfactory to the Holders of a
Majority-in-Interest of the Notes shall be made for such payment, and all Events
of Default under such Notes and under this Indenture (other than the payment of
principal and interest due and payable solely by reason of such declaration)
have been cured to the satisfaction of the Holders of a Majority-in-Interest of
the Notes or provision deemed by the Holders of a Majority-in-Interest of the
Notes to be adequate has been made therefor, then and in every such case, the
Holders of a Majority-in-Interest of the Notes by written notice to the Issuer
and to the Indenture Trustee, shall have the right, but shall not be obligated,
to rescind such declaration and annul such Event of Default in its entirety. No
such rescission and annulment shall extend to or affect any subsequent Event of
Default or impair or exhaust any right or power consequent thereon.
SECTION 7.3. ENFORCEMENT OF REMEDIES
-----------------------
(a) If an Event of Default shall have occurred and be continuing and
the Notes have become or been declared due and payable and such acceleration and
its consequences have not been rescinded and annulled, the Indenture Trustee may
(and, upon the written request of the Holders of a Majority-in-Interest of the
Notes, shall) proceed to protect and enforce its rights and the rights of the
Noteholders under the Notes and this Indenture and take one or more of the
following actions without limitation:
(i) proceed to protect and enforce its rights and the rights of the
Noteholders by appropriate Proceedings whether by the specific enforcement
of any covenant or agreement in this Indenture or in the aid of the
exercise of any power granted herein, or to enforce any other proper
remedy;
(ii) institute Proceedings for the collection of all amounts then
payable on the Notes, whether by declaration or otherwise, enforce any
judgment obtained, and collect any moneys adjudged due;
32
(iii) in accordance with Section 7.13, sell the Indenture Trust
Estate or any portion thereof or rights or interest therein, at one or more
public or private sales called and conducted in any manner permitted by
law; provided, that, unless the Event of Default is in respect of the non-
--------
payment of principal of, interest on, or Loan Yield Maintenance Amounts on
the Notes, the Indenture Trustee may not sell the Indenture Trust Estate
unless either (x) such sale is for an amount greater than or equal to the
sum of the Aggregate Outstanding Principal Amount of the Notes, accrued and
unpaid interest thereon, unpaid Loan Yield Maintenance Amounts in respect
thereof, and amounts due to the Indenture Trustee, the Certificate Trustee,
the Servicer and the Servicing Advisor (other than ▇▇▇▇▇▇▇▇ Capital
Incorporated) or (y) 100% of the Holders of the Notes consent to such sale
and deliver to the Indenture Trustee a written direction to such effect;
(iv) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Indenture Trust
Estate; and
(v) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and remedies
of the Indenture Trustee or the Noteholders hereunder.
(b) In the enforcement of any right or remedy under the Notes or this
Indenture, the Indenture Trustee shall be entitled to ▇▇▇ for, enforce payment
on and receive any and all amounts then or during any Event of Default becoming,
and any time remaining, due from the Issuer, for principal and interest, Loan
Yield Maintenance Amount, if any, or otherwise, under any of the provisions of
the Notes or this Indenture, and unpaid, with interest on overdue payments at
the rate or rates of interest specified in the Notes, together with any and all
costs and expenses of collection and of all Proceedings under the Notes or the
Indenture, without prejudice to any other right or remedy of the Indenture
Trustee or the Noteholders and to recover and enforce judgments or decrees
against the Issuer, but solely as provided in this Indenture and in the Notes
for any amounts remaining unpaid, with interest, costs and expenses, and to
collect from any funds or assets of the Issuer, or, in accordance with other
provisions hereof, the Indenture Trust Estate, in any manner provided by law,
the moneys adjudged or decreed to be payable. The Indenture Trustee shall file
such proof of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee and the
Noteholders allowed in any judicial proceeding, relative to the Issuer or its
creditors or property.
(c) The Indenture Trustee may institute and maintain such suits and
proceedings or take such other acts as it may be advised shall be necessary or
expedient to prevent any impairment of the security under this Indenture or
under any Collateral by any acts which may be unlawful or in violation of this
Indenture or of such Collateral, and such suits and proceedings as the Indenture
Trustee may be advised shall be necessary or expedient to preserve or protect
its interests and the interests of the
33
Noteholders; provided, that such request shall not be otherwise than in
--------
accordance with the provisions of law and of this Indenture.
SECTION 7.4. APPLICATION OF MONEY COLLECTED UPON ACCELERATION. If
------------------------------------------------
the Notes have become or been declared due and payable pursuant to Section 7.2
hereof, any moneys collected by the Indenture Trustee pursuant to this Article
VII or otherwise held by the Indenture Trustee as part of the Indenture Trust
Estate 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 moneys on account of
principal of, interest and Loan Yield Maintenance Amount, if any, on the Notes
upon presentation and surrender thereof:
FIRST: To the payment of amounts then due the Indenture Trustee and
the Certificate Trustee pursuant to Section 9.7 hereof including amounts
payable to the Indenture Trustee acting as Servicer or Servicing Advisor
and the Indenture Trustee's expenses of collection;
SECOND: To the payment of amounts then due to the Servicer and the
Servicing Advisor;
THIRD: To the payment of all the amounts then due and unpaid upon the
Notes for all accrued and unpaid interest payable on the Notes from the
last date on which interest has been paid, to the Holders in accordance
with the relative amounts and priorities set forth in Section 5.2(c)
hereof;
FOURTH: To the payment of all amounts then due and unpaid upon the
Notes for principal, to the Holders of the Notes in accordance with the
relative amounts and priorities set forth in Section 5.2(c) hereof;
FIFTH: To the payment of all amounts then due and unpaid representing
the Loan Yield Maintenance Amounts relating to the Notes, to the Holders of
the Notes in accordance with the relative priorities set forth in Section
5.2(c) hereof; and
SIXTH: To the payment of all other amounts to the Persons entitled
thereto in accordance with the priorities set forth in Section 5.2(c)
hereof.
SECTION 7.5. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE
----------------------------------------------
PRINCIPAL AND INTEREST. Notwithstanding any other provision in this Indenture,
----------------------
the Holder of any Note shall have an absolute and unconditional right to receive
payment of the principal of, interest on and the Loan Yield Maintenance Amounts,
if any, due and payable with respect to such Note (subject to Sections 2.9,
5.2(c) and 7.1(c) hereof) on or after the respective Payment Dates expressed in
such Note, and such right shall not be impaired without the consent of such
Holder.
SECTION 7.6. RESTORATION OF RIGHTS AND REMEDIES. If the Indenture
----------------------------------
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
34
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 such Noteholder, then and in every such case the Issuer, the
Indenture Trustee, and the Noteholders shall, subject to any determination in
such Proceedings, 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 7.7. RIGHTS AND REMEDIES CUMULATIVE. 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 7.8. DELAY OR OMISSION NOT TO CONSTITUTE A WAIVER. No
--------------------------------------------
delay or omission of the Indenture Trustee or any Holder to exercise any right
or remedy accruing upon the occurrence of any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every such right and remedy given by this Article VII or
by law to the Indenture Trustee or to the Noteholders may be exercised from time
to time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
SECTION 7.9. CONTROL BY MAJORITY-IN-INTEREST. Subject to the
-------------------------------
provisions of Sections 7.2, 7.3 and 7.6 hereof, the Holders of a Majority-in-
Interest of the Notes shall have the sole right to direct the time, method and
place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
the Indenture Trustee with respect to the Notes; provided, that:
--------
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) the Indenture Trustee shall have been provided with indemnity
reasonably satisfactory to it;
(c) subject to clause (d) below, any direction to the Indenture
Trustee to undertake a sale of the Indenture Trust Estate shall be by the
Holders of a Super-Majority-in-Interest of the Notes; and
(d) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee which is not inconsistent with such direction;
provided, however, that, subject to Section 9.1 hereof, the Indenture
-------- -------
Trustee need not take any action which it determines might expose it to any
liability or might be
35
detrimental to the Indenture Trustee in any other respect or be unjustly
prejudicial to the Noteholders not consenting.
SECTION 7.10. WAIVER OF PAST EVENTS OF DEFAULT. PRIOR TO THE TIME
--------------------------------
A JUDGMENT OR DECREE FOR PAYMENT OF THE MONEY DUE HAS BEEN OBTAINED BY THE
INDENTURE TRUSTEE, AS PROVIDED IN THIS ARTICLE VII, THE INDENTURE TRUSTEE, AT
THE WRITTEN DIRECTION OF THE HOLDERS OF A MAJORITY-IN-INTEREST OF THE NOTES MAY
WAIVE ANY PAST EVENT OF DEFAULT WITH RESPECT TO THE NOTES AND ITS CONSEQUENCES
EXCEPT AN EVENT OF DEFAULT (A) IN THE PAYMENT OF PRINCIPAL OF, INTEREST ON OR
LOAN YIELD MAINTENANCE AMOUNTS, IF ANY, WITH RESPECT TO ANY OF THE NOTES OR (B)
IN RESPECT OF A COVENANT OR PROVISION HEREOF WHICH CANNOT BE MODIFIED OR AMENDED
WITHOUT THE CONSENT OF THE HOLDER OF EACH NOTE AFFECTED. UPON ANY SUCH WAIVER,
SUCH EVENT OF DEFAULT SHALL CEASE TO EXIST AND BE DEEMED TO HAVE BEEN CURED AND
NOT TO HAVE OCCURRED, AND ANY EVENT OF DEFAULT ARISING THEREFROM SHALL BE DEEMED
TO HAVE BEEN CURED, AND NOT TO HAVE OCCURRED FOR EVERY PURPOSE OF THIS
INDENTURE. IN THE CASE OF ANY SUCH WAIVER, THE ISSUER, THE INDENTURE TRUSTEE AND
THE HOLDERS OF THE NOTES SHALL BE RESTORED TO THEIR FORMER POSITIONS AND RIGHTS
HEREUNDER, RESPECTIVELY; BUT NO SUCH WAIVER SHALL EXTEND TO ANY SUBSEQUENT OR
OTHER EVENT OF DEFAULT OR IMPAIR ANY RIGHT CONSEQUENT THEREON. UPON ANY SUCH
WAIVER, THE INDENTURE TRUSTEE SHALL PROVIDE NOTICE OF SUCH WAIVER TO THE RATING
AGENCIES.
SECTION 7.11. UNDERTAKING FOR COSTS. The Issuer and the Indenture
---------------------
Trustee agree, and each Noteholder by such Noteholder's acceptance of a Note
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture
undertaken by the Indenture Trustee at the direction of the Noteholders, 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 7.11 shall not apply to any suit instituted by the
Indenture Trustee, to any suit instituted by the Holders of a Majority-in-
Interest of the Notes, or to any suit instituted by any Noteholder for the
enforcement of the payment of principal of, interest on or Loan Yield
Maintenance Amounts, if any, of any Note, which principal, interest or Loan
Yield Maintenance Amount is due and payable.
SECTION 7.12. ISSUER WAIVER OF STAY OR EXTENSION LAWS. The Issuer
---------------------------------------
covenants (to the extent that it may lawfully do so) that it will not at any
time insist
36
upon, 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 will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 7.13. SALE OF INDENTURE TRUST ESTATE
------------------------------
(a) The power to effect any sale of any portion of the Indenture
Trust Estate pursuant to Section 7.3 hereof shall not be exhausted by any one or
more sales as to any portion of the Indenture Trust Estate remaining unsold, but
shall continue unimpaired until either the entire Indenture Trust Estate shall
have been sold or all amounts payable on the Notes and under this Indenture
shall have been paid pursuant to Section 7.4. The Indenture Trustee may from
time to time postpone any sale by public announcement made at the time and place
of such sale.
(b) The Indenture Trustee may bid for and acquire any portion of the
Indenture Trust Estate in connection with a public sale or, to the extent
permitted by law, a private sale thereof, and in lieu of paying cash to the
Issuer therefor, may make settlement for the purchase price by applying to the
gross sale price in payment therefor the sum of (i) the amount of unpaid
principal of, accrued interest on and Loan Yield Maintenance Amounts, if any, of
the Notes, and (ii) the expenses of the sale and of any proceedings in
connection therewith which are reimbursable to it pursuant to Section 9.7 hereof
and other amounts due hereunder and secured by the Indenture Trust Estate. The
Notes need not be produced to complete any such sale.
(c) The Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the
Indenture Trust Estate in connection with a sale hereof. In addition, the
Indenture Trustee is hereby irrevocably appointed an agent and attorney-in-fact
of the Issuer to transfer and convey the Issuer's interest in any portion of the
Indenture 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
have any obligation to ascertain the Indenture Trustee's authority, inquire into
the satisfaction of any conditions precedent or see to the application of any
moneys.
SECTION 7.14. 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
Indenture Trust Estate or upon any of the assets of the Issuer.
37
ARTICLE VIII
RELEASE, SATISFACTION AND DISCHARGE
SECTION 8.1. SATISFACTION AND DISCHARGE OF INDENTURE. This
---------------------------------------
Indenture shall cease to be of further effect except as to (a) rights of
registration of transfer and exchange, (b) rights of substitution of new Notes
for mutilated, destroyed, lost or stolen Notes, (c) rights of Noteholders to
receive payments of principal of, interest on and Loan Yield Maintenance
Amounts, if any, with respect to the Notes, (d) the rights, obligations and
immunities of the Indenture Trustee hereunder and (e) the rights of Noteholders
as beneficiaries hereof with respect to the property so deposited with the
Indenture Trustee and payable to them, and the Indenture Trustee, on demand of
and at the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when (i) all Notes theretofore
authenticated and delivered (other than Notes which have been mutilated,
destroyed, stolen and which have been replaced, or paid as provided in Section
2.8 hereof) have been delivered to the Indenture Trustee for cancellation, and
(ii) the Issuer has delivered to the Indenture Trustee an Officer's Certificate
stating that there has been compliance with all conditions precedent herein
provided for the satisfaction and discharge of this Indenture.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer to the Indenture Trustee under Section 9.7 hereof and
of the Indenture Trustee to the Issuer and the Noteholders, as the case may be,
under Section 8.2 hereof and the provisions of Article II hereof with respect to
lost, stolen, destroyed or mutilated Notes, registration of transfer and
exchange of Notes, and rights to receive payments of principal of, interest on
or Loan Yield Maintenance Amounts, if any, with respect to the Notes shall
survive.
SECTION 8.2. APPLICATION OF TRUST MONEY. All moneys deposited with
--------------------------
the Indenture Trustee pursuant to Article V hereof shall be held in trust by
the Indenture Trustee, in its trust capacity and not in its commercial capacity,
and applied by the Indenture Trustee in accordance with the provisions of the
Notes and this Indenture, to the payment to the Holders of the Notes, and, if
required hereunder, to the Issuer.
SECTION 8.3. RELEASE OF INDENTURE TRUST ESTATE
---------------------------------
(a) Subject to the payment of its fees, expenses and indemnities
pursuant to Section 9.7 hereof and only when and to the extent required by the
provisions of this Indenture, the Indenture Trustee shall execute instruments,
agreements, certificates or other writings (including, without limitation, UCC
termination statements) to release property from the lien of this Indenture, or
convey the Indenture Trustee's interest in the same, in a manner and under
circumstances which are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Indenture Trustee as
provided in this Article VIII shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any moneys.
38
(b) The Indenture Trustee shall, at such time as all sums due the
Indenture Trustee and the Certificate Trustee pursuant to Section 9.7 hereof
have been paid and the provisions of Section 8.1 have been satisfied, release
the Indenture Trust Estate from the lien of this Indenture.
ARTICLE IX
THE INDENTURE TRUSTEE
SECTION 9.1. CERTAIN DUTIES AND RESPONSIBILITIES
-----------------------------------
(a) Except during the continuance of an Event of Default:
(i) the duties of the Indenture Trustee shall be determined solely
by the express provisions of this Indenture and the Indenture Trustee need
perform only those duties expressly set forth herein and no others; 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 on its part, the Indenture Trustee
may conclusively rely upon certificates, opinions and all other notices and
documents furnished to the Indenture Trustee and conforming as to form to
the requirements of this Indenture, including investment instructions
received pursuant to Section 5.4 hereof, as to the truth of the statements
and the correctness of the opinions expressed therein; but in the case of
any such certificates, opinions and all other notices and documents which
by any provision of this Indenture are specifically required to be
furnished to the Indenture Trustee, the Indenture Trustee shall be under a
duty to examine the same to determine whether or not they meet the
requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(c) No provision of this Indenture, including, without limitation,
Section 9.7, shall be construed to relieve the Indenture Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section 9.1;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by an Authorized Officer of the Indenture
Trustee, unless it
39
shall be proved that the Indenture Trustee was negligent in ascertaining
the pertinent facts; and
(iii) the Indenture Trustee shall not be personally liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with any direction received by the Indenture Trustee in
accordance with the terms of this Indenture from the Holders of a Majority-
in-Interest (or other percentage as may be required by the terms hereof) of
the Notes 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.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct of, affecting the liability of or
affording protection to the Indenture Trustee shall be subject to the provisions
of this Section 9.1.
(e) For all purposes under this Indenture, the Indenture Trustee
shall not be deemed to have notice of any Default or Event of Default (other
than an Event of Default described in Section 7.1(a), (b) or (c) hereof) or a
Default or Event of Default under any document included in the Indenture Trust
Estate, unless an Authorized Officer of the Indenture Trustee has actual
knowledge thereof or unless an Authorized Officer of the Indenture Trustee has
received written notice thereof and such notice references the Notes generally,
the Issuer, the Indenture Trust Estate or this Indenture; provided, that the
--------
Indenture Trustee will not be responsible for conducting or performing any
investigations or inquiries with respect to any such matters. For purposes of
determining the Indenture Trustee's responsibility and liability hereunder,
whenever reference is made in this Indenture to a Default or an Event of
Default, such reference shall be construed to refer only to the Default or the
Event of Default of which the Indenture Trustee is deemed to have notice of the
type described in this Section 9.1(e).
(f) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it, the Indenture Trustee having the right to require
an indemnity pursuant to subparagraph (g) below.
(g) The Indenture Trustee shall, at its own expense, maintain at all
times and keep in full force and effect (i) fidelity insurance, (ii) theft of
documents insurance, (iii) forgery insurance and (iv) insurance covering the
risk of errors and omissions. Such insurance may be maintained by the Indenture
Trustee in the form of self-insurance. The Indenture Trustee shall not be under
any obligation to institute any suit, or to take any remedial Proceeding under
this Indenture, or to enter any appearance in or in any way defend any suit in
which it may be made defendant, or to take any steps in the execution of the
trusts hereby created, the performance of any of its duties hereunder or in the
40
enforcement of any rights and powers hereunder until it shall be indemnified to
its reasonable satisfaction against any and all costs and expenses, outlays and
counsel fees and other reasonable disbursements and against all liability,
except liability which is adjudicated to have resulted from its own negligence
or willful misconduct, in connection with any action so taken.
(h) Notwithstanding any extinguishment of all right, title and
interest of the Issuer in and to the Indenture Trust Estate following an Event
of Default and a consequent acceleration of the maturity of the Notes, whether
such extinguishment occurs through a sale of the Indenture Trust Estate to
another person, the acquisition of the Indenture Trust Estate by the Indenture
Trustee or otherwise, the rights, powers and duties of the Indenture Trustee
with respect to the Indenture Trust Estate (or the proceeds thereof) and the
Noteholders and the rights of the Noteholders shall continue to be governed by
the terms of this Indenture.
(i) The Indenture Trustee shall keep and maintain proper books of
record and accounts relating to the Notes in which full, true and correct
entries will be made of all dealings or transactions of the Indenture Trustee in
relation to the Notes, the Accounts and the Issuer. The Indenture Trustee shall
keep such books of record and accounts reasonably available for inspection
during normal business hours and upon reasonable advance notice to the Indenture
Trustee (but in no event more frequently than one inspection per calendar month)
by the Issuer and under reasonable circumstances in accordance with the terms of
this Indenture.
(j) Until one year and one day after such time as the Notes issued
under the Indenture are paid in full, no Indenture Trustee or successor trustee
nor any Holder shall institute the filing of an involuntary bankruptcy petition
against the Issuer or the Seller.
SECTION 9.2. NOTICE OF EVENTS OF DEFAULT. Promptly after an
---------------------------
Authorized Officer of the Indenture Trustee shall have received written notice
of the occurrence of any Default or Event of Default, the Indenture Trustee
shall promptly transmit by mail to all Holders, the Rating Agencies and the
Issuer notice of such Event of Default actually known to the Indenture Trustee.
SECTION 9.3. CERTAIN RIGHTS OF THE INDENTURE TRUSTEE. Except as
---------------------------------------
otherwise expressly provided in Section 9.1 hereof:
(a) in the absence of bad faith or negligence the Indenture Trustee
conclusively may rely on, and shall be protected in acting or refraining
from acting when doing so, in each case in accordance with, any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note or other paper or document believed
by the Indenture Trustee to be genuine and to have been signed or presented
by the proper party or parties, and the Indenture Trustee need not
investigate any facts stated therein;
41
(b) whenever in the administration of this Indenture the Indenture
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Indenture
Trustee (unless other evidence be herein specifically prescribed) may, in
the absence of bad faith on its part, rely upon an Officer's Certificate;
(c) before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or Opinion of Counsel, or both, and the
Indenture Trustee shall not be liable for any action it takes, suffers or
omits in reliance on either thereof; the Indenture Trustee may consult with
counsel, and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of the legality
of any action taken, suffered or omitted by the Indenture Trustee hereunder
in good faith and in reliance thereon;
(d) the Indenture Trustee shall not be under any 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
(i) 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 and (ii) in the event and to the extent that the Indenture
Trustee has received prior written notice from a Rating Agency that such
exercise shall result in the withdrawal or downgrading of any rating
assigned by such Rating Agency to the Notes;
(e) the Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note or other paper or document, but the
Indenture Trustee 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, on reasonable prior notice to the
Issuer and during the Issuer's normal business hours (but in no event more
frequently than once per calendar month), to examine the books, records and
premises of the Issuer, personally or by agent or attorney; provided, that
--------
the Indenture Trustee shall and shall cause its agents to hold in
confidence all such information except to the extent disclosure may be
required by law and except to the extent that the Indenture Trustee, in its
sole judgment, may determine that such disclosure is consistent with its
obligations hereunder. Notwithstanding anything herein to the contrary,
the forgoing shall not be construed to prohibit (i) disclosure of any and
all information that is or becomes publicly known, or information obtained
by the Indenture Trustee from sources other than the Issuer or the
Servicer, (ii) disclosure of any and all information (A) if required to do
so by any applicable statute, law, rule or regulation, (B) to any
government agency or regulatory body having or claiming authority to
regulate or oversee any respects of the Indenture Trustee's business or
that of its affiliates, (C) pursuant to any subpoena, civil investigative
42
demand or similar demand or request of any court, regulatory authority,
arbitrator or arbitration to which the Indenture Trustee an affiliate or an
officer, director, employer or shareholder thereof is a party, (D) in any
preliminary or final offering circular, registration statement or contract
or other document pertaining to the transactions contemplated by this
Indenture approved in advance by the Issuer or (E) to any affiliate,
independent or internal auditor, agent, employee or attorney of the
Indenture Trustee having a need to know the same provided that the
Indenture Trustee advises such recipient of the confidential nature of the
information being disclosed, or (iii) any other disclosure authorized by
the Issuer;
(f) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Indenture Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(g) the Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within
the rights or powers conferred upon it by this Indenture if such action or
omission is not negligent; and
(h) to the extent a Person other than the Indenture Trustee is
appointed by the Issuer to act as Registrar, the Indenture Trustee shall
not be liable or responsible by reason of any act or omission of any such
Person.
SECTION 9.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
-------------------------------------------------
The recitals contained herein and in the Notes, except any such recitals
relating to the Indenture Trustee, shall be taken as the statements of the
Issuer, and the Indenture Trustee assumes no responsibility for their
correctness. The Indenture Trustee shall not be responsible for and makes no
representation as to the validity or sufficiency of this Indenture, the Notes or
the Indenture Trust Estate. The Indenture Trustee shall not be accountable for
the Issuer's issue of the Notes or application of the proceeds thereof or for
any money paid to the Issuer or upon the Issuer's direction under any of the
provisions of this Indenture. The Indenture Trustee is not responsible for the
use or application of any moneys by any agent other than the Indenture Trustee,
including, without limitation, any co-trustee, the Servicer or the Servicing
Advisor. The Indenture Trustee shall not be responsible for any statement in
the Notes or in any other document prepared, executed or delivered in connection
with the sale and issuance of the Notes or the execution and delivery of this
Indenture except its certificate of authentication.
SECTION 9.5. MAY HOLD NOTES. The Indenture Trustee, in its
--------------
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Issuer with the same rights it would have if it were
not the Indenture Trustee.
43
SECTION 9.6. MONEY HELD IN TRUST. Money held by the Indenture
-------------------
Trustee in trust hereunder will be held by the Indenture Trustee in its trust
capacity and not in its commercial capacity, in a segregated account in
accordance with the Indenture. The Indenture Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Issuer and except to the extent of income or other
gain on Eligible Investments which are obligations of the Indenture Trustee and
income or other gain actually received by the Indenture Trustee on Eligible
Investments which are obligations of a third party.
SECTION 9.7. COMPENSATION AND REIMBURSEMENT
------------------------------
(a) The Issuer agrees:
(1) subject to any separate written agreement with the Indenture
Trustee, to pay the Indenture Trustee from time to time compensation at the
Trustee Fee Rate for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) to reimburse the Indenture Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Indenture Trustee in accordance with any provision of this Indenture
(including the compensation and the reasonable expenses and disbursements
of its agents, including the co-trustee, if any, and counsel and costs and
expenses of collection); and
(3) to indemnify the Indenture Trustee, including any of its
directors, officers, employees, agents, and any co-trustee appointed
pursuant to this Indenture, and counsel of the Indenture Trustee for, and
to hold them harmless against, any loss, penalties, fines, forfeitures,
legal fees, liability or expense incurred without negligence or bad faith
on their part, arising out of or in connection with the acceptance or
administration of this trust, including the reasonable costs and expenses,
including reasonable attorneys' fees, of defending themselves against any
claim or liability in connection with the exercise or performance of any of
their powers or duties hereunder; provided, that:
--------
(i) with respect to any such claim, the Indenture Trustee shall
have given the Issuer written notice thereof promptly after
the Indenture Trustee shall have knowledge thereof;
provided, however, that the failure of the Indenture
-------- -------
Trustee to so notify the Issuer shall not relieve the Issuer
of its obligations pursuant to this subparagraph;
(ii) the Issuer shall assume the defense of any such claim;
provided, that if the Issuer shall not have employed counsel
--------
reasonably satisfactory to the Indenture Trustee to direct
the defense of such claim within a reasonable time after
such notice of the claim
44
pursuant to paragraph (i) above, the Indenture Trustee
shall have the right to direct the defense of such claim
and retain its own counsel;
(iii) the Indenture Trustee shall have the right to employ
separate counsel with respect to any claim and to
participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the
Indenture Trustee unless the payment of such counsel has
been authorized in writing by the Issuer, which consent
shall not be unreasonably withheld by the Issuer;
provided, that a conflict of interest shall be deemed to
--------
be reasonable grounds for retaining separate counsel by
the Indenture Trustee; provided, further, that if the
-------- -------
Indenture Trustee shall assume the defense of any claim
as described in paragraph (ii) above, the Issuer shall
pay the reasonable fees and expenses of Indenture
Trustee's counsel in connection with the defense of such
claim; and
(iv) notwithstanding anything to the contrary in this Section
9.7(a)(3), the Issuer shall not be liable for settlement
of any such claim by the Indenture Trustee entered into
without the prior consent of the Issuer, which consent
shall not be unreasonably withheld.
Nothing in this Section 9.7 shall be construed to limit the exercise
by the Indenture Trustee of any right or remedy permitted under this Indenture
or otherwise in the event of the Issuer's failure to pay any sums due the
Indenture Trustee pursuant to this Section 9.7.
(b) The provisions of this Section 9.7 shall govern all other
provisions of this Indenture regarding the payment of the fees and expenses of
the Indenture Trustee.
(c) The Issuer's payment obligations under Section 9.7(a)(3) shall be
satisfied solely from the funds owing to the Issuer pursuant to Section
5.2(c)(xvi). To secure the Issuer's payment obligations under Section
9.7(a)(3), the Indenture Trustee shall have a lien subordinate to the
Noteholders on the Indenture Trust Estate. Such lien shall survive the
satisfaction and discharge of this Indenture or the resignation or removal of
the Indenture Trustee.
(d) The payment obligations of the Issuer under this Section 9.7
shall survive the satisfaction and discharge of this Indenture or the
resignation or removal of the Indenture Trustee.
SECTION 9.8. INDENTURE TRUSTEE ELIGIBILITY. The Indenture Trustee
-----------------------------
shall be a corporation, bank or trust company organized and doing business under
the laws of the United States of America or of any State authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000, subject to supervision or examination by any federal or
state banking
45
authority (except as provided in Section 9.9 hereof). If such Indenture Trustee
publishes reports of condition annually, or more frequently, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 9.8, the combined capital and surplus of such
corporation shall be deemed to be the respective amount set forth in its most
recently published report of condition. If at any time the Indenture Trustee
shall cease to be eligible in accordance with the provisions of this Section
9.8, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article IX.
SECTION 9.9. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR
-------------------------------------------------
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor trustee pursuant to this Article IX shall become
effective until the acceptance of appointment by the successor trustee under
Section 9.10 hereof.
(b) The Indenture Trustee or any trustee hereafter appointed may
resign at any time by giving written notice of resignation to the Issuer, and by
mailing notice of resignation by first-class mail, postage prepaid, to all of
the Noteholders at their addresses appearing on the Register and to the Rating
Agencies. Upon receiving notice of resignation of the Indenture Trustee, the
Issuer may appoint a successor trustee, by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Indenture Trustee
and one copy to the successor trustee or trustees. The Indenture Trustee shall
serve as trustee hereunder until a successor trustee shall have been appointed
and shall have accepted such appointment; provided, however, that if no
-------- -------
successor trustee shall have been appointed and have accepted appointment within
30 days after the giving of such notice of resignation, the Indenture Trustee
may appoint a successor trustee.
(c) If at any time:
(1) the Indenture Trustee shall cease to be eligible under Section
9.8 hereof and shall fail to resign, after written request therefor by the
Issuer; or
(2) (A) the Indenture Trustee shall become incapable of acting, (B) a
court or governmental agency having jurisdiction in the premises in respect
of the Indenture Trustee in an involuntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law, shall have
entered a decree or order granting relief or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) for the Indenture Trustee or for any substantial part of the
Indenture Trustee's property, or ordering the winding-up or liquidation of
the Indenture Trustee's affairs, and any such decree or order shall have
continued unstayed and in effect for a period of 60 consecutive days or (C)
the Indenture Trustee commences a voluntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy,
46
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) for the Indenture Trustee or for
any substantial part of the Indenture Trustee's property, or makes any
assignment for the benefit of creditors or fails generally to pay its debts
as such debts become due or takes any corporate action in furtherance of
any of the foregoing;
then, in any such case the Issuer hereby agrees with the Noteholders that it
shall remove the Indenture Trustee by written request and appoint a successor
trustee acceptable to Issuer by written instrument, in five counterparts, one
copy of which instrument shall be delivered to the Indenture Trustee so removed,
one copy to the successor trustee, and one copy to each of the Rating Agencies.
(d) If Issuer fails to appoint a successor Indenture Trustee, the
Indenture Trustee may be removed at any time by act of the Holders of a
Majority-in-Interest of the Notes.
(e) The Issuer shall give notice of the resignation or removal of the
Indenture Trustee by mailing notice of such event by first-class mail, postage
prepaid, to the Holders of the Notes as their names and addresses appear in the
Register. Each notice shall include the name of the successor trustee and the
address of its trust division or department. The notice required by this
paragraph (e) may be given at the same time as the notice required by Section
9.10.
SECTION 9.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR
--------------------------------------
(a) Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer and its predecessor trustee an instrument
accepting such appointment hereunder. Upon the delivery and execution of the
required instruments, the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts, duties
and obligations of its predecessor hereunder. Notwithstanding the foregoing, on
request of the Issuer, or the successor trustee, such predecessor trustee shall,
upon payment of its then unpaid charges due and payable under Section 9.7
hereof, execute and deliver an instrument transferring to such successor trustee
all of the rights, powers and trusts of the predecessor trustee and shall duly
assign, transfer and deliver to such successor trustee all property and money
held by such predecessor trustee hereunder. Upon request of any such successor
trustee, the Issuer shall execute any and all instruments providing for more
full and certain vesting in and confirming to such successor trustee all such
rights, powers and trusts of this Indenture.
(b) Upon acceptance of appointment by a successor trustee as provided
in this Section 9.10, the Issuer shall mail notice thereof by first-class mail,
postage prepaid, to the Holders at the Holders' addresses appearing upon the
Register. If the Issuer fails to
47
mail such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Issuer.
(c) Any successor trustee is subject to the approval of the Rating
Agencies and must, at the time of such successor's acceptance of its
appointment, meet the eligibility requirements set forth in this Article IX, and
otherwise exercise the rights, remedies, powers and authority of the predecessor
trustee with respect to the Indenture Trust Estate.
(d) Notwithstanding the replacement of the Indenture Trustee or any
successor trustee pursuant to the provisions of this Indenture, the Issuer's
obligations set forth in Section 9.7 hereof shall survive such replacement and
continue for the benefit of the resigning or replaced trustee.
SECTION 9.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
--------------------------------------------------
BUSINESS OF INDENTURE TRUSTEE. Any corporation into which the Indenture
-----------------------------
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
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 without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, that such corporation shall be otherwise qualified and eligible under
--------
this Article IX. 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 deliver the Notes so
authenticated with the same effect as if such successor trustee had itself
authenticated such Notes.
SECTION 9.12. CO-TRUSTEES AND SEPARATE INDENTURE TRUSTEES
-------------------------------------------
(a) At any time or times, for the purpose of meeting the legal
requirements of any jurisdiction in which any of the Indenture Trust Estate may
at any time be located, the Issuer and the Indenture Trustee shall have power to
appoint, and, upon the written request of the Indenture Trustee, 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 either to act
as co-trustee, jointly with the Indenture Trustee, of all or any part of such
Indenture Trust Estate, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable to meet such
legal requirements, subject to the other provisions of this Section 9.12. 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 has occurred and is
continuing, the Indenture Trustee alone shall have power to make such
appointment.
48
(b) Should any written instrument from the Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Issuer.
(c) Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the following
terms, namely:
(1) The Notes shall be authenticated and delivered and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Indenture Trustee hereunder, shall be
exercised, solely by the Indenture Trustee.
(2) The rights, powers, duties and obligations hereby conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee or by the Indenture Trustee
and such co-trustee or separate trustee jointly, as shall be provided in
the instrument appointing such co-trustee or separate trustee, except to
the extent that under any law of any jurisdiction in which any particular
act is to be performed, the 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-trustee or
separate trustee.
(3) The Indenture Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Issuer evidenced by an
Officer's Certificate to such effect, may accept the resignation of or
remove any co-trustee or separate trustee appointed under this Section
9.12, and, in case an Event of Default has occurred and is continuing, the
Indenture Trustee shall have power to accept the resignation of, or remove,
any such co-trustee or separate trustee without the concurrence of the
Issuer. Upon the written request of the 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-trustee or
separate trustee so resigned or removed may be appointed in the manner
provided in this Section 9.12.
(4) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Indenture Trustee, or any
other such trustee hereunder.
(5) Any act of Noteholders delivered to the Indenture Trustee shall
be deemed to have been delivered to each such co-trustee and separate
trustee.
SECTION 9.13. ▇▇▇▇▇▇ ACT. Any provisions required to be contained
----------
in this Indenture by Section 126 of Article 4-A of the New York Real Property
Law are
49
hereby incorporated, and such provisions shall be in addition to those conferred
or imposed by this Indenture; provided, however, that to the extent that such
-------- -------
Section 126 shall not apply to this Indenture, said Section 126 shall not have
any effect, and if said Section 126 should at any time be repealed or cease to
apply to this Indenture; or be construed by judicial decision to be
inapplicable, said Section 126 shall cease to have any further effect upon the
provisions of this Indenture. In case of a conflict between the provisions of
this Indenture and any mandatory provisions of Article 4-A of the New York Real
Property Law, such mandatory provisions of said Article 4-A shall prevail;
provided, that if said Article 4-A shall not apply to this Indenture, should at
--------
any time be repealed, or cease to apply to this Indenture, or be construed by
judicial decision to be inapplicable, such mandatory provisions of such Article
4-A shall cease to have any further effect upon the provisions of this
Indenture.
SECTION 9.14. TAX REPORTING. Not later than February 1 of each
-------------
calendar year, the Indenture Trustee shall report to each Noteholder the amount
of interest paid on the Notes, the amount of any original issue discount on the
Notes, to the extent such amount was provided to the Indenture Trustee by the
Issuer, and the amount of interest actually withheld for federal income taxes,
if any, for the preceding calendar year.
ARTICLE X
AMENDMENTS
SECTION 10.1. AMENDMENTS WITHOUT CONSENT OF NOTEHOLDERS. Without
-----------------------------------------
the consent of, or notice to, the Holders of any Notes, the Issuer and the
Indenture Trustee may amend this Indenture at any time and from time to time for
any of the following purposes:
(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, in compliance with the provisions of
Section 4.2(b) hereof, of another Person to the Issuer, and the assumption
by any such successor of the covenants of the Issuer contained herein and
in the Notes; or
(c) to add to the covenants of the Issuer or the Indenture Trustee,
for the benefit of the Noteholders, or to surrender any right or power
herein conferred upon the Issuer; or
(d) to convey, transfer, assign, mortgage or pledge any property to
the Indenture Trustee to constitute additional Indenture Trust Estate; or
50
(e) to cure any ambiguity, correct or supplement any provision herein
which may be defective or inconsistent with any other provisions herein or
amend any other provisions with respect to matters or questions arising
under this Indenture; provided, that such action shall not adversely affect
--------
the interests of the Holders; or
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee or note registrar, pursuant to the
requirements of Section 9.9 or Section 9.10 hereof.
The Indenture Trustee is hereby authorized to join in the execution of
any such amendment and to make any further appropriate agreements and
stipulations which may be therein contained or required.
SECTION 10.2. AMENDMENTS WITH CONSENT OF NOTEHOLDERS AND THIRD
------------------------------------------------
PARTIES
-------
(a) With the consent of the Holders of a Majority-in-Interest of the
Notes delivered to the Issuer and the Indenture Trustee, the Issuer, pursuant to
a written request, and the Indenture Trustee may amend this Indenture for the
purpose of adding to, changing or eliminating any of the provisions of this
Indenture or of modifying the rights of Holders under this Indenture; provided,
--------
however, that no such amendment shall, without the consent of the Holder of each
-------
Outstanding Note:
(1) change the Maturity of the principal of, or any installment of
principal of, interest on or Loan Yield Maintenance Amount, if any, with
respect to any Note, or reduce the principal amount thereof or change the
interest rate thereon, or change the provisions of this Indenture relating
to the application of the Indenture Trust Estate to payment of principal of
Notes, or change any place of payment where, or the coin or currency in
which, the principal of or the interest of any Note is payable, or impair
the right to institute Proceedings for the enforcement of the provisions of
the Indenture requiring the application of funds available therefor, as
provided in Article VII, to the payment of any amount due on the Notes on
or after the Maturity thereof; or
(2) reduce the percentage of the Aggregate Outstanding Principal
Amount of the Notes, the consent of the Holders of which is required for
any amendment, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
or
(3) modify or alter the provisions of the proviso to the definition
of the term "Outstanding"; or
(4) 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 Indenture
Trust Estate or
51
terminate the lien of this Indenture on any property at any time subject
hereto or deprive any Holder of the security afforded by the lien of this
Indenture except as provided in 8.3(d) hereof or as otherwise expressly
permitted hereby; or
(5) reduce the percentage of the Aggregate Outstanding Principal
Amount of the Notes, the consent of the Holders of which is required to
direct the Indenture Trustee to sell the Indenture Trust Estate pursuant to
Section 7.10 hereof; or
(6) modify any of the provisions of this Section 10.2, except to
increase any percentage specified herein or to provide that certain
additional provisions of this Indenture cannot be modified or waived
without the consent of each Holder of an Outstanding Note affected thereby;
or
(7) modify any of the provisions of this Indenture in such a manner
as to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the calculation of
any of the individual components of such calculation).
(b) Notwithstanding anything to the contrary herein, the prior
written consent of Servicer shall be required in connection with any amendment
that amends, modifies or alters any of the provisions of this Indenture with
respect to the Servicing Fee or which would have the effect of subordinating,
reducing or eliminating the payment of such amounts to Servicer or otherwise
affecting the Servicer's rights with respect thereto.
(c) Promptly after the execution by the Issuer and the Indenture
Trustee of any amendment pursuant to this Section 10.2, the Indenture Trustee
shall mail to the Holders and each Rating Agency a copy of the executed
amendment. Any failure of the Indenture Trustee to mail such copy, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such amendment.
SECTION 10.3. EXECUTION OF AMENDMENTS. In executing, or permitting
-----------------------
the modifications of the trusts created by this Indenture or the additional
trusts created by, any amendment of the Indenture permitted by this Article X,
the Indenture Trustee, and the Noteholders shall be entitled to receive, and
(subject to Sections 9.1 and 9.3 hereof) shall be fully protected in relying
upon, an Opinion of Counsel to the Issuer stating that the execution of such
amendment is authorized or permitted by this Indenture and that all conditions
precedent thereto have been complied with. The Indenture Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Indenture
Trustee's own rights, duties, liabilities or immunities under this Indenture or
otherwise unless indemnified to the Indenture Trustee's satisfaction.
SECTION 10.4. EFFECT OF AMENDMENT. Upon the execution of any
-------------------
amendment of this Indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to each Note and the respective rights, limitations, obligations,
duties, liabilities and immunities
52
under this Indenture of the Indenture Trustee, the Issuer and the Holders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such amendment shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 10.5. REFERENCE IN NOTES TO AMENDMENTS. Notes
--------------------------------
authenticated and delivered after the execution of any amendment of this
Indenture pursuant to this Article X may, and, if required by the Issuer shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such amendment. If the Issuer shall so require, new Notes so
modified as to conform, in the opinion of the Indenture Trustee and the Issuer,
to any such amendment may be prepared and executed by the Issuer and
authenticated and delivered by the Indenture Trustee in exchange for Outstanding
Notes.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. COMPLIANCE CERTIFICATES. Whenever, upon any
-----------------------
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall, to the extent required
by any provision of this Indenture, furnish to the Indenture Trustee and the
Rating Agencies an Officer's Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with, and except in the case of any application or request as to which
the furnishing of additional documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate has read such
covenant or condition;
(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 are based;
(c) a statement that, in the opinion of each such Person, such Person
has made such examination or investigation as necessary to enable such
person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
53
(d) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with.
SECTION 11.2. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE. In
------------------------------------------------
any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents. Where any Person is required to
make, give or execute two or more applications, requests, consents,
certificates, statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.
Any certificate or opinion of the Issuer may be based, insofar as it
relates to legal matters, upon an opinion of, or representations by, counsel,
unless the Issuer knows, or in the exercise of reasonable care should know, that
the certificate or opinion or representations with respect to the matters upon
which its certificate or opinion is based are erroneous. Any Officer's
Certificate or Opinion of Counsel by any other Person may be based, without
independent investigation, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, the Issuer, the Indenture
Trustee or other appropriate Person, stating that the information with respect
to such factual matters is in the possession of the Issuer, the Indenture
Trustee or other appropriate Person, as the case may be, unless such Person
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
In connection with any application, certificate or report to the
Indenture Trustee, whenever this Indenture provides that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any terms hereof, it is intended that
the truth and accuracy of the facts and opinions stated in such document, at the
time of the granting of such application or at the effective date of such
certificate or report (as the case may be), shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article IX hereof or to impose a duty on the Indenture Trustee to ascertain
such truth or inaccuracy.
Whenever this Indenture provides that the absence of the occurrence
and continuation of a Default or Event of Default is a condition precedent to
the taking of any action by the Indenture Trustee at the request or direction of
the Issuer, then, notwithstanding that the satisfaction of such condition is a
condition precedent to the Issuer's right to make such request or direction, the
Indenture Trustee shall be protected in acting in accordance with such request
or direction if it does not have knowledge of the
54
occurrence and continuance of a Default or Event of Default as provided in
Section 9.1(e) hereof.
SECTION 11.3. NOTICES, ETC. TO PARTIES. All notices, requests or
------------------------
other communications desired or required to be given under this Indenture to the
Indenture Trustee and the Issuer shall be in writing and shall be sent by (a)
certified or registered mail, return receipt requested, postage prepaid, (b)
national prepaid overnight delivery service, (c) telecopy or other facsimile
transmission (following with hard copies to be sent by national prepaid
overnight delivery service) or (d) personal delivery with receipt acknowledged
in writing, as follows:
(a) If to the Indenture Trustee:
Bankers Trust Company
Corporate Trust and Agency Services
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance Team
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to the Issuer:
▇▇▇▇▇▇▇▇ Franchisee
Loan Funding 1998-A LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
(c) If to a Noteholder: to such Person at the address of such Person
listed in the Register;
(d) Notices or consents required under this Indenture to be sent to
Noteholders, including, but not limited to, notice of (i) the appointment
of a successor Indenture Trustee, (ii) the payment of the Notes in full,
(iii) any amendments to this Indenture (including amendments pursuant to
Sections 10.1 and 10.2), (iv) any amendments or modifications to the
documents specified in Section 3.1 hereof, shall in addition be sent by the
Indenture Trustee (unless the Issuer or the Servicer is required to provide
such notices to the Rating Agencies) to each Rating Agency at its
respective address at (A) in the case of Standard & Poor's, ▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (B) in the case of DCR, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and (C) in the case of Fitch
IBCA, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(e) Notices required under this Indenture to be sent to the
Noteholders shall in addition be sent to the Issuer.
55
All notices shall be deemed given when actually received or refused by the party
to whom the same is directed (except to the extent sent by certified or
registered mail, return receipt requested, postage prepaid, in which event such
notice shall be deemed given three days after the date of mailing). Each party
may designate a change of address or supplemental address(es) by notice to the
other parties, given at least 15 days before such change of address is to become
effective.
SECTION 11.4. NOTICES AND INFORMATION 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 its address as it appears on the Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Noteholder shall affect the sufficiency of such notice
with respect to other Noteholders, and any notice which is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a 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 11.5. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The
----------------------------------------
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.6. SUCCESSORS AND ASSIGNS. All covenants and agreements
----------------------
this Indenture by the Issuer shall bind its successors and assigns, whether so
expressed or not.
SECTION 11.7. SEVERABILITY. In case any provision in this
------------
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 11.8. LEGAL HOLIDAYS. If any Payment Date or other date
--------------
for the payment of principal of, interest on or Loan Yield Maintenance Amount,
if any, in respect of, any Note is proposed to be paid, or any date on which
mailing of notices by
56
the Indenture Trustee to any person is required pursuant to any provision of
this Indenture, shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment or mailing of such notice need
not be made on such date, but may be made or mailed on the next succeeding
Business Day with the same force and effect, and in the case of payments, no
interest shall accrue for the period from and after the date on which such
payment was due to the next succeeding Business Day when paid.
SECTION 11.9. RECORDING OF INDENTURE. If this Indenture is subject
----------------------
to recording in any appropriate public recording office, such recording is to be
effected by the Issuer at its expense.
SECTION 11.10. LIMITED OBLIGATIONS. No recourse for obligations
-------------------
hereunder or any other obligation running directly for the benefit of the
Indenture Trustee may be taken, directly or indirectly, against any member,
officer or director of the Issuer or of any predecessor or successor of the
Issuer, any member of, or Holder of a beneficial interest in, the Issuer or any
incorporator, subscriber to the capital stock, stockholder, officer, director or
employee of the Indenture Trustee or of any predecessor or successor of the
Indenture Trustee with respect to the Issuer's obligations with respect to the
Notes or the obligation of the Issuer or the Indenture Trustee under this
Indenture or any certificate or other writing delivered in connection herewith
or therewith.
SECTION 11.11. GOVERNING LAW. THIS INDENTURE, EACH INDENTURE
-------------
SUPPLEMENTAL HERETO AND EACH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
SECTION 11.12. COUNTERPARTS. This Indenture may be executed by the
------------
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original, and all of which shall together
constitute but one and the same instrument.
[Remainder of Page Intentionally Left Blank]
57
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their duly authorized officers all as of
the day and year first above written.
▇▇▇▇▇▇▇▇ FRANCHISEE LOAN FUNDING
1998-A LLC
By: ▇▇▇▇▇▇▇▇ Intermediate Funding
1998-A, Inc., its Managing Member
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Treasurer
BANKERS TRUST COMPANY,
not in its individual capacity but
solely in its capacity as Indenture
Trustee
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Secretary
APPENDIX A
DEFINITIONS
Acceleration Date shall mean the date on which the acceleration of the
maturity of the Notes occurs pursuant to Section 7.2 of the Indenture.
Account shall mean any account or fund, and any subaccount thereof,
established under Article V of the Indenture. In the event any Account is not
maintained in the corporate trust department of the Indenture Trustee or the
Certificate Trustee, such Account shall be maintained at an Eligible
Institution.
Accounting Date shall mean with respect to a Payment Date the fifth
Business Day preceding such Payment Date.
Accrual Period shall mean with respect to any Payment Date, the period
from and including the first day of the calendar month preceding the month in
which such Payment Date occurs through and including the last day of such month.
Affiliate shall mean with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
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.
Affiliate Guarantee, with respect to a Loan, shall mean the guarantee
(including a secured guarantee) contained in the Loan Documents of certain
Borrowers relating to each such Borrower's Loan from an Affiliate of the
Borrower of the Borrower's obligations under such Loan.
Affiliated Borrowers shall mean Borrowers under common control.
Agent Member shall mean a DTC participant who maintains accounts for
purchasers of securities.
Aggregate Notional Amount shall mean as of any date of determination
with respect to the Class A-X Notes, the sum of the Aggregate Outstanding
Principal Amount of the Notes and the Issuer Balance.
Aggregate Outstanding Principal Amount shall mean as of any date of
determination, (i) with respect to the Notes, other than the Class A-X Notes,
the Initial Aggregate Principal Amount of all Notes less any payment of
principal on such Notes and all Write-down Amounts attributable to the Notes
prior to such date of determination, (ii) with respect to any Class of Notes,
other than the Class A-X Notes, the Initial Aggregate Principal Amount of all
Notes of such Class, less any payment of principal on such Notes and all Write-
down Amounts
attributable to such Class of Notes prior to such date of determination and
(iii) with respect to the Loans, the aggregate Remaining Principal Payments of
all Loans, less all Net Losses, at such date of determination.
Assigned Assets shall mean the Loans and related Collateral, together
with all interest accrued thereon from and including the Cut-Off Date to but not
including the Closing Date (but not including the Pre-Cut-Off Date Loan
Payments) and all escrow deposits relating thereto.
Assignment of Leasehold Mortgage shall mean with respect to each
Leasehold Mortgage, the one or more executed original assignments in recordable
form evidencing the assignment of the related Leasehold Mortgage from the Seller
to the Issuer and from the Issuer to the Indenture Trustee for the benefit of
the Noteholders.
Authorized Officer (i) in the case of the Issuer, shall mean the
President, Treasurer, Secretary or any Vice President of the Depositor, as sole
member of the Issuer, (ii) in the case of the Servicer, shall mean any Vice
President or more senior officer thereof and (iii) in the case of the Indenture
Trustee, shall mean any officer in the Corporate Trust and Agency Group of the
Indenture Trustee (or any successor group of the Indenture Trustee) including
any managing director, vice president, assistant vice president, assistant
secretary, assistant treasurer of any other officer or assistant officer of the
Indenture Trustee customarily performing functions similar to those performed by
the Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred at the Indenture Trustee's Trust Office
because of such officer's knowledge and familiarity with the particular subject.
Available Funds shall mean with respect to a Payment Date, (i) any and
all of amounts held in the Distribution Account (other than with respect to Loan
prepayments, repurchases or payments made in respect of Defaulted Loans) on the
related Accounting Date representing payments on the Loans which were due in the
related Due Period or any prior Due Period, (ii) with respect to any Loan
prepayment (or repurchase) or payment made in respect of a Defaulted Loan
received during the related Prepayment Period or any prior Prepayment Period (to
the extent not distributed on the related Payment Date), the Prepayment Amount
relating thereto (in the case of Defaulted Loan, to the extent actually received
and net of related reimbursements for advances of servicing expenses), (iii) all
amounts on deposit in the Reserve Account on the related Accounting Date, and
(iv) any P&I Advances on deposit in the Distribution Account on such Payment
Date; provided, however, that Available Funds shall not include any Early
-------- -------
Payments held in the Collection Account.
Bankruptcy Code shall mean Title 11 of the United States Code, as
amended.
Bankruptcy Law shall have the meaning accorded such term in the
Servicing Agreement.
Base Interest Fraction shall mean, with respect to any principal
prepayment on any Loan and with respect to any Class of Notes (other than the
Class A-X Notes), a fraction (A) whose numerator is the greater of (x) zero and
(y) the difference between (i) the Note Rate on the
A-2
most senior Class of Notes receiving a distribution of principal on such Payment
Date (and, if the most senior Class of Notes receiving distributions is the
Class A Notes, as long as the Class A-1 Notes are outstanding, the Class A-1
Note Rate, otherwise the Class A-2 Note Rate) and (ii) the Prepayment Discount
Rate for such Loan and (B) whose denominator is the difference between (i) the
Loan Rate of the Loan and (ii) the Converted Treasury Yield; provided, however,
-------- -------
that with respect to Loans for which the Loan Yield Maintenance Amount is a
fixed amount or based on a fixed percentage, the Base Interest Fraction shall be
equal to 25%; provided, further, however, that under no circumstances shall the
-------- ------- -------
Base Interest Fraction be greater than one. If such Prepayment Discount Rate for
such Loan is greater than the Loan Rate on such Loan, then the Base Interest
Fraction shall equal zero.
Basic Documents shall mean the Loan Sale and Purchase Agreement, the
Pooling Agreement, the Certificate Purchase Agreement, the Indenture, the
Servicing Agreement, and other documents and certificates delivered in
connection with any of the above.
Benefit Plan Investor shall mean each purchaser and each transferee of
a Note for which part of the funds being used to purchase such Notes constitutes
assets of an employee benefit plan (as defined in section 3(3) of ERISA),
whether or not it is subject to the provisions of Title I of ERISA, or assets of
a plan described in section 4975(e)(l) of the Code.
Borrower shall mean the party executing a Promissory Note to evidence
its obligations thereunder, and its successors and assigns.
Business Day shall mean any day that is not a Saturday, Sunday or a
day on which banking institutions located in (a) the City of New York, New York,
(b) San Francisco, California, or (c) the city and state where the principal
offices of each of the Indenture Trustee and the Servicer are located, are
authorized or obligated by law or executive order to be closed.
Business Value means what one franchisee in good standing would pay
another franchisee for the right to operate a franchise unit in the specified
location, as determined by a third party independent valuation consultant.
CERCLA shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
Certificate of Beneficial Ownership shall mean the Certificate of
Beneficial Ownership issued pursuant to the Pooling Agreement.
Certificate of Formation shall mean the Certificate of Formation of
the Issuer filed with the Secretary of State of the State of Delaware.
Certificate Purchase Agreement shall mean the Certificate Purchase
Agreement between the Depositor and the Issuer.
Certificate Trustee shall mean Bankers Trust Company, a New York
banking corporation, until a successor Person shall have become the Certificate
Trustee pursuant to the
applicable provisions of the Pooling Agreement, and thereafter "Certificate
Trustee" shall mean such successor Person.
Class shall mean each respective class of Notes.
Class A Note shall mean each Class A-1 Note, Class A-2 Note and the
Class A-X Note issued pursuant to Article II of the Indenture.
Class A Interest Distribution shall mean with respect to any Payment
Date, the sum of (a) the Class A-1 Interest Distribution and (b) the Class A-2
Interest Distribution.
Class A-1 Interest Distribution shall mean with respect to the Class
A-1 Notes on any Payment Date, the sum of (a) the amount of interest accrued
during the related Accrual Period at the Class A-1 Note Rate on the Aggregate
Outstanding Principal Amount of the Class A-1 Notes on the Business Day
immediately prior to such Payment Date and (b) any previously accrued and unpaid
interest for prior Payment Dates.
Class A-1 Note shall mean each Class A-1 Note issued pursuant to
Article II of the Indenture.
Class A-1 Note Rate shall mean, with respect to any Accrual Period, a
per-annum rate equal to ***/1/.
Class A-2 Interest Distribution shall mean with respect to the Class
A-2 Notes on any Payment Date, the sum of (a) the amount of interest accrued
during the related Accrual Period at the Class A-2 Note Rate on the Aggregate
Outstanding Principal Amount of the Class A-2 Notes on the Business Day
immediately prior to such Payment Date, plus (b) any previously accrued and
unpaid interest for prior Payment Dates.
Class A-2 Note shall mean each Class A-2 Note issued pursuant to
Article II of the Indenture.
Class A-2 Note Rate shall mean, with respect to any Accrual Period, a
per-annum rate equal to ***.
Class A-X Distribution shall mean with respect to the Class A-X Notes
on any Payment Date, the amount of interest accrued during the related Accrual
Period at the Class A-X Note Rate on the Aggregate Notional Amount of the Class
A-X Notes on the Business Day immediately prior to such Payment Date.
------------------
/1/ Certain information has been deleted from this document where denoted
by asterisks, and has been filed separately with the Commission. The Company has
requested confidential treatment for such omitted information.
A-4
Class A-X Note shall mean each Class A-X Note issued pursuant to
Article II of the Indenture.
Class A-X Note Rate shall mean, with respect to any Accrual Period, a
per annum rate equal to (i) the calculated WAPT Rate less (ii) the Total
Weighted Average Rate.
Class B Interest Distribution shall mean, with respect to the Class B
Notes on any Payment Date, the sum of (a) the amount of interest accrued during
the related Accrual Period at the Class B Note Rate on the Aggregate Outstanding
Principal Amount of the Class B Notes on the Business Day immediately prior to
such Payment Date and (b) any previously accrued and unpaid interest for prior
Payment Dates.
Class B Note shall mean each Class B Note issued pursuant to Article
II of the Indenture.
Class B Note Rate shall mean, with respect to any Accrual Period, a
per-annum rate equal to ***/2/.
Class C Interest Distribution shall mean, with respect to the Class C
Notes on any Payment Date, the sum of (a) the amount of interest accrued during
the related Accrual Period at the Class C Note Rate on the Aggregate Outstanding
Principal Amount of the Class C Notes on the Business Day immediately prior to
such Payment Date and (b) any previously accrued and unpaid interest for prior
Payment Dates.
Class C Note shall mean each Class C Note issued pursuant to Article
II of the Indenture.
Class C Note Rate shall mean, with respect to any Accrual Period, a
per-annum rate equal to ***.
Class D Interest Distribution shall mean, with respect to the Class D
Notes on any Payment Date, the sum of (a) the amount of interest accrued during
the related Accrual Period at the Class D Note Rate on the Aggregate Outstanding
Principal Amount of the Class D Notes on the Business Day immediately prior to
such Payment Date and (b) any previously accrued and unpaid interest for prior
Payment Dates.
Class D Note shall mean each Class D Note issued pursuant to Article
II of the Indenture.
----------------------
/2/ Certain information has been deleted from this document where denoted
by asterisks, and has been filed separately with the Commission. The Company has
requested confidential treatment for such omitted information.
A-5
Class D Note Rate shall mean, with respect to any Accrual Period, a
per annum rate equal to ***/3/.
Class E Interest Distribution shall mean with respect to the Class E
Notes on any Payment Date, the sum of (a) the amount of interest accrued during
the related Accrual Period at the Class E Note Rate on the Aggregate Outstanding
Principal Amount of the Class E Notes on the Business Day immediately prior to
such Payment Date and (b) any previously accrued and unpaid interest for prior
Payment Dates.
Class E Note shall mean each Class E Note issued pursuant to Article
II of the Indenture.
Class E Note Rate shall mean with, respect to any Accrual Period, a
per-annum rate equal to ***.
Class F Interest Distribution shall mean with respect to the Class F
Notes on any Payment Date, the sum of (a) the amount of interest accrued during
the related Accrual Period at the Class F Note Rate on the Aggregate Outstanding
Principal Amount of the Class F Notes on the Business Day immediately prior to
such Payment Date and (b) any previously accrued and unpaid interest for prior
Payment Dates.
Class F Note shall mean each Class F Note issued pursuant to Article
II of the Indenture.
Class F Note Rate shall mean, with respect to any Accrual Period, a
per-annum rate equal to ***.
Closing Date shall mean the date on which the Notes are first
executed, authenticated and delivered.
Code shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute thereto, including the regulations promulgated thereunder.
Collateral shall mean, with respect to a Loan, the related Security
Agreement, the Leasehold Mortgage or the Mortgage, if any, the Affiliate
Guarantee, if any, and any other Loan Documents and the security interests and
liens granted thereunder.
Collection Account shall mean the Account by that name established,
maintained and disbursed pursuant to Article V of the Indenture.
------------------
/3/ Certain information has been deleted from this document where denoted
by asterisks, and has been filed separately with the Commission. The Company has
requested confidential treatment for such omitted information.
A-6
Concept or Concepts shall mean individually or collectively the
franchise concepts owned or leased and operated under ***./4/
Condemnation Proceeds shall mean all compensation, awards and proceeds
received by or on behalf of a Borrower as a result of a condemnation (which term
shall include any damage or taking by any governmental or quasi-governmental
authority and any transfer by private sale in lieu thereof), net of all
reasonable direct fees, costs (exclusive of overhead) and disbursements incurred
in connection with the collection thereof or the restoration or replacement of
the Borrower's collateral as contemplated by the Loan Documents.
Controlling Class shall mean the most subordinate Class of Notes then
outstanding whose Aggregate Principal Amount is at least equal to 25% of the
Initial Aggregate Principal Amount of such Class of Notes.
Controlling Party shall mean (x) while the Issuer Balance is greater
than zero, the Issuer, and (y) after the Issuer Balance has been reduced to
zero, the Holders of a Majority-in-Interest of the Controlling Class.
Converted Treasury Yield shall mean the yield available, or if there
is more than one yield available, the average yields, on United States Treasury
non-callable bonds (excluding Flower Bonds) and notes having a maturity date
closest to the Remaining Average Life, as reported in The Wall Street Journal or
similar publication on the fifth Business Day preceding the date prepayment will
be made, converted to a twelve-month "equivalent yield" plus twenty-five basis
----
points (0.25%).
Custodian shall mean Bankers Trust Company of California, N.A., a
national banking association.
Cut-Off Date shall mean the close of business August 1, 1998.
DCR shall mean Duff & ▇▇▇▇▇▇ Credit Rating Co.
Default shall mean any occurrence that is, or with notice or the lapse
of time or both, would become an Event of Default.
Defaulted Loan shall mean a Loan (a) as to which the Servicing Advisor
has determined in its sole discretion, for purposes of the Indenture, that
eventual payment of Scheduled Payments is unlikely or (b) which is a Delinquent
Loan for which a Scheduled
-------------------
/4/ Certain information has been deleted from this document where denoted
by asterisks, and has been filed separately with the Commission. The Company has
requested confidential treatment for such omitted information.
A-7
Payment is overdue (without taking into account any extension of the due date
for any such Scheduled Payment) for more than 120 consecutive days.
Delinquent Borrower shall mean a Borrower of a Delinquent or Defaulted
Loan.
Delinquent Loan shall mean a Loan (a) as to which a Scheduled Payment
was not received as of the date on which such payment was due and payable and
(b) which is not a Defaulted Loan.
Depositor shall mean ▇▇▇▇▇▇▇▇ Intermediate Funding 1998-A, Inc., a
special purpose corporation organized under the laws of the State of Delaware,
and its successors and assigns.
Determination Date, as used in the definitions of the terms Prepayment
Amount and Remaining Principal Payments, shall mean the date Remaining Principal
Payments are to be prepaid (in the case of a prepaid Loan) or accelerated (in
the case of a Defaulted Loan).
Distribution Account shall mean the Distribution Account established
and maintained by the Indenture Trustee for the benefit of the Noteholders
pursuant to the Indenture.
DOL shall mean the United States Department of Labor.
DTC shall mean The Depository Trust Company.
Due Period shall mean with respect to a Payment Date, the period from
and including the second day of the calendar month preceding the month in which
such Payment Date occurs through and including the first day of the calendar
month in which such Payment Date occurs.
Early Payment shall mean with respect to a Loan and any Payment Date,
any Scheduled Payment in respect of such Loan which is due for any Due Period
subsequent to the Due Period relating to such Payment Date. An Early Payment
shall not be deemed a prepayment of any Loan.
Eligible Institution shall mean a depository institution organized
under the laws of the United States of America or any one of the States thereof
(a) the deposits of which are insured, to the full extent permitted by
applicable law, by the FDIC through the Bank Insurance Fund, which is subject to
supervision and examination by federal or state authorities, (b) whose long-term
unsecured debt rating is AAA by each of Standard & Poor's, Fitch IBCA, if rated
by Fitch IBCA, and DCR, if rated by DCR, or certificate of deposit rating is at
least A-1+ by Standard & Poor's, F1+ by Fitch IBCA, if rated by Fitch IBCA, and
D-1+ by DCR, if rated by DCR) or (c) with respect to the Collection Account, as
long as Mellon Mortgage Company is the Servicer, Mellon Bank, N.A.
Eligible Investments at any time means any of the following:
(i) Government Obligations; or
A-8
(ii) commercial paper having an original maturity of less than 270
days and a rating in the highest rating category of Standard & Poor's,
Fitch IBCA, if rated by Fitch IBCA, and DCR, if rated by DCR, at the time
of such investment; or
(iii) 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 any agent of the Indenture Trustee
acting in its commercial capacity so long as it is an Eligible Institution)
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 (a) depository institution or
trust company has a long-term unsecured debt rating (in the case of
obligations of 270 days or over) or short-term unsecured debt rating (in
the case of obligations under 270 days) in the highest rating category of
Standard & Poor's, Fitch IBCA, if rated by Fitch IBCA, and DCR, if rated by
DCR, and provided that each such investment has an original maturity of
less than 365 days, or (b) demand or time deposit or certificate of deposit
is fully insured by the FDIC through the Bank Insurance Fund; or
(iv) repurchase obligations with respect to (a) any security
described in clause (i) collateralized at 105% of the principal amount of
such repurchase obligations or (b) any other security issued or guaranteed
as to timely payment by an agency or instrumentality of the United States
of America, collateralized at 105% of the principal amount of such
repurchase obligations in either case entered into with a depository
institution or trust company (including the Indenture Trustee), acting as
principal, whose obligations having the same maturity as that of the
repurchase agreement would be Eligible Investments under clause (iii) above
(provided that the counterparty is rated at least A-1+ by Standard &
Poor's, F1+ by Fitch IBCA, if rated by Fitch IBCA, and D-1+ by DCR, if
rated by DCR); or
(v) a guaranteed investment contract issued by any insurance
company or other corporation having a claims-paying ability rating,
counter-party risk rating, long-term unsecured debt rating or guaranteed by
an entity with such rating in the highest rating category of Standard &
Poor's, Fitch IBCA, if rated by Fitch IBCA, and DCR, if rated by DCR, at
the time of such investment; or
(vi) investments in money market funds (which may be 12b-1 funds, as
contemplated under the rules promulgated by the Securities and Exchange
Commission under the Investment Company Act of 1940) having a rating of
AAA-m or AAAM-G from Standard & Poor's (including funds for which the
Indenture Trustee or any of its affiliates acts as an investment advisor or
manager), having a rating of AAA by Fitch IBCA, if rated by Fitch IBCA,
and having a rating of AAA by DCR, if rated by DCR; or
(vii) investments approved in writing by the Majority-in-Interest
of the Notes and acceptable to the Rating Agencies.
A-9
Environmental Laws shall mean any foreign, federal, state or local
statute, code, ordinance, rule, regulation, permit, consent, approval, license,
judgment, order, writ, judicial decision, common law rule, decree, agency
interpretation, injunction or other authorization or requirement whenever
promulgated, issued, modified or otherwise in effect, including the requirement
to register underground storage tanks, relating to: (i) emissions, discharges,
spills, releases or threatened releases of Hazardous Substances or materials
containing Hazardous Substances, into ambient air, surface water, groundwater,
watercourses, publicly or privately owned treatment works, drains, sewer
systems, wetlands, septic systems or onto land; (ii) the use, treatment,
storage, disposal, handling, manufacturing, transportation, or shipment of
Hazardous Substances, materials containing Hazardous Substances (or of equipment
or apparatus containing Hazardous Substances) as defined in or regulated under
the Hazardous Materials Transportation Act, 49 U.S.C. (S) 1801 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
(S) 9601 et seq., and/or the Toxic Substances Control Act, 15 U.S.C. (S) 2601 et
seq., and their implementing regulations as they may be amended from time to
time or (iii) otherwise relating to pollution or the protection of human health
or the environment.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended.
Event of Default shall have the meaning accorded to such term in
Article VII of the Indenture.
FCR shall mean the fixed charge coverage ratio which, for any 12-month
period is equal to the sum of the adjusted fee cash flow and occupancy cost
divided by the sum of occupancy cost and total debt service.
FDIC shall mean The Federal Deposit Insurance Corporation, or any
successor thereto.
Fee Mortgage Loan shall mean a Loan secured by a mortgage on the fee
interest of the real property where the franchise unit is located.
Fiduciary with respect to a Plan shall have the meaning accorded to
such term in ERISA.
1st Leasehold Mortgage, 3rd Party Lessor Loan shall mean a Loan
secured by a tenant's leasehold interest in the building and the land.
Fiscal Year shall mean the calendar year from each January 1 to the
following December 31.
Fitch shall mean Fitch IBCA, Inc.
A-10
Franchise Agreement shall mean with respect to any Borrower, the
franchise agreement with a franchisor pursuant to which the Borrower operates
its franchise business at the location specified in such agreement.
Franchisor Lease Loan shall mean any Loan whereby the franchisor is
the lessor under the related lease and the Borrower is the lessee and an
intercreditor or tri-party agreement among the Seller, the Borrower and the
franchisor provides each party with specific cure rights based upon the nature
of the default.
▇▇▇▇ Act shall mean the ▇▇▇▇-St. Germain Depository Institutions Act
of 1982.
Global Securities shall mean Notes issued in the form of one or more
fully registered global notes deposited with, or on behalf of, DTC and
registered in the name of DTC or its nominee.
Government Obligations shall mean (i) non-callable direct obligations
of, or non-callable obligations fully guaranteed by, the United States of
America 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, or (ii) an investment in a no-load money market fund rated
AAA-G by Standard & Poor's, the assets of which are invested solely in
obligations described in (i).
Grant shall have the meaning specified in the Granting Clauses of the
Indenture.
Grantor Trust shall mean the grantor trust created pursuant to the
terms of the Pooling Agreement.
Ground Lease Loan shall mean a Loan secured by a trust deed/mortgage
on both the tenant's interest under the ground lease and the tenant's ownership
of the improvements subject to the ground lease.
Hazardous Substances shall mean (a) hazardous materials, hazardous
wastes, hazardous substances and toxic substances as those terms are defined
under the following statutes and their implementing regulations as they may be
amended from time to time: the Hazardous Materials Transportation Act, 49 U.S C.
(S) 1791 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901
et seq., the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. (S) 9601 et seq., the Clean Water Act, 33 U.S.C. (S) 1251 et
seq., and the Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq., (b)
petroleum and petroleum products including crude oil and any fractions thereof,
(c) natural gas, synthetic gas and any mixtures thereof, (d) asbestos and/or any
material which contains any hydrated mineral silicate, including, without
limitation, chrysotile, amosite, crocidolite, tremolite, anthophyllite and/or
actinolite, whether friable or nonfriable, (e) PCBs, or PCB-containing materials
or fluids, (f) radon, (g) any other hazardous, radioactive, toxic or noxious
substance, material, pollutant, contaminant, product, by-product or solid,
liquid or gaseous waste, and (h) any other substance regulated by any
Environmental Laws.
A-11
Holder shall mean a Noteholder.
Indenture shall mean the Indenture of Trust, dated as of August 1,
1998, between the Issuer and the Indenture Trustee, as the same may be amended
or supplemented from time to time.
Indenture Trust Estate shall have the meaning specified in the
Granting Clauses of the Indenture.
Indenture Trustee shall mean Bankers Trust Company, a New York banking
corporation, until a successor Person shall have become the Indenture Trustee
pursuant to the applicable provisions of the Indenture, and thereafter
"Indenture Trustee" shall mean such successor Person.
Independent Accountant shall mean the firm of independent accountants
appointed by the Servicer pursuant to Section 3.3 of the Servicing Agreement.
Independent Director with respect to the Depositor shall mean a
natural person who, for the five-year period prior to his or her appointment as
Independent Director has not been, and during the continuation of his or her
service as Independent Director is not: (i) an employee, director, stockholder,
partner or officer of the Depositor or any of its affiliates (other than his or
her service as an Independent Director of the Depositor or any affiliate of the
Depositor); (ii) a customer or supplier that derives more than ten percent of
its revenues from the Issuer or any of its affiliates; or (iii) any member of
the immediate family of a person described in (i) or (ii).
Ineligible Loan shall have the meaning accorded to such term in the
Loan Sale and Purchase Agreement.
Initial Aggregate Notional Amount shall mean with respect to the Class
A-X Notes, $201,339,799.
Initial Aggregate Principal Amount shall mean approximately (i)
$190,266,110 with respect to all Notes, (ii) $ ***/5/ with respect to the Class
A-1 Notes, (iii) $ *** with respect to the Class A-2 Notes, (iv) $ *** with
respect to the Class B Notes, (v) $ *** with respect to the Class C Notes, (vi)
$ *** with respect to the Class D Notes, (vii) $ *** with respect to the Class E
Notes, (viii) $ *** with respect to the Class F Notes and (ix) $ *** with
respect to the Loans.
-------------------
/5/ Certain information has been deleted from this document where
denoted by asterisks, and has been filed separately with the Commission. The
Company has requested confidential treatment for such omitted information.
A-12
Initial Deposit shall mean the initial deposit into the Collection
Account and represents payments, if any, made in respect of the Loans after the
Cut-Off Date and prior to the Closing Date.
Initial Issuer Balance shall mean $11,073,689.
Initial Notional Amount shall mean, with respect any Class A-X Note,
the initial notional amount of such Class A-X Note on the Closing Date as
indicated thereon.
Initial Principal Amount shall mean, with respect to any Note, the
initial principal amount of such Note on the Closing Date as indicated thereon.
Initial Purchaser shall mean PaineWebber Incorporated and its
successors and assigns.
Insurance Policy or Insurance Policies shall mean any insurance policy
or policies maintained by a Borrower in accordance with the requirements of its
Loan Documents or by the Servicer pursuant to the Servicing Agreement with
respect to any Loan.
Insurance Proceeds shall mean any amounts received upon settlement of
a claim filed under an Insurance Policy (including proceeds of title insurance),
net of direct fees, costs (exclusive of overhead) and disbursements incurred in
connection with the collection thereof or the restoration or replacement of such
Borrower's collateral as contemplated by the Loan Documents.
Interest Distribution shall mean, with respect to each Class of Notes
other than the Class A-X Notes, the amount designated as the Interest
Distribution for such Class of Notes, and with respect to the Class A-X Notes,
the Class A-X Distribution.
Interest Payment shall mean, with respect to a Payment Date and a
Loan, any payment of interest due from the Borrower in respect of such Loan in
the related Due Period.
Investment Income shall mean the difference (but not below zero) of
(i) the sum of all investment interest or other earnings on Accounts that are
part of the Trust Estate, minus (ii) any investment losses incurred in respect
of Accounts that are part of the Trust Estate.
IRS shall mean the Internal Revenue Service.
Issuer shall mean ▇▇▇▇▇▇▇▇ Franchisee Loan Funding 1998-A LLC, a
special purpose limited liability company organized under the laws of the State
of Delaware, and its successors and assigns.
Issuer Balance shall mean on any date, an amount equal to the
difference, if any, obtained by subtracting (i) the Aggregate Outstanding
Principal Amount of the Notes from (ii) the Aggregate Outstanding Principal
Amount of the Loans.
A-13
Issuer Rate shall mean, with respect to any Accrual Period, a per
annum rate equal to ***./6/
Late Payment Charges shall mean, with respect to a Payment Date and a
Loan, all late payment charges (as described in the Promissory Note) due for
such Loan in respect of the related Due Period.
Leasehold Mortgage shall mean the leasehold mortgage (or collateral
assignment of lease) with respect to any lease, if any, securing the obligations
of the Borrower under its Promissory Note, as such leasehold mortgage (or
assignment of lease) may be amended, modified or renewed from time to time.
Limited Liability Company Agreement shall mean the limited liability
company agreement of the Issuer.
Liquidated Loan shall mean any Defaulted Loan as to which the
Servicing Advisor has reasonably determined that all amounts it reasonably
expects to collect with respect to such Defaulted Loan have been collected.
Liquidation Date shall mean, with respect to a Defaulted Loan, the
date on which such Defaulted Loan is determined to be a Liquidated Loan.
List of Loans shall mean the schedule listing all of the Loans
constituting a part of the Trust Estate under the Indenture, which schedule
shall set forth or include for each Loan listed thereon (i) the name of the
Borrower under such Loan, (ii) the original principal amount of the Promissory
Note evidencing such Loan, (iii) the original and the remaining term to the
Maturity Date of such Loan, (iv) the amortization term of such Loan and (v) the
interest rate.
Loan shall mean any Restaurant Loan or Specialty Retail Loan and
Loans, collectively, shall mean the Restaurant Loans and the Specialty Retail
Loans.
Loan Documents shall mean, with respect to a Loan, those instruments,
agreements, guaranty documents, certificates or other writings, now or hereafter
executed and delivered by the Borrower in respect of such Loan, including,
without limitation, those which are required to be included in the Loan File
therefor, as the same may be modified, amended, consolidated, continued or
extended from time to time.
Loan File shall mean the following instruments and documents in
connection with each Loan:
------------------
/6/ Certain information has been deleted from this document where
denoted by asterisks, and has been filed separately with the Commission. The
Company has requested confidential treatment for such omitted information.
A-14
(i) the executed original of the Promissory Note endorsed to the
order of the Depositor and then to the order of the Certificate Trustee, on
behalf of the Grantor Trust;
(ii) an executed original of the loan agreement between the Borrower
and the Seller relating to the Loan;
(iii) an executed original Security Agreement;
(iv) either
(a) the original Mortgage, with evidence of recording thereon,
or a duplicate original of such Mortgage, if applicable,
together with escrow instructions requiring such Mortgage to
be dispatched to the appropriate public recording office for
recordation; or
(b) an executed original Leasehold Mortgage, in appropriate form
for recording (with the possible exception of the obtaining
of a landlord signature) or with evidence of recording
thereon;
(v) an executed original Affiliate Guaranty, if applicable;
(vi) the UCC-1 financing statement, with evidence of filing thereon,
or a copy of the original UCC-1 financing statement, together with escrow
instructions requiring such UCC-1 financing statement to be dispatched to
the appropriate public filing office;
(vii) an executed original of each landlord, mortgagee or prior
lien or estoppel, if applicable;
(viii) an executed original of an intercreditor or similar
agreement among the franchisor, the Seller and the Borrower, if applicable;
(ix) an executed original of a subordination of lessor's lien or
similar agreement between the franchisor and the Seller, if applicable;
(x) the original title insurance policy, if applicable; together
with all riders thereto; or in the event that the original title policy has
not been received from the insurer, any one of an original title binder, an
original preliminary title report, or an original title commitment, or copy
thereof certified by the title company;
(xi) applicable certificates of insurance;
(xii) the environmental indemnity, if applicable;
(xiii) an assignment of Mortgage; and
(xiv) any other credit or security document necessary for the
enforcement of such Loan, if applicable.
Loan Payments shall mean, with respect to a Payment Date and a Loan,
the sum of all Principal Payments, Interest Payments, Loan Yield Maintenance
Amounts, if any, Late Payment Charges, if any, and any other amounts received
from the Borrower in respect of such Loan for the related Due Period.
A-15
Loan Rate shall mean, with respect to each Loan, the rate of interest
borne as set forth on the List of Loans.
Loan Sale and Purchase Agreement shall mean the Loan Sale and Purchase
Agreement, dated as of August 1, 1998, between the Seller and the Issuer.
Loan Yield Maintenance Amount, with respect to any prepaid Loan or
Defaulted Loan which is not a Repurchased Loan, shall mean the loan yield
maintenance amount specified in the related loan agreement.
LTV or LTV Ratio shall mean with respect to any Loan the original
principal amount of a Loan divided by the related Business Value determined at
origination.
LUST shall mean leaking underground storage tank.
Majority-in-Interest shall mean Holders of Notes representing in
excess of fifty percent (50%) of the Percentage Interests or, with respect to
any Class of Notes, Holders of Notes representing in excess of fifty percent
(50%) of the Percentage Interests of such Class or, with respect to the Class A-
X Notes, the Class A-X Noteholders representing in excess of fifty percent (50%)
of the Percentage Interests of such members.
Maturity shall mean, with respect to any Note, the date on which the
unpaid principal of such Note becomes due and payable as provided in the
Indenture, whether at its stated maturity or otherwise.
Maturity Date, with respect to any Loan, shall have the meaning
specified in the Promissory Note evidencing such Loan.
Mortgage shall mean any mortgage or deed of trust or deed to secure a
Loan entered into by a Borrower (but not including Leasehold Mortgages) creating
a lien on and a security interest in the Mortgaged Property securing the
obligations of the Borrower under the related Promissory Note, together with any
other security instruments and any related UCC financing and continuation
statements delivered by the Borrower, including, in all events, the property and
rights assigned under all such instruments, together with all amendments,
substitutions and replacements of any of the foregoing.
Mortgage Assignment shall mean, with respect to each Mortgage, one or
more executed original assignments in recordable form evidencing the assignment
of the related Mortgage from the Seller to the Issuer and from the Issuer to the
Indenture Trustee for the benefit of the Noteholders.
Mortgage Title Insurance shall mean title insurance obtained by the
Seller in connection with a Mortgage or Leasehold Mortgage securing a Loan.
A-16
Mortgaged Property shall mean, collectively, all fee simple (or ground
lessee) interests of the mortgagor in any real property, including the
improvements thereon, subject to the lien of a Mortgage which secures a Loan.
Net Loss shall mean, with respect to a Liquidated Loan, the amount
equal to (i) the Remaining Principal Payments with respect to such Loan on the
Business Day immediately prior to the Liquidation Date for such Liquidated Loan,
less (ii) all principal received in liquidation of such Loan, net of any
Servicing Advances and Reimbursements of the Servicer and Servicing Advisor.
1933 Act shall mean the Securities Act of 1933, as amended, and the
applicable published rules and regulations thereunder.
1934 Act shall mean the Securities Exchange Act of 1934, as amended,
and the applicable published rules and regulations thereunder.
1940 Act shall mean the Investment Company Act of 1940, as amended,
and the applicable published rules and regulations thereunder.
Note or Notes shall mean any note or notes, as the case may be, issued
pursuant to the Indenture.
Noteholder shall mean the registered owner of a Note as evidenced by
the Note Register.
Note Obligations shall mean any and all liabilities and obligations
under or in connection with the Notes, including, without limitation, any and
all liabilities and obligations for payment of principal, interest and Loan
Yield Maintenance Amount, if any, under the Notes.
Note Rate shall mean (i) with respect to the Class A-1 Notes, the
Class A-1 Note Rate, (ii) with respect to the Class A-2 Notes, the Class A-2
Note Rate, (iii) with respect to the Class A-X Notes, the Class A-X Note Rate,
(iv) with respect to the Class B Notes, the Class B Note Rate, (v) with respect
to the Class C Notes, the Class C Note Rate, (vi) with respect to the Class D
Notes, the Class D Note Rate, (vii) with respect to the Class E Notes, the Class
E Note Rate and (viii) with respect to the Class F Notes, the Class F Note Rate.
Offering Circular shall mean the Confidential Offering Circular dated
July 31, 1998, relating to the Notes.
Officer's Certificate shall mean, unless otherwise specified, a
certificate signed by any Authorized Officer of the party delivering such
certificate, delivered to the Indenture Trustee and complying with the
applicable requirements of Section 11.1 of the Indenture or, with respect to a
transferee under Section 2.6(c) of the Indenture, complying with the
requirements thereof.
OID shall mean "original issue discount." A Note will have OID if its
stated redemption price at maturity exceeds its issue price by more than a
statutory de minimis amount.
A-17
Opinion of Counsel shall mean one or more written opinions of counsel
who may, except as otherwise expressly provided in the Indenture, be counsel for
the Issuer or its affiliates.
Optimal Principal Amount shall mean, with respect to any Payment Date,
an amount equal to the sum of the following, without duplication:
(i) for all Loans (other than Loans included in (iii)), an amount
equal to scheduled monthly payments received on such Loans attributable to
reductions in principal less advances of principal with respect thereto
made with respect thereto for any prior Due Period;
(ii) all advances of principal made by the Servicer with respect to
such Due Period;
(iii) for each prepaid Loan (or Repurchased Loan) for which a
Prepayment Amount (or, with respect to a Repurchased Loan, the Repurchase
Price therefor) has been received during the Prepayment Period and not
distributed on any prior Payment Date, an amount equal to the Remaining
Principal Payments of such Loan as of the date of prepayment (or
repurchase); and
(iv) all Principal Payments, Insurance Proceeds, Condemnation
Proceeds and other moneys constituting principal in respect of the Loans
(including, without limitation, Remaining Principal Payments in respect of
prepaid or Defaulted Loans) received in the related Due Period and not
included in (i) or (ii).
Origination Date shall mean, with respect to a Loan, the date on which
such Loan was originated.
Outstanding shall mean, as of the date of determination, all Notes
theretofore authenticated and delivered under the Indenture except:
(i) Notes theretofore canceled by the Registrar or delivered to the
Registrar for cancellation;
(ii) Notes for the payment of which money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust for the
Holders of such Notes;
(iii) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered under the Indenture; and
(iv) Notes alleged to have been mutilated, destroyed, lost or stolen
for which replacement Notes have been issued as provided for in Section 2.8
of the Indenture;
provided, however, that in determining whether the Holders of Notes having the
-------- -------
requisite aggregate Percentage Interest have given any request, demand,
authorization, direction, notice, consent or waiver under the Indenture, 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. Notes so
A-18
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee is not
the Issuer or any other obligor upon the Notes or any Affiliate of the Issuer or
such other obligor.
Outstanding Notional Amount shall mean as of any date of determination
with respect to the Class A-X Notes, the sum of the Aggregate Outstanding
Principal Amount of the Notes and the Issuer Balance.
Outstanding Principal Amount shall mean as of any date of
determination, with respect to any Note, other than a Class A-X Note, the
Initial Principal Amount thereof less any payment of principal on such Note and
all Write-down Amounts attributable to such Note prior to such date of
determination.
P&I Advance shall mean an advance required to be made by the Servicer,
subject to a recoverability determination within two Business Days following the
Accounting Date, with respect to each Payment Date in an amount that is
generally equal to the aggregate of all Scheduled Payments, due or deemed due,
as the case may be, on or in respect of a Delinquent Loan during the related Due
Period, in each case to the extent that such amount was not paid by or on behalf
of the related Borrower as of the close of business on the Accounting Date for
the related Payment Date. The Servicer will not be required to make any P&I
Advances to the extent that the Servicer determines that the Servicer will not
be able to recover the Reimbursements with respect to any such P&I Advances.
Payment Date shall mean the fifteenth day of each month in each year,
or if such day is not a Business Day, the next succeeding Business Day
commencing September 15, 1998.
Percentage Interest shall mean (i) with respect to each Class of
Notes, other than the Class A-X Notes, a fraction, expressed as a percentage,
the numerator of which is the Initial Aggregate Principal Amount of such Class
of Notes and the denominator of which is the Initial Aggregate Principal Amount
of all Notes, (ii) with respect to each Note, other than a Class A-X Note, a
fraction, expressed as a percentage, the numerator of which is the Initial
Principal Amount of such Note, and the denominator of which is the Initial
Aggregate Principal Amount of all Notes of the same Class and (iii) with respect
to a Class A-X Note, the percentage interest set forth on the face thereof.
Periodic Filings shall mean any filings or submissions that the Issuer
is required to make with any state or federal regulatory agency or under the
Code.
Person shall mean any legal person, including any individual,
corporation, partnership, joint venture, limited liability company, association,
joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
Plan shall mean any employee benefit plan subject to ERISA or plans or
arrangements subject to Code Section 4975.
A-19
Plan Asset Regulations shall mean the DOL final regulations concerning
the definition of what constitutes the assets of a Plan for purposes of ERISA
and the prohibited transaction provisions.
Pooling Agreement shall mean the Pooling Agreement dated as of August
1, 1998 by and between the Issuer and the Certificate Trustee.
PORTAL shall mean The PortalSM Market, a subsidiary of the Nasdaq
Stock Market, Inc.
Pre-Cut-Off Date Loan Payments shall mean all payments under the Loans
(including all payments of principal and interest) due on and prior to the Cut-
Off Date.
Prepayment Amount shall mean as of any Determination Date (x) with
respect to a prepaid Loan or a Defaulted Loan, an amount equal to the sum of (1)
the Remaining Principal Payments of such Loan or Defaulted Loan, together with
any other principal payments due on the Loan, (2) accrued interest on such Loan
or Defaulted Loan to the date of prepayment, and (3) an amount equal to the Loan
Yield Maintenance Amount, if any, with respect to such prepaid Loan or Defaulted
Loan; and (y) with respect to a Repurchased Loan, an amount equal to the
Repurchase Price for such Loan.
Prepayment Discount Rate shall mean, with respect to a prepaid Loan,
the discount rate utilized in calculating the Loan Yield Maintenance Amount for
such Loan.
Prepayment Period shall mean (i) with respect to the first Payment
Date, the period from but excluding the Cut-Off Date through and including the
last day of the related Due Period and (ii) with respect to each Payment Date
after the first Payment Date, the related Due Period.
Principal Balance shall mean with respect to any Note or Class of
Notes, other than the Class A-X Notes, and any date of determination, the
Initial Aggregate Principal Amount of such Note or Classes of Notes reduced by
all distributions in respect of principal on such Note or Class of Notes and all
Write-down Amounts allocated to such Notes or Class of Notes.
Principal Payment shall mean, with respect to a Payment Date and a
Loan, any payment of principal due in respect of such Loan in the related Due
Period.
Proceeding shall mean any suit in equity, action at law or other
judicial or administrative proceeding.
Promissory Note shall mean the promissory note executed by a Borrower
as evidence of the obligation of such Borrower to repay funds borrowed by the
Borrower from the Seller constituting a Loan, as such promissory note may be
amended, extended, modified or renewed from time to time.
Prospective Owner shall mean each prospective transferee of an
interest in Notes.
A-20
Purchase Agreement shall mean, with respect to the purchase and resale
of the Notes, that certain Purchase Agreement between the Issuer and the Initial
Purchaser relating thereto.
QIBs shall mean "qualified institutional buyers" as defined in Rule
144A under the 1933 Act.
Rated Final Distribution Date shall mean for each Class of Notes, May
15, 2002.
Rating Agencies shall mean Standard & Poor's, DCR and Fitch IBCA.
Record Date shall mean, with respect to a Payment Date, the last day
of the immediately preceding calendar month.
Recoveries shall mean for any Prepayment Period occurring after the
date on which any Loan becomes a Defaulted Loan and with respect to such
Defaulted Loan all payments or amounts received on or in respect of such Loan
(whether in connection with the disposition of such Loan or any or the related
Collateral or otherwise) during such Prepayment Period in respect of amounts
then payable pursuant to such Defaulted Loan (including, without limitation, any
amounts received by the Servicer or the Indenture Trustee in connection with the
management or operation of any REO Property), net of out-of-pocket direct costs
(exclusive of overhead) and expenses reasonably incurred by the Servicer, the
Servicing Advisor or the Indenture Trustee in connection with any such payments
or amounts and any preservation and disposition of the Loan or related
Collateral.
Register shall have the meaning specified in Section 2.6 of the
Indenture.
Registrar shall have the meaning specified in Section 2.6 of the
Indenture.
Reimbursement shall mean amount entitled to be recovered by the
Servicer in respect of P&I Advances, equal to (i) the amount of any P&I Advance
made by the Servicer and (ii) interest on such P&I Advance from the date it was
made at the Reimbursement Rate.
Reimbursement Rate shall mean a per annum rate equal to the "prime
rate" published in the "Money Rates" section of The Wall Street Journal, as such
"prime rate" may change from time to time.
Remaining Average Life shall mean, with respect to a Loan on any date,
the number of years (calculated to the nearest one-twelfth year) obtained by
dividing (a) the sum of the products obtained by multiplying (i) each remaining
principal payment (but not interest thereon) by (ii) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the date
of determination and the scheduled due date of such remaining principal payment
by (b) the outstanding Principal Balance of the Loan.
Remaining Principal Payments shall mean as of any date, with respect
to any Loan or a Loan that is a Defaulted Loan, all scheduled Principal Payments
with respect to such
A-21
Loan or Loan that is a Defaulted Loan that would be or become due on or after
such date for such Loan or Loan that is a Defaulted Loan; provided, however,
-------- -------
that the Remaining Principal Payments of any Liquidated Loan shall be deemed to
be zero.
REO Properties shall mean collateral related to any Loan acquired by
or on behalf of the Noteholders through foreclosure, deed in lieu of foreclosure
or otherwise.
Repurchase Option shall mean, with respect to any Loan which has
become an Ineligible Loan, the right to require the Seller to repurchase such
Loan for the Repurchase Price for such Loan, which right is granted in the Loan
Sale and Purchase Agreement with respect to such Loan and is exercisable during
the related Repurchase Option Period by written notice of election to exercise
to the Seller.
Repurchase Option Date shall mean the date upon which the Issuer
delivers written notice to the Seller stating that one or more of the Seller's
representations and warranties with respect to a Loan set forth in the Loan Sale
and Purchase Agreement were inaccurate in a material and adverse respect on the
date and time in which such representations and warranties were made.
Repurchase Option Period shall mean, with respect to any Repurchase
Option, the period commencing on the Repurchase Option Date and terminating on
the earliest of (i) the date that the Seller assigns to the Grantor Trust a Loan
meeting the requirements established for a substituted Loan in exchange for the
Loan subject to the Repurchase Option; (ii) the date such breached
representations and warranties are cured to the reasonable satisfaction of the
Issuer; and (iii) the date which is 90 days from the Repurchase Option Date.
Repurchase Price shall mean, with respect to any Loan which is
repurchased in accordance with the Loan Sale and Purchase Agreement, an amount
equal to the then outstanding principal amount of such Loan plus any unpaid
interest thereon that has accrued at the Loan Rate to the date of repurchase and
any ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances or Servicing Advances and accrued interest thereon
at the Reimbursement Rate.
Repurchased Loan shall mean any Loan repurchased by the Seller for the
Repurchase Price in accordance with the Loan Sale and Purchase Agreement and
shall be treated as a prepaid Loan for purposes of the Indenture.
Reserve Account shall mean the account by that name created,
maintained and disbursed, from time to time, pursuant to Article V of the
Indenture.
Reserve Deposit Amount shall mean $100,000.
Restaurant Borrower shall mean the Borrower of a Restaurant Loan, and
its successors and assigns.
Restaurant Business shall mean a retail business that operates a quick
service or casual dining restaurant business.
A-22
Restaurant Loan shall mean each Loan made or acquired by the Seller to
a Restaurant Borrower that operates a Restaurant Business which Loans are
evidenced by a Promissory Note owned by the Issuer listed on the List of Loans
as a Restaurant Loan and granted and delivered to the Indenture Trustee under
the Indenture as security for the Notes.
Rule 144A Information shall mean the information requested by
prospective purchasers necessary to satisfy the requirements of Rule 144A under
the 1933 Act.
Scheduled Payment shall mean, with respect to a Payment Date and a
Loan, the sum of the scheduled principal payments and interest payments, if any,
due from the Borrower in respect of such Loan in the related Due Period in
accordance with the terms of the related Loan Documents.
Secured Party shall, with respect to any Loan, have the meaning
accorded to such term in the Loan Documents for such Loan.
Security Agreement shall mean, with respect to a Loan, the Security
Agreement included in the Loan Documents in respect of such Loan.
Seller shall mean ▇▇▇▇▇▇▇▇ Capital Incorporated, a Delaware
corporation.
Senior Notes shall mean the Class A-1 Notes, the Class A-2 Notes, the
Class B Notes, the Class C Notes, and the Class D Notes.
Servicer shall mean Mellon Mortgage Company in its capacity as
servicer under the Servicing Agreement, together with its subservicers,
successors and assigns as permitted thereunder.
Servicer Report Date shall mean, with respect to a Payment Date, the
fifth Business Day preceding such Payment Date.
Servicer's Certificate shall mean a certificate to be provided by the
Servicer in accordance with Section 3.1 of the Servicing Agreement and signed by
an Authorized Officer of the Servicer and furnished to the Issuer and the
Indenture Trustee by the Servicer.
Servicing Advances shall mean funds advanced by the Servicer or the
Servicing Advisor in respect of expenses in connection with the Loans (whether
for maintaining insurance, protecting or maintaining Collateral, or otherwise).
Servicing Advisor shall mean ▇▇▇▇▇▇▇▇ Capital Incorporated, a Delaware
corporation, in its capacity as servicing advisor under the Servicing Agreement,
together with its subservicers, successors and assigns as permitted thereunder.
A-23
Servicing Advisor Fee shall mean the fee payable to the Servicing
Advisor pursuant to the Servicing Agreement which for any Payment Date shall
mean an amount equal to one twelfth of the product of (a) ***/7/ and (b) the
Aggregate Outstanding Principal Amount of the Loans for such Payment Date.
Servicing Agreement shall mean the Servicing and Custodial Agreement,
dated as of August 1, 1998, by and among the Certificate Trustee, the Indenture
Trustee, the Custodian, the Servicer and the Servicing Advisor wherein the
Servicer and the Servicing Advisor agreed to provide administrative, servicing
and collection supervision services in respect of the Loans for the benefit of
the Noteholders.
Servicing Fee shall mean the fee payable to the Servicer pursuant to
the Servicing Agreement which for any Payment Date shall mean an amount equal to
the sum of (i) one twelfth of the product of (x) the Servicing Fee Rate and (y)
the Aggregate Outstanding Principal Amount of the Loans for such Payment Date,
plus (ii) Late Payment Charges, if any, received during the related Prepayment
Period with respect to the Loan plus (iii) plus amounts in respect of Servicing
Advances in respect of the Loan, if any, during the related Prepayment Period
that are reimbursable pursuant to the Servicing Agreement, plus any
Reimbursements of P&I Advances.
Servicing Fee Rate shall mean *** per annum.
Servicing Standard shall mean such customary, prudent and usual
procedures of financial institutions which service loans similar to the Loans
and to the extent more exacting, the procedures which the Servicer would use if
the Loans were owned by the Servicer.
SMMEA shall mean the Secondary Mortgage Market Enhancement Act of
1984.
Specially Serviced Loan shall mean (i) a Loan which is a Delinquent
Loan for a period of 60 consecutive days and (ii) a Loan with respect to which
the related Borrower is a debtor in any proceeding under any Bankruptcy Law.
Specialty Retail Borrower shall mean the Borrower of a Specialty
Retail Loan and its successor and assigns.
Specialty Retail Business shall mean a retail business that sells
quick lube and automotive maintenance services.
Specialty Retail Loan shall mean each Loan made by the Seller to an
Specialty Retail Borrower that operates an Specialty Retail Business, which
Loans are evidenced by a
--------------
/7/ Certain information has been deleted from this document where denoted
by asterisks, and has been filed separately with the Commission. The Company has
requested confidential treatment for such omitted information.
A-24
Promissory Note owned by the Issuer listed on the List of Loans as an Specialty
Retail Loan and delivered to the Indenture Trustee under the Indenture as
security for the Notes.
Standard & Poor's or S&P shall mean Standard & Poor's Ratings
Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
State shall mean any one of the states of the United States of
America, or the District of Columbia.
Super-Majority-in-Interest shall mean Holders of Notes representing in
excess of sixty-six and two-thirds percent (66 2/3 %) of the Percentage
Interests of the Notes.
Tax Counsel shall mean ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, as special tax counsel to
the Issuer.
Third Party Pledgee shall have the meaning accorded such term in "Risk
Factors--The Loans--Cross-Collateralization Considerations" in the Offering
Circular.
Title Insurance Policy shall mean, with respect to a particular
Mortgaged Property, an ALTA (extended coverage) Loan Title Insurance Policy or
Policies or other title insurance (including all riders or endorsements thereto)
containing no survey exceptions and insuring the Seller that the Mortgage
constitutes a valid first lien on the Mortgaged property, subject to permitted
encumbrances.
Total Weighted Average Rate shall mean, for any Accrual Period, a per
annum rate equal to (a) the sum of (i) the sum of the products of the Aggregate
Outstanding Principal Amount of each Class of Notes, other than the Class A-X
Notes, multiplied by the related Note Rate and (ii) and the product of the
Issuer Balance multiplied by the Issuer Rate, divided by (b) the sum of the
Aggregate Outstanding Principal Amount of the Notes and the Issuer Balance.
Transfer shall mean an event by which a Note is sold, pledged,
hypothecated or otherwise transferred.
Trustee Fee shall mean the fee payable to the Indenture Trustee
pursuant to the Indenture which for any Payment Date shall be an amount equal to
one-twelfth of the product of (x) the Trustee Fee Rate and (y) the Aggregate
Outstanding Principal Amount of the Loans for such Payment Date.
Trustee Fee Rate shall mean ***/8/ per annum.
-----------------------
/8/ Certain information has been deleted from this document where
denoted by asterisks, and has been filed separately with the Commission. The
Company has requested confidential treatment for such omitted information.
A-25
Trust Estate shall mean the Loans and other Collateral deposited in
the Grantor Trust by the Depositor.
Trust Office shall mean the office of the Indenture Trustee located at
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as such location may be changed from
time to time in accordance with the Indenture.
UCC shall mean Uniform Commercial Code.
Underwriting Guidelines shall mean, with respect to the Seller and a
Loan, the underwriting guidelines of the Seller under which the Loan was
originated.
Unit FCR, with respect to any Loan, shall mean the FCR of the financed
franchise unit.
WAPT Rate shall mean with respect to any Accrual Period, a per annum
rate equal to (i) (a) the sum of the products of the Outstanding Principal
Balance of each Loan multiplied by the related Loan Rate in respect of such
Accrual Period, divided by (b) the Aggregate Outstanding Principal Balance of
the Loans, less (ii) the sum of (a) the Trustee Fee Rate and (b) the Servicing
Fee Rate.
Write-down Amount shall mean, with respect to any Net Loss incurred in
respect of any Liquidated Loan, the amount by which (a) the sum of the Aggregate
Outstanding Principal Amount of the Notes and the Issuer Balance is greater than
(b) the Aggregate Outstanding Principal Amount of the Loans.
Yield Maintenance Available Funds shall mean, with respect to any
Prepayment Period, all Loan Yield Maintenance Amounts collected in the
Collection Account during such Prepayment Period.
Zoning Laws shall mean, with respect to any Borrower and franchise
unit, the applicable building and zoning ordinances and codes affecting such
franchise unit.
A-26
