1
Exhibit 10.1
INDENTURE
among
MICROFINANCIAL INCORPORATED,
as Servicer,
MFI FINANCE CORP. I,
as Issuer,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Indenture Trustee,
and
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Back-up Servicer
Dated as of March 1, 2000
2
TABLE OF CONTENTS
PAGE
ARTICLE ONE
DEFINITIONS
Section 1.01 Definitions 2
Section 1.02 Usage of Terms 19
Section 1.03 Legal Holidays 19
ARTICLE TWO
THE NOTES
Section 2.01 Form Generally 20
Section 2.02 Series; Denomination 20
Section 2.03 Execution, Authentication, Delivery and Dating 21
Section 2.04 [Reserved] 21
Section 2.05 Registration, Registration of Transfer and Exchange 21
Section 2.06 Limitation on Transfer and Exchange 22
Section 2.07 Mutilated, Destroyed, Lost or Stolen Note 23
Section 2.08 Payment of Principal and Interest; Principal and Interest Rights Preserved 24
Section 2.09 Persons Deemed Owner 25
Section 2.10 Cancellation 25
Section 2.11 Tax Treatment 25
ARTICLE THREE
[reserved]
ARTICLE FOUR
ISSUANCE OF NOTES; SUBSTITUTIONS OF COLLATERAL
Section 4.01 Conditions to Initial Issuance of Notes 27
Section 4.02 Issuances of Additional Series of Notes 28
Section 4.03 Security for Notes 30
Section 4.04 Substitution, Removal and Purchase of Contracts in Trust Estate 31
Section 4.05 Requirements for All Contracts in Trust Estate 32
Section 4.06 Releases 33
Section 4.07 Trust Estate 34
Section 4.08 Notice of Release 34
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01 Satisfaction and Discharge of Indenture 35
Section 5.02 Application of Trust Money 35
i
3
PAGE
ARTICLE SIX
DEFAULTS AND REMEDIES
Section 6.01 Events of Default 36
Section 6.02 Acceleration of Stated Maturity Date; Rescission and Annulment 37
Section 6.03 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee 37
Section 6.04 Remedies 38
Section 6.05 Optional Preservation of Trust Estate 39
Section 6.06 Indenture Trustee May File Proofs of Claim 39
Section 6.07 Indenture Trustee May Enforce Claims Without Possession of Notes 40
Section 6.08 Application of Money Collected Following an Event of Default 40
Section 6.09 Limitation on Suits 41
Section 6.10 Unconditional Right of Noteholders to Receive Principal and Interest 42
Section 6.11 Restoration of Rights and Remedies 42
Section 6.12 Rights and Remedies Cumulative 42
Section 6.13 Delay or Omission; Not Waiver 42
Section 6.14 Control by Noteholders 42
Section 6.15 Waiver of Certain Events by Less than All Noteholders 43
Section 6.16 Undertaking for Costs 43
Section 6.17 Waiver of Stay or Extension Laws 43
Section 6.18 Sale of Trust Estate 44
Section 6.19 Action on Notes 45
ARTICLE SEVEN
THE INDENTURE TRUSTEE
Section 7.01 Certain Duties and Responsibilities 46
Section 7.02 Notice of Default and Other Events 47
Section 7.03 Certain Rights of Indenture Trustee 48
Section 7.04 Not Responsible for Recitals or Issuance of Notes 48
Section 7.05 May Hold Notes 49
Section 7.06 Money Held in Trust 49
Section 7.07 Compensation and Reimbursement 49
Section 7.08 Corporate Trustee Required; Eligibility 50
Section 7.09 Resignation and Removal; Appointment of Successor 50
Section 7.10 Acceptance of Appointment by Successor 51
Section 7.11 Merger, Conversion, Consolidation or Succession to Business of Indenture Trustee 52
Section 7.12 Co-Indenture Trustees and Separate Indenture Trustees 52
Section 7.13 Rights with Respect to the Servicer 53
Section 7.14 Appointment of Authenticating Agent 53
Section 7.15 Indenture Trustee to Hold Contracts 54
Section 7.16 Money for Note Payments to Be Held in Trust 55
ARTICLE EIGHT
THE NOTE INSURANCE POLICIES
Section 8.01 Payments under the Note Insurance Policies 57
4
PAGE
ARTICLE NINE
AMENDMENTS; SUPPLEMENTAL INDENTURES
Section 9.01 Amendments and Supplemental Indentures without Consent of Noteholders 58
Section 9.02 Amendments or Supplemental Indentures with Consent of Noteholders 59
Section 9.03 Execution of Amendments and Supplemental Indentures 60
Section 9.04 Effect of Amendments and Supplemental Indentures 60
Section 9.05 Reference in Notes to Amendments and Supplemental Indentures 60
Section 9.06 Certain Amendments 60
ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01 Redemption at the Option of the Issuer; Election to Redeem 61
Section 10.02 Notice to Indenture Trustee; Deposit of Redemption Price 61
Section 10.03 Notice of Redemption by the Issuer 61
Section 10.04 Notes Payable on Redemption Date 62
Section 10.05 Release of Series Contracts 62
ARTICLE ELEVEN
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 11.01 Representations and Warranties 63
Section 11.02 Covenants 64
Section 11.03 Other Matters as to the Issuer 69
ARTICLE TWELVE
ACCOUNTS AND ACCOUNTINGS
Section 12.01 Collection of Money 70
Section 12.02 Collection Account; Redemption Account 70
Section 12.03 Cash Collateral Account 72
Section 12.04 Reports by Indenture Trustee to the Note Insurer and Noteholders 73
ARTICLE THIRTEEN
PROVISIONS OF GENERAL APPLICATION
Section 13.01 General Provisions 75
Section 13.02 Acts of Noteholders 75
Section 13.03 Notices, etc., to Indenture Trustee, the Note Insurer, Issuer and Servicer 75
Section 13.04 Notices to Noteholders; Waiver 76
Section 13.05 Effect of Headings and Table of Contents 76
Section 13.06 Successors and Assigns 76
Section 13.07 Separability 76
Section 13.08 Benefits of Indenture 77
Section 13.09 Governing Law 77
Section 13.10 Counterparts 77
Section 13.11 Compliance Certificates and Opinions 77
Section 13.12 Consent to Jurisdiction 78
5
This INDENTURE, dated as of March 1, 2000 (this "Indenture"), is among
MFI Finance Corp. I, as Issuer (the "Issuer"), MicroFinancial Incorporated, as
Servicer (the "Servicer"), and Norwest Bank Minnesota, National Association, as
Indenture Trustee (in such capacity, the "Indenture Trustee") and as Back-up
Servicer (in such capacity, the "Back-up Servicer").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for the issuance of the Issuer's Notes issuable as provided
in this Indenture. All covenants and agreements made by the Issuer, the
Servicer, the Indenture Trustee and the Back-up Servicer herein are for the
benefit and security of the Holders of the Notes and, to the extent set forth
herein, the Note Insurer. The Issuer, the Servicer, the Indenture Trustee and
the Back-up Servicer are entering into this Indenture, and the Indenture Trustee
is accepting the trusts created hereby, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of the
Issuer, the Servicer, the Indenture Trustee and the Back-up Servicer in
accordance with its terms have been done.
GRANTING CLAUSE
To secure the payment of the principal of and interest on the Notes in
accordance with their terms, the payment of all of the sums payable under this
Indenture (other than sums payable to the Issuer) and the performance of the
covenants contained in this Indenture, the Issuer hereby Grants to the Indenture
Trustee, solely in trust and as collateral security as provided in this
Indenture, for the benefit of the Holders of the Notes and the Note Insurer, any
and all of the Issuer's right, title and interest in, to and under the following
and any and all benefits accruing to the Issuer from: (a) the Contracts and the
Receivables and all payments received or receivable on or with respect to the
Contracts and the Receivables and due after the applicable Cut-Off Date
(including Servicing Charges); (b) the Equipment; (c) each Insurance Policy
related to the Contracts and any Insurance Proceeds related thereto; (d) the
Contract Acquisition Agreement; (e) the Servicing Agreement; (f) all amounts
from time to time on deposit in the Collection Account, the Cash Collateral
Account and the Redemption Account (including any Eligible Investments and other
property in such accounts); (g) the Contract Files; (h) the Note Insurance
Policies (provided, that the right and interest of the Holders of a Series of
Notes in and to the Note Insurance Policies is limited to the Note Insurance
Policy issued in respect of such Series of Notes); (i) amounts on deposit in the
Operating Account that constitute proceeds of the foregoing and (j) proceeds of
the foregoing (including, but not by way of limitation, all cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind, and other forms of obligations and receivables
which at any time constitute all or part or are included in the proceeds of any
of the foregoing), in each case above whether now owned or hereafter acquired
(all of the foregoing being hereinafter referred to as the "Collateral" or
"Trust Estate"). The foregoing Grant does not constitute and is not intended to
result in a creation or an assumption by the Indenture Trustee, any Noteholder
or the Note Insurer of any obligation of the Issuer, the Company, the Servicer
or any other Person in connection with the Trust Estate or under any agreement
or instrument relating thereto.
The Indenture Trustee acknowledges its acceptance on behalf of the
Noteholders and the Note Insurer of all right, title and interest previously
held by the Issuer in, to and under the Trust Estate, and
6
declares that it shall maintain such right, title and interest in accordance
with the provisions hereof and agrees to perform the duties herein required to
the best of its ability to the end that the interests of the Noteholders and the
Note Insurer may be adequately and effectively protected.
ARTICLE ONE
DEFINITIONS
SECTION 1.01 DEFINITIONS .
Except as otherwise expressly provided herein or in the applicable
Supplement, or unless the context otherwise requires, the following terms have
the respective meanings set forth below for all purposes of this Indenture, and
the definitions of such terms are equally applicable both to the singular and
plural forms of such terms. Each capitalized term used and not otherwise defined
herein shall have the meaning assigned thereto in the Servicing Agreement or in
the Contract Acquisition Agreement.
"Accrual Date": With respect to any Series of Notes, the date upon
which interest begins accruing on such Notes, as specified in such Notes and the
applicable Supplement.
"Accrual Period": With respect to any Series of Notes and (i) each
Payment Date other than an Initial Payment Date, the period beginning on the
sixteenth day of the immediately preceding calendar month and ending on the
fifteenth day of the calendar month in which such Payment Date occurs, and (ii)
an Initial Payment Date, the period beginning on the related Accrual Date and
ending on the fifteenth day of the calendar month in which such Initial Payment
Date occurs.
"Acquisition Date": Any Delivery Date or date of substitution of a
Substitute Contract, as the context may require.
"Act": With respect to any Noteholder, the meaning specified in Section
13.02.
"Additional Contract": Each Contract acquired by the Issuer on an
Acquisition Date other than the Initial Delivery Date.
"Additional Principal Amount": The amount, if any, payable to
Noteholders pursuant to Section 12.02(d)(x) hereof.
"Additional Servicer Fee": The amount, if any, of the fee payable in
accordance with Section 6.02 of the Servicing Agreement to a successor Servicer
appointed pursuant to Section 6.02 of the Servicing Agreement that is in excess
of the Servicer Fee.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control," when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate IPB": The aggregate of the Implicit Principal Balances of
all Series Contracts for all Outstanding Series of Notes.
2
7
"Aggregate Initial IPB": The sum of all Series Initial IPB for all
Outstanding Series of Notes.
"Agreement Regarding Operating Account": The Agreement Regarding
Operating Account, dated as of March 1, 2000, between the Indenture Trustee and
Fleet National Bank, as agent under the Credit Agreement.
"Amended Contract Schedule": With respect to any Series Contract
Schedule, the list of Contracts amending such Series Contract Schedule pursuant
to any acquisition, removal, substitution, repurchase or modification of
Contracts in accordance with the terms hereof and the Contract Acquisition
Agreement, and accompanied by a MFI Certificate and a Company Certificate.
"Annualized Default Rate": Unless otherwise specified in any applicable
Supplement, for any Determination Date, the product (stated as a percentage) of
(a) twelve and (b) a fraction, the numerator of which is equal to (i) the sum of
the Implicit Principal Balances of all Contracts that have become Defaulted
Contracts during the related Due Period minus (ii) the amount of Recoveries,
Residual Proceeds and Servicing Charges received during such Due Period, and the
denominator of which is the Aggregate IPB as of the first day of such Due
Period.
"Authenticating Agent": Initially, the Indenture Trustee, and
thereafter, any entity appointed by the Indenture Trustee pursuant to Section
7.14 hereof.
"Back-up Servicer": Norwest Bank Minnesota, National Association.
"Back-up Servicer Fee": With respect to each Series of Notes, the fee
payable on each Payment Date to the Back-up Servicer in consideration for the
Back-up Servicer's performance of its duties pursuant to this Indenture and the
Servicing Agreement as Back-up Servicer, in an amount equal to the product of
(i) one-twelfth of the applicable Back-up Servicer Fee Rate and (ii) the
Outstanding Principal Amount of such Series of Notes immediately following the
preceding Payment Date; provided that, with respect to the Initial Payment Date
for each Series of Notes issued pursuant to this Indenture, the Back-up Servicer
Fee shall equal the amount specified in the applicable Supplement.
"Back-up Servicer Fee Rate": With respect to each Series of Notes, the
rate per annum specified in the applicable Supplement.
"Benefit Plan Investor": The meaning specified in 29 X.X.X.xx.
2510.3-101.
"Board of Directors": Either the board of directors of the Issuer or of
the Servicer, as the context may require, or any duly authorized committee of
such Board.
"Board Resolution": A copy of a resolution certified by the Secretary
or an Assistant Secretary of the Issuer, the Servicer or the Company to have
been duly adopted by its Board of Directors and to be in full force and effect
on the date of such certification and delivered to the Indenture Trustee.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in New York City or in the city in which the
principal place of business of the Issuer or the Servicer or the Corporate Trust
Office of the Indenture Trustee under this Indenture is located are authorized
or obligated by law or executive order to remain closed.
3
8
"Calculation Date": The last day of a Due Period, except that, with
respect to any calculation of the Series Initial IPB, the Calculation Date shall
mean the close of business on the related Cut-Off Date.
"Cash Collateral Account": The trust account or accounts created and
maintained pursuant to Section 12.03 hereof.
"Cash Collateral Account Factor": The meaning specified in the
applicable Supplement.
"Cash Collateral Account Required Balance": As of any determination
date, the sum of all Series Cash Collateral Account Required Balances.
"Change of Control": (a) Either or both Key Employees (i) die, (ii) are
unable to work for a period of six consecutive months, or (iii) cease to be
employed in an executive capacity by the Reported Companies; and (b) such
condition exists for a period of ninety days without approval by the Controlling
Party of a replacement for such Key Employee.
"Code": The Internal Revenue Code of 1986.
"Collateral": The meaning specified in the Granting Clause of this
Indenture.
"Collateralization Percentage": The meaning specified in the applicable
Supplement.
"Collection Account": The meaning specified in Section 12.02(a) hereof.
"Company": Leasecomm Corporation.
"Company Certificate": The meaning specified in the Contract
Acquisition Agreement.
"Concentration Limits": The meaning specified in the Contract
Acquisition Agreement.
"Consolidated Net Deficit": With respect to any period, the
consolidated net deficit of the Reported Companies for such period.
"Consolidated Net Income": With respect to any period, the consolidated
net income of the Reported Companies for such period, without giving effect to
(i) any gain or loss arising from any write-up of assets and (ii) any
extraordinary or nonrecurring gains.
"Contract": Each Lease Contract or Rental Contract.
"Contract Acquisition Agreement": The Contract Acquisition Agreement,
dated as of March 1, 2000, between the Issuer and the Company.
"Contract Assets": The meaning specified in the Contract Acquisition
Agreement.
"Contract File": The meaning specified in the Contract Acquisition
Agreement.
"Controlling Party": The Note Insurer or, if (i) a Note Insurer Default
has occurred and is continuing or (ii) 124 days have elapsed since the date on
which all amounts owing to the Note Insurer under all applicable Note Insurance
Agreements have been paid in full, all Note Insurance Agreements
4
9
have been terminated and all Note Insurance Policies have been surrendered to
the Note Insurer for cancellation, the Majority Holders.
"Corporate Trust Office": The principal corporate trust office of the
Indenture Trustee at 0xx Xxxxxx and Marquette Avenue, MAC N9311-161,
Xxxxxxxxxxx, Xxxxxxxxx 00000, or at such other address as the Indenture Trustee
may designate from time to time by notice to the Note Insurer, the Noteholders
and the Issuer, or the principal corporate trust office of any successor
Indenture Trustee.
"Credit Agreement": The Third Amended and Restated Revolving Credit
Agreement, dated as of December 21, 1999, among the lenders party thereto, Fleet
National Bank (formerly known as BankBoston, N.A.), as agent, and the Company,
as amended from time to time or any credit agreement entered into by the Company
or MicroFinancial as substitution therefor.
"Customer": The lessee or obligor under each related Contract,
including any guarantor of such Person.
"Customer Prepayment Amount": The meaning specified in Section
4.04(d)(ii).
"Cut-Off Date": With respect to the Delivery Date for any Series of
Notes, including the Initial Delivery Date, the meaning specified in the
applicable Supplement and, with respect to any Contracts acquired by the Issuer
and Granted by the Issuer hereunder on any Acquisition Date that is not a
Delivery Date, the Calculation Date immediately preceding such Acquisition Date.
"Default": Any occurrence or circumstance which with notice or the
lapse of time or both would become an Event of Default.
"Defaulted Contract": A Contract shall become a Defaulted Contract at
the earlier to occur of (a) the Calculation Date as of which such Contract has
been delinquent for a period of 181 or more days and (b) the date as of which
the Servicer determines in good faith in accordance with its customary practices
that it shall not make a Servicer Advance with respect to such Contract, that a
prior Servicer Advance with respect to such Contract is unrecoverable or that
the remaining Scheduled Payments under the related Contract are uncollectible.
"Delinquency Rate": For any Determination Date, the percentage
equivalent of a fraction, the numerator of which is the sum of the Implicit
Principal Balances as of the last day of the related Due Period of all Contracts
that are Delinquent Contracts (and that are more than 30 days past due) as of
such date, and the denominator of which is the Aggregate IPB as of the last day
of such Due Period.
"Delinquent Contract": For any Determination Date, any Contract (a) as
to which the entire amount of the Scheduled Payment was not received when due
and which remains unpaid in whole or in part as of the last day of the related
Due Period and (b) which is not a Defaulted Contract.
"Delivery Date": The date on which the Notes of a Series are first
executed, authenticated and delivered, as specified in the related Supplement,
including the Initial Delivery Date in the case of the first Series of Notes
issued hereunder.
"Determination Date": The fourth Business Day preceding each Payment
Date.
5
10
"Discount Rate": With respect to a Series of Notes, unless otherwise
specified in the related Supplement, the rate equal to the sum of the applicable
Note Interest Rate, the Trustee Fee Rate, the Back-up Servicer Fee Rate and the
applicable Note Insurer Premium Rate.
"Dollar(s)": Lawful money of the United States of America.
"Due Date": With respect to each Contract, each date on which a
Scheduled Payment is due from a Customer thereunder.
"Due Period": As to any Determination Date or Payment Date, the period
beginning on the first day and ending on the last day of the calendar month
preceding the month in which such Determination Date or Payment Date occurs.
"Electronic Ledgers": The electronic master records of all contracts of
the Company or the Servicer similar to and including the Contracts.
"Eligible Contract": The meaning specified in the Contract Acquisition
Agreement.
"Eligible Investments": Any and all of the following:
(a) direct obligations of, and obligations fully guaranteed by,
the United States of America, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, the
Federal Home Loan Banks or any agency or instrumentality of
the United States of America the obligations of which are
backed by the full faith and credit of the United States of
America;
(b) (i) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by or federal funds sold by any
depository institution or trust company (including the
Indenture Trustee or its agent acting in their respective
commercial capacities) incorporated under the laws of the
United States of America or any State thereof and subject to
supervision and examination by federal and/or state
authorities, so long as at the time of such investment or
contractual commitment providing for such investment, such
depository institution or trust company has a short term
unsecured debt rating in one of the two highest available
rating categories of S & P and the highest available rating
category of Xxxxx'x and provided that each such investment has
an original maturity of no more than 365 days, and (ii) any
other demand or time deposit or deposit which is fully insured
by the Federal Deposit Insurance Corporation;
(c) repurchase obligations with a term not to exceed 30 days with
respect to any security described in clause (a) above and
entered into with a depository institution or trust company
(acting as a principal) rated "A" or higher by S & P, rated A2
or higher by Xxxxx'x; provided, however, that collateral
transferred pursuant to such repurchase obligation must be of
the type described in clause (a) above and must (i) be valued
weekly at current market price plus accrued interest, (ii)
pursuant to such valuation, equal, at all times, 105% of the
cash transferred by the Indenture Trustee in exchange for such
collateral and (iii) be delivered to the Indenture Trustee or,
if the Indenture Trustee is supplying the collateral, an agent
for the Indenture Trustee, in such a manner as to accomplish
perfection of a security interest in the collateral by
possession of certificated securities;
6
11
(d) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United
States of America or any State thereof which has a long term
unsecured debt rating in the highest available rating category
of each of the Rating Agencies at the time of such investment;
(e) commercial paper having an original maturity of less than 365
days and issued by an institution having a short term
unsecured debt rating in the highest available rating category
of each of the Rating Agencies at the time of such investment;
(f) a guaranteed investment contract approved by each of the
Rating Agencies and the Controlling Party and issued by an
insurance company or other corporation having a long term
unsecured debt rating in the highest available rating category
of each of the Rating Agencies at the time of such investment;
(g) money market funds having ratings in one of the two highest
available rating categories of S & P and the highest available
rating category of Moody's at the time of such investment
which invest only in other Eligible Investments; any such
money market funds which provide for demand withdrawals being
conclusively deemed to satisfy any maturity requirement for
Eligible Investments set forth in this Indenture; and
(h) any other investment approved by the Controlling Party and
each Rating Agency.
Each of the Eligible Investments may be purchased by the Indenture
Trustee or through an Affiliate of the Indenture Trustee.
"Equipment": The equipment leased or rented or purportedly leased or
rented to the Customers pursuant to the Contracts, together with any replacement
parts, additions or repairs thereof, and any accessories incorporated therein or
affixed thereto.
"ERISA": The Employee Retirement Income Security Act of 1974.
"Event of Default": The meaning specified in Section 6.01 hereof.
"Existing Indebtedness": The meaning specified in the Contract
Acquisition Agreement.
"Expected Rental Termination Date": With respect to each Rental
Contract, the Due Date occurring in the last month of the period corresponding
to the multiple of monthly payments used to determine the price paid by the
Company to purchase such Contract.
"Final Due Date": With respect to (a) each Lease Contract, the final
Due Date thereunder and (b) each Rental Contract, the Expected Rental
Termination Date.
"Final Payment Date": With respect to any Note of a Series, the date on
which the final principal payment on such Note is made as therein or herein
provided, whether at the Stated Maturity Date or by acceleration or redemption.
"Floor Percentage": The meaning specified in the applicable Supplement.
7
12
"Grant": To grant, bargain, warrant, alienate, remise, release, convey,
assign, transfer, mortgage, pledge, create and grant a security interest in and
right of set-off against, deposit, set over and confirm. A Grant of the
Contracts, the Receivables or of any other instrument shall include all rights,
powers and options (but none of the obligations) of the Granting party
thereunder, including, without limitation, the immediate and continuing right to
claim, collect, receive and receipt for payments in respect of the Contracts and
the related Receivables, or any other payment due thereunder, to give and
receive notices and other communications, to make waivers or other agreements,
to exercise all rights and options, to bring proceedings in the name of the
Granting party or otherwise, and generally to do and receive anything which the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"Guaranty Amounts": Any and all amounts paid by the individual
guarantor indicated on the applicable Contract.
"Holder" or "Noteholder": The Person in whose name a Note is registered
in the Note Register.
"Implicit Principal Balance" or "IPB": With respect to any Contract and
any date of determination, the present value of the remaining stream of
Scheduled Payments (or, in the case of a Rental Contract, the present value of
the expected remaining stream of Scheduled Payments, assuming that such stream
of Scheduled Payments will terminate at the related Expected Rental Termination
Date) due with respect to such Contract after the applicable Calculation Date
(reduced by the applicable Servicer Fee but not reduced by any Additional
Servicer Fee) calculated by discounting such Scheduled Payments (assuming such
Scheduled Payments are received on the last day of the related Due Period) to
such Calculation Date at an annual rate equal to the applicable Discount Rate,
at the same frequency as the Payment Dates; except that on the Calculation Date,
(a) on or immediately following the deposit into the Collection Account of
Insurance Proceeds equal to the outstanding Implicit Principal Balance of the
related Contract or the Purchase Price, or on or immediately following the
delivery of a Substitute Contract, (b) on or immediately following the date that
a Contract has become a Defaulted Contract or a Terminated Rental Contract, or
(c) immediately preceding the Final Due Date of a Contract, the Implicit
Principal Balance of the related Receivable shall be zero. To the extent that
the Final Due Date of any Series Contract is later than the Stated Maturity Date
of the last maturing Notes of the related Series of Notes, any Scheduled Payment
due on such Contract after the Calculation Date immediately preceding such
Stated Maturity Date shall not be taken into account in calculating the Implicit
Principal Balance of such Contract.
"Indenture Trustee": Norwest Bank Minnesota, National Association.
"Independent": When used with respect to any specified Person means
such a Person, who since the time of appointment and for at least five years
prior thereto (a) is in fact independent of the Issuer, (b) does not have any
direct financial interest or any material indirect financial interest in the
Issuer or in any Affiliate of the Issuer, (c) is not connected with the Issuer
as an officer, employee, shareholder, promoter, underwriter, trustee, partner,
director, customer, supplier or person performing similar functions, (d) is not
a person controlling or under common control with any such stockholder,
customer, supplier or other person and (e) is not a member of the immediate
family of any such stockholder, director, officer, employee, customer, supplier
or other person. For the purposes of this definition, an "Affiliate" of a person
or an entity controlling, controlled by, or under common control with such first
person or entity and the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of management,
policies or activities of a person or entity, whether through ownership of
voting securities, by contract or otherwise; provided that, solely with respect
to the Articles of Organization of
8
13
the Issuer, any Person owning more than 5% of the equity interest in an entity
shall be deemed to have control of such entity. Whenever it is herein provided
that any Independent Person's opinion or certificate shall be furnished to the
Indenture Trustee, such Person shall be appointed by an Issuer Order and
approved by the Indenture Trustee in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read this definition and
that the signer is Independent within the meaning hereof.
"Independent Accountants": Any firm of independent certified public
accountants of recognized national standing satisfactory to the Controlling
Party.
"Initial Cash Collateral Account Deposit": The amount, if any, required
to be deposited by the Issuer into the Cash Collateral Account in connection
with the issuance of any new Series of Notes, as specified in the applicable
Supplement.
"Initial Delivery Date": The date on which the first Series of Notes
are executed, authenticated and delivered.
"Initial Payment Date": The meaning specified in the applicable
Supplement.
"Insurance Policy": With respect to an item of Equipment and the
related Contract, any insurance policy maintained by the Customer pursuant to
the related Contract that covers physical damage to the Equipment or general
liability (including policies procured by the Company or the Servicer, if any,
on behalf of the Customer).
"Insurance Proceeds": With respect to an item of Equipment and the
related Contract, any amount received pursuant to an Insurance Policy, net of
any costs of collecting such amounts not otherwise reimbursed.
"Insurer": Any insurance company or other insurer providing any
Insurance Policy.
"Interest Calculation Convention": The meaning specified in the
applicable Supplement.
"Investment Letter": The meaning specified in Section 2.06.
"Issuer": MFI Finance Corp. I.
"Issuer Order" and "Issuer Request": A written order or request signed
in the name of the Issuer by its Chairman of the Board, its President, or any
Vice President, and delivered to the Indenture Trustee.
"Key Employee": Each of Xxxxx xxx Xxxxxxxxx and Xxxxxxx Xxxxxx.
"Lease Contracts": Lease contracts and all rights with respect thereto,
including all guaranties and other agreements or arrangements of whatever
character from time to time supporting or securing payment of any lease contract
and all rights with respect to any agreements or arrangements with the vendors,
dealers or manufacturers of the Equipment to the extent specifically related to
any lease contract, which contracts are identified on either a Series Contract
Schedule delivered to the Indenture Trustee and the Note Insurer on a Delivery
Date or on an Amended Contract Schedule delivered to the Indenture Trustee and
the Note Insurer on an Acquisition Date; provided that, from and after the date
on which a Lease Contract is repurchased, removed or substituted by the Company
or the Issuer in accordance with Section 4.04 hereof, such repurchased, removed
or replaced Lease Contract shall no longer constitute a Lease Contract for
purposes of the Transaction Documents.
9
14
"Lien": The meaning specified in the Contract Acquisition Agreement.
"Loss and Damage Waiver Fee": With respect to a Contract, the aggregate
monthly fees payable by the Customer under such Contract in lieu of such
Customer obtaining an Insurance Policy.
"Majority Holders": Holders of Notes representing at least 51% in
Outstanding Principal Amount of all Notes of all Series.
"MFI Certificate": An MFI Certificate, substantially in the form
attached hereto as Exhibit D.
"Monthly Servicer's Report": The report prepared by the Servicer
pursuant to Section 4.01 of the Servicing Agreement.
"Moody's": Xxxxx'x Investors Service, Inc.
"Net Worth Requirement": The requirement that the consolidated Tangible
Net Worth of the Reported Companies must be at least equal to $70,000,000 plus
50.00% of the aggregate amount of Consolidated Net Income of the Reported
Companies for each of the fiscal quarters ending after September 30, 1999, but
without deducting therefrom any amount of Consolidated Net Deficit for any of
such fiscal quarters. All such amounts shall be calculated in accordance with
generally accepted accounting principles except as otherwise specified herein.
"Nonrecoverable Advance": The meaning specified in the Servicing
Agreement.
"Noteholder" or "Holder": The Person in whose name a Note is registered
in the Note Register.
"Note Insurance Agreement": With respect to each Series of Notes, the
applicable Note Insurance Agreement, dated as of the related Transaction
Documents Date, among the Note Insurer, the Issuer, the Company, the Servicer,
the Back-up Servicer and the Indenture Trustee.
"Note Insurance Policy": Each note guaranty insurance policy issued by
the Note Insurer insuring each Series of Notes in accordance with the terms
thereof, the form of which is attached hereto as Exhibit E.
"Note Insurer": Ambac Assurance Corporation.
"Note Insurer Default": The occurrence and continuance of any one or
more of the following events:
(a) the failure by the Note Insurer to make a payment under a Note
Insurance Policy in accordance with its terms;
(b) the Superintendent of Insurance of the State of New York (or
any Person succeeding to the duties of such Superintendent)
(the "Superintendent") shall apply for an order (i) pursuant
to Section 7402 of the New York Insurance Law (or any
successor provision thereto), directing him to rehabilitate
the Note Insurer, (ii) pursuant to section 7404 of the New
York Insurance Law (or any successor provision thereto),
directing him to liquidate the business of the Note Insurer or
(iii) pursuant to Section 7416 of the New York Insurance Law
(or any successor provision thereto), dissolving the corporate
existence of the Note Insurer and, in each case, such
application shall not be dismissed or withdrawn
10
15
during a period of 60 consecutive days or a court of competent
jurisdiction enters an order granting the relief sought;
(c) the Superintendent shall determine that the Note Insurer is
insolvent within the meaning of Section 1309 of the New York
Insurance Law or any successor section;
(d) the Note Insurer shall commence a voluntary case or other
proceeding seeking rehabilitation, liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for
the benefit of creditors; or
(e) an involuntary case or other proceeding shall be commenced
against the Note Insurer seeking rehabilitation, liquidation,
reorganization or other relief with respect to it or its debts
under bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of
it or any substantial part of its property and such case or
proceeding is not dismissed or otherwise terminated within a
period of 60 consecutive days or a court of competent
jurisdiction enters an order granting the relief sought in
such case or proceeding.
"Note Insurer Premium": With respect to each Series of Notes, the fee
payable on each Payment Date to the Note Insurer, in an amount equal to the
product of (i) one-twelfth of the applicable Note Insurer Premium Rate and (ii)
the Outstanding Principal Amount of such Series of Notes immediately following
the preceding Payment Date; provided that, with respect to the Initial Payment
Date for each Series of Notes issued pursuant to this Indenture, the Note
Insurer Premium shall equal the amount specified in the applicable Supplement.
"Note Insurer Premium Rate": With respect to each Series of Notes, the
meaning specified in the applicable Supplement.
"Note Interest Rate": With respect to each Series of Notes, the meaning
specified in the applicable Supplement.
"Note Purchase Agreement": With respect to each Series of Notes, the
meaning specified in the applicable Supplement.
"Note Register" and "Note Registrar": The respective meanings specified
in Section 2.05 hereof.
"Notes": Collectively, all Outstanding Series of Notes or all
Outstanding Notes of any one Series, as the context may require.
"Officer's Certificate": A certificate signed by the Chairman of the
Board, the President, a Vice President, the Treasurer, the Controller, an
Assistant Controller or the Secretary of the company on whose behalf the
certificate is delivered, and delivered to the Indenture Trustee, which
certificate shall comply
11
16
with the applicable requirements of Section 13.11 hereof. Unless otherwise
specified, any reference in this Indenture to an Officer's Certificate shall be
to an Officer's Certificate of the Issuer.
"Operating Account": The bank account maintained by MicroFinancial
Incorporated in the name of Leasecomm Corporation at Fleet National Bank or any
bank account substituted therefor.
"Opinion of Counsel": A written opinion of counsel who may, except as
otherwise expressly provided in this Indenture, be counsel for the Issuer and
who shall be reasonably satisfactory to the Indenture Trustee and the
Controlling Party and which opinion shall comply with the applicable
requirements of Section 13.11 hereof.
"Outstanding": With respect to Notes of any Series, as of any date of
determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(a) Notes theretofore canceled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(b) Notes for whose payment money in the necessary amount has been
theretofore irrevocably deposited with the Indenture Trustee
or any Paying Agent (other than the Issuer) in trust for the
Holders of such Notes (provided, however, that if such Notes
are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or any provision therefor,
satisfactory to the Indenture Trustee, has been made, in
accordance with Article Ten hereof); and
(c) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture,
unless proof satisfactory to the Indenture Trustee is
presented that any such Notes are held by a bona fide
purchaser;
provided, that for purposes of disbursing payments from the Note Insurance
Policies and in determining whether the Holders of the requisite Outstanding
Principal Amount of Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Notes owned by the Issuer or any
other obligor upon the Notes or any Affiliate of the Issuer or such other
obligor shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Indenture Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent, or waiver, only
Notes which the Indenture Trustee knows to be so owned shall be so disregarded.
"Outstanding Principal Amount": With respect to any Outstanding Note or
Series of Notes (including, for purposes of accruing interest thereon, any Notes
called for redemption but not yet redeemed), the unpaid principal amount of such
Note or all Notes of such Series, as applicable.
"Paying Agent": The Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 7.08
hereof and is authorized by the Issuer pursuant to Section 7.16 hereof to pay
the principal of, or interest on, any Notes on behalf of the Issuer.
"Payment Date": For each Series of Notes, the sixteenth day of each
calendar month (or if such day is not a Business Day, the next succeeding
Business Day) commencing on the Initial Payment Date for such Series.
12
17
"Person": Any individual, corporation, partnership, association,
joint-stock company, limited liability company, limited liability partnership,
statutory or common law trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Placement Agent": The meaning specified in the applicable Supplement.
"Preference Claim": The meaning specified in Section 8.01.
"Prepayment Differential": The meaning specified in Section
4.04(d)(ii).
"Principal Distribution Amount": Except as otherwise set forth in the
applicable Supplement, as to any Series of Notes,
(a) as of each Payment Date prior to the Stated Maturity Date of
such Series, an amount equal to:
(i) the applicable Targeted Principal Distribution Amount
for such Series for such Payment Date, or
(ii) if the amounts available in the Collection Account
and the Cash Collateral Account (including any
Reinvestment Income) after payment of all amounts
required by clauses (i) through (v) of Section
12.02(d) hereof are less than the Targeted Principal
Distribution Amounts for all Series of Notes, an
amount equal to the product of
(A) the total funds available for payment of
principal on all Series of Notes in
accordance with the priorities set forth in
Section 12.02(d) hereof, and
(B) the applicable Pro Rata Share with respect
to the Targeted Principal Distribution
Amount (computed without giving effect to
this subclause (ii)) for such Series of
Notes;
(b) on and after the Stated Maturity Date of such Series, an
amount equal to the Outstanding Principal Amount of the Notes
of such Series as of such date.
"Private Placement Memorandum" or "Final Private Placement Memorandum":
The Private Placement Memorandum related to any direct or indirect offering of a
Series of Notes and having the date specified in the applicable Supplement.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Pro Rata Share": With respect to:
(a) any distribution of the Principal Distribution Amount on any
Series of Notes on any Payment Date, a fraction (expressed as
a decimal), the numerator of which is the Targeted Principal
Distribution Amount scheduled to be paid on such Series of
Notes on such Payment Date, and the denominator of which is
the aggregate Targeted Principal Distribution Amounts in
respect of all Series of Notes on such Payment Date;
13
18
(b) any distribution of interest on any Series of Notes on any
Payment Date, a fraction (expressed as a decimal), the
numerator of which is the amount of interest scheduled to be
paid on such Series of Notes on such Payment Date and the
denominator of which is the amount of interest scheduled to be
paid on all Series of Notes on such Payment Date; and
(c) any payments of Additional Principal Amounts, with respect to
any Series, on any Payment Date, a fraction (expressed as a
decimal), the numerator of which is the decline in the related
Series IPB since the Calculation Date preceding the Trigger
Event, and the denominator of which is the decline in the
Aggregate IPB since the Calculation Date preceding the Trigger
Event.
"Purchase Price": With respect to any Contract repurchased by the
Company pursuant to Section 3.03 of the Contract Acquisition Agreement or
removed by the Issuer pursuant to Section 4.04(d) hereof, the sum of (a)(i) in
the case of a Lease Contract, the Implicit Principal Balance (computed without
giving effect to clauses (b) and (c) of the definition of Implicit Principal
Balance) of such Contract on the Calculation Date on or immediately preceding
the date as of which the Contract is removed or repurchased, (ii) in the case of
a Rental Contract, the greater of (A) the Implicit Principal Balance (computed
without giving effect to clauses (b) and (c) of the definition of Implicit
Principal Balance) of such Rental Contract on the Calculation Date on or
immediately preceding the date as of which the Contract is removed or
repurchased and (B) the scheduled termination fee payable pursuant to such
Rental Contract, (b) any Scheduled Payments with respect to such Contract due on
or prior to such Calculation Date but not received through such Calculation
Date, and (c) with respect to the related Equipment, the greater of (i) the
amount, if any, recorded in the books and records of the Company as the
"unguaranteed residual"and (ii) the fair market value of the Issuer's interest
in such Equipment at the time of such repurchase or removal.
"Rating Agency": With respect to any Series of Notes and any date of
determination, each nationally recognized statistical rating organization which
has been requested by the Issuer to provide a rating for such Series of Notes
and which, as of such date of determination, is so rating such Series of Notes.
"Rating Agency Condition" means, with respect to any action and a
Series of Notes, that each Rating Agency with respect to such Series shall have
been given ten Business Days (or such shorter period as is acceptable to such
Rating Agency) prior notice thereof and that no Rating Agency shall have
notified the Issuer, the Servicer, the Indenture Trustee or the Note Insurer in
writing that such action will result in a qualification, reduction or withdrawal
of its then-current rating, whether explicit or implied (including any notice to
the Note Insurer regarding the "shadow rating"), of such Series of Notes.
"Receivable": With respect to any Contract, all of and the right to
receive all of (a) the Scheduled Payments, (b) any prepayments made with respect
of such Contract, (c) any Guaranty Amounts, (d) any Insurance Proceeds, (e) any
Residual Proceeds, (f) any Recoveries and (g) any Servicing Charges.
"Record Date": The close of business on the last day of the calendar
month preceding the applicable Payment Date, whether or not a Business Day,
except that, with respect to an Initial Payment Date, the Record Date shall be
the related Delivery Date.
"Recoveries": For any Due Period during which or occurring after the
date on which any Contract becomes a Defaulted Contract and with respect to such
Defaulted Contract, all payments that the
14
19
Servicer received from or on behalf of a Customer during such Due Period in
respect of such Defaulted Contract or from liquidation or re-leasing of the
related Equipment, including but not limited to Scheduled Payments, Guaranty
Amounts, and Insurance Proceeds, as reduced by (a) any unreimbursed Servicer
Advances with respect to such Contract and (b) any out-of-pocket expenses
reasonably incurred by the Servicer in enforcing such Defaulted Contract.
"Redemption Account": The meaning specified in Section 12.02(e) hereof.
"Redemption Date": A date fixed pursuant to Section 10.01 hereof.
"Redemption Price": With respect to any Series of Notes being redeemed
pursuant to Article Ten hereof, and as of the related Redemption Date, the
Outstanding Principal Amount of such Series of Notes, together with, in each
case, interest accrued and unpaid thereon to but excluding the related
Redemption Date at the applicable Note Interest Rate (exclusive of installments
of interest and principal maturing on or prior to such date, payment of which
shall have been made or duly provided for to the Holder of such Note on the
applicable Record Date or as otherwise provided in this Indenture).
"Redemption Record Date": With respect to any redemption of Notes, a
date fixed pursuant to Section 10.01 hereof.
"Registered Holder": The Person whose name appears on the Note Register
on the applicable Record Date or Redemption Record Date.
"Reinvestment Income": Any interest or other earnings earned on all or
part of the Trust Estate.
"Rental Contract": Each contract in respect of (i) a residential or
commercial security monitoring agreement or (ii) an equipment rental agreement
with an unspecified term related to point of sale bankcard equipment or such
other personal property as is approved in advance by the Controlling Party, and
all rights with respect thereto, including all guaranties and other agreements
or arrangements of whatever character from time to time supporting or securing
payment of any rental contract and all rights with respect to any agreements or
arrangements with the vendors, dealers or manufacturers of the related Equipment
or the provider of any monitoring service to the extent specifically related to
any rental contract, which contracts are identified on either a Series Contract
Schedule delivered to the Indenture Trustee and the Note Insurer on a Delivery
Date or on an Amended Contract Schedule delivered to the Indenture Trustee and
the Note Insurer on an Acquisition Date; provided that, from and after the date
on which a Rental Contract is repurchased, removed or substituted by the Company
or the Issuer in accordance with Section 4.04 hereof, such repurchased, removed
or replaced Rental Contract shall no longer constitute a Rental Contract for
purposes of the Transaction Documents.
"Reported Companies": MicroFinancial Incorporated and its consolidated
subsidiaries.
"Required Collateralization Amount": With respect to a Series of Notes,
as of any date of determination, the greater of
(a) the related Collateralization Percentage multiplied by the
Series IPB, and
(b) the related Floor Percentage multiplied by the Series Initial
IPB.
"Required Prepayment Amount": The meaning specified in Section
4.04(d)(ii).
15
20
"Residual Proceeds": With respect to a Contract that is not a Defaulted
Contract and the related Equipment, the net proceeds (excluding Insurance
Proceeds) of any sale, re-lease or re-rental (including any lease or rental
renewal) or other disposition of such Equipment.
"Responsible Officer": When used with respect to the Indenture Trustee,
any officer assigned to the Corporate Trust Department (or any successor
thereto), including any Vice President, Senior Trust Officer, Trust Officer,
Assistant Trust Officer, any Assistant Secretary, any Trust Officer or any other
Officer of the Indenture Trustee customarily performing functions similar to
those performed by any of the above designated officers and having direct
responsibility for the administration of this Indenture, and also, with respect
to a particular matter, any other officer, to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"Sale": The meaning specified in Section 6.18 hereof.
"Scheduled Payment": With respect to a Due Period and a Contract, the
periodic payment, including, if so specified in the applicable Supplement, any
payments pursuant to any "PUT" (Purchase Upon Termination) clause or balloon
payment provision (but excluding any amounts in respect of Servicing Charges),
as set forth in such Contract, due from the Customer in such Due Period,
calculated without regard to any modification granted pursuant to Section
3.01(b)(v) of the Servicing Agreement.
"Securities Act": The Securities Act of 1933, as amended.
"Series": A separate Series of Notes issued pursuant to this Indenture,
with the specific terms identified in the applicable Supplement.
"Series Cash Collateral Account Required Balance": With respect to a
Series of Notes then Outstanding, as of any determination date, an amount equal
to the sum of (a) the Initial Cash Collateral Account Deposit for such Series
and (b) the product of
(i) the positive excess, if any, of the Required Collateralization
Amount for such Series minus the difference between
(A) the Series IPB, and
(B) the Outstanding Principal Amount of such Series of Notes,
after giving effect to any payments of principal expected to occur on
the Payment Date occurring on or immediately after such determination
date; and
(ii) the related Cash Collateral Account Factor;
provided, that, if a Trigger Event has occurred, the Series Cash Collateral
Account Required Balance shall be an amount equal to zero.
"Series Contracts": With respect to each Series of Notes, the Contracts
listed on the related Series Contract Schedule, including any Substitute
Contracts.
"Series Contract Schedule": For each Series of Notes, the list of
Contracts and Receivables attached to the applicable Supplement for such Series
of Notes, together with and as amended by all related Amended Contract
Schedules, each of which shall include with respect to each Contract as of the
16
21
related Acquisition Date: (a) a number identifying the Contract, (b) the
Implicit Principal Balance of the related Receivable, (c) the identity of the
Customer, (d) the State of the Customer's billing address, (e) the original and
remaining term, (f) the Scheduled Payment, (g) the frequency with which
Scheduled Payments are due, (h) the zip code of the Customer's billing address,
(i) the amount of any Loss and Damage Waiver Fee, (j) whether such Contract is a
Lease Contract or a Rental Contract and whether the terms of such Contract
include a PUT clause or any balloon payment, (k) the equipment type, and (l) any
additional items specified in the related Supplement.
"Series Initial IPB": With respect to any Series of Notes, the
aggregate Implicit Principal Balance of the related Series Contracts as
calculated on the close of business on the related Cut-Off Date.
"Series IPB": With respect to any Series of Notes, as of any
determination date, the sum of the Implicit Principal Balances of all related
Series Contracts, as of such determination date.
"Servicer": MicroFinancial Incorporated.
"Servicer Advance": The meaning set forth in Section 3.04 of the
Servicing Agreement.
"Servicer Event of Default": The meaning specified in Section 6.01(a)
of the Servicing Agreement.
"Servicer Fee": With respect to each Contract (other than Defaulted
Contracts or Contracts that are extended beyond their Final Due Date, as to
which there is no Servicer Fee) and each Due Period, $3.00 per Scheduled Payment
becoming due during such Due Period.
"Servicing Agreement": The Servicing Agreement, dated as of March 1,
2000, among the Servicer, the Issuer, the Back-up Servicer and the Indenture
Trustee, as amended from time to time.
"Servicing Charges": For any Due Period, the sum of (a) all late
payment charges paid by Customers on Contracts that are Delinquent Contracts
after payment in full of any Scheduled Payments due in a prior or current Due
Period, (b) all Loss and Damage Waiver Fees, (c) any termination fees payable
with respect to a Rental Contract and (d) any other incidental charges or fees
received from a Customer, including but not limited to, late fees, collection
fees, and returned check charges in excess of any Scheduled Payment.
"Servicing Officers": The persons listed on a certificate of the
Servicer from time to time delivered by the Servicer to the Issuer and the
Indenture Trustee.
"S & P": Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc.
"State": Any state of the United States of America and, in addition,
the District of Columbia and Puerto Rico.
"Stated Maturity Date": With respect to any Series of Notes, the
meaning specified in the applicable Supplement.
"Substitute Contract": The meaning specified in the Contract
Acquisition Agreement.
17
22
"Supplement": A Supplement to this Indenture, substantially in the form
of Exhibit B attached hereto, pursuant to which a Series of Notes is issued.
"Tangible Net Worth": The sum, with respect to the Reporting Companies,
on a consolidated basis, of (a) the capital stock, (b) additional paid-in
capital (less accrued dividends), (c) retained earnings and (d) subordinated
debt less (x) net organizational costs and net good will, (y) treasury stock and
(z) 25% of debt issue costs.
"Targeted Balance": Except as otherwise set forth in the related
Supplement, for any Payment Date and any Series of Notes, the amount indicated
under the column "Targeted Balance" on Schedule B to the applicable Supplement
for such Payment Date.
"Targeted Principal Distribution Amount": Except as otherwise set forth
in the related Supplement, with respect to a Payment Date and a Series of Notes,
(a) for any Payment Date prior to the applicable Stated Maturity
Date, if the Aggregate IPB equals or exceeds the aggregate
Targeted Balance for all Outstanding Series, an amount equal
to the Outstanding Principal Amount of the Notes of such
Series as of such Payment Date (before giving effect to
distributions on such date), minus the amount of the
applicable Targeted Balance for such Series for such Payment
Date;
(b) for any Payment Date prior to the applicable Stated Maturity
Date, if the Aggregate IPB is less than the aggregate Targeted
Balance for all Outstanding Series, an amount equal to the
Outstanding Principal Amount of the Notes of such Series as of
such Payment Date (before giving effect to distributions on
such date), minus the lesser of
(i) the amount of the applicable Targeted Balance for
such Series for such Payment Date, and
(ii) the applicable Series IPB; and
(c) for any Payment Date on or after the applicable Stated
Maturity Date, an amount equal to the Outstanding Principal
Amount of the Notes of such Series as of such date.
"Terminated Rental Contract": A Rental Contract that has been
terminated by the related Customer prior to the related Expected Rental
Termination Date.
"Transaction Documents": This Indenture, the Servicing Agreement, the
Contract Acquisition Agreement, the Agreement Regarding Operating Account and,
with respect a particular Series of Notes, the related Supplement, the related
Notes, the related Note Purchase Agreement(s), the related Note Insurance
Agreement and the related Note Insurance Policy.
"Transaction Documents Date": With respect to each Series of Notes, the
meaning specified in the applicable Supplement.
"Transition Cost": Any documented expenses reasonably incurred by a
successor Servicer or the Indenture Trustee in connection with a transfer of
servicing from the Servicer to a successor Servicer as successor Servicer
pursuant to Section 6.02 of the Servicing Agreement, but not to exceed $75,000
in the aggregate.
18
23
"Trigger Event": The occurrence of any one or more of the following
events, unless waived in writing by the Controlling Party:
(a) in any Due Period, the average of the Annualized Default Rates
for the three consecutive prior Due Periods equals or exceeds
7.00%;
(b) for any Due Period, the Annualized Default Rate equals or
exceeds 21.00%;
(c) in any Due Period, the average of the Delinquency Rates for
the three consecutive prior Due Periods equals or exceeds
14.50%;
(d) the Net Worth Requirement is not met and such failure to meet
the Net Worth Requirement remains uncured for a period of
thirty days after delivery of the financial statements
reflecting such failure or after the date on which such
financial statements were required to have been delivered;
(e) a Change of Control;
(f) an Event of Default;
(g) a Servicer Event of Default;
(h) any failure on the part of the Company duly to observe or
perform in any material respect any covenants or agreements of
the Company set forth in Section 3.03 of the Contract
Acquisition Agreement; or
(i) the occurrence of any other event designated as an additional
Trigger Event in any Supplement.
"Trust Estate": The meaning specified in the Granting Clause of this
Indenture.
"Trustee Fee": With respect to each Series of Notes, the fee payable on
each Payment Date to the Indenture Trustee in consideration for the Indenture
Trustee's performance of its duties pursuant to this Indenture as Indenture
Trustee, in an amount equal to the product of one-twelfth of the Trustee Fee
Rate and the Outstanding Principal Amount of such Series immediately following
the preceding Payment Date; provided that with respect to the Initial Payment
Date for each Series of Notes, the Trustee Fee shall equal the amount calculated
as set forth in the applicable Supplement.
"Trustee Fee Rate": The meaning specified in the applicable Supplement.
"Vice President": With respect any entity, any vice president, whether
or not designated by a number or a word or words added before or after the title
"vice president."
"Withdrawn Collateral": The meaning specified in Section 5.01(b)
hereof.
19
24
SECTION 1.02 USAGE OF TERMS .
With respect to all terms in this Indenture, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to a "writing" include printing, typing, lithography and
other means of reproducing words in a tangible form; references to agreements
and other contractual instruments and statutes and other laws include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Indenture; references to
Persons include their permitted successors and assigns; the term "including"
means "including without limitation" and, unless the context requires otherwise,
the term "or" means "and/or."
SECTION 1.03 LEGAL HOLIDAYS.
In any case in which the date of any Payment Date or the Stated
Maturity Date of any Note shall not be a Business Day, then (notwithstanding any
other provision of a Note or this Indenture) payment of principal or interest
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the nominal date of any such
Stated Maturity Date or Payment Date and, assuming such payment is actually made
on such subsequent Business Day, no additional interest shall accrue on the
amount so paid for the period from and after any such nominal date.
20
25
ARTICLE TWO
THE NOTES
SECTION 2.01 FORM GENERALLY.
Each Series of Notes issued hereunder and the certificates of
authentication affixed thereto shall be substantially in the form set forth in
Exhibit A hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and the applicable Supplement, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon,
as may, consistently herewith, be determined by the officers executing such
Notes, such determination to be conclusively evidenced by their execution of the
Notes.
The definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any manner acceptable to the Indenture Trustee and the initial purchasers of the
Notes, all as determined by the officers executing such Notes, such
determination to be conclusively evidenced by their execution of such Notes.
SECTION 2.02 SERIES; DENOMINATION.
(a) This Indenture provides for the issuance by the Issuer from time to
time of one or more Series of Notes. Each Note in a Series shall bear upon the
face thereof the designation selected for the Series to which it belongs. All
Notes of a Series shall be identical except for differences in registration
information and denomination.
Each Series of Notes issued under this Indenture shall be in all
respects equally and ratably secured with all other Series of Notes by the
Collateral Granted by the Issuer on the Initial Delivery Date and from time to
time thereafter (provided, that (a) each Note Insurance Policy is and is to be
issued specific to a Series of Notes and the Holders of Notes of any other
Series shall have no right or interest in the Note Insurance Policy issued in
respect of such other Series and (b) all cash amounts shall be applied by the
Trustee in accordance with the express provisions hereof) and shall be entitled
to the benefits hereof without preference, priority or distinction on account of
the actual time or times of authentication and delivery, all in accordance with
the terms and provisions of this Indenture and the applicable Supplement.
The Supplement with regard to a Series of Notes shall establish,
without limitation, the following terms and provisions of such Series, each of
which the Issuer shall determine in authorizing the issuance of any Series:
(i) designation of the Series;
(ii) the applicable Delivery Date, Initial Payment Date,
Accrual Date, Transaction Documents Date, the schedules to be attached
to such Supplement containing the Targeted Balances with respect to
such Series of Notes and the Series Contract Schedule, and if
applicable, the date of the related Private Placement Memorandum, and
the applicable Cut-Off Date;
(iii) the maximum aggregate principal amount of Notes of such
Series that may be issued;
21
26
(iv) the related Note Interest Rate or the method for
determining the related Note Interest Rate and the Interest Calculation
Convention;
(v) the amount of any Initial Cash Collateral Account Deposit;
(vi) the Note Insurance Policy number;
(vii) the Stated Maturity Date for such Series;
(viii) any additional Trigger Events, if applicable, for such
Series; and
(ix) any additional conditions to the issuance of Notes of
such Series or additional defined terms related to such Series.
(b) The aggregate principal amount of Notes of each Series which may be
authenticated and delivered under this Indenture is specified in the applicable
Supplement, except for Notes authenticated and delivered upon registration of
transfer or in exchange for or in lieu of, other Notes pursuant to Sections
2.04, 2.05, 2.07 or 9.05 hereof. The Notes shall be issuable only as registered
Notes without coupons in minimum denominations of $500,000 and integral
multiples of $0.01 in excess thereof; provided, that the foregoing shall not
restrict or prevent the transfer in accordance with Sections 2.05 and 2.06
hereof of any Note with a remaining Outstanding Principal Amount of less than
its original minimum denomination.
SECTION 2.03 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
(a) The Notes shall be manually executed on behalf of the Issuer by its
President, Treasurer or one of its Vice Presidents. Notes bearing the manual
signatures of individuals who were at any time the proper officers of the Issuer
shall bind the Issuer, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication or delivery of such
Notes or did not hold offices at the date of authentication or delivery of such
Notes.
(b) Each Note shall bear on its face the applicable Delivery Date and
be dated as of the date of its authentication.
(c) No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee or by any Authenticating Agent by the manual
signature of one of its authorized officers, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
SECTION 2.04 [RESERVED]
SECTION 2.05 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Issuer shall cause to be kept at an office or agency to be
maintained by the Issuer in accordance with Section 11.02(m) hereof a register
(the "Note Register"), in which, subject to such reasonable regulations as it
may prescribe, the Issuer shall provide for the registration of Notes and the
registration of transfers of Notes. Norwest Bank Minnesota, National
Association, Sixth Street and Marquette Avenue, MAC N9311-161, Xxxxxxxxxxx,
Xxxxxxxxx 00000, is hereby appointed "Note
22
27
Registrar" for the purpose of registering Notes and transfers of Notes as herein
provided. The Indenture Trustee shall have the right to examine the Note
Register at all reasonable times and to rely conclusively upon a Certificate of
the Note Registrar as to the names and addresses of the Holders of the Notes and
the principal amounts and numbers of such Notes as held.
(b) Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 11.02(m)
hereof and subject to the conditions set forth in Section 2.06 hereof, the
Issuer shall execute, and the Indenture Trustee or its agent shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Notes of any authorized denominations, and of a like aggregate
principal amount, Series and Stated Maturity Date.
(c) At the option of the Holder, Notes of a Series may be exchanged for
other Notes of such Series of any authorized denominations and of a like
aggregate principal amount and Stated Maturity Date, upon surrender of the Notes
to be exchanged at such office or agency. Whenever any Notes are so surrendered
for exchange, the Issuer shall execute, and the Indenture Trustee or its agent
shall authenticate and deliver, the Notes which the Noteholder making the
exchange is entitled to receive.
(d) All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of such transfer or exchange.
(e) Every Note presented or surrendered for registration of transfer or
exchange shall (if so required by the Issuer or the Note Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Note Registrar duly executed, by the Holder
thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.04 or 9.05 hereof not involving any registration
of transfer.
SECTION 2.06 LIMITATION ON TRANSFER AND EXCHANGE.
(a) The Notes have not been registered or qualified under the
Securities Act or the securities laws of any state. No transfer of any Note
shall be made unless that transfer is made in a transaction which does not
require registration or qualification under the Securities Act or under
applicable state securities or "Blue Sky" laws. In the event that a transfer is
to be made, such Noteholder's prospective transferee shall deliver to the
Indenture Trustee either (i) an investment letter substantially in the form set
forth on Exhibit C hereto (the "Investment Letter") or (ii) an opinion of
counsel that the transfer is exempt from such registration or qualification
under the Securities Act (which opinion shall not be at the expense of the
Issuer, the Indenture Trustee, the Servicer or the Trust Estate). Neither the
Issuer nor the Indenture Trustee is obligated to register or qualify the Notes
under the Securities Act or any other securities law. Any such Holder desiring
to effect such transfer shall, and does hereby agree to, indemnify the Indenture
Trustee, the Note Insurer and the Issuer against any liability, cost or expense
(including attorneys' fees) that may result if the transfer is not so exempt or
is not made in accordance with such federal and state laws. MicroFinancial
Incorporated (whether or not acting as Servicer) shall provide to the Indenture
Trustee the information required to be delivered to Holders and prospective
transferees of Notes in connection with resales of the Notes to permit
compliance with Rule 144A promulgated under the Securities Act in connection
with such resales and, promptly upon its receipt thereof, the Indenture
23
28
Trustee shall furnish such information to any Holder or any prospective
transferee designated by a Holder.
(b) No acquisition or transfer of a Note or any interest therein may be
made to any "Benefit Plan Investor"(as defined in 29 C.F.R. ss.2510.3-101) or to
any Person who is directly or indirectly purchasing the Notes or an interest
therein on behalf of, as named fiduciary of, as trustee of, or with assets of,
such a Benefit Plan Investor unless the Indenture Trustee is provided with
evidence that establishes to the reasonable satisfaction of the Indenture
Trustee that (i) either no "prohibited transaction" under ERISA or the Code will
occur in connection with such prospective acquirer's or transferee's acquisition
and holding of the Notes or that the acquisition and holding of the Notes by
such prospective acquirer or transferee is subject to a statutory or
administrative exemption, and (ii) that the prospective acquirer's or
transferee's acquisition and holding will not subject the Issuer, the Servicer
or the Indenture Trustee to any obligation or liability (including obligations
or liabilities under ERISA or Section 4975 of the Code) in addition to those
explicitly undertaken in the Transaction Documents. In the absence of a change
in applicable law, the delivery of an executed Investment Letter shall be deemed
to provide satisfactory evidence of compliance with this Section 2.06(b).
(c) The Indenture Trustee shall have no liability to the Trust Estate
or any Noteholder arising from a transfer of any such Note in reliance upon a
certification described in this Section 2.06.
SECTION 2.07 MUTILATED, DESTROYED, LOST OR STOLEN NOTE.
If (i) any mutilated Note is surrendered to the Note Registrar, or the
Indenture Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, and (ii) there is delivered to the Indenture Trustee and
the Note Insurer such security or indemnity as may be required by the Indenture
Trustee to save the Issuer, the Indenture Trustee and the Note Insurer or any
agent of any of them harmless (it being understood that the unsecured written
undertaking of any domestic institutional Holder shall be deemed to be
sufficient for such purposes), then, in the absence of notice to the Issuer or
the Note Registrar that such Note has been acquired by a bona fide purchaser,
the Issuer shall execute and, upon its request, the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a new Note of the same Series, initial principal
amount and Stated Maturity Date, bearing a number not contemporaneously
outstanding. If after the delivery of such new Note, a bona fide purchaser of
the original Note in lieu of which such new Note was issued presents for payment
such original Note, the Note Insurer, the Issuer and the Indenture Trustee shall
be entitled to recover such new Note from the Person to whom it was delivered or
any Person taking therefrom, except a bona fide purchaser, and shall be entitled
to recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expenses incurred by the Note Insurer, the Issuer or the
Indenture Trustee or any agent of any of them in connection therewith. If any
such mutilated, destroyed, lost or stolen Note shall have become or shall be
about to become due and payable, or shall have become subject to redemption in
full, in lieu of issuing a new Note, the Issuer may pay such Note without
surrender thereof, except that any mutilated Note shall be surrendered.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.05 or 9.05 hereof not involving any registration
of transfer.
Every new Note issued pursuant to this Section 2.07, in lieu of any
destroyed, lost or stolen Note, shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of
24
29
this Indenture equally and proportionately with any and all other Notes duly
issued hereunder. Upon the issuance of any new Note under this Section, the
Indenture Trustee or Note Registrar may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.08 PAYMENT OF PRINCIPAL AND INTEREST; PRINCIPAL AND INTEREST
RIGHTS PRESERVED.
(a) Unless otherwise specified in the applicable Supplement, for each
applicable Accrual Period, the Notes of each Series shall accrue interest on the
Outstanding Principal Amount thereof (as of the first day of the related Accrual
Period) from and including the first day to and including the last day of such
Accrual Period at the related Note Interest Rate and using the related Interest
Calculation Convention. Interest shall be due and payable in arrears on each
Payment Date, with each payment of interest calculated as described above on the
Outstanding Principal Amount of the Notes immediately following the making of
payments on the preceding Payment Date or on the applicable Delivery Date, if
there has not been a preceding Payment Date. In making any such interest
payment, if the interest calculation with respect to a Note shall result in a
portion of such payment being less than $0.01, then such payment shall be
decreased to the nearest whole cent, and no subsequent adjustment shall be made
in respect thereof.
(b) The principal of each Note shall be payable in installments ending
no later than the applicable Stated Maturity Date thereof unless such Note
becomes due and payable at an earlier date by declaration of acceleration, call
for redemption or otherwise. All reductions in the principal amount of a Note
effected by payments of installments of principal made on any Payment Date shall
be binding upon all future Holders of such Note and of any Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof,
whether or not such payment is noted on such Note. Each installment of principal
payable on the Notes shall be in an amount equal to the Principal Distribution
Amount and the Additional Principal Amount, if any, available to be paid in
accordance with the priorities of Sections 12.02(d) hereof. The principal
payable on the Notes of each Series shall be paid in accordance with the terms
of the applicable Supplement or, if not specified therein, then on each Payment
Date beginning on the applicable Initial Payment Date and ending on the
applicable Final Payment Date, and with respect to all of the Notes within a
Series, on a pro rata basis based upon the ratio that the Outstanding Principal
Amount of a Note bears to the Outstanding Principal Amount of all Notes of such
Series; provided, that if as a result of such proration a portion of such
principal would be less than $0.01, then such payment shall be increased to the
nearest whole cent, and such portion shall be deducted from the next succeeding
principal payment.
(c) The principal of and interest on the Notes are payable by check
mailed by first-class mail to the Person whose name appears as the Registered
Holder of such Note on the Note Register at the address of such Person as it
appears on the Note Register except that such payment shall be by wire transfer
in immediately available funds to the account specified in the Note Purchase
Agreement (or such alternative account specified in writing to the Indenture
Trustee by any Registered Holder at least five Business Days prior to the Record
Date for the Payment Date on which wire transfers will commence), in such coin
or currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts. All payments on the Notes
shall be paid without any requirement of presentment. The Issuer shall notify
the Person in whose name a Note is registered at the close of
25
30
business on the Record Date next preceding the Payment Date on which the Issuer
expects that the final installment of principal of such Note will be paid that
the Issuer expects that such final installment will be paid on such Payment
Date. Such notice shall be mailed no later than the tenth day prior to such
Payment Date and shall specify the place where such Note may be surrendered.
Funds representing any such checks returned undeliverable shall be held in
accordance with Section 7.16 hereof. Each Noteholder shall surrender its Note to
the Indenture Trustee promptly following payment of the final installment of
principal of such Note. Each Holder of Notes does by its acceptance of a Note
agree to indemnify the Indenture Trustee, the Note Insurer and the Issuer
against any liability, cost or expenses (including attorneys' fees) that may
result if such Noteholder fails to so deliver such Note.
(d) Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Notes, if the Notes have become or
been declared due and payable following an Event of Default and such
acceleration of maturity and its consequences have not been rescinded and
annulled, then payments of principal of and interest on such Notes shall be made
in accordance with Section 6.08 hereof.
SECTION 2.09 PERSONS DEEMED OWNER.
Prior to due presentment for registration of transfer of any Note, the
Issuer, the Note Insurer, the Indenture Trustee and any agent of the Issuer, the
Note Insurer or the Indenture Trustee shall treat the Person in whose name any
Note is registered as the owner of such Note for the purpose of receiving
payments of principal of and interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Issuer, the
Note Insurer, the Indenture Trustee nor any agent of the Issuer, the Note
Insurer or the Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.10 CANCELLATION.
All Notes surrendered to the Indenture Trustee for payment,
registration of transfer or exchange (including Notes surrendered to any Person
other than the Indenture Trustee which shall be delivered to the Indenture
Trustee) shall be promptly canceled by the Indenture Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section 2.10, except as expressly permitted by this Indenture. All canceled
Notes held by the Indenture Trustee shall be disposed of by the Indenture
Trustee as is customary with its standard practice.
SECTION 2.11 TAX TREATMENT.
The Issuer has structured this Indenture and the Notes with the
intention that the Notes qualify under applicable tax laws as indebtedness
secured by the Trust Estate. The Issuer, the Indenture Trustee, the Servicer,
the Note Insurer and each Noteholder, by acceptance of its Note (and any Person
that is a beneficial owner of any interest in a Note, by virtue of such Person's
acquisition of a beneficial interest therein) agree to report the transactions
contemplated hereby in accordance with such stated intentions unless and until
determined to the contrary by an applicable taxing authority.
26
31
ARTICLE THREE
[reserved]
27
32
ARTICLE FOUR
ISSUANCE OF NOTES; SUBSTITUTIONS OF COLLATERAL
SECTION 4.01 CONDITIONS TO INITIAL ISSUANCE OF NOTES.
The Series of Notes to be issued on the Initial Delivery Date may be
executed by the Issuer and delivered to the Indenture Trustee for
authentication, and thereupon, the same shall be authenticated and delivered by
the Indenture Trustee upon Issuer Order and upon receipt by the Indenture
Trustee of the following:
(a) an executed Company Certificate and MFI Certificate, each with the
related Series Contract Schedule attached thereto;
(b) the original manually executed counterpart of each Contract and,
except as otherwise provided in the Transaction Documents, all other items
included in the Contract File with respect to each Contract;
(c) a Board Resolution of each of the Issuer, the Servicer and the
Company authorizing, as applicable, the execution, delivery and performance of
the Transaction Documents and the transactions contemplated hereby and by the
other Transaction Documents, certified by the Secretary or an Assistant
Secretary of the Issuer, the Servicer or the Company, as applicable;
(d) a copy of an officially certified document, dated not more than 30
days prior to the Initial Delivery Date, evidencing the due organization and
good standing of each of the Issuer, the Servicer and the Company in their
respective States of incorporation;
(e) copies of the Articles of Organization and By-Laws of each of the
Issuer, the Servicer and the Company, certified by the Secretary or an Assistant
Secretary of the Issuer, the Servicer and the Company, as applicable;
(f) (i) evidence of filing with the Secretary of State of the State
(and with the relevant county, if required by the applicable state law) of the
Company's chief executive office of UCC-1 financing statements executed by the
Company, as debtor, and naming the Issuer as secured party, the Indenture
Trustee for the benefit of the Noteholders and the Note Insurer as assignee and
the Contract Assets as collateral; and (ii) evidence of filing with the
Secretary of State of the State (and with the relevant county, if required by
the applicable state law) of the Issuer's chief executive office of UCC-1
financing statements executed by the Issuer, as debtor, and naming the Indenture
Trustee for the benefit of the Noteholders and the Note Insurer as secured
party, and the Trust Estate as collateral;
(g) a certificate listing the Servicing Officers of the Servicer as of
the Initial Delivery Date;
(h) an executed copy of a Supplement for the Series of Notes to be
issued on the Initial Delivery Date and an executed copy of the Servicing
Agreement, the Contract Acquisition Agreement and the applicable Note Purchase
Agreement;
(i) a Note Insurance Policy for the Series of Notes being issued on
such date;
(j) evidence of the deposit by the Issuer of the Initial Cash
Collateral Account Deposit;
28
33
(k) evidence of the deposit by the Issuer into the Collection Account
of any amounts due and paid on the Contracts since the applicable Cut-off Date;
(l) an executed Officer's Certificate of each of the Issuer and the
Company certifying that all of the terms of the Contract Acquisition Agreement
have been complied with;
(m) favorable opinions of counsel (i) to the effect that the Notes of
such Series will be characterized as debt for tax purposes, (ii) regarding the
security interest of the Indenture Trustee in the Trust Estate, (iii) regarding
true sale and the nonconsolidation matters of the Issuer and the Company in the
event of a bankruptcy of the Company, and (iv) regarding certain basic corporate
matters and that the Issuer is not required to be registered as an "investment
company" under the Investment Company Act of 1940; and
(n) such other documents as are required by the applicable Note
Purchase Agreement or as the Indenture Trustee or the Note Insurer may
reasonably require.
SECTION 4.02 ISSUANCES OF ADDITIONAL SERIES OF NOTES.
(a) Additional Series of Notes may be issued by the Issuer in
accordance with the terms of this Indenture, provided, however, that if the
Series delivered on the Initial Delivery Date is then Outstanding, any
additional Series of Notes shall not have a Stated Maturity Date any earlier
than the Stated Maturity Date for such initial Series of Notes. In addition, all
additional Series of Notes must be approved in writing by the Controlling Party;
provided, that nothing herein shall obligate the Note Insurer to issue any Note
Insurance Policy, rather such obligation shall arise only under a written
commitment issued by the Note Insurer, at the sole and absolute discretion of
the Note Insurer, to issue a Note Insurance Policy.
(b) On or before the Delivery Date relating to any new Series of Notes,
the parties hereto shall execute and deliver a Supplement specifying the terms
applicable to such new Series of Notes. The terms set forth in such Supplement
may modify or amend, subject to Article Nine hereof, the terms of this Indenture
solely as applied to such new Series of Notes; provided, that any additional
Trigger Events specified in such Supplement shall be Trigger Events for all
purposes for all Series so long as any Notes of the Series related to such
Supplement are Outstanding. Each new Series of Notes shall be executed by the
Issuer and delivered to the Indenture Trustee for authentication, and thereupon,
the same shall be authenticated and delivered by the Indenture Trustee upon
Issuer Order and the fulfillment of the following conditions to issuance:
(i) the Issuer shall have delivered or caused to be delivered
to the Indenture Trustee the original manually executed counterpart of
each Contract to be made a part of the Trust Estate on such Delivery
Date, and, except as otherwise provided in the Transaction Documents,
all other items included in the related Contract File, and an Officer's
Certificate of the Issuer certifying that all of the terms of the
Contract Acquisition Agreement have been complied with;
(ii) the Issuer shall have delivered to the Indenture Trustee
an executed Company Certificate and MFI Certificate, subjecting all
Series Contracts of such Series to the provisions of the Transaction
Documents, and providing a Series Contract Schedule with respect to all
Series Contracts;
29
34
(iii) on or before the tenth Business Day immediately
preceding the Delivery Date for the Series to be issued (unless the
parties to be notified agree to a shorter time period), the Issuer
shall have given the Indenture Trustee, the Servicer, the Note Insurer
and each Rating Agency notice of such issuance and the applicable
Delivery Date;
(iv) the Issuer shall have delivered to the Indenture Trustee
the related Supplement, executed by each party hereto (including the
Note Insurer, as an acknowledgment party) other than the Indenture
Trustee;
(v) the Issuer shall have delivered to the Indenture Trustee
an Officers' Certificate of the Issuer certifying (A) that such
issuance will not result in the occurrence of a Trigger Event or an
Event of Default under this Indenture and the Issuer is not in Default
under this Indenture, (B) that the issuance of the Series applied for
will not result in a breach of any of the terms, conditions or
provisions of, or constitute a default under, any agreement or
instrument to which the Issuer is a party or by which it is bound, or
any order of any court or administrative agency entered in any
proceeding to which the Issuer is a party or by which it may be bound
or to which it may be subject, and (C) that all conditions precedent
provided in this Indenture relating to the execution and delivery of
the additional Series of Notes applied for have been complied with;
(vi) to the extent not previously filed or delivered, the
Issuer shall have delivered to the Indenture Trustee (A) evidence of
filing with the Secretary of State of the State (and with the relevant
county, if required by the applicable state law) of the Company's chief
executive office of UCC-1 financing statements executed by the Company,
as debtor, and naming the Issuer as secured party, the Indenture
Trustee for the benefit of the Noteholders and the Note Insurer as
assignee and the Contract Assets as collateral; and (B) evidence of
filing with the Secretary of State of the State (and with the relevant
county, if required by the applicable state law) of the Issuer's chief
executive office of UCC-1 financing statements executed by the Issuer,
as debtor, and naming the Indenture Trustee for the benefit of the
Noteholders and the Note Insurer as secured party, and the Trust Estate
as collateral;
(vii) the Issuer shall have delivered to the Indenture Trustee
an Officers' Certificate certifying that attached thereto are true and
correct copies of (a) letters from S & P and Moody's confirming that
the Notes of such Series have been rated "AAA" by S & P and "Aaa" by
Moody's, as applicable, and (b) letters from each Rating Agency
confirming that the rating on each other Series of Notes has not been
or will not be withdrawn or downgraded on the applicable Delivery Date
as a result of such issuance;
(viii) the Issuer shall have delivered or caused to be
delivered to the Indenture Trustee a financial guaranty insurance
policy issued by the Note Insurer with respect to the payment of
principal and interest of such new Series of Notes in form and
substance substantially the same as the Note Insurance Policy issued by
the Note Insurer with respect to the Notes issued on the Initial
Delivery Date, and evidence that the rating of the Note Insurer shall
not have been downgraded, qualified or withdrawn;
(ix) the Issuer shall have delivered to the Indenture Trustee
favorable opinions of counsel (i) to the effect that the Notes of such
Series will be characterized as debt for tax purposes and that the
issuance of such Series will not adversely affect the characterization
of the Notes of any Outstanding Series as debt for tax purposes, (ii)
confirming the status of the security interest of the Indenture Trustee
in the Trust Estate, (iii) confirming true sale and the
nonconsolidation matters of the Issuer and the Company or the Servicer
in the event of a bankruptcy of the
30
35
Company or the Servicer, and (iv) confirming basic corporate matters
and that the Issuer is not required to be registered as an "investment
company" under the Investment Company Act of 1940;
(x) the Issuer shall have delivered to the Indenture Trustee
evidence of the deposit by the Issuer into the Collection Account of
any amounts due and paid under the Contracts of such Series of Notes
since the related Cut-off Date and evidence of the deposit by the
Issuer of any applicable amounts to the Cash Collateral Account;
(xi) the Issuer shall have delivered to the relevant party or
parties such other documents, certificates, instruments, opinions, or
other items as may be required by the terms of the Supplement creating
such Series of Notes or as may be required by the Note Insurer; and
(xii) the Indenture Trustee shall have received from each of
the Note Insurer and the Issuer an officer's certificate certifying
that no Note Insurer Default has occurred and is continuing with
respect to any outstanding Series of Notes.
Upon satisfaction of the above conditions, the Indenture Trustee shall
execute the Supplement and shall authenticate and deliver to or upon the order
of the Issuer the applicable Notes, and provide notice to all existing
Noteholders of the issuance of such Series of Notes.
SECTION 4.03 SECURITY FOR NOTES.
(a) The Issuer and the Company shall file UCC-1 financing statements
described in Sections 4.01(f) and 4.02(b)(vi) hereof in accordance with such
Sections. In addition, as soon as practicable but no later than 30 days after
the Initial Delivery Date and any subsequent Delivery Date or Acquisition Date,
as the case may be, the Issuer and the Company shall file with respect to all
Contracts Granted to the Indenture Trustee on such date as to which the original
cost of the underlying Equipment was in excess of $10,000, UCC assignments
assigning to the Indenture Trustee on behalf of the Holders of the Notes and the
Note Insurer, the Company's security interest in the Equipment under such
Contracts. From time to time, the Servicer shall take or cause to be taken such
actions and execute such documents as are necessary to perfect and protect the
Indenture Trustee's and the Note Insurer's respective interests in the Contracts
and the Equipment owned by the Issuer (provided that, with respect to financing
statements filed regarding Equipment, the original cost of such Equipment was in
excess of $10,000) against all other Persons, including, without limitation, the
filing of financing statements, amendments thereto and continuation statements,
the execution of transfer instruments and the making of notations on or taking
possession of all records or documents of title.
(b) If any change in either the Company's or the Issuer's name,
identity, structure or the location of its principal place of business, chief
executive office or jurisdiction of organization occurs, then the Issuer shall,
or the Issuer shall cause the Company, to deliver 30 days prior written notice
of such change or relocation to the Servicer, the Note Insurer and the Indenture
Trustee and no later than the effective date of such change or relocation, the
Servicer shall file such amendments or statements as may be required to preserve
and protect the Indenture Trustee's and the Note Insurer's respective interests
in the Trust Estate.
(c) During the term of this Indenture, the Issuer shall maintain each
of its chief executive office, principal place of business and jurisdiction of
organization in one of the States of the United States.
31
36
(d) The Servicer agrees to pay all reasonable costs and disbursements
in connection with the perfection and the maintenance of perfection, as against
all third parties, of the Indenture Trustee's and the Note Insurer's respective
right, title and interest in and to the Trust Estate (other than with respect to
the Equipment related to a Contract the original cost of which was less than
$10,000).
(e) The Indenture Trustee shall hold the original manually executed
counterpart of each Contract at its office in the State of Minnesota, and at any
such new address in the State of Minnesota as the Indenture Trustee shall inform
the Servicer, the Issuer and the Note Insurer in writing from time to time. The
Indenture Trustee shall hold each Contract for the benefit of Noteholders and
the Note Insurer, and maintain accurate records pertaining to each Contract to
maintain a current inventory thereof. The Indenture Trustee may, if requested by
the Servicer in writing in the form attached hereto as Exhibit F for purposes of
servicing a Contract, temporarily release to the Servicer such Contract. Any
Contract temporarily released from the custody of the Indenture Trustee to the
Servicer or its agents shall have stamped on it prior to delivery a legend to
the effect that the Contract is subject to a security interest in favor of
Norwest Bank Minnesota, National Association, as Indenture Trustee. The Servicer
shall promptly return the Contract to the Indenture Trustee when the need
therefor no longer exists.
SECTION 4.04 SUBSTITUTION, REMOVAL AND PURCHASE OF CONTRACTS IN TRUST
ESTATE.
(a) NOTICE OF BREACH OF REPRESENTATION OR WARRANTY. If at any time the
Issuer, the Servicer or the Indenture Trustee obtains knowledge (within the
meaning of 7.01(e) hereof, in the case of the Indenture Trustee), discovers or
is notified by the Company, the Issuer, the Note Insurer or the Servicer that
any of the representations and warranties of the Company in the Contract
Acquisition Agreement were incorrect at the time as of which such
representations and warranties were made, then the Person discovering, or
obtaining knowledge or receiving notification of such defect, omission, or
circumstance shall promptly notify the other parties to this Indenture and the
Note Insurer.
(b) MANDATORY REPURCHASE OR SUBSTITUTION UPON BREACH OF CERTAIN
REPRESENTATIONS OR WARRANTIES. In the event that any representation or warranty
of the Company in the Contract Acquisition Agreement was incorrect as of the
date made and the interests of the Note Insurer or the Holders of any Notes are
materially and adversely affected thereby, or if the Company is otherwise
required to take action under Section 3.03 of the Contract Acquisition Agreement
with respect to such a breach, the Issuer shall require the Company, pursuant to
the Contract Acquisition Agreement, to eliminate or otherwise cure the
circumstance or condition which has caused such breach within 30 days of
discovery or notice thereof by or to the Issuer, the Company or the Servicer. If
the Company fails or the Company or the Servicer is unable to cure such
circumstance or condition in accordance with the Contract Acquisition Agreement,
then the Issuer shall require the Company, pursuant to the Contract Acquisition
Agreement, to substitute a Substitute Contract for or to repurchase at the
Purchase Price, each affected Contract within the time specified in Section 3.03
of the Contract Acquisition Agreement. The proceeds of any such repurchase shall
be remitted by or on behalf of the Issuer to the Servicer for deposit by the
Servicer in the Collection Account pursuant to Section 3.03 of the Servicing
Agreement.
(c) INDENTURE TRUSTEE TO ACT. If the Issuer fails to enforce the
purchase or substitution obligations of the Company under the Contract
Acquisition Agreement in accordance with clause (b) above, the Indenture Trustee
is hereby appointed attorney-in-fact to act on behalf of and in the name of the
Issuer to require such purchase or substitution.
32
37
(d) PROHIBITION ON VOLUNTARY REPURCHASE OR SUBSTITUTION; MANDATORY
DEPOSITS OR SUBSTITUTIONS RELATED TO PREPAID CONTRACTS; DE MINIMIS EXCEPTION TO
PROHIBITION.
(i) Except as set forth in subclause (iii) below, no party to
this Indenture or the Contract Acquisition Agreement may purchase,
remove or otherwise release any Contract from the Trust Estate, unless
such purchase, removal or release is required by this Indenture.
(ii) In addition to the mandatory repurchase or substitution
required pursuant to clauses (b) and (c) of this Section 4.04, a
Contract shall be removed from the Trust Estate if the Servicer permits
any Customer to prepay or terminate a Contract in accordance with
Section 3.09 of the Servicing Agreement and all amounts paid by the
Customer in respect thereof (the "Customer Prepayment Amount") are
remitted to the Indenture Trustee for deposit to the Collection
Account. Unless otherwise specified by the terms of such Contract, the
Servicer may permit the Customer Prepayment Amount to be less than the
Purchase Price for such Contract (the "Required Prepayment Amount"),
and cause the release of the related Contract and related Equipment,
only if the differential between the Required Prepayment Amount and the
Customer Prepayment Amount (such differential, the "Prepayment
Differential") is remitted by the Issuer to the Indenture Trustee for
deposit to the Collection Account; and provided further that the amount
of such Prepayment Differential shall be deemed to be a voluntary
repurchase subject to the limitations and restrictions of subclauses
(iii) and (iv) below. At the option of the Issuer, in lieu of remitting
the Customer Prepayment Amount and the Prepayment Differential to the
Indenture Trustee, such removal may instead be effected by the
substitution of a Substitute Contract in accordance with subclause
(iii) below, provided that such substitution shall be deemed to be a
voluntary removal subject to the limitations and restrictions of this
Section 4.04(d).
(iii) In addition to the mandatory repurchases and
substitutions required under clauses (b), (c) and (d)(ii) of this
Section 4.04, the Issuer may also, at its option, voluntarily (A)
repurchase at the Purchase Price any Defaulted Contract or Delinquent
Contract and (B) substitute a Substitute Contract for any Defaulted
Contract, Delinquent Contract or prepaid or early terminated Contract.
Any such Substitute Contract shall meet the same requirements as those
specified in Section 3.04 of the Contract Acquisition Agreement for
substitutions by the Company upon the breach of a representation or
warranty. The sum of (x) the Purchase Price for all repurchased or
removed Contracts paid by the Company or the Issuer, (y) the aggregate
IPB of all Substitute Contracts delivered by the Company or the Issuer
and (z) the aggregate Prepayment Differential paid by the Issuer in
respect of all prepaid or early terminated Contracts, shall not exceed
10% of the Aggregate Initial IPB. It is intended that Customer
Prepayment Amounts not be included in calculating such 10% limitation.
SECTION 4.05 REQUIREMENTS FOR ALL CONTRACTS IN TRUST ESTATE.
(a) The Issuer shall comply with the requirements relating to the
acquisition of Contracts as set forth in the Contract Acquisition Agreement
(including compliance with the Eligibility Criteria and Concentration Limits set
forth therein) within the time periods set forth therein. On or prior to the
Business Day preceding each Acquisition Date, the Indenture Trustee will review
the related Contract in accordance with paragraph (b) below. The Indenture
Trustee shall confirm, by execution and delivery of a certificate of the
Indenture Trustee to the Issuer, the Noteholders and the Note Insurer, that the
Indenture Trustee has received the manually executed original of each Contract.
In the case of any Substitute Contracts acquired by the Issuer, the Issuer shall
provide (x) to the Indenture Trustee on the
33
38
applicable date of delivery the items listed in (i) and (ii) below and (y) to
the Note Insurer the item listed in (i) below:
(i) an Officer's Certificate of each of the Company and the
Issuer, each such Officer's Certificate having attached thereto an
Amended Contract Schedule and subjecting such Substitute Contract to
the provisions thereof and hereof and providing with respect to the
Substitute Contract the information required to supplement the related
Series Contract Schedule; and
(ii) the original manually executed counterpart of the
Contract relating to such Substitute Contract and, if applicable, all
or any of the other items included in the Contract File.
The Issuer shall also provide to the Indenture Trustee and the Note Insurer, at
the end of each calendar quarter, evidence that any necessary financing
statements have been filed in accordance with Sections 4.01(f), 4.02(b)(vi) and
4.03 hereof with respect to all such Substitute Contracts acquired during such
period.
(b) Upon receipt of each Contract, the Indenture Trustee shall confirm
that (i) each such Contract is the original manually executed counterpart of
such Contract; (ii) each such Contract has been executed by the Customer named
thereon; and (iii) each such Contract is identified on the applicable Series
Contract Schedule delivered therewith by Contract number and Customer name. If,
upon such examination of the Contracts, the Indenture Trustee determines that
any such Contract does not satisfy the requirements set forth above or in clause
(a) hereof, or is unable to confirm that the requirements have been met, the
Indenture Trustee shall promptly notify the Issuer, the Servicer and the Note
Insurer by telephone or telecopy and shall deliver an exception report to each
such party setting forth any missing or defective items with respect to such
Contracts.
(c) Within forty-five days after each Acquisition Date, the Indenture
Trustee shall review any exception report delivered in accordance with paragraph
(b) above and shall verify that it has possession of any missing items noted
thereon. The Indenture Trustee shall send such verification report and notice of
any defects to the Issuer, the Company and the Note Insurer within such
forty-five days and shall take any appropriate action under the Contract
Acquisition Agreement.
SECTION 4.06 RELEASES OF INDIVIDUAL OR SERIES CONTRACTS IN TRUST
ESTATE.
(a) The Issuer shall be entitled to obtain a release from the lien of
this Indenture for any individual Contract and the related Contract Assets at
any time (i) after a payment by the Company or the Issuer of the Purchase Price
of the Contract and the related Contract Assets, (ii) after a Substitute
Contract is substituted for such Contract and the related Contract Assets, (iii)
twelve months after the Final Due Date of a Contract that is not a Defaulted
Contract and for which the IPB of such Contract has been reduced to zero or (iv)
with respect to Defaulted Contracts, upon request of the Servicer, subject to
the requirements set forth below. Notwithstanding the foregoing, (y) in the case
of a Defaulted Contract, such Contract and the related Equipment shall be
released from the lien of this Indenture only following the sale, lease or other
disposition of the related Equipment in accordance with Section 3.01(b)(i) of
the Servicing Agreement, provided that the related Recovery and Residual
Proceeds shall not be released from the lien of this Indenture and (z) no
release may be effected pursuant to clause (iii) above if a Trigger Event or
Event of Default shall have occurred and be continuing. In order to effect such
release, the Issuer shall deliver to the Indenture Trustee and the Note Insurer
an Officer's Certificate substantially in the form attached hereto as Exhibit G
(A) identifying the Receivable and the related Contract and
34
39
Equipment to be released, (B) requesting the release thereof, (C) setting forth
the amount deposited in the Collection Account with respect thereto, in the
event that the subject Contract and the related Equipment are being released
from the lien of this Indenture pursuant to (i) or (iii) above, and (D)
certifying that the amount deposited in the Collection Account (1) equals the
Purchase Price of the Contract, in the event that the subject Contract and the
related Equipment are being released from the lien of this Indenture pursuant to
(i) above or (2) equals the entire amount of Insurance Proceeds or Recoveries
received with respect to such Contract and related Equipment in the event of a
release from the lien of this Indenture pursuant to subclause (y) above.
(b) In addition, except in the case in which a Series of Notes is
redeemed with the proceeds from a new Series of Notes, the Issuer shall be
entitled, in connection with any permitted redemption or other retirement of a
Series of Notes to obtain a release from the lien of the Indenture for any of
the related Series Contracts and related Contract Assets to the extent that,
after giving effect to such release, the sum of (i) the amount of funds then
held in the Cash Collateral Account and (ii) the Aggregate IPB of the Contracts
remaining in the Trust Estate after giving effect to such release, equals or
exceeds the sum of (y) the Required Collateralization Amount for each Series of
Notes (after giving effect to such payment of principal) plus (z) the
Outstanding Principal Amount of all Series of Notes (after giving effect to such
payment of principal).
(c) Upon satisfaction of the conditions specified in subsection (a) or
(b), as applicable, the Indenture Trustee shall release from the lien of this
Indenture and deliver to or upon the order of the Issuer (or to or upon the
order of the Company if it has satisfied its obligations under Section 4.04
hereof and Section 3.04 of the Contract Acquisition Agreement with respect to a
Contract) the Contract and all related Contract Assets described in the Issuer's
request for release.
SECTION 4.07 TRUST ESTATE.
The Indenture Trustee may, and when required by the provisions of
Articles Four, Five, Six and Twelve hereof shall, execute instruments to release
property from the lien of this Indenture, or convey the Indenture Trustee's
interest in the same, in a manner and under circumstances which are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Indenture Trustee as provided in this Article Four
shall be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
SECTION 4.08 NOTICE OF RELEASE.
The Indenture Trustee shall be entitled to receive at least 10 days
notice of any action to be taken pursuant to Section 4.06 hereof, accompanied by
copies of any instruments involved.
35
40
ARTICLE FIVE
SATISFACTION AND DISCHARGE
SECTION 5.01 SATISFACTION AND DISCHARGE OF INDENTURE.
(a) Following payment in full of (i) all of the Notes of each Series
issued hereunder, (ii) the fees and charges of the Indenture Trustee, (iii) all
other obligations of the Issuer under this Indenture and each other Transaction
Document and (iv) all amounts owing to the Note Insurer under each Note
Insurance Agreement, and the release by the Indenture Trustee of the Trust
Estate in accordance with Section 5.01(b) hereof, this Indenture shall be
discharged and the Indenture Trustee shall provide notice of such discharge to
each of the Rating Agencies.
(b) Upon payment in full of the amounts referred to in clauses (i)
through (iv) of Section 5.01(a) hereof, the Issuer may submit to the Indenture
Trustee an Officer's Certificate requesting the release to the Issuer or its
designee of a stated amount of the funds on deposit in the Cash Collateral
Account and some or all of the other Trust Estate (collectively, the "Withdrawn
Collateral"), accompanied by an Opinion of Counsel reasonably acceptable to the
Controlling Party to the effect that, after the release of the Withdrawn
Collateral, there will remain an amount in the Cash Collateral Account or
otherwise subject to this Indenture at least equal to the payments of interest
previously made on the Outstanding Notes and the Principal Distribution Amounts
that are subject to recapture as preferential transfers pursuant to Section 547
of the Bankruptcy Code or, alternatively, to the effect that no such payments
are subject to recapture. In rendering such Opinion of Counsel, such counsel may
rely as to factual matters, including, without limitation, the date on which
funds were received and the source of funds, upon an Officer's Certificate.
Promptly after receipt of such Officer's Certificate, Opinion of Counsel and
authorization to release from the Controlling Party, the Indenture Trustee shall
release the Withdrawn Collateral from the lien of this Indenture, and deliver
the Withdrawn Collateral to the Issuer or its designee. The Issuer shall be
entitled to deliver more than one such Officer's Certificate and Opinion of
Counsel until the entire Trust Estate is released and delivered to the Issuer or
its designee. Notwithstanding the foregoing, the Controlling Party may waive the
requirement that the Issuer deliver such Officer's Certificate and/or Opinion of
Counsel and authorize the Indenture Trustee by written direction to release all
or a portion of the Cash Collateral Account or other items of the Trust Estate
from the lien of this Indenture upon payment in full of the amounts referred to
in clauses (i) through (iv) of Section 5.01(a) hereof. Notwithstanding
termination of this Indenture, the Indenture Trustee shall remain obligated to
make claims under the Note Insurance Policy with respect to any Preference
Claim.
(c) In connection with the discharge of this Indenture and the release
of the Trust Estate, the Indenture Trustee shall release from the lien of this
Indenture and deliver to or upon the order of the Issuer all property remaining
in the Trust Estate and shall execute and file, at the expense of the Issuer,
UCC financing statements evidencing such discharge and release.
SECTION 5.02 APPLICATION OF TRUST MONEY.
Subject to the last paragraph of Section 7.16 hereof, all monies held
by the Indenture Trustee pursuant to Section 5.01 hereof shall be held in trust
and if invested, shall be invested in Eligible Investments of the type described
in clause (a) of the definition thereof, and applied by the Indenture Trustee,
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent as the Indenture Trustee
may determine, to the Persons entitled thereto, of the principal and interest
for whose payment such money has been deposited with the Indenture Trustee;
36
41
such money shall be segregated from other funds to the extent required in this
Indenture and to the extent required by law.
37
42
ARTICLE SIX
DEFAULTS AND REMEDIES
SECTION 6.01 EVENTS OF DEFAULT.
"Event of Default" wherever used herein means any one of the following
events:
(a) default in the payment of any interest on any Note on any Payment
Date;
(b) the failure to have paid in full the principal of any Note at the
related Stated Maturity Date;
(c) default in the payment of any other amounts due hereunder
(including any reimbursement payments due to the Note Insurer) on the applicable
due date therefor;
(d) default in the performance of any covenant of the Issuer, or breach
of any representation or warranty of the Issuer, in this Indenture, the Contract
Acquisition Agreement, any Note Insurance Agreement or the Servicing Agreement
(other than a covenant or warranty default in the performance of which or breach
of which is elsewhere in this Section specifically dealt with) which default or
breach has a material adverse effect on the Noteholders or the Note Insurer, and
continuance of such default or breach for a period of 30 days after the earlier
of the Issuer's receipt of written notice of such default or the date on which
the Issuer obtains actual knowledge thereof;
(e) the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer under the United States
Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency,
reorganization, liquidation or other similar law now or hereafter in effect or
any arrangement with creditors or appointing a receiver, liquidator, assignee,
trustee, or sequestrator (or other similar official) for the Issuer or for any
substantial part of its property, or ordering the winding up or liquidation of
the Issuer's affairs, and the continuance of any such decree or order unstayed
and in effect for a period of 60 consecutive days;
(f) the institution by the Issuer of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by the Issuer to the institution of
bankruptcy or insolvency proceedings against the Issuer, or the filing by the
Issuer of a petition or answer or consent seeking reorganization or relief under
the United States Bankruptcy Code or any other applicable federal or state
bankruptcy insolvency, reorganization, liquidation or other similar law now or
hereafter in effect, or the consent by the Issuer to the filing of any such
petition or to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or other similar
official) of the Issuer or of any substantial part of the Issuer's property, or
the making by the Issuer of any assignment for the benefit of creditors, or the
admission by it in writing of its inability, or the failure by it generally, to
pay its debts as they become due, or the taking of corporate action by the
Issuer in furtherance of any such action;
(g) the payment by the Note Insurer of any amounts under any Note
Insurance Policy pursuant to Section 8.01 hereof; or
(h) the Issuer or the Trust Estate is required to register as an
"investment company" pursuant to the Investment Company Act of 1940, as amended.
38
43
SECTION 6.02 ACCELERATION OF STATED MATURITY DATE; RESCISSION AND
ANNULMENT.
If an Event of Default shall have occurred and be continuing, then, and
in every such case, the Indenture Trustee shall, at the direction of the
Controlling Party, declare the principal of all the Notes to be immediately due
and payable, by notice given in writing to the Issuer (and to the Indenture
Trustee if given by Noteholders); provided, that the Note Insurer, if the Note
Insurer is the Controlling Party, shall not declare the Outstanding Principal
Amount of all of the Notes immediately due and payable unless the Note Insurer
shall have endorsed the Note Insurance Policies to provide coverage for any
shortfall in the payment of accelerated principal and any interest due on the
Outstanding Notes on the date established for redemption thereof pursuant to
such acceleration, and upon any such declaration, such principal shall become
immediately due and payable without any presentment, demand, protest or other
notice of any kind (except such notices as shall be expressly required by the
provisions of this Indenture), all of which are hereby expressly waived.
At any time after such a declaration of acceleration has been made, but
before any Sale of the Trust Estate has been made or a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as provided
hereinafter in this Article, the Controlling Party, by written notice to the
Issuer and the Indenture Trustee, may rescind and annul such declaration and its
consequences (except that in the case of a payment default on the Notes, the
consent of all the Noteholders shall be required to rescind and annul such a
declaration and its consequences) if:
(a) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay
(i) all overdue installments of interest on all Notes;
(ii) the principal of any Notes, which has become due
otherwise than by such declaration of acceleration and interest thereon
at the rate borne by such Notes from the time such principal first
became due until the date when paid; and
(iii) all sums paid or advanced, together with interest
thereon, by the Indenture Trustee, the Note Insurer or any Noteholder
hereunder or by the Note Insurer under any Note Insurance Agreement or
any Note Insurance Policy, and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, the Note Insurer
and the Noteholders, their agents and counsel incurred in connection
with the enforcement of this Indenture to the date of such payment or
deposit; and
(b) all Events of Default have been cured or waived as provided in
Section 6.15 hereof, other than the nonpayment of the principal on any of the
Notes which has become due solely by such declaration of acceleration.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 6.03 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE.
The Issuer covenants that if an Event of Default shall have occurred
and be continuing and any of the Notes have been declared due and payable and
such declaration has not been rescinded and annulled, the Issuer shall, upon
demand of the Indenture Trustee and at the direction of the Controlling Party,
pay to the Indenture Trustee, for the benefit of the Holders of the Notes and
the Note Insurer, the whole amount then due and payable on the Notes for
principal and interest, with interest upon the overdue principal at
39
44
the rate borne by the Notes and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee, the Note Insurer and their respective agents and counsel.
If the Issuer fails to pay such amount forthwith upon such demand, the
Indenture Trustee, in its own name and as Indenture Trustee of an express trust
shall, at the direction of the Controlling Party, institute Proceedings for the
collection of the sums so due and unpaid, and prosecute such Proceeding to
judgment or final decree, and enforce the same against the Issuer and collect
the monies adjudged or decreed to be payable in the manner provided by law out
of the property of the Issuer, wherever situated.
If an Event of Default shall have occurred and be continuing, the
Indenture Trustee shall, at the direction of the Controlling Party proceed, to
protect and enforce its rights and the rights of such Controlling Party by such
appropriate Proceedings as the Indenture Trustee, at the direction of the
Controlling Party, shall deem most effective to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in
this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 6.04 REMEDIES.
If an Event of Default shall have occurred and be continuing, the
Indenture Trustee shall, at the direction of the Controlling Party, do one or
more of the following as the Controlling Party shall direct:
(a) institute Proceedings for the collection of all amounts then due
and payable on the Notes or under this Indenture, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Issuer the monies
adjudged due;
(b) take possession of and sell the Trust Estate securing the Notes or
any portion thereof or rights or interest therein, at one or more Sales called
and conducted in any manner permitted by law;
(c) institute any Proceedings from time to time for the complete or
partial foreclosure of the lien created by this Indenture with respect to the
Trust Estate securing the Notes;
(d) during the continuance of a default under a Contract, exercise any
of the rights of the lessor under such Contract;
(e) exercise any remedies of a secured party under the UCC or any
applicable law and take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee, the Note Insurer or the Holders of
the Notes hereunder; and
(f) institute proceedings against the Note Insurer for the collection
of any amounts then due and payable under any Note Insurance Policy, whether by
declaration or otherwise, enforce any judgment obtained, and collect from the
Note Insurer the monies adjudged due;
provided, that without the consent of the Note Insurer, or, if a Note Insurer
Default has occurred and is continuing, all the Holders of Outstanding Notes,
the Indenture Trustee may not sell or otherwise liquidate any portion of the
Trust Estate unless the proceeds of such Sale or liquidation distributable to
the Noteholders are sufficient to discharge in full the amounts then due and
unpaid upon the Notes for principal and interest together with all amounts owed
to the Note Insurer under the Note Insurance Agreements.
40
45
SECTION 6.05 OPTIONAL PRESERVATION OF TRUST ESTATE.
If (i) an Event of Default shall have occurred and be continuing with
respect to the Notes and (ii) no Notes have been declared due and payable, or
such declaration and its consequences have been annulled and rescinded, the
Indenture Trustee shall, at the direction of the Controlling Party, elect, by
giving written notice of such election to the Issuer, to take possession of and
retain the Trust Estate securing the Notes intact, collect or cause the
collection of the proceeds thereof and make and apply all payments and deposits
and maintain all accounts in respect of such Notes in accordance with the
provisions of Article Twelve of this Indenture. If the Indenture Trustee is
unable to or is stayed from giving such notice to the Issuer for any reason
whatsoever, such election shall be effective as of the time of such
determination or request, as the case may be, notwithstanding any failure to
give such notice, and the Indenture Trustee shall give such notice upon the
removal or cure of such inability or stay (but shall have no obligation to
effect such removal or cure). Any such election may be rescinded with respect to
any portion of the Trust Estate securing the Notes remaining at the time of such
rescission by written notice to the Indenture Trustee and the Issuer from the
Controlling Party.
SECTION 6.06 INDENTURE TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, conservatorship,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial Proceeding relating to the Issuer or any other
obligor upon any of the Notes or the property of the Issuer or of such other
obligor or their creditors, the Indenture Trustee (irrespective of whether the
principal of any of the Notes shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Indenture Trustee
shall have made any demand on the Issuer for the payment of overdue principal or
interest) shall be entitled and empowered, to intervene in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes issued hereunder and to file
such other papers or documents as may be necessary or advisable in order to have
the claims of the Indenture Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee, its
agents and counsel and any other amounts due the Indenture Trustee under Section
7.07 hereof) and of the Note Insurer and the Noteholders allowed in such
judicial Proceeding, and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same,
and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such judicial Proceeding is hereby authorized by the
Note Insurer and each Noteholder to make such payments to the Indenture Trustee,
and in the event that the Indenture Trustee shall consent to the making of such
payments directly to the Note Insurer or the Noteholders, to pay to the
Indenture Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel, and any other amounts due the Indenture Trustee under Section 7.07
hereof.
Nothing contained in this Indenture shall be deemed to authorize the
Indenture Trustee to authorize or consent to or accept or adopt on behalf of the
Note Insurer or any Noteholder any plan of reorganization, arrangement,
adjustment or composition affecting the Note Insurer or any of the Notes or the
rights of any Holder thereof, or to authorize the Indenture Trustee to vote in
respect of the claim of the Note Insurer or any Noteholder in any such
Proceeding.
41
46
SECTION 6.07 INDENTURE TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
NOTES.
(a) In all Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all of the Noteholders, and it shall not be necessary to make
any Noteholder a party to any such Proceedings.
(b) All rights of actions and claims under this Indenture or any of the
Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any Proceeding
relating thereto, and any such Proceedings instituted by the Indenture Trustee
shall be brought in its own name as Indenture Trustee of an express trust, and
any recovery whether by judgment, settlement or otherwise shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel, be for the Note
Insurer and the ratable benefit of the Holders of the Notes.
SECTION 6.08 APPLICATION OF MONEY COLLECTED FOLLOWING AN EVENT OF
DEFAULT.
If the Notes have been declared due and payable following an Event of
Default and such declaration has not been rescinded or annulled, any money
collected by the Indenture Trustee with respect to the Notes pursuant to this
Article Six or otherwise and any other money that may be held thereafter by the
Indenture Trustee as security for the Notes shall be applied in the following
order, at the date or dates fixed by the Indenture Trustee and, in case of the
distribution of such money on account of principal or interest, with no
requirement of presentment, provided that each Noteholder shall surrender its
Note promptly following payment in full thereof; provided that if there are
insufficient funds to make the payments of interest or principal specified in
clause Fifth and Sixth below, then the amount available to be paid pursuant to
such clause and at such level of priority will be allocated to each Series of
Notes based on the applicable pro rata share; provided further, that proceeds of
a claim under a Note Insurance Policy shall be used only to pay interest and
principal on the applicable Series in the manner set forth in clauses Fifth and
Sixth below:
FIRST: To the payment to the Indenture Trustee of the Trustee Fee then
due, and any reasonable costs and expenses incurred by it in connection with
enforcing the remedies provided for in this Article Six;
SECOND: To the payment of all amounts due the Servicer, including any
amounts due to a successor Servicer that has been appointed pursuant to Section
6.02 of the Servicing Agreement, pursuant to Section 3.08 of the Servicing
Agreement and Section 12.02(d)(i) hereof and to pay the Servicer the amount
necessary to reimburse the Servicer for any other unrecovered Servicer Advances;
THIRD: To the payment to the Back-up Servicer of the Back-up Servicer
Fee and any Transition Costs then due;
FOURTH: To the payment to the Note Insurer of the Note Insurer Premium
then due;
FIFTH: To the payment of the amounts then due and unpaid upon the Notes
of each Series for interest, with interest (to the extent that payment thereof
is legally enforceable at the respective rate or rates prescribed therefor in
the Notes) on overdue interest, in the proportion in which the Outstanding
Principal Amount of each Series of Notes represents of the Outstanding Principal
Amount of all Series of
42
47
Notes, without preference or priority of any kind, according to the amounts due
and payable on the Notes for interest;
SIXTH: To the payment of the remaining Outstanding Principal Amount of
the Notes, in the proportion in which the Outstanding Principal Amount of each
Series of Notes represents of the Outstanding Principal Amount of all Series of
Notes, without preference or priority of any kind;
SEVENTH: To the payment to the Note Insurer of (a) any amounts
previously paid by the Note Insurer under any of the Note Insurance Policies and
not theretofore repaid, together with interest thereon, and (b) any other
amounts due under the Note Insurance Agreements and amounts necessary to
reimburse the Note Insurer for any costs or expenses incurred by it in
connection with any enforcement action with respect to this Indenture, the Note
Insurance Agreements or the Notes;
EIGHTH: To reimburse the Noteholders, pro rata, for any reasonable
costs or expenses incurred by them in connection with any enforcement action
with respect to this Indenture or the Notes;
NINTH: To the payment to the Indenture Trustee and the Back-up
Servicer, any other amounts due to the Indenture Trustee or the Back-up Servicer
as expressly provided herein and in the Servicing Agreement;
TENTH: To the payment to the Servicer of any other amounts due the
Servicer as expressly provided herein and in the Servicing Agreement; and
ELEVENTH: To the payment of any surplus to or at the written direction
of the Issuer or any other person legally entitled thereto.
SECTION 6.09 LIMITATION ON SUITS.
No Holder of any Note shall have any right to institute any Proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder for so long as a Note
Insurer Default has not occurred, and if a Note Insurer Default has occurred,
unless
(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) the Majority Holders shall have made written request to the
Indenture Trustee to institute Proceedings in respect of such Event of Default
in its own name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(d) the Indenture Trustee for 60 days after its receipt of such notice,
request and offer of security or indemnity has failed to institute any such
Proceedings; and
(e) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 60-day period by the Majority Holders; it
being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes, or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this
43
48
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all the Holders of Notes.
SECTION 6.10 UNCONDITIONAL RIGHT OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal and interest on such Note as such principal and
interest becomes due and payable and to institute any Proceeding for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
SECTION 6.11 RESTORATION OF RIGHTS AND REMEDIES.
If the Indenture Trustee, the Note Insurer or any Noteholder has
instituted any Proceeding to enforce any right or remedy under this Indenture
and such Proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Indenture Trustee, the Note Insurer or to such
Noteholder, then, and in every case, the Issuer, the Indenture Trustee, the Note
Insurer and the Noteholders shall, subject to any determination in such
Proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Indenture Trustee, the
Note Insurer and the Noteholders shall continue as though no such Proceeding had
been instituted.
SECTION 6.12 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section
2.07 hereof, no right or remedy herein conferred upon or reserved to the
Indenture Trustee, the Note Insurer or to the Noteholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.13 DELAY OR OMISSION; NOT WAIVER.
No delay or omission of the Indenture Trustee, the Note Insurer or of
any Holder of any Note to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or any acquiescence therein. Every right and remedy given
by this Article Six or by law to the Indenture Trustee, the Note Insurer or to
the Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Indenture Trustee, the Note Insurer or by the
Noteholders, as the case may be, subject in each case, however, to the right of
the Controlling Party to control any such right and remedy except as provided in
Section 6.14 hereof.
SECTION 6.14 CONTROL BY NOTEHOLDERS.
The Controlling Party shall have the right to direct the time, method
and place of conducting any Proceeding for any remedy available to the Indenture
Trustee or exercising any trust or power conferred on the Indenture Trustee;
provided that:
44
49
(a) such direction shall not be in conflict with any rule of law or
with this Indenture including, without limitation, any provision hereof which
expressly provides for approval by a greater percentage of Outstanding Principal
Amount of all Notes;
(b) any direction to the Indenture Trustee by the Noteholders to
undertake a private sale of the Trust Estate shall be by the Holders of all
Outstanding Notes, unless the condition set forth in Section 6.18(b)(ii) hereof
is met;
(c) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee which is not inconsistent with such direction; provided
that, subject to Section 7.01 hereof, the Indenture Trustee need not take any
action which a Responsible Officer or Officers of the Indenture Trustee in good
faith determines might involve it in personal liability or be unjustly
prejudicial to the Noteholders not consenting; and
(d) the Indenture Trustee has been furnished reasonable indemnity
against costs, expenses and liabilities which it might incur in connection
therewith as provided in Section 7.01(f) hereof.
SECTION 6.15 WAIVER OF CERTAIN EVENTS BY LESS THAN ALL NOTEHOLDERS.
The Controlling Party may on behalf of the Holders of all the Notes
waive any past Default, Event of Default or Trigger Event hereunder and its
consequences, except:
(a) a Default described in Sections 6.01(a), (b), (d), (e) or (f)
hereof, or
(b) in respect of a covenant or provision hereof which under Article
Nine hereof cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected.
Upon any such waiver, such Default, Event of Default or Trigger Event
shall cease to exist, and any Event of Default or other consequence arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default,
Event of Default or Trigger Event or impair any right consequent thereon.
SECTION 6.16 UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Note by its
acceptance of such Note shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Indenture Trustee for any
action taken, suffered or omitted by it as Indenture Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 6.16 shall not apply to any suit
instituted by the Indenture Trustee or the Note Insurer, or to any suit
instituted by the Majority Holders, or to any suit instituted by any Noteholder
for the enforcement of the payment of the principal of or interest on any Note
on or after the Stated Maturity Date expressed in such Note.
SECTION 6.17 WAIVER OF STAY OR EXTENSION LAWS.
45
50
The Issuer covenants (to the extent that it may lawfully do so) that it
shall not, at any time, insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not hinder, delay or impede the execution of
any power herein granted to the Indenture Trustee, but shall suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 6.18 SALE OF TRUST ESTATE .
(a) The power to effect any sale (a "Sale") of any portion of the Trust
Estate pursuant to Section 6.04 hereof shall not be exhausted by any one or more
Sales as to any portion of the Trust Estate remaining unsold, but shall continue
unimpaired until the entire Trust Estate securing the Notes shall have been sold
or all amounts payable on the Notes and under this Indenture with respect
thereto shall have been paid. The Indenture Trustee may from time to time
postpone any Sale by public announcement made at the time and place of such
Sale.
(b) To the extent permitted by applicable law, the Indenture Trustee
shall not, in any private Sale, sell to a third party (i) the Trust Estate
unless the provisions of Section 6.04 are satisfied, or (ii) any portion thereof
unless:
(i) the Note Insurer, or if a Note Insurer Default has
occurred the Holders of all Outstanding Notes, consents in writing to
or directs the Indenture Trustee to make such Sale; or
(ii) if a Note Insurer Default has occurred, the proceeds of
such Sale would not be less than the sum of all amounts due to the
Indenture Trustee hereunder and the Outstanding Principal Amount of all
Notes and interest due or to become due thereon on the Payment Date
next succeeding such Sale.
(c) The Indenture Trustee, the Note Insurer or the Noteholders may bid
for and acquire any portion of the Trust Estate in connection with a public Sale
thereof, and in lieu of paying cash therefor, any Noteholder may make settlement
for the purchase price by crediting against amounts owing on the Notes of such
Holder or other amounts owing to such Holder secured by this Indenture, that
portion of the net proceeds of such Sale to which such Holder would be entitled,
after deducting the reasonable costs, charges and expenses incurred by the
Indenture Trustee, the Note Insurer or the Noteholders in connection with such
Sale. The Notes need not be produced in order to complete any such Sale, or in
order for the net proceeds of such Sale to be credited against the Notes. The
Indenture Trustee, the Note Insurer or the Noteholders may hold, lease, operate,
manage or otherwise deal with any property so acquired in any manner permitted
by law.
(d) The Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the Trust
Estate in connection with a Sale thereof. In addition, the Indenture Trustee is
hereby irrevocably appointed the agent and attorney-in-fact of the Issuer to
transfer and convey its interest in any portion of the Trust Estate in
connection with a Sale thereof, and to take all action necessary to effect such
Sale. No purchaser or transferee at such a sale shall be bound to ascertain the
Indenture Trustee's authority, inquire into the satisfaction of any conditions
precedent or see to the application of any monies.
46
51
(e) The method, manner, time, place and terms of any Sale of all or any
portion of the Trust Estate shall be commercially reasonable.
SECTION 6.19 ACTION ON NOTES .
The Indenture Trustee's right to seek and recover judgment on the Notes
or under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture. Neither
the lien of this Indenture nor any rights or remedies of the Indenture Trustee
or the Noteholders shall be impaired by the recovery of any judgment by the
Indenture Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer.
47
52
ARTICLE SEVEN
THE INDENTURE TRUSTEE
SECTION 7.01 CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default known to the
Indenture Trustee as provided in subsection (e) below:
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith or negligence on its part,
the Indenture Trustee may conclusively rely as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions, which by any provision hereof are
specifically required to be furnished to the Indenture Trustee, the
Indenture Trustee shall be under a duty to examine the same and to
determine whether or not they conform to the requirements of this
Indenture.
(b) In the event that an Event of Default known to the Indenture
Trustee as provided in subsection (e) below shall have occurred and be
continuing, the Indenture Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and shall use the same degree of care and skill
in its exercise, as a reasonable person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct or bad faith, except that:
(i) this subsection (c) shall not be construed to limit the
effect of subsection (a) of this Section;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Indenture Trustee, unless it shall be proved that the Indenture Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Controlling Party or the Holders
of Notes representing such percentage of Outstanding Principal Amount
as may be required by the terms hereof, in accordance with Section 6.14
hereof relating to the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee,
under this Indenture, the Contract Acquisition Agreement or the
Servicing Agreement; and
(iv) no provision of this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for
48
53
believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it, provided that
nothing contained in this Indenture shall excuse the Indenture Trustee
for failure to perform its duties as Indenture Trustee under this
Indenture.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Indenture Trustee shall be subject to the provisions
of this Section 7.01.
(e) For all purposes under this Indenture, the Indenture Trustee shall
not be deemed to have notice of any Event of Default described in Section
6.01(e) or 6.01(f) hereof or any Default described in Section 6.01(d) hereof or
of any Trigger Event unless a Responsible Officer assigned to and working in the
Indenture Trustee's corporate trust department has actual knowledge thereof or
unless written notice of any event which is in fact such an Event of Default,
Default or Trigger Event is received by the Indenture Trustee at the Corporate
Trust Office, and such notice references any of the Notes generally, the Issuer,
the Trust Estate or this Indenture.
(f) The Indenture Trustee shall be under no obligation to institute any
suit, or to take any remedial proceeding under this Indenture, or to enter any
appearance or in any way defend in any suit in which it may be made defendant,
or to take any steps in the execution of the trusts hereby created or in the
enforcement of any rights and powers hereunder until it shall be indemnified to
its satisfaction against any and all costs and expenses, outlays and counsel
fees and other reasonable disbursements and against all liability, except
liability that is adjudicated, in connection with any action so taken.
(g) Notwithstanding any extinguishment of all right, title and interest
of the Issuer in and to the Trust Estate following an Event of Default and a
consequent declaration of acceleration of the maturity of any of the Notes,
whether such extinguishment occurs through a Sale of the Trust Estate to another
person or the acquisition of the Trust Estate by the Indenture Trustee, the
rights of the Noteholders shall continue to be governed by the terms of this
Indenture.
(h) Notwithstanding anything to the contrary contained herein, the
provisions of subsections (e) through (g), inclusive, of this Section 7.01 shall
be subject to the provisions of subsections (a) through (c), inclusive, of this
Section 7.01.
(i) The Indenture Trustee shall provide the reports and accountings as
required pursuant to Section 12.04 hereof.
SECTION 7.02 NOTICE OF DEFAULT AND OTHER EVENTS.
Promptly after the occurrence of any Default, Trigger Event or Note
Insurer Default known to the Indenture Trustee (within the meaning of Section
7.01(e) hereof) which is continuing, within one Business Day of obtaining such
knowledge, the Indenture Trustee shall transmit by telephonic or telegraphic
communication confirmed by mail to the Note Insurer and by mail to all Holders
of Notes, as their names and addresses appear on the Note Register, notice of
such Default, Trigger Event or Note Insurer Default known to the Indenture
Trustee.
49
54
SECTION 7.03 CERTAIN RIGHTS OF INDENTURE TRUSTEE.
Except as otherwise provided in Section 7.01,
(a) the Indenture Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
obligation, paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Indenture
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Indenture Trustee
(unless other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officer's Certificate;
(d) the Indenture Trustee may consult with counsel and the written
advice of such counsel selected by the Indenture Trustee with due care or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon;
(e) the Indenture Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(f) unless so directed by the Controlling Party and the requirements of
clause (e) above are met, the Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, note or other paper or document, but the Indenture Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Indenture Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Issuer, upon reasonable notice and at
reasonable times personally or by agent or attorney; and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys.
SECTION 7.04 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
(a) The recitals contained in this Indenture and in the Notes, except
the certificates of authentication on the Notes, shall be taken as the
statements of the Issuer, and the Indenture Trustee assumes no responsibility
for their correctness. The Indenture Trustee makes no representations as to the
validity or condition of the Trust Estate or any part thereof, or as to the
title of the Issuer thereto or as to the security afforded thereby or hereby, or
as to the validity or genuineness of any securities at any time pledged and
deposited with the Indenture Trustee hereunder or as to the validity or
sufficiency of this
50
55
Indenture or any of the Notes. The Indenture Trustee shall not be accountable
for the use or application by the Issuer of any of the Notes or the proceeds
thereof or of any money paid to the Issuer or upon Issuer Order under any
provisions hereof.
(b) Except as otherwise expressly provided herein and without limiting
the generality of the foregoing, the Indenture Trustee shall have no
responsibility or liability for or with respect to the validity of any Equipment
or Contract, the perfection of any security interest (whether as of the date
hereof or at any future time), the maintenance of or the taking of any action to
maintain such perfection, the validity of the assignment of any portion of the
Trust Estate to the Indenture Trustee or of any intervening assignment, the
review of any Contract (it being understood that the Indenture Trustee has not
reviewed and does not intend to review the substance or form of any such
Contract), the performance or enforcement of any Contract, the validity and
sufficiency of the Note Insurance Policies, the compliance by the Issuer or the
Servicer with any covenant or the breach by the Issuer or the Servicer of any
warranty or representation made hereunder or in any related document or the
accuracy of any such warranty or representation, any investment of monies in the
Collection Account or any loss resulting therefrom, the acts or omissions of the
Issuer, the Servicer, the Note Insurer or any Customer, any action of the
Servicer taken in the name of the Indenture Trustee, or the validity of the
Servicing Agreement or the Contract Acquisition Agreement.
(c) Except as otherwise expressly provided herein, the Indenture
Trustee shall not have any obligation or liability under any Contract by reason
of or arising out of this Indenture or the granting of a security interest in
such Contract hereunder or the receipt by the Indenture Trustee of any payment
relating to any Contract pursuant hereto, nor shall the Indenture Trustee be
required or obligated in any manner to perform or fulfill any of the obligations
of the Issuer under or pursuant to any Contract, or to make any payment, or to
make any inquiry as to the nature or the sufficiency of any payment received by
it, or the sufficiency of any performance by any party, under any Contract.
SECTION 7.05 MAY HOLD NOTES.
The Indenture Trustee, the Servicer, any Paying Agent, the Note
Registrar, any Authenticating Agent or any other agent of the Issuer, in its
individual or any other capacity, may become the owner or pledgee of Notes, and,
if operative, may otherwise deal with the Issuer with the same rights it would
have if it were not Indenture Trustee, Servicer, Paying Agent, Note Registrar,
Authenticating Agent or such other agent.
SECTION 7.06 MONEY HELD IN TRUST.
Money and investments held in trust by the Indenture Trustee or any
Paying Agent hereunder shall be held in one or more trust accounts hereunder but
need not be segregated from other funds except to the extent required in this
Indenture or required by law. The Indenture Trustee or any Paying Agent shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Issuer or otherwise specifically provided in this
Indenture.
51
56
SECTION 7.07 COMPENSATION AND REIMBURSEMENT.
The Issuer agrees:
(a) to pay the Indenture Trustee monthly its fee for all services
rendered by it hereunder as Indenture Trustee, in the amount of the Trustee Fee
(which compensation shall not otherwise be limited by any provision of law in
regard to the compensation of a trustee of an express trust), and to pay to the
Back-up Servicer its fee for all services rendered hereunder and under the
Servicing Agreement as Back-up Servicer, in the amount of the Back-up Servicer
Fee;
(b) except as otherwise expressly provided herein, to reimburse the
Indenture Trustee or the Back-up Servicer upon its request for all reasonable
out-of-pocket expenses, disbursements and advances incurred or made by the
Indenture Trustee or the Back-up Servicer in accordance with any provision of
this Indenture or the Servicing Agreement (including the reasonable compensation
and the expenses and disbursements of the Indenture Trustee's and Back-up
Servicer's agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(c) to indemnify and hold harmless the Trust Estate and the Indenture
Trustee from and against any loss, liability, expense, damage or injury (other
than those attributable to a Noteholder in its capacity as an investor in any of
the Notes) sustained or suffered pursuant to this Indenture by reason of any
acts, omissions or alleged acts or omissions arising out of activities of the
Trust or the Indenture Trustee (including without limitation any violation of
any applicable laws by the Issuer as a result of the transactions contemplated
by this Indenture), including, but not limited to, any judgment, award,
settlement, reasonable attorneys' fees and other expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim;
provided, that the Issuer shall not indemnify the Indenture Trustee if such
loss, liability, expense, damage or injury is due to the Indenture Trustee's
gross negligence or willful misconduct, willful misfeasance or bad faith in the
performance of duties. Any indemnification pursuant to this Section shall only
be payable from the assets of the Issuer and shall not be payable from the
assets of the Trust Estate. The provisions of this indemnity shall run directly
to and be enforceable by an injured Person subject to the limitations hereof and
this indemnification agreement shall survive the termination of this Indenture.
SECTION 7.08 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$100,000,000 (or a lesser amount with the approval of the Controlling Party and
the Rating Agencies), subject to supervision or examination by federal or state
authority and having an office within the United States of America, not
affiliated (within the meaning of Rule 3a-7 under the Investment Company Act)
with the Issuer or any other Person involved in the organization or operation of
the Issuer, and which shall have a commercial paper or other short-term rating
of the highest short term rating categories by each of the Rating Agencies, or
otherwise acceptable to each of the Rating Agencies and the Controlling Party.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Indenture Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
52
57
SECTION 7.09 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 7.10 hereof.
(b) The Indenture Trustee may resign at any time by giving 30 days
written notice thereof to the Issuer, the Note Insurer and to each Noteholder.
If an instrument of acceptance by a successor Indenture Trustee shall not have
been delivered to the Indenture Trustee within 30 days after the giving of such
notice of resignation, the resigning Indenture Trustee may petition any court of
competent jurisdiction for the appointment of a successor Indenture Trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
may prescribe, appoint a successor Indenture Trustee.
(c) The Indenture Trustee may be removed by the Controlling Party at
any time if one of the following events have occurred:
(i) the Indenture Trustee shall cease to be eligible under
Section 7.08 hereof and shall fail to resign after written request
therefor by the Issuer, the Note Insurer or any Noteholder, or
(ii) the Indenture Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Indenture Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Indenture Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, or
(iii) the Indenture Trustee has failed to perform its duties
in this Indenture or has breached any representation or warranty made
in this Indenture.
(d) If the Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Indenture
Trustee for any cause with respect to any of the Notes, the Issuer by a Board
Resolution, shall promptly appoint a successor Indenture Trustee satisfactory to
the Controlling Party. If no successor Indenture Trustee shall have been so
appointed by the Issuer within 30 days of notice of removal or resignation and
shall have accepted appointment in the manner hereinafter provided, then the
Controlling Party may appoint a successor Indenture Trustee. If the Note Insurer
is the Controlling Party and has failed to appoint a successor Indenture Trustee
within 90 days after succeeding to the right to so appoint a successor Indenture
Trustee, then the Majority Holders may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee with respect
to the Notes.
(e) The Issuer shall give notice in the manner provided in Section
13.04 hereof of each resignation and each removal of the Indenture Trustee and
each appointment of a successor Indenture Trustee with respect to the Notes to
the Noteholders and the Rating Agencies. Each notice shall include the name of
the successor Indenture Trustee and the address of its Corporate Trust Office.
53
58
SECTION 7.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer and the retiring Indenture Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Indenture Trustee shall become effective and such successor
Indenture Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Indenture
Trustee but, on request of the Issuer or the successor Indenture Trustee, such
retiring Indenture Trustee shall, upon payment of its reasonable out-of-pocket
costs and expenses, execute and deliver an instrument transferring to such
successor Indenture Trustee all the rights, powers and trusts of the retiring
Indenture Trustee, and shall duly assign, transfer and deliver to such successor
Indenture Trustee all property and money held by such retiring Indenture Trustee
hereunder, subject nevertheless to its lien, if any, provided for in Section
7.07 hereof. Upon request of any such successor Indenture Trustee, the Issuer
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Indenture Trustee all such rights, powers and
trusts.
No successor Indenture Trustee shall accept its appointment unless at
the time of such acceptance such successor Indenture Trustee shall be eligible
under this Article.
SECTION 7.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF INDENTURE TRUSTEE.
Any Person into which the Indenture Trustee may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Indenture Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Indenture Trustee, shall be the successor of the Indenture
Trustee hereunder, provided that such Person shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, and notice thereof shall
be provided by the Indenture Trustee to the Noteholders and the Rating Agencies.
In case any Notes have been authenticated, but not delivered, by the Indenture
Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Indenture Trustee may adopt such authentication and deliver
the Notes so authenticated with the same effect as if such successor Indenture
Trustee had itself authenticated such Notes.
SECTION 7.12 CO-INDENTURE TRUSTEES AND SEPARATE INDENTURE TRUSTEES.
At any time or times, for the purpose of meeting the legal requirements
of any jurisdiction in which any of the Trust Estate may at the time be located,
the Issuer, the Controlling Party and the Indenture Trustee shall have power to
appoint, and, upon the written request of the Indenture Trustee, the Controlling
Party or of the Holders representing at least 25% in Outstanding Principal
Amount of all Notes, the Issuer shall for such purpose join with the Indenture
Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to appoint, one or more Persons approved by the
Indenture Trustee and meeting the requirements of Section 7.08 hereof, either to
act as co-Indenture Trustee, jointly with the Indenture Trustee of all or any
part of such Trust Estate, or to act as separate Indenture Trustee of any such
property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section. If the Issuer does not join in such
appointment within 15 days after the receipt by it of a request so to do, or in
case an Event of Default shall have occurred and be continuing, the Indenture
Trustee alone shall have power to make such appointment.
54
59
Should any written instrument from the Issuer be reasonably required by
any co-Indenture Trustee or separate Indenture Trustee so appointed for more
fully confirming to such co-Indenture Trustee or separate Indenture Trustee such
property, title, right or power, any and all such instruments shall, on request,
be executed, acknowledged and delivered by the Issuer.
Every co-Indenture Trustee or separate Indenture Trustee shall, to the
extent permitted by law, but to such extent only, be appointed subject to the
following terms:
(a) the Notes shall be authenticated and delivered by, and all rights,
powers, duties and obligations under this Indenture in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Indenture Trustee under this Indenture, shall be
exercised solely by the Indenture Trustee;
(b) the rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee by this Indenture in respect of any property covered
by such appointment shall be conferred or imposed upon and exercised or
performed by the Indenture Trustee or by the Indenture Trustee and such
co-Indenture Trustee or separate Indenture Trustee jointly, as shall be provided
in the instrument appointing such co-Indenture Trustee or separate Indenture
Trustee, except to the extent that under any law of any jurisdiction in which
any particular act is to be performed, the Indenture Trustee shall be
incompetent or unqualified to perform such act, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
co-Indenture Trustee or separate Indenture Trustee;
(c) the Indenture Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Issuer evidenced by a Board
Resolution, may accept the resignation of or remove any co-Indenture Trustee or
separate Indenture Trustee, appointed under this Section, and, in case an Event
of Default shall have occurred and be continuing, the Indenture Trustee shall
have power to accept the resignation of, or remove, any such co-Indenture
Trustee or separate Indenture Trustee without the concurrence of the Issuer.
Upon the written request of the Indenture Trustee, the Issuer shall join with
the Indenture Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-Indenture Trustee or separate Indenture Trustee
that has so resigned or been removed may be appointed in the manner provided in
this Section;
(d) no co-Indenture Trustee or separate Indenture Trustee hereunder
shall be personally liable by reason of any act or omission of the Indenture
Trustee or any other such Indenture Trustee hereunder nor shall the Indenture
Trustee be liable by reason of any act or omission of any co-Indenture Trustee
or separate Indenture Trustee selected by the Indenture Trustee with due care or
appointed in accordance with directions to the Indenture Trustee pursuant to
Section 6.14; and
(e) any Act of Noteholders delivered to the Indenture Trustee shall be
deemed to have been delivered to each such co-Indenture Trustee and separate
Indenture Trustee.
SECTION 7.13 RIGHTS WITH RESPECT TO THE SERVICER.
The Indenture Trustee's rights and obligations with respect to the
Servicer and the Back-up Servicer shall be governed by the Servicing Agreement.
55
60
SECTION 7.14 APPOINTMENT OF AUTHENTICATING AGENT.
The Indenture Trustee may appoint an Authenticating Agent or Agents
with respect to the Notes which shall be authorized to act on behalf of the
Indenture Trustee to authenticate Notes issued upon original issue or upon
exchange, registration of transfer or pursuant to Section 2.05 hereof, and Notes
so authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Indenture
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Notes by the Indenture Trustee or the Indenture
Trustee's certificate of authentication or the delivery of Notes to the
Indenture Trustee for authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Indenture Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Indenture Trustee by an Authenticating Agent and delivery of the Notes to
the Authenticating Agent on behalf of the Indenture Trustee. Each Authenticating
Agent shall be acceptable to the Issuer, the Note Insurer and the Noteholders
and shall at all times be a corporation having a combined capital and surplus of
not less than the equivalent of $50,000,000 and subject to supervision or
examination by Federal or state authority or the equivalent foreign authority,
in the case of an Authenticating Agent who is not organized and doing business
under the laws of the United States of America, any state thereof or the
District of Columbia. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of such Authenticating Agent, shall continue to be an
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Indenture Trustee or such Authenticating Agent; provided,
that such corporation shall be otherwise eligible under this Section.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Indenture Trustee, the Note Insurer and to the Issuer. The
Indenture Trustee may at any time terminate the agency of an Authenticating
Agent by giving written notice thereof to such Authenticating Agent, the Note
Insurer and to the Issuer. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time such Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, the Indenture
Trustee may appoint a successor Authenticating Agent which shall be acceptable
to the Issuer and the Controlling Party and shall mail written notice of such
appointment by first-class mail, postage prepaid, to all Holders of Notes, if
any, with respect to which such Authenticating Agent will serve, as their names
and addresses appear in the Note Register. Any successor Authenticating Agent
upon acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section.
The Indenture Trustee may pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section and the
Indenture Trustee shall be entitled to be reimbursed for such payments, subject
to the provisions of Section 7.07 hereof.
56
61
If an appointment is made pursuant to this Section, the Notes may have
endorsed thereon, in addition to the Indenture Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
This is one of the Notes described in the within-mentioned Indenture.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
As Indenture Trustee
By:
----
as Authenticating Agent
By:
----
Authorized Officer
SECTION 7.15 INDENTURE TRUSTEE TO HOLD CONTRACTS.
The Indenture Trustee hereby acknowledges receipt of (subject to any
exceptions as may be noted by the Indenture Trustee to the Servicer and the
Controlling Party pursuant to Section 4.05 hereof) and shall hold each Contract,
together with any documents relating thereto that may from time to time be
delivered to the Indenture Trustee, until such time as such Contract is released
from the lien of this Indenture pursuant to the terms of this Indenture.
Except as set forth in Section 4.05 hereof, the Indenture Trustee shall
be under no duty or obligation to inspect, review or examine the Contracts and
other documents to determine that the same are genuine, enforceable or
appropriate for the represented purpose or that they have actually been recorded
or that they are other than what they purport to be on their face.
SECTION 7.16 MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
The Indenture Trustee shall execute and deliver, and if there is any
Paying Agent other than the Indenture Trustee, the Issuer shall cause each
Paying Agent other than the Indenture Trustee to execute and deliver to the
Indenture Trustee and the Controlling Party an instrument in which such Paying
Agent shall agree with the Indenture Trustee that, subject to the provisions of
this Section, such Paying Agent shall:
(a) hold all sums held by it for the payment of principal or interest
on Notes in trust for the benefit of the Noteholders entitled thereto and the
Note Insurer until such sums shall be paid to such Persons or otherwise disposed
of as herein provided;
(b) give the Indenture Trustee, the Note Insurer and the Noteholders
notice of any Default by the Issuer (or any other obligor upon the Notes) in the
making of any payment of principal or interest; and
(c) at any time during the continuance of any such Default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture Trustee
all sums so held in trust by such Paying Agent.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Issuer Order direct any Paying Agent to pay, to the
57
62
Indenture Trustee all sums held in trust by such Paying Agent, such sums to be
held by the Indenture Trustee upon the same trusts as those upon which such sums
were held by such Paying Agent; and, upon such payment by any Paying Agent to
the Indenture Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money deposited with the Indenture Trustee or any Paying Agent in
trust for the payment of the principal or interest on any Note and remaining
unclaimed for three years after such principal or interest has become due and
payable shall be paid to the Issuer on Issuer Request or to the Note Insurer if
such payment had been made by the Note Insurer; and the Holder of such Note
shall thereafter, as an unsecured general creditor, and subject to any
applicable statute of limitations, look only to the Issuer for payment thereof,
and all liability of the Indenture Trustee, such Paying Agent or the Note
Insurer with respect to such trust money or the related Note, shall thereupon
cease; provided, that the Indenture Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Issuer cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the city in which
the Corporate Trust Office is located, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then
remaining shall be repaid to the Issuer; and provided further, that any amounts
held that are proceeds of a claim made under a Note Insurance Policy shall be
returned to the Note Insurer, and the Noteholders shall look only to the Note
Insurer for such payments. The Indenture Trustee may also adopt and employ, at
the expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Noteholders whose right to or interest in monies due and payable but not claimed
is determinable from the records of any Paying Agent, at the last address as
shown on the Note Register for each such Noteholder).
63
ARTICLE EIGHT
THE NOTE INSURANCE POLICIES
SECTION 8.01 PAYMENTS UNDER THE NOTE INSURANCE POLICIES.
With respect to any applicable Series, if on the close of business on
the fourth Business Day prior to any Payment Date, the funds on deposit in the
Collection Account and available to be distributed on such Payment Date pursuant
to Section 12.02(d) hereof (after taking into account any transfers from the
Cash Collateral Account in accordance with Section 12.03 and any amounts payable
pursuant to Section 12.02(d)(i) through (iv) hereof) are not sufficient to make
the payment of interest due on the Outstanding Notes of such Series on such
Payment Date in accordance with Section 12.02(d)(v) hereof, the Indenture
Trustee shall, no later than 10:00 a.m. (Central Time), on the third Business
Day immediately preceding such Payment Date make a claim under the applicable
Note Insurance Policy in an amount equal to such insufficiency (the "Interest
Deficiency Draw Amount"). In addition, with respect to any Series, if on the
close of business on the fourth Business Day immediately prior to the related
Stated Maturity Date the funds on deposit in the Collection Account (after
taking into account any transfers from the Cash Collateral Account in accordance
with Section 12.03 and any amounts payable pursuant to Section 12.02(d)(i)
through (v) hereof) are not sufficient to pay the entire Outstanding Principal
Amount of all Notes of the applicable Series (after giving effect to the
application of funds available to pay the Pro Rata Share of the Principal
Distribution Amount of each Outstanding Series in accordance with Section
12.02(d)(vi) hereof), the Indenture Trustee shall, no later than 10:00 a.m.
(Central Time), on the third Business Day immediately preceding such Payment
Date, make a claim under the applicable Note Insurance Policy in an amount equal
to such insufficiency (the "Note Principal Balance Deficiency"). Proceeds of
claims on the Note Insurance Policies shall be deposited in the Collection
Account or the Redemption Account, as applicable, by 11:00 a.m. (Central Time)
on the later of (i) the second Business Day after receipt by the Note Insurer of
notice of such claim and (ii) the Business Day immediately preceding such
Payment Date and used solely to pay amounts due in respect of interest on the
applicable Notes on each Payment Date prior to the Stated Maturity Date and
principal of and interest on the applicable Notes at the Stated Maturity Date.
In addition, on any day that the Indenture Trustee has actual knowledge
or receives notice that any amount previously paid to a Noteholder has been
subsequently recovered from such Noteholder pursuant to a final order of a court
of competent jurisdiction that such payment constitutes an avoidable preference
within the meaning of any applicable bankruptcy law to such Noteholder (a
"Preference Claim"), the Indenture Trustee shall make a claim within one
Business Day upon the relevant Note Insurance Policy for the full amount of such
Preference Claim in accordance with the terms of such Note Insurance Policy. Any
proceeds of any such Preference Claim received by the Indenture Trustee shall be
paid to the related Noteholders.
64
ARTICLE NINE
AMENDMENTS; SUPPLEMENTAL INDENTURES
SECTION 9.01 AMENDMENTS AND SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
NOTEHOLDERS.
The Issuer, the Servicer, the Back-up Servicer and the Indenture
Trustee, with the written consent of the Controlling Party, at any time and from
time to time, may enter into one or more amendments or indentures supplemental
hereto, in form satisfactory to the Indenture Trustee, for any of the following
purposes, provided that any such amendment or supplement, as evidenced by an
Opinion of Counsel if requested by the Indenture Trustee, will not have a
material adverse affect on any Noteholder:
(a) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and confirm
unto the Indenture Trustee any property subject or required to be subjected to
the lien of this Indenture, or to subject to the lien of this Indenture
additional property; or
(b) to evidence the succession of another Person to the Issuer, and the
assumption by such successor of the covenants of the Issuer herein and in the
Notes contained, in accordance with Section 11.02(o) hereof; or
(c) to add to the covenants of the Issuer, for the benefit of the Note
Insurer or the Holders of all Notes, or to surrender any right or power herein
conferred upon the Issuer; or
(d) to convey, transfer, assign, mortgage or pledge any property to or
with the Indenture Trustee; or
(e) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provisions with
respect to matters or questions arising under this Indenture, which shall not be
inconsistent with the provisions of this Indenture, provided that such action
shall not adversely affect the interests of the Holders of the Notes; or
(f) to evidence the succession of the Indenture Trustee pursuant to
Article Seven hereof; or
(g) to add events to the list of Events of Default; or
(h) to substitute one or more Contracts in accordance with Section 4.04
hereof and to add Additional Contracts; or
(i) so long as, as of the date of such amendment, no Note Insurer
Default has occurred and is continuing with respect to any Series then
Outstanding and the Rating Agency Condition has been met with respect to all
Series then Outstanding, to amend the definition of "Collateralization
Percentage," or "Trigger Event"; or
(j) as may be necessary to effectuate the issuance of any additional
Series of Notes in accordance with the terms of this Indenture and the related
Supplement; provided that any such amendment does not modify this Indenture in a
manner described in paragraphs (a)(i) through (a)(viii) of Section 9.02 hereof.
65
The Indenture Trustee is hereby authorized to join in the execution of
any such amendment or supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Indenture
Trustee shall not be obligated to enter into any such amendment or supplemental
indenture that affects the Indenture Trustee's own rights, duties, liabilities
or immunities under this Indenture or otherwise.
Promptly after the execution by the Issuer, the Servicer, the Back-up
Servicer and the Indenture Trustee of any amendment or supplemental indenture,
and the consent thereto by the Note Insurer, pursuant to this Section, the
Issuer shall mail to the Rating Agencies and each Noteholder a copy of such
amendment or supplemental indenture.
SECTION 9.02 AMENDMENTS OR SUPPLEMENTAL INDENTURES WITH CONSENT OF
NOTEHOLDERS.
(a) With the prior written consent of (i) the Note Insurer, unless a
Note Insurer Default shall have occurred and be continuing, and (ii) (A) the
Holders of not less than 51% of the Outstanding Principal Amount of all Series
of Notes, or (B) in respect of matters relating only to discrete Series of Notes
the Holders of not less than 51% of the Outstanding Principal Amount of such
Series of Notes, by Act of said Holders delivered to the Issuer and the
Indenture Trustee and written notice thereof delivered to the Rating Agencies,
the Issuer, the Servicer, the Back-up Servicer and the Indenture Trustee may
enter into amendments or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture. Notwithstanding the foregoing, no
such amendment or supplemental indenture shall, without the consent of the
Holders of each Outstanding Note:
(i) change the Stated Maturity Date of any Note or the due
date of any installment of principal of, or any installment of interest
on, any Note, or reduce the principal amount thereof or the Note
Interest Rate or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such
payment; or
(ii) reduce the percentage in Outstanding Principal Amount of
Notes, the consent of the Holders of which is required for any such
amendment or supplemental indenture, or the consent of the Holders of
which is required for any waiver of compliance with certain provisions
of this Indenture or Events of Default or their consequences; or
(iii) impair or adversely affect the Trust Estate except as
otherwise expressly permitted herein; or
(iv) modify or alter the proviso to the definition of the term
"Outstanding" or "Outstanding Principal Amount"; or
(v) modify or alter the provisions of the proviso to Section
6.04 hereof; or
(vi) modify any of the provisions of this Section 9.02, except
to increase the percentage of Holders required for any modification or
waiver or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of each Holder of each
Outstanding Note affected thereby; or
66
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or terminate the lien of this Indenture on any property at
any time subject hereto or deprive the Holder of any Note of the
security afforded by the lien of this Indenture; or
(viii) modify any of Sections 4.02, 6.01(a) or (b), 6.02,
6.03, 6.18, or 12.02(d) hereof.
(b) The Indenture Trustee is hereby authorized to join in the execution
of any supplemental indenture pursuant to clause (a) above and to make any
further appropriate agreements and stipulations that may be therein contained,
but the Indenture Trustee shall not be obligated to enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties,
liabilities or immunities under this Indenture. Promptly after the execution by
the Issuer, the Servicer, the Back-up Servicer and the Indenture Trustee of any
supplemental indenture pursuant to this Section, the Issuer shall mail to the
Holders of the Notes, the Note Insurer and the Rating Agencies a copy of such
supplemental indenture.
SECTION 9.03 EXECUTION OF AMENDMENTS AND SUPPLEMENTAL INDENTURES.
In executing any amendment or supplemental indenture permitted by this
Article or the modifications thereby of the trusts created by this Indenture,
the Indenture Trustee shall be entitled to receive upon request, and (subject to
Section 7.01 hereof) shall be fully protected in relying in good faith upon, an
Opinion of Counsel reasonably acceptable to the Indenture Trustee stating that
the execution of such amendment or supplemental indenture is authorized or
permitted by this Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such amendment or supplemental indenture which
affects the Indenture Trustee's own duties or immunities under this Indenture or
otherwise.
SECTION 9.04 EFFECT OF AMENDMENTS AND SUPPLEMENTAL INDENTURES.
Upon the execution of any amendment or supplemental indenture under
this Article, this Indenture shall be modified in accordance therewith, and such
amendment or supplemental indenture shall form a part of this Indenture for all
purposes; and every Holder of Notes theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
SECTION 9.05 REFERENCE IN NOTES TO AMENDMENTS AND SUPPLEMENTAL
INDENTURES.
Notes authenticated and delivered after the execution of any amendment
or supplemental indenture pursuant to this Article may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such amendment or supplemental
indenture. If the Issuer shall so determine, new Notes so modified as to
conform, in the opinion of the Indenture Trustee and the Issuer, to any such
amendment or supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Notes.
SECTION 9.06 CERTAIN AMENDMENTS. If any party to this Indenture is
unable to sign any amendment due to its dissolution, winding up or comparable
circumstances, then the consent of the Noteholders representing at least 51% in
Outstanding Principal Amount of all Notes of all Series shall be sufficient to
allow an amendment that otherwise meets the requirements of this Article Nine to
become effective without such party's signature; provided, however, that no such
amendment shall impose on the
67
party that is unable to provide a signature any obligation or liability in
excess of what is then currently imposed hereunder prior to such amendment.
68
ARTICLE TEN
REDEMPTION OF NOTES
SECTION 10.01 REDEMPTION AT THE OPTION OF THE ISSUER; ELECTION TO
REDEEM.
Except as may be otherwise specified in the related Supplement, the
Issuer shall have the option to redeem all of the Outstanding Notes of any
Series of Notes at any time after the Outstanding Principal Amount of such
Series of Notes is less than 10% of the original Outstanding Principal Amount of
such Series of Notes as of the related Delivery Date, in each case at the
applicable Redemption Price plus any fees due hereunder and all amounts due to
the Note Insurer under the related Note Insurance Agreement. With respect to any
such permitted redemption, the Note Insurer shall have the same option to redeem
any such Series of Notes in the absence of the exercise thereof by the Issuer.
The Issuer or the Note Insurer, as the case may be, shall set the
Redemption Date and the Redemption Record Date for a Series of Notes and give
notice thereof to the Indenture Trustee pursuant to Section 10.02 hereof.
Installments of interest and principal that are due regarding a Series
of Notes on or prior to the related Redemption Date shall continue to be payable
to the Holders of such Notes called for redemption as of the relevant Record
Dates according to their terms and the provisions of Section 2.08 hereof. The
election of the Issuer or the Note Insurer to redeem any Notes pursuant to this
Section shall be evidenced by a Board Resolution or written notice from the Note
Insurer, respectively, directing the Indenture Trustee to make the payment of
the Redemption Price on all of the Notes to be redeemed from monies deposited
with the Indenture Trustee pursuant to Section 10.02 hereof.
SECTION 10.02 NOTICE TO INDENTURE TRUSTEE; DEPOSIT OF REDEMPTION PRICE.
In the case of any redemption pursuant to Section 10.01 hereof, the
Issuer or the Note Insurer, as applicable, shall, at least 15 days prior to the
related Redemption Date, notify the Indenture Trustee and the Holders of the
Series of Notes to be redeemed of such Redemption Date and shall deposit into
the Redemption Account on such notification date an amount equal to the
Redemption Price of all Notes to be redeemed on such Redemption Date plus any
fees due hereunder and all amounts due to the Note Insurer under the related
Note Insurance Agreement.
SECTION 10.03 NOTICE OF REDEMPTION BY THE ISSUER.
Upon receipt of such notice and such deposit set forth in Section 10.02
above, the Indenture Trustee shall provide notice of redemption pursuant to
Section 10.01 hereof by first-class mail, postage prepaid, mailed no later than
the Business Day following the date on which such deposit was made, to each
Holder of Notes whose Notes are to be redeemed, at his address in the Note
Register.
All notices of redemption shall state:
(a) the applicable Redemption Date;
(b) the applicable Redemption Price; and
69
(c) that on such Redemption Date, the Redemption Price will become due
and payable upon each such Note in the related Series, and that interest thereon
shall cease to accrue on such date.
Notice of redemption of a Series of Notes shall be given by the
Indenture Trustee in the name and at the expense of the Issuer or the Note
Insurer, as applicable. Failure to give notice of redemption, or any defect
therein, to any Holder of any Note selected for redemption shall not impair or
affect the validity of the redemption of any other Note.
SECTION 10.04 NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as provided in Section 10.03
hereof, the Series of Notes to be redeemed shall, on the applicable Redemption
Date, become due and payable at the Redemption Price and on such Redemption Date
(unless the Issuer or the Note Insurer, as applicable, shall default in the
payment of the Redemption Price) such Notes shall cease to bear interest. The
Holders of such Notes shall be paid the Redemption Price by the Paying Agent on
behalf of the Issuer; provided, that installments of principal and interest that
are due regarding such Series of Notes on or prior to such Redemption Date shall
be payable to the Holders of such Notes registered as such on the relevant
Record Dates according to their terms and the provisions of Section 2.08 hereof.
If the Holders of any Note called for redemption shall not be so paid,
the principal and premium, if any, on such Series of Notes shall, until paid,
bear interest from the applicable Redemption Date at the related Note Interest
Rate.
SECTION 10.05 RELEASE OF SERIES CONTRACTS.
In connection with any redemption permitted under this Article Ten, the
Issuer or the Note Insurer, as the case may be, shall be permitted to obtain a
release of the related Series Contracts, (a) to the extent provided in Section
4.06(b) hereof and (b) so long as the applicable Redemption Price shall have
been deposited into the Redemption Account as required by Section 10.02, and the
Insurance Policy has been terminated with respect to such Series or the Note
Insurer otherwise consents to such release.
70
ARTICLE ELEVEN
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 11.01 REPRESENTATIONS AND WARRANTIES.
The Issuer hereby makes the following representations and warranties
for the benefit of the Indenture Trustee, the Note Insurer and the Noteholders
on which the Indenture Trustee relies in accepting the Trust Estate in trust and
in authenticating the Notes. Such representations and warranties are made as of
the Initial Delivery Date and, except as specifically provided herein, each
additional Delivery Date, and shall survive the Grant of the Trust Estate to the
Indenture Trustee.
(a) ORGANIZATION AND GOOD STANDING. The Issuer is a corporation duly
organized, validly existing and in good standing under the laws of its State of
incorporation and each other State where the nature of its business requires it
to qualify, except to the extent that the failure to so qualify would not in the
aggregate materially adversely affect the Trust Estate or the ability of the
Issuer to perform its obligations under the Transaction Documents. The Issuer
has not operated under any other names and does not have any trade names,
fictitious names or "doing business as" names. The Issuer has no subsidiaries;
(b) AUTHORIZATION. The Issuer has the power, authority and legal right
to execute, deliver and perform under the terms of the Transaction Documents and
the execution, delivery and performance of the Transaction Documents have been
duly authorized by the Issuer by all necessary corporate action;
(c) BINDING OBLIGATION. Assuming the due authorization, execution and
delivery by each other party thereto, each of (i) this Indenture, (ii) the
applicable Note Insurance Agreement, (iii) the Servicing Agreement, (iv) the
Contract Acquisition Agreement, (v) the Notes then Outstanding and (vi) the Note
Purchase Agreement constitutes a legal, valid and binding obligation of the
Issuer, enforceable against the Issuer in accordance with its terms except (A)
as such enforcement may be subject to or limited by applicable bankruptcy,
conservatorship, insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether a proceeding at law or in equity;
(d) NO VIOLATION. The consummation of the transactions contemplated by
the terms of the Transaction Documents will not conflict with, result in any
breach of any of the terms and provisions of or constitute (with or without
notice, lapse of time or both) a default under the organizational documents or
bylaws of the Issuer, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Issuer is a party or by which it is bound, or in
the creation or imposition of any Lien upon any of its properties pursuant to
the terms of such indenture, agreement, mortgage, deed of trust or other such
instrument, other than any Lien created or imposed pursuant to the terms of the
Transaction Documents, or violate any law or, any material order, rule or
regulation applicable to the Issuer of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Issuer or any of its properties.
(e) NO PROCEEDINGS. There are no Proceedings or investigations to which
the Issuer, or any of the Issuer's Affiliates, is a party pending, or, to the
knowledge of the Issuer, threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality (A)
71
asserting the invalidity of the Transaction Documents, (B) seeking to prevent
the issuance of any of the Notes or the consummation of any of the transactions
contemplated by the Transaction Documents or (C) seeking any determination or
ruling that would materially and adversely affect the performance by the Issuer
of its obligations under, or the validity or enforceability of, the Transaction
Documents.
(f) APPROVALS. All approvals, authorizations, consents, orders or other
actions of any Person, or of any court, governmental agency or body or official,
required in connection with the execution and delivery of the Transaction
Documents and with the valid and proper authorization, issuance and sale of the
Notes pursuant to this Indenture (except approvals of State securities officials
under any applicable securities or "blue sky" laws), have been or will be taken
or obtained on or prior to the applicable Delivery Date.
(g) PLACE OF BUSINESS. The Issuer's principal place of business and
chief executive office is located at 000 Xxxxxx Xxxxxx, Xxxxx 0000X, Xxxxxxx,
Xxxxxxxxxxxxx 00000.
(h) TRANSFER AND ASSIGNMENT. Upon the delivery to the Indenture Trustee
of the Contracts and the filing of the financing statements described in
Sections 4.01(f) and 4.02(b)(vi) hereof, the Indenture Trustee for the benefit
of the Noteholders shall have a first priority perfected security interest in
the Receivables and the Contracts and in the proceeds thereof, except for Liens
permitted under Section 11.02(a) and limited to the extent set forth in Section
9-306 of the UCC as in effect in the applicable jurisdiction. All filings
(including, without limitation, UCC filings pursuant to Section 4.01 and 4.02
hereof, but excluding any UCC filings with respect to Equipment except as
otherwise provided herein) as are necessary in any jurisdiction to perfect the
ownership or other interest of the Indenture Trustee in the Trust Estate,
including the transfer of the Contracts and the payments to become due
thereunder, have been made.
(i) PARENT OF THE ISSUER. The Company is the registered owner of all of
the issued and outstanding common stock of the Issuer, all of which common stock
has been validly issued, is fully paid and nonassessable and is owned of record.
(j) CONTRACT ACQUISITION AGREEMENT. As of the Initial Delivery Date,
the Issuer has entered into the Contract Acquisition Agreement with the Company
relating to its acquisition of the Contracts and the related Contract Assets,
and the representations and warranties made by the Company relating to the
Contracts and the related Contract Assets have been validly assigned to and are
for the benefit of the Issuer, the Indenture Trustee, the Note Insurer and the
Noteholders and such representations and warranties are true and correct in all
material respects.
(k) BULK TRANSFER LAWS. The transfer, assignment and conveyance of the
Contracts, the Equipment and the Receivables by the Company to the Issuer
pursuant to the Contract Acquisition Agreement or by the Issuer pursuant to this
Indenture is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
(l) THE CONTRACTS. The Issuer hereby restates and makes each of the
representations and warranties with respect to the Contracts and the related
Contract Assets that are made by the Company in Section 3.01 of the Contract
Acquisition Agreement in each case as of the date as of which the related
representation or warranty speaks.
SECTION 11.02 COVENANTS.
72
The Issuer hereby makes the following covenants for the benefit of the
Indenture Trustee, the Note Insurer and the Noteholders, on which the Indenture
Trustee relies in accepting the Trust Estate in trust and in authenticating the
Notes. Such covenants are made as of the Initial Delivery Date, but shall
survive the Grant of the Trust Estate to the Indenture Trustee.
(a) NO LIENS. Except for the conveyances and grant of security
interests hereunder, the Issuer will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on,
any Collateral now existing or hereafter created, or any interest therein, prior
to the termination of this Indenture pursuant to Section 5.01 hereof; the Issuer
will notify the Indenture Trustee of the existence of any Lien on any Collateral
immediately upon discovery thereof and shall pay or cause to be paid all taxes,
fees, assessments, governmental charges and levies when due or payable or levied
against its property, including any property that is part of the Collateral; and
the Issuer shall defend the right, title and interest of the Indenture Trustee
in, to and under the Trust Estate now existing or hereafter created, against all
claims of third parties claiming through or under the Issuer; provided, that
nothing in this Section 11.02(a) shall prevent or be deemed to prohibit the
Issuer from suffering to exist upon any of the Trust Estate any Liens for
municipal or other local taxes and other governmental charges if such taxes or
governmental charges shall not at the time be due and payable or if the Issuer
shall currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto.
(b) DELIVERY OF COLLECTIONS. The Issuer agrees to hold in trust and
promptly pay to the Servicer all amounts received by the Issuer in respect of
the Trust Estate (other than amounts distributed to or for the benefit of the
Issuer pursuant to Article Twelve hereof).
(c) OBLIGATIONS WITH RESPECT TO CONTRACTS. The Issuer shall duly
fulfill all obligations on its part to be fulfilled under or in connection with
each Contract and shall do nothing to impair the rights of the Indenture Trustee
(for the benefit of the Noteholders and the Note Insurer) in the Receivables,
the Contracts and any other assets comprising the Trust Estate. As long as there
is no event of default under the applicable Contract, the Issuer shall do
nothing to disturb the Customer's quiet enjoyment of the related Equipment and
the Customer's unrestricted use thereof for its intended purpose.
(d) COMPLIANCE WITH LAW. The Issuer shall comply, in all material
respects, with all acts, rules, regulations, orders, decrees and directions of
any governmental authority applicable to the Contracts or any part thereof;
provided, that the Issuer may contest any act, regulation, order, decree or
direction in any reasonable manner which shall not materially and adversely
affect the rights of the Indenture Trustee (for the benefit of the Noteholders
and the Note Insurer) in the Receivables, the Contracts and the related
Equipment. The Issuer shall comply, in all material respects, with all
requirements of law applicable to the Issuer.
(e) PRESERVATION OF SECURITY INTEREST. The Issuer shall execute and
file such continuation statements and any other documents which may be required
by law to fully preserve and protect the interest of the Indenture Trustee (for
the benefit of the Noteholders and the Note Insurer) in the Trust Estate;
provided, that the Issuer shall not be required to file financing statements or
any related agreements or documentation with respect to any Equipment the
original cost of which was not in excess of $10,000.
(f) MAINTENANCE OF OFFICE, ETC. The Issuer shall not, without providing
30 days notice to the Indenture Trustee and the Controlling Party and without
filing such amendments to any previously filed financing statements or any new
filings as the Indenture Trustee or the Controlling Party may require or
73
as may be required in order to maintain the Indenture Trustee's perfected
security interest in the Trust Estate, (a) change the location of its principal
executive office or its jurisdiction of organization, or (b) change its name,
identity or corporate structure in any manner which would make any financing
statement or continuation statement filed by the Issuer in accordance with the
Servicing Agreement or this Indenture seriously misleading within the meaning of
Article 9-402 of any applicable enactment of the UCC.
(g) FURTHER ASSURANCES. Except as set forth in Section 11.02(e), the
Issuer shall make, execute or endorse, acknowledge, and file or deliver to the
Indenture Trustee from time to time such schedules, confirmatory assignments,
conveyances, transfer endorsements, powers of attorney, certificates, reports
and other assurances or instruments and take such further steps relating to the
Trust Estate, as the Indenture Trustee may request and reasonably require.
(h) NOTICE OF LIENS. The Issuer shall notify the Indenture Trustee and
the Controlling Party promptly after becoming aware of any Lien on any
Collateral, except for any Liens for municipal or other local taxes if such
taxes shall not at the time be due or payable without penalty or if the Issuer
or the related customer shall currently be contesting the validity thereof in
good faith by appropriate proceedings and the Issuer shall have set aside on its
books adequate reserves with respect thereto.
(i) ACTIVITIES OF THE ISSUER. The Issuer (i) shall engage in only (A)
the acquisition, ownership, leasing, selling and pledging of the property
acquired by the Issuer pursuant to the Contract Acquisition Agreement, and
causing the issuance of, receiving and selling the Notes issued pursuant to this
Indenture and (B) the exercise of any powers permitted to corporations under the
corporate law of the State of its incorporation which are incidental to the
foregoing or necessary to accomplish the foregoing and the Issuer shall incur no
debt other than trade payables and expense accruals in connection with its
operations in the normal course of business and other than as contemplated by
the Transaction Documents; (ii) shall (A) maintain its books, records and cash
management accounts separate from the books and records and cash management
accounts of any other Person and in accordance with generally accepted
accounting principles (except as otherwise permitted under the Transaction
Documents with respect to the Operating Account), (B) maintain separate bank
accounts and, except for a limited period of time between receipt by the Company
or the Servicer of certain payments on the Contracts and the underlying proceeds
as specified in the Servicing Agreement and the Agreement Regarding Operating
Account, or as otherwise provided in the Transaction Documents, ensure that no
funds or assets of the Issuer shall be commingled with those of the Company, the
Servicer or any other Person, (C) keep in full effect its existence, rights and
franchises as a corporation under the laws of its State of incorporation, and
shall obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture,
including all of its licenses, permits, governmental approvals, rights and
privileges necessary in the normal conduct of its business as now conducted or
presently proposed to be conducted; (D) observe all procedures required by its
Articles of Organization, its by-laws and the laws of the State of its
incorporation; (E) maintain its good standing under the laws of the State of its
incorporation, (F) keep correct and complete books and records of account and
minutes of meeting and other proceedings of its board of directors and
shareholders, (G) obtain proper authorization from its board of directors or
shareholders, as appropriate and act solely in its own name and through its duly
authorized officers and agents in the conduct of its business, (H) reflect in
its financial statements that the Contract Assets have been sold and assigned to
the Issuer and that the Contract Assets have been Granted by the Issuer to the
Indenture Trustee and that the assets of the Issuer are not available to pay the
creditors of the Company, (I) maintain a separate telephone number and
stationery reflecting a separate address and identity from that of the Company;
and (iii) shall not (A) dissolve or liquidate in whole or in part, (B) own any
74
subsidiary or lend or advance any moneys to, or make an investment in, any
Person, (C) make any capital expenditures, (D)(1) commence any case, proceeding
or other action under any existing or future bankruptcy, insolvency or similar
law seeking to have an order for relief entered with respect to it, or seeking
reorganization, arrangement, adjustment, wind-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, (2) seek
appointment of a receiver, trustee, custodian or other similar official for it
or any part of its assets, (3) make a general assignment for the benefit of
creditors, or (4) take any action in furtherance of, or consenting or
acquiescing in, any of the foregoing, (E) guarantee (directly or indirectly),
endorse or otherwise become contingently liable (directly or indirectly) for the
obligations of, or own or purchase any stock, obligations or securities of or
any other interest in, or make any capital contribution to, any other Person,
(F) merge or consolidate with any other Person except as provided in subsection
(o) of this Section 11.02, (G) engage in any other action that bears on whether
the separate legal identity of the Issuer shall be respected, including without
limitation (1) holding itself out as being liable for the debts of any other
party or (2) acting other than in its corporate name and through its duly
authorized officers or agents, or (H) create, incur, assume, or in any manner
become liable in respect of, any indebtedness other than as contemplated by the
Transaction Documents and other than trade payables and expense accruals
incurred in the ordinary course of business and which are incidental to its
business purpose. The Issuer shall not amend any article in its Articles of
Organization that deals with any matter discussed above without the prior
written consent of the Controlling Party. On or before April 15 of each year, so
long as any of the Notes are Outstanding, the Issuer shall furnish to each
Noteholder, the Indenture Trustee and the Note Insurer, an Officer's Certificate
confirming that the Issuer has complied with its obligations under this Section
11.02(i).
(j) DIRECTORS. The Issuer agrees that at all times, at least two of the
directors of the Issuer (or two persons, one of whom is serving as both a
director and an executive officer) shall be Independent; provided, that such
Independent directors may serve in similar capacities for other "special purpose
corporations" formed by the Company and its Affiliates. The Issuer's Articles of
Organization shall at all times provide that such Independent directors shall
have a fiduciary duty to the Holders of the Notes and will always require
unanimous consent of the board of directors of the Issuer to file any bankruptcy
petition on behalf of the Issuer.
(k) PRESERVATION OF THE EQUIPMENT. The Issuer warrants that it is the
lawful owner and possessor of the Equipment or has a valid perfected security
interest therein and that it will warrant and defend such Equipment against all
Persons, claims and demands whatsoever. The Issuer shall not assign, sell,
pledge, or exchange, or in any way encumber or otherwise dispose of the
Equipment, except as permitted under this Indenture.
(l) TAXABLE INCOME FROM THE CONTRACTS. The Issuer shall treat the Notes
issued by it as debt and shall treat the Contracts as owned by it for federal,
state and local income tax purposes, and the affiliated group of which the
Issuer is a member within the meaning of section 1504 of the Code and the Issuer
and such affiliated group shall report and include in the computation of the
Issuer's gross income for such tax purposes the rental and other income from the
Contracts, and shall deduct the interest paid or accrued with respect to the
Notes in accordance with its applicable method of accounting for such purposes.
(m) MAINTENANCE OF OFFICE OR AGENCY. The Issuer shall maintain an
office or agency within the United States of America where Notes may be
presented or surrendered following payment in full, where Notes may be
surrendered for registration of transfer or exchange and where notices and
demand to or upon the Issuer in respect of the Notes and this Indenture may be
served. The Issuer hereby initially appoints the Indenture Trustee as the Paying
Agent and its Corporate Trust Office as the office for each of
75
said purposes. The Issuer shall give 30 days prior written notice to the
Indenture Trustee, the Note Insurer and the Noteholders of any change in the
identity of the Paying Agent or the location, of any such office or agency. If
at any time the Issuer shall fail to maintain any such office or agency or shall
fail to furnish the Indenture Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Indenture Trustee, and the Issuer hereby irrevocably appoints the Indenture
Trustee its agent to receive all such presentations, surrenders, notices and
demands.
(n) ENFORCEMENT OF SERVICING AGREEMENT AND CONTRACT ACQUISITION
AGREEMENT. The Issuer shall take all actions necessary, and diligently pursue
all remedies available to it, to the extent commercially reasonable, to enforce
the obligations of the Servicer under the Servicing Agreement and the Company
under the Contract Acquisition Agreement and to secure its rights thereunder.
(o) ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The Issuer
shall not consolidate or merge with or into any other Person or convey or
transfer its properties and assets substantially as an entirety to any Person,
unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger or which acquires by conveyance
or transfer the properties and assets of the Issuer substantially as an
entirety shall be a Person organized and existing as a limited purpose
corporation under the laws of the United States of America or any State
thereof and shall have expressly assumed, by an indenture supplemental
hereto, executed and delivered to the Indenture Trustee and the Note
Insurer, in form and substance reasonably satisfactory to the Indenture
Trustee, the Majority Noteholders and the Note Insurer, the obligation
to make due and punctual payments of the principal of and interest on
all of the Notes and to perform every covenant of the Transaction
Documents on the part of the Issuer to be performed or observed;
(ii) the Rating Agency Condition shall have been met;
(iii) immediately after giving effect to such transaction, no
Event of Default or Default shall have occurred and be continuing;
(iv) the Issuer shall have delivered to the Indenture Trustee
and the Note Insurer an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation, merger, conveyance or transfer
and such Supplement comply with this Article Eleven and that all
conditions precedent herein provided for relating to such transaction
have been complied with and an Opinion of Counsel, for the benefit of
the Indenture Trustee, the Note Insurer and the Noteholders, confirming
the enforceability of documents in connection with such consolidation,
merger, conveyance or transfer;
(v) such consolidation, merger, conveyance or transfer shall
be on such terms as shall fully preserve the lien and security of this
Indenture, the perfection and priority thereof and the rights and
powers of the Indenture Trustee, the Note Insurer and the Holders of
the Notes under the Transaction Documents;
(vi) the surviving corporation shall be a "special purpose
entity"; i.e., shall have an organizational charter substantially
similar to the Articles of Organization of the Issuer including
specific limitations on the business purposes, and provisions for
independent directors; and
76
(vii) the Controlling Party shall have given its prior written
consent, which consent shall not be unreasonably withheld or delayed.
(p) SUCCESSOR SUBSTITUTED. Upon any consolidation or merger, or any
conveyance or transfer of the properties and assets of the Issuer substantially
as an entirety in accordance with Section 11.02(o) hereof, the Person formed by
or surviving such consolidation or merger (if other than the Issuer) or the
Person to which such conveyance or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with the same effect as if such Person had been named as the
Issuer herein. In the event of any such conveyance or transfer, the Person named
as the "Issuer" in the first paragraph of this Indenture or any successor which
shall theretofore have become such in the manner prescribed in this Article
shall be released from its liabilities as obligor and maker on all the Notes and
from its obligations under this Indenture and may be dissolved, wound-up and
liquidated at any time thereafter.
(q) USE OF PROCEEDS. The proceeds from the sale of the Notes shall be
used by the Issuer (i) to pay the Existing Indebtedness, (ii) to pay the
expenses associated with this transaction, and (iii) for general corporate
purposes. None of the transactions contemplated in this Indenture, the Contract
Acquisition Agreement or the Servicing Agreement (including the use of the
proceeds from the sale of the Notes) will result in a violation of Section 7 of
the Securities and Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto, including Regulations T, U and X of the Board of Governors of
the Federal Reserve System, 12 C.F.R., Chapter II. The Issuer does not own or
intend to carry or purchase any "margin stock" within the meaning of said
Regulation U, including margin securities originally issued by it.
(r) NOTICE OF TRIGGER EVENTS. Upon the Issuer's obtaining knowledge of
the occurrence of any Trigger Event, the Issuer shall within one Business Day of
obtaining such knowledge notify the Note Insurer, the Indenture Trustee, the
Rating Agencies and the Noteholders of such occurrence.
SECTION 11.03 OTHER MATTERS AS TO THE ISSUER.
(a) LIMITATION ON LIABILITY OF DIRECTORS, OFFICERS, OR EMPLOYEES OF THE
ISSUER. The directors, officers, any incorporator, agents, subscriber to the
capital stock, stockholder, or employees of the Issuer shall not be under any
liability to the Trust Estate, the Note Insurer, the Indenture Trustee, the
Noteholders, the Company, the Servicer, the Back-up Servicer or any other Person
hereunder or pursuant to any document delivered hereunder, it being expressly
understood that all such liability is expressly waived and released as a
condition of, and as consideration for, the execution of this Indenture and the
issuance of the Notes.
(b) PARTIES SHALL NOT INSTITUTE INSOLVENCY PROCEEDINGS. During the term
of this Indenture and for one year and one day after the termination hereof,
none of the parties hereto, the Noteholders, the Note Insurer or any Affiliate
thereof shall file any involuntary petition or otherwise institute or
orchestrate, or cooperate in the institution or orchestration of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or
other proceeding under any federal or state bankruptcy or similar law against
the Issuer.
77
ARTICLE TWELVE
ACCOUNTS AND ACCOUNTINGS
SECTION 12.01 COLLECTION OF MONEY.
Except as otherwise expressly provided herein, the Indenture Trustee
may demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture. The Indenture Trustee shall, upon request from the
Servicer, provide the Servicer with sufficient information regarding the amount
of collections with respect to the Contracts received by the Indenture Trustee
in the accounts held in the name of the Indenture Trustee to permit the Servicer
to perform its duties under the Servicing Agreement. The Indenture Trustee shall
hold all such money and property so received by it as part of the Trust Estate
and shall apply it as provided in this Indenture. If any Contract becomes a
Defaulted Contract, the Indenture Trustee, upon Issuer or Servicer request may
and, upon the request of the Controlling Party, shall take such action as may be
appropriate to enforce the payment by or performance of the related Customer,
including the institution and prosecution of appropriate Proceedings. Any such
action shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and to proceed thereafter as provided in Article
Six hereof.
SECTION 12.02 COLLECTION ACCOUNT; REDEMPTION ACCOUNT.
(a) Prior to the Initial Delivery Date, the Indenture Trustee shall
open and maintain a trust account at its Corporate Trust Office (the "Collection
Account") in the name of the Indenture Trustee for the benefit of the
Noteholders and the Note Insurer, for the receipt of (i) payments with respect
to the Contract Assets remitted to the Indenture Trustee by the Servicer or
received directly by the Indenture Trustee, (ii) amounts transferred from the
Cash Collateral Account in accordance with Section 12.03(d) hereof, (iii)
proceeds of claims made under any of the Note Insurance Policies, in accordance
with Article Eight hereof, upon receipt, and (iv) any Reinvestment Income and
(v) any other amounts required by the terms of this Indenture to be so
deposited. Funds in the Collection Account shall not be commingled with any
other monies. All payments to be made from time to time by the Issuer to the
Noteholders out of funds in the Collection Account pursuant to this Indenture
shall be made by the Indenture Trustee or the Paying Agent of the Issuer. All
monies deposited from time to time in the Collection Account pursuant to this
Indenture shall be held by the Indenture Trustee as part of the Trust Estate as
herein provided.
(b) Upon Issuer Order, the Indenture Trustee shall invest the funds in
the Collection Account in Eligible Investments; provided, that all monies on
deposit in the Collection Account pursuant to Section 12.02(a)(iii) hereof shall
remain uninvested. The Issuer Order shall specify the Eligible Investments in
which the Indenture Trustee shall invest, shall state that the same are Eligible
Investments and shall further specify the percentage of funds to be invested in
each Eligible Investment. No such Eligible Investment shall mature later than
the second Business Day preceding the next following Payment Date and shall not
be sold or disposed of prior to its maturity; provided that Eligible Investments
of the type described in clause (a) of the definition of Eligible Investments
may mature on the Business Day immediately preceding such Payment Date. In the
absence of an Issuer Order, the Indenture Trustee shall invest funds in the
Collection Account in Eligible Investments described in clause (g) of the
definition thereof. Eligible Investments shall be made in the name of the
Indenture Trustee for the benefit of the Noteholders and the Note Insurer. The
Indenture Trustee shall provide to the Servicer and the Note Insurer monthly
written confirmation of such investments, describing the Eligible Investments in
which
78
such amounts have been invested. Any funds not so invested must be insured by
the Federal Deposit Insurance Corporation.
(c) Any income or other gain from investments in Eligible Investments
as outlined in (b) above shall be credited to the Collection Account and any
loss resulting from such investments shall be charged to such account; provided,
that the Issuer shall make or cause to be made no later than the applicable
Payment Date a deposit to the Collection Account to the extent of any losses
therein. The Indenture Trustee shall not be liable for any loss incurred on any
funds invested in Eligible Investments pursuant to the provisions of this
Section 12.02 (other than in its capacity as obligor under any Eligible
Investment).
(d) On each Payment Date if either no Default or Event of Default shall
have occurred and be continuing or a Default or Event of Default shall have
occurred and be continuing but the entire Outstanding Principal Amount of all
Notes shall not have been declared due and payable pursuant to Section 6.02
hereof, after making all transfers and deposits to the Collection Account
referred to in Section 12.02(a) hereof, the Indenture Trustee shall withdraw
from the Collection Account all funds then on deposit therein, including the
Reinvestment Income, and shall make the following disbursements in the following
order in accordance with the provisions of and instructions on the Monthly
Servicer's Report; provided that (x) the proceeds of claims under any of the
Note Insurance Policies shall be used solely to pay interest and principal due
under paragraphs (v) and (vi) of this Section 12.02(d) in accordance with the
terms of the applicable Note Insurance Policy; (y) the Indenture Trustee shall
withdraw from the Collection Account and make interest payments based on the
Outstanding Principal Amount of each Series of Notes even if it shall not have
received the Monthly Servicer's Report; and (z) if there are insufficient funds
to make the payments of interest or principal specified in clause (v) or (vi)
below, then the amount available to be paid pursuant to such clause shall be
allocated to each Series of Notes based on the applicable Pro Rata Share,
provided that proceeds of a claim under any Note Insurance Policy to pay any
Outstanding Principal Amount upon the Stated Maturity Date of a Series of Notes
shall be used solely to pay such Outstanding Principal Amount after giving
effect to the application of funds available to pay the Pro Rata Share of the
Principal Distribution Amount of each Outstanding Series:
(i) to pay to the Servicer: (A) the Servicer Fee then due for
all Notes; (B) any amounts received from Customers to pay the taxes
described in Section 3.07 of the Servicing Agreement, to the extent
deposited in the Collection Account; (C) all amounts received in
respect of Receivables as to which the Servicer has made an unrecovered
Servicer Advance, to the extent of such Servicer Advance; and (D) the
amount necessary to reimburse the Servicer for any Nonrecoverable
Advance (provided that such Nonrecoverable Advance was a permissible
Servicer Advance when made);
(ii) to pay to the Indenture Trustee the Trustee Fee then due
for all Notes;
(iii) to pay to the Back-up Servicer the Back-up Servicer Fee
then due for all Notes and any Transition Costs incurred by it;
(iv) to pay to the Note Insurer the Note Insurer Premium then
due for all Notes;
(v) to pay the interest due on that Payment Date on all Series
of Outstanding Notes and any overdue interest, to be applied as
provided in Section 2.08 hereof;
(vi) to pay the Principal Distribution Amount on all Series of
Outstanding Notes, to be applied to the payment of Note principal as
provided in Section 2.08 hereof;
79
(vii) to deposit into the Cash Collateral Account an amount
necessary to bring the balance therein to an amount equal to the Cash
Collateral Account Required Balance;
(viii) to pay to a successor Servicer after a successor
Servicer has been appointed pursuant to Section 6.02 of the Servicing
Agreement, the Additional Servicer Fee, if any, and to pay any
successor Servicer, the Note Insurer or the Indenture Trustee, any
costs incurred by any successor Servicer, the Note Insurer (solely
pursuant to Section 6.02 of the Servicing Agreement) or the Indenture
Trustee of the type referred to in the definition of "Transition Costs"
and not previously reimbursed;
(ix) to pay to the Note Insurer, any amounts previously paid
by the Note Insurer under any Note Insurance Policy and not heretofore
repaid, together with interest thereon in accordance with the
applicable Note Insurance Agreement;
(x) on and after the first Payment Date following the initial
occurrence of a Trigger Event, apply any remaining funds to the payment
of Note principal on all Series of Outstanding Notes, in the amount of
the Pro Rata Share for each Series;
(xi) to pay to the following Persons, sequentially in the
following order, any other amounts expressly provided for in any
Transaction Document then due and unpaid: the Noteholders, the
Servicer, the Note Insurer, the Indenture Trustee and the Back-up
Servicer; and
(xii) to remit any excess funds to or at the direction of the
Issuer in accordance with the instructions on the Monthly Servicer's
Report.
(e) Prior to the Initial Delivery Date, the Issuer shall cause the
Indenture Trustee to open and maintain a trust account at the Corporate Trust
Office (the "Redemption Account") in the name of the Indenture Trustee for the
benefit of Noteholders and the Note Insurer, for the receipt of the Redemption
Price of any Notes to be redeemed in accordance with Article Ten hereof. On any
Redemption Date, the Indenture Trustee shall withdraw the applicable Redemption
Price from the Redemption Account and the Paying Agent shall remit the
Redemption Price to the applicable Noteholders in accordance with Section 10.04
hereof. Moneys in the Redemption Account shall be invested in the name of the
Indenture Trustee for the benefit of the Noteholders and the Note Insurer in
Eligible Investments that mature no later than two Business Days prior to the
relevant Redemption Date. Any monies deposited in the Redemption Account for
purposes of redeeming Notes pursuant to Article Ten hereof shall, subject to
Section 7.16 hereof, remain in the Redemption Account until used to redeem such
Notes.
SECTION 12.03 CASH COLLATERAL ACCOUNT.
(a) Prior to the Initial Delivery Date, the Issuer shall cause the
Indenture Trustee to open and maintain a trust account at the Corporate Trust
Office (the "Cash Collateral Account") in the name of the Indenture Trustee for
the benefit of the relevant Noteholders and the Note Insurer, for the receipt of
(i) the Initial Cash Collateral Account Deposit required to be made with respect
to a Series of Notes and (ii) deposits pursuant to Section 12.02(d)(vii). Monies
received in the Cash Collateral Account shall be invested at the written
direction of the Issuer in Eligible Investments during the term of this
Indenture, and any income or other gain realized from such investment, shall be
held by the Indenture Trustee in the Cash Collateral Account as part of the
Trust Estate as security for the Notes subject to disbursement and
80
withdrawal as herein provided. Monies shall be subject to withdrawal in
accordance with Section 12.03(d) hereof.
(b) Upon Issuer Order, all or a portion of the Cash Collateral Account
shall be invested and reinvested at the Issuer's written direction in one or
more Eligible Investments. In the absence of an Issuer Order, the Indenture
Trustee shall invest funds in the Cash Collateral Account in Eligible
Investments described in clause (g) of the definition thereof. Eligible
Investments shall be made in the name of the Indenture Trustee for the benefit
of the relevant Noteholders and the Note Insurer. All income or other gain from
such investments shall be credited to such Cash Collateral Account and any loss
resulting from such investments shall be charged to such Cash Collateral
Account; provided, that the Issuer shall make or cause to be made on any
Determination Date a deposit to the Cash Collateral Account to the extent of any
losses therein caused as a result of the Issuer's investment instructions. No
Eligible Investment shall mature later than the Business Day preceding the next
following Determination Date and shall not be sold or disposed of prior to its
maturity. The Indenture Trustee shall provide to the Servicer and the Note
Insurer monthly written confirmation of such investments, describing the
Eligible Investments in which such amounts have been invested. Any funds not so
invested must be insured by the Federal Deposit Insurance Corporation.
(c) If any amounts invested as provided in Section 12.03(b) hereof
shall be needed for disbursement from the Cash Collateral Account as set forth
in Section 12.03(d) hereof, the Indenture Trustee shall cause such investments
of such Cash Collateral Account to be sold or otherwise converted to cash to the
credit of such Cash Collateral Account. The Indenture Trustee shall not be
liable for any investment loss resulting from investment of money in the Cash
Collateral Account in any Eligible Investment in accordance with the terms
hereof (other than in its capacity as obligor under any Eligible Investment).
(d) Disbursements from the Cash Collateral Account shall be made, to
the extent funds therefor are available, only as follows:
(i) in the event that the amount in the Collection Account at
10:00 a.m. Central Time on the Determination Date immediately preceding
any Payment Date is less than the sum of (1) the amounts required to be
paid from the Collection Account on such Payment Date pursuant to
clauses (i) through (v) of Section 12.02(d) hereof plus (2) the
Principal Distribution Amount determined in accordance with clauses
(a)(i) and (b) of the definition thereof, the Indenture Trustee shall
withdraw funds from the Cash Collateral Account on or prior to 4:00
p.m. Central Time on such Determination Date to the extent necessary to
make such payments on such Payment Date and deposit such funds into the
Collection Account;
(ii) subject to subparagraph (iii) of this Section 12.03(d),
in the event that on any Payment Date the balance in the Cash
Collateral Account equals an amount greater than the Cash Collateral
Account Required Balance (after giving effect to the distributions
required under Section 12.03(d)(i) and Section 12.02(d)(i) through
(vii) hereof on such Payment Date), the Indenture Trustee shall
withdraw funds in the Cash Collateral Account in such amount so that
the remaining amount in the Cash Collateral Account after such
withdrawal will equal the Cash Collateral Account Required Balance, and
deposit such funds into the Collection Account for disbursement in
accordance with the provisions of Section 12.02(d) hereof; and
(iii) in the event that on any Payment Date a Trigger Event
has occurred, the Indenture Trustee shall withdraw all funds from the
Cash Collateral Account and deposit such
81
funds into the Collection Account for disbursement in accordance with
the provisions of Section 12.02(d) hereof.
SECTION 12.04 REPORTS BY INDENTURE TRUSTEE TO THE NOTE INSURER AND
NOTEHOLDERS.
(a) On each Payment Date, the Indenture Trustee shall account to each
Holder of Notes on which payments of principal and interest are then being made
the amount which represents principal and the amount which represents interest,
and shall contemporaneously advise the Issuer and the Note Insurer of all such
payments. The Indenture Trustee shall satisfy its obligations under this Section
12.04 by delivering the Monthly Servicer's Report to each Holder of the Notes,
the Note Insurer, the Issuer, the Rating Agencies and the Placement Agent. On or
before the 15th day prior to any Final Payment Date the Indenture Trustee shall
provide notice to the Note Insurer, the Rating Agencies and the Holders of the
applicable Series of Notes of the Final Payment Date for such Notes. Such notice
shall include (1) a statement that interest shall cease to accrue as of the last
day preceding the date on which the Final Payment Date occurs, and (2) shall
specify the place or places at which the Notes of such Series are to be
surrendered following payment thereof.
(b) At least annually, or as otherwise required by law, the Indenture
Trustee shall distribute to Noteholders any information returns or other tax
information or statements as are required by applicable tax law to be
distributed to the Noteholders. The Servicer shall prepare or cause to be
prepared all such information for distribution by the Indenture Trustee to the
Noteholders.
82
ARTICLE THIRTEEN
PROVISIONS OF GENERAL APPLICATION
SECTION 13.01 GENERAL PROVISIONS.
All of the provisions of this Article shall apply to this Indenture, as
supplemented by each Supplement.
SECTION 13.02 ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 7.01 hereof)
conclusive in favor of the Indenture Trustee and the Issuer, if made in the
manner provided in this Section 13.02.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind the Holder of every
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Issuer in reliance thereon, whether or not notation
of such action is made upon such Note.
SECTION 13.03 NOTICES, ETC., TO INDENTURE TRUSTEE, THE NOTE INSURER,
ISSUER AND SERVICER.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with any party hereto shall be
sufficient for every purpose hereunder if in writing and telecopied or mailed,
first-class postage prepaid and addressed to the appropriate address below:
(a) to the Indenture Trustee at Sixth Street and Marquette Avenue, MAC
N9311-161, Xxxxxxxxxxx, Xxxxxxxxx 00000, Facsimile: (000) 000-0000, or at any
other address previously furnished in writing to the Issuer, the Note Insurer,
the Noteholders and the Servicer; or
(b) to the Note Insurer at Ambac Assurance Corporation, Xxx Xxxxx
Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Facsimile: (000) 000-0000, or at any
other address previously furnished in writing by the Note Insurer to the
Indenture Trustee, the Noteholders, the Servicer and the Issuer; or
83
(c) to the Issuer at 000 Xxxxxx Xxxxxx, Xxxxx 0000X, Xxxxxxx,
Xxxxxxxxxxxxx 00000, Facsimile: (000) 000-0000, or at any other address
previously furnished in writing to the Indenture Trustee, the Note Insurer, the
Noteholders and the Servicer by the Issuer; or
(d) to the Servicer at 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxxxxxxx 00000, Facsimile: (000) 000-0000, or at any other address
previously furnished in writing to the Indenture Trustee, the Note Insurer, the
Noteholders and the Issuer.
(e) to each of (i) S & P, Attention: Asset Backed Surveillance Group,
00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Facsimile: (000) 000-0000 and (ii)
Xxxxx'x, 00 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Facsimile: (000) 000-0000.
SECTION 13.04 NOTICES TO NOTEHOLDERS; WAIVER.
Where this Indenture provides for notice to Noteholders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Noteholder affected by such event, at his address as it appears on the Note
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case in which notice to
Noteholders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Noteholder shall affect the
sufficiency of such notice with respect to other Noteholders, and any notice
which is mailed in the manner herein provided shall conclusively be presumed to
have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
SECTION 13.05 EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 13.06 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Issuer shall bind
its successors and assigns, whether so expressed or not. There shall be no
assignment hereof, except in accordance with the provisions of Section 7.10
hereof.
84
SECTION 13.07 SEPARABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 13.08 BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto, the Noteholders, and any
Paying Agent which may be appointed pursuant to the provisions hereof, and any
of their successors hereunder, any benefit or any legal or equitable right,
remedy or claim under this Indenture or under the Notes.
SECTION 13.09 GOVERNING LAW.
THE INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED THEREIN, WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS OF ANY STATE THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF A
STATE OTHER THAN NEW YORK.
SECTION 13.10 COUNTERPARTS.
The Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument. Delivery of an
executed counterpart of a signature page to this Indenture by telecopier shall
be as effective as delivery of manually executed counterpart of this Indenture.
SECTION 13.11 COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application, order or request by the Issuer or the Servicer to
the Indenture Trustee to take any action under any provision of this Indenture
for which a specific request is required under this Indenture, the Issuer or the
Servicer, as applicable, shall furnish to the Indenture Trustee an Officer's
Certificate of the Issuer or the Servicer, as applicable, stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, except that in the case of any such
application or request as to which the furnishing of a different certificate is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
85
(c) a statement that, in the opinion of each such individual, such
individual has made such examination or investigation as is necessary to enable
such individual to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 13.12 CONSENT TO JURISDICTION.
(a) The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of the United States District Court for the Southern District of
New York and any court in the State of New York Located in the City and County
of New York, and any appellate court from any thereof, in any action, suit or
proceeding brought against or by it in connection with this Agreement or for
recognition or enforcement of any judgment relating thereto, and the parties
hereto hereby irrevocably and unconditionally agree that all claims in respect
of any such action or proceeding may be heard or determined in such New York
state court or, to the extent permitted by law, in such federal court. The
parties agree that a final nonappealable judgment in any such action, suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. To the extent
permitted by applicable law, the parties hereby waive and agree not to assert by
way of motion, as a defense or otherwise in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such courts,
that the suit, action or proceeding is brought in an inconvenient forum, that
the venue of the suit, action or proceeding is improper or that the related
documents or the subject matter thereof may not be litigated in or by such
courts.
(b) To the extent permitted by applicable law, the parties shall not
seek and hereby waive the right to any review of the judgment of any such court
by any court of any other jurisdiction which may be called upon to grant an
enforcement of such judgment.
(c) Service on any party hereto may be made by mailing or delivering
copies of the summons and complaint and other process which may be served in any
suit, action or proceeding to such party at its address listed in herein or in
the other Transaction Documents. Such address may be changed by the applicable
party or parties by written notice to each of the other parties hereto.
(d) Nothing contained in this Agreement shall limit or affect any
party's right to serve process in any other manner permitted by law or to start
legal proceedings relating to its rights under other agreements or against any
other party or its properties in the courts of any jurisdiction.
86
IN WITNESS WHEREOF, the Issuer, the Servicer, the Indenture Trustee and
the Back-up Servicer have caused this Indenture to be duly executed by their
respective officers thereunto duly authorized as of the date and year first
above written.
MFI FINANCE CORP. I, as Issuer
By:
----
Name:
Title:
MICROFINANCIAL INCORPORATED, as
Servicer
By:
----
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Indenture
Trustee
By:
----
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Back-up
Servicer
Acknowledged and Agreed to:
By:
AMBAC ASSURANCE CORPORATION ---- Name:
Name: Title:
By: Title:
----
