EXHIBIT 4.2
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LONG BEACH ACCEPTANCE RECEIVABLES CORP. (II)
$__________ ____% Asset Backed Notes, Class A
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INDENTURE
Dated as of _________, 20__
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[NAME OF INDENTURE TRUSTEE]
Indenture Trustee
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions 3
SECTION 1.1. Definitions.................................................................................3
SECTION 1.2. Rules of Construction.......................................................................3
SECTION 1.3. Incorporation by Reference of Trust Indenture Act...........................................3
ARTICLE II The Notes 4
SECTION 2.1. Form. 4
SECTION 2.2. Execution, Authentication and Delivery......................................................4
SECTION 2.3. Temporary Notes.............................................................................5
SECTION 2.4. Registration; Registration of Transfer and Exchange.........................................5
SECTION 2.5. Mutilated, Destroyed, Lost or Stolen Notes..................................................6
SECTION 2.6. Persons Deemed Owner........................................................................7
SECTION 2.7. Access to List of Noteholders' Names and Addresses..........................................7
SECTION 2.8. Maintenance of Office or Agency.............................................................7
SECTION 2.9. Payment of Principal and Interest; Defaulted Interest.......................................7
SECTION 2.10. Cancellation................................................................................8
SECTION 2.11. Release of Pledged Property.................................................................8
SECTION 2.12. Book-Entry Notes............................................................................8
SECTION 2.13. Notices to Clearing Agency..................................................................9
SECTION 2.14. Definitive Notes............................................................................9
ARTICLE III Covenants 10
SECTION 3.1. Payment of Principal and Interest..........................................................10
SECTION 3.2. Maintenance of Office or Agency............................................................10
SECTION 3.3. Money for Payments to be Held in Trust.....................................................10
SECTION 3.4. Existence..................................................................................12
SECTION 3.5. Protection of Pledged Property.............................................................12
SECTION 3.6. Opinions as to Pledged Property............................................................13
SECTION 3.7. Performance of Obligations; Servicing of Receivables.......................................13
SECTION 3.8. Negative Covenants.........................................................................14
SECTION 3.9. Annual Statement as to Compliance..........................................................15
SECTION 3.10. Issuer May Consolidate, Etc. Only on Certain Terms.........................................15
SECTION 3.11. Successor or Transferee....................................................................17
SECTION 3.12. No Other Business..........................................................................17
SECTION 3.13. No Borrowing...............................................................................17
SECTION 3.14. Servicer's Obligations.....................................................................18
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities..........................................18
SECTION 3.16. Capital Expenditures.......................................................................18
SECTION 3.17. Compliance with Laws.......................................................................18
SECTION 3.18. Restricted Payments........................................................................18
SECTION 3.19. Notice of Events of Default................................................................18
SECTION 3.20. Further Instruments and Acts...............................................................18
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SECTION 3.21. Income Tax Characterization................................................................18
ARTICLE IV Satisfaction and Discharge............................................................................19
SECTION 4.1. Satisfaction and Discharge of Indenture....................................................19
SECTION 4.2. Application of Trust Money.................................................................20
SECTION 4.3. Repayment of Moneys Held by Note Paying Agent..............................................20
ARTICLE V Remedies 20
SECTION 5.1. Events of Default..........................................................................20
SECTION 5.2. Rights Upon Event of Default...............................................................21
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee..................22
SECTION 5.4. Remedies...................................................................................25
SECTION 5.5. Optional Preservation of the Pledged Property..............................................26
SECTION 5.6. Priorities.................................................................................26
SECTION 5.7. Limitation of Suits........................................................................27
SECTION 5.8. Unconditional Rights of Noteholders To Receive Principal and Interest......................28
SECTION 5.9. Restoration of Rights and Remedies.........................................................28
SECTION 5.10. Rights and Remedies Cumulative.............................................................28
SECTION 5.11. Delay or Omission Not a Waiver.............................................................28
SECTION 5.12. Control by Noteholders.....................................................................29
SECTION 5.13. Waiver of Past Defaults....................................................................29
SECTION 5.14. Undertaking for Costs......................................................................29
SECTION 5.15. Waiver of Stay or Extension Laws...........................................................30
SECTION 5.16. Action on Notes............................................................................30
SECTION 5.17. Performance and Enforcement of Certain Obligations.........................................30
SECTION 5.18. [Subrogation...............................................................................30
SECTION 5.19. [Preference Claims; Direction of Proceedings...............................................31
ARTICLE VI The Indenture Trustee.................................................................................32
SECTION 6.1. Duties of Indenture Trustee................................................................32
SECTION 6.2. Rights of Indenture Trustee................................................................34
SECTION 6.3. Individual Rights of Indenture Trustee.....................................................36
SECTION 6.4. Indenture Trustee's Disclaimer.............................................................36
SECTION 6.5. Notice of Defaults.........................................................................36
SECTION 6.6. Reports by Indenture Trustee to Holders....................................................36
SECTION 6.7. Compensation and Indemnity.................................................................37
SECTION 6.8. Replacement of Indenture Trustee...........................................................37
SECTION 6.9. Successor Indenture Trustee by Merger......................................................39
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee..............................................39
SECTION 6.11. Eligibility................................................................................41
SECTION 6.12. Representations and Warranties of the Indenture Trustee....................................41
SECTION 6.13. Waiver of Setoffs..........................................................................42
SECTION 6.14. Control by the Controlling Party...........................................................42
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SECTION 6.15. Preferential Collection of Claims Against Issuer...........................................42
ARTICLE VII Noteholders' Lists and Communications................................................................42
SECTION 7.1. Issuer To Furnish To Trustee Names and Addresses of Noteholders............................42
SECTION 7.2. Preservation of Information; Communications to Noteholders.................................42
SECTION 7.3. Reports by Issuer..........................................................................43
SECTION 7.4. Reports by Indenture Trustee...............................................................43
ARTICLE VIII Collection of Money; Releases......................................................................43
SECTION 8.1. Collection of Money........................................................................43
SECTION 8.2. Release of Pledged Property................................................................44
SECTION 8.3. Opinion of Counsel.........................................................................44
ARTICLE IX Supplemental Indentures...............................................................................44
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders.....................................44
SECTION 9.2. Supplemental Indentures with Consent of Noteholders........................................45
SECTION 9.3. Execution of Supplemental Indentures.......................................................47
SECTION 9.4. Effect of Supplemental Indenture...........................................................47
SECTION 9.5. Reference in Notes to Supplemental Indentures..............................................47
SECTION 9.6. Conformity With Trust Indenture Act........................................................47
ARTICLE X Redemption of Notes....................................................................................48
SECTION 10.1. Redemption.................................................................................48
SECTION 10.2. Form of Redemption Notice..................................................................48
SECTION 10.3. Notes Payable on Redemption Date...........................................................48
ARTICLE XI Miscellaneous........................................................................................49
SECTION 11.1. Compliance Certificates and Opinions, etc..................................................49
SECTION 11.2. Form of Documents Delivered to Indenture Trustee...........................................50
SECTION 11.3. Acts of Noteholders.......................................................................51
SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer and Rating Agencies............................51
SECTION 11.5. Notices to Noteholders; Waiver.............................................................53
SECTION 11.6. Effect of Headings and Table of Contents...................................................53
SECTION 11.7. Successors and Assigns.....................................................................53
SECTION 11.8. Separability...............................................................................53
SECTION 11.9. Benefits of Indenture......................................................................53
SECTION 11.10. Legal Holidays.............................................................................54
SECTION 11.11. GOVERNING LAW..............................................................................54
SECTION 11.12. Counterparts...............................................................................54
SECTION 11.13. Recording of Indenture.....................................................................54
SECTION 11.14. Issuer Obligation..........................................................................54
SECTION 11.15. No Petition................................................................................55
SECTION 11.16. Inspection.................................................................................55
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SECTION 11.17. [Rights of Note Insurer as Controlling Party...............................................55
SECTION 11.18. [Effect of Policy Expiration Date..........................................................55
SECTION 11.19. Conflict with Trust Indenture Act..........................................................56
ANNEXES AND EXHIBITS
Annex A Defined Terms
Exhibit A Form of Class A Note
Exhibit B Form of Depository Agreement
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INDENTURE dated as of __________, 20__, between LONG BEACH
ACCEPTANCE RECEIVABLES CORP. (II), a Delaware corporation (the "Issuer"), and
[Name of indenture trustee], a ________________________, as indenture trustee
(the "Indenture Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Issuer's ____%
Asset Backed Notes, Class A (the "Notes").
As security for the payment and performance by the Issuer of
its obligations under this Indenture and the Notes, the Issuer has agreed to
assign the Pledged Property (as defined below) as collateral to the Indenture
Trustee for the benefit of the Noteholders.
[[Name of note insurer] (the "Note Insurer") has issued and
delivered a financial guaranty insurance policy, dated the Closing Date (with
endorsements, the "Note Policy"), pursuant to which the Note Insurer guarantees
Scheduled Payments, as defined in the Insurance Agreement.]
[As an inducement to the Note Insurer to issue and deliver the
Note Policy, the Issuer and the Note Insurer have executed and delivered the
Insurance and Indemnity Agreement, dated as of __________, 20__ (as amended from
time to time, the "Insurance Agreement"), among the Note Insurer, the Issuer and
Long Beach Acceptance Corp., a Delaware corporation ("LBAC").]
[As an additional inducement to the Note Insurer to issue the
Note Policy, and] as security for the performance by the Issuer of its
obligations under this Indenture and as security for the performance by the
Issuer of its obligations under this Indenture, the Issuer has agreed to assign
the Pledged Property (as defined below) as collateral to the Indenture Trustee
for the benefit of the Noteholders [and the Note Insurer, as their respective
interests may appear.]
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee for the
benefit of the Holders of the Notes [and the Note Insurer] all of the Issuer's
right, title and interest in and to the following property (the "Pledged
Property") now owned or hereafter acquired:
(i) the Receivables listed in Schedule A hereto, all monies
received on the Receivables after the Cutoff Date and, with
respect to the Receivables which are Precomputed Receivables,
the related Payahead Amount, and all Liquidation Proceeds and
Recoveries received with respect to such Receivables;
(ii) the security interests in the related Financed Vehicles
granted by the related Obligors pursuant to the Receivables,
including, without limitation, the certificates of title and
any other evidence of ownership with respect to such Financed
Vehicles;
(iii) any proceeds from claims on any physical damage, credit life
and credit accident and health insurance policies or
certificates or the VSI Policy, if any, relating to the
related Financed Vehicles or the related Obligors, including
any rebates and premiums;
(iv) property (including the right to receive future Liquidation
Proceeds) that secures a Receivable, and that has been
acquired by or on behalf of the Issuer pursuant to the
liquidation of such Receivable;
(v) the Purchase Agreement, the Servicing Agreement, and the
Guarantee, including, without limitation, a direct right to
cause LBAC to purchase Receivables from the Issuer upon the
occurrence of a breach of any of the representations and
warranties contained in Section 3.2(b) of the Purchase
Agreement, or the failure of LBAC to timely comply with its
obligations pursuant to Section 5.5 of the Purchase Agreement;
(vi) refunds for the costs of extended service contracts with
respect to the related Financed Vehicles, refunds of unearned
premiums with respect to credit life and credit accident and
health insurance policies or certificates covering a related
Obligor or Financed Vehicle or his or her obligations with
respect to such Financed Vehicle and any recourse to Dealers
for any of the foregoing;
(vii) the Legal Files and the Receivable Files related to each
Receivable and any and all other documents that LBAC keeps on
file in accordance with its customary procedures relating to
the Receivables, the related Obligors or the related Financed
Vehicles;
(viii) all amounts and property from time to time held in or credited
to the Collection Account or the Note Account;
(ix) all amounts and property from time to time held in or credited
to the Lock-Box Account, to the extent such amounts and
property relate to the Receivables;
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(x) any proceeds from recourse against Dealers (other than any
Chargeback Obligations), including, without limitation, any
Dealer Title Guaranties with respect to the sale of the
Receivables; and
(xi) the proceeds of any and all of the foregoing.
The foregoing Grant is made in trust to the Indenture Trustee for the benefit of
the Noteholders [and the Note Insurer]. The Indenture Trustee hereby
acknowledges such Grant, accepts the trusts under this Indenture in accordance
with the provisions of this Indenture and agrees to perform its duties required
in this Indenture to the end that the interests of such parties, recognizing the
priorities of their respective interests may be adequately and effectively
protected.
ARTICLE I
Definitions
SECTION 1.1. Definitions. Whenever used in this Indenture, capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
Annex A attached hereto.
SECTION 1.2. Rules of Construction. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles as in
effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the plural
include the singular.
SECTION 1.3. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
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"obligor" on the indenture securities means the Issuer.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
ARTICLE II
The Notes
SECTION 2.1. Form. The Notes shall be in substantially the forms set forth
in Exhibit A, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
The Notes shall be dated the date of its authentication. The terms of the
Notes set forth in Exhibit A are part of the terms of this Indenture.
SECTION 2.2. Execution, Authentication and Delivery. The Notes shall be
executed by an authorized representative of the Issuer. The signature of any
such authorized representative on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who were at
any time authorized representatives of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall, upon receipt of [the Policy and] the Issuer
Order, authenticate and deliver the Notes for original issue in an aggregate
principal amount of $_______________. The Notes outstanding at any time may not
exceed such amounts except as provided in Section 2.5.
The Notes shall be issuable as registered Notes in minimum denominations of
one hundred thousand dollars ($100,000) and integral multiples of one thousand
dollars ($1,000) in excess thereof.
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 by the manual or facsimile signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
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SECTION 2.3. Temporary Notes. Pending the preparation of Definitive Notes,
the Issuer may execute and, upon receipt of an Issuer Order, the Indenture
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the Definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to be
prepared without unreasonable delay. After the preparation of Definitive Notes,
the temporary Notes shall be exchangeable for Definitive Notes upon surrender of
the temporary Notes at the office or agency of the Issuer to be maintained as
provided in Section 3.2, without charge to the Noteholder. Upon surrender for
cancellation of any one or more temporary Notes, the Issuer shall execute and
the Indenture Trustee shall authenticate and deliver in exchange therefor a like
principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes.
SECTION 2.4. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept 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 and exchanges of
Notes. The Indenture Trustee shall be "Note Registrar" for the purpose of
registering Notes and transfers and exchanges of Notes as herein provided. Upon
any resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties of
Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Indenture Trustee prompt written notice
of the appointment of such Note Registrar and of the location, and any change in
the location, of the Note Register, and the Indenture Trustee shall have the
right to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Indenture Trustee shall have the right to conclusively rely
upon a certificate executed on behalf of the Note Registrar by an authorized
signatory thereof as to the names and addresses of the Noteholders of the Notes
and the principal amounts and number of such Notes.
Subject to Sections 2.13 and 2.14 hereof, upon surrender for registration
of transfer of any Note at the office or agency of the Issuer to be maintained
as provided in Section 3.2, if the requirements of Section 8-401(1) of the UCC
are met the Issuer shall execute and upon its request the Indenture Trustee
shall authenticate and the Noteholder shall obtain from the Indenture Trustee,
in the name of the designated transferee or transferees, one or more new Notes,
in any authorized denominations, of the same class and a like aggregate
principal amount.
At the option of the Noteholder, Notes may be exchanged for other Notes in
any authorized denominations, of the same class and a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, subject to Sections 2.13 and
2.14 hereof, if the requirements of Section 8-401(1) of the UCC are met the
Issuer shall execute and upon its request the Indenture Trustee shall
authenticate and the Noteholder shall obtain from the Indenture Trustee, the
Notes which the Noteholder making the exchange is entitled to receive.
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All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or exchange shall be (i) duly endorsed by, or be accompanied by a
written instrument of transfer in the form attached to Exhibit A duly executed
by, the Holder thereof or such Holder's attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("Stamp") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as the Indenture
Trustee may require.
Notwithstanding the foregoing, in the case of any sale or
other transfer of a Definitive Note, the transferor of such Definitive Note
shall be required to represent and warrant in writing that the prospective
transferee either (a) is not (i) an employee benefit plan (as defined in section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), which is subject to the provisions of Title I of ERISA, (ii) a plan
(as defined in section 4975(e)(1) of the Code), which is subject to Section 4975
of the Code, or (iii) an entity whose underlying assets are deemed to be assets
of a plan described in (i) or (ii) above by reason of such plan's investment in
the entity (any such entity described in clauses (i) through (iii), a "Benefit
Plan Entity") or (b) is a Benefit Plan Entity and the acquisition and holding of
the Definitive Note by such prospective transferee is covered by a Department of
Labor Prohibited Transaction Class Exemption. Each transferee of a Book Entry
Note that is a Benefit Plan Entity shall be deemed to represent that its
acquisition and holding of the Book Entry Note is covered by a Department of
Labor Prohibited Transaction Class Exemption.
No service charge shall be made to a Noteholder for any
registration of transfer or exchange of Notes, but the Note Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes.
The preceding provisions of this section notwithstanding, the
Issuer shall not be required to make, and the Note Registrar shall not register
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to the
Note.
SECTION 2.5. Mutilated, Destroyed, Lost or Stolen Notes.
If (a) any mutilated Note shall be surrendered to the Note Registrar, or if the
Note Registrar shall receive evidence to its satisfaction of the destruction,
loss, or theft of any Note and (b) there shall be delivered to the Note
Registrar, the Indenture Trustee [and the Note Insurer] such security or
indemnity as may be required by them to save each of them harmless, then in the
absence of notice that such Note shall have been acquired by a bona fide
purchaser, the Issuer shall execute, and the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a new Note of like tenor and denomination. In
connection with the issuance of any new Note under this Section 2.5, the
Indenture Trustee and the Note Registrar may require the payment of a sum
sufficient to cover any tax or other
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governmental charge that may be imposed in connection therewith. Any duplicate
Note issued pursuant to this Section 2.5 shall constitute valid obligations of
the Issuer, evidencing the same debt and entitled to the same benefits of this
Indenture, as if originally issued, whether or not the lost, stolen, or
destroyed Note shall be found at any time.
SECTION 2.6. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of Issuer, the Indenture Trustee, [the Note Insurer] may treat the Person
in whose name any Note is registered (as of the Record Date) as the owner of
such Note for the purpose of receiving payments of principal of and interest, if
any on such Note and for all other purposes whatsoever, whether or not such Note
be overdue, and none of the Issuer, [the Note Insurer], the Indenture Trustee
nor any agent of the Issuer or the Indenture Trustee shall be affected by notice
to the contrary.
SECTION 2.7. Access to List of Noteholders' Names and Addresses. The
Indenture Trustee shall furnish or cause to be furnished to the Servicer [or the
Note Insurer], at the expense of the Issuer, within 15 days after receipt by the
Indenture Trustee of a request therefor from the Servicer [or the Note Insurer,
as the case may be,] in writing, a list of the names and addresses of the
Noteholders as of the most recent Record Date. If three or more Noteholders or
one or more Noteholders evidencing not less than 25% of the Note Balance apply
in writing to the Indenture Trustee, and such application states that the
applicants desire to communicate with other Noteholders with respect to their
rights under this Indenture or under the Notes and such application shall be
accompanied by a copy of the communication that such applicants propose to
transmit, then the Indenture Trustee shall, within five Business Days after the
receipt for such application, afford such applicants access during normal
business hours to the current list of Noteholders. Each Holder, by receiving and
holding a Note, shall be deemed to have agreed to hold none of the Issuer, the
Servicer, [the Note Insurer,] the Note Registrar or the Indenture Trustee
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
SECTION 2.8. Maintenance of Office or Agency. The Indenture Trustee shall
maintain in ____________________________, an office or offices or agency or
agencies where Notes may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Indenture Trustee in respect of the
Notes and this Indenture may be served. The Indenture Trustee initially
designates its office located at ______________ ____________,
________________________, as its office for such purposes. The Indenture Trustee
shall give prompt written notice to the Issuer and to Noteholders of any change
in the location of the Note Register or any such office or agency.
SECTION 2.9. Payment of Principal and Interest; Defaulted Interest. (a) The
Notes shall accrue interest as provided in the form of the Notes set forth in
Exhibit A and such interest shall be due and payable on each Payment Date, as
specified therein. Any installment of interest or principal, if any, payable on
any Note which is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall be paid as set forth in Section [5.6] of the
Servicing Agreement.
(b) The principal of each Note shall be payable in installments on each
Payment Date as provided in the form of the Notes. Notwithstanding the
foregoing, the entire unpaid Note Balance of the Notes shall be due and payable,
if not previously paid, on the date on
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which an Event of Default shall have occurred and be continuing, if the
Controlling Party has declared the Notes to be immediately due and payable in
the manner provided in Section 5.2. All principal payments on the Notes shall be
made pro rata to the Noteholders entitled thereto. Upon written notice from the
Issuer, the Indenture Trustee shall notify the Person in whose name a Note is
registered at the close of business on the Record Date preceding the Payment
Date on which the Issuer expects that the final installment of principal of and
interest on such Note will be paid. Such notice shall be mailed or transmitted
by facsimile prior to such final Payment Date and shall specify that such final
installment will be payable only upon presentation and surrender of such Note
and shall specify the place where such Note may be presented and surrendered for
payment of such installment. Notices in connection with redemptions of Notes
shall be mailed to Noteholders as provided in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the Notes, and such
default is waived by the Controlling Party, the Issuer shall pay the Interest
Carryover Shortfall to the related Noteholders, as applicable, on the
immediately following Payment Date.
(d) [Promptly following the date on which all principal of and interest on
the Notes has been paid in full and the Notes have been surrendered to the
Indenture Trustee, the Indenture Trustee shall, if the Note Insurer has paid any
amount in respect of the Notes under the Note Policy or otherwise which has not
been reimbursed to it, deliver such surrendered Notes to the Note Insurer.]
SECTION 2.10. Cancellation. Subject to Section 2.9(d), all Notes
surrendered for payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Indenture Trustee, be delivered to
the Indenture Trustee and shall be promptly canceled by the Indenture Trustee.
Subject to Section 2.9(d), the Issuer may at any time deliver to the Indenture
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Issuer may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly 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, except as expressly permitted by this Indenture.
Subject to Section 2.9(d), all canceled Notes may be held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time unless the Issuer shall timely direct by an Issuer
Order that such Notes be destroyed or returned to it; provided that such Notes
have not been previously disposed of by the Indenture Trustee prior to its
receipt of such Issuer Order.
SECTION 2.11. Release of Pledged Property. The Indenture Trustee shall, on
or after the Termination Date, release and cause the Trust Collateral Agent to
release any remaining portion of the Pledged Property from the lien created by
this Indenture and deposit in the Collection Account any funds then on deposit
in any of the other Accounts. The Indenture Trustee shall release property from
the lien created by this Indenture pursuant to this Section 2.11 only upon
receipt of an Issuer Request and (if required by the TIA) Independent
Certificates in accordance with TIA xx.xx. 314(c) and 314(d)(1) meeting the
applicable requirements of Section 11.1.
SECTION 2.12. Book-Entry Notes. The Notes, upon original issuance, will be
issued in the form of typewritten Notes representing the Book-Entry Notes, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Issuer.
8
Such Notes shall initially be registered on the Note Register in the name of
Cede & Co., the nominee of the initial Clearing Agency, and no Note Owner will
receive a Definitive Note representing such Note Owner's interest in such Note,
except as provided in Section 2.14. Unless and until definitive, fully
registered Notes (the "Definitive Notes") have been issued to Note Owners
pursuant to Section 2.14:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture (including
the payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole Holder of the Notes, and
shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants. Unless and until Definitive Notes are issued
pursuant to Section 2.14, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
payments of principal of and interest on the Notes to such Clearing Agency
Participants;
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Noteholders evidencing a specified
percentage of the Outstanding Amount of the Notes, the Clearing Agency
shall be deemed to represent such percentage only to the extent that it has
received instructions to such effect from Note Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered such
instructions to the Indenture Trustee; and
(vi) Note Owners may receive copies of any reports sent to Noteholders
pursuant to this Indenture, upon written request, together with a
certification that they are Note Owners and payment of reproduction and
postage expenses associated with the distribution of such reports, from the
Indenture Trustee at the Corporate Trust Office.
SECTION 2.13. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.14, the Indenture Trustee shall give all such notices and communications
specified herein to be given to the Noteholders to the Clearing Agency, and
shall have no obligation to the Note Owners.
SECTION 2.14. Definitive Notes. If (i) the Servicer advises the Indenture
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities with respect to the Notes, and the
Servicer is unable to locate a qualified successor, (ii) the Servicer at its
option advises the Indenture Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence of
an
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Event of Default, Note Owners representing beneficial interests aggregating at
least a majority of the Outstanding Amount of the Notes advise the Indenture
Trustee through the Clearing Agency in writing that the continuation of a book
entry system through the Clearing Agency is no longer in the best interests of
the Note Owners, then the Clearing Agency shall notify all Note Owners and the
Indenture Trustee of the occurrence of any such event and of the availability of
Definitive Notes to Note Owners requesting the same. Upon surrender to the
Indenture Trustee of the typewritten Note or Notes representing the Book-Entry
Notes by the Clearing Agency, accompanied by registration instructions, the
Issuer shall execute and the Indenture Trustee shall authenticate the Definitive
Notes in accordance with the instructions of the Clearing Agency. None of the
Issuer, the Note Registrar or the Indenture Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be fully protected in relying on, such instructions. Upon the issuance of
Definitive Notes, the Indenture Trustee shall recognize the Holders of the
Definitive Notes as Noteholders.
ARTICLE III
Covenants
SECTION 3.1. Payment of Principal and Interest. The Issuer will duly and
punctually pay the principal of and interest on the Notes in accordance with the
terms of the Notes and this Indenture. Without limiting the foregoing, the
Issuer will cause to be distributed on each Payment Date all amounts on deposit
in the Note Account deposited therein pursuant to the Servicing Agreement for
the benefit of the Notes, to the Noteholders. Amounts properly withheld under
the Code by any Person from a payment to any Noteholder of interest and/or
principal shall be considered as having been paid by the Issuer to such
Noteholder for all purposes of this Indenture.
SECTION 3.2. Maintenance of Office or Agency. The Issuer will maintain in
_____________________________________, an office or agency where Notes may be
surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Issuer in respect of the Notes and this Indenture may be
served. The Issuer hereby initially appoints the Indenture Trustee to serve as
its agent for the foregoing purposes. The Issuer will give prompt written notice
to the Indenture Trustee of the location, and of any change in the location, of
any such office or 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 surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee
as its agent to receive all such surrenders, notices and demands.
SECTION 3.3. Money for Payments to be Held in Trust. On or before each
Payment Date and Redemption Date, the Issuer shall deposit or cause to be
deposited in the Note Account from the Collection Account an aggregate sum
sufficient to pay the amounts then becoming due under the Notes, such sum to be
held in trust for the benefit of the Persons entitled thereto and (unless the
Note Paying Agent is the Indenture Trustee) shall promptly notify the Indenture
Trustee of its action or failure so to act.
The Issuer will cause each Note Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee [and the Note Insurer]
an instrument in which such
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Note Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Note Paying Agent, it hereby so agrees), subject to the
provisions of this Section, that such Note Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the Issuer
(or any other obligor upon the Notes) of which it has actual knowledge in
the making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Note Paying Agent;
(iv) immediately resign as a Note Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment of Notes
if at any time it ceases to meet the standards required to be met by a Note
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order,
direct any Note Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Note Paying Agent, such sums to be held by the Indenture Trustee
upon the same trusts as those upon which the sums were held by such Note Paying
Agent; and upon such a payment by any Note Paying Agent to the Indenture
Trustee, such Note Paying Agent shall be released from all further liability
with respect to such money.
Subject to applicable laws with respect to the escheat of funds, any money
held by the Indenture Trustee or any Note Paying Agent in trust for the payment
of any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on Issuer Request [with the consent of the Note
Insurer (unless a Note Insurer Default shall have occurred and be continuing)]
and shall be deposited by the Indenture Trustee in the Collection Account; and
the Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof (but only to the extent of the amounts so
paid to the Issuer), and all liability of the Indenture Trustee or such Note
Paying Agent with respect to such trust money shall thereupon cease; [provided,
however, that if such money or any portion thereof had been previously deposited
by the Note Insurer or the Trust Collateral Agent with the Indenture Trustee for
the payment of principal or interest on the Notes, to the extent any amounts are
owing to the Note Insurer, such amounts shall be paid promptly to the Note
Insurer upon the Indenture
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Trustee's receipt of a written request by the Note Insurer to such effect; and]
provided, further, that the Indenture Trustee or such Note Paying Agent, before
being required to make any such repayment, shall 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 New
York, New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than thirty (30) days from the date
of such publication, any unclaimed balance of such money then remaining will be
repaid to the Issuer. The Indenture Trustee shall 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
Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Indenture Trustee or of any Note
Paying Agent, at the last address of record for each such Holder).
SECTION 3.4. Existence. Except as otherwise permitted by the provisions of
Section 3.10, the Issuer will keep in full effect its existence, rights and
franchises as a corporation under the laws of the State of Delaware (unless it
becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other state or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction) and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Pledged Property.
SECTION 3.5. Protection of Pledged Property. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Indenture
Trustee for the benefit of [the Note Insurer and] the Noteholders to be prior to
all other liens in respect of the Pledged Property, and the Issuer shall take
all actions necessary to obtain and maintain, in favor of the Indenture Trustee,
for the benefit of [the Note Insurer and] the Noteholders, a first lien on and a
first priority, perfected security interest in the Pledged Property. The Issuer
will from time to time prepare (or shall cause to be prepared), execute and
deliver all such supplements and amendments hereto and all such financing
statements, continuation statements, instruments of further assurance and other
instruments, and will take such other action necessary or advisable to:
(i) provide further assurance with respect to the Grant and/or Grant
more effectively all or any portion of the Pledged Property or maintain the
Pledged Property free and clear of all prior liens;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) in favor of the Indenture Trustee for the benefit of the
Noteholders [and the Note Insurer] created by this Indenture or carry out
more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iv) enforce any of the Pledged Property;
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(v) preserve and defend title to the Pledged Property and the rights
of the Indenture Trustee in such Pledged Property against the claims of all
persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the Pledged
Property when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Indenture Trustee pursuant to this Section.
SECTION 3.6. Opinions as to Pledged Property. (a) On the Closing Date, the
Issuer shall furnish to the Indenture Trustee [and the Note Insurer] an Opinion
of Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents, and with
respect to the execution and filing of any financing statements and continuation
statements, as are necessary to perfect and make effective the first priority
lien and security interest in favor of the Indenture Trustee, for the benefit of
the Noteholders [and the Note Insurer,] created by this Indenture and reciting
the details of such action, or stating that, in the opinion of such counsel, no
such action is necessary to make such lien and security interest effective.
(b) Within 120 days after the beginning of each calendar year, beginning
with the calendar year beginning January 1, 20__, the Issuer shall furnish to
the Indenture Trustee [and the Note Insurer] an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and continuation
statements as are necessary to maintain the lien and security interest created
by this Indenture and reciting the details of such action or stating that in the
opinion of such counsel no such action is necessary to maintain such lien and
security interest. Such Opinion of Counsel shall also describe the recording,
filing, re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and the execution and filing of any
financing statements and continuation statements that will, in the opinion of
such counsel, be required to maintain the lien and security interest of this
Indenture until January 30 in the following calendar year.
SECTION 3.7. Performance of Obligations; Servicing of Receivables. (a) The
Issuer will not take any action and will use its best efforts not to permit any
action to be taken by others that would release any Person from any of such
Person's material covenants or obligations under any instrument or agreement
included in the Pledged Property or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the Basic Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons [acceptable to the Note
Insurer (so long as no Note Insurer Default shall have occurred and be
continuing)] to assist it in performing its duties under this Indenture, and any
performance of such duties by a Person
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identified to the Indenture Trustee [and the Note Insurer] in an Officer's
Certificate of the Issuer shall be deemed to be action taken by the Issuer.
Initially, the Issuer has contracted with the Servicer to assist the Issuer in
performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, the Basic Documents and in the
instruments and agreements included in the Pledged Property, including, but not
limited to, preparing (or causing to prepared) and filing (or causing to be
filed) all UCC financing statements and continuation statements required to be
filed by the terms of this Indenture and the Servicing Agreement in accordance
with and within the time periods provided for herein and therein. Except as
otherwise expressly provided therein, the Issuer shall not waive, amend, modify,
supplement or terminate any Basic Document or any provision thereof without the
consent of the Indenture Trustee [or the Note Insurer (or if a Note Insurer
Default has occurred and is continuing, the Majorityholders)].
(d) If a Servicer Termination Event shall arise from the failure of the
Servicer to perform any of its duties or obligations under the Servicing
Agreement with respect to the Receivables, the Issuer shall take all reasonable
steps available to it to remedy such failure.
(e) The Issuer agrees that it will not waive timely performance or
observance by the Servicer of its duties under the Basic Documents [(x) without
the prior consent of the Note Insurer (unless a Note Insurer Default shall have
occurred and be continuing) or (y)] if the effect thereof would adversely affect
the Holders of the Notes.
SECTION 3.8. Negative Covenants. So long as any Notes are outstanding, the
Issuer shall not:
(i) except as expressly permitted by this Indenture or the Basic
Documents, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the Pledged
Property, unless directed to do so by the Controlling Party;
(ii) claim any credit on, or make any deduction from the principal or
interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against any
present or former Noteholder by reason of the payment of the taxes levied
or assessed upon any part of the Pledged Property;
(iii) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien in favor of the Indenture Trustee created by
this Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or
obligations with respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise, claim,
security interest, mortgage or other encumbrance (other than the lien of
this Indenture) to be created on or extend to or otherwise arise upon or
burden the Pledged Property or any part thereof or any interest therein or
the proceeds thereof (other than tax liens, mechanics' liens and other
liens that arise by operation of law, in each case on a Financed Vehicle
and arising solely as a result of an action or omission of the related
14
Obligor), (C) permit the lien of this Indenture not to constitute a valid
first priority (other than with respect to any such tax, mechanics' or
other lien) security interest in the Pledged Property or (D) amend, modify
or fail to comply with the provisions of the Basic Documents without the
prior written consent of the Controlling Party;
(iv) incur or assume any indebtedness or guarantee any indebtedness of
any Person, except for such indebtedness incurred pursuant to Section 3.10;
or
(v) dissolve or liquidate in whole or in part or merge or consolidate
with any other Person, other than in compliance with Section 3.10.
SECTION 3.9. Annual Statement as to Compliance. The Issuer will deliver to
the Indenture Trustee [and the Note Insurer,] within 120 days after the end of
each fiscal year of the Issuer (commencing with the fiscal year ended December
31, 20__), and otherwise in compliance with the requirements of TIA Section
3.4(a)(4), an Officer's Certificate stating, as to the Authorized Officer
signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year and of
performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has complied with all conditions and covenants under
this Indenture throughout such year, or, if there has been a default in the
compliance of any such condition or covenant, specifying each such default
known to such Authorized Officer and the nature and status thereof.
SECTION 3.10. Issuer May Consolidate, Etc. Only on Certain Terms. (a) The
Issuer shall not consolidate or merge with or into any other Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any state and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture Trustee [and the
Note Insurer (so long as no Note Insurer Default shall have occurred and be
continuing)], the due and punctual payment of the principal of and interest
on all Notes and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Indenture Trustee [and the Note
Insurer (so long as no Insurer Default shall have occurred and be
continuing)]) to the effect that such transaction will not have any
material adverse tax consequence to [the Note Insurer,] any Noteholder or
the Certificateholder;
15
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) 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 or merger and such supplemental indenture
comply with this Article III and that all conditions precedent herein
provided for relating to such transaction have been complied with; and
(vii) [so long as no Note Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Note Insurer written notice of
such conveyance or transfer at least twenty (20) Business Days prior to the
consummation of such action and shall have received the prior written
approval of the Note Insurer of such conveyance or transfer and] the Issuer
or the Person (if other than the Issuer) formed by or surviving such
conveyance or transfer has a net worth, immediately after such conveyance
or transfer, that is (a) greater than zero and (b) not less than the net
worth of the Issuer immediately prior to giving effect to such conveyance
or transfer.
(b) The Issuer shall not convey or transfer all or substantially all of its
properties or assets, including those included in the Pledged Property, to any
Person, unless:
(i) the Person that acquires by conveyance or transfer the properties
and assets of the Issuer the conveyance or transfer of which is hereby
restricted shall (A) be a United States citizen or a Person organized and
existing under the laws of the United States of America or any state, (B)
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form satisfactory to the Indenture
Trustee, [and the Note Insurer (so long as no Note Insurer Default shall
have occurred and be continuing),] the due and punctual payment of the
principal of and interest on all Notes and the performance or observance of
every agreement and covenant of this Indenture and each of the Basic
Documents on the part of the Issuer to be performed or observed, all as
provided herein, (C) expressly agree by means of such supplemental
indenture that all right, title and interest so conveyed or transferred
shall be subject and subordinate to the rights of Holders of the Notes, (D)
unless otherwise provided in such supplemental indenture, expressly agree
to indemnify, defend and hold harmless the Issuer against and from any
loss, liability or expense arising under or related to this Indenture and
the Notes and (E) expressly agree by means of such supplemental indenture
that such Person (or if a group of persons, then one specified Person)
shall prepare (or cause to be prepared) and make all filings with the
Commission (and any other appropriate Person) required by the Exchange Act
in connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
16
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Indenture Trustee [and the Note
Insurer (so long as no Note Insurer Default shall have occurred and be
continuing)]) to the effect that such transaction will not have any
material adverse tax consequence to [the Note Insurer,] any Noteholder or
the Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee [and the
Note Insurer] an Officers' Certificate and an Opinion of Counsel each
stating that such conveyance or transfer and such supplemental indenture
comply with this Article III and that all conditions precedent herein
provided for relating to such transaction have been complied with; and
(vii) [so long as no Note Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Note Insurer written notice of
such conveyance or transfer at least twenty (20) Business Days prior to the
consummation of such action and shall have received the prior written
approval of the Note Insurer of such consolidation or merger and] the
Issuer or the Person (if other than the Issuer) formed by or surviving such
consolidation or merger has a net worth, immediately after such
consolidation or merger, that is (a) greater than zero and (b) not less
than the net worth of the Issuer immediately prior to giving effect to such
consolidation or merger.
SECTION 3.11. Successor or Transferee. (a) Upon any consolidation or merger
of the Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) 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.
(b) Upon a conveyance or transfer of all the assets and properties of the
Issuer pursuant to Section 3.10 (b), Long Beach Acceptance Receivables Corp.
(II) will be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery of written notice to the Indenture Trustee stating
that Long Beach Acceptance Receivables Corp. (II) is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the Basic Documents
and activities incidental thereto.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) [obligations owing from time to time
to the Note Insurer under the Insurance Agreement and (iii)] any other
Indebtedness permitted by or arising under the Basic Documents. The proceeds of
the Notes shall be used exclusively to fund the Issuer's acquisition of the
Receivables and the other assets specified in the Purchase Agreement, [to fund
the Spread Account] and to pay the Issuer's organizational, transactional and
start-up expenses.
17
SECTION 3.14. Servicer's Obligations. The Issuer shall cause the Servicer
to comply with Sections [4.9, 4.10, 4.11 and 5.7] of the Servicing Agreement.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by the Servicing Agreement or this Indenture, the Issuer shall not
make any loan or advance or credit to, or guarantee (directly or indirectly or
by an instrument having the effect of assuring another's payment or performance
on any obligation or capability of so doing or otherwise), endorse or otherwise
become contingently liable, directly or indirectly, in connection with the
obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or
agree contingently to do so) any stock, obligations, assets or securities of, or
any other interest in, or make any capital contribution to, any other Person.
SECTION 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
Basic Document.
SECTION 3.18. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any payment (by reduction of capital or
otherwise), whether in cash, property, securities or a combination thereof, to
any owner of a beneficial interest in the Issuer or otherwise with respect to
any ownership or equity interest or security in or of the Issuer or to the
Servicer, (ii) redeem, purchase, retire or otherwise acquire for value any such
ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose; provided, however, that the Issuer
may make, or cause to be made, payments to the Servicer, the Trust Collateral
Agent, the Back-up Servicer, the Custodian, the Indenture Trustee, [the Note
Insurer,] the Noteholders and the Certificateholder as permitted by, and to the
extent funds are available for such purpose under, the Servicing Agreement [or
the Spread Account Agreement]. The Issuer will not, directly or indirectly, make
payments to or payments from the Collection Account except in accordance with
this Indenture and the Basic Documents.
SECTION 3.19. Notice of Events of Default. Upon a responsible officer of
the Issuer having actual knowledge or receipt of written notice thereof, the
Issuer agrees to give the Indenture Trustee, the Trust Collateral Agent, [the
Note Insurer] and the Rating Agencies prompt written notice of each Event of
Default hereunder and each default on the part of the Servicer of its
obligations under the Servicing Agreement.
SECTION 3.20. Further Instruments and Acts. Upon request of the Indenture
Trustee [or the Note Insurer], the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Indenture.
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SECTION 3.21. Income Tax Characterization. For purposes of federal income,
state and local income and franchise and any other income taxes, the Issuer will
treat, and each Noteholder by its acceptance of a Note will be deemed to have
agreed to treat the Notes as indebtedness and hereby instructs the Indenture
Trustee to treat the Notes as indebtedness for all applicable tax reporting
purposes.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to the Notes except as to (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12, 3.13, 3.20 and 3.21, (v) the rights, obligations and immunities of
the Indenture Trustee hereunder (including the rights of the Indenture Trustee
under Section 6.7 and the obligations of the Indenture Trustee under Section
4.2) and (vi) the rights of Noteholders as beneficiaries hereof with respect to
the property so deposited with the Indenture Trustee payable to all or any of
them, and the Indenture Trustee, on demand of and at the expense of the Issuer,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture with respect to the Notes, when:
(A) either
(1) all Notes theretofore authenticated and delivered (other than (i)
Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 2.5 and (ii) Notes for whose payment money
has theretofore been deposited in trust or segregated and held in trust by
the Issuer and thereafter repaid to the Issuer or discharged from such
trust, as provided in Section 3.3) have been delivered to the Indenture
Trustee for cancellation [and the Note Policy has expired and been returned
to the Note Insurer for cancellation]; or
(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation
(i) have become due and payable,
(ii) will become due and payable on the Final Scheduled Payment Date
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of notice
of redemption by the Indenture Trustee in the name, and at the expense, of
the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture Trustee
cash or direct obligations of or obligations guaranteed by the United
States of America (which will mature prior to the date such amounts are
payable), in trust for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore delivered
to the Indenture Trustee for cancellation when due on the Final Scheduled
Payment Date or Redemption Date (if Notes shall have been called for
redemption pursuant to Section 10.1(a)), as the case may be;
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(B) the Issuer has paid or caused to be paid all its obligations to
[the Note Insurer,] the Noteholders and the Indenture Trustee; and
(C) the Issuer has delivered to the Indenture Trustee [and the Note
Insurer] an Officer's Certificate and an Opinion of Counsel, each meeting
the applicable requirements of Section 11.1(a) and each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
SECTION 4.2. Application of Trust Money. All moneys deposited with the
Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Note Paying Agent, as
the Indenture Trustee may determine, to the Holders of the particular Notes for
the payment or redemption of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest; but such moneys need not be segregated from other funds except to the
extent required herein or in the Servicing Agreement or required by law.
SECTION 4.3. Repayment of Moneys Held by Note Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Note Paying Agent other than the Indenture Trustee
under the provisions of this Indenture with respect to such Notes shall, upon
demand of the Issuer, be paid to the Indenture Trustee to be held and applied
according to Section 3.3 and thereupon such Note Paying Agent shall be released
from all further liability with respect to such moneys.
ARTICLE V
Remedies
SECTION 5.1. Events of Default. "Event of Default", wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any Note Interest when the same becomes
due and payable, and such default shall continue for a period of five (5)
days [(solely for purposes of this clause, a payment on the Notes funded by
the Note Insurer or the Collateral Agent pursuant to the Spread Account
Agreement shall be deemed to be a payment made by the Issuer)]; or
(ii) default in the payment of the Principal Payment Amount on the
Final Scheduled Payment Date [(solely for purposes of this clause, a
payment on the Notes funded by the Note Insurer or the Collateral Agent
pursuant to the Spread Account Agreement, shall be deemed to be a payment
made by the Issuer)]; or
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(iii) [so long as a Note Insurer Default shall not have occurred and
be continuing, an Insurance Agreement Indenture Cross Default shall have
occurred; provided, however, that the occurrence of an Insurance Agreement
Indenture Cross Default may not form the basis of an Event of Default
unless the Note Insurer shall, upon prior written notice to the Rating
Agencies, have delivered to the Issuer and the Indenture Trustee and not
rescinded a written notice specifying that such Insurance Agreement
Indenture Cross Default constitutes an Event of Default under this
Indenture; or]
(iv) [so long as a Note Insurer Default shall have occurred and be
continuing,] a default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere
in this Section specifically dealt with), which default shall continue
unremedied for a period of thirty (30) days after the date on which written
notice of such failure requiring the same to be remedied, shall have been
given (1) to the Issuer by the Indenture Trustee, or (2) to the Issuer and
the Indenture Trustee by the Noteholders evidencing not less than 25% of
the Note Balance; or
(v) [so long as a Note Insurer Default shall have occurred and be
continuing,] the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Pledged Property in an involuntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for
any substantial part of the Pledged Property, or ordering the winding-up or
liquidation of the Issuer's affairs, and such decree or order shall remain
unstayed and in effect for a period of sixty (60) consecutive days; or
(vi) [so long as a Note Insurer Default shall have occurred and be
continuing,] the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Issuer to the entry of an
order for relief in an involuntary case under any such law, or the consent
by the Issuer to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official
of the Issuer or for any substantial part of the Pledged Property, or the
making by the Issuer of any general assignment for the benefit of
creditors, or the failure by the Issuer generally to pay its debts as such
debts become due, or the taking of action by the Issuer in furtherance of
any of the foregoing.
SECTION 5.2. Rights Upon Event of Default. (a) If [a Note Insurer Default
shall not have occurred and be continuing and] an Event of Default shall have
occurred and be continuing, the Notes shall become immediately due and payable
at par, together with accrued interest thereon. If an Event of Default shall
have occurred and be continuing, the Controlling Party may exercise any of the
remedies specified in Section 5.4(a). [In the event of any acceleration of any
Notes by operation of this Section 5.2, the Indenture Trustee shall continue to
be entitled to make claims under the Note Policy pursuant to the Servicing
Agreement for Scheduled Payments on the Notes. Payments under the Note Policy
following acceleration of any Notes shall be applied by the Indenture Trustee:
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First: to Noteholders for amounts due and unpaid on the Notes for
interest, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes for interest; and
Second: to Noteholders for amounts due and unpaid on the Notes for
principal, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal.]
(b) [In the event any Notes are accelerated due to an Event of Default, the
Note Insurer shall have the right (in addition to its obligation to pay
Scheduled Payments on the Notes in accordance with the Note Policy), but not the
obligation, to make payments under the Note Policy or otherwise of interest and
principal due on such Notes, in whole or in part, on any date or dates following
such acceleration as the Note Insurer, in its sole discretion, shall elect.]
(c) [If a Note Insurer Default shall have occurred and be continuing and an
Event of Default shall have occurred and be continuing, the Indenture Trustee in
its discretion may, or if so requested in writing by the Majorityholders shall,
declare by written notice to the Issuer that the Notes become, whereupon they
shall become, immediately due and payable at par, in accordance with the
priorities set forth in Section 5.6, together with accrued interest thereon.]
(d) [If a Note Insurer Default shall have occurred and be continuing, then]
at any time after such declaration of acceleration of maturity has been made and
before a judgment or decree for payment of the money due has been obtained by
the Indenture Trustee as hereinafter in this Article V; provided, the
Majorityholders, by written notice to the Issuer and the Indenture Trustee, may
rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(A) all payments of principal of and interest on all Notes and
all other amounts that would then be due hereunder or upon such Notes
if the Event of Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been
cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. (a) The Issuer covenants that if (i) default is made in the
payment of any interest on any Note when the same becomes due and payable, and
such default continues for a period of five days, or (ii) default is made in the
payment of the principal of or any installment of the principal of any Note when
the same becomes due and payable, the Issuer will pay to the
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Indenture Trustee, for the benefit of the Holders of the Notes, the whole
amount then due and payable on such Notes for principal and interest, with
interest upon the overdue principal, and, to the extent payment at such
rate of interest shall be legally enforceable, upon overdue installments of
interest, at the applicable Note Rate and in addition thereto such further
amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee and its agents and counsel.
(b) [Each of] the Indenture Trustee [and the Note Insurer] hereby
irrevocably and unconditionally appoints the Controlling Party as the true and
lawful attorney-in-fact of the Indenture Trustee [or the Note Insurer, as
applicable,] for so long as neither the Indenture Trustee [nor the Note Insurer]
is the Controlling Party, with full power of substitution, to execute,
acknowledge and deliver any notice, document, certificate, paper, pleading or
instrument and to do in the name of the Controlling Party as well as in the
name, place and stead of the Indenture Trustee [and the Note Insurer] such acts,
things and deeds for or on behalf of and in the name of either the Indenture
Trustee [or the Note Insurer] under this Indenture (including specifically under
Section 5.4) and under the Basic Documents which either the Indenture Trustee
[and the Note Insurer] could or might do or which may be necessary, desirable or
convenient in such Controlling Party's sole discretion to effect the purposes
contemplated hereunder and under the Basic Documents and, without limitation,
following the occurrence of an Event of Default, exercise full right, power and
authority to take, or defer from taking, any and all acts with respect to the
administration, maintenance or disposition of the Pledged Property.
(c) If an Event of Default occurs and is continuing, the Indenture Trustee
may in its discretion [but with the consent of the Note Insurer, so long as no
Note Insurer Default is then continuing,] and shall, at the direction of the
Controlling Party, proceed to protect and enforce its rights and the rights of
the Noteholders by such appropriate Proceedings as the Indenture Trustee or the
Controlling Party shall deem effective to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy or legal or equitable right vested in the Indenture
Trustee by this Indenture or by law.
(d) Intentionally Omitted.
(e) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Pledged Property, proceedings under Title 11 of the United States Code or
any other applicable federal or State bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
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(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence, bad faith or willful misconduct)
and of the Noteholders allowed in such proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Noteholders in any election of a trustee, a standby trustee
or person performing similar functions in any such proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Indenture Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee or the Noteholders allowed in any judicial proceedings relative to
the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(f) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar person.
(g) All rights of action and of asserting claims under this Indenture, [the
Spread Account Agreement,] any other Basic Document or under any of the Notes,
may be enforced by the Indenture Trustee without the possession of any of the
Notes or the production thereof in any trial or other proceedings relative
thereto, and any such action or proceedings instituted by the Indenture Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents and attorneys, shall be for the ratable benefit of the
Holders of the Notes.
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(h) In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this
Indenture, [the Spread Account Agreement] or any other Basic Document), the
Indenture Trustee shall be held to represent all the Holders of the Notes,
and it shall not be necessary to make any Noteholder a party to any such
proceedings.
SECTION 5.4. Remedies. (a) If an Event of Default shall have occurred and
be continuing, the Controlling Party may do one or more of the following
(subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of an express
trust for the collection of all amounts then payable on the Notes or under
this Indenture with respect thereto, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the Issuer and any other
obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Pledged Property;
(iii) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and remedies
of the Indenture Trustee[, the Note Insurer] and the Holders of the Notes;
and
(iv) direct the Trust Collateral Agent to sell the Pledged Property or
any portion thereof or rights or interest therein, at one or more public or
private sales called and conducted in any manner permitted by law;
provided, however, that:
(A) [if the Note Insurer is the Controlling Party, the Note
Insurer may not sell or otherwise liquidate the Pledged Property
following an Insurance Agreement Indenture Cross Default unless:
(I) such Insurance Agreement Indenture Cross Default is
pursuant to Section 5.01(a), (e), (n) or (o) of the Insurance
Agreement; or
(II) the proceeds of such sale or liquidation Payment to the
Noteholders are sufficient to discharge in full all amounts then
due and unpaid upon such Notes for principal and interest; or]
(B) if the Indenture Trustee is the Controlling Party, the
Indenture Trustee may not, nor direct the Trust Collateral Agent to,
sell or otherwise liquidate the Pledged Property following an Event of
Default unless:
(I) such Event of Default is of the type described in
Section 5.01(i) or (ii), or
(II) either
(x) 100% of the Noteholders consent thereto,
25
(y) the proceeds of such sale or liquidation Payment to
the Noteholders are sufficient to discharge in full all
amounts then due and unpaid upon such Notes for principal
and interest, or
(z) the Indenture Trustee determines that the Pledged
Property will not continue to provide sufficient funds for
the payment of principal of and interest on the Notes as
they would have become due if the Notes had not been
declared due and payable, and the Indenture Trustee provides
prior written notice to the Rating Agencies and obtains the
consent of Holders of 66-2/3% of the outstanding Note
Balance.
In determining such sufficiency or insufficiency with respect to clause (y)
and (z), the Indenture Trustee may, but need not, obtain and conclusively rely
upon an opinion of an Independent investment banking or accounting firm of
national reputation, which opinion shall not be at the expense of the Indenture
Trustee, as to the feasibility of such proposed action and as to the sufficiency
of the Pledged Property for such purpose.
SECTION 5.5. Optional Preservation of the Pledged Property. If the
Indenture Trustee is the Controlling Party and if the Notes have been declared
to be due and payable under Section 5.2 following an Event of Default and such
declaration and its consequences have not been rescinded and annulled, the
Indenture Trustee may, but need not, elect to direct the Trust Collateral Agent
to maintain possession of the Pledged Property. It is the desire of the parties
hereto and the Noteholders that there be at all times sufficient funds for the
payment of principal of and interest on the Notes, and the Indenture Trustee
shall take such desire into account when determining whether or not to direct
the Trust Collateral Agent to maintain possession of the Pledged Property. In
determining whether to direct the Trust Collateral Agent to maintain possession
of the Pledged Property, the Indenture Trustee may, but need not, obtain and
conclusively rely upon an opinion of an Independent investment banking or
accounting firm of national reputation, which opinion shall not be at the
expense of the Indenture Trustee, as to the feasibility of such proposed action
and as to the sufficiency of the Pledged Property for such purpose.
SECTION 5.6. Priorities. (a) If the Indenture Trustee collects any money or
property pursuant to this Article V [(excluding any payments made under the Note
Policy),] or if the Trust Collateral Agent delivers any money or property in
respect of liquidation of the Pledged Property to the Indenture Trustee pursuant
to Section 5.4(a)(iv), such money or property, as applicable, shall be applied
by the Indenture Trustee on the related Payment Date in the following order of
priority:
First: amounts due and owing and required to be distributed to the
Servicer (provided there is no Servicer Termination Event), the Indenture
Trustee, the Custodian and the Back Up Servicer, respectively, pursuant to
priorities (i) and (ii) of Section [5.6(c)] of the Servicing Agreement and
not previously distributed, in the order of such priorities and without
preference or priority of any kind within such priorities;
26
Second: to Noteholders, for amounts due and unpaid on the Notes for
interest, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes for interest;
Third: to Noteholders for amounts due and unpaid on the Notes for
principal, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal;
Fourth: [amounts due and owing and required to be distributed to the
Note Insurer pursuant to priority (v) of Section [5.6(c)] of the Servicing
Agreement and not previously distributed;]
Fifth: to the Trust Collateral Agent, the Back-up Servicer, the
Indenture Trustee and the Custodian, respectively, amounts due and owing
and required to be distributed to such entities pursuant to priority (v) of
Section [5.6(c)] of the Servicing Agreement and not previously distributed;
and
Sixth: to [the Collateral Agent, for deposit in the Spread Account]
[the Certificateholders], any amounts remaining after application pursuant
to the priorities above[, for application in accordance with the provisions
of the Spread Account Agreement].
(b) The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 5.6. At least 15 days before
such record date the Issuer shall mail to each Noteholder and the Indenture
Trustee a notice that states the record date, the payment date and the amount to
be paid.
SECTION 5.7. Limitation of Suits.
No Noteholder shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(ii) the Noteholders evidencing not less than 25% of the Note Balance
have made written request to the Indenture Trustee to institute such
proceeding in respect of such Event of Default in its own name as Indenture
Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for sixty (60) days after its receipt of
such notice, request and offer of indemnity has failed to institute such
proceedings;
(v) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 60-day period by the Majorityholders;
and
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(vi) [a Note Insurer Default shall have occurred and be continuing.]
With respect to (i) through (vi) above, it is understood and intended that
no one or more Noteholders shall have any right in any manner whatever by virtue
of, or by availing of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other Noteholders or to obtain or to seek to obtain
priority or preference over any other Noteholders or to enforce any right under
this Indenture, except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders, each
representing less than a majority of the outstanding Note Balance, the Indenture
Trustee shall take direction from the group representing the greater percentage
of the outstanding Note Balance and if the groups represent equal interests, the
Indenture Trustee, in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.8. Unconditional Rights of Noteholders To Receive Principal and
Interest. Subject to the provisions of this Indenture, the Holder of any Note
shall have the right, which is absolute and unconditional, to receive payment of
the principal of and interest, if any, on such Note on or after the respective
due dates thereof expressed in such Note or in this Indenture (or, in the case
of redemption, on or after the Redemption Date), to the extent that funds are
available for distribution to each such Holder on such due dates, and the
Controlling Party may institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Holder.
SECTION 5.9. Restoration of Rights and Remedies. If the Controlling Party
or any Noteholder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Controlling Party 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 5.11. Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, the Controlling Party or any Holder of any Note to exercise
any right or remedy accruing upon any Default or Event of Default shall impair
any such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this Article
V 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 or by the Noteholders, as the case may be.
28
SECTION 5.12. Control by Noteholders. If the Indenture Trustee is the
Controlling Party, Majorityholders shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Indenture Trustee with respect to the Notes or exercising any trust or power
conferred on the Indenture Trustee; provided that:
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) if the conditions set forth in Section 5.5 have been satisfied
and the Indenture Trustee elects to retain the Pledged Property pursuant to
such Section, then any direction to the Indenture Trustee by Noteholders
representing less than 100% of the outstanding Note Balance of the Notes to
sell or liquidate the Pledged Property shall be of no force and effect; and
(iii) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction;
provided, however, that, subject to Article VI, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
SECTION 5.13. Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.4, [the Note
Insurer (provided no Note Insurer Default shall have occurred and be continuing)
or] the Majorityholders [(if a Note Insurer Default shall have occurred and be
continuing),] may waive any past Default or Event of Default and its
consequences except a Default (a) in payment of principal of or interest on any
of the Notes or (b) in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the Holder of each Note. In the case
of any such waiver, the Issuer, the Indenture Trustee and the Holders of the
Notes shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.]
SECTION 5.14. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant 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 shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholders, or groups of
Noteholders, in each case holding in the aggregate more than 10% of the
outstanding Note Balance or (c) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest on any Note on or after
the respective due dates expressed in such Note and in this Indenture (or, in
the case of redemption, on or after the Redemption Date).
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SECTION 5.15. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 5.16. 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 Pledged Property or upon
any of the assets of the Issuer.
SECTION 5.17. Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Indenture Trustee upon the direction of
the Servicer to do so and at the Issuer's expense, the Issuer agrees to take all
such lawful action as the Indenture Trustee may request to compel or secure the
performance and observance by the Servicer of each of its obligations to the
Issuer under or in connection with the Servicing Agreement in accordance with
the terms thereof, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the
Servicing Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of the
Servicer thereunder and the institution of legal or administrative actions or
proceedings to compel or secure performance by the Servicer of each of its
obligations under the Servicing Agreement.
(b) If the Indenture Trustee is the Controlling Party and if an Event of
Default has occurred and is continuing, the Indenture Trustee may, and, at the
written direction of the Holders of 66-2/3% of the outstanding Note Balance
shall, subject to Article VI, exercise all rights, remedies, powers, privileges
and claims of the Issuer against the Servicer under or in connection with the
Servicing Agreement, including the right or power to take any action to compel
or secure performance or observance by the Servicer of each of its obligations
to the Issuer thereunder and to give any consent, request, notice, direction,
approval, extension or waiver under the Servicing Agreement, and any right of
the Issuer to take such action shall be suspended.
SECTION 5.18. [Subrogation. The Note Insurer shall, to the extent it makes
any payment with respect to the Notes, become subrogated to the rights of the
recipients of such payments to the extent of such payments. Subject to and
conditioned upon any payment with respect to the Notes by or on behalf of the
Note Insurer, each Noteholder shall be deemed,
30
without further action, to have directed the Indenture Trustee to assign to the
Note Insurer all rights to the payment of interest or principal with respect to
the Notes which are then due for payment to the extent of all payments made by
the Note Insurer and the Note Insurer may exercise any option, vote, right,
power or the like with respect to the Notes to the extent that it has made
payment pursuant to the Note Policy. Notwithstanding the foregoing, the order of
priority of payments to be made pursuant to Section [5.6(c)] of the Servicing
Agreement shall not be modified by this clause (c). To evidence such
subrogation, the Note Registrar shall note the Note Insurer's rights as subrogee
upon the register of Noteholders upon receipt from the Note Insurer of proof of
payment by the Note Insurer of any Interest Payment Amount or Principal Payment
Amount.]
SECTION 5.19. [Preference Claims; Direction of Proceedings.
(a) In the event that the Indenture Trustee has received a certified copy
of an order of the appropriate court that any Scheduled Payment paid on a Note
has been avoided in whole or in part as a preference payment under applicable
bankruptcy law, the Indenture Trustee shall so notify the Note Insurer, shall
comply with the provisions of the Note Policy to obtain payment by the Note
Insurer of such avoided payment, and shall, at the time it provides notice to
the Note Insurer, notify Holders of the Notes by mail that, in the event that
any Noteholder's payment is so recoverable, such Noteholder will be entitled to
payment pursuant to the terms of the Note Policy. Pursuant to the terms of the
Note Policy, the Note Insurer will make such payment on behalf of the Noteholder
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order (as defined in the Note Policy) and not to the Indenture
Trustee or any Noteholder directly (unless a Noteholder has previously paid such
payment to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy, in which case the Note Insurer will make such payment to the
Indenture Trustee for payment, in accordance with the instructions to be
provided by the Note Insurer, to such Noteholder upon proof of such payment
reasonably satisfactory to the Note Insurer).
(b) Each Notice of Claim shall provide that the Indenture Trustee, on its
behalf and on behalf of the Noteholders, thereby appoints the Note Insurer as
agent and attorney-in-fact for the Indenture Trustee and each Noteholder in any
legal proceeding with respect to the Notes. The Indenture Trustee shall promptly
notify the Note Insurer of any proceeding or the institution of any action (of
which a Responsible Officer of the Indenture Trustee has actual knowledge)
seeking the avoidance as a preferential transfer under applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (a "Preference Claim")
of any payment made with respect to the Notes. Each Holder of Notes, by its
purchase of Notes, and the Indenture Trustee hereby agree that so long as a Note
Insurer Default shall not have occurred and be continuing, the Note Insurer may
at any time during the continuation of any proceeding relating to a Preference
Claim direct all matters relating to such Preference Claim including, without
limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal at the expense of the Note Insurer, but subject to
reimbursement as provided in the Insurance Agreement. In addition, and without
limitation of the foregoing, the Note Insurer shall be subrogated to, and each
Noteholder and the Indenture Trustee hereby delegate and assign, to the fullest
extent permitted by law, the rights of the Indenture Trustee and each Noteholder
in the conduct of any proceeding with respect to a Preference Claim, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Preference
Claim.]
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ARTICLE VI
The Indenture Trustee
SECTION 6.1. Duties of Indenture Trustee. (a) The Indenture Trustee, both
prior to the occurrence of an Event of Default and after an Event of Default
shall have been cured or waived, shall undertake to perform such duties and only
such duties as are specifically set forth in this Indenture. If an Event of
Default shall have occurred and shall not have been cured or waived, the
Indenture Trustee may, and at the direction of [the Note Insurer (or, if a Note
Insurer Default shall have occurred and is continuing,] the Noteholders), 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 their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of its own affairs.
(b) The Indenture Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Indenture Trustee that shall be specifically required to be furnished
pursuant to any provision of this Indenture, shall examine them to determine
whether they conform to the requirements of this Indenture; provided, however,
that the Indenture Trustee shall not be responsible for the accuracy or content
of any such resolution, certificate, statement, opinion, report, document, order
or other instrument. If any such instrument is found not to conform in any
material respect to the requirements of this Indenture, the Indenture Trustee
shall notify [the Note Insurer and] the Noteholders of such instrument in the
event that the Indenture Trustee, after so requesting, does not receive a
satisfactorily corrected instrument.
(c) The Indenture Trustee shall take and maintain custody of the Schedule
of Receivables included as Schedule A to the Servicing Agreement and shall
retain copies of all Servicer's Certificates prepared thereunder.
(d) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, or its own bad faith; provided, however, that:
(i) Prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred, the
duties and obligations of the Indenture Trustee shall be determined solely
by the express provisions of this Indenture, the Indenture Trustee shall
not be liable except for the performance of such duties and obligations as
shall be specifically set forth in this Indenture, no implied covenants or
obligations shall be read into this Indenture against the Indenture Trustee
and, in the absence of bad faith on the part of the Indenture Trustee, the
Indenture Trustee may conclusively rely on the truth of the statements and
the correctness of the opinions expressed in any certificates or opinions
furnished to the Indenture Trustee and conforming to the requirements of
this Indenture;
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(ii) The Indenture Trustee shall not be liable for an error of
judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Indenture Trustee shall have been negligent in ascertaining
the pertinent facts;
(iii) The Indenture Trustee shall not be liable with respect to any
action taken, suffered, or omitted to be taken in good faith in accordance
with this Indenture or at the direction of [the Note Insurer or, after a
Note Insurer Default,] the Noteholders evidencing not less than 25% of the
Note Balance, 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;
(iv) The Indenture Trustee shall not be charged with knowledge of any
Event of Default, unless a Responsible Officer of the Indenture Trustee
receives written notice of such Event of Default from the Servicer, [the
Note Insurer or, after a Note Insurer Default,] the Noteholders evidencing
not less than 25% of the Note Balance (such notice shall constitute actual
knowledge of an Event of Default by the Indenture Trustee); and
(v) The Indenture Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Indenture.
(e) The Indenture Trustee may, but shall not be required to, expend or risk
its own funds or otherwise incur financial liability in the performance of any
of its duties hereunder, or in the exercise of any of its rights or powers,
unless it shall have been provided with indemnity against such risk or liability
in form and substance satisfactory to the Indenture Trustee, and none of the
provisions contained in this Indenture shall in any event require the Indenture
Trustee to perform, or be responsible for the manner of performance of, any of
the obligations of the Servicer under this Indenture except during such time, if
any, as the Indenture Trustee, in its capacity as Back-up Servicer, shall be the
successor to, and be vested with the rights, duties, powers, and privileges of,
the Servicer in accordance with the terms of the Servicing Agreement.
(f) Except for actions expressly authorized by this Indenture, the
Indenture Trustee shall take no action reasonably likely to impair the security
interests created or existing under any Receivable or Financed Vehicle or to
impair the value of any Receivable or Financed Vehicle.
(g) All information obtained by the Indenture Trustee regarding the
Obligors and the Receivables, whether upon the exercise of its rights under this
Indenture or otherwise, shall be maintained by the Indenture Trustee in
confidence and shall not be disclosed to any other Person; provided that,
nothing herein shall prevent the Indenture Trustee from delivering copies of
such information whether or not constituting confidential information, and
disclosing other information, whether or not confidential information to (i) its
directors, officers, employees, agents and professional consultants to the
extent necessary to carry on the Indenture Trustee's business in the ordinary
course, (ii) any Noteholder [or the Note Insurer] to the extent that such
Noteholder [or the Note Insurer] is entitled to such information under this
Indenture, but not otherwise, (iii) any governmental authority which
specifically requests (or as to which applicable regulations require) such
information, (iv) any nationally recognized rating agency in connection with the
rating of the Notes by such agency, or (v) any other Person to which such
delivery or disclosure may be necessary or appropriate, (a) in compliance with
any applicable law, rule, regulation or order, (b) in response to any subpoena
or other legal process, (c) in connection with any litigation to which the
Indenture Trustee is a party, or (d) in order to protect or enforce the rights
of the Noteholders [and the Note Insurer] hereunder.
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(h) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Servicing Agreement.
(i) 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 6.1.
(j) The Indenture Trustee shall, and hereby agrees that it will, perform
all of the obligations and duties required of it under the Servicing Agreement.
(k) [The Indenture Trustee shall, and hereby agrees that it will, hold the
Note Policy in trust, and will hold any proceeds of any claim on the Note Policy
in trust, solely for the use and benefit of the Noteholders.]
(l) Without limiting the generality of this Section 6.1, the Indenture
Trustee shall have no duty (i) to see to any recording, filing or depositing of
this Indenture or any agreement referred to herein or any financing statement
evidencing a security interest in the Financed Vehicles, or to see to the
maintenance of any such recording or filing or depositing or to any recording,
refiling or redepositing of any thereof, (ii) to see to any insurance of the
Financed Vehicles or Obligors or to effect or maintain any such insurance, (iii)
to see to the payment or discharge of any tax, assessment or other governmental
charge or any Lien or encumbrance of any kind owing with respect to, assessed or
levied against any part of the Pledged Property, (iv) to confirm or verify the
contents of any reports or certificates delivered to the Indenture Trustee
pursuant to this Indenture or the Servicing Agreement believed by the Indenture
Trustee to be genuine and to have been signed or presented by the proper party
or parties, or (v) to inspect the Financed Vehicles at any time or ascertain or
inquire as to the performance of observance of any of the Issuer's, the
Servicer's representations, warranties or covenants or the Servicer's duties and
obligations as Servicer and as custodian of the Receivable Files under the
Servicing Agreement.
(m) The Indenture Trustee shall not be required to give any bond or surety
in respect of the powers granted to it under this Indenture.
SECTION 6.2. Rights of Indenture Trustee. Except as otherwise provided in
Section 6.1(b):
(i) The Indenture Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
Servicer's Certificate, certificate of auditors, or any other Opinion of
Counsel, certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond, or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties.
34
(ii) The Indenture Trustee may consult with counsel, and any written
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
under this Indenture in good faith and in accordance with such written
advice or Opinion of Counsel.
(iii) The Indenture Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture, or to
institute, conduct, or defend any litigation under this Indenture or in
relation to this Indenture, at the request, order or direction of any of
the Noteholders [or the Note Insurer] pursuant to the provisions of this
Indenture, unless such Noteholders [or the Note Insurer] shall have offered
to the Indenture Trustee reasonable security or indemnity in form and
substance reasonably satisfactory to the Indenture Trustee against the
costs, expenses, and liabilities that may be incurred therein or thereby;
nothing contained in this Indenture, however, shall relieve the Indenture
Trustee of the obligations, upon the occurrence of an Event of Default
(that shall not have been cured or waived), to exercise such of the rights
and powers vested in it by this Indenture, and to use the same degree of
care and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of its own affairs.
(iv) 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,
consent, order, approval, bond, or other paper or document, unless
requested in writing to do so by [the Note Insurer (if no Note Insurer
Default shall have occurred or be continuing),] the Issuer or by the
Noteholders evidencing not less than 25% of the Note Balance; provided,
however, that, if the payment within a reasonable time to the Indenture
Trustee of the costs, expenses, or liabilities likely to be incurred by it
in the making of such investigation shall be, in the opinion of the
Indenture Trustee, not assured to the Indenture Trustee by the security
afforded to it by the terms of this Indenture, the Indenture Trustee may
require indemnity in form and substance satisfactory to it against such
cost, expense, or liability as a condition to so proceeding. The reasonable
expense of every such examination shall be paid by the Person making such
request or, if paid by the Indenture Trustee, shall be reimbursed by the
Person making such request upon demand.
(v) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties under this Indenture either directly or by
or through agents or attorneys or a custodian. The Indenture Trustee shall
not be responsible for any misconduct or negligence of any such agent or
custodian appointed with due care by it hereunder, or of any agent or
custodian of the Servicer in its capacity as Servicer or custodian or
otherwise.
(vi) The Indenture Trustee shall have no duty of independent inquiry,
and the Indenture Trustee may rely upon the representations and warranties
and covenants of the Issuer and the Servicer contained in the Basic
Documents with respect to the Receivables and the Receivable Files.
(vii) The Indenture Trustee may rely, as to factual matters relating
to the Issuer and the Servicer, on an Officer's Certificate of the Issuer
and the Servicer.
35
(viii) The Indenture Trustee shall not be required to take any action
or refrain from taking any action under this Indenture, or any related
documents referred to herein, nor shall any provision of this Indenture, or
any such related document be deemed to impose a duty on the Indenture
Trustee to take action, if the Indenture Trustee shall have been advised by
counsel that such action is contrary to (i) the terms of this Indenture,
(ii) any such related document or (iii) law.
SECTION 6.3. Individual Rights of Indenture Trustee. The Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee. Any Note Paying Agent, Note
Registrar, co-registrar or co-Note Paying Agent may do the same with like
rights.
SECTION 6.4. Indenture Trustee's Disclaimer. The recitals contained herein
shall be taken as the statements of the Issuer and the Indenture Trustee does
not assume any responsibility for the correctness thereof. The Indenture Trustee
shall not make any representations as to the validity or sufficiency of this
Indenture, the Notes, or of any Receivable or related document. The Indenture
Trustee shall not at any time have any responsibility or liability for or with
respect to the validity or adequacy of this Indenture, the Pledged Property or
the Notes; it shall not be accountable for the Issuer's use of the proceeds from
the Notes; and it shall not be responsible for any statement of the Issuer in
the Indenture or in any document issued in connection with the sale of the Notes
or in the Notes; provided, however, that the foregoing shall not relieve either
the Indenture Trustee of its obligation to perform its duties under this
Indenture. Except with respect to a claim based on the failure of the Indenture
Trustee to perform its duties under this Indenture or based on the Indenture
Trustee's negligence or willful misconduct, no recourse shall be had for any
claim based on any provision of this Indenture, the Notes, or any Receivable or
assignment thereof against the Indenture Trustee in its individual capacity, the
Indenture Trustee shall not have any personal obligation, liability, or duty
whatsoever to any Noteholder or any other Person with respect to any such claim,
and any such claim shall be asserted solely against the Issuer or any indemnitor
who shall furnish indemnity as provided in this Indenture. The Indenture Trustee
shall not be accountable for the use or application by the Issuer of any of the
Notes or of the proceeds of such Notes, or for the use or application of any
funds paid to the Servicer in respect of the Receivables.
SECTION 6.5. Notice of Defaults. If an Event of Default or a Servicing
Termination Event under the Servicing Agreement occurs and is continuing and if
it is either known by, or written notice of the existence thereof has been
delivered to, a Responsible Officer of the Indenture Trustee, the Indenture
Trustee shall mail to each Noteholder notice of the Event of Default or Servicer
Termination Event within ninety (90) days after such knowledge or notice occurs.
Except in the case of a Default in payment of principal of or interest on any
Note (including payments pursuant to the mandatory redemption provisions of such
Note), the Indenture Trustee may withhold the notice if and so long as a
committee of two or more of its Responsible Officers in good faith determines
that withholding the notice is in the interests of Noteholders.
SECTION 6.6. Reports by Indenture Trustee to Holders. The Indenture Trustee
shall deliver to each Noteholder such information as may be reasonably required
to enable such Holder to prepare its federal and state income tax returns.
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SECTION 6.7. Compensation and Indemnity. (a) Pursuant to Section [5.6(c)]
of the Servicing Agreement, the Issuer shall pay to the Indenture Trustee from
time to time compensation for its services The Indenture Trustee, in its
capacities, as Indenture Trustee, Trust Collateral Agent and Custodian, shall be
entitled to receive the Indenture Trustee Fee on each Payment Date. The
Indenture Trustee's compensation shall not be limited by any law on compensation
of a trustee of an express trust. Pursuant to Section [5.6(c)] of the Servicing
Agreement, the Issuer shall reimburse the Indenture Trustee and the Trust
Collateral Agent for all reasonable out-of-pocket expenses incurred or made by
it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses
and disbursements of the Indenture Trustee's, the Back-up Servicer's, the
Custodian's, [the Collateral Agent's] and the Trust Collateral Agent's agents,
counsel, accountants and experts. The Issuer shall cause the Servicer to
indemnify the Indenture Trustee, the Trust Collateral Agent, the Back-up
Servicer, the Custodian, [the Collateral Agent] and their respective officers,
directors, employees and agents against any and all loss, liability or expense
(including attorneys' fees and expenses) incurred by each of them in connection
with the acceptance or the administration and the performance of its duties
under the Basic Documents. The Indenture Trustee, the Trust Collateral Agent,
the Custodian, [the Collateral Agent] or the Back-up Servicer shall notify the
Issuer and the Servicer promptly of any claim for which it may seek indemnity.
Failure by the Indenture Trustee, the Back-up Servicer, the Custodian, [the
Collateral Agent] or the Trust Collateral Agent to so notify the Issuer and the
Servicer shall not relieve the Issuer of its obligations hereunder or the
Servicer of its obligations under Article [XII] of the Servicing Agreement. The
Issuer shall cause the Servicer to defend any such claim, the Indenture Trustee,
Trust Collateral Agent, the Custodian, [the Collateral Agent] or the Back-up
Servicer may have separate counsel and the Issuer shall cause the Servicer to
pay the fees and expenses of such counsel. Neither the Issuer nor the Servicer
need reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee, the Back-up Servicer, the Custodian, [the
Collateral Agent] or Trust Collateral Agent through the Indenture Trustee's, the
Back-up Servicer's, the Custodian's, [the Collateral Agent's] or Trust
Collateral Agent's own willful misconduct, negligence or bad faith.
(b) The Issuer's payment obligations pursuant to this Section shall survive
the discharge of this Indenture or the earlier resignation or removal of the
Indenture Trustee. When the Indenture Trustee, the Trust Collateral Agent, the
Custodian or the Back-up Servicer incurs expenses after the occurrence of a
Default specified in Section 5.1(iv) or (v) with respect to the Issuer, the
expenses are intended to constitute expenses of administration under Title 11 of
the United States Code or any other applicable federal or State bankruptcy,
insolvency or similar law. Notwithstanding anything else set forth in this
Indenture or the Basic Documents, the Indenture Trustee agrees that the
obligations of the Issuer (but not the Servicer) to the Indenture Trustee
hereunder and under the Basic Documents shall be recourse to the Pledged
Property only and specifically shall not be recourse to the assets of the
Certificateholder or any Noteholder. In addition, the Indenture Trustee agrees
that its recourse to the Issuer, the Pledged Property [and amounts held pursuant
of the Spread Account Agreement] shall be limited to the right to receive the
payments referred to in Section [5.6(c) and (d)] of the Servicing Agreement.
SECTION 6.8. Replacement of Indenture Trustee. The Indenture Trustee may
resign at any time by so notifying the Issuer [and the Note Insurer]. To the
extent that the Indenture Trustee resigns hereunder, the Trust Collateral Agent
and the Custodian shall resign under the Servicing Agreement [and the Collateral
Agent shall resign under the Spread Account
37
Agreement]. The Issuer may [and, at the request of the Note Insurer (unless a
Note Insurer Default shall have occurred and be continuing) shall,] remove the
Indenture Trustee, if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Indenture Trustee in an involuntary case or proceeding under federal or
state banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar
law, shall have entered a decree or order granting relief or appointing a
receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or similar official) for the Indenture Trustee or for any
substantial part of the Indenture Trustee's property, or ordering the
winding-up or liquidation of the Indenture Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws, as now or
hereafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law is commenced with respect to the
Indenture Trustee and such case is not dismissed within sixty (60) days;
(iv) the Indenture Trustee commences a voluntary case under any
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or other similar official) for the Indenture
Trustee or for any substantial part of the Indenture Trustee's property, or
makes any assignment for the benefit of creditors or fails generally to pay
its debts as such debts become due or takes any corporate action in
furtherance of any of the foregoing;
(v) the Trust Collateral Agent resigns or is removed in accordance
with Section [10.8] of the Servicing Agreement;
(vi) [the Collateral Agent resigns or is removed in accordance with
the Spread Account Agreement;]
(vii) the Back-up Servicer is removed in accordance with Section [8.5]
of the Servicing Agreement; or
(viii) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of the Indenture Trustee for any reason (the Indenture Trustee in
such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee and Trust Collateral
Agent [acceptable to the Note Insurer (so long as a Note Insurer Default shall
not have occurred and be continuing)]. If the Issuer fails to appoint such a
successor Indenture Trustee and Trust Collateral Agent, the Controlling Party
may appoint a successor Indenture Trustee and Trust Collateral Agent.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, [the Note Insurer (provided that
no Insurer Default
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shall have occurred and be continuing)] and to the Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the retiring Indenture Trustee under this Indenture subject to satisfaction
of the Rating Agency Condition. The successor Indenture Trustee shall mail a
notice of its succession to Noteholders. The retiring Indenture Trustee shall
promptly transfer all property held by it as Indenture Trustee to the successor
Indenture Trustee.
If a successor Indenture Trustee does not take office within sixty (60)
days after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer [or the Note Insurer (so long as no Note Insurer
Default has occurred and is continuing)] or the Majorityholders [(if a Note
Insurer Default has occurred and is continuing)] may petition any court of
competent jurisdiction for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
Any resignation or removal of the Indenture Trustee and appointment of a
successor Indenture Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to this Section and payment of all fees and expenses
owed to the retiring Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section, the Issuer's obligations under Section 6.7 shall continue for the
benefit of the retiring Indenture Trustee.
SECTION 6.9. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee. The Indenture
Trustee shall provide the Rating Agencies with written notice of any such
transaction and shall mail notice of such merger or consolidation to the Rating
Agencies.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor Indenture Trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Pledged Property may at the time be located, the Indenture Trustee [with
the consent of the Note Insurer (so long as a Note Insurer Default shall not
have occurred and be continuing)] shall have the power and may
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execute and deliver all instruments to appoint one or more Persons to act as a
co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Pledged Property, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders, such title to the Pledged
Property, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Indenture
Trustee may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
Indenture Trustee under Section 6.11 and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised
or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Pledged Property or any portion
thereof in any such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at the direction of the
Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder, including acts or omissions
of predecessor or successor Indenture Trustees; and
(iii) the Indenture Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee shall die, dissolve, become insolvent, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall invest
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in and be exercised by the Indenture Trustee, to the extent permitted by law,
without the appointment of a new or successor Indenture Trustee.
(e) Any and all amounts relating to the fees and expenses of the co-trustee
or separate trustee will be borne by the Pledged Property.
SECTION 6.11. Eligibility.
The Indenture Trustee under this Indenture shall at all times satisfy the
requirements of TIA ss. 310(a); have a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities [satisfactory to the Note Insurer]; and have a rating, both with
respect to long-term and short-term unsecured obligations, of not less than
investment grade by each Rating Agency. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section 6.11, 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. The Indenture Trustee shall comply with TIA
ss. 310(b), including the optional provision permitted by the second sentence of
TIA ss. 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA ss. 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such exclusion
set forth in TIA ss. 310(b)(1) are met. In case at any time the Indenture
Trustee shall cease to be eligible in accordance with the provisions of this
Section 6.11, the Indenture Trustee shall resign immediately in the manner and
with the effect specified in Section 6.8.
SECTION 6.12. Representations and Warranties of the Indenture Trustee. The
Indenture Trustee represents and warrants to the Issuer and to [each of] the
Indenture Trustee [and the Note Insurer] as follows:
(a) Due Organization. The Indenture Trustee is a __________ in good
standing under the laws of _________ and is duly authorized and licensed under
applicable law to conduct its business as presently conducted.
(b) Corporate Power. The Indenture Trustee has all requisite right, power
and authority to execute and deliver this Indenture and to perform all of its
duties as Indenture Trustee hereunder.
(c) Due Authorization. The execution and delivery by the Indenture Trustee
of this Indenture and the other Basic Documents to which it is a party, and the
performance by the Indenture Trustee of its duties hereunder and thereunder,
have been duly authorized by all necessary corporate proceedings and no further
approvals or filings, including any governmental approvals, are required for the
valid execution and delivery by the Indenture Trustee, or the performance by the
Indenture Trustee, of this Indenture and such other Basic Documents.
(d) Valid and Binding Indenture. The Indenture Trustee has duly executed
and delivered this Indenture and each other Basic Document to which it is a
party, and each of this Indenture and each such other Basic Document constitutes
the legal, valid and binding obligation of the Indenture Trustee, enforceable
against the Indenture Trustee in accordance with its terms, except as (i) such
enforceability may be limited by bankruptcy, insolvency,
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reorganization and similar laws relating to or affecting the enforcement of
creditors' rights generally and (ii) the availability of equitable remedies may
be limited by equitable principles of general applicability.
SECTION 6.13. Waiver of Setoffs. The Indenture Trustee hereby expressly
waives any and all rights of setoff that the Indenture Trustee may otherwise at
any time have under applicable law with respect to any Account and agrees that
amounts in the Accounts shall at all times be held and applied solely in
accordance with the provisions hereof.
SECTION 6.14. Control by the Controlling Party. The Indenture Trustee shall
comply with notices and instructions given by the Issuer only if accompanied by
the written consent of the Controlling Party, except that if any Event of
Default shall have occurred and be continuing, the Indenture Trustee shall act
upon and comply with notices and instructions given by the Controlling Party
alone in the place and stead of the Issuer.
SECTION 6.15. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VII
Noteholders' Lists and Communications
SECTION 7.1. Issuer To Furnish To Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after the earlier of (i) each Record Date
and (ii) three months after the last Record Date, a list, in such form as the
Indenture Trustee may reasonably require, of the names and addresses of the
Holders as of such Record Date, (b) at such other times as the Indenture Trustee
may request in writing, within thirty (30) days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than
10 days prior to the time such list is furnished; provided, however, that so
long as the Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished. [The Indenture Trustee or, if the Indenture Trustee is
not the Note Registrar, the Issuer shall furnish to the Note Insurer in writing
on an annual basis on each June 30 and at such other times as the Note Insurer
may request a copy of the list.]
SECTION 7.2. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders contained in the most recent
list furnished to the Indenture Trustee as provided in Section 7.1 and the names
and addresses of Holders received by the Indenture Trustee in its capacity as
Note Registrar. The Indenture Trustee may destroy any list furnished to it as
provided in such Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have the
protection of TIA ss. 312(c).
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SECTION 7.3. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer
is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Issuer may be required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act;
(ii) file with the Indenture Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the Commission
such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee shall
transmit by mail to all Noteholders described in TIA ss. 313(c)) such
summaries of any information, documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a) as may
be required by rules and regulations prescribed from time to time by the
Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
SECTION 7.4. Reports by Indenture Trustee. If required by TIA ss. 313(a),
within 60 days after each May 31, beginning with May 31, 20__, the Indenture
Trustee shall mail to each Noteholder as required by TIA ss. 313(c) a brief
report dated as of such date that complies with TIA ss. 313(a). The Indenture
Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
Collection of Money; Releases
SECTION 8.1. 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 and the Servicing
Agreement. The Indenture Trustee shall apply all such money received by it, or
cause the Trust Collateral Agent to apply all money received by it, as provided
in this Indenture and the Servicing Agreement. Except as otherwise expressly
provided in this Indenture or in the Servicing Agreement, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Pledged Property, the
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Indenture Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article V.
SECTION 8.2. Release of Pledged Property. (a) Subject to the payment of its
fees and expenses and other amounts pursuant to Section 6.7, the Indenture
Trustee may, and when required by the provisions of this Indenture shall,
execute instruments to release property from the lien of this Indenture, in a
manner and under circumstances that are not inconsistent with the provisions of
this Indenture. No party relying upon an instrument executed by the Indenture
Trustee as provided in this Article VIII shall be bound to ascertain the
Indenture Trustee's authority, inquire into the satisfaction of any conditions
precedent or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
outstanding[, all amounts owing to the Note Insurer under the Basic Documents
have been paid] and all sums due the Indenture Trustee pursuant to Section 6.7
have been paid, release the Pledged Property from the lien of this Indenture and
release to the Issuer or any other Person entitled thereto any funds then on
deposit in the Accounts. The Indenture Trustee shall release property from the
lien of this Indenture pursuant to this Section 8.2(b) only upon receipt of an
Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel
and (if required by the TIA) Independent Certificates in accordance with TIA
xx.xx. 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1.
SECTION 8.3. Opinion of Counsel. The Indenture Trustee shall receive at
least seven days' notice when requested by the Issuer to take any action
pursuant to Section 8.2(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require as a condition to such action, an
Opinion of Counsel in form and substance satisfactory to the Indenture Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with and such action will not materially and
adversely impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Pledged Property. Counsel rendering any such opinion may rely,
without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Indenture Trustee in connection
with any such action.
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders. Without
the consent of the Holders of any Notes but with [the prior written consent of
the Note Insurer (unless a Note Insurer Default shall have occurred and be
continuing) and with] prior notice to the Rating Agencies by the Issuer, as
evidenced to the Indenture Trustee, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter into
one or more indentures supplemental hereto (which shall conform to the
44
provisions of the TIA as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided that such action shall
not adversely affect in any material respect the interests of the Holders
of the Notes, as evidenced by satisfaction of the Rating Agency Condition
with respect to such supplemental indenture;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor Indenture Trustee with respect to the Notes and to
add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more
than one trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
SECTION 9.2. Supplemental Indentures with Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to the Rating Agencies, [with the prior written consent of the
Note Insurer (or, if a Note Insurer Default shall have occurred and be
continuing, with the consent of the Majorityholders),] enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to,
or changing in any manner or eliminating any of the provisions of, this
Indenture or of modifying in any manner the rights of the Holders of the Notes
under this Indenture; provided, however, that, [subject to the express rights of
the Note Insurer under the Basic Documents,] no such
45
supplemental indenture shall, without the consent of the Holder of each
outstanding Note affected thereby:
(i) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the Note Rate
thereon or the Redemption Price with respect thereto, change the provision
of this Indenture relating to the application of collections on, or the
proceeds of the sale of, the Pledged Property to payment of principal of or
interest on the Notes, or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due
on the Notes on or after the respective due dates thereof (or, in the case
of redemption, on or after the Redemption Date);
(iii) reduce the percentage of the outstanding Note Balance of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required
for any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture;
(iv) reduce the percentage of the outstanding Note Balance of the
Notes required to direct the Indenture Trustee to direct the Issuer to sell
or liquidate the Pledged Property pursuant to Section 5.4;
(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each Outstanding Note affected
thereby;
(vi) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the calculation of
any of the individual components of such calculation) or to affect the
rights of the Noteholders to the benefit of any provisions for the
mandatory redemption of the Notes contained herein; or
(vii) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Pledged
Property or, except as otherwise permitted or contemplated herein or in any
of the Basic Documents, terminate the lien of this Indenture on any
property at any time subject hereto or deprive the Holder of any Note of
the security provided by the lien of this Indenture.
The Indenture Trustee may determine whether or not any Notes would be
affected by any supplemental indenture and any such determination shall be
conclusive upon the Holders of all Notes, whether theretofore or thereafter
authenticated and delivered hereunder. The Indenture Trustee shall not be liable
for any such determination made in good faith.
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It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of any
supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.3. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the amendments or modifications thereby of the
trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted by
this Indenture. The Indenture Trustee may, but shall not be obligated to, enter
into any such supplemental indenture that affects the Indenture Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
SECTION 9.6. Conformity With Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.
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ARTICLE X
Redemption of Notes
SECTION 10.1. Redemption. The Notes are subject to redemption in whole, but
not in part, by the Certificateholder on any Payment Date occurring on or after
the date on which the outstanding Note Balance is less than or equal to 10% of
the Initial Note Balance, at a price equal to the Redemption Price. If the Notes
are to be redeemed pursuant to this Section 10.1(a), the Certificateholder will
be required to furnish notice of such election to the Indenture Trustee not
later than the end of the Collection Period for the related Payment Date and
deposit with the Indenture Trustee in the Note Account the Redemption Price of
the Notes to be redeemed[, plus any amounts owed to the Note Insurer under the
Insurance Agreement]; whereupon all such Notes shall be due and payable on the
Redemption Date upon the furnishing of a notice complying with Section 10.2 to
each Holder of Notes. The Indenture Trustee shall furnish [the Note Insurer and]
the Rating Agencies notice of such redemption.
SECTION 10.2. Form of Redemption Notice. Notice of redemption under Section
10.1(a) shall be given by the Indenture Trustee by facsimile or by first-class
mail, postage prepaid, transmitted or mailed prior to the applicable Redemption
Date to each Holder of Notes, as of the close of business on the Record Date
preceding the applicable Redemption Date, at such Holder's address appearing in
the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such Redemption
Date is not applicable and that payments shall be made only upon
presentation and surrender of such Notes and the place where such Notes are
to be surrendered for payment of the Redemption Price (which shall be the
office or agency of the Issuer to be maintained as provided in Section
3.2); and
(iv) that interest on the Notes shall cease to accrue on the
Redemption Date.
Notice of redemption of the Notes shall be given by the Indenture Trustee
in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
SECTION 10.3. Notes Payable on Redemption Date. The Notes to be redeemed
shall, following notice of redemption as required by Section 10.2, on the
Redemption Date become due and payable at the Redemption Price and (unless the
Certificateholder shall default in the payment of the Redemption Price) no
interest shall accrue on the Redemption Price for any period after the date to
which accrued interest is calculated for purposes of calculating the Redemption
Price.
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ARTICLE XI
Miscellaneous
SECTION 11.1. Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee [and to the Note Insurer] (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory
such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Pledged Property or other property
or securities with the Indenture Trustee that is to be made the basis for
the release of any property or securities subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in
Section 11.1(a) or elsewhere in this Indenture, furnish to the Indenture
Trustee [and the Note Insurer] an Officer's Certificate certifying or
stating the opinion of each person signing such certificate as to the fair
value (within 90 days of such deposit) to the Issuer of the Pledged
Property or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee [and the Note Insurer] an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters described in
clause (i) above, the Issuer shall also deliver to the Indenture Trustee
[and the Note Insurer] an Independent Certificate as to the same matters,
if the fair value to the Issuer of the securities to be so deposited and of
all other
49
such securities made the basis of any such withdrawal or release
since the commencement of the then-current fiscal year of the Issuer, as
set forth in the certificates delivered pursuant to clause (i) above and
this clause (ii), is 10% or more of the outstanding Note Balance of the
Notes, but such a certificate need not be furnished with respect to any
securities so deposited, if the fair value thereof to the Issuer as set
forth in the related Officer's Certificate is less than $25,000 or less
than 1% percent of the outstanding Note Balance of the Notes.
(iii) Other than with respect to the release of any Purchased
Receivables or Liquidated Receivables or any Receivable that has been paid
in full by or on behalf of the related Obligor, whenever any property or
securities are to be released from the lien of this Indenture, the Issuer
shall also furnish to the Indenture Trustee [and the Note Insurer] an
Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within ninety (90) days of
such release) of the property or securities proposed to be released and
stating that in the opinion of such person the proposed release will not
impair the security under this Indenture in contravention of the provisions
hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee [and the Note Insurer] an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters described in
clause (iii) above, the Issuer shall also furnish to the Indenture Trustee
[and the Note Insurer] an Independent Certificate as to the same matters if
the fair value of the property or securities and of all other property
other than Purchased Receivables and Defaulted Receivables, or securities
released from the lien of this Indenture since the commencement of the then
current calendar year, as set forth in the certificates required by clause
(iii) above and this clause (iv), equals 10% or more of the outstanding
Note Balance of the Notes, but such certificate need not be furnished in
the case of any release of property or securities if the fair value thereof
as set forth in the related Officer's Certificate is less than $25,000 or
less than 1 percent of the then outstanding Note Balance of the Notes.
(v) Notwithstanding Section 2.11 or any other provision of this
Section, the Issuer may (A) collect, liquidate, sell or otherwise dispose
of Receivables as and to the extent permitted or required by the Basic
Documents and (B) make cash payments out of the Accounts as and to the
extent permitted or required by the Basic Documents.
SECTION 11.2. Form of Documents Delivered to Indenture Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his or her
50
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Servicer or the Issuer, stating that the information
with respect to such factual matters is in the possession of the Servicer or the
Issuer, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.3. Acts of Noteholders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Noteholders in person
or by agents 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 6.1)
conclusive in favor of the Indenture Trustee and the Issuer, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any person of any such instrument
or writing may be proved in any customary manner of the Indenture Trustee.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration 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 11.4. Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or
51
other documents provided or permitted by this Indenture to be made upon, given
or furnished to or filed with:
(a) The Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed certified mail, return receipt requested and shall
be deemed to have been duly given upon receipt to the Indenture Trustee at its
Corporate Trust Office, or
(b) The Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed certified mail, return receipt requested and shall
deemed to have been duly given upon receipt to the Issuer addressed to: Long
Beach Acceptance Receivables Corp. (II) _______________, _____________, ______,
__________________, Attention: _____________ (Telecopy: (___) ___-____), or at
any other address previously furnished in writing to the Indenture Trustee by
Issuer. The Issuer shall promptly transmit any notice received by it from the
Noteholders to the Indenture Trustee.
(c) [The Note Insurer by the Issuer or the Indenture Trustee shall be
sufficient for any purpose hereunder if in writing and mailed by registered mail
or personally delivered or telexed or telecopied to the recipient as follows:
To the Note Insurer: [Name of note insurer]
---------------------
---------------------
---------, ----------
Attention:
--------------------
Re: Long Beach Acceptance Receivables
Corp. (II)
Telex No.:
Confirmation:
Telecopy Nos.:
[(In each case in which notice or other communication to the Note Insurer refers
to an Event of Default, a claim on the Note Policy or with respect to which
failure on the part of the Note Insurer to respond shall be deemed to constitute
consent or acceptance, then a copy of such notice or other communication should
also be sent to the attention of the General Counsel "URGENT MATERIAL
ENCLOSED.")]]
Notices required to be given to the Rating Agencies by the Issuer or the
Indenture Trustee shall be in writing, personally delivered, delivered by
overnight courier or mailed certified mail, return receipt requested to [(i) in
the case of Moody's, at the following address: Xxxxx'x Investors Service, Inc.,
00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (ii) in the case of S&P, at the
following address: Standard & Poor's Ratings Services, 00 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Asset Backed Surveillance
Department;] or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
52
SECTION 11.5. 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 where notice to Noteholders is given by mail, neither the failure to
mail such notice nor any defect in any notice so mailed to any particular
Noteholder shall affect the sufficiency of such notice with respect to other
Noteholders, and any notice that is mailed in the manner here in provided shall
conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to
give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.
SECTION 11.6. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.7. Successors and Assigns. All covenants and agreements in this
Indenture and the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee in this
Indenture shall bind its successors, co-trustees and agents of the Indenture
Trustee.
SECTION 11.8. 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 11.9. Benefits of Indenture. [The Note Insurer and its successors
and assigns shall be third-party beneficiaries to the provisions of this
Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture so long as no Note Insurer Default shall have
occurred and be continuing.] Nothing in this Indenture or in the Notes, express
or implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Noteholders, and any other party secured
hereunder, and any other person with an ownership interest in any part of the
Pledged Property, any benefit or any legal or equitable right, remedy or claim
under this Indenture. [The Note Insurer may disclaim any of its rights and
powers under this Indenture (in which case the Indenture Trustee may exercise
such
53
right or power hereunder), but not its duties and obligations under the Note
Policy, upon delivery of a written notice to the Indenture Trustee.]
SECTION 11.10. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date an which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.11. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.12. Counterparts. This 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.
SECTION 11.13. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee [and the Note Insurer]) to the effect that
such recording is necessary either for the protection of the Noteholders or any
other person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee or the Trust Collateral Agent under this
Indenture or the Servicing Agreement, or the Collateral Agent under the Spread
Account Agreement.
SECTION 11.14. Issuer Obligation.
(a) No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Servicer, the Trust Collateral Agent or the
Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Issuer, the Servicer, the Indenture Trustee or the Trust Collateral Agent, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Servicer, the
Indenture Trustee, the Trust Collateral Agent, any holder of a beneficial
interest in the Issuer, the Servicer, the Trust Collateral Agent or the
Indenture Trustee or of any successor or assign of the Servicer, the Indenture
Trustee, the Trust Collateral Agent, except in each case as any such Person may
have expressly agreed (it being understood that the Indenture Trustee and the
Trust Collateral Agent have no such obligations in their individual capacity)
and except that any such partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed and delivered by [Name of indenture trustee], not in
its individual capacity but solely as Indenture Trustee and in no event shall
[Name of indenture trustee] have
54
any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer.
SECTION 11.15. No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not prior to the date that is one year and one day after the
payment in full of all outstanding Notes institute against the Issuer, or join
in any institution against the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or State bankruptcy or similar law in connection with
any obligations relating to the Notes, this Indenture or any of the Basic
Documents.
SECTION 11.16. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee [or of the
Note Insurer], during the Issuer's normal business hours, to examine all the
books of account, records, reports, and other papers of the Issuer, to make
copies and extracts therefrom, to cause such books to be audited by independent
certified public accountants, and to discuss the Issuer's affairs, finances and
accounts with the Issuer's officers, employees, and independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. Notwithstanding anything herein to the contrary, the foregoing shall
not be construed to prohibit (i) disclosure of any and all information that is
or becomes publicly known, (ii) disclosure of any and all information (A) if
required to do so by any applicable statute, law, rule or regulation, (B) to any
government agency or regulatory body having or claiming authority to regulate or
oversee any respects of the Indenture Trustee's business or that of its
affiliates, (C) pursuant to any subpoena, civil investigative demand or similar
demand or request of any court, regulatory authority, arbitrator or arbitration
to which the Indenture Trustee or an affiliate or an officer, director, employer
or shareholder thereof is a party, (D) in any preliminary or final offering
circular, registration statement or contract or other document pertaining to the
transactions contemplated by the Indenture approved in advance by the Servicer
or the Issuer or (E) to any independent or internal auditor, agent, employee or
attorney of the Indenture Trustee having a need to know the same, provided that
the Indenture Trustee advises such recipient of the confidential nature of the
information being disclosed, or (iii) any other disclosure authorized by the
Servicer or the Issuer.
SECTION 11.17. [Rights of Note Insurer as Controlling Party. So long as no
Note Insurer Default has occurred and is continuing, except as otherwise
specifically provided herein, whenever Noteholder action, consent or approval is
required under this Indenture, such action, consent or approval shall be deemed
to have been taken or given on behalf of, and shall be binding upon, all
Noteholders if the Note Insurer agrees to take such action or give such consent
or approval. If a Note Insurer Default has occurred and is continuing, any
provision, including this Section 11.17, which gives the Note Insurer any rights
as Controlling Party shall be inoperative during the period of such Note Insurer
Default and such rights shall instead vest in the Indenture Trustee acting at
the direction of the Majorityholders.]
SECTION 11.18. [Effect of Policy Expiration Date. Notwithstanding anything
to the contrary set forth herein, all references to any right of the Note
Insurer to direct, appoint, consent to, accept, approve of, take or omit to take
any action under this Indenture or any other Basic Document shall be
inapplicable at all times after the Policy Expiration Date, and (i) if such
reference provides for another party or parties to take or omit to take any such
action following a Note Insurer Default, such party or parties shall also be
entitled to take or omit to take such action following the Policy Expiration
Date and (ii) if such reference does not provide for another party or parties to
take or omit to take any such action following a
55
Note Insurer Default, then the Indenture Trustee acting at the direction of the
Majorityholders shall have the right to take or omit to take such action
following the Policy Expiration Date. In addition, any other provision of this
Indenture or any other Basic Document which is operative based in whole or in
part on whether a Note Insurer Default has or has not occurred shall, at all
times on or after the Policy Expiration Date, be deemed to refer to whether or
not the Policy Expiration Date has occurred.]
SECTION 11.19. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of the TIA, such required
provision shall control.
The provisions of TIA xx.xx. 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
[THIS SPACE INTENTIONALLY LEFT BLANK]
56
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have
caused this Indenture to be duly executed by their respective officers, hereunto
duly authorized, all as of the day and year first above written.
LONG BEACH ACCEPTANCE RECEIVABLES CORP. (II)
By:
-------------------------------------
Name:
Title:
[NAME OF INDENTURE TRUSTEE], not in its
individual capacity but solely as
Indenture Trustee
By:
-------------------------------------
Name:
Title:
EXHIBIT A
REGISTERED $___________
No. RA-1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. __________
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
LONG BEACH ACCEPTANCE RECEIVABLES CORP. (II)
_____% ASSET BACKED NOTE, CLASS A
Long Beach Acceptance Receivables Corp. (II), a corporation organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of
______________________________________________________ payable on each Payment
Date in an amount equal to the result obtained by multiplying (i) a fraction the
numerator of which is $___________ and the denominator of which is $____________
by (ii) the aggregate amount, if any, payable from the Note Account in respect
of principal on the Class A Notes pursuant to the Indenture; provided, however,
that the entire unpaid principal amount of this Class A Note shall be due and
payable on the ________ ____ Payment Date (the "Final Scheduled Payment Date").
The Issuer will pay interest on this Note at the rate per annum shown above on
each Payment Date until the principal of this Note is paid or made available for
payment. Interest on this Note will accrue for each Payment Date from the most
recent Payment Date on which interest has been paid to but excluding such
Payment Date or, if no interest has yet been paid, from and including
__________, ____ (the "Interest Period"). Interest will be computed [on the
basis of a [360]-day year and the actual number of days elapsed during the
related Interest Period or on the basis of a 360-day year consisting of twelve
30 day months.] Such principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and
A-1
private debts. All payments made by the Issuer with respect to this Note shall
be applied first to interest due and payable on this Note as provided above and
then to the unpaid principal of this Note.
[The Class A Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Note Policy") issued by ________________________ (the
"Note Insurer"), pursuant to which the Note Insurer has unconditionally
guaranteed payment to the Noteholders of the Interest Payment Amount and the
Principal Payment Amount with respect to each Payment Date, all as more fully
set forth in the Indenture and the Servicing Agreement.]
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
A-2
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer as of the date set forth
below.
Date: ______________, 20__
LONG BEACH ACCEPTANCE RECEIVABLES CORP. (II)
By:
-----------------------------------
Name:
Title:
A-3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: _________ [NAME OF INDENTURE TRUSTEE], not in its
individual capacity but solely as
Indenture Trustee
By:
-----------------------------------
Authorized Signatory
A-4
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ____% Asset Backed Notes, Class A (herein called the "Notes"),
issued under an Indenture dated as of ______________, 20__ (such indenture, as
supplemented or amended, is herein called the "Indenture"), between the Issuer
and [Name of indenture trustee], as Indenture Trustee (the "Indenture Trustee",
which term includes any successor Indenture Trustee under the Indenture) to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights and obligations thereunder of the
Issuer, the Indenture Trustee and the Holders of the Notes. The Notes are
subject to all terms of the Indenture and the Servicing Agreement. All terms
used in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Notes are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Payment Date in an amount
described on the face hereof. "Payment Date" means the _________ day of each
month, or, if any such date is not a Business Day, the next Business Day,
commencing _______________. The term "Payment Date," shall be deemed to include
the Final Scheduled Payment Date.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note is registrable in the Note Register upon
surrender of this Note for registration of transfer at the offices or agencies
maintained by the Indenture Trustee in its capacity as Note Registrar or by any
successor Note Registrar, in _______________________, accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee and the
Note Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Notes of authorized
denominations evidencing the same aggregate debt of the Issuer will be issued to
the designated transferee.
The Notes shall be issuable in minimum denominations of one hundred
thousand dollars ($100,000) and integral multiples of one thousand dollars
($1,000) in excess thereof. As provided in the Agreement and subject to certain
limitations set forth therein, Notes are exchangeable for new Notes of
authorized denominations evidencing the same aggregate denomination, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Indenture Trustee may
require payment of a sum sufficient to cover any tax or governmental charges
payable in connection therewith.
The Indenture Trustee, the Note Registrar, and any agent of the Indenture
Trustee or the Note Registrar may treat the person in whose name this Note is
registered as the owner hereof for all purposes, and neither the Indenture
Trustee, the Note Registrar, nor any such agent shall be affected by any notice
to the contrary.
The obligations and responsibilities created by the Servicing Agreement and
the Indenture shall terminate upon the payment to Noteholders of all amounts
required to be paid to
A-5
them pursuant to the Indenture and the Servicing Agreement, the payment of all
Reimbursement Obligations, and the expiration of any preference period with
respect thereto and the disposition of all property held in trust under the
Indenture. The Certificateholder may redeem the Notes on any Payment Date on or
after the outstanding Note Balance is less than or equal to 10% of the Initial
Note Balance at a price specified in the Indenture.
The Issuer shall pay interest on overdue installments of interest at the
Note Rate to the extent lawful.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, Trust Collateral Agent, [Collateral Agent,] Back-up Servicer,
Custodian or the Indenture Trustee on the Notes or under the Indenture or any
certificate or other writing delivered in connection therewith, against (i) the
Issuer, the Servicer, the Originator, the Indenture Trustee, Trust Collateral
Agent, [Collateral Agent,] Back-up Servicer or Custodian, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Servicer, the Originator, the
Indenture Trustee, Trust Collateral Agent, [Collateral Agent,] Back-up Servicer
or Custodian or any holder of a beneficial interest in the Issuer, the Servicer,
the Originator, Trust Collateral Agent, [Collateral Agent,] Back-up Servicer,
Custodian or the Indenture Trustee or of any successor or assign of the
Servicer, the Originator, the Indenture Trustee, Trust Collateral Agent,
[Collateral Agent,] Back-up Servicer or Custodian, except as any such Person may
have expressly agreed (it being understood that the Indenture Trustee, Trust
Collateral Agent, [Collateral Agent,] Back-up Servicer and Custodian have no
such obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note covenants and agrees to treat the
Notes as indebtedness for purposes of federal income, state and local income and
franchise and any other income taxes.
The Indenture permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights of the Noteholders under
the Indenture at any time by the Issuer and the Indenture Trustee [with the
consent of the Note Insurer but,] in certain circumstances, without the consent
of the Holders of Notes. The Indenture also contains provisions permitting the
Noteholders representing specified percentages of the outstanding Note Balance
of the Notes, on behalf of the Holders of all the Notes, to waive compliance by
the Issuer with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note (or any one of more Predecessor Notes) shall be conclusive
and binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
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The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Noteholders under the Indenture.
This Note, the Servicing Agreement and the Indenture shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture or any of the other Basic Documents
and no provision of this Note or of the Indenture or any of the other Basic
Documents shall alter or impair the obligation of the Issuer, which is absolute
and unconditional, to pay the principal of and interest on this Note at the
times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither any owner of a
beneficial interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on, or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in this
Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Issuer for the sole
purposes of binding the interests of the Issuer in the assets of the Issuer. The
Holder of this Note by the acceptance hereof agrees that except as expressly
provided in the Indenture or the Basic Documents, in the case of an Event of
Default under the Indenture, the Holder shall have no claim against any of the
foregoing for any deficiency, loss or claim therefrom; provided, however, that
nothing contained herein shall be taken to prevent recourse to, and enforcement
against, the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
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ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ (name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated 1
------------------------ ---------------------------------
Signature Guaranteed:
----------------------
1 NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
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EXHIBIT B
FORM OF DEPOSITORY AGREEMENT
B-1
