Exhibit 10.27
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INDENTURE
AMONG
FINANCIAL PACIFIC FUNDING II, LLC,
AS THE ISSUER,
FINANCIAL PACIFIC LEASING, LLC,
AS THE SERVICER,
AND
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
AS THE TRUSTEE AND THE BACK-UP SERVICER
DATED AS OF JULY 14, 2003
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Indenture
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS............................................................................. 2
Section 1.01. Definitions...................................................................... 2
ARTICLE 2 NOTES................................................................................... 27
Section 2.01. Form Generally................................................................... 27
Section 2.02. Denomination..................................................................... 27
Section 2.03. Execution, Delivery and Dating................................................... 28
Section 2.04. [Reserved]....................................................................... 28
Section 2.05. Registration, Registration of Transfer and Exchange.............................. 28
Section 2.06. Limitation on Transfer and Exchange.............................................. 29
Section 2.07. Mutilated, Destroyed, Lost or Stolen Note........................................ 31
Section 2.08. Payment of Principal and Interest; Principal and Interest Rights Preserved....... 32
Section 2.09. Persons Deemed Owner............................................................. 33
Section 2.10. Cancellation..................................................................... 34
Section 2.11. Intended Tax Characterization.................................................... 34
Section 2.12. Book-Entry Registration.......................................................... 34
Section 2.13. Notice to Clearing Agency........................................................ 35
Section 2.14. Definitive Notes................................................................. 35
ARTICLE 3 FUNDINGS................................................................................ 35
Section 3.01. Fundings......................................................................... 35
ARTICLE 4 CONDITIONS TO ISSUANCE OF NOTES AND FUNDINGS............................................ 36
Section 4.01. Conditions to Issuance of Notes.................................................. 36
Section 4.02. Fundings......................................................................... 38
Section 4.03. Perfection of Transfer........................................................... 39
Section 4.04. Removal and Purchase of Assets................................................... 40
Section 4.05. Releases......................................................................... 41
Section 4.06. Collateral....................................................................... 41
Section 4.07. Notice of Release................................................................ 41
ARTICLE 5 SATISFACTION AND DISCHARGE.............................................................. 41
Section 5.01. Satisfaction and Discharge of this Indenture..................................... 41
ARTICLE 6 DEFAULTS AND REMEDIES................................................................... 42
Section 6.01. Events of Default................................................................ 42
Section 6.02. Acceleration of Maturity; Rescission and Annulment............................... 00
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TABLE OF CONTENTS
PAGE
Section 6.03. Collection of Indebtedness and Suits for Enforcement by Trustee.................. 44
Section 6.04. Remedies......................................................................... 44
Section 6.05. Optional Preservation of Collateral.............................................. 45
Section 6.06. Trustee May File Proofs of Claim................................................. 45
Section 6.07. Trustee May Enforce Claims Without Possession of Notes........................... 46
Section 6.08. Application of Money or Property Collected....................................... 46
Section 6.09. Limitation on Suits.............................................................. 46
Section 6.10. Unconditional Right of Noteholders to Receive Principal and Interest............. 47
Section 6.11. Restoration of Rights and Remedies............................................... 47
Section 6.12. Rights and Remedies Cumulative................................................... 47
Section 6.13. Delay or Omission Not Waiver..................................................... 47
Section 6.14. Control by Controlling Party..................................................... 47
Section 6.15. Waiver of Certain Events......................................................... 48
Section 6.16. Undertaking for Costs............................................................ 48
Section 6.17. Waiver of Stay or Extension Laws................................................. 48
Section 6.18. Sale of Collateral............................................................... 49
Section 6.19. Action on Notes.................................................................. 50
Section 6.20. Subrogation...................................................................... 50
Section 6.21. Preference Claims; Directions of Proceedings..................................... 50
ARTICLE 7 THE TRUSTEE............................................................................. 51
Section 7.01. Certain Duties and Responsibilities.............................................. 51
Section 7.02. Notice of Default and Other Events............................................... 53
Section 7.03. Certain Rights of Trustee........................................................ 53
Section 7.04. Not Responsible for Recitals or Issuance of Notes................................ 54
Section 7.05. May Hold Notes................................................................... 55
Section 7.06. Money Held in Trust.............................................................. 55
Section 7.07. Compensation and Reimbursement................................................... 55
Section 7.08. Corporate Trustee Required; Eligibility.......................................... 56
Section 7.09. Resignation and Removal; Appointment of Successor................................ 56
Section 7.10. Acceptance of Appointment by Successor........................................... 57
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TABLE OF CONTENTS
PAGE
Section 7.11. Merger, Conversion, Consolidation or Succession to Business of Trustee........... 57
Section 7.12. Co-Trustees and Separate Trustees................................................ 58
Section 7.13. Rights with Respect to the Servicer.............................................. 59
Section 7.14. Trustee to Hold Contracts; Trustee Check-In Procedures........................... 59
Section 7.15. Money for Note Payments to Be Held in Trust...................................... 60
Section 7.16. Representations and Warranties of the Trustee.................................... 61
Section 7.17. Waiver and Setoff................................................................ 61
Section 7.18. Control by the Controlling Party................................................. 61
ARTICLE 8 THE RESERVE ACCOUNT AND CLAIMS UNDER THE POLICY......................................... 62
Section 8.01. Reserve Account.................................................................. 62
Section 8.02. Withdrawals from Reserve Account................................................. 62
Section 8.03. The Policy....................................................................... 62
Section 8.04. Claims Under the Policy.......................................................... 62
Section 8.05. Preference Claims; Direction of Proceedings...................................... 63
Section 8.06. Surrender of Policy.............................................................. 64
ARTICLE 9 AMENDMENTS.............................................................................. 64
Section 9.01. Amendments Without Consent of Noteholders........................................ 64
Section 9.02. Amendments and Modifications to Agreement with Consent of Noteholders............ 65
Section 9.03. Execution of Amendments.......................................................... 66
Section 9.04. Effect of Amendments............................................................. 66
Section 9.05. Reference in Notes to Amendments................................................. 66
Section 9.06. Amendment as to Registered Form.................................................. 67
ARTICLE 10 REDEMPTION OF NOTES..................................................................... 67
Section 10.01. Redemption at the Option of the Issuer; Election to Redeem....................... 67
Section 10.02. Notices; Deposit of Redemption Price............................................. 67
Section 10.03. Notice of Redemption by the Issuer............................................... 68
Section 10.04. Notes Payable on Redemption Date................................................. 68
ARTICLE 11 REPRESENTATIONS, WARRANTIES AND COVENANTS............................................... 69
Section 11.01. Representations and Warranties................................................... 69
Section 11.02. Covenants........................................................................ 72
Section 11.03. Other Matters as to the Issuer................................................... 77
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TABLE OF CONTENTS
PAGE
ARTICLE 12 ACCOUNTS AND ACCOUNTINGS................................................................ 78
Section 12.01. Collection of Money.............................................................. 78
Section 12.02. Collection Account; Distribution Account; Redemption Account..................... 78
Section 12.03. Reserve Account.................................................................. 81
Section 12.04. Prefunding Account............................................................... 81
Section 12.05. Negative Carry Account........................................................... 82
Section 12.06. Revenue Tax Account.............................................................. 83
Section 12.07. Reports by Trustee............................................................... 83
Section 12.08. Optional Deposits by the Note Insurer............................................ 84
ARTICLE 13 PROVISIONS OF GENERAL APPLICATION....................................................... 84
Section 13.01. General Provisions............................................................... 84
Section 13.02. Acts of Noteholders.............................................................. 84
Section 13.03. Notices, etc..................................................................... 85
Section 13.04. Notices to Noteholders; Waiver................................................... 86
Section 13.05. Effect of Headings and Table of Contents......................................... 86
Section 13.06. Successors and Assigns........................................................... 86
Section 13.07. Separability..................................................................... 86
Section 13.08. Benefits of Agreement............................................................ 86
Section 13.09. Legal Holidays................................................................... 87
Section 13.10. Governing Law.................................................................... 87
Section 13.11. Counterparts..................................................................... 87
Section 13.12. Corporate Obligation............................................................. 87
Section 13.13. Compliance Notes and Opinions.................................................... 87
Section 13.14. Furnishing of Reports, Etc....................................................... 88
Section 13.15. SUBMISSION TO JURISDICTION; WAIVERS.............................................. 88
Section 13.16. WAIVER OF JURY TRIAL............................................................. 88
Section 13.17. Benefits of Indenture............................................................ 88
Section 13.18. Insurer as Controlling Party..................................................... 89
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TABLE OF CONTENTS
PAGE
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This INDENTURE (this "Indenture"), dated as of July 14, 2003, is by and
among Financial Pacific Funding II, LLC (the "Issuer"), Financial Pacific
Leasing, LLC (the "Company"), as servicer (in such capacity, the "Servicer"),
Xxxxx Fargo Bank Minnesota, National Association, a national banking
association, as trustee (in such capacity, the "Trustee") and as back-up
servicer (in such capacity, the "Back-up Servicer").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for the issuance of the Notes (as defined herein) by the
Issuer. All representations, warranties, covenants and agreements made by the
Issuer, the Servicer, the Trustee and the Back-up Servicer herein are for the
benefit and security of the Holders of the Notes and the Note Insurer. The
Issuer, the Servicer, the Trustee and the Back-up Servicer are entering into
this Indenture for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of the
Issuer, the Servicer, the Trustee and the Back-up Servicer in accordance with
its terms have been done.
GRANTING CLAUSE
The Issuer does hereby grant a security interest to the Trustee, for
the benefit of the Holders of the Notes and the Note Insurer, in all of the
Issuer's rights, title and interest in and to the following and any and all
benefits accruing to the Issuer from (but none of the obligations under): (a)
the Receivables and Contracts and all payments (including without limitation all
Scheduled Payments, Residual Proceeds, Recoveries and Guaranty Amounts) on or
with respect to the Contracts (including without limitation Discount Contracts)
and Receivables (including without limitation all Assets) and due or received
after the applicable Cut-Off Date; (b) the Equipment; (c) each Insurance Policy
related to the Contracts and Insurance Proceeds; (d) the Acquisition Agreement;
(e) the Servicing Agreement and the other Transaction Documents (other than the
Note Purchase Agreement); (f) all amounts from time to time on deposit in the
Collection Account, the Distribution Account, the Lockbox Account, the
Prefunding Account, the Revenue Tax Account and the Negative Carry Account
(including without limitation any Eligible Investments and other property in
such accounts); (g) the Contract Files; (h) all books, records and other
documents relating to the foregoing; and (i) all proceeds of the foregoing
(including, but not by way of limitation, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, recoveries, condemnation awards, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute, all or part or are included in the proceeds of any of the
foregoing), in each case whether now owned or hereafter acquired (all of the
foregoing being hereinafter referred to, collectively, as the "Collateral"). The
foregoing grant of security interest does not constitute, and is not intended to
result in a creation or an assumption by the Trustee, any Noteholder or the Note
Insurer of any obligation of the Issuer, the Company, the Servicer or any other
Person in connection with the Collateral or under any agreement or instrument
relating thereto.
Indenture
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. Except as otherwise expressly provided herein
or unless the context otherwise requires, the following terms have the
respective meanings set forth below for all purposes of this Indenture, and the
definitions of such terms are equally applicable both to the singular and plural
forms of such terms. Capitalized terms used herein but not otherwise defined
shall have the respective meanings assigned to such terms in the Servicing
Agreement or the Acquisition Agreement.
"1933 Act": The Securities Act of 1933, as amended.
"31 to 60 Day Delinquency Ratio": With respect to a Due Period, the
fraction, expressed as a percentage, equal to (a) the aggregate Gross Balance of
Delinquent Contracts that are 31 days or greater and 60 days or fewer days past
due (without giving effect to any applicable grace periods) as of the last day
of such Due Period divided by (b) the aggregate Gross Balance of all Contracts
as of the last day of such Due Period.
"61 to 90 Day Delinquency Ratio": With respect to a Due Period, the
fraction, expressed as a percentage, equal to (a) the aggregate Gross Balance of
Delinquent Contracts that are 61 days or greater and 90 days or fewer days past
due (without giving effect to any applicable grace periods) as of the last day
of such Due Period divided by (b) the aggregate Gross Balance of all Contracts
as of the last day of such Due Period.
"Acquisition Agreement": The Amended and Restated Acquisition
Agreement, dated as of July 14, 2003, by and between the Issuer and the Company,
as amended or supplemented from time to time in accordance with the terms
thereof.
"Acquisition Date": The Closing Date or a Funding Date, as applicable.
"Act": With respect to any Noteholder, the meaning specified in Section
13.02 hereof.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control," when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate IPB": As of any date, the aggregate of the Implicit
Principal Balances of all Contracts outstanding at such date.
"Assets": The "Purchased Assets", as such term is defined in the
Acquisition Agreement.
"Assignment": An assignment executed by the Company substantially in
the form of Exhibit A to the Acquisition Agreement.
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"Available Funds": For any Payment Date, the sum of the following
amounts with respect to the preceding Due Period: (i) all payments and other
amounts included in the definition of Receivables that were received or
collected with respect to the Contracts during such Due Period, (ii) all amounts
in respect of payments of Purchase Prices deposited in the Distribution Account,
(iii) investment earnings with respect to the Prefunding Account, the Collection
Account and the Distribution Account and (iv) all amounts required to be
transferred, if any, to the Distribution Account from the Reserve Account, the
Revenue Tax Account and the Negative Carry Account. Available Funds shall not
include any Servicing Charges.
"Back-up Servicer": Xxxxx Fargo Bank Minnesota, National Association,
and all successors thereto in accordance with the terms of the Servicing
Agreement.
"Back-up Servicer and Trustee Fee Rate": Nine basis points (0.09%) per
annum.
"Back-up Servicer Fee": The fees and expenses payable from the Trustee
Fee on each Payment Date to the Back-up Servicer for the Back-up Servicer's
performance of its duties pursuant to this Indenture and the Servicing
Agreement.
"Board of Directors": Either the board of directors of the Issuer (or
of the sole member of the Issuer) or the Servicer, or any duly authorized
committee of such board, as applicable.
"Board Resolution": A copy of a resolution certified by the Secretary
or an Assistant Secretary of the Issuer (or of the sole member of the Issuer) or
the Servicer to have been duly adopted by its Board of Directors and to be in
full force and effect on the date of such certification and delivered to the
Trustee.
"Book-Entry Notes": Beneficial interests in the Notes, the ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.12 hereof.
"Business Day": Any day other than a Saturday, Sunday or a day on which
banking institutions in (a) New York City, or (b) in the city in which the
principal place of business of the Servicer is located, or (c) in the city in
which the Corporate Trust Office of the Trustee under this Indenture is located
are authorized or obligated by law or executive order to close.
"Calculation Date": With respect to any date, unless the context
requires otherwise, the close of business on the last day of the most recently
ended Due Period or, with respect to the Closing Date, May 31, 2003.
"Cede & Co.": The initial registered holder of the Notes, acting as
nominee of The Depository Trust Company.
"Clearing Agency": An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.
"Clearing Agency Participant": A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
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"Closing Date": July 14, 2003.
"Code": The Internal Revenue Code of 1986, as amended from time to time
and the Treasury Regulations promulgated thereunder.
"Collateral": The meaning specified in the Granting Clause of this
Indenture.
"Collateral Agent": The meaning specified in the Master Reserve Account
Agreement.
"Collection Account": As defined in Section 12.02(a) hereof.
"Collection Guidelines": The credit and collections policies of the
Company, as amended from time to time in accordance with Section 3.18 of the
Servicing Agreement.
"Company": Financial Pacific Leasing, LLC, and all successors thereto.
"Continued Errors": The meaning specified in Section 5.02(d) of the
Servicing Agreement.
"Contract Exception Report": The meaning specified in Section 7.14(b)
hereof.
"Contract File": With respect to any Contract:
(a) the only manually executed original of the Contract
and copies of all lease documents, schedules and addenda, if any;
(b) the original or a copy of the credit application;
(c) a certificate of the Company reflecting that the
related Customer confirmed, in a telephone call, delivery and
acceptance of the related Equipment;
(d) the Customer's corporate resolutions or consent of
members, as applicable, if any;
(e) all related personal guaranties, if any;
(f) copies of, or, in the case of electronic filings,
acknowledgements of, all UCC financing statements filed with respect to
the Equipment or the Contract;
(g) with respect to a Contract relating to titled
Equipment, a copy of the application for a certificate of title; and
(h) with respect to a Contract that relates to titled
Equipment, the original certificate of title, reflecting the Issuer's
ownership thereof (or with respect to the Discount Contracts, the
related Existing Broker's ownership thereof) and the Trustee's Lien
thereon, within 180 days after the related Contract was sold to the
Issuer.
"Contract Schedule": For the Contracts and Receivables which are part
of the Collateral on the Closing Date and each Funding Date, the list of
Contracts and Receivables attached to the Officer's Certificate of the Issuer
and Company substantially in the form attached hereto as Exhibit 11.01(s), which
list shall include with respect to each Contract: (a) a number identifying
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the Contract, (b) the Customer name, (c) the state of the Customer's billing
address and (d) the Scheduled Payment.
"Contracts": The contracts (and all rights with respect thereto,
including all guaranties and other agreements or arrangements of whatever
character from time to time supporting or securing payment of any such contract
and all rights with respect to any agreements or arrangements with the vendors,
dealers or manufacturers of the Equipment to the extent specifically related to
any such contract) which evidence a lease of Equipment and are identified in the
Contract Schedules attached to the Officer's Certificates of the Issuer and the
Company substantially in the form attached hereto as Exhibit 11.01(s) on the
Closing Date and each Funding Date and which will be identified in the Contract
Schedules delivered to the Trustee and the Note Insurer on the Closing Date and
on each Funding Date, including Discount Contracts; provided that, from and
after the date on which a contract is repurchased or removed by the Company or
the Issuer in accordance with Section 4.04 hereof, such repurchased or removed
Contract shall no longer constitute a Contract for purposes of the Transaction
Documents.
"Controlling Party": (A) So long as a Note Insurer Default shall not
have occurred and be continuing, the Note Insurer; or (B) in the event that a
Note Insurer Default has occurred and is continuing, the Holders of fifty-one
percent (51%) or more in principal amount of the Outstanding Notes (or the
Trustee at the direction of such Holders).
"Corporate Trust Office": The principal corporate trust office of the
Trustee at the location specified in Section 13.03 hereof or such other address
as the Trustee may designate from time to time in accordance with Section 13.03
hereof, or the principal corporate trust office of any successor Trustee.
"Cumulative Gross Default Rate": As of any Calculation Date, for the
period of time beginning on the Closing Date and ending on such Calculation
Date, the percentage equivalent of a fraction equal to (a) the sum of the
Current Lease Balance of all Contracts that became Defaulted Contracts prior to
or on such Calculation Date (including any Defaulted Contracts for which the
Purchase Price has been deposited in the Distribution Account) divided by (b)
the aggregate original equipment cost.
"Cumulative Net Default Rate": As of any Calculation Date, for the
period of time beginning on the Closing Date and ending on such Calculation
Date, the percentage equivalent of a fraction equal to (a)(i) the sum of the
Current Lease Balance of all Contracts that became Defaulted Contracts prior to
or on such Calculation Date (including any Defaulted Contracts for which the
Purchase Price has been deposited in the Distribution Account) minus (ii) any
Recoveries that have been received prior to or on such Calculation Date divided
by (b) the aggregate original equipment cost.
"Current Lease Balance": As of any date with respect to a Contract, the
sum of (i) the aggregate Gross Balance, plus (ii) booked residuals, less (iii)
unearned income applicable thereto, provided that the Current Lease Balance of
any Defaulted Contract shall be deemed to be zero except when used in the
calculation of Cumulative Gross Default Rate and Cumulative Net Default Rate.
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"Customer": The lessee or obligor under each related Contract,
including any guarantor of such lessee and its successors and assigns.
"Cut-Off Date": With respect to the Closing Date, the Initial Cut-Off
Date, and with respect to any subsequent Funding Date, the Calculation Date
immediately preceding such Funding Date.
"Data Report": The meaning specified in Section 3.15 of the Servicing
Agreement.
"Default": Any occurrence or circumstance which with notice or the
lapse of time or both would become an Event of Default.
"Defaulted Contract": A Contract shall become a Defaulted Contract at
the earliest of (i) the Calculation Date as of which an amount equal to fifty
percent (50%) or more of any one Scheduled Payment with respect to such Contract
(aggregating together, for purposes of determining such amount, all due and
unpaid Scheduled Payments, or due and unpaid portions of one or more Scheduled
Payments) has not been received by the Servicer and remains unpaid for one
hundred eighty (180) or more days (without giving effect to any applicable grace
periods), (ii) the date as of which the related Customer has become the subject
of voluntary or involuntary bankruptcy proceedings, (iii) the date the Equipment
related to such Contract is repossessed or (iv) the day the Servicer determines
in its good faith discretion and in accordance with the Collection Guidelines
that the remaining Scheduled Payments due on such Contract are uncollectible and
such Contract is written off.
"Deficiency Notice": As defined in Section 8.02 hereof.
"Definitive Note": A definitive, fully registered Note issued pursuant
to Section 2.14 hereof.
"Delinquent Contract": Any Contract (a) as to which the related
Customer is more than thirty (30) days contractually delinquent with respect to
fifty percent (50%) or more of a Scheduled Payment (aggregating together, for
purposes of determining such amount, all due and unpaid Scheduled Payments, or
due and unpaid portions of one or more Scheduled Payments) and (b) which is not
a Defaulted Contract; provided, however, any applicable grace period with
respect to a Contract shall not be taken into account in the determination as to
whether or not a Contract is a Delinquent Contract.
"Depository Agreement": The letter of representations between the
Issuer and the Depository Trust Company, as Clearing Agency.
"Determination Date": The fifth Business Day preceding each Payment
Date.
"Discount Contract": A Contract originated by an Existing Broker, in
which the Company owns an interest in the Receivables due thereunder, and does
not own the Contract or the related Equipment.
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"Discount Lease Interest": All of the Company's right, title and
interest in and to the Receivables due under a Discount Contract and any
security interest of the Company in such Discount Contract and the Equipment
related thereto.
"Discount Rate": For each Contract, the per annum rate equal to the sum
of (a) the Note Interest Rate, (b) the Premium Rate, (c) the Servicer Fee Rate,
and (d) the Back-up Servicer and Trustee Fee Rate.
"Distribution Account": As defined in Section 12.02 hereof.
"Dollar(s)": Lawful money of the United States of America.
"Draw Date": With respect to any Payment Date, the third Business Day
preceding such Payment Date.
"Due Date": With respect to each Contract, each date on which payment
is due thereunder.
"Due Period": With respect to each calendar month and as to any
Determination Date or Payment Date, the period beginning on the first day and
ending at the close of business on the last day of the calendar month preceding
the month in which such Determination Date or Payment Date occurs.
"Electronic Ledgers": The electronic master records of all contracts of
the Company or the Servicer, as the case may be, similar to and including the
Contracts.
"Eligible Contract": A Contract that satisfies all of the following
criteria as of the Closing Date (or, with respect to Contracts acquired by the
Issuer during the Funding Period, as of the related Funding Date):
(a) Such Contract (1) has been originated or purchased
(other than Discount Contracts, in which case the related
Discount Lease Interest has been purchased) in the United
States of America by the Company in the ordinary course of the
Company's business and there has been no fraud or material
misrepresentation on the part of the Company, the Existing
Broker or the Customer in regard to such origination, (2) is
evidenced by an installment sales contract or lease which has
been fully and properly executed by the parties thereto, and
has been originated or purchased (other than Discount
Contracts, in which case, the related Discount Lease Interest
has been purchased) by the Company in connection with the sale
or lease of Equipment by the Company or any Existing Broker,
(3) contains customary and enforceable provisions such that
the rights and remedies of the holder or assignee thereof
shall be adequate for realization against the collateral of
the benefits of the security and (4) is denominated and
payable only in Dollars in the United States of America.
(b) The information with respect to such Contract set
forth in the related Contract Schedule is true and correct in
all material respects as of the close of
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business on the related Cut-Off Date, and such Contract
satisfies the eligibility criteria specified in Section 3.2(b)
of the Acquisition Agreement.
(c) Such Contract complies in all material respects with
all requirements of applicable federal, state, and local laws,
and regulations thereunder including, without limitation, to
the extent applicable, usury laws, the Federal
Truth-in-Lending Act, the Fair Credit Reporting Act, the Fair
Debt Collection Practices Act, the Equal Credit Opportunity
Act, the Federal Trade Commission Act, the Xxxxxxxx-Xxxx
Warranty Act, the Federal Reserve Board's Regulations M, B and
Z and other credit laws and equal credit opportunity and
disclosure laws and no party to such Contract (including,
without limitation, any assignee) is in violation of any such
law, rule or regulation in any material respect if such
violation would impair the collectibility or enforceability of
such Contract.
(d) Such Contract represents the genuine, legal, valid
and binding payment obligation in writing of the Customer and
all supporting obligors, enforceable by the holder or assignee
thereof in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforceability of creditors' rights generally and by general
equitable principles as such laws apply to the Customer. All
parties to such Contract had full legal capacity to execute
and deliver such Contract and all other documents related
thereto and to grant the security interest purported to be
granted thereby.
(e) Such Contract is not due from any foreign government,
the United States of America, any state or any municipality or
from any agency, department or instrumentality of any foreign
government, the United States of America, any state or any
municipality.
(f) Immediately prior to the grant of a security interest
therein under this Indenture, either (1) such Contract is
characterized as a true lease by the Company, and the Issuer
is the sole owner of the related Equipment free and clear of
all encumbrances, except for Permitted Liens (other than
Equipment related to the Discount Contracts, in which case the
Equipment is owned by the related Existing Broker and the
Issuer has a first priority perfected security interest
therein), which Equipment (other than Equipment related to the
Discount Contracts) has been validly transferred to the Issuer
and the Issuer has acquired good title thereto, and the Issuer
has granted a first priority perfected security interest in
its rights with respect thereto to the Trustee or (2) if such
Contract is not characterized as a true lease by the Company
(or if such Contract is characterized as a true lease by the
Company and either (A) the cost of the related Equipment
exceeded fifteen thousand dollars ($15,000) or (B) such
Contract is a Discount Contract), such Contract is secured by
a validly existing first priority perfected security interest
in the Equipment in favor of the Company (as original lien
holder or assignee) as secured party, and such security
interest is or shall be prior to all other Liens upon and
security interests in such Equipment, other than Permitted
Liens, which now exist or may hereafter arise or be created
and such security interest has been assigned by the Company to
the Issuer and pledged by the Issuer to the Trustee.
Immediately after the transfers and conveyances to the
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Issuer as contemplated in the Acquisition Agreement, all
necessary action will have been taken by the Company to
validly convey to the Issuer (x) all right, title and interest
of the Company in and to such Contract, the Receivables and
all Scheduled Payments to become due thereunder and (y) all
right, title and interest of the Company in and to the related
Equipment.
(g) The Customer of such Contract has made at least one
payment (which may be a security deposit or advance payment)
with respect thereto. No Customer has been released in whole
or in part from any of its obligations in respect of any such
Contract. Such Contract has not been (in whole or in part)
satisfied, subordinated, rescinded, cancelled, released or
terminated. No Equipment has been released from the Lien
granted by such Contract in whole or in part; nor has any
instrument been executed that would effect any such
satisfaction, subordination, rescission, cancellation, release
or termination. Neither the Customer nor any other obligated
party has suspended or has reduced the aggregate Scheduled
Payments or obligations due or to become due thereunder by
reason of a default by the other party to such Contract.
(h) Such Contract has not been extended or rewritten and
is not subject to any waiver, modification, amendment,
deferral, payment plans, forbearance agreements or other
alternative payment arrangements of any kind whatsoever,
except in accordance with the Collection Guidelines. Such
Contract has not been amended, altered or modified in any way
which would individually or in the aggregate materially
adversely affect the Issuer's or the Trustee's rights
thereunder or would prohibit payment by the Customer, and no
provision of such Contract has been amended, waived or
otherwise modified except in writing, and copies of all such
writings are included in the related Contract File.
(i) No right of rescission, setoff, counterclaim or
defense, including the defense of usury, exists or has been
asserted in writing or threatened in writing with respect to
such Contract. The operation of the terms of such Contract or
the exercise of any right thereunder will not render such
Contract unenforceable in whole or in part or subject to any
such right of rescission, setoff, counterclaim, or defense,
including a defense arising out of the Customer's right of
quiet enjoyment of the Equipment.
(j) There are no Liens, other than Permitted Liens, or
claims existing or which have been filed for work, labor,
storage or materials relating to the Equipment relating to
such Contract that shall be Liens prior to, or equal or
coordinate with, the security interest in such Equipment
granted by such Contract.
(k) As of the related Cut-Off Date, (A) such Contract is
not a Delinquent Contract; (B) the Company is not in the
process of terminating such Contract or repossessing the
Equipment subject thereto or making any plans for any such
termination or repossession; (C) no default, breach,
charge-off, violation or event permitting acceleration under
the terms of such Contract has occurred and is continuing, (D)
to the best of the Company's knowledge, the Customer is not
currently the subject of a bankruptcy proceeding, (E) no
continuing condition that with notice or the lapse of time
would constitute such a default, breach, violation
-9- Indenture
or event permitting acceleration under the terms of such
Contract has arisen; and neither the Company nor the Issuer
has waived any of the foregoing; and no Equipment shall have
been repossessed, (F) such Contract is not reflected on the
Company's or the Servicer's computer records as having been
referred to counsel and (G) such Contract is not a Defaulted
Contract.
(l) The Servicer, in accordance with its customary
procedures, has confirmed that at the time of origination or
acquisition of such Contract, the Equipment relating to such
Contract was covered by an Insurance Policy, insuring against
loss and damage due to fire, theft, collision and, in the case
of titled Equipment, against other risks generally covered by
liability coverage. The insurance coverage required by such
Contract is of a type customary for the leasing industry for
the type of Equipment covered and satisfies all minimum
liability coverage limits, if any, under applicable law. Such
Contract provides that the insurance required by such Contract
must name the Company and its successors and assigns as a loss
payee, and that the Customer will pay the premiums for such
insurance. Such insurance requires the related insurer to
notify the Company prior to cancellation of such insurance.
(m) The grant of a security interest in such Contract and
related Collateral pursuant to this Indenture constitutes a
valid pledge to the Trustee of the Issuer's right, title and
interest in and to such Contract and related Collateral, free
and clear of all Liens (other than Permitted Liens), and
constitutes the grant of a first priority perfected security
interest, in the Issuer's rights in such property. Neither
such Contract nor the Receivable relating thereto (nor any
interest of the Company or the Issuer in the related
Equipment) has been sold, transferred, assigned, or pledged by
the Company or the Issuer to any Person other than the
Trustee, except for grants of security interests that have
been released. Such Contract (or, if such Contract is a
Discount Contract, the related Discount Lease Interest) has
been contributed or sold by the Company to the Issuer pursuant
to the Acquisition Agreement. Immediately prior to the grant
of the security interest herein contemplated, the Issuer had
good and marketable title to such Contract (or, if such
Contract is a Discount Contract, the Issuer had good and
marketable title to the Discount Lease Interest related
thereto), and was the sole owner thereof, free and clear of
all Liens and, immediately upon such grant of a security
interest, the Trustee shall have a valid first priority
perfected security interest in such Contract, in each case
free and clear of all Liens.
(n) Such Contract has not been originated in any
jurisdiction under which the sale or other transfer or pledge
of such Contract or an interest therein to the Company or the
Issuer, or the pledge and grant of a security interest in such
Contract under the Indenture, is unlawful, void, or voidable,
or result in the Customer having the right to void or rescind
any of its material obligations under such Contract. None of
the Company, the Issuer or, to the knowledge of the Company
and the Issuer, the related Existing Broker has entered into
any agreement with respect to any Contract that prohibits,
restricts or conditions the assignment of any portion of such
Contract.
-10- Indenture
(o) Subject to the following sentence, all filings
(including, without limitation, UCC filings) necessary in any
jurisdiction to perfect the Trustee's interest in the rights
of the Issuer in the related Equipment have been filed in the
appropriate filing office and are in full force and effect,
except Equipment valued at less than fifteen thousand dollars
($15,000) and related to a Contract characterized by the
Company as a true lease. If the Equipment relating to such
Contract is titled, (A) the Company (or with respect to the
Discount Contracts, the related Existing Broker) shall have
initiated all applicable filings necessary to obtain an
original certificate of title on or before the Closing Date or
the related Funding Date, as applicable, and not later than
sixty (60) days after the Company originated or acquired such
Contract and (B) the Trustee shall have received the original
certificate of title reflecting the Trustee's Lien thereon
(or, in the case of a true lease, the Issuer's (or with
respect to the Discount Contracts, the related Existing
Broker's) ownership thereof and the Trustee's Lien thereon)
within one hundred eighty (180) days after the date such
Contract was, or is, sold to the Issuer, as applicable.
(p) The Company has delivered to the Trustee the complete
and correct Contract File with respect to such Contract. There
is only one manually executed original of such Contract. The
Servicer is in possession of complete servicing records with
respect to such Contract.
(q) Such Contract constitutes "chattel paper" under the
UCC.
(r) As of the related Cut-Off Date, there is no Lien
against the related Equipment for delinquent taxes.
(s) As of the related Cut-Off Date, the Customer on such
Contract was not noted in the related records of the Servicer
as having any other contract, lease, installment sales
contract or similar contract outstanding to the Company with
respect to which fifty percent (50%) or more of any scheduled
payment (aggregating together, for purposes of determining
such amount, all due and unpaid scheduled payments, or due and
unpaid portions of one or more scheduled payments) is more
than sixty (60) days past due. Such Customer has an address
in, and is domiciled in, the United States of America, such
Customer is not the Company, the Issuer or an Affiliate of the
Company or the Issuer. Without limiting the foregoing, neither
the Company nor any Affiliate of the Company has guaranteed
any obligations under such Contract. Such Customer is a
business that is not using the Equipment for personal
purposes. None of the Company, the Servicer or the Issuer has
knowledge that such Customer is a Person in the business of
selling equipment of the same type as the Equipment subject to
such Contract. As of the related Cut-Off Date, if such
Customer has been in business for less than two years, then
the sum of the Implicit Principal Balance of such Contract
plus the Implicit Principal Balances of Contracts with respect
to all other Customers that have been in business for less
than two years does not exceed twenty-five percent (25%) of
the Aggregate IPB.
-11- Indenture
(t) Such Contract at origination had a final Scheduled
Payment date which was not sooner than twelve (12) months nor
later than sixty-five (65) months after origination of such
Contract.
(u) Such Contract relates to Equipment having an initial
cost of not more than one hundred twenty five thousand dollars
($125,000).
(v) The Customer of such Contract has been approved by
the Company in the ordinary course of its business based on
the Underwriting Guidelines, and such Contract satisfies all
applicable requirements of the Underwriting Guidelines, with
such occasional exceptions as may be customary in the industry
and in the ordinary course in the Company's business that do
not result in a material adverse effect on the value or the
collectibility of such Contract. The origination and
collection practices used by the Company with respect to such
Contract have been in all respects legal and in all material
respects in accordance with the Underwriting Guidelines and
the Collection Guidelines.
(w) The transfer from an Existing Broker to the Company,
and the transfer, assignment and contributions to the Issuer
of such Contract and the Company's right, title and interest
in and to any item of related Equipment, and the pledge by the
Issuer to the Trustee of the Issuer's rights in such Contract
and Equipment, do not violate the terms or provisions of such
Contract or any other agreement to which the Company then is a
party or by which it is bound.
(x) At the time that any item of the related Equipment
was assigned, transferred and contributed pursuant to the
terms of the Acquisition Agreement, the Company had no
knowledge that such Equipment has suffered any loss or damage
except for such Equipment that has been restored to its
original value, ordinary wear and tear excepted, and such
Contract requires the Customer thereunder to maintain
insurance on the Equipment subject thereto in an amount at
least equal to the replacement value thereof.
(y) Such Contract has been entered into or purchased by
the Company in the ordinary course of its business in
accordance with the Company's regular credit approval process
and does not contravene any laws, rules or regulations
applicable thereto or any contract between the Company and the
Issuer. Such Contract has not been knowingly selected on any
basis which would have any adverse effect on the Issuer, the
Noteholders or the Note Insurer.
(z) As of the applicable Cut-Off Date, (i) the sum of the
Implicit Principal Balance of such Contract plus the Implicit
Principal Balances of all other Contracts for which the
related Customer has a billing address in the same state will
not exceed ten percent (10%) (or twenty five percent (25%) in
the case of California) of the Aggregate IPB; provided,
however, if the related Equipment for such Contract is
vehicles or trailers, such Customer shall not have a billing
address in the States of Connecticut, Pennsylvania, New
Jersey, New York or Rhode Island; (ii) the sum of the Implicit
Principal Balance of such Contract plus the Implicit Principal
Balances of all other Contracts with respect to which the
related Equipment is a single equipment type shall not exceed
ten percent (10%) of the Aggregate IPB, provided, however,
that the sum of the Implicit Principal
-12- Indenture
Balance of such Contract plus the Implicit Principal Balances
of the Contracts for which the related Equipment is vehicles
or trailers (which is considered one equipment type),
industrial, restaurant, health and beauty or computer systems
shall not exceed fifteen percent (15%), eleven percent (11%),
eleven percent (11%), eleven percent (11%) or eleven percent
(11%), respectively, of the Aggregate IPB; (iii) the sum of
the Implicit Principal Balance of such Contract plus the
Implicit Principal Balances of all other Contracts that were
originated by the same broker will not exceed five percent
(5%) of the Aggregate IPB, except for the top broker which may
account for no more than ten percent (10%) of the Aggregate
IPB; (iv) if such Contract was originated by a broker, such
broker had been doing business with the Company for no less
than three months prior to the date on which the Company
acquired such Contract; (v) (A) if such Contract is a Discount
Contract, the sum of the Implicit Principal Balance of such
Contract plus the Implicit Principal Balances of all other
Discount Contracts will not exceed five and fifteen one
hundredths of one percent (5.15%) of the Aggregate IPB and (B)
if such Contract is a Discount Contract originated by Balboa
Capital Corporation, the sum of the Implicit Principal Balance
of such Contract plus the Implicit Principal Balances of all
other Discount Contracts originated by Balboa Capital
Corporation will not exceed three and seventy five one
hundredths of one percent (3.75%) of the Aggregate IPB and
(vi) if such Contract was originated by a broker, such
Contract was purchased by the Company as a result of arm's
length negotiations and there exists no broker recourse and no
vendor recourse against the Company in connection with such
purchase.
(aa) The obligation of the related Customer to make
Scheduled Payments under such Contract throughout the term
thereof is absolute and unconditional, without any right of
setoff by such Customer and without regard to any event
affecting the Equipment subject thereto, the obsolescence of
such Equipment, any claim of such Customer against the Issuer,
the Company or the Servicer or any change in circumstances of
such Customer or any other circumstances whatsoever except to
the extent that, in the event of a casualty of any item of
Equipment relating to such Contract or early termination of
such Contract, the related Customer is obligated to pay, in
lieu of all future Scheduled Payments with respect to such
item, an amount which equals the amount required to be prepaid
with respect to such Contract. Such Contract requires that the
Customer shall, at the Customer's sole cost and expense and in
addition to the Scheduled Payments due under such Contract or
schedule thereto, promptly pay all taxes, and all other
governmental charges, as applicable, whether levied, assessed
or imposed on the Customer, the Company, the Issuer, the
related Equipment or otherwise, relating to such Equipment or
the delivery, leasing, operations, ownership, possession,
purchase, xxxxxxxxxxxx, xxxxxx, sales or use thereof during
the term of such Contract or schedule thereto, or the interest
of the Customer in such Equipment or under such Contract or
schedule thereto, or the rental or other payments thereunder
or earnings arising therefrom (excepting only taxes on the
Company's or the Issuer's net income). Such Contract is
noncancelable by the Customer during the term of such
Contract. The Company has no knowledge that the obligations of
any Customer under such Contract will not be paid in full.
-13- Indenture
(bb) Such Contract does not consist of, and is not subject
to, a master lease.
(cc) Such Contract provides that the Company has no
obligation to assemble, install, test, adjust or service the
Equipment related to such Contract. Such Contract provides
that the Customer, at its sole expense, at all times during
the term of such Contract and until return of the related
Equipment, will maintain such Equipment in good operating
order, repair, condition and appearance and protect such
Equipment from deterioration and provide all accessories,
upgrades, repairs, replacement parts and service required
therefor.
(dd) To the knowledge of the Issuer, the Company and the
Servicer, no item of Equipment relating to such Contract has
been relocated from the jurisdiction set forth in such
Contract or, if the Issuer has knowledge of any such
relocation, all UCC filings, if any, necessary to continue the
first priority perfected security interest in such Equipment
have been made (except that with respect to Equipment valued
at less than fifteen thousand dollars ($15,000) and related to
a Contract characterized by the Company as a true lease, such
security interest is not perfected). Each item of Equipment
relating to such Contract is located in the United States.
(ee) The Company has duly performed all material
obligations on its part required to be performed by it under
or in connection with such Contract, including, without
limitation, giving any notices or consents necessary to effect
the sale, contribution, assignment, transfer and conveyance of
such Contract from the Company to the Issuer and has done
nothing to materially impair the rights of the Issuer, the
Trustee, the Noteholders or the Note Insurer in such Contract
or the payments due thereunder.
(ff) As of the related Cut-Off Date, the sum of the
Implicit Principal Balance of such Contract plus the Implicit
Principal Balances of all other Contracts with respect to the
same Customer (including any Affiliate or related party of
such Customer) does not exceed one percent (1%) of the
Aggregate IPB.
(gg) The parties to such Contract (other than Discount
Contracts) are the Company (either expressly or by assignment)
and the Customer of the related Equipment.
(hh) The Company has not taken any action to convey to any
Person (other than the Issuer) any right to payments received
under such Contract, the related Insurance Policy, the
Company's interest in the related Equipment, or any other
related property conveyed by the Company pursuant to the
Acquisition Agreement and the Issuer has all of the right,
title and interest in and to such Contract and such Equipment
previously held by the Company free and clear of all liens and
encumbrances and any interest of the Company or its
successors, except for the lien of the Trustee. The Issuer has
the right under such Contract to exercise appropriate remedies
with respect to the related Equipment without obtaining the
consent of any third parties.
(ii) The Company and the Servicer have caused their
respective records to be marked to reflect the transfer of
such Contract to the Issuer.
-14- Indenture
(jj) Such Contract is net to the lessor of any
maintenance, taxes, insurance or other expenses and contains
provisions requiring such Customer to assume all risk of loss
or malfunction of the related Equipment.
(kk) Such Contract is identical in form to one of the
forms of Contracts provided to the Note Insurer and the
Initial Purchaser prior to the Closing Date, except for
modifications or deviations from such forms of Contracts which
will not have a material adverse effect on any of the
Noteholders or the Note Insurer.
(ll) Such Contract obligates the related Customer to make
all Scheduled Payments thereunder in full notwithstanding the
collection by the lessor of a security deposit with respect
thereto.
(mm) The Company (or with respect to the Discount
Contracts, the related Existing Broker) has duly fulfilled all
obligations on the lessor's part to be fulfilled under or in
connection with the origination, acquisition and assignment of
such Contract and the Company's interest in the related
Equipment, including, without limitation, giving any required
notices or consents.
(nn) Either the Company or an Existing Broker purchased
each item of related Equipment from either (1) the
manufacturer or other supplier following receipt of an invoice
from such manufacturer or supplier, or (2) a Customer
following confirmation that such item of Equipment was on such
Customer's premises. Prior to the time of the grant to the
Trustee of a security interest in respect of the related
Contract, the manufacturer, lessor or supplier or Customer, as
the case may be, shall have received in full the purchase
price and any related charges in connection with the
acquisition of such Equipment.
(oo) The sale, transfer, assignment and conveyance of such
Contract and related items pursuant to the Acquisition
Agreement are not subject to and did not result in any
transfer taxes other than transfer taxes which have been paid.
(pp) Such Contract is not a "consumer credit contract" or
a "purchase money loan" as such terms are defined in 6 C.F.R.
Section 433.1.
(qq) Such Contract is assignable without the consent of
the related Customer.
(rr) The Issuer has a clear legal right of repossession
with respect to the Equipment relating to such Contract.
(ss) Such Contract was originated on or after December 1,
2001.
(tt) Neither the Company nor the Issuer has established
any specific credit reserve for the Customer under such
Contract in anticipation of any negative credit event expected
in connection with such Contract.
"Eligible Investments": Any and all of the following:
(a) direct non-callable obligations of, and non-callable
obligations fully guaranteed by, the United States of America, or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America;
-15- Indenture
(b) demand and time deposits in, certificates of deposits of, and
bankers' acceptances issued by, any depository institution or trust company
(including the Trustee acting in its commercial capacity) incorporated under the
laws of the United States of America or any state thereof, having a combined
capital and surplus of at least $100,000,000, and subject to supervision and
examination by federal and/or state banking authorities, so long as at the time
of such investment or contractual commitment providing for such investment the
unsecured commercial paper or other unsecured short-term debt obligations of
such depository institution or trust company (or, in the case of a depository
institution that is the principal subsidiary of a holding company, the unsecured
commercial paper or other unsecured short-term debt obligations of such holding
company) have the highest short-term credit ratings available from each Rating
Agency;
(c) commercial paper (including both non-interest bearing discount
obligations and interest-bearing obligations) payable on demand or on a
specified date not more than one year after the date of issuance thereof having
the highest unsecured short-term credit ratings from each Rating Agency, at the
time of such investment; and
(d) money market funds (which may be sponsored by the Trustee or
any of its Affiliates) that redeem their shares on demand, invest only in other
Eligible Investments, have ratings in the highest available ratings category of
each Rating Agency and, other than investments in the "Xxxxx Fargo Prime
Investment Money Market Fund", have been approved by the Note Insurer.
The Trustee may purchase from or sell to itself or an affiliate on arm's-length
terms, as principal or agent, the Eligible Investments listed above. All
Eligible Investments shall be made in the name of the Trustee for the benefit of
the Noteholders and the Note Insurer and shall mature prior to each Payment
Date.
"Equipment": The equipment and/or each vehicle leased or sold to, or
financed by, a Customer pursuant to a Contract or securing the obligations of a
Customer under a Contract, together with any replacement parts, additions and
repairs thereof, and any accessories incorporated therein and/or affixed
thereto.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended or any successor statute thereto.
"ERISA Plan": The meaning specified in Section 2.06(b) hereof.
"Errors": The meaning specified in Section 5.02(d) of the Servicing
Agreement.
"Event of Default": The meaning specified in Section 6.01 hereof.
"Existing Broker": A broker or originator of Contracts that originated
one or more of the Contracts pledged to the Trustee pursuant to this Indenture,
which broker or originator is not the Company, the Issuer or an Affiliate of the
Company or the Issuer.
"Final Due Date": With respect to each Contract, the final Due Date
thereunder.
-16- Indenture
"Final Payment Date": With respect to any Note, the date on which the
final principal payment on such Note is made as therein or herein provided,
whether at the Stated Maturity Date, or by acceleration or redemption.
"Funding": The withdrawal of funds from the Prefunding Account pursuant
to Section 12.04 hereof in connection with the Issuer's acquisition of
additional Contracts.
"Funding Date": During the Funding Period, each Payment Date on which
Contracts are transferred to the Issuer in connection with a Funding after the
Closing Date.
"Funding Date Reserve Account Deposit Amount": With respect to a
Funding, one percent (1%) of the Funding IPB of the Contracts being acquired by
the Issuer on the related Funding Date.
"Funding IPB": The sum of the Implicit Principal Balances of the
Contracts being acquired by the Issuer in connection with a Funding, measured as
of the related Calculation Date.
"Funding Period": The period beginning on the Closing Date to and
including the earlier of (a) the occurrence of any Trigger Event and (b) the
October 15, 2003 Payment Date.
"Funding Report": A report substantially in the form of Exhibit 3.01
hereto.
"Gross Balance": As of any date with respect to a Contract, the then
remaining aggregate Scheduled Payments to be made by the Customer under such
Contract; provided that the Gross Balance of any Defaulted Contract shall be
deemed to be zero, except as provided in the definition of Current Lease
Balance.
"Guaranty Amounts": Any and all amounts paid by any guarantor obligated
under the applicable Contract.
"Holder": The Person in whose name a Note is registered in the Note
Register.
"Implicit Principal Balance": As of any Calculation Date, with respect
to any Contract, the present value of the remaining stream of Scheduled Payments
due with respect to such Contract after such Calculation Date, and calculated by
discounting such Scheduled Payments (assuming each Scheduled Payment is received
on the last day of its related Due Period) to such Calculation Date at an annual
rate equal to the Discount Rate, compounded monthly; provided, however, that
immediately following the deposit into the Distribution Account of the Purchase
Price in respect of a Contract, the Implicit Principal Balance of such Contract
shall be deemed to be zero; provided further that with respect to any Contract
that has become a Defaulted Contract, the Implicit Principal Balance of such
Contract shall be deemed to be zero; provided further that such deemed reduction
to zero of the Implicit Principal Balance of a Contract pursuant to the
immediately preceding proviso (x) shall not constitute a release by the Trustee
of its security interest in such Contract and (y) shall be ignored in connection
with the calculation of any Purchase Price. The calculation of the Implicit
Principal Balance of each Contract does not include any security deposits or
advance payments collected by or on behalf of the lessor or Scheduled Payments
due after the Stated Maturity Date.
-17- Indenture
"Indemnification Agreement": The Indemnification Agreement, dated as of
July 14, 2003 among the Issuer, the Note Insurer, the Initial Purchaser and
WestLB Panmure Securities Inc.
"Indenture": This Indenture in the form when originally executed and,
if from time to time further supplemented or amended by one or more amendments
hereto pursuant to the applicable provisions hereof, as so supplemented or
amended. All references in this Indenture to designated "Articles," "Sections,"
"Subsections" and other subdivisions are to the designated Articles, Sections,
Subsections and other subdivisions of this Indenture as originally executed, or
if amended or supplemented, as so amended and supplemented. The words "herein,"
"hereof," "hereunder", and other words of similar import when not related to a
specific subdivision of this Indenture, refer to this Indenture as a whole and
not to any particular Article, Section, Subsection or other subdivision of this
Indenture or any supplement or amendment hereto.
"Independent": When used with respect to any specified Person means
such a Person, who (a) is in fact independent of the Issuer, the Company and any
Affiliate of the Issuer or the Company, (b) does not have any direct financial
interest or any material indirect financial interest in the Issuer, the Company
or in any Affiliate of the Issuer or the Company and (c) is not connected with
the Issuer, the Company or any Affiliate of the Issuer or the Company as an
officer, employee, promoter, underwriter, trustee, partner, director, or person
performing similar functions. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such Person shall be appointed by an Issuer Order and approved by the Trustee in
the exercise of reasonable care, and such opinion or certificate shall state
that the signer has read this definition and that the signer is Independent
within the meaning hereof.
"Initial Aggregate IPB": As of any date of determination, an amount
equal to the Aggregate IPB as of the Initial Cut-Off Date plus the total Funding
IPB of all Contracts acquired by the Issuer during the Funding Period.
"Initial Cut-Off Date": May 31, 2003.
"Initial Negative Carry Account Deposit Amount": one hundred
twenty-five thousand seven hundred eighteen dollars and forty two cents
($125,718.42).
"Initial Prefunding Account Deposit Amount": thirteen million five
hundred fourteen thousand eight hundred eighty dollars and four cents
($13,514,880.04).
"Initial Purchaser": WestLB AG, London Branch.
"Initial Reserve Account Deposit Amount": One percent of the Aggregate
IPB as of the Initial Cut-Off Date.
"Insurance Agreement": The Insurance and Indemnity Agreement, dated as
of July 14, 2003, among the Note Insurer, the Company, and the Issuer, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"Insurance Agreement Indenture Cross Default": As defined in the
Insurance Agreement.
-18- Indenture
"Insurance Policy": With respect to an item of Equipment and a
Contract, any insurance policy maintained by the Customer pursuant to the
related Contract that covers physical damage to the Equipment or general
liability or both (including policies procured by the Company or the Servicer on
behalf of the Customer).
"Insurance Proceeds": With respect to an item of Equipment and a
Contract, any amount received pursuant to an Insurance Policy issued with
respect to such Equipment and the related Contract.
"Interest Accrual Period": With respect to a particular Payment Date,
the period from and including the immediately preceding Payment Date to but
excluding such particular Payment Date; provided that the first Interest Accrual
Period shall be the period from and including the Closing Date to but excluding
the first Payment Date occurring after the Closing Date.
"Interest Carryover Shortfall": With respect to any Payment Date
(commencing with the second Payment Date occurring after the Closing Date), the
excess, if any, of the Interest Distributable Amount for the preceding Payment
Date over the amount that was actually paid on such preceding Payment Date on
account of the Interest Distributable Amount.
"Interest Distributable Amount": With respect to any Payment Date, the
sum of the Monthly Interest Distribution Amount and the Interest Carryover
Shortfall, plus interest on the Interest Carryover Shortfall, to the extent
permitted by law, accrued at the Note Interest Rate during the related Interest
Accrual Period.
"Investment and Assumption Letter": The letter required to be delivered
by each transferee of a Definitive Note, as provided in Section 2.06 hereof,
substantially in the form of Exhibit 2.06(a) hereto.
"Issuer": Financial Pacific Funding II, LLC, and all successors thereto
in accordance with the terms hereof.
"Issuer Order" and "Issuer Request": A written order or request signed
in the name of the Issuer by its President or a Vice President, and delivered to
the Trustee.
"Lien": Any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing); except
that the interest of the Existing Broker in the Contract and the Equipment under
a Discount Contract shall be deemed not to be a Lien.
"Lockbox Account": The meaning specified in Section 4.02 of the
Servicing Agreement.
"Lockbox Agreement": The meaning specified in Section 4.02 of the
Servicing Agreement.
"Lockbox Bank": The meaning specified in Section 4.02 of the Servicing
Agreement.
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"Master Reserve Account Agreement": The Master Spread Account Agreement
dated as of July 14, 2003 among the Note Insurer, the Issuer and the Trustee.
"Material Adverse Effect": A material adverse effect on (a) the
Collateral, (b) the property, business, condition (financial or otherwise) or
prospects of the Company, the Servicer or the Issuer, (c) the ability of the
Company, the Servicer or the Issuer to perform its obligations under any
Transaction Documents to which it is a party, (d) the validity or enforceability
of any Transaction Document, (e) the rights or remedies of the Trustee, the Note
Insurer or the Noteholders under any Transaction Document, or (f) the
enforceability or collectibility of a material portion of the Contracts.
"Memorandum": The offering memorandum relating to the Notes dated July
9, 2003.
"Modification Ratio": The meaning specified in Section 3.02 of the
Servicing Agreement.
"Monthly Interest Distribution Amount": With respect to any Payment
Date, interest accrued during the related Interest Accrual Period at the Note
Interest Rate on the outstanding principal amount of the Notes as of the close
of business on the preceding Payment Date (or, in the case of the first Interest
Accrual Period, the outstanding principal amount of the Notes as of the Closing
Date).
"Monthly Servicer's Report": The report prepared by the Servicer
pursuant to Section 3.09 of the Servicing Agreement.
"Moody's": Xxxxx'x Investors Service, Inc., and its successors.
"Negative Carry Account": As defined in Section 12.05 hereof.
"Note" or "Notes": The Receivables-Backed Notes issued under the terms
of this Indenture.
"Noteholder": A Holder.
"Note Insurer": Financial Security Assurance Inc.
"Note Insurer Default": The meaning specified in the Insurance
Agreement.
"Note Interest Rate": two and twenty nine one hundredths of one percent
(2.29%) per annum.
"Note Purchase Agreement": The Note Purchase Agreement, dated July 9,
2003, among the Issuer, the Company, the Initial Purchaser and WestLB Panmure
Securities Inc.
"Note Register": The meaning specified in Section 2.05 hereof.
"Note Registrar": The meaning specified in Section 2.05 hereof.
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"Note Owner": With respect to a Book-Entry Note, the Person who is the
beneficial owner of such Book-Entry Note as reflected on the books of the
Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency Participant (directly or as an indirect participant, in
accordance with the rules of such Clearing Agency).
"Noteholder" or "Holder": The Person in whose name a Note is registered
in the Note Register.
"Notice of Claim": As defined in the Policy.
"NPA Ratio": With respect to a Due Period, the fraction, expressed as a
percentage, equal to (a) the Current Lease Balance of Contracts that became 90
days or more past due (without giving effect to any applicable grace periods) as
of the last day of such Due Period but have not been determined to be Defaulted
Contracts, divided by (b) the aggregate Gross Balance of all Contracts as of the
last day of such Due Period.
"Officer's Certificate": A certificate signed by any of the Chairman of
the Board, the Chief Executive Officer, the President, a Vice President, the
Treasurer, the Controller, an Assistant Controller or the Secretary of the
Person (or of a member of such Person, if such Person is a limited liability
company) on whose behalf the certificate is delivered, and delivered to the
Trustee and the Note Insurer, which certificate shall comply with the applicable
requirements of Section 13.13 hereof. Unless otherwise specified, any reference
in this Indenture to an Officer's Certificate shall be to an Officer's
Certificate of the Issuer (or of the sole member of the Issuer).
"Opinion of Counsel": A written opinion of outside counsel who shall be
reasonably satisfactory to the Trustee and the Note Insurer and which opinion
shall comply with the applicable requirements of Section 13.13 hereof.
"Outstanding": With respect to the Notes, as of any date of
determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(a) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation; and
(b) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to this Indenture,
unless proof satisfactory to the Trustee is presented that any such
Notes are held by a bona fide purchaser;
provided, however, that for purposes of determining whether the Holders of the
requisite outstanding principal amount of Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Issuer or any Affiliate of the Issuer shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent, or waiver, only Notes which the Trustee knows to be so owned
shall be so disregarded provided that to the extent that the Notes have been
paid in full with proceeds of the Policy, such Notes shall continue to remain
Outstanding until the Note Insurer has been paid as a subrogee and (without
duplication) has been paid all outstanding Premiums and any other
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amounts owing to the Note Insurer under the Insurance Agreement, and the Note
Insurer shall be deemed the Holder thereof, to the extent of any payments
thereon made by the Note Insurer;
"Participants": The participating organizations of DTC.
"Payment Date": The fifteenth day of each calendar month (or if such
day is not a Business Day, the next succeeding Business Day); provided that the
initial Payment Date after the Closing Date shall be July 15, 2003.
"Permitted Lien": Any tax lien (if such taxes are not at the time due
and payable) or non-material mechanics' lien on an item of Equipment provided
that such mechanics' lien does not extend to the related Contract.
"Person": Any individual, corporation, partnership, association,
joint-stock company, limited liability company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge and Collateral Agency Agreement": The Pledge and Collateral
Agency Agreement, dated as of July 14, 2003 among the Issuer, the Company, the
Note Insurer and the Trustee.
"Policy": The financial guaranty insurance policy issued by the Note
Insurer to the Trustee on behalf of the Noteholders.
"Policy Claim Amount": As defined in Section 8.04 hereof.
"Pool": The pool of Eligible Contracts funded on the Closing Date and
any Funding Date.
"Predecessor Servicer Work Product": The meaning specified in Section
5.02(d) of the Servicing Agreement.
"Preference Claim": As defined in Section 6.21(b) hereof.
"Prefunding Account": As defined in Section 12.04 hereof.
"Premium": As defined in the Insurance Agreement.
"Premium Letter": The Premium Letter, dated as of July 14, 2003 among
the Note Insurer, the Issuer, the Trustee and the Company.
"Premium Rate": As defined in the Insurance Agreement.
"Principal Distributable Amount": With respect to (i) any Payment Date
prior to the Stated Maturity Date, an amount equal to the positive difference,
if any, between (A) the aggregate principal amount of the Outstanding Notes as
of the Calculation Date preceding such Payment Date minus the amount then on
deposit in the Prefunding Account, and (B) the Aggregate IPB as of the
Calculation Date preceding such Payment Date minus the Required
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Overcollateralization Amount, and (ii) the Stated Maturity Date, the unpaid
principal amount of the Notes.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Purchase Price": With respect to any Contract repurchased by the
Company pursuant to Section 6.2 of the Acquisition Agreement or purchased by the
Servicer pursuant to Section 3.07 of the Servicing Agreement or removed from the
Lien of this Indenture by the Issuer pursuant to Section 4.04 or 4.05 hereof,
the sum of (a) the Implicit Principal Balance of the related Receivable on the
Calculation Date on or immediately preceding the date when the Contract is
removed or repurchased and (b) any Scheduled Payments with respect to the
Contract due on or prior to such Calculation Date but not received prior to the
date of such repurchase or removal.
"QIB" or "Qualified Institutional Buyer": Qualified institutional
buyer, as defined in Rule 144A.
"Rating Agency Condition": With respect to any action, that each Rating
Agency (other than Moody's) shall have given its written approval that the
contemplated action will not result in a reduction or withdrawal of the then
current rating of the Notes and, with respect to Moody's, ten (10) Business Days
(or such shorter time period as agreed upon by Moody's) prior written notice to
Moody's and Moody's shall not have notified the Issuer within ten (10) Business
Days (or such shorter time period as agreed upon by Moody's) that such action
will result in a downgrade of the then current rating on the Notes.
"Rating Agencies": Moody's and S&P.
"Receivables": With respect to any Contract, all of, and the right to
receive all of, (a) the Scheduled Payments, (b) any prepayments made with
respect to such Contract, (c) any Guaranty Amounts, (d) any Insurance Proceeds,
(e) any Residual Proceeds, (f) any Recoveries and (g) any administrative fees or
similar charges collected on such Contract including, but not limited to, late
fees, prepayment charges, collection fees and bounced check charges; provided
that Receivables shall not include any of, or the right to receive any of, the
Servicing Charges.
"Record Date": With respect to any Payment Date, the close of business
on the last day of the related Interest Accrual Period.
"Recoveries": With respect to a Defaulted Contract, the monies
collected or applied from whatever source, including Customer deposits, if any,
after the respective Due Period in which a Contract became a Defaulted Contract,
on such Defaulted Contract, net of (a) the reasonable costs of liquidation
(including without limitation reasonable repossession and disposition costs and
expenses), and (b) any amounts required by law to be remitted to the applicable
Customer; provided, however, that the Recoveries for any Contract shall not be
less than zero.
"Redemption Account": As defined in Section 12.02(e) hereof.
"Redemption Date": A date fixed pursuant to Section 10.01 hereof.
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"Redemption Price": With respect to the Notes, and as of any related
Redemption Date, the aggregate principal amount of Outstanding Notes, together
with interest accrued and unpaid thereon to but excluding the related Redemption
Date at the related Note Interest Rate and any other amounts due and owing under
the Transaction Documents.
"Redemption Record Date": With respect to any redemption of any Note, a
date fixed pursuant to Section 10.01 hereof.
"Registered Holder": The Person whose name appears on the Note Register
on the applicable Record Date or Redemption Record Date.
"Reinvestment Income": Any interest or other earnings earned on all or
part of the Collateral.
"Required Negative Carry Account Balance": As of any date of
determination, an amount equal to the product of (A) the difference between the
Discount Rate minus an assumed yield on eligible investments in the Prefunding
Account of three quarters of one percent (0.75%) per annum times (B) the amount
then on deposit in the Prefunding Account times (C) the maximum number of days
remaining in the Funding Period divided by 360.
"Required Overcollateralization Amount": With respect to any Payment
Date, the greater of (a) thirty percent (30.0%) of the Aggregate IPB as of the
Calculation Date preceding such Payment Date and (b) five and three quarters
percent (5.75%) of the Initial Aggregate IPB.
"Required Reserve Account Balance": The "Requisite Amount" as defined
in the Master Reserve Account Agreement.
"Reserve Account": As defined in Section 12.03 hereof.
"Reserve Account Draw Amount": With respect to any Determination Date,
the excess, if any, of (a) the sum of the amounts payable pursuant to clauses
(i) through (vi) of Section 12.02(d), over (b) the amount of Available Funds
(excluding amounts to be transferred from the Reserve Account) available in the
Distribution Account to pay such amounts with respect to such Determination
Date.
"Residual Proceeds": With respect to a Contract that is not a Defaulted
Contract and the related Equipment, the net proceeds (including any Insurance
Proceeds) of any sale, rent streams to be received for a re-lease (including any
lease renewal) or other disposition of such Equipment.
"Responsible Officer": When used with respect to the Trustee, any
officer assigned to the Corporate Trust Department (or any successor thereto),
including any Vice President, Senior Trust Officer, Trust Officer, Assistant
Trust Officer, any Assistant Secretary, any Trust Officer or any other Officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and having direct responsibility for the
administration of this Indenture, and also, with respect to a particular matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
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"Revenue Tax Account": As defined under Section 12.06 hereof.
"Rule 144A": Rule 144A promulgated under the 1933 Act.
"S&P": Standard & Poor's Rating Services, a division of The XxXxxx-Xxxx
Companies, Inc., and its successors.
"Scheduled Payment": With respect to a Contract, the periodic payment
(exclusive of any amounts in respect of insurance, maintenance and taxes) set
forth in such Contract due from the Customer in the related Due Period. With
respect to any Payment Date, Scheduled Payment means, where applicable,
Scheduled Payments due in the related Due Period.
"Scheduled Policy Payment": "Scheduled Payments" as defined under the
Policy.
"Servicer": Initially, the Company, and thereafter any successor
Servicer appointed pursuant to Section 5.02 of the Servicing Agreement.
"Servicer Event of Default": The meaning specified in Section 5.01 of
the Servicing Agreement.
"Servicer Extension Notice": The meaning specified in Section 5.03 of
the Servicing Agreement.
"Servicer Fee": The meaning specified in Section 3.08 of the Servicing
Agreement.
"Servicer Fee Rate": One and fifteen one hundredths percent (1.15%) per
annum.
"Servicing Agreement": The Servicing Agreement, dated as of July 14,
2003, by and among the Servicer, the Issuer, the Back-up Servicer and the
Trustee, as amended or supplemented from time to time in accordance with the
terms thereof.
"Servicing Charges": The sum of (a) the costs and expenses of the
Servicer incurred in connection with the repossession and disposition of
Equipment, (b) payments by Customers of premiums on insurance, (c) payments of
taxes by Customers and (d) any security deposits paid by any Customer.
"Servicing Officers": The Persons listed on a certificate of the
Servicer from time to time delivered by the Servicer to the Issuer and the
Trustee.
"Stated Maturity Date": The Payment Date in October 2009.
"Supplemental Grant of Contracts": Any Supplemental Grant of Contracts
in substantially the form attached as Exhibit 4.02 hereto delivered by the
Issuer on any Funding Date.
"Tangible Net Worth": With respect to any Person on any date of
determination, the excess, if any, of:
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(a) the tangible assets of such Person and its Affiliates
calculated in accordance with generally accepted accounting principles;
provided, however, that : (A) in no event shall there be included in
the above calculation trade names, copyrights, licenses, goodwill,
organizational costs, advances or loans to, or receivables from,
directors, officers, employees or affiliates (excluding amounts, if
any, owing to the initial Servicer by Financial Pacific Company arising
from the formation of the initial Servicer), amounts relating to
covenants not to compete, pension assets, deferred charges (excluding
unamortized lease origination costs and debt acquisition costs), or
treasury stock or any securities unless the same are readily marketable
in the United States of America or entitled to be used as a credit
against federal income tax liabilities; (B) securities included in such
tangible assets shall be taken into account at their current market
price or cost, whichever is lower; and (C) any write-up in the book
value of any assets (other than market value adjustments of derivative
financial instruments, if any) shall not be taken into account; over
(b) all indebtedness, including subordinated debt, of
such Person and its subsidiaries and Affiliates (it being understood
that preferred stock shall not be considered to be indebtedness for
purposes of this clause (b)).
"Transaction Documents": This Indenture, the Servicing Agreement, the
Insurance Agreement, the Policy, the Acquisition Agreement, each Assignment, the
Note Purchase Agreement, each Lockbox Agreement, the Notes, the Indemnification
Agreement, the Pledge and Collateral Agency Agreement, the Premium Letter and
the Master Reserve Account Agreement.
"Transition Expenses": The amount, if any, of expenses payable to the
successor Servicer incurred in connection with the assumption of
responsibilities of the Servicer, including, without limitation, the cost of
transferring or licensing to the successor Servicer of a license to use
servicing software.
"Trigger Event": The occurrence of any one or more of the following
events (unless waived in writing by the Controlling Party by notice delivered to
the Trustee):
(a) the three month rolling simple average 31 to 60 Day
Delinquency Ratio exceeds the percentage specified for such period in
the Delinquency Matrix included in Schedule 1.01 hereto;
(b) the three month rolling simple average 61 to 90 Day
Delinquency Ratio exceeds the percentage specified for such period in
the Delinquency Matrix included in Schedule 1.01 hereto;
(c) the three month rolling simple average NPA Ratio
exceeds the percentage specified for such period in the Delinquency
Matrix included in Schedule 1.01 hereto;
(d) the Cumulative Net Default Rate as of any Calculation
Date is equal to or greater than the percentage specified for such
period in the Default Matrix included in Schedule 1.01 hereto;
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(e) the Cumulative Gross Default Rate as of any
Calculation Date is equal to or greater than the percentage specified
for such period in the Default Matrix included in Schedule 1.01 hereto;
or
(f) the occurrence of a Servicer Event of Default or an
Event of Default.
"Trustee": Xxxxx Fargo Bank Minnesota, National Association, until a
successor Person shall have become the Trustee pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean such successor
Person.
"Trustee Fee": The fee payable on each Payment Date to the Trustee in
consideration for the Trustee's performance of its duties pursuant to this
Indenture and the other Transaction Documents as Trustee, in an amount equal to
the greater of (a) the product of one-twelfth of the Back-up Servicer and
Trustee Fee Rate multiplied by the aggregate principal amount of Outstanding
Notes on the preceding Payment Date after giving effect to distributions on such
date (or, in the case of the first Payment Date after the Closing Date, $2,000)
or (b) $2,000.
"UCC": The Uniform Commercial Code as in effect in the applicable
jurisdiction.
"Underwriting Guidelines": The credit approval guidelines used by the
Company in the origination or purchase of contracts, leases, installment sales
contracts and other contracts, including the Contracts.
"Vice President": With respect to a Person (or with respect to a member
of such Person, if such Person is a limited liability company), any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president."
"WestLB": WestLB AG, London Branch, a joint stock company organized
under the laws of Germany, and its successors and assigns.
ARTICLE 2
NOTES
Section 2.01. Form Generally. The Notes shall be in substantially the
form set forth in Exhibit 2.01 hereto, in each case 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.
The definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any manner acceptable to the Trustee and the Initial Purchaser, all as
determined by the officers executing such Notes, as evidenced by their execution
of such Notes.
Section 2.02. Denomination. (a) This Indenture provides for the
issuance by the Issuer of the Notes, all subject to and in accordance with the
terms of this Indenture.
-27- Indenture
(b) On the Closing Date, the Issuer shall issue the Notes in the
aggregate principal amount of seventy million dollars ($70,000,000). The Notes
shall bear interest at a rate equal to the Note Interest Rate. The aggregate
principal amount of the Notes which may be authenticated and delivered under
this Indenture shall be equal to the dollar amount specified in the first
sentence of this paragraph, except for Notes authenticated and delivered upon
registration of transfer or in exchange for or in lieu of other Notes pursuant
to Sections 2.05, 2.07, 2.14 or 9.05 hereof. The Notes shall be issuable only as
registered Notes without coupons in denominations of at least two hundred fifty
thousand dollars ($250,000) and any amount in excess thereof; provided, however,
that the foregoing shall not restrict or prevent the transfer of any such Note
with a remaining aggregate principal amount outstanding of less than two hundred
fifty thousand dollars ($250,000) in accordance with Sections 2.05, 2.06, 2.07
and 2.14 hereof.
Section 2.03. Execution, Delivery and Dating. The Notes shall be
executed on behalf of the Issuer by an officer of the Issuer or of the sole
member of the Issuer. Such signature on the Notes must be manual.
Notes bearing the manual signatures of individuals who were at the time
when such signatures were affixed, authorized to sign on behalf of the Issuer
(or its sole member) shall be valid, binding obligations, notwithstanding that
such individuals or any of them have ceased to be so authorized prior to the
delivery of such Notes or did not hold such offices at the date of delivery of
such Notes.
Each Note shall bear on its face the Closing Date and be dated as of
the date on which it is signed.
Section 2.04. [Reserved].
Section 2.05. Registration, Registration of Transfer and Exchange. (a)
The Trustee (the "Note Registrar") shall cause to be kept at its Corporate Trust
Office a register (the "Note Register"), in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the registration
of Notes and the registration of transfers of Notes.
(b) Only upon surrender for registration of transfer of any Note
at the Corporate Trust Office and subject to the conditions set forth in Section
2.06 hereof, an officer of the Issuer (or an officer of the sole member of the
Issuer on behalf of the Issuer) shall execute, and the Issuer or its agent (or
the Trustee or its agent) shall deliver, in the name of the designated
transferee or transferees, one or more new Notes of any authorized
denominations, and of a like aggregate principal amount and Stated Maturity
Date.
(c) At the option of the Holder, a Note may be exchanged for other
Notes of any authorized denominations and of a like aggregate principal amount
and Stated Maturity Date, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange, an officer
of the Issuer (or an officer of the sole member of the Issuer on behalf of the
Issuer) shall execute, and the Issuer or its agent (or the Trustee or its agent)
shall deliver, the Notes which the Noteholder making the exchange is entitled to
receive.
(d) All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt
and entitled to the same benefits
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under this Indenture, as the Notes surrendered upon such registration of such
transfer or exchange.
(e) Every Note presented or surrendered for registration of
transfer or exchange shall (if so required by the Trustee) be duly endorsed or
be accompanied by a written instrument of transfer in form reasonably
satisfactory to the Trustee duly executed, by the Holder thereof or his attorney
duly authorized in writing.
(f) No service charge shall be made to a Holder for any
registration of transfer or exchange of Notes, but the Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 9.05 hereof not involving any
registration of transfer.
Section 2.06. Limitation on Transfer and Exchange. (a) The Notes have
not been registered or qualified under the 1933 Act or the securities laws of
any state or other jurisdiction. The restrictions set forth in this Section 2.06
shall apply to transfers of the Notes. Beneficial interests in the Notes may be
transferred only (x) to a Person whom the transferor reasonably believes is a
QIB in a transaction meeting the requirements of Rule 144A under the 1933 Act
and whom the transferor has notified that it may be relying on the exemption
from the registration requirements of the 1933 Act provided by Rule 144A of the
1933 Act, or (y) in a transaction otherwise exempt from the registration
requirements of the 1933 Act (and based on an opinion of counsel to such effect
if the Issuer or the Trustee so requests), in each case in compliance with the
Indenture and all applicable securities laws of any State of the United States
or any other applicable jurisdiction. Each transferee of a beneficial interest
in a Book-Entry Note shall be deemed to have made the acknowledgements,
representations and agreements set forth in subsection (d) hereof. Each
transferee of a beneficial interest in a Definitive Note shall either (i)
deliver to the Trustee an Investment and Assumption Letter in the form attached
hereto as Exhibit 2.06(a) or (ii) deliver to the Trustee an Opinion of Counsel
that the transfer is exempt from the 1933 Act (which opinion shall not be at the
expense of the Issuer, the Trustee, the Servicer or the Issuer, and which may be
an opinion of in-house counsel to the transferor or the transferee of the Note).
Neither the Issuer nor the Trustee is obligated to register or qualify the Notes
under the 1933 Act or any other securities law. Any such Holder desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee and
the Issuer against any liability, cost or expense (including attorneys' fees)
that may result if the transfer is not so exempt or is not made in accordance
with such federal and state laws. The Trustee shall promptly, after receipt of
such information as is set forth in the next succeeding sentence, furnish to any
Holder, or any prospective transferee designated by a Holder, the information
required to be delivered to Holders and prospective transferees of Notes in
connection with resales of the Notes to permit compliance with Rule 144A of the
1933 Act in connection with such resales. Such information shall be provided to
the Trustee by the Issuer.
(b) By its acceptance of a beneficial interest in a Note, each
Noteholder and Note Owner shall be deemed to have represented and warranted
that: either (A) it is not acquiring the Note with plan assets of an "employee
benefit plan" as defined in Section 3(3) of ERISA, which is subject to Title I
of ERISA, a "plan" as defined in Section 4975 of the Code, an entity deemed to
hold the plan assets of any of the foregoing by reason of investment by an
employee benefit
-29- Indenture
plan or plan in such entity, or a governmental plan subject to applicable law
that is substantially similar to the fiduciary responsibility provisions of
ERISA or Section 4975 of the Code (each such entity an "ERISA Plan") or (B) its
acquisition and holding of the Note will not give rise to a non-exempt
prohibited transaction under Section 406(a) of ERISA or Section 4975 of the
Code.
(c) The Trustee shall have no liability to the Issuer or any
Noteholder arising from a transfer of any such Note in accordance with this
Section 2.06.
(d) Each transferee of a beneficial interest in a Book-Entry Note
shall be deemed to have represented and warranted to and agreed with the Issuer,
the Trustee and the Servicer as follows:
(1) It is purchasing the Notes for its own account or an
account with respect to which it exercises sole investment discretion
and it or such account is a QIB and is aware that the sale to it is
being made in reliance on Rule 144A and is acquiring such Notes for
investment and not with a view to, or for offer or sale in connection
with, any distribution (within the meaning of the 1933 Act,) or
fractionalization thereof or with any intention of reselling the Notes
or any part thereof, subject to any requirement of law that the
disposition of its property or the property of such account or accounts
be at all times within its or their control and subject to its or their
ability to resell such Notes pursuant to Rule 144A.
(2) It acknowledges that the Notes have not been and will
not be registered under the 1933 Act and may not be sold within the
United States or to, or for the account or benefit of, U.S. persons
except as permitted below.
(3) It agrees that if it should reoffer, resell, pledge
or otherwise transfer its Note, (a) it will do so in compliance with
any applicable state securities or "Blue Sky" laws and only (A) to the
Issuer or (B) in compliance with Rule 144A, and only if a letter in the
form of Exhibit 2.06(a) hereof is delivered by the transferee to the
Trustee, and (b) it will give the transferee notice of any restrictions
on resale of such Note.
(4) It understands that the Notes, unless otherwise
agreed by the Issuer and the Holder thereof, will bear a legend to the
following effect:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR
THE BENEFIT OF THE ISSUER THAT THIS NOTE MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED OTHER THAN IN COMPLIANCE WITH
THE SECURITIES ACT AND OTHER APPLICABLE LAWS (1) TO FINANCIAL
PACIFIC FUNDING II, LLC ("FINANCIAL PACIFIC") OR ANY OF ITS
AFFILIATES OR (2) PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT TO AN INSTITUTIONAL INVESTOR THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE
MEANING OF RULE 144A, OR PURCHASING FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER WHOM THE HOLDER HAS INFORMED, IN
EACH CASE, THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, AND UPON THE RECEIPT BY THE
ISSUER OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE ISSUER THAT
SUCH RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS.
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(5) It has received the information, if any, requested by
it pursuant to Rule 144A, has had full opportunity to review such
information and has received all additional information necessary to
verify such information.
(6) It (i) has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and
risks of its investment in the Notes, and (ii) has the ability to bear
the economic risks of its prospective investment and can afford the
complete loss of such investment. and
(7) It understands that the Issuer, the Initial Purchaser
and others will rely upon the truth and accuracy of the foregoing
acknowledgments, representations and agreements and agrees that if any
of the foregoing acknowledgments, representations or agreements deemed
to have been made by it are no longer accurate, it will promptly notify
the Issuer and the Initial Purchaser. If it is acquiring any Notes as a
fiduciary or agent for one or more investor accounts, it represents
that it has sole investment discretion with respect to each such
account and it has full power to make the foregoing acknowledgments,
representations and agreements on behalf of such account.
(e) Notwithstanding anything in this Indenture to the contrary, no
ownership interest in any Note shall be issued, sold, transferred, listed or
otherwise exchanged at any time on an established securities market, including,
(A) a national securities exchange registered under the Exchange Act or exempted
from registration because of the limited volume of transactions; (B) a foreign
securities exchange that, under the laws of the jurisdiction where it is
organized, satisfies regulatory requirements that are analogous to the
regulatory requirements under the Exchange Act applicable to exchanges described
in clause (A); (C) a regional or local exchange; or (D) an over-the-counter
market, as the terms in clause (A), (B), (C) and (D) are defined for purposes of
Section 7704 of the Code.
Section 2.07. Mutilated, Destroyed, Lost or Stolen Note. Upon receipt
by the Trustee of evidence reasonably satisfactory to it of the ownership of (as
indicated on the Note Register) and the loss, theft, destruction or mutilation
of any Note (which evidence shall be, in the case of a QIB, notice from such QIB
of such ownership and such loss, theft, destruction or mutilation), and (a) in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to
it and the Note Insurer (provided that if the holder of such Note is, or is a
nominee for, a QIB, such Person's own unsecured agreement of indemnity shall be
deemed to be satisfactory), or (b) in the case of mutilation, upon surrender and
cancellation thereof, an officer of the Issuer (or an officer of the sole member
of the Issuer) shall execute and deliver, in lieu thereof, a new Note, dated and
bearing interest from the date to which interest shall have been paid on such
lost, stolen, destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have been paid thereon.
If after the delivery of such new Note, a bona fide purchaser of the original
Note in lieu of which such new Note was issued presents for payment such
original Note and the Trustee shall be entitled to recover such new Note from
the Person to whom it was delivered or any Person taking therefrom, except a
bona fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expenses
incurred by the Trustee or the Issuer or any agent of any of them in connection
therewith. If any such mutilated, destroyed, lost or stolen Note shall have
become or shall be about to become due and payable, or shall have become subject
to redemption in full,
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instead of issuing a new Note, the Trustee may pay such Note without surrender
thereof, except that any mutilated Note shall be surrendered.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 9.05 hereof not involving any registration of
transfer. Upon the issuance of any new Note under this Section, the Trustee may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section 2.07, in lieu of any
destroyed, lost or stolen Note, shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 2.08. Payment of Principal and Interest; Principal and Interest
Rights Preserved. (a) The Notes shall bear interest on the outstanding principal
amount thereof during each Interest Accrual Period at the Note Interest Rate
(calculated on the basis of a 360-day year consisting of 12 months of 30 days
each except that, in the case of the first Interest Accrual Period, the actual
number of days in such first Interest Accrual Period (rather than 30 days) shall
be used for this purpose) and (to the extent that the payment of such interest
shall be legally enforceable) on any overdue installment of interest from the
date such interest became due and payable until fully paid. Interest shall be
due and payable in arrears on each Payment Date, with each payment of interest
calculated as described above on the aggregate unpaid principal amount of
Outstanding Notes. In making any such interest payment, if the interest
calculation with respect to a Note shall result in a portion of such payment
being less than $0.01, then such payment shall be increased to the nearest whole
cent, and no subsequent adjustment shall be made in respect thereof.
(b) The principal of each Note shall be payable in installments
ending no later than the Stated Maturity Date unless such Note becomes due and
payable at an earlier date by declaration of acceleration, call for redemption
or otherwise. All reductions in the principal amount of a Note effected by
payments of installments of principal made on any Payment Date shall be binding
upon all future Holders of such Note and of any Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof,
whether or not such payment is noted on such Note. Each installment of principal
payable on the Notes shall be in an amount equal to the amounts payable under
clauses (v) and (vii) of Section 12.02(d) hereof. The principal payable in the
foregoing sentence on the Note shall be paid on each Payment Date in accordance
with Section 12.02(d) hereof until the Final Payment Date. All payments of
principal with respect to all of the Notes shall be made on a pro rata basis
based upon the ratio that the
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aggregate principal amount outstanding of a Note bears to the aggregate
principal amount of all Outstanding Notes; provided, however, that if as a
result of such proration a portion of such principal would be less than $.01,
then such payment shall be increased to the nearest whole cent, and such portion
shall be deducted from the next succeeding principal payment.
(c) The principal of and interest on the Notes are payable by
check mailed by first-class mail to the Person whose name appears as the
Registered Holder of such Note on the Note Register at the address of such
Person as it appears on the Note Register or by wire transfer in immediately
available funds to the account specified in writing to the Trustee by such
Registered Holder at least five Business Days prior to the Record Date for the
Payment Date on which wire transfers will commence, in such coin or currency of
the United States of America as at the time of payment is legal tender for the
payment of public and private debts. All payments on the Notes shall be paid
without any requirement of presentment (except with respect to the final
payment). The Issuer shall notify the Person in whose name a Note is registered
at the close of business on the Record Date next preceding the Payment Date on
which the Issuer expects that the final installment of principal of such Note
will be paid that the Issuer expects that such final installment will be paid on
such Payment Date. Such notice shall be mailed no later than the fifteenth day
prior to such Payment Date and shall specify the place where such Note may be
surrendered. Funds representing any such checks returned undeliverable shall be
held in accordance with Section 7.15 hereof. If a Noteholder fails to surrender
its Note prior to final payment, such Noteholder shall surrender its Note to the
Trustee for cancellation within fourteen (14) days after receipt of the final
payment. Each Noteholder, by its acceptance of the final payment with respect to
a Note, will be deemed to have relinquished any further right to receive
payments under this Indenture and any interest in the Collateral. Each
Noteholder shall indemnify and hold harmless the Issuer, the Trustee, the Note
Insurer, and any other Person asserting a claim or against whom a claim is
asserted in connection with such Noteholder's failure to tender the Note to the
Trustee for cancellation. Such indemnity shall include any liability, cost or
expenses (including attorney's fees) that may result from the Noteholder's
failure to surrender such Note, and shall survive the assignment or termination
of this Indenture.
(d) [Reserved].
(e) Other than the Trustee acting pursuant to the direction of the
Controlling Party, each Holder of a Note, by acceptance of its Note, agrees that
during the term of this Indenture and for one year and one day after the
termination of this Indenture, such Holder and such Holder's Affiliates will not
file any involuntary petition against the Issuer or otherwise institute any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or
other proceeding under any federal or state bankruptcy or similar law against
the Issuer.
Section 2.09. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Trustee, any agent of the Trustee and
the Note Insurer shall treat the Person in whose name any Note is registered as
the owner of such Note for the purpose of receiving payments of principal of and
interest on such Note and for all other purposes whatsoever, whether or not such
Note be overdue, and none of the Trustee, any agent of the Trustee or the Note
Insurer shall be affected by notice to the contrary.
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Section 2.10. Cancellation. All Notes surrendered to the Trustee for
payment, registration of transfer or exchange (including Notes surrendered to
any Person other than the Trustee which shall be delivered to the Trustee) shall
be promptly canceled by the Trustee. No Notes shall be authenticated in lieu of
or in exchange for any Notes canceled as provided in this Section 2.10, except
as expressly permitted by this Indenture. All canceled Notes held by the Trustee
shall be disposed of by the Trustee as is customary with its standard practice.
Section 2.11. Intended Tax Characterization. The parties hereto agree
that it is their mutual intent that, for all applicable tax purposes, the Notes
shall constitute indebtedness. Further, each party hereto, including the
Noteholders, hereby covenants (and the Note Owners, each of which shall be
deemed by its acceptance of a Note or an interest in a Note to covenant) to
every other party hereto to treat the Notes as indebtedness for all applicable
tax purposes in all tax filings, reports and returns and otherwise, and further
covenants that neither it nor any of its Affiliates will take or participate in
the taking of, or permit to be taken, any action that is inconsistent with the
treatment of the Notes as indebtedness for tax purposes. All successors and
assigns of the parties hereto shall be bound (including each successor and
assign to any Noteholder or Note Owner, each of which shall be deemed by its
acceptance of a Note or an interest in a Note to be bound) by the provisions
hereof.
Section 2.12. Book-Entry Registration. Each of the Notes, upon original
issuance, shall be issued in the form of one or more typewritten Notes (the
"Book-Entry Notes"), to be delivered to The Depository Trust Company, the
initial Clearing Agency, or its agent by, or on behalf of, the Issuer. Each of
the Notes shall initially be registered on the Note Register in the name of Cede
& Co., the nominee of The Depository Trust Company, as the initial Clearing
Agency, and no Note Owner will receive a definitive certificate representing
such Note Owner's interest in such Note Owner's Notes, except as provided in
Section 2.14 hereof. Unless and until Definitive Notes have been issued to the
Note Owners pursuant to Section 2.14 hereof:
(a) the provisions of this Section 2.12 shall be in full
force and effect with respect to the Notes, as the case may be;
(b) the Issuer, the Servicer and the Trustee may deal
with the Clearing Agency and the Clearing Agency Participants for all
purposes with respect to the Notes (including the making of
distributions on the Notes) as the authorized representatives of the
respective Note Owners;
(c) to the extent that the provisions of this Section
2.12 conflict with any other provisions of this Indenture, the
provisions of this Section 2.12 shall control; and
(d) the rights of the respective Note Owners shall be
exercised only through the Clearing Agency and the Clearing Agency
Participants and shall be limited to those established by law and
agreements between such respective Note Owners and the Clearing Agency
and/or the Clearing Agency Participants. Pursuant to the Depository
Agreement, unless and until the Definitive Notes are issued pursuant to
Section 2.14 hereof, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit distributions of principal of and interest on the related
Notes to such Clearing Agency Participants.
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For purposes of any provision of this Indenture, requiring or
permitting actions with the consent of, or at the direction of, holders of Notes
evidencing a specified percentage of the Outstanding principal amount of such
Notes, such direction or consent may be given by Note Owners (acting through the
Clearing Agency and the Clearing Agency Participants) owning such Notes
evidencing the requisite percentage of the Outstanding principal amount of such
Notes, respectively.
Section 2.13. Notice to Clearing Agency. Whenever notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to the related Note Owners
pursuant to Section 2.14 hereof, the Trustee shall give all such notices and
communications specified herein to be given to such Noteholders to the
applicable Clearing Agency which shall give such notices and communications to
the related Note Owners in accordance with its applicable rules, regulations and
procedures.
Section 2.14. Definitive Notes. If (a)(i) the Issuer advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities under the Depository Agreement and (ii)
the Trustee or the Issuer is unable to locate a qualified successor, with the
consent of the Note Insurer, (b) the Issuer, at its option, advises the Trustee
in writing that it elects to terminate the book-entry system with respect to the
Notes through the Clearing Agency or (c) after the occurrence of an Event of
Default, the Note Insurer, unless a Note Insurer Default shall have occurred and
be continuing, otherwise Note Owners evidencing not less than 50% of the
aggregate unpaid Outstanding principal amount of the Notes, advise the Trustee
and the Clearing Agency through the Clearing Agency Participants in writing that
the continuation of a book-entry system with respect to the Notes through the
Clearing Agency is no longer in the best interests of the Note Owners, the
Trustee shall notify all Note Owners, through the Clearing Agency, and the Note
Insurer of the occurrence of any such event and of the availability of
Definitive Notes, to the Note Owners requesting the same. Upon surrender to the
Trustee of Notes by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Issuer shall execute
and the Trustee shall authenticate and deliver the applicable Definitive Notes.
Neither the Issuer nor the Trustee shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Notes to the Note
Owners, all references herein to obligations imposed upon or to be performed by
the Clearing Agency shall be deemed to be imposed upon and performed by the
Trustee, to the extent applicable with respect to such Definitive Notes and the
Trustee shall recognize the holders of such Definitive Notes as Noteholders
hereunder.
ARTICLE 3
FUNDINGS
Section 3.01. Fundings.
(a) Conditions Precedent. Each Funding is subject to the
satisfaction of the following conditions precedent on the relevant date
specified below:
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(i) notification by the Issuer to the Servicer, the Note
Insurer and the Trustee at least two Business Days prior to the
proposed Funding Date of a request for a Funding to occur;
(ii) no later than 11:00 a.m. (New York time) on the third
Business Day immediately prior to the requested Funding Date, the
Issuer shall have delivered to the Servicer, the Note Insurer, the
Rating Agencies, the Back-up Servicer and the Trustee, by a diskette or
electronic transfer, a list of the proposed Contracts to be funded, and
providing for each such Contract all information required to be
provided in the Contract Schedule as provided in the definition
thereof;
(iii) no later than 1:00 p.m. (New York time) on the third
Business Day immediately prior to the requested Funding Date, the
Issuer shall have delivered to the Trustee the sole original executed
counterpart of each Contract relating to the applicable Funding and all
other items included in the Contract File relating to such Contract,
subject to exceptions as shall have been approved by the Controlling
Party;
(iv) satisfaction of the conditions precedent set forth in
Section 4.02 hereof; and
(v) with respect to a Contract for which exceptions
remain on the applicable Funding Date, the consent of the Controlling
Party pursuant to Section 7.14(c) hereof.
(b) Preparation of Funding Report. The Servicer shall review such
diskette or electronic transfer specified in clause (a)(ii) above and prepare a
Funding Report from the information provided therein, the existing information
regarding all other Contracts and the existing information used to generate the
Monthly Servicer's Report. No later than 10:00 a.m. (New York time) on the
Business Day immediately preceding a proposed Funding Date, the Servicer shall
transmit by facsimile or hand delivery the Funding Report and the amount to be
paid to the Issuer, and the Issuer shall thereupon execute the Funding Report
and transmit it by facsimile to the Trustee and the Note Insurer no later than
11:00 a.m. (New York time) on the date of the Issuer's receipt thereof.
(c) Each additional Pool shall become subject to this Indenture
and the related Contract Files shall be held by the Trustee as provided herein.
ARTICLE 4
CONDITIONS TO ISSUANCE OF NOTES AND FUNDINGS
Section 4.01. Conditions to Issuance of Notes. On the Closing Date,
subject to receipt by the Trustee of items (a) and (b) below at least three (3)
Business Days prior to the Closing Date and receipt by the Trustee and the Note
Insurer of items (c) through (n) below on or prior to the Closing Date, the
Issuer will issue the Notes:
(a) the Contract Schedule;
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(b) the sole original executed counterpart of each
Contract, including any amendments or modifications thereto, and all
other items included in the Contract File relating to such Contract,
subject to such exceptions as shall have been approved by the
Controlling Party, as provided in Section 7.14 hereof (and the Trustee
shall have delivered to the Company, the Issuer and the Note Insurer a
certificate substantially in the form attached hereto as Exhibit
7.14(b) with respect to each such Contract);
(c) a Board Resolution of each of the Issuer and the
Company authorizing, as applicable, the execution, delivery and
performance of the Transaction Documents and the transactions
contemplated hereby and by the other Transaction Documents, certified
by the Secretary or an Assistant Secretary of the Issuer (or of the
sole member of the Issuer) or the Company, as applicable;
(d) a copy of an officially certified document, dated not
more than 30 days prior to the Closing Date, evidencing the due
organization and good standing of each of the Issuer and the Company in
their respective states of formation;
(e) copies of the certificate of formation and limited
liability company agreement of each of the Issuer and the Company,
certified by the Secretary or an Assistant Secretary of the Issuer (or
of the sole member of the Issuer) and the Company, as applicable;
(f) (A) evidence of filing with the Secretary of State of
the state of the Company's jurisdiction of formation of a UCC-1
financing statement naming the Company, as debtor, the Trustee as
secured party, the Issuer, as the intermediate assignor, and the Assets
as collateral; and (B) evidence of filing with the Secretary of State
of the state of the Issuer's jurisdiction of formation of a UCC-1
financing statement naming the Issuer, as debtor, the Trustee as
secured party, and the Collateral as collateral;
(g) a certificate listing the Servicing Officers of the
Servicer as of the Closing Date;
(h) an executed copy of the Note Purchase Agreement;
(i) an executed copy of the Servicing Agreement, the
Acquisition Agreement and the Master Reserve Account Agreement;
(j) an executed copy of the Insurance Agreement, the
Indemnification Agreement, the Premium Letter and the original Policy;
(k) evidence of the deposit by the Issuer into the
Collection Account of any amounts paid on the Contracts since the
Initial Cut-Off Date;
(l) evidence of the deposit of (A) the Initial Negative
Carry Account Deposit Amount into the Negative Carry Account, (B) the
Initial Prefunding Account Deposit Amount into the Prefunding Account,
and (C) the Initial Reserve Account Deposit Amount into the Reserve
Account;
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(m) the Issuer and the Servicer shall have delivered to
the Trustee and the Note Insurer an Officer's Certificate of the Issuer
and the Servicer, as appropriate, to the effect that (i) there has not
occurred, and the funding on the Closing Date will not result in the
occurrence of, a Trigger Event or a Default, (ii) the funding on the
Closing Date will not result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, any
agreement or instrument to which the Issuer or the Servicer, as
appropriate, is a party or by which it is bound, or any order of any
court or administrative agency entered in any proceeding to which the
Issuer or the Servicer, as appropriate, is a party or by which it may
be bound or to which it may be subject, (iii) all of the terms of the
Acquisition Agreement and this Indenture shall have been complied with
and all of the representations and warranties of the Servicer or the
Issuer, as appropriate, in the Acquisition Agreement and this Indenture
shall be true and correct as of the Closing Date and (iv) all
conditions precedent provided in this Indenture relating to the
issuance of the Notes have been complied with; and
(n) such other documents as the Trustee or the Note
Insurer may reasonably require.
Section 4.02. Fundings. After the Closing Date, the obligation of the
Trustee to release amounts from the Prefunding Account as part of a Funding
pursuant to Sections 3.01 and 12.04 hereof is subject to the satisfaction of the
following conditions:
(a) the Trustee shall have delivered to the Company, the
Issuer and the Note Insurer a certificate in the form attached hereto
as Exhibit 7.14(b) with respect to the Contracts being funded on the
applicable Funding Date;
(b) the Issuer shall have delivered to the Trustee a
Supplemental Grant of Contracts with respect to such Contracts;
(c) the Issuer and the Servicer shall have delivered to
the Trustee and the Note Insurer an Officer's Certificate of the Issuer
and the Servicer, as appropriate, to the effect that (i) no Trigger
Event or Default has occurred and such Funding will not result in the
occurrence of a Trigger Event or a Default and none of the Issuer, the
Servicer or the Company shall be in default under this Indenture, the
Servicing Agreement or the Acquisition Agreement, as applicable, (ii)
the Funding will not result in a breach of any of the terms, conditions
or provisions of, or constitute a default under, any agreement or
instrument to which the Issuer, the Servicer or the Company, as the
case may be, is a party or by which it is bound, or any order of any
court or administrative agency entered in any proceeding to which the
Issuer, the Servicer or the Company, as the case may be, is a party or
by which it may be bound or to which it may be subject and (iii) all
conditions precedent provided in Section 3.01(a) of this Indenture and
the Acquisition Agreement relating to the Funding shall have been
complied with;
(d) evidence of the deposit by the Issuer into the
Collection Account of any amounts paid under the related Contracts
since the related Cut-Off Date;
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(e) evidence of the deposit by the Issuer into the
Reserve Account of the amount necessary to cause the balance in the
Reserve Account to equal the Required Reserve Account Balance;
(f) the Servicer shall have delivered to the Trustee a
Funding Report pursuant to Section 3.01(b) hereof;
(g) the Trustee shall have received written consent
thereto from the Note Insurer;
(h) the Note Insurer shall have received confirmation
from S&P that the Notes are rated "investment grade" without the
benefit of the Policy;
(i) if requested by the Controlling Party, the Issuer and
the Company shall provide "bring down" opinions with respect to the
Opinions of Counsel delivered on the Closing Date by the Company and
the Issuer; and
(j) such other documents as the Trustee or the Note
Insurer may reasonably require.
Section 4.03. Perfection of Transfer. (a) The Issuer and the Company
shall file UCC-1 financing statements described in Section 4.01 hereof in
accordance with such Section 4.01. From time to time, the Servicer shall take or
cause to be taken such actions and execute such documents as are necessary to
perfect and protect the Trustee's first perfected priority interest in the
Collateral against all other Persons, including, without limitation, the filing
of financing statements, amendments thereto and continuation statements, the
execution of transfer instruments and the making of notations on or taking
possession of all records or documents of title.
(b) During the term of this Indenture, the Issuer will maintain
its chief executive office, its jurisdiction of formation and principal place of
business in one of the states of the United States.
(c) The Servicer agrees to pay all costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Trustee's right, title and interest in and to the
Collateral in accordance with the Transaction Documents.
(d) In addition to the opinions of counsel to be delivered on the
Closing Date, the Issuer shall deliver to each of the Trustee and the Note
Insurer, within 30 days after the end of the Funding Period, an Opinion of
Counsel in form and substance reasonably satisfactory to the Trustee and to the
Note Insurer, to the effect that (a) in the opinion of the counsel rendering
such Opinion of Counsel, all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and protect
the perfected security interest of the Trustee in the Collateral, and reciting
the details of such filings or referring to prior Opinions of Counsel in which
such details are given, or (b) in the opinion of such counsel, no action shall
be necessary to preserve and protect such interest.
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Section 4.04. Removal and Purchase of Assets. (a) If at any time the
Issuer or the Trustee obtains knowledge (within the meaning of Section 7.01(e)
hereof), discovers or is notified by the Servicer or the Note Insurer that any
of the representations and warranties of the Company in the Acquisition
Agreement were incorrect at the time as of which such representations and
warranties were made, then the Person discovering such defect, omission, or
circumstance shall promptly notify the other parties to this Indenture.
(b) In the event that any representation or warranty of the
Company in Section 3.2(a) or (b) of the Acquisition Agreement is incorrect
(i.e., "breached") and the failure of such representation and warranty to be
correct materially and adversely affects the interests of the Holders of the
Notes (without giving effect to the Policy) and the Note Insurer, the Issuer
shall require the Company pursuant to the Acquisition Agreement to eliminate or
otherwise cure the circumstance or condition which has caused such
representation or warranty to be incorrect within 30 days of the earlier of the
discovery or notice thereof; provided, however, the determination of whether or
not a breach has occurred shall be made without regard to the Company's
knowledge of the occurrence of any such event; and provided, further, any breach
shall be deemed to constitute a breach which materially and adversely affects
the interests of the Holders of the Notes (without giving effect to the Policy)
if the Controlling Party in its sole discretion determines any such breach to be
material. If the Company fails or the Company is unable to cure such
circumstance or condition in accordance with the Acquisition Agreement, then the
Issuer shall cause the Company to purchase pursuant to the Acquisition Agreement
any Asset as to which such representation or warranty is incorrect within the
time specified in Section 6.2 of the Acquisition Agreement. The applicable
Purchase Price shall be remitted by the Company to the Servicer pursuant to the
Acquisition Agreement and shall be deposited by the Servicer in the Distribution
Account within two Business Days of the Servicer's receipt thereof.
(c) If the Issuer fails to enforce the purchase obligation of the
Company under the Acquisition Agreement, the Trustee is hereby appointed
attorney-in-fact to act on behalf of and in the name of the Issuer to require
such purchase.
(d) With respect to (x) any Contract to be prepaid or terminated
early in accordance with Section 3.01 of the Servicing Agreement and (y) any
Contract that becomes a Defaulted Contract or any Contract that becomes a
Delinquent Contract, the Issuer shall be entitled to, upon five Business Days'
notice to the Trustee and the Note Insurer, cause such Contract to be removed
from the Collateral; provided, however, that all Defaulted Contracts or
Delinquent Contracts which are purchased by the Issuer (I) shall be included in
the calculation of the Cumulative Gross Default Rate, the Cumulative Net Default
Rate, the NPA Ratio, the 31 to 60 Day Delinquency Ratio and the 61 to 90 Day
Delinquency Ratio with respect to the Due Period such Contracts were purchased
and (II) the cumulative Implicit Principal Balance (measured as of the date of
purchase) of all such purchased Contracts shall not exceed 10% of the Initial
Aggregate IPB; provided further that no such removal shall be made without the
prior written consent of the Controlling Party or if (i) such removal is made
with any intent to hinder, delay, or defraud any entity to which the Issuer is
or will become indebted; (ii) there shall be any reason to believe that the
Issuer is insolvent or that such removal will render the Issuer insolvent on the
date thereof or as a result of such removal; (iii) at the time of such removal,
the Issuer is engaged in business, or about to engage in business, for which the
assets remaining with it after the
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repurchase will be an unreasonably small amount of capital; (iv) the Issuer
intends or believes that it will incur debts beyond its ability to pay as such
debts mature or (v) a Default has occurred and is continuing or would occur as a
result of such removal.
Section 4.05. Releases. (a) The Issuer shall be entitled to obtain a
release from the lien of this Indenture for any Contract, the related Receivable
and the related Equipment at any time (i) after a payment by the Issuer of the
Purchase Price of the Receivable and the deposit of such payment into the
Distribution Account, or (ii) upon the termination of a Contract following the
sale, lease or other disposition of the related Equipment in accordance with
Section 3.01 of the Servicing Agreement, if the Issuer delivers to the Trustee
and the Note Insurer an Officer's Certificate (A) identifying the Receivable and
the related Contract and rights and interests (whether an interest for security
or otherwise) in the Equipment to be released, (B) requesting the release
thereof, (C) setting forth the amount deposited in the Distribution Account with
respect thereto, in the event a Contract and the rights and interests (whether
an interest for security or otherwise) in the related Equipment are being
released from the lien of this Indenture pursuant to (i) or (ii) above, and (D)
certifying that the amount deposited in the Distribution Account equals the
Purchase Price of the Contract; provided the Issuer shall only be entitled to
any such release purported to be allowed pursuant to (i) or (ii) above if the
provisions of the Transaction Documents are met and the Trustee has confirmed
receipt of the deposit of the amounts set forth in this Section 4.05(a) into the
Distribution Account and the Note Insurer has consented thereto.
(b) Upon satisfaction of the conditions specified in subsection
(a), the Trustee shall release from the lien of this Indenture and deliver to or
upon the order of the Issuer the Contract and the related Contract File.
Section 4.06. Collateral. At the expense of the Servicer, the Trustee
may, at the direction of the Servicer, and when required by the provisions of
Articles 4, 5, 6 and 12 hereof shall, execute instruments to release property
from the lien of this Indenture, or convey the Trustee's interest in the same,
in a manner and under circumstances which are consistent with the provisions of
this Indenture. No Person relying upon an instrument executed by the Trustee as
provided in this Article 4 shall be bound to ascertain the Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any monies.
Section 4.07. Notice of Release. The Issuer shall give the Trustee and
the Note Insurer at least 10 days' prior notice of any action to be taken
pursuant to Section 4.05(a) hereof, accompanied by copies of any instruments
involved.
ARTICLE 5
SATISFACTION AND DISCHARGE
Section 5.01. Satisfaction and Discharge of this Indenture. (a)
Following (x) payment in full of (i) all of the Notes, (ii) the fees and charges
of the Trustee, the Note Insurer and the Back-up Servicer, and (iii) all other
obligations of the Issuer under the Transaction Documents and (y) the expiration
of the Policy and return thereof to the Note Insurer for cancellation, this
Indenture shall be discharged.
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(b) In connection with the discharge of this Indenture and the
release of the Collateral, the Trustee shall release from the lien of this
Indenture and deliver (at the expense of the Issuer) to or upon the order of the
Issuer all property remaining in the Collateral and shall be deemed to have
authorized UCC financing statements evidencing such discharge and release.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default. "Event of Default" means the
occurrence of any one of the following:
(a) if a Note Insurer Default has occurred and is
continuing, a default in the payment of any interest on or the
principal of the Notes when the same becomes due and payable, and the
continuation of such default for a period of five days; or
(b) a demand for payment under the Policy; or
(c) a default in the performance of any covenant of the
Issuer, or breach of any representation or warranty of the Issuer, in
this Indenture, the Acquisition Agreement or the Servicing Agreement,
and continuance of such default or breach for a period of 30 days after
the Issuer has actual knowledge thereof or written notice of such
default or breach, requiring the situation giving rise to such default
or breach to be remedied, shall have been given to the Issuer by the
Trustee, the Note Insurer, the Servicer or any Noteholder; or
(d) the entry of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer under the
United States Bankruptcy Code or any other applicable Federal or state
bankruptcy, insolvency, reorganization, liquidation or other similar
law now or hereafter in effect or any arrangement with creditors or
appointing a receiver, liquidator, assignee, trustee, or sequestrator
(or other similar official) for the Issuer or for any substantial part
of its respective property, or ordering the winding up or liquidation
of the Issuer's affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; or
(e) the institution by the Issuer of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by the Issuer to
the institution of bankruptcy or insolvency proceedings against the
Issuer, or the filing by the Issuer of a petition or answer or consent
seeking reorganization or relief under the United States Bankruptcy
Code or any other applicable Federal or state bankruptcy insolvency,
reorganization, liquidation or other similar law now or hereafter in
effect, or the consent by the Issuer to the filing of any such petition
or to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or other
similar official) of the Issuer or of any substantial part of the
Issuer's property, or the making by the Issuer of any assignment for
the benefit of creditors, or the admission by it in writing of its
inability, or the failure by it generally, to pay its debts as they
become due, or the taking of corporate or limited liability company
action by the Issuer in furtherance of any such action; or
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(f) the Issuer becomes an "investment company" within the
meaning of the Investment Company Act of 1940, as amended; or
(g) the Issuer grants or permits a Lien on all or any
portion of the Collateral other than in accordance with Section
11.02(a) hereof or in favor of the Trustee pursuant to this Indenture;
or
(h) a default under any instrument or agreement
evidencing, securing or providing for the issuance of indebtedness for
borrowed money in excess of $500,000 of, or guaranteed by, the Issuer,
the Servicer, Financial Pacific Company or any of the respective
subsidiaries of such entities, which default (a) is a default in
payment of any principal or interest on such indebtedness when due or,
if later, within any applicable grace period, or (b) has resulted in
acceleration of the maturity of such indebtedness; or
(i) a Servicer Event of Default; or
(j) an Insurance Agreement Indenture Cross Default.
Section 6.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default occurs and is continuing, then, in every such case, the Trustee
shall give notice to the Issuer, the Servicer, each Rating Agency and the Note
Insurer (and, if such Event of Default has not been cured or waived within
thirty (30) days after becoming known to the Trustee, the Trustee shall give
notice to the Holders of all Notes) in accordance with Section 7.02 hereof and,
at the direction of the Controlling Party, shall, or the Controlling Party
itself may, declare the principal of all the Notes to be immediately due and
payable, by notice given in writing to the Trustee if given by the Controlling
Party, and upon any such declaration, such principal shall become due and
payable as herein set forth without any presentment, demand, protest or other
notice of any kind (except such notices as shall be expressly required by the
provisions of this Indenture), all of which are hereby expressly waived;
provided, however, that if an Event of Default in any of clauses (d) or (e) in
Section 6.01 hereof occurs and is continuing, then, in any such case, the
principal of all the Notes shall automatically become immediately due and
payable (unless otherwise waived by the Controlling Party).
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 Policy Payments on the Notes in accordance with the Policy), but not
the obligation, to make payments under the Policy or otherwise of 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.
At any time after such a declaration of acceleration has been made or
the Notes have otherwise been accelerated, but before any sale of the Collateral
has been made or a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Controlling
Party, by written notice to the Trustee, may rescind and annul such declaration
and its consequences if:
(1) the Issuer has paid or deposited with the Trustee a
sum sufficient to pay
(A) all overdue installments of interest on all
Notes;
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(B) the principal of any Notes which have become
due otherwise than by such declaration of acceleration and
interest thereon at the rate borne by such Notes from the time
such principal first became due until the date when paid; and
(C) all sums paid or advanced, together with
interest thereon, by the Trustee, the Note Insurer or any
Noteholder hereunder, and the reasonable compensation,
expenses, disbursements and advances of the Trustee, the Note
Insurer and the Noteholders, their agents and counsel incurred
in connection with the enforcement of this Indenture to the
date of such payment or deposit; and
(2) all Events of Default, other than the nonpayment of
the principal on the Notes which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 6.15 hereof.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Section 6.03. Collection of Indebtedness and Suits for Enforcement by
Trustee. If an Event of Default shall occur and be continuing and the Notes have
been declared due and payable and such declaration has not been rescinded and
annulled, the Trustee will, at the direction of the Controlling Party, sell the
Collateral; provided that any such sale must comply with the provisions of
Section 6.18 hereof.
If an Event of Default occurs and is continuing, the Trustee shall, at
the direction of the Controlling Party, proceed to protect and enforce its
rights by such appropriate Proceedings as the Trustee is directed by the
Controlling Party, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
Section 6.04. Remedies. If an Event of Default shall have occurred and
be continuing, the Trustee may, with the consent of the Controlling Party, and
shall, at the direction of the Controlling Party, do one or more of the
following:
(a) institute Proceedings for the collection of all
amounts then due and payable on the Notes or under the Transaction
Documents, whether by declaration or otherwise, enforce any judgment
obtained, and collect from the Issuer the monies adjudged due;
(b) take possession of and sell the Collateral or any
portion thereof or rights or interest therein, at one or more sales
called and conducted in any manner permitted by law; provided, however,
the provisions of Section 6.18 hereof must be complied with in
connection with any such sale;
(c) institute any Proceedings from time to time for the
complete or partial foreclosure of the lien created by this Indenture
with respect to the Collateral; and
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(d) exercise any remedies of a secured party under the
UCC or any other applicable law and take any other appropriate action
to protect and enforce the rights and remedies of the Trustee, the Note
Insurer and the Holders of the Notes hereunder.
Section 6.05. Optional Preservation of Collateral. If (i) an Event of
Default shall have occurred and be continuing and (ii) no Notes have been
declared due and payable, or such declaration and its consequences have been
annulled and rescinded, then the Trustee shall, upon request from the
Controlling Party, elect, by giving written notice of such election to the
Issuer, to take possession of and retain the Collateral intact, collect or cause
the collection of the proceeds thereof and make and apply all payments and
deposits and maintain all accounts in respect of such Notes in accordance with
the provisions of Article 12 of this Indenture. If the Trustee is unable to or
is stayed from giving such notice to the Issuer for any reason whatsoever, such
election shall be effective as of the time of such determination or request, as
the case may be, notwithstanding any failure to give such notice, and the
Trustee shall give such notice upon the removal or cure of such inability or
stay (but shall have no obligation to effect such removal or cure). Any such
election may be rescinded with respect to any portion of the Collateral securing
the Notes remaining at the time of such rescission by written notice to the
Trustee and the Issuer from the Controlling Party.
Section 6.06. Trustee May File Proofs of Claim. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial Proceeding relating to
the Issuer or the property of the Issuer or its creditors, the Trustee
(irrespective of whether the principal of any of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Issuer for the payment of
overdue principal or interest) shall intervene at the direction of the
Controlling Party and shall be empowered, to intervene in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Notes issued hereunder and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel and any other amounts due the Trustee under Section 7.07 hereof),
the Note Insurer and of the Noteholders allowed in such judicial Proceeding, and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same,
and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such judicial Proceeding is hereby authorized by each
Noteholder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
Nothing contained in this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder or the Controlling Party any plan of
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reorganization, arrangement, adjustment or composition affecting any of the
Notes or the rights of any Noteholder, or to authorize the Trustee to vote in
respect of the claim of any Noteholder in any such Proceeding.
Section 6.07. Trustee May Enforce Claims Without Possession of Notes.
(a) In all Proceedings brought by the Trustee (and also any Proceedings
involving the interpretation of any provision of any Transaction Document to
which the Trustee shall be a party), the Trustee shall be held to represent all
of the Noteholders, and it shall not be necessary to make any Noteholder a party
to any such Proceedings.
(b) All rights of actions and claims under any Transaction
Document or any of the Notes may be prosecuted and enforced by the Trustee
without the possession of any of the Notes or the production thereof in any
Proceeding relating thereto, and any such Proceedings instituted by the Trustee
shall be brought in its own name as Trustee of an express trust, and any
recovery whether by judgment, settlement or otherwise shall, after provision for
the payment of the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, be for the benefit of the Holders of the
Notes.
Section 6.08. Application of Money or Property Collected. If the
Trustee collects any money or property pursuant to this Article 6, the Trustee
shall pay out such money or property according to the priorities set forth in
Section 12.02(d) hereof.
Section 6.09. Limitation on Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(a) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(b) the Controlling Party shall have made written request
to the Trustee to institute Proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 30 days after its receipt of such
notice, request and offer of security or indemnity has failed to
institute any such Proceedings;
(e) no direction inconsistent with such written request
has been given to the Trustee during such 30-day period by the
Controlling Party; and
(f) a Note Insurer Default has occurred and is
continuing;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes, or to obtain or to seek to obtain
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priority or preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided.
Section 6.10. Unconditional Right of Noteholders to Receive Principal
and Interest. The Holders of the Notes shall have the right, which is absolute
and unconditional, subject to the express terms of this Indenture, to receive
payment of principal and interest on such Notes, subject to the respective
relative priorities provided for in this Indenture, as such principal and
interest becomes due and payable from the Collateral and to institute
Proceedings for the enforcement of any such payment, and such right shall not be
impaired except as expressly permitted herein without the consent of such
Holders.
Section 6.11. Restoration of Rights and Remedies. If the Trustee or any
Noteholder or the Note Insurer 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 Trustee,
the Note Insurer or to such Noteholder, then, and in every case, the Issuer, the
Trustee, the Note Insurer and the Noteholders shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee, the Note Insurer and the Noteholders shall continue as though no such
Proceeding had been instituted.
Section 6.12. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Notes in the last paragraph of Section 2.07 hereof, no right or
remedy herein conferred upon or reserved to the Trustee or to the Noteholders or
the Note Insurer is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.13. Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Noteholder or of the Note Insurer to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or any acquiescence therein.
Every right and remedy given by this Article 6 or by law to the 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 Trustee, the Note Insurer or by the
Noteholders, as the case may be.
Section 6.14. Control by Controlling Party. The Controlling Party shall
have the right to direct the time, method and place of conducting any Proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee; provided that:
(a) such direction shall not be in conflict with any rule
of law or with this Indenture;
(b) subject to Section 7.01, the Trustee may take any
other action deemed proper by the Trustee which is not inconsistent
with such direction; provided, however,
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that, subject to Section 7.01 hereof, the Trustee need not take any
action which a Responsible Officer or Officers of the Trustee in good
faith determines might involve it in personal liability (unless the
Trustee is furnished with the reasonable indemnity referred to in
Section 6.14(c) hereof); and
(c) the Trustee has been furnished reasonable indemnity
against costs, expenses and liabilities which it might incur in
connection therewith as provided in Section 7.01(f) hereof.
Section 6.15. Waiver of Certain Events. The Controlling Party may, on
behalf of the Holders of all the Notes, waive any past Default, Trigger Event,
Event of Default or Servicer Event of Default (except as provided in Section
12.06(b) hereof), and its consequences; provided that, if the Note Insurer is
not the Controlling Party, the Controlling Party shall not waive:
(a) a Default or Event of Default in the payment of the
principal of or interest on any Note, or a Default or Event of Default
described in Sections 6.01(d) or (e) hereof, or
(b) a Default or Event of Default in respect of a
covenant or provision hereof which under Article 9 hereof cannot be
modified or amended without the consent of the Holder of each
Outstanding Note affected.
Upon any such waiver, such Default, Trigger Event, Event of Default or
Servicer Event of Default shall cease to exist, and any Default, Trigger Event,
Event of Default, or Servicer Event of Default or other consequence arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default,
Trigger Event, Event of Default or Servicer Event of Default or impair any right
consequent thereon.
Section 6.16. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by its acceptance 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 Trustee for any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 6.16 shall not apply to
any suit instituted by the Trustee or to any suit instituted by any Noteholder
for the enforcement of the payment of the principal of or interest on any Note
on or after the Stated Maturity Date.
Section 6.17. 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, which may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder,
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delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
Section 6.18. Sale of Collateral. (a) The power to effect any sale of
any portion of the Collateral pursuant to Section 6.03 or 6.04 hereof shall not
be exhausted by any one or more sales as to any portion of the Collateral
remaining unsold, but shall continue unimpaired until the entire Collateral
securing the Notes shall have been sold or all amounts payable on the Notes and
under the Transaction Documents with respect thereto shall have been paid. The
Trustee may from time to time postpone any sale by public announcement made at
the time and place of such sale.
(b) The Trustee shall not, in any private sale, sell to a third
party the Collateral, or any portion thereof, unless the Controlling Party
consents in writing to or directs the Trustee to make such sale.
(c) The Trustee or any Noteholder may bid for and acquire any
portion of the Collateral in connection with a public or private sale thereof,
and in lieu of paying cash therefor, any Noteholder may make settlement for the
purchase price by crediting against amounts owing on the Notes of such Holder or
other amounts owing to such Holder secured by this Indenture, that portion of
the net proceeds of such sale to which such Holder would be entitled, after
deducting the reasonable costs, charges and expenses incurred by the Trustee or
the Noteholders in connection with such sale. The Notes need not be produced in
order to complete any such sale, or in order for the net proceeds of such sale
to be credited against the Notes. The Trustee or the Noteholders may hold,
lease, operate, manage or otherwise deal with any property so acquired in any
manner permitted by law.
(d) The Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the
Collateral in connection with a sale thereof. In addition, the Trustee is hereby
irrevocably appointed the agent and attorney-in-fact of the Issuer to transfer
and convey its interest in any portion of the Collateral in connection with a
sale thereof, and to take all action necessary to effect such sale. No purchaser
or transferee at such a sale shall be bound to ascertain the Trustee's
authority, inquire into the satisfaction of any conditions precedent or see to
the application of any monies.
(e) The method, manner, time, place and terms of any sale of all
or any portion of the Collateral shall be commercially reasonable. For the
purposes of this Section 6.18, it shall be commercially reasonable to give ten
(10) days' prior written notice of a proposed sale of all or any portion of the
Collateral.
(f) So long as one or more Holders of Notes constitute the
Controlling Party, the Trustee shall not (at the direction of the Controlling
Party as elsewhere provided in this Indenture) sell all or any portion of the
Collateral unless:
(i) the proceeds of such sale, together with any other
funds available to the Trustee from the Collateral for the purpose of
paying the Notes, shall be sufficient to discharge in full the amounts
then due and unpaid upon all of the Notes; or
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(ii) the Controlling Party shall, or at the direction of
the Controlling Party the Trustee shall, have given each Holder of the
Notes at least ten (10) days' prior written notice of a proposed sale
of all or any portion of the Collateral, stating in such notice the
portion of the Collateral proposed to be sold and the minimum proposed
sale price expected to be received by the Trustee in such sale; or
(iii) notwithstanding anything else to the contrary
contained in Section 6.18(f) hereof, in the event the proceeds of a
sale are less than the amount necessary to pay in full the outstanding
principal amount of the Notes at the time of such sale, the Holders of
100% in principal amount of Notes shall have consented in writing to
such sale.
Section 6.19. Action on Notes. The 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 Trustee or the Noteholders or the Note Insurer shall be impaired by the
recovery of any judgment by the Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Collateral or upon any of
the assets of the Issuer.
Section 6.20. 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, without further action, to have
directed the 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 with respect to the Notes whether pursuant
to the Policy or otherwise. Notwithstanding the foregoing, the order of priority
of payments to be made pursuant to Section 12.02(d) hereof shall not be modified
by this clause. To evidence such subrogation, the Note Registrar shall note the
Note Insurer's rights as subrogee upon the Note Register upon receipt from the
Note Insurer of proof of payment by the Note Insurer of any Scheduled Policy
Payment or other payment.
Section 6.21. Preference Claims; Directions of Proceedings.
(a) In the event that the Trustee has received a
certified copy of an order of the appropriate court that any Scheduled
Policy Payment paid on a Note has been avoided in whole or in part as a
preference payment under applicable bankruptcy law, the Trustee shall
so notify the Note Insurer, shall comply with the provisions of the
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 Policy. Pursuant to the terms of the
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 Policy) and
not to the Trustee or any Noteholder directly (unless such 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 Trustee for payment, in
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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 Trustee,
on its behalf and on behalf of the Noteholders, thereby appoints the
Note Insurer as agent and attorney-in-fact for the Trustee and each
Noteholder in any legal proceeding with respect to the Notes. The
Trustee shall promptly notify the Note Insurer of any proceeding or the
institution of any action (of which a Responsible Officer of the
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 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 Trustee hereby delegate and assign, to the fullest extent
permitted by law, the rights of the 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.
ARTICLE 7
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default known to the Trustee as provided in
subsection (e) below:
(i) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith or negligence on its
part, the Trustee may conclusively rely as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such
certificates or opinions, which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same and to determine whether or not
they conform to the requirements of this Indenture.
(b) In case an Event of Default known to the Trustee as provided
in subsection (e) below has occurred and is continuing, the Trustee may, and at
the direction of the Controlling Party shall, exercise such of the rights and
powers vested in it by this Indenture, and shall use the
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same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct or bad faith, except that:
(i) this subsection (c) shall not be construed to limit
the effect of subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Controlling Party (or if the Note Insurer is
not the Controlling Party, in accordance with the direction of
Noteholders representing such percentage of the Outstanding Notes as
may be required by the terms hereof) in accordance with Section 6.14
hereof relating to the time, method and place of conducting any
Proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture, the
Acquisition Agreement or the Servicing Agreement; and
(iv) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its duties hereunder, or in
the exercise of any of its rights or powers which include discretionary
judgments to be made by the Trustee, if it shall have reasonable
grounds for believing that repayment of such funds or reasonable
indemnity satisfactory to the Trustee against such risk or liability is
not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 7.01.
(e) For all purposes under this Indenture, the Trustee shall not
be deemed to have notice of any Event of Default described in Section 6.01(d) or
6.01(e) hereof or any Default described in Section 6.01(c) hereof or of any
Servicer Event of Default or Trigger Event unless a Responsible Officer assigned
to and working in the Trustee's corporate trust department has actual knowledge
thereof or unless written notice of any event which is in fact such an Event of
Default, Default, Servicer Event of Default or Trigger Event is received by the
Trustee at the Corporate Trust Office, and such notice references any of the
Notes generally, the Issuer, the Collateral or this Indenture.
(f) The Trustee shall be under no obligation to institute any
suit, or to take any remedial proceeding under this Indenture, or to enter any
appearance or in any way defend in any suit in which it may be made defendant,
or to take any steps in the execution of the trusts hereby created or in the
enforcement of any rights and powers hereunder until it shall be indemnified to
its reasonable satisfaction against any and all costs and expenses, outlays and
counsel fees and
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other reasonable disbursements and against all liability, except liability that
is adjudicated, in connection with any action so taken.
(g) Notwithstanding any extinguishment of all right, title and
interest of the Issuer in and to the Collateral following an Event of Default
and a consequent declaration of acceleration of the maturity of any of the
Notes, whether such extinguishment occurs through a sale of the Collateral to
another Person or the acquisition of the Collateral by the Trustee, the rights
of the Noteholders shall continue to be governed by the terms of this Indenture.
(h) Notwithstanding anything to the contrary contained herein, the
provisions of subsections (e) through (g), inclusive, of this Section 7.01 shall
be subject to the provisions of subsections (a) through (c), inclusive, of this
Section 7.01.
(i) The Trustee shall provide the reports and accountings as
required pursuant to Section 12.07 hereof.
(j) The Trustee shall, and hereby agrees that it will, hold the
Policy in trust, and will hold any proceeds of any claim on the Policy in trust,
solely for the use and benefit of the Noteholders.
Section 7.02. Notice of Default and Other Events. Promptly after the
occurrence of any Default, Event of Default, Servicer Event of Default or
Trigger Event known to the Trustee (within the meaning of Section 7.01(e)
hereof) which is continuing, within one Business Day of obtaining such
knowledge, the Trustee shall transmit by telephonic or facsimile communication
confirmed by mail to the Issuer, the Servicer, each Rating Agency and the Note
Insurer, notice of such Default, Event of Default, Servicer Event of Default or
Trigger Event known to the Trustee. If such Default, Event of Default, Servicer
Event of Default or Trigger Event known to the Trustee has not been cured or
waived within thirty (30) days after becoming known to the Trustee, the Trustee
shall submit by mail to the Holders of the Notes, as their names and addresses
appear on the Note Register, notice of such Default, Event of Default, Servicer
Event of Default or Trigger Event known to the Trustee.
Section 7.03. Certain Rights of Trustee. Except as otherwise provided
in Section 7.01 hereof,
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
obligation, paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein shall
be sufficiently evidenced by an Issuer Request or Issuer Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
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(d) the Trustee may consult with counsel and the written advice of
such counsel selected by the Trustee with due care or any Opinion of Counsel
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Noteholders or the Note Insurer pursuant to this Indenture, unless
such Noteholders or the Note Insurer shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document, but the Trustee, at the direction of the
Controlling Party, shall make such further inquiry or investigation into such
facts or matters as, and if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books, records and
premises of the Issuer, upon reasonable notice and at reasonable times
personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys.
Section 7.04. Not Responsible for Recitals or Issuance of Notes. (a)
The recitals contained in this Indenture and in the Notes shall be taken as the
statements of the Issuer, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
condition of the Collateral or any part thereof, or as to the title of the
Issuer thereto or as to the security afforded thereby or hereby, or as to the
validity or genuineness of any securities at any time pledged and deposited with
the Trustee hereunder or as to the validity or sufficiency of this Indenture or
any of the Notes, except as affected by the representations and warranties made
hereunder by the Trustee. The Trustee shall not be accountable for the use or
application by the Issuer of any of the Notes or the proceeds thereof or of any
money paid to the Issuer or upon Issuer Order under any provisions hereof.
(b) Except as otherwise expressly provided in Section 7.14 hereof
and in the other Transaction Documents and without limiting the generality of
the foregoing, the Trustee shall have no responsibility or liability for or with
respect to the validity of any Equipment or Contract, the perfection of any
security interest (whether as of the date hereof or at any future time), the
maintenance of or the taking of any action to maintain such perfection, the
validity of the assignment of any portion of the Collateral to the Trustee or of
any intervening assignment, the review of any Contract (it being understood that
the Trustee has not reviewed and does not intend to review the substance or form
of any such Contract), the performance or enforcement of any Contract, the
compliance by the Issuer or the Servicer with any covenant or the breach by the
Issuer or the Servicer of any warranty or representation made hereunder or in
any related document or the accuracy of any such warranty or representation, any
investment of monies in the Collection Account, the Distribution Account or the
Reserve Account or any loss resulting therefrom, the acts or omissions of the
Issuer, the Servicer or any Customer, any action of the
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Servicer taken in the name of the Trustee, or the validity of the Servicing
Agreement or the Acquisition Agreement.
(c) Except as otherwise expressly provided herein, the Trustee
shall not have any obligation or liability under any Contract by reason of or
arising out of this Indenture or the assignment of such Contract hereunder or
the receipt by the Trustee of any payment relating to any Contract pursuant
hereto, nor shall the Trustee be required or obligated in any manner to perform
or fulfill any of the obligations of the Issuer under or pursuant to any
Contract, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it, or the sufficiency of any performance
by any party, under any Contract.
Section 7.05. May Hold Notes. The Trustee, Servicer (if it is not the
Company) or any other agent of the Issuer, in its individual or any other
capacity, may become the owner or pledgee of Notes, and, if operative, may
otherwise deal with the Issuer with the same rights it would have if it were not
Trustee, Servicer or such other agent (but subject to the proviso to the
definition of "Outstanding"); provided that the Company shall not become the
owner or pledgee of any Note.
Section 7.06. Money Held in Trust. Money and investments held in trust
by the Trustee hereunder shall be held in one or more trust accounts hereunder.
The Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Issuer or otherwise specifically
provided in this Indenture.
Section 7.07. Compensation and Reimbursement. The Issuer agrees:
(a) to pay the Trustee monthly its fee for all services
rendered by it hereunder as Trustee, in the amount of the Trustee Fee
(which compensation shall not otherwise be limited by any provision of
law in regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable out-of-pocket
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of the Transaction Documents (including
the reasonable compensation and the expenses and disbursements of the
Trustee's agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or bad faith; and
(c) to indemnify and hold harmless the Trustee and the
Back-up Servicer from and against any loss, liability, expense, damage
or injury sustained or suffered pursuant to this Indenture by reason of
any acts, omissions or alleged acts or omissions arising out of
activities of the Issuer, the Trustee or the Back-up Servicer
(including without limitation any violation of any applicable laws by
the Issuer as a result of the transactions contemplated by this
Indenture), including, but not limited to, any judgment, award,
settlement, reasonable attorneys' fees and other expenses incurred in
connection with the defense of any actual or threatened action,
proceeding or claim; provided that the Issuer shall not indemnify the
Trustee or the Back-up Servicer if such loss, liability, expense,
damage or injury is due to the Trustee's or Back-up Servicer's
negligence or willful
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misconduct, willful misfeasance or bad faith in the performance of
duties. Any indemnification pursuant to this Section shall only be
payable from the assets of the Issuer in accordance with the priorities
specified in Section 12.02(d). The provisions of this indemnity shall
run directly to and be enforceable by an injured person subject to the
limitations hereof and this indemnification agreement shall survive the
termination of this Indenture.
Upon the occurrence of an Event of Default resulting in an acceleration
of maturity of the Notes that has not been rescinded and annulled, the Trustee
shall have, as security for the performance of the Issuer under this Section
7.07, a lien ranking senior to the lien of the Notes to the extent set forth in
Section 6.08 hereof with respect to which any claim of the Trustee under this
Section 7.07 arose upon all property and funds held or collected as part of the
Collateral by the Trustee in its capacity as such. The Trustee shall not
institute any Proceeding seeking the enforcement of such lien against the
Collateral unless such Proceeding is in connection with a proceeding in
accordance with Article 6 hereof for enforcement of the lien of this Indenture
for the benefit of the Holders of the Notes and the Note Insurer secured by such
Collateral after the occurrence of an Event of Default (other than an Event of
Default due solely to a breach of this Section 7.07) and a resulting declaration
of acceleration of maturity of such Notes that has not been rescinded and
annulled. All monies so collected by the Trustee shall be applied in accordance
with Section 6.08 hereof.
Section 7.08. Corporate Trustee Required; Eligibility. There shall at
all times be a trustee hereunder which shall be a corporation, association or
national banking association organized and doing business under the laws of the
United States of America or of any state thereof, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $500,000,000, or be a member of a consolidated bank holding company with a
combined capital and surplus of at least $500,000,000, subject to supervision or
examination by Federal or state authority and having an office within the United
States of America, and, except with respect to the initial Trustee hereunder,
which shall have an unsecured commercial paper or other short-term unsecured
rating of the highest short-term rating by each Rating Agency, or otherwise
acceptable to the Controlling Party. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 7.08, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 7.08, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article 7.
Section 7.09. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10 hereof.
(b) The Trustee may resign at any time by giving 60 days' prior
written notice thereof to the Issuer and to each Noteholder and to the Note
Insurer. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 60 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction
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for the appointment of a successor Trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and may prescribe, appoint a successor
Trustee.
(c) The Trustee may be removed by the Controlling Party, by notice
to the Trustee at any time.
(d) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause
with respect to the Notes, the Controlling Party shall promptly appoint a
successor Trustee. If the Controlling Party shall fail to appoint a successor
Trustee within 90 days of notice of removal or resignation, then the Issuer may
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Notes.
(e) The Issuer shall give notice in the manner provided in Section
13.04 hereof of each resignation and each removal of the Trustee and each
appointment of a successor Trustee with respect to the Notes to the Noteholders,
the Rating Agencies and to the Note Insurer. Each notice shall include the name
of the successor Trustee and the address of its Corporate Trust Office.
The Trustee shall continue to remain liable for all obligations
incurred by it during the time that it served as Trustee hereunder.
Section 7.10. Acceptance of Appointment by Successor. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Issuer, the Note Insurer and the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee but, on request of the Issuer or the successor
Trustee, such retiring Trustee shall, upon payment of its reasonable
out-of-pocket costs and expenses, execute and deliver an instrument transferring
to such successor Trustee all the rights, powers and trusts of the retiring
Trustee, and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder, subject
nevertheless to its lien, if any, provided for in Section 7.07 hereof. Upon
request of any such successor Trustee, the Issuer shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be eligible under this Article.
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any Person into which the Trustee may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Person shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, and notice thereof shall be provided by the
Trustee to the Noteholders and to the Note Insurer. In case any Notes have been
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authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes.
Section 7.12. Co-Trustees and Separate Trustees. At any time or times,
for the purpose of meeting the legal requirements of any jurisdiction in which
any of the Collateral may at the time be located, the Issuer and the Trustee
shall have power to appoint, and, upon the written request of the Trustee or of
the Controlling Party, the Issuer shall for such purpose join with the Trustee
in the execution, delivery and performance of all instruments and agreements
necessary or proper to appoint, one or more Persons approved by the Trustee and
meeting the requirements of Section 7.08 hereof, either to act as co-trustee,
jointly with the Trustee of all or any part of such Collateral, or to act as
separate trustee of any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such Person or Persons
in the capacity aforesaid, any property, title, right or power deemed necessary
or desirable, subject to the other provisions of this Section. If the Issuer
does not join in such appointment within 15 days after the receipt by it of a
request so to do, or in case an Event of Default has occurred and is continuing,
the Trustee alone shall have power to make such appointment.
Should any written instrument from the Issuer be reasonably required by
any co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate trustee such property, title, right or power, any
and all such instruments shall, on request, be executed, acknowledged and
delivered by the Issuer.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:
(a) all rights, powers, duties and obligations under this
Indenture in respect of the custody of securities, cash and other
personal property held by, or required to be deposited or pledged with,
the Trustee under this Indenture shall be exercised solely by the
Trustee;
(b) the rights, powers, duties and obligations conferred
or imposed upon the Trustee by this Indenture in respect of any
property covered by such appointment shall be conferred or imposed upon
and exercised or performed by the Trustee or by the Trustee and such
co-trustee or separate trustee jointly, as shall be provided in the
instrument appointing such co-trustee or separate trustee, except to
the extent that under any law of any jurisdiction in which any
particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers,
duties and obligations shall be exercised and performed by such
co-trustee or separate trustee;
(c) the Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Issuer evidenced by a Board
Resolution, may accept the resignation of or remove any co-trustee or
separate trustee appointed under this Section, and, in case an Event of
Default has occurred and is continuing, the Trustee shall have power to
accept the resignation of, or remove, any such co-trustee or separate
trustee
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without the concurrence of the Issuer. Upon the written request of the
Trustee, the Issuer shall join with the Trustee in the execution,
delivery and performance of all instruments and agreements necessary or
proper to effectuate such resignation or removal. A successor to any
co-trustee or separate trustee that has so resigned or been removed may
be appointed in the manner provided in this Section;
(d) no co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Trustee or
any other such Trustee hereunder nor shall the trustee be liable by
reason of any act or omission of any co-trustee or separate trustee
selected by the Trustee with due care or appointed in accordance with
directions to the Trustee pursuant to Section 6.14 hereof; and
(e) any Act of Noteholders delivered to the Trustee shall
be deemed to have been delivered to each such co-trustee and separate
trustee.
Section 7.13. Rights with Respect to the Servicer. The Trustee's rights
and obligations with respect to the Servicer shall be governed by the Servicing
Agreement.
Section 7.14. Trustee to Hold Contracts; Trustee Check-In Procedures.
(a) The Trustee shall hold each Contract together with any documents relating
thereto that may from time to time be delivered to the Trustee in accordance
with this Indenture, until such time as such Contract is released from the
Collateral pursuant to the terms of this Indenture.
(b) In connection with the funding of the Contracts, the Trustee
shall perform a check-in of all Contract Files by the applicable Acquisition
Date, and shall deliver via facsimile transmission to the Issuer, the Servicer
and the Note Insurer a certification in substantially the form attached hereto
as Exhibit 7.14(b) to the effect that (except as described on the deficiency
report attached thereto (the "Contract Exception Report")) the Trustee has
received the Contract Files for each Contract listed on the related Contract
Schedule, it is holding such Contracts as Trustee for the benefit of the
Noteholders and the Note Insurer and (i) all documents required to be delivered
to it pursuant to clauses (a) through (g) of the definition of "Contract File"
are in its possession; (ii) such documents have been reviewed by it and do not
appear on their face to have been mutilated, damaged, torn or otherwise
physically altered and relate to such Contract identified in the Contract
Schedule; (iii) based on its examination of the Contract Files, the information
set forth in clause (a) of the definition of "Contract Schedule" with respect to
such Contract accurately reflects the information on the Contract Schedule; (iv)
each Contract appears to have been signed in the name of the related Customer
and endorsed in the name of the payee and does not contain any notations on its
face that purport to evidence any encumbrances or restrictions on transfer; and
(v) the Contract Exception Report lists all Contracts (x) for which the Trustee
does not have all of the items listed in clauses (a) through (g) of the
definition of "Contract File," and (y) which were not included on the Contract
Schedule.
(c) The Issuer and the Controlling Party shall resolve any such
exceptions to the Controlling Party's satisfaction prior to the applicable
Acquisition Date and the Trustee shall not disburse funds to the Issuer in
respect of any Contract for which exceptions remain without the prior written
consent of the Controlling Party, provided that the Controlling Party's prior
consent to any such exception shall not release the Company from its obligations
under Section 6.2 of the
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Acquisition Agreement. The Trustee shall be under no duty or obligation to
inspect, review or examine the Contracts and other documents to determine that
the same are genuine, enforceable or appropriate for the represented purpose or
that they have actually been recorded or that they are other than what they
purport to be on their face.
(d) With respect to Contracts relating to titled vehicles, (i) the
Servicer shall cause to be delivered to the Trustee the applicable items
contemplated by clause (h) of the definition of Contract File within the time
period provided therein, and (ii) the Trustee shall track the receipt of titles
for all such vehicles and shall review all such titles or titling office
acknowledgements upon receipt. On or before the 180th day following the Closing
Date and each Funding Date, the Trustee shall create a report listing any titles
or titling office acknowledgements that are due but have not been delivered and
provide such report to the Issuer, the Servicer and the Note Insurer. A title or
titling office acknowledgement received by the Trustee shall be deemed to
accurately reflect the Trustee's Lien on the related Equipment if it reflects
the name "Xxxxx Fargo" or a variation thereof as the first lienholder thereon.
(e) The Trustee shall hold the originally executed copy of each
Contract that constitutes chattel paper for the purposes of the UCC (including
the originally executed copy of any document that is a part thereof), together
with any documents relating thereto that may from time to time be delivered to
the Trustee in accordance with this Indenture, until such time as such Contract
is released from the lien of this Indenture or delivered to the Servicer
pursuant to the terms hereof or of the Servicing Agreement. The Trustee shall
hold the Contracts in the same state as the location of the Corporate Trust
Office, which initially is in Minneapolis, Minnesota.
(f) The Servicer and the Trustee, in its capacity as custodian of
the Contract Files shall, upon reasonable notice, permit the Noteholders and the
Note Insurer access to the Contract Files at all reasonable times, upon
reasonable notice and during the Servicer's or Trustee's normal business hours.
Such access shall be afforded without charge to the Noteholders and the Note
Insurer but only upon reasonable request. Any expenses incurred by the Trustee
pursuant to this Section 7.14(f) shall be reimbursed to it by the Servicer from
the Servicer's own funds.
Section 7.15. Money for Note Payments to Be Held in Trust. The Trustee
agrees, subject to the provisions of this Section, that it will hold all sums
held by it for the payment of principal or interest on Notes in trust for the
benefit of the Noteholders entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided.
Any money deposited with the Trustee in trust for the payment of the
principal or interest on any Note and remaining unclaimed for three years after
such principal or interest has become due and payable shall be paid to the
Issuer; and the Holder of such Note shall thereafter, as an unsecured general
creditor, and subject to any applicable statute of limitations, look only to the
Issuer for payment thereof, and all liability of the Trustee with respect to
such trust money or the related Note shall thereupon cease; provided, however,
that the Trustee, before being required to make any such repayment, may at the
expense of the Issuer cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the city in which the Corporate Trust Office is located, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining
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will be repaid to the Issuer. The Trustee may also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Noteholders whose right to or interest in monies due and payable but not claimed
is determinable from the records of the Trustee at the last address as shown on
the Note Register for each such Noteholder).
Section 7.16. Representations and Warranties of the Trustee. The
Trustee represents and warrants to the Issuer and the Note Insurer as follows:
(a) Due Organization. The Trustee is a national banking
association in good standing under the laws of the State of the United States
and is duly authorized and licensed under applicable law to conduct its business
as presently conducted.
(b) Corporate Power. The Trustee has all requisite right, power
and authority to execute and deliver this Indenture and to perform all of its
duties as Trustee hereunder.
(c) Due Authorization. The execution and delivery by the Trustee
of this Indenture and the other Transaction Documents to which it is a party,
and the performance by the 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 Trustee, or the performance by the Trustee,
of this Indenture and such other Transaction Documents.
(d) Valid and Binding Indenture. The Trustee has duly executed and
delivered this Indenture and each other Transaction Document to which it is a
party, and each of this Indenture and each such other Transaction Document
constitutes the legal, valid and binding obligation of the Trustee, enforceable
against the Trustee in accordance with its terms, except as (i) such
enforceability may be limited by bankruptcy, insolvency, 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 7.17. Waiver and Setoff. The Trustee hereby expressly waives
any and all rights of setoff that the 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 7.18. Control by the Controlling Party. The 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 Trustee shall act upon and
comply with notices and instructions given by the Controlling Party alone in the
place and stead of the Issuer.
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ARTICLE 8
THE RESERVE ACCOUNT AND CLAIMS UNDER THE POLICY
Section 8.01. Reserve Account. The Issuer agrees, simultaneously with
the execution and delivery of this Indenture, to execute and deliver the Master
Reserve Account Agreement and, pursuant to the terms thereof, to deposit the
Initial Reserve Account Deposit Amount in the Reserve Account on the Closing
Date. Although the Issuer has pledged the Reserve Account to the Collateral
Agent, pursuant to the Master Reserve Account Agreement, the Reserve Account
shall not under any circumstances be deemed to be a part of or otherwise
includible in the Issuer or the Collateral.
Section 8.02. Withdrawals from Reserve Account. In the event that the
Monthly Servicer's Report with respect to any Determination Date shall state
that the Reserve Account Draw Amount on such Determination Date exceeds zero,
then on the Deficiency Claim Date (as defined in the Master Reserve Account
Agreement) immediately preceding such Payment Date, the Trustee shall deliver to
the Note Insurer, the Fiscal Agent (as such term is defined in the Insurance
Agreement), if any, the Servicer, by hand delivery, telex or facsimile
transmission, a written notice (a "Deficiency Notice") specifying the Reserve
Account Draw Amount for such Payment Date. Such Deficiency Notice shall direct
the Collateral Agent to remit such Reserve Account Draw Amount (to the extent of
the funds available to be distributed pursuant to the Master Reserve Account
Agreement) to the Trustee for deposit in the Distribution Account.
Any Deficiency Notice shall be delivered by 10:00 a.m., New York City
time, on the related Deficiency Claim Date or within one (1) Business Day after
receiving the Monthly Servicer's Report. The amounts distributed by the
Collateral Agent to the Trustee pursuant to a Deficiency Notice shall be
deposited by the Trustee into the Distribution Account as Available Funds for
distribution in accordance with Section 12.02(d).
Section 8.03. The Policy. The Issuer agrees, simultaneously with the
execution and delivery of this Indenture, to cause the Note Insurer to issue the
Policy for the benefit of the Noteholders in accordance with the terms thereof.
Section 8.04. Claims Under the Policy. (a) In the event that the
Trustee has delivered a Deficiency Notice with respect to any Determination
Date, the Trustee shall determine on the related Draw Date whether the amount of
Available Funds with respect to such Determination Date (as stated in the
Monthly Servicer's Report with respect to such Determination Date) taking into
account the amount of the Reserve Account Draw Amount, if any, available to be
deposited into the Distribution Account as described in Section 8.02, after
giving effect to the payments required by Section 12.02(d)(i) through (iii), is
less than the Scheduled Policy Payments for the related Payment Date. If such
amount available in the Distribution Account is less than the Scheduled Policy
Payments, the Trustee shall furnish to the Note Insurer no later than 12:00 noon
New York City time on the related Draw Date a completed Notice of Claim in the
amount of the shortfall in amounts so available to pay the Scheduled Policy
Payments with respect to such Payment Date (the amount of any such shortfall
being hereinafter referred to as the "Policy Claim Amount"). Amounts paid by the
Note Insurer under the Policy shall be deposited by the
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Trustee into the Distribution Account for payment to Noteholders on the related
Payment Date (or promptly following payment on a later date as set forth in the
Policy).
(b) Any notice delivered by the Trustee to the Note Insurer
pursuant to Section 8.05(a) shall specify the Policy Claim Amount claimed under
the Policy and shall constitute a "Notice of Claim" under the Policy. In
accordance with the provisions of the Policy, the Note Insurer is required to
pay to the Trustee the Policy Claim Amount properly claimed thereunder by 12:00
noon, New York City time, on the later of (i) the third Business Day (as defined
in the Policy) following receipt on a Business Day (as defined in the Policy) of
the Notice of Claim, and (ii) the applicable Payment Date. Any payment made by
the Note Insurer under the Policy shall be applied solely to the payment of the
Notes, and for no other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each
Noteholder any Policy Claim Amount from the Note Insurer and (ii) deposit the
same in the Distribution Account for disbursement to the Noteholders as set
forth in clauses (iv) and (v) of Section 12.02(d). Any and all Policy Claim
Amounts disbursed by the Trustee from claims made under the Policy shall not be
considered payment by the Issuer or from the Reserve Account with respect to
such Notes, and shall not discharge the obligations of the Issuer with respect
thereto. 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, without further action, to have directed the 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 Policy. Notwithstanding the foregoing, the order of
priority of payments to be made pursuant to Section 12.02(d) 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 Note Register upon
receipt from the Note Insurer of proof of payment by the Note Insurer of any
Scheduled Policy Payment.
(d) The Trustee shall enforce, on behalf of the Noteholders, the
obligations of the Note Insurer under the Policy. Notwithstanding any other
provision of this Indenture, the Noteholders are not entitled to institute
proceedings directly against the Note Insurer.
Section 8.05. Preference Claims; Direction of Proceedings. (a) In the
event that the Trustee has received a certified copy of an order of the
appropriate court that any Scheduled Policy Payment paid on a Note has been
avoided in whole or in part as a preference payment under applicable bankruptcy
law, the Trustee shall so notify the Note Insurer, shall comply with the
provisions of the Policy to obtain payment by the Note Insurer of such avoided
payment, and shall, at the time it provides notice to the Note Insurer, comply
with the provisions of the Policy to obtain payment by 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 Policy. Pursuant to the terms of the 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 Policy) and not to the Trustee or any Noteholder directly (unless a
Noteholder has previously paid such payment to the
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receiver, conservator, debtor-in-possession or trustee in bankruptcy, in which
case the Note Insurer will make such payment to the 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 Trustee, on its
behalf and on behalf of the Noteholders, thereby appoints the Note Insurer as
agent and attorney-in-fact for the Trustee and each Noteholder in any legal
proceeding with respect to the Notes. The Trustee shall promptly notify the Note
Insurer of any proceeding or the institution of any action (of which a
Responsible Officer of the Trustee has actual knowledge) seeking the avoidance
as a preferential transfer under applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law of any payment made with respect to
the Notes. Each Holder of Notes, by its purchase of Notes, and the 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, as set forth in
Section 8.04(c), the Note Insurer shall be subrogated to, and each Noteholder
and the Trustee hereby delegate and assign, to the fullest extent permitted by
law, the rights of the 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.
Section 8.06. Surrender of Policy. The Trustee shall surrender the
Policy to the Note Insurer for cancellation upon its expiration in accordance
with the terms thereof.
ARTICLE 9
AMENDMENTS
Section 9.01. Amendments Without Consent of Noteholders. The Issuer,
the Servicer, the Trustee and the Back-up Servicer, without the consent of the
Holders of any Note but with the consent of the Note Insurer, at any time and
from time to time, may enter into one or more amendments hereto, in form
satisfactory to the Trustee and the Note Insurer, for any of the following
purposes, provided that any such amendment will not have an adverse effect on
the Holders, and the Rating Agency Condition shall have been satisfied in
connection with any such amendment:
(a) to better assure, convey and confirm unto the Trustee
any property subject or required to be subjected to the lien of this
Indenture, or to subject to the lien of this Indenture additional
property; or
(b) to evidence the succession of another Person to the
Issuer, and the assumption by such successor of the covenants of the
Issuer herein and in the Notes contained, in accordance with Section
11.02(o) hereof; or
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(c) to add to the covenants of the Issuer, for the
benefit of the Holders of all Notes or to surrender any right or power
herein conferred upon the Issuer; or
(d) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee; or
(e) to evidence the succession of the Trustee pursuant to
Article 7 hereof; or
(f) to correct any ambiguity or to correct or supplement
any provision of this Indenture which may be inconsistent with another
provision of this Indenture.
The Trustee is hereby authorized to join in the execution of any such
amendment and to make any other appropriate agreements and stipulations that may
be therein contained, but the Trustee shall not be obligated to enter into any
such amendment that affects the Trustee's own rights, duties, liabilities or
immunities under this Indenture or otherwise.
Promptly after the execution by the Issuer, the Servicer, the Trustee
and the Back-up Servicer of any amendment pursuant to this Section, the Issuer
shall mail to each Noteholder, the Note Insurer, WestLB and each Rating Agency a
copy of such amendment, such Opinion of Counsel and such confirmation by such
Rating Agency.
Section 9.02. Amendments and Modifications to Agreement with Consent of
Noteholders. (a) With the prior written consent of the Note Insurer, if then the
Controlling Party, or by Act of the Noteholders (if the applicable Noteholders
are the Controlling Party) delivered to the Issuer and the Trustee, the Issuer,
the Servicer, the Trustee and the Back-up Servicer may enter into an amendment
or modification of this Indenture 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 (other than as described in Section 9.01 hereof); provided, however,
that no such amendment shall, without the consent of the Holders of each
Outstanding Note affected thereby:
(i) change the Stated Maturity Date or the due date of
any installment of principal of, or any installment of interest on, any
Note, or change the principal amount thereof or the Note Interest Rate
or change any place of payment where, or the coin or currency in which,
any Note or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment; or
(ii) reduce the percentage of the principal amount of
Outstanding Notes, the consent of the Holders of which is required for
any such amendment, or the consent of the Holders of which is required
for any waiver of compliance with certain provisions of this Indenture
or Events of Default or their consequences; or
(iii) impair or adversely affect the priority or perfection
of the interests of the Trustee in the Collateral; or
(iv) modify or alter the definition of the terms
"Outstanding", "Monthly Interest Distribution Amount", "Interest
Distributable Amount" and "Principal Distributable Amount"; or
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(v) modify or alter the provisions of Section 6.18(f)
hereof; or
(vi) modify any of the provisions of this Section 9.02 or
any defined term as used in this Section 9.02, except to increase the
percentage of Holders required for any modification or waiver or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of each Holder of each
Outstanding Note affected thereby; or
(vii) permit the creation of any lien ranking prior to, on
a parity with, or subordinate to the Lien of this Indenture with
respect to any part of the Collateral or, except as expressly provided
herein, terminate or release the Lien of this Indenture on any property
at any time subject hereto or deprive the Holder of any Note of the
security afforded by the Lien of this Indenture; or
(viii) modify Section 12.02(d) hereof or any defined terms
as used in such Section.
(b) The Trustee is hereby authorized to join in the execution of
any amendments to this Indenture pursuant to clause (a) above and to make any
further appropriate agreements and stipulations that may be therein contained,
but the Trustee shall not be obligated to enter into any such amendment that
affects the Trustee's own rights, duties, liabilities or immunities under this
Indenture. It shall not be necessary for an Act of Noteholders under this
Section to approve the particular form of any proposed amendment or supplemental
agreement. Promptly after the execution by the Issuer, the Servicer, the Trustee
and the Back-up Servicer of any amendment pursuant to this Section, the Issuer
shall mail to each Rating Agency, WestLB, the Note Insurer and the Holders of
the Notes a copy of such amendment.
Section 9.03. Execution of Amendments. In executing any amendment
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Trustee shall be entitled to receive upon request, and
(subject to Section 7.01 hereof) shall be fully protected in relying in good
faith upon, an Opinion of Counsel reasonably acceptable to the Trustee stating
that the execution of such amendment is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own duties or immunities under this
Indenture or otherwise.
Section 9.04. Effect of Amendments. Upon the execution of any amendment
under this Article, this Indenture shall be modified in accordance therewith,
and such amendment shall form a part of this Indenture for all purposes; and
every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.05. Reference in Notes to Amendments. Notes authenticated and
delivered after the execution of any amendment pursuant to this Article may, and
if required by the Trustee shall, bear a notation in form approved by the
Trustee as to any matter provided for in such amendment. If the Issuer shall so
determine, new Notes so modified as to conform, in the opinion of the Trustee
and the Issuer, to any such amendment may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
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Section 9.06. Amendment as to Registered Form. Notwithstanding anything
to the contrary contained in Sections 9.01 and 9.02 hereof, no amendment shall
be entered into by the parties to this Indenture which would result in the Notes
not to be in registered form in accordance with Section 163(f) of the Internal
Revenue Code of 1986, as amended, unless the Issuer obtains an Opinion of
Counsel reasonably acceptable to the Controlling Party to the effect that the
failure of the Notes to be in registered form will not result in adverse federal
tax consequences.
ARTICLE 10
REDEMPTION OF NOTES
Section 10.01. Redemption at the Option of the Issuer; Election to
Redeem. The Issuer shall have the option to redeem all (but not less than all)
of the Outstanding Notes, on any Payment Date on which the aggregate principal
amount of the Outstanding Notes, after giving effect to any payments to be made
on such date, is ten percent (10%) or less of the aggregate principal amount of
the Notes as of the Closing Date.
The Issuer shall set the Redemption Date and the Redemption Record Date
for the Notes and give notice thereof to the Trustee pursuant to Section 10.02
hereof.
Installments of interest and principal that are due regarding the Notes
on or prior to the Redemption Date shall continue to be payable to the Holders
of such Notes called for redemption as of the relevant Record Dates according to
their terms and the provisions of Section 2.08 hereof. The election of the
Issuer to redeem the Notes pursuant to this Section shall be evidenced by a
Board Resolution directing the Trustee to make the payment of the Redemption
Price on all of the Notes from monies deposited with the Trustee pursuant to
Section 10.02 hereof.
Section 10.02. Notices; Deposit of Redemption Price. In the case of any
redemption pursuant to Section 10.01 hereof, the Issuer, at least 15 days prior
to the Redemption Date, (a) shall notify the Trustee and the Noteholders and the
Note Insurer of such Redemption Date, (b) shall give to the Trustee and the Note
Insurer such evidence, if any, as the Trustee or the Note Insurer may reasonably
request as to the ability of the Issuer to pay the Redemption Price and (c)
shall deposit into the Redemption Account on or before the Business Day prior to
the Redemption Date an amount equal to (i) the Redemption Price of all Notes to
be redeemed on such Redemption Date plus (ii) any fees due hereunder plus (iii)
any other amounts due and owing under the Transaction Documents, including but
not limited to amounts due and owing to the Note Insurer. To the extent the
Issuer deposits the Redemption Price into the Redemption Account prior to the
Redemption Date, the Lien of the Trustee in the Collateral shall without further
action on the part of any Person, be deemed to be released and the obligations
of the Issuer, except as otherwise provided herein, under this Indenture shall
have been discharged.
Section 10.03. Notice of Redemption by the Issuer. Upon receipt of such
notice and such deposit set forth in Section 10.02 hereof, the Trustee shall
provide notice of redemption pursuant to Section 10.01 hereof by overnight
courier, postage prepaid, mailed no later than the Business Day following the
date on which such deposit was made, (i) to each Holder of Notes listed on the
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Note Register as of the Redemption Record Date, at such Holder's address as
listed in the Note Register and (ii) to the Note Insurer.
All notices of redemption shall state:
(a) the applicable Redemption Date;
(b) the applicable Redemption Price;
(c) the applicable Redemption Record Date;
(d) that on such Redemption Date, the Redemption Price
will become due and payable upon each such Note, and that interest
thereon shall cease to accrue on such date; and
(e) that the Notes must be surrendered in accordance with
Section 2.08(c) hereof.
Notice of redemption of Notes shall be given by the Trustee in the name
and at the expense of the Issuer. Failure to give notice of redemption, or any
defect therein, to any Holder of any Note selected for redemption shall not
impair or affect the validity of the redemption of any other Note.
Section 10.04. Notes Payable on Redemption Date. Notice of redemption
having been given as provided in Section 10.03 hereof, the Notes to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
and on such Redemption Date such Notes shall cease to bear interest, except as
provided below. The Holders of such Notes as of the Redemption Record Date shall
be paid the Redemption Price by the Trustee on behalf of the Issuer; provided,
however, that installments of principal and interest that are due regarding such
Notes on or prior to such Redemption Date shall be payable to the Holders of
such Notes registered as such on the relevant Record Dates according to their
terms and the provisions of Section 2.08 hereof.
If the Holders of any Note called for redemption shall not be so paid,
the principal on such Notes shall, until paid, bear interest from the applicable
Redemption Date at the related Note Interest Rate; provided, however, that such
principal of such Notes shall cease to bear interest to the extent that an
amount equal to the Redemption Price of all such Notes is on deposit in the
Redemption Account.
ARTICLE 11
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 11.01. Representations and Warranties. The Issuer hereby makes
the following representations and warranties for the benefit of the Trustee and
the Noteholders and the Note Insurer on which the Trustee and the Noteholders
and the Note Insurer shall rely. Except as specifically provided herein, such
representations and warranties were made as of the Closing
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Date and will be made as of each Funding Date, and shall survive the pledge of
the Collateral to the Trustee.
(a) Organization and Good Standing. The Issuer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware and each other state where the nature of its
business requires it to qualify, except to the extent that the failure to so
qualify would not have a Material Adverse Effect.
(b) Authorization. The Issuer has the power, authority and legal
right to execute, deliver and perform under the terms of the Transaction
Documents and the execution, delivery and performance of the Transaction
Documents have been duly authorized by the Issuer by all necessary limited
liability company action.
(c) Binding Obligation. Each of the Transaction Documents to which
the Issuer is a party, assuming due authorization, execution and delivery by the
other parties thereto, constitutes a legal, valid and binding obligation of the
Issuer, enforceable against the Issuer in accordance with its terms except that
(A) such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws (whether statutory, regulatory or decisional)
now or hereafter in effect relating to creditors' rights generally and (B) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to certain equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought, whether a proceeding
at law or in equity.
(d) No Violation. The consummation of the transactions
contemplated by the fulfillment of the terms of the Transaction Documents will
not conflict with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under the
certificate of formation or the limited liability company agreement of the
Issuer, or any indenture, agreement, mortgage, deed of trust or other instrument
to which the Issuer is a party or by which it is bound, or in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of such
indenture, agreement, mortgage, deed of trust or other such instrument, other
than any Lien created or imposed pursuant to the terms of the Transaction
Documents, or violate any law, or any material order, rule or regulation
applicable to the Issuer of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Issuer or any of its properties.
(e) No Proceedings. There are no Proceedings or investigations to
which the Issuer, or any of the Issuer's Affiliates, is a party pending, or, to
the knowledge of the Issuer, threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality (i)
asserting the invalidity of any Transaction Document, (ii) seeking to prevent
the issuance of any of the Notes or the consummation of any of the transactions
contemplated by any Transaction Document, or (iii) seeking any determination or
ruling that would materially and adversely affect the performance by the Issuer
of its obligations under, or the validity or enforceability of, any Transaction
Document or (iv) materially affecting the Collateral.
(f) Approvals. All approvals, authorizations, consents, orders or
other actions of any Person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of the
Transaction Documents and with the valid and proper
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authorization, issuance and sale of the Notes pursuant to this Indenture (except
approvals of State securities officials under the Blue Sky Laws) have been
taken.
(g) Name and Place of Business. The Issuer's legal name is as set
forth in this Indenture. The Issuer has not used or done business under any
other name in the previous five-year period. The Issuer's principal place of
business and chief executive office is located at 0000 X. 000 Xxx, Xxxxxxx Xxx,
XX 00000, or at such other location where all action required by Section
11.02(f) hereof shall have been taken place with respect to the Collateral. The
Issuer has not used any other address in the previous five-year period. The
Issuer's jurisdiction of formation is Delaware.
(h) Transfer and Assignment. Upon the delivery to the Trustee of
the Contracts and the filing of the financing statements described in Sections
4.01 hereof, the Trustee for the benefit of the Noteholders and the Note Insurer
will have a first priority perfected security interest in the Receivables, the
Contracts and the other related Assets and in the proceeds thereof, except for
Liens permitted under Section 11.02(a) hereof and limited to the extent set
forth in Section 9-315 of the UCC as in effect in the applicable jurisdiction.
All filings (including, without limitation, UCC filings) as are necessary in any
jurisdiction to perfect the ownership or other interest of the Trustee in the
Collateral, including the transfer of the Contracts and the payments to become
due thereunder, have been made.
(i) Parent of the Issuer. The Company is the registered owner of
all of the issued and outstanding membership interests of the Issuer, all of
which membership interests have been validly issued, and are fully paid and
nonassessable.
(j) Acquisition Agreement. The Issuer hereby restates and makes
each of the representations and warranties made by the Company in Section
3.02(b) of the Acquisition Agreement.
(k) Bulk Transfer Laws. The transfer, assignment and conveyance of
the Contracts, the rights and interests (whether an interest for security or
otherwise) in the related Equipment and the Receivables (i) by the applicable
Existing Broker, if any, to the Company, (ii) by the Company to the Issuer
pursuant to the Acquisition Agreement and (iii) by the Issuer pursuant to this
Indenture are not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
(l) Solvency. Neither on the date of the transactions contemplated
by the Transaction Documents or immediately before each Funding Date, nor as a
result of the transactions, will the Issuer:
(A) be insolvent such that the sum of its debts is
greater than all of its respective property, at a fair valuation;
(B) be engaged in, or about to engage in, business or a
transaction for which any property remaining with the Issuer will be an
unreasonably small capital or the remaining assets of the Issuer will
be unreasonably small in relation to its respective business or the
transaction; and
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(C) have intended to incur, or believed it would incur,
debts that would be beyond its respective ability to pay as such debts
mature or become due. The Issuer's assets and cash flow enable it to
meet its present obligations in the ordinary course of business as they
become due.
(m) Tax Returns. All tax returns or extensions required to be
filed by the Issuer in any jurisdiction have in fact been filed, and all taxes,
assessments, fees and other governmental charges upon the Issuer, or upon any of
the respective properties, income or franchises shown to be due and payable on
such returns have been paid. All such tax returns are true and correct and the
Issuer has no knowledge of any proposed additional tax assessment against it in
any material amount nor of any basis therefor. The provisions for taxes on the
books of the Issuer are in accordance with generally accepted accounting
principles.
(n) Reporting. The Issuer will treat the acquisition of the
Receivables related to the Contracts and the security interest in the related
Equipment as an absolute conveyance from the Company to the Issuer on its books
and records.
(o) Subsidiaries. The Issuer has no subsidiaries.
(p) Pension Plans. The Issuer is not a party to any pension plan
or profit sharing plan.
(q) Full Disclosure. The Memorandum fairly describes, in all
material respects, the Issuer. The Memorandum, and the documents, certificates
or other writings delivered to each investor in the Notes, by or on behalf of
the Issuer in connection with the transactions contemplated by the Transaction
Documents, taken as a whole, do not contain any untrue statement of a material
fact with respect to an investment in the Notes or omit to state any material
fact with respect to an investment in the Notes necessary to make the statements
therein not misleading in light of the circumstances under which they were made.
Except as disclosed in the Memorandum or as expressly described in one of the
documents, certificates or other writings delivered to each investor in the
Notes, there has been no change in the financial condition, operations,
business, properties or prospects of the Issuer or the Collateral, except
changes that individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect. There is no fact known to the Issuer that
could reasonably be expected to have a Material Adverse Effect that has not been
set forth herein or in the Memorandum or in the other documents, certificates
and other writings delivered to each investor in the Notes by or on behalf of
the Issuer specifically for use in connection with the transactions contemplated
by the Transaction Documents.
(r) Expenses of Enforcement. To the extent not otherwise
previously paid under the Transaction Documents, including under Section 6.08
hereof, the Issuer will pay to the Holder of each Note on demand such further
amount as shall be sufficient to cover all costs and expenses of such Holder
incurred in any enforcement or collection under this Indenture and the other
Transaction Documents, including, without limitation, reasonable attorney's
fees, expenses and disbursements.
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(s) Contracts. The Issuer does hereby represent and warrant that
all representations and warranties of the Issuer made under each of the
Transaction Documents with respect to the Contracts are true and correct on the
date as of which such representations and warranties were originally made and
such representations and warranties are true as of the Closing Date and will be
true as of each Funding Date. As of the Closing Date, the Contracts identified
on the Officer's Certificate of the Issuer in the form of Exhibit 11.01(s)
attached hereto dated the Closing Date are all of and the only Contracts in the
Collateral.
(t) No Margin Transactions. None of the transactions contemplated
in the Transaction Documents (including the use of the proceeds from the sale of
the Notes) will result in a violation of Section 7 of the Securities and
Exchange Act of 1934, as amended, or any regulations issued pursuant thereto,
including Regulations T, U and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II. The Issuer does not own or intend to
carry or purchase any "margin security" within the meaning of said Regulation U.
(u) Perfection Representations. The additional representations and
warranties set forth on Schedule 11.01(u) are true and correct.
Section 11.02. Covenants. The Issuer hereby makes and confirms the
following covenants for the benefit of the Trustee and the Noteholders and the
Note Insurer, on which the Trustee and the Noteholders and the Note Insurer
rely. Such covenants are hereby made as of the Closing Date and shall survive
the pledge of the Collateral to the Trustee.
(a) No Liens. Except as provided in this Indenture, the Issuer
will not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien (other than Permitted Liens) on any
portion of the Collateral now existing or hereafter created, or any interest
therein prior to the termination of this Indenture pursuant to Section 5.01
hereof; the Issuer will notify the Trustee and the Note Insurer of the existence
of any Lien on any portion of the Collateral immediately upon discovery thereof,
and the Issuer shall defend the right, title and interest of the Trustee in, to
and under all portions of the Collateral now existing or hereafter created,
against all claims of third parties claiming through or under the Issuer;
provided, however, that nothing in this Section 11.02(a) shall prevent or be
deemed to prohibit the Issuer from suffering to exist upon any of the Equipment
any Liens for municipal or other local taxes and other governmental charges owed
by the Issuer or a Customer if such taxes or governmental charges shall not at
the time be due and payable or if the Issuer (with the consent of the Trustee)
or related Customer shall currently be contesting the validity thereof in good
faith by appropriate proceedings and the Issuer shall have set aside on its
books adequate reserves with respect thereto.
(b) Delivery of Collections. The Issuer agrees to hold in trust
and promptly pay to the Servicer all amounts received by the Issuer in respect
of the Collateral (other than amounts distributed to or for the benefit of the
Issuer pursuant to Article 12 hereof).
(c) Obligations with Respect to Contracts. The Issuer will duly
fulfill all obligations on its part to be fulfilled under or in connection with
each Contract and will do nothing to impair the rights of the Trustee (for the
benefit of the Noteholders and the Note Insurer) in the Receivables, the
Contracts or any other portion of the Collateral. As long as there is no event
of
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default under the applicable Contract, the Issuer will not disturb the
Customer's quiet and peaceful possession of the related Equipment and the
Customer's unrestricted use thereof for its intended purpose.
(d) Compliance with Law. The Issuer will comply, in all material
respects, with all acts, rules, regulations, orders, decrees and directions of
any governmental authority applicable to the Collateral or any part thereof;
provided, however, that the Issuer may contest any act, regulation, order,
decree or direction in any reasonable manner which shall not materially and
adversely affect the rights of the Trustee (for the benefit of the Noteholders
and the Note Insurer) in the Collateral. The Issuer will comply, in all material
respects, with all requirements of law applicable to the Issuer.
(e) Preservation of Security Interest. The Issuer shall execute
and file such continuation statements and any other documents which may be
required by law to fully preserve and protect the first priority perfected
security interest of the Trustee (for the benefit of the Noteholders and the
Note Insurer) in the Collateral.
(f) Maintenance of Office, etc. The Issuer will not, without
providing 30 days' prior notice to the Trustee and the Note Insurer and without
filing any new financing statement or amendments to any previously filed
financing statements as the Trustee or the Note Insurer may require or as may be
required in order to maintain the Trustee's first priority perfected security
interest in the Collateral, (a) change its state of formation or (b) change its
name, identity or structure in any manner which would make any financing
statement or continuation statement filed against the Issuer in accordance with
the Servicing Agreement or this Indenture seriously misleading within the
meaning of Section 9-506 of any applicable enactment of the UCC.
(g) Further Assurances. The Issuer will make, execute or endorse,
acknowledge, and file or deliver to the Trustee and the Note Insurer from time
to time such schedules, confirmatory assignments, conveyances, transfer
endorsements, powers of attorney, certificates, reports and other assurances or
instruments and take such further steps relating to the Collateral, as the
Trustee or the Note Insurer may request and reasonably require.
(h) Notice of Liens. The Issuer shall notify the Trustee and the
Back-up Servicer and the Note Insurer promptly after becoming aware of any Lien
on any portion of the Collateral, except for any Permitted Liens on Equipment
for municipal or other local taxes if such taxes shall not at the time be due or
payable without penalty.
(i) Activities of the Issuer. The Issuer (a) shall engage in only
(1) the acquisition, ownership, leasing, selling and pledging of the property
acquired by the Issuer pursuant to the Acquisition Agreement and this Indenture,
and causing the issuance of, receiving and selling the Notes issued pursuant to
this Indenture and (2) the exercise of any powers permitted to limited liability
companies under the limited liability company law of the State of Delaware which
are incidental to the foregoing or necessary to accomplish the foregoing; (b)
will (1) maintain its books and records separate from the books and records of
any other entity, (2) maintain separate bank accounts and no funds of the Issuer
shall be commingled with funds of any other entity other than temporary
commingling as contemplated by the Transaction Documents, (3) keep in full
effect its existence, rights and franchises as a limited liability company under
the laws of the
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State of Delaware, and will obtain and preserve its qualification to do business
as a foreign limited liability company in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, and (4) operate its business generally so as
not to be substantively consolidated with any of its Affiliates; and (c) will
not (1) dissolve or liquidate in whole or in part, (2) own any subsidiary or
lend or advance any moneys to, or make an investment in, any Person, (3) make
any capital expenditures, (4) (A) commence any case, proceeding or other action
under any existing or future bankruptcy, insolvency or similar law seeking to
have an order for relief entered with respect to it, or seeking reorganization,
arrangement, adjustment, wind-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, (B) seek appointment of a receiver,
trustee, custodian or other similar official for it or any part of its assets,
(C) make a general assignment for the benefit of creditors, or (D) take any
action in furtherance of, or consenting or acquiescing in, any of the foregoing,
(5) guarantee (directly or indirectly), endorse or otherwise become contingently
liable (directly or indirectly) for the obligations of, or own or purchase any
stock, obligations or securities of or any other interest in, or make any
capital contribution to, any other Person, (6) merge or consolidate with any
other Person, except as permitted pursuant to Section 11.02(n) hereof, (7)
engage in any other action that bears on whether the separate legal identity of
the Issuer will be respected, including without limitation (A) holding itself
out as being liable for the debts of any other party or (B) acting other than in
its name and through its duly authorized officers or agents, or (8) create,
incur, assume, or in any manner become liable in respect of any indebtedness
other than trade payables and expense accruals incurred in the ordinary course
of business and which are incidental to its business purpose. Notwithstanding
the foregoing, (i) before any additional indebtedness (other than pursuant to
the Transaction Documents) is incurred by the Issuer, the Rating Agency
Condition shall have been satisfied and the Issuer shall have obtained the prior
written consent of the Controlling Party, and (ii) nothing in this Section or in
any other part of this Indenture or any other Transaction Document shall apply
to or limit the obligations of the Issuer under the Note Purchase Agreement or
the Insurance Agreement.
(j) Managers. The Issuer agrees that at all times, the Issuer
shall have at least two Independent Managers (as defined in the limited
liability company agreement of the Issuer); provided, however, that (a) such
Independent Managers may also be independent officers and (b) such Independent
Managers and such independent officers may serve in similar capacities for other
"special purpose entities" formed by the Company or Affiliates of the Company.
(k) Consolidated Return. For Federal income tax purposes, the
Issuer is disregarded as an entity separate from the Company or the owner of the
Company and all of the income and expenses of the Issuer will be included in the
federal income tax return of the Company for federal income tax purposes at all
times until termination of this Indenture.
(l) Security Interest in the Equipment. The Issuer warrants that
it owns or has a valid first priority perfected security interest in the
Equipment (except that Equipment valued at less than fifteen thousand dollars
($15,000) and related to a Contract characterized by the Company as a true lease
will not be perfected) and that it will defend its security interest in such
Equipment against all Persons, claims and demands whatsoever. The Issuer shall
not assign, sell, pledge, or exchange, or in any way encumber or otherwise
dispose of its interest in the Equipment, except as permitted under this
Indenture.
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(m) Enforcement of Servicing Agreement and Acquisition Agreement.
The Issuer will take all actions necessary, and diligently pursue all remedies
available to it, to enforce the obligations of the Servicer under the Servicing
Agreement and the Company under the Acquisition Agreement (and, in the case of
the Acquisition Agreement, maintain the perfection of its interests thereunder).
(n) Issuer May Consolidate, etc., Only on Certain Terms. The
Issuer shall not consolidate or merge with or into any other Person or convey or
transfer its properties and assets substantially as an entirety to any Person,
unless it obtains the prior written consent of the Controlling Party.
(o) Successor Substituted. Upon any consolidation or merger, or
any conveyance or transfer of the properties and assets of the Issuer
substantially as an entirety in accordance with Section 11.02(n) hereof, the
Person formed by or surviving such consolidation or merger (if other than the
Issuer) or the Person to which such conveyance or transfer is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein upon the execution of an assignment and assumption
agreement by such Person. In the event of any such conveyance or transfer, the
Person named as the "Issuer" in the first paragraph of this Indenture or any
successor which shall theretofore have become such in the manner prescribed in
this Article shall be released from its liabilities as obligor and maker on all
the Notes and from its obligations under this Indenture and may be dissolved,
wound-up and liquidated at any time thereafter.
(p) Use of Proceeds. The proceeds received by the Issuer on the
Closing Date from the sale of the Notes, and the proceeds received by the Issuer
on each Funding Date from the related Funding, will be used by the Issuer (i) in
the case of the Closing Date (A), to pay any amounts owing under the Warehouse
and Security Agreement dated as of December 14, 2001 among the Issuer, Financial
Pacific Company, Financial Pacific Leasing, LLC, Xxxxx Fargo Bank Minnesota,
National Association, and Westside Funding Corporation, (B) to pay the expenses
associated with this transaction, (C) to make the required deposits to the
Reserve Account, the Prefunding Account and the Negative Carry Account, (ii) in
the case of a Funding, to acquire Contracts from the Company and make the
required deposit to the Reserve Account pursuant to Section 4.02(e) hereof, and
(iii) for general business purposes.
(q) Investment Company Act of 1940. The Issuer will at all times
conduct its operations in a manner which will not subject it to registration as
an "investment company" under the Investment Company Act of 1940, as amended.
The Issuer will not issue or register the transfer of any of its membership
interests if immediately after such issuance or transfer there would be more
than 100 beneficial owners (within the meaning of the Investment Company Act of
1940, as amended) of (i) the Notes, (ii) the membership interests of the Issuer
and (iii) all other securities of the Issuer.
(r) Transactions with Affiliates. The Issuer will not enter into
or cause, suffer or permit to exist any arrangement or contract with any of its
Affiliates unless such arrangement or contract is fair and equitable to the
Issuer, is commercially reasonable and is an arrangement or contract no less
favorable to the Issuer than generally available on an arms-length basis in
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transactions with third parties; provided that this sentence shall not apply to
or limit the obligations of the Issuer under the Note Purchase Agreement or the
Insurance Agreement.
(s) Notice of Defaults, Events of Default, Servicer Events of
Default and Trigger Events. Upon the Issuer's obtaining knowledge of the
occurrence of any Default, Event of Default, Servicer Event of Default or
Trigger Event, the Issuer shall within one Business Day of obtaining such
knowledge notify the Trustee, WestLB, each Rating Agency and the Note Insurer of
such occurrence.
(t) Subsidiary. The Issuer will not take any action to cause the
Issuer to no longer be a wholly-owned subsidiary of the Company.
(u) Maintenance of Ratings. The Issuer will provide each Rating
Agency with any information reasonably requested by such Rating Agency in order
to maintain the ratings on the Notes.
(v) Rule 144A Transfers. The Issuer will deliver with reasonable
promptness any financial or other information that a Holder may reasonably
request from time to time to permit such Holder to comply with the requirements
of Rule 144A in connection with the resale of Notes by such Holder.
(w) Dividends. The Issuer will not pay dividends to any Person,
except with funds received pursuant to clause (xi) of Section 12.02(d) hereof.
(x) Tax Treatment. The Issuer will treat the Notes as indebtedness
for federal, state and local tax purposes.
(y) Annual Statement as to Compliance. The Issuer will deliver to
the 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, 2003), an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that:
(a) 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
(b) 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.
(z) Opinions as to Pledged Collateral.
(a) On the Closing Date, the Issuer shall furnish to the
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
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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 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, 2004, the
Issuer shall furnish to the 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 re-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 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 re-filing 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 11.03. Other Matters as to the Issuer.
(a) Limitation on Liability of Directors, Officers, or Employees
of the Issuer. (a) Except as provided elsewhere in this Indenture, the
directors, managers, officers, or employees of the Issuer shall not be under any
personal liability to the Trustee, the Noteholders, the Servicer, the Note
Insurer or any other Person hereunder or pursuant to any documents delivered
hereunder, it being expressly understood that all such liability is expressly
waived and released as a condition of, and as consideration for, the execution
of this Indenture and the issuance of the Notes, except with respect to
liability resulting from the fraudulent or willful misconduct of any such
director, manager, officer or employee. The Issuer and any director, manager,
officer, employee or agent of the Issuer may rely in good faith on the advice of
counsel or on any documents of any kind, prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
(b) Parties Will Not Institute Insolvency Proceedings. During the
term of this Indenture and for one year and one day after the termination
hereof, none of the parties hereto or any Affiliate thereof (other than the
Trustee acting pursuant to the direction of the Controlling Party) will file any
involuntary petition or otherwise institute any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other proceeding under any
federal or state bankruptcy or similar law against the Issuer.
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ARTICLE 12
ACCOUNTS AND ACCOUNTINGS
Section 12.01. Collection of Money. Except as otherwise expressly
provided herein, the 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 Trustee pursuant to this Indenture. The Trustee shall, upon
request from the Servicer, provide the Servicer with sufficient information
regarding the amount of collections with respect to the Contracts received by
the Trustee in the Distribution Account and the other accounts held in the name
of the Trustee to permit the Servicer to perform its duties under the Servicing
Agreement. The Trustee shall hold all such money and property so received by it
as part of the Collateral and shall apply it as provided in this Indenture. If
any Contract becomes a Defaulted Contract, the Trustee, upon the request of the
Issuer or the Servicer may, and upon the request of the Controlling Party shall,
take such action as may be appropriate to enforce payment or performance of such
Contract, including the institution and prosecution of appropriate Proceedings.
Any such action shall be without prejudice to any right to claim a Default or
Event of Default under this Indenture and to proceed thereafter as provided in
Article 6 hereof.
Section 12.02. Collection Account; Distribution Account; Redemption
Account. (a) The Servicer represents and warrants that it has established an
account (the "Collection Account") in the name of the Trustee at the bank
holding the initial Lockbox Account, bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Noteholders and
the Note Insurer, for the receipt of (i) payments remitted to the Trustee by the
Servicer or the Issuer and amounts transferred from the Lockbox Account in
accordance with Section 4.02(b) of the Servicing Agreement, and (ii) any
Reinvestment Income with respect to the Collection Account. Funds in the
Collection Account shall not be commingled with any other monies. On each
Determination Date, the Servicer shall cause all amounts in the Collection
Account constituting Available Funds with respect to the related Payment Date to
be transferred to the Distribution Account.
The Issuer represents and warrants that it has established a trust
account (the "Distribution Account") in the name of the Trustee for the benefit
of the Noteholders and the Note Insurer, for the receipt of (i) amounts
transferred from the Reserve Account in accordance with Section 8.02 hereof,
(ii) amounts transferred from the Prefunding Account in accordance with Section
12.04(d) hereof, (iii) amounts transferred from the Negative Carry Account in
accordance with Section 12.05(d) hereof, (iv) payments on the Policy in
accordance with Article 8 hereof, (v) amounts transferred from the Collection
Account in accordance with the preceding paragraph, (vi) Purchase Prices, (vii)
amounts transferred from the Revenue Tax Account in accordance with Section
12.06 hereof, and (viii) any Reinvestment Income with respect to the
Distribution Account. Funds in the Distribution Account shall not be commingled
with any other monies. All payments to be made from time to time by the Issuer
to the Noteholders out of funds in the Distribution Account pursuant to this
Indenture shall be made by the Trustee. All monies deposited from time to time
in the Distribution Account pursuant to this Indenture shall be held by the
Trustee as part of the Collateral as herein provided.
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(b) Funds on deposit in the Collection Account shall be invested
by the bank holding the Collection Account, at the direction of the Servicer, in
Eligible Investments. Upon an Issuer Order (which may be a standing order), the
Trustee shall invest the funds in the Distribution Account, in Eligible
Investments. The Issuer Order shall specify the Eligible Investments in which
the Trustee shall invest, shall state that the same are Eligible Investments and
shall further specify the percentage of funds to be invested in each Eligible
Investment. No Eligible Investment in the Collection Account shall mature later
than the second Business Day preceding the next following Determination Date and
shall not be sold or disposed of prior to its maturity. No Eligible Investment
in the Distribution Account shall mature later than the second Business Day
preceding the next following Payment Date and shall not be sold or disposed of
prior to its maturity. In the absence of an Issuer Order, the Trustee shall
invest funds in the Distribution Account in Eligible Investments described in
clause (d) of the definition thereof. All investments by the Trustee in Eligible
Investments shall be made in the name of the Trustee for the benefit of the
Noteholders and the Note Insurer. Any funds in the Distribution Account not so
invested by the Trustee must be insured by the Federal Deposit Insurance
Corporation.
(c) Any income or other gain from investments in Eligible
Investments as outlined in (b) above shall be credited to the Collection Account
or the Distribution Account, as the case may be, and any loss resulting from
such investments shall be charged to such account; provided, however, that the
Issuer shall make or cause to be made no later than the applicable Determination
Date a deposit to the Collection Account or the Distribution Account, as the
case may be, to the extent of any losses therein. Except as otherwise
specifically set forth herein, the Trustee shall not be liable for any loss
incurred on any funds invested in Eligible Investments pursuant to the
provisions of this Section 12.02 (other than in its capacity as obligor under
any Eligible Investment).
(e) On each Payment Date, after making all transfers and deposits
to the Distribution Account referred to in Section 12.02(a) hereof, the Trustee
shall withdraw all Available Funds (and with respect to item (iv) below (for the
Monthly Interest Distributable Amount) and item (v) below, all amounts paid by
the Note Insurer under the Policy) from the Distribution Account, and shall make
the following disbursements in the following order:
(i) to the Trustee and the Back-up Servicer, the Trustee
Fee, the Back-up Servicer Fee, any reasonable Transition Expenses then
due (provided that the aggregate amount of Transition Expenses that may
be paid pursuant to this clause (i) for all periods since the Closing
Date shall not exceed seventy-five thousand dollars ($75,000)) and any
reasonable out-of-pocket expenses of the Trustee (provided that the
aggregate amount of out-of-pocket expenses of the Trustee that may be
paid pursuant to this clause (i) for all periods since the Closing Date
shall not exceed seventy-five thousand dollars ($75,000));
(ii) to the Servicer, the sum of (A) the Servicer Fee then
due (and any previously unpaid Servicer Fees) and (B) the amount of the
revenue taxes imposed by the State of Washington on the receipt of
lease payments with respect to the related Due Period;
(iii) to the Note Insurer, the Premium then due and any
previously unpaid Premiums;
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(iv) to the Noteholders, the Interest Distributable
Amount;
(v) to the Noteholders, the Principal Distributable
Amount;
(vi) to the Note Insurer, (A) reimbursement of any amounts
paid under the Policy and (B) any other amounts owing to the Note
Insurer under the Insurance Agreement;
(vii) if so directed by the Controlling Party, on each
Payment Date following the occurrence of a Trigger Event, to the
Noteholders, any remaining amounts as a payment of principal until the
Notes are paid in full;
(viii) to transfer to the Reserve Account any remaining
amounts until the amounts on deposit in the Reserve Account equal the
Required Reserve Account Balance;
(ix) to the Trustee, the Back-up Servicer and any
successor Servicer, any other amounts due them under any of the
Transaction Documents and not previously reimbursed above or otherwise
paid under the Transaction Documents;
(x) to the Servicer, any other amounts due under any of
the Transaction Documents and not previously reimbursed above or
otherwise paid under the Transaction Documents; and
(xi) to the Issuer, any remaining amounts.
(e) The Trustee represents and warrants that it has established a
trust account at the Corporate Trust Office (the "Redemption Account") in the
name of the Trustee for the benefit of Noteholders and the Note Insurer, for the
receipt of the Redemption Price of any Notes to be redeemed (plus any other
amounts due and owing under the Transaction Documents) in accordance with
Article 10 hereof. On any Redemption Date, the Trustee shall withdraw the
applicable Redemption Price from the Redemption Account and shall remit the
Redemption Price to the applicable Noteholders in accordance with Section 10.04
hereof. Upon an Issuer Order, the Trustee shall invest funds in the Redemption
Account in Eligible Investments that mature no later than two Business Days
prior to the relevant Redemption Date. In the absence of an Issuer Order, the
Trustee shall invest funds in the Redemption Account in Eligible Investments
described in clause (d) of the definition thereof. All investments by the
Trustee in Eligible Investments shall be made in the name of the Trustee for the
benefit of the Noteholders and the Note Insurer. Any monies deposited in the
Redemption Account for purposes of redeeming Notes pursuant to Article 10 hereof
shall, subject to Section 7.16 hereof, remain in the Redemption Account until
used to redeem such Notes.
Section 12.03. Reserve Account. Pursuant to the Master Reserve Account
Agreement, an account (the "Reserve Account") has been established with a bank
as set forth therein for the benefit of the Noteholders. On the Closing Date,
the Issuer shall cause the Trustee to deposit the Initial Reserve Account
Deposit Amount from the proceeds of the sale of the Notes to the Reserve
Account. On each Payment Date thereafter, the Reserve Account shall be funded up
to the Required Reserve Account Balance from amounts available in the
Distribution Account in
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accordance with Section 12.02(d) hereof. On each Funding Date, the Funding Date
Reserve Account Deposit Amount shall be transferred from the Prefunding Account
to the Reserve Account in accordance with Section 12.04(d) hereof.
Section 12.04. Prefunding Account. (a) The Trustee represents and
warrants that it has established a trust account at its Corporate Trust Office
(the "Prefunding Account") in the name of the Trustee for the benefit of the
Noteholders and the Note Insurer. On the Closing Date, the Issuer shall cause
the Trustee to deposit into the Prefunding Account the Initial Prefunding
Account Deposit Amount.
(b) Upon an Issuer Order (which may be a standing order), the
Trustee shall invest all or a portion of the funds in the Prefunding Account in
one or more Eligible Investments. In the absence of an Issuer Order, the Trustee
shall invest funds in the Prefunding Account in Eligible Investments described
in clause (d) of the definition thereof. All income or other gain from such
investments shall be credited to such Prefunding Account and any loss resulting
from such investments shall be charged to such Prefunding Account; provided,
however, that the Issuer shall make or cause to be made on any Determination
Date a deposit to the Prefunding Account to the extent of any losses therein.
Such investments shall be made in the name of the Trustee for the benefit of the
Noteholders and the Note Insurer.
(c) If any amounts invested as provided in Section 12.04(b) hereof
shall be needed for disbursement from the Prefunding Account as set forth in
Section 12.04(d) hereof, the Trustee shall cause such investments of such
Prefunding Account to be sold or otherwise converted to cash to the credit of
such Prefunding Account. The Trustee shall not be liable for any investment loss
resulting from investment of money in the Prefunding Account in any Eligible
Investment in accordance with the terms hereof (other than in its capacity as
obligor under any Eligible Investment).
(d) Disbursements from the Prefunding Account shall be made, to
the extent funds therefor are available, only as follows:
(i) on each Funding Date, the Servicer shall instruct the
Trustee in writing to withdraw (and the Trustee shall so withdraw) from
the Prefunding Account and, subject to the satisfaction of the
conditions set forth in Sections 3.01 and 4.02 hereof, to distribute
(and the Trustee shall so distribute) amounts on deposit in the
Prefunding Account first to make a deposit in the Reserve Account in an
amount equal to the Funding Date Reserve Account Deposit Amount, and
second to or at the direction of the Issuer in order to fund the
acquisition by the Issuer of additional Contracts pursuant to the
Acquisition Agreement, provided that the amount distributed to or at
the direction of the Issuer pursuant to this clause (i) on a Funding
Date for the acquisition of Contracts shall not exceed sixty-nine
percent (69%) of the Funding IPB of such Contracts;
(ii) if the amount in the Prefunding Account has not been
reduced to zero on the Payment Date on or immediately following the end
of the Funding Period after giving effect to any reductions in the
Prefunding Account on such Payment Date pursuant to clause (i) above,
the Servicer shall instruct the Trustee in writing to withdraw (and the
Trustee shall so withdraw) from the Prefunding Account on such Payment
Date all
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amounts remaining on deposit in the Prefunding Account (excluding any
Reinvestment Income in such account) and to pay such amounts to the
Noteholders as principal on the Notes; and
(iii) on each Payment Date, the Trustee shall withdraw
funds representing Reinvestment Income from the Prefunding Account,
pursuant to instructions in the Monthly Servicer's Report, and deposit
such funds in the Distribution Account, for disbursement in accordance
with the provisions of Section 12.02(d) hereof.
Section 12.05. Negative Carry Account. (a) The Trustee represents and
warrants that it has established a trust account at its Corporate Trust Office
(the "Negative Carry Account") in the name of the Trustee for the benefit of the
Noteholders and the Note Insurer. On the Closing Date, the Issuer shall deposit
the Initial Negative Carry Account Deposit Amount into the Negative Carry
Account.
(b) Upon an Issuer Order (which may be a standing order), the
Trustee shall invest all or a portion of the funds in the Negative Carry Account
in one or more Eligible Investments. In the absence of an Issuer Order, the
Trustee shall invest funds in the Negative Carry Account in Eligible Investments
described in clause (d) of the definition thereof. All income or other gain from
such investments shall be credited to such Negative Carry Account and any loss
resulting from such investments shall be charged to such Negative Carry Account;
provided, however, that the Issuer shall make or cause to be made on any
Determination Date a deposit to the Negative Carry Account to the extent of any
losses therein. Such investments shall be made in the name of the Trustee for
the benefit of the Noteholders and the Note Insurer.
(c) If any amounts invested as provided in Section 12.05(b) hereof
shall be needed for disbursement from the Negative Carry Account as set forth in
Section 12.05(d) hereof, the Trustee shall cause such investments of such
Negative Carry Account to be sold or otherwise converted to cash to the credit
of such Negative Carry Account. The Trustee shall not be liable for any
investment loss resulting from investment of money in the Negative Carry Account
in any Eligible Investment in accordance with the terms hereof (other than in
its capacity as obligor under any Eligible Investment).
(d) Disbursements from the Negative Carry Account shall be made,
to the extent funds therefor are available, only as follows:
(i) On each Payment Date during the Funding Period, the
Servicer shall direct the Trustee to transfer from the Negative Carry
Account to the Distribution Account an amount equal to the excess of
the amount on deposit in the Negative Carry Account over the Required
Negative Carry Account Balance, after giving effect to any reductions
in the Prefunding Account on such date pursuant to Section 12.04(d)
hereof; and
(ii) All amounts on deposit in the Negative Carry Account
shall be transferred on the last Payment Date in the Funding Period
(or, if earlier, on the first Payment Date following the occurrence of
a Trigger Event if the Funding Period has ended pursuant to clause (a)
of the definition of Funding Period) to the Distribution Account for
disbursement as described in Section 12.02(d) hereof.
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Section 12.06. Revenue Tax Account. (a) If the product of (i) the tax
rate imposed by the State of Washington on the income earned on leases
characterized for tax purposes as conditional sales and (ii) the apportionment
ratio relating to such tax rate increases above one hundred ninety-five basis
points (1.95%), the Servicer shall establish an account (the "Revenue Tax
Account") at an eligible bank and shall fund the Revenue Tax Account with the
difference between (i) the estimated total tax due over the remaining life of
the Collateral calculated based on the such tax rate minus (ii) the estimated
total tax due over the remaining life of the Collateral calculated based on a
tax rate of three percent (3%) and a sixty-five percent (65%) apportionment
ratio. On each Payment Date after the funding of the Revenue Tax Account, the
Servicer shall direct the Trustee to transfer from the Revenue Tax Account to
the Distribution Account an amount equal to the difference between the tax due
in such period based on the new tax rate and the new apportionment ratio versus
the amount that would have been due based on a tax rate of three percent (3%)
and a sixty five percent (65%) apportionment ratio. From and after the date on
which the Revenue Tax Account is established, the Note Insurer shall verify the
mathematical accuracy of the Servicer's calculations with respect to amounts
owed to the State of Washington and the deposits into the Revenue Tax Account.
(b) (i) If the deposit that the Servicer is required to make into the
Revenue Tax Account is greater than five hundred thousand dollars ($500,000) and
the Servicer fails to make such deposit within sixty (60) days of the date
required, the Controlling Party may not waive, unless the Rating Agency
Condition shall have been satisfied, the Trigger Event with respect to such
failure on the part of the Servicer; and (ii) if the deposit that the Servicer
is required to make into the Revenue Tax Account is greater than one million
dollars ($1,000,000) and the Servicer fails to make such deposit within sixty
(60) days of the date required, the Controlling Party may not waive, unless the
Rating Agency Condition shall have been satisfied, the Servicer Event of Default
with respect to such failure on the part of the Servicer.
Section 12.07. Reports by Trustee. (a) On each Payment Date, the
Trustee shall account to each Holder of Notes on which payments of principal and
interest are then being made the amount which represents principal and the
amount which represents interest, and shall contemporaneously advise the Issuer
and the Note Insurer of all such payments. The Trustee may satisfy its
obligations under this Section 12.07 by making available the Monthly Servicer's
Report to each such Holder of the Notes, the Issuer, the Note Insurer and
WestLB. On or before the 10th day prior to the Final Payment Date, the Trustee
shall provide notice to the Holders of the Notes and the Note Insurer of the
Final Payment Date. Such notice shall include a statement that interest shall
cease to accrue as of the last day preceding the date on which the Final Payment
Date occurs.
(b) The Trustee shall promptly notify the Noteholders and the Note
Insurer if a Responsible Officer of the Trustee has actual knowledge that the
credit rating of any institution in which funds are invested pursuant to the
definition of Eligible Investments has been lowered.
(c) At least annually, or as otherwise required by law, the
Trustee shall distribute to Noteholders any information returns or other tax
information or statements as are required by applicable tax law to be
distributed to the Noteholders or as may be requested by any Noteholder to
prepare such Noteholder's tax returns. The Issuer shall prepare or cause to be
prepared all such information for distribution by the Trustee to the
Noteholders.
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(d) The Trustee may make available to the Noteholders, the Issuer,
the Rating Agencies, the Note Insurer and WestLB via the Trustee's Internet
website, all Monthly Servicer's Reports available each month and, with the
consent or at the direction of the Issuer, such other information regarding the
Notes and/or the Contracts as the Trustee may have in its possession, but only
with the use of a password provided by the Trustee or its agent to such Person
upon receipt by the Trustee from such Person of a certification substantially in
the form of Exhibit 12.07(d); provided, however, that the Trustee or its agent
shall provide such password to the parties to this Indenture, WestLB the Note
Insurer and each Rating Agency without requiring such certification. The Trustee
will make no representation or warranties as to the accuracy or completeness of
such documents and will assume no responsibility therefor.
The Trustee's Internet website shall be located initially at
"xxx.XXXXxx.xxx" or at such other address as shall be specified by the Trustee
from time to time in writing to the Noteholders, the Issuer, the Note Insurer
and WestLB. In connection with providing access to the Trustee's Internet
website, the Trustee may require registration and the acceptance of a
disclaimer. The Trustee shall not be liable for the dissemination of information
in accordance with this Indenture.
Section 12.08. Optional Deposits by the Note Insurer. The Note Insurer
shall at any time, and from time to time, with respect to a Payment Date, have
the option to deliver amounts to the Trustee for deposit into the Distribution
Account for any of the following purposes: (i) to provide funds in respect of
the payment of fees or expenses of any provider of services to the Issuer with
respect to such Payment Date, or (ii) to include such amount as part of the
Monthly Interest Distributable Amount or the Principal Distributable Amount for
such Payment Date to the extent that without such amount a draw would be
required to be made on the Policy.
ARTICLE 13
PROVISIONS OF GENERAL APPLICATION
Section 13.01. General Provisions. All of the provisions of this
Article shall apply to this Indenture.
Section 13.02. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by an agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it is
hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
7.01 hereof) conclusive in favor of the Trustee and the Issuer, if made in the
manner provided in this Section 13.02.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Trustee reasonably
deems sufficient.
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(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Note shall bind the Holder
of every Note issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
Section 13.03. Notices, etc. Any request, demand, authorization,
direction, notice, consent, waiver or Act of Noteholders or other document
provided or permitted by this Indenture to be made upon, given or furnished to,
or filed with any party hereto (or to any Rating Agency, WestLB or the Note
Insurer) shall be sufficient for every purpose hereunder if in writing and sent
by facsimile transmission or mailed via overnight courier, postage prepaid and
addressed to the appropriate address below (or at any other address furnished in
accordance with this Section to the Persons listed below):
(a) to the Trustee or to the Back-up Servicer at Sixth
Street and Marquette Avenue, MAC N9311-161, Xxxxxxxxxxx, Xxxxxxxxx
00000 (facsimile number (000) 000-0000), Attention: Corporate Trust
Services-Asset-Backed Administration/Financial Pacific Funding II, LLC;
or
(b) to the Issuer at 3455 S. 000 Xxx, Xxxxx 000, Xxxxxxx
Xxx, Xxxxxxxxxx 00000 (facsimile number (000) 000-0000), Attention:
Xxxx Xxxxxx; or
(c) to the Servicer at 3455 S. 000 Xxx, Xxxxx 000,
Xxxxxxx Xxx, Xxxxxxxxxx 00000 (facsimile number (000) 000-0000),
Attention: Xxxx Xxxxxx; or
(d) to Moody's, at 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (facsimile number (000) 000-0000), Attention: ABS Surveillance
Group; or
(e) to S&P, at 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (facsimile number (000) 000-0000), Attention: ABS
Surveillance; or
(f) to WestLB, at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, (facsimile number (000) 000-0000), Attention: Xxxxxxxx
Xxxxxxx; or
(g) to the Note Insurer, at Financial Security Assurance
Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Senior Vice
President -- Transaction Oversight Department (with a copy to the
Attention of the General Counsel), Re: Financial Pacific Funding II,
LLC, Series 2003-A, Policy No. 00000-X, Xxxxxxxxxxxx: (000) 000-0000,
Facsimile Nos.: (000) 000-0000, (000) 000-0000 (in each case in which
notice or other communication to the Note Insurer refers to an Event of
Default, a claim on the 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 each of the
General Counsel and the Head-Financial Guaranty Group and shall be
marked to indicate "URGENT MATERIAL ENCLOSED.")
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Section 13.04. Notices to Noteholders; Waiver. Unless otherwise
specified in this Indenture, 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, via first class
mail, postage prepaid, to each Noteholder affected by such event, at such
Noteholder's address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case in which notice to Noteholders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice which is mailed in the manner
herein provided shall be deemed to have been received when actually received or
when rejected; provided, however, if the Trustee is permitted or required to
take any action following any such notice, such notice shall be deemed to have
been received when 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 Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders and the Note Insurer 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 Trustee shall be
deemed to be a sufficient giving of such notice.
Section 13.05. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 13.06. Successors and Assigns. All covenants and agreements in
this Indenture by the Issuer shall bind its successors and assigns, whether so
expressed or not. There shall be no assignment hereof, except in accordance with
the provisions of Section 7.10 hereof.
Section 13.07. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 13.08. Benefits of Agreement. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and the Noteholders, WestLB, the Note Insurer, and any of their
respective successors, any benefit or any legal or equitable right, remedy or
claim under this Indenture or under the Notes.
Section 13.09. Legal Holidays. In any case in which the date of any
Payment Date or the Stated Maturity Date of the Notes shall not be a Business
Day, then (notwithstanding any other provision of a Note or this Indenture)
payment of principal or interest need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the nominal date of any such Stated Maturity Date or Payment Date and, assuming
such
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payment is actually made on such subsequent Business Day, no additional interest
shall accrue on the amount so paid for the period from and after any such
nominal date.
Section 13.10. Governing Law. THIS INDENTURE, EACH NOTE AND ALL MATTERS
ARISING OUT OF OR RELATING TO THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 13.11. Counterparts. The Indenture may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 13.12. Corporate Obligation. No recourse may be taken, directly
or indirectly, against any incorporator, subscriber to the capital stock,
stockholder, member, employee, officer or director of the Issuer or of any
predecessor or successor of the Issuer with respect to the Issuer's obligations
on the Notes or under this Indenture or any certificate or other writing
delivered in connection herewith in the absence of fraud.
Section 13.13. Compliance Notes and Opinions. Upon any application,
order or request by the Issuer or the Servicer to the Trustee to take any action
under any provision of this Indenture for which a specific request is required
under this Indenture, the Issuer or the Servicer, as applicable, shall furnish
to the Trustee an Officer's Certificate of the Issuer or the Servicer, as
applicable, stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with, except that
in the case of any such application or request as to which the furnishing of a
different certificate is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, such
individual has made such examination or investigation as is necessary to enable
such individual to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 13.14. Furnishing of Reports, Etc. Upon written request of any
Noteholder, specifying in reasonable detail an item or items delivered under
this Indenture and requested by such Noteholder; the Trustee shall promptly
furnish a copy of such item or items to the requesting Noteholder.
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Section 13.15. SUBMISSION TO JURISDICTION; WAIVERS. EACH PARTY HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS INDENTURE AND THE OTHER TRANSACTION DOCUMENTS, OR
FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE
NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE
FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS DETERMINED IN ACCORDANCE WITH SECTION 13.03 OF THIS INDENTURE; AND
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO XXX IN ANY OTHER JURISDICTION.
Section 13.16. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS INDENTURE, ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
Section 13.17. 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
Collateral, 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 Trustee may exercise such right or power
hereunder), but not its duties and obligations under the Policy, upon delivery
of a written notice to the Trustee.
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Section 13.18. Insurer as Controlling Party. Each Noteholder by
purchase of the Notes held by it acknowledges that as partial consideration of
the issuance of the Policy, the Note Insurer shall have certain rights hereunder
for so long as no Note Insurer Default shall have occurred and be continuing and
the Notes shall remain outstanding or amounts or amounts owing the Note Insurer
have not been paid to it. So long as a Note Insurer Default has occurred and is
continuing, any provision in any Transaction Document giving the Insurer the
right to direct, appoint or consent to, approve of, or take any action under
this Indenture shall be inoperative during the period of such Insurer Default
and such right shall instead vest in the Trustee acting at the written direction
of the Controlling Party. The Note Insurer may disclaim any of its rights and
powers under this Indenture (but not its duties and obligations under the
Policy) upon delivery of a written notice to the Trustee. The Insurer may give
or withhold any consent hereunder in its sole and absolute discretion.
[Signatures follow]
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IN WITNESS WHEREOF, the Issuer, the Servicer, the Trustee and the
Back-up Servicer have caused this Indenture to be duly executed as of the date
and year first above written.
FINANCIAL PACIFIC FUNDING II, LLC, as
Issuer
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
FINANCIAL PACIFIC LEASING, LLC, as
Servicer
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
Indenture
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee and
Back-up Servicer
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Assistant Vice President
Indenture
EXECUTION COPY
SUPPLEMENTAL INDENTURE NO. 1
dated as of March 3, 2004
among
Financial Pacific Funding II, LLC,
as the Issuer,
Financial Pacific Leasing, LLC,
as the Servicer,
and
Xxxxx Fargo Bank, National Association, successor-by-merger to Xxxxx Fargo Bank
Minnesota, National Association,
as the Trustee and the Back-up Servicer
to
INDENTURE
Dated as of July 14, 2003
SUPPLEMENTAL INDENTURE NO. 1
SUPPLEMENTAL INDENTURE NO. 1, dated as of March 3, 2004 (as it may be
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with its terms, the "Amendment") among Financial Pacific
Funding II, LLC (the "Issuer"), Financial Pacific Leasing, LLC, as servicer (in
such capacity, the "Servicer"), Xxxxx Fargo Bank, National Association,
successor-by-merger to Xxxxx Fargo Bank Minnesota, National Association, a
national banking association, as trustee (in such capacity, the "Trustee") and
as back-up servicer (in such capacity, the "Back-up Servicer").
RECITALS
WHEREAS, the Issuer, the Servicer, the Trustee and the Back-up Servicer
(collectively, the "Amending Parties") have entered into the Indenture dated as
of July 14, 2003, as the same may be further amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with its
terms (the "Indenture") and the Amending Parties desire to amend the Indenture
in certain respects as provided below; and
WHEREAS, Section 9.02 of the Indenture permits the Amending Parties,
with the prior written consent of the Note Insurer, if then the Controlling
Party to amend the Indenture in the manner contemplated by this Amendment; and
WHEREAS, as of the date hereof ,the Note Insurer is the Controlling
Party and desires to consent to the amendment of the Indenture pursuant to this
Amendment.
AGREEMENTS
In consideration of the premises, and for other good and valuable
consideration, the adequacy, receipt and sufficiency of which are hereby
acknowledged, the Amending Parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. Unless defined in this Amendment,
capitalized terms used in this Amendment (including in the Preamble and the
Recitals) shall have the meaning given such terms in the Indenture, as
identifiable from the context in which such term is used.
Article II
AMENDMENTS
SECTION 2.1. Amendments to Schedule 1.01 of the Indenture. Schedule
1.01 to the Indenture is hereby replaced in its entirety by Schedule 1.01
"Default Matrix" attached hereto.
ARTICLE III
CONDITION TO EFFECTIVENESS
SECTION 3.1. Execution of Amendment By Amending Parties. This Amendment
shall become effective upon receipt by the Controlling Party, the Issuer, the
Servicer, the Trustee and the Backup Servicer of executed counterparts of this
Amendment.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Ratification. Except as expressly set forth herein, this
Amendment shall not by implication or otherwise limit, impair, constitute a
waiver of, or otherwise affect the rights and remedies of any of the Amending
Parties under the Indenture, nor alter, modify, amend or in any way affect any
of the terms, conditions, obligations, covenants or agreements contained in the
Indenture, all of which are hereby ratified and affirmed in all respects by each
of the Amending Parties and shall continue in full force and effect. This
Amendment shall apply and be effective only with respect to the provisions of
the Indenture specifically referred to herein and any references in the
Indenture to the provisions of the Indenture specifically referred to herein
shall be to such provisions as amended by this Amendment.
SECTION 4.2. Counterparts. This Amendment may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all of such counterparts shall together constitute but one and the same
instrument.
SECTION 4.3. GOVERNING LAW. THIS AMENDMENT AND ALL MATTERS ARISING OUT
OF OR RELATING TO THIS INSURANCE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 4.4. Waiver of Notice. Each of the Amending Parties waives any
prior notice and any notice period that may be required by any other agreement
or document in connection with the execution of this Amendment.
2
SECTION 4.5. Headings. The headings of Sections contained in this
Amendment are provided for convenience only. They form no part of this Amendment
or the Indenture and shall not affect the construction or interpretation of this
Amendment, the Indenture or any provisions hereof or thereof.
[Remainder of Page Intentionally Left Blank]
3
IN WITNESS WHEREOF, the Amending Parties have caused this Amendment to
be duly executed by their respective duly authorized officers as of the day and
year first above written.
FINANCIAL PACIFIC FUNDING II, LLC,
as Issuer
By: /s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
FINANCIAL PACIFIC LEASING, LLC, as
Servicer
By: /s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
XXXXX FARGO BANK,
NATIONAL ASSOCIATION, successor-
by merger to Xxxxx Fargo Bank Minnesota,
National Association, as Trustee and Back-
up Servicer
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Assistant Vice President
CONSENTED TO:
FINANCIAL SECURITY ASSURANCE INC., as Controlling Party
By: /s/ Xxxxx Xxx
-------------------------
Name: Xxxxx Xxx
Title: Managing Director
4
