Exhibit 4.1
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INDENTURE
between
PARAGON AUTO RECEIVABLES OWNER TRUST ____-_
and
[NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION]
as Indenture Trustee
Dated as of __________ ___, ____
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Table of Contents
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Page
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions................................................................................2
SECTION 1.2. Incorporation by Reference of Trust Indenture Act..........................................7
SECTION 1.3. Rules of Construction......................................................................7
ARTICLE II
The Notes
SECTION 2.1. Form.......................................................................................8
SECTION 2.2. Execution, Authentication and Delivery.....................................................8
SECTION 2.3. Temporary Notes............................................................................8
SECTION 2.4. Registration; Registration of Transfer and Exchange........................................9
SECTION 2.5. Mutilated, Destroyed, Lost or Stolen Notes................................................10
SECTION 2.6. Persons Deemed Owners.....................................................................11
SECTION 2.7. Payment of Principal and Interest; Defaulted Interest.....................................11
SECTION 2.8. Cancellation..............................................................................12
SECTION 2.9. Release of Collateral.....................................................................12
SECTION 2.10. Definitive Notes..........................................................................12
ARTICLE III
Covenants
SECTION 3.1. Payment of Principal and Interest.........................................................12
SECTION 3.2. Maintenance of Office or Agency...........................................................12
SECTION 3.3. Money for Payments To Be Held in Trust....................................................13
SECTION 3.4. Existence.................................................................................14
SECTION 3.5. Protection of the Trust Estate............................................................14
SECTION 3.6. Opinion as to the Trust Estate............................................................15
SECTION 3.7. Performance of Obligations; Servicing of Receivables......................................15
SECTION 3.8. Negative Covenants........................................................................16
SECTION 3.9. Annual Statement as to Compliance.........................................................17
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms......................................17
SECTION 3.11. Successor or Transferee..................................................................19
SECTION 3.12. No Other Business........................................................................19
SECTION 3.13. No Borrowing.............................................................................19
SECTION 3.14. Servicer's Obligations...................................................................19
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SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities........................................19
SECTION 3.16. Capital Expenditures.....................................................................19
SECTION 3.17. Notice of Events of Default..............................................................20
SECTION 3.18. Further Instruments and Acts.............................................................20
SECTION 3.19. Compliance with Laws.....................................................................20
SECTION 3.20. Tax Treatment............................................................................20
SECTION 3.21. Investment Company Act...................................................................20
SECTION 3.22. Liens....................................................................................20
SECTION 3.23. Conduct of Business......................................................................20
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture...................................................21
SECTION 4.2. Payment of Moneys Held by Paying Agent....................................................22
SECTION 4.3. Release of Trust Estate...................................................................22
ARTICLE V
Remedies
SECTION 5.1. Events of Default.........................................................................22
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment........................................23
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee...........................24
SECTION 5.4. Remedies; Priorities......................................................................26
SECTION 5.5. Optional Preservation of the Receivables..................................................27
SECTION 5.6. Limitation of Suits.......................................................................27
SECTION 5.7. Unconditional Rights of Noteholders To Receive Principal
and Interest........................................................................28
SECTION 5.8. Restoration of Rights and Remedies........................................................28
SECTION 5.9. Rights and Remedies Cumulative............................................................28
SECTION 5.10. Delay or Omission Not a Waiver...........................................................28
SECTION 5.11. Control by Noteholders...................................................................28
SECTION 5.12. Waiver of Past Defaults..................................................................29
SECTION 5.13. Undertaking for Costs....................................................................29
SECTION 5.14. Waiver of Stay or Extension Laws.........................................................30
SECTION 5.15. Action on Notes..........................................................................30
SECTION 5.16. Performance and Enforcement of Certain Obligations.......................................30
ARTICLE VI
The Trustee
SECTION 6.1. Duties of the Trustee.....................................................................30
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SECTION 6.2. Rights of Trustee.........................................................................33
SECTION 6.3. Individual Rights of the Trustee..........................................................34
SECTION 6.4. Trustee's Disclaimer......................................................................34
SECTION 6.5. Notice of Defaults........................................................................34
SECTION 6.6. Reports by Trustee to the Holders.........................................................34
SECTION 6.7. Compensation, Reimbursement and Indemnity.................................................34
SECTION 6.8. Replacement of the Trustee................................................................35
SECTION 6.9. Successor Trustee by Merger...............................................................36
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee............................................36
SECTION 6.11. Eligibility; Disqualification............................................................37
SECTION 6.12. Appointment and Powers...................................................................38
SECTION 6.13. Limitation on Liability..................................................................38
SECTION 6.14. Trustee Not Liable for Notes or Receivables..............................................38
SECTION 6.15. Reliance upon Documents..................................................................39
SECTION 6.16. Representations and Warranties of the Trustee............................................39
SECTION 6.17. Waiver of Setoffs........................................................................40
SECTION 6.18. Rights to Direct Trustee.................................................................40
SECTION 6.19. Preferential Collection of Claims Against Issuer.........................................40
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1. Issuer To Furnish Trustee Names and Addresses of Noteholders..............................40
SECTION 7.2. Preservation of Information; Communications to Noteholders................................41
SECTION 7.3. Reports by Issuer.........................................................................41
SECTION 7.4. Reports by Trustee........................................................................41
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1. Collection of Money.......................................................................42
SECTION 8.2. Trust Accounts............................................................................42
SECTION 8.3. General Provisions Regarding Accounts.....................................................42
SECTION 8.4. Release of Trust Estate...................................................................42
SECTION 8.5. Opinion of Counsel........................................................................43
ARTICLE IX
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders....................................43
SECTION 9.2. Supplemental Indentures With Consent of Noteholders.......................................44
SECTION 9.3. Execution of Supplemental Indentures......................................................46
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SECTION 9.4. Effect of Supplemental Indenture..........................................................46
SECTION 9.5. Reference in Notes to Supplemental Indentures.............................................46
ARTICLE X
Redemption of Notes
SECTION 10.1. Redemption...............................................................................46
SECTION 10.2. Form of Redemption Notice................................................................46
SECTION 10.3. Notes Payable on Redemption Date.........................................................47
ARTICLE XI
Miscellaneous
SECTION 11.1. Compliance Certificates and Opinions, etc................................................47
SECTION 11.2. Form of Documents Delivered to Trustee...................................................49
SECTION 11.3. Acts of Noteholders......................................................................50
SECTION 11.4. Notices, etc., to the Trustee, Issuer and Rating Agency..................................50
SECTION 11.5. Notices to Noteholders; Waiver...........................................................51
SECTION 11.6. Alternate Payment and Notice Provisions..................................................51
SECTION 11.7. Effect of Headings and Table of Contents.................................................52
SECTION 11.8. Successors and Assigns...................................................................52
SECTION 11.9. Severability.............................................................................52
SECTION 11.10. Benefits of Indenture...................................................................52
SECTION 11.11. Legal Holidays..........................................................................52
SECTION 11.12. GOVERNING LAW...........................................................................52
SECTION 11.13. Counterparts............................................................................52
SECTION 11.14. Recording of Indenture..................................................................52
SECTION 11.15. Trust Obligation........................................................................53
SECTION 11.16. No Petition.............................................................................53
SECTION 11.17. Inspection..............................................................................53
SECTION 11.18. Conflict with Trust Indenture Act.......................................................54
EXHIBITS
EXHIBIT A Form of Class A Notes
EXHIBIT B Form of Class B Notes
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INDENTURE, dated as of ________ ___, ____, between PARAGON AUTO
RECEIVABLES OWNER TRUST ____-_, a Delaware trust (the "Issuer"), and
[NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association], as trustee and not in its individual capacity (the
"Trustee").
Each party agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Issuer's ___%
Asset Backed Notes, Class A (each, a "Class A Note") and ___% Asset Backed
Notes, Class B (each, a "Class B Note"; and together with the Class A
Notes, the "Notes").
As security for the payment and performance by the Issuer of the
Secured Obligations (as defined below), the Issuer has agreed to assign the
Indenture Collateral (as defined below) as collateral to the Trustee on
behalf of the Noteholders.
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee at the Closing Date, on
behalf of and for the benefit of the Noteholders (as defined below) to
secure the performance of the Secured Obligations and its compliance with
the covenants hereof, all of the Issuer's right, title and interest in (but
none of the obligations), to and under the following, whether now existing
or hereafter arising or acquired (collectively, the "Indenture
Collateral"):
(a) the Receivables, all monies received thereunder or in
respect thereof after the Cutoff Date and all Liquidation Proceeds
and recoveries received with respect to such Receivables;
(b) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Receivables, and any other
interest of the Issuer in the Financed Vehicles, including the
certificates of title with respect to the Financed Vehicles;
(c) the Insurance Policies and any proceeds from any
Insurance Policies relating to the Receivables, the Obligors or
the related Financed Vehicles, including rebates or refunds of
premiums;
(e) rights against Dealers with respect to the Receivables
under the Dealer Agreements and the Dealer Assignments;
(f) the rights of the Seller under the Receivables
Purchase Agreement and the rights of the Issuer under the Sale and
Servicing Agreement;
(g) all funds on deposit from time to time in the
Collection Account and the Reserve Account, including all income
thereon and proceeds thereof; and
(h) all proceeds and investments of any of the foregoing,
all present and future claims, demands, causes and choses in
action in respect of any or all of the foregoing and all
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payments on or under and all proceeds of every kind and nature
whatsoever in respect of any of the foregoing.
The foregoing Grant is made in trust to secure the payment of the
Secured Obligations.
The Trustee, as Trustee on behalf of the Holders, acknowledges
such Grant, accepts the trusts under this Indenture in accordance with this
Indenture and agrees to perform its duties required in this Indenture to
the end that the interests of the Holders of the Notes may be adequately
and effectively protected.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions. (a) Except as otherwise specified herein or
as the context may otherwise require, the following terms have the
respective meanings set forth below for all purposes of this Indenture:
"Act" has the meaning specified in Section 11.3(a).
"Authorized Officer" means, with respect to the Issuer, any
officer or agent acting pursuant to a power of attorney of the Owner
Trustee on behalf of the Issuer, as applicable, in matters relating to the
Issuer and who is identified on the list of Authorized Officers delivered
by the Owner Trustee to the Trustee on the Closing Date (as such list may
be modified or supplemented from time to time thereafter).
"Class" means any class of Notes.
"Class A Interest Rate" means ___% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
"Class A Note" is defined in the recitals. Each Class A Note shall
be substantially in the form of Exhibit A.
"Class B Interest Rate" means ___% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
"Class B Note" is defined in the recitals. Each Class B Note shall
be substantially in the form of Exhibit B.
"Closing Date" means ________ ___, ____.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, and Treasury Regulations promulgated thereunder.
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"Commission" shall mean the Securities and Exchange Commission.
"Corporate Trust Office" means the principal office of the Trustee
at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Indenture
is located at [Norwest Center, Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: Corporate Trust
Services/Asset-Backed Administration]; or at such other address as the
Trustee may designate from time to time by notice to the Noteholders and
the Issuer, or the principal corporate trust office of any successor
Trustee (the address of which the successor Trustee shall notify the
Noteholders and the Issuer).
"Default" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Definitive Notes" shall mean definitive, fully registered Notes.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the officers executing such
Notes, as evidenced by their execution of such Notes.
"Event of Default" has the meaning specified in Section 5.1.
"Eligible Account" means (i) A segregated trust account that is
maintained with the corporate trust department of the Trustee, or (ii) a
segregated direct deposit account maintained with a depository institution
or trust company organized under the laws of the United States of America,
or any of the States thereof or the District of Columbia, having a
certificate of deposit, short-term deposit or commercial paper rating of at
least ["D-1" by DCR (or, if not rated by XXX, "X-0" by Standard & Poor's or
"P-1" by Moody's)].
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create and xxxxx x xxxx upon and
a security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture, and other forms of the verb "to Grant"
shall have correlative meanings. A Grant of the Indenture Collateral or of
any other agreement or instrument shall include all rights, powers and
options (but none of the obligations) of the Granting party thereunder,
including the immediate and continuing right to claim for, collect, receive
and give receipt for principal and interest payments in respect of the
Indenture Collateral and all other moneys payable thereunder, to give and
receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring Proceedings in the
name of the Granting party or otherwise and generally to do and receive
anything that the Granting party is or may be entitled to do or receive
thereunder or with respect thereto.
"Holder" means the Person in whose name a Note is registered on
the Note Register.
"Indenture" means this Indenture as amended or supplemented from
time to time.
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"Indenture Collateral" has the meaning specified in the Granting
Clause of this Indenture.
"Independent" means, when used with respect to any specified
Person, that the Person: (a) is in fact independent of the Issuer, any
other obligor upon the Notes, Paragon and any Affiliate of any of the
foregoing Persons, (b) does not have any direct financial interest or any
material indirect financial interest in the Issuer, any such other obligor,
Paragon or any Affiliate of any of the foregoing Persons and (c) is not
connected with the Issuer, any such other obligor, Paragon or any Affiliate
of any of the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar
functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, made
by an Independent appraiser or other expert duly licensed and of recognized
standing appointed by an Issuer Order, and such opinion or certificate
shall state that the signer has read the definition of "Independent" in
this Indenture and that the signer is Independent within the meaning
thereof.
"Institutional Accredited Investor" means institutional investors
that are "accredited investors" as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D promulgated under the Securities Act.
"Issuer" means Paragon Auto Receivables Owner Trust ____-_, until
a permitted successor replaces it and, thereafter, means such successor.
"Issuer Order" and "Issuer Request" means a written order or
request, respectively, signed in the name of the Issuer by any one of its
Authorized Officers and delivered to the Trustee.
"Noteholder" means a Holder.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.4.
"Notes" is defined in the introduction hereto.
"Note Majority" means Holders of Class A Notes and Class B Notes
representing more than 50% of the Note Balance, or if there are no Class A
Notes Outstanding, Holders of Class B Notes representing more than 50% of
the Class B Note Balance, or if there are no Class B Notes Outstanding,
Holders of Class A Notes representing at least 50% of the Class A Note
Balance.
"Officers' Certificate" means a certificate signed by any two
Authorized Officers of the Issuer, under the circumstances described in,
and otherwise complying with, the applicable requirements of Section 11.1,
and delivered to the Trustee.
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"Opinion of Counsel" means one or more written opinions of
counsel, which counsel may be counsel to Paragon and which opinion shall be
reasonably satisfactory to the Trustee, and which shall comply with any
applicable requirements of Section 11.1.
"Outstanding" means, as of any date, all Notes theretofore
authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which
money in the necessary amount has been theretofore deposited with
the Trustee or any Paying Agent in trust for the Holders of such
Notes (provided, however, that if such Notes are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture); and
(iii) Notes in exchange for or in lieu of other Notes
that 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 in determining whether the Holders of the requisite
Note Balance have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Related Document, Notes
owned by the Issuer, any other obligor upon the Notes, Paragon or any
Affiliate of any of the foregoing Persons 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 that a Responsible Officer
of the Trustee actually knows to be so owned shall be so disregarded. Notes
so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee
the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obligor upon the Notes, Paragon or any
Affiliate of any of the foregoing Persons.
"Owner Trustee" means [Wilmington Trust Company], not in its
individual capacity but solely as trustee of the Issuer.
"Paying Agent" means the Trustee or any other Person that meets
the eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the payments to and distributions from the
Collection Account, including payment of principal of or interest on the
Notes on behalf of the Issuer.
"Predecessor Note" means, with respect to any particular
Note, every previous Note evidencing all or a portion of the same debt as
that evidenced by such particular Note; and, for the purpose of this
definition, any Note authenticated and delivered under Section 2.5 in lieu
of a mutilated, lost, destroyed or stolen Note shall be deemed to evidence
the same debt as the mutilated, lost, destroyed or stolen Note.
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"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Redemption Date" means the Payment Date specified by the Servicer
or the Issuer pursuant to Section 10.1.
"Redemption Price" means the aggregate unpaid principal amount of
the Notes to be redeemed, plus accrued and unpaid interest thereon at the
applicable interest rate to but excluding the related Redemption Date.
"Registered Holder" means the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee, including any
Vice President, Assistant Vice President, Secretary or Assistant Secretary,
or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers 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, in each case having responsibility with
respect to this Indenture.
"Sale and Servicing Agreement" means the Sale and Servicing
Agreement, dated as of ________ __, ____, between the Issuer, the Seller,
Paragon, in its individual capacity and as Servicer, and [Norwest Bank
Minnesota, National Association], as Trustee and as Backup Servicer, as the
same may be amended or supplemented from time to time.
"Secured Obligations" means all amounts and obligations that the
Issuer may at any time owe to or on behalf of the Trustee for the benefit
of the Noteholders under this Indenture or the Notes (including all
payments under the Notes).
"Securities Act" means the Securities Act of 1933, as amended.
"State" means any one of the 50 states of the United States of America
or the District of Columbia.
"Termination Date" means the date on which the Trustee shall have
received full and indefeasible payment and performance of all Secured
Obligations.
"TIA" means the Trust Indenture Act.
"Trust Estate" means all the money, instruments, rights and other
property that are subject or intended to be subject to the Lien and
security interest of this Indenture for the benefit of the Noteholders
(including, without limitation, all property and interests Granted to the
Trustee), including all proceeds thereof.
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"Trustee" means [Norwest Bank Minnesota, National Association],
not in its individual capacity but solely as Trustee under this Indenture,
or any successor Trustee under this Indenture.
"Underwriter" means ________________________.
(b) Except as otherwise specified herein or as the context may
otherwise require, the capitalized terms used herein but not defined have
the respective meanings set forth in the Sale and Servicing Agreement for
all purposes of this Indenture.
SECTION 1.2. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means Trustee.
"obligor" on the indenture securities means Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission
rule have the meaning assigned to them by such definitions.
SECTION 1.3. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted
accounting principles as in effect on the date hereof;
(iii) "or" is not exclusive;
(iv) "including" means "including, without limitation,";
and
(v) words in the singular include the plural and words in
the plural include the singular.
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ARTICLE II
The Notes
SECTION 2.1. Form. The Class A Notes and Class B Notes, together
with the Trustee's certificate of authentication, shall be in substantially
the forms set forth in Exhibits A and B, respectively, with such
appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon, as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the
Notes. Any portion of the text of any Note may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Note.
Each Note shall be dated the date of its authentication. The terms
of the Notes set forth in Exhibits A and B are part of the terms of this
Indenture.
SECTION 2.2. Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers.
The signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
The Trustee shall upon receipt of an Issuer Order authenticate and
deliver Class A Notes and Class B Notes for original issue in an aggregate
principal amount of $_____________ and $____________, respectively. The
Class A Note Balance and Class B Note Balance at any time may not exceed
such respective amounts.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of
$________ and in integral multiples of $1,000 in excess thereof; provided,
however, that one Note of each Class may be issued in an additional amount
equal to any remaining portion of the original Note Balance for such Class.
No Note shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate of authentication shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated
and delivered hereunder.
SECTION 2.3. Temporary Notes. Pending the preparation of
Definitive Notes, the Issuer may execute, and upon receipt of an Issuer
Order, the Trustee shall authenticate and deliver, temporary Notes that are
printed, lithographed, typewritten, mimeographed or otherwise produced, of
the tenor of the Definitive Notes in lieu of which they are issued and with
such variations not
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inconsistent with this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive
Notes to be prepared without unreasonable delay. After the preparation of
Definitive Notes, the temporary Notes shall be exchangeable for Definitive
Notes upon surrender of the temporary Notes at the office or agency of the
Issuer to be maintained as provided in Section 3.2, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes,
the Issuer shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of Definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as
Definitive Notes.
SECTION 2.4. Registration; Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the
Issuer shall provide for the registration of Notes and the registration of
transfers of Notes. The Trustee shall be the "Note Registrar" for the
purpose of registering Notes and transfers of Notes as herein provided.
Upon any resignation of any Note Registrar, the Issuer shall promptly
appoint a successor or, if it elects not to make such an appointment,
assume the duties of the Note Registrar.
If a Person other than the Trustee is appointed by the Issuer as
the Note Registrar, the Issuer will give the Trustee prompt written notice
of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Trustee shall have
the right to inspect the Note Register at all reasonable times, to obtain
copies thereof, and to rely upon a certificate executed on behalf of the
Note Registrar by an Executive Officer thereof as to the names and
addresses of the Holders of the Notes and the principal amounts and number
of such Notes.
Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.2,
if the requirements of Section 8-401(1) of the UCC are met, the Issuer
shall deliver an Issuer Request to the Trustee and the Issuer shall
execute, the Trustee shall authenticate and the Noteholder shall obtain
from the Trustee, in the name of the designated transferee or transferees,
one or more new Notes in any authorized denominations of a like aggregate
principal amount.
At the option of the Holder, Notes may be exchanged for other new
Notes of the same Class in any authorized denominations of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange, if
the requirements of Section 8-401(1) of the UCC are met, the Issuer shall
deliver an Issuer Request to the Trustee and the Issuer shall execute, the
Trustee shall authenticate and the Noteholder shall obtain from the
Trustee, the Notes that the Noteholder making the exchange is entitled to
receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
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Every Note presented or surrendered for registration of transfer
or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed
by, the Holder thereof or such Holder's attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar.
No service charge shall be made to a Holder for any registration
of transfer or exchange of Notes, but the Issuer or 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 2.3 or 9.5 not
involving any transfer.
SECTION 2.5. Mutilated, Destroyed, Lost or Stolen Notes. If (i)
any mutilated Note is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Note,
and (ii) there is delivered to the Trustee such security or indemnity as
may be reasonably required by the Trustee and the Issuer to hold the Issuer
and the Trustee, respectively, harmless, then, in the absence of notice to
the Issuer, the Note Registrar or the Trustee that such Note has been
acquired by a bona fide purchaser, and provided that the requirements of
Section 8- 405 of the UCC are met, the Issuer shall execute, and upon its
request the Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Note, a replacement
Note of the same Class; provided, however, that if any such destroyed, lost
or stolen Note, but not a mutilated Note, shall have become, or within
seven days shall be, due and payable, or shall have been called for
redemption, instead of issuing a replacement Note, the Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the
Redemption Date without surrender thereof. If, after the delivery of such
replacement Note (or payment of a destroyed, lost or stolen Note pursuant
to the proviso to the preceding sentence), a bona fide purchaser of the
original Note in lieu of which such replacement Note was issued presents
for payment such original Note, the Issuer and the Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person
to whom it was delivered or any Person taking such replacement Note from
such Person to whom such replacement Note was delivered (or payment made)
or any assignee of such Person, 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 expense incurred by the Issuer or the
Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 2.5,
the Issuer or the Trustee may require the payment by the Holder of such
Note of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other reasonable expenses
(including the fees and expenses of the Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 2.5 in
replacement of any mutilated, destroyed, lost or stolen Note shall
constitute an original additional contractual obligation of the Issuer,
whether or not the mutilated, 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.
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The provisions of this Section 2.5 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 2.6. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee and any agent
of the Issuer or the Trustee may treat the Person in whose name any Note is
registered as of the preceding Record Date as the owner of such Note for
the purpose of receiving payments of principal of and interest, if any, on
such Note and for all other purposes whatsoever, whether or not such Note
be overdue, and neither the Issuer nor the Trustee nor any agent thereof
shall be affected by notice to the contrary.
SECTION 2.7. Payment of Principal and Interest; Defaulted
Interest. (a) The Class A Notes and Class B Notes shall accrue interest at
the Class A Interest Rate and the Class B Interest Rate, respectively, and
such interest shall be payable on each Payment Date, as and to the extent
provided in Section 4.5 of the Sale and Servicing Agreement and Section 3.1
of this Indenture. Any installment of interest or principal, if any,
payable on any Note that is punctually paid or duly provided for by the
Issuer on the applicable Payment Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered on the
related Record Date, by wire transfer of immediately available funds, or
(if such Person has not delivered to the Trustee in writing instructions
with respect to effecting a wire transfer to such Person) by check mailed
first-class, postage prepaid to such Person's address as it appears on the
Note Register on such Record Date. Notwithstanding the above, the final
installment of principal payable with respect to the Notes (and except for
the Redemption Price for any Note called for redemption pursuant to Section
10.1) shall be payable as provided in Section 2.7(b)(ii). The funds
represented by any such checks returned undelivered shall be held in
accordance with Section 3.3.
(b)(i) The principal of each Note shall be payable in installments
on each Payment Date (including the Final Scheduled Payment Date) as and to
the extent provided in this Indenture and in Section 4.5 of the Sale and
Servicing Agreement. Notwithstanding the foregoing (and subject to the
provisions of Sections 5.1 and 5.2), the entire Note Balance shall be due
and payable, ratably to all Noteholders, on the date on which an Event of
Default shall have occurred and be continuing if the Trustee or a Note
Majority has declared the Notes to be immediately due and payable in the
manner provided in Section 5.2.
(ii) The Trustee shall notify the Person in whose name a
Note is registered at the close of business on the Accounting Date
preceding the Payment Date on which the Issuer expects that the
final installment of principal of and interest on such Note will
be paid. Such notice shall be mailed no later than five days prior
to such final Payment Date and shall specify that such final
installment will be payable only upon presentation and surrender
of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment. Notices
in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.2.
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(c) If the Issuer defaults in a payment of interest on the Notes,
the Issuer shall pay, in any lawful manner, defaulted interest (plus
interest on such defaulted interest to the extent lawful) at the applicable
interest rate from the Payment Date for which such payment is in default.
The Issuer may pay such defaulted interest to the Persons who are
Noteholders on a subsequent Payment Date.
SECTION 2.8. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to
any Person other than the Trustee, be delivered to the Trustee and shall be
promptly cancelled by the Trustee. The Issuer may at any time deliver to
the Trustee for cancellation any Notes previously authenticated and
delivered hereunder that the Issuer may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly cancelled by the
Trustee. No Notes shall be authenticated in lieu of or in exchange for any
Notes cancelled as provided in this Section except as expressly permitted
by this Indenture. All cancelled Notes may be held or disposed of by the
Trustee in accordance with its standard retention or disposal policy as in
effect at the time.
SECTION 2.9. Release of Collateral. Subject to Section 11.1 and
the Related Documents and except (i) in connection with the discharge, in
the ordinary course of business, by the Servicer of its servicing
obligations under Article III of the Sale and Servicing Agreement, (ii) in
connection with any of the activities referred to in Section 11.1(b)(v), or
(iii) in accordance with Sections 2.3, 2.5 and 2.6 of the Sale and
Servicing Agreement, the Trustee shall release property from the lien of
this Indenture only upon receipt of an Issuer Request accompanied by an
Officers' Certificate and an Opinion of Counsel and the Trustee (acting at
the written instruction of Holders representing the Note Majority).
SECTION 2.10. Definitive Notes. Upon issuance of Definitive Notes,
the Trustee shall recognize the Holders of the Definitive Notes as Noteholders.
ARTICLE III
Covenants
SECTION 3.1. Payment of Principal and Interest. The Issuer shall
duly and punctually pay the principal and interest, if any, on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting
the foregoing, the Issuer shall distribute (or cause to be distributed) the
amounts on deposit in the Collection Account on each Payment Date for the
benefit of the Class A Notes and Class B Notes, respectively, as and to the
extent provided in Section 4.5 of the Sale and Servicing Agreement to
Holders of the Notes. Amounts properly withheld under the Code or any
applicable State law by any Person from a payment to any Noteholder of
interest and/or principal shall be considered as having been paid by the
Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.2. Maintenance of Office or Agency. The Trustee shall
maintain in the city of [Minneapolis, Minnesota] an office or agency where
Notes may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Issuer in respect of the Notes
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and this Indenture may be served. The Issuer hereby initially appoints the
Trustee to serve as its agent for the foregoing purposes. The Trustee shall
give prompt written notice to the Issuer of the location, and of any change
in the location, of any such office or agency. If at any time the Trustee
shall fail to maintain any such office or agency or shall fail to furnish
the Issuer with the address thereof, such surrenders, notices and demands
may be made or served at the Corporate Trust Office, and the Issuer hereby
appoints the Trustee as its agent to receive all such surrenders, notices
and demands.
SECTION 3.3. Money for Payments To Be Held in Trust. As provided
in Section 8.2(a), all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection
Account pursuant to Section 8.2(b) shall be made on behalf of the Issuer by
the Trustee or by another Paying Agent, and no amounts so withdrawn from
the Collection Account for payments of Notes shall be paid over to the
Issuer, except as provided in this Section 3.3 and Section 4.5 of the Sale
and Servicing Agreement.
On or before each Payment Date (including the Final Scheduled
Payment Date) and Redemption Date, the Issuer shall deposit or cause to be
deposited in the Collection Account an aggregate sum sufficient to pay the
amounts then becoming due under the Notes as and to the extent provided in
Section 4.5 of the Sale and Servicing Agreement, such sum to be held in
trust for the benefit of the Persons entitled thereto.
The Issuer shall cause each Paying Agent (other than the Trustee)
to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee (and if the Trustee acts as Paying
Agent, it hereby so agrees), subject to the provisions of this Section 3.3,
that such Paying Agent shall:
(i) hold all sums held by it for the payment of amounts
due with respect to the Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and pay such
sums to such Persons as herein provided;
(ii) give the Trustee written notice of any Default by
the Issuer (or any other obligor upon the Notes) of which it has
actual knowledge in the making of any payment required to be made
with respect to the Notes;
(iii) at any time during the continuance of any such
Default, upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith
pay to the Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to
be met by a Paying Agent; and
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(v) comply with all requirements of the Code with respect
to the withholding from any payments made by it on any Notes of
any applicable withholding taxes imposed thereon and with respect
to any applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order, direct any Paying Agent to pay to the Trustee all sums held
in trust by such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which the sums were held by such Paying Agent;
and upon such payment by any Paying Agent to the Trustee, such Paying Agent
shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any
money held by the Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two
years after such amount has become due and payable shall be discharged from
such trust and upon Issuer Request shall be deposited by the Trustee in the
Collection Account; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof
(but only to the extent of the amounts so paid to the Issuer), and all
liability of the Trustee or such Paying Agent with respect to such trust
money shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, shall at
the expense and direction 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 of New York, 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 will be repaid to the
Issuer. The Trustee shall also adopt and employ, at the expense of the
Issuer, any other reasonable means of notification of such repayment
(including mailing notice of such repayment to Holders whose Notes have
been called but have not been surrendered for redemption or whose right to
or interest in moneys due and payable but not claimed is determinable from
the records of the Trustee or of any Paying Agent, at the last address of
record for each such Holder).
SECTION 3.4. Existence. The Issuer shall keep in full effect its
existence, rights and franchises as a trust under the laws of The State of
Delaware and shall obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Indenture, the Notes, the
Indenture Collateral and each other instrument or agreement included in the
Trust Estate or to enforce its rights under the Receivables and with
respect to the Financed Vehicles.
SECTION 3.5. Protection of the Trust Estate. The Issuer intends
the security interest Granted pursuant to this Indenture in favor of the
Noteholders to be prior to all other liens in respect of the Trust Estate,
and the Issuer shall take all actions necessary to obtain and maintain, in
favor of the Trustee for the benefit of the Noteholders, a first lien on
and a first priority, perfected security interest in the Trust Estate. The
Issuer shall from time to time execute and deliver all such supplements and
amendments hereto and all such financing statements, continuation
statements,
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instruments of further assurance and other instruments, and shall take such
other action necessary or advisable to:
(i) Grant more effectively all or any portion of the
Trust Estate;
(ii) maintain the Trust Estate free and clear of all
prior liens;
(iii) maintain or preserve the lien and security interest
(and the priority thereof) in favor of the Trustee for the benefit
of the Noteholders created by this Indenture or carry out more
effectively the purposes hereof;
(iv) perfect, publish notice of or protect the validity
of any Grant made or to be made by this Indenture;
(v) enforce any of the Indenture Collateral;
(vi) preserve and defend title to the Trust Estate and
the rights of the Trustee and the Noteholders in such Trust Estate
against the claims of all Persons; and
(vii) pay all taxes or assessments levied or assessed
upon the Trust Estate when due.
The Issuer hereby designates the Trustee as its agent and attorney-in-fact
to execute any financing statement, continuation statement, instrument of
further assurance or other instrument required to be executed to accomplish
the foregoing; provided, however, that the Trustee shall not be obligated
to execute such instruments except upon written instruction from the
Servicer or the Issuer, except, that such instruction need not be in
writing if delivered with respect to instruments to be executed by the
Trustee on the Closing Date.
SECTION 3.6. Opinion as to the Trust Estate. On the Closing Date
the Issuer shall furnish to the Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken
with respect to the execution and filing of any financing statements and
continuation statements as are necessary to perfect and make effective the
first priority lien and security interest in the Receivables and the
proceeds thereof in favor of the Trustee for the benefit of the Noteholders
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.
SECTION 3.7. Performance of Obligations; Servicing of Receivables.
(a) The Issuer shall not take, or fail to take, any action and shall use
its best efforts not to permit any action to be taken by others that would
release any Person from any material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result
in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any such instrument or
agreement, except as expressly provided in this Indenture, the Sale and
Servicing Agreement or such other instrument or agreement.
15
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such
duties by a Person identified to the Trustee in an Officers' Certificate of
the Issuer shall be deemed to be action taken by the Issuer. Pursuant to
the Sale and Servicing Agreement, the Issuer has contracted with the
Servicer to assist the Issuer in performing its duties under the Notes and
this Indenture.
(c) The Issuer shall perform and observe all of its obligations
and agreements contained in this Indenture, the other Related Documents and
in the instruments and agreements included in the Trust Estate, including
filing or causing to be filed any UCC financing statements and continuation
statements required to be filed by this Indenture and the Sale and
Servicing Agreement in accordance with and within the time periods provided
for herein and therein.
(d) If the Issuer shall have knowledge of the occurrence of a
Servicer Termination Event under the Sale and Servicing Agreement, the
Issuer shall promptly notify the Trustee and the Rating Agency thereof in
writing, and shall specify in such notice the action, if any, the Issuer is
taking with respect thereto. If a Servicer Termination Event shall arise
from the failure of the Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the
Receivables, the Issuer shall take all reasonable steps available to it to
remedy such failure.
(e) If notice of termination has been given to the Servicer of the
Servicer's rights and powers pursuant to Section 8.2 of the Sale and
Servicing Agreement, the Backup Servicer or another successor Servicer
shall be appointed as successor Servicer in accordance with Section 8.3 of
the Sale and Servicing Agreement.
(f) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly
notify the Trustee. As soon as a successor Servicer is appointed, the
Issuer shall notify the Trustee of such appointment, specifying in such
notice the name and address of such successor Servicer.
(g) The Issuer agrees that it shall not waive timely performance
or observance by the Servicer, the Backup Servicer or Paragon of their
respective duties under Related Documents if the effect thereof would
adversely affect the Holders.
SECTION 3.8. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or
the Sale and Servicing Agreement, sell, transfer, exchange or
otherwise dispose of any of the properties or assets of the
Issuer, including those included in the Trust Estate;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or
applicable State law) or assert any claim against any present or
former
16
Noteholder by reason of the payment of the taxes levied or assessed
upon any part of the Trust Estate; or
(iii)(A) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit
any Person to be released from any covenants or obligations with
respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance (other
than the lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part
thereof or any interest therein or the proceeds thereof (other
than any liens which are junior to or are otherwise subordinated
to the lien in favor of the Trustee (and to which the Trustee has
consented in writing) and tax liens, mechanics' liens and other
liens that arise by operation of law, in each case on a Financed
Vehicle and arising solely as a result of an action or omission of
the related Obligor), or (C) permit the lien of this Indenture not
to constitute a valid first priority (other than with respect to
any such tax lien, mechanics' lien or other lien not considered a
lien) security interest in the Trust Estate.
SECTION 3.9. Annual Statement as to Compliance. The Issuer will
deliver to the Trustee on or before April 30 of each year, commencing April
30, ____, the officers' certificate specified in Section 3.10 of the Sale
and Servicing Agreement.
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized
and existing under the laws of the United States of America or any
State and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the
principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on
the part of the Issuer to be performed or observed, all as
provided herein;
(ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Trustee) to the
effect that such transaction will not have any material adverse
tax consequence to any Noteholder;
17
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
and
(vi) the Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that
such consolidation or merger and such supplemental indenture
comply with this Section 3.10 and that all conditions precedent
provided for in this Section 3.10 relating to such transaction
have been complied with (including any filing required by the
Exchange Act).
(b) The Issuer shall not convey or transfer all or substantially
all of its properties or assets, including those included in the Trust
Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer
the properties and assets of the Issuer the conveyance or transfer
of which is hereby restricted shall: (A) be a United States
citizen or a Person organized and existing under the laws of the
United States of America or any State, (B) expressly assumes, by
an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed,
all as provided herein, (C) expressly agrees by means of such
supplemental indenture that all right, title and interest so
conveyed or transferred shall be subject and subordinate to the
rights of Holders of the Notes, (D) unless otherwise provided in
such supplemental indenture, expressly agrees to indemnify, defend
and hold harmless the Issuer against and from any loss, liability
or expense arising under or related to this Indenture and the
Notes, and (E) expressly agrees by means of such supplemental
indenture that such Person (or if a group of Persons, then one
specified Person) shall make any filings with the Commission (and
any other appropriate Person) required by the Exchange Act in
connection with the Notes;
(ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Trustee) to the
effect that such transaction will not have any material adverse
tax consequence to any Noteholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
and
(vi) the Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that
such conveyance or transfer and such supplemental
18
indenture comply with this Section 3.10 and that all conditions
precedent provided for in this Section 3.10 relating to such
transaction have been complied with (including any filing required
by the Exchange Act).
SECTION 3.11. Successor or Transferee. (a) Upon any consolidation
or merger of the Issuer in accordance with Section 3.10(a), the Person
formed by or surviving such consolidation or merger (if other than the
Issuer) shall succeed to, and be substituted for, and may exercise every
right and power of, the Issuer under this Indenture with the same effect as
if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all or substantially all the
assets and properties of the Issuer pursuant to Section 3.10(b), the Issuer
shall be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery of written notice to the Trustee stating that
the Issuer is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in
any business other than financing, purchasing, owning, selling and managing
of the Receivables in the manner contemplated by this Indenture and the
other Related Documents and activities incidental thereto.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for
any indebtedness except for (i) the Notes and (ii) any other indebtedness
permitted by the Related Documents. The proceeds of the Notes shall be used
to fund the initial deposit in the Reserve Account pursuant to Section 5.1
of the Sale and Servicing Agreement, to purchase the Receivables and to pay
the Issuer's organizational, transactional and start up expenses. Net
amounts remaining after such payments shall be distributed by the Issuer to
the Certificateholder(s). The Issuer shall incur no additional borrowed
money indebtedness secured by the Trust Estate other than the Notes.
SECTION 3.14. Servicer's Obligations. The Issuer shall cause the
Servicer to comply with Article III of the Sale and Servicing Agreement.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Sale and Servicing Agreement or this
Indenture, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability
of so doing or otherwise), endorse or otherwise become contingently liable,
directly or indirectly, in connection with the obligations, stocks or
dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or
any other interest in, or make any capital contribution to, any other
Person.
SECTION 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long- term or operating lease or otherwise) for capital
assets (either realty or personalty).
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SECTION 3.17. Notice of Events of Default. The Issuer shall give
the Trustee and the Rating Agency prompt written notice of each Event of
Default hereunder and each default on the part of the Servicer or Paragon
of its obligations under the Sale and Servicing Agreement, in each case of
which it becomes aware.
SECTION 3.18. Further Instruments and Acts. Upon request of the
Trustee, the Issuer shall execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
SECTION 3.19. Compliance with Laws. The Issuer shall comply with
the requirements of all applicable laws, the non-compliance with which
would, individually or in the aggregate, materially and adversely affect
the ability of the Issuer to perform its obligations under the Notes, this
Indenture or any Related Document.
SECTION 3.20. Tax Treatment. The Issuer has structured this
Indenture and the Notes with the intention that the Notes will qualify
under applicable federal, state and local tax law as indebtedness. The
Issuer and each Holder agrees to treat, and take no action inconsistent
with the treatment of, the Notes (or any beneficial interest therein) as
indebtedness for purposes of federal, state and local income or franchise
taxes and any other tax imposed on or measured by income. Each Holder, by
acquisition of a beneficial interest in a Note, agrees to be bound by the
provisions of this Section 3.20.
SECTION 3.21. Investment Company Act. The Issuer shall conduct its
operations in a manner that will not subject it to registration as an
"investment company" under the Investment Company Act of 1940, as amended.
SECTION 3.22. Liens. The Issuer shall not contract for, create,
incur or suffer to exist any Lien upon any of its property or assets,
whether now owned or hereafter acquired, except for Permitted Liens.
SECTION 3.23. Conduct of Business. The Issuer shall (a) conduct
its business solely in its own name through its duly authorized officers or
agents so as not to mislead others as to the identity of the Issuer with
which those others are concerned, and particularly shall use its best
efforts to avoid the appearance of conducting business on behalf of
Paragon, the Seller or any Affiliate thereof or that the assets of the
Issuer are available to pay the creditors of Paragon, the Seller or any
Affiliate thereof or any other entity; (b) maintain records and books of
account separate from those of Paragon, the Seller or any Affiliate thereof
or any other entity; (c) use its best efforts to maintain an arm's-length
relationship with Paragon, the Seller or any Affiliate thereof and shall
not hold itself out as being liable for the debts of Paragon, the Seller or
any Affiliate thereof or any other entity; (d) use its best efforts to keep
its assets and its liabilities wholly separate from those of all other
entities, including Paragon, the Seller or any Affiliate thereof, except as
otherwise anticipated by the Related Documents; (e) not maintain bank
accounts or other depository accounts to which any Affiliate (other than
the Seller in its capacity as sole Certificateholder of the Issuer) is an
account party, into which any Affiliate (other than the Seller in its
capacity as sole Certificateholder of the
20
Issuer) makes deposits or from which any Affiliate (other than the Seller
in its capacity as sole Certificateholder of the Issuer) has the power to
make withdrawals, except as otherwise permitted by Sections 3.2 and 4.2 of
the Sale and Servicing Agreement; (f) shall obtain proper authorization for
all the Issuer's actions requiring such authorization; (g) shall obtain
proper authorization from the Seller and its other Certificateholders, if
any, for all action requiring approval of the Seller and its other
Certificateholders, if any; (h) shall pay operating expenses and
liabilities from the Issuer's own funds; (i) shall disclose in its annual
financial statements the effects of the Issuer's transactions under the
Related Documents in accordance with generally accepted accounting
principles and shall disclose that the assets of the Issuer are not
available to pay creditors of Paragon; (j) shall continuously maintain the
resolutions, agreements and other instruments underlying the transactions
described in the Related Documents as official records; and (k) shall
insure that any consolidated financial statements of Paragon has notes to
the effect that the Issuer is a separate entity whose creditors have a
claim on its assets prior to those assets becoming available to its equity
holders.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes
except as to (i) rights of registration of transfer and exchange, (ii)
substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of
Noteholders to receive payments of principal thereof and interest thereon,
(iv) Sections 3.2, 3.3 and 3.20, (v) the rights, obligations and immunities
of the Trustee hereunder (including the rights of the Trustee under Section
6.7 and the obligations of the Trustee under Section 4.2) and (vi) the
rights of Noteholders as beneficiaries hereof with respect to the property
so deposited with the Trustee payable to all or any of them, and the
Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, when:
(A) all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.5 and
(ii) Notes for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Issuer and
thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.3) have been delivered to the Trustee for
cancellation;
(B) the Issuer has paid or caused to be paid all other
sums payable hereunder by the Issuer; and
(C) the Issuer has delivered to the Trustee an Officers'
Certificate, an Opinion of Counsel and (if required by the
Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of
Section 11.1(a) and, subject to Section 11.2, each stating that
all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied
with.
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SECTION 4.2. Payment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the
Notes, all moneys then held by any Paying Agent other than the Trustee
under this Indenture with respect to such Notes shall, upon demand of the
Issuer, be paid to the Trustee to be held and applied according to Section
3.3 and Section 4.5 of the Sale and Servicing Agreement, and thereupon such
Paying Agent shall be released from all further liability with respect to
such moneys.
SECTION 4.3. Release of Trust Estate. The Trustee shall, on or
after the Termination Date, release any remaining portion of the Trust
Estate from the lien created by this Indenture. Subject to Section 2.9, the
Trustee shall release property from the lien created by this Indenture
pursuant to this Section 4.3 only upon receipt of a written request of the
Issuer accompanied by an Officer's Certificate.
ARTICLE V
Remedies
SECTION 5.1. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any Governmental
Authority):
(i) default in the payment of any interest on any Note
when the same becomes due and payable, and such default shall
continue for a period of five days;
(ii) default in the payment of the principal of any Note
when the same becomes due and payable;
(iii) default in the observance or performance of any
covenant or agreement of the Issuer made in this Indenture (other
than a covenant or agreement a default in the observance or
performance of which is elsewhere in this Section 5.1 specifically
dealt with), or any representation or warranty of the Issuer made
in this Indenture or in any certificate or other writing delivered
pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when the same
shall have been made, and such default shall continue or not be
cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been
eliminated or otherwise cured, for a period of 30 days after there
shall have been given, by registered or certified mail, to the
Issuer by the Trustee or to the Issuer and the Trustee by the
Holders of at least 25% of the Note Balance, a written notice
specifying such default or incorrect representation or warranty
and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder;
(iv) the filing of a petition for relief by a court
having jurisdiction in the premises in respect of the Issuer, the
Seller or any substantial part of its property in an involuntary
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case under any applicable Federal or State bankruptcy, insolvency
or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official of the Issuer, the Seller or for any
substantial part of its property, or ordering the winding-up or
liquidation of the affairs of the Issuer or the Seller, and such
petition shall remain unstayed and in effect for a period of 60
consecutive days;
(v) the commencement by the Issuer or the Seller of a
voluntary case under any applicable Federal or State bankruptcy,
insolvency or other similar law now or hereafter in effect, or the
consent by the Issuer or the Seller to the entry of an order for
relief in an involuntary case under any such law, or the consent
by the Issuer or the Seller to the appointment or taking
possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Issuer or the
Seller or for any substantial part of its property, or the making
by the Issuer or the Seller of any general assignment for the
benefit of creditors, or the failure by the Issuer or the Seller
generally to pay its debts as such debts become due, or the taking
of action by the Issuer or the Seller in furtherance of any of the
foregoing; or
(vi) the failure to pay the Note Balance of any Class of
Notes on the Final Scheduled Payment Date for such Class of Notes.
The Issuer shall deliver to the Trustee, the Noteholders and the
Rating Agency, within five days after the occurrence thereof, written
notice in the form of an Officers' Certificate of any event that, with the
giving of notice or the lapse of time or both, would become an Event of
Default under clause (iii), its status and what action the Issuer is taking
or proposes to take with respect thereto.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default shall have occurred and be continuing, the Trustee
in its discretion may, or if so requested in writing by Holders of Notes
representing the Note Majority shall, declare by written notice to the
Issuer that the Notes become, whereupon they shall become, immediately due
and payable, together with accrued and unpaid interest thereon.
Notwithstanding anything to the contrary in this Section 5.2, if an Event
of Default specified in Section 5.1(iv) or (v) shall occur and be
continuing, the Notes shall become immediately due and payable at par,
together with accrued interest thereon.
At any time after such declaration of acceleration of maturity has
been made by the Trustee and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article V
provided, the Note Majority, by written notice to the Issuer and the
Trustee, may rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Trustee
a sum sufficient to pay:
(A) all payments of principal of and interest on
all Notes and all other amounts that would then be due
hereunder or upon such Notes if the Event of Default
giving rise to such acceleration had not occurred; and
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(B) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents
and counsel; and
(ii) all Events of Default, other than the nonpayment of
the principal of the Notes that has become due solely by such
acceleration, have been cured or waived as provided in Section
5.12.
No such rescission shall affect any subsequent default or impair
any right consequent thereto.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement
by Trustee. (a) The Issuer covenants that if the Notes are accelerated
following the occurrence of an Event of Default, the Issuer will, upon
demand of the Trustee, pay to it as and to the extent provided in Section
4.5 of the Sale and Servicing Agreement, for the benefit of the Holders of
Notes, the whole amount then due and payable on such Notes for principal
and interest, and, to the extent payment at such rate of interest shall be
legally enforceable, upon overdue installments of interest, at the
applicable interest rate, and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances
of the Trustee and its agents and counsel.
(b) If an Event of Default occurs and is continuing, the Trustee
may, as more particularly provided in Section 5.4, proceed to protect and
enforce its rights and the rights of the Noteholders, by such appropriate
Proceedings as the Trustee shall deem most effective to protect and enforce
any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right
vested in the Trustee by this Indenture or by law.
(c) If there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, Proceedings under Title 11 of the United
States Code or any other applicable Federal or State bankruptcy, insolvency
or other similar law, or in case a receiver, assignee, trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official
shall have been appointed for or taken possession of the Issuer or its
property or such other obligor or Person, or in case of any other
comparable judicial Proceedings relative to the Issuer or other obligor
upon the Notes, or to the creditors or property of the Issuer or such other
obligor, the Trustee, irrespective of whether the principal of any Notes
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any
demand pursuant to this Section 5.3, shall be entitled and empowered, by
intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of
the Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee
and each predecessor Trustee, and their respective agents,
attorneys and counsel, and for reimbursement of all expenses and
24
liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee, except as a result of negligence or bad
faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law or regulations,
to vote on behalf of the Holders of the Notes in any election of a
trustee, a standby trustee or any Person performing similar
functions in any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the Noteholders and
of the Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the
claims of the Trustee or the Holders of Notes allowed in any
Proceedings relative to the Issuer, its creditors and its
property;
and any trustee, receiver, liquidator, assignee, custodian, sequestrator or
other similar official in any such Proceeding is hereby authorized by each
of such Noteholders to make payments to the Trustee, and, if the Trustee
shall consent to the making of payments directly to such Noteholders, to
pay to the Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Trustee, each predecessor Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor
Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on behalf
of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Noteholder in
any such proceeding except, as aforesaid, to vote for the election of a
trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes may be enforced by the Trustee without
the possession of any of the Notes or the production thereof in any trial
or other Proceedings relative thereto, and any such action or Proceedings
instituted by the Trustee shall be brought in its own name and as trustee
of an express trust, and any recovery of judgment, subject to the payment
of the expenses, disbursements and compensation of the Trustee, each
predecessor Trustee and their respective agents and attorneys, shall be for
the ratable benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Trustee or to which the
Trustee shall be a party (and also any Proceedings involving the
interpretation of any provision of this Indenture), the Trustee shall be
held to represent all the Holders of the Notes, and it shall not be
necessary to make any Noteholder a party to any such Proceedings.
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SECTION 5.4. Remedies; Priorities. (a) If an Event of Default shall
have occurred and be continuing, the Trustee may or shall, at the direction of
the Note Majority (subject to Section 5.5) exercise any one or more of the
following remedies, whether sequentially or concurrently:
(i) institute Proceedings in its own name and as or on
behalf of a trustee of an express trust for the collection of all
amounts then payable on the Notes or under this Indenture with
respect thereto, whether by declaration or otherwise, enforce any
judgment obtained, and collect from the Issuer and any other
obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to
the Trust Estate;
(iii) exercise any remedies of a secured party under the
UCC and take any other appropriate action to protect and enforce
the rights and remedies of the Noteholders;
(iv) sell the Trust Estate, or any portion thereof or
rights or interest therein, at one or more public or private sales
called and conducted in any manner permitted by law;
(v) elect to have the Issuer maintain possession of the
Receivables and continue to apply collections on such Receivables
as if there had been no declaration of acceleration; and
(vi) make demand upon the Servicer, by written notice,
that the Servicer deliver to the Trustee all Receivable Files;
provided, however, that the Trustee may not sell or otherwise liquidate the
Trust Estate following an Event of Default, other than an Event of Default
described in Section 5.1(i) or (ii), unless: (A) all the Noteholders
consent thereto, (B) the proceeds of such sale or liquidation distributable
to the Noteholders are sufficient to discharge in full all amounts then due
and unpaid upon such Notes for principal and interest or (C) the Trustee
determines that the Trust Estate will not continue to provide sufficient
funds for the payment of principal of and interest on the Notes as they
would have become due if the Notes had not been declared due and payable,
and the Trustee provides prior written notice to the Rating Agency and
obtains the consent of Holders of the Note Majority. In determining such
sufficiency or insufficiency with respect to clauses (B) and (C) above, the
Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
(b) If the Trustee collects any money or property pursuant to this
Article V, it shall pay out such money or property according to the
priorities set forth in Section 4.5 of the Sale and Servicing Agreement.
26
The Trustee may fix a special record date and special payment date
for any payment to Noteholders pursuant to this Section. At least 15 days
before such special record date, the Trustee shall mail to each Noteholder
and the Issuer a notice that states the special record date, the special
payment date and the amount to be paid.
SECTION 5.5. Optional Preservation of the Receivables. If the
Notes have been declared to be due and payable under Section 5.2 following
an Event of Default, and such declaration and its consequences have not
been rescinded and annulled, the Trustee may, but need not, elect to retain
possession of the Trust Estate and effect the collection thereof rather
than dispose of or liquidate the Trust Estate. It is the desire of the
parties hereto and the Noteholders that there be at all times sufficient
funds for the payment of principal of and interest on the Notes, and the
Trustee shall take such desire into account when determining whether or not
to retain possession of the Trust Estate. In determining whether to retain
possession of the Trust Estate and effect the collection thereof, the
Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose. Subject to Section 5.11 and for purposes of
effecting the collection of the Trust Estate, the Trustee may (but shall
not be required to) reasonably exercise any judgment or take any action not
otherwise inconsistent with the terms hereof.
SECTION 5.6. Limitation of 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:
(i) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(ii) the Holder(s) of not less than 25% of the Note
Balance have made written request to the Trustee to institute such
Proceeding in respect of such Event of Default in its own name as
Trustee hereunder;
(iii) such Holder(s) have offered to the Trustee
indemnity reasonably satisfactory to the Trustee against the
costs, expenses and liabilities to be incurred in complying with
such request;
(iv) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute
such Proceeding; and
(v) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the
Note Majority;
it being understood and intended that no one or more Holder(s) 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 Holder(s) of Notes or to obtain or to seek to obtain
priority or
27
preference over any other Holder(s) or to enforce any right under this
Indenture, except in the manner herein provided.
SECTION 5.7. Unconditional Rights of Noteholders To Receive
Principal and Interest. Notwithstanding any other provisions in this
Indenture, the Holder of any Note shall have the right, which is absolute
and unconditional, to receive payment of the principal of and interest, if
any, on such Note on or after the respective due dates thereof expressed in
such Note or in this Indenture (or, in the case of redemption, on or after
the Redemption Date) and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder.
SECTION 5.8. Restoration of Rights and Remedies. If the Trustee or
any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned
for any reason or has been determined adversely to the Trustee or to such
Noteholder, then and in every such case the Issuer, the Trustee and the
Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder,
and thereafter all rights and remedies of the Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
SECTION 5.9. Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 5.10. Delay or Omission Not a Waiver. No delay or omission
of the Trustee or any Holder of Notes to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right
or remedy or constitute a waiver of any such Default or Event of Default or
an acquiescence therein. Every right and remedy given by this Article V or
by law to the Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the
Noteholders, as the case may be.
SECTION 5.11. Control by Noteholders. The Holders of the Note
Majority shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Trustee with
respect to the Notes or exercising any trust or power conferred on the
Trustee; provided, however that:
(i) such direction shall not be in conflict with any
rule of law or with this Indenture;
(ii) subject to the express terms of Section 5.4, any
direction to the Trustee to sell or liquidate the Trust Estate
shall be by all the Noteholders;
28
(iii) if the conditions set forth in Section 5.5 have
been satisfied and the Trustee elects to retain the Trust Estate
pursuant to such Section, then any direction to the Trustee by
Holders of Notes representing less than 100% of the Note Balance
to sell or liquidate the Trust Estate shall be of no force and
effect; and
(iv) the Trustee may take any other action deemed proper
by the Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Trustee need not take
any action that it reasonably determines might involve it in liability or
would reasonably be expected to materially adversely affect the rights of
any Noteholder(s) not consenting to such action, except that no such action
shall be deemed to reasonably be expected to materially adversely affect
the rights of the Class B Noteholders by reason of such Class B
Noteholders' being subordinate to the Class A Noteholders under the terms
of this Indenture or with respect to the Indenture Collateral.
SECTION 5.12. Waiver of Past Defaults. The Holders of the Note
Majority may waive any past Default or Event of Default and its
consequences except a Default (a) in payment of principal of or interest on
any of the Notes or (b) in respect of a covenant or provision hereof that
cannot be modified or amended without the consent of the Holder of each
Note. In the case of any such waiver, the Issuer, the Trustee and the
Holders of the Notes shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent
or other Default or Event of Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of
Default arising therefrom shall be deemed to have been cured and not to
have occurred, for every purpose of this Indenture; but no such waiver
shall extend to any subsequent or other Default or impair any right
consequent thereto.
The Indenture Trustee shall promptly provide written notice to the
Rating Agency of any such waiver.
SECTION 5.13. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof
shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the 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
attorney's 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 5.13 shall not apply to (a)
any suit instituted by the Trustee, (b) any suit instituted by any
Noteholder(s) holding in the aggregate more than 10% of the Note Balance or
(c) any suit instituted by any Noteholder for the enforcement of the
payment of principal of or interest on any Note on or after the respective
due dates expressed in such Note and in this Indenture (or, in the case of
redemption, on or after the Redemption Date).
29
SECTION 5.14. Waiver of Stay or Extension Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead or in any manner whatsoever, claim or take
the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
SECTION 5.15. 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 the Notes or this Indenture. Neither the lien of this Indenture
nor any rights or remedies of the Trustee or the Noteholders 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
Trust Estate or upon any of the assets of the Issuer.
SECTION 5.16. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Trustee to do so (after the
occurrence of an Event of Default as otherwise required under this Article
V or upon the direction of the Servicer, as applicable) and at the Issuer's
expense, the Issuer shall take all such lawful action as the Trustee may
request to compel or secure the performance and observance by Paragon and
the Servicer, as applicable, of each of their obligations to the Seller or
the Issuer under or in connection with the Sale and Servicing Agreement in
accordance with the terms thereof, and to exercise any and all rights,
remedies, powers and privileges lawfully available to the Issuer under or
in connection with the Sale and Servicing Agreement to the extent and in
the manner directed by the Trustee, including the transmission of notices
of default on the part of Paragon or the Servicer thereunder and the
institution of legal or administrative actions or proceedings to compel or
secure performance by Paragon or the Servicer of each of their obligations
under the Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Trustee may, and at the direction (which direction shall be in writing) of
the Holders of the Note Majority shall, exercise all rights, remedies,
powers, privileges and claims of the Issuer against Paragon or the Servicer
under or in connection with the Sale and Servicing Agreement, including the
right or power to take any action to compel or secure performance or
observance by Paragon or the Servicer of each of their obligations to the
Seller thereunder and to give any consent, request, notice, direction,
approval, extension or waiver under the Sale and Servicing Agreement, and
any right of the Issuer to take such action shall be suspended.
ARTICLE VI
The Trustee
SECTION 6.1. Duties of the Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
30
(b) Except during the continuance of an Event of Default actually
known to a Responsible Officer:
(i) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture
and its other Related Documents and no implied covenants or
obligations shall be read into this Indenture against the Trustee;
and
(ii) in the absence of bad faith 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; provided, however, in the case of
any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture and the
Trustee's other Related Documents.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(i) this clause (c) does not limit the effect of clause
(b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to this Indenture;
(iv) the Trustee shall not be charged with knowledge of
an Event of Default or Servicer Termination Event unless a
Responsible Officer obtains actual knowledge of such event or the
Trustee receives written notice of such event from Paragon, the
Servicer or Holders owning Notes aggregating not less than 10% of
the Note Balance; and
(v) the Trustee shall have no duty to monitor the
performance of the Issuer, the Seller, Paragon or the Servicer,
nor shall it have any liability in connection with malfeasance or
nonfeasance by the Issuer, the Seller, Paragon or the Servicer.
The Trustee shall have no liability in connection with compliance
of the Issuer, the Seller, Paragon or the Servicer with statutory
or regulatory requirements related to the Receivables. The Trustee
shall not make or be deemed to have made any representations or
warranties with respect to the Receivables or the validity or
sufficiency of any pledge or assignment of the Receivables to the
Trustee.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to clauses (a), (b), (c) and (g).
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(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuer.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law, this Indenture or the
Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur or be subjected to
financial liability in the performance of any of its duties hereunder or in
the exercise of any of its rights or powers, if it shall have reasonable
grounds to believe that repayments of such funds or adequate indemnity
reasonably satisfactory to it against any loss, liability or expense is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to this Section 6.1.
(i) The Trustee shall, upon two Business Day's prior notice to the
Trustee, permit any representative of the Issuer, during the Trustee's
normal business hours, to examine all books of account and official records
required to be maintained in accordance with this Agreement of the Trustee
relating to the Notes, to make copies and extracts therefrom and to discuss
the Trustee's affairs and actions, as such affairs and actions relate to
the Trustee's duties with respect to the Notes, with the Trustee's officers
and employees responsible for carrying out the Trustee's duties with
respect to the Notes. All expenses incurred by the Trustee in connection
with such examination shall be borne by the Issuer.
(j) In no event shall the Trustee be required to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer, or any other party, under the Sale and Servicing Agreement except
that [Norwest Bank Minnesota, National Association] solely in its capacity
as Backup Servicer, shall perform and be responsible for such obligations
during such time, if any, as the Backup Servicer shall be the successor to,
and be vested with the rights, powers, duties and privileges of the
Servicer in accordance with the terms of the Sale and Servicing Agreement.
(l) Without limiting the generality of this Section 6.1, the
Trustee, in its capacity as Trustee, shall have no duty, unless
specifically set forth in this Indenture or the Related Documents, (i) to
see to any recording, filing or depositing of this Indenture or any
agreement referred to herein or any financing statement evidencing a
security interest in the Financed Vehicles, or to see to the maintenance of
any such recording or filing or depositing or to any recording, refiling or
redepositing of any thereof, (ii) to see to the payment or discharge of any
tax, assessment or other governmental charge or any lien or encumbrance of
any kind owing with respect to, assessed or levied against any part of the
Trust Estate, (iii) to confirm or verify the contents of any reports or
certificates delivered to the Trustee pursuant to this Indenture or the
Sale and Servicing Agreement believed by the Trustee to be genuine and to
have been signed or presented by the proper party or parties, or (iv) to
inspect the Financed Vehicles at any time or ascertain or inquire as to the
performance or observance of any of the Issuer's, the Seller's or the
Servicer's representations, warranties or covenants or the Servicer's
duties and obligations as Servicer.
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(m) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture, or to institute,
conduct or defend any litigation under this Agreement or in relation to
this Indenture, at the request, order or direction of any of the
Noteholders, pursuant to the provisions of this Indenture, unless such
Noteholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby.
(n) 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 6.1 and to the provisions of the
TIA.
SECTION 6.2. Rights of Trustee. (a) The Trustee may conclusively
rely and shall be fully protected in acting on any document reasonably
believed by it to be genuine and to have been signed or presented by the
proper person. The Trustee need not investigate any fact or matter stated
in any such document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
attorneys or a custodian or nominee, and the Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed
with due care by it.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct, negligence (other than errors in judgment) or
bad faith.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(f) The Trustee shall not be required to make any initial or
periodic examination of any files or records related to the Receivables for
the purpose of establishing the presence or absence of defects, the
compliance by the Issuer with its representations and warranties or for any
other purpose.
(g) If the Trustee is also acting as Paying Agent or Note
Registrar hereunder, the rights and protections afforded to the Trustee
pursuant to this Article VI shall also be afforded to such Paying Agent or
Note Registrar.
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SECTION 6.3. Individual Rights of the Trustee. The Trustee shall
not, in its individual capacity, but may in a fiduciary capacity, become
the owner of Notes. The Trustee may otherwise deal with the Issuer or its
Affiliates with the same rights it would have if it were not the Trustee.
Any Paying Agent, Note Registrar, co-registrar or co-paying agent may do
the same with like rights. However, the Trustee must comply with Sections
6.11 and 6.12.
SECTION 6.4. Trustee's Disclaimer. The Trustee shall not be
responsible for, and makes no representation as to the validity or adequacy
of, this Indenture, the Trust Estate or the Notes; shall not be accountable
for the Issuer's use of the proceeds from the Notes; and shall not be
responsible for any statement of the Issuer in this Indenture or in any
document issued in connection with the sale of the Notes or in the Notes
other than the Trustee's certificate of authentication.
SECTION 6.5. Notice of Defaults. If an Event of Default or
Servicer Termination Event occurs and is continuing and is known to a
Responsible Officer, the Trustee shall mail to the Rating Agency and each
Noteholder notice of the Event of Default or Servicer Termination Event
within 20 days after such Responsible Officer has knowledge of such Event
of Default or Servicer Termination Event. Except in the case of an Event of
Default in payment of principal of or interest on any Note, the Trustee may
withhold the notice of such Event of Default if and so long as a committee
of its Responsible Officers in good faith determines that withholding the
notice is in the interests of Noteholders.
SECTION 6.6. Reports by Trustee to the Holders. The Trustee shall
deliver to each Noteholder such information as set forth in Section 4.7 of
the Sale and Servicing Agreement.
SECTION 6.7. Compensation, Reimbursement and Indemnity. (a) The
Issuer shall, or shall cause the Servicer to, pay to the Trustee from time
to time reasonable compensation for its services, including extraordinary
services such as default administration. The Trustee's compensation shall
not be limited by any law on compensation of a trustee of an express trust.
The Issuer shall, or shall cause the Servicer to, reimburse the Trustee for
all reasonable out-of-pocket expenses incurred or made by it, including
costs of collection, in addition to the compensation for its services. Such
expenses shall include securities transaction charges and the reasonable
compensation and expenses, disbursements and advances of the Trustee's
agents, counsel, accountants and experts but, with respect to securities
transaction charges, only to the extent such charges have not been waived
due to the Trustee's receipt of payment from any financial institution with
respect to certain eligible investments specified by the Servicer pursuant
to Section 4.1(b) of the Sale and Servicing Agreement.
(b) The Issuer shall or shall cause the Servicer to indemnify the
Trustee and its officers, directors, employees and agents against any and
all loss, liability or expense (including attorneys' fees) incurred by them
in connection with the administration of this trust and the performance of
its duties hereunder. The Trustee shall notify the Issuer and the Servicer
promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Issuer and the Servicer shall not relieve the
Issuer or the Servicer of its obligations hereunder. The Issuer shall, or
shall cause the Servicer to, defend the claim and the Trustee may have
separate counsel and the Issuer shall, or shall
34
cause the Servicer to, pay the fees and expenses of such counsel. Neither
the Issuer nor the Servicer need reimburse any expense or indemnify against
any loss, liability or expense incurred by the Trustee through the
Trustee's own willful misconduct, negligence (other than errors in
judgment) or bad faith.
The Issuer's payment obligations to the Trustee pursuant to this
Section 6.7 shall survive the discharge of this Indenture. When the Trustee
incurs expenses after the occurrence of an Event of Default specified in
Section 5.1(iv) or (v), the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other
applicable Federal or State bankruptcy, insolvency or similar law.
Notwithstanding anything else set forth in this Indenture or the Related
Documents, the Trustee agrees that the obligations of the Issuer to the
Trustee hereunder and under the Related Documents shall be recourse to the
Trust Estate only and specifically shall not be recourse to the assets of
the Issuer, the Seller or Paragon, except that Paragon, as Servicer, has
undertaken the payment and indemnity obligations as described in this
Section 6.7.
SECTION 6.8. Replacement of the Trustee. No resignation or removal
of the Trustee and no appointment of a successor Trustee shall become
effective until the acceptance of appointment by the successor Trustee
pursuant to this Section 6.8. Subject to the preceding sentence, the
Trustee may resign at any time by providing 60 days prior written notice to
the Issuer and the Noteholders or sooner if so required by law. The Issuer
may remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) the Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of
the Trustee or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Issuer shall promptly provide
written notice of such event to the Rating Agency and the Noteholders and
shall appoint a successor Trustee. If the Issuer fails to appoint such a
successor Trustee, the Trustee may appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Noteholders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee and shall be
paid all fees and expenses owed through the date of termination.
35
If a successor Trustee does not take office within 60 days after
the retiring Trustee provides notice of intended resignation or is removed,
the retiring Trustee, the Issuer or a Note Majority may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee shall fail to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Issuer's obligations under Section 6.7 shall continue for the
benefit of the retiring Trustee. The retiring Trustee shall have no
liability for any act or omission by any successor Trustee.
SECTION 6.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Trustee. The
Trustee shall provide the Rating Agency and the Issuer written notice of
any such transaction; provided, however, that such corporation or banking
association shall be otherwise qualified and eligible under Section 6.11.
If at the time of any such succession by merger, conversion or
consolidation to the Trustee any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such
Notes so authenticated; and in case at that time any of the Notes shall not
have been authenticated, any successor to the Trustee may authenticate such
Notes either in the name of any predecessor trustee hereunder or in the
name of the successor to the Trustee; and in all such cases such
certificates of authentication shall have the full force and effect to the
same extent given to the certificate of authentication of the Trustee
anywhere in the Notes or in this Indenture.
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for
the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust Estate may at the time be located, the Trustee shall
have the power and may execute and deliver all instruments to appoint one
or more Person(s) to act as co-trustee(s), or separate trustee(s), of all
or any part of the Trust Estate, and to vest in such Person(s), in such
capacity and for the benefit of the Noteholders, such title to the Trust
Estate, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Trustee
may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 6.11 and no notice to Noteholders of the appointment
of any co-trustee or separate trustee shall be required under Section 6.8.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and
36
such separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to act
separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any
particular act(s) are to be performed, the Trustee shall be
incompetent or unqualified to perform such act(s), in which event
such rights, powers, duties and obligations (including the holding
of title to the Trust Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to
this Indenture and the conditions of this Article VI. Each separate trustee
and co-trustee, upon its acceptance of the trusts conferred, shall be
vested with the estates or property specified in its instrument of
appointment, either jointly with the Trustee or separately, as may be
provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the
conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Trustee as its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in
respect of this Indenture on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
(e) The Trustee shall have no obligation to determine whether a
co-trustee or separate trustee is legally required in any jurisdiction in
which any part of the Trust Estate may be located.
SECTION 6.11. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in
its most recent published annual report of condition. Trustee shall comply
with TIA Section 310(b), including the optional provision permitted by the
second sentence of TIA Section 310(b)(9); provided, however, that there shall
be excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities of Issuer are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 6.12. Appointment and Powers. Subject to the terms and
conditions hereof, each of the Noteholders hereby appoints [Norwest Bank
Minnesota, National Association] as Trustee with
37
respect to the Indenture Collateral, and [Norwest Bank Minnesota, National
Association] hereby accepts such appointment and agrees to act as the
Trustee on behalf of the Noteholders with respect to the Indenture
Collateral for the Noteholders, to maintain custody and possession of such
Indenture Collateral (except as otherwise provided hereunder) and to
perform the other duties of the Trustee in accordance with the provisions
of this Indenture. Receipt of such instructions shall not be a condition to
the exercise by the Trustee of its express duties hereunder, except where
this Indenture provides that the Trustee is permitted to act only following
and in accordance with such instructions.
SECTION 6.13. Limitation on Liability. Neither the Trustee nor any
of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them hereunder or in
connection herewith, except that the Trustee shall be liable for its
negligence (other than errors in judgment), bad faith or willful
misconduct; nor shall the Trustee be responsible for the validity,
effectiveness, value, sufficiency or enforceability against the Issuer of
this Indenture or any of the Indenture Collateral (or any part thereof).
Notwithstanding any term or provision of this Indenture, the Trustee shall
incur no liability to the Issuer or the Noteholders for any action taken or
omitted by the Trustee in connection with the Indenture Collateral, except
for the negligence (other than errors in judgment) or willful misconduct on
the part of the Trustee and, further, shall incur no liability to the
Noteholders except for negligence (other than errors in judgment) or
willful misconduct in carrying out its duties to the Noteholders. Subject
to Section 6.15, the Trustee shall be protected and shall incur no
liability to any such party in relying upon the accuracy, acting in
reliance upon the contents, and assuming the genuineness of any notice,
demand, certificate, signature, instrument or other document reasonably
believed by the Trustee to be genuine and to have been duly executed by the
appropriate signatory, and (absent actual knowledge to the contrary) the
Trustee shall not be required to make any independent investigation with
respect thereto. The Trustee shall at all times be free independently to
establish to its reasonable satisfaction, but shall have no duty to
independently verify, the existence or nonexistence of facts that are a
condition to the exercise or enforcement of any right or remedy hereunder
or under any of the Related Documents. The Trustee may consult with
counsel, and shall not be liable for any action taken or omitted to be
taken by it hereunder in good faith and in accordance with the advice of
such counsel. The Trustee shall not be under any obligation to exercise any
of the remedial rights or powers vested in it by this Indenture or to
follow any direction from the Issuer unless it shall have received security
or indemnity satisfactory to the Trustee against the costs, expenses and
liabilities which might be incurred by it.
SECTION 6.14. Trustee Not Liable for Notes or Receivables. The
Trustee makes no representations as to the validity or sufficiency of the
Sale and Servicing Agreement or of the Notes (other than authentication of
the Notes) or of any Receivable or Related Document, except as expressly
provided herein or in the Sale and Servicing Agreement. Except as expressly
set forth in the Related Documents, the Trustee shall at no time (except
for its duties as Backup Servicer under the Related Documents and except
during such time, if any, as it is acting as successor Servicer) have any
responsibility or liability for or with respect to the legality, validity
and enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or
the maintenance of any such perfection and priority, or for or with respect
to the efficiency of the Trust or its ability to generate the payments to
be distributed to Noteholders
38
under this Indenture, including the existence, condition, location and
ownership of any Financed Vehicle; the existence and enforceability of any
insurance thereon; the existence of any Receivable or any computer or other
record thereof (it being understood that the Trustee has not reviewed and
does not intend to review such matters, the sole responsibility for such
review being vested in the Seller or the Servicer, as applicable); the
completeness of any Receivable; the receipt by the Servicer of any
Receivable; the performance or enforcement of any Receivable; the
compliance by the Seller and the Servicer with any covenant or the breach
by the Seller and the Servicer of any warranty or representation made under
any Related Document and the accuracy of any such warranty or
representation prior to the Trustee's receipt of notice or other discovery
of any noncompliance therewith or any breach thereof; any investment of
monies by or at the direction of the Servicer or any loss resulting
therefrom (it being understood, however, that the Trustee shall remain
responsible for any Trust Property that it may hold directly); the acts or
omissions of the Seller, the Servicer or any Obligor; any action of the
Servicer taken in the name of the Trustee; the accuracy, content or
completeness of any offering documents used in connection with the sale of
the Notes or any action by the Trustee taken at the instruction of the
Servicer, the Seller or the Noteholders holding the requisite percentage of
Notes; provided, however, that the foregoing shall not relieve the Trustee
of its obligation to perform its duties under this Agreement and the other
Related Documents, whether as Trustee or as Backup Servicer. The Trustee
shall not be accountable for the use or application by the Seller of any of
the Notes or of the proceeds of such Notes, or for the use or application
of any funds paid to the Servicer in respect of the Receivables prior to
the time such funds are deposited in the Collection Account.
SECTION 6.15. Reliance upon Documents. In the absence of bad faith
or negligence on its part, the Trustee shall be entitled to rely on any
communication, instrument, paper or other document reasonably believed by
it to be genuine and correct and to have been signed or sent by the proper
Person or Persons and shall have no liability in acting, or omitting to
act, where such action or omission to act is in reasonable reliance upon
any statement or opinion contained in any such document or instrument.
SECTION 6.16. Representations and Warranties of the Trustee.
The Trustee represents and warrants to the Issuer as follows:
(a) Due Organization. The Trustee is a national banking
association duly organized, validly existing and in good standing under the
laws 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 Related 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
39
execution and delivery by the Trustee or the performance by the Trustee, of
this Indenture and such other Related Documents.
(d) Valid and Binding Indenture. The Trustee has duly executed and
delivered this Indenture and each other Related Document to which it is a
party, and each of this Indenture and each such other Related Document
constitutes the legal, valid and binding obligation of the Trustee,
enforceable against the Trustee in accordance with its respective 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 6.17. Waiver of Setoffs. 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 the Trust Accounts and
agrees that amounts in the Trust Accounts shall at all times be held and
applied solely in accordance with the provisions hereof and of the Sale and
Servicing Agreement.
SECTION 6.18. Rights to Direct Trustee. A Note Majority 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, however, that subject to Section 6.1,
the Trustee shall have the right to decline to follow any such direction if
the Trustee upon written advice of counsel shall determine that the action
so directed may not lawfully be taken, or if the Trustee in good faith
shall determine that the proceedings so directed would be in violation of
this Indenture or any of the Related Documents or would subject it to
personal liability against which it has not been provided reasonable
indemnity or be unduly prejudicial to the rights of Noteholders not parties
to such direction; and provided, further, that nothing in this Indenture
shall impair the right of the Trustee to take any action deemed proper by
the Trustee and that is not inconsistent with such direction by the
Noteholders.
SECTION 6.19. Preferential Collection of Claims Against Issuer.
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1. Issuer To Furnish Trustee Names and Addresses of
Noteholders. Issuer will furnish or cause to be furnished to Trustee (a)
not more than five days after the earlier of (i) each Record Date and (ii)
three months after the last Record Date, a list, in such form as Trustee
may reasonably require, of the names and addresses of the Holders as of
such Record Date, (b) at such other times as Trustee may request in
writing, within 30 days after receipt by Issuer of any such request, a list
of similar form and content as of a date not more than 10 days prior to the
time such list is furnished; provided, however, that so long as (i) Trustee
is Note Registrar, or (ii) the Notes are Book-Entry Notes, no such list
shall be required to be furnished.
40
SECTION 7.2. Preservation of Information; Communications to
Noteholders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Trustee as provided in
Section 7.1 and the names and addresses of Holders of Notes received by the
Trustee in its capacity as Note Registrar. The Trustee may destroy any list
furnished to it as provided in Section 7.1 upon receipt of a new list so
furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or
under the Notes. Three or more Noteholders, or one or more Holder(s) of
Notes evidencing at least 25% of the Note Balance, may obtain a list of the
names and addresses of Holders of Notes of record as of the most recent
Record Date in order to communicate with other Noteholders with respect to
their rights under this Indenture or under the Notes.
SECTION 7.3. Reports by Issuer. (a) Issuer shall:
(i) file with Trustee, within 15 days after Issuer is
required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations
prescribe) which Issuer may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with
respect to compliance by Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such
rules and regulations; and
(iii) supply to Trustee (and Indenture Trustee shall
transmit by mail to all Noteholders described in TIA Section 313(c))
such summaries of any information, documents and reports required
to be filed by Issuer pursuant to clauses (i) and (ii) of this
Section 7.3(a) as may be required by rules and regulations
prescribed from time to time by the Commission.
(b) Unless Issuer otherwise determines, the fiscal year of Issuer
shall end on December 31 of each year.
SECTION 7.4. Reports by Trustee. If required by TIA Section 313(a),
within 60 days after each March 31, beginning with March 31, ____, Trustee
shall mail to each Noteholder as required by TIA Section 313(c) a brief report
dated as of such date that complies with TIA Section 313(a). Trustee also shall
comply with TIA Section 313(b)(1). A copy of each report at the time of its
mailing to Noteholders shall be filed by Trustee with the Commission and
each stock exchange, if any, on which the Notes are listed. Issuer shall
notify Trustee if and when the Notes are listed on any stock exchange.
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ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1. 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
apply all such money received by it as provided in this Indenture. Except
as otherwise expressly provided in this Indenture, if any default occurs in
the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Trustee may take such action as may
be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action
shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as
provided in Article V.
SECTION 8.2. Trust Accounts. (a) On or prior to the Closing Date,
the Issuer shall cause the Servicer to establish and maintain, in the name of
the Trustee, for the benefit of the Noteholders, the Trust Accounts as
provided in Section 4.1 of the Sale and Servicing Agreement.
(b) On each Payment Date, the Trustee shall distribute all amounts
on deposit in the Collection Account to Noteholders to the extent of
amounts due and unpaid on the Notes for principal and interest in the
amounts and in the order of priority set forth in Section 4.5 of the Sale
and Servicing Agreement.
SECTION 8.3. General Provisions Regarding Accounts. (a) So long as
no Default or Event of Default shall have occurred and be continuing, all
or a portion of the funds in the Trust Accounts shall be invested and
reinvested by the Trustee in Eligible Investments in accordance with
Section 4.1(b) of the Sale and Servicing Agreement.
(b) Subject to Section 6.1(c), the Trustee shall not in any way be
held liable for the selection of Eligible Investments or by reason of any
insufficiency in the Trust Accounts resulting from any loss on any Eligible
Investment included therein, except for losses attributable to the
Trustee's failure to make payments on such Eligible Investments issued by
the Trustee, in its commercial capacity as principal obligor and not as
trustee, in accordance with their terms.
SECTION 8.4. Release of Trust Estate. (a) Subject to the payment
of its fees and expenses pursuant to Section 6.7, the Trustee may, and when
required by this Indenture 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 that are not inconsistent with
this Indenture and the Sale and Servicing Agreement. No party relying upon
an instrument executed by the Trustee as provided in this Article shall be
bound to ascertain the Trustee's authority, inquire into the satisfaction
of any conditions precedent or see to the application of any moneys.
(b) The Trustee shall, at such time as there are no Notes
Outstanding and all sums due to the Trustee pursuant to Section 6.7 have
been paid and all other Secured Obligations have been
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paid in full, release any remaining portion of the Trust Estate that
secured the Notes from the lien of this Indenture and release to the Issuer
or any other Person entitled thereto any funds then on deposit in the
Collection Account. The Trustee shall release property from the lien of
this Indenture pursuant to this paragraph only upon receipt of an Issuer
Request accompanied by an Officers' Certificate and an Opinion of Counsel
meeting the applicable requirements of Section 11.1.
SECTION 8.5. Opinion of Counsel. The Trustee shall receive at
least seven days' notice when requested by the Issuer to take any action
pursuant to Section 8.4(a), accompanied by copies of any instruments
involved, and the Trustee shall also require, as a condition to such
action, an Opinion of Counsel stating the legal effect of any such action,
outlining the steps required to complete the same, and concluding that all
conditions precedent to the taking of such action have been complied with
and such action will not materially and adversely impair the security for
the Notes or the rights of the Noteholders in contravention of this
Indenture; provided, however, that no such Opinion of Counsel shall be
required after the Notes are paid in full or for the release of liens in
connection with a Purchased Receivable; and provided, further, that such
Opinion of Counsel shall not be required to express an opinion as to the
fair value of the Trust Estate. Counsel rendering any such opinion may
rely, without independent investigation, on the accuracy and validity of
any certificate or other instrument delivered to the Trustee in connection
with any such action.
ARTICLE IX
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of
Noteholders. (a) Without the consent of the Holders of Notes but with prior
written notice to the Rating Agency, the Issuer and the Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter
into one or more indentures supplemental hereto in form satisfactory to the
Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property
at any time subject to the lien of this Indenture, or better to
assure, convey and confirm unto the Trustee any property subject
or required to be subjected to the lien of this Indenture, or to
subject to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and
the assumption by any such successor of the covenants of the
Issuer herein and in the Notes;
(iii) to add to the covenants of the Issuer, for the
benefit of the Holders of Notes, or to surrender any right or
power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
additional property to or with the Trustee;
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(v) (A) to cure any ambiguity or to correct any provision
herein or in any supplemental indenture that may be inconsistent
with any other provision herein or in any supplemental indenture
or (B) to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture so long as, in the Opinion of Counsel, such action in
this clause (B) shall not materially adversely affect the
interests of the Holders of Notes; or
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the
Notes and to add to or change any of the provisions of this
Indenture as shall be necessary to facilitate the administration
of the trusts hereunder by more than one trustee, pursuant to the
requirements of Article VI.
The Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer
Order, may, without the consent of the any of the Holders of Notes but with
prior written notice to the Rating Agency, enter into an indenture or
indentures supplemental hereto (i) to cure any ambiguity, (ii) to correct
or supplement any provisions in this Indenture or (iii) 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 Notes under this Indenture so long as such action in this
clause (iii) shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Noteholder.
SECTION 9.2. Supplemental Indentures With Consent of Noteholders.
The Issuer and the Trustee, when authorized by an Issuer Order, may, with
prior written notice to the Rating Agency and with the prior written
consent of the Note Majority enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Notes under this
Indenture; provided, however, that, no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note affected
thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal
amount thereof, the interest rate thereon or the Redemption Price
with respect thereto, change the provisions of this Indenture
relating to the application of collections on, or the proceeds of
the sale of, the Trust Estate to the payment of principal of or
interest on the Notes, or change any place of payment where, or
the coin or currency in which, any Note or the interest thereon is
payable, or impair the right to institute suit for the enforcement
of the provisions of this Indenture requiring the application of
funds available therefor, as provided in Article V, to the payment
of any such amount due on or after the respective due dates
thereof (or, in the case of redemption, on or after the Redemption
Date);
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(ii) reduce the percentage of the Note Balance, the
consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of
this Indenture or certain defaults hereunder and their
consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to
the definition of "Outstanding";
(iv) reduce the percentage of the Note Balance required
to direct the Trustee to direct the Issuer to sell or liquidate
the Trust Estate pursuant to Section 5.4 or 5.11;
(v) modify any provision of this Section 9.2 except to
increase any percentage specified herein or to provide that
certain additional provisions of this Indenture or the other
Related Documents cannot be modified or waived without the consent
of the Holder of each Outstanding Note affected thereby;
(vi) modify any of the provisions of this Indenture in
such manner as to affect the calculation of the amount of any
payment of interest or principal due on any Note on any Payment
Date (including the calculation of any of the individual
components of such calculation);
(vii) permit the creation of any lien ranking prior to or
on a parity with the lien of this Indenture with respect to any
part of the Trust Estate or, except as otherwise permitted or
contemplated herein, terminate the lien of this Indenture on any
property at any time subject hereto or deprive any Holder of Notes
of the security provided by the lien of this Indenture; or
(viii) become effective if the Rating Agency Condition in
respect thereof shall have not been satisfied.
It shall not be necessary for any Act of the Noteholders under
this Section 9.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act shall
approve the substance thereof. The manner of obtaining such consents (and
any other consents of Noteholders provided for in this Indenture or in any
other Related Document) and of evidencing the authorization of the
execution thereof by Noteholders shall be subject to such reasonable
requirements as the Trustee may provide.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section 9.2, the Trustee shall mail
to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of
such supplemental indenture. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.
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SECTION 9.3. Execution of Supplemental Indentures. In executing,
or permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may,
but shall not be obligated to, enter into any such supplemental indenture
that affects the Trustee's own rights, duties, liabilities or immunities
under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective
rights, limitations of rights, obligations, duties, liabilities and
immunities under this Indenture of the Trustee, the Issuer and the Holders
of the Notes shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and
all the terms and conditions of any such supplemental indenture shall be
and be deemed to be part of the terms and conditions of this Indenture for
any and all purposes.
SECTION 9.5. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may bear a notation in form approved by
the Trustee as to any matter provided for in such supplemental indenture.
If the Issuer shall so determine, new Notes so modified as to conform, in
the opinion of the Issuer, to any such supplemental indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Trustee in exchange for Outstanding Notes.
ARTICLE X
Redemption of Notes
SECTION 10.1. Redemption. On any Payment Date on which the
Servicer exercises its option to purchase the Receivables and other Trust
Property pursuant to Section 9.1 of the Sale and Servicing Agreement, the
Notes shall be redeemed in whole, but not in part, for a purchase price
equal to the Redemption Price. Pursuant to said Section 9.1, the Servicer
shall furnish notice of such redemption to the Trustee, the Backup Servicer
and the Rating Agency not later than 10 days prior to the Redemption Date
and the Servicer shall deposit with the Trustee in the Collection Account
the Redemption Price of the Notes to be redeemed on or before the date of
redemption.
SECTION 10.2. Form of Redemption Notice. Notice of redemption
under Section 10.1 shall be given by the Trustee by first-class mail,
postage prepaid, mailed not less than 5 days prior to the applicable
Redemption Date to each Holder of Notes, as of the close of business on the
Record Date preceding the applicable Redemption Date, at such Holder's
address appearing in the Note Register.
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All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered
for payment of the Redemption Price (which shall be the office or
agency of the Issuer to be maintained as provided in Section 3.2).
Notice of redemption of the 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 shall not
impair or affect the validity of the redemption of any other Note.
SECTION 10.3. Notes Payable on Redemption Date. The Notes or
portions thereof to be redeemed shall, following notice of redemption
pursuant to this Article X, become due and payable on the Redemption Date
at the Redemption Price and (unless the Issuer shall default in the payment
of the Redemption Price) no interest shall accrue on the Redemption Price
for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Price.
If there are not sufficient funds in the Collection Account on the
Payment Date on which the Notes are to be redeemed available to pay the
Redemption Price, the notice of redemption shall be deemed to have been
revoked and the Notes shall not be redeemed on the Redemption Date.
Payments will be made on such Payment Date in accordance with Section 4.5
of the Sale and Servicing Agreement as though no notice of redemption had
been given and the Notes shall continue to bear interest at the Class A
Interest Rate or Class B Interest Rate, as applicable.
ARTICLE XI
Miscellaneous
SECTION 11.1. Compliance Certificates and Opinions, etc. (a) Upon
any application or request by the Issuer to the Trustee to take any action
under this Indenture, the Trustee shall be entitled to request that the
Issuer furnish to the Trustee (i) an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to
the proposed action have been complied with, (ii) an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent,
if any, have been complied with and (iii) (if required by the TIA) an
Independent Certificate from a firm of certified public accountants meeting
the applicable requirements of this Section 11.1, except that, in the case
of any such application or request as to which the furnishing of such
documents is specifically required by this Indenture, no additional
certificate or opinion need be furnished.
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Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate
or opinion has read or has caused to be read such covenant or
condition and the definitions herein relating thereto;
(2) 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;
(3) a statement that, in the opinion of each such
signatory, such signatory has made (or has caused to be made) such
examination or investigation as is necessary to enable such
signatory to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each
such signatory, such condition or covenant has been complied with.
(b)(i) Prior to the deposit of any Indenture Collateral or other
property or securities with the Trustee that is to be made the basis for
the release of any property or securities subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in
Section 11.1(a) or elsewhere in this Indenture, furnish to the Trustee an
Officers' Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such
deposit) to the Issuer of the Indenture Collateral or other property or
securities to be so deposited.
(ii) If (A) the Issuer is required to furnish to the
Trustee an Officers' Certificate described in clause (i), and (B)
the fair value to the Issuer of the Indenture Collateral or other
property or securities to be so deposited and of all other such
Indenture Collateral or other property or securities made the
basis of any such withdrawal or release since the commencement of
the then-current fiscal year of the Issuer (as set forth in the
certificates delivered pursuant to clause (i) and this clause
(ii)) is 11% or more of the Note Balance, the Issuer shall also
deliver to the Trustee an Independent Certificate as to the same
matters, provided, however, that such a certificate need not be
furnished with respect to any Indenture Collateral or other
property or securities so deposited if the fair value thereof to
the Issuer as set forth in the related Officers' Certificate is
less than $25,000 or less than one percent of the Note Balance.
(iii) Other than with respect to property as contemplated
by clause (v), whenever any Indenture Collateral or other property
or securities are to be released from the lien of this Indenture,
the Issuer shall also furnish to the Trustee an Officers'
Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of
such release) of the Indenture Collateral or other property or
securities proposed to be released and stating that in the opinion
of such person the proposed release will not impair the security
under this Indenture in contravention of the provisions hereof.
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(iv) If (A) the Issuer is required to furnish to the
Trustee an Officers' Certificate certifying or stating the opinion
of any signer thereof as to the matters described in clause (iii)
and (B) the fair value to the Issuer of the Indenture Collateral
or other property or securities and of all other property (other
than property as contemplated by clause (v)) or securities
released from the lien of this Indenture since the commencement of
the then-current fiscal year (as set forth in the certificates
required by clause (iii) and this clause (iv)) equals 11% or more
of the Note Balance, the Issuer shall also furnish to the Trustee
an Independent Certificate as to the same matters, provided,
however, that such certificate need not be furnished in the case
of any release of Indenture Collateral or other property or
securities if the fair value thereof to the Issuer as set forth in
the related Officers' Certificate is less than $25,000 or less
than one percent of the then Note Balance.
(v) Notwithstanding Section 2.9 or any other provision of
this Section 11.1, the Issuer may, without compliance with the
requirements of the other provisions of this Section 11.1: (A)
collect, liquidate, sell or otherwise dispose of Receivables and
Financed Vehicles as and to the extent permitted or required by
the Related Documents and (B) make cash payments out of the
Collection Account as and to the extent permitted or required by
the Related Documents.
SECTION 11.2. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or
that they be so certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate,
opinion or representations with respect to the matters upon which his
certificate or opinion is based is/are erroneous. Any such certificate of
an Authorized Officer or Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Servicer, Paragon or the
Issuer, stating that the information with respect to such factual matters
is in the possession of the Servicer, Paragon or the Issuer, as applicable,
unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate, opinion or
representations with respect to such matters is/are erroneous.
Where any Person is required or permitted to make, give or execute
two or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but need not,
be consolidated and form one instrument.
Whenever in this Indenture, in connection with any application,
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or
as evidence of the Issuer's compliance with any term hereof, it is intended
49
that the truth and accuracy, at the time of the granting of such application
or at the effective date of such certificate or report (as the case may be),
of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application
granted or to the sufficiency of such certificate or report. The foregoing
shall not, however, be construed to affect the Trustee's right to rely upon
the truth and accuracy of any statement or opinion contained in any such
document as provided in Article VI.
SECTION 11.3. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided
by this Indenture to be given or taken by Noteholders may be embodied in
and evidenced by one or more instrument(s) of substantially similar tenor
signed by such Noteholders in person or by agents duly appointed in
writing; and except as herein otherwise expressly provided, such action
shall become effective when such instrument(s) are delivered to the
Trustee, and, where it is hereby expressly required, to the Issuer. Such
instrument(s) (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Noteholders signing such
instrument(s). Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1) conclusive in favor of the Trustee
and the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or Act by the Holder of any Notes shall bind the Holder of
every Note issued upon the registration thereof, 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 11.4. Notices, etc., to the Trustee, Issuer and Rating
Agency. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders, or other documents provided or permitted by
this Indenture, shall be in writing and, if such request, demand,
authorization, direction, notice, consent, waiver or Act of Noteholders is
to be made upon, given or furnished to or filed with:
(a) the Trustee by any Noteholder or by the Issuer, shall
be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, or
(b) the Issuer by the Trustee or by any Noteholder, shall
be sufficient for every purpose hereunder if in writing and
mailed, first-class, postage prepaid, to the Issuer addressed to:
Paragon Auto Receivables Owner Trust ____-_, 27405 Puerta Real,
Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, Telecopy No.: (714)
348-8707, or at any other address
50
previously furnished in writing to the Trustee by the Issuer, with
a copy to the Owner Trustee, addressed to: [Wilmington Trust Company,
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention:
Corporate Trust Administration]. The Issuer shall promptly transmit
any notice received by it from the Noteholders to the Trustee.
Notices required to be given to the Rating Agency by the Issuer or
the Trustee shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, to their respective addresses set
forth in Section 10.9 of the Sale and Servicing Agreement.
SECTION 11.5. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class, postage prepaid to each Noteholder
affected by such event, at his address as it appears on the Note Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such notice nor
any defect in any notice so mailed to any particular Noteholder shall
affect the sufficiency of such notice with respect to other Noteholders,
and any notice that is mailed in the manner herein provided shall
conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Noteholders shall be filed
with the Trustee but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service, it
shall be impractical to mail notice of any event to Noteholders when such
notice is required to be given pursuant to 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.
Where this Indenture provides for notice to the Rating Agency,
failure to give such notice shall not affect any other rights or
obligations created hereunder, and shall not under any circumstance
constitute a Default or Event of Default.
SECTION 11.6. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Trustee or any Paying
Agent to such Holder, that is different from the methods provided for in
this Indenture or the Notes for such payments or notices. The Issuer will
furnish to the Trustee a copy of each such agreement and the Trustee will
cause payments to be made and notices to be given in accordance with such
agreements to the extent such alternative arrangements are reasonable. Any
additional costs or expenses associated therewith shall be payable by the
Issuer or the applicable Noteholder.
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SECTION 11.7. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.8. Successors and Assigns. All covenants and agreements
in this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors, co-trustees and agents of the Trustee.
SECTION 11.9. Severability. Any provision of this Indenture or the
Notes that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or of
the Notes, as applicable, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 11.10. Benefits of Indenture. 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, the Noteholders, any other
party secured hereunder and any other Person with an ownership interest in
any part of the Trust Estate, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 11.11. Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on
such date, but may be made on the next Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.12. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13. Counterparts. This 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 11.14. Recording of Indenture. If this Indenture is
subject to recording in any public recording offices, such recording is to
be effected by the Issuer and, at its expense, accompanied by an Opinion of
Counsel to the effect that such recording is necessary either for the
protection of the Noteholders or any other Person secured hereunder or for
the enforcement of any right or remedy granted to the Trustee under this
Indenture.
52
SECTION 11.15. Trust Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer or
the Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i)
the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
officer, director, employee or agent of (a) the Owner Trustee in its
individual capacity, (b) any owner of a beneficial interest in the Issuer
or the Trustee or (c) of any successor or assign of the Owner Trustee in
its individual capacity, except as any such Person may have expressly
agreed (it being understood that the Owner Trustee has no such obligations
in its individual capacity) and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity.
SECTION 11.16. No Petition. The Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and
agree that they shall not at any time institute against the Issuer, or join
in any institution against the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings
under any United States Federal or State bankruptcy or similar law in
connection with any obligations relating to the Notes, this Indenture or
any other Related Document. The foregoing shall not limit the rights of the
Trustee to file any claim in or otherwise take any action with respect to
any insolvency proceeding that was instituted against the Issuer by any
Person other than the Trustee.
SECTION 11.17. Inspection. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Trustee, during the
Issuer's normal business hours, to examine all the books of account,
records, reports and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by Independent
certified public accountants, and to discuss the Issuer's affairs, finances
and accounts with the Issuer's officers, employees and Independent
certified public accountants, all at such reasonable times and as often as
may be reasonably requested. The Trustee shall and shall cause its
representatives to hold in confidence all such information; provided,
however, that the foregoing shall not be construed to prohibit (i)
disclosure of any and all information that is or becomes publicly known, or
information obtained by the Trustee from sources other than the Issuer or
the Servicer, (ii) disclosure of any and all information (A) if required to
do so by any applicable statute, law, rule or regulation, (B) to any
government agency or regulatory or self-regulatory body having or claiming
authority to regulate or oversee any aspects of the Trustee's business or
that of its Affiliates, (C) pursuant to any subpoena, civil investigative
demand or similar demand or request of any court, regulatory authority,
arbitrator or arbitration to which the Trustee, such Noteholder or an
Affiliate thereof or any officer, director, employee or shareholder thereof
is subject, (D) in any preliminary or final placement memorandum,
registration statement or contract or other document pertaining to the
transactions contemplated by the Indenture and approved in advance by the
Issuer or (E) to any Affiliate, independent or internal auditor, agent,
employee or attorney of the Trustee or such Noteholder having a need to
know the same; provided, that the Trustee or such Noteholder advises such
recipient of the confidential nature of the information being disclosed and
such recipient agrees to keep such information confidential, (iii) any
other disclosure authorized by the Issuer or the Servicer
53
or (iv) disclosure to the other parties to the transactions contemplated by
the Related Documents and the Noteholders.
SECTION 11.18. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the
Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
54
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed by their respective officers duly authorized as of the
day and year first above written.
PARAGON AUTO RECEIVABLES OWNER TRUST ____-_
By: [WILMINGTON TRUST COMPANY], not in its
individual capacity but solely as Owner
Trustee
By: ________________________________
Name:
Title:
[NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION], as Trustee
By: ________________________________
Name:
Title:
55
EXHIBIT A
to Indenture
FORM OF CLASS A NOTES
REGISTERED $____________1/
No. R-___
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
PARAGON AUTO RECEIVABLES OWNER TRUST ____-_
____% ASSET BACKED NOTES, CLASS A
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Paragon Auto Receivables Owner Trust ____-_, a Delaware trust
(including any successor, the "Issuer"), for value received, hereby
promises to pay to ______________, or registered assigns, the principal sum
of __________________ DOLLARS ($___________), partially payable on each
Payment Date in an amount equal to the aggregate amount, if any, payable
from the Collection Account in respect of principal on the Class A Notes
pursuant to Section 3.1 of the Indenture and Section 4.5 of the Sale and
Servicing Agreement; provided, however, that the entire unpaid principal
amount of this Note shall be due and payable on the earlier of the Final
Scheduled Payment Date and the Redemption Date, if any, pursuant to Section
10.1 of the Indenture. The Issuer will pay interest on this Note at the
rate per annum shown above, on each Payment Date until the principal of
this Note is paid or made available for payment, on the principal amount of
this Note outstanding on the close of business on the day preceding such
Payment Date, subject to certain limitations
--------
1/Denominations of $250,000 and integral multiples of $1,000 in excess thereof.
A-1
contained in Section 3.1 of the Indenture and Section 4.5 of the Sale and
Servicing Agreement. Interest on this Note will accrue for each Payment
Date from the most recent Payment Date on which interest has been paid to
but excluding the then current Payment Date or, if no interest has yet been
paid, from _________ __, ____. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on
this Note shall be paid in the manner specified in the Indenture.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts. All payments made
by the Issuer with respect to this Note shall be applied first to interest
due and payable on this Note as provided above and then to the unpaid
principal of this Note.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed
by the Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture referred to on the reverse hereof, or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Dated: ________ __, ____
PARAGON AUTO RECEIVABLES OWNER TRUST ____-_
By: [WILMINGTON TRUST COMPANY], not in its individual
capacity but solely as Owner Trustee
By:__________________________________________________
Name:____________________________________________
Title:___________________________________________
A-2
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ________ __, ____
[NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION],
not in its individual capacity but solely as Indenture Trustee
By: _____________________________________
Authorized Signatory
A-3
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its ____% Asset Backed Notes, Class A (herein called
the "Class A Notes" or the "Notes"), all issued under an Indenture, dated
as of ________ __, ____ (such Indenture, as supplemented or amended, is
herein called the "Indenture"), between the Issuer and [Norwest Bank
Minnesota, National Association], not in its individual capacity but solely
as trustee (the "Trustee", which term includes any successor Trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Trustee and the Holders of the
Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are not otherwise defined herein and that are defined in
the Indenture shall have the meanings assigned to them in or pursuant to
the Indenture.
The Class A Notes and the Class B Notes are and will each be
secured by the collateral pledged as security therefor as provided in the
Indenture.
The Issuer shall pay interest on overdue installments of interest
at the Class A Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant
to Section 10.1 of the Indenture, in whole, but not in part, if the
Servicer exercises its option to purchase the Receivables and the other
Trust Property on any Payment Date if, as of the related Accounting Date,
the Aggregate Principal Balance of Receivables has declined to less than
10% of the Cutoff Date Principal Balance.
Each Noteholder, by acceptance of a Note, covenants and agrees
that no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Owner Trustee in its individual capacity or the
Trustee in its individual capacity, (ii) any owner of a beneficial interest
in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director or employee of (a) the Owner Trustee in its individual capacity or
the Trustee in its individual capacity, (b) any holder of a beneficial
interest in the Issuer or the Owner Trustee or the Trustee or of (c) any
successor or assign of the Owner Trustee in its individual capacity or the
Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any
unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
It is the intent of the Issuer, the Servicer and the Noteholders
that, for purposes of Federal and State income tax and any other tax
measured in whole or in part by income, the Notes will qualify as
indebtedness of the Issuer. The Noteholders, by acceptance of a Note, agree
to treat, and to take no action inconsistent with the treatment of, the
Notes for such tax purposes as indebtedness of the Issuer.
A-4
Each Noteholder, by acceptance of a Note, covenants and agrees
that by accepting the benefits of the Indenture that such Noteholder will
not at any time institute against the Issuer, or join in any institution
against the Issuer of, any bankruptcy, reorganization or arrangement,
insolvency or liquidation proceedings under any United States Federal or
State bankruptcy or similar law in connection with any obligations relating
to the Notes, the Indenture or the Related Documents.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties
hereunder and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest
on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Related Documents, neither [Wilmington Trust
Company], in its individual capacity, [Norwest Bank Minnesota, National
Association], in its individual capacity, any owner of a beneficial
interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees, successors or
assigns shall be personally liable for, nor shall recourse be had to any of
them for, the payment of principal of or interest on, or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in this Note or the Indenture, it being expressly understood that
said covenants, obligations and indemnifications have been made by (i) the
Owner Trustee for the sole purpose of binding the assets of the Issuer, and
(ii) the Trustee for the sole purpose of binding the interests of the
Trustee in the assets of the Issuer. The Holder of this Note by the
acceptance hereof agrees that, except as expressly provided in the Related
Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency,
loss or claim therefrom; provided, however, that nothing contained herein
shall be taken to prevent recourse to, and enforcement against, the assets
of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
A-5
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
-----------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto _______________________________
__________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ______________________, attorney, to transfer said
Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: _____________ _______________________________ */
Signature Guaranteed:
___________________________________
Signatures must be guaranteed by an
"eligible guarantor institution"
meeting the requirements of the Note
Registrar.
-------------------------
*/ NOTE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the
within Note in every particular without alteration, enlargement or
any change whatsoever.
A-6
EXHIBIT B
to Indenture
FORM OF CLASS B NOTES
REGISTERED $____________2/
No. R-___
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
PARAGON AUTO RECEIVABLES OWNER TRUST ____-_
___% ASSET BACKED NOTES, CLASS B
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE MAY NOT BE PURCHASED BY EMPLOYEE BENEFIT PLANS THAT ARE
SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"), OR PERSONS USING ASSETS OF SUCH PLANS.
Paragon Auto Receivables Owner Trust ____-_, a Delaware trust
(including any successor, the "Issuer"), for value received, hereby
promises to pay to ________________________, or registered assigns, the
principal sum of __________________ DOLLARS ($___________), partially
payable on each Payment Date in an amount equal to the aggregate amount, if
any, payable from the
--------
2/Denominations of $250,000 and integral multiples of $1,000 in excess thereof.
B-1
Collection Account in respect of principal on the Class B Notes pursuant to
Section 3.1 of the Indenture and Section 4.5 of the Sale and Servicing
Agreement; provided, however, that the entire unpaid principal amount of
this Note shall be due and payable on the earlier of the Final Scheduled
Payment Date and the Redemption Date, if any, pursuant to Section 10.1 of
the Indenture. The Issuer will pay interest on this Note at the rate per
annum shown above, on each Payment Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the close of business on the day preceding such Payment Date
(after giving effect to all payments of principal made on the preceding
Payment Date), subject to certain limitations contained in Section 3.1 of
the Indenture and Section 4.5 of the Sale and Servicing Agreement. Interest
on this Note will accrue for each Payment Date from the most recent Payment
Date on which interest has been paid to but excluding the then current
Payment Date or, if no interest has yet been paid, from _______ __, ____.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Such principal of and interest on this Note shall be paid in the
manner specified in the Indenture.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts. All payments made
by the Issuer with respect to this Note shall be applied first to interest
due and payable on this Note as provided above and then to the unpaid
principal of this Note.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed
by the Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture referred to on the reverse hereof, or be valid
or obligatory for any purpose.
B-2
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Dated: _________ __, ____
PARAGON AUTO RECEIVABLES OWNER TRUST ____-_
By: [WILMINGTON TRUST COMPANY], not in its individual
capacity but solely as Owner Trustee
By:________________________________________________________
Name:___________________________________________________
Title:__________________________________________________
B-3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ________ __, ____
[NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION],
not in its individual capacity but solely
as Indenture Trustee
By:______________________________________
Authorized Signatory
B-4
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its ____% Asset Backed Notes, Class B (herein called
the "Class B Notes" or the "Notes"), all issued under an Indenture, dated
as of ________ __, ____ (such Indenture, as supplemented or amended, is
herein called the "Indenture"), between the Issuer and [Norwest Bank
Minnesota, National Association], not in its individual capacity but solely
as trustee (the "Trustee", which term includes any successor Trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Trustee and the Holders of the
Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are not otherwise defined herein and that are defined in
the Indenture shall have the meanings assigned to them in or pursuant to
the Indenture.
The Class A Notes and the Class B Notes are and will each be
secured by the collateral pledged as security therefor as provided in the
Indenture.
The Issuer shall pay interest on overdue installments of interest
at the Class B Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant
to Section 10.1 of the Indenture, in whole, but not in part, if the
Servicer exercises its option to purchase the Receivables and the other
Trust Property on any Payment Date if, as of the related Accounting Date,
the Aggregate Principal Balance of Receivables has declined to less than
10% of the Cutoff Date Principal Balance.
Each Noteholder, by acceptance of a Note, covenants and agrees
that no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Owner Trustee in its individual capacity or the
Trustee in its individual capacity, (ii) any owner of a beneficial interest
in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director or employee of (a) the Owner Trustee in its individual capacity or
the Trustee in its individual capacity, (b) any holder of a beneficial
interest in the Issuer or the Owner Trustee or the Trustee or of (c) any
successor or assign of the Owner Trustee in its individual capacity or the
Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any
unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
It is the intent of the Issuer, the Servicer and the Noteholders
that, for purposes of Federal and State income tax and any other tax
measured in whole or in part by income, the Notes will qualify as
indebtedness of the Issuer. The Noteholders, by acceptance of a Note, agree
to treat, and to take no action inconsistent with the treatment of, the
Notes for such tax purposes as indebtedness of the Issuer.
B-5
Each Noteholder, by acceptance of a Note, covenants and agrees
that by accepting the benefits of the Indenture that such Noteholder will
not at any time institute against the Issuer, or join in any institution
against the Issuer of, any bankruptcy, reorganization or arrangement,
insolvency or liquidation proceedings under any United States Federal or
State bankruptcy or similar law in connection with any obligations relating
to the Notes, the Indenture or the Related Documents.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties
hereunder and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest
on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Related Documents, neither [Wilmington Trust
Company], in its individual capacity, [Norwest Bank Minnesota, National
Association], in its individual capacity, any owner of a beneficial
interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees, successors or
assigns shall be personally liable for, nor shall recourse be had to any of
them for, the payment of principal of or interest on, or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in this Note or the Indenture, it being expressly understood that
said covenants, obligations and indemnifications have been made by (i) the
Owner Trustee for the sole purpose of binding the assets of the Issuer and
(ii) the Trustee for the sole purpose of binding the interests of the
Trustee in the assets of the Issuer. The Holder of this Note by the
acceptance hereof agrees that, except as expressly provided in the Related
Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency,
loss or claim therefrom; provided, however, that nothing contained herein
shall be taken to prevent recourse to, and enforcement against, the assets
of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
B-6
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
-----------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto _______________________________
__________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ______________________, attorney, to transfer said
Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: _____________ _______________________________ */
Signature Guaranteed:
___________________________________
Signatures must be guaranteed by an
"eligible guarantor institution"
meeting the requirements of the Note
Registrar.
-------------------------
*/ NOTE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the
within Note in every particular without alteration, enlargement or
any change whatsoever.
B-7
