EXHIBIT 4.1
----------------------------
INDENTURE
Dated as of January __, 2005,
by and between
Consumer Portfolio Services, Inc., as obligor
and
Xxxxx Fargo Bank, National Association,
a national banking association, as trustee
----------------------------
$100,000,000.00
Renewable Unsecured Subordinated Notes
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE..............................................................1
Section 1.1 Definitions..................................................................................1
Section 1.2 Other Definitions............................................................................6
Section 1.3 Incorporation by Reference of Trust Indenture Act............................................6
Section 1.4 Rules of Construction........................................................................7
ARTICLE II THE SECURITIES.........................................................................................7
Section 2.1 Security Terms; Amount; Accounts; Interest; Maturity.........................................7
Section 2.2 Written Confirmation; Rejection; Rescission.................................................11
Section 2.3 Registrar and Paying Agent..................................................................11
Section 2.4 Paying Agent to Hold Money in Trust.........................................................12
Section 2.5 List of Holders.............................................................................12
Section 2.6 Transfer and Exchange.......................................................................12
Section 2.7 Payment of Principal and Interest; Principal and Interest Rights Preserved..................13
Section 2.8 Outstanding Securities......................................................................14
Section 2.9 Treasury Securities......................................................................14
Section 2.10 Defaulted Interest.......................................................................15
Section 2.11 Temporary Notes..........................................................................15
Section 2.12 Execution, Authentication And Delivery...................................................15
Section 2.13 Book-Entry Registration..................................................................16
Section 2.14 Initial and Periodic Statements..........................................................17
Section 2.15 Appointment of Agents....................................................................17
ARTICLE III REDEMPTION AND REPURCHASE............................................................................18
Section 3.1 Redemption of Securities at the Company's Election..........................................18
Section 3.2 Repurchase of Securities at the Holder's Request............................................18
ARTICLE IV COVENANTS.............................................................................................20
Section 4.1 Payment of Securities.......................................................................20
Section 4.2 Maintenance of Office or Agency.............................................................20
Section 4.3 SEC Reports and Other Reports...............................................................21
Section 4.4 Compliance Certificate......................................................................22
Section 4.5 Stay, Extension and Usury Laws..............................................................22
Section 4.6 Liquidation.................................................................................23
Section 4.7 Financial Covenants.........................................................................23
Section 4.8 Restrictions on Dividends and Certain Transactions with Affiliates..........................23
Section 4.9 Securitization Transactions and Additional Indebtedness.....................................23
ARTICLE V SUCCESSORS.............................................................................................24
Section 5.1 When the Company May Merge, etc.............................................................24
Section 5.2 Successor Entity Substituted................................................................24
ARTICLE VI DEFAULTS AND REMEDIES.................................................................................24
Section 6.1 Events of Default...........................................................................24
Section 6.2 Acceleration................................................................................25
Section 6.3 Other Remedies..............................................................................26
Section 6.4 Waiver of Past Defaults.....................................................................26
Section 6.5 Control by Majority.........................................................................26
Section 6.6 Limitation on Suits.........................................................................26
Section 6.7 Rights of Holders to Receive Payment........................................................27
Section 6.8 Collection Suit by Trustee..................................................................27
INDENTURE - Page i
Section 6.9 Trustee May File Proofs of Claim............................................................27
Section 6.10 Priorities...............................................................................28
Section 6.11 Undertaking for Costs....................................................................28
ARTICLE VII TRUSTEE..............................................................................................29
Section 7.1 Duties of Trustee...........................................................................29
Section 7.2 Rights of Trustee...........................................................................30
Section 7.3 Individual Rights of Trustee................................................................31
Section 7.4 Trustee's Disclaimer........................................................................31
Section 7.5 Notice of Defaults..........................................................................31
Section 7.6 Reports by Trustee to Holders...............................................................31
Section 7.7 Compensation and Indemnity..................................................................32
Section 7.8 Replacement of Trustee......................................................................33
Section 7.9 Successor Trustee by Merger, etc............................................................34
Section 7.10 Eligibility; Disqualification............................................................34
Section 7.11 Preferential Collection of Claims Against Company........................................34
ARTICLE VIII DISCHARGE OF INDENTURE..............................................................................34
Section 8.1 Termination of Company's Obligations........................................................34
Section 8.2 Application of Trust Money..................................................................35
Section 8.3 Repayment to Company........................................................................36
Section 8.4 Reinstatement...............................................................................36
ARTICLE IX AMENDMENTS............................................................................................36
Section 9.1 Without Consent of Holders..................................................................36
Section 9.2 With Consent of Holders.....................................................................37
Section 9.3 Compliance with Trust Indenture Act.........................................................38
Section 9.4 Effect of Consents..........................................................................38
Section 9.5 Notation on or Exchange of Securities.......................................................38
Section 9.6 Trustee to Sign Amendments, etc.............................................................39
ARTICLE X SUBORDINATION..........................................................................................39
Section 10.1 Agreement to Subordinate.................................................................39
Section 10.2 Liquidation; Dissolution; Bankruptcy.....................................................39
Section 10.3 Default of Senior Debt...................................................................40
Section 10.4 When Distribution Must Be Paid Over......................................................41
Section 10.5 Notice by Company........................................................................42
Section 10.6 Subrogation..............................................................................42
Section 10.7 Relative Rights..........................................................................42
Section 10.8 Subordination May Not Be Impaired by the Company or Holders of Senior Debt...............42
Section 10.9 Distribution or Notice to Representative.................................................44
Section 10.10 Rights of Trustee and Paying Agent.......................................................44
Section 10.11 Authorization to Effect Subordination....................................................44
Section 10.12 Article Applicable to Paying Agent.......................................................44
Section 10.13 Miscellaneous............................................................................45
ARTICLE XI MISCELLANEOUS.........................................................................................45
Section 11.1 Trust Indenture Act Controls.............................................................45
Section 11.2 Notices..................................................................................45
Section 11.3 Communication by Holders with Other Holders..............................................46
Section 11.4 Certificate and Opinion as to Conditions Precedent.......................................47
INDENTURE - Page ii
Section 11.5 Statements Required in Certificate or Opinion............................................47
Section 11.6 Rules by Trustee and Agents..............................................................47
Section 11.7 Legal Holidays...........................................................................47
Section 11.8 No Recourse Against Others...............................................................48
Section 11.9 Duplicate Originals......................................................................48
Section 11.10 Governing Law............................................................................48
Section 11.11 No Adverse Interpretation of Other Agreements............................................48
Section 11.12 Successors...............................................................................48
Section 11.13 Severability.............................................................................48
Section 11.14 Counterpart Originals....................................................................48
Section 11.15 Table of Contents, Headings, etc.........................................................48
EXHIBITS:
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A - Form of Note
INDENTURE - Page iii
CROSS-REFERENCE TABLE
*Trust Indenture Act Section Indenture Section
310(a)(1)......................................................................................................7.10
(a)(2).........................................................................................................7.10
(a)(3).........................................................................................................N.A.
(a)(4).........................................................................................................N.A.
(a)(5).........................................................................................................N.A.
(b).......................................................................................................7.8; 7.10
(c)............................................................................................................N.A.
311(a).........................................................................................................7.11
(b)............................................................................................................7.11
(c)............................................................................................................N.A.
312(a)..........................................................................................................2.5
(b)............................................................................................................11.3
(c)............................................................................................................11.3
313(a)..........................................................................................................7.6
(b)(1).........................................................................................................N.A.
(b)(2)..........................................................................................................7.6
(c).......................................................................................................7.6; 11.2
(d).............................................................................................................7.6
314(a)...............................................................................................4.3; 4.4; 11.2
(b)............................................................................................................N.A.
(c)(1).........................................................................................................11.4
(c)(2).........................................................................................................11.4
(c)(3)....................................................................................................11.4; 1.1
(d)............................................................................................................N.A.
(e)............................................................................................................11.5
(f)............................................................................................................N.A.
315(a).......................................................................................................7.1(b)
(b).......................................................................................................7.5; 11.2
(c)..........................................................................................................7.1(a)
(d)..........................................................................................................7.1(c)
(e)............................................................................................................6.11
316(a)(last sentence)...........................................................................................2.9
(a)(1)(A).......................................................................................................6.5
(a)(1)(B).......................................................................................................6.4
(a)(2).........................................................................................................N.A.
(b).............................................................................................................6.7
(c)............................................................................................................N.A.
317(a)(1).......................................................................................................6.8
(a)(2)..........................................................................................................6.9
(b).............................................................................................................2.4
318(a).........................................................................................................11.1
N.A. means not applicable
* This Cross Reference Table is not part of the Indenture
THIS INDENTURE is hereby entered into as of January ___, 2005, by and
between Consumer Portfolio Services, Inc., a California corporation (the
"COMPANY"), as obligor, and Xxxxx Fargo Bank, National Association, a national
banking association, as trustee (the "TRUSTEE").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the renewable,
unsecured, subordinated debt securities of the Company issued pursuant to the
Company's registration statement on Form S-2, declared effective by the
Securities and Exchange Commission on or about January __, 2005 (the
"REGISTRATION STATEMENT"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 DEFINITIONS.
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"ACCOUNT" means the record of beneficial ownership of a Security
maintained by the Registrar.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise.
"AGENT" means any Registrar, Paying Agent or co-registrar of the
Securities or any Person appointed and retained by the Company to perform
certain of the duties or obligations, or exercise certain of the rights and
discretions, of the Company hereunder, on behalf of the Company pursuant to
Section 2.15 hereof.
"BOARD OF DIRECTORS" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.
"BUSINESS DAY" means any day other than a Legal Holiday.
"COMPANY" means Consumer Portfolio Services, Inc., a California
corporation, unless and until replaced by a successor in accordance with Article
V hereof and thereafter means such successor.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is originally dated, located at Sixth Street and Marquette Avenue, MAC
N9303-120, Xxxxxxxxxxx, Xxxxxxxxx, 00000, Attention: Consumer Portfolio
Services, Inc. Administrator.
INDENTURE - Page 1
"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FISCAL YEAR" means a year ending December 31.
"GAAP" means, as of any date, generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, which are in effect from time to time.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HOLDER" means a Person in whose name a Security is registered.
"INDEBTEDNESS" means, with respect to any Person and without
duplication, any indebtedness of such Person, whether or not contingent, in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or representing the balance deferred and unpaid of the purchase price
of any property (including capital lease obligations) or the expenditure for any
services or representing any hedging obligations, including without limitation,
any such balance that constitutes an accrued expense or an account or trade
payable, if and to the extent any of the foregoing indebtedness (other than
letters of credit and hedging obligations) would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP, and also
includes, to the extent not otherwise included, (a) the Guarantee of items that
would be included within this definition, and (b) liability for items that would
arise by operation of a Person's status as a general partner of a partnership.
"INDENTURE" means this Indenture as amended or supplemented from time
to time.
"INTEREST ACCRUAL PERIOD" means, as to each Security, the period from
the later of the Issue Date of such Security or the last Payment Date upon which
an interest payment was made until and including the day before the following
Payment Date during which interest accrues on each Security with respect to any
Payment Date.
"ISSUE DATE" means, with respect to any Security, the date on which
such Security is deemed registered on the books and records of the Registrar,
which shall be (i) the date the Company accepts funds for the purchase of the
Security if such funds are received prior to 12:01 p.m. (Central Time) on a
Business Day, or if such funds are not so received, on the next Business Day, or
(ii) the date that the Security is renewed as of the Maturity Date pursuant to
Section 2.1(e).
INDENTURE - Page 2
"MATURITY DATE" means, with respect to any Security, the date on which
the principal of such Security becomes due and payable as therein provided.
"MATURITY RECORD DATE" means, with respect to any Security, as of 11:59
p.m. of the date 15 days prior to the Maturity Date or Redemption Date
applicable to such Security.
"NOTICE OF MATURITY" means a written notice from the Company to a
Holder (as further described in Section 2.1(d)) that the Holder's Securities
will be maturing on the related Maturity Date occurring within 15 days but not
less than 10 days of the delivery of such notice.
"OBLIGATIONS" means any principal, interest (including Post-Petition
Interest), penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"OFFICER" means the Chairman of the Board or principal executive
officer of the Company, the President or principal operating officer of the
Company, the Chief Financial Officer or principal financial officer of the
Company, the Treasurer, Controller or principal accounting officer of the
Company, Secretary or any Executive or Senior Vice-President of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers, one
of whom must be the principal executive officer, principal operating officer,
principal financial officer or principal accounting officer of the Company;
provided, however, that if the opinion of an accountant is required pursuant to
TIA ss. 314(c)(3), the certificate must be signed by an Officer who is an
accountant.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"PARI PASSU DEBT" means any Indebtedness of the Company that is payable
on a pari passu basis with the Securities.
"PAYMENT ACCOUNT" means the bank account designated by the Holder to
receive payments of interest and/or principal due on such Holder's Securities,
as may be amended by the Holder by written notice to the Registrar from time to
time.
"PAYMENT DATE" means (i) with respect to any Security for which monthly
interest payments are required to be made, the first day of the following
calendar month or such other date as is designated by the Holder pursuant to
subsection 2.1(c), (ii) with respect to any Security for which interest is
required to be made quarterly, semi-annually or annually, the same day of the
month as the quarterly, semi-annual or annual anniversary of the Issue Date of
the Security (except in the case where the Issue Date of a Security is the 29th,
30th or 31st day of the month and there is no like date in the anniversary
month, in which case the Payment Date for such month shall be the first day of
the following month) and (iii) with respect to each Security, the Maturity Date
(or such date following the Maturity Date on which payment is made pursuant to
subsection 2.1(d) hereof), the Repurchase Date or the Redemption Date of the
Security; provided, that if any such day in the preceding clauses (i) through
(iii) is not a Business Day, the Business Day immediately following such day.
INDENTURE - Page 3
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"POST-PETITION INTEREST" means interest accruing after the commencement
of any bankruptcy or insolvency case or proceeding with respect to the Company
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, at the rate applicable to the related
Indebtedness, whether or not such interest is an allowable claim in any such
proceeding.
"PROSPECTUS" means the prospectus included in the Registration
Statement at the time it was declared effective by the SEC, as supplemented by
any prospectus supplement (including interest rate supplements) relating to the
Securities that are filed with the SEC pursuant to Rule 424(b) under the
Securities Act. References herein to the Prospectus shall be deemed to refer to
and include the documents incorporated therein by reference.
"QUALIFIED SALES AND FINANCING TRANSACTION" means any transaction or
series of transactions (including without limitation the performance and
liquidation or termination of such transactions) that may be entered into,
sponsored or conducted by the Company or any of its Affiliates pursuant to which
the Company or any of its Affiliates may sell, convey, finance, pledge or
otherwise transfer to (a) a Special Purpose Entity (in the case of a transfer by
the Company or any of its Affiliates) or (b) any other Person (in the case of a
transfer by the Company or a Special Purpose Entity), or may grant a security
interest in or pledge, any Receivables, any securities backed by or any
interests in Receivables (whether now existing or arising or acquired in the
future) and any assets related thereto including, without limitation, all
collateral securing such Receivables, all contracts and contract rights and all
guarantees or other obligations in respect of such Receivables, proceeds of such
Receivables and other assets (including contract rights), which are customarily
sold, transferred or pledged as security in connection with asset
securitization, secured financing or other transactions involving Receivables,
including the ability to finance and sell the residual cash flows retained from
all such transactions.
"RECEIVABLES" means installment sale contracts, loans evidenced by
promissory notes secured by assets, leases, mortgages or other finance
receivables or instruments purchased, originated or owned by the Company or any
of its Affiliates.
"REDEMPTION NOTICE" means a written notice from the Company to the
Holders (as further described in Section 2.1(f)) stating that the Company is
redeeming all or a specified portion of Securities pursuant to Section 3.1, with
a copy to the Registrar and the Trustee.
"REDEMPTION PRICE" means, with respect to any Security to be redeemed,
the principal amount of such Security plus the interest accrued but unpaid
during the Interest Accrual Period up to and not including the Redemption Date
for such Security.
"REGULAR RECORD DATE" means, with respect to each Payment Date, as of
11:59 p.m. of the date 15 days prior to such Payment Date.
INDENTURE - Page 4
"REPAYMENT ELECTION" means a written notice from a Holder to the
Company (as further described in Section 2.1(d)) stating that repayment of the
Holder's Securities is required in connection with the maturity of such
Securities.
"REPURCHASE PRICE" means, with respect to any Security to be
repurchased, the principal amount of such Security plus the interest accrued but
unpaid during the Interest Accrual Period up to and not including the Repurchase
Date for such Security, minus the Repurchase Penalty, if any.
"REPURCHASE REQUEST" means a written notice from a Holder to the
Company (as further described in Section 2.1(g)) stating that such Holder is
making an irrevocable request for the Company to repurchase such Holder's
Securities pursuant to Section 3.2.
"RESPONSIBLE OFFICER" when used with respect to the Trustee, means any
officer in its Corporate Trust Office, or any other assistant officer of the
Trustee in its Corporate Trust Office customarily performing functions similar
to those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
or her knowledge of and familiarity with the particular subject.
"SEC" means the U.S. Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY" or "SECURITIES" means, the Company's renewable, unsecured,
subordinated notes issued under this Indenture pursuant to the Registration
Statement.
"SENIOR DEBT" means any Indebtedness other than the Securities (whether
outstanding on the date hereof or thereafter created) incurred by the Company
(including its subsidiaries) whether such Indebtedness is or is not specifically
designated by the Company as being "Senior Debt" in its defining instruments.
"SERVICING AGENT" means Xxxxxx Xxxxxxxxxx Ltd., a Minnesota
corporation.
"SPECIAL PURPOSE ENTITIES" means Affiliates of the Company formed for
the specific purpose of securitizing auto loan receivables or facilitating the
Company's warehouse, residual and other financing facilities.
"SUBSCRIPTION AGREEMENT" means a Subscription Agreement entered into by
a Person under which such Person has committed to purchase certain Securities as
identified thereby and which is in substantially the form filed as Exhibit ___
to the Registration Statement.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. xx.xx.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"TOTAL PERMANENT DISABILITY" means a determination by a physician
approved by the Company that the Holder of a Security who is a natural person,
who was gainfully employed on a full time basis at the Issue Date of such
INDENTURE - Page 5
Security is unable to work on a full time basis during the succeeding
twenty-four months. For purposes of this definition, "working on a full time
basis" shall mean working at least forty hours per week.
"TRUSTEE" means Xxxxx Fargo Bank, National Association, a national
banking association, until a successor replaces it in accordance with the
applicable provisions of this Indenture and thereafter means the successor
serving hereunder.
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations of the United
States of America, or any agency or instrumentality thereof for the payment of
which the full faith and credit of the United States of America is pledged.
"WRITTEN CONFIRMATION" means a written confirmation of the acceptance
of a subscription for, or the transfer or pledge of, a Security or Securities in
the form of a transaction statement executed or issued by the Company or its
duly authorized Agent and delivered to the Holder of such Security or Securities
with a copy to the Registrar and the Trustee, which is in substantially the form
of Exhibit ___ to the Registration Statement.
SECTION 1.2 OTHER DEFINITIONS.
------------------
Term Defined in Section
---- ------------------
"Bankruptcy Law" 6.1
"Custodian" 6.1
"Event of Default" 6.1
"Legal Holiday" 11.7
"Paying Agent" 2.3
"Payment Blockage Period" 10.3
"Payment Notice" 10.3
"Redemption Date" 2.1(f)
"Registrar" 2.3
"Registration Statement" Introduction
"Repurchase Date" 3.2(d)
"Repurchase Penalty" 3.2(b)
"Securities Register" 2.3
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
--------------------------------------------------
(a) 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:
"INDENTURE SECURITIES" means the Securities;
INDENTURE - Page 6
"INDENTURE SECURITY HOLDER" means any Holder of the
Securities;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the
Trustee;
"OBLIGOR" on the Securities means the Company or any successor
obligor upon the Securities.
(b) All other terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by a
SEC rule under the TIA have the meanings so assigned to them.
SECTION 1.4 RULES OF CONSTRUCTION.
----------------------
Unless the context otherwise requires: (a) a term has the meaning
assigned to it; (b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP; (c) references to GAAP, as of any date,
shall mean GAAP in effect in the United States as of such date; (d) "or" is not
exclusive; (e) words in the singular include the plural, and in the plural
include the singular; and (f) provisions apply to successive events and
transactions.
ARTICLE II
THE SECURITIES
SECTION 2.1 SECURITY TERMS; AMOUNT; ACCOUNTS; INTEREST; MATURITY.
-----------------------------------------------------
(a) UNLIMITED AMOUNT AND FORM OF SECURITY. The outstanding
aggregate principal amount of Securities to be issued hereunder (absent
an amendment to the Registration Statement) is limited to $100 million,
provided, however, that the Company and the Trustee may, without the
consent of any Holder, increase such aggregate principal amount of
Securities which may be outstanding at any time. The Securities are
unsecured obligations of the Company and shall be subordinate in right
of payment to the Senior Debt of the Company as further described in
Article X. The Securities are an obligation and liability of the
Company, and not of any other Person, including, without limitation,
any shareholder, director, Officer, employee, Affiliate or Agent of the
Company. The Securities are not certificates of deposit or similar
obligations of, and are not guaranteed or insured by, any depository
institution, the Federal Deposit Insurance Corporation, any other
governmental or private fund, any securities insurer or any other
Person.
In the event issued in certificated form pursuant to Section
2.13(b): (i) the Securities, together with the Trustee's certificate of
authentication, shall be in substantially the form set forth as EXHIBIT
A to this Indenture, with any 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
be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing
INDENTURE - Page 7
such Securities, as evidenced by their execution of the Securities;
(ii) any portion of the text of any Securities may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of
the Securities; and (iii) the Securities may be subject to notations,
legends or endorsements required by law, stock exchange rule, or
agreements to which the Company is subject or usage.
(b) BOOK-ENTRY; DENOMINATIONS; TERM. Except as provided in
Section 2.13(b), each Security shall neither be issued as, nor
evidenced by, a promissory note or certificated security, but rather
each Security shall be issued in book entry or uncertificated form, in
which the record of beneficial ownership of each such Security shall be
established and maintained as Accounts by the Registrar pursuant to
Section 2.13. In connection with the issuance of each Security in book
entry form in accordance with Section 2.13, each such Security shall be
deemed to be represented in an uncertificated form that includes the
same terms and provisions as those set forth in the form of Security in
EXHIBIT A to this Indenture, and the related Account for each such
Security shall be deemed to include these same terms and provisions.
Each Security shall be in such denominations as provided by
this Indenture and as may be designated from time to time by the
Company, but in no event in an original denomination less than $1,000.
Separate purchases may not be cumulated to satisfy the minimum
denomination requirements. Each Security shall have a term of three or
six months, or one, two, three, four, five or ten years, as designated
by the Holder at the time of purchase, subject to the Company's
acceptance thereof.
(c) INTEREST AND INTEREST PAYMENTS. Each Security shall bear
interest from and commencing on its Issue Date at such rate of interest
as the Company shall determine from time to time, which rate may vary
from Holder to Holder depending upon the aggregate principal amount of
Securities held by such Holder and all immediate family members, as set
forth in the Prospectus; provided, however, that the interest rate of
each Security will be fixed for the term of such Security upon
issuance, subject to change upon the renewal of the Security at
maturity. Interest on the Securities will compound daily based on a
calendar year consisting of 365 days and the Holder thereof may elect
to have interest paid monthly, quarterly, semi-annually, annually, or
upon maturity, which payments shall be made on the Payment Date, except
that a Holder who elects monthly payments may select the day of the
month on which to receive interest payments; provided that no interest
shall be paid to a Holder until the expiration of the Holder's
rescission right under Section 2.2(b) and, if the monthly interest
payment date selected by the Holder is within five Business Days of the
Issue Date of the Security, the first interest payment will be made in
the following month and will include all of the interest earned since
the Issue Date. If the Holder does not elect an interest payment
option, interest will be paid on the Maturity Date of the Note. A
Holder may change this election once during the term of the Security,
subject to the Company's approval, which change shall be effective by
the first Business Day following the 45th day after receipt of written
notice from the Holder requesting such change.
(d) REPAYMENT ELECTION AT MATURITY. The Company will send each
Holder of a Security (existing as of the applicable Maturity Record
Date) a Notice of Maturity approximately 15 but not less than 10 days
INDENTURE - Page 8
prior to the Maturity Date of the Security held by such Holder
reminding such Holder of the pending maturity of the Security and
reminding the Holder that the automatic renewal provision described in
Section 2.1(e) will take effect, unless (i) the Company states in the
Notice of Maturity that it will not allow the Holder to renew the
Security (in which case the Company shall pay the Holder principal and
accrued interest with regard to the Security on the Maturity Date), or
(ii) the Holder delivers a Repayment Election to the Company for the
payment of all principal and interest due on the Security as of the
Maturity Date so that such Repayment Election is received by the
Company within 15 days after the Maturity Date. Such Notice of Maturity
shall also state that payment of principal of a Security shall be made
upon presentation of a Repayment Election requiring payment of such
Security and shall specify the place where such Repayment Election may
be presented. Upon or following the delivery of a Notice of Maturity
for a Security, the Holder thereof, in their discretion, may deliver to
the Company a Repayment Election; provided that such Repayment Election
must be delivered to the Company no later than 15 days after the
Maturity Date. If a Holder delivers a Repayment Election requiring
repayment on or prior to the 15th day following the Maturity Date, no
interest will accrue after the Maturity Date and the Holder will be
sent payment upon the later of the Maturity Date or five days following
the date the Company receives such Repayment Election from the Holder;
provided that if the Company has previously paid interest to the Holder
for periods after the Maturity Date, such interest shall be deducted
from such payment.
The Notice of Maturity also shall state that the Holder may,
and the Holder may, submit a Repayment Election for the repayment of
the maturing Security and use all or a portion of the proceeds thereof
to purchase a new Security with a different term. To exercise this
option, the Holder shall complete a new Subscription Agreement for the
new Security and send it along with the Holder's Repayment Election to
the Company. The Issue Date of the new Security shall be the Maturity
Date of the maturing Security. Any proceeds from the maturing Security
that are not applied to the purchase of the new Security shall be sent
to the Holder of such maturing Security.
If a Security pays interest only on the Maturity Date, then
the Notice of Maturity also shall state that the Holder may, and the
Holder may, submit an "interest-only" Repayment Election in which the
Holder requires the payment of the accrued interest that such Holder
has earned on the maturing Security up to the Maturity Date and allows
the principal amount of such maturing Security to renew in the manner
provided in subsection (e) below.
(e) AUTOMATIC RENEWAL. If a Holder of such Security has not
delivered a Repayment Election for repayment of the Security on or
prior to the 15th day following the Maturity Date, and the Company did
not notify the Holder of its intention to repay the Security in the
Notice of Maturity, then such maturing Security shall be extended
automatically for an additional term equal to the original term, and
shall be deemed to be renewed by the Holder and the Company as of the
Maturity Date of such maturing Security. A maturing Security will
continue to renew as described herein absent a Redemption Notice or
Repurchase Request by the Holder or an indication by the Company that
it will repay and not allow the Security to be renewed in the Notice of
INDENTURE - Page 9
Maturity. Interest on the renewed Security shall accrue from the Issue
Date thereof, which is the first day of such renewed term (i.e., the
Maturity Date of the maturing Security). Such renewed Security will be
deemed to have the identical terms and provisions of the maturing
Security, including provisions relating to payment, except that the
interest rate payable during the term of the renewed Security shall be
the interest rate which is being offered by the Company on other
Securities having the same term and to Persons holding the same
aggregate principal amount of Securities (including holdings of
immediate family members, as described in the Prospectus) as of the
Issue Date of such renewal. If other Securities having the same term
are not then being issued on the Issue Date of such renewal, the
interest rate upon renewal will be the rate specified by the Company on
or before the Maturity Date of such Security, or the then existing rate
of the Security being renewed if no such rate is specified. If the
maturing Security pays interest only on the Maturity Date, then, except
as provided in subsection (d) above, all accrued interest thereon shall
be added to the principal amount of the renewed Security upon renewal.
Notwithstanding the foregoing or anything in Section 2.1(d) to
the contrary, if a Repayment Election is given or is due at a time when
the Company has determined that a post-effective amendment to the
Registration Statement was required but not yet effective, the Company
will provide notice to the Holder (including a copy of the
post-effective amendment to the Prospectus), and the Holder will be
entitled to rescind his or her Repayment Election, if made, or to make
a Repayment Election, if not previously made, by delivering a written
rescission of the earlier Repayment Election, or a Repayment Election,
as the case may be, to the Company no later than 10 days following the
postmark date on the Company's notice of such post-effective amendment.
(f) REDEMPTION NOTICE FROM COMPANY. Pursuant to Section 3.1,
each Security shall be redeemable by the Company at any time, without
penalty, upon the delivery of a Redemption Notice to the Holder of such
Security. Such Redemption Notice shall set forth a date for the
redemption of such Security (the "REDEMPTION DATE") that is at least 30
days after the date that such Redemption Notice has been delivered by
the Company to the Holder hereunder.
(g) REPURCHASE REQUEST BY HOLDER. Pursuant to and subject to
the limitations set forth in Section 3.2, each Security shall be
subject to repurchase at the request of the Holder upon the delivery of
a Repurchase Request to the Company. Subject to the limitations on
repurchase and the Repurchase Penalties described in Section 3.2, the
payment of interest and principal due upon the repurchase of a Security
shall be made to the Holder on a Repurchase Date that is within 10 days
of the delivery of such Repurchase Request to the Company or, in the
case of a repurchase of a Security in connection with the death or
Total Permanent Disability of a Holder, a Repurchase Date that is
within 10 days after the Company's receipt of satisfactory
establishment or such Holder's death or Total Permanent Disability.
(h) TERMS OF SECURITIES. The terms and provisions contained in
the Securities shall constitute, and are hereby expressly made, a part
of this Indenture and to the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture, and the
INDENTURE - Page 10
Holders by accepting the Securities, expressly agree to such terms and
provisions and to be bound hereby and thereby. In case of a conflict,
the provisions of this Indenture shall control.
SECTION 2.2 WRITTEN CONFIRMATION; REJECTION; RESCISSION.
--------------------------------------------
(a) Except with respect to an automatically renewed Security
pursuant to Section 2.1(e), a Security shall not be validly issued to a
Person until the following have occurred: (i) such Person has remitted
good and available funds for the full principal amount of such Security
to the Company or a duly authorized Agent of the Company; (ii) a
Written Confirmation of the acceptance of the subscription is sent by
the Company or a duly authorized Agent of the Company to such Person;
and (iii) an Account is established by the Registrar in the name of
such Person as the Holder of such Security pursuant to Section 2.13
hereof. The Company or a duly authorized Agent of the Company, in their
sole discretion, may reject any subscription from a Person for the
purchase of Securities, in which event any funds received from such
Person pursuant to such subscription shall be promptly returned to such
Person. No interest shall be paid on any funds returned on a rejected
subscription.
(b) For a period of five Business Days following the mailing
by the Company of (i) a Written Confirmation that evidences the valid
issuance of a Security at the time of original purchase (but not upon
transfer or automatic renewal of a Security), or (ii) notice from the
Company that a Holder's purchase of a Security occurred at a time when
a post-effective amendment to the Registration Statement was required
but not yet effective (which notice shall be accompanied by a copy of
the post-effective amendment to the Prospectus), such Holder shall have
the right to rescind the Security and receive repayment of the
principal by presenting a written request for such rescission to the
Company. Such written request for rescission (A) if personally
delivered or delivered via facsimile or electronic transmission, must
be received by the Company on or prior to the 5th Business Day
following the mailing of such Written Confirmation or post-effective
amendment notice by the Company or (B) if mailed must be postmarked on
or before the 5th Business Day following the mailing by the Company of
such Written Confirmation or post-effective amendment notice. Repayment
of the principal shall be made within 10 days of the Company's receipt
of such request from the Holder. No interest shall be paid on any such
rescinded Security.
SECTION 2.3 REGISTRAR AND PAYING AGENT.
---------------------------
(a) The Company shall maintain (i) an office or agency where
Securities may be presented for registration of transfer or for
exchange ("REGISTRAR") and (ii) an office or agency where Securities
may be presented for payment ("PAYING AGENT"). The Registrar shall keep
a register of the Securities and of their transfer and exchange, which
shall include the name, address for notices and Payment Account of the
Holder and the payment election information, principal amount, term and
interest rate for each Security (the "SECURITIES REGISTER"). The
Company may appoint one or more co-registrars and one or more
additional paying agents. The term "REGISTRAR" includes any
co-registrar, and the term "PAYING AGENT" includes any additional
paying agent. The Company may change any Paying Agent or Registrar
INDENTURE - Page 11
without prior notice to any Holder; provided that the Company shall
promptly notify the Holders and the Trustee of the name and address of
any Agent not a party to this Indenture. The Company may act as Paying
Agent and/or Registrar. In the event the Company uses any Agent other
than the Company or the Trustee, the Company shall enter into an
appropriate agency agreement with such Agent, which agreement shall
incorporate the provisions of the TIA or provide that the duties
performed thereunder are subject to and governed by the provisions of
this Indenture. The agreement shall implement or be subject to the
provisions of this Indenture that relate to such Agent. The Company
shall notify the Trustee of the name and address of any such Agent. If
the Company fails to maintain a Registrar or Paying Agent, or fails to
give the foregoing notice, the Trustee shall act as such, and shall be
entitled to appropriate compensation in accordance with Section 7.7
hereof. In no event shall the Trustee be liable for the acts or
omissions of any predecessor Paying Agent or Registrar.
(b) Pursuant to Section 2.15, the Company hereby appoints the
Servicing Agent as the initial Registrar and as agent for service of
notices and demands in connection with the Securities. The Servicing
Agent shall act as Registrar and agent for service of notices and
demands in connection with the Securities until such time as the
Company gives the Trustee written notice to the contrary. Also pursuant
to Section 2.15, the Company hereby appoints Xxxxx Fargo Bank, National
Association as the initial Paying Agent.
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST.
------------------------------------
Prior to each due date of the principal or interest on any Security,
the Company shall deposit with the Paying Agent sufficient funds to pay
principal and interest then so becoming due and payable in cash. The Company
shall require each Paying Agent other than the Trustee to agree in writing that
the Paying Agent will hold in trust for the benefit of Holders or the Trustee
all money held by the Paying Agent for the payment of principal or interest on
the Securities, and will notify the Trustee promptly in writing of any default
by the Company in making any such payment. While any such default continues, the
Trustee shall require a Paying Agent (if other than the Company) to pay all
money held by it to the Trustee. The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee. Upon payment over to the
Trustee, the Paying Agent (if other than the Company) shall have no further
liability for the money delivered to the Trustee. If the Company acts as Paying
Agent, then the Company shall segregate and hold in a separate trust fund for
the benefit of the Holders all money held by it as Paying Agent. The Company
shall notify the Trustee in writing at least five days before the Payment Date
of the name and address of the Paying Agent if a person other than the Trustee
is named Paying Agent at any time or from time to time.
SECTION 2.5 LIST OF HOLDERS.
----------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not
the Registrar, the Registrar shall furnish to the Trustee within 10 days after
the end of each fiscal quarter during the term of this Indenture and at such
other times as the Trustee may request in writing, a copy of the current
Securities Register as of such date as the Trustee may reasonably require and
the Company shall otherwise comply with TIA ss. 312(a).
INDENTURE - Page 12
SECTION 2.6 TRANSFER AND EXCHANGE.
----------------------
(a) The Securities are not negotiable instruments and cannot
be transferred without the prior written consent of the Company (which
consent shall not be unreasonably withheld). Requests to the Registrar
for the transfer of any Security shall be:
(i) made to the Registrar in writing on a form
supplied by the Registrar;
(ii) duly executed by the Holder of the Security, as
reflected on the Registrar's records as of the date of receipt
of such transfer request, or such Holder's attorney duly
authorized in writing;
(iii) accompanied by the written consent of the
Company to the transfer (which consent may not be unreasonably
withheld); and
(iv) if requested by the Company or the Registrar, an
opinion of Holder's counsel (which counsel shall be reasonably
acceptable to the requesting party) that the transfer does not
violate any applicable securities laws and/or a signature
guarantee.
(b) Upon transfer of a Security, the Company, or the Registrar
on behalf of the Company, will provide the new registered owner of the
Security with a Written Confirmation that will evidence the transfer of
the Security in the Securities Register and will establish a
corresponding Account.
(c) The Company or the Registrar may assess reasonable service
charges to a Holder for any registration or transfer or exchange, and
the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental
charge payable upon exchange pursuant to Section 9.5 hereof).
(d) With respect to the relevant Regular Record Date, the
Company shall treat the individual or entity listed on each Account
maintained by the Registrar as the absolute owner of the Security
represented thereby for purposes of receiving payments thereon and for
all other purposes whatsoever.
SECTION 2.7 PAYMENT OF PRINCIPAL AND INTEREST; PRINCIPAL AND INTEREST RIGHTS
----------------------------------------------------------------
PRESERVED.
----------
(a) Each Security shall accrue interest at the rate specified
for such Security in the Securities Register and such interest shall be
payable on each Payment Date following the Issue Date for such
Security, until the principal thereof becomes due and payable. Any
installment of interest payable on a Security that is caused to be
punctually paid or duly provided for by the Company on the applicable
Payment Date shall be paid to the Holder in whose name such Security is
INDENTURE - Page 13
registered in the Securities Register on the applicable Regular Record
Date with respect to the Securities outstanding, by electronic deposit
to such Holder's Payment Account as it appears in the Securities
Register on such Regular Record Date. The payment of any interest
payable in connection with the payment of any principal payable with
respect to such Security on a Maturity Date shall be payable as
provided below. In the event any payments made by electronic deposit
are not accepted into the Holder's Payment Account for any reason, such
funds shall be held in accordance with Sections 2.4 and 8.3 hereof. Any
installment of interest not punctually paid or duly provided for shall
be payable in the manner and to the Holders as specified in Section
2.10 hereof.
(b) Each of the Securities shall have stated maturities of
principal as shall be indicated on such Securities or in the Written
Confirmation and as set forth in the Securities Register. The principal
of each Security shall be paid in full as of the Maturity Date thereof
pursuant to Section 2.1(d), unless the term of such Security is renewed
pursuant to Section 2.1(e) hereof or such Security becomes due and
payable at an earlier date by acceleration, redemption, repurchase or
otherwise. Interest on each Security shall be due and payable on each
Payment Date at the interest rate applicable to such Security for the
Interest Accrual Period related to such Security and such Payment Date.
Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Securities, if the
Securities have become or been declared due and payable following an
Event of Default, then payments of principal of and interest on the
Securities shall be made in accordance with Article VI hereof. If
definitive, certificated securities are issued, then the principal
payment made on any Security on any Maturity Date (or the Redemption
Price or the Repurchase Price of any Security required to be redeemed
or repurchased, respectively), and any accrued interest thereon, shall
be payable on or after the Maturity Date, Redemption Date or the
Repurchase Date therefore at the office or agency of the Company
maintained by it for such purpose pursuant to Section 2.3 hereof or at
the office of any Paying Agent for such Security.
(c) All computations of interest due with respect to any
Security shall be made, unless otherwise specified in the Security,
based upon a 365-day year.
SECTION 2.8 OUTSTANDING SECURITIES.
-----------------------
(a) The Securities outstanding at any time are the outstanding
principal balances of all Accounts representing the Securities
maintained by the Company or such other entity as the Company
designated as Registrar.
(b) If the principal amount of any Security is considered paid
under Section 4.1 hereof, it ceases to be outstanding and interest on
it ceases to accrue.
(c) Subject to Section 2.9 hereof, a Security does not cease
to be outstanding because the Company or an Affiliate of the Company
holds the Security.
INDENTURE - Page 14
SECTION 2.9 TREASURY SECURITIES.
--------------------
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only
Securities that a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded.
SECTION 2.10 DEFAULTED INTEREST.
-------------------
If the Company defaults in a payment of interest on any Security, it
shall pay the defaulted interest plus, to the extent lawful, any interest
payable on the defaulted interest, to the Holder of such Security on a
subsequent special Payment Date, which date shall be at the earliest practicable
date, but in all events within 15 days following the scheduled Payment Date of
the defaulted interest, in each case at the rate provided in the Security. The
Regular Record Date for the scheduled Payment Date shall be the record date for
the special Payment Date. Prior to any such special Payment Date, the Company
(or the Trustee, in the name of and at the expense of the Company) shall mail to
Holder(s) a notice that states the special Payment Date and the amount of such
interest to be paid.
SECTION 2.11 TEMPORARY NOTES.
----------------
If Securities are issued in certificated form in the limited
circumstances contemplated under Section 2.13(b), pending the preparation of
definitive Securities, the Company may execute, and direct that the Trustee
authenticate and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities, in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Registrar without charge to the Holder.
Upon surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Securities of
authorized denominations. Until so exchanged the temporary Securities shall in
all respects be entitled to the same benefits under this Indenture as definitive
Securities.
SECTION 2.12 EXECUTION, AUTHENTICATION AND DELIVERY.
---------------------------------------
(a) Subject to subsection (b) below, the Securities shall be
executed on behalf of the Company by an Officer and attested by its
Secretary or Assistant Secretary. The signature of any of these
officers on the Securities may be manual or facsimile. Securities
INDENTURE - Page 15
bearing the manual or facsimile signatures of individuals who were at
any time the proper Officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At the time of and from time to time after the execution and
delivery of this Indenture, the Company will deliver definitive or
certificated forms of Securities, if any, executed by the Company to
the Trustee for authentication, together with a direction from the
Company for the authentication and delivery of such Securities. The
Trustee in accordance with such direction from the Company shall
authenticate and deliver such Securities as in this Indenture provided
and not otherwise. Securities issued hereunder shall be dated as of
their Issue Date.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there
appears on such Security an authentication executed by or on behalf of
the Trustee by manual signature, and such authentication upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is
entitled to the benefits of the Indenture.
(b) Notwithstanding the preceding subsection (a) of this
Section, in connection with the issuance of each Security in book-entry
form pursuant to Section 2.13, each Security shall be deemed to be
executed and attested to by the Company and authenticated and delivered
by the Trustee, in the same manner as provided in the preceding
subsection (a), upon the delivery by the Company (or the Company's duly
authorized Agent) to the Holder of such Security of a Written
Confirmation, with a copy of such Written Confirmation delivered to the
Trustee, and the establishment by the Registrar of an Account for such
Security in the name of the Holder pursuant to Section 2.13 hereof.
SECTION 2.13 BOOK-ENTRY REGISTRATION.
------------------------
(a) The Registrar shall maintain a book-entry registration and
transfer system through the establishment and maintenance of Accounts
for the benefit of Holders of Securities as the sole method of
recording the ownership and transfer of ownership interests in such
Securities. The registered owners of the Accounts established by the
Registrar in connection with the purchase or transfer of the Securities
shall be deemed to be the Holders of the Securities outstanding for all
purposes under this Indenture. The Company (or its duly authorized
Agent) shall promptly notify the Registrar of the acceptance of a
subscriber's order to purchase a Security by providing a copy of the
accepted Subscription Agreement and the related Written Confirmation,
and upon receipt of such notices, the Registrar shall establish an
Account for such Security by recording a credit to its book-entry
registration and transfer system to the Account of the related Holder
of such Security for the principal amount of such Security owned by
such Holder and issue a Written Confirmation to the Holder, with a copy
being delivered to the Trustee, on behalf of the Company. The Registrar
shall make appropriate credit and debit entries within each Account to
record all of the applicable actions under this Indenture that relate
INDENTURE - Page 16
to the ownership of the related Security and issue Written
Confirmations to the related Holders as set forth herein, with copies
being delivered to the Trustee, on behalf of the Company. For example,
the total amount of any principal and/or interest due and payable to
the Holders of the Accounts maintained by the Registrar as provided in
this Indenture shall be credited to such Accounts by the Registrar
within the time frames provided in this Indenture, and the amount of
any payments of principal and/or interest distributed to the Holders of
the Accounts as provided in this Indenture shall be debited to such
Accounts by the Registrar. The Trustee may review the book-entry
registration and transfer system as it deems necessary to ensure the
Registrar's compliance with the terms of the Indenture.
(b) Book-entry Accounts evidencing ownership of the Securities
shall be exchangeable for definitive or certificated forms of
Securities in denominations of $1,000 and any amount in excess thereof
and fully registered in the names as each Holder directs only if (i)
the Company at its option advises the Trustee and the Registrar in
writing of its election to terminate the book-entry system, or (ii)
after the occurrence of any Event of Default, Holders of a majority of
the aggregate outstanding principal amount of the Securities (as
determined based upon the latest quarterly statement provided to the
Trustee pursuant to Section 2.5 hereof) advise the Trustee in writing
that the continuation of the book-entry system is no longer in the best
interests of such Holders and the Trustee notifies all Holders of the
Securities, of such event and the availability of certificated forms of
securities to the Holders of Securities.
SECTION 2.14 INITIAL AND PERIODIC STATEMENTS.
--------------------------------
(a) Subject to the rejection of a Subscription Agreement
pursuant to Section 2.2(a), the Registrar shall send Written
Confirmations to initial purchasers, registered owners, registered
pledgees, former registered owners and former pledgees, within two
Business Days of its receipt of proper notice regarding the purchase,
transfer or pledge of a Security, with copies of such Written
Confirmations being delivered to the Trustee, on behalf of the Company.
(b) The Registrar shall send each Holder of a Security (and
each registered pledgee) via U.S. mail not later than 10 Business Days
after each quarter end in which such Holder had an outstanding balance
in such Holder's Account, a statement which indicates as of the quarter
end preceding the mailing: (i) the balance of such Account; (ii)
interest credited for the period; (iii) repayments, redemptions or
repurchases, if any, during the period; and (iv) the interest rates
paid on the Securities in such Account during the period. The Registrar
shall provide additional statements as the Holders or registered
pledgees of the Securities may reasonably request from time to time.
The Registrar may charge such Holders or pledgees requesting such
statements a fee to cover the charges incurred by the Registrar in
providing such additional statements.
SECTION 2.15 APPOINTMENT OF AGENTS.
----------------------
The Company may from time to time engage Agents to perform its
obligations and exercise its rights and discretion under the terms of this
Indenture. In each such case, the Company will provide the Trustee with a copy
INDENTURE - Page 17
of each agreement under which any such Agent is engaged and the name, address,
telephone number and capacity of the Agent appointed. If any such Agent shall
resign, or such Agent's engagement is terminated by the Company, subsequent to
the Agent's appointment by the Company under this Section 2.15, the Company
shall promptly notify the Trustee of such resignation or termination, along with
the name, address, telephone number and capacity of any successor Agent.
Notwithstanding any engagement of an Agent hereunder, the Company shall remain
obligated to fulfill each of its obligations under this Indenture.
ARTICLE III
REDEMPTION AND REPURCHASE
SECTION 3.1 REDEMPTION OF SECURITIES AT THE COMPANY'S ELECTION.
---------------------------------------------------
(a) The Company may redeem, in whole or in part, any Security
prior to the scheduled Maturity Date of the Security by providing
pursuant to Section 2.1(f) a Redemption Notice to the Holder thereof
listed on the records maintained by the Registrar, which notice shall
include the Redemption Date and the Redemption Price to be paid to the
Holder on the Redemption Date. No interest shall accrue on a Security
to be redeemed under this Section 3.1 for any period of time after the
Redemption Date for such Security, provided that the Company or the
Paying Agent has timely tendered the Redemption Price to the Holder.
(b) The Company shall have no mandatory redemption or sinking
fund obligations with respect to any of the Securities.
(c) In its sole discretion, the Company may offer certain
Holders the ability to extend the maturity of an existing Security
through the redemption of such Security and the issuance of a new
Security. This redemption option shall not be subject to the 30 day
notice of redemption described in Section 2.1(f).
SECTION 3.2 REPURCHASE OF SECURITIES AT THE HOLDER'S REQUEST.
-------------------------------------------------
(a) REPURCHASE UPON DEATH OR DISABILITY. Subject to subsection
(c) below, within 45 days of the death or Total Permanent Disability of
a Holder who is a natural person (including Securities held in an
individual retirement account), the estate of such Holder (in the event
of death) or such Holder (in the event of Total Permanent Disability)
may request that the Company repurchase, in whole and not in part,
without penalty, the Security held by such Holder, by delivering to the
Company a Repurchase Request. If a Security is held jointly by natural
persons who are legally married, then a Repurchase Request may be made
when either registered Holder of such Security dies or becomes subject
to a Total Permanent Disability, the surviving Holder or the disabled
Holder may request that the Company repurchase in whole and not in
part, without penalty, such Security as jointly held by the Holders by
delivering to the Company a Repurchase Request. In the event a Security
is held jointly by two or more natural persons that are not legally
married, neither of these persons shall have the right to request that
INDENTURE - Page 18
the Company repurchase such Security unless all joint holders of such
Security have either died or suffered a Total Permanent Disability. If
the Security is held by a Holder who is not a natural person, such as a
trust, partnership, corporation or other similar entity, the right to
request repurchase upon death or disability does not apply.
(b) REPURCHASE UPON HOLDER'S ELECTION. Subject to subsection
(c) below, a Holder may request the Company to repurchase, in whole and
not in part, the Security held by such Holder by delivering a
Repurchase Request to the Company. Any such requested repurchase shall
be made only at the Company's discretion and, if made, will be subject
to an early Repurchase Penalty to be deducted from the payment of such
Holder's Repurchase Price on the Repurchase Date. The early repurchase
penalty (the "REPURCHASE Penalty") shall equal the following: (i) with
respect to a Security with a three month maturity, the interest accrued
on a simple interest basis on such Security from the Issue Date to the
Repurchase Date at the existing interest rate thereof, but not to
exceed three months of simple interest on such Security, or (ii) with
respect to a Security with a maturity of six months or longer, the
interest accrued on a simple interest basis on such Security from the
Issue Date to the Repurchase Date at the existing interest rate
thereof, but not to exceed six months of simple interest on such
Security.
(c) LIMITATION ON REPURCHASES. The Company will only be
required to repurchase Securities for which Repurchase Requests have
been received pursuant to paragraph (a) above, and, if accepted by the
Company, paragraph (b) above, to the extent that the aggregate
Repurchase Price for all Securities for which Repurchase Requests are
then outstanding in any calendar quarter would not exceed the greater
of (i) two percent of the aggregate outstanding principal balance of
all Securities as of the last day of the previous calendar quarter or
(ii) $1 million. For the purposes of applying such limits on the
aggregate Repurchase Price for outstanding Repurchase Requests, such
outstanding Repurchase Requests will be honored in the order of the
date received or, in the case of Repurchase Requests made in connection
with a Holder's death or Total Permanent Disability, the later of the
date received or the date such death or Total Permanent Disability is
established to the reasonable satisfaction of the Company, and to the
extent any Repurchase Request is not paid in the quarter received or so
established due to such limitations, it will be honored in the
subsequent quarter, to the extent possible, subject to the
applicability of such limits on aggregate Repurchase Requests in each
subsequent quarter. For the avoidance of doubt, in the event that the
Company would otherwise be required to repurchase a Security hereunder
in a given quarter by reason of the priority of the Repurchase Request
(as established in this Section) but for the fact that the Repurchase
Price exceeds the amount remaining under the forgoing limitations
(after giving effect to all other Repurchase Requests having priority
during such quarter), the Company may, at its option, effect a partial
repurchase of such Security, up to the portion of the Repurchase Price
covered by the amount remaining, and carry the Repurchase Request for
the balance of such Security forward as provided above.
(d) REPURCHASE DATE. To the extent a Security for which a
Repurchase Request has been received during the then current calendar
quarter is determined not to be subject to the limitation in subsection
(c) above and thus, will be repurchased during the current quarter,
then the Company shall designate a date for the repurchase of such
INDENTURE - Page 19
Security (the "REPURCHASE DATE"), which date shall not be more than 10
days after the Company's receipt of the Repurchase Request or, in the
case of a Repurchase Request following the death or Total Permanent
Disability of the Holder, 10 days after the Company's receipt of
satisfactory establishment of such Holder's death or Total Permanent
Disability. On the Repurchase Date, the Company shall pay the
Repurchase Price to the Holder (or the estate of the Holder, in the
case of a request following death) in accordance with Section 2.7. With
respect to a Security for which a Repurchase Request has been received
during a prior calendar quarter and for which the Repurchase Price was
not paid during such prior calendar quarter, but rather the Repurchase
Request has been carried over to and is still outstanding in the
current calendar quarter (because of the limitation in subsection (c)
above), the Company shall designate a Repurchase Date not later than
the tenth (10th) day after the start of such calendar quarter, unless
subsection (c) is again applicable, in which case such obligation shall
be met not later than the tenth (10th) day after the start of the next
calendar quarter during which such limitation is no longer applicable.
No interest shall accrue on a Security to be repurchased under this
Section 3.2 for any period of time on or after the Repurchase Date for
such Security, provided that the Company or the Paying Agent has timely
tendered the Repurchase Price to the Holder or the estate of the
Holder, as the case may be.
(e) WAIVER AND MODIFICATION OF REPURCHASE POLICIES. The
Company may waive or reduce any early Repurchase Penalty in its sole
discretion and may modify at any time its policy on the repurchase of
Securities at the request of Holders; provided that no such
modification shall adversely affect the rights of Holders to the
repurchase of Securities for which Repurchase Requests are then
outstanding.
ARTICLE IV
COVENANTS
SECTION 4.1 PAYMENT OF SECURITIES.
----------------------
(a) The Company shall duly pay the principal of and interest
on each Security on the dates and in the manner provided under this
Indenture. Principal and interest (to the extent such interest is paid
in cash) shall be considered paid on the date due if the Paying Agent,
if other than the Company, holds, at least one Business Day before that
date, money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal and interest then
due; provided, however, that principal and interest shall not be
considered paid within the meaning of this Section 4.1 if money is held
by the Paying Agent for the benefit of holders of Senior Debt pursuant
to the provisions of Article X hereof. Such Paying Agent shall return
to the Company, no later than five days following the date of payment,
any money (including accrued interest, if any) that exceeds such amount
of principal and interest paid on the Securities in accordance with
this Section 4.1.
(b) To the extent lawful, the Company shall pay interest
(including Post-Petition Interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate borne by the
Securities, compounded semi-annually; it shall pay interest (including
INDENTURE - Page 20
Post-Petition Interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest (without regard to any applicable
grace period) at the same rate, compounded semi-annually.
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY.
--------------------------------
(a) The Company will maintain an office or agency (which may
be an office of the Trustee, Registrar or co-registrar) where
Securities may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change in
the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate
Trust Office of the Trustee.
(b) The Company may also from time to time designate one or
more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time
rescind such designations. The Company will give prompt written notice
to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
(c) The Company hereby designates its office at 00000 Xxxxxx
Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000, as one such office or agency of
the Company in accordance with Section 2.3.
SECTION 4.3 SEC REPORTS AND OTHER REPORTS.
------------------------------
(a) The Company shall provide to the Trustee, within 45 days
after filing with the SEC, paper copies or, if such documents are
readily available on the SEC's website, notification of the
availability of, the annual reports and of the information, documents,
and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) that the Company is
required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. The Company shall otherwise comply with the periodic
reporting requirements as set forth in TIA ss. 314(a), and the Company
shall file with the Trustee and the SEC, in accordance with the rules
and regulations prescribed by the SEC, such additional information,
documents and reports with respect to compliance by the Company with
the conditions and covenants of this Indenture as may be required from
time to time by such rules and regulations. Notwithstanding anything to
the contrary herein, the Trustee shall have no duty to review such
documents for purposes of determining compliance with any provisions of
the Indenture.
(b) The Company, or such other entity as the Company shall
designate as Registrar, shall provide the Trustee at intervals of not
more than six months with management reports which provide the Trustee
with such information regarding the Accounts maintained by the Company
for the benefit of the Holders of the Securities as the Trustee may
INDENTURE - Page 21
reasonably request which information shall include at least the
following for the relevant time interval from the date of the
immediately preceding report: (i) the outstanding balance of each
Account at the end of the period; (ii) interest credited for the
period; (iii) repayments, repurchases and redemptions, if any, made
during the period; and (iv) the interest rate paid on each Security in
such Account maintained by the Registrar during the period.
(c) Notwithstanding any provision of this Indenture to the
contrary, the Company shall not have any obligation to maintain any of
its securities (other than the Securities hereunder), including without
limitation its common stock, as securities registered under the
Exchange Act or the Securities Act, as amended, or as securities listed
and publicly traded on any national securities exchange.
SECTION 4.4 COMPLIANCE CERTIFICATE.
-----------------------
(a) The Company shall deliver to the Trustee, within 120 days
after the end of each Fiscal Year, beginning in 2006, an Officers'
Certificate stating that a review of the activities of the Company
during the preceding fiscal year has been made under the supervision of
the signing Officers with a view to determining whether the Company has
kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of their knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance
of any of the terms, provisions and conditions hereof (or, if a Default
or Event of Default shall have occurred, describing all such Defaults
or Events of Default of which he or she may have knowledge and what
action the Company is taking or proposes to take with respect thereto)
and that to the best of their knowledge no event has occurred and
remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Securities are prohibited or
if such event has occurred, a description of the event and what action
the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public
Accountants, the annual financial statements delivered pursuant to
Section 4.3 above shall be accompanied by a written statement of the
Company's independent public accountants that in making the examination
necessary for certification of such financial statements nothing has
come to their attention which would lead them to believe that the
Company has violated the provisions of Section 4.1 of this Indenture
or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants
shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any Officer
becoming aware of any Default or Event of Default, an Officers'
Certificate specifying such Default or Event of Default and what action
the Company is taking or proposes to take with respect thereto.
INDENTURE - Page 22
SECTION 4.5 STAY, EXTENSION AND USURY LAWS.
-------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all beneficial advantage of any such
law, and covenants that it will not, by resort to any such law, 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 has been
enacted.
SECTION 4.6 LIQUIDATION.
------------
The Board of Directors or the stockholders of the Company shall not
adopt a plan of liquidation that provides for, contemplates or the effectuation
of which is preceded by (a) the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company, otherwise than (i)
substantially as an entirety (Section 5.1 of this Indenture being the Section
hereof which governs any such sale, lease, conveyance or other disposition
substantially as an entirety), or (ii) and Qualified Sales and Financing
Transaction, and (b) the distribution of all or substantially all of the
proceeds of such sale, lease, conveyance or other disposition and of the
remaining assets of the Company to the holders of capital stock of the Company,
unless the Company, prior to making any liquidating distribution pursuant to
such plan, makes provision for the satisfaction of the Company's Obligations
hereunder and under the Securities as to the payment of principal and interest.
SECTION 4.7 FINANCIAL COVENANTS.
--------------------
The Company covenants that, so long as any of the Securities are
outstanding, the Company will maintain a positive net worth, which includes all
equity held by the Company's common and preferred stockholders and any
subordinated debt of the Company that is subordinate to these Securities.
SECTION 4.8 RESTRICTIONS ON DIVIDENDS AND CERTAIN TRANSACTIONS WITH AFFILIATES.
-------------------------------------------------------------------
(a) The Company covenants that, so long as any of the
Securities are outstanding, it shall not declare or pay any dividends
or other payments of cash or other property to its common or preferred
stockholders (other than any dividend payable in shares of or rights to
acquire shares of the Company's capital stock on a pro rata basis to
all stockholders), unless no Default or Event of Default with respect
to the Securities then exists or would exist immediately following the
declaration or payment of such dividend or other payment.
(b) The Company covenants that, so long as any of the
Securities are outstanding, it shall not guarantee, endorse or
otherwise become liable for any obligations of any of the Company's
Affiliates; provided, that the Company and its subsidiaries may make
investments in and guarantee the obligations of Special Purpose
Entities.
SECTION 4.9 SECURITIZATION TRANSACTIONS AND ADDITIONAL INDEBTEDNESS.
--------------------------------------------------------
INDENTURE - Page 23
Notwithstanding any provision to the contrary within this Indenture,
the Company shall not be prohibited, restricted or otherwise limited under this
Indenture from entering into, sponsoring or conducting any Qualified Sales and
Financing Transaction.
Except as otherwise provided in Section 4.8(b), the Company shall not
be prohibited, restricted or otherwise limited from incurring or refinancing any
Indebtedness subsequent to the date hereof, which Indebtedness will have such
terms and provisions as the Company and the lender thereof may agree upon
without any restriction or limitation hereunder and such Indebtedness will
likely be senior in right of payment to the Securities.
ARTICLE V
SUCCESSORS
SECTION 5.1 WHEN THE COMPANY MAY MERGE, ETC.
--------------------------------
(a) The Company may not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions to another corporation, Person or entity unless (i) the
Company is the surviving corporation or the entity or the Person formed
by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made is a corporation, limited
liability company or limited partnership organized or existing under
the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or
Person to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made assumes all the obligations of
the Company pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, under the Securities and this Indenture;
and (iii) immediately after such transaction no Default or Event of
Default exists.
(b) The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate to
the foregoing effect and an Opinion of Counsel stating that the
proposed transaction and such supplemental indenture comply with this
Indenture. The Trustee shall be entitled to conclusively rely upon such
Officers' Certificate and Opinion of Counsel.
SECTION 5.2 SUCCESSOR ENTITY SUBSTITUTED.
-----------------------------
Upon any consolidation or merger, or any sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 5.1, the successor entity or Person formed by such
consolidation or into or with which the Company, is merged or to which such
sale, lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor entity or Person has
been named as the Company herein, and upon such succession and substitution, the
Company shall be released from all of its obligations and liabilities under this
Indenture and the Securities.
INDENTURE - Page 24
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 EVENTS OF DEFAULT.
------------------
An "EVENT OF DEFAULT" occurs if:
(a) the Company fails to pay interest on a Security when the
same becomes due and payable and such failure continues for a period of
15 days, whether or not such payment is prohibited by the provisions of
Article X hereof;
(b) the Company fails to pay the principal amount of any
Security when the same becomes due and payable at maturity, on a
Repurchase Date, Redemption Date or Payment Date (that relates to a
Maturity Date) or otherwise, and such failure continues for a period of
10 days, whether or not prohibited by the provisions of Article X
hereof;
(c) the Company fails to observe or perform any material
covenant, condition or agreement on the part of the Company under this
Indenture or the breach by the Company of any material representation
or warranty of the Company under this Indenture, and such failure or
breach continues unremedied for a period of 30 days after the Company's
receipt of written notice of such failure or breach;
(d) the Company defaults in any other material financial
obligation of the Company, and such default continues unremedied for a
period of 30 days after the Company's receipt of written notice of such
default;
(e) the Company pursuant to or within the meaning of any
Bankruptcy Law (i) commences a voluntary case; (ii) consents to the
entry of an order for relief against it in an involuntary case; (iii)
consents to the appointment of a custodian of it or for all or
substantially all of its property; (iv) makes a general assignment for
the benefit of its creditors; or (v) admits in writing its inability to
pay debts as the same become due; or
(f) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (i) is for relief against the
Company in an involuntary case; (ii) appoints a custodian of the
Company or for all or substantially all of its property; (iii) orders
the liquidation of the Company, and in each case the order or decree
remains unstayed and in effect for 120 consecutive days.
The term "BANKRUPTCY LAW" means Title 11 of the U.S. Code or any
similar federal or state law for the relief of debtors. The term "custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
A Default under clauses (c) or (d) of this Section 6.1 (except for a
Default with respect to Section 4.6 or 5.1) is not an Event of Default until the
Trustee or the Holders of at least a majority in principal amount of the then
INDENTURE - Page 25
outstanding Securities notify the Company of the Default and the Company does
not cure the Default or such Default is not waived within 30 days after receipt
of the notice pursuant to Section 6.4. The notice must specify the Default,
demand that it be remedied and state that the notice is a "Notice of Default."
SECTION 6.2 ACCELERATION.
-------------
If an Event of Default (other than an Event of Default specified in
clauses (e) or (f) of Section 6.1) occurs and is continuing, the Trustee by
notice to the Company or the Holders of at least a majority in principal amount
of the then outstanding Securities by written notice to the Company and the
Trustee may declare the unpaid principal of and any accrued interest on all the
Securities to be due and payable. Upon such declaration, all unpaid principal of
and accrued interest on all Securities shall be due and payable immediately;
provided, however, that if any Indebtedness or Obligation is outstanding
pursuant to the Senior Debt, such a declaration of acceleration by the Holders
shall not become effective until the earlier of (i) the day which is five
Business Days after the receipt by each of the Company and the holders of Senior
Debt of such written notice of acceleration or (ii) the date of acceleration of
any Indebtedness under any Senior Debt. If an Event of Default specified in
clause (e) or (f) of Section 6.1 occurs, all unpaid principal of and accrued
interest on all Securities shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
SECTION 6.3 OTHER REMEDIES.
---------------
If an Event of Default occurs and is continuing, the Trustee may, after
a declaration of acceleration under Section 6.2 above, pursue any available
remedy to collect the payment of principal or interest on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the
Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
SECTION 6.4 WAIVER OF PAST DEFAULTS.
------------------------
Holders of a majority in principal amount of the then outstanding
Securities by notice to the Trustee may, on behalf of the Holders of all
Securities, waive any existing Default or Event of Default and its consequences
under this Indenture, including without limitation a rescission of an
acceleration pursuant to Section 6.2, except for a continuing Default or Event
of Default in the payment of interest on or the principal of any Security held
by a non-consenting Holder, or except for a waiver that would conflict with any
judgment or decree. Upon actual receipt of any such notice of waiver by a
Responsible Officer of the Trustee, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
INDENTURE - Page 26
SECTION 6.5 CONTROL BY MAJORITY.
--------------------
The Holders of a majority in principal amount of the then outstanding
Securities may 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 it, provided, that indemnification for the Trustee's fees and
expenses, in a form reasonably satisfactory to the Trustee, shall have been
provided. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Holders, or that may involve the Trustee in
personal liability.
SECTION 6.6 LIMITATION ON SUITS.
--------------------
A Holder may pursue a remedy with respect to this Indenture only if:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least a majority in principal amount of
the then outstanding Securities make a written request to the Trustee
to pursue the remedy;
(c) such Holder or Holders offer and, if requested, provide to
the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60 day period the Holders of a majority in
principal amount of the then outstanding Securities do not give the
Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
SECTION 6.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
-------------------------------------
Notwithstanding any other provision of this Indenture, but subject to
Article X hereof, the right of any Holder of a Security to receive payment of
principal and interest on the Security, on or after the respective due dates
expressed in the Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of the Holder.
SECTION 6.8 COLLECTION SUIT BY TRUSTEE.
---------------------------
If an Event of Default specified in Section 6.1(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid on the Securities and interest on
overdue principal and, to the extent lawful, interest and 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,
its agents and counsel.
INDENTURE - Page 27
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM.
---------------------------------
(a) The Trustee is authorized 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 (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and the Holders allowed in any judicial proceedings
relative to the Company (or any other obligor upon the Securities), its
creditors or its property and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee
any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.7 hereof. To the
extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.7 hereof out of the
estate in any such proceeding, shall be denied for any reason, payment
of the same shall be secured by a lien on, and shall be paid out of,
any and all distributions, dividends, money, securities and other
properties which the Holders of the Securities may be entitled to
receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the
rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
(b) If the Trustee does not file a proper claim or proof of
debt in the form required in any such proceeding prior to 30 days
before the expiration of the time to file such claims or proofs, then
any holder of Senior Debt shall have the right to demand, xxx for,
collect and receive the payments and distributions in respect of the
Securities which are required to be paid or delivered to the holders of
Senior Debt as provided in Article X hereof and to file and prove all
claims therefor and to take all such other action in the name of the
Holders or otherwise, as such holder of Senior Debt may determine to be
necessary or appropriate for the enforcement of the provisions of
Article X hereof.
SECTION 6.10 PRIORITIES.
-----------
If the Trustee collects any money pursuant to this Article, it shall,
subject to the provisions of Article X hereof, pay out the money in the
following order:
(a) FIRST: to the Trustee, its agents and attorneys for
amounts due under Section 7.7, including payment of all compensation,
expenses and liabilities incurred, and all advances made, if any, by
the Trustee and the costs and expenses of collection;
INDENTURE - Page 28
(b) SECOND: to holders of Senior Debt to the extent required
by Article X hereof;
(c) THIRD: to Holders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
(d) FOURTH: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders.
SECTION 6.11 UNDERTAKING FOR COSTS.
----------------------
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 or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7, or a suit by Holders of more than ten percent (10%) in
principal amount of the then outstanding Securities.
ARTICLE VII
TRUSTEE
SECTION 7.1 DUTIES OF TRUSTEE.
------------------
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) The duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the
Trustee need perform only those duties that are specifically
set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee.
(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 resolutions, statements, reports, documents,
orders, certificates, opinions or other instruments furnished
to the Trustee and conforming to the requirements of this
Indenture. However, in the case of any of the above that are
specifically required to be furnished to the Trustee pursuant
to this Indenture, the Trustee shall examine them to determine
whether they substantially conform to the requirements of this
Indenture.
INDENTURE - Page 29
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) This paragraph does not limit the effect of
paragraph (b)(i) and (b)(ii) 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 proven that the Trustee was negligent in ascertaining
the pertinent facts.
(iii) The Trustee shall not be liable to the Holders
with respect to any action it takes or omits to take in good
faith in accordance with a direction received by it pursuant
to Section 6.5.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is
subject to paragraphs (a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee may
refuse to perform any duty or exercise any right or power unless it
receives indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money
received by it, except as the Trustee may agree in writing with the
Company or, except with respect to any money held by the Trustee over a
holiday or weekend, in which event the Trustee shall remit to the
Company the interest earnings on such money at a rate equal to the then
current rate for money market funds invested by the Trustee; provided
that the Company has directed the Trustee to invest such money. Money
held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.2 RIGHTS OF TRUSTEE.
------------------
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented to it
by the proper Person. The Trustee need not investigate any fact or
matter stated in the document. The Trustee shall have no duty to
inquire as to the performance of the Company's covenants in Article IV
hereof. In addition, the Trustee shall not be deemed to have knowledge
of any Default or any Event of Default except any Default or Event of
Default of which the Trustee shall have received written notification
or obtained actual knowledge.
Delivery of reports, information and documents to the Trustee under
Sections 4.3(a), 4.3(b) and 4.4(b) is for informational purposes only
and the Trustee's receipt of the foregoing shall not constitute
constructive notice of any information contained therein or
determinable from information contained therein, including the
Company's compliance with any of their covenants hereunder (as to which
the Trustee is entitled to rely conclusively on Officers'
Certificates).
INDENTURE - Page 30
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers' Certificate or Opinion of
Counsel. The Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through agents, attorneys, custodians
or nominees and shall not be responsible for the misconduct or
negligence or the supervision of any agents, attorneys, custodians or
nominees appointed by it with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or
within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
(f) The Trustee shall not be deemed to have notice of an Event
of Default for any purpose under this Indenture unless notified of such
Event of Default by the Company, the Paying Agent (if other than the
Company) or a Holder of the Securities.
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE.
-----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11.
SECTION 7.4 TRUSTEE'S DISCLAIMER.
---------------------
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities or any
money paid to the Company or upon the Company's direction under any provision
hereof, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee and it shall not be
responsible for any statement or recital herein or any statement in the
Securities or any other document in connection with the sale of the Securities
or pursuant to this Indenture other than its certificate of authentication.
SECTION 7.5 NOTICE OF DEFAULTS.
-------------------
If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to Holders
a notice of the Default or Event of Default within 90 days after it occurs. At
least five Business Days prior to the mailing of any notice to Holders under
this Section 7.5, the Trustee shall provide the Company with notice of its
INDENTURE - Page 31
intent to mail such notice. Except in the case of a Default or Event of Default
in payment on any Security, the Trustee may withhold the notice if and so long
as the Responsible Officer of the Trustee in good faith determines that
withholding the notice is in the interests of the Holders.
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS.
------------------------------
(a) Within 60 days of the end of EACH Fiscal Year, commencing
with the fiscal year ending December 31, 2006, the Trustee shall mail
to Holders (with a copy to the Company) a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event
described in TIA ss. 313(a) has occurred within the 12 months preceding
the reporting date, no report need be prepared or transmitted). The
Trustee also shall comply with TIA ss. 313(b). The Trustee shall also
transmit by mail all reports as required by TIA ss. 313(c).
(b) Commencing at the time this Indenture is qualified under
the TIA, a copy of each report mailed to Holders under this Section 7.6
(at the time of its mailing to Holders) shall be filed with the SEC and
each stock exchange, if any, on which the Securities are listed. The
Company shall promptly notify the Trustee if and when the Securities
are listed on any stock exchange.
SECTION 7.7 COMPENSATION AND INDEMNITY.
---------------------------
(a) The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and its
performance of the duties and services required hereunder. The
Trustee's compensation shall not be limited by any law on compensation
of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
(b) The Company shall indemnify the Trustee against any and
all losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under
this Indenture, except as set forth in Section 7.7(d). The Trustee
shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder, except to the extent
the Company is prejudiced thereby. The Company shall defend the claim
and the Trustee shall reasonably cooperate in such defense. The Trustee
may have separate counsel and the Company shall pay the reasonable fees
and expenses of one such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be
unreasonably withheld.
(c) The obligations of the Company to pay compensation under
Section 7.7(a) through the date of termination, and for indemnification
under Section 7.7(b) shall survive the satisfaction and discharge of
this Indenture.
INDENTURE - Page 32
(d) The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through its own
negligence, bad faith or willful misconduct.
(e) To secure the Company's payment obligations in this
Section, the Trustee shall have a lien prior to the Holders on all
money or property held or collected by the Trustee, except that held in
trust to pay principal and interest on the Securities or to pay Senior
Debt. Such lien shall survive the satisfaction and discharge of this
Indenture.
(f) When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.1(e) or (f) occurs, the
expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.
SECTION 7.8 REPLACEMENT OF TRUSTEE.
-----------------------
(a) A resignation or removal of the Trustee and appointment of
a successor Trustee shall become effective only upon the successor
Trustee's acceptance of appointment as provided in this Section 7.8.
(b) The Trustee may resign at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a
majority of the aggregate principal amount of the outstanding
Securities may remove the Trustee (including any successor Trustee) at
any time by so notifying the Trustee and the Company in writing. The
Company may remove the Trustee if:
(i) the Trustee fails to comply with Section 7.10;
(ii) the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to
the Trustee under any Bankruptcy Law;
(iii) a Custodian or public officer takes charge of
the Trustee or its property;
(iv) the Trustee becomes incapable of acting as
Trustee under this Indenture, or
(v) the Company so elects, provided such replacement
Trustee is qualified.
(c) If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee.
(d) If a successor Trustee does not take office within 30 days
after notice that the Trustee has resigned or has been removed, the
Company or the Trustee or the Holders of at least a majority in
principal amount of the then outstanding Securities may petition any
court of competent jurisdiction for the appointment of a successor
Trustee.
INDENTURE - Page 33
(e) If the Trustee after written request by any Holder who has
been a Holder for at least six months fails to comply with Section
7.10, such Holder may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(f) A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. 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 all Holders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, provided all sums owing to the Trustee hereunder
have been paid and subject to the lien provided for in Section 7.7.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations to pay compensation under Section 7.7(a)
through the date of termination, and for indemnification under Section
7.7(b) hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
---------------------------------
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION.
------------------------------
(a) There shall at all times be a Trustee hereunder which
shall be a corporation organized and doing business under the laws of
the United States of America or of any state or territory thereof or of
the District of Columbia authorized under such laws to exercise
corporate trustee power, shall be subject to supervision or examination
by Federal, state, territorial or District of Columbia authority and
shall have a combined capital and surplus of at least $5,000,000 as set
forth in its most recent published annual report of condition.
(b) This Indenture shall always have a Trustee who satisfies
the requirements of TIA ss. 310(a)(1) and (2). The Trustee shall be
subject to TIA ss. 310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
--------------------------------------------------
The Trustee shall be subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
INDENTURE - Page 34
ARTICLE VIII
DISCHARGE OF INDENTURE
SECTION 8.1 TERMINATION OF COMPANY'S OBLIGATIONS.
-------------------------------------
(a) This Indenture shall cease to be of further effect (except
that the Company's obligations to pay compensation under Section 7.7(a)
through the date of termination, and for indemnification under Section
7.7(b) and its obligations under Section 8.4, and the Company's,
Trustee's and Paying Agent's obligations under Section 8.3 shall
survive) when, without violating Article X hereof, all outstanding
Securities have been paid in full and the Company has paid all sums
payable by the Company hereunder. In addition, the Company may
terminate all of its obligations under this Indenture if, without
violating Article X hereof:
(i) the Company irrevocably deposits in trust with
the Trustee or, at the option of the Trustee, with a trustee
reasonably satisfactory to the Trustee and the Company under
the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, money or U.S.
Government Obligations sufficient (as certified by an
independent public accountant designated by the Company) to
pay principal and interest on the Securities to maturity or
redemption, as the case may be, and to pay all other sums
payable by it hereunder, provided that (A) the trustee of the
irrevocable trust shall have been irrevocably instructed to
pay such money or the proceeds of such U.S. Government
Obligations to the Trustee and (B) the Trustee shall have been
irrevocably instructed to apply such money or the proceeds of
such U.S. Government Obligations to the payment of said
principal and interest with respect to the Securities;
(ii) the Company delivers to the Trustee an Officers'
Certificate stating that all conditions precedent to
satisfaction and discharge of this Indenture have been
complied with; and
(iii) no Default or Event of Default with respect to
the Securities shall have occurred and be continuing on the
date of such deposit.
Then, this Indenture shall cease to be of further effect (except as
provided in this paragraph), and the Trustee, on demand of the Company,
shall execute proper instruments acknowledging confirmation of and
discharge under this Indenture. The Company may make the deposit only
if Article X hereof does not prohibit such payment. However, the
Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 4.2, 7.7(c),
7.8, 8.3 and 8.4 and the Trustee's and Paying Agent's obligations in
Section 8.3 shall survive until the Securities are no longer
outstanding. Thereafter, only the Company's obligations to pay
compensation under Section 7.7(a) through the date of termination, and
for indemnification under Section 7.7(b), its obligations under Section
8.4 and the Company's, Trustee's and Paying Agent's obligations in
Section 8.3 shall survive.
INDENTURE - Page 35
(b) After such irrevocable deposit made pursuant to this
Section 8.1 and satisfaction of the other conditions set forth herein,
the Trustee upon written request shall acknowledge in writing the
discharge of the Company's obligations under this Indenture except for
those surviving obligations specified above.
(c) In order to have money available on a payment date to pay
principal or interest on the Securities, the U.S. Government
Obligations shall be payable as to principal or interest at least one
Business Day before such payment date in such amounts as will provide
the necessary money. U.S. Government Obligations shall not be callable
at the issuer's option.
SECTION 8.2 APPLICATION OF TRUST MONEY.
---------------------------
The Trustee or a trustee satisfactory to the Trustee and the Company
shall hold in trust money or U.S. Government Obligations deposited with it
pursuant to Section 8. 1. It shall apply the deposited money and the money from
U.S. Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal and interest on the Securities.
SECTION 8.3 REPAYMENT TO COMPANY.
---------------------
(a) The Trustee and the Paying Agent shall promptly pay to the
Company upon written request any excess money or securities held by
them at any time.
(b) The Trustee and the Paying Agent shall pay to the Company
upon written request any money held by them for the payment of
principal or interest on the Securities that remains unclaimed for two
years after the date upon which such payment shall have become due;
provided, however, that the Company shall have either caused notice of
such payment to be mailed to each Holder entitled thereto no less than
30 days prior to such repayment or within such period shall have
published such notice in a newspaper of widespread circulation
published in Orange County, California. After payment to the Company,
Holders entitled to the money must look to the Company for payment as
general creditors unless an applicable abandoned property law
designates another Person, and all liability of the Trustee and such
Paying Agent with respect to such money shall cease.
SECTION 8.4 REINSTATEMENT.
--------------
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.2 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.1 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 8.2; provided, however,
that if the Company has made any payment of interest on or principal of any
Securities because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment, as long as no money is owed to the Trustee by the Company, from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
INDENTURE - Page 36
ARTICLE IX
AMENDMENTS
SECTION 9.1 WITHOUT CONSENT OF THE HOLDERS.
-------------------------------
The Company and the Trustee may amend this Indenture or the Securities
without the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Section 5.1;
(c) to provide for the issuance of additional uncertificated
Securities or certificated Securities;
(d) to make any change that does not adversely affect the
legal rights hereunder of any Holder, including but not limited to, an
increase in the aggregate dollar amount of Securities which may be
outstanding under this Indenture;
(e) make any change in Section 3.2; provided, however, that no
such change shall adversely affect the rights of any outstanding or
issued Security; or
(f) to comply with any requirements of the SEC in connection
with the qualification of this Indenture under the TIA.
SECTION 9.2 WITH CONSENT OF THE HOLDERS.
----------------------------
(a) The Company and the Trustee may amend this Indenture or
the Securities with the written consent of the Holders of at least a
majority in principal amount of the then outstanding Securities. The
Holders of a majority in principal of the then outstanding Securities
may also waive on behalf of all Holders any existing Default or Event
of Default or compliance with any provision of this Indenture or the
Securities. However, without the consent of the Holder of each Security
affected, an amendment or waiver under this Section may not (with
respect to any Security held by a nonconsenting Holder):
(i) reduce the aggregate principal amount of
Securities whose Holders must consent to an amendment,
supplement or waiver;
(ii) reduce the rate of or change the time for
payment of interest, including default interest, on any
outstanding Security;
INDENTURE - Page 37
(iii) reduce the principal of or change the fixed
maturity of any Security or alter the redemption provisions or
the price at which the Company shall offer to purchase such
Security pursuant to Section 3.1 of Article III hereof;
(iv) make any Security payable in money other than
that stated in the Prospectus;
(v) modify or eliminate the right of the estate of a
Holder or a Holder to cause the Company to repurchase a
Security upon the death or Total Permanent Disability of a
Holder pursuant to Article III; provided, however, that the
Company may not modify or eliminate such right, as it may be
in effect on the Issue Date, of any Security which was issued
with such right, and after an amendment under this subsection
9.2(a)(v) becomes effective, the Company shall mail to the
Holders of each Security then outstanding a notice briefly
describing the amendment;
(vi) make any change in Section 6.4 or 6.7 hereof or
in this sentence of this Section 9.2;
(vii) make any change in Article X that materially
adversely affects the rights of any Holders; or
(viii) waive a Default or Event of Default in the
payment of principal of or interest on any Security (except a
rescission of acceleration of the Securities by the Holders of
at least a majority in aggregate principal amount of the
Securities and a waiver of the payment default that resulted
from such acceleration).
(b) It shall not be necessary for the consent of the Holders
under this Section to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.
(c) After an amendment or waiver under this Section becomes
effective, the Company shall mail to the Holders of each Security
affected thereby a notice briefly describing the amendment or waiver.
Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any
such supplemental indenture or waiver. Subject to Sections 6.4 and 6.7
hereof, the Holders of a majority in principal amount of the Securities
then outstanding may waive compliance in a particular instance by the
Company with any provision of this Indenture or the Securities.
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT.
------------------------------------
If at the time this Indenture shall be qualified under the TIA, every
amendment to this Indenture or the Securities shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
INDENTURE - Page 38
SECTION 9.4 EFFECT OF CONSENTS.
-------------------
(a) Until an amendment or waiver becomes effective, a consent
to it by a Holder of a Security is a continuing consent by the Holder
and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even if
notation of the consent is not made on any Security. An amendment or
waiver becomes effective in accordance with its terms and thereafter
binds every Holder.
(b) The Company may fix a record date for determining which
Holders must consent to such amendment or waivers. If the Company fixes
a record date, the record date shall be fixed at (i) the later of 30
days prior to the first solicitation of such consent or the date of the
most recent list of Holders furnished to the Trustee prior to such
solicitation pursuant to Section 2.5, or (ii) such other date as the
Company shall designate.
SECTION 9.5 NOTATION ON OR EXCHANGE OF SECURITIES.
--------------------------------------
The Trustee may place an appropriate notation about an amendment or
waiver on any Security, if certificated, or any Account statement. Failure to
make any notation or issue a new Security shall not affect the validity and
effect of such amendment or waiver.
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
--------------------------------
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article IX if, in the Trustee's reasonable
discretion, the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign it. In signing or refusing to sign such amendment or supplemental
indenture, the Trustee shall be entitled to receive, if requested, an indemnity
reasonably satisfactory to it and to receive and, subject to Section 7.1, shall
be fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel (or written advice of counsel) as conclusive evidence that such
amendment or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms. The Company may not sign
an amendment or supplemental indenture until its Board of Directors approves it.
ARTICLE X
SUBORDINATION
SECTION 10.1 AGREEMENT TO SUBORDINATE.
-------------------------
(a) The Company agrees, and each Holder by accepting a
Security consents and agrees, that the Indebtedness evidenced by the
Securities and the payment of the principal of and interest on the
Securities is subordinated in right of payment, to the extent and in
the manner provided in this Article, to the prior payment in full, in
cash, cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, of all Obligations due in respect of Senior
Debt of the Company whether outstanding on the date hereof or hereafter
incurred, and that the subordination is for the benefit of the holders
of Senior Debt.
INDENTURE - Page 39
(b) For purposes of this Article X, a payment or distribution
on account of the Securities may consist of cash, property or
securities, by set-off or otherwise, and a payment or distribution on
account of any of the Securities shall include, without limitation, any
redemption, purchase or other acquisition of the Securities.
SECTION 10.2 LIQUIDATION; DISSOLUTION; BANKRUPTCY.
-------------------------------------
(a) Upon any payment or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to
creditors upon (i) any dissolution or winding-up or total or partial
liquidation or reorganization of the Company whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy or
(ii) any bankruptcy or insolvency case or proceeding or any
receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its
assets, (iii) any assignment for the benefit of creditors or any other
marshaling of assets of the Company, all obligations due, or to become
due, in respect of Senior Debt (including interest after the
commencement of any such proceeding at the rate specified in the
applicable Senior Debt) shall first indefeasibly be paid in full, or
provision shall have been made for such payment, in cash, cash
equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt, before any payment is made on account of the principal of
or interest on the Securities, except that Holders may receive
securities that are subordinated to at least the same extent as the
Securities are to (x) Senior Debt and (y) any securities issued in
exchange for Senior Debt. Upon any such dissolution, winding-up,
liquidation or reorganization, any payment or distribution of assets of
the Company of any kind or character, whether in cash, property or
securities, to which the Holders of the Securities or the Trustee under
this Indenture would be entitled, except for the provisions hereof,
shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders of the Securities or by the Trustee
under this Indenture if received by them, directly to the holders of
Senior Debt (in order of priority, and when of equal priority, pro rata
to such holders of equal priority on the basis of the amounts of Senior
Debt held by such holders) or their representative or representatives,
or to the trustee or trustees under any indenture pursuant to which any
of such Senior Debt may have been issued, as their interests may
appear, for application to the payment of Senior Debt remaining unpaid
until all such Senior Debt has been indefeasibly paid in full, or
provisions shall have been made for such payment, in cash, cash
equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt, after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of Senior
Debt.
(b) For purposes of this Article X, the words "cash, property
or securities" shall not be deemed to include securities of the Company
or any other corporation provided for by a plan of reorganization or
readjustment which are subordinated, to at least the same extent as the
Securities, to the payment of all Senior Debt then outstanding or to
INDENTURE - Page 40
the payment of all securities issued in exchange therefor to the
holders of Senior Debt at the time outstanding. The consolidation of
the Company with, or the merger of the Company with or into, another
corporation or the liquidation or dissolution of the Company following
the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided in Article V shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this
Section if such other corporation shall, as part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in
Article V.
(c) The provisions of Section 10.2(a) and (b) shall not
prohibit, restrict or otherwise limit the Company from entering into,
sponsoring or conducting any Qualified Sales and Financing Transaction.
SECTION 10.3 DEFAULT OF SENIOR DEBT.
-----------------------
(a) In the event and during the continuation of any default in
the payment of principal of (or premium, if any) or interest on any
Senior Debt, or any amount owing from time to time under or in respect
of Senior Debt or in the event that any nonpayment event of default
with respect to any Senior Debt shall have occurred and be continuing
and shall have resulted in such Senior Debt becoming or being declared
due and payable prior to the date on which it would otherwise have
become due and payable, or (b) in the event that any other nonpayment
event of default with respect to any Senior Debt shall have occurred
and be continuing permitting the holders of such Senior Debt (or a
trustee on behalf of the holders thereof) to declare such Senior Debt
due and payable prior to the date on which it would otherwise have
become due and payable, then the Company shall make no payment, direct
or indirect (including any payment which may be payable by reason of
the payment of any other Indebtedness of the Company being subordinated
to the payment of the Securities) (other than securities that are
subordinated to at least the same extent as the Securities are to (x)
Senior Debt and (y) any securities issued in exchange for Senior Debt)
unless and until (i) such event of default shall have been cured or
waived or shall have ceased to exist or such acceleration shall have
been rescinded or annulled, or (ii) in case of any nonpayment event of
default specified in (b), during the period (a "PAYMENT BLOCKAGE
PERIOD") commencing on the date the Company and the Trustee receive
written notice (a "PAYMENT NOTICE") of such event of default (which
notice shall be binding on the Trustee and the Holders as to the
occurrence of such an event of default) from a holder of the Senior
Debt to which such default relates and ending on the earliest of (A)
179 days after such date, (B) the date, if any, on which such Senior
Debt to which such default relates is discharged or such default is
waived by the holders of such Senior Debt or otherwise cured and (C)
the date on which the Trustee receives written notice from the holder
of such Senior Debt to which such default relates terminating the
Payment Blockage Period. [Notwithstanding the foregoing, during any
Payment Blockage Period, the Company shall make payments for rescinded
subscriptions under Section 2.2(b) (including subscriptions that occur
at a time when a post-effective amendment to the Registration Statement
was required but not yet effective).] No new Payment Blockage Period
may be commenced within 360 days after the receipt by the Trustee of
any prior Payment Notice. For all purposes of this Section 10.3, no
event of default which existed or was commencing with respect to the
Senior Debt to which a Payment Blockage Period relates on the date such
Payment Blockage Period commenced shall be or be made the basis for the
INDENTURE - Page 41
commencement or any subsequent Payment Blockage Period unless such
event of default is cured or waived for a period of not less than 180
consecutive days.
SECTION 10.4 WHEN DISTRIBUTION MUST BE PAID OVER.
------------------------------------
(a) If the Trustee or any Holder receives any payment with
respect to the Securities, whether in cash, property or securities
(other than securities that are subordinated to at least the same
extent as the Securities are to the Senior Debt), such payment shall be
held by the Trustee or such Holder, in trust for the benefit of, and
shall be paid forthwith over and delivered to, the holders of Senior
Debt (in order of their priority, and when of equal priority, pro rata
to such holders of equal priority on the basis of the amounts of Senior
Debt held by such holders) for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent
necessary to pay such Obligations in full, in cash, cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Debt, in
accordance with the terms of such Senior Debt, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Debt.
(b) With respect to the holders of Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee
as are specifically set forth in this Article X, and no implied
covenants or obligations with respect to the holders of Senior Debt
shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior
Debt, and shall not be liable to any such holders if the Trustee shall
pay over or distribute to or on behalf of Holders or the Company or any
other Person money or assets to which any holders of Senior Debt shall
be entitled by virtue of this Article X, except if such payment is made
as a result of the willful misconduct or negligence of the Trustee.
SECTION 10.5 NOTICE BY COMPANY.
------------------
The Company shall promptly notify the Trustee and the Paying Agent in
writing of any facts known to the Company that would cause a payment of any
Obligations with respect to the Company to violate this Article, but failure to
give such notice shall not affect the subordination of the Securities to the
Senior Debt provided in this Article.
SECTION 10.6 SUBROGATION.
------------
After all Senior Debt is paid in full, in cash, cash equivalents or
otherwise in a manner satisfactory to the holders of such Senior Debt, and until
the Securities are paid in full, Holders shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Securities) to the
rights of holders of Senior Debt to receive distributions applicable to Senior
Debt to the extent that distributions otherwise payable to the Holders have been
applied to the payment of Senior Debt.
SECTION 10.7 RELATIVE RIGHTS.
----------------
(a) This Article defines the relative rights of Holders and
holders of Senior Debt. Nothing in this Indenture shall:
INDENTURE - Page 42
(i) impair, as between the Company and Holders, the
obligations of the Company, which are absolute and
unconditional, to pay principal of and interest on the
Securities in accordance with their terms;
(ii) affect the relative rights of Holders and
creditors of the Company other than their rights in relation
to holders of Senior Debt; or
(iii) prevent the Trustee or any Holder from
exercising its available remedies upon a Default or Event of
Default, subject to the rights of holders and owners of Senior
Debt to receive distributions and payments otherwise payable
to Holders.
(b) If the Company fails because of this Article to pay
principal of or interest on a Security on the due date, the failure is
still a Default or Event of Default.
SECTION 10.8 SUBORDINATION MAY NOT BE IMPAIRED BY THE COMPANY OR HOLDERS OF
--------------------------------------------------------------
SENIOR DEBT.
------------
(a) No right of any present or future holder of Senior Debt to
enforce the subordination of the Indebtedness evidenced by the
Securities and the Obligations related thereto shall be prejudiced or
impaired by any act or failure to act by any such holder or by the
Company, the Trustee or any Agent or by the failure of the Company to
comply with this Indenture, regardless of any knowledge thereof which
any such holder may have or otherwise be charged with.
(b) Without limiting the effect of the preceding paragraph,
any holder of Senior Debt may at any time and from time to time without
the consent of or notice to any other holder or to the Trustee, without
impairing or releasing any of the rights of any holder of Senior Debt
under this Indenture, upon or without any terms or conditions and in
whole or in part:
(i) change the manner, place or term of payment, or
change or extend the time of payment of, renew or alter any
Senior Debt or any other liability of the Company to such
holder, any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the provisions
of this Article X shall apply to the Senior Debt as so
changed, extended, renewed or altered;
(ii) notwithstanding the provisions of Section 5.1
hereof, sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any
property by whomsoever at any time pledged or mortgaged to
secure, or howsoever securing, any Senior Debt or any other
liability of the Company to such holder or any other
liabilities incurred directly or indirectly in respect thereof
or hereof or any offset thereagainst;
(iii) exercise or refrain from exercising any rights
or remedies against the Company or others or otherwise act or
refrain from acting or, for any reason, fail to file, record
or otherwise perfect any security interest in or lien on any
property of the Company or any other Person; and
INDENTURE - Page 43
(iv) settle or compromise any Senior Debt or any
other liability of the Company to such holder, or any security
therefor, or any liability incurred directly or indirectly in
respect thereof.
(c) All rights and interests under this Indenture of any
holder of Senior Debt and all agreements and obligations of the
Trustee, the Holders, and the Company under Article VI and under this
Article X shall remain in full force and effect irrespective of (i) any
lack of validity or enforceability of any agreement or instrument
relating to any Senior Debt or (ii) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the
Trustee, any Holder, or the Company.
(d) Any holder of Senior Debt is hereby authorized to demand
specific performance of the provisions of this Article X, whether or
not the Company shall have complied with any of the provisions of this
Article X applicable to it, at any time when the Trustee or any Holder
shall have failed to comply with any of these provisions. The Trustee
and the Holders irrevocably waive any defense based on the adequacy of
a remedy at law that might be asserted as a bar to such remedy of
specific performance.
SECTION 10.9 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
-----------------------------------------
(a) Whenever a distribution is to be made or a notice given to
holders of Senior Debt, the distribution may be made and the notice
given to their representative.
(b) Upon any payment or distribution of assets of the Company
referred to in this Article X, the Trustee and the Holders shall be
entitled to rely upon any order or decree made by any court of
competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending or upon any
certificate of any representative of any holder of Senior Debt or of
the liquidating trustee or agent or other Person making any
distribution, delivered to the Trustee or to the Holders, for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article X.
SECTION 10.10 RIGHTS OF TRUSTEE AND PAYING AGENT.
-----------------------------------
(a) Notwithstanding the provisions of this Article X or any
other provision of this Indenture, the Trustee shall not be charged
with knowledge of the existence of any facts which would prohibit the
making of any payment or distribution by the Trustee, or the taking of
any action by the Trustee, and the Trustee or Paying Agent may continue
to make payments on the Securities unless it shall have received at its
Corporate Trust Office at least five Business Days prior to the date of
such payment written notice of facts that would cause the payment of
any Obligations with respect to the Securities to violate this Article,
which notice, unless specified by a holder of Senior Debt as such,
shall not be deemed to be a Payment Notice. The Trustee may
conclusively rely on such notice. Only the Company or a holder of
INDENTURE - Page 44
Senior Debt may give the notice. Nothing in this Article X shall apply
to amounts due to, or impair the claims of, or payments to, the Trustee
under or pursuant to Section 7.7 hereof.
(b) The Trustee in its individual or any other capacity may
hold Senior Debt with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights.
SECTION 10.11 AUTHORIZATION TO EFFECT SUBORDINATION.
--------------------------------------
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Senior Debt and the
Holders, the subordination as provided in this Article X, and appoints the
Trustee his attorney-in-fact for any and all such purposes.
SECTION 10.12 ARTICLE APPLICABLE TO PAYING AGENT.
-----------------------------------
In case at any time any Paying Agent (other than the Trustee or the
Company) shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article X shall in such case (unless the
context otherwise requires) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article X in addition to or in place of the
Trustee.
SECTION 10.13 MISCELLANEOUS.
--------------
(a) The agreements contained in this Article X shall continue
to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Senior Debt is rescinded or must otherwise be
returned by any holder of Senior Debt upon the insolvency, bankruptcy
or reorganization of the Company or otherwise, all as though such
payment had not been made.
(b) The Trustee shall notify all holders of Senior Debt (of
whose identity the Trustee has received reasonable advance written
notice) of the existence of any Default or Event of Default under
Section 6.1 promptly after a Responsible Officer of the Trustee
actually becomes aware thereof; provided, however, that at least five
Business Days prior to the notification of any holder of Senior Debt
under this Section 10.13, the Trustee shall provide the Company with
notice of its intent to provide such notification, provided further,
however, that no defect in the form or delivery of the Trustee's notice
to the Company shall preclude the timely notice by the Trustee to the
holders of Senior Debt.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 TRUST INDENTURE ACT CONTROLS.
-----------------------------
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss. 318(c), the imposed duties shall control.
INDENTURE - Page 45
SECTION 11.2 NOTICES.
--------
(a) Any notice, instruction, direction, request or other
communication by the Company, the Trustee or any other holder of Senior
Debt to the others is duly given if in writing and delivered in person
or mailed by first-class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing
next day delivery, to the other's address:
If to the Company:
Consumer Portfolio Services, Inc.
00000 Xxxxxx Xxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Chief Financial Officer
Telecopier: 000-000-0000
With a copy to:
Xxxxxxx Xxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telecopier: 000-000-0000
If to the Trustee:
Xxxxx Fargo Bank, National Association
Sixth Street and Marquette Avenue
MAC N9303-120
Xxxxxxxxxxx, Xxxxxxxxx, 00000
Attention: Consumer Portfolio Services, Inc, Administrator
Telecopier: (000) 000-0000
If to a holder of Senior Debt, such address as such holder of Senior
Debt shall have provided in writing to the Company and the Trustee.
(b) The Company, the Trustee or a holder of Senior Debt by
notice to the Company and the Trustee may designate additional or
different addresses for subsequent notices or communications.
(c) All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered
by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when answered back,
if telexed; when receipt acknowledged, if telecopied; and the next
INDENTURE - Page 46
Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery.
(d) Any notice or communication to a Holder shall be mailed by
first-class mail to his address shown on the register kept by the
Registrar. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other
Holders.
(e) If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given, whether or
not the addressee receives it.
(f) If the Company mails a notice or communication to Holders,
it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 11.3 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
--------------------------------------------
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Securities. The Trustee
shall be subject to ss. 312(b). The Company, the Trustee, the Registrar and
anyone else shall have the protection of TIA ss. 312(c).
SECTION 11.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
---------------------------------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 11.5) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 11.5) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been complied with.
SECTION 11.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
----------------------------------------------
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
INDENTURE - Page 47
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion whether such covenant or condition has been
complied with; and
(d) a statement whether, in the opinion of such Person, such
condition or covenant has been complied with.
SECTION 11.6 RULES BY TRUSTEE AND AGENTS.
----------------------------
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 11.7 LEGAL HOLIDAYS.
---------------
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the State of Minnesota or at a place of payment are authorized
or obligated by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
SECTION 11.8 NO RECOURSE AGAINST OTHERS.
---------------------------
No director, officer, employee, agent, manager or stockholder of the
Company as such, shall have any liability for any Obligations of the Company
under the Securities or this Indenture or for any claim based on, in respect of
or by reason of such Obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability.
SECTION 11.9 DUPLICATE ORIGINALS.
--------------------
The parties may sign any number of copies of this Indenture. One signed
copy is enough to prove this Indenture.
SECTION 11.10 GOVERNING LAW.
--------------
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE
AND THE SECURITIES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
SECTION 11.11 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
----------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
INDENTURE - Page 48
SECTION 11.12 SUCCESSORS.
-----------
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 11.13 SEVERABILITY.
-------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.14 COUNTERPART ORIGINALS.
----------------------
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 11.15 TABLE OF CONTENTS, HEADINGS, ETC.
---------------------------------
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions thereof.
[REMAINDER OF PAGE BLANK]
INDENTURE - Page 49
SIGNATURES:
IN WITNESS WHEREOF, the parties hereto have caused to be duly executed
as of the day and year first written above, this Indenture.
CONSUMER PORTFOLIO SERVICES, INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
a national banking association, as Trustee
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
INDENTURE - Page 50
