Document:

EXHIBIT 10.27

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

RESEARCH AND DEVELOPMENT OPTION AND LICENSE AGREEMENT

 

BETWEEN

 

MEDICIS PHARMACEUTICAL CORPORATION

 

and

 

ANACOR PHARMACEUTICALS, INC.

 

This RESEARCH AND DEVELOPMENT OPTION AND LICENSE AGREEMENT (the “Agreement”) is entered into and made effective as of the 9th day of February, 2011 (the “Effective Date”) by and between Anacor Pharmaceuticals, Inc., a Delaware corporation having its principal place of business at 1020 East Meadow Circle, Palo Alto, CA 94303 (“Anacor”), and Medicis Pharmaceutical Corporation, a Delaware corporation having offices at 7720 North Dobson Road, Scottsdale, AZ 85256 (“Medicis”).  Anacor and Medicis are each referred to herein by name or as a “Party” or, collectively, as “Parties”.

 

RECITALS

 

WHEREAS, Anacor possesses proprietary technology and know-how related to the discovery, identification, synthesis and development of boron-based small molecule drug candidates;

 

WHEREAS, Medicis possesses expertise in the research, development, manufacturing and commercialization of human pharmaceuticals, and Medicis is interested in developing such boron-based small molecule compounds as drug products;

 

WHEREAS, Medicis desires to engage in a collaborative effort with Anacor pursuant to which Anacor will carry out a research and development program to discover and develop boron-based small molecule compounds directed against the Target (as defined below), and Medicis will have an option, exercisable at Medicis’s sole discretion, to further develop and commercialize such compounds for any and all uses in the Territory (as defined below), all on the terms and conditions set forth herein; and

 

WHEREAS, upon exercise by Medicis of its option to such compounds, Anacor desires to grant to Medicis, and Medicis desires to obtain, an exclusive license under Anacor Exclusively Licensed IP (as defined below) to make, have made, use, sell, offer for sale and import Products (as defined below) throughout the Territory on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

 

ARTICLE 1

 

DEFINITIONS; RULES OF CONSTRUCTION

 

1.1                                 Defined Terms.  As used in this Agreement, the following terms shall have the meanings set forth in this Article 1 unless context dictates otherwise:

 

1.1.1                                           “Additional Compound” has the meaning assigned to such term in Section 2.7.

 

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1.1.2                                           “Additional Target” has the meaning assigned to such term in Section 2.5.

 

1.1.3                                           “Affiliate” means any Person, whether de jure or de facto, which directly or indirectly through one (1) or more intermediaries Controls, is Controlled by or is under common Control with a Party.

 

1.1.4                                           “Agreement” has the meaning assigned to such term in the Preamble.

 

1.1.5                                           “Anacor” has the meaning assigned to such term in the Preamble.

 

1.1.6                                           “Anacor Compound” means any small molecule compound that (a) (i) is generated or discovered by Anacor during the Term or (ii) is within Anacor’s existing compound bank, (b) is within the Field and (c) [ * ].

 

1.1.7                                           “Anacor Compound IP” means, with respect to an Anacor Compound, the Anacor Compound Know-How and Anacor Compound Patents, collectively, with respect to such Anacor Compound.

 

1.1.8                                           “Anacor Compound Know-How” means, with respect to an Anacor Compound, any Information Controlled by Anacor or its Affiliates that is discovered, developed, invented or created on or prior to the date on which such Anacor Compound becomes a Collaboration Compound (if at all) and that relates directly (but not necessarily exclusively) to, or is directly (but not necessarily exclusively) useful in connection with, the making, having made, using, selling, offering for sale or importing of such Anacor Compound.

 

1.1.9                                           “Anacor Compound Patents” means, with respect to an Anacor Compound, any Patents in the Territory Controlled by Anacor or its Affiliates that claim inventions conceived or reduced to practice on or prior to the date on which such Anacor Compound becomes a Collaboration Compound (if at all) and that (a) claim the composition of matter or method of making or use of such Anacor Compound, or (b) Cover the making, having made, using, selling, offering for sale or importing of such Anacor Compound.

 

1.1.10                                     “Anacor Diligence Failure Event” has the meaning assigned to such term in Section 2.4.1(a).

 

1.1.11                                     “Anacor Exclusively Licensed IP” means, collectively, (a) Anacor Compound IP with respect to the Medicis Development Compounds; (b) Anacor Target Patents; (c) Anacor Target Know-How; (d) Collaboration Compound IP with respect to the Medicis Development Compounds that is owned or Controlled by Anacor or its Affiliates on the Effective Date or at any time during the Term (to the extent of Anacor’s ownership or Control thereof); (e) Medicis Development Compound IP owned or Controlled by Anacor or its Affiliates on the Effective Date or at any time during the Term (to the extent of Anacor’s ownership or Control thereof); and (f) to the extent not included in the foregoing, Anacor Patents with respect to the Medicis Development Compounds or Products.

 

1.1.12                                     “Anacor IP” means, collectively, (a) Anacor Compound IP; (b) Anacor Target Patents; (c) Anacor Target Know-How; (d) Collaboration Compound IP owned or Controlled by Anacor or its Affiliates on the Effective Date or at any time during the Term (to the extent of Anacor’s ownership or Control thereof); (e) Medicis Development Compound IP owned or Controlled by Anacor or its Affiliates on the Effective Date or at any time during the Term (to the extent of Anacor’s ownership or Control thereof); and (f) to the extent not included in the foregoing, Anacor Patents.

 

1.1.13                                     “Anacor Patents” means any Patents in the Territory Controlled by Anacor or its Affiliates on the Effective Date or at any time during the Term: (a) that are (or were at the relevant time)

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Anacor Compound Patents, Anacor Target Patents, Collaboration Compound Patents or Medicis Development Compound Patents or, (b) to the extent not one of the foregoing, that (i) claim the composition of matter or method of making or use of a Medicis Development Compound in the Field, or (ii) Cover the making, having made, using, selling, offering for sale or importing of a Medicis Development Compound in the Field.

 

1.1.14                                     “Anacor Target Know-How” means any Information Controlled by Anacor or its Affiliates on the Effective Date or at any time during the Term (but excluding Collaboration Know-How) that relates directly (but not necessarily exclusively) to the Target in the Field or is reasonably useful for Medicis to perform its obligations or exercise its rights with respect to such Target in the Field under the Research Collaboration.

 

1.1.15                                     “Anacor Target Patents” means any Patents in the Territory Controlled by Anacor or its Affiliates on the Effective Date or at any time during the Term (but excluding Anacor Compound Patents, Collaboration Compound Patents and Medicis Development Compound Patents) that claim or Cover the composition or use of the Target in the Field or that would otherwise be infringed (absent a license as provided herein) by Medicis’s performance of its obligations or exercise of its rights under the Research Collaboration.

 

1.1.16                                     “Annual Net Sales” means total Net Sales in the Territory in a particular calendar year.  A “calendar year” means a period of twelve (12) consecutive months beginning on January 1 and ending on December 31.

 

1.1.17                                     “[ * ]”  means a compound [ * ].

 

1.1.18                                     “Arbitration Request” has the meaning assigned to such term in Section 13.2.

 

1.1.19                                     “Back-Up Compound” has the meaning assigned to such term in Section 2.6.6(d).

 

1.1.20                                     “Back-Up Compound Election Term” has the meaning assigned to such term in Section 2.6.6(d).

 

1.1.21                                     “BfArM” means the Federal Institute for Drugs and Medical Devices (Bundesinstitut für Arzneimittel und Medizinprodukte, BfArM) in Germany.

 

1.1.22                                     “Breaching Party” has the meaning assigned to such term in Section 12.2.1.

 

1.1.23                                     “Business Day” means a day on which banking institutions in New York, New York, United States are open for business.

 

1.1.24                                     “Calendar Quarter” means a period of three (3) consecutive months ending on the last day of March, June, September, or December, respectively.

 

1.1.25                                     “Candidate Selection Activities” means, with respect to any Collaboration Compound, the activities conducted to determine whether such Collaboration Compound meets the Candidate Selection Criteria.

 

1.1.26                                     “Candidate Selection Activities Report” has the meaning assigned to such term in Section 2.6.6(a).

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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1.1.27                                     “Candidate Selection Compound” means a Collaboration Compound resulting from the Program that the JRC determines meets all of the Candidate Selection Criteria.

 

1.1.28                                     “Candidate Selection Criteria” means the criteria for selecting a Candidate Selection Compound, as described in Section 2.6.4.

 

1.1.29                                     “cGCP” (Good Clinical Practice) means the current regulations adopted by the FDA or other commonly recognized group or individual regulatory agency (e.g., EMA, MHLW, MHRA and BfArM) for research involving human subjects.

 

1.1.30                                     “cGLP” (Good Laboratory Practice) means the current system of management controls for laboratories and research organizations to ensure the consistency and reliability of results as outlined in the Organisation for Economic Co-operation and Development (OECD) Principles of cGLP and national regulations.

 

1.1.31                                     “cGMP” means current Good Manufacturing Practices as described in (i) the ICH Harmonised Tripartite Guideline, Step 4 version, dated November 10, 2000 and (ii) Parts 210 and 211 of Title 21 of the U.S.  Code of Federal Regulations, each as may be amended from time to time, or any successor thereto.

 

1.1.32                                     “Chairperson” has the meaning assigned to such term in Section 3.1.1.

 

1.1.33                                     “Change of Control” means, with respect to Anacor, the occurrence of any of the following:

 

(a)                                  any “person” or “group” (as such terms are defined below) other than Anacor (or any Controlling Affiliate of Anacor as of the Effective Date) (i) is or becomes the “beneficial owner” (as defined below), directly or indirectly, of shares of capital stock or other interests (including partnership interests) of Anacor (or any Controlling Affiliate of Anacor) then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of the directors, managers or similar supervisory positions (“Voting Stock”) of Anacor (or its Controlling Affiliate) representing fifty percent (50%) or more of the total voting power of all outstanding classes of Voting Stock of Anacor (or its Controlling Affiliate) or (ii) has the power, directly or indirectly, to elect a majority of the members of Anacor’s (or its Controlling Affiliate’s) board of directors or similar governing body (as the case may be, “Board of Directors”); or

 

(b)                                 Anacor (or its Controlling Affiliate) enters into a merger, consolidation or other form of business combination, share exchange, reorganization, recapitalization or other similar extraordinary transaction or series of transactions with another Person (whether or not Anacor (or its Controlling Affiliate) is the surviving entity) and as a result of such merger, consolidation or other form of business combination, share exchange, reorganization, recapitalization or similar extraordinary transaction, (i) the members of the Board of Directors of Anacor (or its Controlling Affiliate) immediately prior to such transaction constitute less than a majority of the members of the Board of Directors of Anacor (or its Controlling Affiliate) or, if not Anacor (or its Controlling Affiliate), such surviving Person immediately following such transaction or series of transactions or (ii) the Persons that beneficially owned, directly or indirectly, the shares of Voting Stock of Anacor (or its Controlling Affiliate) immediately prior to such transaction or series of transactions cease to beneficially own, directly or indirectly, shares of Voting Stock representing at least a majority of the total voting power of all outstanding classes of Voting Stock of the surviving Person in substantially the same proportions as their

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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ownership of Voting Stock of Anacor (or its Controlling Affiliate) immediately prior to such transaction or series of transactions; or

 

(c)                                  Anacor (or its Controlling Affiliate) sells or transfers to any Third Party, in one or more related transactions, properties or assets representing all or substantially all of the consolidated total assets of Anacor; or

 

(d)                                 the holders of capital stock of Anacor (or its Controlling Affiliate) approve a plan or proposal for the liquidation or dissolution of Anacor (or its Controlling Affiliate).

 

For the purpose of this definition: (x) “person” and “group” have the meanings given such terms under Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the term “group” includes any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act; (y) a “beneficial owner” shall be determined in accordance with Rule 13d-3 under the Exchange Act; and (z) the terms “beneficially owned” and “beneficially own” shall have meanings correlative to that of “beneficial owner.”

 

1.1.34                                     “Claims” has the meaning assigned to such term in Section 11.1.

 

1.1.35                                     “CMC” means chemistry, manufacturing and controls.

 

1.1.36                                     “Collaboration Compound” means each Anacor Compound or Medicis Compound that has entered into nonclinical toxicology and nonclinical [ * ] efficacy studies, and other testing as described in the Research Plan, and is part of the Program.  The following Anacor Compounds, whose structures Anacor has disclosed to Medicis prior to the Effective Date, shall be deemed Collaboration Compounds: [ * ].

 

1.1.37                                     “Collaboration Compound IP” means, with respect to a Collaboration Compound, any Collaboration Compound Know-How or Collaboration Compound Patents with respect to such Collaboration Compound.

 

1.1.38                                     “Collaboration Compound Know-How” means, with respect to a Collaboration Compound, any Information pertaining to such Collaboration Compound that is discovered, developed, invented or created after the date on which the applicable Anacor Compound or Medicis Compound becomes such Collaboration Compound but prior to (i) Medicis’s exercise of the PoC Option or expiration of the PoC Option with respect to such Collaboration Compound and (ii) termination of the Research Collaboration under Section 2.4.1, 12.4.1, 12.5.2, 12.6.3(c) or 13.7 solely by or on behalf of (a) a Party (or its agents or contractors), (b) the Parties jointly (or jointly through their respective agents or contractors), or (c) either or both of their respective Affiliates.

 

1.1.39                                     “Collaboration Compound Patent” means, with respect to a Collaboration Compound, any Patent in the Territory that claims or Covers an invention conceived or reduced to practice after the date on which the applicable Anacor Compound or Medicis Compound becomes such Collaboration Compound and before the date (if any) on which Medicis exercises its PoC Option with respect to that Collaboration Compound or terminates the Research Collaboration under Section 2.4.1, 12.4.1, 12.5.2, 12.6.3(c) or 13.7 (thus rendering the Collaboration Compound a Medicis Development Compound) or expiration of the PoC Option with respect to such Collaboration Compound, and that (a) claims the composition of matter or method of making or use of such Collaboration Compound, or (b) Covers the making, having made, using, selling, offering for sale or importing of such Collaboration Compound.  For the avoidance of doubt: (i) any

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Patents with respect to inventions made or discovered prior to the date on which a Collaboration Compound becomes a Medicis Development Compound shall be either Anacor Compound Patents or Collaboration Compound Patents; and (ii) Collaboration Compound Patents may Cover compounds in addition to a Collaboration Compound.

 

1.1.40                                     “Combination Product” means a Product that includes at least one Other Active Ingredient.  To be a Combination Product, the Product and all its ingredients must be sold together as a single product and invoiced as one product.  For clarity, drug delivery vehicles, adjuvants, and excipients shall not be deemed to be Other Active Ingredients, and their presence shall not be deemed to create a Combination Product.

 

1.1.41                                     “Competitive Infringement” has the meaning assigned to such term in Section 8.4.1.

 

1.1.42                                     “Confidential Information” has the meaning assigned to such term in Section 9.1.

 

1.1.43                                     “Control,”  means, with respect to intellectual property or an intellectual property right, possession of the ability to grant access, license or sublicense in, to or under such intellectual property or intellectual property right without violating the terms of any agreement with any Third Party.  With respect to a Person, a Person shall be deemed to “Control” another Person if it (a) owns, directly or indirectly, beneficially or legally, at least fifty percent (50%) of the outstanding voting securities or capital stock (or such lesser percentage which is the maximum allowed to be owned by a Person in a particular jurisdiction) of such other Person, or has other comparable ownership interest with respect to any Person other than a corporation; or (b) has the power, whether pursuant to contract, ownership of securities or otherwise, to direct the management and policies of the Person.  In either case, “Controls,”  “Controlled”  or  “Controlling” shall have correlative meaning.

 

1.1.44                                     “Cover” means, with respect to intellectual property or an intellectual property right and a composition or method, that the possession, making, use, sale, offer for sale, import, or disclosure of such composition or method would infringe or misappropriate such intellectual property right absent a license grant or an exemption from infringement for manufacturing, use, sale or offer for sale related to obtaining Regulatory Approval.

 

1.1.45                                     “Derivative” means, with respect to a Medicis Development Compound, (a) any compound that is derived from such Medicis Development Compound by [ * ], or (b) any compound in the Field that (i) is based on the same Scaffold as such Medicis Development Compound, (ii) is made pursuant to the license granted in Section 5.3, and (iii) is a [ * ].

 

1.1.46                                     “Develop” or  “Development” means engage or engagement in activities relating to obtaining Regulatory Approval of a Product, and engage or engagement in activities to develop manufacturing capabilities for Products.  Development includes, but is not limited to, engage or engagement in: nonclinical or clinical pharmacology, toxicology, pharmacokinetic or other safety or efficacy studies, formulation activities, analytical characterization activities, manufacturing process design, optimization and scale-up (including bulk compound and final product production) activities, quality assurance and quality control activities, technical support and regulatory affairs activities.

 

1.1.47                                     “Diligent Efforts” means the following: (a) with respect to Anacor, commercially reasonable efforts that are consistent with the efforts and resources customarily used by a biopharmaceutical company [ * ] in the exercise of its reasonable business discretion relating to the research and Development progression of a potential pharmaceutical product owned by such company (or to which it has exclusive rights)

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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with similar product characteristics as the Collaboration Compound, but in any event efforts at least as great as those exercised by Anacor [ * ] in the Development of potential products that have a [ * ]; and (b) with respect to Medicis, commercially reasonable efforts that are consistent with the efforts and resources customarily used by a specialty pharmaceutical company in the exercise of its reasonable business discretion relating to a prescription pharmaceutical product owned by it (or to which it has exclusive rights) with similar product characteristics as the Medicis Development Compound and which is of similar market potential at a similar stage in its Development or product life as the Medicis Development Compound, taking into account issues of patent coverage, safety and efficacy, the competitiveness of the marketplace, the proprietary position, the regulatory structure involved, profitability (including pricing and reimbursement status achieved, [ * ], and other relevant factors, including technical, legal, scientific or medical factors.

 

1.1.48                                     “Disclosing Party” has the meaning assigned to such term in Section 9.1.

 

1.1.49                                     “Dollars” or  “$” means the legal tender of the U.S.

 

1.1.50                                     “Effective Date” has the meaning assigned to such term in the Preamble.

 

1.1.51                                     “EMA” means the European Medicines Agency of the European Union, and any successor agency thereto.

 

1.1.52                                     “European Union” means all countries that are officially recognized as member states of the European Union at any particular time during the Term.

 

1.1.53                                     “Executive Officer” has the meaning assigned to such term in Section 13.1.

 

1.1.54                                     “FDA” means the U.S.  Food and Drug Administration, and any successor entity thereto.

 

1.1.55                                     “Field” means the use of a [ * ]  [ * ] for the [ * ].

 

1.1.56                                     “First Commercial Sale” means, with respect to any Product, the first sale for which revenue has been recognized by Medicis from an independent Third Party for subsequent sale to an end user (i.e., not based upon a transfer price to an affiliate or distributor or sublicensee) or consumption by the general public of such Product in any country in the Territory after all required Regulatory Approvals have been granted, or where such sale is otherwise permitted, by the Regulatory Authority in such country, excluding registration samples and compassionate use.

 

1.1.57                                     “First Dosing in a Phase 1 Clinical Trial” means the date on which the first subject is dosed in a Phase 1 Clinical Trial for a Collaboration Compound that is conducted by or on behalf of Anacor or Medicis (or an Affiliate or Sublicensee of Medicis).

 

1.1.58                                     “First Dosing in a Phase 3 Clinical Trial” means the date on which the first subject is dosed in a Phase 3 Clinical Trial for a Medicis Development Compound that is conducted by or on behalf of Medicis (or an Affiliate or Sublicensee of Medicis).

 

1.1.59                                     “GAAP” means the then-current applicable Generally Accepted Accounting Principles in the United States as applied by Medicis or as recognized as generally accepted by the Financial Accounting Standards Board.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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1.1.60                                     “Generic Product” means, with respect to a Product, any pharmaceutical product sold by a Third Party that is not authorized by Medicis, an Affiliate or Sublicensee, that is approved by a Regulatory Authority in reliance on the prior approval of such Product as determined by the applicable Regulatory Authority, on the basis of it being comparable to and substitutable for such Product.

 

1.1.61                                     “HSR” has the meaning assigned to such term in Section 4.2.2.

 

1.1.62                                     “IND” means any investigational new drug application filed with the FDA pursuant to Part 312 of Title 21 of the U.S.  Code of Federal Regulations, and any amendments thereto.  References herein to IND shall include, to the extent applicable, any comparable filing(s) outside the U.S. (such as a clinical trial application in an individual country or in a member country of the European Union).

 

1.1.63                                     “Indemnitee” has the meaning assigned to such term in Section 11.3.

 

1.1.64                                     “Information” means any and all tangible and intangible information, techniques, technology, practices, trade secrets, inventions (whether patentable or not), methods, knowledge, know-how, skill, experience, data, results (including pharmacological, toxicological and nonclinical or clinical test data and results), analytical and quality control data, results or descriptions, software and algorithms.  As used herein, “clinical test data” shall be deemed to include all information related to the clinical or nonclinical testing of a Collaboration Compound or Product, including patient report forms, investigators’ reports, biostatistical, pharmaco-economic and other related analyses, regulatory filings and communications, and the like.

 

1.1.65                                     “Insolvency Event” has the meaning assigned to such term in Section 12.4.1.

 

1.1.66                                     “Joint Patent Subcommittee” or  “JPS” has the meaning assigned to such term in Section 3.2.

 

1.1.67                                     “Joint Research Committee” or  “JRC” has the meaning assigned to such term in Section 3.1.

 

1.1.68                                     “JRC Term” means the period commencing on the Effective Date and extending throughout the Research Collaboration Term.

 

1.1.69                                     “Lead Back-Up Compound” has the meaning assigned to such term in Section 4.2.1(a).

 

1.1.70                                     “Losses” has the meaning assigned to such term in Section 11.1.

 

1.1.71                                     “Manufacturing Cost” has the meaning assigned to such term in Section 6.4.2(d).

 

1.1.72                                     “Materials” has the meaning assigned to such term in Section 2.8.1.

 

1.1.73                                     “Material IP” means, collectively, (a) Patents Covering or claiming Materials and (b) Information pertaining specifically to Materials which, in each case (i) exist as of the date such Materials are transferred as provided in Section 2.8.1, or (ii) are conceived by the “Transferor” (as defined in Section 2.8.1) prior to its transfer of such Materials to the other Party as provided in Section 2.8.1.

 

1.1.74                                     “Medicis” has the meaning assigned to such term in the Preamble.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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1.1.75                                     “Medicis Compound” means any small molecule compound that (a) is introduced into the Program by Medicis during the Research Collaboration Term and was invented or conceived (as determined under the inventorship laws of the United States) solely by inventors who have assigned or agreed to assign their rights in such compound to Medicis, (b) is not based on or derived from an Anacor Compound and was not identified or conceived using Anacor’s Confidential Information, (c) is within the Field and (d) is a [ * ].

 

1.1.76                                     “Medicis Development Compound” means (a) the PoC Compound and any Provisional Back-Up Compounds, Lead Back-Up Compound or other Back-Up Compounds selected by Medicis for further Development in accordance with Sections 2.6.6(d) or 4.2.1(a), or (b) any Collaboration Compounds deemed Medicis Development Compounds pursuant to Section 2.4.1(c), 12.4.1, 12.5.2, 12.6.3(c) or 13.7.

 

1.1.77                                     “Medicis Development Compound IP” means, collectively, Medicis Development Compound Patents and Medicis Development Compound Know-How.

 

1.1.78                                     “Medicis Development Compound Know-How” means any Information pertaining to a Medicis Development Compound that is discovered, invented, created or developed on or after the date on which a Collaboration Compound becomes such Medicis Development Compound, solely by or on behalf of (a) a Party (or its agents or contractors), (b) the Parties jointly (or jointly through their respective agents or contractors), or (c) either or both of their respective Affiliates.

 

1.1.79                                     “Medicis Development Compound Patent” means, with respect to a Medicis Development Compound, any Patent in the Territory that claims or Covers an invention conceived or reduced to practice on or after the date on which a Collaboration Compound becomes such Medicis Development Compound and that (a) claims the composition of matter or method of making or use of such Medicis Development Compound, or (b) Covers the making, having made, using, selling, offering for sale or importing of such Medicis Development Compound.  For the avoidance of doubt: (i) any Patents with respect to a Medicis Development Compound shall be one of Anacor Compound Patents, Collaboration Compound Patents or Medicis Development Compound Patents; and (ii) Medicis Development Compound Patents may Cover compounds in addition to a Medicis Development Compound.

 

1.1.80                                     “Medicis IP” means, collectively, (a) Medicis Research Collaboration Patents, (b) Medicis Research Collaboration Know-How, (c) Medicis Target Patents, (d) Medicis Target Know-How, (e) Collaboration Compound IP owned or Controlled by Medicis or its Affiliates at any time during the Term; and (f) Medicis Development Compound IP owned or Controlled by Medicis or its Affiliates at any time during the Term.

 

1.1.81                                     “Medicis Research Collaboration Know-How” means any Information Controlled by Medicis or its Affiliates at any time during the Term that relates directly (but not necessarily exclusively) to a Collaboration Compound and is directly (but not necessarily exclusively) useful for Anacor to conduct its obligations under the Research Collaboration in accordance with the Research Plan.

 

1.1.82                                     “Medicis Research Collaboration Patents” means any Patents in the Territory Controlled by Medicis or its Affiliates on the Effective Date or at any time during the Term that claim or Cover the composition of matter or method of use of a Collaboration Compound and are directly (but not necessarily exclusively) useful for Anacor to conduct its obligations under the Research Collaboration in accordance with the Research Plan.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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1.1.83                                     “Medicis Research Compound” has the meaning assigned to such term in Section 5.3.

 

1.1.84                                     “Medicis Target Know-How” means any Information Controlled by Medicis or its Affiliates on the Effective Date or at any time during the Term (but excluding Collaboration Compound Know-How and Medicis Development Compound Know-How) that relates directly (but not necessarily exclusively) to the Target in the Field and is reasonably useful for Anacor to perform its obligations with respect to such Target under the Research Collaboration.

 

1.1.85                                     “Medicis Target Patents” means any Patents in the Territory Controlled by Medicis or its Affiliates on the Effective Date or at any time during the Term (but excluding Collaboration Compound Patents and Medicis Development Compound Patents) that claim or Cover the composition or use of the Target in the Field or that would otherwise be infringed (absent a license as provided herein) by Anacor’s performance of its obligations with respect to such Target under the Research Collaboration.

 

1.1.86                                     “MHLW” means the Ministry for Health, Labor and Welfare of Japan, or the Pharmaceutical and Medical Devices Agency (the “PMDA,” formerly known as Iyakuhin Iryokiki Sogo Kiko), or any successor to either of them, as the case may be.

 

1.1.87                                     “MHRA” means the Medicines and Healthcare products Regulatory Agency, an executive agency of the United Kingdom Department of Health.

 

1.1.88                                     “Mixed Patent” has the meaning assigned to such term in Section 5.3.

 

1.1.89                                     “NDA” means a New Drug Application (as more fully defined in 21 C.F.R.  314.5 et seq.  or its successor regulation) and all amendments and supplements thereto filed with the FDA.

 

1.1.90                                     “Necessary License” has the meaning assigned to such term in Section 6.4.2(c).

 

1.1.91                                     “Negotiation Period” has the meaning assigned to such term in Section 2.7.

 

1.1.92                                     “Net Sales”  means the total of the [ * ] price charged by Medicis, its Affiliates and Sublicensees for the sale of Products to Third Parties who are not Sublicensees less the following deductions, to the extent included in such invoiced amounts or accrued in accordance with GAAP:

 

·                                          cash, trade or quantity discounts, rebates, and government-required discounts and allowances granted to buyers (including governmental required rebates, such as, for example and without limitation, Medicaid rebates, institutional rebates, volume discounts, chargebacks, retroactive price adjustments and other reductions, concessions and allowances that effectively reduce the selling price; [ * ];

 

·                                          sales, use, tariffs, import/export duties or other excise taxes imposed on particular sales (excepting value added taxes or income taxes);

 

·                                          discounts and rebates paid or credited to buyers, Third Party payers, healthcare systems and administrators [ * ];

 

·                                          [ * ];

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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·                                          rebates and discounts paid or credited pursuant to applicable law;

 

·                                          transportation costs, including insurance and shipping, freight, and handling charges, to the extent included in the invoiced amount, and

 

·                                          allowances, refunds or credits to buyers because of rejections or returns (including withdrawals and recalls).

 

Net Sales shall also [ * ].  Net Sales will be calculated in a manner consistent with GAAP or at Medicis’s option similarly reputable local accounting principles prevailing in the countries of sale, consistently applied, and in any event amounts deducted shall be deducted only once regardless of whether it is identified more than once above.

 

1.1.93                                     “Non-breaching Party” has the meaning assigned to such term in Section 12.2.1.

 

1.1.94                                     “Non-Disclosure Agreement” has the meaning assigned to such term in Section 9.4.

 

1.1.95                                     “Offer Period” has the meaning assigned to such term in Section 2.7.

 

1.1.96                                     “Other Active Ingredient” means a therapeutically effective active pharmaceutical ingredient that is co-formulated or co-packaged with a Medicis Development Compound or Derivative thereof in a Product and which is neither the Medicis Development Compound nor part of the same molecule as that containing such Medicis Development Compound.  Drug delivery vehicles, adjuvants, and excipients shall not be deemed to be “therapeutically effective active pharmaceutical ingredients”.

 

1.1.97                                     “Party”  or  “Parties” has the meaning assigned to such term in the Preamble.

 

1.1.98                                     “Patent” means (a) all patents and patent applications in any country or supranational jurisdiction in the Territory, (b) any substitutions, divisions, continuations, continuations-in-part, provisional applications, reissues, renewals, registrations, confirmations, re-examinations, extensions, supplementary protection certificates and the like of any such patents or patent applications, and (c) foreign counterparts of any of the foregoing.

 

1.1.99                                     “Patent Costs” means the reasonable fees and expenses paid to outside legal counsel and other out-of-pocket expenses paid to Third Parties, incurred in connection with the Prosecution and Maintenance of Patents.

 

1.1.100                               “Person” means any individual, partnership, joint venture, limited liability company, corporation, firm, trust, association, unincorporated organization, governmental authority or agency, or any other entity not specifically listed herein.

 

1.1.101                               “Phase 1 Clinical Trial” means a clinical trial of a pharmaceutical product on subjects that generally provides for the introduction into humans of such product with the primary purpose of determining safety, metabolism and pharmacokinetic properties and clinical pharmacology of such product.

 

1.1.102                               “Phase 3 Clinical Trial” means one or more clinical trials on sufficient numbers of subjects, which trial(s) are designed to (a) establish that a drug is safe and efficacious for its intended use; (b) define warnings, precautions and adverse reactions that are associated with the drug in the dosage range to be prescribed; and (c) support Regulatory Approvals for such drug.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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1.1.103                               “PoC Compound” means a Candidate Selection Compound that the JRC determines has satisfied the PoC Compound Criteria.

 

1.1.104                               “PoC Compound Criteria” means proof of concept (“PoC”) criteria for selection of a clinical PoC Compound, as described in Section 2.6.4, which shall include, among other things, CMC, safety and efficacy standards.

 

1.1.105                               “PoC Option” has the meaning assigned to such term in Section 4.2.1(a).

 

1.1.106                               “PoC Option Deadline Extension Period” has the meaning assigned to such term in Section 4.2.2.

 

1.1.107                               “PoC Option Deadline Period” has the meaning assigned to such term in Section 4.2.1(a).

 

1.1.108                               “PoC Trial” means, with respect to any Candidate Selection Compound, a clinical trial of such Candidate Selection Compound that is reasonably designed to successfully meet the PoC Compound Criteria.  For clarity, the PoC Trial is intended only to demonstrate the safety, and to provide preliminary evidence of activity, of a particular Collaboration Compound, and is not necessarily intended to be a pivotal trial or to otherwise provide data sufficient to support Regulatory Approvals.

 

1.1.109                               “PoC Trial Report” has the meaning assigned to such term in Section 2.6.6(c).

 

1.1.110                               “Product” means any product that includes a Medicis Development Compound or Derivative thereof or a Medicis Compound, or any base form, prodrug, ester, salt form, crystalline polymorph, hydrate or solvate thereof, whether or not as the sole active ingredient and in any dosage, form or formulation.

 

1.1.111                               “Program” means the Research Collaboration activities conducted by Anacor pursuant to the Research Plan for the discovery, use, manufacture and Development of Anacor Compounds.

 

1.1.112                               “Prosecuting Party” has the meaning assigned to such term in Section 8.2.2.

 

1.1.113                               “Prosecution and Maintenance”  or  “Prosecute and Maintain” means, with regard to a Patent, the preparing, filing, prosecuting and maintenance of such Patent, as well as re-examinations, reissues, and requests for patent term adjustments and patent term extensions with respect to such Patent, together with the initiation or defense of interferences, the initiation or defense of oppositions and other similar proceedings with respect to the particular Patent.  For clarification, “Prosecution and Maintenance” or “Prosecute and Maintain” shall not include any other enforcement actions taken with respect to a Patent.

 

1.1.114                               “Provisional Back-Up Compound” has the meaning assigned to such term in Section 4.2.1.

 

1.1.115                               “Receiving Party” has the meaning assigned to such term in Section 9.1.

 

1.1.116                               “Regulatory Approval” means any and all approvals (including price and reimbursement approvals, if required prior to sale in the applicable jurisdiction), licenses, registrations, or authorizations of any country, federal, supranational, state or local regulatory agency, department, bureau or other government entity that are necessary for the manufacture, use, storage, import, transport or sale of a particular Product in the applicable jurisdiction.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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1.1.117                               “Regulatory Authority” means the FDA or any other health regulatory authority in any country in the Territory that is a counterpart to the FDA and holds responsibility for granting regulatory marketing approval for a Product in such country, and any successor(s) thereto, including but not limited to the EMA, MHLW, MHRA and BfArM.

 

1.1.118                               “Regulatory Exclusivity” means any exclusive marketing rights or data exclusivity rights conferred by any governmental authority by statute, regulation or other governmental action with respect to a Product in a country in the Territory, other than a Patent right, provided that such rights (a) are specific to the composition of the Product and not its use or indication and (b) prohibit the sale of such Product by Third Parties in such country.

 

1.1.119                               “Research Collaboration” means the program of research, discovery, characterization, optimization and nonclinical and clinical testing of Collaboration Compounds and Candidate Selection Compounds and the identification of a PoC Compound pursuant to this Agreement and the Research Plan, as described in Article 2.

 

1.1.120                               “Research Collaboration Term” has the meaning assigned to such term in Section 2.3.

 

1.1.121                               “Research Plan” has the meaning assigned to such term in Section 2.2.

 

1.1.122                               “Royalty Term” has the meaning assigned to such term in Section 6.4.3.

 

1.1.123                                “Scaffold” means a core chemical structure that includes one or more variable structural elements within or appended to the core structure (by insertion, deletion, substitution, or addition of one or more bonds or atoms, or otherwise).  Any molecule containing a Scaffold as part of its structure shall, for purposes of this Agreement, be deemed to be “based on such Scaffold,” regardless of the nature of the variable elements associated with the Scaffold.  The Scaffolds for the Collaboration Compounds as of the Effective Date are described in Exhibit 10.

 

1.1.124                               “Subcommittee” has the meaning assigned to such term in Section 3.1.6.

 

1.1.125                               “Sublicensee” means, with respect to a particular Medicis Development Compound or Product, a Third Party to whom Medicis has granted a sublicense or license under any Anacor Exclusively Licensed IP or Medicis IP, including distributors (through multiple tiers) of such Medicis Development Compound or Product.

 

1.1.126                               “Target” means the [ * ].

 

1.1.127                               “Term” has the meaning assigned to such term in Section 12.1.

 

1.1.128                               “Territory” means the entire world.

 

1.1.129                               “Third Party” means any Person other than Anacor or Medicis or an Affiliate of Anacor or Medicis.

 

1.1.130                               “Third Party License” has the meaning assigned to such term in Section 4.5.1.

 

1.1.131                               “Transfer Record” has the meaning assigned to such term in Section 2.8.1.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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1.1.132                               “United States”  or  “U.S.” means the United States of America.

 

1.1.133                               “Valid Claim” means any claim within an issued U.S. Patent or issued Patent in a jurisdiction outside the U.S. that has not expired, lapsed, been cancelled or abandoned, or been held unenforceable, invalid or cancelled by a court of competent jurisdiction in an order or decision from which no appeal has been or can be taken.

 

1.2                                 Rules of Construction.  Interpretation of this Agreement shall be governed by the following rules of construction: (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) references to the terms Article, Section, paragraph and Exhibit are references to the Articles, Sections, paragraphs and Exhibits of and to this Agreement unless otherwise specified, (iii) the terms “hereof,” “herein,” “hereby,” “hereto,” “hereunder” and derivative or similar words refer to this entire Agreement, including the Exhibits hereto, (iv) references to “$” shall mean U.S.  dollars, (v) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified, (vi) the word “or” shall not be exclusive, (vii) references to “written” or “in writing” include in electronic form, (viii) provisions shall apply, when appropriate, to successive events and transactions, (ix) the headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement, (x) the Parties have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or burdening any such Party by virtue of the authorship of any of the provisions in any of this Agreement, (xi) a reference to any person includes such person’s successors and permitted assigns, (xii) any reference to “days” means calendar days unless Business Days are expressly specified and (xiii) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded, and if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day.

 

ARTICLE 2

 

RESEARCH AND DEVELOPMENT COLLABORATION

 

2.1                                 Overview.  Pursuant to this Agreement and the Research Plan, and as further provided in this Article 2, Anacor will undertake the Research Collaboration, the scope of which is the discovery, identification and Development of compounds directed toward the Target, which compounds Medicis shall have certain options to exclusively license on a worldwide basis, as provided in Article 4.  The goal of the Research Collaboration will be to present to the JRC at least [ * ] JRC-approvable PoC Compound for consideration within [ * ] of the Effective Date.

 

2.2                                 Research Plan.  The Research Collaboration activities will be carried out by Anacor pursuant to an operating plan (the “Research Plan”), which will outline anticipated discovery, research, and nonclinical and clinical Development activities to be conducted by Anacor during the Research Collaboration Term, and shall include a mechanism for identification of promising Anacor Compounds, the structure of tests to be performed on such compounds and personnel commitments (if any).  The initial draft of the Research Plan is attached hereto as Exhibit 1.  From time to time during the Research Collaboration Term (but no less frequently than [ * ] per year), the JRC shall update the Research Plan (or applicable portions thereof).  Once approved by

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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the JRC, the updated Research Plan shall replace the Research Plan previously in effect.  The Research Plan will be reviewed as necessary at each meeting of the JRC, and at any other time upon the request of either Party, and may be modified by the JRC, as appropriate, to reflect material scientific or commercial developments.  In the event of any inconsistency between the Research Plan and this Agreement, the terms of this Agreement shall prevail and any such inconsistent portion of such Research Plan shall hereby be expressly rejected.

 

2.3                                 Research Collaboration Term.  The Research Collaboration shall commence at the Effective Date and shall expire upon the earlier of (a) Anacor’s completion of a PoC Trial and delivery of a PoC Trial Report to the JRC under Section 2.6.6(c), and (b) [ * ] after the Effective Date, unless extended upon Medicis’s election pursuant to Section 2.6.6(d), or unless earlier terminated as provided herein (the “Research Collaboration Term”).  Except as otherwise specified herein, upon the expiration of the Research Collaboration Term, all obligations of Anacor to conduct research pursuant to the Research Collaboration shall terminate (although Anacor’s requirement to participate on the JRC and consult following the JRC Term as provided in Section 3.1.5 shall not be affected by expiration of the Research Collaboration Term), but the other rights and obligations under this Agreement shall not otherwise be affected.

 

2.4                                 Research Efforts; Diligence.  During the Research Collaboration Term, Anacor shall use Diligent Efforts to discover and Develop Anacor Compounds and Medicis Compounds (if any) in accordance with the terms of this Agreement, the Research Plan and as reasonably directed by the JRC in accordance with the purposes of this Agreement, subject to Section 2.6.6(d).  Unless Medicis elects Back-Up Compound Development under Section 2.6.6(d), Anacor shall not be obligated to progress more than [ * ] to the stage of being approved as a Candidate Selection Compound.  Anacor shall not be obligated to progress more than [ * ] through completion of a PoC Trial.  Anacor shall document its activities hereunder in writing with reasonable detail and in accordance with the requirements of Section 2.9.2 and taking into account the obligations to provide the summaries, reports and other work product called for in Section 4.4.  In support of such Diligent Efforts, Anacor shall maintain and utilize scientific and technical staff, laboratories, offices and other facilities as needed to perform its Research Collaboration activities as set forth in the Research Plan.  Anacor shall use personnel with sufficient skills and experience as are required to accomplish efficiently and expeditiously the objectives of the Research Collaboration as set forth in the Research Plan in good scientific manner and in compliance in all material respects with all requirements of applicable laws, rules and regulations and in such number and with such expertise as specified in the Research Plan.  At any time reasonably requested by Medicis during the Research Collaboration Term, Anacor will promptly provide Medicis with any reasonably requested Information relating to its Diligent Efforts applied in fulfilling the Research Plan.

 

2.4.1                                           Anacor Diligence Failure Event.

 

(a)                                  If at any time during the Research Collaboration Term Anacor materially fails to conduct the Research Collaboration in accordance with the Research Plan and its diligence obligations in Sections 2.4, 2.6.6(a) or 2.6.6(d) (an  “Anacor Diligence Failure Event”), including for example, by failing to commence appropriate toxicology testing on one or more promising Anacor Compounds in accordance with the Research Plan or by allocating materially insufficient resources for Development activities hereunder, then Medicis shall have the right to allege an Anacor Diligence Failure Event by providing written notice of same to Anacor, such notice setting forth the basis for such alleged failure of diligence.  For clarity, any delay or failure to achieve a milestone or deliverable set forth in the Research Plan, to the extent caused by a scientific or technical failure or difficulty, shall not be considered a breach of this Agreement so long as Anacor is conducting the activities set forth in the Research Plan that are instructed by results of previous activities under the Research Plan.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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(b)                                 Subject to Sections 2.4.2 and 12.2.3, upon receipt of notice of an Anacor Diligence Failure Event, Anacor shall have [ * ] within which to cure such Anacor Diligence Failure Event; [ * ]

 

(c)                                  Subject to Sections 2.4.2 and 12.2.3, if Anacor has not cured an Anacor Diligence Failure Event by the conclusion of the applicable [ * ], [ * ], Medicis shall have the following rights:

 

(i)                                     If such Anacor Diligence Failure Event occurred with respect to activities other than Development efforts conducted under Section 2.6.6(d) with respect to Back-Up Compounds and is therefore prior to achievement of the PoC Criteria by a Collaboration Compound, Medicis shall have the right to immediately terminate the Research Collaboration Term upon written notice to Anacor.  Notwithstanding anything to the contrary in this Agreement, Anacor shall have no further obligations to conduct the Program as of the effective date of termination of the Research Collaboration Term by Medicis under this Section 2.4.1(c)(i).  Upon any such termination of the Research Collaboration Term by Medicis under this subsection (c)(i), (A) all Collaboration Compounds identified prior to said termination date shall be deemed to be Medicis Development Compounds, and (B) subject to the terms and conditions of this Agreement, Anacor shall grant and does hereby grant, as of the effective date of such termination and election by Medicis, an exclusive (even as to Anacor and its Affiliates), worldwide license (with the right to grant sublicenses) under the Anacor Exclusively Licensed IP, to make, have made, use, sell, offer for sale and import such Medicis Development Compounds and Derivatives thereof as and into Products in the Territory during the Term. Medicis will have the right to continue the Development of any such deemed Medicis Development Compounds as of such termination event on its own or through Sublicensees.  Following any termination of the Research Collaboration Term by Medicis under this Section, Medicis shall pay to Anacor (x) a royalty on Annual Net Sales of Products at a rate that is equal to [ * ] of the applicable royalty rates set forth in Section 6.4 and (y) non-royalty payments at a rate that is equal to [ * ] of the applicable rate set forth in Section 6.5.  Medicis shall further pay to Anacor [ * ] of the applicable milestone payments due under Sections 6.2 or 6.3 for any milestones achieved subsequent to Medicis’s termination under this Section.

 

(ii)                                  If such Anacor Diligence Failure event occurred with respect to Development efforts conducted under Section 2.6.6(d) for a particular Back-Up Compound, Medicis shall have the right to immediately terminate Anacor’s Development of such Back-Up Compound upon written notice to Anacor.  Upon any such termination under this subsection (c)(ii), if Medicis has not previously exercised the PoC Option, (A) such Back-Up Compound shall be deemed to be a Medicis Development Compound, (B) subject to the terms and conditions of this Agreement, Anacor shall grant and does hereby grant, as of the effective date of such termination and election by Medicis, an exclusive (even as to Anacor and its Affiliates), worldwide license (with the right to grant sublicenses) under the Anacor Exclusively Licensed IP, to make, have made, use, sell, offer for sale and import such Medicis Development Compound and Derivatives thereof as and into Products in the Territory during the Term, and (C) such Medicis Development Compound shall be in addition to the [ * ] Medicis Development Compounds under Section 4.2.1(a).  Medicis will have the right to continue the Development of any such Medicis Development Compound as of such termination event on its own or through Sublicensees.  Following any termination of development of a Back-Up Compound by Medicis under this Section, Medicis shall pay to Anacor (x) a royalty on Annual Net Sales of Products containing such Back-Up Compound at a rate that is equal to [ * ] of the applicable royalty rates set forth in Section 6.4 and (y) non-royalty payments attributable to such Back-Up Compound at a rate that is equal to [ * ] of the applicable rate set forth in Section 6.5.  Medicis shall further pay to Anacor [ * ] of the applicable milestone payments due under Section 6.2 for any milestones achieved by a Product containing such Back-Up Compound subsequent to Medicis’s termination under this Section.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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(d)                                 The Parties understand and agree that, due to the nature of the collaboration under this Agreement, damages to Medicis resulting from a material breach by Anacor of its diligence obligations under Section 2.4 or 2.6.6(d) would be difficult to calculate accurately, and thus the remedies set forth in this Section 2.4.1 represent a rational relationship between the damages from the material breach by Anacor of its diligence obligations on the one hand, and the cumulative loss to Medicis of its expectation interest, its lost investment and its lost potential return on investment due to the upfront payment and milestone payments made.  The remedies set forth in this Section 2.4.1, if elected by Medicis, shall be Medicis’s sole and exclusive remedies for an Anacor Diligence Failure Event.

 

2.4.2                                           Disputes Relating To Alleged Anacor Diligence Failure Events.  In the event that Anacor, in good faith, disputes the existence of an Anacor Diligence Failure Event, Anacor shall have the right to submit such dispute to the Executive Officers in accordance with Section 13.1 within [ * ] after receipt of notice of a termination under Section 2.4.1(c)(i) or (ii) from Medicis.  If the Executive Officers are unable to resolve the dispute, Anacor decides to resolve such dispute through arbitration as provided in Section 13.2, and the adjudication by arbitration pursuant to Section 13.2 or settlement of such dispute is solely in Medicis’s favor, the license described in Section 2.4.1(c)(i) or (ii) shall be thereafter be deemed granted subject to the terms and conditions of this Agreement, and Anacor will be responsible for [ * ] of Medicis’s reasonable and documented costs in adjudicating the arbitration, which shall immediately become due and payable.  If the adjudication by arbitration pursuant to Section 13.2 or settlement of such dispute is solely in Anacor’s favor, any license described in Section 2.4.1(c)(i) or (ii) shall be revoked, and Medicis will be responsible for [ * ] of Anacor’s reasonable and documented costs in adjudicating the arbitration, which shall immediately become due and payable, provided that during the entire time pending the final resolution of any such dispute, Medicis shall not be responsible for making payments hereunder and Anacor shall not have any obligations to conduct further work under the Research Collaboration, and Anacor shall not grant any license to any Third Party under any Anacor Exclusively Licensed IP with respect to the same subject matter as, nor take any other action or inaction that would conflict or otherwise interfere with, the potential exclusive license to Medicis described under Section 2.4.1(c)(i) or (ii), as applicable.

 

2.5                                 Additional Target; Additional Scaffolds.

 

2.5.1                                           If (a) either Party identifies another [ * ] during the Research Collaboration Term that [ * ]  [ * ]  [ * ]  [ * ] and is not encumbered by a pre-existing agreement between Anacor and a Third Party or (b) a PoC Compound has not been selected and the JRC recommends that a new target be evaluated or selected instead of the Target, then in either case, the JRC may propose an amendment to this Agreement modifying or adding such additional target (the “Additional Target”), as well as additional conforming changes; provided, however, that (i) such Additional Target under clause (b) shall be selected within [ * ] after the JRC determines by consensus not to pursue the Target, and (ii) such amendment shall require mutual written consent of the Parties in accordance with the requirements of Section 13.12.  Any amendment of the Agreement pursuant to this Section 2.5 shall include reasonable payments to Anacor (including upfront and milestone payments and royalties) for its anticipated contributions; provided that “reasonable payments” shall be deemed to consist of (a) [ * ], in consideration for exclusivity with respect to such Additional Target at the time of addition of such Additional Target under this Agreement substantively equivalent to the exclusivity with respect to the Target under Sections 7.1 and 7.2, and (b) the [ * ] due to Anacor hereunder, unless in either case (a) and (b) either Party can demonstrate a compelling justification for an alternative payment structure.  If an Additional Target is approved by the Parties as set forth herein the JRC shall update the Research Plan accordingly within [ * ] of such approval to reflect the anticipated discovery, research, and nonclinical and clinical Development activities to be conducted by Anacor in connection with such Additional Target.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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2.5.2                                           If, during the Research Collaboration Term, either Party identifies a compound that (a) [ * ], (b) [ * ]  [ * ]  [ * ], (c) is not encumbered by a pre-existing agreement between Anacor and a Third Party and (d) does not contain one of the Scaffolds listed in Exhibit 10, the Parties may amend Exhibit 10 to add the Scaffold on which such compound is based as a Collaboration Compound Scaffold, as well as additional conforming changes to this Agreement.  If the Parties so amend Exhibit 10, the JRC shall also update the Research Plan accordingly within [ * ] of such amendment to reflect the anticipated discovery, research, and nonclinical and clinical Development activities to be conducted by Anacor in connection with such new Collaboration Compound Scaffold; provided that, if such amendment occurs after Anacor has [ * ], then such efforts [ * ].  In any event, to the extent that such identified compound does not satisfy the definition of Anacor Compound or Medicis Compound, the Scaffold shall no longer be considered a Collaboration Compound Scaffold.

 

2.6                                 Development of Collaboration Compounds.

 

2.6.1                                           Anacor Responsibility.  Prior to Medicis’s exercise of its PoC Option, Anacor shall have primary responsibility for conducting the nonclinical and clinical Development activities for each Collaboration Compound in connection with the Program (including clinical trials and submissions to Regulatory Authorities) in accordance with this Agreement, the Research Plan and as reasonably directed by the JRC in accordance with the purposes of this Agreement.

 

2.6.2                                           Additional Development Work by Medicis.  During the Research Collaboration Term Medicis may conduct additional research (directly or through subcontractors or Sublicensees) on Collaboration Compounds in support of the Research Plan, provided that such research is conducted under the guidance of the JRC and any results of such research are reported to the JRC and further provided that Medicis will bear all responsibility for any costs associated with such additional research.  At Medicis’s cost and expense, Anacor will provide any reasonable assistance requested by Medicis in connection with such additional research, subject to Medicis’s payment to Anacor of reasonable compensation for such assistance in an amount agreed by the Parties at the time of request.  Such assistance may include providing reasonable sample quantities of compounds to Medicis or its Sublicensees, it being understood that Anacor may, if required, manufacture or have manufactured compounds to the extent not then currently available in the quantities requested.

 

2.6.3                                           Encumbered Compounds.  Anacor shall not include in the Program an Anacor Compound that is encumbered by a grant of rights to a Third Party for an indication outside the Field.

 

2.6.4                                           Candidate Selection Criteria; PoC Compound Criteria.  The Parties acknowledge and agree that the selection criteria for Candidate Selection Compounds (the “Candidate Selection Criteria”) and the initial criteria for PoC Compounds (the “PoC Compound Criteria”) are attached hereto as Exhibits 2 and 3, respectively.  The Candidate Selection Criteria and PoC Compound Criteria may be amended by the Parties as set forth in Section 3.1.4(c).  The Parties anticipate that the PoC Compound Criteria will be amended upon recommendation from the JRC, with the aim to define a set of criteria that best enables the Parties to select a PoC Compound and other Medicis Development Compound(s) with the greatest likelihood of success in Development, as the understanding of the Program increases during the Research Collaboration Term, such as on the first achievement of Candidate Selection Criteria, the filing of an IND by Anacor for a Candidate Selection Compound, or the failure of a Candidate Selection Compound to achieve desired endpoints in a clinical trial.

 

2.6.5                                           Reports and Information.  During the Research Collaboration Term, Anacor shall provide reasonable written progress updates at each meeting of the JRC on the status of activities within the

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Program.  Without limiting the foregoing, Anacor shall notify the JRC in a timely fashion upon including any Anacor Compound as a Collaboration Compound (other than Collaboration Compounds [ * ].

 

2.6.6                                           Evaluation of Candidate Selection Activities and PoC Trial Results.

 

(a)                                  Development Funnel.  Anacor shall use Diligent Efforts to evaluate and test a number of promising Anacor Compounds or Medicis Compounds in accordance with the Research Plan and shall present regular written summaries of the results to the JRC as provided in Section 2.6.5; provided, however, that Anacor shall not be obligated to conduct [ * ].  Notwithstanding the foregoing, if at the time of [ * ], the JRC reasonably believes that Anacor has not Developed a reasonable number of other viable Collaboration Compounds that have the potential to serve as possible Lead Back-Up Compounds or other Back-Up Compounds, the JRC shall modify the Research Plan to include reasonable additional screening or lead optimization activities by Anacor, [ * ].  In any event, any failure by the JRC to reach consensus on any modification of the Research Plan to include such additional activities shall not be deemed a breach of this Agreement by Anacor.  Anacor shall identify to the JRC all Collaboration Compounds.  In the event that Anacor determines that a Collaboration Compound meets the Candidate Selection Criteria, Anacor shall promptly notify Medicis in writing of such event and shall provide to the JRC, not less than [ * ] prior to the next regularly scheduled meeting, a data package containing a reasonably complete set of analyses, results and raw data from the Candidate Selection Activities for such Collaboration Compound and related correspondence or Information received from or sent to any Regulatory Authority relating to such Collaboration Compound, if any (collectively, for the purpose of this Section 2.6.6(a), the “Candidate Selection Activities Report”).  The JRC will, at its next regularly scheduled meeting or at an ad hoc meeting scheduled by the JRC (and in any event within [ * ] after the JRC’s receipt of the Candidate Selection Activities Report), review the Candidate Selection Activities Report to confirm whether the Collaboration Compound meets the Candidate Selection Criteria.  If the JRC determines that the Collaboration Compound did not meet the Candidate Selection Criteria, Medicis shall nonetheless have the right to deem such Collaboration Compound a Candidate Selection Compound by paying the applicable milestone payment set forth in Section 6.2.1 (it being understood that Anacor shall not be obligated to conduct additional Development of such Collaboration Compound unless and until such election and payment are made by Medicis).

 

(b)                                 PoC  Trial Design.  Medicis shall prepare an initial PoC Trial design for the applicable Candidate Selection Compound, for review, modification and approval by the JRC.  Such PoC Trial shall include the requirements of the Phase 1 Study Synopsis and PoC Trial Synopsis, attached hereto as Exhibit 5.  For clarity, Anacor shall not be obligated to conduct more than [ * ] or more than [ * ].

 

(c)                                  PoC Compound Confirmation.  The JRC will select among the Candidate Selection Compounds to determine which one(s) will be developed to the stage of filing an IND and which one will be evaluated in a PoC Trial.  Following the PoC Trial, Anacor shall promptly notify Medicis in writing and shall provide to the JRC a data package containing all analyses, results and raw data from the PoC Trial for such Candidate Selection Compound, and any related correspondence or Information received from or sent to any Regulatory Authority relating to such Candidate Selection Compound (collectively, the “PoC Trial Report”).  Unless otherwise agreed to by the Parties, the JRC will schedule an ad hoc meeting not more than thirty [ * ] after receipt of such PoC Trial Report to review such PoC Trial Report and determine whether or not such Candidate Selection Compound meets the PoC Compound Criteria.  If the JRC agrees that the Candidate Selection Compound meets the PoC Compound Criteria, Medicis shall have a right to exercise its PoC Option pursuant to Section 4.2.1(a).  If the JRC determines that the Candidate Selection Compound did not meet the PoC Criteria, Medicis shall nonetheless have the right to deem such Collaboration Compound a PoC Compound and exercise the PoC Option for such Candidate Selection Compound pursuant to Section 4.2.1(a).  If, during

 

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the Research Collaboration Term, a Candidate Selection Compound completes a PoC Trial and does not satisfy the PoC Compound Criteria, [ * ].

 

(d)                                 Back-Up Development. In addition to the Development required in Section 2.4 above, at Medicis’s written election prior to the earlier of (i) [ * ] of the Effective Date and (ii) first NDA approval of a Product by FDA (the “Back-Up Compound Election Term”), at Anacor’s sole cost and expense (but subject to the milestone payments set forth in Section 6.2.2), Anacor shall use Diligent Efforts to provide such Development services as Medicis may find necessary or useful to progress [ * ] additional Collaboration Compound selected by Medicis (the “Lead Back-Up Compound”) to the stage where Medicis may prepare an IND for submission (which activities by Anacor will not include Anacor’s conduct of any human clinical trial) and up to [ * ] additional Collaboration Compounds selected by Medicis (each a “Back-Up Compound”) to the stage of being approved by the JRC as Candidate Selection Compounds pursuant to subsection (a) above; provided, however, that Medicis may make such elections as follows: the first such election for a Back-Up Compound may be made no sooner than [ * ] following commencement of the [ * ] referenced on page 3 of the Research Plan and no later than [ * ] after the [ * ], and each subsequent election for a different Back-Up Compound may be made no earlier than [ * ] after the previous election.  For clarity, each such election shall be for one (1) Back-Up Compound only.  At the time of Medicis’s election under this Section, the Parties shall amend the Research Plan and shall mutually agree whether an extension of the Research Collaboration Term is necessary to complete the associated Development work; provided that the Research Collaboration Term may not be extended beyond [ * ] after the Effective Date.  Any such extension of the Research Collaboration Term shall be agreed in writing by the Parties pursuant to Section 13.12.  For the avoidance of doubt, Anacor shall not continue any such Development work beyond achievement of the milestone events identified above for each Lead Back-Up Compound or other Back-Up Compound.  Should Medicis make an election under this Section, Anacor’s resulting diligence obligation shall continue until the earlier of: (A) [ * ], (B) [ * ] or (C) for the applicable Back-Up Compound only, the JRC’s decision to terminate development of such Back-Up Compound.  Following Medicis’s election hereunder, at any time during the Back-Up Compound Election Term, Medicis may, upon notice to Anacor, substitute any of the Lead Back-Up Compounds or other Back-Up Compounds in lieu of the PoC Compound elected under Section 4.2.1 or substitute a different Collaboration Compound in lieu of the initially elected Lead Back-Up Compound or other Back-Up Compound. If such substitution occurs after the PoC Option has been exercised by Medicis, such substitution shall not obligate Anacor to conduct any additional Development activities or in any way affect the payments due to Anacor hereunder.  If such substitution occurs before the PoC Option has been exercised, Anacor shall Develop the Collaboration Compound(s) substituted by Medicis hereunder in lieu of the previously designated Lead Back-Up Compound or other Back-Up Compound; [ * ]; and provided further that each applicable milestone payment under Section 6.2.2 shall be due for each such Collaboration Compound, regardless of whether such milestone was paid for the Back-Up Compound that was replaced by such Collaboration Compound.  Notwithstanding anything to the contrary herein, the total number of Collaboration Compounds for which Medicis may request Development services under this Section 2.6.6(d) is [ * ].  Upon receipt of such notice of substitution, Anacor’s diligence obligations (as well as any applicable license grants under Section 4.2.1) hereunder shall apply to the newly elected Lead Back-Up Compound or other Back-Up Compound(s) and shall terminate for the previously elected Lead Back-Up Compound or other Back-Up Compound(s).

 

2.7                                 Development of Additional Compounds.  From the Effective Date through the PoC Option Deadline Period and, if Medicis exercises its PoC Option, extending through [ * ] from the Effective Date, should Anacor identify any compound that Anacor desires to make, have made, use, sell, offer for sale, import or otherwise exploit as [ * ] for treating [ * ] (an “Additional Compound”) or grant rights to any Third Party to do so,  Medicis shall have a right of first offer with respect to such Additional Compound, as follows: Anacor

 

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shall notify Medicis in writing and Medicis shall have the right to present a written proposal (including financial and other terms) to Anacor regarding the rights to such Additional Compound.  Medicis shall have [ * ] after receipt of such notice from Anacor (the  “Offer Period”), to respond with (a) a written proposal or (b) a notice that it intends to submit a written proposal within [ * ] followed by a proposal within such [ * ] period.  If Medicis fails to provide such proposal within the specified time period, then Anacor shall be deemed to have fulfilled its obligations under this Section 2.7 and shall be free to offer a Third Party the right to make, have made, use, sell, offer for sale, import or otherwise exploit such Additional Compound, or make, have made, use, sell, offer for sale, import or otherwise exploit such Additional Compound itself, so long as doing so is not in violation of Anacor’s obligations under Section 7.1.  If Medicis submits a written proposal with respect to an Additional Compound hereunder, Anacor shall negotiate with Medicis for a period of at least [ * ] (the “Negotiation Period”).  If a definitive agreement with respect to such Additional Compound is not consummated within such Negotiation Period, subject to any obligations Anacor may have under Section 7.1, Anacor shall be free to (i) offer a Third Party rights to make, have made, use, sell, offer for sale, import or otherwise exploit such Additional Compound [ * ], or (ii) make, have made, use, sell, offer for sale, import or otherwise exploit such Additional Compound itself.  For clarity, this Section 2.7 is not intended and shall not be interpreted to limit or affect Anacor’s obligation under Section 7.1.

 

2.8                                 Material Transfer.

 

2.8.1                                           Transfer.  To facilitate the Research Collaboration, either Party (the “Transferor”) shall, upon request by the other Party (“other Party”), provide the other Party (collectively, the “Recipient”) certain biological materials or chemical compounds, such as cell-based assays or research tools owned by or licensed to the Transferor (such materials or compounds provided hereunder are referred to, collectively, as “Materials”) (a) for use by the Recipient in furtherance of the Research Collaboration pursuant to the Research Plan or (b) where the other Party is Medicis, for verification and validation of test results reported by Anacor.  All transfers of such Materials by the Transferor to the Recipient shall be documented in writing (the “Transfer Record”), which Transfer Record shall set forth the type and name of the Material transferred, the amount of the Material transferred, the date of the transfer of such Material and the proposed use of such Material by the Recipient.

 

2.8.2                                           Ownership; Use.  Except as otherwise provided under this Agreement, all such Materials delivered by the Transferor to the Recipient shall remain the sole property of the Transferor and shall only be used by the Recipient in furtherance of the Research Collaboration, provided, however, that the Recipient may provide such Materials to a Third Party laboratory for verification and validation of test results in accordance with Section 2.8.1; provided that the Recipient shall not disclose the chemical structure of the Materials to such Third Party laboratory and shall require the Third Party laboratory, prior to receiving any Materials, to enter into an agreement with the Recipient assigning all of its rights in the results of the testing, and any inventions made in the course of or as a result of conducting such testing, to the Recipient.  Other than as provided herein, the Recipient shall not cause the Materials be used or delivered to or for the benefit of any Third Party without the prior written consent of the Transferor.  Further, the Recipient shall not use the Materials in research or testing involving human subjects, unless expressly agreed by the Transferor in writing.

 

2.8.3                                           License.  At the time the Transferor provides Materials to the Recipient as provided herein, the Transferor shall grant, and hereby does grant to the Recipient, subject to the terms and conditions of this Agreement, a non-exclusive license under the Material IP Controlled by the Transferor or its Affiliates to use such Materials for the purpose set forth in the Transfer Record.  In any event, Material IP shall not become nor be deemed Collaboration Compound IP solely by virtue of the transfer.

 

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2.8.4                                           Prosecution; License Back.  Subject to Article 8, the Transferor shall have sole control over all matters pertaining to the Prosecution and Maintenance of Material IP and the defense and enforcement of any Patents included in the Material IP, in each case which Material IP is Controlled by such Transferor or its Affiliates.  In the event that the Recipient conceives an invention based on its use of any Materials from the Transferor as provided in the Transfer Record and obtains Patent protection therefor, any such Patents shall not fall within the Material IP Controlled by the Transferor or its Affiliates.  However, subject to the terms and conditions of this Agreement, the Recipient shall grant and hereby does grant to the Transferor and its Affiliates a non-exclusive, non-sub-licensable, perpetual, worldwide, fully-paid and royalty-free license, under all of the Recipient’s rights in and to such Patents and specifically related know how, to conduct any research, Development or commercial activities outside the scope of this Agreement (provided that if Medicis is the Transferor, such license shall only be outside the Field).

 

2.8.5                                           DISCLAIMER.  THE MATERIALS SUPPLIED BY THE TRANSFEROR UNDER SECTION 2.8.1 ARE SUPPLIED “AS IS” AND THE TRANSFEROR MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE MATERIALS DOES NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER PROPRIETARY RIGHTS OF A THIRD PARTY.

 

2.8.6                                           Liability.  The Recipient assumes all liability for damages which may arise from its use, storage or disposal of the Materials.  The Transferor will not be liable to the Recipient for any loss, claim or demand made by the Recipient, or made against such Recipient by any Third Party, due to or arising from the use, storage or disposal of the Materials except, to the extent permitted by law, when caused by the gross negligence or willful misconduct of the Transferor.

 

2.8.7                                           Clinical Testing and Supply.  The provisions of this Section 2.8 shall not apply to any materials to be used for clinical testing.

 

2.9                                 Regulatory Matters; Compliance.

 

2.9.1                                           Compliance.  Each Party shall conduct all nonclinical activities, pre-clinical activities and clinical trials in good scientific manner, and in compliance in all respects with all requirements of applicable United States laws, rules and regulations, as well as all applicable laws, rules and regulations of other nations with jurisdiction over the nonclinical activities, pre-clinical activities and clinical trials, and all other applicable requirements of cGMP, cGLP and cGCP.

 

2.9.2                                           Data Integrity.

 

(a)                                  Anacor acknowledges the importance to Medicis of ensuring that the Program is undertaken in accordance with the following good data management practices:

 

(i)                                     data is being generated using sound scientific techniques and processes;

 

(ii)                                  data is being accurately and reasonably contemporaneously recorded in accordance with good scientific practices by Persons conducting research hereunder;

 

(iii)                               data is being analyzed appropriately without bias in accordance with good scientific practices; and

 

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(iv)                              data and results are being stored securely and can be easily retrieved.

 

(b)                                 Anacor agrees that it shall use Diligent Efforts to carry out the Research Collaboration so as to collect and record any data generated therefrom in a manner consistent with the requirement set forth in subsection (a) above.

 

2.9.3                                           Ownership.  Anacor shall own and maintain all regulatory filings for Collaboration Compounds Developed during the Research Collaboration Term pursuant to this Agreement, including all INDs.  In the event that any Regulatory Authority requests a teleconference, videoconference, or meeting with Anacor with respect to a particular Collaboration Compound during the Research Collaboration Term, Anacor shall provide Medicis with prompt notice and shall endeavor to coordinate an opportunity for the Parties to jointly strategize with respect to the handling of the teleconference, videoconference, or meeting.  Anacor shall orally present the Parties’ position(s) at such teleconference, videoconference, or meeting and shall use reasonable efforts to communicate with the Regulatory Authority regarding any Collaboration Compound in such a manner as mutually agreed at such joint strategy session.  One or more representative(s) of Medicis’s choice may appear as a [ * ] participant at any such teleconference, videoconference, or meeting.  Anacor shall not [ * ] a Regulatory Authority on any matter relating to a Collaboration Compound without consulting with Medicis and providing Medicis with at least [ * ], to the extent practicable and permitted by the applicable Regulatory Authority; provided, however, that Anacor shall not [ * ].  Upon exercise by Medicis of its PoC Option with respect to a Collaboration Compound, Anacor (or its successor in the event of a Change of Control) shall transfer ownership of such regulatory filings for such Medicis Development Compounds, including all relevant INDs, to Medicis, and shall provide Medicis with (i) copies of such INDs and other regulatory filings and all final study reports for clinical trials of such Medicis Development Compounds within [ * ], and (ii) all other nonclinical and clinical data and results (including pharmacology, toxicology, formulation, and stability studies) related to such Medicis Development Compounds as soon as reasonably practicable, in accordance with Section 4.4.  Thereafter, Medicis (or one of its Affiliates) shall own and maintain all regulatory filings and Regulatory Approvals for Medicis Development Compounds.

 

2.9.4                                           Adverse Event Reporting.  Beginning on the Effective Date and continuing during the Term until such time, if any, that Medicis exercises its PoC Option with respect to a Collaboration Compound, or until such time, if any, that Medicis exercises its right to terminate the Research Collaboration under Section 2.4.1(c), 12.4.1 12.5.2, 12.6.3(c) or 13.7, Anacor shall be responsible, at Anacor’s sole cost, for investigating and monitoring all adverse drug reaction experiences related to a Collaboration Compound in connection with the activities of Anacor under this Agreement and for reporting all serious adverse events to the appropriate Regulatory Authorities in the countries in the Territory in which the Collaboration Compound is being Developed, in accordance with the appropriate laws and regulations of the relevant countries and Regulatory Authorities.  Anacor shall provide Medicis notice of any serious adverse events within [ * ] and notice of any other adverse events as soon as reasonably practicable, and shall provide copies of all reports of serious adverse events filed with a Regulatory Authority within [ * ] after the applicable event.  Anacor shall, at Anacor’s sole cost, comply with any requests for remedial action required by a Regulatory Authority with respect to a Collaboration Compound.  Through the JRC, Medicis shall have the right to review from time to time Anacor’s pharmacovigilance policies and procedures.  Medicis and Anacor agree to cooperate and use good faith efforts to ensure that data from Anacor’s adverse event database is organized in a format reasonably acceptable to Medicis.  Anacor shall provide to Medicis consolidated written summaries of the data and information set forth in such database regarding all adverse events at least quarterly.  Commencing on the date that Medicis exercises its PoC Option, or until such time, if any, that Medicis exercises its right to terminate the Research Collaboration under Section 2.4.1(c), 12.5.2, 12.4.1, 12.6.3(c) or 13.7, at Medicis’s reasonable request and

 

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expense, Anacor shall cooperate with Medicis on all matters relating to conduct of adverse event reporting/pharmacovigilance in respect of any Medicis Development Compound.

 

2.10                           Research Collaboration Costs.  Each Party shall bear its own costs in connection with performing Research Collaboration activities.

 

2.11                           Subcontracting.  Subject to the terms of this Agreement, each Party shall have the right to engage Affiliates or Third Party subcontractors to perform certain of its obligations under this Agreement.  Any Affiliate or subcontractor to be engaged by a Party to perform a Party’s obligations set forth in the Agreement shall meet the qualifications typically required by such Party for the performance of work similar in scope and complexity to the subcontracted activity.  Notwithstanding the preceding, any Party engaging an Affiliate or subcontractor hereunder shall remain principally responsible and obligated for such activities.  In addition, any Party engaging a subcontractor shall in all cases retain or obtain Control of any and all intellectual property created by or used with the relevant Party’s permission by such subcontractor directly related to such subcontracted activity.  However, it is understood that, in some cases, it may not be commercially reasonable for such Party to obtain exclusive Control of trade secrets or know-how to be created by such subcontractor.  To the extent that such exclusive rights cannot be obtained with respect to any intellectual property from any such subcontractor, prior to entering into such arrangement with such subcontractor, such Party shall bring such matter to the JRC for a determination of whether to enter into such arrangement.

 

ARTICLE 3

 

MANAGEMENT OF THE COLLABORATION

 

3.1                                 Joint Research Committee.  The business and affairs of the Parties’ collaboration hereunder shall be primarily coordinated by a committee (the “Joint Research Committee” or  “JRC”) as more fully described in this Section 3.1.  The JRC shall have review and oversight responsibilities for all Development activities within the Research Collaboration.  Each Party agrees to keep the JRC informed of its progress and activities under the Program.

 

3.1.1                                           Membership.  The JRC shall be comprised of [ * ] (each, a “Representative”).  The initial representatives for each Party shall be provided via written notice to the other Party within [ * ] of the Effective Date.  Each Party may replace any or all of its Representatives at any time upon written notice to the other Party in accordance with Section 13.8 of this Agreement.  Each Representative of each Party shall have expertise (either individually or collectively) in pharmaceutical drug discovery and development.  Any Representative may designate a substitute to attend and perform the functions of that member at any meeting of the JRC.  Each Party may, in its reasonable discretion, invite non-member representatives of such Party to attend meetings of the JRC as a non-voting participant, subject to the confidentiality obligations of Article 9.  Medicis shall designate one of its Representatives as a chairperson (each, a “Chairperson”) to oversee the operation of the JRC and prepare minutes.  The Chairperson shall prepare and circulate to the JRC members an agenda for each meeting reasonably in advance of such meeting.  The JRC shall have the right to remove a Representative by a vote of the members in accordance with Section 3.1.3.  The Party of a removed Representative shall appoint a new Representative in accordance with this Section 3.1.1 within [ * ] of the removal.  Should a Party fail to appoint a new Representative within such [ * ] period, the JRC shall nevertheless be deemed operational without such new Representative following such [ * ] period.

 

3.1.2                                           Meetings.  Subject to Section 3.1.5, during the JRC Term, the JRC shall meet in person or otherwise at least once each Calendar Quarter, and more frequently as the Parties mutually deem

 

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appropriate, on such dates, and at such places and times, as provided herein or as the Parties shall agree.  Meetings of the JRC that are held in person shall alternate between the offices of the Parties, or such other place as the Parties may agree.  The members of the JRC also may convene or be polled or consulted from time to time by means of telecommunications, video conferences, electronic mail or correspondence, as the Parties deem necessary or appropriate.  Each Party will bear all expenses it incurs in regard to participating in all meetings of the JRC, including all travel and living expenses.

 

3.1.3                                           Decisions.  All decisions of the JRC shall be made by consensus, with each Party having collectively one (1) vote in all decisions, with a quorum requiring the presence of one or more Representatives from each Party and [ * ]; provided, however, that if consensus cannot be obtained Medicis shall have the determinative vote in (a) deciding whether a particular Anacor Compound or Medicis Compound should be included in the Program (but subject to clause (i) below); (b) selecting among the Candidate Selection Compounds to determine which ones will be developed to the stage where an IND may be filed and which one will be evaluated in a PoC Trial, and (c) designing a PoC Trial; and  provided further, that Medicis shall not have the right to [ * ] without the prior written consent of Anacor.  For clarity, amendments to the Candidate Selection Criteria or PoC Compound Criteria require the Parties’ mutual written agreement.

 

3.1.4                                           Responsibilities.  During the JRC Term the JRC shall perform the following functions, some or all of which may be addressed directly at each meeting of the JRC:

 

(a)                                  review and coordinate all activities under the Program;

 

(b)                                 review the progress of the Program against the Research Plan and related budget;

 

(c)                                  recommend revisions of the Candidate Selection Criteria or PoC Compound Criteria based on developments in the Field or in the Program (including after any failure of a Candidate Selection Compound to achieve the PoC Compound Criteria), provided that any such revisions must be agreed in writing by the Parties before taking effect;

 

(d)                                 prepare, review, modify, update and approve the PoC Trial design consistent with the synopses in Exhibit 5;

 

(e)                                  review, comment on, approve and update the Research Plan and related budget;

 

(f)                                    advise whether particular Anacor Compounds or Medicis Compounds should be introduced into, progressed within or prioritized (in relation other Collaboration Compounds) within the Program;

 

(g)                                 advise whether a new target be evaluated or selected as an Additional Target;

 

(h)                                 confirm that a Collaboration Compound has satisfied the Candidate Selection Criteria or PoC Compound Criteria;

 

(i)                                     discuss and attempt to resolve any deadlock issues submitted to it by any Subcommittee; and

 

(j)                                     such other responsibilities as may be assigned to the JRC pursuant to this Agreement or as may be mutually agreed upon in writing by the Parties from time to time.

 

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For clarity, the JRC shall not have any authority beyond the specific matters set forth above in this Section 3.1.4, and in particular shall not have any power to amend or modify the terms or provisions of this Agreement.  In addition, Medicis (and not Anacor or the JRC) shall have the sole right to make decisions in its sole discretion with respect to (i) whether to exercise the PoC Option; and (ii) the Development and commercialization of Medicis Development Compounds (and resultant Products) after exercise by Medicis of the PoC Option with respect thereto.

 

3.1.5                                           Post PoC Exercise.  Anacor shall have the right to withdraw from participation on the JRC at any time after the JRC Term on [ * ] written notice to Medicis; provided, however, that upon Medicis’s request, Anacor shall continue to consult with Medicis on an as-needed basis; provided that the first [ * ] per month of consulting during the [ * ] after the JRC Term shall be at no cost to Medicis, the first [ * ] per month of consulting during the period commencing on the [ * ] after the JRC Term and terminating upon FDA approval of a Product shall be at no cost to Medicis and for any additional consultation work, Medicis shall pay Anacor a reasonable consulting fee of no more than [ * ].  After the JRC Term, the JRC shall cease to serve the functions set forth in Section 3.1.4 and shall instead serve as an Information transfer vehicle to facilitate the discussion of Development and commercialization of Medicis Development Compounds and Products.  Following the JRC Term, the JRC shall meet annually unless the Parties mutually agree that more frequent meetings are desired.

 

3.1.6                                           Subcommittee(s).  From time to time, the JRC may establish subcommittees to oversee particular projects or activities, as it deems necessary or advisable (each, a “Subcommittee”).  Each Subcommittee shall consist of such number of members as the JRC determines is appropriate from time to time.  Such members shall be individuals with expertise and responsibilities in the areas of nonclinical development, clinical development, Patents, process sciences, manufacturing, regulatory affairs, product development or product commercialization, as applicable to the stage of development of the project or activity.

 

3.2                                 Joint Patent Subcommittee.  Within [ * ] after the Effective Date, the JRC shall establish a Subcommittee to be responsible for the coordination of the Parties’ efforts in accordance with Article 8 of this Agreement during the Research Collaboration Term (the “Joint Patent Subcommittee” or “JPS”), including the Prosecution and Maintenance of Patents, with an aim of maximizing patent protection, and assessments of inventorship of inventions created pursuant to the Research Collaboration.  The JPS shall be comprised of an equal number of representatives from each of Medicis and Anacor and shall meet on such dates and at such places and times agreed to by the Parties.  Prior to each meeting of the JPS, Anacor shall provide the JPS with a then-current list of all Collaboration Compounds and any Patents that disclose or claim such Collaboration Compounds.  All decisions of the JPS on matters for which it has responsibility shall be made by consensus, with each Party having collectively one (1) vote in all decisions.  In the event that the JPS is unable to reach a consensus decision within [ * ] after it has met and attempted to reach such decision, then either Party may, by written notice to the other, refer the matter to for expedited resolution by a mutually agreed attorney acting as an independent subject matter expert and who has agreed to terms providing that the Parties share a common legal interest in the matters under dispute and calculated to minimize the extent to which the disclosure of information to the expert would result in the loss of or otherwise impair the attorney-client privilege, attorney work product doctrine or similar protection.  The decision of such person shall be binding on the Parties.  Each Party will bear all expenses it incurs in regard to participating in all meetings of the JPS, including all travel and living expenses; provided, however, that if a matter is submitted to a mutually agreed attorney acting as an independent subject matter expert in accordance with this Section, the costs of such attorney shall be allocated between the Parties as part of his/her decision hereunder, taking into account the relative merits of the Parties’ respective positions.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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ARTICLE 4

 

GRANT OF RIGHTS

 

4.1                                 Exclusivity of License and License Option.  During the Term, Anacor will not grant to any Third Party rights to any Anacor IP that are inconsistent with or would interfere with the grant of the licenses resulting from the exercise of the PoC Option by Medicis (including with respect to any applicable Anacor Compounds or Collaboration Compounds).

 

4.2                                 PoC Option.

 

4.2.1                                           Exercise And Expiration Of the PoC Option.

 

(a)                                  Subject to Section 4.2.1(b), commencing upon the date that the JRC confirms that a Candidate Selection Compound satisfies the applicable PoC Compound Criteria (or, if the Candidate Selection Compound did not satisfy the PoC Compound Criteria but Medicis deems such compound a PoC Compound under Section 2.6.6(c), the date that the JRC confirms such failure to satisfy the PoC Compound Criteria) and continuing for [ * ] thereafter (the “PoC Option Deadline Period”), Medicis may in its sole discretion exercise its exclusive option (the “PoC Option”) to Develop and commercialize such PoC Compound, any additional Collaboration Compound that has been subject to an election by Medicis pursuant to Section 2.6.6(d), and, so long as no more than [ * ] Collaboration Compounds are elected in total, up to [ * ] additional Collaboration Compounds of Medicis’s choosing (the “Provisional Back-Up Compounds”), by delivering to Anacor a written notice of Medicis’s exercise of the PoC Option, specifying the PoC Compound, Provisional Back-Up Compounds, Back-Up Compounds and Lead Back-Up Compound (if any) for which such PoC Option is being exercised.  Upon Medicis’s exercise of its PoC Option, (i) each such PoC Compound, Provisional Back-Up Compound, Back-Up Compound and Lead Back-Up Compound (but no more than [ * ] such compounds in total at any particular time) shall be deemed a Medicis Development Compound and (ii) Anacor shall deliver to Medicis the items required by Section 4.4, Section 2.9.3 and Exhibit 6 with respect to such Medicis Development Compounds.  Any PoC Option exercised by Medicis shall be irrevocable.  Following Medicis’s election hereunder, Medicis may, during the Back-Up Compound Election Term, upon notice to Anacor, substitute one or more Collaboration Compounds in lieu of the initially elected Provisional Back-Up Compounds.  Should Medicis make an election pursuant to Section 2.6.6(d) whereby an additional Collaboration Compound becomes a Back-Up Compound or Lead Back-Up Compound subsequent to the date upon which Medicis exercises its PoC Option or should Medicis substitute a new Collaboration Compound as a Provisional Back-Up Compound as provided herein, as of the date of Medicis’s election or substitution (as applicable), such Back-Up Compound, Lead Back-Up Compound or Provisional Back-Up Compound (as applicable) shall be deemed a Medicis Development Compound, any previous Provisional Back-Up Compound shall no longer be a Medicis Development Compound and Anacor shall deliver to Medicis the items required by Section 4.4, Section 2.9.3 and Exhibit 6 with respect to such new Medicis Development Compounds.

 

(b)                                 Subject to Sections 2.6.6(d) and 3.1.5, following exercise of its PoC Option, Medicis shall have sole responsibility, and Anacor shall have no obligations, for the further Development, manufacturing, and registration of the Collaboration Compounds that became Medicis Development Compounds (including clinical activities and submissions to regulatory agencies) pursuant to the terms of this Agreement.

 

4.2.2                                           HSR And Equivalent Foreign Laws.  If Medicis reasonably determines in good faith prior to the expiration of the PoC Option Deadline Period that the exercise of its PoC Option by Medicis under

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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this Agreement is required to be filed with the Federal Trade Commission (the “FTC”) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. §18a) (“HSR”) or with equivalent foreign governmental authorities under any similar foreign law, the PoC Option Deadline Period shall be extended automatically by [ * ] from the original expiration of the PoC Option Deadline Period (the “PoC  Option Deadline Extension Period”) in the event that: (a) the HSR (or similar foreign law) initial waiting period is still pending as of the original date of the expiration of the PoC Option Deadline Period; or (b) a “Second Request” to which Medicis intends to respond is received from the FTC (or equivalent foreign authority) in connection with such filing and clearance has not been granted as of the PoC Option Deadline Period.  Each Party agrees to cooperate at the request of the Party that decides in its sole discretion to respond to any such request for Information to expedite review of such transaction.  In the event that HSR (or similar foreign law) clearance has still not been granted as of the expiration of the PoC Option Deadline Extension Period, (x) Anacor and Medicis shall promptly meet to negotiate in good faith whether an additional extension of the PoC Option Deadline Extension Period is required and (y) Medicis shall provide Anacor with copies of all written correspondence from the FTC (or equivalent foreign authority) within Medicis’s custody or control that relates to such HSR (or similar foreign law) clearance.  In such event, such extension of the PoC Option Deadline Extension Period shall only be effective with the mutual written approval of the Parties, not to be withheld by Anacor unless Anacor can demonstrate a credible basis to believe, based on documented correspondence from the FTC (or equivalent foreign authority) that such HSR (or similar foreign law) clearance is unlikely to be forthcoming.  In the event that HSR (or similar foreign law) clearance is not granted upon expiration of the PoC Option Deadline Extension Period, the PoC Option shall be deemed to have expired unexercised.

 

4.3                                 License Grants.

 

4.3.1                                           Research Collaboration.  Subject to the terms and conditions of this Agreement, Medicis hereby grants to Anacor a non-exclusive, non-royalty bearing license under the Medicis Research Collaboration Patents and Medicis Research Collaboration Know-How (if any), solely as and to the extent necessary or important to enable Anacor to conduct activities for which Anacor is responsible under the Research Plan during the Research Collaboration Term, including any activities conducted by Anacor pursuant to Section 2.6.6(d).  Subject to the terms and conditions of this Agreement, Anacor hereby grants to Medicis a non-exclusive, non-royalty bearing license, with the right to grant sublicenses, under the Anacor IP, solely as and to the extent necessary or important to enable Medicis to exercise its rights under Section 2.6.2.

 

4.3.2                                           Development And Commercialization.

 

(a)                                  Subject to the terms and conditions of this Agreement and upon Medicis’s exercise of its PoC Option in accordance with Section 4.2.1(a) or 12.5.2, Anacor shall be hereby deemed to have granted and hereby grants to Medicis the exclusive (even as to Anacor) right and license in the Territory, with the right to grant sublicenses (through multiple tiers) in accordance with subsection (b), under the Anacor Exclusively Licensed IP, to make, have made, use, sell, offer for sale, import and otherwise exploit the Medicis Development Compounds and any Derivatives thereof as and into Products during the Term.

 

(b)                                 The license granted by Anacor to Medicis in subsection (a) may be sublicensed by Medicis to an Affiliate (without notice to Anacor) or Third Party (with prior written notice to Anacor being required if the sublicense is as to all of Medicis’s rights with respect to a particular Medicis Development Compound in a particular territory).  Medicis shall provide Anacor with a copy of each agreement under which it grants a sublicense under its commercialization rights promptly upon execution thereof, to the extent permitted under the terms of such agreement; provided that [ * ].  If Medicis cannot obtain such right, Medicis shall provide Anacor with a redacted copy of such sublicense agreement, provided that all terms related to

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Medicis’s rights and obligations under this Agreement, including payment obligations to Anacor, may not be redacted.   For each other sublicense agreement, Medicis shall inform Anacor of the identity of such Sublicensee, as well as the term and scope of the sublicense, promptly upon execution of such sublicense agreement.  Medicis shall, in each sublicense agreement, require the Sublicensee to provide the following to Anacor if this Agreement terminates  and to Medicis if only such sublicense agreement terminates: (i) the assignment and transfer of ownership and possession of all Regulatory Approvals and other regulatory materials related to a Medicis Development Compound or Product held or possessed by such Sublicensee, and (ii) the assignment of, or a freely sublicensable exclusive license to, all intellectual property Controlled by such Sublicensee that Covers or embodies a Medicis Development Compound or Product and that was created by or on behalf of such Sublicensee during the exercise of its rights or fulfillment of its obligations pursuant to such sublicense agreement.  Upon any termination of this Agreement by Anacor that results in a loss of Medicis’s license under Section 4.3.2 hereunder, the rights of each Sublicensee shall survive such termination, but only if the Sublicensee is in compliance with all terms of the sublicense agreement and cures any breach of this Agreement by Medicis, [ * ].  Each sublicense agreement shall be subject to the applicable terms and conditions of this Agreement and any Third Party licenses sublicensed to the Sublicensee.

 

4.4                                 Technology Transfer after Medicis’s PoC Option Exercise.  Within [ * ] after Medicis exercises its PoC Option, Anacor and Medicis shall meet to develop a plan for Anacor’s delivery to Medicis, at no cost to Medicis other than for Medicis’s costs and expenses, all Information and material in Anacor’s possession and Control relating to such Medicis Development Compounds, including quality/CMC written final study or Development reports, nonclinical and clinical final study reports, along with all supporting cGLP and cGMP written final reports, and in any event shall use reasonable efforts to provide all such Information as soon as practicable and, unless [ * ], within no more than [ * ] of the exercise of the PoC Option other than for delays due to the request or inability of Medicis to accept or arrange receipt of such Information.  As part of such transfer, Anacor shall provide Medicis with all remaining supplies of Medicis Development Compounds in Anacor’s possession that were manufactured under the Research Plan, at no cost to Medicis, and shall assist Medicis, at Medicis’s reasonable request, in a technology transfer to a Third Party supplier of Medicis Development Compounds to Medicis.  Other than for delays due to the request or inability of Medicis to accept or arrange such transfer, the transfer shall be completed in [ * ] or less.  The Parties shall use reasonable efforts to cooperate to provide Medicis, at no cost to Medicis other than for Medicis’s costs and expenses, with any other Information relating to such Medicis Development Compound as may be Developed or identified by Anacor during the Term, to the extent that Medicis has a license under this Agreement to such Information. In addition, both Parties shall use commercially reasonable efforts with respect to those activities for which it is responsible to reasonably ensure orderly transition and uninterrupted Development of the Medicis Development Compounds and to provide a reasonable amount of technical assistance, subject to Section 3.1.5, in the transfer of the technology.

 

4.5                                 Third Party Licenses.

 

4.5.1                                           During the Research Collaboration Term, [ * ] all costs and payments of any kind (including all upfront fees, annual payments, milestone payments and royalty payments) for any license(s) required from a Third Party for (a) use of any Anacor Compounds, in the form provided by Anacor to Medicis, in connection with the Program (each a “Third Party License”), or (b) the use of Anacor’s proprietary technology as contemplated hereunder for the discovery, research, manufacture or use of Anacor Compounds or Targets in connection with the Program in either case prior to expiration of the Research Collaboration Term.  During the Research Collaboration Term, [ * ] satisfying all costs and payments of any kind (including all upfront fees, annual payments, milestone payments and royalty payments) for any license(s) required from a Third Party for the use of any Medicis Compounds in connection with the Program.  In addition, [ * ] all costs

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

29

 

and payments of any kind (including all upfront fees, annual payments, milestone payments and royalty payments) on account of the use of Anacor Compounds in the form delivered by Anacor to Medicis for any license from a Third Party to Anacor that exists as of the Effective Date.  [ * ]  Notwithstanding anything to the contrary herein, this Section 4.5.1 does not apply to any license from a Third Party to Medicis that exists as of the Effective Date, and [ * ] all costs and payments of any kind thereunder.  For the avoidance of doubt, if Medicis modifies the form of an Anacor Compound in such a way as to necessitate taking an additional license from a Third Party, [ * ] for obtaining and paying for such Third Party license.  However, if Medicis’s modification does not trigger the need for an additional license, the fact of the modification itself shall not relieve [ * ] of its responsibilities pursuant to Sections 4.5.1 and 4.5.2.

 

4.5.2                                           If Medicis determines that it needs to obtain one or more licenses from one or more Third Parties (other than any license described in Section 4.5.1) to manufacture, have manufactured, import, use, sell, offer for sale, or otherwise commercialize any Medicis Development Compound, Medicis shall inform Anacor.  Medicis shall have the first right to obtain such license(s).  In the event that Medicis decides not to pursue such license(s), Anacor may do so.  To the extent a license obtained by Medicis pursuant to this Section 4.5.2 is a Necessary License, Medicis shall be entitled to the credit set forth in Section 6.4.2(c).  In the event that Anacor obtains such a license, any intellectual property licensed to Anacor under such license shall be deemed to be Collaboration Compound IP Controlled by Anacor or its Affiliates, and all costs and expenses incurred by Anacor under such license(s) shall be [ * ], to the extent attributable to an Anacor Compound in the form delivered by Anacor to Medicis.  Medicis shall be responsible for all costs and expenses incurred by either Party under any license(s) to Third Party intellectual property to the extent attributable to Medicis Compounds (or Collaboration Compounds or Medicis Development Compounds derived therefrom).

 

4.5.3                                           Except as set forth in Sections 4.5.1 and 4.5.2, Medicis shall be solely responsible for obtaining any licenses from Third Parties that Medicis determines, in its sole discretion, are required in order to lawfully research, Develop, manufacture, and commercialize Medicis Development Compounds and Products in the Field in the Territory.  Medicis shall be solely responsible for any costs associated with such licenses, subject to the royalty adjustment set forth in Section 6.4.2(c), if applicable.

 

ARTICLE 5

 

POST-RESEARCH COLLABORATION ACTIVITIES

 

5.1                                 Medicis Development and Commercialization.  Subject to the continuing obligations of Anacor under Section 2.6.6(d), following exercise of its PoC Option or termination of the Research Collaboration pursuant to Section 2.4.1(c), 12.4.1, 12.5.2, 12.6.3(c) or 13.7, Medicis, either itself or by and through its Affiliates, Sublicensees or contractors, shall be responsible for all Development, manufacturing, marketing, advertising, promotional, launch and sales activities in connection with the marketing of the Medicis Development Compounds and Products containing the same.  Except as set forth in Sections 4.4 and 4.5, all costs associated with such activities shall be borne solely by Medicis.

 

5.2                                 Medicis Diligence.  Following Medicis’s exercise of its PoC Option or termination of the Research Collaboration pursuant to Section 2.4.1(c), 12.4.1, 12.5.2, 12.6.3(c) or 13.7, Medicis shall use Diligent Efforts to Develop and commercialize (either itself or through Sublicensees) the Medicis Development Compounds into Products throughout the Territory.

 

5.3                                 Medicis Derivatives Research.  Following Medicis’s exercise of the PoC Option and the expiration or termination of the Research Collaboration Term, or following termination of the Research

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Collaboration pursuant to Section 2.4.1(c), 12.4.1, 12.5.2, 12.6.3(c) or 13.7, Medicis shall have the right during the Term to conduct research in the Field on Medicis Development Compounds, for the sole purpose of identifying compounds in the Field that (a) are based on the same Scaffold as a Medicis Development Compound, and (b) [ * ] (collectively, the “Medicis Research Compounds”), and solely using employees or agents who are under written obligation to assign all rights in inventions made in the course of such research to Medicis; provided that such right to conduct research shall apply only to the PoC Compound until the end of the Back-Up Compound Election Term, after which it shall apply to all Medicis Development Compounds.  On a Calendar Quarterly basis until the end of the Term, Medicis shall disclose to Anacor all Information discovered, developed, invented or created by or on behalf of Medicis in the course of or as a result of conducting such research, including a list of all compounds (including Derivatives).  Under the oversight of the JPS, Medicis shall employ commercially reasonable efforts and cooperate with Anacor in adopting Prosecution and Maintenance strategies for such Medicis Research Compounds that are [ * ].  If Medicis files an application for a Patent that claims the composition of matter of a Medicis Research Compound and subject matter related to Medicis Research Compounds other than the composition of matter of a Medicis Research Compound (a “Mixed Patent”), Medicis shall, upon request by Anacor, employ commercially reasonable efforts to [ * ]. Further, Medicis [ * ] of such Medicis Research Compounds.  Medicis agrees to take all reasonable actions to [ * ] as reasonably requested by Anacor, at Anacor’s reasonable expense.  Prior to Medicis’s commencement of any such research, the Parties shall determine the applicable Scaffolds from which such compounds may be generated.  Subject to the terms and conditions of this Agreement, Anacor hereby grants to Medicis a non-exclusive, worldwide license under the Anacor Exclusively Licensed IP, commencing upon the expiration or termination of the Research Collaboration and continuing for the remainder of the Term, solely to conduct the research described in this Section 5.3.  Any compound resulting from such research that is a Derivative shall be included in the license granted to Medicis in Section 4.3.2(a).

 

ARTICLE 6

 

MILESTONES AND ROYALTIES; PAYMENTS

 

6.1                                 Upfront Payment.  In consideration of Anacor’s willingness to devote its pre-existing know-how  and expertise to the identification and Development of Collaboration Compounds hereunder, Medicis shall pay to Anacor a non-refundable, non-creditable payment of Seven Million Dollars ($7,000,000) within five (5) days after execution of this Agreement.

 

6.2                                 Development Milestones Payable by Medicis to Anacor.

 

6.2.1                                           Initial Development Milestones.  Subject to Sections 2.4.1(c), 12.4, and 12.5, during the Term, Medicis shall make the non-refundable, non-creditable milestone payments to Anacor that are set forth below upon occurrence of the corresponding Development milestone event with respect to a Collaboration Compound or Derivative.  If a milestone event occurs and the payment for occurrence of a previous milestone event has not yet been made by Medicis, then payments for both such milestone events shall be paid together.  For the avoidance of doubt, all milestone payments under this Section 6.2.1 shall be due only upon the first (1st) occurrence of the Development milestone event at issue, regardless of whether the Development milestone event may subsequently be met by another Collaboration Compound or Derivative.

 

	
Development Milestone Event
    	
 
    	
Milestone Payment 
   (Million US $)
    	
 
    
	
[ *]
    	
 
    	
[ *]
    	
 
    

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

31

 

	
Development Milestone Event
    	
 
    	
Milestone Payment 
   (Million US $)
    
	
[ * ]
    	
 
    	
[ * ]
    
	
[ * ]
    	
 
    	
[ * ]
    
	
[ * ]
    	
 
    	
[ * ]
    
	
[ * ]
    	
 
    	
[ * ]
    
	
[ * ]
    	
 
    	
[ * ]
    

 

6.2.2                                           Back-Up Compound Milestones.  Subject to Sections 2.4.1(c), 12.4, and 12.5, during the Term, Medicis shall make the following additional non-refundable, non-creditable milestone payments to Anacor that are set forth below upon occurrence of the corresponding Development milestone event with respect to the Lead Back-Up Compound or other Back-Up Compound as designated by Medicis pursuant to Section 2.6.6(d).  If a milestone event occurs with respect to a Lead Back-Up Compound or other Back-Up Compound and the payment for occurrence of a previous milestone event for such Lead Back-Up Compound or other Back-Up Compound has not yet been made by Medicis, then payments for both such milestone events shall be paid together.  If Medicis substitutes a Lead Back-Up Compound or other Back-Up Compound for a Provisional Back-Up Compound, Lead Back-Up Compound or other Back-Up Compound, Medicis shall make each applicable payment below for each such substituted compound.  For clarity, the maximum amount payable under this Section 6.2.2 is [ * ] (including a maximum of one payment for milestone #3).

 

	
Development Milestone Event
    	
 
    	
Milestone Payment 
   (Million US $)
    
	
[ * ]
    	
 
    	
[ * ]
    
	
[ * ]
    	
 
    	
[ * ]
    
	
[ * ]
    	
 
    	
[ * ]
    

 

6.3                                 Sales Milestones Payable by Medicis to Anacor.  Subject to Sections 2.4.1(c), 12.4, and 12.5, during the Term, Medicis shall also make the non-refundable, non-creditable milestone payments to Anacor that are set forth below upon occurrence of the corresponding sales milestone event with respect to all Products (cumulatively).  For the avoidance of doubt, such milestone payments shall be due only upon the first (1st) occurrence of the sales milestone event at issue, regardless of whether the sales milestone event may subsequently be met.

 

	
Sales Milestone Event
    	
 
    	
Milestone Payments 
   (Million US $)
    
	
[ * ]
    	
 
    	
[ * ]
    
	
[ * ]
    	
 
    	
[ * ]
    

 

6.4                                 Royalties.

 

6.4.1                                           Incremental Royalty.  Subject to the terms of this Article 6 and Sections 2.4.1(c), 12.4, and 12.5, during the Term, Medicis shall pay to Anacor an incremental royalty equaling a percentage of aggregate Annual Net Sales by Medicis and its Affiliates and Sublicensees to Third Parties in the Territory.  Such royalty shall be calculated at the rates as set forth in the table below; provided, however, that in the case of transfers or sales of any Product between Medicis and an Affiliate or Sublicensee of Medicis, a royalty shall not be payable.  For clarity, the royalty rates set forth in this Section are incremental rates that apply only for the

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

32

 

respective increment of Annual Net Sales described.  Accordingly, once a total Net Sales figure is achieved for the year, the royalties owed on any lower-tier portion of Annual Net Sales are not adjusted to the higher rate.  For example, if total Net Sales in the Territory for 2011 is [ * ], Medicis would pay to Anacor a royalty for 2011 in [ * ] as follows:  [ * ].

 

	
Annual Net Sales (Million US $)
    	
 
    	
Royalty Rate
    
	
[ * ]
    	
 
    	
[ * ]
    
	
[ * ]
    	
 
    	
[ * ]
    
	
[ * ]
    	
 
    	
[ * ]
    
	
[ * ]
    	
 
    	
[ * ]
    

 

6.4.2                                           Royalty Adjustments.

 

(a)                                  Know-How Royalty.  If, on a country-by-country and Product-by-Product basis, there is (a) no Valid Claim of an issued Patent [ * ] (or, solely in the case of Medicis Compounds, [ * ]) that in either case claims or Covers [ * ] the Medicis Development Compound or Derivative included in such Product, either at the time of First Commercial Sale or anytime thereafter, and (b) no Regulatory Exclusivity for such Product, then Medicis shall have no obligation to pay to Anacor royalties on Net Sales of such Product in such country at the royalty rates set forth in Section 6.4.1; provided, however, that if [ * ], then Medicis shall pay Anacor a know-how royalty on a country-by-country and Product-by-Product basis on Net Sales of such Product in such country at a royalty rate of [ * ] of those set forth in Section 6.4.1 above; and provided further that in no case shall Medicis be obligated to pay a know-how royalty to Anacor after [ * ] following the date of First Commercial Sale.  Following issuance of [ * ], Medicis shall pay royalties for the applicable Product and country under Section 6.4.1.

 

(b)                                 Royalty Reduction for Competition.  If at any such time that a Generic Product having the same or substantially the same active ingredient as a Product incorporating a Medicis Development Compound enters the market in a given country, and such Generic Product(s) accounts for [ * ] of Product and all Generic Products in the given country in any given Calendar Quarter according to data published by IMS Health Inc. (or any similar Person mutually agreed by the Parties), the royalty rates payable pursuant to this Section 6.4 for such Calendar Quarter shall be [ * ].

 

(c)                                  Necessary Licenses.  If any intellectual property rights of a Third Party should exist in any country during the Term Covering the composition of matter or manufacture of a Medicis Development Compound that was an Anacor Compound, or the use of a Medicis Development Compound that was an Anacor Compound in the Field, and Medicis determines in good faith and [ * ] such Medicis Development Compound without obtaining a royalty-bearing license from such Third Party under such intellectual property in a particular country (a “Necessary License”), then Medicis shall be entitled to a credit, against any royalty payments due to Anacor upon sales of a Product containing such Medicis Development Compound in such country, in an amount totaling [ * ] by Medicis to such Third Party for acquiring such Necessary License in such country, provided that in no event shall the royalty payment due to Anacor upon sales of such Product in any Calendar Quarter be [ * ] of the amount otherwise due under Sections 6.4.1 or 6.4.2, as applicable.

 

(d)                                 Combination Product.  In the event a royalty under Section 6.4.1 is due on Net Sales of a Product that is in the form of a Combination Product, the Net Sales of the Combination Product in a country shall be adjusted by multiplying the Net Sales of the Combination Product calculated in accordance

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

33

 

with Section 1.1.91 by a fraction A/(A+B) where A is the established market price in such country of the Combination Product without the Other Active Ingredient(s), and B is the established market price in such country of a product containing only the Other Active Ingredient(s).  If the market price for the Other Active Ingredient(s) is not established, then the Parties shall estimate the market price for such Other Active Ingredient(s) by subtracting from the Net Sales of the Combination Product (as determined without reference to this paragraph) [ * ].  However, in case that any Other Active Ingredient that is not sold separately is [ * ] in the country of sale, the [ * ].

 

6.4.3                                           Royalty Term.  The royalties due under Section 6.4.1 with respect to a Product, even if reduced as provided herein, shall commence upon the First Commercial Sale of such Product in a particular country in the Territory and will expire on the later of (a) expiration on a country-by-country basis of the last to expire Valid Claim of an issued Patent [ * ] (or, solely in the case of Medicis Compounds, [ * ]) claiming or Covering [ * ] the Medicis Development Compound or Derivative included in such Product or (b) expiration on a country-by-country basis of Regulatory Exclusivity for such Product, or in the case of Products containing only unpatented technology, [ * ] from First Commercial Sale of such Product.  The period during which Medicis is paying any royalty to Anacor as provided in this Section 6.4 is referred to in this Agreement as the “Royalty Term”.  Following the expiration of the Royalty Term, the license granted pursuant to Section 4.3.2 (or Section 2.4.1(c)) shall be fully paid.

 

6.5                                 Non-Royalty Payments.  Medicis shall pay to Anacor [ * ] of any non-royalty payments received from Sublicensees, including upfront payments, development and regulatory milestones and sales milestones (excluding, in any event, payments that are reimbursements for research and Development activities or fees for data or services provided by Medicis).

 

6.6                                 Reports and Payment of Milestones.  Medicis shall notify Anacor in writing promptly, but in no event later than [ * ], after the achievement of milestone [ * ] and milestone [ * ].  Medicis shall notify Anacor in writing promptly, but in no event later than [ * ], after the achievement of [ * ] milestone [ * ].  Medicis shall pay the appropriate milestone payments due for exercising the [ * ] as set forth in Section 6.2 within [ * ] after notifying Anacor that it has exercised [ * ], as provided in Section 4.2.1(a).  For all milestone payments other than for PoC Option exercise, Medicis shall pay the milestone payment due within [ * ] after receipt of an invoice therefor from Anacor following the achievement of the corresponding milestone event.

 

6.7                                 Reports; Royalty and Non-Royalty Payments.  Until the expiration of Medicis’s royalty obligations under this Article 6 and non-royalty payment obligations under Section 6.5, Medicis agrees to make written reports to Anacor within [ * ] covering all sales of Products in the Territory by Medicis, its Affiliates and Sublicensees for which invoices were sent during such Calendar Quarter and all payments from Sublicensees subject to Section 6.5, each such written report in reasonable detail as available to Medicis stating for the applicable period:  (a) the total Net Sales for each Product (including an itemization of the deductions applied to such gross sales to derive such Net Sales); (b) a calculation of the amount of royalty payment due on such Net Sales pursuant to Article 6; and (c) the total amounts received under Section 6.5 from each Sublicensee and the applicable milestone event.  The Information contained in each report under this Section 6.7 shall be considered Confidential Information of Medicis.  Concurrent with the delivery of each such report, Medicis shall make the royalty payment due to Anacor under Section 6.4 and the non-royalty payment due to Anacor under Section 6.5 for the Calendar Quarter covered by such report.

 

6.8                                 Methods of Payments.  All payments due from Medicis to Anacor under this Agreement shall be paid in Dollars by wire transfer to a bank in the United States designated in writing by Anacor.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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6.9                                 Accounting.  Medicis agrees to keep full, clear and accurate records as required by applicable laws, but in no event for less than [ * ] after the relevant payment is owed pursuant to this Agreement, setting forth the sales and other disposition of Product sold or otherwise disposed of, and amounts received from Sublicensees, in sufficient detail to enable royalties and compensation payable to Anacor hereunder to be determined.  Medicis further agrees, upon not less than [ * ] prior written notice, to permit the books and records relating to such [ * ] period to be examined by an independent accounting firm selected by Anacor and reasonably acceptable to Medicis for the purpose of verifying reports provided by Medicis under Section 6.7.  Such audit shall not be performed more frequently than [ * ] per calendar year and shall be conducted under appropriate confidentiality provisions, for the sole purpose of verifying the accuracy and completeness of all financial, accounting and numerical Information and calculations provided under this Agreement.  Such examination is to be made at the expense of Anacor, except in the event that the results of the audit reveal an underpayment of royalties, milestone payments, or other payments to Anacor under this Agreement of [ * ] or more over the period being audited, in which case reasonable audit fees for such examination shall be paid by Medicis.  When calculating Net Sales, the amount of such sales in foreign currencies shall be converted into Dollars using the standard methodologies employed by Medicis for consolidation purposes, or if such methodologies do not exist, based upon the daily average of the calendar quarter for which such Net Sales are calculated, as published by the Financial Times or The  Wall Street Journal.  Medicis shall provide reasonable documentation of the calculation and reconciliation of the conversion figures on a country-by-country basis as part of its report of Net Sales for the period covered under the report.  All amounts payable by Medicis hereunder shall become final and not subject to further challenge except to the extent subject to an audit initiated by Anacor within [ * ] of the due date of the relevant payment.

 

6.10                           Taxes.  If a law or regulation of any country of the Territory requires withholding of taxes of any type, levies or other charges with respect to any amounts payable hereunder to Anacor, Medicis shall promptly pay such tax, levy, or charge for and on behalf of Anacor to the proper governmental authority, and shall furnish Anacor with documentation of such payment.  Medicis shall have the right to deduct any such tax, levy or charge actually paid from payment due Anacor or be promptly reimbursed by Anacor if no further payments are due Anacor.  Medicis agrees to assist Anacor in claiming exemption from such deductions or withholdings under double taxation or similar agreement or treaty from time to time in force and in minimizing the amount required to be so withheld or deducted.  The recipient of any transfer under this Agreement of Patents, Information, Collaboration Compounds, or Products, as the case may be, shall be solely responsible for any sales, use, value added, excise or other taxes applicable to such transfer.

 

6.11                           Late Payments.  Any amount owed by Medicis to Anacor under this Agreement that is not paid within the applicable time period set forth herein shall accrue interest at the rate of [ * ] above the then-applicable prime commercial lending rate of Citibank, N.A., San Francisco, California, or, if lower, the highest rate permitted under applicable law.

 

ARTICLE 7

 

EXCLUSIVITY

 

7.1                                 Anacor Exclusivity Obligation.  Subject to Sections 7.3, 12.5.2, 12.6.2(c), and 12.6.4(b)(i), for eleven (11) years from the Effective Date, except pursuant to this Agreement, Anacor shall not, either alone or with or for any Third Party, conduct any research, Development, manufacturing, or commercialization activities with respect to any small molecule compound [ * ].  The obligation set forth in this Section 7.1 shall survive termination of this Agreement by Medicis under Section 12.6.3.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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7.2                                 Medicis Exclusivity Obligation.  Subject to Sections 7.3, 12.5.2, 12.6.2(c), and 12.6.3(b)(ii), for nine (9) years from the Effective Date, except pursuant to this Agreement, Medicis shall not, either alone or with or for any Third Party, research, Develop, manufacture, or commercialize any small molecule compound [ * ], and that either (a) contains boron or [ * ]; provided, however, that the foregoing exclusivity obligation will expire on the fourth (4th) anniversary of the Effective Date if [ * ] by such date.

 

7.3                                 Exceptions.  Notwithstanding the foregoing in this Article 7, the Parties shall have the right, either alone or with or for a Third Party, to conduct research with any target that, at the time such Party initiates research on such target, is not the Target or an Additional Target.

 

ARTICLE 8

 

INTELLECTUAL PROPERTY RIGHTS

 

8.1                                 Ownership.

 

8.1.1                                           Solely-Owned Intellectual Property.  Anacor shall retain all of its rights, title and interest in and to the Anacor IP, and Medicis shall retain all of its rights, title and interest in and to the Medicis IP, except to the extent that any rights, licenses or assignments are expressly granted by one Party to the other Party under this Agreement.

 

8.1.2                                           Collaboration Compound IP, Medicis Development Compound IP and Other Information.

 

(a)                                  Medicis shall be the sole owner of any Collaboration Compound IP, Medicis Development Compound IP or other Information discovered, developed, invented or created solely by or on behalf of Medicis personnel, and Medicis shall retain all of its rights, title and interest thereto, except to the extent that any rights, licenses or assignments are expressly granted thereunder by Medicis to Anacor under this Agreement;

 

(b)                                 Anacor shall be the sole owner of any Collaboration Compound IP, Medicis Development Compound IP, or other Information discovered, developed, invented or created solely by or on behalf of Anacor personnel, and Anacor shall retain all of its rights, title and interest thereto, except to the extent that any rights, licenses or assignments are expressly granted thereunder by Anacor to Medicis under this Agreement; and

 

(c)                                  Any Collaboration Compound IP, Medicis Development Compound IP or other Information that is discovered, developed, invented or created jointly by or on behalf of Medicis and Anacor shall be owned jointly by Medicis and Anacor, and all rights, title and interest thereto shall be jointly owned by the Parties, except to the extent that any exclusive rights, licenses or assignments are expressly granted to a Party under this Agreement.

 

Notwithstanding the foregoing, Anacor shall be the sole owner of any Information [ * ], and Medicis shall be the sole owner of any Information [ * ].  Each Party hereby assigns to the other Party such of its right, title and interest in and to such Information as is necessary to effect the ownership set forth in the preceding sentence, and agrees to take all reasonable actions to evidence such assignment as reasonably requested by the other Party, at such other Party’s reasonable expense.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Except as expressly provided in this Agreement, neither Party shall have any obligation to account to the other for profits, or to obtain any consent of the other Party to license or exploit patented jointly-owned subject matter, by reason of joint ownership thereof, and each Party hereby waives any right it may have under the laws of any jurisdiction to require any such consent or accounting.

 

8.2                                 Prosecution and Maintenance of Patents.

 

8.2.1                                           Responsibility for Prosecution and Maintenance of Patents.  Subject to Section 8.2.2, during the Term, Medicis will be responsible for Prosecution and Maintenance of all solely-owned Patents included in the Medicis IP, Anacor will be responsible for Prosecution and Maintenance of all Collaboration Compound Patents jointly owned by Medicis and Anacor, and Anacor will be responsible for Prosecution and Maintenance of all other Patents included in the Anacor IP.  Anacor will employ commercially reasonable efforts and cooperate with Medicis in adopting Prosecution and Maintenance strategies for Anacor-owned or jointly-owned Patents Prosecuted and Maintained by Anacor hereunder that are designed to separate, as much as possible without substantively jeopardizing its other rights in Anacor-owned Patents, Patents that claim Medicis Development Compounds from Patents that either do not claim or claim, but not specifically, Medicis Development Compounds.  In the event of termination of this Agreement for material breach of either Party or by Medicis for convenience, Anacor shall be solely responsible for Prosecuting and Maintaining all jointly owned Patents.

 

8.2.2                                           Prosecution Standards and Cooperation - Generally.

 

(a)                                  The Party responsible for Prosecution and Maintenance of any Patents (the “Prosecuting Party”) shall use Diligent Efforts to obtain a reasonable scope of protection and issued claims as free of invalidity or unenforceability risks as commercially reasonable for Collaboration Compounds prior to the expiration or Medicis’s exercise of the PoC Option or termination of the Research Collaboration Term under Section 2.4.1(c), 12.4.1, 12.5.2, 12.6.3(c) or 13.7, and for Medicis Development Compounds thereafter, using in-house or external counsel of its own choice, but reasonably acceptable to the other Party.  For the avoidance of doubt, there shall be no attorney-client relationship between such other Party and the in-house or external counsel selected by the Party responsible for such Prosecution and Maintenance.

 

(b)                                 Each Party agrees that in connection with its Prosecution and Maintenance of Patents hereunder, it shall comply with all applicable rules and standards of the United States Patent and Trademark Office and equivalent offices in foreign jurisdictions.  Each Party shall keep the other Party informed as to material developments with respect to the Prosecution and Maintenance of all Patents directed to a Collaboration Compound, including by promptly providing complete copies of all office actions or any other substantive documents that such Party receives from any patent office, including notice of all interferences, reissues, re-examinations, oppositions or requests for patent term extensions, and by providing the other Party the timely opportunity to consider and provide reasonable input into the strategic aspects of such Prosecution and Maintenance, including having the opportunity to (i) attend any proposed interviews, oral arguments or other proceedings regarding such Patents and (ii) consider any proposed filings and substantive submissions in any Patent and to comment thereon, which comments shall, if timely and reasonably provided, be considered, and, unless the Party responsible for such Prosecution and Maintenance reasonably believes that such comments are not in furtherance of the aims of this Agreement or are not otherwise reasonable, acted on in good faith by such responsible Party.  Should the Parties fail to agree on the ownership or Prosecution and Maintenance of any Patents directed to a Collaboration Compound, or if any Party believes that the other Party proposes taking an action that is likely to adversely affect its rights under this Agreement or with respect to the Anacor Patents, the matter will be presented to the JPS for resolution in accordance with Section 3.2.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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(c)                                  If Medicis is not satisfied with counsel used by Anacor with respect to Patents that claim Medicis Development Compounds, Medicis has the right to request that Anacor transfer responsibility for Prosecution and Maintenance of such Anacor Patents to counsel appointed by Medicis and reasonably acceptable to Anacor, which request will not be unreasonably denied by Anacor.  If Prosecution and Maintenance of any Anacor Patent transferred to new counsel at Medicis’s request affects Anacor’s rights or those of a Third Party licensee of the Anacor Patents, Medicis will consult with Anacor in accordance with Section 8.2.2(b) before making any decision relevant to the Prosecution and Maintenance of such Anacor Patent, and such consultation will be concluded in a timely manner so as not to adversely affect the rights of any Party under the Anacor Patents.  If Medicis and Anacor are unable to agree on Prosecution and Maintenance of such Anacor Patents, the matter will be decided by the JPS in accordance with Section 3.2.  Requests by Medicis that, in the judgment of Anacor, will adversely affect the existing Third Party rights will be referred to the JPS for resolution in accordance with Section 3.2.

 

(d)                                 Notwithstanding anything to the contrary in this Article 8, after Medicis’s exercise of the PoC Option or termination of the Research Collaboration Term under Section 2.4.1(c), 12.4.1, 12.5.2, 12.6.3(c) or 13.7, Medicis’s rights and Anacor’s obligations under this Article 8 with respect to Prosecution and Maintenance and enforcement of any Patents in the Anacor IP shall apply only to Patents in the Anacor Exclusively Licensed IP.  In light of the likelihood for future changes in the U.S.  Patent system and future changes to the European Patent Convention (EPC) (collectively, “New Rules”), the Parties will come to an agreement on filing strategy in view of any New Rules.

 

(e)                                  Medicis and Anacor have a common legal interest in the Prosecution and Maintenance of Patents included in the Anacor IP and Medicis IP.  The parties hereby acknowledge and agree that the provision to, receipt by, retention, permitted use or sharing between the Parties (for common legal interest purposes or otherwise) of Confidential Information relating to those Patents shall not diminish the confidentiality of such Confidential Information, but shall be subject to all privileges under applicable laws, including any attorney-client privilege, attorney work product doctrine, legal advice privilege and litigation privilege or any other privilege, doctrine or protection applicable to the Confidential Information, and shall not be deemed to be a waiver of any such privileges, applicable laws or doctrines, all of which are expressly preserved.  Each Party shall remain entitled to such protection under the common interest doctrine.

 

8.2.3                                           Anacor Patents Licensed to Third Parties.  In recognition that one or more of the Anacor Patents is or may be licensed to one or more Third Parties, as described in Section 8.5, during the Term, Anacor shall use commercially reasonable efforts to work in consultation with Medicis to Prosecute and Maintain its Anacor Patents in a manner that reasonably separates (a) the compounds and related rights licensed to such Third Parties from (b) those Collaboration Compounds and Medicis Development Compounds and related rights licensed or to be licensed (pursuant to the PoC Option) to Medicis as contemplated by this Agreement.  Such consultation with Medicis shall be done in a manner allowing a reasonable opportunity by Medicis and Anacor to provide input in view of the New Rules, and each Party agrees to give such input due consideration.  Input shall be provided and consideration undertaken and concluded in a timely manner so as not to jeopardize the pendency of the application under review or otherwise negatively affect or limit the rights of Anacor, Medicis or any Third Party licensee of Anacor IP.  Should the Parties fail to agree on any matter in this Section, such matter will be presented to the JPS for resolution in accordance with Section 3.2.

 

8.2.4                                           Target IP.  Anacor shall use commercially reasonable efforts to work in consultation with Medicis to Prosecute and Maintain its Anacor Target Patents, and Medicis shall use commercially reasonable efforts to work in consultation with Anacor to Prosecute and Maintain its Medicis Target Patents; provided, however, that neither Party shall be required to disclose any Confidential Information that is not

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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specific to the Research Collaboration.  Input shall be provided and consideration undertaken and concluded by the Parties in a timely manner so as not to jeopardize the pendency of the application under review or otherwise negatively affect or limit the rights of any Party hereto.  Should the Parties fail to agree on any matter in this Section, such matter will be presented to the JPS for resolution in accordance with Section 3.2.

 

8.2.5                                           Prosecution Lapse.  If, during the Term, the Party responsible for Prosecuting and Maintaining a Patent in the Anacor Patents or Collaboration Compound IP intends to allow such Patent to lapse or become abandoned without having first filed a continuation, divisional, or substitute, the Prosecuting Party shall notify the other Party of such intention at least [ * ] prior to the date upon which such Patent shall lapse or become abandoned, and such other Party shall thereupon have the right, but not the obligation, to assume responsibility for the Prosecution and Maintenance thereof at its own expense with counsel of its own choice; provided, however, that after Medicis’s exercise of the PoC Option or termination of the Research Collaboration Term, the foregoing obligation shall apply to Anacor only with respect to Patents in the Anacor Exclusively Licensed IP.

 

8.2.6                                           Cooperation in Prosecution and Extensions.  Each Party shall provide the other Party all reasonable assistance and cooperation in the Prosecution and Maintenance efforts provided above in this Section 8.2, including providing any necessary powers of attorney and executing any other required documents or instruments for such Prosecution and Maintenance.  Each Party shall consult with the other Party before applying for or obtaining any patent term extension or related extension of rights, including supplementary protection certificates and similar rights for any Collaboration Compound Patents or Medicis Development Compound Patents.  Neither Party shall proceed with such an extension until the Parties have agreed to a strategy therefor, with any disagreements on such strategy to be resolved by the JPS; provided that Medicis shall have the right to decide any matter related to patent term extension of a Collaboration Compound Patent or Medicis Development Compound Patent that claims Medicis Development Compounds.  Each Party shall provide reasonable assistance to the other Party in connection with obtaining any such extensions consistent with such strategy.

 

8.3                                 Patent Costs.

 

8.3.1                                           Collaboration Compound  Patents.  Except as provided in Section 8.3.3, each Party shall be responsible for Patent Costs associated with the Prosecution and Maintenance of any Collaboration Compound Patents that it is responsible for Prosecuting and Maintaining.

 

8.3.2                                           Existing Anacor IP and Medicis IP.  Except as provided in Section 8.3.3, Anacor shall be responsible for [ * ] of the Patent Costs [ * ].  Medicis shall be responsible for [ * ] of the Patent Costs [ * ].

 

8.3.3                                           Patent Costs Following Medicis’s Exercise of the PoC Option.  Notwithstanding the foregoing in this Section 8.3, following Medicis’s exercise of its PoC Option or termination of the Research Collaboration Term pursuant to Section 2.4.1(c), 12.4.1, 12.5.2, 12.6.3(c) or 13.7, Medicis, following receipt of invoice from Anacor, shall reimburse Anacor [ * ].  Patent Costs charged to Medicis associated with the Prosecution and Maintenance of an Anacor Patent that is also licensed to one or more Third Parties shall be limited to [ * ].  All such reimbursements shall be limited to those expenses [ * ].

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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8.4                                 Enforcement of Anacor or Medicis Intellectual Property Rights.

 

8.4.1                                           Duty To Notify Of Competitive Infringement.  If any Party learns of an infringement, unauthorized use, misappropriation or other such activity, or any threat thereof, by a Third Party with respect to any Anacor IP, by the making, use, sale, offer for sale or export of [ * ] that is identical or substantially similar to a Collaboration Compound (“Competitive Infringement”), such Party shall promptly notify the other Party and shall provide such other Party with available evidence of such Competitive Infringement.

 

8.4.2                                           Prior To Exercise Of PoC Option.  Prior to Medicis’s exercise of its PoC Option, with respect to any Competitive Infringement, Anacor shall have the primary right, but not the obligation, to institute, prosecute, and control any action or proceeding with respect thereto by counsel of its own choice, and Medicis shall have the right, at its own expense, to be represented in that action by counsel of its own choice.  If Anacor fails to bring any such action or proceeding within a period of [ * ] after first being notified (or notifying Medicis) of such Competitive Infringement, so long as [ * ], then Medicis shall have the right, but not the obligation, to bring and control any such action by counsel of its own choice, and Anacor shall have the right to be represented in any such action by counsel of its own choice at its own expense.

 

8.4.3                                           Following Exercise Of PoC Option.  Following Medicis’s exercise of its PoC Option or termination of the Research Collaboration Term under Section 2.4.1(c), 12.4.1, 12.5.2, 12.6.3(c) or 13.7, with respect to any Competitive Infringement, but only with respect to a Medicis Development Compound, Medicis shall have the primary right, but not the obligation, to institute, prosecute, and control any action or proceeding with respect thereto by counsel of its own choice, and Anacor shall have the right, at its own expense, to be represented in that action by counsel of its own choice.  If Medicis fails to bring any such action or proceeding within a period of [ * ] after first being notified (or notifying Anacor) of such Competitive Infringement, so long as [ * ], Anacor shall have the right, but not the obligation, to bring and control any such action by counsel of its own choice, and Medicis shall have the right to be represented in any such action by counsel of its own choice at its own expense.

 

8.4.4                                           Recoveries.  If one Party brings any such action or proceeding in accordance with this Section 8.4, the second Party agrees to be joined as a party plaintiff where necessary, at the first Party’s expense, waives any objection which it may have pertaining to improper venue or forum non conveniens and shall give the first Party reasonable assistance and authority to file and prosecute the suit.  The costs and expenses of the Party bringing suit under this Section 8.4 shall be borne by such Party, and any damages or other monetary awards recovered shall be first applied to repay the reasonable expenses of the Parties in connection with the suit, and any excess shall be allocated [ * ] to the Party bringing the suit and [ * ] to the other Party.  A settlement or consent judgment or other voluntary final disposition of a suit under this Section 8.4 may be entered into without the consent of the Party not bringing the suit; provided that such settlement, consent judgment or other disposition does not admit the invalidity or unenforceability of the relevant Patent in the Anacor Patents, Anacor Target Patents, Medicis Patents, Medicis Target Patents, Collaboration Compound IP or Medicis Development Compound IP and, provided further, that any rights granted under the relevant Patent to continue the infringing activity in such settlement, consent judgment or other disposition shall be limited to those rights that the granting Party otherwise has the right to grant.

 

8.4.5                                           Other Infringement.  Subject to Sections 8.4.1 through 8.4.4 above, with respect to the infringement of jointly owned Collaboration Compound IP which is not a Competitive Infringement, each Party may proceed in such manner as the law permits.  Each Party shall bear its own expenses, and any recovery obtained by either Party may be retained by such Party unless otherwise agreed.  In addition, Anacor shall retain all rights to pursue an infringement of any Patent solely owned by Anacor that is other than a Competitive Infringement, and Medicis shall retain all rights to pursue an infringement of any Patent solely owned by Medicis that is other than a Competitive Infringement.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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8.4.6              35 U.S.C. § 271(e)(2) Infringement.  Notwithstanding anything to the contrary in this Section 8.4, for infringement under 35 U.S.C. § 271(e)(2) where Medicis has exercised its PoC Option, and where Medicis is the holder of the applicable NDA, and for so long as Medicis maintains or retains its exclusive license under such PoC Option, Medicis has the sole right to initiate legal action to enforce all Anacor IP licensed to it pursuant to Section 4.3.2 against infringement, unauthorized use, misappropriation, or other such activity, or any threat thereof, by Third Parties or defend any declaratory judgment action relating thereto or alleging the invalidity, unenforceability, or ownership of such Anacor IP at its sole expense.

 

8.5           Other Agreement(s).  Medicis’s rights under this Article 8 with respect to any Anacor Patents or Collaboration Compound Patents shall be subject to the rights that one or more Third Parties may have, or the obligations that Anacor may have, in each case to file, prosecute, maintain, or enforce such Patents under the agreement(s) listed in Exhibit 4.

 

ARTICLE 9

 

CONFIDENTIALITY

 

9.1           Confidentiality; Exceptions.  Except to the extent expressly authorized by this Agreement or otherwise agreed in writing, the Parties agree that the receiving Party, its Affiliates, and their respective employees, representatives, agents, consultants and Sublicensees, collectively (the “Receiving Party”) shall keep confidential and shall not publish or otherwise disclose or use for any purpose other than as provided for in this Agreement any Information or other confidential and proprietary information and materials, patentable or otherwise, in any form (written, oral, photographic, electronic, magnetic, or otherwise) which is disclosed to it by the other Party or its Affiliates or their respective employees, representatives, agents, consultants or Sublicensees (the “Disclosing Party”) or otherwise received or accessed by a Receiving Party in the course of performing its obligations or exercising its rights under this Agreement including trade secrets, know-how, inventions or discoveries, proprietary information, formulae, processes, techniques and information relating to a Party’s or its Affiliate’s past, present and future marketing, financial, and research and Development activities of any product or potential product or useful technology of the Disclosing Party and the pricing thereof (collectively, “Confidential Information”), except to the extent that it can be established by the Receiving Party that such Confidential Information:

 

9.1.1              was in the lawful knowledge and possession of the Receiving Party prior to the time it was disclosed to, or learned by, the Receiving Party, or was otherwise developed independently by the Receiving Party, as evidenced by written records kept in the ordinary course of business, or other documentary proof of actual use by the Receiving Party;

 

9.1.2              was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party;

 

9.1.3              became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the Receiving Party in breach of this Agreement; or

 

9.1.4              was disclosed to the Receiving Party, other than under an obligation of confidentiality, by a Third Party who had no obligation to the Disclosing Party not to disclose such Information to others.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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9.2           Authorized Use and Disclosure.

 

9.2.1              General.  Except as expressly provided otherwise in this Agreement, a Receiving Party may use and disclose Confidential Information of the Disclosing Party as follows: (a) under appropriate confidentiality provisions similar to those in this Agreement, in connection with the performance of its obligations or exercise of rights granted or reserved in this Agreement (including the rights to commercialize Products and to grant licenses and sublicenses hereunder); or (b) to the extent such disclosure is reasonably necessary in filing, prosecuting, maintaining, defending, or enforcing Patents, copyright and trademark applications, prosecuting or defending litigation, complying with applicable governmental regulations, obtaining Regulatory Approval, conducting pre-clinical activities or clinical trials, marketing Products, or otherwise required by law; provided, however, that if a Receiving Party is required by law or regulation to make any such disclosure of a Disclosing Party’s Confidential Information it will, except where impracticable for necessary disclosures, for example in the event of medical emergency, give reasonable advance notice to the Disclosing Party of such disclosure requirement and, except to the extent inappropriate in the case of Patent applications, will use its reasonable efforts to secure confidential treatment of such Confidential Information required to be disclosed; or (c) in communication with employees, representatives, Affiliates, Sublicensees, investors, consultants, advisors or others on a need to know basis, in each case under appropriate confidentiality provisions or legal obligations at least as stringent as those of this Agreement; or (d) to the extent mutually agreed to in writing by the Parties.

 

9.2.2              Post-PoC.  For the avoidance of doubt, following Medicis’s exercise of the PoC Option, Medicis may use and disclose any Confidential Information provided to it by Anacor prior to exercise of the PoC Option, to the extent such information relates directly to the Medicis Development Compound(s) identified pursuant to Section 4.2.1(a), to the extent such use or disclosure is in connection with Medicis’s exercise of its rights or performance of its obligations hereunder.

 

9.3           Press Release; Disclosure of Agreement.  Anacor shall have the right to make an 8-K filing with the Securities and Exchange Commission substantially in the form attached as Exhibit 7 on or after the Effective Date.  Anacor shall have the right to make a public announcement of the execution of this Agreement substantially in the form of the press release attached as Exhibit 8 on or after the Effective Date.  Neither Party shall be free to issue any other press release or other public disclosure regarding the Agreement or the Parties’ activities hereunder, or any results or data arising hereunder, except with the other Party’s prior written consent, or except as necessary to comply with all applicable national securities exchange listing requirements or laws, rules or regulations.  The Parties agree to consult with each other reasonably and in good faith, and each Party shall reasonably consider the other Party’s comments, with respect to the text and timing of any such press releases or other public disclosure prior to the issuance thereof.  Except as otherwise permitted in accordance with this Section 9.3, neither Party shall make any public announcements concerning this Agreement or the subject matter hereof without the prior written consent of the other.  The principles to be observed by Anacor and Medicis in any such permitted public disclosures with respect to this Agreement shall be: accuracy and completeness, the requirements of confidentiality under this Article 9, and the normal business practice in the pharmaceutical and biotechnology industries for disclosures by companies comparable to Anacor and Medicis.  Notwithstanding the foregoing, to the extent Information regarding this Agreement has already been publicly disclosed other than through any act or omission of a Party in breach of this Agreement, either Party may subsequently disclose the same Information to the public without the consent of the other Party.  Each Party shall be permitted to disclose the terms of this Agreement, in each case under appropriate confidentiality provisions substantially equivalent to those of this Agreement, to any actual or potential acquirers, merger partners, and professional advisors.  Each Party shall give the other Party a reasonable opportunity to review all filings with the United States Securities and Exchange Commission describing the terms of this Agreement

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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prior to submission of such filings, and shall consider any reasonable comments by the non-filing Party relating to such filing, including the provisions of this Agreement for which confidential treatment should be sought.

 

9.4           Termination of Prior Agreements.  This Agreement supersedes the confidentiality obligations set forth in the [ * ] (the “Term Sheet”) and the [ * ] (the “Non-Disclosure Agreement”).  The Term Sheet and the Non-Disclosure Agreement and all Information exchanged between the Parties in connection therewith shall be deemed Confidential Information hereunder and shall be subject to the terms of this Article 9.

 

9.5           Remedies.  Each Party shall be entitled to seek, in addition to any other right or remedy it may have, at law or in equity, a temporary injunction, without the posting of any bond or other security, enjoining or restraining the other Party from any violation or threatened violation of this Article 9.

 

9.6           Publications.  Except as provided in this Agreement, during the Term, neither Party or its Affiliates shall publish or publicly disclose the results of any of the research or Development activities conducted under this Agreement, without the prior written consent of the other Party, such consent not to be unreasonably withheld, except that after Medicis’s exercise of the PoC Option, the foregoing shall not apply to Medicis for results that relate directly to any Medicis Development Compounds.  It shall be deemed reasonable for either Party to withhold consent hereunder to prevent the disclosure of such Party’s independently developed trade secrets or other confidential information of such Party.  Each Party shall provide to the other Party at its earliest practical opportunity any proposed abstracts, manuscripts or summaries of presentations that cover the results of research or Development activities under this Agreement, for review and comment as to matters relating to Patents and Confidential Information.  The non-submitting Party shall respond in writing promptly and in no event later than [ * ] after receipt of the proposed material, or within such reasonably shorter period as is required (and promptly communicated to the non-submitting) by the relevant publication deadline, with comments on the proposed material or a specific statement of concern, based upon the need either to seek patent protection or to delete Confidential Information.  In the event of concern, the submitting Party agrees not to submit such publication or to make such presentation that contains such information until the other Party is given a reasonable period of time (not to exceed [ * ] to seek patent protection for any material in such publication or presentation which it believes is patentable or to resolve any other issues.

 

ARTICLE 10

 

REPRESENTATIONS AND WARRANTIES

 

10.1         Representations and Warranties of Both Parties.  Each Party hereby represents, warrants, and covenants to the other Party, as of the Effective Date, that:

 

10.1.1            such Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;

 

10.1.2            such Party has taken all necessary action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder;

 

10.1.3            this Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, binding obligation, enforceable against it in accordance with the terms hereof;

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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10.1.4            the execution, delivery and performance of this Agreement does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it is bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having jurisdiction over such Party;

 

10.1.5            no government authorization, consent, approval, license or exemption of with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, under any applicable laws, rules or regulations currently in effect, is or will be necessary for, or in connection with, the transaction contemplated by this Agreement or any other agreement or instrument executed in connection herewith, or for the performance by it of its obligations under this Agreement and such other agreements except as may be required to obtain HSR clearance; and

 

10.1.6            it has not employed and in the future will not employ (and, to the best of its knowledge without further duty of inquiry, has not used a contractor or consultant that has employed or in the future will employ) any Person debarred by the FDA (or subject to a similar sanction of EMA or other regulatory agency), or, to the best of its knowledge without further duty of inquiry, any Person which is the subject of an FDA debarment investigation or proceeding (or similar proceeding of EMA or other regulatory agency), in the conduct of the nonclinical activities or clinical studies of Collaboration Compounds and its activities under the Research Collaboration.

 

10.2         Deficit Reduction Act Compliance Policy.  In accordance with Section 6032 of the Deficit Reduction Act of 2005, Pub.  Law No.  109-171, Medicis has adopted a policy, entitled “Medicis Employee Education Policy Concerning the Prevention and Detection of Fraud, Waste, and Abuse in Government Health Care Programs:  Compliance Policy Pursuant to the Deficit Reduction Act of 2005” (hereinafter “Medicis’s Deficit Reduction Act Compliance Policy”), which establishes a written protocol for educating all employees (including management) of Medicis, and any contractors or agents who may on behalf of Medicis furnish or authorize the furnishing of Medicaid health care items or services, perform billing or coding functions, or become involved in monitoring any health care provided by Medicis (hereinafter “Applicable Agents”), about Medicis’s internal policies and procedures as well as various federal and state statutes and administrative remedies related to detecting and preventing fraud, waste, and abuse in government health care programs.  It is a condition of this Agreement that throughout the Term Anacor comply with the Deficit Reduction Act and Medicis’s Deficit Reduction Act Compliance Policy, and that Anacor provide the educational Information required under the Deficit Reduction Act to all employees who bear any responsibility in the performance of this Agreement.  A copy of Medicis’s Deficit Reduction Act Compliance Policy, as well as an addendum entitled “Federal and State Statutes and Administrative Remedies Related to Preventing and Detecting Fraud, Waste, and Abuse in Government Health Care Programs,” is available at [ * ] and is incorporated herein by reference.  Medicis will notify Anacor of any update to Medicis’s Deficit Reduction Act Compliance Policy within [ * ] of the date in which such policy is updated.  Anacor represents and warrants that, in the course of performing the Services described in this Agreement throughout the Term, it will comply with the Deficit Reduction Act and Medicis’s Deficit Reduction Act Compliance Policy.  Medicis represents and warrants to Anacor that it will comply with the Deficit Reduction Act and Medicis’s Deficit Reduction Act Compliance Policy throughout the Term.

 

10.3         Representations and Warranties of Anacor.  Anacor hereby represents, warrants, and covenants to Medicis, as of the Effective Date, that:

 

10.3.1            To the best of its knowledge, Anacor is the owner of, or has a license to, make, use, sell or offer for sale each Anacor Compound, in the form provided to Medicis, including the compounds [ * ];

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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10.3.2            To the best of its knowledge, Anacor has the right to grant all rights, licenses and assignments it purports to grant to Medicis under this Agreement;

 

10.3.3            Anacor has no present knowledge that any claims of any Anacor Patents or Anacor Target Patents or any claims directed to the compounds [ * ] are unpatentable, invalid or unenforceable;

 

10.3.4            There are no settled, pending or threatened Claims or lawsuits or legal proceedings by a Third Party against Anacor alleging that the making, composition or method of use of any boron-containing small molecule compound in Anacor’s library, including the compounds [ * ], infringes, uses without authorization, misappropriates or otherwise violates in part or in whole the intellectual property or intellectual property rights of such Third Party;

 

10.3.5            Anacor has not granted as of the Effective Date, and during the Term shall not grant, any right or license to any Third Party relating to any of the Anacor IP that would conflict with any of the rights or licenses granted to Medicis hereunder;

 

10.3.6            Without limiting the foregoing Sections 10.1.4 and 10.3.5, the execution, delivery and performance of this Agreement does not breach nor conflict with any agreement, instrument or understanding, oral or written, that Anacor has undertaken with SmithKline Beecham Corporation d/b/a/ GlaxoSmithKline;

 

10.3.7            Except pursuant to the agreements set forth on Exhibit 9, there are no obligations of Anacor to any Third Party that would encumber the compounds [ * ] or any other Collaboration Compound; and

 

10.3.8            To its knowledge, Anacor has disclosed to Medicis all material data and Information, all material correspondence to/from any Regulatory Authority regardless of whether such data and Information would have a positive, neutral or negative impact on the potential commercial, scientific or strategic value or attractiveness of the Anacor Compounds in existence as of the Effective Date.

 

10.4         Mutual Covenants.  Each Party hereby covenants to the other Party that:

 

10.4.1            All employees and independent contractors of such Party or its Affiliates and working under this Agreement shall be under the obligation to assign all right, title and interest in and to their inventions and discoveries, whether or not patentable, if any, to such Party as the sole owner thereof;

 

10.4.2            Such Party shall not employ (or, to the best of its knowledge without further duty of inquiry, shall not use any contractor or consultant that employs) any Person debarred by the FDA (or subject to a similar sanction of EMA or other regulatory agency), or, to the best of its knowledge without further duty of inquiry, any Person which is the subject of an FDA debarment investigation or proceeding (or similar proceeding of EMA or other regulatory agency), in the conduct of its activities hereunder; and

 

10.4.3            Such Party shall, except as otherwise specified in this Agreement or Research Plan, perform its activities pursuant to this Agreement in compliance with good laboratory (cGLP), clinical (cGCP) and manufacturing (cGMP) practices and other applicable ICH guidelines, in each case as applicable under the laws and regulations of the country and the state and local government wherein such activities are conducted, and with respect to the care, handling and use in research and Development activities hereunder of any non-human animals by or on behalf of such Party, shall at all times comply (and shall ensure compliance by its subcontractors) with all applicable federal, state and local laws, regulations and ordinances, and also with the

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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most current best practices in the industry for the proper care, handling and use of animals in pharmaceutical research and Development activities, subject to the other Party’s reasonable right of inspection.

 

10.5         Continuing Covenant of Non-Contravention.  Anacor covenants to Medicis that at all times during the Term (a) each Collaboration Compound and the associated Anacor IP shall be free of liens, mortgages, security interests and similar encumbrances except such encumbrances granted in favor of a lender, provided that Anacor shall use commercially reasonable efforts to obtain an acknowledgement from each such lender of Medicis’s rights hereunder and that such lender shall not seek to interfere with such rights; and (b) the Anacor IP shall not be subject to any license to a Third Party that would allow the Third Party to make, use, sell, offer to sell, import or otherwise exploit any of the Collaboration Compounds in the Field.

 

10.6         Disclaimer.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND EITHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY THAT ANY PATENTS ARE VALID OR ENFORCEABLE OR THAT THEIR EXERCISE DOES NOT INFRINGE ANY PATENT RIGHTS OF THIRD PARTIES.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH PARTY DISCLAIMS ANY WARRANTIES WITH REGARDS TO:  (A) THE SUCCESS OF ANY RESEARCH, STUDY OR TEST COMMENCED UNDER THIS AGREEMENT, (B) THE SAFETY OR USEFULNESS FOR ANY PURPOSE OF THE TECHNOLOGY OR MATERIALS, INCLUDING ANY COLLABORATION COMPOUNDS, IT PROVIDES OR DISCOVERS UNDER THIS AGREEMENT; OR (C) THE VALIDITY, ENFORCEABILITY, OR NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OR TECHNOLOGY IT PROVIDES OR LICENSES TO THE OTHER PARTY UNDER THIS AGREEMENT, EXCEPT IN EACH CASE (A)-(C) AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT.

 

10.7         LIMITATION OF LIABILITY.  EXCEPT FOR A BREACH OF ARTICLE 9 OR FOR CLAIMS OF A THIRD PARTY THAT ARE SUBJECT TO INDEMNIFICATION UNDER ARTICLE 11 OR AS OTHERWISE EXPRESSLY STATED IN THIS AGREEMENT, NEITHER ANACOR NOR MEDICIS, NOR ANY OF THEIR AFFILIATES OR SUBLICENSEES, WILL BE LIABLE TO THE OTHER PARTY, ITS AFFILIATES OR ANY OF THEIR SUBLICENSEES FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, RELIANCE OR PUNITIVE DAMAGES OR LOST OR IMPUTED PROFITS OR ROYALTIES, LOST DATA OR COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, WHETHER LIABILITY IS ASSERTED IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT PRODUCT LIABILITY), INDEMNITY OR CONTRIBUTION, AND IRRESPECTIVE OF WHETHER SUCH PARTY OR ANY REPRESENTATIVE THEREOF HAS BEEN ADVISED OF, OR OTHERWISE MIGHT HAVE ANTICIPATED THE POSSIBILITY OF, ANY SUCH LOSS OR DAMAGE.

 

ARTICLE 11

 

INDEMNIFICATION; INSURANCE

 

11.1         Indemnification by Medicis.  Medicis shall indemnify, defend and hold harmless Anacor and its Affiliates, and its or their respective directors, officers, employees and agents, from and against any and all liabilities, damages, losses, costs and expenses, including the reasonable fees of attorneys and other professionals (collectively, “Losses”), arising out of or resulting from any and all Third Party suits, claims, actions, proceedings or demands (“Claims”) based upon:

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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11.1.1            the negligence, recklessness or wrongful intentional acts or omissions of Medicis or its Affiliates and its or their respective directors, officers, employees and agents, in connection with Medicis’s performance of its obligations or exercise of its rights under this Agreement;

 

11.1.2            any breach of any representation or warranty or express covenant made by Medicis under Article 10 or any other provision under this Agreement; or

 

11.1.3            the Development that is actually conducted by or on behalf of Medicis (excluding any Development carried out by Anacor hereunder), the handling and storage by or on behalf of Medicis of any chemical agents or other compounds for the purpose of conducting Development by or on behalf of Medicis, and the manufacture, marketing, commercialization and sale by Medicis, its Affiliate or Sublicensees of any Medicis Development Compound or Derivative thereof or Product, including Third Party Claims that any such activity infringes, misappropriates or otherwise violates such Third Party’s intellectual property or other proprietary rights, but only to the extent such Third Party Claims do not arise from or involve an allegation that an Anacor Compound as introduced into the Program by Anacor infringes, misappropriates or otherwise violates such Third Party’s intellectual property or other proprietary rights;

 

11.1.4            except, in each case 11.1.1 – 11.1.3 above, to the extent such Claim arose out of or resulted from or is attributable to the negligence, recklessness or wrongful intentional acts or omissions of Anacor or its Affiliates, or their respective directors, officers, employees or agents.

 

11.2         Indemnification by Anacor.  Anacor shall indemnify, defend and hold harmless Medicis and its Affiliates, and its or their respective directors, officers, employees, representatives, and agents, from and against any and all Losses, arising out of or resulting from any and all Third Party Claims based upon:

 

11.2.1            the negligence, recklessness or wrongful intentional acts or omissions of Anacor or its Affiliates or its or their respective directors, officers, employees and agents, in connection with Anacor’s performance of its obligations or exercise of its rights under this Agreement;

 

11.2.2            any breach of any representation or warranty or express covenant made by Anacor under Article 10 or any other provision under this Agreement; or

 

11.2.3            the research or Development actually conducted by or on behalf of Anacor (excluding any Development carried out by Medicis), including Third Party Claims that such research or Development, or any Anacor Compound resulting therefrom, infringes, misappropriates or otherwise violates such Third Party’s intellectual property or other proprietary rights;

 

11.2.4            except, in each case 11.2.1 – 11.2.3 above, to the extent such Claim arose out of or resulted from or is attributable to the negligence, recklessness or wrongful intentional acts or omissions of Medicis or its Affiliate, or their respective directors, officers, employees and agents.

 

11.3         Procedure.  In the event that any person (an “Indemnitee”) entitled to indemnification under Section 11.1 or Section 11.2 is seeking such indemnification, such Indemnitee shall (a) inform, in writing, the indemnifying Party of the Claim as soon as reasonably practicable after such Indemnitee receives notice of such Claim, (b) permit the indemnifying Party to assume direction and control of the defense of the Claim (including the sole right to choose counsel and settle it at the sole discretion of the indemnifying Party, taking into consideration in good faith any reasonable concerns or objections raised by the Indemnitee; provided that such settlement does not impose any obligation on, or otherwise adversely affect, the Indemnitee or other Party), (c)

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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cooperate as reasonably requested (at the expense of the indemnifying Party) in the defense of the Claim, and (d) undertake all reasonable steps to mitigate any loss, damage or expense with respect to the Claim(s).

 

11.4         Insurance.

 

11.4.1            Anacor’s Insurance Obligations.  Anacor shall maintain, at its cost, with effect from prior to the date of first administration of any Collaboration Compound (including all Products and any product based thereon) for testing in humans hereunder and during the Research Collaboration Term plus [ * ] thereafter, insurance from an insurance company or companies having a Best’s Financial Performance Rating  (“BFPR”) of A+/A++ and a minimum Financial Size Category (“FSC”) of VIII or higher (if BFPR is A/A-, then FSC must be IX or higher) as follows: (a) workers’ compensation in the amount required by applicable state law in which the Program will be conducted; (b) commercial general liability insurance, including premises and operations coverage, with minimum limits of not less than [ * ] for Claims against Losses; (c) product and professional liability insurance appropriate for the conduct of clinical trials similar to those to be included in the Program with minimum limits of [ * ].  Such insurance shall designate Medicis and its Affiliates as “additional insureds” on commercial general liability policies.  Anacor shall furnish to Medicis evidence of such insurance, upon request.

 

11.4.2            Medicis’s Insurance Obligations.  Medicis hereby represents and warrants to Anacor that it has and will maintain sufficient insurance (either through self-insurance or through Third Party policy(ies)) against the types of liability and other risks that reasonably would be expected to be associated with its activities and obligations under this Agreement in such amounts and on such terms as are customary for prudent practices for pharmaceutical companies in the pharmaceutical industry for the activities to be conducted by it under this Agreement. Medicis shall furnish to Anacor evidence of such insurance or self-insurance, upon request.  From and after the date of the exercise of the PoC Option by Medicis hereunder and thereafter through the Term plus [ * ] thereafter, Medicis shall obtain and maintain insurance from an insurance company or companies having a BFPR of A+/A++ and a minimum FSC of VIII or higher (if BFPR is A/A-, then FSC must be IX or higher) as follows: (a) workers’ compensation in the amount required by applicable state law in which Development and commercialization by Medicis will be conducted; (b) comprehensive general liability insurance, including premises and operations coverage, with minimum limits of not less than [ * ] for all Claims against all Losses; and (c) product and professional liability insurance appropriate for the conduct of clinical trials with minimum limits of [ * ].  As applicable, such insurance shall provide coverage for all Claims against all losses, claims, demands, proceedings, damages, costs, charges and expenses for injuries or damage to any person or property arising out of or in connection with Medicis’s Development and commercialization of a Product, including its performance or nonperformance under this Agreement.  Such insurance shall designate Anacor and its Affiliates as “additional insureds” on comprehensive general liability policies.

 

11.4.3            The terms of this Section 11.4 shall not be deemed to limit the liability of either Party hereunder or to limit any rights either Party may have against the other, including, without limitation, indemnity or contribution.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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ARTICLE 12

 

TERM AND TERMINATION

 

12.1         Term; Expiration.

 

12.1.1            This Agreement shall become effective as of the Effective Date and, unless earlier terminated pursuant to the other provisions of this Article 12, shall expire as follows:

 

(a)           Upon expiration of the PoC Option Deadline Period or, if applicable, the PoC Option Deadline Extension Period, if Medicis has not then exercised the PoC Option, or

 

(b)           If Medicis exercises the PoC Option:

 

(i)            On a Product-by-Product and country-by-country basis, on the date of the expiration of all payment obligations under this Agreement with respect to such Product in such country; and

 

(ii)           In its entirety upon the expiration of all payment obligations under this Agreement with respect to the last Product in all countries in the Territory.

 

12.1.2            The period from the Effective Date until the date of expiration of this Agreement in its entirety, or as the case may be, until the date of the expiration of this Agreement in part with respect to a given Product, is referred to herein as the “Term.”

 

12.2         Termination for Cause.

 

12.2.1            Termination For Material Breach.  Either Party (the “Non-breaching Party”) may, without prejudice to any other remedies available to it at law or in equity, terminate this Agreement, in the event the other Party (the “Breaching Party”) shall have materially breached or defaulted in the performance of any of its material obligations hereunder, and such default shall have continued for [ * ] after written notice thereof was provided to the Breaching Party by the Non-breaching Party, such notice describing with particularity and in detail the alleged material breach.

 

12.2.2            Disagreement.  If the Parties reasonably and in good faith disagree as to whether there has been a material breach, the Party which seeks to dispute that there has been a material breach may contest the allegation in accordance with Section 13.1.  Notwithstanding the above sentence, the cure period for any allegation made in good faith as to a material breach under this Agreement will run from the date that written notice was first provided to the Breaching Party by the Non-breaching Party, but will be suspended during the pendency of any dispute resolution process under Section 13.1 or 13.2.  Irrespective of the length of the cure period, should the dispute resolution process extend beyond [ * ] after written notice was first provided to the Breaching Party by the Non-breaching Party hereunder, all Development and payment obligations of the Non-breaching Party under this Agreement shall be suspended pending resolution of the dispute and shall not be reinstated unless and until the dispute resolution process results in a final determination in favor of the Breaching Party.  Any termination of the Agreement under this Section 12.2 shall become effective at the end of the [ * ], unless the Breaching Party has cured any such breach or default prior to the expiration of such [ * ] period.  The right of either Party to terminate this Agreement as provided in this Section 12.2 shall not be affected in any way by such Party’s waiver or failure to take action with respect to any previous default.

 

12.2.3            Anacor Diligence Failure Event.  Upon the occurrence of an Anacor Diligence Failure Event that also constitutes a material breach, Medicis may either (a) elect the procedures and remedies set forth in Section 2.4.1, which shall be Medicis’s sole and exclusive remedy for such material breach or (b) proceed in accordance with this Section 12.2 and Section 12.6.3.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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12.3         Medicis Unilateral Termination Rights.  Medicis shall have the right, at its sole discretion and without any penalty or liability, exercisable at any time during the Term unless Medicis is a Breaching Party at the time of any proposed notice, to terminate this Agreement for any reason or no reason at all, in its entirety upon (a) [ * ] written notice to Anacor if delivered [ * ], or (b) [ * ] written notice to Anacor if delivered [ * ], subject to the obligations set forth in Sections 12.6.2 and 12.6.5.  Notice of termination pursuant to this Section shall not be deemed to limit or terminate any rights or obligations accrued or continuing through the effective date of termination.

 

12.4         Termination for Insolvency.

 

12.4.1            Either Party may terminate this Agreement if, at any time, the other Party shall file in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of substantially all of its assets, or if the other Party proposes a written agreement of composition or extension of substantially all of its debts, or if the other Party shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within [ * ] after the filing thereof, or if the other Party shall propose or be a party to any dissolution or liquidation, or if the other Party shall make an assignment of substantially all of its assets for the benefit of creditors (each an “Insolvency Event”).  Upon any termination of the Agreement by Medicis under this Section during the Research Collaboration Term and prior to the JRC’s confirmation of a PoC Compound: (a) all Collaboration Compounds identified prior to said termination date shall be deemed to be Medicis Development Compounds, (b) subject to the terms and conditions of this Agreement, Anacor shall grant and does hereby grant, as of the effective date of such termination and election by Medicis, an exclusive (even as to Anacor and its Affiliates), worldwide license (with the right to grant sublicenses) under the Anacor Exclusively Licensed IP, to make, have made, use, sell, offer for sale and import such Medicis Development Compounds and Derivatives thereof as and into Products in the Territory, (c) Medicis will have the right to continue the Development of any such deemed Medicis Development Compounds as of such termination event on its own or through Sublicensees, and (d) following any such termination by Medicis under this Section during the Research Collaboration Term and prior to the JRC’s confirmation of a PoC Compound, Medicis shall pay to Anacor (i) a royalty on Annual Net Sales of Products at a rate that is equal to [ * ] of the applicable royalty rates set forth in Section 6.4, (ii) non-royalty payments at a rate that is equal to [ * ] of the applicable rate set forth in Section 6.5, and (iii) [ * ] of the applicable milestone payments due under Sections 6.2 or 6.3 for any milestones achieved subsequent to Medicis’s termination under this Section.  Notwithstanding anything to the contrary in this Agreement, Anacor shall have no further obligations to conduct the Program as of the effective date of such termination by Medicis under this Section.  For clarity, the foregoing license and payment reductions apply only for termination under this Section during the Research Collaboration Term and prior to the JRC’s confirmation of a PoC Compound.

 

12.4.2            All rights and licenses granted under or pursuant to any section of this Agreement are and shall otherwise be deemed to be for purposes of Section 365(n) of Title 11, United States Code (the “Bankruptcy Code”) licenses of rights to “intellectual property” as defined in Section 101(35A) of the Bankruptcy Code.  The Parties shall retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code.  Upon the bankruptcy of any Party, the non-bankrupt Party shall further be entitled to a complete duplicate of, or complete access to, any such intellectual property, and such, if not already in its possession, shall be promptly delivered to the non-bankrupt Party, unless the bankrupt Party elects to continue, and continues, to perform all of its obligations under this Agreement.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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12.5         Anacor Change of Control.

 

12.5.1            Notice.  If Anacor enters into an agreement that results in, or if the transaction (or series of transactions) contemplated thereby if completed would result in, a Change of Control of Anacor, Anacor shall provide Medicis with prompt written notice describing such Change of Control in reasonable detail (the “Anacor Change of Control Notice”).  The Anacor Change of Control Notice shall be provided by Anacor promptly following the earlier of (a) the public disclosure of the entry into such agreement and (b) consummation of the transaction (or series of transactions) resulting in the Change of Control.

 

12.5.2            Consequences of Change of Control of Anacor.  Upon the occurrence of any Change of Control of Anacor during the Research Collaboration Term and prior to the JRC’s confirmation of a PoC Compound, Medicis shall have the right to either (a) continue the Research Collaboration Term in accordance with the terms of this Agreement, or (b) within [ * ] after receipt of the Anacor Change of Control Notice, terminate the Research Collaboration Term and exercise the PoC Option by written notice to Anacor specifying up to [ * ] Collaboration Compounds to be deemed Medicis Development Compounds, notwithstanding that the JRC has not identified a PoC Compound.  Following Medicis’s exercise of the PoC Option under this Section, Anacor shall provide Medicis with the Information and other materials required by Section 4.4, and Medicis shall have the license set forth in Section 4.3.2 with respect to such Medicis Development Compounds.  For clarity, all payment obligations in Article 6 shall apply to such Medicis Development Compounds and any Products containing such compounds; provided, however, that milestone payments 1 through 3 as set forth in Section 6.2.1 (if not already paid) shall be [ * ].  If Anacor’s acquirer is, at the time of the closing date of the Change of Control, developing or commercializing any compound or product whose research, Development, or commercialization by Anacor would violate any exclusivity obligation under Section 7.1, (x) such activities shall be excluded from the limitations of and deemed not to violate Section 7.1 and (y) [ * ].  In any event, at the time of the closing date of the Change of Control, Section 2.7 shall immediately terminate and no longer be of any force or effect.

 

12.6         Effect of Termination or Expiration

 

12.6.1            Upon Expiration.  Following the expiration of the Term pursuant to Section 12.1, Medicis shall return to Anacor all Confidential Information of Anacor then in its possession.  If the Term expires following Medicis’s exercise of the PoC Option, Medicis shall have, and Anacor hereby grants to Medicis, an exclusive, fully-paid (only upon such expiration) and royalty-free right and license, with the right to grant sublicenses, under the Anacor Exclusively Licensed IP to make, have made, use, sell, offer for sale, import and otherwise exploit the Medicis Development Compounds as and into Products in the Territory, for so long as it continues to do so.

 

12.6.2            Upon Unilateral Termination By Medicis.  In the event of a unilateral termination of this Agreement by Medicis pursuant to Section 12.3, the following terms shall apply, in addition to Section 12.6.5:

 

(a)           Notwithstanding anything contained herein to the contrary, all licenses granted to Medicis with respect to Medicis Development Compounds, if any, shall terminate;

 

(b)           Any unexercised PoC Option as of the date that Anacor receives such termination notice from Medicis shall be cancelled and of no force and effect; and

 

(c)           The exclusivity obligations under Article 7 shall immediately terminate and no longer be of any force or effect.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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12.6.3            Upon Termination By Medicis For Cause.

 

(a)           In the event of a termination of this Agreement in its entirety by Medicis pursuant to Section 12.2.1 or 12.4.1 before the end of the Research Collaboration Term, the Research Collaboration Term shall terminate.

 

(b)           In the event of a termination of this Agreement by Medicis pursuant to Section 12.2.1, 12.4.1 or 13.7:

 

(i)            Any unexercised PoC Option as of the effective date of termination shall be cancelled and of no force and effect; and

 

(ii)           All of Medicis’s exclusivity obligations under Section 7.2 shall immediately terminate and no longer be of any force or effect, but Anacor’s exclusivity obligations under Section 7.1 shall survive.

 

(c)           If Medicis has the right to terminate this Agreement under Section 12.2.1 during the Research Collaboration Term and prior to the JRC’s confirmation of a PoC Compound, then in lieu of terminating this Agreement, Medicis may instead terminate only the Research Collaboration Term, in which case all Collaboration Compounds identified prior to said termination date shall be deemed to be Medicis Development Compounds.  Subject to the terms and conditions of this Agreement, Anacor shall grant and does hereby grant, as of the effective date of such termination and election by Medicis, an exclusive (even as to Anacor and its Affiliates), worldwide license (with the right to grant sublicenses) under the Anacor Exclusively Licensed IP, to make, have made, use, sell, offer for sale and import such Medicis Development Compounds and Derivatives thereof as and into Products in the Territory.  Medicis will have the right to continue the Development of any such deemed Medicis Development Compounds as of such termination event on its own or through Sublicensees.  Following any termination of the Research Collaboration Term by Medicis under this Section prior to the JRC’s confirmation of a PoC Compound, Medicis shall pay to Anacor either (x) a royalty on [ * ] at a rate that is equal to [ * ] of the applicable royalty rates set forth in Section 6.4; non-royalty payments at a rate that is equal to [ * ] of the applicable rate set forth in Section 6.5; and [ * ] of the applicable milestone payments due under Sections 6.2 or 6.3 for any milestones achieved subsequent to Medicis’s termination under this Section, or (y) all payments as set forth in Article 6, except that Medicis may offset against any milestone and royalty payments to Anacor under this clause (y) an amount equal to [ * ] as of the date of Anacor’s receipt of notice from Medicis under Section 12.2.1.  Medicis shall elect between clauses (x) and (y) in the preceding sentence by written notice to Anacor on or before the effective date of termination of the Research Collaboration Term. Notwithstanding anything to the contrary in this Agreement, as of the effective date of such termination of the Research Collaboration Term by Medicis under this Section 12.6.3(c), Anacor shall have no further obligations to conduct the Program.  If Medicis elects to terminate the Research Collaboration Term under this Section 12.6.3(c), such election shall be Medicis’s sole and exclusive remedy for the applicable material breach by Anacor.

 

12.6.4            Upon Termination By Anacor For Cause.  In the event of a termination of this Agreement by Anacor pursuant to Section 12.2.1, 12.4.1 or 13.7, the following terms shall apply, in addition to Section 12.6.5:

 

(a)           In the event of a termination of this Agreement by Anacor pursuant to Section 12.2.1 or 12.4.1 before the end of the Research Collaboration Term, the Research Collaboration Term shall terminate.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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(b)           In the event of a termination of this Agreement by Anacor pursuant to Section 12.2.1, 12.4.1 or 13.7:

 

(i)            All of Anacor’s exclusivity obligations under Section 7.1 shall immediately terminate and no longer be of any force or effect; and

 

(ii)           Any unexercised PoC Option as of the effective date of termination shall be cancelled and of no force and effect.  For clarity, Medicis shall not be permitted to exercise its PoC Option after receiving notice of Anacor’s termination under Section 12.2.1 or 12.4.1, without Anacor’s prior written consent, unless and until Anacor agrees, or it is determined pursuant to Section 13.1, that Medicis has cured the applicable breach in a timely manner.

 

12.6.5            Additional Effects of Termination.  Upon termination of this Agreement by Anacor pursuant to Section 12.2.1, 12.4.1 or 13.7 or by Medicis pursuant to Section 12.3:

 

(a)           License.  Medicis hereby grants to Anacor, effective only upon such termination, a perpetual, irrevocable, exclusive (even as to Medicis), royalty-free right and license in the Territory, with the right to grant sublicenses (through multiple tiers), under the Medicis IP, to make, have made, use, sell, offer for sale and import the Medicis Development Compounds as and into Products.

 

(b)           Regulatory Filings.

 

(i)            If Prior to First Commercial Sale of Product: At no cost to Anacor, Medicis would exclusively license or assign and deliver to Anacor all relevant documents, safety databases, regulatory filings, Regulatory Approvals and Development and manufacturing Information to the extent pertaining specifically to any Products and which is necessary or important for commercial use and exploitation in the Territory; and

 

(ii)           If Following First Commercial Sale of a Product: At no cost to Anacor and with respect to all affected countries, Medicis would exclusively license or assign and deliver to Anacor all relevant documents, safety data, regulatory filings, Development and manufacturing Information, trademarks as well as any other Information, data and materials reasonably requested by Anacor, to the extent pertaining specifically to any Products and which is necessary or important for commercial use and exploitation in the Territory.  In addition, at no cost to Anacor, Medicis shall provide for reasonable transitional support, such support to be not less than [ * ] in countries in which the Product is approved for marketing.

 

(c)           Each Party shall return to the other Party all of such other Party’s Confidential Information, and Medicis shall return to Anacor all other Information provided by Anacor to Medicis related to the Program, Anacor Compounds and Collaboration Compounds.

 

12.7         Accrued Rights; Surviving Provisions of the Agreement.

 

12.7.1            Termination, relinquishment or expiration of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of any Party prior to such termination, relinquishment or expiration including the payment obligations under Article 6 hereof and any and all damages arising from any breach hereunder.  Such termination, relinquishment or expiration shall not relieve any Party from obligations which are expressly indicated to survive termination of this Agreement.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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12.7.2            The provisions of Article 9 and Article 11 and Sections 2.8.2, 2.8.4, 2.8.5, 2.8.6, 6.9, 6.10, 8.1, 8.2.1 (last sentence only), 10.5, 12.6, 12.7, 13.4, 13.8, 13.10, 13.11, 13.13, 13.16, 13.17, 13.18 and 13.19, as well as any applicable definitions in Article 1, shall survive the termination, relinquishment or expiration of this Agreement for any reason, in accordance with their respective terms and conditions, and for the duration stated, and where no duration is stated, shall survive indefinitely.

 

ARTICLE 13

 

MISCELLANEOUS

 

13.1         Dispute Resolution.  Unless otherwise set forth in this Agreement, in the event of a dispute arising under this Agreement between the Parties, either Party shall have a right to refer such dispute to an individual holding a position with said Party of Senior Vice President or higher (each an “Executive Officer”) who shall attempt in good faith to resolve such dispute.  If the Parties are unable to resolve a given dispute pursuant to this Section 13.1 within [ * ] of referring such dispute to the Executive Officers, either Party may have the given dispute settled by binding arbitration pursuant to Section 13.2.

 

13.2         Arbitration Request.  If a Party intends to begin an arbitration to resolve a dispute arising under this Agreement, such Party shall provide written notice (the  “Arbitration Request”) to the other Party of such intention and the issues for resolution.  From the date of the Arbitration Request and until such time as the dispute has become finally settled, the running of the time periods as to which Party must cure a breach of this Agreement becomes suspended as to any breach that is the subject matter of the dispute.

 

13.2.1            Additional Issues.  Within [ * ] after the receipt of the Arbitration Request, the other Party may, by written notice, add additional issues for resolution.

 

13.2.2            No Arbitration of Patent/Confidentiality Issues.  Unless otherwise agreed by the Parties, disputes relating to Patents and non-disclosure, non-use and maintenance of Confidential Information shall not be subject to arbitration, and shall be submitted to a court of competent jurisdiction.

 

13.2.3            Arbitration Procedure.  The Arbitration shall be held in Wilmington, Delaware by JAMS pursuant to the Comprehensive Arbitration Rules and Procedures of JAMS then in effect (the “JAMS Rules”). The arbitration shall be conducted by [ * ] who are knowledgeable in the subject matter at issue in the dispute.  [ * ]will be selected by Anacor, [ * ] will be selected by Medicis, and [ * ] will be selected by mutual agreement of the [ * ] selected by the Parties.  The arbitrators may proceed to an award, notwithstanding the failure of either Party to participate in the proceedings.  The arbitrators shall, within [ * ] after the conclusion of the arbitration hearing, issue a written award and statement of decision describing the essential findings and conclusions on which the award is based, including the calculation of any damages awarded.  The arbitrators shall be authorized to award compensatory damages, but shall not be authorized to award non-economic damages or punitive damages, or to reform, modify or materially change this Agreement.  The arbitrators also shall be authorized to grant any temporary, preliminary or permanent equitable remedy or relief the arbitrators deem just and equitable and within the scope of this Agreement, including an injunction or order for specific performance.  The award of the arbitrators shall be the sole and exclusive remedy of the Parties (except for those remedies set forth in this Agreement).  Judgment on the award rendered by the arbitrators may be enforced in any court having competent jurisdiction thereof, subject only to revocation on grounds of fraud or clear bias on the part of the arbitrators.  Notwithstanding anything contained in this Section 13.2 to the contrary, each Party shall have the right to institute judicial proceedings against the other Party or anyone acting by,

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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through or under such other Party, in order to enforce the instituting Party’s rights hereunder through specific performance, injunction or similar equitable relief.

 

13.3         Costs.  Each Party shall bear its own attorneys’ fees, costs, and disbursements arising out of the arbitration, and shall pay an equal share of the fees and costs of the arbitrators; provided, however, that the arbitrators shall be authorized to determine whether a Party is the prevailing Party, and if so, to award to that prevailing Party reimbursement for its reasonable attorneys’ fees, costs and disbursements (including, for example, expert witness fees and expenses, photocopy charges and travel expenses).

 

13.4         Governing Law.  This Agreement and any dispute arising from the construction, interpretation, performance, or breach hereof shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without reference to conflicts of laws principles.

 

13.5         Assignment.  Either Party may assign this Agreement to any Affiliate of such Party without the prior written consent of the other Party; provided that such Party provides the other Party with written notice of such assignment and remains fully liable for the performance of such Party’s obligations hereunder by such Affiliate.  Further, subject to Section 12.5, each Party may assign this Agreement without the prior written consent of the other Party, to its successor in interest by way of merger, acquisition, or sale of all or substantially all of its assets to which this Agreement relates; provided that such Party provides the other Party with written notice of such assignment.  The terms and conditions of this Agreement shall be binding upon and shall inure to the benefit of the successors, heirs, administrators and permitted assigns of the Parties.  Any purported assignment in violation of this Section shall be null and void and of no force and effect.

 

13.6         Performance Warranty.  Each Party hereby acknowledges and agrees that it shall be responsible for the full and timely performance as and when due under, and observance of all the covenants, terms, conditions and agreements set forth in, this Agreement by its Affiliate(s) and Sublicensees.

 

13.7         Force Majeure.  No Party shall be held liable or responsible to the other Parties nor be deemed to be in default under, or in breach of any provision of, this Agreement for failure or delay in fulfilling or performing any obligation (other than a payment obligation) of this Agreement when such failure or delay is due to force majeure, and without the fault or negligence of the Party so failing or delaying.  For purposes of this Agreement, force majeure is defined as causes beyond the control of the Party, including acts of God; acts, regulations, or laws of any government; war; civil commotion; destruction of production facilities or materials by fire, flood, earthquake, explosion or storm; labor disturbances; epidemic; and failure of public utilities or common carriers.  In such event Anacor or Medicis, as the case may be, shall immediately notify the other Party of such inability and of the period for which such inability is expected to continue.  The Party giving such notice shall thereupon be excused from such of its obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled for up to a maximum of [ * ], after which time the Party not affected by the force majeure may terminate this Agreement upon written notice to the other Party.  To the extent possible, each Party shall use reasonable efforts to minimize the duration of any force majeure.  If Medicis has the right to terminate this Agreement under this Section during the Research Collaboration Term and prior to the JRC’s confirmation of a PoC Compound, then in lieu of terminating the Agreement, Medicis may instead terminate only the Research Collaboration Term, in which case all Collaboration Compounds identified prior to said termination date shall be deemed to be Medicis Development Compounds.  Subject to the terms and conditions of this Agreement, Anacor shall grant and does hereby grant, as of the effective date of such termination of the Research Collaboration Term and election by Medicis, an exclusive (even as to Anacor and its Affiliates), worldwide license (with the right to grant sublicenses) under the Anacor Exclusively Licensed IP, to make, have made, use, sell, offer for sale and import such Medicis Development Compounds

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

55

 

and Derivatives thereof as and into Products in the Territory.  Medicis will have the right to continue the Development of any such deemed Medicis Development Compounds as of such termination event on its own or through Sublicensees.  For clarity, all payment obligations in Article 6 shall apply to such Medicis Development Compounds and any Products containing such compounds; provided, however, that milestone payments 1 through 3 as set forth in Section 6.2.1 (if not already paid) shall be [ * ].  Notwithstanding anything to the contrary in this Agreement, Anacor shall have no further obligations to conduct the Program as of the effective date of termination of the Research Collaboration Term by Medicis under this Section.

 

13.8         Notices.  Any notice or request required or permitted to be given under or in connection with this Agreement shall be deemed to have been sufficiently given if in writing and personally delivered or sent by certified mail (return receipt requested), facsimile transmission (receipt verified), or overnight express courier service (signature required), prepaid, to the Party for which such notice is intended, at the address set forth for such Party below:

 

	
If   to Anacor, addressed to:
    	
Anacor   Pharmaceuticals, Inc.
    
	
 
    	
1020   East Meadow Circle
    
	
 
    	
Palo   Alto, CA 94303-4230
    
	
 
    	
Attention:   Chief Executive Officer
    
	
 
    	
Facsimile:     (650) 543-7660
    
	
 
    	
 
    
	
with   a copy to:
    	
Cooley   LLP
    
	
 
    	
3175   Hanover Street
    
	
 
    	
Palo   Alto, CA 94304-1130
    
	
 
    	
Attention:   Glen Y. Sato, Esq.
    
	
 
    	
Facsimile:     (650) 849-7400
    
	
 
    	
 
    
	
If   to Medicis, addressed to:
    	
Medicis   Pharmaceutical Corporation
    
	
 
    	
7720   North Dobson Road
    
	
 
    	
Scottsdale,   AZ 85256
    
	
 
    	
Attention:   Legal Department
    
	
 
    	
Facsimile:   480-291-5163
    

 

or to such other address for such Party as it shall have specified by like notice to the other Party, provided that notices of a change of address shall be effective only upon receipt thereof.  If delivered personally or by facsimile transmission, the date of delivery shall be deemed to be the date on which such notice or request was given.  If sent by overnight express courier service, the date of delivery shall be deemed to be the next Business Day after such notice or request was deposited with such service.  If sent by certified mail, the date of delivery shall be deemed to be the third Business Day after such notice or request was deposited with the U.S.  Postal Service.

 

13.9         Export Clause.  Each Party acknowledges that the laws and regulations of the United States restrict the export and re-export of commodities and technical data of United States origin.  Each Party agrees that it will not export or re-export restricted commodities or the technical data of the other Party in any form without the appropriate United States and foreign government licenses.

 

13.10       Waiver.  Neither Party may waive or release any of its rights or interests in this Agreement except in writing in accordance with Section 13.8.  The failure of either Party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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or excuse a similar subsequent failure to perform any such term or condition.  No waiver by either Party of any condition or term in any one or more instances shall be construed as a continuing waiver of such condition or term or of another condition or term.

 

13.11       Severability.  If any provision hereof should be held invalid, illegal or unenforceable in any jurisdiction, the Parties shall negotiate in good faith a valid, legal and enforceable substitute provision that most nearly reflects the original intent of the Parties and all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the Parties hereto as nearly as may be possible.  Such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction.

 

13.12       Entire Agreement.  This Agreement, together with the Schedules and Exhibits hereto, set forth all the covenants, promises, agreements, warranties, representations, conditions and understandings between the Parties hereto and supersede and terminate all prior agreements and understanding between the Parties, including the Term Sheet and the Non-Disclosure Agreement.  There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the Parties other than as set forth herein and therein.  No subsequent alteration, amendment, change or addition to this Agreement shall be binding upon the Parties hereto unless reduced to writing and signed by the respective authorized officers of the Parties.

 

13.13       Independent Contractors.  Nothing herein shall be construed to create any relationship of employer and employee, agent and principal, partnership or joint venture between the Parties.  Each Party is an independent contractor.  Neither Party shall assume, either directly or indirectly, any liability of or for the other Party.  Neither Party shall have the authority to bind or obligate the other Party and neither Party shall represent that it has such authority.

 

13.14       Books and Records.  Any financial books and records to be maintained under this Agreement by a Party or its Affiliates or Sublicensees shall be maintained in accordance with U.S.  generally accepted accounting principles.

 

13.15       Further Actions.  Each Party shall execute, acknowledge and deliver such further instruments, and do all such other acts, as may be necessary or appropriate in order to carry out the expressly stated purposes and the clear intent of this Agreement.

 

13.16       Parties in Interest.  All of the terms and provisions of this Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by the Parties hereto and their respective successors, heirs, administrators and permitted assigns.

 

13.17       Construction of Agreement.  The terms and provisions of this Agreement represent the results of negotiations between the Parties and their representatives, each of which has been represented by counsel of its own choosing, and neither of which has acted under duress or compulsion, whether legal, economic or otherwise.  Accordingly, the terms and provisions of this Agreement shall be interpreted and construed in accordance with their usual and customary meanings, and each of the Parties hereto hereby waives the application in connection with the interpretation and construction of this Agreement of any rule of law to the effect that ambiguous or conflicting terms or provisions contained in this Agreement shall be interpreted or construed against the Party whose attorney prepared the executed draft or any earlier draft of this Agreement.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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13.18       Supremacy.  In the event of any express conflict or inconsistency between this Agreement and the Research Plan or of any Schedule or Exhibit hereto, the terms of this Agreement shall control.  The Parties understand and agree that the Schedules and Exhibits hereto are not intended to be the final and complete embodiment of any terms or provisions of this Agreement, and are to be updated from time to time during the Term, as appropriate and in accordance with the provisions of this Agreement.

 

13.19       Counterparts.  This Agreement may be signed in counterparts, each and every one of which shall be deemed an original, notwithstanding variations in format or file designation which may result from the electronic transmission, storage and printing of copies of this Agreement from separate computers or printers.  Facsimile signatures and signatures transmitted via PDF shall be treated as original signatures.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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IN WITNESS WHEREOF, the Parties have caused this Research and Development Option and License Agreement to be executed by their duly authorized representatives as of the Effective Date.

 

 

	
Anacor   Pharmaceuticals, Inc.
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   David P. Perry
    	
 
    
	
 
    	
 
    
	
Name:    David P. Perry
    	
 
    
	
 
    	
 
    
	
Title:   President & Chief Executive Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Medicis   Pharmaceutical Corporation
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Richard D. Peterson
    	
 
    
	
 
    	
 
    
	
Name:   
    	
Richard   D. Peterson
    	
 
    
	
 
    	
 
    	
 
    
	
Title:   
    	
Executive   Vice President, CFO, Treasurer
    	
 
    
				

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Exhibits
    
	
 
    	
 
    
	
Exhibit 1
    	
Research   Plan
    
	
Exhibit 2
    	
Candidate   Selection Criteria
    
	
Exhibit 3
    	
PoC   Compound Criteria
    
	
Exhibit 4
    	
Third   Party Agreements
    
	
Exhibit 5
    	
Phase   1 Synopsis
    
	
Exhibit 6
    	
Post   PoC Transfers
    
	
Exhibit 7
    	
8-K   Filing
    
	
Exhibit 8
    	
Press   Release
    
	
Exhibit 9
    	
Encumbrances
    
	
Exhibit 10
    	
Collaboration   Compound Scaffolds
    

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT 1

Research Plan

 

[ * ]

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

1

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT 2

Candidate Selection Criteria

 

[ * ]

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

1

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT 3

PoC Compound Criteria

 

The following represent acceptance criteria for a PoC Compound:

 

[ * ]

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

1

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT 4

Third Party Agreements

 

[ * ]

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

1

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT 5

Phase 1 Study Synopsis

 

[ * ]

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

1

 

PoC Trial Synopsis

 

[ * ]

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

2

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT 6

Post PoC Transfers

 

[ * ]

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

1

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT 7

8K Filing

 

ITEM 1.01            ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

 

On February 9, 2011, we entered into a Research and Development Option and License Agreement (the “Agreement”) with Medicis Pharmaceutical Corporation (“Medicis”) to discover and develop boron-based small molecule compounds directed against a specified target for the potential treatment of acne.  Under the terms of the Agreement, we will receive a $7 million upfront payment and will be primarily responsible, during a defined research collaboration term, for discovering and conducting early development of product candidates for which Medicis would have an option to obtain an exclusive license.  We would also be eligible for future research, development, regulatory and sales milestones of up to $153 million, as well as high single-digit to low double-digit royalties on sales of products which Medicis licenses pursuant to its option.  Following option exercise, Medicis would be responsible for further development and commercialization of product candidates on a worldwide basis.

 

If Medicis exercises its option for a product candidate, the Agreement will continue in effect until the expiration of royalty payment obligations, which obligations will run through the later of patent or regulatory exclusivity and 7 years from first commercial sale, on a product-by-product basis.  Upon the expiration of such payment obligations for a product under the Agreement, Medicis will retain an exclusive, fully paid and royalty-free right and license in such product.  The Agreement allows for at-will termination by Medicis upon written notice, and either party may terminate for the other party’s uncured material breach of the agreement or specified activities related to insolvency.  In the event of at-will termination by Medicis or termination by us for material breach or insolvency activities by Medicis, all rights granted by us to Medicis would revert to us, and Medicis would be required to grant to us a non-exclusive license under its patent rights covering products under the Agreement.  If we materially breach the Agreement prior to the completion of the research collaboration term and exercise of the option, Medicis would be entitled to either terminate the Agreement or continue with the Agreement and terminate the research collaboration term, in which case Medicis would have a right to reduce its financial obligations to us or recover its costs to mitigate the damages resulting from such breach.

 

We have agreed not to research or develop, with respect to the target that is the subject of the Agreement, any small molecule products in a specified field for use in humans for a period of 11 years.  Medicis has agreed not to research or develop with respect to the target that is the subject of the Agreement any boron-containing compound for 9 years from the date of the Agreement or, if a certain milestone is not met, for 4 years from the date of the Agreement.

 

The foregoing is only a brief description of certain of the terms of the Agreement, does not purport to be complete and is qualified in its entirety by reference to the Agreement that will be filed as an exhibit to our quarterly report on Form 10-Q for the quarter ending March 31, 2011.

 

A press release announcing the foregoing is attached as Exhibit 99.1 attached hereto.

 

ITEM 9.01     FINANCIAL STATEMENTS AND EXHIBITS.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

 

(d)  Exhibits.  

 

	
Exhibit Number
    	
 
    	
Description
    
	
99.1
    	
 
    	
Press   Release announcing entry into Research and Development Option and License   Agreement
    

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

3

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT 8

Press Release

 

	

    	

    

 

	
CONTACT:
    	
 
    
	
Medicis
    	
Anacor
    
	
Kara   Stancell (media)
    	
DeDe   Sheel
    
	
(480)   291-5454
    	
(650)   543-7575
    
	
Sean   Andrews (investors)
    	
 
    
	
(480)   291-5854
    	
 
    

 

MEDICIS AND ANACOR ENTER INTO RESEARCH AND DEVELOPMENT COLLABORATION FOR THE TREATMENT OF ACNE

 

SCOTTSDALE, Ariz. and PALO ALTO, Calif.—February XX, 2011—Medicis Pharmaceutical Corporation (NYSE:MRX) and Anacor Pharmaceuticals, Inc. (NASDAQ:ANAC) today announced that the two companies have entered into a research and development agreement to discover and develop boron-based small molecule compounds directed against a target for the potential treatment of acne.

 

Under the terms of the agreement, Anacor will receive a $7 million upfront payment from Medicis and will be primarily responsible for discovering and conducting early development of product candidates which utilize Anacor’s proprietary boron chemistry platform.  Medicis will have an option to obtain an exclusive license for products covered by the agreement.  Anacor will be eligible for future research, development, regulatory and sales milestones of up to $153 million, as well as high single-digit to low double-digit royalties on sales by Medicis.  Medicis will be responsible for further development and commercialization of the licensed products on a worldwide basis.

 

“We are pleased to announce this important collaboration with Anacor,” said Jonah Shacknai, Chairman and Chief Executive Officer of Medicis.  “Anacor and its scientists are well respected in the scientific community, and Medicis is proud to be among other significant organizations who have partnered with them to explore the pharmaceutical development of the Anacor boron chemistry platform.  We will together be working hard to achieve breakthroughs with this proprietary technology in the treatment of acne.”

 

“We have demonstrated that boron-based chemistry is productive in creating novel small molecule therapeutics, and we are excited to work with Medicis to apply this technology to the development of a unique,

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

 

patented treatment for acne,” said David Perry, Anacor’s Chief Executive Officer.  “With our technology and Medicis’ expertise in developing and commercializing pharmaceuticals, we hope this collaboration will result in innovative products to help the patients who suffer from this condition.”

 

About Medicis

 

Medicis is the leading independent specialty pharmaceutical company in the United States focusing primarily on the treatment of dermatological and aesthetic conditions.  The Company is dedicated to helping patients attain a healthy and youthful appearance and self-image.  Medicis has leading branded prescription products in a number of therapeutic and aesthetic categories.  The Company’s products have earned wide acceptance by both physicians and patients due to their clinical effectiveness, high quality and cosmetic elegance.

 

The Company’s products include the brands DYSPORT® (abobotulinumtoxinA) 300 Units for Injection, PERLANE® Injectable Gel, PERLANE-L® Injectable Gel with 0.3% Lidocaine,  RESTYLANE® Injectable Gel, RESTYLANE-L® Injectable Gel with 0.3% Lidocaine, DYNACIN® (minocycline HCl Tablets, USP), LOPROX® (ciclopirox) Gel 0.77% and Shampoo 1%, PLEXION® (sodium sulfacetamide 10% and sulfur 5%) Cleanser, Cleansing Cloths and SCT, SOLODYN® (minocycline HCl, USP) Extended Release Tablets, TRIAZ® (benzoyl peroxide) 3%, 6% and 9% Cleansers, Pads and Foaming Cloths, VANOS® (fluocinonide) Cream 0.1%, ZIANA® (clindamycin phosphate 1.2% and tretinoin 0.025%) Gel, AMMONUL® (sodium phenylacetate and sodium benzoate) Injection 10%/10%, BUPHENYL® (sodium phenylbutyrate) Tablets and Powder, the LIPOSONIXTM system(1) and the over-the-counter brand ESOTERICA®.

 

For more information about Medicis, please visit the Company’s website at www.Medicis.com.  Printed copies of the Company’s complete audited financial statements are available free of charge upon request.

 

Medicis Forward-Looking Statements

 

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act.  All statements included in this press release that address activities, events or developments that Medicis expects, believes or anticipates will or may occur in the future are forward-looking statements.  These statements are based on certain assumptions made by Medicis based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.  No assurances can be given, however, that these activities, events or developments will occur or that such results will be achieved. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Medicis. Several of these risks are outlined in the Company’s most recent annual report on Form 10-K for the year ended December 31, 2009, and other documents we file with the Securities and Exchange Commission.  Forward-looking statements represent the judgment of Medicis management as of the date of this release, and Medicis disclaims any intent or obligation to update any forward-looking statements contained herein, which speak as of the date hereof.

 

NOTE: Full prescribing information for any Medicis prescription product is available by contacting the Company or by visiting www.Medicis.com.  All trademarks are the property of their respective owners.

 

About Anacor Pharmaceuticals

 

Anacor is a biopharmaceutical company focused on discovering, developing and commercializing novel small-molecule therapeutics derived from its boron chemistry platform. Anacor has discovered five clinical compounds which are currently in development, including its three lead programs: AN2690, a topical antifungal for the treatment of onychomycosis; AN2728, a topical anti-inflammatory PDE-4 inhibitor for the treatment of

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

5

 

psoriasis; and GSK 2251052, or GSK ‘052 (formerly referred to as AN3365), a systemic antibiotic for the treatment of infections caused by Gram-negative bacteria, which has been licensed to GlaxoSmithKline under the companies’ research and development agreement. In addition, Anacor is developing AN2718 as a topical antifungal product candidate for the treatment of onychomycosis and skin fungal infections, and AN2898 as a topical anti-inflammatory product candidate for the treatment of psoriasis and atopic dermatitis.   For more information visit www.anacor.com.

 

Anacor Forward-Looking Statements

 

This release contains forward-looking statements, including statements regarding the success of and any payments that may result from Anacor’s collaboration with Medicis, as well as other matters that are described in Anacor’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission.  Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release.  The Company undertakes no obligation to update any forward-looking statement in this press release.

 

(1) The LIPOSONIXTM system is not approved or cleared for sale in the U.S.

 

#  #  #

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

6

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT 9

Encumbrances

 

Loan and Security Agreement No. 5251 by and between Lighthouse Capital Partners V, L.P. and Anacor Pharmaceuticals, Inc., dated June 30, 2006, as amended as of the Effective Date

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

 

EXHIBIT 10

Collaboration Compound Scaffolds

 

The following scaffolds: [ * ].

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

8Exhibit 4.1

 

 

CNH EQUIPMENT TRUST 2011-A

 

INDENTURE

 

between

 

CNH EQUIPMENT TRUST 2011-A

 

and

 

DEUTSCHE BANK TRUST COMPANY AMERICAS

 

as Indenture Trustee.

 

Dated as of April 1, 2011

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I Definitions and Incorporation by Reference
    	
2
    
	
 
    	
 
    	
 
    
	
SECTION 1.1.
    	
Definitions
    	
2
    
	
SECTION 1.2.
    	
Incorporation by Reference of Trust Indenture Act
    	
2
    
	
SECTION 1.3.
    	
Other Definitional Provisions
    	
3
    
	
 
    	
 
    	
 
    
	
ARTICLE II The Notes
    	
3
    
	
 
    	
 
    	
 
    
	
SECTION 2.1.
    	
Form
    	
3
    
	
SECTION 2.2.
    	
Execution, Authentication and Delivery
    	
4
    
	
SECTION 2.3.
    	
Temporary Notes
    	
4
    
	
SECTION 2.4.
    	
Registration; Registration of Transfer and Exchange
    	
5
    
	
SECTION 2.5.
    	
Mutilated, Destroyed, Lost or Stolen Notes
    	
6
    
	
SECTION 2.6.
    	
Persons Deemed Owner
    	
7
    
	
SECTION 2.7.
    	
Payment of Principal and Interest; Defaulted Interest
    	
7
    
	
SECTION 2.8.
    	
Cancellation
    	
8
    
	
SECTION 2.9.
    	
Release of Collateral
    	
8
    
	
SECTION 2.10.
    	
Book-Entry Notes
    	
8
    
	
SECTION 2.11.
    	
Notices to Clearing Agency
    	
9
    
	
SECTION 2.12.
    	
Definitive Notes
    	
9
    
	
SECTION 2.13.
    	
Tax Treatment
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE III Covenants
    	
10
    
	
 
    	
 
    	
 
    
	
SECTION 3.1.
    	
Payment of Principal and Interest
    	
10
    
	
SECTION 3.2.
    	
Maintenance of Office or Agency
    	
10
    
	
SECTION 3.3.
    	
Money for Payments To Be Held in Trust
    	
10
    
	
SECTION 3.4.
    	
Existence
    	
12
    
	
SECTION 3.5.
    	
Protection of the Trust Estate
    	
12
    
	
SECTION 3.6.
    	
Opinions as to the Trust Estate
    	
12
    
	
SECTION 3.7.
    	
Performance of Obligations; Servicing of Receivables
    	
13
    
	
SECTION 3.8.
    	
Negative Covenants
    	
14
    
	
SECTION 3.9.
    	
Annual Statement as to Compliance
    	
15
    
	
SECTION 3.10.
    	
Issuing Entity May Consolidate, etc., Only on Certain   Terms
    	
15
    
	
SECTION 3.11.
    	
Successor or Transferee
    	
17
    
	
SECTION 3.12.
    	
No Other Business
    	
17
    
	
SECTION 3.13.
    	
No Borrowing
    	
17
    
	
SECTION 3.14.
    	
Servicer’s Obligations
    	
17
    
	
SECTION 3.15.
    	
Guarantees, Loans, Advances and Other Liabilities
    	
17
    
	
SECTION 3.16.
    	
Capital Expenditures
    	
17
    
	
SECTION 3.17.
    	
Removal of Administrator
    	
17
    
	
SECTION 3.18.
    	
Restricted Payments
    	
18
    

 

i

 

	
SECTION 3.19.
    	
Notice of Events of Default
    	
18
    
	
SECTION 3.20.
    	
Further Instruments and Acts
    	
18
    
	
SECTION 3.21.
    	
Perfection Representation
    	
18
    
	
 
    	
 
    	
 
    
	
ARTICLE IV Satisfaction and Discharge
    	
18
    
	
 
    	
 
    	
 
    
	
SECTION 4.1.
    	
Satisfaction and Discharge of Indenture
    	
18
    
	
SECTION 4.2.
    	
Application of Trust Money
    	
19
    
	
SECTION 4.3.
    	
Repayment of Monies Held by Paying Agent
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE V Remedies
    	
20
    
	
 
    	
 
    	
 
    
	
SECTION 5.1.
    	
Events of Default
    	
20
    
	
SECTION 5.2.
    	
Acceleration of Maturity; Rescission and Annulment
    	
21
    
	
SECTION 5.3.
    	
Collection of Indebtedness and Suits for Enforcement by   Indenture Trustee
    	
21
    
	
SECTION 5.4.
    	
Remedies; Priorities
    	
23
    
	
SECTION 5.5.
    	
Optional Preservation of the Receivables
    	
25
    
	
SECTION 5.6.
    	
Limitation of Suits
    	
25
    
	
SECTION 5.7.
    	
Unconditional Rights of Noteholders To Receive Principal   and Interest
    	
26
    
	
SECTION 5.8.
    	
Restoration of Rights and Remedies
    	
26
    
	
SECTION 5.9.
    	
Rights and Remedies Cumulative
    	
26
    
	
SECTION 5.10.
    	
Delay or Omission Not a Waiver
    	
27
    
	
SECTION 5.11.
    	
Control by Noteholders
    	
27
    
	
SECTION 5.12.
    	
Waiver of Past Defaults
    	
27
    
	
SECTION 5.13.
    	
Undertaking for Costs
    	
28
    
	
SECTION 5.14.
    	
Waiver of Stay or Extension Laws
    	
28
    
	
SECTION 5.15.
    	
Action on Notes
    	
28
    
	
SECTION 5.16.
    	
Performance and Enforcement of Certain Obligations
    	
28
    
	
 
    	
 
    	
 
    
	
ARTICLE VI The Indenture Trustee
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 6.1.
    	
Duties of the Indenture Trustee
    	
29
    
	
SECTION 6.2.
    	
Rights of Indenture Trustee
    	
31
    
	
SECTION 6.3.
    	
Individual Rights of the Indenture Trustee
    	
32
    
	
SECTION 6.4.
    	
Indenture Trustee’s Disclaimer
    	
32
    
	
SECTION 6.5.
    	
Notice of Defaults
    	
32
    
	
SECTION 6.6.
    	
Reports by Indenture Trustee to the Holders
    	
32
    
	
SECTION 6.7.
    	
Compensation and Indemnity
    	
32
    
	
SECTION 6.8.
    	
Replacement of the Indenture Trustee
    	
33
    
	
SECTION 6.9.
    	
Successor Indenture Trustee by Merger
    	
34
    
	
SECTION 6.10.
    	
Appointment of Co-Trustee or Separate Trustee
    	
34
    
	
SECTION 6.11.
    	
Eligibility; Disqualification
    	
35
    
	
SECTION 6.12.
    	
Preferential Collection of Claims Against the Issuing Entity
    	
36
    
	
SECTION 6.13.
    	
Information to Be Provided by the Indenture Trustee
    	
37
    
	
SECTION 6.14.
    	
Representations and Warranties
    	
37
    

 

ii

 

	
ARTICLE VII Noteholders’ Lists and Reports
    	
38
    
	
 
    	
 
    	
 
    
	
SECTION 7.1.
    	
Issuing Entity To Furnish Indenture Trustee Names and   Addresses of Noteholders
    	
38
    
	
SECTION 7.2.
    	
Preservation of Information; Communications to Noteholders
    	
38
    
	
SECTION 7.3.
    	
Reports by Issuing Entity
    	
38
    
	
SECTION 7.4.
    	
Required Filings
    	
39
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII Accounts, Disbursements and Releases
    	
39
    
	
 
    	
 
    	
 
    
	
SECTION 8.1.
    	
Collection of Money
    	
39
    
	
SECTION 8.2.
    	
Trust Accounts
    	
39
    
	
SECTION 8.3.
    	
General Provisions Regarding Accounts
    	
41
    
	
SECTION 8.4.
    	
Release of Trust Estate
    	
42
    
	
SECTION 8.5.
    	
Opinion of Counsel
    	
42
    
	
 
    	
 
    	
 
    
	
ARTICLE IX Supplemental Indentures
    	
43
    
	
 
    	
 
    	
 
    
	
SECTION 9.1.
    	
Supplemental Indentures Without Consent of Noteholders
    	
43
    
	
SECTION 9.2.
    	
Supplemental Indentures With Consent of Noteholders
    	
44
    
	
SECTION 9.3.
    	
Execution of Supplemental Indentures
    	
46
    
	
SECTION 9.4.
    	
Effect of Supplemental Indenture
    	
46
    
	
SECTION 9.5.
    	
Conformity with Trust Indenture Act
    	
46
    
	
SECTION 9.6.
    	
Reference in Notes to Supplemental Indentures
    	
46
    
	
SECTION 9.7.
    	
Amendment without Consent
    	
46
    
	
SECTION 9.8.
    	
Backup Servicer Consent
    	
46
    
	
 
    	
 
    	
 
    
	
ARTICLE X Redemption of Notes
    	
47
    
	
 
    	
 
    	
 
    
	
SECTION 10.1.
    	
Redemption
    	
47
    
	
SECTION 10.2.
    	
Form of Redemption Notice
    	
47
    
	
SECTION 10.3.
    	
Notes Payable on Redemption Date
    	
47
    
	
 
    	
 
    	
 
    
	
ARTICLE XI Miscellaneous
    	
48
    
	
 
    	
 
    	
 
    
	
SECTION 11.1.
    	
Compliance Certificates and Opinions, etc
    	
48
    
	
SECTION 11.2.
    	
Form of Documents Delivered to Indenture Trustee
    	
49
    
	
SECTION 11.3.
    	
Acts of Noteholders
    	
50
    
	
SECTION 11.4.
    	
Notices, etc., to the Indenture Trustee, Issuing   Entity and Rating Agencies
    	
51
    
	
SECTION 11.5.
    	
Notices to Noteholders; Waiver
    	
51
    
	
SECTION 11.6.
    	
Alternate Payment and Notice Provisions
    	
52
    
	
SECTION 11.7.
    	
Conflict with Trust Indenture Act
    	
52
    
	
SECTION 11.8.
    	
Effect of Headings and Table of Contents
    	
52
    
	
SECTION 11.9.
    	
Successors and Assigns
    	
52
    
	
SECTION 11.10.
    	
Severability
    	
52
    
	
SECTION 11.11.
    	
Benefits of Indenture
    	
53
    
	
SECTION 11.12.
    	
Legal Holidays
    	
53
    

 

iii

 

	
SECTION 11.13.
    	
Governing Law
    	
53
    
	
SECTION 11.14.
    	
Counterparts
    	
53
    
	
SECTION 11.15.
    	
Recording of Indenture
    	
53
    
	
SECTION 11.16.
    	
Trust Obligation
    	
53
    
	
SECTION 11.17.
    	
No Petition
    	
54
    
	
SECTION 11.18.
    	
Inspection
    	
54
    
	
SECTION 11.19.
    	
Subordination
    	
54
    
	
SECTION 11.20.
    	
Information Requests
    	
55
    
	
SECTION 11.21.
    	
Communications with Rating Agencies
    	
55
    

 

iv

 

EXHIBITS

 

	
EXHIBIT A-1
    	
Form of   A-1 Notes
    
	
 
    	
 
    
	
EXHIBIT A-2
    	
Form of   A-2 Notes
    
	
 
    	
 
    
	
EXHIBIT A-3
    	
Form of   A-3 Notes
    
	
 
    	
 
    
	
EXHIBIT A-4
    	
Form of   A-4 Notes
    
	
 
    	
 
    
	
EXHIBIT A-5
    	
Form of   Class B Notes
    
	
 
    	
 
    
	
EXHIBIT B
    	
Form of   Section 3.9 Officer’s Certificate
    

 

SCHEDULES

 

	
SCHEDULE   P
    	
Perfection   Representations & Warranties
    

 

v

 

INDENTURE dated as of April 1, 2011 between CNH EQUIPMENT TRUST 2011-A, a Delaware statutory trust (the “Issuing Entity”), and DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation (“DB Trust”), as trustee and not in its individual capacity (the “Indenture Trustee”).

 

Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Issuing Entity’s 0.33573% Class A-1 Asset Backed Notes (each an “A-1 Note”), 0.62% Class A-2 Asset Backed Notes (each an “A-2 Note”), 1.20% Class A-3 Asset Backed Notes (each an “A-3 Note”), 2.04% Class A-4 Asset Backed Notes (each an “A-4 Note”) and the 2.52% Class B Asset Backed Notes (each a “Class B Note”; and together with the A-1 Notes, the A-2 Notes, the A-3 Notes, and the A-4 Notes, the “Notes”).

 

GRANTING CLAUSE

 

The Issuing Entity hereby Grants to DB Trust at the Closing Date, as Indenture Trustee for the benefit of the Holders of the Notes, all of the Issuing Entity’s right, title and interest in, to and under the following, whether now existing or hereafter arising or acquired (collectively, the “Collateral”):

 

(a)   the Receivables, including all documents constituting chattel paper included therewith, and all obligations of the Obligors thereunder, including all monies paid thereunder on or after the Cutoff Date;

 

(b)   the security interests in the Financed Equipment granted by Obligors pursuant to the Receivables and any other interest of the Issuing Entity in the Financed Equipment;

 

(c)   any proceeds with respect to the Receivables from claims on insurance policies covering Financed Equipment or Obligors (to the extent not used to purchase Substitute Equipment);

 

(d)   any proceeds from recourse to Dealers with respect to the Receivables;

 

(e)   any Financed Equipment that shall have secured a Receivable and that shall have been acquired by or on behalf of the Trust;

 

(f)    all funds on deposit from time to time in the Trust Accounts, including the Spread Account Deposit, and all investments and proceeds thereof (including all income thereon);

 

(g)   the Sale and Servicing Agreement (including all rights of the Seller under the Liquidity Receivables Purchase Agreement and the Purchase Agreement assigned to the Issuing Entity pursuant to the Sale and Servicing Agreement);

 

(h)           [Reserved]; and

 

(i)    all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of

 

 

the conversion, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds (to the extent not used to purchase Substitute Equipment), condemnation awards, rights to payment of any and every kind and other forms of obligations and receivables, instruments and other property that at any time constitute all or part of or are included in the proceeds of any and all of the foregoing.

 

The foregoing Grant is made in trust to secure (x) first, the payment of principal of and interest on, and any other amounts owing in respect of, the Class A Notes, equally and ratably without prejudice, priority or distinction, and (y) second, the payment of principal of and interest on, and any other amounts owing in respect of, the Class B Notes, equally and ratably without prejudice, priority or distinction, and to secure compliance with this Indenture.

 

DB Trust, as Indenture Trustee on behalf of the Noteholders, (1) acknowledges such Grant, and (2) accepts the trusts under this Indenture in accordance with this Indenture and agrees to perform its duties required in this Indenture and the other Basic Documents to which it is a party in accordance with their terms.

 

ARTICLE I
 Definitions and Incorporation by Reference

 

SECTION 1.1.              Definitions.  Capitalized terms used but not otherwise defined herein are defined in Appendix A hereto.

 

SECTION 1.2.              Incorporation by Reference of Trust Indenture Act.  Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following terms, where used in the TIA, shall have the following meanings for the purposes hereof:

 

“Commission” means the Securities and Exchange Commission.

 

“indenture securities” means the Notes.

 

“indenture security holder” means a Noteholder.

 

“indenture to be qualified” means this Indenture.

 

“indenture trustee” or “institutional trustee” means the Indenture Trustee.

 

“obligor” on the indenture securities means the Issuing Entity and any other obligor on the indenture securities.

 

All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule have the meaning assigned to them by such definitions.

 

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SECTION 1.3.              Other Definitional Provisions.  (a)  All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

 

(b)   As used in this Agreement and in any certificate or other document made or delivered pursuant hereto, accounting terms not defined in this Agreement or in any such certificate or other document, and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under generally accepted accounting principles as in effect on the date hereof.  To the extent that the definitions of accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under generally accepted accounting principles, the definitions contained in this Agreement or in any such certificate or other document shall control.

 

(c)   The words “hereof”, “herein”, “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Schedule and Exhibit references contained in this Agreement are references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” shall mean “including, without limitation,”.

 

(d)   The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.

 

(e)   References to any law or regulation refer to that law or regulation as amended from time to time and include any successor law or regulation.

 

(f)    References to any agreement refer to that agreement as from time to time amended or supplemented or as the terms of such agreement are waived or modified in accordance with its terms.

 

(g)   References to any Person include that Person’s successors and assigns.

 

ARTICLE II
 The Notes

 

SECTION 2.1.              Form.  The A-1 Notes, A-2 Notes, A-3 Notes, A-4 Notes and Class B Notes, together with the Indenture Trustee’s certificate of authentication, shall be in substantially the forms set forth in Exhibits A-1, A-2, A-3, A-4 and A-5 respectively, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon, as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of the Notes.  Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note.

 

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The Definitive Notes shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the officers executing such Notes, as evidenced by their execution of such Notes.

 

Each Note shall be dated the date of its authentication.  The terms of the Notes set forth in Exhibits A-1, A-2, A-3, A-4, and A-5 are part of the terms of this Indenture.

 

SECTION 2.2.              Execution, Authentication and Delivery.  The Notes shall be executed on behalf of the Issuing Entity by any of its Authorized Officers.  The signature of any such Authorized Officer on the Notes may be manual or facsimile.

 

Notes bearing the manual or facsimile signature of individuals who were at the time of signature Authorized Officers of the Issuing Entity shall bind the Issuing Entity, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes.

 

The Indenture Trustee shall upon Issuing Entity Order authenticate and deliver A-1 Notes, A-2 Notes, A-3 Notes, A-4 Notes and Class B Notes for original issue in an aggregate principal amount of $237,900,000, $251,000,000, $352,000,000, $129,600,000 and $29,500,000, respectively.  The Outstanding Amount of A-1 Notes, A-2 Notes, A-3 Notes, A-4 Notes and Class B Notes at any time may not exceed such respective amounts except as provided in Section 2.5.

 

Each Note shall be dated the date of its authentication.  The Notes shall be issuable as registered Notes in the minimum denomination of $1,000 and in greater whole-dollar denominations in excess thereof.

 

No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized signatories, and such certificate of authentication shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.

 

SECTION 2.3.              Temporary Notes.  Pending the preparation of Definitive Notes, the Issuing Entity may execute, and upon receipt of an Issuing Entity Order, the Indenture Trustee shall authenticate and deliver, temporary Notes that are printed, lithographed, typewritten, mimeographed or otherwise produced, of the tenor of the Definitive Notes in lieu of which they are issued and with such variations not inconsistent with this Indenture as the Authorized Officers executing such Notes may determine, as evidenced by their execution of such Notes.

 

If temporary Notes are issued, the Issuing Entity will cause Definitive Notes to be prepared without unreasonable delay.  After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender of the temporary Notes at the office or agency of the Issuing Entity to be maintained as provided in Section 3.2, without charge to the Holder.  Upon surrender for cancellation of any one or more temporary Notes, the Issuing Entity shall execute and the Indenture Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Notes of authorized denominations.  Until so exchanged,

 

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the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as if they were Definitive Notes.

 

SECTION 2.4.              Registration; Registration of Transfer and Exchange.  The Issuing Entity shall cause to be kept a register (the “Note Register”) in which, subject to such reasonable regulations as it may prescribe, the Issuing Entity shall provide for the registration of Notes and the registration of transfers of Notes.  The Indenture Trustee shall be the “Note Registrar” for the purpose of registering Notes and transfers of Notes as herein provided.  Upon any resignation of any Note Registrar, the Issuing Entity shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of the Note Registrar.

 

If a Person other than the Indenture Trustee is appointed by the Issuing Entity as the Note Registrar, the Issuing Entity will give the Indenture Trustee prompt written notice of the appointment of such Note Registrar and of the location, and any change in the location, of the Note Register, and the Indenture Trustee shall have the right to inspect the Note Register at all reasonable times, to obtain copies thereof and to rely upon a certificate executed on behalf of the Note Registrar by an Executive Officer thereof as to the names and addresses of the Holders of the Notes and the principal amounts and number of such Notes.

 

Upon surrender for registration of transfer of any Note at the office or agency of the Issuing Entity to be maintained as provided in Section 3.2, if the requirements of Section 8-401(a) of the UCC are met, the Issuing Entity shall execute, the Indenture Trustee shall authenticate and the Noteholder shall obtain from the Indenture Trustee, in the name of the designated transferee or transferees, one or more new Notes in any authorized denominations of a like aggregate principal amount.

 

At the option of the Holder, Notes may be exchanged for other new Notes of the same Class in any authorized denominations of a like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency.  Whenever any Notes are so surrendered for exchange, if the requirements of Section 8-401(a) of the UCC are met, the Issuing Entity shall execute, the Indenture Trustee shall authenticate and the Noteholder shall obtain from the Indenture Trustee, the Notes that the Noteholder making the exchange is entitled to receive.

 

By its acquisition of a Note or any interest therein, each purchaser or transferee shall be deemed to represent and warrant that either (a) it is not an “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is subject to Title I of ERISA, a “plan” as defined in Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), an entity deemed to hold “plan assets” of any of the foregoing or a “governmental plan” as defined in Section 3(32) of ERISA that is subject to any law substantially similar to ERISA or Section 4975 of the Code or (b) the acquisition and holding of the Note or any interest therein will not result in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or any substantially similar applicable law.

 

All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuing Entity, evidencing the same debt and entitled to the same benefits under this Indenture as the Notes surrendered upon such registration of transfer or exchange.

 

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Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which requirements include membership or participation in the Securities Transfer Agent’s Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Exchange Act.

 

No service charge shall be made to a Holder for any registration of transfer or exchange of Notes, but the Issuing Entity may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Sections 2.3 or 9.6 not involving any transfer.

 

SECTION 2.5.              Mutilated, Destroyed, Lost or Stolen Notes.  If: (i) any mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the Indenture Trustee such security or indemnity as may be required by the Indenture Trustee and the Issuing Entity to hold the Indenture Trustee and the Issuing Entity, respectively, harmless, then, in the absence of notice to the Issuing Entity, the Note Registrar or the Indenture Trustee that such Note has been acquired by a bona fide purchaser, and provided that the requirements of Section 8-405 of the UCC are met, the Issuing Entity shall execute, and upon its request the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note of the same Class; provided, however, that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall have become, or within seven days shall be, due and payable, or shall have been called for redemption, instead of issuing a replacement Note, the Issuing Entity may pay such destroyed, lost or stolen Note when so due or payable or upon the Redemption Date without surrender thereof.  If, after the delivery of such replacement Note (or payment of a destroyed, lost or stolen Note pursuant to the proviso to the preceding sentence), a bona fide purchaser of the original Note in lieu of which such replacement Note was issued presents for payment such original Note, the Issuing Entity and the Indenture Trustee shall be entitled to recover such replacement Note (or such payment) from the Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such replacement Note was delivered (or payment made) or any assignee of such Person, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuing Entity or the Indenture Trustee in connection therewith.

 

Upon the issuance of any replacement Note under this Section, the Issuing Entity may require the payment by the Holder of such Note of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Indenture Trustee) connected therewith.

 

Every replacement Note issued pursuant to this Section in replacement of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuing Entity, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time 

 

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enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

 

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

 

SECTION 2.6.              Persons Deemed Owner.  Prior to due presentment for registration of transfer of any Note, the Issuing Entity, the Indenture Trustee and any agent of the Issuing Entity or the Indenture Trustee may treat the Person in whose name any Note is registered (as of the day of determination) as the owner of such Note for the purpose of receiving payments of principal and interest, if any, on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Issuing Entity, the Indenture Trustee nor any agent of the Issuing Entity or the Indenture Trustee shall be affected by notice to the contrary.

 

SECTION 2.7.              Payment of Principal and Interest; Defaulted Interest.  (a)   The A-1 Notes, A-2 Notes, A-3 Notes, A-4 Notes and Class B Notes shall accrue interest at the A-1 Note Rate, the A-2 Note Rate, the A-3 Note Rate, the A-4 Note Rate and the Class B Note Rate, respectively, and such interest shall be payable on each Payment Date, subject to Section 3.1.  Any installment of interest or principal, if any, payable on any Note that is punctually paid or duly provided for by the Issuing Entity on the applicable Payment Date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered on the Record Date by check mailed first-class, postage prepaid, to such Person’s address as it appears on the Note Register on such Record Date.  However, unless Definitive Notes have been issued, with respect to Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payment will be made by wire transfer in immediately available funds to the account designated by such nominee.  Notwithstanding the above, the final installment of principal payable with respect to such Note (and except for the Redemption Price for any Note called for redemption pursuant to Section 10.1(a)) shall be payable as provided in clause (b)(ii).  The funds represented by any such checks returned undelivered shall be held in accordance with Section 3.3.

 

(b)   (i) The principal of each Note shall be payable in installments on each Payment Date as provided in this Indenture, and except as provided below each such installment shall be due and payable only to the extent that there are funds available to make the payment in accordance with the Basic Documents.  Notwithstanding the foregoing:  (A) the entire Outstanding Amount of each Class of Notes shall be due and payable on the related Class Final Scheduled Maturity Date, and (B) the entire Outstanding Amount of all Classes of Notes shall be due and payable, ratably to all Noteholders, on any date on which an Event of Default shall have occurred and be continuing if the Indenture Trustee or the Holders of Notes representing not less than a majority of the Outstanding Amount of the Notes have declared the Notes to be immediately due and payable in the manner provided in Section 5.2.  All principal payments on the Class A-1 Notes shall be made pro rata to the Noteholders of the Class A-1 Notes.  All principal payments on the Class A-2 Notes shall be made pro rata to the Noteholders of the Class A-2 Notes. All principal payments on the Class A-3 Notes shall be made pro rata to the Noteholders of the Class A-3 Notes.  All principal payments on the Class A-4 Notes shall be 

 

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made pro rata to the Noteholders of the Class A-4 Notes.  All principal payments on the Class B Notes shall be made pro rata to the Noteholders of the Class B Notes.

 

(ii)           The Indenture Trustee shall notify the Person in whose name a Note is registered at the close of business on the Record Date preceding the Payment Date on which the Issuing Entity expects that the final installment of principal of and interest on such Note will be paid. Such notice shall be mailed no later than five Business Days prior to such final Payment Date and shall specify that such final installment will be payable only upon presentation and surrender of such Note and shall specify the place where such Note may be presented and surrendered for payment of such installment. Notices in connection with redemptions of Notes shall be mailed to Noteholders as provided in Section 10.2.

 

(c)   If the Issuing Entity defaults in a payment of interest on the Notes, the Issuing Entity shall pay, in any lawful manner, defaulted interest (plus interest on such defaulted interest to the extent lawful) at the applicable interest rate from the Payment Date for which such payment is in default.  The Issuing Entity may pay such defaulted interest to the Persons who are Noteholders on a subsequent special record date, which date shall be at least five Business Days prior to the special payment date.  The Issuing Entity shall fix or cause to be fixed any such special record date and special payment date, and, at least 15 days before any such special record date, shall mail to each Noteholder a notice that states the special record date, the special payment date and the amount of defaulted interest to be paid.

 

SECTION 2.8.              Cancellation.  All Notes surrendered for payment, registration of transfer, exchange or redemption shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee.  The Issuing Entity may at any time deliver to the Indenture Trustee for cancellation any Notes previously authenticated and delivered hereunder that the Issuing Entity may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Indenture Trustee.  No Notes shall be authenticated in lieu of or in exchange for any Notes canceled as provided in this Section except as expressly permitted by this Indenture.  All canceled Notes may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time unless the Issuing Entity shall direct by an Issuing Entity Order that they be returned to it; provided, that such Issuing Entity Order is timely and the Notes have not been previously disposed of by the Indenture Trustee.

 

SECTION 2.9.              Release of Collateral.  Subject to Sections 8.4 and 11.1 and the Basic Documents, the Indenture Trustee shall release property from the Lien of this Indenture only upon receipt of an Issuing Entity Request accompanied by an Officer’s Certificate, an Opinion of Counsel and Independent Certificates in accordance with TIA §§314(c) and 314(d)(l), or an Opinion of Counsel in lieu of such Independent Certificates to the effect that the TIA does not require any such Independent Certificates.

 

SECTION 2.10.            Book-Entry Notes.  The Notes, upon original issuance, will be issued in the form of typewritten Notes representing the Book-Entry Notes, to be delivered to The Depository Trust Company (“DTC”) (the initial Clearing Agency), or its custodian, by, or on behalf of, the Issuing Entity. Such Notes shall initially be registered on the Note Register in the 

 

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name of Cede & Co., the nominee of the initial Clearing Agency, and no Note Owner of such Note will receive a Definitive Note representing such Note Owner’s interest in such Note, except as provided in Section 2.12. Unless and until definitive, fully registered Notes (the “Definitive Notes”) representing Notes have been issued to Note Owners:

 

(i)            this Section shall be in full force and effect;

 

(ii)           the Note Registrar and the Indenture Trustee may deal with the Clearing Agency for all purposes (including the payment of principal of and interest on the applicable Notes) as the authorized representative of the Note Owners;

 

(iii)          to the extent that this Section conflicts with any other provisions of this Indenture, this Section shall control;

 

(iv)          the rights of Note Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Note Owners and the Clearing Agency and/or the Clearing Agency Participants pursuant to the Note Depository Agreement.  Unless and until Definitive Notes are issued, the Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit payments of principal of and interest on the applicable Notes to such Clearing Agency Participants; and

 

(v)           whenever this Indenture requires or permits actions to be taken based upon instructions or directions of Holders of Notes evidencing a specified percentage of the Outstanding Amount of the Notes (or a Class of Notes), the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Note Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Notes (or Class of Notes) and has delivered such instructions to the Indenture Trustee.

 

SECTION 2.11.            Notices to Clearing Agency.  Whenever a notice or other communication to the Noteholders is required under this Indenture, unless and until Definitive Notes for the Notes have been issued to Note Owners, the Indenture Trustee shall give all such notices and communications to the Clearing Agency.

 

SECTION 2.12.            Definitive Notes.  Notes initially or subsequently cleared through a clearing agency may be issued in definitive, fully registered certificated form to Noteholders if requested by the DTC participants to whom the Notes are credited and in accordance with DTC’s rules and procedures.  Upon any surrender to the Indenture Trustee of the typewritten Notes representing the Book-Entry Notes by the Clearing Agency, accompanied by registration instructions, the Issuing Entity shall execute, and the Indenture Trustee shall authenticate, the Definitive Notes in accordance with the instructions of the Clearing Agency.  None of the Issuing Entity, the Note Registrar or the Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.  Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes as Noteholders.  In addition, Notes issued as 

 

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Definitive Notes from time to time may be subsequently issued as Book-Entry Notes and cleared through a Clearing Agency at the request of applicable Holders of the Definitive Notes.

 

SECTION 2.13.            Tax Treatment.  It is the intent of the Seller, the Servicer, the Noteholders and the Note Owners that, for purposes of federal and State income tax and any other tax measured in whole or in part by income, until the Certificates are held by other than the Seller, the Trust be disregarded as an entity separate from the Seller and the Notes be treated as debt of the Seller.  At such time that the Certificates are held by more than one Person, it is the intent of the Seller, the Servicer, the Noteholders and the Note Owners that, for such tax purposes, the Trust be treated as a partnership and the Notes be treated as debt of the Trust.  Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in a Note, agrees to treat, and to take no action inconsistent with the treatment of, the Notes for such tax purposes as provided in this Section 2.13.

 

ARTICLE III
 Covenants

 

SECTION 3.1.              Payment of Principal and Interest.  The Issuing Entity will duly and punctually pay the principal and interest, if any, on the Notes in accordance with the terms of the Notes and this Indenture.  Without limiting the foregoing, subject to Sections 8.2(c) and (e), the Issuing Entity will cause to be distributed to Holders of the Notes all amounts on deposit in the Note Distribution Account on a Payment Date deposited therein for the benefit of the Notes pursuant to the Sale and Servicing Agreement.  Amounts properly withheld under the Code or any applicable State law by any Person from a payment to any Noteholder of interest and/or principal shall be considered as having been paid by the Issuing Entity to such Noteholder for all purposes of this Indenture.

 

SECTION 3.2.              Maintenance of Office or Agency.  The Issuing Entity will maintain an office or agency where Notes may be surrendered for registration of transfer or exchange, and where notices and demands to or upon the Issuing Entity in respect of the Notes and this Indenture may be served.  The Issuing Entity hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes.  The Issuing Entity will give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency.  If at any time the Issuing Entity shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Issuing Entity hereby appoints the Indenture Trustee as its agent to receive all such surrenders, notices and demands.

 

SECTION 3.3.              Money for Payments To Be Held in Trust.  As provided in Sections 8.2(a) and (b), all payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the Collection Account and the Note Distribution Account pursuant to Section 8.2(c) or Section 8.2(e), as applicable, shall be made on behalf of the Issuing Entity by the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from the Collection Account and the Note Distribution Account for payments of Notes shall be paid over to the Issuing Entity except as provided in this Section.

 

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One Business Day prior to each Payment Date and Redemption Date, the Issuing Entity shall deposit or cause to be deposited in the Note Distribution Account an aggregate sum sufficient to pay the amounts then becoming due under the Notes, such sum to be held in trust for the benefit of the Persons entitled thereto and (unless the Paying Agent is the Indenture Trustee) shall promptly notify the Indenture Trustee of its action or failure so to act.

 

Any Paying Agent shall be appointed by Issuing Entity Order with written notice thereof to the Indenture Trustee.  Any Paying Agent appointed by the Issuing Entity shall be a Person who would be eligible to be Indenture Trustee hereunder as provided in Section 6.11.

 

The Issuing Entity will cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section, that such Paying Agent will:

 

(i)            hold in trust all sums held by it for the payment of amounts due with respect to the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided;

 

(ii)           give the Indenture Trustee notice of any default by the Issuing Entity (or any other obligor upon the Notes) of which it has actual knowledge in the making of any payment required to be made with respect to the Notes;

 

(iii)          at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent;

 

(iv)          immediately resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Notes if at any time it ceases to meet the standards required to be met by a Paying Agent; and

 

(v)           comply with all requirements of the Code and any applicable State law with respect to the withholding from any payments made by it on any Notes of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith.

 

The Issuing Entity may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, by Issuing Entity Order, direct any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money.

 

Subject to applicable laws with respect to escheat of funds, any money held by the Indenture Trustee or any Paying Agent in trust for the payment of any amount due with respect to any Note and remaining unclaimed for two years after such amount has become due and payable shall be discharged from such trust and be paid to the Issuing Entity on Issuing Entity 

 

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Order; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuing Entity for payment thereof (but only to the extent of the amounts so paid to the Issuing Entity), and all liability of the Indenture Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Indenture Trustee or such Paying Agent, before being required to make any such repayment, shall at the expense and direction of the Issuing Entity cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Issuing Entity.  The Indenture Trustee shall also adopt and employ, at the expense of the Issuing Entity, any other reasonable means of notification of such repayment (including mailing notice of such repayment to Holders whose Notes have been called but have not been surrendered for redemption or whose right to or interest in monies due and payable but not claimed is determinable from the records of the Indenture Trustee or of any Paying Agent, at the last address of record for each such Holder).

 

SECTION 3.4.              Existence.  The Issuing Entity will keep in full effect its existence, rights and franchises as a statutory trust under the laws of the jurisdiction of its organization and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the Notes, the Collateral and each other instrument or agreement included in the Trust Estate.

 

SECTION 3.5.              Protection of the Trust Estate.  The Issuing Entity will from time to time execute and deliver all such supplements and amendments hereto and all such financing statements, continuation statements, instruments of further assurance and other instruments, and will take such other action necessary or advisable to:

 

(i)            maintain or preserve the Lien and security interest (and the priority thereof) of this Indenture or carry out more effectively the purposes hereof;

 

(ii)           perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture;

 

(iii)          enforce any of the Collateral; or

 

(iv)          preserve and defend title to the Trust Estate and the rights of the Indenture Trustee and the Noteholders in such Trust Estate against the claims of all Persons.

 

The Issuing Entity hereby designates the Indenture Trustee as its agent and attorney-in-fact to execute any financing statement, continuation statement, instrument of further assurance or other instrument required to be executed to accomplish the foregoing.

 

SECTION 3.6.              Opinions as to the Trust Estate.  (a)   On the Closing Date, the Issuing Entity shall furnish to the Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken or will be taken with respect to the recording and filing of this Indenture, any indentures supplemental hereto and any other requisite documents, and with respect to the execution and filing of any financing statements and 

 

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continuation statements, as are necessary to perfect and make effective the Lien and security interest created by this Indenture and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to make such Lien and security interest effective.

 

(b)   On or before April 30 in each calendar year commencing in the calendar year 2012 the Issuing Entity shall furnish to the Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents, and with respect to the execution and filing of any financing statements and continuation statements, as is necessary to maintain the Lien and security interest of this Indenture and reciting the details of such action, or stating that in the opinion of such counsel no such action is necessary to maintain such Lien and security interest.  Such Opinion of Counsel shall also describe the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents, and the execution and filing of any financing statements, amendments to financing statements and continuation statements, that will, in the opinion of such counsel, be required to maintain the Lien and security interest of this Indenture until April 30 in the following calendar year.

 

SECTION 3.7.              Performance of Obligations; Servicing of Receivables.  (a)   The Issuing Entity will not take any action and will use its best efforts not to permit any action to be taken by others that would release any Person from any material covenants or obligations under any instrument or agreement included in the Trust Estate or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except as expressly provided in this Indenture, the Sale and Servicing Agreement or such other instrument or agreement.

 

(b)   The Issuing Entity may contract with other Persons to assist it in performing its duties under this Indenture, and any performance of such duties by a Person identified to the Indenture Trustee in an Officer’s Certificate of the Issuing Entity shall be deemed to be action taken by the Issuing Entity.  Initially, the Issuing Entity has contracted with the Servicer and the Administrator to assist the Issuing Entity in performing its duties under this Indenture.

 

(c)   The Issuing Entity will punctually perform and observe all of its obligations and agreements contained in this Indenture, the other Basic Documents and in the instruments and agreements included in the Trust Estate, including filing or causing to be filed all UCC financing statements and continuation statements required to be filed by this Indenture and the Sale and Servicing Agreement in accordance with and within the time periods provided for herein and therein.  Except as otherwise expressly provided therein, the Issuing Entity shall not waive, amend, modify, supplement or terminate any Basic Document or any provision thereof without the consent of the Indenture Trustee or the Holders of at least a majority of the Outstanding Amount of the Notes.

 

(d)   If the Issuing Entity shall have knowledge of the occurrence of a Servicer Default, the Issuing Entity shall promptly notify the Indenture Trustee and the Rating Agencies thereof, and shall specify in such notice the action, if any, the Issuing Entity is taking with respect to such default.  If a Servicer Default shall arise from the failure of the Servicer to 

 

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perform any of its duties or obligations under the Sale and Servicing Agreement with respect to the Receivables, the Issuing Entity shall take all reasonable steps available to it to remedy such failure.

 

(e)   As promptly as possible after the giving of notice of termination to the Servicer of the Servicer’s rights and powers pursuant to Section 8.1 of the Sale and Servicing Agreement, the Backup Servicer shall become the successor servicer (the “Successor Servicer”) (or if there is no Backup Servicer on such date, then the Issuing Entity shall appoint a Successor Servicer acceptable to the Indenture Trustee), and such Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Indenture Trustee.  In the event that a Successor Servicer has not been appointed and accepted its appointment at the time when the previous Servicer ceases to act as Servicer, the Indenture Trustee without further action shall automatically be appointed as the Successor Servicer.  Notwithstanding the above, the Indenture Trustee shall, if it is unable to so act, (i) notify the Issuing Entity of its resignation as Successor Servicer and (ii) appoint or petition a court of competent jurisdiction to appoint any established institution, having a net worth of not less than $50,000,000 and whose regular business shall include the servicing of equipment receivables as the successor to the Servicer under the Sale and Servicing Agreement.  In accordance with Section 8.2 of the Sale and Servicing Agreement, the Issuing Entity shall enter into an agreement with such Successor Servicer for the servicing of the Receivables (such agreement to be in form and substance satisfactory to the Indenture Trustee).  If the Indenture Trustee shall succeed to the previous Servicer’s duties as servicer of the Receivables as provided herein, it shall do so in its individual capacity and not in its capacity as Indenture Trustee and, accordingly, the provisions of Article VI shall be inapplicable to the Indenture Trustee in its duties as the Successor Servicer and the servicing of the Receivables.  In case the Indenture Trustee shall become the Successor Servicer under the Sale and Servicing Agreement, the Indenture Trustee shall be entitled to act through or appoint as Servicer any one of its Affiliates; provided, that it shall be fully liable for the actions and omissions of such Affiliate in its capacity as Successor Servicer.  Notwithstanding anything else herein to the contrary, in no event shall the Indenture Trustee be liable for any servicing fee or for any differential in the amount of the Servicing Fee paid hereunder and the amount necessary to induce any successor Servicer to act as Successor Servicer under this Indenture and the transactions set forth or provided for herein, or be liable for or be required to make any servicer advances.

 

(f)    Upon any termination of the Servicer’s rights and powers pursuant to the Sale and Servicing Agreement, the Issuing Entity shall promptly notify the Indenture Trustee.  As soon as a Successor Servicer is appointed, the Issuing Entity shall notify the Indenture Trustee of such appointment, specifying in such notice the name and address of such Successor Servicer.

 

SECTION 3.8.              Negative Covenants.  So long as any Notes are Outstanding, the Issuing Entity shall not:

 

(i)            except as expressly permitted by this Indenture, the Purchase Agreement or the Sale and Servicing Agreement, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Issuing Entity, including those included in the Trust Estate, unless directed to do so by the Indenture Trustee;

 

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(ii)           claim any credit on, or make any deduction from the principal or interest payable in respect of, the Notes (other than amounts properly withheld from such payments under the Code or applicable State law) or assert any claim against any present or former Noteholder by reason of the payment of the taxes levied or assessed upon any part of the Trust Estate; or

 

(iii)          (A) permit the validity or effectiveness of this Indenture to be impaired, or permit the Lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Notes under this Indenture except as may be expressly permitted hereby, (B) permit any Lien (other than the Lien of this Indenture) to be created on or extend to or otherwise arise upon or burden the Trust Estate or any part thereof or any interest therein or the proceeds thereof or (C) permit the Lien of this Indenture not to constitute a valid first priority (other than with respect to any tax lien, mechanics’ lien or other lien not considered a Lien) security interest in the Trust Estate.

 

SECTION 3.9.              Annual Statement as to Compliance.  The Issuing Entity will deliver to the Indenture Trustee, within 120 days after the end of each fiscal year of the Issuing Entity, an Officer’s Certificate, substantially in the form of Exhibit B, stating that:

 

(i)            a review of the activities of the Issuing Entity during such year and of performance under this Indenture has been made under such Authorized Officer’s supervision; and

 

(ii)           to the best of such Authorized Officer’s knowledge, based on such review, the Issuing Entity has complied with all conditions and covenants under this Indenture throughout such year or, if there has been a default in the compliance of any such condition or covenant, specifying each such default known to such Authorized Officer and the nature and status thereof.

 

SECTION 3.10.            Issuing Entity May Consolidate, etc., Only on Certain Terms.  i)  The Issuing Entity shall not consolidate or merge with or into any other Person, unless:

 

(i)            the Person (if other than the Issuing Entity) formed by or surviving such consolidation or merger shall be a Person organized and existing under the laws of the United States of America or any State and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form satisfactory to the Indenture Trustee, the due and punctual payment of the principal of and interest on all Notes and the performance or observance of every agreement and covenant of this Indenture on the part of the Issuing Entity to be performed or observed, all as provided herein;

 

(ii)           immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

 

(iii)          the Rating Agency Condition shall have been satisfied with respect to such transaction;

 

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(iv)          the Issuing Entity shall have received an Opinion of Counsel (and shall have delivered copies thereof to the Indenture Trustee) to the effect that such transaction will not have any material adverse tax consequence to the Issuing Entity, any Noteholder or any Certificateholder;

 

(v)           any action that is necessary to maintain the Lien and security interest created by this Indenture shall have been taken; and

 

(vi)          the Issuing Entity shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel each stating that such consolidation or merger and such supplemental indenture comply with this Article III and that all conditions precedent herein provided for relating to such transaction have been complied with (including any filing required by the Exchange Act).

 

(b)   Except as permitted by the Basic Documents, the Issuing Entity shall not convey or transfer any of its properties or assets, substantially as an entirety, including those included in the Trust Estate, to any Person, unless:

 

(i)            the Person that acquires by conveyance or transfer the properties and assets of the Issuing Entity the conveyance or transfer of which is hereby restricted shall:  (A) be a United States citizen or a Person organized and existing under the laws of the United States of America or any State, (B) expressly assumes, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form satisfactory to the Indenture Trustee, the due and punctual payment of the principal of and interest on all Notes and the performance or observance of every agreement and covenant of this Indenture and the other Basic Documents on the part of the Issuing Entity to be performed or observed, all as provided herein, (C) expressly agrees by means of such supplemental indenture that all right, title and interest so conveyed or transferred shall be subject and subordinate to the rights of Holders of the Notes, (D) unless otherwise provided in such supplemental indenture, expressly agrees to indemnify, defend and hold harmless the Issuing Entity against and from any loss, liability or expense arising under or related to this Indenture and the Notes and (E) expressly agrees by means of such supplemental indenture that such Person (or if a group of Persons, then one specified Person) shall make all filings with the Commission (and any other appropriate Person) required by the Exchange Act in connection with the Notes;

 

(ii)           immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

 

(iii)          the Rating Agency Condition shall have been satisfied with respect to such transaction;

 

(iv)          the Issuing Entity shall have received an Opinion of Counsel (and shall have delivered copies thereof to the Indenture Trustee) to the effect that such transaction will not have any material adverse tax consequence to the Issuing Entity, any Noteholder or any Certificateholder;

 

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(v)           any action that is necessary to maintain the Lien and security interest created by this Indenture shall have been taken; and

 

(vi)          the Issuing Entity shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel each stating that such conveyance or transfer and such supplemental indenture comply with this Article III and that all conditions precedent herein provided for relating to such transaction have been complied with (including any filing required by the Exchange Act).

 

SECTION 3.11.            Successor or Transferee.  (a)  Upon any consolidation or merger of the Issuing Entity in accordance with Section 3.10(a), the Person formed by or surviving such consolidation or merger (if other than the Issuing Entity) shall succeed to, and be substituted for, and may exercise every right and power of, the Issuing Entity under this Indenture with the same effect as if such Person had been named as the Issuing Entity herein.

 

(b)   Upon a conveyance or transfer of all the assets and properties of the Issuing Entity pursuant to Section 3.10(b), the Issuing Entity will be released from every covenant and agreement of this Indenture to be observed or performed on the part of the Issuing Entity with respect to the Notes immediately upon the delivery of written notice to the Indenture Trustee stating that the Issuing Entity is to be so released.

 

SECTION 3.12.            No Other Business.  The Issuing Entity shall not engage in any business other than as permitted in Section 2.3 of the Trust Agreement.

 

SECTION 3.13.            No Borrowing.  The Issuing Entity shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except for the Notes.

 

SECTION 3.14.            Servicer’s Obligations.  The Issuing Entity shall cause the Servicer to comply with Sections 4.8, 4.9, 4.10, 4.11 and 5.11 of the Sale and Servicing Agreement.

 

SECTION 3.15.            Guarantees, Loans, Advances and Other Liabilities.  Except as contemplated by the Sale and Servicing Agreement or this Indenture, the Issuing Entity shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another’s payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person.

 

SECTION 3.16.            Capital Expenditures.  The Issuing Entity shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty).

 

SECTION 3.17.            Removal of Administrator.  So long as any Notes are Outstanding, the Issuing Entity shall not remove the Administrator without cause unless the Rating Agency Condition shall have been satisfied in connection with such removal.

 

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SECTION 3.18.            Restricted Payments.  The Issuing Entity shall not, directly or indirectly:  (i) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to the Trustee or any owner of a beneficial interest in the Issuing Entity or otherwise with respect to any ownership or equity interest or security in or of the Issuing Entity or to the Servicer or the Administrator, (ii) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or security or (iii) set aside or otherwise segregate any amounts for any such purpose; provided, however, that the Issuing Entity may make, or cause to be made, distributions to the Servicer, the Trustee, the Certificateholders and the Administrator as contemplated by, and to the extent funds are available for such purpose under, the Sale and Servicing Agreement.  The Issuing Entity will not, directly or indirectly, make payments to or distributions from the Collection Account except in accordance with this Indenture and the other Basic Documents.

 

SECTION 3.19.            Notice of Events of Default.  The Issuing Entity shall give the Indenture Trustee and the Rating Agencies prompt written notice of each Event of Default hereunder, each default on the part of the Servicer or the Seller of its obligations under the Sale and Servicing Agreement and each default on the part of CNHCA of its obligations under the Purchase Agreement.

 

SECTION 3.20.            Further Instruments and Acts.  Upon request of the Indenture Trustee, the Issuing Entity will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

 

SECTION 3.21.            Perfection Representation.  The Issuing Entity further makes all the representations, warranties and covenants set forth in Schedule P.

 

ARTICLE IV
 Satisfaction and Discharge

 

SECTION 4.1.              Satisfaction and Discharge of Indenture.  This Indenture shall cease to be of further effect with respect to the Notes except as to: (i) rights of registration of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments of principal thereof and interest thereon, (iv) [Reserved]; (v) Sections 3.3, 3.4, 3.5, 3.8, 3.10, 3.12 and 3.13, (vi) the rights, obligations and immunities of the Indenture Trustee hereunder (including the rights of the Indenture Trustee under Section 6.7 and the obligations of the Indenture Trustee under Section 4.2) and (vii) the rights of Noteholders as beneficiaries hereof with respect to the property so deposited with the Indenture Trustee payable to all or any of them, and the Indenture Trustee, on demand of and at the expense of the Issuing Entity, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Notes, when:

 

(A)          either:

 

(1)           all Notes theretofore authenticated and delivered (other than: (i) Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.5 and (ii) Notes for whose payment money has

 

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theretofore been deposited in trust or segregated and held in trust by the Issuing Entity and thereafter repaid to the Issuing Entity or discharged from such trust, as provided in Section 3.3) have been delivered to the Indenture Trustee for cancellation; or

 

(2)           all Notes not theretofore delivered to the Indenture Trustee for cancellation:

 

(i)            have become due and payable,

 

(ii)           will become due and payable on the respective Class Final Scheduled Maturity Date within one year, or

 

(iii)          are to be called for redemption within one year under arrangements satisfactory to the Indenture Trustee for the giving of notice of redemption by the Indenture Trustee in the name, and at the expense, of the Issuing Entity, and the Issuing Entity, in the case of clause (2)(i), (ii) or (iii), has irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee cash or direct obligations of or obligations guaranteed by the United States of America (which will mature prior to the date such amounts are payable), in trust for such purpose, in an amount sufficient to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Indenture Trustee for cancellation when due to the respective Class Final Scheduled Maturity Date or Redemption Date (if Notes shall have been called for redemption pursuant to Section 10.1(a)), as the case may be;

 

(B)           the Issuing Entity has paid or caused to be paid all other sums payable hereunder by the Issuing Entity; and

 

(C)           the Issuing Entity has delivered to the Indenture Trustee an Officer’s Certificate, an Opinion of Counsel and (if required by the TIA) an Independent Certificate from a firm of certified public accountants, each meeting the applicable requirements of Section 11.1(a) and, subject to Section 11.2, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

 

SECTION 4.2.              Application of Trust Money.  All monies deposited with the Indenture Trustee pursuant to Section 4.1 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent, as the Indenture Trustee may determine, to the Holders of the particular Notes for the payment or redemption of which such monies have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal and interest; but such monies need not be segregated from other funds except to the extent required herein or in the Sale and Servicing Agreement or as required by law.

 

SECTION 4.3.              Repayment of Monies Held by Paying Agent.  In connection with the satisfaction and discharge of this Indenture with respect to the Notes, all monies then

 

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held by any Paying Agent other than the Indenture Trustee under this Indenture with respect to such Notes shall, upon demand of the Issuing Entity, be paid to the Indenture Trustee to be held and applied according to Section 3.3, and thereupon such Paying Agent shall be released from all further liability with respect to such monies.

 

ARTICLE V
 Remedies

 

SECTION 5.1.              Events of Default.  “Event of Default”, wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

 

(i)            default in the payment of any interest on any Note when the same becomes due and payable, and such default shall continue for a period of five days;

 

(ii)           default in the payment of the principal of any Note when the same becomes due and payable;

 

(iii)          default in the observance or performance of any covenant or agreement of the Issuing Entity made in this Indenture (other than a covenant or agreement a default in the observance or performance of which is elsewhere in this Section specifically dealt with), or any representation or warranty of the Issuing Entity made in this Indenture or in any certificate or other writing delivered pursuant hereto or in connection herewith proving to have been incorrect in any material respect as of the time when the same shall have been made, and such default shall continue or not be cured, or the circumstance or condition in respect of which such misrepresentation or warranty was incorrect shall not have been eliminated or otherwise cured, for a period of 30 days after there shall have been given, by registered or certified mail, to the Issuing Entity by the Indenture Trustee or to the Issuing Entity and the Indenture Trustee by the Holders of at least 25% of the Outstanding Amount of the Notes, a written notice specifying such default or incorrect representation or warranty and requiring it to be remedied and stating that such notice is a notice of Default hereunder;

 

(iv)          the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuing Entity or any substantial part of the Trust Estate in an involuntary case under any applicable federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuing Entity or for any substantial part of the Trust Estate, or ordering the winding-up or liquidation of the Issuing Entity’s affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or

 

(v)           the commencement by the Issuing Entity of a voluntary case under any applicable federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuing Entity to the entry of an order for relief in an

 

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involuntary case under any such law, or the consent by the Issuing Entity to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuing Entity or for any substantial part of the Trust Estate, or the making by the Issuing Entity of any general assignment for the benefit of creditors, or the failure by the Issuing Entity generally to pay its debts as such debts become due, or the taking of action by the Issuing Entity in furtherance of any of the foregoing.

 

The Issuing Entity shall deliver to the Indenture Trustee, within five days after the Issuing Entity or the Administrator obtains actual knowledge thereof, written notice in the form of an Officer’s Certificate of any event that, with the giving of notice or the lapse of time or both, would become an Event of Default under clause  (iii), its status and what action the Issuing Entity is taking or proposes to take with respect thereto.

 

SECTION 5.2.              Acceleration of Maturity; Rescission and Annulment.  If an Event of Default should occur and be continuing, then and in every such case the Indenture Trustee or the Holders of Notes representing not less than a majority of the Outstanding Amount may declare all the Notes to be immediately due and payable, by a notice in writing to the Issuing Entity (and to the Indenture Trustee if given by Noteholders), and upon any such declaration the Outstanding Amount, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable.

 

At any time after such declaration of acceleration of maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter in this Article V provided, the Holders of Notes representing not less than a majority of the Outstanding Amount, by written notice to the Issuing Entity and the Indenture Trustee, may rescind and annul such declaration and its consequences if:

 

(i)            the Issuing Entity has paid or deposited with the Indenture Trustee a sum sufficient to pay:

 

(A)          all payments of principal of and interest on all Notes and all other amounts, in each case, that would then be due hereunder if the Event of Default giving rise to such acceleration had not occurred; and

 

(B)           all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel; and

 

(ii)           all Events of Default, other than the nonpayment of the principal of the Notes that has become due solely by such acceleration, have been cured or waived as provided in Section 5.12.

 

No such rescission shall affect any subsequent default or impair any right consequent to such default.

 

SECTION 5.3.              Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.  (a)  The Issuing Entity covenants that if an Event of Default described in

 

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Section 5.1(i) or (ii) occurs, the Issuing Entity will, upon demand of the Indenture Trustee, pay to it, for the benefit of the Holders of Notes, the whole amount then due and payable on such Notes for principal and interest, with interest upon the overdue principal at the applicable interest rate, and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of interest, at the applicable interest rate, and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel.

 

(b)   In case the Issuing Entity shall fail forthwith to pay such amounts upon such demand, the Indenture Trustee, in its own name and as trustee of an express trust, may institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and may enforce the same against the Issuing Entity or other obligor upon such Notes and collect in the manner provided by law out of the property of the Issuing Entity or other obligor upon such Notes, wherever situated, the monies adjudged or decreed to be payable.

 

(c)   In case an Event of Default occurs and is continuing, the Indenture Trustee may, as more particularly provided in Section 5.4, in its discretion, proceed to protect and enforce its rights and the rights of the Noteholders, by such appropriate Proceedings as the Indenture Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture or by law.

 

(d)   In case there shall be pending, relative to the Issuing Entity or any other obligor upon the Notes or any Person having or claiming an ownership interest in the Trust Estate, Proceedings under Title 11 of the United States Code or any other applicable federal or State bankruptcy, insolvency or other similar law, or in case a receiver, assignee, trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuing Entity or its property or such other obligor or Person, or in case of any other comparable judicial Proceedings relative to the Issuing Entity or other obligor upon the Notes, or to the creditors or property of the Issuing Entity or such other obligor, the Indenture Trustee, irrespective of whether the principal of any Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to this Section, shall be entitled and empowered, by intervention in such Proceedings or otherwise:

 

(i)            to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith) and of the Noteholders allowed in such Proceedings;

 

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(ii)           unless prohibited by applicable law or regulations, to vote on behalf of the Holders of the Notes in any election of a trustee, a standby trustee or any Person performing similar functions in any such Proceedings;

 

(iii)          to collect and receive any monies or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Noteholders and of the Indenture Trustee on their behalf; and

 

(iv)          to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Holders of Notes allowed in any judicial Proceedings relative to the Issuing Entity, its creditors and its property;

 

and any trustee, receiver, liquidator, assignee, custodian, sequestrator or other similar official in any such Proceeding is hereby authorized by each of such Noteholders to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to such Noteholders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other reasonable expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or bad faith.

 

(e)   Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Indenture Trustee to vote in respect of the claim of any Noteholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.

 

(f)    All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Indenture Trustee without the possession of any of the Notes or the production thereof in any trial or other Proceedings relative thereto, and any such action or Proceedings instituted by the Indenture Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Notes.

 

(g)   In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Holders of the Notes, and it shall not be necessary to make any Noteholder a party to any such Proceedings.

 

SECTION 5.4.              Remedies; Priorities.  (a)  If the Notes have been declared to be due and payable under Section 5.2 following an Event of Default, the Indenture Trustee may do one or more of the following (subject to Section 5.5):

 

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(i)            institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the Notes or under this Indenture with respect thereto, whether by declaration or otherwise, enforce any judgment obtained, and collect from the Issuing Entity and any other obligor upon such Notes monies adjudged due;

 

(ii)           institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Trust Estate;

 

(iii)          exercise any remedies of a secured party under the UCC and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Holders of the Notes;

 

(iv)          sell the Trust Estate, or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law; and

 

(v)           make demand upon the Servicer, by written notice, that the Servicer deliver to the Indenture Trustee all Receivable Files;

 

provided, however, that the Indenture Trustee may not sell or otherwise liquidate the Trust Estate following an Event of Default, other than an Event of Default described in Section 5.1(i) or (ii), unless:  (A) all the Noteholders consent thereto, (B) the proceeds of such sale or liquidation distributable to the Noteholders are sufficient to discharge in full all amounts then due and unpaid upon such Notes for principal and interest or (C) the Indenture Trustee determines that the Trust Estate will not continue to provide sufficient funds for the payment of principal of and interest on the Notes as they would have become due if the Notes had not been declared due and payable, and the Indenture Trustee obtains the consent of Holders of 66 2/3% of the Outstanding Amount of the Notes. In determining such sufficiency or insufficiency with respect to clauses (B) and (C), the Indenture Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose.  The Indenture Trustee shall incur no liability as a result of the sale of the Trust Estate or any part thereof at any sale pursuant to this Section 5.4 conducted in a commercially reasonable manner.  Each of the Issuing Entity and Holders hereby waives any claims against the Indenture Trustee arising by reason of the fact that the price at which the Trust Estate may have been sold at such sale was less than the price that might have been obtained, even if the Indenture Trustee accepts the first offer received and does not offer the Trust Estate to more than one offeree, so long as such sale is conducted in a commercially reasonable manner.

 

(b)   If the Indenture Trustee collects any money or property pursuant to this Article V, it shall pay out such money or property in the following order:

 

FIRST:  to pay the Backup Servicer its accrued and unpaid Backup Servicer Fees;

 

SECOND:  to pay the Servicer its accrued and unpaid Servicing Fee;

 

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THIRD:  to the Indenture Trustee for amounts due under Section 6.7 and to the Trustee for amounts due under Section 8.1 of the Trust Agreement;

 

FOURTH:  to the Administrator its accrued and unpaid Administration Fees;

 

FIFTH:  to the Note Distribution Account for distribution pursuant to Section 8.2(e) to the extent of all amounts payable under such Section, other than any amounts that would be deposited into the Certificate Distribution Account under such Section;

 

SIXTH:  first, to the Backup Servicer, to cover any accrued and unpaid reimbursable expenses (including the Backup Servicer Expenses) to the extent unreimbursed after application of Section 4.12 of the Sale and Servicing Agreement and second to the Servicer, to cover any accrued and unpaid reimbursable expenses;

 

SEVENTH:  to the Trustee for amounts due to the Trustee under Article VIII of the Trust Agreement to the extent not paid under clause THIRD above; and

 

EIGHTH:  to the Issuing Entity for distribution to the Certificateholders.

 

The Indenture Trustee may fix a special record date and special payment date for any payment to Noteholders pursuant to this Section.  At least 15 days before such special record date, the Issuing Entity shall mail to each Noteholder and the Indenture Trustee a notice that states the special record date, the special payment date and the amount to be paid.

 

SECTION 5.5.              Optional Preservation of the Receivables.  If the Notes have been declared to be due and payable under Section 5.2 following an Event of Default, and such declaration and its consequences have not been rescinded and annulled, the Indenture Trustee may, but need not, elect to maintain possession of the Trust Estate.  It is the desire of the parties hereto and the Noteholders that there be at all times sufficient funds for the payment of principal of and interest on the Notes, and the Indenture Trustee shall take such desire into account when determining whether or not to maintain possession of the Trust Estate.  In determining whether to maintain possession of the Trust Estate, the Indenture Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose.

 

SECTION 5.6.              Limitation of Suits.  No Holder of any Note shall have any right to institute any Proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

 

(i)            such Holder has previously given written notice to the Indenture Trustee of a continuing Event of Default;

 

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(ii)           the Holder(s) of not less than 25% of the Outstanding Amount of the Notes have made written request to the Indenture Trustee to institute such Proceeding in respect of such Event of Default in its own name as Indenture Trustee hereunder;

 

(iii)          such Holder(s) have offered to the Indenture Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in complying with such request;

 

(iv)          the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceeding; and

 

(v)           no direction inconsistent with such written request has been given to the Indenture Trustee during such 60-day period by the Holders of a majority of the Outstanding Amount of the Notes;

 

it being understood and intended that no one or more Holder(s) of Notes shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder(s) of Notes or to obtain or to seek to obtain priority or preference over any other Holder(s) or to enforce any right under this Indenture, except in the manner herein provided.

 

In the event the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Noteholders, each representing less than a majority of the Outstanding Amount of the Notes, the Indenture Trustee in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture.

 

SECTION 5.7.              Unconditional Rights of Noteholders To Receive Principal and Interest.  Notwithstanding any other provisions in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest, if any, on such Note on or after the respective due dates thereof expressed in such Note or in this Indenture (or, in the case of redemption, on or after the Redemption Date) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.

 

SECTION 5.8.              Restoration of Rights and Remedies.  If the Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee or to such Noteholder, then and in every such case the Issuing Entity, the Indenture Trustee and the Noteholders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Noteholders shall continue as though no such Proceeding had been instituted.

 

SECTION 5.9.              Rights and Remedies Cumulative.  No right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or

 

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remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

SECTION 5.10.            Delay or Omission Not a Waiver.  No delay or omission of the Indenture Trustee or any Holder of Notes to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or Event of Default or an acquiescence therein.  Every right and remedy given by this Article or by law to the Indenture Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as the case may be.

 

SECTION 5.11.            Control by Noteholders.  The Holders of not less than a majority of the Outstanding Amount of the Notes shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Notes or exercising any trust or power conferred on the Indenture Trustee; provided, that:

 

(i)            such direction shall not be in conflict with any rule of law or with this Indenture;

 

(ii)           subject to the express terms of Section 5.4, any direction to the Indenture Trustee to sell or liquidate the Trust Estate shall be by all the Noteholders;

 

(iii)          if the conditions set forth in Section 5.5 have been satisfied and the Indenture Trustee elects to retain the Trust Estate pursuant to such Section, then any direction to the Indenture Trustee by Holders of Notes representing less than 100% of the Outstanding Amount of the Notes to sell or liquidate the Trust Estate shall be of no force and effect; and

 

(iv)          the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction;

 

provided further, however, that, subject to Section 6.1, the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Noteholder(s) not consenting to such action.

 

SECTION 5.12.            Waiver of Past Defaults.  Prior to the time a judgment or decree for payment of money due has been obtained as described in Section 5.3, the Holders of Notes of not less than a majority of the Outstanding Amount of the Notes may waive any past Default or Event of Default and its consequences except a Default:  (a) in payment of principal of or interest on any of the Notes or (b) in respect of a covenant or provision hereof that cannot be modified or amended without the consent of the Holder of each Note.  In the case of any such waiver, the Issuing Entity, the Indenture Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.

 

Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to

 

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have been cured and not to have occurred, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto.

 

SECTION 5.13.            Undertaking for Costs.  All parties to this Indenture agree, and each Holder of any Note by such Holder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorney’s fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to:  (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by any Noteholder(s) holding in the aggregate more than 10% of the Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder for the enforcement of the payment of principal of or interest on any Note on or after the respective due dates expressed in such Note and in this Indenture (or, in the case of redemption, on or after the Redemption Date).

 

SECTION 5.14.            Waiver of Stay or Extension Laws.  The Issuing Entity covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuing Entity (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

 

SECTION 5.15.            Action on Notes.  The Indenture Trustee’s right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture.  Neither the Lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuing Entity or by the levy of any execution under such judgment upon any portion of the Trust Estate or upon any of the assets of the Issuing Entity. Any money or property collected by the Indenture Trustee shall be applied in accordance with Section 5.4(b).

 

SECTION 5.16.            Performance and Enforcement of Certain Obligations.  (a)  Promptly following a request from the Indenture Trustee to do so and at the Administrator’s expense, the Issuing Entity shall take all such lawful action as the Indenture Trustee may request to compel or secure the performance and observance by the Seller and the Servicer, as applicable, of each of their obligations to the Issuing Entity under or in connection with the Sale and Servicing Agreement or to the Seller under or in connection with the Purchase Agreement in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuing Entity under or in connection with the Sale and Servicing Agreement (or the Seller under or in connection with the Purchase Agreement) to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices

 

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of default on the part of the Seller or the Servicer thereunder and the institution of legal or administrative actions or proceedings to compel or secure performance by the Seller or the Servicer of each of their obligations under the Sale and Servicing Agreement or the Purchase Agreement.

 

(b)   If an Event of Default has occurred and is continuing, the Indenture Trustee may, and at the direction (which direction shall be in writing) of the Holders of not less than 66 2/3% of the Outstanding Amount of the Notes shall, exercise all rights, remedies, powers, privileges and claims of the Issuing Entity against the Seller or the Servicer under or in connection with the Sale and Servicing Agreement, including the right or power to take any action to compel or secure performance or observance by the Seller or the Servicer of each of their obligations to the Issuing Entity thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Sale and Servicing Agreement, and any right of the Issuing Entity to take such action shall be suspended.

 

(c)   If an Event of Default has occurred and is continuing, the Indenture Trustee may, and at the direction (which direction shall be in writing) of the Holders of not less than 66 2/3% of the Outstanding Amount of the Notes shall, exercise all rights, remedies, powers, privileges and claims of the Seller against CNHCA under or in connection with the Purchase Agreement, including the right or power to take any action to compel or secure performance or observance by CNHCA, of each of its obligations to the Seller thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Purchase Agreement, and any right of the Seller to take such action shall be suspended.

 

ARTICLE VI
 The Indenture Trustee

 

SECTION 6.1.              Duties of the Indenture Trustee.  (a)  If an Event of Default has occurred and is continuing, the Indenture Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

 

(b)   Except during the continuance of an Event of Default actually known to a Responsible Officer:

 

(i)            the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee; and

 

(ii)           in the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture; provided, however, in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Indenture Trustee, the Indenture Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

 

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(c)   The Indenture Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

 

(i)            this clause (c) does not limit the effect of clause (b) of this Section;

 

(ii)           the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is conclusively determined by a court of competent jurisdiction that the Indenture Trustee was negligent in ascertaining the pertinent facts;

 

(iii)          the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to the Indenture;

 

(iv)          the Indenture Trustee shall not be charged with knowledge of an Event of Default or Servicer Default unless a Responsible Officer obtains actual knowledge of such event or the Indenture Trustee receives written notice of such event from the Seller, Servicer or Note Owners owning Notes aggregating not less than 10% of the Outstanding Amount of the Notes; and

 

(v)           the Indenture Trustee shall have no duty to monitor the performance of the Issuing Entity, the Trustee, the Seller or the Servicer, nor shall it have any liability in connection with malfeasance or nonfeasance by the Issuing Entity, the Trustee, the Seller or the Servicer.  The Indenture Trustee shall have no liability in connection with compliance of the Issuing Entity, the Trustee, the Seller or the Servicer with statutory or regulatory requirements related to the Receivables.  The Indenture Trustee shall not make or be deemed to have made any representations or warranties with respect to the Receivables or the validity or sufficiency of any assignment of the Receivables to the Trust Estate or the Indenture Trustee.

 

(d)   Every provision of this Indenture that in any way relates to the Indenture Trustee is subject to clauses (a), (b), (c) and (g).

 

(e)   The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuing Entity.

 

(f)    Money held in trust by the Indenture Trustee need not be segregated from other funds except to the extent required by law, this Indenture or the Sale and Servicing Agreement.

 

(g)   No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity satisfactory to it against any loss, liability or expense is not reasonably assured to it.

 

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(h)   Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to this Section and the TIA.

 

SECTION 6.2.              Rights of Indenture Trustee.  (a)  The Indenture Trustee may conclusively rely and shall be fully protected in acting on any document reasonably believed by it to be genuine and to have been signed or presented by the proper Person.  The Indenture Trustee need not investigate any fact or matter stated in any such document.

 

(b)   Before the Indenture Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel.  The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officer’s Certificate or Opinion of Counsel.

 

(c)   The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, a custodian or a nominee, and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent, attorney, custodian or nominee appointed with due care by it.

 

(d)   The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustee’s conduct does not constitute willful misconduct, negligence or bad faith.

 

(e)   The Indenture Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

 

(f)    The Indenture Trustee shall not be required to make any initial or periodic examination of any files or records related to the Receivables for the purpose of establishing the presence or absence of defects, the compliance by the Issuing Entity with its representations and warranties or for any other purpose.

 

(g)   In the event that the Indenture Trustee is also acting as Paying Agent or Note Registrar hereunder, the rights and protections afforded to the Indenture Trustee pursuant to this Article VI shall also be afforded to the Indenture Trustee in its capacity as such Paying Agent or Note Registrar.

 

(h)   In order to comply with the laws, rules, regulations and executive orders in effect from time to time applicable to banking institutions, including those relating to the funding of terrorist activities and money laundering (“Applicable Law”), the Indenture Trustee is required to obtain, verify and record certain information relating to individuals and entities which maintain a business relationship with the Indenture Trustee.  Accordingly, each of the parties to the Indenture agrees to provide to the Indenture Trustee, upon its request from time to time such identifying information and documentation as may be available for such party and is reasonably

 

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acceptable for such party to provide in order to enable the Indenture Trustee to comply with Applicable Law.

 

SECTION 6.3.              Individual Rights of the Indenture Trustee.  The Indenture Trustee shall not, in its individual capacity, but may in a fiduciary capacity, become the owner of Notes or otherwise extend credit to the Issuing Entity.  The Indenture Trustee may otherwise deal with the Issuing Entity or its Affiliates with the same rights it would have if it were not the Indenture Trustee.  Any Paying Agent, Note Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12.

 

SECTION 6.4.              Indenture Trustee’s Disclaimer.  The Indenture Trustee shall not be responsible for, and makes no representation as to the validity or adequacy of, this Indenture or the Notes; shall not be accountable for the Issuing Entity’s use of the proceeds from the Notes; and shall not be responsible for any statement of the Issuing Entity in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Indenture Trustee’s certificate of authentication.

 

SECTION 6.5.              Notice of Defaults.  If a Default occurs and is continuing and is known to a Responsible Officer, the Indenture Trustee shall mail to each Noteholder notice of the Default within 90 days after it occurs.  Except in the case of a Default in payment of principal of or interest on any Note, the Indenture Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Noteholders.

 

SECTION 6.6.              Reports by Indenture Trustee to the Holders.  The Indenture Trustee shall deliver to each Noteholder such information as may be required to enable such Holder to prepare its federal, State and other income tax returns.  Within 60 days after each December 31, starting with December 31, 2011, the Indenture Trustee shall mail to each Noteholder a brief report as of such December 31 that complies with TIA § 313(a) (if required by said section).

 

SECTION 6.7.              Compensation and Indemnity.  The Issuing Entity shall, or shall cause the Servicer to, pay to the Indenture Trustee from time to time reasonable compensation for its services as agreed to between the Issuing Entity and the Indenture Trustee in writing.  The Indenture Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Issuing Entity shall, or shall cause the Servicer to, reimburse the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Indenture Trustee’s agents, counsel, accountants and experts.  The Issuing Entity shall or shall cause the Servicer to indemnify the Indenture Trustee and its officers, directors, employees and agents against any and all loss, liability or expense (including attorneys’ fees and expenses) incurred by them in connection with the administration of this trust and the performance of its duties hereunder.  The Indenture Trustee shall notify the Issuing Entity and the Servicer promptly of any claim for which it may seek indemnity.  Failure by the Indenture Trustee to so notify the Issuing Entity and the Servicer shall not relieve the Issuing Entity or the Servicer of its respective

 

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obligations hereunder.  The Issuing Entity shall, or shall cause the Servicer to, defend the claim and the Indenture Trustee may have separate counsel and the Issuing Entity shall, or shall cause the Servicer to, pay the reasonable fees and expenses of such counsel.  Notwithstanding anything to the contrary contained herein, neither the Issuing Entity nor the Servicer need reimburse any expense or indemnify against any loss, liability or expense incurred by the Indenture Trustee through the Indenture Trustee’s own willful misconduct, negligence or bad faith.

 

The Issuing Entity’s payment obligations to the Indenture Trustee pursuant to this Section shall survive the discharge of this Indenture or the earlier resignation or removal of the Indenture Trustee.  When the Indenture Trustee incurs expenses after the occurrence of a Default specified in Section 5.1(iv) or (v), the expenses are intended to constitute expenses of administration under Title 11 of the United States Code or any other applicable federal or State bankruptcy, insolvency or similar law.

 

SECTION 6.8.              Replacement of the Indenture Trustee.  No resignation or removal of the Indenture Trustee and no appointment of a successor Indenture Trustee shall become effective until the acceptance of appointment by the successor Indenture Trustee pursuant to this Section 6.8.  The Indenture Trustee may resign at any time by so notifying the Issuing Entity in writing.  The Holders of not less than a majority of the Outstanding Amount of the Notes may remove the Indenture Trustee by so notifying the Indenture Trustee in writing and may appoint a successor Indenture Trustee.  The Issuing Entity shall remove the Indenture Trustee if:

 

(i)            the Indenture Trustee fails to comply with Section 6.11;

 

(ii)           the Indenture Trustee is adjudged a bankrupt or insolvent;

 

(iii)          a receiver or other public officer takes charge of the Indenture Trustee or its property; or

 

(iv)          the Indenture Trustee otherwise becomes incapable of acting.

 

If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Issuing Entity shall promptly appoint a successor Indenture Trustee.

 

A successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring Indenture Trustee and to the Issuing Entity.  Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee under this Indenture.  The successor Indenture Trustee shall mail a notice of its succession to the Noteholders. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the successor Indenture Trustee.

 

If a successor Indenture Trustee does not take office within 60 days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Issuing Entity or the

 

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Holders of not less than a majority of the Outstanding Amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee.

 

If the Indenture Trustee fails to comply with Section 6.11, any Noteholder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee.

 

Notwithstanding the replacement of the Indenture Trustee pursuant to this Section, the Issuing Entity’s and the Administrator’s obligations under Section 6.7 shall continue for the benefit of the retiring Indenture Trustee.  The retiring Indenture Trustee shall have no liability for any act or omission by any successor Indenture Trustee other than itself, serving again as Indenture Trustee.

 

SECTION 6.9.              Successor Indenture Trustee by Merger.  If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Indenture Trustee.  The Indenture Trustee shall provide prompt written notice of any such transaction following the consummation thereof to the Issuing Entity and, subject to Section 11.21, to the Rating Agencies; provided, that such corporation or banking association shall be otherwise qualified and eligible under Section 6.11.

 

In case at the time such successor(s) by merger, conversion or consolidation to the Indenture Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor Indenture Trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Notes either in the name of any predecessor Indenture Trustee hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates of authentication shall have the full force and effect to the same extent given to the certificate of authentication of the Indenture Trustee anywhere in the Notes or in this Indenture.

 

SECTION 6.10.            Appointment of Co-Trustee or Separate Trustee.  (a)  Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Trust Estate may at the time be located, the Indenture Trustee shall have the power and may execute and deliver all instruments to appoint one or more Person(s) to act as co-trustee(s), or separate trustee(s), of all or any part of the Trust Estate, and to vest in such Person(s), in such capacity and for the benefit of the Noteholders, such title to the Trust Estate, or any part thereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable.  No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.11 and no notice to Noteholders of the appointment of any co-trustee or separate trustee shall be required under Section 6.8.

 

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(b)   Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions:

 

(i)            all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act(s) are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act(s), in which event such rights, powers, duties and obligations (including the holding of title to the Trust Estate or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee;

 

(ii)           no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and

 

(iii)          the Indenture Trustee may at any time accept the resignation of or remove, in its sole discretion, any separate trustee or co-trustee.

 

(c)   Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them.  Every instrument appointing any separate trustee or co-trustee shall refer to this Agreement and the conditions of this Article VI.  Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee.  Every such instrument shall be filed with the Indenture Trustee.

 

(d)   Any separate trustee or co-trustee may at any time constitute the Indenture Trustee as its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name.  If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.

 

(e)   The Indenture Trustee shall have no obligation to determine whether a co-trustee or separate trustee is legally required in any jurisdiction in which any part of the Trust Estate may be located.

 

SECTION 6.11.            Eligibility; Disqualification.  The Indenture Trustee shall at all times satisfy the requirements of TIA § 310(a) and, upon Issuing Entity Order, Section 26(a)(1) of the Investment Company Act of 1940, as amended.  The Indenture Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published 

 

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annual report of condition and it shall have a long term senior, unsecured debt rating of “Baa3” or better by Moody’s (or, if not rated by Moody’s, a comparable rating by another statistical rating agency).  The Indenture Trustee shall comply with TIA § 310(b), including the optional provision permitted by the second sentence of TIA § 310(b)(9); provided, however, that there shall be excluded from the operation of TIA § 310(b)(1) any indenture(s) under which other securities of the Issuing Entity are outstanding if the requirements for such exclusion set forth in TIA § 310(b)(1) are met.

 

If a default occurs under this Indenture, and the Indenture Trustee is deemed to have a conflicting interest as a result of acting as trustee for both (1) the Class A Notes and (2) the Class B Notes, a successor Indenture Trustee shall be appointed for one or more of such Classes, so that there will be separate Indenture Trustees for the Class A Notes and the Class B Notes, respectively.  No such event shall alter the voting rights of the Class A Noteholders or the Class B Noteholders under this Indenture or any other Basic Document.  However, so long as any amounts remain unpaid with respect to the Class A Notes, only the Indenture Trustee for the Class A Noteholders will have the right to exercise remedies under this Indenture (but subject to the express provisions of Section 5.4 and to the right of the Class B Noteholders to receive their respective shares of any proceeds of enforcement, subject to the subordination of the Class B Notes to the Class A Notes as described herein).  Upon repayment of the Class A Notes in full, but so long as any amounts remain unpaid with respect to the Class B Notes, only the Indenture Trustee for the Class B Noteholders will have the right to exercise remedies under this Indenture (but subject to the express provisions of Section 5.4).

 

In the case of the appointment hereunder of a successor Indenture Trustee with respect to any Class of Notes, the Issuing Entity, the retiring Indenture Trustee and the successor Indenture Trustee with respect to such Class of Notes shall execute and deliver an indenture supplemental hereto wherein the each successor Indenture Trustee shall accept such appointment and which (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, the successor Indenture Trustee all the rights, powers, trusts and duties of the retiring Indenture Trustee with respect to the Notes of the Class to which the appointment of such successor Indenture Trustee relates, (ii) if the retiring Indenture Trustee is not retiring with respect to all Classes of Notes, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Indenture Trustee with respect to the Notes of each Class as to which the retiring Indenture Trustee is not retiring shall continue to be vested in the retiring Indenture Trustee, and (iii) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Indenture Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Indenture Trustees co-trustees of the same trust and that each such Indenture Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Indenture Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Indenture Trustee shall become effective to the extent provided therein.

 

SECTION 6.12.            Preferential Collection of Claims Against the Issuing Entity.  The Indenture Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed 

 

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in TIA § 311(b).  An Indenture Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.

 

SECTION 6.13.            Information to Be Provided by the Indenture Trustee.  At any time when the Issuing Entity’s reporting obligations under Section 15(d) of the Exchange Act are not suspended, the Indenture Trustee shall notify the Servicer promptly after the Indenture Trustee becomes aware of (a) the initiation of any legal proceedings against the Indenture Trustee, or of which any property of the Indenture Trustee is subject, that are material to the Noteholders, (b) any developments in any such proceedings that are material to the Noteholders and (c) any such material proceedings that are contemplated by any governmental authority against the Indenture Trustee.

 

SECTION 6.14.            Representations and Warranties.  The Indenture Trustee hereby represents that:

 

(a)   the Indenture Trustee is duly organized and validly existing as a banking corporation in good standing under the laws of the State of New York with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted;

 

(b)   the Indenture Trustee has the power and authority to execute and deliver this Indenture and to carry out its terms; and the execution, delivery and performance of this Indenture have been duly authorized by the Indenture Trustee by all necessary corporate action;

 

(c)   the consummation of the transactions contemplated by this Indenture and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under the articles of association or bylaws of the Indenture Trustee or any material agreement or other instrument to which the Indenture Trustee is a party or by which it is bound;

 

(d)   to best of the Indenture Trustee’s knowledge, there are no proceedings or investigations pending or threatened before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Indenture Trustee or its properties:  (i) asserting the invalidity of this Indenture, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Indenture or (iii) seeking any determination or ruling that might materially and adversely affect the performance by the Indenture Trustee of its obligations under, or the validity or enforceability of, this Indenture; and

 

(e)   as of the date of the Underwriting Agreement, the Preliminary Prospectus Date, the Prospectus Date and the Closing Date, there are no legal proceedings pending against the Indenture Trustee, or of which any property of the Indenture Trustee is subject, that are material to the Noteholders, and no such legal proceedings are known to the Indenture Trustee to be contemplated by any governmental authority against the Indenture Trustee that are material to the Noteholders.

 

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ARTICLE VII
 Noteholders’ Lists and Reports

 

SECTION 7.1.              Issuing Entity To Furnish Indenture Trustee Names and Addresses of Noteholders.  The Issuing Entity will furnish or cause to be furnished to the Indenture Trustee:  (a) not more than five days after the earlier of:  (i) each Record Date and (ii) three months after the last Record Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Holders of Notes as of such Record Date, and (b) at such other times as the Indenture Trustee may request in writing, within 30 days after receipt by the Issuing Entity of any such request, a list of similar form and content as of a date not more than 10 days prior to the time such list is furnished; provided, however, that so long as the Indenture Trustee is the Note Registrar, no such list shall be required to be furnished.

 

SECTION 7.2.              Preservation of Information; Communications to Noteholders.  (a)  The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders of Notes contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.1 and the names and addresses of Holders of Notes received by the Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished.

 

(b)   Three or more Noteholders, or one or more Holder(s) of Notes evidencing at least 25% of the Outstanding Amount of the Notes, may communicate pursuant to TIA § 312(b) with other Noteholders with respect to their rights under this Indenture or under the Notes.

 

(c)   The Issuing Entity, the Indenture Trustee and the Note Registrar shall have the protection of TIA § 312(c).

 

SECTION 7.3.              Reports by Issuing Entity.  (a)  The Issuing Entity shall:

 

(i)            file with the Indenture Trustee, within 15 days after the Issuing Entity is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) that the Issuing Entity may be required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act;

 

(ii)           file with the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Issuing Entity with the conditions and covenants of this Indenture (with a copy of any such filings being delivered promptly to the Indenture Trustee); and

 

(iii)          supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Noteholders described in TIA § 313(c)) such summaries of any information, documents and reports required to be filed by the Issuing Entity pursuant to clauses (i) and (ii) as may be required by the rules and regulations prescribed from time to time by the Commission.

 

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(b)   Unless the Issuing Entity otherwise determines, the fiscal year of the Issuing Entity shall end on December 31 of each year.

 

SECTION 7.4.              Required Filings.  In no event shall the Indenture Trustee or any agent of the Indenture Trustee be obligated or responsible for preparing, executing, filing or delivering in respect of the Trust Estate or on behalf of another person, either (A) any report or filing required or permitted by the SEC to be prepared, executed, filed or delivered by or in respect of the Trust Estate or another person, or (B) any certification in respect of any such report or filing; in either case, other than as required expressly herein or in the other Basic Documents.

 

ARTICLE VIII
 Accounts, Disbursements and Releases

 

SECTION 8.1.              Collection of Money.  Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture.  The Indenture Trustee shall apply all such money received by it as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Collateral and the Trust Estate, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate Proceedings.  Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in Article V.

 

SECTION 8.2.              Trust Accounts.  (a)  On or prior to the Closing Date, the Issuing Entity shall cause the Servicer to establish and maintain, in the name of the Indenture Trustee, for the benefit of the Noteholders and the Certificateholders, the Trust Accounts as provided in Section 5.1 of the Sale and Servicing Agreement.

 

(b)   On or before each Payment Date, the Total Distribution Amount with respect to the preceding Collection Period will be deposited in the Collection Account as provided in Section 5.3 of the Sale and Servicing Agreement.  On or before each Payment Date, the First Principal Payment Amount and Noteholders’ Distributable Amount with respect to the preceding Collection Period will be transferred to the Note Distribution Account as provided in Sections 5.5 and 5.6 of the Sale and Servicing Agreement, and the Turbo Principal Payment Amount as of such Payment Date will be transferred to the Note Distribution Account as provided in Section 5.6(b)(x) of the Sale and Servicing Agreement.

 

(c)   On each Payment Date and Redemption Date prior to an Event of Default and acceleration of the Notes, the Indenture Trustee shall deposit or distribute all amounts on deposit in the Note Distribution Account to the Noteholders in the following amounts and in the following order of priority:

 

(i)            [Reserved];

 

(ii)           to the Class A Noteholders, the Class Interest Amount for each Class of Class A Notes; provided, that if there are not sufficient funds in the Note Distribution 

 

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Account to pay the entire amount of accrued and unpaid interest then due on such Notes, the amount in the Note Distribution Account shall be applied to the payment of such interest on such Notes pro rata on the basis of the total such interest due on such Notes;

 

(iii)          to the Class A Noteholders, an amount equal to the First Principal Payment Amount in the following order of priority:

 

(A)          to the A-1 Noteholders, until the Outstanding principal balance of the A-1 Notes is reduced to zero;

 

(B)           to the A-2 Noteholders, until the Outstanding principal balance of the A-2 Notes is reduced to zero;

 

(C)           to the A-3 Noteholders, until the Outstanding principal balance of the A-3 Notes is reduced to zero;

 

(D)          to the A-4 Noteholders, until the Outstanding principal balance of the A-4 Notes is reduced to zero;

 

(iv)          to the Class B Noteholders, the Class Interest Amount for the Class B Notes;

 

(v)           to the Class A Noteholders, for payment of principal, in the following order of priority:

 

(A)          to the A-1 Noteholders, until the Outstanding principal balance of the A-1 Notes is reduced to zero;

 

(B)           to the A-2 Noteholders, until the Outstanding principal balance of the A-2 Notes is reduced to zero;

 

(C)           to the A-3 Noteholders, until the Outstanding principal balance of the A-3 Notes is reduced to zero;

 

(D)          to the A-4 Noteholders, until the Outstanding principal balance of the A-4 Notes is reduced to zero;

 

(vi)          to the Class B Noteholders, for payment of principal, until the Outstanding principal balance of the Class B Notes is reduced to zero;

 

(vii)         [Reserved]; and

 

(viii)        thereafter, any excess shall be deposited in the Certificate Distribution Account.

 

(d)   On the A-1 Note Final Scheduled Maturity Date, the Indenture Trustee shall distribute to the Class A-1 Noteholders, from the amount available in the Note Distribution Account, an amount equal to the sum of (i) the aggregate accrued and unpaid interest on the 

 

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Class A-1 Notes as of the A-1 Note Final Scheduled Maturity Date, and (ii) the amount necessary to reduce the outstanding principal amount of the Class A-1 Notes to zero.

 

(e)   On each Payment Date and Redemption Date, after an Event of Default and acceleration of the Notes (and, if any Notes remain outstanding after the Final Scheduled Maturity Date), the Indenture Trustee shall distribute all amounts on deposit in the Note Distribution Account to the Noteholders in the following amounts and in the following order of priority:

 

(i)            [Reserved];

 

(ii)           to the Class A Noteholders, the Class Interest Amount for each Class of Class A Notes; provided, that if there are not sufficient funds in the Note Distribution Account to pay the entire amount of accrued and unpaid interest then due on such Notes, the amount in the Note Distribution Account shall be applied to the payment of such interest on such Notes pro rata on the basis of the total such interest due on such Notes;

 

(iii)          to the Class A Noteholders, for payment of principal, ratably, according to the amounts due and payable on each Class of Class A Notes for principal, without preference or priority of any kind, until the Outstanding principal balance of each Class of Class A Notes has been reduced to zero;

 

(iv)          to the Class B Noteholders, the Class Interest Amount for the Class B Notes;

 

(v)           to the Class B Noteholders, for payment of principal, until the Outstanding principal balance of the Class B Notes is reduced to zero;

 

(vi)          [Reserved]; and

 

(vii)         thereafter, any excess shall be deposited in the Certificate Distribution Account.

 

(f)    [Reserved].

 

(g)   [Reserved].

 

SECTION 8.3.              General Provisions Regarding Accounts.  (a)  So long as no Default or Event of Default shall have occurred and be continuing, all or a portion of the funds in the Trust Accounts shall be invested in Eligible Investments and reinvested by the Indenture Trustee upon Issuing Entity Order, subject to the provisions of Section 5.1(b) of the Sale and Servicing Agreement.  All income or other gain from investments of monies deposited in the Trust Accounts shall be deposited by the Indenture Trustee in the Collection Account, and any loss or expenses resulting from such investments shall be charged to such account.  The Issuing Entity will not direct the Indenture Trustee to make any investment of any funds or to sell any investment held in any of the Trust Accounts unless the security interest granted and perfected in such account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the 

 

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Indenture Trustee to make any such investment or sale, if requested by the Indenture Trustee, the Issuing Entity shall deliver to the Indenture Trustee an Opinion of Counsel to such effect.

 

(b)   Subject to Section 6.1(c), the Indenture Trustee shall not in any way be held liable for the selection of Eligible Investments or by reason of any insufficiency in any of the Trust Accounts resulting from any loss on any Eligible Investment included therein, except for losses attributable to the Indenture Trustee’s failure to make payments on such Eligible Investments issued by the Indenture Trustee, in its commercial capacity as principal obligor and not as trustee, in accordance with their terms; provided, however, that the limitation to the Indenture Trustee’s liability does not extend to any actions constituting willful misconduct, negligence or bad faith.

 

(c)   If (i) the Issuing Entity shall have failed to give investment directions for any funds on deposit in the Trust Accounts to the Indenture Trustee by 11:00 a.m. (New York City time) (or such other time as may be agreed by the Issuing Entity and the Indenture Trustee) on any Business Day; or (ii) a Default or Event of Default shall have occurred and be continuing with respect to the Notes but the Notes shall not have been declared due and payable pursuant to Section 5.2, or, if such Notes shall have been declared due and payable following an Event of Default, but amounts collected or receivable from the Trust Estate are being applied in accordance with Section 5.4(b) as if there had not been such a declaration; then the Indenture Trustee shall, to the fullest extent practicable, invest and reinvest funds in the Trust Accounts in the Eligible Investments identified in clause (d) of the definition of Eligible Investments.

 

(d)   [Reserved].

 

SECTION 8.4.              Release of Trust Estate.  (a)  Subject to the payment of its fees and expenses pursuant to Section 6.7, the Indenture Trustee may, and when required by this Indenture shall, execute instruments to release property from the Lien of this Indenture, or convey the Indenture Trustee’s interest in the same, in a manner and under circumstances that are not inconsistent with this Indenture.  No party relying upon an instrument executed by the Indenture Trustee as provided in this Article shall be bound to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any monies.

 

(b)   The Indenture Trustee shall, at such time as there are no Notes Outstanding and all sums due to the Indenture Trustee pursuant to Section 6.7 have been paid, release any remaining portion of the Trust Estate that secured the Notes from the Lien of this Indenture and release to the Issuing Entity or any other Person entitled thereto any funds then on deposit in the Trust Accounts.  The Indenture Trustee shall release property from the Lien of this Indenture pursuant to this paragraph only upon receipt of an Issuing Entity Request accompanied by an Officer’s Certificate, an Opinion of Counsel, and (if required by the TIA) Independent Certificates in accordance with TIA §§ 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1 or an Opinion of Counsel in lieu of such Independent Certificates to the effect that the TIA does not require any such Independent Certificates.

 

SECTION 8.5.              Opinion of Counsel.  The Indenture Trustee shall receive at least seven days’ notice when requested by the Issuing Entity to take any action pursuant to Section 

 

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8.4(a), accompanied by copies of any instruments involved, and the Indenture Trustee shall also require, as a condition to such action, an Opinion of Counsel stating the legal effect of any such action, outlining the steps required to complete the same, and concluding that all conditions precedent to the taking of such action have been complied with and such action will not materially and adversely impair the security for the Notes or the rights of the Noteholders in contravention of this Indenture; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Trust Estate.  Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action.

 

ARTICLE IX
 Supplemental Indentures

 

SECTION 9.1.              Supplemental Indentures Without Consent of Noteholders.

 

(a)   Without the consent of the Holders of Notes but with prior written notice to the Rating Agencies (which notice shall be given pursuant to Section 11.21), the Issuing Entity and the Indenture Trustee, when authorized by an Issuing Entity Order, at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the TIA as in force at the date of the execution thereof), in form satisfactory to the Indenture Trustee, for any of the following purposes:

 

(i)            to correct or amplify the description of any property at any time subject to the Lien of this Indenture, or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the Lien of this Indenture, or to subject to the Lien of this Indenture additional property;

 

(ii)           to evidence the succession, in compliance with the applicable provisions hereof, of another Person to the Issuing Entity, and the assumption by any such successor of the covenants of the Issuing Entity herein and in the Notes;

 

(iii)          to add to the covenants of the Issuing Entity, for the benefit of the Holders of Notes, or to surrender any right or power herein conferred upon the Issuing Entity;

 

(iv)          to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee;

 

(v)           to replace the Spread Account with another form of credit enhancement; provided, the Rating Agency Condition is satisfied;

 

(vi)          to cure any ambiguity, to correct or supplement any provision herein or in any supplemental indenture that may be inconsistent with any other provision herein or in any supplemental indenture or to make any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture; provided, that such action shall not materially adversely affect the interests of the Holders of Notes;

 

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(vii)         to evidence and provide for the acceptance of the appointment hereunder by a successor or additional trustee with respect to the Notes or any class thereof and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Article VI;

 

(viii)        to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA or under any similar federal statute hereafter enacted and to add to this Indenture such other provisions as may be expressly required by the TIA; or

 

(ix)           to amend the “Specified Spread Account Balance” definition in a manner that results in an increase in the amounts required to be on deposit in the Spread Account pursuant to such definition.

 

The Trustee is hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained.

 

(b)   The Issuing Entity and the Indenture Trustee, when authorized by an Issuing Entity Order, may, without the consent of any of the Holders of Notes but with prior written notice to the Rating Agencies (which notice shall be given pursuant to Section 11.21), enter into an indenture or indentures supplemental hereto to cure any ambiguity, to correct or supplement any provisions in this Indenture or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Notes under this Indenture; provided, however, that such action shall not, as evidenced by an Officer’s Certificate of the Seller, adversely affect in any material respect the interests of any Noteholder.  A supplemental indenture shall be deemed not to adversely affect in any material respect the interests of any Class of Notes if the Rating Agency Condition has been satisfied with respect to such supplemental indenture for such Class of Notes.

 

(c)   [Reserved].

 

SECTION 9.2.              Supplemental Indentures With Consent of Noteholders.  The Issuing Entity and the Indenture Trustee, when authorized by an Issuing Entity Order, may, with prior written notice to the Rating Agencies (which notice shall be given pursuant to Section 11.21) and with the consent of the Holders of Notes evidencing not less than a majority of the Outstanding Amount of the Notes, by Act of such Holders delivered to the Issuing Entity and the Indenture Trustee, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Notes under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Note affected thereby:

 

(i)            delay the Class Final Scheduled Maturity Date of any Note, or reduce the principal amount thereof, the interest rate thereon or the Redemption Price with respect thereto or change any place of payment where, or the coin or currency in which, any Note

 

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or the interest thereon is payable, or impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of funds available therefor, as provided in Article V, to the payment of any such amount due on or after the respective due dates thereof (or, in the case of redemption, on or after the Redemption Date);

 

(ii)           reduce the percentage of the Outstanding Amount, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture;

 

(iii)          modify or alter the provisions of the proviso to the definition of “Outstanding”;

 

(iv)          reduce the percentage of the Outstanding Amount required to direct the Indenture Trustee to direct the Issuing Entity to sell or liquidate the Trust Estate pursuant to Section 5.4;

 

(v)           modify any provision of this Section except to increase any percentage specified herein or to provide that certain additional provisions of this Indenture or the Basic Documents cannot be modified or waived without the consent of the Holder of each Outstanding Note affected thereby;

 

(vi)          modify any of the provisions of this Indenture in such manner as to affect the calculation of the amount of any payment of interest or principal due on any Note on any Payment Date (including the calculation of any of the individual components of such calculation); or

 

(vii)         permit the creation of any Lien ranking prior to or on a parity with the Lien of this Indenture with respect to any part of the Trust Estate or, except as otherwise permitted or contemplated herein, terminate the Lien of this Indenture on any property at any time subject hereto or deprive any Holder of Notes of the security provided by the Lien of this Indenture.

 

It shall not be necessary for any Act of the Noteholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.  The manner of obtaining such consents (and any other consents of Noteholders provided for in this Indenture or in any other Basic Document) and of evidencing the authorization of the execution thereof by Noteholders shall be subject to such reasonable requirements as the Indenture Trustee may provide.

 

Promptly after the execution by the Issuing Entity and the Indenture Trustee of any supplemental indenture pursuant to this Section, the Indenture Trustee shall mail to the Holders of the Notes to which such amendment or supplemental indenture relates a notice setting forth in general terms the substance of such supplemental indenture.  Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

 

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SECTION 9.3.              Execution of Supplemental Indentures.  In executing, or permitting the additional trusts created by, any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Indenture Trustee shall be entitled to receive, and, subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture.  The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise.

 

SECTION 9.4.              Effect of Supplemental Indenture.  Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to the Notes affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuing Entity and the Holders of the Notes shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

 

SECTION 9.5.              Conformity with Trust Indenture Act.  Every amendment of this Indenture and every supplemental indenture executed pursuant to this Article IX shall conform to the requirements of the TIA as then in effect so long as this Indenture shall then be qualified under the TIA.

 

SECTION 9.6.              Reference in Notes to Supplemental Indentures.  Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture.  If the Issuing Entity or the Indenture Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Indenture Trustee and the Issuing Entity, to any such supplemental indenture may be prepared and executed by the Issuing Entity and authenticated and delivered by the Indenture Trustee in exchange for Outstanding Notes.

 

SECTION 9.7.              Amendment without Consent.  Notwithstanding anything herein to the contrary (other than as provided in Section 9.1(c) and Section 9.2), any term or provision of this Agreement may be amended by the Issuing Entity and the Indenture Trustee without the consent of the Noteholders or any other Person to add, modify or eliminate any provisions as may be necessary or advisable in order to comply with or obtain more favorable treatment for the Issuing Entity, the Seller or any of their Affiliates under or with respect to any law or regulation or any accounting rule or principle (whether now or in the future in effect); it being a condition to any such amendment that the Rating Agency Condition shall have been satisfied.

 

SECTION 9.8.              Backup Servicer Consent. Notwithstanding any other provision to the contrary, for so long as there is a Backup Servicer, the Issuing Entity and the Indenture Trustee shall not, without the consent of the Backup Servicer (such consent is not to be unreasonably withheld), make, execute, acknowledge or deliver amendments to this Indenture or enter into any supplemental indentures hereto or thereto or otherwise waive or amend any

 

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provision of this Indenture if such action shall have, or it is expected may have, a material adverse effect on the Backup Servicer or any Successor Servicer.

 

ARTICLE X
 Redemption of Notes

 

SECTION 10.1.            Redemption.  (a)  The Notes are subject to redemption in whole, but not in part, at the direction of CNHCA pursuant to Section 9.1(a) of the Sale and Servicing Agreement, on any Payment Date on which CNHCA exercises its option to purchase the Trust Estate pursuant to said Section 9.1(a), for a purchase price equal to the Redemption Price.  The Servicer or the Issuing Entity shall furnish the Rating Agencies notice of such redemption.  If such Notes are to be redeemed pursuant to this Section 10.1, CNHCA or the Issuing Entity shall furnish notice of such election to the Indenture Trustee not later than 25 days prior to the Redemption Date and the Issuing Entity shall deposit with the Indenture Trustee in the Note Distribution Account the Redemption Price of the Notes to be redeemed.

 

(b)   Reserved.

 

SECTION 10.2.            Form of Redemption Notice.  Notice of redemption under Section 10.1 shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than five Business Days prior to the applicable Redemption Date to each Holder of Notes, as of the close of business on the Record Date preceding the applicable Redemption Date, at such Holder’s address appearing in the Note Register.

 

All notices of redemption shall state:

 

(i)            the Redemption Date;

 

(ii)           the Redemption Price;

 

(iii)          the place where such Notes are to be surrendered for payment of the Redemption Price (which shall be the office or agency of the Issuing Entity to be maintained as provided in Section 3.2); and

 

(iv)          the CUSIP numbers of the affected Notes.

 

Notice of redemption of the Notes shall be given by the Indenture Trustee in the name and at the expense of the Issuing Entity.  Failure to give notice of redemption, or any defect therein, to any Holder of any Note shall not impair or affect the validity of the redemption of any other Note.

 

SECTION 10.3.            Notes Payable on Redemption Date.  The Notes to be redeemed shall, following notice of redemption pursuant to this Article, become due and payable on the Redemption Date at the Redemption Price and (unless the Issuing Entity shall default in the payment of the Redemption Price) no interest shall accrue on the Redemption Price for any period after the date to which accrued interest is calculated for purposes of calculating the Redemption Price.

 

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ARTICLE XI
 Miscellaneous

 

SECTION 11.1.            Compliance Certificates and Opinions, etc.  (a)  Upon any application or request by the Issuing Entity to the Indenture Trustee to take any action under this Indenture, the Issuing Entity shall furnish to the Indenture Trustee:  (i) an Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with and (iii) (if required by the TIA) an Independent Certificate from a firm of certified public accountants meeting the applicable requirements of this Section, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by this Indenture, no additional certificate or opinion need be furnished.

 

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

 

(w)          a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto;

 

(x)           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;

 

(y)           a statement that, in the opinion of each such signatory, such signatory has made (or has caused to be made) such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and

 

(z)           a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with.

 

(b)   (i)    Prior to the deposit of any Collateral or other property or securities with the Indenture Trustee that is to be made the basis for the release of any property or securities subject to the Lien of this Indenture, the Issuing Entity shall, in addition to any obligation imposed in Section 11.1(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days after such deposit) to the Issuing Entity of the Collateral or other property or securities to be so deposited.

 

(ii)           Whenever the Issuing Entity is required to furnish to the Indenture Trustee an Officer’s Certificate described in clause (i), the Issuing Entity shall also deliver to the Indenture Trustee an Independent Certificate as to the same matters, if the fair value to the Issuing Entity of the Collateral or other property or securities to be so deposited and of all other such Collateral or other property or securities made the basis of any such withdrawal or release since the commencement of the then-current fiscal year of the Issuing Entity, as set forth in the certificates delivered pursuant to clause (i) and this

 

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clause (ii), is 10% or more of the Outstanding Amount of the Notes, but such a certificate need not be furnished with respect to any Collateral or other property or securities so deposited if the fair value thereof to the Issuing Entity as set forth in the related Officer’s Certificate is (A) less than $25,000 or (B) less than one percent of the then Outstanding Amount of the Notes.

 

(iii)          Other than with respect to property as contemplated by clause (v), whenever any Collateral or other property or securities are to be released from the Lien of this Indenture, the Issuing Entity shall also furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days after such release) of the Collateral or other property or securities proposed to be released and stating that in the opinion of such person the proposed release will not impair the security under this Indenture in contravention of the provisions hereof.

 

(iv)          Whenever the Issuing Entity is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signer thereof as to the matters described in clause (iii), the Issuing Entity shall also furnish to the Indenture Trustee an Independent Certificate as to the same matters if the fair value to the Issuing Entity of the Collateral or other property or securities and of all other property, other than property as contemplated by clause (v), or securities released from the Lien of this Indenture since the commencement of the then-current fiscal year, as set forth in the certificates required by clause (iii) and this clause (iv), equals 10% or more of the Outstanding Amount of the Notes, but such certificate need not be furnished in the case of any release of Collateral or other property or securities if the fair value thereof to the Issuing Entity as set forth in the related Officer’s Certificate is (A) less than $25,000 or (B) less than one percent of the then Outstanding Amount of the Notes.

 

(v)           Notwithstanding Section 2.9 or any other provision of this Section, the Issuing Entity may, without compliance with the requirements of the other provisions of this Section:  (A) collect, liquidate, sell or otherwise dispose of Receivables and Financed Equipment as and to the extent permitted or required by the Basic Documents and (B) make cash payments out of the Trust Accounts as and to the extent permitted or required by the Basic Documents so long as the Issuing Entity shall deliver to the Indenture Trustee every six months, commencing March 1, 2012, an Officer’s Certificate of the Issuing Entity stating that all such dispositions of Collateral that occurred since the execution of the previous such Officer’s Certificate (or for the first such Officer’s Certificate, since the Closing Date) were in the ordinary course of the Issuing Entity’s business and that the proceeds thereof were applied in accordance with the Basic Documents.

 

SECTION 11.2.            Form of Documents Delivered to Indenture Trustee.  In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more

 

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other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

 

Any certificate or opinion of an Authorized Officer of the Issuing Entity may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate, opinion or representations with respect to the matters upon which his certificate or opinion is based is/are erroneous.  Any such certificate of an Authorized Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Servicer, the Seller, the Issuing Entity or the Administrator, stating that the information with respect to such factual matters is in the possession of the Servicer, the Seller, the Issuing Entity or the Administrator, as applicable, unless such Authorized Officer or counsel knows, or in the exercise of reasonable care should know, that the certificate, opinion or representations with respect to such matters is/are erroneous.

 

Where any Person is required or permitted to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

 

Whenever in this Indenture, in connection with any application, certificate or report to the Indenture Trustee, it is provided that the Issuing Entity shall deliver any document as a condition of the granting of such application, or as evidence of the Issuing Entity’s compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuing Entity to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee’s right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI.

 

SECTION 11.3.            Acts of Noteholders.  (a)  Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instrument(s) of substantially similar tenor signed by such Noteholders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided, such action shall become effective when such instrument(s) are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Issuing Entity.  Such instrument(s) (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Noteholders signing such instrument(s).  Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.1) conclusive in favor of the Indenture Trustee and the Issuing Entity, if made in the manner provided in this Section.

 

(b)   The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient.

 

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(c)   The ownership of Notes shall be proved by the Note Register.

 

(d)   Any request, demand, authorization, direction, notice, consent, waiver or Act by the Holder of any Notes shall bind the Holder of every Note issued upon the registration thereof, in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuing Entity in reliance thereon, whether or not notation of such action is made upon such Note.

 

SECTION 11.4.            Notices, etc., to the Indenture Trustee, Issuing Entity and Rating Agencies.  Any request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders, or other documents provided or permitted by this Indenture, shall be in writing and, if such request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders is to be made upon, given or furnished to or filed with:

 

(a)   the Indenture Trustee by any Noteholder or by the Issuing Entity, shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Indenture Trustee at its Corporate Trust Office, or

 

(b)   the Issuing Entity by the Indenture Trustee or by any Noteholder, shall be sufficient for every purpose hereunder if in writing and mailed, first-class, postage prepaid, to the Issuing Entity addressed to:  CNH Equipment Trust 2011-A, in care of Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration, (facsimile: (302) 636-4140), and to New Holland Credit Company, LLC, as Administrator, 100 Brubaker Avenue, New Holland Pennsylvania, 17557, Attention: Finance Manager, (facsimile: (630) 887-5448); with a copy to: New Holland Credit Company, LLC, 6900 Veterans Boulevard, Burr Ridge, Illinois 60527, Attention: Assistant Treasurer, (facsimile: (630) 887-5448), or at any other address or facsimile number previously furnished in writing to the Indenture Trustee by the Issuing Entity or the Administrator.  The Issuing Entity shall promptly transmit any notice received by it from the Noteholders to the Indenture Trustee.

 

(c)   [Reserved].

 

Subject to Section 11.21, notices required to be given to the Rating Agencies by the Issuing Entity, the Indenture Trustee or the Trustee shall be in writing, personally delivered or mailed by certified mail, return receipt requested, or by facsimile to their respective addresses or facsimile numbers set forth above or, to the extent not set forth there, as set forth in Section 10.3 of the Sale and Servicing Agreement.

 

SECTION 11.5.            Notices to Noteholders; Waiver.  Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid to each Noteholder affected by such event, at his address as it appears on the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice.  In any case where notice to Noteholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Noteholder shall affect the sufficiency of

 

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such notice with respect to other Noteholders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given.

 

Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Noteholders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver.

 

In case, by reason of the suspension of regular mail service, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice.

 

Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder, and shall not under any circumstance constitute a Default or Event of Default.

 

SECTION 11.6.            Alternate Payment and Notice Provisions.  Notwithstanding any provision of this Indenture or any of the Notes to the contrary, the Issuing Entity may enter into any agreement with any Holder of a Note providing for a method of payment, or notice by the Indenture Trustee or any Paying Agent to such Holder, that is different from the methods provided for in this Indenture or the Notes for such payments or notices.  The Issuing Entity will furnish to the Indenture Trustee a copy of each such agreement and the Indenture Trustee will cause payments to be made and notices to be given in accordance with such agreements.

 

SECTION 11.7.            Conflict with Trust Indenture Act.  If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this Indenture by the TIA, such required provision shall control.

 

The provisions of TIA §§ 310 through 317 that impose duties on any Person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein.

 

SECTION 11.8.            Effect of Headings and Table of Contents.  The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

 

SECTION 11.9.            Successors and Assigns.  All covenants and agreements in this Indenture and the Notes by the Issuing Entity shall bind its successors and assigns, whether so expressed or not.  All agreements of the Indenture Trustee in this Indenture shall bind its successors, co-trustees and agents of the Indenture Trustee.

 

SECTION 11.10.          Severability.  Any provision of this Indenture or the Notes that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or of the Notes, as applicable, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

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SECTION 11.11.          Benefits of Indenture.  Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the Noteholders, the Trustee, the Backup Servicer, a Successor Servicer, any other party secured hereunder and any other Person with an ownership interest in any part of the Trust Estate, any benefit or any legal or equitable right, remedy or claim under this Indenture.

 

SECTION 11.12.          Legal Holidays.  In any case where the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Notes or this Indenture) payment need not be made on such date, but may be made on the next Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date; provided, however, that interest on the Notes will be calculated and accrue as set forth in the definition of “Class Interest Amount” and “Interest Period” in the Indenture.

 

SECTION 11.13.          Governing Law.  This Indenture shall be construed in accordance with the laws of the State of New York, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.

 

SECTION 11.14.          Counterparts.  This Indenture may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

 

SECTION 11.15.          Recording of Indenture.  If this Indenture is subject to recording in any public recording offices, such recording is to be effected by the Issuing Entity and, at its expense, accompanied by an Opinion of Counsel (which may be counsel to the Indenture Trustee or any other counsel reasonably acceptable to the Indenture Trustee) to the effect that such recording is necessary either for the protection of the Noteholders or any other Person secured hereunder or for the enforcement of any right or remedy granted to the Indenture Trustee under this Indenture.

 

SECTION 11.16.          Trust Obligation.  No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuing Entity, the Trustee or the Indenture Trustee on the Notes or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against:  (i) the Indenture Trustee or the Trustee in their individual capacities, (ii) any owner of a beneficial interest in the Issuing Entity or (iii) any partner, owner, beneficiary, officer, director, employee or agent of:  (a) the Indenture Trustee or the Trustee in their individual capacities, (b) any owner of a beneficial interest in the Issuing Entity, the Trustee or the Indenture Trustee or (c) of any successor or assign of the Indenture Trustee or the Trustee in their individual capacities, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and the Trustee have no such obligations in their individual capacities) and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. For all purposes of this Indenture, in the performance of any duties or obligations of the Issuing Entity hereunder, the Trustee shall be subject to, and entitled to the benefits of, Articles VI, VII and VIII of the Trust Agreement.

 

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SECTION 11.17.          No Petition.  The Indenture Trustee, by entering into this Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree that they will not at any time institute against the Seller or the Issuing Entity, or solicit or join or cooperate with or encourage any institution against the Seller or the Issuing Entity of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, this Indenture or any of the Basic Documents.  The foregoing shall not limit the rights of the Indenture Trustee to file any claim in or otherwise take any action with respect to any insolvency proceeding that was instituted against the Issuing Entity by any Person other than the Indenture Trustee.

 

SECTION 11.18.          Inspection.  The Issuing Entity agrees that, on reasonable prior notice, it will permit any representative of the Indenture Trustee, during the Issuing Entity’s normal business hours, to examine all the books of account, records, reports and other papers of the Issuing Entity, to make copies and extracts therefrom, to cause such books to be audited by Independent certified public accountants, and to discuss the Issuing Entity’s affairs, finances and accounts with the Issuing Entity’s officers, employees and Independent certified public accountants, all at such reasonable times and as often as may be reasonably requested.  The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information; provided, however, that the foregoing shall not be construed to prohibit:  (i) disclosure of any and all information that is or becomes publicly known, or information obtained by the Indenture Trustee from sources other than the Issuing Entity or Servicer, (ii) disclosure of any and all information:  (A) if required to do so by any applicable statute, law, rule or regulation, (B) to any government agency or regulatory or self-regulatory body having or claiming authority to regulate or oversee any aspects of the Indenture Trustee’s business or that of its Affiliates, (C) pursuant to any subpoena, civil investigative demand or similar demand or request of any court, regulatory authority, arbitrator or arbitration to which the Indenture Trustee or an Affiliate or any officer, director, employee or shareholder thereof is subject, (D) in any preliminary or final offering circular, registration statement or contract or other document pertaining to the transactions contemplated by the Indenture and approved in advance by the Issuing Entity or (E) to any Affiliate, independent or internal auditor, agent, employee or attorney of the Indenture Trustee having a need to know the same; provided, that the Indenture Trustee advises such recipient of the confidential nature of the information being disclosed and such recipient agrees to keep such information confidential, and provided further, that the Indenture Trustee promptly notifies the Issuing Entity of any disclosure of such information that it is required to make pursuant to the preceding clause (A), (B) or (C) so that the Issuing Entity may seek appropriate protective orders or restrictions on the disclosure of the information involved; (iii) any other disclosure authorized by the Issuing Entity or the Servicer or (iv) disclosure to the other parties to the transactions contemplated by the Basic Documents.

 

SECTION 11.19.          Subordination.  Issuing Entity and each Noteholder by accepting a Note acknowledge and agree that such Note represents indebtedness of Issuing Entity and does not represent an interest in any assets (other than the Trust Estate) of CNHCR (including by virtue of any deficiency claim in respect of obligations not paid or otherwise satisfied from the Trust Estate and proceeds thereof).  In furtherance of and not in derogation of the foregoing, to the extent CNHCR enters into other securitization transactions, the Issuing Entity as well as each Noteholder by accepting a Note acknowledge and agree that it shall have

 

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no right, title or interest in or to any assets (or interests therein) (other than Trust Estate) conveyed or purported to be conveyed by CNHCR to another securitization trust or other Person or Persons in connection therewith (whether by way of a sale, capital contribution or by virtue of the granting of a lien) (“Other Assets”).  To the extent that, notwithstanding the agreements and provisions contained in the preceding sentences of this subsection, the Issuing Entity or any Noteholder either (i) asserts an interest or claim to, or benefit from, Other Assets, whether asserted against or through CNHCR or any other Person owned by CNHCR, or (ii) is deemed to have any such interest, claim or benefit in or from Other Assets, whether by operation of law, legal process, pursuant to applicable provisions of insolvency laws or otherwise (including by virtue of Section 1111(b) of the Bankruptcy Code or any successor provision having similar effect under the Bankruptcy Code), and whether deemed asserted against or through CNHCR or any other Person owned by CNHCR, then the Issuing Entity and each Noteholder by accepting a Note further acknowledge and agree that any such interest, claim or benefit in or from Other Assets is and shall be expressly subordinated to the indefeasible payment in full of all obligations and liabilities of CNHCR which, under the terms of the relevant documents relating to the securitization of such Other Assets, are entitled to be paid from, entitled to the benefits of, or otherwise secured by such Other Assets (whether or not any such entitlement or security interest is legally perfected or otherwise entitled to a priority of distribution or application under applicable law, including insolvency laws, and whether asserted against CNHCR or any other Person owned by CNHCR), including, the payment of post-petition interest on such other obligations and liabilities.  This subordination agreement shall be deemed a subordination agreement within the meaning of Section 510(a) of the Bankruptcy Code.  Each Noteholder further acknowledges and agrees that no adequate remedy at law exists for a breach of this Section 11.19 and the terms of this Section 11.19 may be enforced by an action for specific performance.

 

SECTION 11.20.                              Information Requests.  The parties hereto shall provide any information reasonably requested by the Issuing Entity, Seller or any of their Affiliates, at the expense of the Issuing Entity, Seller or any of their Affiliates, as applicable, in order to comply with or obtain more favorable treatment for the Issuing Entity, the Seller or any of their Affiliates under any current or future law, rule, regulation, accounting rule or principle.

 

SECTION 11.21.                              Communications with Rating Agencies.  The parties hereto (other than the Seller and its Affiliates but excluding the Issuing Entity) agree that any notices or requests to, or any other written communications with, any of the Rating Agencies, or any of their respective officers, directors or employees, to be given or provided to such Rating Agencies pursuant to, in connection with or related, directly or indirectly, to the Basic Documents, the Collateral or the Notes, shall be in each case either (i) furnished to the Seller who shall forward such communication to the Rating Agencies pursuant to Section 10.18 of the Sale and Servicing Agreement; or (ii) furnished directly to the Rating Agencies with a prior copy to the Seller.  In either case, the parties hereto (other than the Seller and its Affiliates but excluding the Issuing Entity) further agree to provide such notices, requests and communications or copies thereof, as applicable, to the Seller at least one Business Day prior to the date when such notices, requests and communications are required to be delivered (or are in fact delivered, whichever is earlier) to the Rating Agencies pursuant to the Basic Documents.  So long as any Notes are Outstanding, each party hereto (other than the Seller and its Affiliates but excluding the Issuing Entity) agrees that neither it nor any party on its behalf shall engage in any oral communications with respect to

 

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the transactions contemplated hereby, under the Basic Documents or in any way relating to the Notes with any Rating Agency or any of their respective officers, directors or employees, without the participation of the Seller.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed by their respective officers duly authorized as of the day and year first above written.

 

	
 
    	
CNH   EQUIPMENT TRUST 2011-A
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Wilmington Trust Company,
    
	
 
    	
 
    	
not in its individual capacity but solely
    
	
 
    	
 
    	
as Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Dorri Costello
    
	
 
    	
 
    	
Name:   
    	
Dorri   Costello
    
	
 
    	
 
    	
Title:   
    	
Financial   Services Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DEUTSCHE   BANK TRUST COMPANY AMERICAS,
    
	
 
    	
not   in its individual capacity but solely
    
	
 
    	
as   Indenture Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Sue Kim
    
	
 
    	
 
    	
Name:
    	
Sue   Kim
    
	
 
    	
 
    	
Title:
    	
Assistant   Vice President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark Esposito
    
	
 
    	
 
    	
Name:
    	
Mark   Esposito
    
	
 
    	
 
    	
Title:
    	
Associate
    
					

 

 

APPENDIX A
  Definitions

 

“180-Day Receivable” with respect to any Collection Period means any Receivable as to which a scheduled payment is 180 days or more past due by the last day of such Collection Period and which has not become a Liquidated Receivable or a Repossessed Receivable; provided that a Receivable shall cease to be a 180-Day Receivable if the Servicer subsequently receives payment in full of each scheduled payment that was previously 180-days or more past due.

 

“A-1 Note” means any of the Issuing Entity’s 0.33573% Class A-1 Asset Backed Notes.

 

“A-1 Note Final Scheduled Maturity Date” means the May 15, 2012 Payment Date.

 

“A-1 Note Rate” means 0.33573% per annum, computed on the basis of the actual number of days in that Interest Period and a year of 360 days.

 

“A-1 Noteholders” means the holders of record of the A-1 Notes.

 

“A-2 Note” means any of the Issuing Entity’s 0.62% Class A-2 Asset Backed Notes.

 

“A-2 Note Final Scheduled Maturity Date” means the June 16, 2014 Payment Date.

 

“A-2 Note Rate” means 0.62% per annum, computed on the basis of a 360-day year of twelve 30-day months.

 

“A-2 Noteholders” means the holders of record of the A-2 Notes.

 

“A-3 Note” means any of the Issuing Entity’s 1.20% Class A-3 Asset Backed Notes.

 

“A-3 Note Final Scheduled Maturity Date” means the May 16, 2016 Payment Date.

 

“A-3 Note Rate” means 1.20% per annum, computed on the basis of a 360-day year of twelve 30-day months.

 

“A-3 Noteholders” means the holders of record of the A-3 Notes.

 

“A-4 Note” means any of the Issuing Entity’s 2.04% Class A-4 Asset Backed Notes.

 

“A-4 Note Final Scheduled Maturity Date” means the October 17, 2016 Payment Date.

 

“A-4 Note Rate” means 2.04% per annum, computed on the basis of a 360-day year of twelve 30-day months.

 

“A-4 Noteholders” means the holders of record of the A-4 Notes.

 

“Act” is defined in Section 11.3(a) of the Indenture.

 

Appendix A (Page 1)

 

“Administration Agreement” means the Administration Agreement dated as of April 1, 2011 among the Administrator, the Issuing Entity, the Indenture Trustee and the Trustee.

 

“Administration Fee” means the fee payable to the Administrator pursuant to Section 3 of the Administration Agreement.

 

“Administrator” means NH Credit, or any successor Administrator under the Administration Agreement.

 

“Affiliate” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person.  For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.  The term “Affiliated” has a correlative meaning.

 

“Aggregate Statistical Contract Value” means, $1,029,582,382.75 which amount is equal to the aggregate Statistical Contract Value of all Receivables as of the Cutoff Date.

 

“Amount Financed” with respect to a Receivable means the amount advanced under such Receivable toward the purchase price of the Financed Equipment, or, in the case of any retail installment loan or consumer installment loan, the amount advanced to the related Obligor that is secured by Financed Equipment, and any related costs, including any insurance financed thereby.

 

“Annual Percentage Rate” or “APR” of a Receivable means the annual rate of finance charges in effect from time to time under the related Contract.

 

“Asset Balance” means, for any Payment Date, the Pool Balance as of the beginning of the current Collection Period.

 

“Assignment” is defined in Section 2.1 of the Sale and Servicing Agreement.

 

“Authorized Officer” means, with respect to the Issuing Entity, any officer of the Trustee who is authorized to act for the Trustee in matters relating to the Issuing Entity and who is identified on the list of Authorized Officers delivered by the Trustee to the Indenture Trustee on the Closing Date (as such list may be modified or supplemented from time to time thereafter) and, so long as the Administration Agreement is in effect, any Vice President, Assistant Treasurer, Assistant Secretary, or more senior officer of the Administrator who is authorized to act for the Administrator in matters relating to the Issuing Entity and to be acted upon by the Administrator pursuant to the Administration Agreement and who is identified on the list of Authorized Officers delivered by the Administrator to the Indenture Trustee on the Closing Date (in each case as such list may be modified or supplemented from time to time thereafter).

 

“Average Delinquency Ratio” on any Payment Date means the average of the Delinquency Ratios for the preceding three calendar months.

 

Appendix A (Page 2)

 

“Average Delinquency Ratio Test” for the Payment Date occurring in, or following, a month specified below will be met if the Average Delinquency Ratio for such Payment Date is less than the percentage specified opposite such Payment Date:

 

	
Payment Date
    	
 
    	
Percentage
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
November 2012
    	
 
    	
1.75
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
May 2013
    	
 
    	
2.50
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
November 2013
    	
 
    	
3.00
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
May 2014
    	
 
    	
3.50
    	
%
    

 

“Backup Servicer” means Deutsche Bank Trust Company Americas, a New York banking corporation, and its successors and assigns.

 

“Backup Servicer Account” means the account designated as such, established and maintained pursuant to Section 5.1(a)(vii) of the Sale and Servicing Agreement.

 

“Backup Servicer Account Deposit” means $150,000.

 

“Backup Servicer Account Property” means the Backup Servicer Account, all amounts and investments held from time to time in the Backup Servicer Account (whether in the form of deposit accounts, physical property, book-entry securities, uncertificated securities or otherwise), and all proceeds of the foregoing.

 

“Backup Servicer Account Required Amount” means, initially, the Backup Servicer Account  Deposit; provided, however, the Backup Servicer Account Required Amount may be reduced by the Servicer if (a) Moody’s shall have been given at least 10 Business Days’ prior notice thereof and shall have not notified the Issuing Entity and the Indenture Trustee that such reduction will result in a reduction or withdrawal by Moody’s of its then current rating of any Outstanding Class of the Notes (to the extent Moody’s is hired by CNHCA to rate the Notes and is then rating the Notes), (b) DB Trust is no longer acting as Backup Servicer or has otherwise consented to such reduction (such consent shall not be unreasonably withheld) and (c) DB Trust as Backup Servicer has been paid any accrued and unpaid amounts due to it.

 

“Backup Servicer Account Shortfall Amount” is defined in Section 4.12 of the Sale and Servicing Agreement.

 

“Backup Servicer Expenses” is defined in Section 4.12 of the Sale and Servicing Agreement.

 

“Backup Servicer Fees” means the fees payable to the Backup Servicer pursuant to the Backup Servicing Agreement, the Sale and Servicing Agreement and the Indenture.

 

Appendix A (Page 3)

 

“Backup Servicing Agreement” means the Backup Servicing Agreement, dated as of April 1, 2011, entered into by the Issuing Entity, the Seller, the Servicer and the Backup Servicer.

 

“Bankruptcy Code” means the United States Bankruptcy Code, Title 11 of the United States Code, as amended.

 

“Basic Documents” means the Certificate of Trust, the Trust Agreement, the Purchase Agreement, the Sale and Servicing Agreement, the Indenture, the Administration Agreement, the Backup Servicing Agreement and other documents and certificates delivered in connection therewith.

 

“Benefit Plan” is defined in Section 3.4 of the Trust Agreement.

 

“Book-Entry Notes” means a beneficial interest in the Notes of a particular Class, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.10 of the Indenture.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions or trust companies in The City of New York, New York, Wilmington, Delaware, Chicago, Illinois, New Holland, Pennsylvania, St. Joseph, Missouri and Racine, Wisconsin are authorized or obligated by law, regulation or executive order to remain closed.

 

“Certificate Distribution Account” is defined in Section 5.1 of the Trust Agreement.

 

“Certificate of Trust” means the Certificate of Trust substantially in the form of Exhibit B to the Trust Agreement filed for the Trust pursuant to Section 3810(a) of the Trust Statute.

 

“Certificate Register” and “Certificate Registrar” means the register mentioned and the registrar appointed pursuant to Section 3.4 of the Trust Agreement.

 

“Certificated Security” has the meaning assigned thereto in Section 8-102(a)(4) of the UCC.

 

“Certificateholder” means a Person in whose name a Trust Certificate is registered.

 

“Certificates” means the Trust Certificates (as defined in the Trust Agreement).

 

“Class” means any class of Notes.

 

“Class A Noteholder” means any holder of a Class A Note.

 

“Class A Notes” means the A-1 Notes, the A-2 Notes, the A-3 Notes and the A-4 Notes.

 

“Class B Note” means any of the Issuing Entity’s 2.52% Class B Asset Backed Notes.

 

“Class B Note Final Scheduled Maturity Date” means the October 16, 2017 Payment Date.

 

Appendix A (Page 4)

 

“Class B Note Rate” means 2.52% per annum, computed on the basis of a 360-day year of consisting of twelve 30-day months.

 

“Class B Noteholder” means any holder of a Class B Note.

 

“Class Final Scheduled Maturity Date” means, as to any Class of Notes, the final scheduled maturity date for that Class, as designated by the defined term that begins with the designation of that Class and ends with the phrase “Final Scheduled Maturity Date.”  For instance, the Class Final Scheduled Maturity Date for the A-1 Notes is the A-1 Note Final Scheduled Maturity Date.

 

“Class Interest Amount” means, with respect to any Payment Date (the “current Payment Date”) and any Class of Notes, an amount equal to the sum of (a) the aggregate amount of interest accrued on that Class of Notes at the applicable Interest Rate from and including the preceding Payment Date (or, in the case of the initial Payment Date, from and including the Closing Date) to but excluding the current Payment Date plus (b) the Class Interest Shortfall for that Class of Notes and the current Payment Date.

 

“Class Interest Shortfall” means, with respect to any Payment Date (the “current Payment Date”) and any Class of Notes, the excess of the Class Interest Amount for the preceding Payment Date over the amount in respect of interest on that Class of Notes that was actually deposited in the Note Distribution Account on such preceding Payment Date, plus interest on such excess, to the extent permitted by law, at a rate per annum equal to the Interest Rate on that Class of Notes, from such preceding Payment Date to but excluding the current Payment Date.

 

“Clearing Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act that has been designated as the “Clearing Agency” for purposes of the Indenture.

 

“Clearing Agency Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.

 

“Closing Date” means May 12, 2011.

 

“CNH America” means CNH America LLC, a Delaware limited liability company, and its successors and assigns.

 

“CNH Global” means CNH Global N.V., a company organized in the Kingdom of The Netherlands, and its successors and assigns.

 

“CNHCA” means CNH Capital America LLC, a Delaware limited liability company, and its successors and assigns.

 

“CNHCA Assets” is defined in Section 2.1 of the Purchase Agreement.

 

Appendix A (Page 5)

 

“CNHCA Assignment” means the document of assignment attached to the Purchase Agreement as Exhibit A.

 

“CNHCR” means CNH Capital Receivables LLC, a Delaware limited liability company, and its successors in interest to the extent permitted hereunder.

 

“CNHCR Assets” is defined in Section 2.1 of the Sale and Servicing Agreement.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and Treasury Regulations promulgated thereunder.

 

“Collateral” is defined in the Granting Clause of the Indenture.

 

“Collection Account” means the account designated as such, established and maintained pursuant to Section 5.1(a) of the Sale and Servicing Agreement.

 

“Collection Period” means, with respect to any Payment Date, the period from the end of the preceding Collection Period (or, if for the first Payment Date, from the beginning of the day after the Cutoff Date) to and including the last day of the calendar month preceding the calendar month in which the Payment Date occurs.

 

“Commission” means the Securities and Exchange Commission.

 

“Contract” means a Retail Installment Contract.

 

“Contract Value” means, with respect to any day (including the Cutoff Date), the sum of (a) the present value of the future Scheduled Payments discounted monthly at an annual rate equal to the Specified Discount Factor; plus (b) the amount of any past due payments.

 

“Control” with respect to any Federal Book Entry Security, the Indenture Trustee shall have obtained control if:

 

(i)                                     the Indenture Trustee is a participant in the book entry system maintained by the Federal Reserve Bank that is acting as fiscal agent for the Issuing Entity of such Federal Book Entry Security, and such Federal Reserve Bank has indicated by book entry that such Federal Book Entry Security has been credited to the Indenture Trustee’s securities account in such book entry system; or

 

(ii)                                  the Indenture Trustee (1) is registered on the records of a Securities Intermediary as the person having a Securities Entitlement in respect of such Federal Book Entry Security against such Securities Intermediary; or (2) has obtained the agreement, in writing, of the Securities Intermediary for such Securities Entitlement that such Securities Intermediary will comply with Entitlement Orders of the Indenture Trustee without further consent of any other Person; and (b) the Securities Intermediary is a participant in the book entry system maintained by the Federal Reserve Bank that is acting as fiscal agent for the Issuing Entity of such Federal Book Entry Security; and (c) such Federal

 

Appendix A (Page 6)

 

Reserve Bank has indicated by book entry that such Federal Book Entry Security has been credited to the Securities Intermediary’s securities account in such book entry system.

 

“Corporate Trust Office” means, (a) with respect to the Indenture Trustee, the office of the Indenture Trustee in New York at which at any particular time its corporate trust business shall be administered, and all notices to the Indenture Trustee shall be directed to the Indenture Trustee’s office located at 60 Wall Street, NYC 60-2606, New York, New York 10005, Attention: TSS-SFS, facsimile no. (212) 553-2459, and for purposes of presentment and surrender of the Notes, at DB Services Americas Inc., 5022 Gate Parkway, Suite 200, Jacksonville, Florida 32256; or at such other address as the Indenture Trustee may designate from time to time by notice to the Noteholders and the Seller, or the principal corporate trust office of any successor Indenture Trustee (the address of which the successor Indenture Trustee will notify the Noteholders and the Seller), and (b) with respect to the Trustee, the principal corporate trust office of the Trustee located at 1100 North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration; or at such other address as the Trustee may designate from time to time by notice to the Certificateholders and the Depositor, or the principal corporate trust office of any successor Trustee (the address of which the successor Trustee will notify the Certificateholders and the Depositor).

 

“Cumulative Net Loss Ratio” on any Payment Date means the ratio, expressed as a percentage, of (a) the aggregate Measured Losses on the Receivables since the Cutoff Date through the last day of the related Collection Period, to (b) the Pool Balance as of the Cutoff Date.

 

“Cumulative Net Loss Ratio Test” for the Payment Date occurring in, or following, a month specified below will be met if the Cumulative Net Loss Ratio for such Payment Date is less than the percentage specified opposite such Payment Date:

 

	
Payment Date
    	
 
    	
Percentage
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
November 2012
    	
 
    	
0.40
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
May 2013
    	
 
    	
0.55
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
November 2013
    	
 
    	
0.65
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
May 2014
    	
 
    	
0.75
    	
%
    

 

“Cutoff Date” means March 31, 2011.

 

“Cutoff Date APR” means 3.37%, which is an annual rate that equals the weighted average APR of the Receivables as of the Cutoff Date.

 

“DB Trust” means Deutsche Bank Trust Company Americas, or its successor.

 

Appendix A (Page 7)

 

“Dealer” means the dealer (which may include retail outlets owned in whole or in part by CNH America LLC) or other third-party that originated and assigned the respective Receivable to CNHCA or NH Credit, as applicable, under a Dealer Agreement.

 

“Dealer Agreement” means the retail financing agreement, warranty agreement or other agreement between the applicable Dealer and CNHCA or NH Credit, as applicable, which governs the terms of sales of Receivables from that Dealer to CNHCA or NH Credit, as applicable.

 

“Default” means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default.

 

“Definitive Notes” is defined in Section 2.10 of the Indenture.

 

“Delinquency Ratio” for any calendar month means the ratio, expressed as a percentage, of (a) the sum, for all of the Receivables, of all scheduled payments that are 60 days or more past due (other than Purchased Receivables and Liquidated Receivables) as of the end of such month, determined in accordance with the Servicer’s then-current practices, to (b) the Pool Balance as of the last day of such month.

 

“Delivery” means, when used with respect to Trust Account Property:

 

(i)                                     with respect to a Certificated Security, transfer of such Certificated Security to the Indenture Trustee or its nominee or custodian by physical delivery to the Indenture Trustee or its nominee or custodian, endorsed to, or registered in the name of, the Indenture Trustee or its nominee or custodian or endorsed in blank; and

 

(ii)                                  with respect to any such Trust Account Property that constitutes an Uncertificated Security (including any investments in money market mutual funds, but excluding any Federal Book Entry Security), (A) registration of the Indenture Trustee as the registered owner by the Issuing Entity, or (B) satisfaction of the requirements for obtaining “control” pursuant to Section 8-106(c)(2) of the UCC.

 

“Depositor” means the Seller in its capacity as Depositor under the Trust Agreement.

 

“Determination Date” means, with respect to any Transfer Date, the second Business Day prior to such Transfer Date.

 

“Eligible Deposit Account” means either:  (a) a segregated account with an Eligible Institution or any other segregated account, the deposit of funds in which satisfies the Rating Agency Condition or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any State (or any domestic branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution have a credit rating from each Rating Agency in one of its generic rating categories that signifies investment grade.

 

Appendix A (Page 8)

 

“Eligible Institution” means:  (a) the corporate trust department of the Indenture Trustee or the Trustee or (b) a depository institution organized under the laws of the United States of America or any State (or any domestic branch of a foreign bank), which:  (i) has either a long-term or short-term senior unsecured debt rating or certificate of deposit rating acceptable to the Rating Agencies and (ii) whose deposits are insured by the FDIC.

 

“Eligible Investments” mean book-entry securities, negotiable instruments or securities represented by instruments in bearer or registered form that evidence:

 

(a)                                  direct obligations of, and obligations fully guaranteed as to timely payment by, the United States of America;

 

(b)                                 demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under the laws of the United States of America or any State (or any domestic branch of a foreign bank) and subject to supervision and examination by federal or State banking or depository institution authorities; provided, however, that at the time of the investment or contractual commitment to invest therein, the commercial paper or other short-term senior unsecured debt obligations (other than such obligations the rating of which is based on the credit of a Person other than such depository institution or trust company) thereof shall have a credit rating from each of the Rating Agencies in the highest investment category granted thereby;

 

(c)                                  commercial paper having, at the time of the investment or contractual commitment to invest therein, a rating from each of the Rating Agencies in the highest investment category granted thereby;

 

(d)                                 investments in money market funds having a rating from each of the Rating Agencies in the highest investment category granted thereby (including funds for which the Indenture Trustee or the Trustee or any of their respective Affiliates is investment manager or advisor);

 

(e)                                  bankers’ acceptances issued by any depository institution or trust company referred to in clause (b);

 

(f)                                    repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed as to timely payment by, the United States of America or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depository institution or trust company (acting as principal) described in clause (b); and

 

(g)                                 any other investment permitted by each of the Rating Agencies in the highest investment category granted thereby as set forth in writing delivered to the Indenture Trustee;

 

Appendix A (Page 9)

 

provided, that investments described in clauses (b) through (g) shall be made only so long as making such investments will not require the Issuing Entity to register as an investment company under the Investment Company Act of 1940, as amended.

 

“Entitlement Order” has the meaning assigned thereto in Section 8-102(a)(8) of the UCC.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.

 

“Event of Default” is defined in Section 5.1 of the Indenture.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exchange Act Reports” means any reports on Form 10-D, Form 8-K and Form 10-K filed or to be filed by the Seller with respect to the Issuing Entity under the Exchange Act.

 

“Executive Officer” means, with respect to any corporation or limited liability company, the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, President, Executive Vice President, any Vice President, the Secretary or the Treasurer of such corporation or limited liability company; and with respect to any partnership, any general partner thereof.

 

“Expenses” is defined in Section 8.2 of the Trust Agreement.

 

“Federal Book Entry Security” means an obligation (i) issued by the U.S. Treasury, the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association, or any other direct obligation of, or obligation fully guaranteed as to timely payment of principal and interest by, the United States of America, that is a book-entry security held through the Federal Reserve System pursuant to federal book entry regulations, and (ii) the perfection of a security interest in which is governed pursuant to federal regulations by Article 8 of the UCC.

 

“FDIC” means the Federal Deposit Insurance Corporation or any successor.

 

“Final Scheduled Maturity Date” means the latest to occur of the Class Final Scheduled Maturity Dates.

 

“Financed Equipment” means property, including any agricultural, construction, forestry or other equipment, together with all accessions thereto, securing an Obligor’s indebtedness under a Retail Installment Contract, including any Substitute Equipment that has been substituted (in accordance with Section 4.14 of the Sale and Servicing Agreement) for a piece of equipment that originally secured such indebtedness under a Retail Installment Contract (“Replaced Equipment”).  Following the substitution of the Substitute Equipment pursuant to Section 4.14 of the Sale and Servicing Agreement, the Replaced Equipment shall no longer be considered Financed Equipment for any purposes in the Basic Documents.

 

“Financial Asset” has the meaning assigned thereto in Section 8-102(a)(9) of the UCC.

 

“First Principal Payment Amount” has the meaning assigned thereto in Section 5.6(b)(vi) of the Sale and Servicing Agreement.

 

Appendix A (Page 10)

 

“Fitch” means Fitch, Inc., or its successor.

 

“Form 10-D Disclosure Item” shall mean with respect to any Person, (a) any legal proceedings pending against such Person or of which any property of such Person is then subject, or (b) any governmental proceeding known to be contemplated by governmental authorities against such Person or of which any property of such Person would be subject, in each case that would be material to the Noteholders.

 

“Grant” means mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, create and grant a Lien upon and a security interest in and right of set-off against, deposit, set over and confirm pursuant to the Indenture, and other forms of the verb “to Grant” shall have correlative meanings.  A Grant of the Collateral or of any other agreement or instrument shall include all rights, powers and options (but none of the obligations) of the Granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for principal and interest payments in respect of the Collateral and all other monies payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the Granting party or otherwise and generally to do and receive anything that the Granting party is or may be entitled to do or receive thereunder or with respect thereto.

 

“Holder” means (a) with respect to a Note, the Person in whose name a Note is registered on the Note Register and (b) with respect to a Certificate, a Certificateholder, as the context may require.

 

“Indemnified Parties” is defined in Section 8.2 of the Trust Agreement.

 

“Indenture” means the Indenture dated as of April 1, 2011 between the Issuing Entity and the Indenture Trustee, as the same may be amended and supplemented from time to time.

 

“Indenture Trustee” means Deutsche Bank Trust Company Americas, a New York banking corporation, not in its individual capacity but solely as Indenture Trustee under the Indenture, or any successor Indenture Trustee under the Indenture.

 

“Independent” means, when used with respect to any specified Person, that the Person:  (a) is in fact independent of the Issuing Entity, any other obligor upon the Notes, the Seller and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the Issuing Entity, any such other obligor, the Seller or any Affiliate of any of the foregoing Persons and (c) is not connected with the Issuing Entity, any such other obligor, the Seller or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions.

 

“Independent Certificate” means a certificate or opinion to be delivered to the Indenture Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.1 of the Indenture, made by an Independent appraiser or other expert appointed by an Issuing Entity Order in the exercise of reasonable care and approved by the Indenture Trustee, and such opinion or certificate shall State that the signer has read the

 

Appendix A (Page 11)

 

definition of “Independent” in the Indenture and that the signer is Independent within the meaning thereof.

 

“Initial Pool Balance” means the Pool Balance as of the Cutoff Date, which is $1,000,000,801.18.

 

“Insolvency Event” means, with respect to a specified Person:  (a) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under any applicable federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person’s affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days, or (b) the commencement by such Person of a voluntary case under any applicable federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing.

 

“Instrument” has the meaning assigned thereto in Section 9-102(47) of the UCC.

 

“Interest Period” means (a) with respect to the first Payment Date, the period from and including the Closing Date to, but excluding, the first Payment Date, and (b) with respect to any other Payment Date, the period from and including the immediately preceding Payment Date to, but excluding, that Payment Date.

 

“Interest Rate” means (a) as to the A-1 Notes, the A-1 Note Rate, (b) as to the A-2 Notes, the A-2 Note Rate, (c) as to the A-3 Notes, the A-3 Note Rate, (d) as to the A-4 Notes, the A-4 Note Rate and (e) as to the Class B Notes, the Class B Note Rate.

 

“Investment Earnings” means, with respect to any Payment Date, the interest and other investment earnings (net of losses and investment expenses) on amounts on deposit in the Trust Accounts to be deposited into the Collection Account on the related Transfer Date pursuant to Section 5.1(b) of the Sale and Servicing Agreement.

 

“Investment Property” is defined in Section 9-102(49) of the UCC.

 

“Issuing Entity” means CNH Equipment Trust 2011-A until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained in the Indenture and required by the TIA, each other obligor on the Notes.

 

“Issuing Entity Order” and “Issuing Entity Request” means a written order or request, respectively, signed in the name of the Issuing Entity by any one of its Authorized Officers and delivered to the Indenture Trustee.

 

Appendix A (Page 12)

 

“Item 1119 Party” means the Seller, CNHCA, the Servicer, the Indenture Trustee, the Trustee, the Backup Servicer, any underwriter of the Notes and any other material transaction party identified by the Seller or CNHCA to the Indenture Trustee or the Trustee in writing.

 

“Lien” means a security interest, lien, charge, pledge, equity or encumbrance of any kind, other than (i) tax liens, mechanics’ liens and any liens that attach to the related Receivable by operation of law as a result of any act or omission by the related Obligor and (ii) any lien against the Financed Equipment resulting from a cross-collateralization provision in the related Contract.

 

“Liquidated Receivable” means any Receivable liquidated by the Servicer through the sale or other disposition of the related Financed Equipment or that the Servicer has, after using all reasonable efforts to realize upon the Financed Equipment, determined to charge off without realizing upon the Financed Equipment.

 

“Liquidation Proceeds” means, with respect to any Liquidated Receivable, the monies collected in respect thereof from whatever source (including the proceeds of insurance policies with respect to the related Financed Equipment (to the extent not used to purchase Substitute Equipment) or Obligor and payments made by a Dealer pursuant to the related Dealer Agreement with respect to such Receivable), other than Recoveries, net of the sum of any amounts expended by the Servicer in connection with such liquidation and any amounts required by law to be remitted to the Obligor on such Liquidated Receivable.

 

“Liquidity Receivables Purchase Agreement” is defined in the Recitals of the Purchase Agreement.

 

“Measured Losses” means, for any Collection Period, the sum of (a) for each Receivable that became a Liquidated Receivable during such Collection Period, the difference between (i) the Principal Balance plus accrued and unpaid interest on such Receivable less the Write Down Amount for such Receivable (if such receivable was a 180-Day Receivable or Repossessed Receivable at the time of liquidation), if any, and (ii) the Liquidation Proceeds received with respect to such Receivable during such Collection Period, (b) with respect to any Receivable that became a 180-Day Receivable or a Repossessed Receivable during such Collection Period, the Write Down Amount, if any, for that Receivable and (c) with respect to each other 180-Day Receivable or Repossessed Receivable, the amount of the adjustment, if any, to the Write Down Amount for such Receivable for the related Collection Period.

 

“Modification Purchase Event” is defined in Section 4.2 of the Sale and Servicing Agreement.

 

“Moody’s” means Moody’s Investors Service, Inc., or its successor.

 

“NH Credit” means New Holland Credit Company, LLC, a Delaware limited liability company, and its successors and assigns.

 

“Note Balance” means the aggregate Outstanding Amount of the Notes from time to time.

 

Appendix A (Page 13)

 

“Note Depository Agreement” means the agreement between the Issuing Entity and The Depository Trust Company, as the initial Clearing Agency, dated as of the Closing Date.

 

“Note Distribution Account” means the account designated as such, established and maintained pursuant to Section 5.1(a)(ii) of the Sale and Servicing Agreement.

 

“Note Monthly Principal Distributable Amount” means, with respect to any Payment Date, the amount necessary to be paid on the Notes to reduce the Outstanding Amount of the Notes (after giving effect to the application of the First Principal Payment Amount to reduce such Outstanding Amount) to an amount equal to the Asset Balance for that Payment Date, less the amount of the excess, if any, of the Asset Balance at the beginning of the prior Collection Period over the Outstanding Amount of the Notes as of, and after giving effect to the distributions on, the previous Payment Date; provided that the Note Monthly Principal Distributable Amount shall not exceed the aggregate Outstanding Amount of the Notes; provided, further, that on the Class Final Scheduled Maturity Date for each Class of Notes, the Note Monthly Principal Distributable Amount will at least equal the amount necessary to repay the Outstanding Amount of that Class of Notes and of any other Class of Notes payable prior to that Class of Notes. For purposes of this definition only, the A-1 Notes, A-2 Notes, A-3 Notes and the A-4 Notes shall each be deemed to be a separate Class of Notes.

 

“Note Owner” means, with respect to a Book-Entry Note, the Person who is the owner of such Book-Entry Note, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with the Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of the Clearing Agency).

 

“Note Pool Factor” means, as of the close of business on any Payment Date with respect to any Class of Notes, the Outstanding Amount of that Class of Notes divided by the original Outstanding Amount of that Class of Notes (carried out to the seventh decimal place). The Note Pool Factor for each Class will be 100% as of the Closing Date, and, thereafter, will decline to reflect reductions in the Outstanding Amount of the Notes.

 

“Note Register” and “Note Registrar” have the respective meanings specified in Section 2.4 of the Indenture.

 

“Noteholders” means the Class A Noteholders and the Class B Noteholders.

 

“Noteholders’ Distributable Amount” means, with respect to any Payment Date, the sum of:  (a) the Class Interest Amount for each Class of Notes and (b) the Note Monthly Principal Distributable Amount.

 

“Notes” means the Class A Notes and the Class B Notes.

 

“Obligor” means, with respect to any Receivable, any Person who owes payments under the Receivable.

 

“Officer’s Certificate” means a certificate signed by one of the following:  the Chairman of the Board, the President, the Vice Chairman of the Board, an Executive Vice President, any

 

Appendix A (Page 14)

 

Vice President, a Treasurer, Assistant Treasurer, Secretary or Assistant Secretary of the Seller, Administrator or Servicer, as appropriate.

 

“Opinion of Counsel” means a written opinion of counsel (who may, except as otherwise expressly provided in this Agreement, be an employee of or counsel to the Seller or the Servicer), which counsel and opinion shall be reasonably acceptable to the Indenture Trustee, the Trustee or the Rating Agencies, as applicable.

 

“Originator” means CNHCA.

 

“Outstanding” means, as of the date of determination, all Notes theretofore authenticated and delivered under the Indenture except:

 

(i)                                     Notes theretofore canceled by the Note Registrar or delivered to the Note Registrar for cancellation;

 

(ii)                                  Notes or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the Indenture Trustee or any Paying Agent in trust for the Holders of such Notes (provided, however, that if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to the Indenture); and

 

(iii)                               Notes in exchange for or in lieu of other Notes that have been authenticated and delivered pursuant to the Indenture unless proof satisfactory to the Indenture Trustee is presented that any such Notes are held by a bona fide purchaser; provided, that in determining whether the Holders of the requisite Outstanding Amount of the Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any Basic Document, Notes owned by the Issuing Entity, any other obligor upon the Notes, the Seller or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes that a Responsible Officer of the Indenture Trustee actually knows to be so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Issuing Entity, any other obligor upon the Notes, the Seller or any Affiliate of any of the foregoing Persons.

 

“Outstanding Amount” means the aggregate principal amount of all Notes, or Class of Notes, as applicable, Outstanding at the date of determination.

 

“Owned Contracts” is defined in the Recitals of the Purchase Agreement.

 

“Paying Agent” means (a) with respect to the Notes, the Indenture Trustee or any other Person that meets the eligibility standards for the Indenture Trustee specified in Section 6.11 of the Indenture and is authorized by the Issuing Entity to make the payments to and distributions

 

Appendix A (Page 15)

 

from the Collection Account and the Note Distribution Account, including payment of principal of or interest on the Notes on behalf of the Issuing Entity, and (b) with respect to the Certificates, any paying agent or co-paying agent appointed pursuant to Section 3.9 of the Trust Agreement, and shall initially be Deutsche Bank Trust Company Americas.

 

“Payment Date” means, with respect to each Collection Period, the fifteenth day of the calendar month following the end of that Collection Period, or, if such day is not a Business Day, the next Business Day, commencing on June 15, 2011.

 

“Person” means any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.

 

“Pool Balance” means, at any time, the sum of the aggregate Contract Values of the Receivables as of the beginning of a Collection Period (after giving effect to all payments received from Obligors and Purchase Amounts to be remitted by the Servicer, CNHCA or the Seller, as the case may be, with respect to the preceding Collection Period, if any, and all Realized Losses on Receivables liquidated during such preceding Collection Period, if any) less the aggregate Write Down Amount as of the last day of the preceding Collection Period, if any.

 

“Posted Date” is defined in Section 5.3 of the Sale and Servicing Agreement.

 

“Predecessor Note” means, with respect to any particular Note, every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section 2.5 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note.

 

“Preliminary Prospectus” means the prospectus dated May 2, 2011, the prospectus supplement (subject to completion, dated May 2, 2011) and the supplement to the prospectus supplement (subject to completion, dated May 4, 2011), relating to the Class A Notes and Class B Notes.

 

“Preliminary Prospectus Date” means the date of the preliminary prospectus supplement (subject to completion) included in the Preliminary Prospectus.

 

“Principal Balance” of a Receivable, as of the close of business on the last day of a Collection Period, means the Amount Financed minus the sum of:  (i) that portion of all Scheduled Payments paid on or prior to such day allocable to principal using the simple interest method, (ii) any refunded portion of insurance premiums included in the Amount Financed, (iii) any payment of the Purchase Amount with respect to the Receivable allocable to principal and (iv) any prepayment in full or any partial prepayments applied to reduce the Principal Balance of the Receivable.

 

“Prior Securitization” means a prior securitization by a CNH Equipment Trust.

 

Appendix A (Page 16)

 

“Proceeding” means any suit in equity, action at law or other judicial or administrative proceeding.

 

“Prospectus” means the prospectus dated May 2, 2011 and the prospectus supplement dated May 4, 2011, relating to the Class A Notes and Class B Notes.

 

“Prospectus Date” means the date of the prospectus supplement included in the Prospectus.

 

“Purchase Agreement” means the Purchase Agreement dated as of April 1, 2011 between the Seller and CNHCA, as the same may be amended and supplemented from time to time, which term shall also include, as the context requires, the Liquidity Receivables Purchase Agreement.

 

“Purchase Amount” means, as of the close of business on the last day of a Collection Period, an amount equal to the Contract Value of the applicable Contract, as of the first day of the immediately following Collection Period (or, with respect to any applicable Contract that is a Liquidated Receivable, as of the day immediately prior to such Contract becoming a Liquidated Receivable less any Liquidation Proceeds actually received by the Issuing Entity) plus interest accrued and unpaid thereon as of such last day at a rate per annum equal to, in the case of any Contract transferred on the Closing Date, the Cutoff Date APR.

 

“Purchase Price” is defined in Section 2.1 of the Purchase Agreement.

 

“Purchased Contracts” is defined in the Recitals of the Purchase Agreement.

 

“Purchased Receivable” means a Receivable purchased as of the close of business on the last day of a Collection Period by the Servicer or CNHCA pursuant to Section 4.6 of the Sale and Servicing Agreement, by CNHCA pursuant to Section 6.2 of the Purchase Agreement, or by the Seller pursuant to Section 3.2 of the Sale and Servicing Agreement, or as of the first day of a Collection Period by CNHCA pursuant to Section 9.1(a) of the Sale and Servicing Agreement and Section 6.2 of the Purchase Agreement.

 

“Rating Agency” means, to the extent the applicable following rating agency is hired by CNHCA to rate the Notes and such rating agency is still rating such Notes, each of Moody’s and Fitch.

 

“Rating Agency Condition” means, with respect to any action, that (with respect to each of the following rating agencies to the extent the following rating agency is hired by CNHCA to rate the Notes and such rating agency is still rating such Notes) Fitch and Moody’s shall have been given at least 10 Business Days’ prior notice thereof and Moody’s has not notified the Issuing Entity and the Indenture Trustee that such action will result in a reduction or withdrawal of its then current rating of any Class of the Notes.

 

“Reacquired Receivables” means Receivables that (i) have been purchased by the Servicer, repurchased by CNHCA or the Seller, or otherwise transferred to the Servicer, Seller or CNHCA or their Affiliate pursuant to the terms of the Basic Documents or (ii) are designated or identified to be purchased by the Servicer, repurchased by CNHCA or the Seller, or otherwise

 

Appendix A (Page 17)

 

transferred to the Servicer, Seller or CNHCA or their Affiliate pursuant to the terms of the Basic Documents; provided  however, with respect to the preceding clause (ii), such Receivables shall only become Reacquired Receivables the instant before (x) such purchase, repurchase or transfer pursuant to the Basic Documents, and (y) the full amount, if any, required to be paid for such Receivables having been paid and/or deposited as and when required under the Basic Documents.

 

“Realized Losses” means, with respect to any Liquidated Receivable, the excess of the Principal Balance of such Liquidated Receivable plus accrued but unpaid interest thereon over the amount of any related Liquidation Proceeds.

 

“Receivable” means any Contract included in the Schedule of Receivables delivered by CNHCA to CNHCR on the Closing Date or the Schedule of Receivables delivered by the Servicer to the Trustee on the Closing Date (other than Reacquired Receivables).

 

“Receivable Files” means the documents specified in Section 3.3 of the Sale and Servicing Agreement.

 

“Record Date” means, with respect to a Payment Date or Redemption Date, the close of business on the fourteenth day of the calendar month in which such Payment Date or Redemption Date occurs, or, if Definitive Notes are issued, the close of business on the last day of the calendar month preceding the month of such Payment Date, whether or not such day is a Business Day, or if Definitive Notes were not outstanding on such date, the date of issuance of the Definitive Note.

 

“Recoveries” means, with respect to any Liquidated Receivable, monies collected in respect thereof, from whatever source (other than from the sale or other disposition of the Financed Equipment), after such Receivable became a Liquidated Receivable.

 

“Redemption Date” means the Payment Date specified by the Servicer or the Issuing Entity pursuant to Section 10.1(a) of the Indenture.

 

“Redemption Price” means the unpaid principal amount of the Notes redeemed, plus accrued and unpaid interest thereon at the applicable interest rate to but excluding the Redemption Date.

 

“Registered Holder” means the Person in whose name a Note is registered on the Note Register on the applicable Record Date.

 

“Regulation AB” means Regulation AB under the Securities Act of 1933, as amended.

 

“Replaced Equipment” is defined in “Financed Equipment” above.

 

“Reportable Event” shall mean any event required to be reported on Form 8-K, and in any event, the following:

 

(a)                                  entry into a definitive agreement related to the Issuing Entity or the Notes or an amendment to

 

Appendix A (Page 18)

 

a Basic Document, even if the Seller is not a party to such agreement (e.g., a servicing agreement with a servicer contemplated by Item 1108(a)(3) of Regulation AB);

 

(b)                                 termination of a Basic Document (other than by expiration of the agreement on its stated termination date or as a result of all parties completing their obligations under such agreement), even if the Seller is not a party to such agreement (e.g., a servicing agreement with a servicer contemplated by Item 1108(a)(3) of Regulation AB);

 

(c)                                  with respect to the Servicer only, the occurrence of a Servicer Default;

 

(d)                                 an Event of Default;

 

(e)                                  the resignation, removal, replacement, substitution, of the Indenture Trustee or the Trustee; and

 

(f)                                    with respect to the Indenture Trustee only, a required distribution to holders of the Notes is not made as of the required Payment Date under the Indenture.

 

“Repossessed Receivable” with respect to any Collection Period will be any Receivable as to which the Financed Equipment securing the defaulted Receivable has been repossessed on or prior to the last day of such Collection Period and which has not become a Liquidated Receivable.

 

“Responsible Officer” means, with respect to the Indenture Trustee, any officer within the Corporate Trust Office of the Indenture Trustee, including any Vice President, Assistant Vice President, Secretary or Assistant Secretary, or any other officer of the Indenture Trustee customarily performing functions similar to those performed by any of the above designated officers and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

 

“Retail Installment Contract” means an equipment retail installment contract or retail installment loan, including any consumer installment loan, secured by Financed Equipment.

 

“Sale and Servicing Agreement” means the Sale and Servicing Agreement, dated as of April 1, 2011 among the Issuing Entity, the Seller and the Servicer.

 

“Sale Proceeds” is defined in Section 9.1(b) of the Sale and Servicing Agreement.

 

“Schedule of Receivables” means, collectively, the listings of the Receivables attached to, or incorporated by reference in, the CNHCA Assignment and the Assignment (each of which schedules may be in the form of a compact disk or any other computer-readable medium).

 

“Scheduled Payment” on a Receivable means that portion of the payment required to be made by the Obligor during any Collection Period sufficient to amortize the Principal Balance

 

Appendix A (Page 19)

 

under the simple interest method, in each case, over the term of the Receivable and to provide interest at the APR.

 

“Secretary of State” means the Secretary of State of the State of Delaware.

 

“Securities Account” has the meaning assigned thereto in Section 8-501(a) of the UCC.

 

“Securities Entitlement” has the meaning assigned thereto in Section 8-102(a)(17) of the UCC.

 

“Securities Intermediary” is defined in Section 8-102(a)(14) of the UCC.

 

“Seller” means CNHCR.

 

“Servicer” means NH Credit, as the servicer of the Receivables, and any successor to NH Credit (in the same capacity) pursuant to Section 7.3 or 8.2 of the Sale and Servicing Agreement.

 

“Servicer Default” means an event specified in Section 8.1 of the Sale and Servicing Agreement.

 

“Servicer’s Certificate” means an Officer’s Certificate of the Servicer, substantially in the form of Exhibit C to the Sale and Servicing Agreement.

 

“Servicing Criteria” shall mean the “servicing criteria” set forth in Item 1122(d) of Regulation AB.

 

“Servicing Fee” means, for any Collection Period, the fee payable to the Servicer for services rendered during such Collection Period, determined pursuant to Section 4.7 of the Sale and Servicing Agreement.

 

“Servicing Procedures” is defined in Section 4.1 of the Sale and Servicing Agreement.

 

“Simple Interest Receivable” means any Receivable under which the portion of a payment allocable to interest and the portion allocable to principal is determined by allocating a fixed level payment between principal and interest, such that such payment is allocated first to the accrued and unpaid interest at the Annual Percentage Rate for such Receivable on the unpaid principal balance and the remainder of such payment is allocable to principal.

 

“Specified Discount Factor” equals 4.30%.

 

“Specified Spread Account Balance” means on the Closing Date, 2.25% of the sum of the Pool Balance as of the Cutoff Date and on any Payment Date thereafter the lesser of, (a) 2.25% of the Pool Balance as of the Cutoff Date and (b) the outstanding principal amount of the Notes.  However, if (A) the Specified Spread Account Reduction Trigger is met on the Payment Date in November 2012 or any Payment Date thereafter, the percentage in clause (a) will be reduced to 2.00% on such Payment Date and will remain at such percentage for each Payment Date thereafter unless further reduced on the Payment Dates as provided in the following clauses (B), (C) or (D); (B) if the Specified Spread Account Reduction Trigger is met on the Payment Date in 

 

Appendix A (Page 20)

 

May 2013 or any Payment Date thereafter, the percentage in clause (a) of the preceding sentence will be reduced to 1.75% on such Payment Date (regardless of whether the Specified Spread Account Reduction Trigger was met on the Payment Date in November 2012 or any Payment Date thereafter and will remain at such percentage for each Payment Date thereafter unless further reduced on the Payment Date as provided in the following clause (C) or (D); (C) the Specified Spread Account Reduction Trigger is met on the Payment Date in November 2013 or any Payment Date thereafter, the percentage in clause (a) of the preceding sentence will be reduced to 1.50% on such Payment Date (regardless of whether the Specified Spread Account Reduction Trigger was met on the Payment Dates in November 2012 or any Payment Date thereafter or May 2013 or any Payment Date thereafter) and will remain at such percentage for each Payment Date thereafter unless further reduced on the Payment Date as provided in the following clause (D); and (D) the Specified Spread Account Reduction Trigger is met on the Payment Date in May 2014 or any Payment Date thereafter, the percentage in clause (a) of the preceding sentence will be reduced to 1.15% on such Payment Date (regardless of whether the Specified Spread Account Reduction Trigger was met on the Payment Dates in November 2012 or any Payment Date thereafter, May 2013 or any Payment Date thereafter or November 2013 or any Payment Date thereafter) and will remain at such percentage for each Payment Date thereafter.  In addition to the ability to amend the “Specified Spread Account Balance” definition pursuant to Section 9.1(a) of the Indenture, the Specified Spread Account Balance may also be reduced or modified without the consent of the Holders of the Notes if the Rating Agency Condition is satisfied with respect to such reduction or modification.

 

“Specified Spread Account Reduction Trigger” for the Payment Dates in November 2012, May 2013, November 2013 or May 2014 or any Payment Date after such Payment Dates will be met if the Average Delinquency Ratio Test and the Cumulative Net Loss Ratio Test for such Payment Date are met on such Payment Date or a Payment Date thereafter.

 

“Spread Account” means the account designated as such, established and maintained pursuant to Section 5.1(a) of the Sale and Servicing Agreement.

 

“Spread Account Deposit” means, $22,500,018.03.

 

“State” means any one of the 50 states of the United States of America or the District of Columbia.

 

“Statistical Contract Value” of a Receivable means the current balance of the Receivable on the Servicer’s records.

 

“Substitute Equipment” is defined in Section 4.14 of the Sale and Servicing Agreement.

 

“Successor Servicer” is defined in Section 3.7(e) of the Indenture.

 

“TIA” means the Trust Indenture Act.

 

“Total Distribution Amount” means, with respect to any Payment Date, the aggregate amount of collections on or with respect to the Receivables with respect to the related Collection Period.  Collections on or with respect to the Receivables include all payments made by or on behalf of the Obligors (including any late fees, prepayment charges, extension fees and other

 

Appendix A (Page 21)

 

administrative fees or similar charges allowed by applicable law with respect to the Receivables), any proceeds from insurance policies covering the Financed Equipment (to the extent not used to purchase Substitute Equipment) or related Obligor, Liquidation Proceeds, the Purchase Amount of each Receivable that became a Purchased Receivable in respect of the related Collection Period (to the extent deposited into the Collection Account), Investment Earnings for such Payment Date and payments made by a Dealer pursuant to the related Dealer Agreement with respect to such Receivable, on the Payment Date specified in Section 5.8(b) of the Sale and Servicing Agreement; provided, however, that the Total Distribution Amount shall not include:  (i) all payments or proceeds (including Liquidation Proceeds) of any Receivables the Purchase Amount of which has been included in the Total Distribution Amount in a prior Collection Period or (ii) any Recoveries.

 

“Transfer Date” means the Business Day preceding the fifteenth day of each calendar month.

 

“Treasury Regulations” means regulations, including proposed or temporary regulations, promulgated under the Code. References to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations.

 

“Trust” means the Issuing Entity.

 

“Trust Account Property” means the Trust Accounts, all amounts and investments held from time to time in any Trust Account (whether in the form of deposit accounts, physical property, book-entry securities, uncertificated securities or otherwise), and all proceeds of the foregoing.

 

“Trust Accounts” has the meaning assigned thereto in Section 5.1(b) of the Sale and Servicing Agreement.

 

“Trust Agreement” means the Trust Agreement dated as of April 1, 2011 between the Seller and the Trustee, as the same may be amended and supplemented from time to time.

 

“Trust Certificate” means a certificate evidencing the beneficial interest of a Certificateholder in the Trust, substantially in the form of Exhibit A to the Trust Agreement.

 

“Trust Estate” means (a) with respect to the Indenture, all the money, instruments, rights and other property that are subject or intended to be subject to the Lien and security interest of the Indenture for the benefit of the Noteholders (including all property and interests Granted to the Indenture Trustee), including all proceeds thereof, and (b) with respect to the Trust Agreement, all right, title and interest of the Trust in and to the property and rights assigned to the Trust pursuant to Article II (other than Section 2.1(b)) of the Sale and Servicing Agreement, all funds on deposit from time to time in the Trust Accounts and the Certificate Distribution Account and all other property of the Trust from time to time, including any rights of the Trustee and the Trust pursuant to the Sale and Servicing Agreement and the Administration Agreement.

 

“Trust Indenture Act” means the Trust Indenture Act of 1939, as in force on the date of the Indenture unless otherwise specifically provided.

 

Appendix A (Page 22)

 

“Trust Officer” means, in the case of the Indenture Trustee, any officer within the Corporate Trust Office of the Indenture Trustee, including any Vice President, Assistant Vice President, Secretary, Assistant Secretary or any other officer of the Indenture Trustee customarily performing functions similar to those performed by any of the above designated officers and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject and, with respect to the Trustee, any officer in the Corporate Trustee Administration Department of the Trustee with direct responsibility for the administration of the Trust Agreement and the Basic Documents on behalf of the Trustee.

 

“Trust Statute” means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code § 3801 et seq., as the same may be amended from time to time.

 

“Trustee” means Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely as trustee under the Trust Agreement, and any successor Trustee thereunder.

 

“Turbo Principal Payment Amount” is defined in Section 5.6(b)(x) of the Sale and Servicing Agreement.

 

“Uncertificated Security” has the meaning assigned thereto in Section 8-102(a)(18) of the UCC.

 

“UCC” means, unless the context otherwise requires, the Uniform Commercial Code as in effect in the relevant jurisdiction, as amended from time to time.

 

“Underwriting Agreement” means the Underwriting Agreement dated May 4, 2011 among Merrill Lynch, Pierce, Fenner & Smith Incorporated and Deutsche Bank Securities Inc. as representatives of the several underwriters named therein.

 

“Write Down Amount” for any Collection Period for any 180-Day Receivable or Repossessed Receivable will be the excess of (a) the Principal Balance plus accrued and unpaid interest of such Receivable as of the last day of the Collection Period during which the Receivable became a 180-Day Receivable or Repossessed Receivable, as applicable, over (b) the estimated realizable value of the Receivable, as determined by the Servicer in accordance with its then-current servicing procedures for the related Collection Period, which amount may be adjusted to zero by the Servicer in accordance with its normal servicing procedures if the Receivable has ceased to be a 180-Day Receivable as provided in the definition of “180-Day Receivable.”

 

Appendix A (Page 23)

 

EXHIBIT A-1
  to Indenture

 

FORM OF A-1 NOTES

 

	
REGISTERED
    	
$237,900,000 (1)
    
	
No. R-1
    	
CUSIP NO. 12622X AA8
    

 

Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Issuing Entity or its agent for registration of transfer, exchange or payment, and any Note issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

 

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

 

CNH EQUIPMENT TRUST 2011-A
  0.33573  %  CLASS A-1 ASSET BACKED NOTES

 

CNH Equipment Trust 2011-A, a statutory trust organized and existing under the laws of the State of Delaware (including any successor, the “Issuing Entity”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of TWO HUNDRED AND THIRTY SEVEN MILLION NINE HUNDRED THOUSAND DOLLARS ($237,900,000), partially payable on each Payment Date in an amount equal to the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the A-1 Notes pursuant to Section 3.1 of the Indenture; provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the earlier of the May 15, 2012  Payment Date and the Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture.  The Issuing Entity will pay interest on this Note at the rate per annum shown above, on each Payment Date until the principal of this Note is paid or made available for payment, on the principal amount of this Note outstanding on the preceding Payment Date (after giving effect to all payments of principal made on the preceding Payment Date), subject to certain limitations contained in Section 3.1 of the Indenture.  Interest on this Note will accrue for each Payment Date from the most recent Payment Date on which interest has been paid to but excluding the then current Payment Date or, if no interest has yet been paid, from the date hereof.  Interest will be computed on the basis of a 360-day year and the actual number of days in the applicable Interest Period.  Such principal of and interest on this Note shall be paid in the manner specified in the Indenture.

 

(1)                                  Denominations of $1,000 and in greater whole-dollar denominations in excess thereof.

 

Exhibit A-1 (Page 1)

 

The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuing Entity with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note.

 

Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.

 

Unless the certificate of authentication hereon has been executed by the Indenture Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

 

Exhibit A-1 (Page 2)

 

IN WITNESS WHEREOF, the Issuing Entity has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer.

 

Dated:  May 12, 2011

 

	
 
    	
CNH   EQUIPMENT TRUST 2011-A
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Wilmington   Trust Company,
    
	
 
    	
 
    	
not   in its individual capacity but
    
	
 
    	
 
    	
solely   as Trustee under the
    
	
 
    	
 
    	
Trust   Agreement
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
					

 

Exhibit A-1 (Page 3)

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes designated above and referred to in the within-mentioned Indenture.

 

Dated:  May 12, 2011

 

	
 
    	
DEUTSCHE   BANK TRUST COMPANY AMERICAS,
    
	
 
    	
not   in its individual capacity but solely
    
	
 
    	
as   Indenture Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
					

 

Exhibit A-1 (Page 4)

 

[REVERSE OF NOTE]

 

This Note is one of a duly authorized issue of Notes of the Issuing Entity, designated as its 0.33573 % Class A-1 Asset Backed Notes (herein called the “A-1 Notes” or the “Notes”), all issued under an Indenture dated as of April 1, 2011 (such Indenture, as supplemented or amended, is herein called the “Indenture”) between the Issuing Entity and Deutsche Bank Trust Company Americas, not in its individual capacity but solely as trustee (the “Indenture Trustee”, which term includes any successor Indenture Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuing Entity, the Indenture Trustee and the Holders of the Notes.  The Notes are subject to all terms of the Indenture.  All terms used in this Note that are not otherwise defined herein and that are defined in the Indenture shall have the meanings assigned to them in or pursuant to the Indenture.

 

The Notes, the A-2 Notes, the A-3 Notes and the A-4 Notes are and will be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture.

 

The Issuing Entity shall pay interest on overdue installments of interest at the A-1 Note Rate to the extent lawful.

 

Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in the Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuing Entity or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against:  (i) the Indenture Trustee or the Trustee in their individual capacities, (ii) any owner of a beneficial interest in the Issuing Entity or (iii) any partner, owner, beneficiary, agent, officer, director or employee of:  (a) the Indenture Trustee or the Trustee in their individual capacities, (b) any holder of a beneficial interest in the Issuing Entity, the Trustee or the Indenture Trustee or of (c) any successor or assign of the Indenture Trustee or the Trustee in their individual capacities, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such partner, owner or beneficiary.

 

It is the intent of the Seller, the Servicer, the Noteholders and the Note Owners that, for purposes of federal and State income tax and any other tax measured in whole or in part by income, the Notes qualify as debt.  Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in a Note, agrees to treat, and to take no action inconsistent with the treatment of, the Notes for such tax purposes as debt.

 

Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not at any time institute against the Seller or the Issuing Entity, or join in any institution against the Seller or the Issuing Entity of, any bankruptcy, reorganization or arrangement, insolvency or liquidation proceedings under any United States federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Basic Documents.

 

Exhibit A-1 (Page 5)

 

Each Noteholder or Note Owner, by acceptance of a Note, or in the case of Note Owner, a beneficial interest in the Note, represents that either (a) it is not (i) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code, (iii) any entity whose underlying assets include plan assets of any of the foregoing (each a “Benefit Plan”), or (iv) a governmental plan (as defined in Section 3(32) of ERISA) that is subject to any law substantially similar to ERISA or Section 4975 of the Code or (b) the purchase and holding of the Note, or a beneficial interest therein, will not result in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or any substantially similar applicable law.

 

This Note and the Indenture shall be construed in accordance with the laws of the State of New York, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuing Entity, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

 

Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, neither Deutsche Bank Trust Company Americas, in its individual capacity, any owner of a beneficial interest in the Issuing Entity, nor any of their respective partners, beneficiaries, agents, officers, directors, employees, successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on, or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in this Note or the Indenture, it being expressly understood that said covenants, obligations and indemnifications have been made by the Indenture Trustee for the sole purposes of binding the interests of the Indenture Trustee in the assets of the Issuing Entity.  The Holder of this Note by the acceptance hereof, and each Note Owner by the acceptance of a beneficial interest herein, each agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder and Note Owner shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuing Entity for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note.

 

Exhibit A-1 (Page 6)

 

ASSIGNMENT

 

Social Security or taxpayer I.D. or other identifying number of assignee

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

	
 
    
	
(name and address of assignee)
    

 

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints                                                           , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

 

	
Dated:
    	
 
    	
 
    	
*
    
	
 
    	
 
    	
Signature   Guaranteed: 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signatures   must be guaranteed by an “eligible   guarantor institution” meeting the requirements of the Note   Registrar, which requirements include membership or participation in STAMP or   such other “signature guarantee program”   as may be determined by the Note Registrar in addition to, or in substitution   for, STAMP, all in accordance with the Securities Exchange Act of 1934, as   amended.
    

 

*                                         NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular without alteration, enlargement or any change whatsoever.

 

Exhibit A-1 (Page 7)

 

EXHIBIT A-2
 to Indenture

 

FORM OF A-2 NOTES

 

	
REGISTERED
    	
$251,000,000(1)
    
	
No. R-1
    	
CUSIP NO. 12622X AB6
    

 

Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Issuing Entity or its agent for registration of transfer, exchange or payment, and any Note issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

 

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

 

CNH EQUIPMENT TRUST 2011-A

 

0.62 % CLASS A-2 ASSET BACKED NOTES

 

CNH Equipment Trust 2011-A, a statutory trust organized and existing under the laws of the State of Delaware (including any successor, the “Issuing Entity”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of TWO HUNDRED AND FIFTY ONE MILLION DOLLARS ($251,000,000) partially payable on each Payment Date in an amount equal to the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the A-2 Notes pursuant to Section 3.1 of the Indenture; provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the earlier of the June 16, 2014 Payment Date and the Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture. Except as provided in Section 5.4 of the Indenture, no payments of principal of the Notes will be made until the principal of the A-1 Notes has been paid in full. The Issuing Entity will pay interest on this Note at the A-2 Note Rate, on each Payment Date until the principal of this Note is paid or made available for payment, on the principal amount of this Note outstanding on the preceding Payment Date (after giving effect to all payments of principal made on the preceding Payment Date), subject to certain limitations contained in Section 3.1 of the Indenture. Interest on this Note will accrue for each Payment Date from the most recent Payment Date on which interest has been paid to but excluding the then current Payment Date or, if no interest has yet been paid, from the date hereof.  Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months.  Such principal of and interest on this Note shall be paid in the manner specified in the Indenture.

 

(1)                                  Denominations of $1,000 and in greater whole-dollar denominations in excess thereof.

 

Exhibit A-2 (Page 1)

 

The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuing Entity with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note.

 

Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.

 

Unless the certificate of authentication hereon has been executed by the Indenture Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

 

Exhibit A-2 (Page 2)

 

IN WITNESS WHEREOF, the Issuing Entity has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer.

 

Dated:  May 12, 2011

 

	
 
    	
CNH   EQUIPMENT TRUST 2011-A
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Wilmington   Trust Company,
    
	
 
    	
not   in its individual capacity
    
	
 
    	
but   solely as Trustee
    
	
 
    	
under   the Trust Agreement
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

Exhibit A-2 (Page 3)

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes designated above and referred to in the within-mentioned Indenture.

 

Dated:  May 12, 2011

 

	
 
    	
DEUTSCHE   BANK TRUST COMPANY AMERICAS,
    
	
 
    	
not   in its individual capacity but solely
    
	
 
    	
as   Indenture Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

Exhibit A-2 (Page 4)

 

[REVERSE OF NOTE]

 

This Note is one of a duly authorized issue of the Issuing Entity, designated as its 0.62% Class A-2 Asset Backed Notes (herein called the “A-2 Notes” or the “Notes”), all issued under an Indenture dated as of April 1, 2011 (such Indenture, as supplemented or amended, is herein called the “Indenture”) between the Issuing Entity and Deutsche Bank Trust Company Americas, not in its individual capacity but solely as trustee (the “Indenture Trustee”, which term includes any successor Indenture Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuing Entity, the Indenture Trustee and the Holders of the Notes.  The Notes are subject to all terms of the Indenture.  All terms used in this Note that are not otherwise defined herein and that are defined in the Indenture shall have the meanings assigned to them in or pursuant to the Indenture.

 

The Notes, the A-1 Notes, the A-3 Notes and the A-4 Notes are and will be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture.

 

The Issuing Entity shall pay interest on overdue installments of interest at the A-2 Note Rate to the extent lawful.

 

Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in the Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuing Entity or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against:  (i) the Indenture Trustee or the Trustee in their individual capacities, (ii) any owner of a beneficial interest in the Issuing Entity or (iii) any partner, owner, beneficiary, agent, officer, director or employee of:  (a) the Indenture Trustee or the Trustee in their individual capacities, (b) any holder of a beneficial interest in the Issuing Entity, the Trustee or the Indenture Trustee or of (c) any successor or assign of the Indenture Trustee or the Trustee in their individual capacities, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such partner, owner or beneficiary.

 

It is the intent of the Seller, the Servicer, the Noteholders and the Note Owners that, for purposes of federal and State income tax and any other tax measured in whole or in part by income, the Notes qualify as debt.  Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in a Note, agrees to treat, and to take no action inconsistent with the treatment of, the Notes for such tax purposes as debt.

 

Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not at any time institute against the Seller or the Issuing Entity, or join in any institution against the Seller or the Issuing Entity of, any bankruptcy, reorganization or arrangement, insolvency or liquidation proceedings under any United States

 

Exhibit A-2 (Page 5)

 

federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Basic Documents.

 

Each Noteholder or Note Owner, by acceptance of a Note, or in the case of Note Owner, a beneficial interest in the Note, represents that either (a) it is not (i) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code, (iii) any entity whose underlying assets include plan assets of any of the foregoing (each a “Benefit Plan”), or (iv) a governmental plan (as defined in Section 3(32) of ERISA) that is subject to any law substantially similar to ERISA or Section 4975 of the Code or (b) the purchase and holding of the Note, or a beneficial interest therein, will not result in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or any substantially similar applicable law.

 

This Note and the Indenture shall be construed in accordance with the laws of the State of New York, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuing Entity, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

 

Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, neither Deutsche Bank Trust Company Americas, in its individual capacity, any owner of a beneficial interest in the Issuing Entity, nor any of their respective partners, beneficiaries, agents, officers, directors, employees, successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on, or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in this Note or the Indenture, it being expressly understood that said covenants, obligations and indemnifications have been made by the Indenture Trustee for the sole purposes of binding the interests of the Indenture Trustee in the assets of the Issuing Entity.  The Holder of this Note by the acceptance hereof, and each Note Owner by the acceptance of a beneficial interest herein, each agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder and Note Owner shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuing Entity for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note.

 

Exhibit A-2 (Page 6)

 

ASSIGNMENT

 

Social Security or taxpayer I.D. or other identifying number of assignee

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

	
 
    
	
(name and address of assignee)
    

 

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints                                                 , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

 

	
Dated:
    	
 
    	
 
    	
*
    
	
 
    	
 
    	
Signature   Guaranteed:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signatures   must be guaranteed by an “eligible guarantor   institution” meeting the requirements of the Note Registrar, which   requirements include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the   Note Registrar in addition to, or in substitution for, STAMP, all in   accordance with the Securities Exchange Act of 1934, as amended.
    
	
 
    	
 
    

 

*                                         NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular without alteration, enlargement or any change whatsoever.

 

Exhibit A-2 (Page 7)

 

EXHIBIT A-3

to Indenture

 

FORM OF A-3 NOTES

 

	
REGISTERED
    	
 
    	
$352,000,000(1)
    
	
No. R-1
    	
 
    	
CUSIP NO. 12622X AC4
    

 

Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Issuing Entity or its agent for registration of transfer, exchange or payment, and any Note issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

 

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

 

CNH EQUIPMENT TRUST 2011-A

1.20% CLASS A-3 ASSET BACKED NOTES

 

CNH Equipment Trust 2011-A, a statutory trust organized and existing under the laws of the State of Delaware (including any successor, the “Issuing Entity”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of THREE HUNDRED AND FIFTY-TWO MILLION DOLLARS ($352,000,000), partially payable on each Payment Date in an amount equal to the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the A-3 Notes pursuant to Section 3.1 of the Indenture; provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the earlier of the May 16, 2016 Payment Date and the Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture. Except as provided in Section 5.4 of the Indenture, no payments of principal of the Notes will be made until the principal of the A-1 Notes and the A-2 Notes has been paid in full. The Issuing Entity will pay interest on this Note at the A-3 Note Rate, on each Payment Date until the principal of this Note is paid or made available for payment, on the principal amount of this Note outstanding on the preceding Payment Date (after giving effect to all payments of principal made on the preceding Payment Date), subject to certain limitations contained in Section 3.1 of the Indenture. Interest on this Note will accrue for each Payment Date from the most recent Payment Date on which interest has been paid to but excluding the then current Payment Date or, if no interest has yet been paid, from the date hereof.  Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months.  Such principal of and interest on this Note shall be paid in the manner specified in the Indenture.

 

(1)           Denominations of $1,000 and in greater whole-dollar denominations in excess thereof.

 

Exhibit A-3 (Page 1)

 

The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuing Entity with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note.

 

Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.

 

Unless the certificate of authentication hereon has been executed by the Indenture Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

 

Exhibit A-3 (Page 2)

 

IN WITNESS WHEREOF, the Issuing Entity has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer.

 

	
Dated:   May 12, 2011
    	
 
    
	
 
    	
 
    
	
 
    	
CNH   EQUIPMENT TRUST 2011-A
    
	
 
    	
 
    
	
 
    	
By:
    	
Wilmington   Trust Company,
    
	
 
    	
not   in its individual capacity 
    
	
 
    	
but   solely as Trustee 
   under the Trust Agreement
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

Exhibit A-3 (Page 3)

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes designated above and referred to in the within-mentioned Indenture.

 

Dated:  May 12, 2011

 

	
 
    	
DEUTSCHE   BANK TRUST COMPANY AMERICAS,
    
	
 
    	
not   in its individual capacity but solely
    
	
 
    	
as   Indenture Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

 

Exhibit A-3 (Page 4)

 

[REVERSE OF NOTE]

 

This Note is one of a duly authorized issue of the Issuing Entity, designated as its 1.20% Class A-3 Asset Backed Notes (herein called the “A-3 Notes” or the “Notes”), all issued under an Indenture dated as of April 1, 2011 (such Indenture, as supplemented or amended, is herein called the “Indenture”) between the Issuing Entity and Deutsche Bank Trust Company Americas, not in its individual capacity but solely as trustee (the “Indenture Trustee”, which term includes any successor Indenture Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuing Entity, the Indenture Trustee and the Holders of the Notes.  The Notes are subject to all terms of the Indenture.  All terms used in this Note that are not otherwise defined herein and that are defined in the Indenture shall have the meanings assigned to them in or pursuant to the Indenture.

 

The Notes, the A-1 Notes, the A-2 Notes and the A-4 Notes are and will be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture.

 

The Issuing Entity shall pay interest on overdue installments of interest at the A-3 Note Rate to the extent lawful.

 

Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in the Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuing Entity or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against:  (i) the Indenture Trustee or the Trustee in their individual capacities, (ii) any owner of a beneficial interest in the Issuing Entity or (iii) any partner, owner, beneficiary, agent, officer, director or employee of:  (a) the Indenture Trustee or the Trustee in their individual capacities, (b) any holder of a beneficial interest in the Issuing Entity, the Trustee or the Indenture Trustee or of (c) any successor or assign of the Indenture Trustee or the Trustee in their individual capacities, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such partner, owner or beneficiary.

 

It is the intent of the Seller, the Servicer, the Noteholders and the Note Owners that, for purposes of federal and State income tax and any other tax measured in whole or in part by income, the Notes qualify as debt.  Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in a Note, agrees to treat, and to take no action inconsistent with the treatment of, the Notes for such tax purposes as debt.

 

Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not at any time institute against the Seller or the Issuing Entity, or join in any institution against the Seller or the Issuing Entity of, any bankruptcy, reorganization or arrangement, insolvency or liquidation proceedings under any United States

 

Exhibit A-3 (Page 5)

 

federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Basic Documents.

 

Each Noteholder or Note Owner, by acceptance of a Note, or in the case of Note Owner, a beneficial interest in the Note, represents that either (a) it is not (i) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code, (iii) any entity whose underlying assets include plan assets of any of the foregoing (each a “Benefit Plan”), or (iv) a governmental plan (as defined in Section 3(32) of ERISA) that is subject to any law substantially similar to ERISA or Section 4975 of the Code or (b) the purchase and holding of the Note, or a beneficial interest therein, will not result in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or any substantially similar applicable law.

 

This Note and the Indenture shall be construed in accordance with the laws of the State of New York, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuing Entity, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

 

Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, neither Deutsche Bank Trust Company Americas, in its individual capacity, any owner of a beneficial interest in the Issuing Entity, nor any of their respective partners, beneficiaries, agents, officers, directors, employees, successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on, or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in this Note or the Indenture, it being expressly understood that said covenants, obligations and indemnifications have been made by the Indenture Trustee for the sole purposes of binding the interests of the Indenture Trustee in the assets of the Issuing Entity.  The Holder of this Note by the acceptance hereof, and each Note Owner by the acceptance of a beneficial interest herein, each agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder and Note Owner shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuing Entity for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note.

 

Exhibit A-3 (Page 6)

 

ASSIGNMENT

 

Social Security or taxpayer I.D. or other identifying number of assignee

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

	
 
    

(name and address of assignee)

 

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints

 

                                    , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

 

	
Dated:
    	
 
    	
 
    	
*
    
	
 
    	
 
    	
Signature   Guaranteed:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signatures   must be guaranteed by an “eligible guarantor   institution” meeting the requirements of the Note Registrar, which   requirements include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the   Note Registrar in addition to, or in substitution for, STAMP, all in   accordance with the Securities Exchange Act of 1934, as amended.
    
	
 
    	
 
    

 

*              NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular without alteration, enlargement or any change whatsoever.

 

Exhibit A-3 (Page 7)

 

EXHIBIT A-4
 to Indenture

 

FORM OF A-4 NOTES

 

	
REGISTERED
    	
 
    	
$129,600,000(1)
    
	
No. R-1
    	
 
    	
CUSIP NO. 12622X AD2
    

 

Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Issuing Entity or its agent for registration of transfer, exchange or payment, and any Note issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

 

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

 

CNH EQUIPMENT TRUST 2011-A

2.04% CLASS A-4 ASSET BACKED NOTES

 

CNH Equipment Trust 2011-A, a statutory trust organized and existing under the laws of the State of Delaware (including any successor, the “Issuing Entity”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of ONE HUNDRED AND TWENTY-NINE MILLION SIX HUNDRED THOUSAND DOLLARS ($129,600,000), partially payable on each Payment Date in an amount equal to the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the A-4 Notes pursuant to Section 3.1 of the Indenture; provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the earlier of the October 17, 2016 Payment Date and the Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture. Except as provided in Section 5.4 of the Indenture, no payments of principal of the Notes will be made until the principal of the A-1 Notes, the A-2 Notes and the A-3 Notes has been paid in full. The Issuing Entity will pay interest on this Note at the A-4 Note Rate, on each Payment Date until the principal of this Note is paid or made available for payment, on the principal amount of this Note outstanding on the preceding Payment Date (after giving effect to all payments of principal made on the preceding Payment Date), subject to certain limitations contained in Section 3.1 of the Indenture. Interest on this Note will accrue for each Payment Date from the most recent Payment Date on which interest has been paid to but excluding the then current Payment Date or, if no interest has yet been paid, from the date hereof.  Interest will be computed on the basis of a 360-

 

(1)           Denominations of $1,000 and in greater whole-dollar denominations in excess thereof.

 

Exhibit A-4 (Page 1)

 

day year consisting of twelve 30-day months.  Such principal of and interest on this Note shall be paid in the manner specified in the Indenture.

 

The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuing Entity with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note.

 

Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.

 

Unless the certificate of authentication hereon has been executed by the Indenture Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

 

Exhibit A-4 (Page 2)

 

IN WITNESS WHEREOF, the Issuing Entity has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer.

 

Dated:  May 12, 2011

 

	
 
    	
CNH   EQUIPMENT TRUST 2011-A
    
	
 
    	
 
    
	
 
    	
By:
    	
Wilmington   Trust Company,
    
	
 
    	
not   in its individual capacity
    
	
 
    	
but   solely as Trustee
    
	
 
    	
under   the Trust Agreement
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

Exhibit A-4 (Page 3)

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes designated above and referred to in the within-mentioned Indenture.

 

Dated:  May 12, 2011

 

	
 
    	
DEUTSCHE   BANK TRUST COMPANY AMERICAS,
    
	
 
    	
not   in its individual capacity but solely
    
	
 
    	
as   Indenture Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

Exhibit A-4 (Page 4)

 

[REVERSE OF NOTE]

 

This Note is one of a duly authorized issue of the Issuing Entity, designated as its 2.04% Class A-4 Asset Backed Notes (herein called the “A-4 Notes” or the “Notes”), all issued under an Indenture dated as of April 1, 2011 (such Indenture, as supplemented or amended, is herein called the “Indenture”) between the Issuing Entity and Deutsche Bank Trust Company Americas, not in its individual capacity but solely as trustee (the “Indenture Trustee”, which term includes any successor Indenture Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuing Entity, the Indenture Trustee and the Holders of the Notes.  The Notes are subject to all terms of the Indenture.  All terms used in this Note that are not otherwise defined herein and that are defined in the Indenture shall have the meanings assigned to them in or pursuant to the Indenture.

 

The Notes, the A-1 Notes, the A-2 Notes and the A-3 Notes are and will be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture.

 

The Issuing Entity shall pay interest on overdue installments of interest at the A-4 Note Rate to the extent lawful.

 

Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in the Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuing Entity or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against:  (i) the Indenture Trustee or the Trustee in their individual capacities, (ii) any owner of a beneficial interest in the Issuing Entity or (iii) any partner, owner, beneficiary, agent, officer, director or employee of:  (a) the Indenture Trustee or the Trustee in their individual capacities, (b) any holder of a beneficial interest in the Issuing Entity, the Trustee or the Indenture Trustee or of (c) any successor or assign of the Indenture Trustee or the Trustee in their individual capacities, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such partner, owner or beneficiary.

 

It is the intent of the Seller, the Servicer, the Noteholders and the Note Owners that, for purposes of federal and State income tax and any other tax measured in whole or in part by income, the Notes qualify as debt.  Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in a Note, agrees to treat, and to take no action inconsistent with the treatment of, the Notes for such tax purposes as debt.

 

Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not at any time institute against the Seller or the Issuing Entity, or join in any institution against the Seller or the Issuing Entity of, any bankruptcy, reorganization or arrangement, insolvency or liquidation proceedings under any United States

 

Exhibit A-4 (Page 5)

 

federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Basic Documents.

 

Each Noteholder or Note Owner, by acceptance of a Note, or in the case of Note Owner, a beneficial interest in the Note, represents that either (a) it is not (i) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code, (iii) any entity whose underlying assets include plan assets of any of the foregoing (each a “Benefit Plan”), or (iv) a governmental plan (as defined in Section 3(32) of ERISA) that is subject to any law substantially similar to ERISA or Section 4975 of the Code or (b) the purchase and holding of the Note, or a beneficial interest therein, will not result in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or any substantially similar applicable law.

 

This Note and the Indenture shall be construed in accordance with the laws of the State of New York, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuing Entity, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

 

Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, neither Deutsche Bank Trust Company Americas, in its individual capacity, any owner of a beneficial interest in the Issuing Entity, nor any of their respective partners, beneficiaries, agents, officers, directors, employees, successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on, or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in this Note or the Indenture, it being expressly understood that said covenants, obligations and indemnifications have been made by the Indenture Trustee for the sole purposes of binding the interests of the Indenture Trustee in the assets of the Issuing Entity.  The Holder of this Note by the acceptance hereof, and each Note Owner by the acceptance of a beneficial interest herein, each agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder and Note Owner shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuing Entity for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note.

 

Exhibit A-4 (Page 6)

 

ASSIGNMENT

 

Social Security or taxpayer I.D. or other identifying number of assignee

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

	
 
    
	
(name and address of assignee)
    

 

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints

 

                                               , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

 

	
Dated:
    	
 
    	
 
    	
*
    
	
 
    	
Signature   Guaranteed:
    
	
 
    	
 
    
	
 
    	
 
    	
Signatures   must be guaranteed by an “eligible guarantor   institution” meeting the requirements of the Note Registrar, which   requirements include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the   Note Registrar in addition to, or in substitution for, STAMP, all in   accordance with the Securities Exchange Act of 1934, as amended.
    
	
 
    
					

 

*              NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular without alteration, enlargement or any change whatsoever.

 

Exhibit A-4 (Page 7)

 

EXHIBIT A-5
 to Indenture

 

FORM OF CLASS B NOTES

 

	
REGISTERED
    	
$29,500,000(1)
    
	
No. R-1
    	
CUSIP NO. 12622X AE0
    

 

Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Issuing Entity or its agent for registration of transfer, exchange or payment, and any Note issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

 

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

 

CNH EQUIPMENT TRUST 2011-A

2.52% CLASS B ASSET BACKED NOTES

 

CNH Equipment Trust 2011-A, a statutory trust organized and existing under the laws of the State of Delaware (including any successor, the “Issuing Entity”), for value received, hereby promises to pay to CEDE & CO. or registered assigns, the principal sum of TWENTY-NINE MILLION FIVE HUNDRED THOUSAND DOLLARS ($29,500,000) partially payable on each Payment Date in an amount equal to the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class B Notes pursuant to Section 3.1 of the Indenture; provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the earlier of the October 16, 2017 Payment Date and the Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture.  No payments of principal of the Notes will be made on any Payment Date until the A-1 Notes, the A-2 Notes, the A-3 Notes and the A-4 Notes have been paid in full.  The Issuing Entity will pay interest on this Note at the rate per annum shown above, on each Payment Date until the principal of this Note is paid or made available for payment, on the principal amount of this Note outstanding on the preceding Payment Date (after giving effect to all payments of principal made on the preceding Payment Date), subject to certain limitations contained in Section 3.1 of the Indenture.  Interest on this Note will accrue for each Payment Date from the most recent Payment Date on which interest has been paid to but excluding the then current Payment Date or, if no interest has yet been paid, from the date hereof.  Interest will be computed on the basis of a 360-day year consisting of twelve 30-day

 

(1)           Denominations of $1,000 and in greater whole-dollar denominations in excess thereof.

 

Exhibit A-5 (Page 1)

 

months.  Such principal of and interest on this Note shall be paid in the manner specified in the Indenture.

 

The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuing Entity with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note.

 

Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.

 

Unless the certificate of authentication hereon has been executed by the Indenture Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

 

Exhibit A-5 (Page 2)

 

IN WITNESS WHEREOF, the Issuing Entity has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer.

 

	
Dated: May 12, 2011
    	
 
    
	
 
    	
 
    
	
 
    	
CNH EQUIPMENT TRUST 2011-A
    
	
 
    	
By:  
    	
Wilmington   Trust Company, not in its individual capacity but solely as Trustee under the   Trust Agreement
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
					

 

Exhibit A-5 (Page 3)

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes designated above and referred to in the within-mentioned Indenture.

 

	
Dated: May 12, 2011
    	
 
    
	
 
    	
 
    
	
 
    	
DEUTSCHE BANK TRUST COMPANY AMERICAS,
    
	
 
    	
not in its individual capacity but solely
    
	
 
    	
as Indenture Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

Exhibit A-5 (Page 4)

 

[REVERSE OF NOTE]

 

This Note is one of a duly authorized issue of Notes of the Issuing Entity, designated as its 2.52% Class B Asset Backed Notes (herein called the “Class B Notes” or the “Notes”), all issued under an Indenture dated as of April 1, 2011 (such Indenture, as supplemented or amended, is herein called the “Indenture”) between the Issuing Entity and Deutsche Bank Trust Company Americas, not in its individual capacity but solely as trustee (the “Indenture Trustee”, which term includes any successor Indenture Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuing Entity, the Indenture Trustee and the Holders of the Notes.  The Notes are subject to all terms of the Indenture.  All terms used in this Note that are not otherwise defined herein and that are defined in the Indenture shall have the meanings assigned to them in or pursuant to the Indenture.

 

The Class B Notes are and will be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture, but the interest of the Class B Noteholders in such collateral is subordinated and second to the rights of the Class A Noteholders.

 

The Issuing Entity shall pay interest on overdue installments of interest at the Class B Note Rate to the extent lawful.

 

Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in the Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuing Entity or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against:  (i) the Indenture Trustee or the Trustee in their individual capacities, (ii) any owner of a beneficial interest in the Issuing Entity or (iii) any partner, owner, beneficiary, agent, officer, director or employee of:  (a) the Indenture Trustee or the Trustee in their individual capacities, (b) any holder of a beneficial interest in the Issuing Entity, the Trustee or the Indenture Trustee or of (c) any successor or assign of the Indenture Trustee or the Trustee in their individual capacities, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such partner, owner or beneficiary.

 

It is the intent of the Seller, the Servicer, the Noteholders and the Note Owners that, for purposes of federal and State income tax and any other tax measured in whole or in part by income, the Notes qualify as debt.  Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in a Note, agrees to treat, and to take no action inconsistent with the treatment of, the Notes for such tax purposes as debt.

 

Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not at any time institute against the Seller or the Issuing Entity, or join in any institution against the Seller or the Issuing Entity of, any bankruptcy, 

 

Exhibit A-5 (Page 5)

 

reorganization or arrangement, insolvency or liquidation proceedings under any United States federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Basic Documents.

 

Each Noteholder or Note Owner, by acceptance of a Note, or in the case of Note Owner, a beneficial interest in the Note, represents that either (a) it is not (i) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code, (iii) any entity whose underlying assets include plan assets of any of the foregoing (each a “Benefit Plan”), or (iv) a governmental plan (as defined in Section 3(32) of ERISA) that is subject to any law substantially similar to ERISA or Section 4975 of the Code or (b) the purchase and holding of the Note, or a beneficial interest therein, will not result in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or any substantially similar applicable law.

 

This Note and the Indenture shall be construed in accordance with the laws of the State of New York, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuing Entity, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

 

Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, neither Deutsche Bank Trust Company Americas, in its individual capacity, any owner of a beneficial interest in the Issuing Entity, nor any of their respective partners, beneficiaries, agents, officers, directors, employees, successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on, or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in this Note or the Indenture, it being expressly understood that said covenants, obligations and indemnifications have been made by the Indenture Trustee for the sole purposes of binding the interests of the Indenture Trustee in the assets of the Issuing Entity.  The Holder of this Note by the acceptance hereof, and each Note Owner by the acceptance of a beneficial interest herein, each agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder and Note Owner shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuing Entity for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note.

 

Exhibit A-5 (Page 6)

 

ASSIGNMENT

 

Social Security or taxpayer I.D. or other identifying number of assignee

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

(name and address of assignee)

 

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints                                           , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

 

	
 
    	
 
    	
 
    	
 
    
	
Dated:
    	
 
    	
 
    	
*
    
	
 
    	
 
    	
 
    	
Signature   Guaranteed:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Signatures   must be guaranteed by an “eligible guarantor   institution” meeting the requirements of the Note Registrar, which   requirements include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the   Note Registrar in addition to, or in substitution for, STAMP, all in   accordance with the Securities Exchange Act of 1934, as amended.
    

 

*              NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular without alteration, enlargement or any change whatsoever.

 

Exhibit A-5 (Page 7)

 

EXHIBIT B

to Indenture

 

FORM OF SECTION 3.9 OFFICER’S CERTIFICATE

 

Deutsche Bank Trust Company Americas

________________________

________________________

 

Pursuant to Section 3.9 of the Indenture, dated as of April 1, 2011 (the “Indenture”) between CNH Equipment Trust 2011-A (the “Issuing Entity”) and Deutsche Bank Trust Company Americas, as Indenture Trustee, the undersigned hereby certifies that:

 

(a)           a review of the activities of the Issuing Entity during the previous fiscal year and of performance under the Indenture has been made under the supervision of the undersigned; and

 

(b)           to the best knowledge of the undersigned, based on such review, the Issuing Entity has complied with all conditions and covenants under the Indenture throughout such year. [or, if there has been a default in the compliance of any such condition or covenant, this certificate is to specify each such default known to the undersigned and the nature and status thereof]

 

	
 
    	
CNH   EQUIPMENT TRUST 2011-A
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

Exhibit B (Page 1)

 

Schedule P

 

1.             General.  The Indenture creates a valid and continuing security interest (as defined in the applicable UCC) in all of the Issuing Entity’s right, title and interest in, to and under (i) the Receivables, (ii) the security interests in the Financed Equipment granted by Obligors pursuant to the Receivables, (iii) the Liquidity Receivables Purchase Agreement (only with respect to Owned Contracts) and (iv) the Sale and Servicing Agreement (including all rights of the Seller under the Liquidity Receivables Purchase Agreements and the Purchase Agreement assigned to the Issuing Entity pursuant to the Sale and Servicing Agreement), in each case, in favor of the Indenture Trustee, which, (a) security interest is enforceable upon execution of the Indenture against creditors of and purchasers from the Issuing Entity as such enforceability may be limited by applicable Debtor Relief Laws, now or hereafter in effect, and by general principles of equity (whether considered in a suit at law or in equity), and (b) upon filing of the financing statements described in clause 4 below will be prior to all other Liens.

 

2.             Characterization.  The Receivables constitute “tangible chattel paper” within the meaning of UCC Section 9-102.  The rights granted under the agreements described in clause 1(ii) through (iv) constitute “general intangibles” within the meaning of UCC Section 9-102.  The Issuing Entity has taken or will take all steps necessary to perfect its security interest in the property securing the Receivables within 10 days of the Closing Date.

 

3.             Creation.  Immediately prior to the grant to the Indenture Trustee pursuant to the Indenture, the Issuing Entity owns and has good and marketable title to, or has a valid security interest in, the Receivables free and clear of any Lien, claim or encumbrance of any Person.

 

4.             Perfection.  The Issuing Entity has caused or will have caused, within ten days of the Closing Date, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest granted to the Indenture Trustee under the Indenture in the Receivables.  With respect to the Collateral that constitutes tangible chattel paper, the Servicer or a Subservicer, as custodian, received possession of such tangible chattel paper after the Indenture Trustee received a written acknowledgment (which is contained in the Sale and Servicing Agreement) from such custodian that it is acting solely as agent of the Indenture Trustee.  All financing statements filed under this clause 4 contain a statement that “A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Secured Party”.

 

5.             Priority.  Other than the security interest granted to the Indenture Trustee pursuant to the Indenture, the Issuing Entity has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Collateral.  The Issuing Entity has not authorized the filing of and is not aware of any financing statements against the Issuing Entity that include a description of collateral covering the Collateral other than any financing statement (i) relating to the security interest granted to the Indenture Trustee under the Indenture, (ii) that has been terminated or relating to a security interest which has been released, or (iii) that has been granted pursuant to the terms of the Basic Documents.  None of the tangible chattel paper that constitutes or evidences the Collateral has any marks or notations indicating that they have pledged, assigned

 

Schedule P (Page 1)

 

or otherwise conveyed to any Person other than the Indenture Trustee.  The Issuing Entity is not aware of any judgment, ERISA or tax lien filings against it.

 

6.             Survival of Perfection Representations.  Notwithstanding any other provision of the Indenture or any other Basic Document, the Perfection Representations contained in this Schedule P shall be continuing, and remain in full force and effect (other than with respect to Reacquired Receivables);

 

7.             No Waiver.  The parties to the Indenture:  (i) shall not, without obtaining a confirmation of the then-current rating of the Notes, waive a material breach of any of the representations and warranties in this Schedule P (the “Perfection Representations”); (ii) shall provide the Ratings Agencies with prompt written notice of any material breach of the Perfection Representations, and shall not, without obtaining a confirmation of the then-current rating of the Notes (as determined after any adjustment or withdrawal of the ratings following notice of such breach) waive a material breach of any of the Perfection Representations.

 

8.             Servicer to Maintain Perfection and Priority.  The Servicer covenants that, in order to evidence the interests of Issuing Entity and the Indenture Trustee under this Agreement, Servicer shall take such action, or execute and deliver such instruments as may be necessary or advisable (including, without limitation, such actions as are requested by Issuing Entity) to maintain and perfect, as a first priority interest, the Indenture Trustee’s security interest in the Receivables.  Servicer shall, from time to time and within the time limits established by law, prepare and present to the Indenture Trustee for the Indenture Trustee to authorize the Servicer to file, all financing statements, amendments, continuations, initial financing statements in lieu of a continuation statement, terminations, partial terminations, releases or partial releases, or any other filings necessary or advisable to continue, maintain and perfect the Indenture Trustee’s security interest in the Receivables as a first-priority interest (each a “Filing”).  Issuing Entity shall promptly authorize in writing Servicer to, and Servicer shall, effect such Filing under the Uniform Commercial Code without the signature of the Indenture Trustee or Issuing Entity where allowed by applicable law.

 

Schedule P (Page 2)

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