Document:

Exhibit 4.1

 

 

 

 

GUESS? ROYALTY FINANCE LLC,

as Issuer

 

 

and

 

 

BNY MIDWEST TRUST COMPANY,

Indenture Trustee

on behalf of the Noteholders

 

 

INDENTURE

 

 

Dated as of April 28, 2003

 

 

$75,000,000

 

 

6.75% SECURED NOTES

 

 

 

 

TABLE OF CONTENTS

 

	

  PRELIMINARY STATEMENT

  
	

   

  	

   

  
	

  GRANTING

  CLAUSE

  
	

   

  	

   

  
	

  ARTICLE I DEFINITIONS AND

  INCORPORATION BY REFERENCE

  
	

   

  	

   

  
	

   

  	

  SECTION 1.1.  

  Definitions

  
	

   

  	

  SECTION 1.2.  

  Rules of Construction

  
	

   

  	

   

  
	

  ARTICLE II THE NOTES

  
	

   

  	

   

  
	

   

  	

  SECTION 2.1.  

  Form

  
	

   

  	

  SECTION 2.2.  

  Execution, Authentication and Delivery

  
	

   

  	

  SECTION 2.3.  

  Temporary Notes

  
	

   

  	

  SECTION 2.4.  

  Registration; Registration of Transfer and Exchange; Transfer Restriction;

  Restrictive Legends

  
	

   

  	

  SECTION 2.5.  

  Mutilated, Destroyed, Lost or Stolen Notes

  
	

   

  	

  SECTION 2.6.  

  Persons Deemed Owner

  
	

   

  	

  SECTION 2.7.  

  Payment of Principal and Interest

  
	

   

  	

  SECTION 2.8.  

  Cancellation

  
	

   

  	

  SECTION 2.9.  

  Global Notes

  
	

   

  	

  SECTION 2.10.  

  Notices to Depositary

  
	

   

  	

  SECTION 2.11.  

  Definitive Notes

  
	

   

  	

  SECTION 2.12.  

  Authenticating Agent

  
	

   

  	

  SECTION 2.13.  

  Appointment of Paying Agent

  
	

   

  	

  SECTION 2.14.  

  Servicer’s Reports

  
	

   

  	

  SECTION 2.15.  

  Tax Treatment

  
	

   

  	

  SECTION 2.16.  

  CUSIP Numbers

  
	

   

  	

   

  
	

  ARTICLE III

  COVENANTS; REPRESENTATIONS AND WARRANTIES

  
	

   

  	

   

  
	

   

  	

  SECTION 3.1.  

  Payment of Principal and Interest

  
	

   

  	

  SECTION 3.2.  

  Maintenance of Office or Agency

  
	

   

  	

  SECTION 3.3.  

  Money for Payments to be Held in Trust

  
	

   

  	

  SECTION 3.4.  

  Existence

  
	

   

  	

  SECTION 3.5.  

  Compliance with Laws

  
	

   

  	

  SECTION 3.6.  

  Protection of Collateral

  
	

   

  	

  SECTION 3.7.  

  Annual Opinion of Counsel

  
	

   

  	

  SECTION 3.8.  

  Performance of Obligations; Servicing of Payment Obligations; Inspection

  
	

   

  	

  SECTION 3.9.  

  Use of Proceeds

  
	

   

  	

  SECTION 3.10.  

  Negative Covenants

  
	

   

  	

  SECTION 3.11.  

  Consolidations, Mergers, Sales of Assets

  
	

   

  	

  SECTION 3.12.  

  Conduct of Business and Maintenance of Existence

  
	

   

  	

  SECTION 3.13.  

  Amendment of Transaction Documents

  
			

 

 

	

   

  	

  SECTION 3.14.  

  Restrictions on Certain Actions

  
	

   

  	

  SECTION 3.15.  

  Notices; Information

  
	

   

  	

  SECTION 3.16.  

  Separate Existence

  
	

   

  	

  SECTION 3.17.  

  Further Instruments and Acts

  
	

   

  	

  SECTION

  3.18.   Issuer Representations

  
	

   

  	

   

  
	

  ARTICLE IV SATISFACTION AND DISCHARGE

  
	

   

  	

   

  
	

   

  	

  SECTION 4.1.  

  Satisfaction and Discharge of Indenture

  
	

   

  	

  SECTION 4.2.  

  Application of Trust Money

  
	

   

  	

  SECTION 4.3.  

  Repayment of Moneys Held by Paying Agent

  
	

   

  	

   

  
	

  ARTICLE V REMEDIES

  
	

   

  	

   

  
	

   

  	

  SECTION 5.1.  

  Rapid Amortization Events

  
	

   

  	

  SECTION 5.2.  

  Events of Default

  
	

   

  	

  SECTION 5.3.  

  Rights Upon Event of Default; Notice; Recission and Annulment

  
	

   

  	

  SECTION 5.4.  

  Collection of Indebtedness and Suits for Enforcement by Indenture Trustee;

  Authority of Indenture Trustee

  
	

   

  	

  SECTION 5.5.  

  Remedies

  
	

   

  	

  SECTION 5.6.  

  Optional Preservation of the Indenture Collateral

  
	

   

  	

  SECTION 5.7.  

  Priorities

  
	

   

  	

  SECTION 5.8.  

  Limitation of Suits

  
	

   

  	

  SECTION 5.9.  

  Unconditional Rights of Noteholders to Receive Principal and Interest

  
	

   

  	

  SECTION 5.10.  

  Restoration of Rights and Remedies

  
	

   

  	

  SECTION 5.11.  

  Rights and Remedies Cumulative

  
	

   

  	

  SECTION 5.12.  

  Delay or Omission Not a Waiver

  
	

   

  	

  SECTION 5.13.  

  Control by Noteholders

  
	

   

  	

  SECTION 5.14.  

  Waiver of Past Defaults

  
	

   

  	

  SECTION 5.15.  

  Undertaking for Costs

  
	

   

  	

  SECTION 5.16.  

  Waiver of Stay or Extension Laws

  
	

   

  	

  SECTION 5.17.  

  Action on Notes

  
	

   

  	

   

  
	

  ARTICLE VI THE INDENTURE TRUSTEE

  
	

   

  	

   

  
	

   

  	

  SECTION 6.1.  

  Duties of Indenture Trustee

  
	

   

  	

  SECTION 6.2.  

  Rights of Indenture Trustee

  
	

   

  	

  SECTION 6.3.  

  Individual Rights of Indenture Trustee

  
	

   

  	

  SECTION 6.4.  

  Indenture Trustee’s Disclaimer

  
	

   

  	

  SECTION 6.5.  

  Notice of Defaults

  
	

   

  	

  SECTION 6.6.  

  Reports by Indenture Trustee to Noteholders

  
	

   

  	

  SECTION 6.7.  

  Compensation and Indemnity

  
	

   

  	

  SECTION 6.8.  

  Replacement of Indenture Trustee

  
	

   

  	

  SECTION 6.9.  

  Successor Indenture Trustee by Merger

  
	

   

  	

  SECTION 6.10.  

  Appointment of Co-Indenture Trustee or Separate Indenture Trustee

  
	

   

  	

  SECTION 6.11.  

  Eligibility

  
	

   

  	

  SECTION 6.12.  

  Representations and Warranties of Indenture Trustee

  

 

 

	

  ARTICLE VII

  NOTEHOLDERS’ LISTS AND REPORTS

  
	

   

  	

   

  
	

   

  	

  SECTION 7.1.  

  Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders

  
	

   

  	

  SECTION 7.2.  

  Preservation of Information; Communication to Noteholders

  
	

   

  	

  SECTION 7.3.  

  Rule 144A Information

  
	

   

  	

  SECTION 7.4.  

  Servicer’s Reports

  
	

   

  	

  SECTION 7.5.  

  Certifications

  
	

   

  	

   

  
	

  ARTICLE VIII

  ACCOUNTS, DISBURSEMENTS AND RELEASE

  
	

   

  	

   

  
	

   

  	

  SECTION 8.1.  

  Collection of Money

  
	

   

  	

  SECTION 8.2.  

  Establishment of Accounts; Investment of Funds

  
	

   

  	

  SECTION 8.3.  

  Control of Trust Accounts

  
	

   

  	

  SECTION 8.4.  

  Treatment as Financial Assets

  
	

   

  	

  SECTION 8.5.  

  Securities Intermediary’s Location

  
	

   

  	

  SECTION 8.6.  

  No Other Claims

  
	

   

  	

  SECTION 8.7.  

  Investment and Release

  
	

   

  	

  SECTION 8.8.  

  Tax Allocations

  
	

   

  	

  SECTION 8.9.  

  No Other Agreements

  
	

   

  	

  SECTION 8.10.  

  Powers Coupled With An Interest

  
	

   

  	

  SECTION 8.11.  

  Payment Date Distributions

  
	

   

  	

  SECTION 8.12.  

  Release of Collateral

  
	

   

  	

  SECTION 8.13.  

  Opinion of Counsel

  
	

   

  	

   

  
	

  ARTICLE IX SUPPLEMENTAL INDENTURES

  
	

   

  	

   

  
	

   

  	

  SECTION 9.1.  

  Supplemental Indenture Without Consent of Noteholders

  
	

   

  	

  SECTION 9.2.  

  Supplemental Indentures With Consent of Noteholders

  
	

   

  	

  SECTION 9.3.  

  Execution of Supplemental Indentures

  
	

   

  	

  SECTION 9.4.  

  Effect of Supplemental Indenture

  
	

   

  	

  SECTION 9.5.  

  Reference in Notes to Supplemental Indentures

  
	

   

  	

   

  
	

  ARTICLE X

  OPTIONAL REDEMPTION OF NOTES

  
	

   

  	

   

  
	

   

  	

  SECTION 10.1.  

  Optional Redemption

  
	

   

  	

  SECTION 10.2.  

  Notice of Redemption

  
	

   

  	

  SECTION 10.3.  

  Payment of Notes Called for Redemption

  
	

   

  	

   

  
	

  ARTICLE XI MISCELLANEOUS

  
	

   

  	

   

  
	

   

  	

  SECTION 11.1.  

  Compliance Certificates and Opinions, etc

  
	

   

  	

  SECTION 11.2.  

  Form of Documents Delivered to Indenture Trustee

  
	

   

  	

  SECTION 11.3.  

  Acts of Noteholders

  
	

   

  	

  SECTION 11.4.  

  Notices

  
	

   

  	

  SECTION 11.5.  

  Notices to Noteholders; Waiver

  
	

   

  	

  SECTION 11.6.  

  Effect of Headings and Table of Contents

  
	

   

  	

  SECTION 11.7.  

  Successors and Assigns

  

 

 

	

   

  	

  SECTION 11.8.  

  Separability

  
	

   

  	

  SECTION 11.9.  

  Benefits of Indenture

  
	

   

  	

  SECTION 11.10.   Legal Holidays

  
	

   

  	

  SECTION 11.11.   GOVERNING LAW

  
	

   

  	

  SECTION 11.12.   Counterparts

  
	

   

  	

  SECTION 11.13.   Recording of Indenture

  
	

   

  	

  SECTION 11.14.   No Petition Covenant

  
	

   

  	

  SECTION 11.15.   Limited Recourse

  
	

   

  	

  SECTION 11.16.   WAIVERS OF JURY TRIAL

  
	

   

  	

  SECTION 11.17.   Submission to Jurisdiction; Waivers

  

 

 

	

  ANNEX

  
	

   

  
	

  Annex X

  	

  Definitions

  
	

   

  	

   

  
	

  EXHIBITS

  	

   

  
	

   

  	

   

  
	

  Exhibit A

  	

  Form of Global Note

  
	

  Exhibit B

  	

  Form of Definitive Note

  
	

  Exhibit C

  	

  Rule 144A Certificate

  
	

  Exhibit D

  	

  Form of Quarterly Servicer’s Report

  Certificate

  
	

  Exhibit E

  	

  Form of Servicer Notice Regarding Distribution

  Account

  

 

 

This

Indenture, dated as of April 28, 2003 (this “Indenture”), is between

Guess? Royalty Finance LLC, a limited liability company organized under the

laws of the State of Delaware (the “Issuer”), and BNY Midwest Trust

Company, acting hereunder as indenture trustee and not in its individual

capacity (herein, together with its successors in the trust hereunder, the “Indenture

Trustee”).

 

PRELIMINARY STATEMENT

 

The Issuer has

duly authorized the execution and delivery of this Indenture to provide for

issuance of notes as provided in this Indenture.  All covenants and agreements made by the Issuer herein are for

the benefit and security of the Noteholders. 

The Issuer is entering into this Indenture, and the Indenture Trustee is

accepting the trusts created hereby, for good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged.

 

GRANTING CLAUSE

 

The Issuer

hereby grants to the Indenture Trustee, for the benefit of the Noteholders, a

security interest in (all of the following, the “Indenture Collateral”):

(a) all Royalty Receivables whether now existing or hereafter created, and

all funds collected or to be collected in respect thereof and all other assets

contributed to the Issuer pursuant to the Receivables Contribution Agreement;

(b) all monies and securities, including, without limitation, all Eligible

Investments from time to time held by, or on behalf of, the Indenture Trustee

under the terms of this Indenture, including amounts set apart and transferred to

the Transaction  Accounts and all

investment earnings on any of the foregoing, subject to disbursements from such

accounts in accordance with the provisions of this Indenture; (c) the

Related Contracts, including all rights to receive payment of any amounts which

may become payable to the Issuer thereunder (directly or as assignee thereof)

and all payments received by the Issuer thereunder and all rights of the Issuer

to serve notices and/or make demands thereunder and/or to take such steps as

are required to cause payments due and payable to the Issuer thereunder to

become due and payable thereunder and all rights of action of the Issuer in

respect of any breach thereof and all rights of the Issuer to indemnification

and to receive damages or obtain other relief with respect thereto, together

with all instruments, chattel paper or letters of credit evidencing,

representing, arising from or existing in respect of, relating to, securing or

otherwise supporting the payment of any amounts due and payable to the Issuer

under (directly, or as assignee thereof), the Related Contracts (collectively,

the “Related Contract Proceeds”); (d) any and all other property of

every kind and nature from time to time which was heretofore or hereafter is,

by delivery or by writing of any kind, conveyed, mortgaged, pledged, assigned

or transferred, as and for additional security hereunder, by the Issuer or by

any other Person, with or without the consent of the Issuer, to the Indenture

Trustee, which is hereby authorized to receive any and all such property at any

time and at all times to hold and apply the same subject to the terms hereof;

and (e) all proceeds of any of the foregoing; subject however, to the lien

created pursuant to the Guarantee.

 

This grant of

a security interest is made to the Indenture Trustee, in trust, to secure (i)

the payment of all amounts due and to become due on the Notes in accordance

with their terms, (ii) the payment of all other sums payable under this

Indenture, and (iii) compliance with the provisions of this Indenture, all as

provided in this Indenture.

 

 

The Indenture

Trustee acknowledges the grant of a security interest as provided above and

accepts the trusts hereunder in accordance with the provisions hereof and

agrees to perform the duties herein required to the end that the interests of

the Noteholders may be adequately and effectively protected.

 

ARTICLE I

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

SECTION 1.1.  

Definitions.  Capitalized terms

used in this Indenture shall have the respective meanings assigned to such

terms in Annex X unless otherwise defined herein.  The following terms which are defined in the UCC in the State of

New York shall have the meanings set forth therein:  “account”, “certificated security,” “control,” “deposit account”,

“financial asset,” “entitlement order,” “general intangible,” “investment

property,” “securities account” and “security entitlement.”

 

SECTION 1.2.  

Rules of Construction.  Unless

the context otherwise requires:

 

(a)                                  a

term has the meaning assigned to it;

 

(b)                                 an

accounting term not otherwise defined has the meaning assigned to it in

accordance with GAAP;

 

(c)                                  “or”

is not exclusive;

 

(d)                                 “including”

means including without limitation;

 

(e)                                  words

in the singular include the plural and words in the plural include the

singular;

 

(f)                                    any

agreement, instrument or statute defined or referred to herein or in any

instrument or certificate delivered in connection herewith means such

agreement, instrument or statute as from time to time amended, modified or

supplemented and includes (in the case of agreements or instruments) references

to all attachments thereto and instruments incorporated therein; references to

a Person are also to its permitted successors and assigns; and

 

(g)                                 the

words “hereof,” “herein” and “hereunder” and words of similar import when used

in this Indenture shall refer to this Indenture as a whole and not to any

particular provision of this Indenture; Section, subsection and Schedule

references contained in this Indenture are references to Sections, subsections

and Schedules in or to this Indenture unless otherwise specified.

 

2

 

ARTICLE II

 

THE NOTES

 

SECTION 2.1.  

Form.  The Notes, in each case

together with the Indenture Trustee’s certificate of authentication, shall be

in substantially the form set forth as Exhibit A (Global Note) or Exhibit B

(Definitive Note), 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.

 

SECTION 2.2.  

Execution, Authentication and Delivery. 

The Notes shall be executed on behalf of the Issuer by any of its

Authorized Officers.  The signature of

any such Authorized Officer on the Notes may be manual or facsimile.  Notes bearing the manual or facsimile

signature of individuals who were at any time Authorized Officers of the Issuer

shall bind the Issuer, notwithstanding that such individuals or any of them

have ceased to hold such offices prior to the authentication and delivery of

such Notes or did not hold such offices at the date of such Notes.

 

The Indenture

Trustee or the Authenticating Agent, on behalf of the Indenture Trustee, shall,

upon receipt of an Issuer Order, authenticate and deliver for original issue,

Notes in an aggregate principal amount of $75,000,000 (the “Notes”).  The aggregate principal amount of the Notes

at any time may not exceed such amount, except as otherwise provided herein.

 

Each Note

shall be dated the date of its authentication. 

The Global Notes shall be issuable as registered notes in a minimum

denomination of $100,000 and in integral multiples of $1,000 in excess thereof.  Each Note sold to accredited investors (“Accredited

Investors”) as defined in Rule 501 under the Securities Act (the “AI

Notes”) shall be issuable as registered, certificated notes in a minimum

denomination of $500,000 and in integral multiples of $1,000 in excess thereof.

 

No Note shall

be entitled to any benefit under this Indenture or be valid or obligatory for

any purpose, unless there appears on such Note a certificate of authentication

by the Indenture Trustee substantially in the form provided for herein by the

manual signature of one of its authorized signatories, and such certificate

upon any Note shall be conclusive evidence, and the only evidence, that such

Note has been duly authenticated and delivered hereunder.

 

The Indenture

Trustee may appoint one or more authenticating agents reasonably acceptable to

the Issuer to authenticate Notes (the “Authenticating Agent”).  Unless otherwise provided in the

appointment, the Authenticating Agent may authenticate Notes whenever the

Indenture Trustee may do so.  Each

reference in this Indenture to authentication by the Indenture Trustee includes

authentication by such agent.  The

Authenticating Agent shall have the same rights as an agent to deal with the

Issuer and Affiliates of the Issuer.

 

3

 

SECTION 2.3.  

Temporary Notes.  Pending the

preparation of Global Notes or Definitive Notes, the Issuer may execute, and

upon receipt of an Issuer 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

the terms of this Indenture as the officers executing such Notes may determine,

as evidenced by their execution of such Notes.

 

If temporary

notes are issued, the Issuer will cause Global Notes or Definitive Notes to be

prepared without unreasonable delay. 

After the preparation of Global Notes or Definitive Notes, the temporary

notes shall be exchangeable for Global Notes or Definitive Notes upon surrender

of the temporary notes at the office or agency of the Issuer to be maintained

as provided in Section 3.2, without charge to the Noteholder.  Upon surrender for cancellation of any one

or more Notes, the Issuer shall execute and the Indenture Trustee shall

authenticate and deliver in exchange therefor a like tenor and principal amount

of Global Notes or Definitive Notes in authorized denominations. Until so exchanged,

the temporary notes shall in all respects be entitled to the same benefits

under this Indenture as Global Notes or Definitive Notes.

 

SECTION 2.4.  

Registration; Registration of Transfer and Exchange; Transfer Restriction;

Restrictive Legends.  (a)  The Issuer shall cause to be kept a register

(the “Note Register”) in which, subject to such reasonable regulations as it

may prescribe, the Issuer shall provide for the registration of Notes and the

registration of transfers of Notes.  The

Note Registrar, acting as agent of the Issuer, shall register and transfer

Notes as herein provided.  Upon

resignation of any Note Registrar, the Issuer shall promptly appoint a

successor or, if it elects not to make such an appointment, assume the duties

of the Note Registrar.  The Issuer

appoints BNY Midwest Trust Company as “Note Registrar” for the purpose of

registering Notes and transfers of Notes as herein provided.

 

If a Person

other than the Indenture Trustee is appointed by the Issuer as Note Registrar,

any action required to be taken by the Indenture Trustee in such capacity shall

be deemed to refer to the Note Registrar appointed in its stead.  The Issuer will give the Indenture Trustee

prompt written notice of the appointment of such Note Registrar and of the

location, and any change in the location, of the Note Register, and the

Indenture Trustee shall have the right to inspect the Note Register at all

reasonable times and to obtain copies thereof, and the Indenture Trustee shall

have the right to rely upon a certificate executed on behalf of the Note

Registrar by an Executive Officer thereof as to the names and addresses of the

Noteholders and the principal amounts and the amounts and number of such Notes.

 

An institution

succeeding to the corporate agency business of the Note Registrar shall

continue to be the Note Registrar without the execution or filing of any paper

or any further act on the part of the Indenture Trustee or such Note Registrar.

 

The Note

Registrar shall maintain in the City of New York an office or offices or agency

or agencies where Notes may be surrendered for registration of transfer or

exchange.  The Note Registrar initially

designates the office of its designee, The Bank of New York, located at:  101 Barclay Street, 7W, New York, NY  10286, as its office for such

purposes.  The Note

 

4

 

Registrar shall give prompt written notice to the Servicer and to the

Noteholders of any change in the location of such office or agency.

 

Upon surrender

for registration of transfer of any Note at the office or agency of the Issuer

to be maintained as provided in Section 3.2, the Issuer shall execute, and

the Authenticating Agent shall authenticate and the Noteholder shall obtain

from the Note Registrar or 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 a Noteholder, Notes may be exchanged for other Notes in any authorized

denominations, of a like aggregate amount, upon surrender of the Notes to be

exchanged at such office or agency. 

Whenever any Notes are so surrendered for exchange, the Issuer shall

execute, and the Authenticating Agent shall authenticate and the Noteholder

shall obtain from the Note Registrar, the Notes which the Noteholder making the

exchange is entitled to receive.

 

All Notes

issued upon any registration of transfer or exchange of Notes shall be the

valid obligations of the Issuer, evidencing the same debt, and entitled to the

same benefits under this Indenture, as the Notes surrendered upon such

registration of transfer or exchange.

 

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 Note Registrar duly executed by, the Noteholder thereof or

such Noteholder’s attorney duly authorized in writing, with such signature

guaranteed by a commercial bank or trust company located, or having a

correspondent located in the city in which the Note Registrar’s office is

located, or by a member firm of a national securities exchange, and such other

documents as the Note Registrar may require.

 

The Issuer,

the Note Registrar or the Indenture Trustee may require the payment by the

Noteholder of a sum sufficient to cover any tax or other governmental charge

that may be imposed in connection with any registration of transfer or exchange

of Notes, other than exchanges pursuant to Section 2.3 not involving any

transfer.  The Note Registrar and

Indenture Trustee are not authorized to impose any other charge or impost in

connection with the registration of any transfer or exchange of any Note.

 

The preceding

provisions of this Section notwithstanding, the Issuer shall not be

required to make and the Note Registrar need not register transfers or

exchanges of Notes selected for redemption or of any Note for a period of 15

days preceding the due date for any payment with respect to the Note.

 

Neither the

Indenture Trustee nor the Note Registrar shall have any responsibility to

monitor or restrict the transfer of beneficial ownership in any Note an

interest in which is transferable through the facilities of DTC or any

successor that is a Clearing Agency.

 

(b)                                 Notwithstanding

any other provisions hereof to the contrary:

 

(i)                                     A Global Note may

not be transferred, in whole or in part, to any Person other than the

Depositary or a nominee thereof, and no such transfer to any

 

5

 

such other Person may be registered; provided,  however,

that this clause (i) shall not prohibit any transfer of a Note that is issued

in exchange for a Global Note but is not itself a Global Note and shall not

prohibit any transfer of a beneficial interest in a Global Note effected in

accordance with the other provisions of this Section 2.4(b).

 

(ii)                                  Upon any such

exchange or transfer of all or a portion of any Global Note for a Definitive

Note or an interest in a Global Note, the Global Note from which an interest is

to be so exchanged or transferred will be marked to reflect the reduction of

its principal amount by the aggregate principal amount of such Definitive Note

or the interest to be so exchanged or transferred for an interest in a Global

Note only in accordance with the applicable rules and procedures of the

Depositary (the “Applicable Procedures”) (including any certification

requirement intended to ensure that transfers and exchanges of beneficial

interests in a Global Note comply with Rule 144A under the Securities Act) and

any Applicable Procedures, as may be adopted from time to time by the Issuer

and the Note Registrar.  Until so

exchanged or transferred in full, such Global Note will in all respects be

entitled to the same benefits under this Indenture as the Notes authenticated

and delivered hereunder.

 

(iii)                               Prior to any such

exchange or transfer of all or a portion of any Definitive Note for a

Definitive Note, the transferor shall deliver to the Indenture Trustee a duly

completed Rule 144A Certificate in the form of Exhibit C attached hereto

or an Opinion of Counsel and such other certifications and evidence as the

Indenture Trustee may reasonably require to determine that the proposed

transfer or exchange is being made in compliance with the Securities Act and

any applicable securities laws of any state of the United States.  Upon delivery of a duly completed Rule 144A

Certificate or an Opinion of Counsel, the Indenture Trustee will (x) cancel the

Definitive Note being transferred or exchanged, (y) deliver one or more new

Definitive Notes in authorized denominations having an aggregate principal

amount equal to the principal amount of such transfer or exchange to the

transferee (in the case of a transfer) or the holder of the cancelled

Definitive Note (in the case of an exchange), registered in the name of such

transferee or holder, as applicable, and (z) if such transfer or exchange

involves less than the entire principal amount of the cancelled Definitive

Note, deliver to the holder thereof one or more Definitive Notes in authorized

denominations having an aggregate principal amount equal to the untransferred

or unexchanged portion of the cancelled Definitive Note, registered in the name

of the holder thereof.  All or a portion

of any AI Note may be exchanged or transferred for a beneficial interest in a

Global Note, provided that the holder of the AI Note deliver to the

Indenture Trustee a 144A Certificate and any other evidence reasonably

requested by the Indenture Trustee to ensure that transfers and exchanges of

Notes comply with Rule 144A under the Securities Act and provided, further,

that the Issuer shall issue and the Indenture Trustee shall authenticate a new

Global Note (such Global Note having an original CUSIP number, registered in

the name of the Depositary) and the transferor shall pay a sum sufficient to

cover fees and expenses related to the issuance and

 

6

 

authentication of such Global Note, the registration of such Global

Note in the name of the Depositary and any other fees or expenses incurred by

the Issuer or the Indenture Trustee in connection with any registration of

transfer or exchange of the AI Notes.

 

(iv)                              Until such time as the

Notes cease to be “restricted securities” (as defined in Rule 144 (a) (3) of

the Securities Act), each Purchaser (other than the Initial Purchaser) of the

Notes (including, without limitation, any purchaser of an interest in the

Global Notes) will be deemed to have represented and agreed as follows:

 

(A)                              It

is (x) a Qualified Institutional Buyer as defined in Rule 144A and is acquiring

the Notes for its own institutional account or for the account or accounts of a

Qualified Institutional Buyer or, in the case of A1 Notes only, (y) an

Accredited Investor as defined in Rule 501 and is acquiring the Notes for its

own account;

 

(B)                                It

understands that the Notes are being transferred to it in a transaction not

involving any public offering within the meaning of the Securities Act, and

that, if in the future it decides to resell, pledge or otherwise transfer any

Notes, such Notes may be resold, pledged or transferred only in a transaction

meeting the requirements of Rule 144A to a person who the seller reasonably

believes is a Qualified Institutional Buyer that purchases for its own account

or forth the account or accounts of a Qualified Institutional Buyer to whom

notice is given that the resale, pledge or transfer is being made in reliance

on Rule 144A; and

 

(C)                                It

understands that each Note will bear a legend substantially to the effect of

the Securities Act Legend and each Global Note will also bear a legend

substantially to the effect of the Global Note Legend.

 

(c)                                  Each

Note shall bear the following legends (the “Securities Act Legend”) to

the extent indicated:

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES

ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE

SECURITIES LAWS AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR OTHERWISE

TRANSFERRED EXCEPT AS PERMITTED BY THE FOLLOWING SENTENCES. THE HOLDER OF THIS

NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH

NOTE, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”)

WHICH IS TWO YEARS AFTER [FOR NON AI NOTES — THE ORIGINAL ISSUE DATE

HEREOF][FOR AI NOTES – THE LAST DATE AS OF WHICH ANY OF GUESS? ROYALTY FINANCE

LLC (THE “ISSUER”) OR ANY

 

7

 

AFFILIATE OF

THE ISSUER WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE)] ONLY

(A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN

DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES

ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE

144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL

BUYER” AS DEFINED IN RULE 144A (A “QIB”) THAT PURCHASES FOR ITS OWN

ACCOUNT OR FOR THE ACCOUNT OF A QIB TO WHOM NOTICE IS GIVEN THAT THE TRANSFER

IS BEING MADE IN RELIANCE ON RULE 144A, OR (D) PURSUANT TO ANOTHER AVAILABLE

EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO

THE RIGHT OF THE ISSUER AND THE INDENTURE TRUSTEE, PRIOR TO ANY SUCH OFFER,

SALE OR TRANSFER PURSUANT TO CLAUSE (D), TO REQUIRE THE DELIVERY OF AN OPINION

OF COUNSEL (WHICH COUNSEL MAY BE IN-HOUSE COUNSEL), CERTIFICATION AND/OR OTHER

INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE

REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

 

(d)                                 The

Global Notes shall bear the following legend (the “Global Note Legend”):

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE

HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A

NOMINEE THEREOF.  THIS NOTE MAY NOT BE

EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF

THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON

OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED

CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

(e)                                  The

Global Notes shall bear the following legend so long as the Depositary with

respect thereto is The Depository Trust Company:

 

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE

DEPOSITORY TRUST COMPANY (“DTC”), A NEW YORK CORPORATION, 55 WATER STREET, NEW

YORK, NEW YORK 10004, TO THE ISSUER OR THE REGISTRAR, 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 BECAUSE THE REGISTERED OWNER, CEDE & CO., HAS AN

INTEREST HEREIN.

 

8

 

(f)                                    The

required legends set forth above shall not be removed from the applicable Notes

except as provided herein.  The legend

required for a Note may be removed from such Note if there is delivered to the

Issuer and the Note Registrar such satisfactory evidence, which may include an

Opinion of Counsel (including of in-house counsel) as may be reasonably

required by the Issuer that neither such legend nor the restrictions on

transfer set forth therein are required to ensure that transfers of such note

will not violate the registration requirements of the Securities Act.  Upon provision of such satisfactory

evidence, the Indenture Trustee at the direction of the Issuer shall authenticate

and deliver in exchange for such Note a Note or Notes having an equal aggregate

Original Principal Amount that does not bear such legend.  If such a legend required for a Note has

been removed from a Note as provided above, no other Note issued in exchange

for all or any part of such Note shall bear such legend, unless the Issuer has

reasonable cause to believe that such other Note is a “restricted security”

within the meaning of Rule 144 under the Securities Act and instructs the

Indenture Trustee to cause a legend to appear thereon.

 

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 indemnity (which in the case of the purchasers

purchasing the Notes on the Closing Date need only be such purchaser’s

unsecured promise of indemnity in form reasonably satisfactory to the Indenture

Trustee if such purchaser is an institutional investor and so long as such

purchaser or its parent company (if the parent company is providing the

indemnity) has a total net worth or capital surplus of $100,000,000 or more) as

may be reasonably required by the Issuer or the Indenture Trustee to hold them

harmless, then, in the absence of notice to the Issuer, the Note Registrar or

the Indenture Trustee that such Note has been acquired by a bona fide

purchaser, the Issuer shall execute and upon its written request the Indenture

Trustee or the Authentication Agent shall authenticate and deliver, in exchange

for or in lieu of any such mutilated, destroyed, lost or stolen Note, a

replacement Note; provided, however, that if any such destroyed, lost or stolen

Note, but not a mutilated Note, shall have become or within seven days shall be

due and payable, or shall have been called for redemption, instead of issuing a

replacement Note, the Issuer may pay such destroyed, lost or stolen Note when

so due or payable without surrender thereof. 

If, after the delivery of such replacement Note or payment of a

destroyed, lost or stolen Note pursuant to the proviso to the preceding

sentence, a bona fide purchaser of the original Note in lieu of which such

replacement Note was issued presents for payment such original Note, the

Issuer, and the 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 any assignee of such Person, except a bona fide purchaser, and

shall be entitled to recover upon the security or indemnity provided therefor

to the extent of any loss, damage, cost or expense incurred by the Issuer or

the Indenture Trustee in connection therewith.

 

Upon the

issuance of any replacement Note under this Section, the Issuer, the Note

Registrar or the Indenture Trustee may require the payment by the Noteholder of

such Note of a sum sufficient to cover any tax or other governmental charge

that may be imposed in relation thereto. 

The Note Registrar and Indenture Trustee are not authorized to impose

any other charge or impost in connection with the registration of any

replacement Note.

 

9

 

Every

replacement Note issued pursuant to this Section 2.5 in replacement of any

mutilated, destroyed, lost or stolen Note shall constitute an original

additional contractual obligation of the Issuer, whether or not the mutilated,

destroyed, lost or stolen Note shall be at any time enforceable by anyone, and

shall be entitled to all the benefits of this Indenture equally and

proportionately with any and all other Notes duly issued hereunder.

 

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 Issuer, the

Indenture Trustee, the Note Registrar, any Paying Agent and any of their

respective agents shall 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 of and interest, if any, on such Note, delivery

of all notices in respect of such Note, determination of matters put to the

vote of Note Holders and for all other purposes whatsoever, whether or not such

Note be overdue, and none of the Issuer, the Indenture Trustee or the Note

Registrar nor any of their respective agents shall be affected by notice to the

contrary.

 

SECTION 2.7.  

Payment of Principal and Interest. 

(a)  On each Payment Date during

the Controlled Amortization Period, principal shall be payable in respect of

the Notes in an amount equal to the lesser of (i) the Target Principal

Reduction Amount for such Payment Date and (ii) Available Principal Collections

for such Payment Date.  On each Payment

Date occurring during the Rapid Amortization Period, principal shall be payable

in respect of the Notes in an amount equal to the lesser of (i) Available

Principal Collections on such Payment Date and (ii) the unpaid principal amount

of the Notes.  The unpaid principal

amount of the Notes shall be due and payable on the Maturity Date.  The Notes so paid may not be reissued

hereunder.

 

(b)                                 Accrued

interest with respect to the Notes shall be payable on each Payment Date.  The amount of interest so payable on each

Payment Date shall be equal to the product of (i) the outstanding principal

amount of the Notes on the preceding Payment Date (or, in the case of the

initial Payment Date, on the Closing Date), after giving effect to any

repayment of the Notes occurring on such preceding Payment Date and (ii) the

Interest Rate divided by four; provided that, with respect to the

initial Payment Date, interest on the Notes will be calculated based upon the

Interest Rate per annum from the Closing Date to the initial Payment Date

calculated on the basis of a year of 360 days consisting of twelve 30-day

months.  Any interest that is not paid

on any Payment Date when due shall bear interest at a rate per annum equal to

the Interest Rate until paid in full. 

Any such past due interest, together with the accrued interest thereon,

shall be payable on the succeeding Payment Date.  Any portion of the principal of the Notes that remains unpaid

after the Maturity Date or date as of which the Notes are accelerated in

connection with any Event of Default or Enforcement Event will bear interest at

the Interest Rate plus 2% per annum (the “Default Rate”).

 

(c)                                  Per

annum interest rates hereunder shall be calculated on the basis of a year of

360 days consisting of twelve 30-day months.

 

10

 

SECTION 2.8.  

Cancellation.  All Notes

surrendered for payment, registration of transfer, exchange or redemption

shall, if surrendered to any Person other than the Note Registrar, be delivered

to the Note Registrar and shall be promptly canceled by the Note

Registrar.  The Issuer may at any time

deliver to the Note Registrar for cancellation any Notes previously

authenticated and delivered hereunder which the Issuer may have acquired in any

manner whatsoever, and all Notes so delivered shall be promptly canceled by the

Note Registrar.  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 Note Registrar in accordance with its standard retention or disposal

policy as in effect at the time unless the Issuer shall direct by an Issuer

Order that they be destroyed or returned to it; provided that such Issuer Order

is timely and the Notes have not been previously disposed of by the Note

Registrar.

 

SECTION 2.9.  

Global Notes.  (a)  The Notes (other than the AI Notes), upon

original issuance, shall be issued in the form of typewritten Global Notes

registered in the name of the Depositary or its nominee and no Note Owner of

such Notes will receive a definitive note representing such Note Owner’s

interest in the Notes, except definitive, fully registered Notes that have been

issued to Note Owners in accordance with Section 2.11 (any definitive

notes issued in accordance with Section 2.11, the “Definitive Notes”).

 

Unless and

until Definitive Notes are issued to replace Global Notes, the Issuer, the

Indenture Trustee, the Paying Agent and the Note Registrar may deal with the

Depositary and its participants for all purposes (including the making of

distributions on the Notes) as the authorized representatives of the Note

Owners of Global Notes and the rights of Note Owners of Global Notes shall be

exercised only through the Depositary and its participants and shall be limited

to those established by law and agreements between Note Owners of Global Notes

and the Depositary and such participants. 

Unless and until Definitive Notes are issued in exchange for Global

Notes pursuant to Section 2.11, the Depositary will make book-entry

transfers among its participants and receive and transmit distributions of

principal and interest on the Global Notes to its participants.

 

(b)                                 Neither

any members of, nor participants in, the Depositary (“Agent Members”)

nor any other Persons on whose behalf Agent Members may act shall have any

rights under this Indenture with respect to any Global Note, and the Depositary

or such nominee, as the case may be, may be treated by the Issuer, the

Indenture Trustee and any agent thereof as the absolute owner and holder of

such Global Note for all purposes whatsoever. 

Notwithstanding the foregoing, nothing herein shall prevent the Issuer

or the Indenture Trustee from giving effect to any written certification, proxy

or other authorization furnished by the Depositary or such nominee or impair,

as between the Depositary, its Agent Members and any other Persons on whose

behalf an Agent Member may act, the operation of customary practices of such

Persons governing the exercise of the rights of any Noteholder.

 

(c)                                  Each

of the Notes initially (other than AI Notes) will be issued in the form of one

or more Global Notes in fully registered form, without coupons, registered in

the name of the Depositary or its nominee and deposited with the Indenture

Trustee, as custodian of the Depositary.

 

11

 

SECTION 2.10.  

Notices to Depositary.  Whenever

a notice or other communication to the holders of Global Notes is required

under this Indenture, unless and until Definitive Notes shall have been issued

to such Noteholders pursuant to Section 2.11, the Indenture Trustee or its

agent shall give all such notices and communications specified herein to be

given to Noteholders of the Global Notes to the Depositary, and shall have no

obligation to such Noteholders.  Prior

to the issuance of Definitive Notes, if so instructed by the Issuer, the

Trustee will also deliver notices to specific Noteholders on the dates they are

delivered to the Depositary.  With

respect to the Holders who are purchasing Notes from the Initial Purchaser on

the Closing Date, the Issuer hereby instructs the Indenture Trustee to forward

to such Holders copies of all notices and communications received by, or sent

by the Indenture Trustee hereunder, at the addresses to be supplied by such

Holders to the Indenture Trustee; provided, however, that in no event shall the

Indenture Trustee incur any liability or have an obligation to send notices to

any Holder pursuant to this Section if any Holder fails to timely supply

the Indenture Trustee with a proper address or a timely notice of a change of

address.

 

SECTION 2.11.  

Definitive Notes.  AI Notes will

be issued as Definitive Notes. 

Additionally, Global Notes may be exchanged for Definitive Notes if (a)

the Depositary notifies the Issuer, the Registrar or the Indenture Trustee in

writing that it is no longer willing to continue as Depositary hereunder or has

ceased to be a Clearing Agency and the Indenture Trustee is unable to locate a

qualified successor Depositary or (b) the Issuer at its option advises the

Indenture Trustee in writing that it elects to terminate the book-entry system

through the Depositary, the Note Registrar at the request of the Issuer or the

Indenture Trustee shall notify all Note Owners of Global Notes, through the

Depositary, of the occurrence of any such event and of the availability of

Definitive Notes to such Note Owners. 

In addition, if after the occurrence of an Event of Default, the

Majority Holders advise the Indenture Trustee and the Depositary through the

Agent Members in writing, and if the Depositary shall so notify the Indenture

Trustee that the continuation of a book-entry system through the Depositary is

no longer in the best interests of the Note Owners, then the Depositary shall

notify all such Note Owners of the occurrence of any such event and of the

availability of Definitive Notes to the Note Owners requesting the same. Upon

the giving of such notice and the surrender to the Note Registrar of the Global

Notes by the Depositary, accompanied by registration instructions, the Issuer

shall execute and the Indenture Trustee shall authenticate and (if the Note

Registrar is different than the Indenture Trustee, then the Note Registrar

shall) deliver the Definitive Notes in accordance with the instructions of the

Depositary.  Upon issuance of Definitive

Notes in accordance with this Section 2.11, all references to obligations

imposed upon or to be performed by the Depositary shall be deemed to be imposed

upon and performed by the Indenture Trustee, to the extent applicable with

respect to such Definitive Notes, and the Indenture Trustee shall recognize the

holders of the Definitive Notes as Noteholders hereunder.  If Definitive Notes are to be issued in

accordance with this Section 2.11, the Issuer shall promptly make

available to the Note Registrar a reasonable supply of Definitive Notes.

 

SECTION 2.12.  

Authenticating Agent.  (a)  The Indenture Trustee may appoint one or

more authenticating agents (each, an “Authenticating Agent”) with respect to

the Notes which shall be authorized to act on behalf of the Indenture Trustee

in authenticating the Notes in connection with the issuance, delivery,

registration of transfer, exchange or repayment of the Notes.  Whenever reference is made in this Indenture

to the authentication of the Notes by the Indenture Trustee or the Indenture

Trustee’s certificate of authentication, such reference shall be

 

12

 

deemed to include authentication on behalf of the Indenture Trustee by

an Authenticating Agent and a certificate of authentication executed on behalf

of the Indenture Trustee by an Authenticating Agent.  The Indenture Trustee appoints BNY Midwest Trust Company as Authenticating

Agent hereunder.

 

(b)                                 Any

institution succeeding to the corporate agency business of an Authenticating

Agent shall continue to be an Authenticating Agent without the execution or

filing of any paper or any further act on the part of the Indenture Trustee or

such Authenticating Agent.

 

(c)                                  An

Authenticating Agent may at any time resign by giving written notice of

resignation to the Indenture Trustee and the Issuer.  The Indenture Trustee may at any time terminate the agency of an

Authenticating Agent by giving notice of termination to such Authenticating

Agent and to the Issuer.  Upon receiving

such a notice of resignation or upon such a termination, or in case at any time

an Authenticating Agent shall cease to be acceptable to the Indenture Trustee

or the Issuer, the Indenture Trustee promptly may appoint a successor

Authenticating Agent with the consent of the Issuer.  Any successor Authenticating Agent upon acceptance of its

appointment hereunder shall become vested with all the rights, powers and

duties of its predecessor hereunder, with like effect as if originally named as

an Authenticating Agent.  No successor

Authenticating Agent shall be appointed unless acceptable to the Issuer.

 

(d)                                 The

provisions of Sections 6.1, 6.2, 6.3, 6.4, 6.7 and 6.9 shall be applicable,

mutatis mutandis, to any Authenticating Agent.

 

(e)                                  Pursuant

to an appointment made under this Section, the Notes may have endorsed thereon,

in lieu of the Indenture Trustee’s certificate of authentication, an alternate

certificate of authentication in substantially the following form:

 

13

 

This is one of

the Notes issued under the within mentioned Indenture.

 

	

   

  	

  BNY MIDWEST

  TRUST COMPANY , as

  Indenture Trustee

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name: 

  	

   

  
	

   

  	

   

  	

  Title:

  Authorized Signatory

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  BNY MIDWEST

  TRUST COMPANY, as

  Authenticating Agent for the Indenture Trustee

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name: 

  	

   

  
	

   

  	

   

  	

  Title:

  Authorized Signatory

  	

   

  

 

SECTION 2.13.  

Appointment of Paying Agent. 

(a)  The Issuer may appoint a

Paying Agent with respect to the Notes. 

The Paying Agent shall have the revocable power to withdraw funds from

the Trust Accounts and make distributions to the Noteholders, the Indenture

Trustee, the Issuer and the Servicer pursuant to the provisions hereof.  The Indenture Trustee may revoke such power

and remove the Paying Agent if the Indenture Trustee determines in its sole

discretion that the Paying Agent shall have failed to perform its obligations

under this Indenture in any material respect or for other good cause.  Any Paying Agent shall be permitted to

resign as Paying Agent upon 30 days’ written notice to the Issuer and the

Indenture Trustee.  In the event that any

such Paying Agent shall no longer be the Paying Agent, the Indenture Trustee shall

appoint a successor to act as Paying Agent (which shall be a bank or trust

company and may be the Indenture Trustee) with the consent of the Issuer, which

consent shall not be unreasonably withheld. 

If at any time the Indenture Trustee shall be acting as the Paying

Agent, the provisions of Sections 6.1, 6.2, 6.3, 6.4, 6.7 and 6.9 shall apply,

mutatis mutandis, to the Indenture Trustee in its role as Paying Agent.

 

The Issuer

will cause each Paying Agent, other than the Indenture Trustee, to execute and

deliver to the Issuer 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 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;

 

14

 

(ii)                                  give the Indenture

Trustee notice of any default by the Issuer (or any other obligor upon the

Notes) of which it has actual knowledge in the making of any payment required

to be made with respect to the Notes;

 

(iii)                               at any time during the

continuance of any such default, upon the written request of the Indenture

Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by

such 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 the Notes if at any time it ceases to meet the

standards required to be met by the Paying Agent at the time of its

appointment; and

 

(v)                                 comply with all

requirements of applicable 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.

 

(b)                                 The

Indenture Trustee in its capacity as initial Paying Agent hereunder agrees that

it (i) will hold all sums held by it hereunder for payment to the Noteholders

in trust for the benefit of the Noteholders entitled thereto until such sums

shall be paid to such Noteholders and (ii) shall comply with all requirements

of applicable law with respect to the withholding from any payments made by it

on any Note of any applicable withholding taxes imposed thereon and with

respect to any applicable reporting requirements in connection therewith.

 

(c)                                  An

institution succeeding to the corporate agency business of the Paying Agent

shall continue to be the Paying Agent without the execution or filing of any

paper or any further act on the part of the Indenture Trustee or such Paying

Agent.

 

SECTION 2.14.  

Servicer’s Reports.  The

Indenture Trustee shall deliver to the Issuer and to each Rating Agency each

Quarterly Servicer’s Report delivered to the Indenture Trustee by the Servicer

on behalf of the Issuer pursuant to the Servicing Agreement.  The Indenture Trustee shall review each

Quarterly Servicer’s Report solely for verification of amounts deposited into,

withdrawn from and on deposit in the Trust Accounts as described therein,

verification of the mathematical accuracy of servicer calculations at face

value (including the Historical Coverage Ratio and Prospective Coverage Ratio)

and calculation of principal and interest due on the related Payment Date,

shall cooperate with the Servicer to correct any errors therein and to resolve

any disputes with respect to any such calculations or verifications prior to

the relevant Payment Date, and shall deliver to the Issuer and to each Rating

Agency at the time it delivers each Quarterly Servicer’s Report a certificate

(the “Quarterly Servicer’s Report Certificate”) in substantially the form set

forth as Exhibit D.  The Indenture

Trustee will distribute a Quarterly Servicer’s Report to any Note Owner that

may from time to time request such report in writing (provided that such Note

Owner has provided to the Indenture Trustee a current mailing address, email

address or fax number and evidence, reasonably satisfactory to the Indenture

Trustee, that it is a Note Owner).

 

15

 

SECTION 2.15.  

Tax Treatment.  (a)  All payments by the Issuer in respect of any

Note will be made without withholding or deduction for or on account of any

present or future taxes, duties, assessments, fees or other governmental

charges of whatever nature imposed or levied by or on behalf of the United

States or any political subdivision or authority thereof or therein having

power to tax (“Taxes”), unless such withholding or deduction is required by

law.

 

(b)                                 The

Issuer has entered into this Indenture, and the Notes will be issued, with the

intention that the Notes qualify as indebtedness for United States federal

income tax purposes.  Each of the

Issuer, the Indenture Trustee, and each Noteholder and Note Owner, by acceptance

of a Note or a beneficial interest in a Note, agrees to treat the Notes as

indebtedness for United States federal income tax purposes.

 

SECTION 2.16.  

CUSIP Numbers.  The Issuer in

issuing the notes will use CUSIP numbers and the Indenture Trustee will use

CUSIP numbers in notices as convenience to the Holders; provided that any such

notice may state that no representation is made to the correctness of such

numbers either as printed on the Notes or as contained in any notice and that

reliance may be placed only on the other identification number printed on the

Notes, and any such notice will not be affected by a defect in or omission of

such numbers.  The Issuer will promptly

notify the Indenture Trustee in writing of any change in the CUSIP numbers.

 

ARTICLE III

 

COVENANTS; REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1.  

Payment of Principal and Interest. 

The Issuer shall duly and punctually pay the principal and interest of

the Notes in accordance with the terms of this Indenture.  Amounts properly withheld under the Code by

any Person from a payment to any Noteholder of interest and/or principal shall

be considered as having been paid by the Issuer to such Noteholder for all

purposes of this Indenture.

 

SECTION 3.2.  

Maintenance of Office or Agency. 

The Issuer will maintain in the City of New York, an office or agency

where Notes may be surrendered for registration of transfer or exchange.  The Issuer hereby initially appoints the

Note Registrar to serve as its agent for the foregoing purposes.  The Issuer will give prompt written notice to

the Indenture Trustee of the location, and of any change in the location, of

any such office or agency.  If at any

time the Issuer shall fail to maintain any such office or agency or shall fail

to furnish the Indenture Trustee with the address thereof, such surrenders,

notices and demands may be made or served at the Corporate Trust Office, and

the Issuer hereby appoints the Indenture Trustee as its agent to receive all

such surrenders, notices and demands.

 

SECTION 3.3.  

Money for Payments to be Held in Trust. 

All moneys received by or on behalf of the Indenture Trustee or its

agents hereunder shall be segregated by the Indenture Trustee or its agents in

accordance with the provisions hereof and shall be held in trust for the

benefit of the Persons entitled thereto. 

As provided in Article VIII all payments of amounts due and payable with

respect to the Notes shall be made on behalf of the Issuer by the

 

16

 

Indenture Trustee or by another Paying Agent, and no amounts withdrawn

from the Distribution Account for payments of Notes shall be paid over to the

Issuer except as provided in this Section.

 

The Issuer may

at any time, for the purpose of obtaining the satisfaction and discharge of

this Indenture or for any other purpose, by delivery of an Issuer 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 upon

receipt of an Issuer Order shall be paid over by the Indenture Trustee to the

Issuer; and the related Noteholder shall thereafter, as an unsecured general

creditor, look only to the Issuer for payment thereof, and all liability of the

Indenture Trustee or such Paying Agent with respect to such trust money shall

thereupon cease; provided, that the Indenture Trustee or such Paying

Agent, before being required to make any such repayment, may at the expense of

the Issuer cause to be published once, in a newspaper published in the English

language, customarily published on each Business Day and of general circulation

in The City 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 or for the account of the Issuer. 

The Indenture Trustee may also adopt and employ, at the expense of the

Issuer, any other reasonable means of notification of such repayment

(including, but not limited to, mailing notice of such repayment to Noteholders

whose Notes have been called but have not been surrendered for redemption or

whose right to or interest in moneys due and payable but not claimed is

determinable from the records of the Indenture Trustee or of any Paying Agent,

at the last address of record for each such Noteholder).

 

SECTION 3.4.  

Existence.  (a)  The Issuer will keep in full effect its

existence, rights and franchises as a Delaware limited liability company 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 and each other instrument or

agreement included in the Indenture Collateral.

 

(b)                                 The

Issuer has not engaged in any activities since its formation (other than those

incidental to its formation and other appropriate actions including the issue

of beneficial interest, the proposed contribution of the Royalty Receivables,

the authorization and issuance of the Notes, the execution of the Transaction

Documents to which it is a party and the performance of the activities referred

to in or contemplated by such agreements).

 

SECTION 3.5.  

Compliance with Laws. 

The Issuer will comply with all applicable laws, ordinances, rules,

regulations and requirements of Governmental Authorities in the jurisdiction of

its formation and the rules and regulations thereunder except where the

 

17

 

necessity of compliance therewith is contested in good faith by

appropriate proceedings or where the failure to so comply will not have a

Material Adverse Effect.

 

SECTION 3.6.  

Protection of Collateral. 

(a)  This Indenture creates a

valid and continuing security interest in the Indenture Collateral in favor of

the Indenture Trustee, which security interest is prior to all other Liens

(other than Permitted Liens), and is enforceable as such as against creditors

of and purchasers from the Issuer.

 

(b)                                 The

Indenture Collateral constitutes General Intangibles, Accounts or Deposit

Accounts.

 

(c)                                  The

Issuer owns and has good and marketable title to the Indenture Collateral, free

and clear of any Lien, claim or encumbrance of any Person.

 

(d)                                 The

Issuer:

 

(i)                                     has caused, or

will have caused, on or before the Closing Date, the filing of all appropriate

(A) financing statements in the office of the Secretary of State of Delaware in

order to perfect the security interest in the Indenture Collateral granted to

the Indenture Trustee hereunder, and (B) filings with the United States Patent

and Trademark Office to provide notice of such security interest; and

 

(ii)                                  has delivered to the

Indenture Trustee a fully executed Lockbox Account Control Agreement pursuant

to which the bank maintaining the Lockbox Account has agreed to comply with all

instructions originated by the Indenture Trustee directing disposition of the

funds in the Lockbox Account without further consent of the Issuer.

 

(e)                                  Other

than Liens created pursuant to the Transaction Documents, the Issuer has not

pledged, assigned, sold, granted a security interest in, or otherwise conveyed

any of the Indenture Collateral.  The

Issuer has not authorized the filing of and is not aware of any financing

statements against the Issuer that include a description of collateral covering

the Indenture Collateral other than any financing statement relating to the

security interest granted to the Indenture Trustee hereunder or otherwise

pursuant to the Transaction Documents. 

The Issuer is not aware of any judgment or tax lien filings against the

Issuer (other than Permitted Liens).

 

(f)                                    The

Transaction Accounts are not in the name of any person other than the Issuer or

the Indenture Trustee.  The Issuer has

not consented to any bank maintaining a Transaction Account to comply with

instructions of any person other than the Indenture Trustee; provided,

that prior to an Event of Default, the Issuer and the Servicer may instruct the

disposition of the funds in the Lockbox Account.

 

(g)                                 The

Issuer will from time to time prepare (or shall cause to be prepared), execute,

file 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:

 

18

 

(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 the Lien and security interest created by

this Indenture;

 

(iii)                               enforce the rights of

the Indenture Trustee and the Noteholders in any of the Indenture Collateral;

or

 

(iv)                              preserve and defend title

to the Indenture Collateral and the rights of the Indenture Trustee and the

Noteholders in the Indenture Collateral against the claims of all persons and

parties.

 

The Issuer

hereby designates the Indenture Trustee its agent and attorney-in-fact to

execute any financing statement, continuation statement or other instrument

required to be filed by the Issuer pursuant to this Section.

 

(h)                                 So

long as this Indenture is in effect and any Notes are outstanding, the Issuer

agrees that (a) each representation, warranty and agreement made pursuant to

this Section 3.6 shall survive and (b) the Issuer shall not waive, by

course of conduct or in writing, any of the representations, warranties and

agreements made pursuant to this Section 3.6.

 

SECTION 3.7.  

Annual Opinion of Counsel.  On or

before March 31 of each calendar year, commencing with March 31, 2004, the

Issuer 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 re-filing of this Indenture,

any indentures supplemental hereto and any other requisite documents and with

respect to the execution and filing of any financing statements and

continuation statements as are necessary to maintain the perfection of the Lien

and security interest created by this Indenture and the Guarantee and reciting

the details of such action or stating that in the opinion of such counsel no

such action is necessary to maintain the perfection of such Liens and security

interests.  Such Opinion of Counsel

shall also describe the recording, filing, re-recording and re-filing of this

Indenture, any indentures supplemental hereto and any other requisite documents

and the execution and filing of any financing statements and continuation

statements that will, in the opinion of such counsel, be required to maintain

the perfection of the Lien and security interest of this Indenture and the

Guarantee until March 31 in the following calendar year.

 

SECTION 3.8.  

Performance of Obligations; Servicing of Payment Obligations; Inspection.  (a) 

The Issuer will not take any action and will use its best efforts not to

permit any action to be taken by others that would release any Person from any

of such Person’s material covenants or obligations under any instrument or

agreement included in the Indenture Collateral or that would result in the

amendment, hypothecation, subordination, termination or discharge of, or impair

the validity or effectiveness of, any such instrument or agreement, except as

ordered by any bankruptcy or other court or as expressly provided in, or

permitted by, this Indenture, any other Transaction Document or such other

instrument or agreement.

 

(b)                                 The

Issuer may contract with other Persons to assist it in performing its duties

and obligations under this Indenture, and any performance of such duties by a

Person

 

19

 

identified to the Indenture Trustee in an Officer’s Certificate shall

be deemed to be action taken by the Issuer. 

Initially, the Issuer has contracted with the Servicer to assist the

Issuer in performing its duties under this Indenture.

 

(c)                                  The

Issuer will punctually perform and observe all of its obligations and

agreements contained in this Indenture, the other Transaction Documents and in

the instruments and agreements included in the Indenture Collateral, including

but not limited to preparing (or causing to be prepared) and filing (or causing

to be filed) all financing statements, continuation statements, agreements,

instruments, documents, or papers pursuant to Section 3.6, required to be

filed by the terms of this Indenture, the Guarantee and any other applicable

Transaction Document in accordance with and within the time periods provided

for herein and therein.

 

(d)                                 If

the Issuer shall have actual knowledge of the occurrence of a Servicer Default,

the Issuer shall promptly notify the Indenture Trustee and each Rating Agency

thereof.  Upon any termination of the

Servicer’s rights and powers pursuant to the Servicing Agreement, the Issuer

shall promptly notify the Indenture Trustee. 

As soon as a Successor Servicer is appointed pursuant to the Servicing

Agreement, the Issuer shall notify the Indenture Trustee and the Rating

Agencies of such appointment (to the extent such party has not already been

notified pursuant to the Servicing Agreement), specifying in such notice the

name and address of such Successor Servicer.

 

(e)                                  The

Issuer agrees that it will not waive timely performance or observance by the

Servicer, or IP Holder of their respective duties under the Transaction

Documents if the effect thereof would have a Material Adverse Effect.

 

SECTION 3.9.  

Use of Proceeds.  The Issuer will distribute the net proceeds

of the Notes after deduction of any expenses relating to its formation, minimum

capitalization requirements or the issuance of the Notes, to IP Holder.

 

SECTION 3.10.  

Negative Covenants.  So long as

any Notes are outstanding, the Issuer shall not:

 

(a)                                  except

as expressly permitted or required by the Transaction Documents, sell,

transfer, exchange or otherwise dispose of, or permit the sale, transfer or

other disposition of, any of the properties or assets of the Issuer, including

those included in the Indenture Collateral, or otherwise fail to comply with

any of the covenants or agreements set forth in its operating agreement;

 

(b)                                 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 applicable 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 Indenture Collateral;

 

(c)                                  (i)

permit the validity or effectiveness of this Indenture to be impaired, or

permit the Lien created by this Indenture to be amended, hypothecated,

subordinated, terminated or discharged, or permit any Person to be released

from any covenant or obligations with respect to the Notes under this Indenture

except as may be expressly permitted hereby, (ii) permit any Lien to be created

on or extended to or otherwise arise upon or burden the Indenture Collateral or

 

20

 

any part thereof or any interest therein or the proceeds thereof (other

than Permitted Liens), (iii) permit the Lien created by this Indenture not to

constitute a valid perfected security interest in the Indenture Collateral;

 

(d)                                 dissolve

or liquidate in whole or in part;

 

(e)                                  issue,

incur, assume, guarantee or otherwise become liable, directly or indirectly,

for any indebtedness for borrowed money except for the Permitted Indebtedness;

 

(f)                                    except

as contemplated by the Transaction Documents, 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;

 

(g)                                 make

any expenditure (by long-term or operating lease or otherwise) for capital

assets (either realty or personalty);

 

(h)                                 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 any owner of a beneficial interest in the Issuer or otherwise with

respect to any ownership or equity interest in or of the Issuer, (ii) redeem,

purchase, retire or otherwise acquire for value any such ownership or equity

interest or (iii) set aside or otherwise segregate any amounts for any such

purpose; provided that, so long as no Rapid Amortization Event, Trapping

Event or Event of Default has occurred and is continuing, the Issuer may make,

or cause to be made, any such distributions as are permitted, or not otherwise

prohibited by, and to the extent funds are available for such purpose under,

the Transaction Documents; or

 

(i)                                     directly

or indirectly, make payments to or distributions from the Transaction Accounts

except in accordance with this Indenture and the Transaction Documents.

 

SECTION 3.11.  

Consolidations, Mergers, Sales of

Assets.  Except as expressly

contemplated herein and in the other Transaction Documents, the Issuer will not

consolidate or merge with or into any other Person or sell, lease or otherwise

transfer, directly or indirectly, all or any substantial part of its assets to

any other Person, other than its grant of the Indenture Collateral pursuant to

this Indenture.  The Issuer will not

create any Subsidiaries.

 

SECTION 3.12.  

Conduct of Business and Maintenance

of Existence.  The Issuer

will not engage in any business activity other than as required or contemplated

hereunder and under the other Transaction Documents, or such other activities

that are necessary, suitable or desirable to accomplish the foregoing or are

incidental thereto.  The Issuer will

preserve, renew and keep in full force and effect its limited liability company

existence and rights, privileges and franchises necessary or desirable in the

normal conduct of business.

 

SECTION 3.13.  

Amendment of Transaction Documents.  The Issuer will not agree or consent to any

amendment, modification or waiver of any provision of any Transaction

 

21

 

Document (other than this Indenture and the Notes, amendments and

modifications of which shall be governed by Article IX), without (x) the

consent of the Indenture Trustee acting at the written direction of the

Majority Holders and (y) the Rating Agency Condition having been satisfied

with respect to such amendment, modification or waiver; provided, that the

Issuer may agree to any amendment, waiver or modification of any such provision

of any Transaction Document without any such consent or confirmation as

follows:

 

(a)                                  to

add to the covenants of the Issuer for the benefit of the Noteholders or

surrender for the benefit of the Noteholders any right or power conferred upon

the Issuer; or to add to the covenants of IP Holder, the Servicer for the

benefit of the Issuer or surrender for the benefit of the Issuer any right or

power conferred upon IP Holder or the Servicer;

 

(b)                                 to

cure any ambiguity or to correct or supplement any provision contained in the

Transaction Documents, which may be defective or inconsistent with any other

provision contained therein or in any of the Transaction Documents; or

 

(c)                                  to

make such other provisions in regard to matters or questions arising under the

Transaction Documents as the parties thereto may deem necessary or desirable,

which are not inconsistent with the provisions thereof and which shall not

materially and adversely affect the interests of the Noteholders; provided,

however, that if requested by the Indenture Trustee or the Majority

Holders, an Opinion of Counsel shall be addressed and delivered to the

Indenture Trustee opining that such amendment, waiver or modification does not

materially and adversely affect the rights of the Noteholders under this Indenture.

 

SECTION 3.14.  

Restrictions on Certain Actions.  The Issuer will not take, or knowingly

permit to be taken, any action which would terminate or discharge or prejudice

the validity or effectiveness of any of the Transaction Documents or the

validity, effectiveness or priority of the Liens created thereby or permit any

party to any of the Transaction Documents whose obligations form part of the

security created by this Indenture to be released from such obligations.

 

SECTION 3.15.  

Notices; Information.  (a)  The Issuer agrees to give the Indenture

Trustee and each Rating Agency, as soon as it receives notice thereof, prompt

written notice of each Trapping Event, Rapid Amortization Event and Event of

Default hereunder, of a Servicer Default and the existence of any Lien (other

than Permitted Liens) imposed on any of the Indenture Collateral.

 

(b)                                 The

Issuer will at all times give to the Indenture Trustee such information as the

Indenture Trustee may reasonably require for the purpose of the discharge of

the trusts, powers, rights, duties, authorities and discretions vested in it

hereunder, or under any other Transaction Document or by operation of law.  Additionally, the Issuer will promptly

deliver to the Indenture Trustee any notices, opinions of counsel, financial

statements, officers’ certificates or other forms of communication that it

receives pursuant to the terms of the Related Contracts.

 

(c)                                  The

Issuer will take, or will cause Guess? to take, all action necessary to provide

information to permit resales of the Notes pursuant to Rule 144A under the

Securities Act, including furnishing to any Noteholder or owner of a beneficial

interest in a Note, or to any

 

22

 

prospective purchaser designated by such Noteholder or owner, upon

request of such Noteholder or owner, financial and other information required

to be delivered under paragraph (d)(4) of Rule 144A (as amended from time to

time and including any successor provision) unless, at the time of such request,

the Issuer is subject to the reporting requirements of Section 13 or

Section 15(d) of the Exchange Act or is exempt from such requirements

pursuant to Rule 12g3-2(b) under the Exchange Act (as amended from time to time

and including any successor provision).

 

SECTION 3.16.  

Separate Existence.  The Issuer

shall comply with all of the covenants and agreements set forth in its

operating agreement, including those to:

 

(a)                                  maintain

its own deposit account or accounts, separate from those of any Affiliate, with

commercial banking institutions and ensure that the funds of the Issuer will

not be diverted to any other Person or for other than organizational uses of

the Issuer, nor will such funds be commingled with the funds of IP Holder or

any other Subsidiary or Affiliate of IP Holder;

 

(b)                                 to

the extent that it shares the same officers or other employees as any of its

members or Affiliates, ensure that the salaries of and the expenses related to

providing benefits to such officers and other employees shall be fairly

allocated among such entities, and ensure that each such entity shall bear its

fair share of the salary and benefit costs associated with all such common

officers and employees;

 

(c)                                  to

the extent that it jointly contracts with any of its members or Affiliates to

do business with vendors or service providers or to share overhead expenses,

ensure that the costs incurred in so doing shall be allocated fairly among such

entities, and ensure that each such entity shall bear its fair share of such costs.  To the extent that the Issuer contracts or

does business with vendors or service providers where the goods and services

provided are partially for the benefit of any other Person, the costs incurred

in so doing shall be fairly allocated to or among such entities for whose

benefit the goods or services are provided, and each such entity shall bear its

fair share of such costs.  All material

transactions between the Issuer and any of its Affiliates, whether currently

existing or hereafter entered into, shall be only on terms negotiated at an

arm’s length basis, it being understood and agreed that the transactions

contemplated in the Transaction Documents meet the requirements of this clause

(c);

 

(d)                                 maintain

office space separate from the office space of Guess? and its Affiliates (but

which may be located at the same address as Guess? and its Affiliates); provided,

that segregated offices in the same building shall constitute separate

addresses for purposes of this clause (d). 

To the extent that the Issuer and any of its members or Affiliates have

offices in the same location, there shall be a fair and appropriate allocation

of overhead costs among them, and each such entity shall bear its fair share of

such expenses;

 

(e)                                  conduct

its affairs in its own name and strictly in accordance with its organizational

documents and observe all necessary, appropriate and customary organizational

formalities, including, but not limited to, holding all regular and special

members’ and managers’ meetings appropriate to authorize all organizational

action, keeping separate and accurate minutes of its meetings, passing all

resolutions or consents necessary to authorize actions taken

 

23

 

or to be taken, and maintaining accurate and separate books, records

and accounts, including, but not limited to, payroll and intercompany

transaction accounts;

 

(f)                                    not

assume or guarantee any of the liabilities of IP Holder, the Servicer or any

Affiliate of any thereof; and

 

(g)                                 take,

or refrain from taking, as the case may be, all other actions that are

necessary to be taken or not to be taken in order to (i) ensure that the

assumptions and factual recitations set forth in the Bankruptcy Opinion remain

true and correct in all material respects with respect to the Issuer and (ii)

comply with those procedures described in such provisions which are applicable

to the Issuer.

 

SECTION 3.17.  

Further Instruments and Acts. 

Upon request of the Indenture Trustee, the Issuer will execute and deliver

such further instruments and do such further acts as may be reasonably

necessary or proper to carry out more effectively the purpose of this

Indenture.

 

SECTION 3.18.  

Issuer Representations.

 

(a)                                  The

execution, delivery and performance of this Indenture in accordance with its

terms and the consummation of the transactions contemplated hereby by the

Issuer do not and will not (i) require the consent or approval of any Person,

except for such consents and approvals as have already been obtained and (ii)

violate any applicable laws.

 

(b)                                 The

Issuer is not required to obtain any consent, approval, authorization, permit

or license from, or effect any filing or registration with any Governmental

Authority in connection with the execution, delivery and performance of this

Indenture in accordance with its terms other than filings intended to perfect

the security interest granted hereunder.

 

(c)                                  As

of the date hereof, the Issuer is organized under the laws of the State of

Delaware.

 

(d)                                 Reference

is made to the representations and warranties of IP Holder set forth in

Section 4.3 of the Receivables Contribution Agreement.  The Issuer hereby adopts as its own and

confirms the accuracy as of the date hereof, being deemed to restate here to

the same extent as if set forth in full herein, all such representations and

warranties to the Indenture Trustee for the benefit of the Noteholders.

 

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) Section 3.3, (v) the rights, obligations and immunities of the

Indenture Trustee hereunder (including the rights of

 

24

 

the Indenture Trustee under Section 6.7 and the obligations of the

Indenture Trustee under Section 4.2) and (vi) the rights of Noteholders as

beneficiaries hereof with respect to the property deposited with the Indenture

Trustee payable to all or any of them, and the Indenture Trustee, on demand of

and at the expense of the Issuer, shall execute proper instruments

acknowledging satisfaction and discharge of this Indenture with respect to the

Notes, when

 

(a)                                  either

 

(i)                                     all Notes

theretofore authenticated and delivered (other than (x) Notes that have been

destroyed, lost or stolen and that have been replaced or paid as provided in

Section 2. 5 and (y) Notes for whose payment money has theretofore been

deposited in trust or segregated and held in trust by the Issuer and thereafter

repaid to the Issuer or discharged from such trust, as provided in

Section 3.3) have been delivered to the Indenture Trustee for cancellation

and been paid in full; or

 

(ii)                                  all Notes not

theretofore delivered to the Indenture Trustee for cancellation have become due

and payable,

 

and the

Issuer, in the case of Section 4.1(a)(ii) 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, 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 and for the purposes of Sections 3.6 and 3.10 such

cash or direct obligations of or obligations guaranteed by the United States shall

thereafter be deemed the Indenture Collateral;

 

(b)                                 the

Issuer has paid or caused to be paid all other sums payable hereunder by the

Issuer; and

 

(c)                                  the

Issuer has delivered to the Indenture Trustee an Officer’s Certificate and an

Opinion of Counsel and each meeting the applicable requirements of

Section 11.1 and each stating that all conditions precedent herein

provided for relating to the satisfaction and discharge of this Indenture have

been complied with.

 

SECTION 4.2.  

Application of Trust Money.  All

moneys deposited with the Indenture Trustee pursuant to Section 4.1 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 Noteholders for the

payment or redemption of which such moneys have been deposited with the

Indenture Trustee, of all sums due and to become due thereon for principal and

interest.

 

SECTION 4.3.  

Repayment of Moneys Held by Paying Agent.  In connection with the satisfaction and discharge of this

Indenture with respect to the Notes, all moneys then held by any Paying Agent

other than the Indenture Trustee under the provisions of this Indenture with

respect to such Notes shall, upon demand of the Issuer, be paid to the

Indenture Trustee to be held and applied according to Section 3.3 and

thereupon such Paying Agent shall be released from all further liability with

respect to such moneys.

 

25

 

ARTICLE V

 

REMEDIES

 

SECTION 5.1.  

Rapid Amortization Events.  If any one of the following events shall

occur (each a “Rapid Amortization Event”):

 

(a)                                  on any Payment Date, (i) the Historical

Coverage Ratio as of the preceding Determination Date is less than 110% or (ii)

the Prospective Coverage Ratio as of the preceding Determination Date is less

than 107.5%;

 

(b)                                 a

Servicer Default shall have occurred; or

 

(c)                                  an

Event of Default shall have occurred;

 

then, a Rapid Amortization Event shall occur,

without giving of further notice or any other action on the part of the

Indenture Trustee or any Holder, immediately upon occurrence of such event.

 

SECTION 5.2.  

Events of Default.  “Event of

Default”, wherever used herein, means the occurrence and continuance of 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):

 

(a)                                  the

Issuer shall amend its organizational documents without the written consent of

the Majority Holders and confirmation by each Rating Agency that the Rating

Agency Condition is satisfied;

 

(b)                                 the

Issuer shall fail to pay (i) any principal of any Note on the Maturity Date; or

(ii) any interest in accordance with the terms hereof, and such failure to pay

such interest shall continue for a period of five (5) Business Days;

 

(c)                                  any

representation or warranty made or deemed made by the Issuer herein or in any

other Transaction Document or that is contained in any certificate, document or

financial or other statement furnished by it at any time under or in connection

with this Indenture or any such other Transaction Document shall prove to have

been inaccurate in any material respect on or as of the date made or deemed

made, and shall, at the time of such determination, have a Material Adverse

Effect, and such inaccuracy, if curable, is not cured within twenty (20)

Business Days after the earlier of (1) any Responsible Officer of IP Holder

becoming aware thereof or (2) notice to the Issuer from the Indenture Trustee

(or to the Issuer and Indenture Trustee from the Holders of not less than 25% of

the Outstanding Principal Balance of the Notes Outstanding);

 

(d)                                 the

Issuer shall default in the observance and performance of any agreement (i)

contained in Section 3.10(c) and such default shall continue unremedied

for a period of five (5) Business Days or (ii) contained in this Indenture or

any other Transaction Document (other than as provided in this Section), and,

if curable, such default shall continue

 

26

 

unremedied for a period of twenty (20) Business Days after the earlier

of (1) any Responsible Officer of IP Holder becoming aware thereof or (2)

notice to the Issuer from the Indenture Trustee (or to the Issuer and Indenture

Trustee from the Holders of not less than 25% of the Outstanding Principal

Balance of the Notes Outstanding);

 

(e)                                  a

Servicer Default shall have occurred and shall be continuing and a Successor

Servicer shall not have been appointed under the Servicing Agreement within a

period of thirty (30) days following the occurrence of any such Servicer

Default;

 

(f)                                    on

any Payment Date, (i) the Historical Coverage Ratio as of the preceding

Determination Date is less than 100% or (ii) the Prospective Coverage Ratio as

of the preceding Determination Date is less than 100%;

 

(g)                                 a

Change of Control shall have occurred and, if curable, such default shall

continue unremedied for a period of twenty (20) Business Days following the

occurrence of such Change of Control;

 

(h)                                 an

Insolvency Event shall have occurred with respect to the Issuer, IP Holder or

Guess?

 

(i)                                     (A)

the transfer of the Guess? Contributed IP or the Licensing Contributed License

Agreements to IP Holder pursuant to the Guess? Contribution Agreement and

Licensing Contribution Agreement shall fail to constitute a valid transfer of

ownership of all such property, and all proceeds thereof, to IP Holder; (B) IP

Holder shall fail to have good title to the Guarantee Collateral, free and

clear of all prior Liens, other than the Permitted Liens; or (C) the

Receivables Contribution Agreement shall cease to create for the Issuer the

enforceable right to require IP Holder to sell the Royalty Receivables to the

extent provided thereto, in each case to the extent such event would have a

Material Adverse Effect and, if curable, is not cured within fifteen (15)

Business Days of the earlier of (1) any Responsible Officer of IP Holder

becoming aware thereof or (2) notice to the Issuer from the Indenture Trustee

(or to the Issuer and Indenture Trustee from the Holders of not less than 25%

of the Outstanding Principal Balance of the Notes Outstanding);

 

(j)                                     the

Issuer shall fail to have a valid security interest in all Collateral conveyed

or pledged under the Receivables Contribution Agreement, whether existing on

the Closing Date or thereafter created, subject only to the Permitted Liens, to

the extent such event would have a Material Adverse Effect and, if curable, is

not cured within fifteen (15) Business Days of the earlier of (1) any

Responsible Officer of IP Holder becoming aware thereof or (2) notice to the

Issuer from the Indenture Trustee (or to the Issuer and Indenture Trustee from

the Holders of not less than 25% of the Outstanding Principal Balance of the

Notes Outstanding);

 

(k)                                  the

Grant of the security interest in the Indenture Collateral pursuant to this

Indenture or the Guarantee Collateral pursuant to the Guarantee shall cease,

for any reason, to be in full force and effect, or the Issuer or IP Holder or

any Affiliate of either of them shall so assert, or any lien created by this

Indenture or the Guarantee shall cease to be enforceable and of the same effect

and priority purported to be created thereby, in each case to the extent such

event would have a Material Adverse Effect and, if curable, is not cured within

fifteen (15) Business Days of the earlier of (1) any Responsible Officer of IP

Holder becoming aware thereof or (2)

 

27

 

notice to the Issuer from the Indenture Trustee (or to the Issuer and

Indenture Trustee from the Holders of not less than 25% of the Outstanding

Principal Balance of the Notes Outstanding); and

 

(l)                                     any

representation or warranty made or deemed made by the Guarantor in the

Guarantee or that is contained in any certificate, document or financial or

other statement furnished by it at any time under or in connection with the

Guarantee shall prove to have been inaccurate in any material respect on or as

of the date made or deemed made, and shall, at the time of such determination,

have a Material Adverse Effect, and such inaccuracy, if curable, is not cured

within twenty (20) Business Days after the earlier of (1) any Responsible

Officer of IP Holder becoming aware thereof or (2) notice to the Guarantor from

the Indenture Trustee (or to the Guarantor and Indenture Trustee from the

Holders of not less than 25% of the Outstanding Principal Balance of the Notes

Outstanding);

 

(m)                               the

Guarantor shall default in the observance or performance of any agreement

contained in the Guarantee, and, if curable, such default shall continue

unremedied for a period of twenty (20) Business Days after the earlier of (1)

any Responsible Officer of IP Holder becoming aware thereof or (2) notice to

the Guarantor from the Indenture Trustee (or to the Guarantor and the Indenture

Trustee from the Holders of not less than 25% of the Outstanding Principal

Balance of the Notes Outstanding); and

 

(n)                                 a

final judgment or order for the payment of money shall be rendered against IP

Holder or the Issuer, and such judgment or order is in an amount which, when aggregated

with the amount of other unsatisfied final judgments or orders against IP

Holder and the Issuer, exceeds $250,000 and either; (i) such judgment or order

is not discharged within the period of 30 days after entry thereof or (ii)

there shall be any period of 30 consecutive days during which a stay of

enforcement of such judgment or order shall not be in effect.

 

The Issuer

hereby grants to the Indenture Trustee for the benefit of the Noteholders an

irrevocable power of attorney to prepare, execute and deliver on behalf of the

Issuer, in the name of the Issuer or in the name of the Indenture Trustee for

the benefit of the Noteholders, any and all agreements, certifications,

statements, filings or other documents necessary and appropriate to cure any of

the above-mentioned breaches of representations, warranties and covenants, to

the extent curable, without any requirement that the Indenture Trustee obtain

any consent from or give prior notice thereof to the Issuer in connection with

its preparation, execution or delivery thereof.

 

SECTION 5.3.  

Rights Upon Event of Default; Notice; Rescission and Annulment.  If an Event of Default referred to in clause

(h) of Section 5.2 has occurred with respect to IP Holder or the Issuer or

an Enforcement Event shall have occured, the unpaid principal amount of the

Notes, together with interest accrued but unpaid thereon, and all other amounts

due to the Noteholders under this Indenture, shall immediately and without

further act become due and payable.  If

any other Event of Default shall occur and be continuing, then and in every

such case the Indenture Trustee or the Majority Holders may declare all the

Notes to be immediately due and payable, by a notice in writing to the Issuer

(and to the Indenture Trustee if given by the Noteholders), and upon any such

declaration the unpaid principal amount of such Notes, together with accrued

and unpaid interest thereon through the date of acceleration, shall

 

28

 

become immediately due and payable. 

In connection with any acceleration of the Notes other than in

connection with (i) an Event of Default specified in Section 5.2(b), (e)

or (f), or (ii) an Enforcement Event relating to any such Events of Default, in

addition to all other amounts then due and owing on the Notes, an Acceleration

Premium also will be immediately due and payable on all Notes, and will

constitute an Issuer Obligation secured by the lien of this Indenture and

comprising a payment obligation under the Guarantee.

 

Promptly

following its receipt of written notice hereunder of any Event of Default, the

Indenture Trustee shall send a copy thereof to the Issuer, the Servicer, each

Rating Agency, the Back-Up Manager and each Noteholder.

 

At any time

after such a declaration of acceleration with respect to the Notes 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 Majority Holders, by written notice to the Issuer and the Indenture

Trustee, may rescind and annul such declaration and its consequences (including

the imposition of any Acceleration Premium) if all existing Events of Default,

other than the non-payment of the principal of the Notes which have become due

solely by such declaration of acceleration, have been cured or waived as

provided in Section 5.14.  No such

rescission shall affect any subsequent default or impair any right consequent

thereon.

 

SECTION 5.4.  

Collection of Indebtedness and Suits for Enforcement by Indenture Trustee;

Authority of Indenture Trustee. 

(a)  The Issuer covenants that if

(i) default is made in the payment of any interest on the Notes when the same

becomes due and payable, (ii) the Notes are accelerated following the occurrence

of an Event of Default or (iii) default is made in the payment of the principal

of the Notes on the Maturity Date, the Issuer will, to the extent of funds

available, upon demand of the Indenture Trustee, pay to it, for the benefit of

the Noteholders, the whole amount then due and payable on the Notes for

principal and interest, and, to the extent payment at such rate of interest

shall be legally enforceable, upon overdue installments of interest, at the

Interest Rate and the Default Rate, as applicable, and in addition thereto such

further amount as shall be sufficient to cover 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 Issuer 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 Issuer and collect in the manner provided by law out of the

property of the Issuer, wherever situated, the moneys adjudged or decreed to be

payable, in each case subject to Section 5.5.

 

(c)                                  If

an Event of Default occurs and is continuing, the Indenture Trustee may, as

more particularly provided in, and subject to the limitations of,

Section 5.5, 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

 

29

 

proper remedy or legal or equitable right vested in the Indenture

Trustee by this Indenture or by law, in each case subject to the limitations

specified in Section 5.5.

 

(d)                                 In

case there shall be pending, relative to the Issuer or any Person having or

claiming an ownership interest in the Indenture Collateral, Proceedings under

Title 11 of the United States Code or any other federal or state bankruptcy,

insolvency or other similar law, or in case a receiver, assignee or trustee in

bankruptcy or reorganization, liquidator, sequestrator or similar official

shall have been appointed for or taken possession of the Issuer or its property

or such Person, or in case of any other comparable judicial Proceedings

relative to the Issuer, or to the creditors or property of the Issuer, the

Indenture Trustee, irrespective of whether the principal of any amounts owing

hereunder shall then be due and payable as therein expressed or by declaration

or otherwise and irrespective of whether the Indenture Trustee shall have made

any demand pursuant to the provisions of this Section, shall be entitled and

empowered, by intervention in such Proceedings or otherwise:

 

(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;

 

(ii)                                  unless prohibited by

applicable law and regulations, to vote on behalf of the Noteholders in any

election of a trustee, a standby trustee or Person performing similar functions

in any such Proceedings;

 

(iii)                               to collect and receive

any moneys or other property payable or deliverable on any such claims and to

distribute all amounts received with respect to the claims of the Noteholders

and of the Indenture Trustee on their behalf; and

 

(iv)                              to file such proofs of

claim and other papers or documents as may be necessary or advisable in order

to have the claims of the Indenture Trustee or the Noteholders allowed in any

judicial proceedings relative to the Issuer, its creditors and its property;

 

and

any trustee, receiver, liquidator, custodian or other similar official in any

such Proceeding is hereby authorized by each of such Noteholders to make

payments to the Indenture Trustee, and, in the event that the Indenture Trustee

shall consent to the making of payments directly to such Noteholders, to pay to

the Indenture Trustee such amounts as shall be sufficient to cover reasonable

compensation to the Indenture Trustee, each predecessor Indenture Trustee and

their respective agents, attorneys and counsel, and all other expenses and

liabilities incurred, and all advances made, by the Indenture Trustee and each

predecessor Indenture Trustee except as a result of negligence or bad faith.

 

30

 

(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 compensation

affecting the Notes or the rights of any Noteholder 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 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 benefit of the

Noteholders.

 

(g)                                 In

any Proceedings brought by the Indenture Trustee (including any Proceedings

involving the interpretation of any provision of this Indenture), the Indenture

Trustee shall be held to represent all of the Noteholders, and it shall not be

necessary to make any Noteholder a party to any such Proceedings.

 

SECTION 5.5.  

Remedies.  If an Event of Default

shall have occurred and be continuing and the Notes have been accelerated under

Section 5.3, the Indenture Trustee (subject to Section 5.6 of this

Indenture, Sections 4.02(c) of the Guess? License Agreement, Sections 2.02(d)

and 6.03(f) of the Servicing Agreement, Section 5.2(d) of the Receivables

Contribution Agreement, and Section 6.6 of the Guarantee) may do one or

more of the following:

 

(a)                                  institute

Proceedings in its own name and as or on behalf of a trustee of an express trust

for the collection of all amounts then payable on the Notes or under this

Indenture with respect thereto, whether by declaration or otherwise, enforce

any judgment obtained, and collect from the Issuer and any other obligor upon

such Notes moneys adjudged due;

 

(b)                                 institute

Proceedings from time to time for the complete or partial foreclosure of this

Indenture with respect to the Indenture Collateral;

 

(c)                                  exercise

any remedies of a secured party under applicable law and any other remedy

available to the Indenture Trustee and take any other appropriate action to

protect and enforce the rights and remedies of the Indenture Trustee on behalf

of the Noteholders under this Indenture or the Notes; and

 

(d)                                 direct

the Issuer to sell the Indenture Collateral or any portion thereof or rights or

interest therein, at one or more public or private sales called and conducted

in any manner permitted by law;

 

provided

that upon any acceleration of the Notes, the Indenture Trustee will instruct

the Back-Up Manager to commence performance of the Liquidation Services

specified in the Back-Up Management Agreement, and in particular, to seek

valuations of the Indenture Collateral and Guarantee Collateral for the purpose

of instructing the Indenture Trustee to Downstream and/or liquidate all or any

part of the Indenture Collateral or Guarantee Collateral in order to satisfy

the

 

31

 

Issuer’s Obligations; and provided,

further, that the Indenture Trustee may act upon the instruction of the

Back-Up Manager with respect to all determinations as to the appropriateness of

any Downstreaming or liquidation plan with respect to the Indenture Collateral

or Guarantee Collateral, except that the Indenture Trustee shall not sell or

otherwise liquidate the Indenture Collateral pursuant to the exercise of its

rights under this Section if (i) it has determined (or been instructed by

the Back-Up Manager) that the proceeds thereof would not be sufficient to pay

in full 100% of the outstanding principal of, accrued interest on and any

Acceleration Premium due on all Notes in connection with such acceleration of

the Notes unless the Indenture Trustee obtains the consent of holders of 100%

of the principal amount of all Outstanding Notes (after such Noteholders have

given Paul Marciano and Maurice Marciano a reasonable opportunity to express

their views of the appropriateness or reasonableness of various possible

remedies, including Downstreaming, provided that the Noteholders shall be under

no obligation whatsoever to follow such views), or if (ii) it has determined

(or been instructed by the Back-Up Manager) that the proceeds thereof would be

sufficient to pay in full 100% of the outstanding principal of, accrued

interest on and any Acceleration Premium due on all Notes in connection with

such acceleration of the Notes, unless the Indenture Trustee obtains the

consent of the Majority Holders (after such Noteholders have given Paul

Marciano and Maurice Marciano a reasonable opportunity to express their views

of the appropriateness or reasonableness of various possible remedies including

Downstreaming, provided that the Noteholders shall be under no obligation

whatsoever to follow such views).  The

Majority Holders will be deemed to have consented to the sale or other

liquidation of the Indenture Collateral pursuant to clause (ii) of the prior

sentence if Majority Holders either vote in favor of such action or fail to

vote with respect to such action within 30 Business Days of receipt of the

notice seeking consent from the Indenture Trustee.  In determining such sufficiency or insufficiency, the Indenture

Trustee will 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 Indenture Collateral for such

purpose.

 

SECTION 5.6.  

Optional Preservation of the Indenture Collateral.  If the Notes have been declared to be due

and payable under Section 5.3 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

Indenture Collateral.  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

to maintain possession of the Indenture Collateral.  In determining whether to maintain possession of the Indenture

Collateral, 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 Indenture Collateral for such purpose.

 

SECTION 5.7.  

Priorities.  (a)  If the Indenture Trustee collects any money

pursuant to Section 5.5 (which money shall be deposited in the

Distribution Account) or property upon the sale or other disposition of the

Indenture Collateral following the occurrence of an Event of Default, it shall

pay out or cause to be paid from the proceeds of such sale or other disposition

(net of any amounts due to the Indenture Trustee under Section 6.7) in the

following order of priority:

 

32

 

(i)                                     to the Servicer,

any unpaid Servicer Advance Reimbursement Amounts;

 

(ii)                                  to the Indenture

Trustee, any unpaid Indenture Trustee Fees and expenses;

 

(iii)                               to the Back-Up Manager,

any unpaid Standby Fees;

 

(iv)                              to the Servicer, any

accrued and unpaid Servicing Fees;

 

(v)                                 to the Noteholders,

the aggregate amount of all accrued but unpaid interest to the date of

distribution on the Notes;

 

(vi)                              to the Noteholders, the

outstanding principal amount of the Notes;

 

(vii)                           to the Noteholders, any

Acceleration Premium payable on the Notes;

 

(viii)                        if, after giving effect to the

application of amounts referred to in clauses (i) through (vii) of this

Section, the outstanding principal amount of the Notes and all interest in

respect thereof have been paid in full, to the Issuer, any remaining amounts,

free and clear of the Lien created by this Indenture.

 

(b)                                 The

Issuer may fix a record date and payment date for any payment to Noteholders

pursuant to this Section.  At least 15

days before such record date, the Issuer shall mail to each Noteholder and the

Indenture Trustee a notice that states the record date, the payment date and

the amount to be paid.

 

SECTION 5.8.  

Limitation of Suits.  No

Noteholder shall have any right to institute any Proceeding, judicial or

otherwise, with respect to this Indenture, or for the appointment of a receiver

or trustee, or for any other remedy hereunder, unless:

 

(a)                                  such

Noteholder has previously given written notice to the Indenture Trustee of a

continuing Event of Default;

 

(b)                                 the

Noteholders of not less than 25% of the outstanding principal 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;

 

(c)                                  such

Noteholder or Noteholders have offered to the Indenture Trustee indemnity

reasonably satisfactory to it against the costs, expenses and liabilities to be

incurred in complying with such request;

 

(d)                                 the

Indenture Trustee for 60 days after its receipt of such notice, request and

offer of indemnity has failed to institute such Proceedings; and

 

(e)                                  no

direction inconsistent with such written request has been given to the Indenture

Trustee during such 60-day period by the Majority Holders.

 

33

 

It is understood and intended

that no one or more Noteholders shall have any right in any manner whatever by

virtue of, or by availing of, any provision of this Indenture to affect,

disturb or prejudice the rights of any other Noteholder or to obtain or to seek

to obtain priority or preference over any other Noteholder or to enforce any

right under this Indenture or to take any actions in violation of

Section 6.6 of the Guarantee, except in the manner herein provided.

 

If 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 principal 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 5.9.  

Unconditional Rights of Noteholders to Receive Principal and Interest.  Notwithstanding any other provisions in this

Indenture, each Noteholder shall have the right, which is absolute and

unconditional, to receive payment of the principal of and interest on the Notes

held by it on or after the respective due dates thereof expressed herein or in

the Note held by such holder or in this Indenture and, subject to the terms

hereof, to institute suit for the enforcement of any such payment, and such

right shall not be impaired without the consent of such Noteholder.

 

SECTION 5.10.  

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

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 5.11.  

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

remedy hereunder, or otherwise, shall not prevent the concurrent assertion or

employment of any other appropriate right or remedy.

 

SECTION 5.12.  

Delay or Omission Not a Waiver. 

No delay or omission of the Indenture Trustee or any Noteholder to

exercise any right or remedy accruing upon any Default or Event of Default

shall impair any such right or remedy or constitute a waiver of any such

Default or Event of Default or an acquiescence therein.  Every right and remedy given by this Article

V or by law to the Indenture Trustee 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 5.13.  

Control by Noteholders.  The

Majority Holders shall have the right to direct the time, method and place of

conducting any proceeding for any remedy available

 

34

 

to the Indenture Trustee with respect to the Notes or exercising any

trust or power conferred on the Indenture Trustee; provided that

 

(a)                                  such

direction shall not be in conflict with any rule of law or with this Indenture;

 

(b)                                 subject

to the terms of Section 5.5 which may limit such right as set forth in

such Section;

 

(c)                                  if

the conditions set forth in Section 5.6 have been satisfied and the

Indenture Trustee elects to retain the Indenture Collateral pursuant to such Section,

then any direction to the Indenture Trustee by Holders of Notes representing

less than 100% of the principal amount of the Notes Outstanding shall be of no

force and effect;

 

(d)                                 the

Indenture Trustee may take any other action deemed proper by the Indenture

Trustee that is not inconsistent with such direction; and

 

(e)                                  such

direction shall be in writing;

 

provided,  further, 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 Note Owner not consenting to such action.

 

SECTION 5.14.  

Waiver of Past Defaults.  Prior

to the declaration of the acceleration of the maturity of the Notes as provided

in Section 5.3, the Majority Holders may, on behalf of all Noteholders,

waive any past Default or Event of Default and its consequences except a

Default (a) in payment of principal at maturity or interest on any of the Notes

or (b) in respect of a covenant or provision hereof which cannot be modified or

amended without the consent of the Registered Holder of each Note.  In the case of any such waiver, the Issuer,

the Indenture Trustee and the Noteholders shall be restored to their former

positions and rights hereunder, respectively; but no such waiver shall extend

to any subsequent or other Default or impair any right consequent thereto.  Upon any such waiver, such Event of Default

shall cease to exist and be deemed to have been cured and not to have occurred,

for every purpose of this Indenture. 

The Issuer shall give prompt written notice of any waiver to the Rating

Agencies.

 

SECTION 5.15.  

Undertaking for Costs.  All

parties to this Indenture agree, and each Holder of a Note by such Noteholder’s

acceptance thereof shall be deemed to have agreed, that any court may in its

discretion require, in any suit for the enforcement of any right or remedy

under this Indenture, or in any suit against the Indenture Trustee for any

action taken, suffered or omitted by it as Indenture Trustee, the filing by any

party litigant in such suit of an undertaking to pay the costs of such suit and

that such court may in its discretion assess reasonable costs, including

reasonable attorneys’ fees, against any party litigant in such suit, having due

regard to the merits and good faith of the claims or defenses made by such

party litigant; but the provisions of this Section shall not apply to (i)

any suit instituted by the Indenture Trustee, (ii) any suit instituted by any

Noteholder, or group of Noteholders, in each case holding in the aggregate more

than 10% of the outstanding principal amount of the Notes or (iii) any suit

instituted by any Noteholder for the enforcement of the payment of principal of

or

 

35

 

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 5.16.  

Waiver of Stay or Extension Laws. 

The Issuer covenants (to the extent that it may lawfully do so) that it

will not at any time insist upon, or plead, or in any manner whatsoever claim

or take the benefit or advantage of, any stay or extension law wherever

enacted, now or at any time hereafter in force, that may affect the covenants

or the performance of this Indenture; and the Issuer (to the extent that it may

lawfully do so) hereby expressly waives all benefit or advantages 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 5.17.  

Action on Notes.  The Indenture

Trustee’s right to seek and recover judgment on the Notes or under this

Indenture shall not be affected by the seeking, obtaining or application of any

other relief under or with respect to this Indenture.  Neither the Lien of this Indenture nor any rights or remedies of

the Indenture Trustee or the Noteholders shall be impaired by the recovery of

any judgment by the Indenture Trustee against the Issuer or by the levy of any

execution under such judgment upon any portion of the Indenture Collateral or

upon any of the assets of the Issuer. 

Any money or property collected by the Indenture Trustee shall be

applied in accordance with Section 5.7.

 

ARTICLE VI

 

THE INDENTURE TRUSTEE

 

SECTION 6.1.  

Duties of 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 the Transaction Documents 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:

 

(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 or the other Transaction

Documents 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 factual 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; however, the Indenture

Trustee shall examine the certificates and opinions to determine whether or not

they conform to the requirements of this Indenture and the other Transaction

Documents to which the Indenture Trustee is a party, and shall review each

Quarterly Servicer’s Report in accordance with Section 2.14.

 

36

 

(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 paragraph

does not limit the effect of Section 6.1(b);

 

(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; and

 

(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

Section 5.13.

 

(d)                                 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 Issuer.

 

(e)                                  Money

held in trust by the Indenture Trustee need not be segregated from other funds

except to the extent required by law or the terms of this Indenture or the

Servicing Agreement.

 

(f)                                    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 repayments of such funds or

adequate indemnity against such risk or liability is not reasonably assured to

it.

 

(g)                                 The

Indenture Trustee shall have no duties other than those explicitly set forth in

this Indenture or the other Transaction Documents, and no permissive right

hereunder shall be construed as a duty.

 

(h)                                 The

Indenture Trustee shall not be charged with knowledge of an Event of Default

until such time as a Responsible Officer shall have actual knowledge or have

received written notice thereof.

 

SECTION 6.2.  

Rights of Indenture Trustee. 

(a)  The Indenture Trustee may

conclusively rely and shall be fully protected in acting or refraining from

acting upon any resolution, statement, instrument, opinion, report, notice,

request, consent, order, approval or other paper or document 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 the document or confirm or verify the accuracy of

any information or calculations contained therein.

 

(b)                                 Before

the Indenture Trustee acts or refrains from acting, it may require an Officer’s

Certificate (with respect to factual matters) or an Opinion of Counsel, as

applicable. The Indenture Trustee shall not be liable for any action it takes

or omits to take in good faith in reliance on such Officer’s Certificate or

Opinion of Counsel.

 

37

 

(c)                                  The

Indenture Trustee may execute any of the trusts or powers hereunder or perform

any duties hereunder or under the other Transaction Documents either directly

or by or through agents or attorneys or a custodian or 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 hereunder.  The Indenture Trustee shall have no duty to monitor the

performance of the Issuer or the Servicer.

 

(d)                                 The Indenture Trustee

shall not be liable for any action it takes or omits to take in good faith

which it believes to be authorized or within 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, the other Transaction Documents 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)                                    Prior to the

occurrence of an Event of Default and after the curing or waiver of all Events

of Default that may have occurred, the Indenture Trustee shall not be bound to

make any investigation into the facts or matters stated in any resolution,

certificate, statement, instrument, opinion, report, notice, request, consent,

order, approval, bond, or other paper or document (other than with respect to

Quarterly Servicer’s Reports as provided in Section 2.14 of this

Indenture), unless requested in writing to do so by Noteholders of not less

than 25% of the Outstanding Principal Amount of the Notes; provided, however,

that if the payment within a reasonable time to the Indenture Trustee of the

costs, expenses, or liabilities likely to be incurred by it in the making of

such investigation shall be, in the opinion of the Indenture Trustee, not

reasonably assured to the Indenture Trustee by the security afforded to it by

the terms of this Indenture, the Indenture Trustee may require indemnity

reasonably satisfactory to it against such cost, expense, or liability or

payment of such expenses as a condition precedent to so proceeding; the

reasonable expense of every such investigation shall be paid by the Person

making such request, or, if paid by the Indenture Trustee, shall be reimbursed

by the Person making such request upon demand.

 

(g)                                 The Indenture Trustee

is hereby authorized to execute, deliver and perform those Transaction

Documents (other than this Indenture) to which it is a party.

 

SECTION 6.3.  

Individual Rights of Indenture Trustee. 

The Indenture Trustee in its individual or other capacity (and any

Paying Agent or Note Registrar) may not become the owner or pledgee of the

Notes.

 

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, the

Transaction Documents, the Indenture Collateral or the Notes.  The Indenture Trustee shall not be

accountable for the Issuer’s use of the proceeds from the Notes. The Indenture

Trustee shall not be responsible for any statement of the Issuer in this

Indenture or in any document

 

38

 

issued in connection with the sale of the Notes other than the

Indenture Trustee’s certificate of authentication.

 

SECTION 6.5.  

Notice of Defaults.  If an Event

of Default occurs and is continuing and if it is actually known to a

Responsible Officer, or written notice of the existence thereof has been

delivered to a Responsible Officer of the Indenture Trustee, the Indenture

Trustee shall mail to each Noteholder notice of the Event of Default within

thirty 30 days after such knowledge or notice occurs.

 

SECTION 6.6.  

Reports by Indenture Trustee to Noteholders.  Within the prescribed period of time for tax reporting purposes

after the end of each calendar year during the term of this Indenture, the

Indenture Trustee shall deliver to each Noteholder such information as may be

reasonably required to enable such Noteholder to prepare its United States

federal, state and local income or franchise tax returns for such calendar

year.

 

SECTION 6.7.  

Compensation and Indemnity.  The

Issuer shall pay to the Indenture Trustee from time to time such compensation

for its acceptance of this Indenture and services hereunder or under the other

Transaction Documents as the Issuer and the Indenture Trustee shall from time

to time agree in writing.  The Indenture

Trustee’s compensation shall not be limited by any law on compensation of a

trustee of an express trust.  The Issuer

shall reimburse the Indenture Trustee upon demand for all reasonable

out-of-pocket expenses incurred or made by it, including costs of collection,

costs of preparing and reviewing reports, certificates and other documents,

costs of preparation and mailing of notices to the Noteholders and reasonable costs

of counsel retained by the Indenture Trustee in connection with the delivery of

an Opinion of Counsel or otherwise, 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 Issuer shall indemnify the Indenture

Trustee in each of its capacities hereunder or under the other Transaction

Documents and its officers, directors, employees and agents, and hold them

harmless against any and all loss, liability, damage, claims or expense

(including attorneys’ fees and expenses) incurred by it without negligence or

bad faith on its part in connection with the administration of this trust and

the performance of its duties hereunder, including the costs and expenses of

enforcing this Indenture and of defending itself against any claims.  The Indenture Trustee shall notify the

Issuer promptly of any claim for which it may seek indemnity.  Failure by the Indenture Trustee to so

notify the Issuer shall not relieve the Issuer of its obligations

hereunder.  The Issuer shall defend any

such claim, and the Indenture Trustee may have separate counsel and the Issuer

shall pay the reasonable fees and expenses of such counsel, provided, that the

Issuer shall not be required to pay such fees and expenses if it assumes the

Indenture Trustee’s defense, and, in the reasonable judgment of outside counsel

to the Indenture Trustee, there is no conflict of interest between the Issuer

and the Indenture Trustee in connection with such defense. The right to conduct

the defense of any action against the Indenture Trustee shall include the right

to pursue any remedy of the Indenture Trustee against any other person on the

grounds of any act or omission which may have caused or contributed to, or

which would otherwise entitle the Indenture Trustee to hold such third party

liable for, any part of the matter for which the action is brought. The Issuer

need not 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.

 

39

 

To the extent

the Indenture Trustee renders services or incurs expenses after an Event of

Default specified in 5.2(h), the compensation for services and expenses

incurred by it are intended to constitute expenses of administration under any

applicable federal, state or foreign bankruptcy, insolvency or other similar

law now or hereafter in effect.

 

The Issuer’s

payment obligations to the Indenture Trustee pursuant to this

Section shall survive the discharge of this Indenture and the resignation

or removal of the Indenture Trustee.

 

SECTION 6.8.  

Replacement of Indenture Trustee. 

(a)  The Indenture Trustee may

give notice of its intent to resign at any time by so notifying the Issuer,

each Rating Agency and the Servicer. 

The Issuer shall remove the Indenture Trustee, in each case with notice

to the Servicer and each Rating Agency if:

 

(i)                                     the Indenture

Trustee fails to comply with Section 6.11;

 

(ii)                                  a court having

jurisdiction in the premises in respect of the Indenture Trustee in a case or

Proceeding under any Insolvency Laws shall have entered a decree or order

granting relief or appointing a receiver, liquidator, assignee, custodian,

trustee, conservator, sequestrator (or similar official) for the Indenture

Trustee or for any substantial part of the Indenture Trustee’s property, or

ordering the winding-up or liquidation of the Indenture Trustee’s affairs,

provided any such decree or order shall have continued unstayed and in effect

for a period of 30 consecutive days;

 

(iii)                               the Indenture Trustee

commences a voluntary Proceeding under any Insolvency Laws, or consents to the

appointment of or taking possession by a receiver, liquidator, assignee,

custodian, trustee, conservator, sequestrator or other similar official for the

Indenture Trustee or for any substantial part of the Indenture Trustee’s

property, or makes any assignment for the benefit of creditors or fails

generally to pay its debts as such debts become due or takes any corporate

action in furtherance of any of the foregoing; or

 

(iv)                              the Indenture Trustee

otherwise becomes incapable of acting as required by this Indenture.

 

(b)                                 If the Indenture

Trustee gives notice of its intent to resign or is removed or if a vacancy

exists in the office of the Indenture Trustee for any reason (the Indenture

Trustee in such event being referred to herein as the retiring Indenture

Trustee), the Issuer shall promptly appoint a successor Indenture Trustee.

 

(c)                                  A successor Indenture

Trustee shall deliver a written acceptance of its appointment to the retiring

Indenture Trustee and to the Issuer and thereupon the resignation or removal of

the Indenture Trustee shall become effective, and the successor Indenture

Trustee, without any further act, deed or conveyance 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 the Indenture Trustee to the successor Indenture Trustee.

 

40

 

(d)                                 If a successor

Indenture Trustee does not take office within 30 days after the retiring

Indenture Trustee gives notice of its intent to resign or is removed, the

retiring Indenture Trustee, the Issuer or the Majority Holders may petition any

court of competent jurisdiction for the appointment of a successor Indenture

Trustee.

 

(e)                                  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.

 

(f)                                    Any resignation or

removal of the Indenture Trustee and appointment of a successor Indenture

Trustee pursuant to any of the provisions of this Section shall not become

effective until acceptance of appointment by the successor Indenture Trustee

pursuant to Section 6.8(c) and payment of all fees and expenses owed to

the retiring Indenture Trustee.

 

(g)                                 Notwithstanding the

resignation or removal of the Indenture Trustee pursuant to this Section, the

Issuer’s obligations under Section 6.7 shall continue for the benefit of

the retiring Indenture Trustee.  The

retiring Indenture Trustee shall not be liable for the acts or omissions of any

successor 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; provided, that such corporation or banking association shall be

otherwise qualified and eligible under Section 6.11.  The Indenture Trustee shall provide the

Issuer, the Servicer and each Rating Agency prompt notice of any such

transaction.

 

In case at the

time such successor or successors by merger, conversion or consolidation to the

Indenture Trustee shall succeed to the trusts created by this Indenture any of

the Notes shall have been authenticated but not delivered, any such successor

to the Indenture Trustee may adopt the certificate of authentication of any

predecessor Indenture Trustee, and deliver such Notes so authenticated; and in

case at that time any of the Notes shall not have been authenticated, any

successor to the Indenture Trustee may authenticate such Notes either in the

name of any predecessor hereunder or in the name of the successor to the

Indenture Trustee; and in all such cases such certificate of authentication

shall have the full force which it is anywhere in the Notes or in this

Indenture provided that the certificate of authentication of the Indenture

Trustee shall have.

 

SECTION 6.10.  

Appointment of Co-Indenture Trustee or Separate Indenture Trustee.  (a) 

Notwithstanding any other provision of this Indenture, at any time, for

the purpose of meeting any legal requirement of any jurisdiction in which any

part of the Indenture Collateral 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 Persons to act as a co-trustee or co-trustees, jointly with

the Indenture Trustee, or separate trustee or separate trustees, of all or any

part of the trust created hereby, and to vest in such Person or Persons, in

such capacity and for the benefit of the Noteholders, such title to the

Indenture Collateral, or any part hereof, and, subject to the other provisions

of this Section, such powers, duties, obligations, rights and trusts as the

Indenture

 

41

 

Trustee may consider necessary or desirable.  No co-trustee or separate trustee hereunder shall be required to

meet the terms of eligibility of a successor Indenture Trustee under Section 6.11

and no notice to Noteholders of the appointment of any co-trustee or separate

trustee shall be required under Section 6.8.

 

(b)                                 Every separate trustee

and co-trustee shall, to the extent permitted by law, be appointed and act

subject to the following provisions and conditions:

 

(i)                                     all rights,

powers, duties and obligations conferred or imposed upon the Indenture Trustee

shall be conferred or imposed upon and exercised or performed by the Indenture

Trustee and such separate trustee or co-trustee jointly (it being understood

that such separate trustee or co-trustee is not authorized to act separately

without the Indenture Trustee joining in such act), except to the extent that

under any law of any jurisdiction in which any particular act or acts are to be

performed the Indenture Trustee shall be incompetent or unqualified to perform

such act or acts, in which event such rights, powers, duties and obligations

(including the holding of title to the Indenture Collateral 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 any separate trustee or

co-trustee.

 

(c)                                  Any notice, request

or other writing given to the Indenture Trustee shall be deemed to have been

given to each of the then separate trustees and co-trustees, as effectively as

if given to each of them. Every instrument appointing any separate trustee or

co-trustee shall refer to this Indenture and the conditions of this Article

VI.  Each separate trustee and

co-trustee, upon its acceptance of the trusts conferred, shall be vested with

the estates or property specified in its instrument of co-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

and a copy thereof given to the Issuer.

 

(d)                                 Any separate trustee

or co-trustee may at any time constitute the Indenture Trustee, its agent or

attorney-in-fact with full power and authority, to the extent not prohibited by

law, to do any lawful act under or in respect of this Indenture on its behalf

and in its name. If any separate trustee or co-trustee shall die, 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 Indenture Trustee.

 

SECTION 6.11.  

Eligibility.  The Indenture

Trustee hereunder shall at all times be a trust company organized and doing

business under the laws of the United States or any

 

42

 

State, authorized under such laws to exercise corporate trust powers,

whose long term unsecured debt is rated at least “Baa2” by Moody’s or “BBB” by

S&P and shall have a combined capital and surplus of at least $50,000,000

or shall be a member of a bank holding system the aggregate combined capital

and surplus of which is $200,000,000 and subject to supervision or examination

by federal or state authority or whose parent company shall meet the foregoing

requirements.  If such Person publishes

reports of condition at least annually, pursuant to law or to the requirements

of a supervising or examining authority, then for the purposes of this Section 6.11,

the combined capital and surplus of such Person shall be deemed to be its

combined capital and surplus as set forth in its most recent report of

condition so published.  In case at any

time the Indenture Trustee shall cease to be eligible in accordance with the

provisions of this Section 6.11, the Indenture Trustee shall resign

immediately in the manner and with the effect specified in Section 6. 8.

 

SECTION 6.12.  

Representations and Warranties of Indenture Trustee.  The Indenture Trustee in its individual

capacity and as Indenture Trustee represents and warrants as follows:

 

(a)                                  It is duly organized,

validly existing and in good standing under the laws of the state of its

incorporation or organization.  It has

full corporate power, authority and legal right to execute, deliver and perform

its obligations as Indenture Trustee under this Indenture and to authenticate

the Notes.

 

(b)                                 The execution and

delivery of the Indenture, the consummation of the transactions provided for

therein and the authentication of the Notes have been duly authorized by all

necessary corporate action on its part, either in its individual capacity or as

Indenture Trustee, as the case may be.

 

(c)                                  The Indenture

constitutes a legal, valid and binding obligation of the Indenture Trustee,

enforceable against the Indenture Trustee in accordance with its terms except

as such enforceability may be limited by Insolvency Laws and except as such

enforceability may be limited by general principles of equity (whether

considered in a suit at law or in equity) or by an implied covenant of good

faith and fair dealing.

 

ARTICLE VII

 

NOTEHOLDERS’ LISTS AND REPORTS

 

SECTION 7.1.  

Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders.  The Issuer will furnish or cause to be

furnished to the Indenture Trustee (i) not more than five days after each

Record Date, a list, in such form as the Indenture Trustee may reasonably

require, of the names and addresses of the Noteholders as of such Record Date

and (ii) at such other times as the Indenture Trustee may request in writing,

within 30 days after receipt by the Issuer of any such request, a list of

similar form and content as of a date not more than ten 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.

 

43

 

SECTION 7.2.  

Preservation of Information; Communication to Noteholders.  The Indenture Trustee shall preserve, in as

current a form as is reasonably practicable, the names and addresses of the

Noteholders contained in the most recent list furnished to the Indenture

Trustee as provided in Section 7.1 and the names and addresses of

Noteholders received by the Indenture Trustee. 

The Indenture Trustee may destroy any list furnished to it as provided

in such Section 7.1 upon receipt of a new list so furnished.

 

SECTION 7.3.  

Rule 144A Information.  For so

long as any of the Notes are “restricted securities” within the meaning of Rule

144(a)(3) under the Securities Act, the Issuer agrees to provide, or cause to

provide, to any Noteholder or Note Owner and to any prospective purchaser of

Notes designated by such Noteholder or Note Owner upon the request of such

Noteholder or Note Owner or prospective purchaser, any information in its

possession and required to be provided to such holder or prospective purchaser

to satisfy the conditions set forth in Rule 144A(d)(4) under the Securities

Act.

 

SECTION 7.4.  

Servicer’s Reports.  The

Indenture Trustee shall deliver to each Noteholder the Quarterly Servicer’s

Report and Quarterly Servicer’s Report Certificate within five Business Days

after receipt thereof. The Indenture Trustee shall deliver to each Note Owner

who so requests in writing, and to each Rating Agency, each Quarterly

Servicer’s Report and Quarterly Servicer’s Report Certificate within five

Business Days after receipt thereof.

 

SECTION 7.5.  

Certifications.  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

Issuer or on behalf of another person, either (a) any report or filing required

or permitted by the Securities and Exchange Commission to be prepared,

executed, filed or delivered by or in respect of the Issuer or another person,

or (b) any certification in respect of any such report or filing.

 

ARTICLE VIII

 

ACCOUNTS, DISBURSEMENTS AND RELEASE

 

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 Indenture Trustee, 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 an

Event of Default under this Indenture and any right to proceeds thereafter as

provided in Article V.

 

44

 

SECTION 8.2.  

Establishment of Accounts; Investment of Funds.  On or prior to the Closing Date, there shall

have established the following accounts (collectively, the “Transaction

Accounts”):

 

(a)                                  Lockbox Account.  Pursuant to the Servicing Agreement, the

Servicer, as agent for the Issuer, shall cause the Indenture Trustee to

establish and maintain, at The Bank of New York, an Eligible Deposit Account

(ABA No. 021000018; GLA # 111565; Account No. 115633; ref: Guess? Royalty

Finance) in the name of the Issuer, and over which the Indenture Trustee, pursuant

to the Lockbox Account Control Agreement, shall have sole and exclusive control

and sole and exclusive right of withdrawal from the Closing Date (the “Lockbox

Account”); provided that the Indenture Trustee will transfer to IP

Holder or to an account of IP Holder all amounts at any time on deposit in the

Lockbox Account that do not constitute Collections and will transfer to the

Servicer (if the Servicer is Guess?, Inc.) all amounts on deposit in the

Lockbox Account that the Indenture Trustee has confirmed comprise Retained

Collections for the relevant Collection Period.  From and after the occurrence of an Event of Default or any date

on which the Historical Coverage Ratio is less than 120% or during the Rapid

Amortization Period or a Trapping Period, the Indenture Trustee shall cause all

amounts on deposit in the Lockbox Account to be transferred into the

Distribution Account without any releases of Retained Collections to the

Servicer.  Except as set forth below,

all right, title and interest in and to all cash amounts on deposit from time

to time in the Lockbox Account attributable to Collections shall constitute

part of the Indenture Collateral and shall be held for the benefit of the

Indenture Trustee and the Noteholders until applied as hereinafter

provided.  Each Receivables Obligor is

obligated to make payments of all amounts owing to IP Holder under the Subject

License Agreements directly to the Lockbox Account, in each case without setoff

except for commissions, fees and chargebacks. 

On each Business Day during a Measurement Period, the Indenture Trustee

shall cause all amounts on deposit in the Lockbox Account to be transferred

into the Distribution Account until such time as the Servicer provides the

Indenture Trustee with written notice (substantially in the form of Exhibit E)

that the amount on deposit in the Distribution Account at least equals the

Estimated Distribution Amount for the Payment Date next succeeding the last day

of such Measurement Period, and providing a calculation of such Estimated

Distribution Amount.  Within 2 Business

Days of receipt of such notice, the Indenture Trustee shall verify the

mathematical accuracy of the Servicer’s calculation of the Estimated

Distribution Amount at face value.  Any

amounts on deposit in the Lockbox Account that the Indenture Trustee has so

confirmed will not be needed to fund the Estimated Distribution Amount or any

component thereof will not be required to be transferred to the Distribution

Account pursuant to the preceding sentences and will comprise “Retained

Collections.” The Indenture Trustee shall instruct The Bank of New York to

withdraw any such Retained Collections from the Lockbox Account and deliver

them to the Servicer (if the Servicer is Guess? Inc.).  Such withdrawals shall be subject to

repayment (in whole or in part) by the Servicer to the Collection Account on

the Business Day preceding the succeeding Payment Date if prior to such

Business Day the Indenture Trustee confirms and notifies the Servicer that all

or any part thereof will in fact be needed in order to fund any of the amounts

comprising Estimated Distribution Amounts or to fund required deposits into the

Trapping Account.

 

(b)                                 Distribution

Account.  The Indenture Trustee, for

the benefit of the Noteholders, shall establish and maintain, at BNY Midwest

Trust Company, an Eligible Account (ABA No. 021 000 018; GLA # 111565; Account

No. 115632 ; ref: Guess? Distribution Account )

 

45

 

in the name of the Indenture Trustee, and over which the Indenture

Trustee for the benefit of the Noteholders shall have sole and exclusive right

of withdrawal (the “Distribution Account”).  All right, title and interest in and to all cash amounts on

deposit from time to time in the Distribution Account shall constitute part of

the Indenture Collateral and shall be held for the benefit of the Noteholders

until applied as hereinafter provided.

 

(c)                                  Interest Reserve

Account.  The Indenture Trustee, for

the benefit of the Noteholders, shall establish and maintain, at BNY Midwest

Trust Company, an Eligible Account (ABA No. ABA No. 021 000 018; GLA # 111565;

Account No. 145631; ref: Guess? Interest Reserve Account ) in the name of the

Indenture Trustee, and over which the Indenture Trustee for the benefit of the

Noteholders shall have sole and exclusive right of withdrawal (the “Interest

Reserve Account”).  All right, title

and interest in and to all cash amounts on deposit from time to time in the

Interest Reserve Account shall constitute part of the Indenture Collateral and

shall be held for the benefit of the Noteholders until applied as hereinafter

provided.  Monies in the Interest

Reserve Account shall be subject to withdrawal pursuant to this Indenture, including

Section 8.11 (c).  The Issuer shall

deposit, or shall cause to be deposited, into the Interest Reserve Account on

the Closing Date, an amount equal to $5,062,500.00.

 

(d)                                 Trapping Account.  The Indenture Trustee, for the benefit of

the Noteholders, shall establish and maintain, at BNY Midwest Trust Company, an

Eligible Account (ABA No. ABA No. 021 000 018; GLA # 111565; Account No. 145630

; ref: Guess? Trapping Account ) in the name of the Indenture Trustee, and over

which the Indenture Trustee for the benefit of the Noteholders shall have sole

and exclusive right of withdrawal (the “Trapping Account”).  All right, title and interest in and to all

cash amounts on deposit from time to time in the Trapping Account shall

constitute part of the Indenture Collateral and shall be held for the benefit

of the Noteholders until applied as hereinafter provided.  Monies in the Trapping Account shall be

subject to withdrawal pursuant to this Indenture, including Section 8.11

(d) and (e).

 

(e)                                  (i)                                     Upon the written

instructions of the Servicer, the Indenture Trustee shall invest funds on

deposit in the Trust Accounts in Eligible Investments in accordance with this

Section 8.2(e), such Eligible Investments to be selected by the Servicer

and the settlement thereof to be arranged by the Indenture Trustee or an agent

of the Indenture Trustee appointed for such purpose (an “Investment Agent”).  Any Investment Agent will be subject to

replacement at the discretion of the Indenture Trustee.

 

(ii)                                  Neither the Indenture

Trustee nor the Investment Agent shall be liable for any loss arising from such

investment in Eligible Investments.  The

Indenture Trustee shall have no obligation to invest and reinvest any cash in

the absence of timely and specific written investment direction from the

Servicer.  In no event shall the

Indenture Trustee be liable for the selection of investments or for investment

losses incurred thereon.  The Indenture

Trustee shall have no liability in respect of losses incurred as a result of

the liquidation of any investment prior to its stated maturity or the failure

of the Servicer to provide timely written investment direction.  All such Eligible Investments shall be held

by the Indenture Trustee for the benefit of the Noteholders.

 

46

 

(iii)                               Funds on deposit in the

Trust Accounts that are to be invested shall be invested in Eligible

Investments that will mature so that such funds will become available not later

than the Business Day prior to the next Payment Date, unless such funds shall

be invested under paragraph (e) of the definition of Eligible Investments.

 

(iv)                              All investment income

earned on such investments shall be credited to the Distribution Account on the

date such income is realized.

 

(f)                                    If at any time a

Trust Account ceases to be an Eligible Deposit Account, the Indenture Trustee

shall, within 20 Business Days after becoming aware thereof, establish a new

Eligible Deposit Account for such Trust Account and shall transfer any cash

and/or any investments to such new account.

 

SECTION 8.3.  

Control of Trust Accounts.  The

Indenture Trustee shall have sole control of the Trust Accounts, and shall be

entitled to give instructions and directions to the Securities Intermediary

which shall act upon entitlement orders with respect to each Trust Account

solely from the Indenture Trustee.  If

at any time the Indenture Trustee shall give the Securities Intermediary an

entitlement order relating to any Trust Account, the Securities Intermediary

shall be entitled to comply with such entitlement order without further consent

by the Issuer or any other Person.  The

Issuer shall not be entitled to give the Securities Intermediary any

entitlement orders with respect to the Trust Accounts.

 

SECTION 8.4.  

Treatment as Financial Assets. 

Each item of property (whether investment property, financial asset,

security, instrument or cash) credited to the Trust Accounts shall be treated

as a financial asset.

 

SECTION 8.5.  

Securities Intermediary’s Location. 

The Trust Accounts and the rights and obligations of the Securities

Intermediary, the Indenture Trustee and the Issuer with respect thereto shall

be governed by the laws of the State of New York.  Regardless of any provision in any other agreement, for purposes

of the UCC in the State of New York, New York shall be deemed to be the

Securities Intermediary’s location and the Trust Accounts (and the securities

entitlements related thereto) shall be governed by the laws of the State of New

York.

 

SECTION 8.6.  

No Other Claims.  The Issuer

represents that, except for the claims and interest of the Indenture Trustee

and the Issuer in the Trust Accounts, there is no claim to, or interest in, the

Trust Accounts or in any financial asset credited thereto.  If any person asserts any Lien, encumbrance

or adverse claim (including any writ, garnishment, judgment, warrant of

attachment, execution or similar process) against the Trust Accounts or in any

financial asset carried therein, the Securities Intermediary will promptly

notify the Indenture Trustee.  In the

event that the Securities Intermediary (in its capacity as such) has or

subsequently obtains by agreement, operation of law or otherwise a security

interest in the Trust Accounts or any security entitlement credited thereto,

such security interest shall be subordinate to the security interest of the

Indenture Trustee on behalf of the Noteholders.

 

SECTION 8.7.  

Investment and Release.  All

proceeds of financial assets from time to time credited to the Trust Accounts

shall be allocated, invested and reinvested as

 

47

 

provided in this Indenture.  At

all times prior to termination of this Indenture, no property shall be released

from the Trust Accounts except in accordance with this Indenture and upon

written instructions of the Indenture Trustee.

 

SECTION 8.8.  

Tax Allocations.  All items of

income, gain, expense and loss recognized in the Trust Accounts shall be

reported by or on behalf of the Issuer to the IRS and all state and local

taxing authorities in the same manner as income, gain, expense and loss of the

Issuer.

 

SECTION 8.9.  

No Other Agreements.  The Issuer

shall not permit the Securities Intermediary to enter into or suffer to exist

prior to the termination of this Indenture any agreement (other than the Transaction

Documents) with any other Person relating to the Trust Accounts or any

financial assets credited thereto, including, without limitation, any agreement

to comply with entitlement orders of any Person other than the Indenture

Trustee (as directed in accordance with Section 8.2).

 

SECTION 8.10.    Powers Coupled With An Interest.  The rights and powers granted in this

Article 8 to the Indenture Trustee have been granted in order to perfect its

security interests in the Transaction Accounts, are powers coupled with an

interest and will be affected neither by the bankruptcy of the Issuer nor by

the lapse of time.

 

SECTION 8.11.  

Payment Date Distributions. 

(a)  On each Payment Date

(including any Payment Date on which an Optional Redemption will occur) funds

on deposit in the Distribution Account shall be withdrawn by the Indenture

Trustee based solely on the instructions of the Servicer set forth in the

Quarterly Servicer’s Report (as reviewed by the Servicer pursuant to

Section 2.14 of this Indenture) for payment on such Payment Date solely

for the following purposes and in the following order of priority:

 

(i)                                     first, to

the Servicer, in payment of the Servicer Advance Reimbursement Amount due on

such Payment Date;

 

(ii)                                  second, to the

Indenture Trustee, an amount equal to the lesser of (a) unpaid Indenture

Trustee Fees due on such Payment Date and (b) the Indenture Trustee Priority

Fee Amount for such Payment Date;

 

(iii)                               third, to the

Back-Up Manager, the Standby Fee due on such Payment Date;

 

(iv)                              fourth, to the

Servicer, the Servicing Fee due on such Payment Date;

 

(v)                                 fifth, to the

Noteholders, the accrued and unpaid interest on the Notes due on such Payment

Date pursuant to Section 2.7(b);

 

(vi)                              sixth, to the

Interest Reserve Account, the excess, if any, of the Required Interest Reserve

Amount on such Payment Date over the amount on deposit in the Interest

Reserve Account on such Payment Date;

 

48

 

(vii)                           seventh, to the

Noteholders (a) on each Payment Date falling in the Controlled Amortization

Period, the amount specified in Section 2.7(a) for such Payment Date and

(b) on each Payment Date falling in the Rapid Amortization Period, the amount

specified in Section 2.7(a) for such Payment Date;

 

(viii)                        eighth, during a

Trapping Period, to the Trapping Account, an amount equal to the lesser of (a)

any remaining amounts and (b) the excess, if any, of (i) the unpaid principal

amount of the Notes (after giving effect to the application of amounts

allocated pursuant to clause (vi) of this Section) over (ii) the amounts on

deposit in the Trapping Account on such Payment Date (before giving effect to

an allocation pursuant to this clause (viii));

 

(ix)                                ninth, to the

Indenture Trustee, any unreimbursed fees, expenses, and indemnities;

 

(x)                                   tenth, to the

parties owed such amounts, to the payment of all Additional Costs, if any,

identified in the Quarterly Servicer Report as being payable on such Payment

Date; and

 

(xi)                                eleventh, to the

Issuer, any remaining amounts, free and clear of the Lien created by this

Indenture.

 

(b)                                 If the Servicer has knowledge that, or the

Indenture Trustee notifies the Servicer that, amounts available in the

Distribution Account on any Payment Date may be less than the amounts required

to be distributed on such Payment Date pursuant to clauses (ii), (iii), (v),

(vi), (vii) and (ix) of Section 8.11(a), then, pursuant to the Servicing

Agreement, on the Business Day preceding such Payment Date the Servicer shall

deposit into the Distribution Account an amount equal to the lesser of (i) such

deficiency and (ii) the amount of Retained Collections that were retained by or

released to the Servicer during the related Measurement Period.  Subject to the foregoing, on each Payment

Date the Servicer shall remit all Retained Collections to the Issuer in

satisfaction of amounts due to the Issuer under clause (x) of

Section 8.11(a) hereof free and clear of the Lien created by this

Indenture.

 

(c)                                  If

on the Business Day preceding any Payment Date, the amount on deposit in the

Distribution Account (including any Retained Collections but before giving

effect to any withdrawal from the Interest Reserve Account but after taking

into account all other amounts available) is less than the aggregate amounts

required to be distributed on such Payment Date pursuant to clause (v) of

Section 8.11(a) (without giving effect to any limitation based on lack of

available funds), the Indenture Trustee shall make a withdrawal on the related

Payment Date from the Interest Reserve Account in an amount equal to the lesser

of (i) such deficiency and (ii) the amount on deposit in the Interest

Reserve Account and use such amount to the pay the amount owing under such

clause (v).  On each Payment Date (after

giving effect to any withdrawal from the Interest Reserve Account described in

the preceding sentence), if the amount on deposit in the Interest Reserve

Account exceeds the Required Interest Reserve Amount, the Indenture Trustee

shall withdraw such excess and deposit such excess in the Distribution Account

for distribution pursuant to Section 8.11(a); provided that, if on any

Payment Date (after giving effect to all amounts available to repay the Notes

on such date,

 

49

 

including but not limited to any withdrawal from the Interest Reserve

Account pursuant to the preceding sentence) the amount remaining in the

Interest Reserve Account would be sufficient to pay the outstanding principal

amount of the Notes in full, the Indenture Trustee shall withdraw any funds

remaining in the Interest Reserve Account and shall distribute such amounts (i)

first, to the Noteholders, the amount required to pay the Notes in full and

(ii) second, the remainder, if any, to the Distribution Account, for distribution

on such Payment Date pursuant to Section 8.11(a).  On the Maturity Date the Indenture Trustee

shall withdraw from the Interest Reserve Account any funds remaining in the

Interest Reserve Account (after giving effect to any allocation pursuant to the

preceding sentence) and deposit such funds in the Distribution Account for

distribution on the Maturity Date pursuant to Section 8.11(a).

 

(d)                                 If

on the Business Day preceding any Payment Date during a Trapping Period, the

amount on deposit in the Distribution Account (including any Retained

Collections but before giving effect to any withdrawal from the Trapping

Account but after taking into account all other amounts available) is less than

the aggregate amounts required to be distributed on such Payment Date pursuant

to clauses (i) through (vii) of Section 8.11(a) (without giving effect to

any limitation based on lack of available funds), the Indenture Trustee shall

make a drawing on the related Payment Date from the Trapping Account in an

amount equal to the lesser of (i) such deficiency and (ii) the amount

on deposit in the Trapping Account.  On

the Maturity Date the Indenture Trustee shall withdraw from the Trapping

Account any funds remaining in the Trapping Account (after giving effect to any

allocation pursuant to the preceding sentence) and deposit such funds in the

Distribution Account for distribution on the Maturity Date pursuant to

Section 8.11(a).

 

(e)                                  If

on any Payment Date after the occurrence of a Trapping Event and prior to the

occurrence of a Rapid Amortization Event, the Historical Coverage Ratio is

greater than 120% (a “Trapping Cure Event”) then on such date the

Indenture Trustee shall make a withdrawal from the Trapping Account in an

amount equal to the amount on deposit in the Trapping Account (after giving

effect to any allocation pursuant to section 8.11(d) on such date) and deposit

such funds in the Distribution Account for distribution in accordance with

Section 8.11(a).

 

(f)                                    On

any Payment Date during a Trapping Period the Issuer may elect to apply all or

a portion of the amount on deposit in the Trapping Account (after giving effect

to any allocation of such amounts pursuant to Sections 8.11(d) and (e) on such

Payment Date) as a mandatory prepayment of the Notes in accordance with this

Section 8.11(f).  Each such

prepayment shall be accompanied by payment to the Noteholders of a prepayment

premium calculated as set forth below in this Section.  If the Issuer intends to make such an

optional prepayment, the Issuer shall notify the Servicer and the Indenture

Trustee no later than the Determination Date preceding the Payment Date of its

intention to do so, such notice to set forth the amount of such prepayment and

the amount of the prepayment premium associated therewith.  Such notice shall be accompanied by a

deposit into the Trapping Account from amounts available to the Issuer pursuant

to Section 8.11(a)(x) hereof in an amount equal to such prepayment

premium.  On the Payment Date specified

in such notice, and subject to compliance by the Issuer with the requirements

of the preceding sentence, the Indenture Trustee shall withdraw from the

Trapping Account an amount equal to the prepayment amount and prepayment

premium specified in such notice and pay such amount to the Noteholders pursuant

 

50

 

to clause (vii) of Section 8.11(a), ratably in accordance with the

principal amount of the Notes held by such Noteholder.  Prepayments made pursuant to this

Section 8.11(f) shall be applied to reduce the Target Principal Amount

applicable to each Payment Date after the Payment Date of such prepayment

ratably in the proportion which such Target Principal Amount bears to the

original unpaid balance of the Notes. 

Each such prepayment shall be accompanied by payment of a prepayment

premium equal to the excess, if any, of (i) the sum of the present values of

the remaining principal and interest scheduled to have been paid in respect of

the principal amount of the Notes then being prepaid (assuming payments in

respect of such principal are made on each Payment Date in an amount

proportional to the Target Principal Reduction Amount for such Payment Date as

provided in the preceding sentence), discounted to the date of prepayment

(assuming a 360-day year consisting of twelve 30-day months) at the Treasury

Rate, plus 50 basis points over (ii) the principal amount of the Notes

then being prepaid.

 

(g)                                 On

the Payment Date following any Measurement Period during which any Royalty

Receivables are repurchased from the Issuer by IP Holder pursuant to

Section 4.3(c) of the Receivables Contribution Agreement, the Issuer will

apply the amounts received as the related Repurchase Price as a mandatory

prepayment of the Notes in accordance with this Section 8.11(g).  Each such prepayment shall be accompanied by

payment to the Noteholders of a prepayment premium calculated as set forth

below in this Section.  The Issuer shall

notify the Servicer and the Indenture Trustee promptly, but no later than

second Business Day following its receipt from IP Holder of such Repurchase

Price of its intention to do so, such notice to set forth the amount of such

prepayment and the amount of the prepayment premium associated therewith.  Such notice shall be accompanied by a

deposit into the Distribution Account of such Repurchase Price.  On the Payment Date specified in such

notice, and subject to compliance by the Issuer with the requirements of the

preceding sentence, the Indenture Trustee shall withdraw from the Distribution

Account an amount equal to the prepayment amount and prepayment premium

specified in such notice and pay such amount to the Noteholders pursuant to

clause (vii) of Section 8.11(a), ratably in accordance with the principal

amount of the Notes held by such Noteholder. 

Prepayments made pursuant to this Section 8.11(g) shall be applied

to reduce the Target Principal Amount applicable to each Payment Date after the

Payment Date of such prepayment ratably in the proportion which such Target

Principal Amount bears to the original unpaid balance of the Notes.  Each such prepayment shall be accompanied by

payment of a prepayment premium equal to the excess, if any, of (i) the sum of

the present values of the remaining principal and interest scheduled to have

been paid in respect of the principal amount of the Notes then being prepaid

(assuming payments in respect of such principal are made on each Payment Date

in an amount proportional to the Target Principal Reduction Amount for such

Payment Date as provided in the preceding sentence), discounted to the date of

prepayment (assuming a 360-day year consisting of twelve 30-day months) at the

Treasury Rate, plus 50 basis points, over (ii) the principal amount of

the Notes then being prepaid.

 

SECTION 8.12.  

Release of Collateral.  (a)  When required or contemplated by the

provisions of this Indenture, the Indenture Trustee shall, at the request and

sole expense of the Issuer, release property from the Lien of this Indenture,

and shall deliver to the Issuer any Indenture Collateral held by the Indenture

Trustee hereunder, and execute and deliver to the Issuer such documents

(including, without limitation, UCC termination statements) as the Issuer shall

reasonably request to evidence such release. 

No party relying upon an instrument executed by the Indenture Trustee as

provided in this Section shall be bound to ascertain the Indenture

 

51

 

Trustee’s authority, inquire into the satisfaction of any conditions

precedent or see to the application of any moneys.

 

(b)                                 The

Indenture Trustee shall, at such time as there are no Notes outstanding,

release the Indenture Collateral (including, without limitation any funds then

on deposit in the Transaction Accounts). 

The Indenture Trustee shall, at such time as any Royalty Receivables are

repurchased from the Issuer by IP Holder pursuant to Section 4.3(c) of the

Receivables Contribution Agreement, release the lien of this Indenture with

respect to such Royalty Receivables and all related items of Indenture

Collateral.  The Indenture Trustee shall

release property from the Lien of this Indenture pursuant to this

Section 8.12(b) only upon receipt of an Issuer Request accompanied by an

Officer’s Certificate.

 

SECTION 8.13.  

Opinion of Counsel.  The Indenture

Trustee shall receive at least 3 days prior written notice when requested by

the Issuer to take any action pursuant to Section 8.12(a), accompanied by

copies of any instruments involved, and the Indenture Trustee may also require,

as a condition to such action, an Opinion of Counsel, in form and substance

reasonably satisfactory to the Indenture Trustee, stating the legal effect of

any such action, outlining the steps required to complete the same, and

concluding that all conditions precedent to the taking of such action have been

complied with; provided, however, that such Opinion of Counsel shall not be

required to express an opinion as to the fair value of the Indenture

Collateral.  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 Indenture Without

Consent of Noteholders. 

Without the consent of the Noteholders, the Issuer and the Indenture

Trustee, when authorized by an Issuer Order and upon written notice to the

Rating Agencies, at any time and from time to time, may enter into one or more

indentures supplemental hereto, in form satisfactory to the Indenture Trustee,

for any of the following purposes:

 

(a)                                  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

created by this Indenture, or to subject additional property to the Lien

created by this Indenture;

 

(b)                                 to

evidence the succession, in compliance with the applicable provisions hereof,

of another Person to the Issuer, and the assumption by any such successor of

the covenants of the Issuer herein and in the Notes contained;

 

(c)                                  to

add to the covenants of the Issuer, for the benefit of the Noteholders, or to

surrender any right or power herein conferred upon the Issuer;

 

52

 

(d)                                 to

convey, transfer, assign, mortgage or pledge any property to or with the

Indenture Trustee;

 

(e)                                  to

cure any ambiguity, to correct or supplement any provision herein or in any

supplemental indenture which may be inconsistent with any other provision

herein or in any supplemental indenture or to make any other provisions with

respect to matters or questions arising under this Indenture or in any

supplemental indenture; provided that such action shall not have a Material

Adverse Effect; and

 

(f)                                    to

evidence and provide for the acceptance of the appointment hereunder of a

successor Indenture Trustee with respect to the Notes and to add to or change

any of the provisions of this Indenture as shall be necessary to facilitate the

administration of the trusts hereunder by more than one Indenture Trustee,

pursuant to the requirements of Article VI.

 

(g)                                 The

Indenture Trustee is hereby authorized to join in the execution of any such

supplemental indenture and to make any further appropriate agreements and

stipulations that may be therein contained.

 

SECTION 9.2.  

Supplemental Indentures With Consent of Noteholders.  The Issuer and the Indenture Trustee, when

authorized by an Issuer Order, also may, with prior written notice to each

Rating Agency, and with the prior written consent of the Majority Holders,

delivered to the Issuer 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 Noteholders under this

Indenture; provided, however, that, no such supplemental indenture shall, without

the consent of each Noteholder of each Note Outstanding adversely affected

thereby:

 

(a)                                  change

the date of payment of any installment of principal of or interest on any

Notes, or reduce the principal amount thereof, or the interest rate thereon,

change the provisions of this Indenture relating to the application of

collections on, or the proceeds of the sale of, the Indenture Collateral to

payment of principal of or interest on the Notes, or change any place of

payment where, or the coin or currency in which, any Notes 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 the Notes on or after the respective due dates thereof;

 

(b)                                 reduce

the percentage of the Outstanding Principal Balance of the Notes, the consent

of the Noteholders of which is required for any such supplemental indenture, or

the consent of the Noteholders 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;

 

(c)                                  reduce

the percentage of the outstanding principal amount of the Notes required to

direct the Indenture Trustee to sell or liquidate the Indenture Collateral

pursuant to Section 5.5 or amend the provisions of this Article which

specify the percentage of the

 

53

 

Outstanding Principal Balance of the Notes required to amend this

Indenture or the other Transaction Documents;

 

(d)                                 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 other Transaction Documents cannot be modified or waived without the

consent of the Noteholder adversely affected thereby; or

 

(e)                                  permit

the creation of any Lien ranking prior to or on a parity with the Lien created

by this Indenture with respect to any part of the Indenture Collateral or,

except as otherwise permitted or contemplated herein, terminate the Lien

created by this Indenture on any property at any time subject hereto or deprive

the Noteholder of the security provided by the Lien created by this Indenture.

 

It shall not

be necessary for any Act of Noteholders to approve the particular form of any

proposed supplemental indenture, but it shall be sufficient if such Act shall

approve the substance thereof.

 

Promptly after

the execution by the parties hereto of any supplemental indenture pursuant to

this Section, the Indenture Trustee, at the expense of the Issuer, shall mail

to the Noteholders to which such amendment or supplemental indenture relates a

notice setting forth in general terms the substance of such supplemental

indenture.  Any failure of the Indenture

Trustee to mail such notice, or any defect therein, shall not, however, in any

way impair or affect the validity of any such supplemental indenture.

 

SECTION 9.3.  

Execution of Supplemental Indentures. 

In executing, or permitting the additional trusts created by, any

supplemental indenture permitted by this Article 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 parties hereto and the Noteholders

shall thereafter be determined, exercised and enforced hereunder subject in all

respects to such modifications and amendments, and all the terms and conditions

of any such supplemental indenture shall be and be deemed to be part of the

terms and conditions of this Indenture for any and all purposes.

 

SECTION 9.5.  

Reference in Notes to Supplemental Indentures.  Notes authenticated and delivered after the execution of any

supplemental indenture pursuant to this Article may, and if required by the

Indenture Trustee shall, bear a notation in form approved by the Indenture

Trustee as to any matter provided for in such supplemental indenture.  If the Issuer

 

54

 

or the Indenture Trustee shall so determine, new notes so modified as

to conform, in the opinion of the Indenture Trustee and the Issuer, to any such

supplemental indenture may be prepared and executed by the Issuer and

authenticated and delivered by the Indenture Trustee in exchange for the Notes

outstanding.

 

ARTICLE X

 

OPTIONAL REDEMPTION OF NOTES

 

SECTION 10.1.  

Optional Redemption.  Notes are redeemable, in whole but not in

part, at the option of the Issuer in accordance with their terms and in

accordance with this Article X.

 

SECTION 10.2.  

Notice of Redemption.  Notice of redemption (an “Optional

Redemption Notice”) to Noteholders shall be given by mailing notice of such

redemption by first-class mail, postage prepaid, at least 15 days and not more

than 30 days prior to the date fixed for redemption to such Noteholders at

their last addresses as they shall appear in the Register.  Any Optional Redemption Notice which is

mailed in the manner herein provided shall be conclusively presumed to have

been duly given, whether or not the Holder receives the notice.  Failure to give notice by mail, or any

defect in the notice to the Noteholder of any Note designated for redemption,

shall not affect the validity of the proceedings for the redemption of any

other Note.

 

The Optional

Redemption Notice shall specify the principal amount of the Notes held by such

Holder to be redeemed (which shall be all Notes outstanding), calculation and

amount of the Optional Redemption Premium, the date fixed for redemption (the “Redemption

Date”), the redemption price, the place or places of payment, that interest

accrued but unpaid to the date fixed for redemption will be paid as specified

in said notice and that on and after such date interest thereon or on the

portions thereof to be redeemed will cease to accrue.  The Optional Redemption Notice shall be given by the Issuer or,

at the Issuer’s request, by the Indenture Trustee in the name and at the

expense of the Issuer.

 

SECTION 10.3.  

Payment of Notes Called for

Redemption.  If the Optional

Redemption Notice has been given as provided above, the Notes shall become due

and payable on the date and at the place stated in such notice at the

applicable redemption price, and on and after said date (unless the Issuer

shall default in the payment of such Notes at the redemption price, together

with accrued and unpaid interest and any other amounts payable pursuant hereto

in respect thereof), interest on the Notes shall cease to accrue and, except as

provided in Section 4.3 and to the extent redeemed, such Notes shall cease

from and after the date fixed for redemption to be entitled to any benefit or

security under this Indenture, and the Holders thereof shall have no right in

respect thereof except the right to receive the redemption price, together with

accrued and unpaid interest and any other amounts payable pursuant hereto in

respect thereof; provided that all indemnities hereunder shall survive any such

redemption.  The Notes shall be paid and

redeemed by the Issuer at the applicable redemption price; provided, that any

payment of interest becoming due on the date fixed for redemption shall be

payable to the Holders of such Notes subject to the terms and provisions of

Section 2.7(b).

 

55

 

ARTICLE XI

 

MISCELLANEOUS

 

SECTION 11.1.  

Compliance Certificates and Opinions, etc.  (a)  Upon any application

or request by the Issuer to the Indenture Trustee to take any action under any

provision of this Indenture, the Issuer shall furnish to the Indenture Trustee

(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 and (ii) if requested by the Indenture Trustee, an Opinion of

Counsel stating that in the opinion of such counsel all such conditions

precedent, if any, have been complied with, except that, in the case of any

such application or request as to which the furnishing of such documents is

specifically required by any provision of this Indenture, no additional

certificate or opinion need be furnished.

 

Every

certificate or opinion with respect to compliance with a condition or covenant

provided for in this Indenture shall include:

 

(i)                                     a statement that

each signatory of such certificate or opinion has read or has caused to be read

such covenant or condition and the definitions herein relating thereto;

 

(ii)                                  a brief statement as

to the nature and scope of the examination or investigation upon which the

statements or opinions contained in such certificate or opinion are based;

 

(iii)                               a statement that, in the

opinion of each such signatory, such signatory has made such examination or

investigation as is necessary to enable such signatory to express an informed

opinion as to whether such covenant or condition has been complied with; and

 

(iv)                              a statement as to

whether, in the opinion of each such signatory such condition or covenant has

been complied with.

 

(b)                                 (i)  Except in connection with the deposit of

cash or cash equivalents in connection with a redemption of all of the Notes,

prior to the deposit of any part of the Indenture 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 Issuer 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 of such deposit) to the Issuer

of the part of the Indenture Collateral or other property or securities to be

so deposited;

 

(ii)                                  Whenever any property

or securities are to be released from the Lien of this Indenture, the Issuer

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 of such release) of the property or securities proposed

to be released and stating that in the opinion of such person

 

56

 

the proposed

release will not impair the security under this Indenture in contravention of

the provisions hereof; and

 

(iii)                               Notwithstanding any

provision of this Section, the Issuer may collect, liquidate, sell or otherwise

dispose of the Indenture Collateral as and to the extent permitted or required

by the Transaction Documents.

 

SECTION 11.2.  

Form of Documents Delivered to Indenture Trustee.  In any case where several matters are

required to be certified by, or covered by an opinion of, any specified Person,

it is not necessary that all such matters be certified by, or covered by the

opinion of, only one such Person, or that they be so certified or covered by

only one document, but one such Person may certify or give an opinion with

respect to some matters and one or more other such Persons as to other matters,

and any such Person may certify or given an opinion as to such matters in one

or several documents.

 

Any

certificate or opinion of an Authorized Officer of the Issuer may be based,

insofar as it relates to legal matters, upon a certificate or opinion of, or

representations by, counsel, unless such officer knows, or in the exercise of

reasonable care should know, that the certificate or opinion or representations

with respect to the matters upon which his certificate or opinion is based are

erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel

may be based, insofar as it relates to factual matters, upon a certificate or

opinion of, or representations by, an officer or officers of the Servicer, IP

Holder or the Issuer, stating that the information with respect to such factual

matters is in the possession of the Servicer, IP Holder or the Issuer.

 

Where any

Person is required to make, give or execute two or more applications, requests,

consents, certificates, opinions or other instruments under this Indenture,

they may, but need not, be consolidated and form one instrument.

 

Whenever in

this Indenture, in connection with any application or certificate or report to

the Indenture Trustee, it is provided that the Issuer shall deliver any

document as a condition of the granting of such application, or as evidence of

the Issuer’s compliance with any term hereof, it is intended that the truth and

accuracy, at the time of the granting of such application or at the effective

date of such certificate or report (as the case may be), of the facts and

opinions stated in such document shall in such case be conditions precedent to

the right of the Issuer to have such application granted or to the sufficiency

of such certificate or report.  The foregoing

shall not, however, be construed to affect the Indenture Trustee’s right to

rely upon the truth and accuracy of any statement or opinion contained in any

such document as provided in Article VI.

 

SECTION 11.3.  

Acts of Noteholders.  (a)  Any request, demand, authorization,

direction, notice, consent, waiver or other action provided by this Indenture

to be given or taken by Noteholders may be embodied in and evidenced by one or

more instruments of substantially similar tenor signed by such Noteholders in

person or by agents duly appointed in writing; and except as herein otherwise

expressly provided such action shall become effective when such instrument or

instruments are delivered to the Indenture Trustee, and, where it is hereby

expressly required, to the Issuer.  Such

instrument or instruments (and the action embodied 

 

57

 

therein and evidenced thereby) are herein sometimes referred to as the

“Act” of the Noteholders signing such instrument or instruments. Proof of

execution of any such instrument or of a writing appointing any such agent

shall be sufficient for any purpose of this Indenture and (subject to

Section 6.1) conclusive in favor of the Indenture Trustee and the Issuer,

if made in the manner provided in this Section.

 

(b)                                 The

fact and date of the execution by any person of any such instrument or writing

may be proved in any manner that the Indenture Trustee deems sufficient.

 

(c)                                  The

ownership of Notes shall be proved by the Note Register.

 

(d)                                 Any

request, demand, authorization, direction, notice, consent, waiver or other

action by the Noteholder shall bind the Noteholder of any Note issued upon the

registration thereof or in exchange therefor or in lieu thereof, in respect of

anything done, omitted or suffered to be done by the Indenture Trustee or the

Issuer in reliance thereon, whether or not notation of such action is made upon

such Note.

 

SECTION 11.4.  

Notices.  All notices, demands,

certificates, requests and communications hereunder (“notices”) shall be in

writing and shall be effective (a) upon receipt when sent through the mails,

registered or certified mail, return receipt requested, postage prepaid, with

such receipt to be effective the date of delivery indicated on the return

receipt, or (b) one Business Day after delivery to an overnight courier, or (c)

on the date personally delivered to an Authorized Officer of the party to which

sent, or (d) on the date transmitted by facsimile transmission with a

confirmation of receipt, in all cases addressed to the recipient at the address

specified below.

 

	

  If to the

  Indenture Trustee:

  	

  BNY Midwest

  Trust Company

  2 North LaSalle, Suite 1020

  Chicago, IL  60602

  Attention: Corporate Trust / Structured Finance

  Telephone: 312-827-8500

  Facsimile: 312-827-8562

  
	

   

  	

   

  
	

  If to the

  Issuer:

  	

  Guess? Royalty

  Finance LLC

  2222 Glendale Galleria 2

  Glendale, California  91324

  Attention:

  Telephone:

  Facsimile:

  
	

   

  	

   

  
	

  with a copy

  to:

  	

   

  
	

   

  	

  Guess?, Inc.

  1444 South Alameda Street

  Los Angeles, California 90021

  Attention:  General Counsel

  Telephone:  (213) 765-3100

  Facsimile: (213) 744-7821

  

 

58

 

	

   

  	

  O’Melveny

  & Myers

  400 S. Hope Street, 15th Floor

  Los Angeles, CA  90071

  Attention:  Daniel Passage

  Telephone:  (213) 430-6618

  Facsimile:  (212) 669-6407

  
	

  If to Rating

  Agencies:

  	

   

  
	

   

  	

  Moody’s

  Investors Service

  99 Church Street

  New York, New York 10007

  Attention:  ABS Monitoring Group

  Telephone:

  Facsimile: (212) 298-7139

  
	

   

  	

   

  
	

   

  	

  Standard

  & Poor’s,

  a division of The McGraw-Hill Companies, Inc.

  55 Water Street, 41st Floor

  New York, New York 10041

  Attention:  Asset Back Surveillance

  Department

  Telephone:  (212) 438-2000

  Facsimile:

  

 

Each party hereto may, by

notice given in accordance herewith to each of the other parties hereto,

designate any further or different address to which subsequent notices shall be

sent.

 

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 later date, and not earlier than the earlier date,

prescribed for the giving of such notice. In any case where notice to

Noteholders is given by mail, neither the failure to mail such notice nor any

defect in any notice so mailed to any particular Noteholder shall affect the

sufficiency of such notice with respect to other Noteholders, and any notice

that is mailed in the manner herein provided shall conclusively be presumed to

have been duly given.

 

Where this

Indenture provides for notice in any manner, such notice may be waived in

writing by any Person entitled to receive such notice, either before or after

the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Noteholders shall be

filed with the Indenture Trustee but such filing shall not be a condition

precedent to the validity of any action taken in reliance upon such a waiver.

 

In case, by

reason of the suspension of regular mail service as a result of a strike, work

stoppage or similar activity, it shall be impractical to mail notice of any

event to Noteholders when such notice is required to be given pursuant to any

provision of this Indenture, then any manner of giving such notice as shall be

satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving

of such notice.

 

59

 

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 an Event of Default.

 

SECTION 11.6.  

Effect of Headings and Table of Contents.  The Article and Section headings herein and the Table of

Contents are for convenience only and shall not affect the construction hereof.

 

SECTION 11.7.  

Successors and Assigns.  All

covenants and agreements in this Indenture and the Notes by the Issuer shall

bind its successors and assigns, whether so expressed or not.  All agreements of the Indenture Trustee in

this Indenture shall bind its successors, co-Indenture Trustees and agents.

 

SECTION 11.8.  

Separability.  In case any

provision in this Indenture or in the Notes shall be invalid, illegal or

unenforceable, the validity, legality and enforceability of the remaining

provisions shall not in any way be affected or impaired thereby.

 

SECTION 11.9.  

Benefits of Indenture.  Nothing

in this Indenture or in the Notes, express or implied, shall give to any

Person, other than the parties hereto and their successors hereunder, and the

Noteholders, and any other party secured hereunder, and any other Person with

an ownership interest in any part of the Indenture Collateral, any benefit or

any legal or equitable right, remedy or claim under this Indenture.

 

SECTION 11.10.  

Legal Holidays.  In any case

where the date on which any payment is due shall not be a Business Day, then

(notwithstanding any other provision of the Notes or this Indenture) payment

need not be made on such date, but may be made on the next succeeding Business

Day with the same force and effect as if made on the date on which nominally

due, and no interest shall accrue for the period from and after any such

nominal date.

 

SECTION 11.11.  

GOVERNING LAW.  THIS INDENTURE

SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE

LAWS OF THE STATE OF NEW YORK.

 

SECTION 11.12.  

Counterparts.  This Indenture may

be executed in any number of counterparts, each of which so executed shall be

deemed to be an original, but all such counterparts shall together constitute

but one and the same instrument.

 

SECTION 11.13.  

Recording of Indenture.  If this

Indenture is subject to recording in any appropriate public recording offices,

such recording is to be effected by the Issuer and at its expense accompanied

by an Opinion of Counsel (which may be counsel to the Issuer, 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 11.14.  

No Petition Covenant. 

Notwithstanding any prior termination of this Indenture, the Indenture

Trustee agrees that it shall not, and each Noteholder by its acceptance of a

Note agrees that it shall not, prior to the date which is one year and one day

after

 

60

 

the Notes (including all interest and premium, if any thereon) shall

have been paid in full, acquiesce, petition or otherwise invoke or cause the

Issuer to invoke the process of any court or government authority for the

purpose of commencing or sustaining a case against the Issuer under any

bankruptcy, insolvency, liquidation or similar law or appointing a receiver,

liquidator, assignee, trustee, custodian, sequestrator or other similar

official of the Issuer or any substantial part of its property, or ordering the

winding up or liquidating of the affairs of the Issuer.

 

SECTION 11.15.  

Limited Recourse.  No recourse

may be taken, directly or indirectly, with respect to the obligations of the

Issuer 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 in its individual capacity, (ii) the owner of

any beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,

agent, officer, director, employee or agent of the Indenture Trustee in its

individual capacity, except as any such Person may have expressly agreed (it

being understood that the Indenture Trustee have no such obligations in their

individual capacity).

 

SECTION 11.16.  

WAIVERS OF JURY TRIAL.  THE ISSUER AND THE INDENTURE TRUSTEE HEREBY

IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR

PROCEEDING RELATING TO THIS INDENTURE AND FOR ANY COUNTERCLAIM THEREIN.

 

SECTION 11.17.  

Submission to Jurisdiction; Waivers.  Each

of Issuer and the Indenture Trustee hereby irrevocably and unconditionally:

 

(a)                                  submits

for itself and its property in any legal action or proceeding relating to this

Indenture and the other Transaction Documents to which it is a party, or for

recognition and enforcement of any judgment in respect thereof, to the

non-exclusive general jurisdiction of the courts of the State of New York, the

courts of the United States for the Southern District of New York, and

appellate courts from any thereof;

 

(b)                                 consents that any

such action or proceeding may be brought in such courts and waives any

objection that it may now or hereafter have to the venue of any such action or

proceeding in any such court or that such action or proceeding was brought in

an inconvenient court and agrees not to plead or claim the same;

 

(c)                                  agrees that service

of process in any such action or proceeding may be effected by mailing a copy

thereof by registered or certified mail (or any substantially similar form of

mail), postage prepaid, to the Issuer or the Indenture Trustee, as the case may

be at its address set forth in Section 11.4 or at such other address of

which the Indenture Trustee shall have been notified pursuant thereto;

 

(d)                                 agrees that nothing

herein shall affect the right to effect service of process in any other manner

permitted by law or shall limit the right to sue in any other jurisdiction; and

 

(e)                                  waives, to the

maximum extent not prohibited by law, any right it may have to claim or recover

in any legal action or proceeding referred to in this Section any special,

exemplary, punitive or consequential damages.

 

61

 

[Rest of page left intentionally blank]

 

62

 

IN WITNESS

WHEREOF, the undersigned have caused this Indenture to be duly executed as a

deed as of the date first written above by their respective officers hereunto

duly authorized.

 

	

   

  	

  GUESS?

  ROYALTY FINANCE LLC

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Name: 

  
	

   

  	

   

  	

  Title:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  BNY MIDWEST

  TRUST COMPANY,

  not in its individual capacity

  but solely as Indenture Trustee

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Name: 

  
	

   

  	

   

  	

  Title:

  

 

S-1

 

EXHIBIT A

 

[FORM OF GLOBAL NOTE]

 

THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET

FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL

BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE

HEREOF.

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE

UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),

OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR

OTHERWISE TRANSFERRED EXCEPT AS PERMITTED BY THE FOLLOWING SENTENCES.  THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE

HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE

(THE “RESALE RESTRICTION TERMINATION DATE”) WHICH IS TWO YEARS AFTER THE

LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH GUESS?

ROYALTY FINANCE LLC (THE “ISSUER”) OR ANY AFFILIATE OF THE ISSUER WAS

THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (A) TO THE

ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED

EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE

ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE

144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL

BUYER” AS DEFINED IN RULE 144A (A “QIB”) THAT PURCHASES FOR ITS OWN

ACCOUNT OR FOR THE ACCOUNT OF A QIB TO WHOM NOTICE IS GIVEN THAT THE TRANSFER

IS BEING MADE IN RELIANCE ON RULE 144A, OR (D) PURSUANT TO ANOTHER AVAILABLE

EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO

THE RIGHT OF THE ISSUER AND THE INDENTURE TRUSTEE, PRIOR TO ANY SUCH OFFER,

SALE OR TRANSFER PURSUANT TO CLAUSE (D), TO REQUIRE THE DELIVERY OF AN OPINION

OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF

THEM.  THIS LEGEND WILL BE REMOVED UPON

THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING

OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A

DEPOSITARY OR A NOMINEE THEREOF.  THIS

NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO

TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY

PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED

CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

A-1

 

UNLESS THIS NOTE IS PRESENTED BY AN

AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (“DTC”), A NEW YORK

CORPORATION, 55 WATER STREET, NEW YORK, NEW YORK 10004, TO THE ISSUER OR THE

REGISTRAR, 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 BECAUSE THE

REGISTERED OWNER, CEDE & CO., HAS AN INTEREST HEREIN.

 

A-2

 

CUSIP No. 401620 AA 7

 

6.75% Secured Note

 

Guess? Royalty

Finance LLC, a limited liability company organized and existing under the laws

of the State of Delaware (herein referred to as the “Issuer”), for value

received, hereby promises to pay to Cede & Co., or its registered assigns,

the lesser of the principal sum of

$                                 

Dollars ($                     )

or the outstanding principal amount of this Note, payable on the earlier of the

Payment Date occurring in June, 2012 (the “Maturity Date”) and the

Redemption Date, if any, pursuant to Section 10.1 of the Indenture

referred to on the reverse hereof.

 

Accrued

interest with respect to the Notes shall be payable on each Payment Date.  The amount of interest so payable on each

Payment Date shall be equal to the product of (i) the outstanding principal

amount of the Notes on the preceding Payment Date (or, in the case of the

initial Payment Date, on the Closing Date), after giving effect to any

repayment of the Notes occurring on such preceding Payment Date and (ii) the

Interest Rate divided by four; provided that, with respect to the

initial Payment Date, interest on the Notes will be calculated based upon the

Interest Rate per annum from the Closing Date to the initial Payment Date

calculated on the basis of a year of 360 days consisting of twelve 30-day

months.

 

All payments

made by the Issuer with respect to this Note shall be applied as set forth in

the Indenture.

 

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 Authenticating

Agent or the Indenture Trustee whose name appears below by manual signature,

this Note shall not be entitled to any benefit under the Indenture referred to

on the reverse hereof, or be valid or obligatory for any purpose.

 

It is

expressly understood and agreed by the parties hereto that (a) this Note is

executed and delivered by BNY Midwest Trust Company, not individually or

personally but solely as indenture trustee of the Issuer (the “Indenture

Trustee”), in the exercise of the powers and authority conferred and vested

in it under the Indenture, (b) each of the representations, undertakings and

agreements herein made on the part of the Issuer is made and intended not as

personal representations, undertakings and agreements by the Indenture Trustee

but is made and intended for the purpose of binding only the Issuer and (c)

under no circumstances shall the Indenture Trustee be personally liable for the

payment of any indebtedness or expenses of the Issuer or be liable for the

breach or failure of any obligation, representation, warranty or covenant made

or undertaken by the Issuer under the Indenture or the other Transaction

Documents.

 

A-3

 

IN WITNESS

WHEREOF, the Issuer has caused this instrument to be signed, manually or in

facsimile, by an Authorized Officer, as of the date set forth below.

 

	

   

  	

  GUESS?

  ROYALTY FINANCE LLC

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Printed

  Name:

  
	

   

  	

   

  	

  Title:

  

 

CERTIFICATE OF AUTHENTICATION

 

This is the

Note designated above and referred to in the within-mentioned Indenture.

 

	

   

  	

  [INDENTURE

  TRUSTEE]

  
	

   

  	

  or

  
	

   

  	

  [AUTHENTICATING

  AGENT]

  
	

   

  	

  not in its

  individual capacity but solely as

  Authenticating Agent

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Printed

  Name:

  
	

   

  	

   

  	

  Title:

  
	

   

  	

   

  	

   

  
	

  Dated:

  	

   

  	

   

  	

   

  	

   

  
					

 

A-4

 

[REVERSE OF NOTE]

 

This Note is

one of a duly authorized issue of Notes of the Issuer, designated as its

$75,000,000 6.75% Secured Notes (the “Notes”), all issued under an

Indenture, dated as of April 28, 2003 (the “Indenture”), between the

Issuer and BNY Midwest Trust Company, as Indenture Trustee (the “Indenture

Trustee”), to which Indenture and all indentures supplemental thereto

reference is hereby made for a statement of the respective rights and

obligations thereunder of the Issuer, the Indenture Trustee and the

Noteholders.  The Notes are subject to

all terms of the Indenture.  All terms

used in this Note that are defined in the Indenture, as supplemented or

amended, shall have the meanings assigned to them in or pursuant to the

Indenture, as so supplemented or amended.

 

The Notes are

and will be equally and ratably secured by the Indenture Collateral pledged as

security therefor as provided in the Indenture subject to the priorities of

allocations as to interest and principal payments as described therein.

 

The principal

of the Notes shall be payable on each Payment Date.  During the Controlled Amortization Period, principal shall be

payable in respect of the Notes in an amount equal to the lesser of (i) the

Target Principal Reduction Amount for such Payment Date and (ii) Available

Principal Collections for such Payment Date. 

On each Payment Date occurring during the Rapid Amortization Period,

principal shall be payable in respect of the Notes in an amount equal to the

lesser of (i) Available Principal Collections on such Payment Date and (ii) the

unpaid principal amount of the Notes. 

The unpaid principal amount of the Notes shall be due and payable on the

Maturity Date.  The Notes so paid may

not be reissued hereunder.

 

Notices in

connection with redemptions of Notes shall be mailed to Noteholders as provided

in Section 10.2 of the Indenture.

 

As provided in

the Indenture and subject to certain limitations set forth therein, and subject

to such reasonable regulations as it may prescribe, the Issuer shall provide

for the registration of Notes and the registration of transfers of Notes.

 

Upon surrender

for registration of transfer of any Note at the office or agency of the Issuer

to be maintained as provided in Section 3.2 of the Indenture, the Issuer

shall execute, and the Indenture Trustee or the Authenticating Agent shall

authenticate and the Noteholder shall obtain from the Note Registrar, 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 a Noteholder, Notes may be exchanged for other Notes in any authorized

denominations, of a like aggregate amount, upon surrender of the Notes to be

exchanged at such office or agency. 

Whenever any Notes are so surrendered for exchange, the Issuer shall

execute, and the Authenticating Agent shall authenticate and the Noteholder

shall obtain from the Note Registrar, the Notes which the Noteholder making the

exchange is entitled to receive.

 

All Notes

issued upon any registration of transfer or exchange of Notes shall be the

valid obligations of the Issuer, evidencing the same debt, and entitled to the

same benefits under this Indenture, as the Notes surrendered upon such

registration of transfer or exchange.

 

A-5

 

Every Note

presented or surrendered for registration of transfer or exchange shall be duly

endorsed, or be accompanied by a written instrument of transfer in form

satisfactory to the Note Registrar duly executed by, the Noteholder thereof or

such Noteholder’s attorney duly authorized in writing, with such signature

guaranteed by a commercial bank or trust company located, or having a

correspondent located in the city in which the Note Registrar’s office is

located, or by a member firm of a national securities exchange, and such other documents

as the Note Registrar may require.

 

The Issuer,

the Note Registrar or the Indenture Trustee may require the payment by the

Noteholder of a sum sufficient to cover any tax or other governmental charge

that may be imposed in connection with any registration of transfer or exchange

of Notes, other than exchanges pursuant to Section 2.3 of the Indenture

not involving any transfer.

 

The preceding

provisions notwithstanding, the Issuer shall not be required to make and the

Note Registrar need not register transfers or exchanges of Notes selected for

redemption or of any Note for a period of 15 days preceding the due date for

any payment with respect to the Note.

 

Each

Noteholder, by its acceptance of a Note or a beneficial interest in a Note,

covenants and agrees that no recourse may be taken, directly or indirectly,

with respect to the obligations of the Issuer, 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 in its individual

capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any

partner, owner, beneficiary, agent, officer, director or employee of the

Indenture Trustee in its individual capacity, any holder of a beneficial

interest in the Issuer, the Indenture Trustee or of any successor or assign of

the Indenture Trustee in its individual capacity, except as any such Person may

have expressly agreed and except as otherwise stated in the Indenture.

 

Each of the

Issuer, the Indenture Trustee, and each Noteholder, by acceptance of a Note or

a beneficial interest in a Note, agrees to treat the Notes as indebtedness for

United States federal income tax purposes.

 

Notwithstanding

any prior termination of the Indenture, the Indenture Trustee agrees that it

shall not, and each Noteholder, by its acceptance of a Note, agrees that it

shall not, prior to the date which is one year and one day after the Notes

(including all interest and premium, if any thereon) shall have been paid in full,

acquiesce, petition or otherwise invoke or cause the Issuer to invoke the

process of any court or government authority for the purpose of commencing or

sustaining a case against the Issuer under any bankruptcy, insolvency,

liquidation or similar law or appointing a receiver, liquidator, assignee,

trustee, custodian, sequestrator or other similar official of the Issuer or any

substantial part of its property, or ordering the winding up or liquidating of

the affairs of the Issuer.

 

Prior to due

presentment for registration of transfer of any Note, the Issuer, the Indenture

Trustee, the Note Registrar, any Paying Agent and any of their respective

agents, shall 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 none

 

A-6

 

of the Issuer, the Indenture Trustee nor any of their respective agents

shall be affected by notice to the contrary.

 

The Indenture

permits, with certain exceptions as therein provided, the amendment thereof and

the modification of the rights and obligations of the Issuer and the rights of

the Noteholders under the Indenture with the consent of the Majority

Holders.  The Indenture also permits the

Indenture Trustee to amend or waive certain terms and conditions set forth in

the Indenture without the consent of Noteholders issued thereunder.

 

The Notes are

issuable only in registered form in denominations as provided in the Indenture,

subject to certain limitations therein set forth.

 

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.

 

Notwithstanding

any other provisions herein or in the Indenture, each Noteholder shall have the

right, which is absolute and unconditional, to receive payment of the principal

of and interest on such Note on or after the respective due dates thereof

expressed herein or in the Indenture and, subject to the terms hereof or of the

Indenture, to institute suit for the enforcement of any such payment, and such

right shall not be impaired without the consent of such Noteholder.

 

A-7

 

EXHIBIT B

 

[FORM OF DEFINITIVE NOTE]

 

THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET

FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL

BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE

HEREOF.

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE

UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),

OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR

OTHERWISE TRANSFERRED EXCEPT AS PERMITTED BY THE FOLLOWING SENTENCES.  THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE

HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE

(THE “RESALE RESTRICTION TERMINATION DATE”) WHICH IS TWO YEARS AFTER

[FOR NON_AI NOTES — THE ORIGINAL ISSUE DATE HEREOF][FOR AI NOTES — THE LAST

DATE ON WHICH ANY OF GUESS? ROYALTY FINANCE LLC (THE “ISSUER”) OR ANY

AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH

NOTE)], ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT

HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE

SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES

ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED

INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A (A “QIB”) THAT PURCHASES

FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB TO WHOM NOTICE IS GIVEN THAT

THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (D) PURSUANT TO ANOTHER

AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,

SUBJECT TO THE RIGHT OF THE ISSUER AND THE INDENTURE TRUSTEE, PRIOR TO ANY SUCH

OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), TO REQUIRE THE DELIVERY OF AN

OPINION OF COUNSEL (WHICH COUNSEL MAY BE IN-HOUSE COUNSEL),, CERTIFICATION

AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM.  THIS LEGEND WILL BE REMOVED UPON THE REQUEST

OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

 

B-1

 

CUSIP No.

[                    ]

 

6.75% Secured Note

 

Guess? Royalty

Finance, LLC, a limited liability company organized and existing under the laws

of the State of Delaware (herein referred to as the “Issuer”), for value

received, hereby promises to pay to the holder of this Note, or its registered

assigns, the lesser of the principal sum of

$                                       

Dollars

($                    )

or the outstanding principal amount of this Note, payable on the earlier of the

Payment Date occurring in December, 2010 (the “Maturity Date”) and the

Redemption Date, if any, pursuant to Section 10.1 of the Indenture referred

to on the reverse hereof.

 

Accrued

interest with respect to the Notes shall be payable on each Payment Date.  The amount of interest so payable on each

Payment Date shall be equal to the product of (i) the outstanding principal

amount of the Notes on the preceding Payment Date (or, in the case of the

initial Payment Date, on the Closing Date), after giving effect to any

repayment of the Notes occurring on such preceding Payment Date and (ii) the

Interest Rate divided by four; provided that, with respect to the

initial Payment Date, interest on the Notes will be calculated based upon the

Interest Rate per annum from the Closing Date to the initial Payment Date

calculated on the basis of a year of 360 days consisting of twelve 30-day

months.

 

All payments

made by the Issuer with respect to this Note shall be applied as set forth in

the Indenture.

 

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 Authenticating

Agent or the Indenture Trustee whose name appears below by manual signature,

this Note shall not be entitled to any benefit under the Indenture referred to

on the reverse hereof, or be valid or obligatory for any purpose.

 

It is

expressly understood and agreed by the parties hereto that (a) this Note is

executed and delivered by BNY Midwest Trust Company, not individually or

personally but solely as indenture trustee of the Issuer (the “Indenture

Trustee”), in the exercise of the powers and authority conferred and vested

in it under the Indenture, (b) each of the representations, undertakings and

agreements herein made on the part of the Issuer is made and intended not as

personal representations, undertakings and agreements by the Indenture Trustee

but is made and intended for the purpose of binding only the Issuer and (c)

under no circumstances shall the Indenture Trustee be personally liable for the

payment of any indebtedness or expenses of the Issuer or be liable for the

breach or failure of any obligation, representation, warranty or covenant made

or undertaken by the Issuer under this Indenture or the other Transaction

Documents.

 

B-2

 

IN WITNESS

WHEREOF, the Issuer has caused this instrument to be signed, manually or in

facsimile, by an Authorized Officer, as of the date set forth below.

 

 

	

   

  	

  GUESS?

  ROYALTY FINANCE LLC

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Printed

  Name:

  
	

   

  	

   

  	

  Title:

  

 

 

CERTIFICATE OF AUTHENTICATION

 

This is the

Note designated above and referred to in the within-mentioned Indenture.

 

	

   

  	

  [INDENTURE

  TRUSTEE]

  
	

   

  	

  or

  
	

   

  	

  [AUTHENTICATING

  AGENT]

  
	

   

  	

  not in its

  individual capacity but solely as

  Authenticating Agent

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Printed

  Name:

  
	

   

  	

   

  	

  Title:

  
	

   

  	

   

  	

   

  
	

  Dated:

  	

   

  	

   

  	

   

  	

   

  
					

 

B-3

 

[REVERSE OF NOTE]

 

This Note is

one of a duly authorized issue of Notes of the Issuer, designated as its

$75,000,000 6.75% Secured Notes (the “Notes”), all issued under an

Indenture, dated as of April 28, 2003 (the “Indenture”), between the

Issuer and BNY Midwest Trust Company, as Indenture Trustee (the “Indenture

Trustee”), to which Indenture and all indentures supplemental thereto

reference is hereby made for a statement of the respective rights and

obligations thereunder of the Issuer, the Indenture Trustee and the

Noteholders.  The Notes are subject to

all terms of the Indenture.  All terms

used in this Note that are defined in the Indenture, as supplemented or

amended, shall have the meanings assigned to them in or pursuant to the

Indenture, as so supplemented or amended.

 

The Notes are

and will be equally and ratably secured by the Indenture Collateral pledged as

security therefor as provided in the Indenture subject to the priorities of

allocations as to interest and principal payments as described therein.

 

The principal

of the Notes shall be payable on each Payment Date.  During the Controlled Amortization Period, principal shall be

payable in respect of the Notes in an amount equal to the lesser of (i) the

Target Principal Reduction Amount for such Payment Date and (ii) Available

Principal Collections for such Payment Date. 

On each Payment Date occurring during the Rapid Amortization Period,

principal shall be payable in respect of the Notes in an amount equal to the

lesser of (i) Available Principal Collections on such Payment Date and (ii) the

unpaid principal amount of the Notes. 

The unpaid principal amount of the Notes shall be due and payable on the

Maturity Date.  The Notes so paid may

not be reissued hereunder.

 

The Notes may

be redeemed at the option of the Issuer in accordance with Article X of the

Indenture.  Notices in connection with

redemptions of Notes shall be mailed to Noteholders as provided in

Section 10.2 of the Indenture.

 

As provided in

the Indenture and subject to certain limitations set forth therein, and subject

to such reasonable regulations as it may prescribe, the Issuer shall provide

for the registration of Notes and the registration of transfers of Notes.

 

Upon surrender

for registration of transfer of any Note at the office or agency of the Issuer

to be maintained as provided in Section 3.2 of the Indenture and subject

to the limitations of Section 2.4 of the Indenture, the Issuer shall

execute, and the Indenture Trustee or the Authenticating Agent shall

authenticate and the Noteholder shall obtain from the Note Registrar, 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 a Noteholder and subject to certain limitations set forth in the Indenture,

Notes may be exchanged for other Notes in any authorized denominations, of a

like aggregate amount, upon surrender of the Notes to be exchanged at such

office or agency.  Whenever any Notes

are so surrendered for exchange, the Issuer shall execute, and the

Authenticating Agent shall authenticate and the Noteholder shall obtain from the

Note Registrar, the Notes which the Noteholder making the exchange is entitled

to receive.

 

B-4

 

All Notes

issued upon any registration of transfer or exchange of Notes shall be the

valid obligations of the Issuer, evidencing the same debt, and entitled to the

same benefits under this Indenture, as the Notes surrendered upon such

registration of transfer or exchange.

 

Every Note

presented or surrendered for registration of transfer or exchange shall be duly

endorsed, or be accompanied by a written instrument of transfer in form

satisfactory to the Note Registrar duly executed by, the Noteholder thereof or

such Noteholder’s attorney duly authorized in writing, with such signature

guaranteed by a commercial bank or trust company located, or having a

correspondent located in the city in which the Note Registrar’s office is

located, or by a member firm of a national securities exchange, and such other

documents as the Note Registrar may require.

 

The Issuer,

the Note Registrar or the Indenture Trustee may require the payment by the

Noteholder of a sum sufficient to cover fees and expenses related to the

registration of transfer or exchange of Notes, which sum shall also be

sufficient to cover any tax or other governmental charge that may be imposed in

connection with any registration of transfer or exchange of Notes, other than

exchanges pursuant to Section 2.3 of the Indenture not involving any

transfer.

 

The preceding

provisions notwithstanding, the Issuer shall not be required to make and the

Note Registrar need not register transfers or exchanges of Notes selected for

redemption or of any Note for a period of 15 days preceding the due date for

any payment with respect to the Note.

 

Each

Noteholder, by its acceptance of a Note or a beneficial interest in a Note,

covenants and agrees that no recourse may be taken, directly or indirectly,

with respect to the obligations of the Issuer, the Indenture Trustee on the

Notes or under the Indenture, the Guarantee, or any certificate or other

writing delivered in connection therewith, against (i) the Indenture Trustee in

its individual capacity, (ii) any owner of a beneficial interest in the Issuer,

(iii) any partner, owner, beneficiary, agent, officer, director or employee of

the Indenture Trustee in its individual capacity, any holder of a beneficial

interest in the Issuer, the Indenture Trustee or of any successor or assign of

the Indenture Trustee in its individual capacity, except as any such Person may

have expressly agreed and except as otherwise stated in the Indenture or (iv)

IP Holder in violation of Section 6.6 of the Guarantee.

 

Each of the

Issuer, the Indenture Trustee, and each Noteholder, by acceptance of a Note or

a beneficial interest in a Note, agrees to treat the Notes as indebtedness for

United States federal income tax purposes.

 

Notwithstanding

any prior termination of the Indenture, the Indenture Trustee agrees that it

shall not, and each Noteholder, by its acceptance of a Note, agrees that it

shall not, prior to the date which is one year and one day after the Notes

(including all interest and premium, if any thereon) shall have been paid in

full, acquiesce, petition or otherwise invoke or cause the Issuer to invoke the

process of any court or government authority for the purpose of commencing or

sustaining a case against the Issuer under any bankruptcy, insolvency,

liquidation or similar law or appointing a receiver, liquidator, assignee,

trustee, custodian, 

 

B-5

 

sequestrator or other similar official of the Issuer or any substantial

part of its property, or ordering the winding up or liquidating of the affairs

of the Issuer.

 

Prior to due

presentment for registration of transfer of any Note, the Issuer, the Indenture

Trustee, the Note Registrar, any Paying Agent and any of their respective

agents, shall 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 none of the

Issuer, the Indenture Trustee nor any of their respective agents shall be

affected by notice to the contrary.

 

The Indenture

permits, with certain exceptions as therein provided, the amendment thereof and

the modification of the rights and obligations of the Issuer and the rights of

the Noteholders under the Indenture with the consent of the Majority

Holders.  The Indenture also permits the

Indenture Trustee to amend or waive certain terms and conditions set forth in

the Indenture without the consent of Noteholders issued thereunder.

 

The Notes are

issuable only in registered form in denominations as provided in the Indenture,

subject to certain limitations therein set forth.

 

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.

 

Notwithstanding

any other provisions herein or in the Indenture, each Noteholder shall have the

right, which is absolute and unconditional, to receive payment of the principal

of and interest on such Note on or after the respective due dates thereof

expressed herein or in the Indenture and, subject to the terms hereof or of the

Indenture, to institute suit for the enforcement of any such payment, and such

right shall not be impaired without the consent of such Noteholder.

 

B-6

 

EXHIBIT C

 

Rule 144A Certificate

 

                                       ,

         

 

	

  BNY Midwest

  Trust Company

  2 North LaSalle, Suite 1020

  Chicago, IL 60602

  Attention: Corporate Trust/Structured Finance

  

 

	

  Re:

  	

  Guess?

  Royalty Finance LLC (the “Issuer”)

  6.75% Secured Notes Due 2012 (the “Notes”)

  
	

   

  	

  dated as of

  April 28, 2003, relating to the Notes

  

 

Ladies and Gentlemen:

 

TO BE COMPLETED BY PURCHASER IF (A) BELOW IS

CHECKED.

 

This Certificate relates to:

 

[CHECK A

OR B AS APPLICABLE.]

 

o                                    Our

proposed purchase of

$              

principal amount of Notes issued under the Indenture.

 

o                                    Our

proposed exchange of

$              

principal amount of Notes issued under the Indenture for an equal principal

amount of Notes to be held by us.

 

We and, if applicable, each account for which

we are acting, are a qualified institutional buyer within the meaning of Rule

144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “Securities

Act”).  If we are acting on behalf

of an account, we exercise sole investment discretion with respect to such

account.  We are aware that the transfer

of Notes to us, or such exchange, as applicable, is being made in reliance upon

the exemption from the provisions of Section 5 of the Securities Act

provided by Rule 144A.  Prior to the

date of this Certificate we have received such information regarding the Issuer

as we have requested pursuant to Rule 144A(d)(4) or have determined not to

request such information.

 

C-1

 

You and the Issuer are entitled to rely upon

this Certificate and are irrevocably authorized to produce this Certificate or

a copy hereof to any interested party in any administrative or legal proceeding

or official inquiry with respect to matters covered hereby.

 

Very truly yours,

 

	

  [NAME OF

  PURCHASER

  (FOR TRANSFERS) OR OWNER

  (FOR EXCHANGES)]

  
	

   

  
	

  By:

  	

   

  	

   

  
	

   

  
	

  Name:

  
	

  Title:

  
	

  Address:

  
	

   

  
	

   

  
	

  Date:

  	

   

  	

   

  
				

 

C-2

 

EXHIBIT D

 

Form of Quarterly Servicer’s Report Certificate

 

[INDENTURE TRUSTEE LETTERHEAD]

 

Guess? Royalty Finance LLC

2222 Glendale Galleria 2

Glendale, California  91324

 

Moody’s Investors Service

99 Church Street

New York, New York 10007

Attention:  ABS Monitoring Group

 

Standard & Poor’s, a

division of The McGraw-Hill Companies, Inc.

55 Water Street, 41st Floor

New York, New York 10041

Attention:  Asset Back Surveillance

Department

 

Re:                               Quarterly

Servicer’s Report Certificate

 

Ladies and Gentlemen:

 

Reference is

made to that Indenture, dated as of April 28, 2003 (the “Indenture”), between

Guess? Royalty Finance LLC, a limited liability company organized under the

laws of the State of Delaware, and BNY Midwest Trust Company, acting as

indenture trustee and not in its individual capacity.

 

Pursuant to

Section 2.14 of the Indenture, I have reviewed the enclosed Quarterly

Servicer’s Report dated

                    ,

20   , and I hereby certify that:

 

1.                                       I

have verified the accuracy of the amounts deposited into, withdrawn from and on

deposit in the Trust Accounts as described therein, and

 

2.                                       I

have verified the mathematical accuracy of servicer calculations at face value

(including the Historical Coverage Ratio and Prospective Coverage Ratio) and

calculation of principal and interest due on the related Payment Date.

 

 

	

   

  	

  Very truly

  yours,

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  BNY MIDWEST

  TRUST COMPANY

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Date:

  	

   

  	

   

  	

   

  
						

 

D-1

 

EXHIBIT E

 

Form of Servicer’s Notice Regarding Distribution Account

 

[SERVICER LETTERHEAD]

 

BNY Midwest Trust Company

2 North LaSalle, Suite 1020

Chicago, IL 60602

Attention: Corporate Trust/Structured Finance

 

Re:                               Servicer

Notice Regarding Distribution Account

 

Ladies and Gentlemen:

 

Reference is

made to that Indenture, dated as of April 28, 2003 (the “Indenture”),

between Guess? Royalty Finance LLC, a limited liability company organized under

the laws of the State of Delaware, and BNY Midwest Trust Company, acting as

indenture trustee and not in its individual capacity.

 

This letter is

being furnished pursuant to Section 8.2(a) of the Indenture, and shall

serve as notice that the amount on deposit in the Distribution Account at least

equals the Estimated Distribution Amount for the Payment Date next succeeding

the last day of the current Measurement Period.

 

The

calculation of the Estimated Distribution Amount appears below.

 

	

   

  	

  Very truly

  yours,

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  [SERVICER]

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Date:

  	

   

  	

   

  	

   

  
						

 

E-1Exhibit

4.2

 

 

 

GUARANTEE AND COLLATERAL AGREEMENT

 

 

made by

 

 

GUESS? IP HOLDER L.P.

 

 

in favor of

 

 

BNY MIDWEST TRUST COMPANY,

 

as Indenture Trustee

 

 

Dated as of April 28, 2003

 

 

 

 

TABLE OF CONTENTS

 

	

  SECTION 1.

  	

  DEFINED TERMS

  
	

   

  	

   

  
	

  1.1

  	

  Definitions

  
	

  1.2

  	

  Other

  Definitional Provisions

  
	

   

  	

   

  
	

  SECTION 2.

  	

  GUARANTEE

  
	

   

  	

   

  
	

  2.1

  	

  Guarantee

  
	

  2.2

  	

  No

  Subrogation

  
	

  2.3

  	

  Amendments,

  etc. with respect to the Issuer Obligations

  
	

  2.4

  	

  Guarantee

  Absolute and Unconditional

  
	

  2.5

  	

  Reinstatement

  
	

  2.6

  	

  Payments

  
	

   

  	

   

  
	

  SECTION 3.

  	

  GRANT OF SECURITY INTEREST

  
	

   

  	

   

  
	

  SECTION 4.

  	

  REPRESENTATIONS AND WARRANTIES

  
	

   

  	

   

  
	

  4.1

  	

  Title; No

  Other Liens

  
	

  4.2

  	

  Perfected

  First Priority Liens

  
	

  4.3

  	

  Jurisdiction

  of Organization; Chief Executive Office

  
	

  4.4

  	

  General

  Intangibles

  
	

   

  	

   

  
	

  SECTION 5.

  	

  COVENANTS

  
	

   

  	

   

  
	

  5.1

  	

  Delivery of

  Instruments, Certificated Securities and Chattel Paper

  
	

  5.2

  	

  Payment of

  Obligations

  
	

  5.3

  	

  Maintenance

  of Perfected Security Interest; Further Documentation

  
	

  5.4

  	

  Changes in

  Locations, Name, etc

  
	

  5.5

  	

  Notices

  
	

  5.6

  	

  Maintenance

  of Separate Existence

  
	

  5.7

  	

  Negative

  Covenants

  
	

  5.8

  	

  Existence

  
	

  5.9

  	

  Restrictions

  on Certain Actions

  
	

  5.10

  	

  Performance

  of Obligations

  
	

  5.11

  	

  Perfection

  of Intellectual Property after the Closing Date

  
	

   

  	

   

  
	

  SECTION 6.

  	

  REMEDIAL PROVISIONS

  
	

   

  	

   

  
	

  6.1

  	

  Communications

  with Obligors; IP Holder Remains Liable

  
	

  6.2

  	

  Proceeds to

  be Turned Over To Indenture Trustee

  
	

  6.3

  	

  Application

  of Proceeds

  
	

  6.4

  	

  Code and

  Other Remedies

  
	

  6.5

  	

  Intercreditor

  Issues

  

 

i

 

	

  6.6

  	

  Non

  Disturbance

  
	

   

  	

   

  
	

  SECTION 7.

  	

  THE INDENTURE TRUSTEE

  
	

   

  	

   

  
	

  7.1

  	

  Indenture

  Trustee’s Appointment as Attorney-in-Fact, etc

  
	

  7.2

  	

  Duty of

  Indenture Trustee

  
	

  7.3

  	

  Execution

  of Financing Statements

  
	

  7.4

  	

  Authority

  of Indenture Trustee

  
	

   

  	

   

  
	

  SECTION 8.

  	

  MISCELLANEOUS

  
	

   

  	

   

  
	

  8.1

  	

  Amendments

  in Writing

  
	

  8.2

  	

  Notices

  
	

  8.3

  	

  No Waiver

  by Course of Conduct; Cumulative Remedies

  
	

  8.4

  	

  Enforcement

  Expenses; Indemnification

  
	

  8.5

  	

  Successors

  and Assigns

  
	

  8.6

  	

  Counterparts

  
	

  8.7

  	

  Severability

  
	

  8.8

  	

  Section

  Headings

  
	

  8.9

  	

  Integration

  
	

  8.10

  	

  GOVERNING

  LAW

  
	

  8.11

  	

  Submission

  To Jurisdiction; Waivers

  
	

  8.12

  	

  Acknowledgements

  
	

  8.13

  	

  Releases

  
	

  8.14

  	

  WAIVER OF

  JURY TRIAL

  
	

   

  	

   

  
	

  SCHEDULES

  	

   

  
	

   

  	

   

  
	

  Schedule 1

  	

  Notice Addresses

  
	

  Schedule 2

  	

  Perfection Matters

  
	

  Schedule 3

  	

  Jurisdictions of Organization and Chief Executive Offices

  

 

ii

 

GUARANTEE AND COLLATERAL AGREEMENT, dated as of April 28, 2003 (this “Agreement”),

made by Guess? IP Holder L.P. (the “IP Holder”) in favor of BNY Midwest

Trust Company (the “Indenture Trustee”) for the benefit of the holders

of notes (the “Noteholders”) issued pursuant to the Indenture, dated as

of April 28, 2003 (as amended, supplemented or otherwise modified from time to

time, the “Indenture”) between the Indenture Trustee and Guess? Royalty

Finance LLC (the “Issuer”).

 

W  I  T  N

E  S  S  E  T  H:

 

 

WHEREAS, pursuant to the Indenture, the Noteholders have severally

agreed to purchase notes (the “Notes”) from the Issuer upon the terms

and subject to the conditions set forth therein;

 

WHEREAS, it is a condition to the Noteholders’ purchase of the Notes

that IP Holder shall have executed and delivered this Agreement to the

Indenture Trustee for the benefit of the Noteholders; and

 

WHEREAS, IP Holder will derive substantial direct and indirect benefit

from the proceeds of the sale of the Notes;

 

NOW, THEREFORE, in consideration of the premises and to induce the

Noteholders to purchase the Notes, IP Holder hereby agrees with the Indenture

Trustee, for the benefit of the Noteholders, as follows:

 

SECTION 1.   DEFINED TERMS

 

1.1                                 Definitions.  (a) 

Unless otherwise defined herein, terms defined in Annex X attached hereto

and used herein shall have the meanings given to them in Annex X. 

 

(b)                                 The

following terms are used herein as defined in the New York UCC:  Accounts, Certificated Security, Chattel

Paper, Documents, General Intangibles, Instruments, and Supporting Obligations.

 

1.2                                 Other

Definitional Provisions.  (a)  The words “hereof,” “herein”, “hereto” and

“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,

and Section and Schedule references are to this Agreement unless otherwise

specified.

 

(b)                                 The

meanings given to terms defined herein shall be equally applicable to both the

singular and plural forms of such terms.

 

SECTION 2.   GUARANTEE

 

2.1                                 Guarantee.  (a) 

IP Holder hereby unconditionally and irrevocably, guarantees as

principal, and not as surety, to the Indenture Trustee, for the benefit of the

Noteholders and their respective successors, indorsees, transferees and

assigns, the prompt and complete payment and performance by the Issuer of the

Issuer Obligations. 

 

 

(b)                                 Upon

the occurrence of an Event of Default, the Indenture Trustee will demand for

payment hereunder; provided that the Indenture Trustee, on behalf of the

Noteholders, may not appropriate and realize upon the Guarantee Collateral, or

any part thereof, until the occurrence of any Enforcement Event.

 

(c)                                  The

guarantee contained in this Section 2 shall remain in full force and effect

until all the Issuer Obligations and the obligations of IP Holder under the

guarantee contained in this Section 2 shall have been satisfied by payment in

full.

 

2.2                                 No

Subrogation.  Notwithstanding any

payment made by IP Holder hereunder, IP Holder shall not be entitled to be

subrogated to any of the rights of the Indenture Trustee or any Noteholder

against the Issuer or any collateral security or guarantee held by the

Indenture Trustee or any Noteholder for the payment of the Issuer Obligations,

nor shall IP Holder seek or be entitled to seek any contribution or

reimbursement from the Issuer until all amounts owing to the Indenture Trustee

and the Noteholders by the Issuer on account of the Issuer Obligations are paid

in full.  If any amount shall be paid to

IP Holder on account of such subrogation rights at any time when all of the

Issuer Obligations shall not have been paid in full, such amount shall be held

by IP Holder in trust for the Indenture Trustee, for the benefit of the

Noteholders, segregated from other funds of IP Holder, and shall, forthwith upon

receipt by IP Holder, be deposited into the Lockbox Account in the exact form

received by IP Holder (duly indorsed by IP Holder to the Indenture Trustee, if

required), to be applied against the Issuer Obligations, whether matured or

unmatured, in accordance with the Indenture.

 

2.3                                 Amendments,

etc. with respect to the Issuer Obligations.  IP Holder shall remain obligated hereunder notwithstanding that,

without any reservation of rights against IP Holder and without notice to or

further assent by IP Holder, any demand for payment of any of the Issuer

Obligations made by the Indenture Trustee or any Noteholder may be rescinded by

the Indenture Trustee or such Noteholder and any of the Issuer Obligations

continued, and the Issuer Obligations, or the liability of any other Person

upon or for any part thereof, or any collateral security or guarantee therefor,

may, from time to time, in whole or in part, be renewed, extended, amended,

modified, accelerated, compromised, waived, surrendered or released by the Indenture

Trustee or any Noteholder, and the Indenture and the other Transaction

Documents and any other documents executed and delivered in connection

therewith may be amended, modified, supplemented or terminated, in whole or in

part, as the Indenture Trustee (in accordance with the terms of such agreements

or documents) may deem advisable from time to time, and any collateral

security, or guarantee at any time held by the Indenture Trustee or any

Noteholder for the payment of the Issuer Obligations may be sold, exchanged,

waived, surrendered or released. 

Neither the Indenture Trustee nor any Noteholder shall have any

obligation to protect, secure, perfect or insure any Lien at any time held by

it as security for the Issuer Obligations or for the guarantee contained in

this Section 2 or any property subject thereto.

 

2.4                                 Guarantee

Absolute and Unconditional.  IP

Holder waives any and all requirement of notice of the creation, renewal,

extension or accrual of any of the Issuer Obligations and notice of or proof of

reliance by the Indenture Trustee or any Noteholder upon the guarantee

contained in this Section 2 or acceptance of the guarantee contained in this

Section 2; the Issuer Obligations, and any of them, shall conclusively be

deemed to have been created, contracted or incurred, or renewed, extended,

amended or waived, in reliance upon the guarantee

 

2

 

contained in this Section 2;

and all dealings between the Issuer and IP Holder, on the one hand, and the

Indenture Trustee and the Noteholders, on the other hand, likewise shall be

conclusively presumed to have been had or consummated in reliance upon the

guarantee contained in this Section 2. 

IP Holder waives requirement of diligence, presentment, protest, demand

for payment and notice of default or nonpayment to or upon the Issuer with

respect to the Issuer Obligations.  IP

Holder understands and agrees that the guarantee contained in this Section 2

shall be construed as a continuing, absolute and unconditional guarantee of

payment without regard to (a) the validity or enforceability of the Indenture

or any other Transaction Document, any of the Issuer Obligations or any other

collateral security therefor or guarantee or right of offset with respect thereto

at any time or from time to time held by the Indenture Trustee or any

Noteholder, (b) any defense, set-off or counterclaim (other than a defense of

payment or performance) which may at any time be available to or be asserted by

the Issuer, IP Holder or any other Person against the Indenture Trustee or any

Noteholder, or (c) any other circumstance whatsoever (with or without notice to

or knowledge of the Issuer or IP Holder) which constitutes, or might be

construed to constitute, an equitable or legal discharge of the Issuer for the

Issuer Obligations, or of IP Holder under the guarantee contained in this

Section 2, in bankruptcy or in any similar proceeding.  When making any demand hereunder or

otherwise pursuing its rights and remedies hereunder against IP Holder, the

Indenture Trustee or any Noteholder may, but shall be under no obligation to,

make a similar demand on or otherwise pursue such rights and remedies as it may

have against the Issuer, IP Holder or any other Person or against any

collateral security or guarantee for the Issuer Obligations or any right of

offset with respect thereto, and any failure by the Indenture Trustee or any

Noteholder to make any such demand, to pursue such other rights or remedies or

to collect any payments from the Issuer, IP Holder or any other Person or to

realize upon any such collateral security or guarantee or to exercise any such

right of offset, or any release of the Issuer, IP Holder or any other Person or

any such collateral security, guarantee or right of offset, shall not relieve

IP Holder of any obligation or liability hereunder, and shall not impair or

affect the rights and remedies, whether express, implied or available as a

matter of law, of the Indenture Trustee or any Noteholder against IP Holder.  For the purposes hereof “demand” shall

include the commencement and continuance of any legal proceedings by the

Indenture Trustee or any Noteholder with respect to this Agreement, the

Indenture or the Notes .

 

2.5                                 Reinstatement.  The guarantee contained in this Section 2

shall continue to be effective, or be reinstated, as the case may be, if at any

time payment, or any part thereof, of any of the Issuer Obligations is

rescinded or must otherwise be restored or returned by the Indenture Trustee or

any Noteholder upon the insolvency, bankruptcy, dissolution, liquidation or

reorganization of the Issuer or IP Holder, or upon or as a result of the

appointment of a receiver, intervenor or conservator of, or trustee or similar

officer for, the Issuer or IP Holder or any substantial part of its property,

or otherwise, all as though such payments had not been made.

 

2.6                                 Payments.  IP Holder hereby guarantees that payments

hereunder will be timely paid to the Indenture Trustee for deposit in the

Lockbox Account without set-off or counterclaim in Dollars.

 

SECTION 3.   GRANT OF SECURITY

INTEREST

 

IP Holder hereby assigns and transfers to the Indenture Trustee and

hereby grants to the Indenture Trustee, for the benefit of the Noteholders, a

security interest in, all of the

 

3

 

following property now owned or

at any time hereafter acquired by IP Holder or in which IP Holder now has or at

any time in the future may acquire any right, title or interest (collectively,

the “Guarantee Collateral”), as collateral security for the prompt and

complete payment and performance when due of the Obligations:

 

(a)                                  all

Guess? Trademarks;

 

(b)                                 all

of the Guess? Contributed IP, the Licensing Contributed License Agreements and

the Guess? License Agreement;

 

(c)                                  all

related Accounts;

 

(d)                                 all

books and records pertaining to the Guarantee Collateral; and

 

(e)                                  to

the extent not otherwise included in the foregoing, all Goodwill, the Guess?

Contributed License Agreement Files and Licensing Contributed License Agreement

Files, and all proceeds and Supporting Obligations of any and all of the

foregoing and all collateral security and guarantees given by any Person with

respect to any of the foregoing.

 

Insofar as the foregoing grant of a security interest relates to

amounts included in the Obligations owing to the Back-Up Manager, such grant is

subject to the subordination provisions set forth in the Back-Up Management

Agreement that specify that payments of such amounts to the Back-Up Manager are

subject to the priority of payments set forth in the Indenture.

 

SECTION 4.   REPRESENTATIONS AND

WARRANTIES

 

To induce the Noteholders to purchase the Notes issued under the

Indenture, IP Holder hereby represents and warrants to the Indenture Trustee,

for the benefit of the Noteholders that:

 

4.1                                 Title;

No Other Liens.  Except for the

Permitted Liens, IP Holder has good and marketable title to each item of the

Guarantee Collateral free and clear of any and all Liens, claims or

encumbrances of others.  No financing

statement or other public notice with respect to all or any part of the

Guarantee Collateral is on file or of record in any public office, except such

as have been filed (i) pursuant to the Guess? Contribution Agreement, Licensing

Contribution Agreement or Receivables Contribution Agreement or (ii) in favor

of the Indenture Trustee, for the benefit of the Noteholders, pursuant to this

Agreement or the Indenture or such as have been properly amended or

terminated.  For the avoidance of doubt,

it is understood and agreed that IP Holder has and will continue to grant, as

part of its business, licenses to third parties to use the Guess? Trademarks

owned or developed by IP Holder.  Such

licensing activities constitute Permitted Liens.  Each of the Indenture Trustee and each Noteholder understands

that any such licenses may be exclusive to the applicable licensees, and such

exclusivity provisions may limit the ability of the Indenture Trustee to

utilize, sell, lease or transfer the Guess? Trademarks or otherwise realize

value from the Guess? Trademarks pursuant hereto.

 

4

 

4.2                                 Perfected

Liens.  The security interests

granted pursuant to this Agreement (a) upon completion of the filing of all

appropriate financing statements in the proper filing office and other actions

specified on Schedule 2 (which, in the case of all filings and other

documents referred to on said Schedule, have been delivered to the Indenture

Trustee in completed and duly executed form) will constitute valid and

continuing first priority perfected security interests in all of the Guarantee

Collateral in favor of the Indenture Trustee, for the benefit of the

Noteholders, as collateral security for the Obligations, enforceable in

accordance with the terms hereof against IP Holder and all creditors of IP

Holder and any Persons purporting to purchase any Guarantee Collateral from IP

Holder and (b) are prior to all other Liens on the Guarantee Collateral in

existence on the date hereof except for Permitted Liens.  Other than Liens created pursuant to the

Transaction Documents, IP Holder has not pledged, assigned, sold, granted a

security interest in, or otherwise conveyed any of the Guarantee Collateral.  IP Holder has not authorized the filing of

and is not aware of any financing statements against IP Holder that include a

description of collateral covering the Guarantee Collateral other than any

financing statement relating to the security interest granted to the Indenture

Trustee hereunder  or otherwise pursuant

to the Transaction Documents.  IP Holder

is not aware of any judgment or tax lien filings against IP Holder (other than

Permitted Liens).

 

4.3                                 Jurisdiction

of Organization; Chief Executive Office. 

On the date hereof, IP Holder’s jurisdiction of organization and

identification number from the jurisdiction of organization are specified on

Schedule 3.  IP Holder has furnished to

the Indenture Trustee a certified charter, certificate of incorporation or

other organization document and good standing certificate as of a date which is

recent to the date hereof.

 

4.4                                 General

Intangibles.  The Guess? Trademarks

and Subject License Agreements constitute General Intangibles and/or marks

registered with the United States Patent and Trademark Office in accordance with

15 U.S.C. et seq.

 

4.5                                 Guarantee

Collateral.  Reference is made to

the representations and warranties set forth in Section 3.03 of the Guess?

Contribution Agreement, Section 3.03 of the Licensing Contribution Agreement,

and Section 8.01 of the Guess? License Agreement.  IP Holder hereby adopts as its own and confirms the accuracy as

of the date hereof, being deemed to restate here to the same extent as if set

forth in full herein, all such representations and warranties with respect to

all of the items of Guarantee Collateral to the Indenture Trustee for the

benefit of the Noteholders.

 

SECTION 5.   COVENANTS

 

IP Holder covenants and agrees with the Indenture Trustee that, from

and after the date of this Agreement until the Obligations shall have been paid

in full:

 

5.1                                 Delivery

of Instruments, Certificated Securities and Chattel Paper.  If any amount payable under or in connection

with any of the Guarantee Collateral shall be or become evidenced by any

Instrument, Certificated Security or Chattel Paper, such Instrument,

Certificated Security or Chattel Paper shall be immediately delivered to the

Indenture Trustee, duly indorsed in a manner satisfactory to the Indenture

Trustee, to be held as Guarantee Collateral pursuant to this Agreement.

 

5

 

5.2                                 Payment

of Obligations.  IP Holder will pay

and discharge or otherwise satisfy at or before maturity or before they become

delinquent, as the case may be, all taxes, assessments and governmental charges

or levies imposed upon the Guarantee Collateral or in respect of income or

profits therefrom, as well as all claims of any kind against or with respect to

the Guarantee Collateral, except that no such charge need be paid if the amount

or validity thereof is currently being contested in good faith by appropriate

proceedings; reserves in conformity with GAAP with respect thereto have been

provided on the books of IP Holder; and such proceedings are not reasonably

likely to result in the sale, forfeiture or loss of any material portion of the

Guarantee Collateral or any interest therein. 

 

5.3                                 Maintenance

of Perfected Security Interest; Further Documentation.  (a) 

IP Holder shall maintain the security interest created by this Agreement

as a perfected security interest having at least the priority described in

Section 4.2 and shall defend such security interest against the claims and

demands of all Persons whomsoever.  IP

Holder also shall maintain its ownership and other interests in the Guarantee

Collateral as to which filings or other actions are required in non-U.S.

jurisdictions by timely making all such filings or taking all such actions and

shall defend such ownership or other interests against the claims and demands

of all Persons whomsoever.

 

(b)                                 At

any time and from time to time, upon the written request of the Indenture

Trustee, and at the sole expense of IP Holder, IP Holder will promptly and duly

execute and deliver, and have recorded, such further instruments and documents

and take such further actions as the Indenture Trustee may reasonably request

for the purpose of obtaining or preserving the full benefits of this Agreement

and of the rights and powers herein granted, including, without limitation, (i)

filing any financing or continuation statements under the Uniform Commercial

Code (or other similar laws) in effect in any jurisdiction with respect to the

security interests created hereby, (ii) in the case of any Guarantee

Collateral, taking any actions necessary to enable the Indenture Trustee to

obtain “control” (within the meaning of the applicable Uniform Commercial Code)

with respect thereto to the extent “control” is the basis for perfecting the

Indenture Trustee’s security interest therein and (iii) in the case of the

Intellectual Property (including any license agreements or intellectual

property that become Intellectual Property after the date of this Agreement),

any registration in the United States Patent and Trademark Office and any other

filings as may be required by applicable Requirements of Law or by the laws of

any non-U.S. jurisdiction.

 

5.4                                 Changes

in Locations, Name, etc.  IP Holder

will not, except upon 15 days’ prior written notice to the Indenture Trustee

and delivery to the Indenture Trustee of all additional executed financing

statements and other documents reasonably requested by the Indenture Trustee to

maintain the validity, perfection and priority of the security interests

provided for herein (i) change its jurisdiction of organization from that

referred to in Section 4.3 or (ii) change its name.

 

5.5                                 Notices.  IP Holder will advise the Indenture Trustee

promptly, in reasonable detail, of:

 

6

 

(a)                                  any

Lien (other than any Permitted Lien) on any of the Guarantee Collateral which

would adversely affect the ability of the Indenture Trustee to exercise any of

its remedies hereunder;

 

(b)                                 of

the occurrence of any other event which could reasonably be expected to have a

material adverse effect on the aggregate value of the Guarantee Collateral or

on the security interests created hereby; and

 

(c)                                  each

Rapid Amortization Event, Trapping Event and Event of Default under the

Indenture, a Servicer Default under the Servicing Agreement or an Enforcement

Event under this Guarantee.

 

5.6                                 Maintenance

of Separate Existence.  IP Holder

shall:

 

(a)                                  maintain

its own deposit account or accounts, separate from those of any Affiliate, with

commercial banking institutions and ensure that the funds of IP Holder will not

be diverted to any other Person or for other than organizational uses of IP

Holder, nor will such funds be commingled with the funds of Guess? or any other

Subsidiary or Affiliate of Guess?;

 

(b)                                 to

the extent that it shares the same officers or other employees as any of its

partners or Affiliates, ensure that the salaries of and the expenses related to

providing benefits to such officers and other employees shall be fairly

allocated among such entities, and ensure that each such entity shall bear its

fair share of the salary and benefit costs associated with all such common

officers and employees;

 

(c)                                  to

the extent that it jointly contracts with any of its partners or Affiliates to

do business with vendors or service providers or to share overhead expenses,

ensure that the costs incurred in so doing shall be allocated fairly among such

entities, and ensure that each such entity shall bear its fair share of such

costs.  To the extent that IP Holder

contracts or does business with vendors or service providers where the goods

and services provided are partially for the benefit of any other Person, the

costs incurred in so doing shall be fairly allocated to or among such entities

for whose benefit the goods or services are provided, and each such entity

shall bear its fair share of such costs. 

All material transactions between IP Holder and any of its Affiliates,

whether currently existing or hereafter entered into, shall be only on an arm’s

length basis, it being understood and agreed that the transactions contemplated

in the Transaction Documents meet the requirements of this clause (c);

 

(d)                                 maintain

a principal executive office at a separate address from the address of Guess?

and its Affiliates; provided, that segregated offices in the same

building shall constitute separate addresses for purposes of this clause

(d).  To the extent that IP Holder and

any of its partners or Affiliates have offices in the same location, there

shall be a fair and appropriate allocation of overhead costs among them, and

each such entity shall bear its fair share of such expenses;

 

(e)                                  issue

separate financial statements prepared at least annually and prepared in

accordance with generally accepted accounting principles;

 

7

 

(f)                                    conduct

its affairs in its own name and strictly in accordance with its organizational

documents and observe all necessary, appropriate and customary organizational

formalities, including, but not limited to, holding all regular and special

partners or directors’ meetings appropriate to authorize all organizational

action, keeping separate and accurate minutes of its meetings, passing all

resolutions or consents necessary to authorize actions taken or to be taken,

and maintaining accurate and separate books, records and accounts, including,

but not limited to, payroll and intercompany transaction accounts;

 

(g)                                 not

assume or guarantee any of the liabilities of Guess? or any Affiliate thereof

(other than pursuant to the Transaction Documents);

 

(h)                                 take,

or refrain from taking, as the case may be, all other actions that are

necessary to be taken or not to be taken in order to (i) ensure that the

assumptions and factual recitations set forth in the Bankruptcy Opinion remain

true and correct in all material respects with respect to IP Holder and (ii)

comply with those procedures described in such provisions which are applicable

to IP Holder; and

 

(i)                                     comply

with the covenants and agreements set forth in its agreement of limited

partnership.

 

5.7                                 Negative

Covenants.  So long as this

Guarantee is in effect or any Notes are outstanding, IP Holder shall not:

 

(a)                                  except

as expressly permitted or required by the Transaction Documents, sell,

transfer, exchange or otherwise dispose of, or permit the sale, transfer or

other disposition of, any of the Intellectual Property or any interest therein;

 

(b)                                 (i)

permit the validity or effectiveness of this Guarantee to be impaired, or

permit the Lien created by this Guarantee to be amended, hypothecated,

subordinated, terminated or discharged, (ii) permit any Lien to be created on

or extended to or otherwise arise upon or burden the Guarantee Collateral or

any part thereof or any interest therein or the proceeds thereof (other than

Permitted Liens), (iii) permit the Lien created by this Guarantee not to

constitute a valid first priority perfected security interest in the Guarantee

Collateral;

 

(c)                                  dissolve

or liquidate in whole or in part;

 

(d)                                 issue,

incur, assume, guarantee or otherwise become liable, directly or indirectly,

for any indebtedness for borrowed money except for the Permitted Indebtedness;

 

(e)                                  except

as contemplated by the Transaction Documents, 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;

 

8

 

(f)                                    make

any expenditure (by long-term or operating lease or otherwise) for capital

assets (either realty or personalty);

 

(g)                                 at

any time when an Event of Default has occurred and is continuing, 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 any owner of a beneficial interest in IP Holder or otherwise with

respect to any ownership or equity interest in or of IP Holder, (ii) redeem,

purchase, retire or otherwise acquire for value any such ownership or equity

interest or (iii) set aside or otherwise segregate any amounts for any such

purpose;

 

(h)                                 except

as expressly contemplated herein and in the other Transaction Documents,

consolidate or merge with or into any other Person or sell, lease or otherwise

transfer, directly or indirectly, all or any substantial part of its assets to

any other Person or sell, lease or otherwise transfer, directly or indirectly,

all or any substantial part of its assets to any other Person, other than its

grant of the Guarantee Collateral pursuant to this Agreement and the grant of

the Subject IP pursuant to the Receivables Contribution Agreement; or

 

(i)                                     engage

in any business activity other than as required or contemplated hereunder and

in the other Transaction Documents, or such other activities that are

necessary, suitable or desirable to accomplish the foregoing or are incidental

thereto.

 

5.8                                 Existence.  IP Holder will preserve, renew and keep in

full force and effects its limited partnership existence and rights, privileges

and franchises necessary or desirable in the normal conduct of business.

 

5.9                                 Restrictions

on Certain Actions.  IP Holder will

not take, or knowingly permit to be taken, any action which would terminate or

discharge or prejudice the validity or effectiveness of any of the Transaction

Documents or the validity, effectiveness or priority of the Liens created

thereby or permit any party to any of the Transaction Documents whose

obligations form part of the security created by this Guarantee to be released

from such obligations.  IP Holder will

not license any Subject Trademark to Guess?, Inc. or any of its affiliates on

an exclusive basis except upon certification by the Back-Up Manager that such

license contains commercially reasonable terms that unaffiliated third parties

reasonably would accept as licensees or licensors.  IP Holder will not enter into any license of any Subject

Trademark or permit Guess?, Inc., as licensee under the Guess? License

Agreement, to enter into any sublicense of any Subject Trademark, on an

exclusive basis with any third party to the extent that so doing would violate

any material provision of any Subject License. 

Subject to the foregoing sentences, IP Holder is permitted to license,

and to authorize Guess?, Inc. as licensee under the Guess? License Agreement,

to sublicense Subject Trademarks on an exclusive basis, so long as any such

license contains commercially reasonable terms that unaffiliated third parties

reasonably would accept as licensees or licensors.

 

5.10                           Performance

of Obligations.  IP Holder will not

take any action and will use its best efforts not to permit any action to be

taken by others that would release any Person from any of such Person’s

covenants or obligations under any instrument or agreement included in the

Guarantee Collateral or that would result in the amendment, hypothecation,

subordination, termination or discharge of, or impair the validity or

effectiveness of, any such instrument or

 

9

 

agreement, except as ordered by

any bankruptcy or other court or as expressly provided in, or permitted by,

this Guarantee, any other Transaction Document or such other instrument or

agreement.

 

5.11                           Perfection

of Intellectual Property after the Closing Date.  On the Closing Date, IP Holder shall file and record, or shall

cause to be filed and recorded, financing statements and other filing or

recording documents or instruments with respect to the Guarantee Collateral in

each foreign jurisdiction appropriate to perfect the security interests of the

Indenture Trustee under this Agreement. 

On or prior to the Closing Date, IP Holder shall have delivered a form

of opinion from special Italian counsel to the Issuer, addressed to the Indenture

Trustee, with respect to the creation and enforceability of a perfected

first-priority security interest in the Guarantee Collateral that is located in

or subject to the laws of Italy, with such conditions, exceptions and

exclusions as are customary in Italy, as applicable, and which is satisfactory

to the purchasers purchasing the Notes on the Closing Date.  The final opinion shall be delivered within

2 weeks after the Closing Date, and within 90 days of the Closing Date a

security interest in such Italian collateral shall be filed and perfected.  IP Holder shall pay the related registration

tax at the time of filing.

 

IP Holder will

continue to establish quality standards with respect to the production,

manufacture, marketing, distribution and sale of goods appropriate to the

reasonable maintenance of the existence of and value as Guarantee Collateral of

the Subject Trademarks; provided that the foregoing does not in any sense limit

IP Holder’s right to approve any Downstreaming or to allow any licensee or the

Servicer or any successor Servicer to Downstream in accordance with the

provisions of the Transaction Documents, any Subject License (as the same may

be modified in accordance with the limitations of the Transaction Documents)

and, in the case of the Guess? License Agreement, past and future business

practices of the Trademark Originator undertaken in the sole discretion of the

Trademark Originator.

 

5.12                           Survival

and Non-Waiver of Representations and Warranties.  So long as this Guarantee is in effect and any Notes are

outstanding, IP Holder agrees that (a) each representation and warranty made by

IP Holder pursuant to Sections 4.1, 4.2 and 4.4 of this Agreement (the

“Surviving Representations and Warranties”) shall survive and (b) IP Holder

shall not waive, by course of conduct or in writing, any of the Surviving

Representations and Warranties.

 

SECTION 6.   REMEDIAL PROVISIONS

 

6.1                                 Communications

with Obligors; IP Holder Remains Liable. 

(a)  The Indenture Trustee in its

own name or in the name of others may at any time after the occurrence and

during the continuance of an Enforcement Event communicate with parties to the

License Agreements to verify with them to the Indenture Trustee’s satisfaction

the existence and terms of such License Agreements.

 

(b)                                 Upon

the request of the Indenture Trustee at any time after the occurrence and

during the continuance of an Enforcement Event, IP Holder shall notify the

parties to the License Agreements that the License Agreements have been

assigned to the Indenture Trustee for the benefit of the Noteholders.

 

10

 

(c)                                  Anything

herein to the contrary notwithstanding, IP Holder shall remain liable under

each of the License Agreements to observe and perform all the conditions and

obligations to be observed and performed by it thereunder, all in accordance

with the terms of any agreement giving rise thereto.  Neither the Indenture Trustee nor any Noteholder shall have any

obligation or liability under any License Agreements by reason of or arising

out of this Agreement or the receipt by the Indenture Trustee or any Noteholder

of any payment relating thereto, nor shall the Indenture Trustee or any

Noteholder be obligated in any manner to perform any of the obligations of IP

Holder under or pursuant to any License Agreement, to make any payment, to make

any inquiry as to the nature or the sufficiency of any payment received by it

or as to the sufficiency of any performance by any party thereunder, to present

or file any claim, to take any action to enforce any performance or to collect

the payment of any amounts which may have been assigned to it or to which it

may be entitled at any time or times.

 

6.2                                 Proceeds

to be Turned Over To Indenture Trustee. 

If an Enforcement Event shall occur and be continuing, all proceeds of

Guarantee Collateral received by IP Holder consisting of cash, checks and other

near-cash items shall be remitted within two Business Days of receipt thereof

by IP Holder to the Indenture Trustee in the exact form received by IP Holder

(duly indorsed by IP Holder to the Indenture Trustee, if required) and be

deposited by Indenture Trustee in the exact from received by the Indenture

Trustee into the Lockbox Account.  All

proceeds deposited in the Lockbox Account or held by IP Holder in trust for the

Indenture Trustee (for the benefit of the Noteholders) shall be collateral

security for all the Obligations and shall not constitute payment thereof until

applied as provided in Section 6.3.

 

6.3                                 Application

of Proceeds.  Proceeds received and

held as described in Section 6.2 shall be applied in accordance with Section

5.7 of the Indenture.  Any balance of

such proceeds remaining after the Obligations shall have been paid in full

shall be paid over to whomsoever may be lawfully entitled to receive the same.  

 

6.4                                 Code

and Other Remedies.  If an

Enforcement Event shall occur and be continuing, the Indenture Trustee, on

behalf of the Noteholders, may exercise, in addition to all other rights and

remedies granted to them in this Agreement and in any other instrument or

agreement securing, evidencing or relating to the Obligations, all rights and

remedies of a secured party under the New York UCC or any other applicable

law.  Without limiting the generality of

the foregoing, the Indenture Trustee, without demand of performance or other

demand, presentment, protest, advertisement or notice of any kind (except any

notice required by law referred to below) to or upon IP Holder or any other

Person (all and each of which demands, defenses, advertisements and notices are

hereby waived), may in such circumstances forthwith collect, receive,

appropriate and realize upon the Guarantee Collateral, or any part thereof,

and/or may forthwith sell, lease, assign, give option or options to purchase,

or otherwise dispose of and deliver the Guarantee Collateral or any part

thereof (or contract to do any of the foregoing), in one or more parcels at

public or private sale or sales, at any exchange, broker’s board or office of

the Indenture Trustee or elsewhere upon such terms and conditions as it may

deem advisable and at such prices as it may deem best, for cash or on credit or

for future delivery without assumption of any credit risk.  The Indenture Trustee shall have the right

upon any such public sale or sales, and, to the extent permitted by law, upon

any such private sale or sales, to purchase the whole or any part of the

Guarantee Collateral so sold, free of any right or equity of redemption in IP

Holder, which right or equity is hereby waived and released.  IP Holder further agrees, at the

 

11

 

Indenture Trustee’s request, to

assemble the Guarantee Collateral and make it available to the Indenture

Trustee at IP Holder’s premises.  The

Indenture Trustee shall apply the net proceeds of any action taken by it

pursuant to this Section 6.4, after deducting all reasonable costs and expenses

of every kind incurred in connection therewith or incidental to the care or

safekeeping of any of the Guarantee Collateral or in any way relating to the

Guarantee Collateral or the rights of the Indenture Trustee and the Noteholders

hereunder, including, without limitation, reasonable attorneys’ fees and

disbursements, to the payment in whole or in part of the Obligations, in

accordance with Section 5.7 of the Indenture, and only after such application

and after the payment by the Indenture Trustee of any other amount required by

any provision of law, need the Indenture Trustee account for the surplus, if

any, to IP Holder.  To the extent

permitted by applicable law, IP Holder waives all claims, damages and demands

it may acquire against the Indenture Trustee or any Noteholder arising out of

the exercise by them of any rights hereunder. 

If any notice of a proposed sale or other disposition of Guarantee

Collateral shall be required by law, such notice shall be deemed reasonable and

proper if given at least 10 days before such sale or other disposition.  Notwithstanding the foregoing, the Indenture

Trustee may not sell or otherwise liquidate the Guarantee Collateral pursuant

to the exercise of its rights under this Section, unless (i) it has determined

(or been instructed by the Back-Up Manager) that the proceeds thereof would not

be sufficient to pay in full 100% of the outstanding principal of, accrued interest

on and any Acceleration Premium due on all Notes in connection with such

acceleration of the Notes unless the Indenture Trustee obtains the consent of

holders of 100% of the principal amount of all Outstanding Notes (after such

Noteholders have given Paul Marciano and Maurice Marciano a reasonable

opportunity to express their views of the appropriateness or reasonableness of

various possible remedies, including Downstreaming, provided that the

Noteholders shall be under no obligation whatsoever to follow such views), or

if (ii) it has determined (or been instructed by the Back-Up Manager) that the

proceeds thereof would be sufficient to pay in full 100% of the outstanding

principal of, accrued interest on and any Acceleration Premium due on all Notes

in connection with such acceleration of the Notes, unless the Indenture Trustee

obtains the consent of the Majority Holders (after such Noteholders have given

Paul Marciano and Maurice Marciano a reasonable opportunity to express their

views of the appropriateness or reasonableness of various possible remedies

including Downstreaming, provided that the Noteholders shall be under no

obligation whatsoever to follow such views). 

The Majority Holders will be deemed to have consented to the sale or

other liquidation of the Indenture Collateral pursuant to clause (ii) of the

prior sentence if Noteholders holding a majority of the principal amount of the

Notes Outstanding either vote in favor of such action or fail to vote with

respect to such action within 30 Business Days after receipt of the notice

seeking consent from the Indenture Trustee. 

In determining such sufficiency or insufficiency, the Indenture Trustee

will 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 Guarantee Collateral for such purpose.

 

6.5                                 Intercreditor

Issues.  If the security interest

hereunder and the security interest under the Receivables Contribution

Agreement are enforceable concurrently, the Indenture Trustee may elect to

enforce the rights under either or both agreements in its absolute discretion.

 

6.6                                 Non

Disturbance.  Notwithstanding the

foregoing, the Indenture Trustee and the Noteholders acknowledge and agree that

all remedial actions permitted to be taken by the

 

12

 

Indenture Trustee under this

Agreement and the other Transaction Documents are subject to the provisions of

Section 5.6 of the Indenture, Sections 4.02(c) of the Guess? License Agreement,

Sections 2.02(d) and 6.03(f) of the Servicing Agreement, and Section 5.2(d) of

the Receivables Contribution Agreement. 

For the avoidance of doubt, but not in limitation of the generality of

the foregoing, the Indenture Trustee and the Noteholders acknowledge and agree

that the Indenture Trustee shall not be permitted to take any action that is

reasonably likely to constitute an assignment in gross of the Guess?

Trademarks. 

 

SECTION 7.   THE INDENTURE

TRUSTEE

 

7.1                                 Indenture

Trustee’s Appointment as Attorney-in-Fact, etc.  (a)  IP Holder hereby

irrevocably constitutes and appoints the Indenture Trustee and any officer or

agent thereof, with full power of substitution, as its true and lawful attorney-in-fact

with full irrevocable power and authority in the place and stead of IP Holder

and in the name of IP Holder or in its own name, for the purpose of carrying

out the terms of this Agreement, to take any and all appropriate action and to

execute any and all documents and instruments which may be necessary or

desirable to accomplish the purposes of this Agreement, and, without limiting

the generality of the foregoing, IP Holder hereby gives the Indenture Trustee

the power and right, on behalf of IP Holder, without notice to or assent by IP

Holder, to do any or all of the following:

 

(i)                                     in the name of IP

Holder or its own name, or otherwise, take possession of and indorse and

collect any checks, drafts, notes, acceptances or other instruments for the payment

of moneys due under any License Agreement or with respect to any other

Guarantee Collateral and file any claim or take any other action or proceeding

in any court of law or equity or otherwise deemed appropriate by the Indenture

Trustee for the purpose of collecting any and all such moneys due under any

License Agreement or with respect to any other Guarantee Collateral whenever

payable;

 

(ii)                                  in the case of any

Guess? Contributed Trademarks, execute and deliver, and have recorded, any and

all agreements, instruments, documents and papers as the Indenture Trustee may

request to evidence the Indenture Trustee’s and the Noteholders’ security

interest in such Guess? Contributed Trademarks and the goodwill and general

intangibles of IP Holder relating thereto or represented thereby;

 

(iii)                               pay or discharge taxes

and Liens levied or placed on or threatened against the Guarantee Collateral;

 

(iv)                              execute, in connection

with any sale provided for in Section 6.4, any indorsements, assignments or

other instruments of conveyance or transfer with respect to the Guarantee

Collateral; and

 

(v)                                 (A) direct any party

liable for any payment under any of the Guarantee Collateral to make payment of

any and all moneys due or to become due thereunder directly to the Indenture

Trustee or as the Indenture Trustee shall direct; (B) ask or demand for,

collect, and receive payment of and receipt for, any and all moneys, claims and

other amounts due or to become due to IP Holder at any time in respect of or

arising out of any Guarantee Collateral; (C) commence and prosecute any suits,

actions or

 

13

 

proceedings at

law or in equity in any court of competent jurisdiction to collect the

Guarantee Collateral or any portion thereof and to enforce any other right in

respect of any Guarantee Collateral; (D) defend any suit, action or proceeding

brought against IP Holder with respect to any Guarantee Collateral; (E) settle,

compromise or adjust any such suit, action or proceeding and, in connection

therewith, give such discharges or releases as the Indenture Trustee may deem

appropriate; (F) assign any Guess? Contributed Trademarks (along with the

goodwill of the business to which any such Guess? Contributed Trademark

pertains), throughout the world for such term or terms, on such conditions, and

in such manner, as the Indenture Trustee shall in its sole discretion

determine; and (G) generally, sell, transfer, pledge and make any agreement

with respect to or otherwise deal with any of the Guarantee Collateral as fully

and completely as though the Indenture Trustee were the absolute owner thereof

for all purposes, and do, at the Indenture Trustee’s option and IP Holder’s

expense, at any time, or from time to time, all acts and things which the Indenture

Trustee deems necessary to protect, preserve or realize upon the Guarantee

Collateral and the Indenture Trustee’s and the Noteholders’ security interests

therein and to effect the intent of this Agreement, all as fully and

effectively as IP Holder might do.

 

Anything in this Section 7.1(a)

to the contrary notwithstanding, the Indenture Trustee agrees that it will not

and can not exercise any rights under the power of attorney provided for in

this Section 7.1(a) unless an Enforcement Event shall have occurred and be

continuing and that nothing herein supercedes Section 6.6 of the Guarantee.

 

(b)                                 If

IP Holder fails to perform or comply with any of its agreements contained

herein, the Indenture Trustee, at its option, but without any obligation so to

do, may perform or comply, or otherwise cause performance or compliance, with

such agreement.

 

(c)                                  The

expenses of the Indenture Trustee incurred in connection with actions

undertaken as provided in this Section 7.1 shall be payable by IP Holder to the

Indenture Trustee on demand.

 

(d)                                 IP

Holder hereby ratifies all that said attorneys shall lawfully do or cause to be

done by virtue hereof.  All powers,

authorizations and agencies contained in this Agreement are coupled with an

interest and are irrevocable until this Agreement is terminated and the

security interests created hereby are released.

 

7.2                                 Duty

of Indenture Trustee.  The Indenture

Trustee’s sole duty with respect to the custody, safekeeping and physical

preservation of the Guarantee Collateral in its possession, under Section 9-207

of the New York UCC or otherwise, shall be to deal with it in the same manner

as the Indenture Trustee deals with similar property for its own account.  Neither the Indenture Trustee, any

Noteholder nor any of their respective officers, directors, employees or agents

shall be liable to IP Holder or Guess? for failure to demand, collect or

realize upon any of the Guarantee Collateral or for any delay in doing so or

shall be under any obligation to sell or otherwise dispose of any Guarantee

Collateral upon the request of IP Holder or any other Person or to take any

other action whatsoever with regard to the Guarantee Collateral or any part

thereof.  The powers conferred on the

Indenture Trustee and the Noteholders hereunder are solely to protect the

Indenture Trustee’s and the Noteholders’

 

14

 

interests in the Guarantee

Collateral and shall not impose any duty upon the Indenture Trustee or any

Noteholder to exercise any such powers. 

The Indenture Trustee and the Noteholders shall be accountable only for

amounts that they actually receive as a result of the exercise of such powers,

and neither they nor any of their officers, directors, employees or agents

shall be responsible to IP Holder or Guess? for any act or failure to act

hereunder, except for their own gross negligence or willful misconduct.

 

7.3                                 Execution

of Financing Statements.  Pursuant

to any applicable law, IP Holder authorizes the Indenture Trustee to file or

record financing statements and other filing or recording documents or

instruments with respect to the Guarantee Collateral without the signature of

IP Holder in such form and in such offices as the Indenture Trustee determines

appropriate to perfect the security interests of the Indenture Trustee under

this Agreement.  IP Holder hereby

ratifies and authorizes the filing by the Indenture Trustee of any financing

statement with respect to the Guarantee Collateral made prior to the date

hereof.

 

7.4                                 Authority

of Indenture Trustee.  IP Holder

acknowledges that the rights and responsibilities of the Indenture Trustee

under this Agreement with respect to any action taken by the Indenture Trustee

or the exercise or non-exercise by the Indenture Trustee of any request, judgment

or other right or remedy provided for herein or resulting or arising out of

this Agreement shall, as between the Indenture Trustee and the Noteholders, be

governed by the Indenture and by such other agreements with respect thereto as

may exist from time to time among them, but, as between the Indenture Trustee

and IP Holder, the Indenture Trustee shall be conclusively presumed to be

acting as agent for the Noteholders with full and valid authority so to act or

refrain from acting, and IP Holder shall not be under any obligation, or

entitlement, to make any inquiry respecting such authority.

 

SECTION 8.   MISCELLANEOUS

 

8.1                                 Amendments

in Writing.  None of the terms or

provisions of this Agreement may be waived, amended, supplemented or otherwise

modified except by an instrument in writing signed by the Indenture Trustee

(acting in accordance with the Indenture) and IP Holder.

 

8.2                                 Notices.  All notices, requests and demands to or upon

the Indenture Trustee hereunder shall be effected in the manner provided for in

Section 11.4 of the Indenture. Any such notice, request or demand to or upon IP

Holder shall be addressed to IP Holder at its notice address set forth on

Schedule 1.

 

8.3                                 No

Waiver by Course of Conduct; Cumulative Remedies.  Neither the Indenture Trustee nor any Noteholder shall by any act

(except by a written instrument pursuant to Section 8.1), delay, indulgence,

omission or otherwise be deemed to have waived any right or remedy

hereunder.  No failure to exercise, nor

any delay in exercising, on the part of the Indenture Trustee or any

Noteholder, any right, power or privilege hereunder shall operate as a waiver

thereof.  No single or partial exercise

of any right, power or privilege hereunder shall preclude any other or further

exercise thereof or the exercise of any other right, power or privilege.  A waiver by the Indenture Trustee or any

Noteholder of any right or remedy hereunder on any one occasion shall not be

construed as a bar to any right or remedy which the

 

15

 

Indenture Trustee or such

Noteholder would otherwise have on any future occasion.  The rights and remedies herein provided are

cumulative, may be exercised singly or concurrently and are not exclusive of

any other rights or remedies provided by law.

 

8.4                                 Enforcement

Expenses; Indemnification.  (a)  IP Holder agrees to pay or reimburse the

Noteholders and the Indenture Trustee for all its costs and expenses incurred

in collecting against IP Holder under the guarantee contained in Section 2 and

agrees to pay or reimburse the Noteholders and the Indenture Trustee for

otherwise enforcing or preserving any rights under this Agreement and the other

Transaction Documents to which IP Holder is a party, including, without

limitation, the fees and disbursements of counsel to each Noteholder, and of

counsel to the Indenture Trustee.

 

(b)                                 IP

Holder agrees to pay, and to save the Indenture Trustee and the Noteholders

harmless from, any and all liabilities with respect to, or resulting from any

delay in paying, any and all stamp, excise, sales or other taxes which may be

payable or determined to be payable with respect to any of the Guarantee

Collateral or in connection with any of the transactions contemplated by this

Agreement.

 

(c)                                  IP

Holder agrees to pay, and to save the Indenture Trustee and the Noteholders

harmless from, any and all liabilities, obligations, losses, damages,

penalties, actions, judgments, suits, costs, expenses or disbursements of any

kind or nature whatsoever with respect to the execution, delivery, enforcement,

performance and administration of this Agreement to the extent the Issuer would

be required to do so pursuant to Section 6.7 of the Indenture.

 

(d)                                 The

agreements in this Section 8.4 shall survive repayment of the Obligations and

all other amounts payable under the Indenture and the other Transaction

Documents.

 

8.5                                 Successors

and Assigns.  This Agreement shall

be binding upon the successors and assigns of IP Holder and shall inure to the

benefit of the Indenture Trustee and the Noteholders and their successors and

assigns; provided that IP Holder may not assign, transfer or delegate any of

its rights or obligations under this Agreement without the prior written

consent of the Indenture Trustee.

 

8.6                                 Counterparts.  This Agreement may be executed by one or

more of the parties to this Agreement on any number of separate counterparts

(including by telecopy), and all of said counterparts taken together shall be

deemed to constitute one and the same instrument.

 

8.7                                 Severability.  Any provision of this Agreement which 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, and any such prohibition or

unenforceability in any jurisdiction shall not invalidate or render

unenforceable such provision in any other jurisdiction.

 

8.8                                 Section

Headings.  The Section headings used

in this Agreement are for convenience of reference only and are not to affect

the construction hereof or be taken into consideration in the interpretation

hereof.

 

16

 

8.9                                 Integration.  This Agreement and the other Transaction

Documents represent the agreement of IP Holder, the Indenture Trustee and the

Noteholders with respect to the subject matter hereof and thereof, and there

are no promises, undertakings, representations or warranties by the Indenture

Trustee or any Noteholder relative to subject matter hereof and thereof not

expressly set forth or referred to herein or in the other Transaction

Documents.

 

8.10                           GOVERNING

LAW.  THIS AGREEMENT SHALL BE

GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE

STATE OF NEW YORK.

 

8.11                           Submission

To Jurisdiction; Waivers.  IP Holder

hereby irrevocably and unconditionally:

 

(a)                                  submits

for itself and its property in any legal action or proceeding relating to this

Agreement and the other Transaction Documents to which it is a party, or for

recognition and enforcement of any judgment in respect thereof, to the

non-exclusive general jurisdiction of the courts of the State of New York, the

courts of the United States of America for the Southern District of

New York, and appellate courts from any thereof;

 

(b)                                 consents

that any such action or proceeding may be brought in such courts and waives any

objection that it may now or hereafter have to the venue of any such action or

proceeding in any such court or that such action or proceeding was brought in

an inconvenient court and agrees not to plead or claim the same;

 

(c)                                  agrees

that service of process in any such action or proceeding may be effected by

mailing a copy thereof by registered or certified mail (or any substantially

similar form of mail), postage prepaid, to IP Holder at its address referred to

in Section 8.2 or at such other address of which the Indenture Trustee shall

have been notified pursuant thereto;

 

(d)                                 agrees

that nothing herein shall affect the right to effect service of process in any

other manner permitted by law or shall limit the right to sue in any other

jurisdiction; and

 

(e)                                  waives,

to the maximum extent not prohibited by law, any right it may have to claim or

recover in any legal action or proceeding referred to in this Section any special,

exemplary, punitive or consequential damages.

 

8.12                           Acknowledgements.  IP Holder hereby acknowledges that:

 

(a)                                  it

has been advised by counsel in the negotiation, execution and delivery of this

Agreement and the other Transaction Documents to which it is a party;

 

(b)                                 neither

the Indenture Trustee nor any Noteholder has any fiduciary relationship with or

duty to IP Holder arising out of or in connection with this Agreement or any of

the other Transaction Documents, and the relationship between IP Holder, on the

one hand, and the Indenture Trustee and Noteholders, on the other hand, in

connection herewith or therewith is solely that of debtor and creditor; and

 

17

 

(c)                                  no

joint venture is created hereby or by the other Transaction Documents or

otherwise exists by virtue of the transactions contemplated hereby among the

Noteholders or among IP Holder and the Noteholders.

 

8.13                           Releases.  (a) 

On the Termination Date, the Guarantee Collateral shall be released from

the Liens created hereby, and this Agreement and all obligations (other than

those expressly stated to survive such termination) of the Indenture Trustee

and IP Holder hereunder shall terminate, all without delivery of any instrument

or performance of any act by any party, and all rights to the Guarantee

Collateral shall revert to IP Holder. 

At the request and sole expense of IP Holder following any such

termination, the Indenture Trustee shall deliver to IP Holder any Guarantee

Collateral held by the Indenture Trustee hereunder, and execute and deliver to

IP Holder such documents as IP Holder shall reasonably request to evidence such

termination.

 

(b)                                 If

any of the Guarantee Collateral shall be sold, transferred or otherwise

disposed of by IP Holder in a transaction permitted by the Indenture or any

Transaction Document, then the Indenture Trustee, at the request and sole

expense of IP Holder, shall execute and deliver to IP Holder all releases or

other documents reasonably necessary or desirable for the release of the Liens

created hereby on such Guarantee Collateral.

 

8.14                           WAIVER

OF JURY TRIAL.  IP HOLDER HEREBY

IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR

PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AND FOR

ANY COUNTERCLAIM THEREIN.

 

[Rest of page left intentionally blank]

 

18

 

IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee

and Collateral Agreement to be duly executed and delivered as of the date first

above written.

 

	

   

  	

  GUESS? IP HOLDER L.P.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

  Title:

  

 

19

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