Document:

cpss8kaex550_dtd140122.htm

 

 

SALE AND SERVICING

 

AGREEMENT

 

among

 

CPS AUTO RECEIVABLES TRUST 2013-D, as

 

Issuer,

 

CPS RECEIVABLES FIVE LLC, as

 

Seller,

 

CONSUMER PORTFOLIO SERVICES, INC.,

 

Individually and as Servicer

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as

 

Backup Servicer and Trustee

 

 

Dated as of December 1, 2013

 

 

 

 

 

SALE AND SERVICING AGREEMENT dated as of December 1, 2013, among CPS AUTO RECEIVABLES TRUST 2013-D, a Delaware statutory trust, as Issuer, CPS RECEIVABLES FIVE LLC, a Delaware limited liability company, as Seller, CONSUMER PORTFOLIO SERVICES, INC., a California corporation, individually and as Servicer, WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Backup Servicer and Trustee.

 

WHEREAS the Issuer desires to purchase a portfolio of receivables arising in connection with motor vehicle retail installment sale contracts and promissory notes and security agreements initially acquired by Consumer Portfolio Services, Inc. through motor vehicle dealers and independent finance companies;

 

WHEREAS, the Seller has purchased such receivables from Consumer Portfolio Services, Inc. and is willing to sell such receivables to the Issuer;

 

WHEREAS the Issuer desires to purchase additional receivables arising in connection with motor vehicle retail installment sale contracts and promissory notes and security agreements to be acquired on or after the Closing Date by Consumer Portfolio Services, Inc. through motor vehicle dealers and independent finance companies;

 

WHEREAS the Seller has agreements to purchase such additional receivables from Consumer Portfolio Services, Inc. and is willing to sell such receivables to the Issuer; and

 

WHEREAS the Servicer is willing to service all such receivables.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

SECTION 1.1  UDefinitionsU  (a) Whenever used in this Agreement, the following words and phrases shall have the following meanings:

 

“Accountants’ Report” means the report of a firm of nationally recognized independent accountants described in USection 4.11U.

 

“Addition Notice” means, with respect to any transfer of Subsequent Receivables to the Trust pursuant to Section 2.2, notice of the Seller’s election to transfer Subsequent Receivables to the Trust, such notice to designate the related Subsequent Transfer Date and the approximate principal amount of Subsequent Receivables to be transferred on such Subsequent Transfer Date.

 

“Additional Servicing Compensation” shall mean, with respect to a Receivable, any late fees, prepayment charges and other administrative fees or similar charges allowed by applicable law with respect to the Receivables collected (from whatever source) on the Receivables.

 

“Affiliate” of any Person means any Person who directly or indirectly controls, is controlled by, or is under direct or indirect common control with such Person.  For purposes of this definition, the term “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling,” “controlled by” and “under common control with” have meanings correlative to the foregoing.

 

“Aggregate Extension Limitation” has the meaning assigned to such term in USection 4.2U.

 

“Aggregate Note Balance” means, as of any date of determination, the sum of the Class A Note Balance, the Class B Note Balance, the Class C Note Balance, the Class D Note Balance and the Class E Note Balance.

 

“Agreement” means this Sale and Servicing Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof.

 

“Amount Financed” means, with respect to a Receivable, the aggregate amount advanced under such Receivable toward the purchase price of the Financed Vehicle and any related costs, including amounts advanced in respect of accessories, insurance premiums, service and warranty contracts, other items customarily financed as part of retail automobile installment sale contracts or promissory notes, and related costs.

 

“Annual Percentage Rate” or “APR” of a Receivable means the annual percentage rate of finance charges or service charges, as stated in the related Contract.

 

“Assignment” has the meaning assigned to such term in the Receivables Purchase Agreement.

 

“Assumption Date” has the meaning specified in USection 10.3(a)U.

 

“Backup Servicer” means Wells Fargo Bank, National Association, in its capacity as Backup Servicer under this Agreement.

 

“Backup Servicing Fee” means, so long as the Backup Servicer is not then acting as Servicer, the “Monthly Backup Servicing Fee,” as reflected on UExhibit HU, due and payable on each Payment Date in respect of the immediately preceding Collection Period; UprovidedU, UhoweverU, that on the first Payment Date the Backup Servicer will be entitled to receive an amount equal to Backup Servicing Fee multiplied by a fraction, the numerator of which is the number of days from and including the Closing Date to and including December 31, 2013, and the denominator of which is 360.

 

“Basic Documents” means this Agreement, each Subsequent Transfer Agreement, the Certificate of Trust, the Trust Agreement, the Indenture, the Receivables Purchase Agreement, each Subsequent Receivables Purchase Agreement, each Assignment, the Lockbox Agreement, the Placement Agency Agreement, the Notes, the Residual Pass-through Certificates and any and all other documents and certificates delivered in connection with the foregoing.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in the City of New York, the State of Minnesota, the State of Delaware or the State in which the executive offices of the Servicer are located shall be authorized or obligated by law, executive order, or governmental decree to be closed.

 

“Casualty” means, with respect to a Financed Vehicle, the total loss or destruction of such Financed Vehicle.

 

“Certificate Distribution Account” has the meaning assigned to such term in the Trust Agreement.

 

“Certificate Register” has the meaning assigned to such term in the Trust Agreement.

 

“Certificate Registrar” has the meaning assigned to such term in the Trust Agreement.

 

“Class” means the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes or the Class E Notes as the context requires.

 

“Class A Final Scheduled Payment Date” means the Payment Date occurring in July 2018.

 

“Class A Interest Rate” has the meaning assigned to such term in the Indenture.

 

“Class A Note Balance” on the Closing Date will equal the Original Class A Note Balance and on any date thereafter will equal the Original Class A Note Balance reduced by all distributions of principal previously made in respect of the Class A Notes.

 

“Class A Notes” has the meaning assigned to such term in the Indenture.

 

“Class A Parity Deficit Amount” means, with respect to any Payment Date, the excess, if any, of (x) the Class A Note Balance on such Payment Date over (y) the Collateral Balance at the end of the related Collection Period.

 

“Class B Final Scheduled Payment Date” means the Payment Date occurring in November 2019.

 

“Class B Interest Rate” has the meaning assigned to such term in the Indenture.

 

“Class B Note Balance” on the Closing Date will equal the Original Class B Note Balance and on any date thereafter will equal the Original Class B Note Balance reduced by all distributions of principal previously made in respect of the Class B Notes.

 

“Class B Notes” has the meaning assigned to such term in the Indenture.

 

“Class B Parity Deficit Amount” means, with respect to any Payment Date, the excess, if any, of (x) the sum of the Class A Note Balance (after giving effect to any reduction thereof to occur on such Payment Date due to any payments of Class A Parity Deficit Amounts on such Payment Date) and the Class B Note Balance on such Payment Date over (y) the Collateral Balance at the end of the related Collection Period.

 

“Class C Final Scheduled Payment Date” means the Payment Date occurring in November 2019.

 

“Class C Interest Rate” has the meaning assigned to such term in the Indenture.

 

“Class C Note Balance” on the Closing Date will equal the Original Class C Note Balance and on any date thereafter will equal the Original Class C Note Balance reduced by all distributions of principal previously made in respect of the Class C Notes.

 

“Class C Notes” has the meaning assigned to such term in the Indenture.

 

“Class C Parity Deficit Amount” means, with respect to any Payment Date, the excess, if any, of (x) the sum of the Class A Note Balance and the Class B Note Balance (after giving effect to any reduction thereof to occur on such Payment Date due to any payments of Class A Parity Deficit Amounts and Class B Parity Deficit Amounts on such Payment Date) and the Class C Note Balance on such Payment Date over (y) the Collateral Balance at the end of the related Collection Period.

 

“Class D Final Scheduled Payment Date” means the Payment Date occurring in November 2019.

 

“Class D Interest Rate” has the meaning assigned to such term in the Indenture.

 

“Class D Note Balance” on the Closing Date will equal the Original Class D Note Balance and on any date thereafter will equal the Original Class D Note Balance reduced by all distributions of principal previously made in respect of the Class D Notes.

 

“Class D Notes” has the meaning assigned to such term in the Indenture.

 

“Class D Parity Deficit Amount” means, with respect to any Payment Date, the excess, if any, of (x) the sum of the Class A Note Balance, the Class B Note Balance and the Class C Note Balance (after giving effect to any reduction thereof to occur on such Payment Date due to any payments of Class A Parity Deficit Amounts, Class B Parity Deficit Amounts and Class C Parity Deficit Amounts on such Payment Date) and the Class D Note Balance on such Payment Date over (y) the Collateral Balance at the end of the related Collection Period.

 

“Class E Final Scheduled Payment Date” means the Payment Date occurring in March 2021.

 

“Class E Interest Rate” has the meaning assigned to such term in the Indenture.

 

“Class E Note Balance” on the Closing Date will equal the Original Class E Note Balance and on any date thereafter will equal the Original Class E Note Balance reduced by all distributions of principal previously made in respect of the Class E Notes.

 

“Class E Notes” has the meaning assigned to such term in the Indenture.

 

“Class E Parity Deficit Amount” means, with respect to any Payment Date, the excess, if any, of (x) the sum of the Class A Note Balance, the Class B Note Balance, the Class C Note Balance and the Class D Note Balance (after giving effect to any reduction thereof to occur on such Payment Date due to any payments of Class A Parity Deficit Amounts, Class B Parity Deficit Amounts, Class C Parity Deficit Amounts and Class D Parity Deficit Amounts on such Payment Date) and the Class E Note Balance on such Payment Date over (y) the Collateral Balance at the end of the related Collection Period.

 

“Closing Date” means December 18, 2013.

 

“Code” has the meaning specified in USection 3.2(b)U.

 

“Collateral” has the meaning assigned to such term in the Indenture.

 

“Collateral Balance” means, as of any date of determination, the sum of (i) the Pool Balance as of such date, and (ii) the Pre-Funded Amount as of such date.

 

“Collection Account” means the account designated as such, established and maintained pursuant to USection 5.1(a)U.

 

“Collection Period” means, with respect to each Payment Date, the calendar month preceding the calendar month in which such Payment Date occurs.  Any amount stated “as of the close of business on the last day of a Collection Period” shall give effect to the following calculations as determined as of the end of the day on such last day: (i) all applications of collections, and (ii) all distributions.

 

“Collection Policy” means the collection policies of the Seller/Servicer, which are the practices and procedures employed in the servicing of Receivables as of the Closing Date, as described in UExhibit EU hereto.

 

“Consumer Lender” means a Person that is licensed under applicable law to originate loans to natural persons resident in one or more of the States within the United States of America and authorized by CPS to participate in its direct lending program, but shall not include CPS or any of its Affiliates.

 

“Contract” means a motor vehicle retail installment sale contract or an installment promissory note and security agreement, in each case relating to the sale or refinancing of new or used automobiles, light duty trucks, vans or minivans, and any other documents related thereto from time to time.

 

“Controlling Class” means (i) so long as any Class A Notes are Outstanding, the Class A Notes, (ii) after payment in full of the Class A Notes, so long as any Class B Notes are Outstanding, the Class B Notes, (iii) after payment in full of the Class A Notes and the Class B Notes, so long as any Class C Notes are Outstanding, the Class C Notes, (iv) after payment in full of the Class A Notes, the Class B Notes and the Class C Notes, so long as any Class D Notes are Outstanding, the Class D Notes and (v) after payment in full of the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes, so long as any Class E Notes are Outstanding, the Class E Notes.

 

“Corporate Trust Office” means (i) with respect to the Owner Trustee, the principal corporate trust office of the Owner Trustee, which at the time of execution of this agreement is Rodney Square North, 1100 N. Market Street, Wilmington, Delaware  19890-0001, and (ii) with respect to the Trustee, the principal corporate trust office of the Trustee, which at the time of execution of this agreement is Sixth Street and Marquette Avenue,  MAC N9311-161, Minneapolis, Minnesota, 55479, Attention: Corporate Trust Services/Asset Backed Administration – CPS 2013-D.

 

“CPS” means Consumer Portfolio Services, Inc., a California corporation and its successors.

 

“Cram Down Loss” means, with respect to a Receivable (other than a Liquidated Receivable), if a court of appropriate jurisdiction in an insolvency proceeding issues a ruling that reduces the amount owed on a Receivable or otherwise modifies or restructures the Scheduled Receivable Payments to be made thereon, an amount equal to the sum of (a) the Principal Balance of the Receivable immediately prior to such order minus the Principal Balance of such Receivable as so reduced, modified or restructured, plus (b) if such court shall have issued an order reducing the effective rate of interest on such Receivable, an amount equal to the excess of (i) the net present value (using as a discount rate a rate equal to the adjusted APR on such Receivable) of the Scheduled Receivable Payments as so modified or restructured over (ii) the net present value (using as a discount rate a rate equal to the original APR on such Receivable) of the Scheduled Receivable Payments as so modified or restructured.  A Cram Down Loss will be deemed to have occurred on the date of issuance of such order.

 

“Cumulative Net Losses” means, as of any date of determination, the aggregate cumulative principal amount of all Receivables that have become Liquidated Receivables since the Initial Cutoff Date, net of all Net Liquidation Proceeds and Recoveries with respect to such Receivables as of last day of the most recently ended Collection Period.

 

“Cumulative Net Loss Rate” means, as of any date of determination, a rate expressed as a percentage equal to a fraction (I) the numerator of which is the Cumulative Net Losses with respect to all Receivables and (II) the denominator of which is the Original Pool Balance.

 

“Cutoff Date” means the Initial Cutoff Date (in the case of the Initial Receivables) or the applicable Subsequent Cutoff Date (in the case of a Subsequent Receivable), as applicable.

 

“Dealer” means, with respect to a Receivable, the seller of the related Financed Vehicle, who originated and assigned such Receivable to CPS.

 

“Defaulted Texas Receivables” means Receivables the related Obligors of which reside in the State of Texas or the related Financed Vehicles of which are located in the State of Texas and as to which more than 10% of a Scheduled Receivable Payment of more than ten dollars shall have become 90 or more days delinquent as of the end of a Collection Period, and which are subject to repurchase pursuant to USection 4.16U.

 

“Deficiency Claim Amount” has the meaning set forth in USection 5.5(a)U.

 

“Deficiency Notice” has the meaning set forth in USection 5.5(a)U.

 

“Delinquency Ratio” means, as of any date of determination, a rate expressed as a percentage equal to a fraction (I) the numerator of which is the aggregate Principal Balance of all Receivables that are Delinquent Receivables as of the last day of the most recently ended Collection Period and (II) the denominator of which is the aggregate Principal Balance of all Receivables as of the last day of the most recently ended Collection Period.

 

“Delinquent Receivable” means any Contract as to which more than ten percent (10%) of the Scheduled Receivable Payment is more than 30 days contractually delinquent as of the last day of the most recently ended Collection Period, including any Contract for which the related Financed Vehicle has been repossessed and the proceeds thereof have not yet been realized by the Servicer.

 

“Delivery” means, when used with respect to Trust Account Property  (terms used in the following provisions that are not otherwise defined are used as defined in Articles 8 and 9 of the UCC):

 

(i) 177Bin the case of such Trust Account Property consisting of security entitlements not covered by the following paragraphs in this definition of Delivery, by (1) causing the Trustee or related securities intermediary to indicate by book-entry that a financial asset related to such securities entitlement has been credited to the related Trust Account and (2) causing the Trustee or related securities intermediary to indicate that the Trustee is the sole entitlement holder of each such securities entitlement and causing the Trustee or related securities intermediary to agree that it will comply with entitlement orders originated by the Trustee with respect to each such security entitlement without further consent by the Issuer;

 

(ii) 178Bin the case of each certificated security (other than a clearing corporation security (as defined below)) or instrument by: (1) the delivery of such certificated security or  instrument to the Trustee or related securities intermediary registered in the name of the Trustee or related securities intermediary or its respective affiliated nominee or endorsed to the Trustee or related securities intermediary in blank; (2) causing the Trustee or related securities intermediary to continuously indicate by book-entry that such certificated security or instrument is credited to the related Trust Account; and (3) the Trustee or related securities intermediary maintaining continuous possession of such certificated security or instrument;

 

(iii)  in the case of each uncertificated security (other than a clearing corporation security (as defined below)), by causing: (1) such uncertificated security to be continuously registered in the books of the issuer thereof to the Trustee or related securities intermediary; and (2) the Trustee or related securities intermediary to continuously indicate by book-entry that such uncertificated security is credited to the related Trust Account;

 

(iv) 180Bin the case of each security in the custody of or maintained on the books of a clearing corporation (a “clearing corporation security”), by causing: (1) the relevant clearing corporation to credit such clearing corporation security to the securities account of the Trustee or related securities intermediary at such clearing corporation; and (2) the Trustee or related securities intermediary to continuously indicate by book-entry that such clearing corporation security is credited to the related Trust Account;

 

(v) 181Bin the case of each security issued or guaranteed by the United States of America or agency or instrumentality thereof (other than a security issued by the Government National Mortgage Association) representing a full faith and credit obligation of the United States of America and that is maintained in book-entry records of the Federal Reserve Bank of New York (“FRBNY”) (each such security, a “government security”), by causing: (1) the creation of a security entitlement to such government security by the credit of such government security to the securities account of the Trustee or related securities intermediary at the FRBNY; and (2) the Trustee or related securities intermediary to continuously indicate by book-entry that such government security is credited to the related Trust Account.

 

(vi) 182Bin each case of delivery contemplated pursuant to clauses (ii) through (v) hereof, the Trustee shall make appropriate notations on its records, and shall cause the same to be made on the records of its nominees, indicating that such Trust Property which constitutes a security is held in trust pursuant to and as provided in this Agreement.

 

“Determination Date” means the earlier of (i) the seventh Business Day of each calendar month and (ii) the fifth Business Day preceding the related Payment Date.

 

“Eligible Account” means a segregated direct deposit or trust account maintained with a depository institution organized under the laws of the United States of America, or any of the States thereof, or the District of Columbia, so long as (i) the long-term unsecured debt of such depository institution shall have a credit rating from Standard & Poor’s of at least BBB and from Moody’s in one of its generic rating categories that signifies investment grade and (ii) such depository institutions’ deposits are insured by the FDIC.

 

“Eligible Investments” mean book-entry securities, negotiable instruments or securities represented by instruments in registered form which evidence:

 

(i)           direct obligations of, and obligations fully guaranteed as to the full and timely payment by, the United States of America;

 

(ii)           demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under the laws of the United States of America or any State thereof (or any domestic branch of a foreign bank) and subject to supervision and examination by Federal or State banking or depository institution authorities; provided, however, that at the time of the investment or contractual commitment to invest therein, the commercial paper or other short-term unsecured debt obligations (other than such obligations the rating of which is based on the credit of a Person other than such depository institution or trust company) thereof shall be rated “A-1+” by Standard & Poor’s and “Prime-1” by Moody’s;

 

(iii)           commercial paper that, at the time of the investment or contractual commitment to invest therein, is rated “A-1+” by Standard & Poor’s and “Prime-1” by Moody’s;

 

(iv)           bankers’ acceptances issued by any depository institution or trust company referred to in clause (ii) above;

 

(v)           repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed as to the full and timely payment by, the United States of America or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with (a) a depository institution or trust company (acting as principal) described in clause (ii) or (b) a depository institution or trust company whose commercial paper or other short term unsecured debt obligations are rated “A-1+” by Standard & Poor’s and “Prime-1” by Moody’s and long term unsecured debt obligations are rated “AAA” by Standard & Poor’s and “Aaa” by Moody’s;

 

(vi)           money market mutual funds registered under the Investment Company Act of 1940, as amended, having a rating, at the time of such investment, from each of Standard & Poor’s and Moody’s in the highest investment category granted thereby; and

 

(vii)           any other investment as to which the Rating Agency Condition is satisfied;

 

provided that, an Eligible Investment must have a fixed principal amount due at maturity and, if rated by Standard & Poor’s, must not have an “r” suffix attached to the rating.

 

Any of the foregoing Eligible Investments may be purchased by or through the Owner Trustee or the Trustee or any of their respective Affiliates.

 

“Eligible Servicer” means a Person that, at the time of its appointment as Servicer, (i) has a net worth of not less than $50,000,000, (ii) is servicing a portfolio of motor vehicle retail installment sale contracts and/or motor vehicle loans, (iii) is legally qualified, and has the capacity, to service the Receivables, (iv) has demonstrated the ability to service a portfolio of motor vehicle retail installment sale contracts and/or motor vehicle loans similar to the Receivables professionally and competently in accordance with standards of skill and care that are consistent with prudent industry standards and (v) is qualified and entitled to use pursuant to a license or other written agreement, and agrees to maintain the confidentiality of, the software which the Servicer uses in connection with performing its duties and responsibilities under this Agreement or obtains rights to use, or develops at its own expense, software which is adequate to perform its duties and responsibilities under this Agreement.

 

“ERISA” has the meaning specified in Section 3.2(b)U.

 

“Event of Default” has the meaning specified in the Indenture.

 

“FDIC” means the Federal Deposit Insurance Corporation.

 

“Final Scheduled Payment Date” means with respect to the Class A Notes, the Class A Final Scheduled Payment Date, with respect to the Class B Notes, the Class B Final Scheduled Payment Date, with respect to the Class C Notes, the Class C Final Scheduled Payment Date, with respect to the Class D Notes, the Class D Final Scheduled Payment Date and with respect to the Class E Notes, the Class E Final Scheduled Payment Date.

 

“Financed Vehicle” means a new or used automobile, light truck, van or minivan, together with all accessions thereto, securing an Obligor’s indebtedness under a Receivable.

 

“Fireside” means Fireside Bank, a California corporation.

 

“Funding Period” means the period beginning on and including the Closing Date and ending on the first to occur of (a) the first date on which the amount on deposit in the Pre-Funding Account (after giving effect to any transfers therefrom in connection with the transfer of Subsequent Receivables to the Issuer on such date) is less than $100,000, (b) the date on which an Event of Default or a Servicer Termination Event occurs, (c) the date on which an Insolvency Event occurs with respect to the Seller, and (d) January 31, 2014.

 

“Indenture” means the Indenture dated as of December 1, 2013, between the Issuer and Wells Fargo Bank, National Association, as trustee, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

 

“Initial Cutoff Date” means the close of business on November 30, 2013.

 

“Initial Receivable” means each Contract related to a Financed Vehicle transferred to the Issuer pursuant to Section 2.1, which, as of the Closing Date, is listed on Schedule A (which Schedule A may be in the form of an electronic file), and all rights and obligations thereunder, except for Initial Receivables that shall have become Purchased Receivables or Sold Receivables.

 

“Initial Spread Account Deposit” means $1,196,005.16.

 

“Initial Trust Property” means the property and proceeds conveyed pursuant to Section 2.1.

 

“Insolvency Event” means, with respect to a specified Person, (a) the institution of a proceeding or the filing of a petition against such Person seeking the entry of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under any applicable Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person’s affairs, and such petition, decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (b) the commencement by such Person of a voluntary case under any applicable Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by, a receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing.

 

“Insurance Policy” means, with respect to a Receivable, any insurance policy (including the insurance policies described in USection 4.4U) benefiting the holder of the Receivable providing loss or physical damage, credit life, credit disability, theft, mechanical breakdown or similar coverage with respect to the Financed Vehicle or the Obligor.

 

“Interest Rate” means the Class A Interest Rate, the Class B Interest Rate, the Class C Interest Rate, the Class D Interest Rate or the Class E Interest Rate, as applicable.

 

“Investment Earnings” means, with respect to any Payment Date and any Trust Account, the investment earnings on amounts on deposit in such Trust Account during the related Collection Period and deposited into the Collection Account on such Payment Date pursuant to USection 5.1(f)U.

 

“Issuer” means CPS Auto Receivables Trust 2013-D.

 

“Lien” means a security interest, lien, charge, pledge, equity, or encumbrance of any kind, other than tax liens, storage liens, mechanics’ liens and any liens that attach to the respective Receivable by operation of law.

 

“Lien Certificate” means, with respect to a Financed Vehicle, an original certificate of title, certificate of lien or other notification (paper or electronic) issued by the Registrar of Titles of the applicable state (or by a third-party service provider authorized by the Registrar of Titles) to a secured party that indicates that the lien of the secured party on the Financed Vehicle is recorded with the State for purposes of establishing the existence and priority of a secured party’s Lien on the Financed Vehicle. In any jurisdiction in which the original certificate of title is required to be given to the registered owner of the Financed Vehicle, the term “Lien Certificate” shall mean only a certificate or notification, paper or electronic, issued to a secured party.

 

“Liquidated Receivable” means, as of any date of determination, any Receivable as to which any of the following first occurs:  (i)  the related Financed Vehicle has been sold by the Servicer; (ii) the related Financed Vehicle has been repossessed and 90 days have elapsed since the date of such repossession, (iii) more than 10% of a Scheduled Receivable Payment of more than ten dollars shall have become 120 (or, if the related Financed Vehicle has been repossessed, 210) or more days delinquent as of the end of a Collection Period, (iv) with respect to which proceeds have been received which, in the Servicer’s judgment, constitute the final amounts recoverable in respect of such Receivable; (v) the related Obligor has filed for bankruptcy under Federal or state law and the Servicer has determined that its loss is known; or (vi) such Receivable becomes a Sold Receivable.

 

“Lockbox Account” means a direct deposit account maintained on behalf of the Trustee by the Lockbox Bank pursuant to USection 4.2(b)U.

 

“Lockbox Agreement” means the Deposit Account Agreement, dated as of December 18, 2013 by and among the Lockbox Processor, the Lockbox Bank, the Servicer, the Issuer and the Trustee, as such agreement may be amended, supplemented or otherwise modified from time to time, unless the Trustee shall cease to be a party thereunder, or such agreement shall be terminated in accordance with its terms, in which event “Lockbox Agreement” shall mean such other replacement agreement therefor among the Servicer, the Trustee, the Lockbox Bank and the Lockbox Processor.

 

“Lockbox Bank” means, as of any date, Wells Fargo Bank, National Association or another depository institution named by the Servicer and acceptable to the Trustee at which the Lockbox Account is established and maintained as of such date.

 

“Lockbox Processor” means Wells Fargo Bank, National Association and its successors and assigns.

 

“LTV” means, with respect to any Receivable, the ratio, at the time of origination, of (i) the amount financed of such Receivable to (ii) the wholesale book value of the related Financed Vehicle as set forth in the Kelly Blue Book®, the NADA Official Used Car Guide® or the Black Book Wholesale Average Condition.

 

“Majority Certificateholders” has the meaning assigned to such term in the Trust Agreement.

 

“Mandatory Redemption Date” means the first Payment Date occurring on or after the last day of the Funding Period.

 

“Minimum Sale Price” means (i) with respect to a Receivable (x) that has become 120 to 210 days delinquent or (y) that has become greater than 210 days delinquent and with respect to which the related Financed Vehicle has been repossessed by the Servicer and has not yet been sold at auction, the greater of (A) 55% multiplied by the Principal Balance of such Receivable and (B) the product of the three month rolling average recovery rate (expressed as a percentage) for the Servicer in its liquidation of all receivables for which it acts as servicer, either pursuant to this Agreement or otherwise, multiplied by the Principal Balance of such Receivable or (ii) with respect to a Receivable (x) the related Financed Vehicle of which has been repossessed by the Servicer and has been sold at auction and the Net Liquidation Proceeds for which have been deposited in the Collection Account, or (y) that has become greater than 210 days delinquent and the related Financed Vehicle of which has not been repossessed by the Servicer despite the Servicer’s diligent efforts, consistent with its servicing obligations, to repossess the Financed Vehicle, $1.

 

	  

“Moody’s” means Moody’s Investors Service, Inc., or its successor.

 

“Net Liquidation Proceeds” means, with respect to a Liquidated Receivable, all amounts realized with respect to such Receivable during the Collection Period in which such Receivable became a Liquidated Receivable, including any Sale Amounts, net of (i) reasonable expenses incurred by the Servicer in connection with the collection of such Receivable and any repossession and disposition of the Financed Vehicle and (ii) amounts that are required to be refunded to the Obligor on such Receivable; provided, however, that the Net Liquidation Proceeds with respect to any Receivable shall in no event be less than zero.

 

“Non-United States Investor” has the meaning assigned to such term in the Trust Agreement.

 

“Note Balance” means, with respect to the Class A Notes, the Class A Note Balance, with respect to the Class B Notes, the Class B Note Balance, with respect to the Class C Notes, the Class C Note Balance, with respect to the Class D Notes, the Class D Note Balance and with respect to the Class E Notes, the Class E Note Balance.

 

“Note Majority” means the Holders collectively evidencing more than 50% of the aggregate outstanding Note Balance for each Class of Notes.

 

“Note Paying Agent” has the meaning assigned to such term in the Indenture.

 

“Note Prepayment Amount” means an amount equal to the Pre-Funded Amount on the Mandatory Redemption Date (after giving effect to any application thereof to acquire Subsequent Receivables on the last day of the Funding Period).

 

“Note Register” has the meaning assigned to such term in the Indenture.

 

“Note Registrar” has the meaning assigned to such term in the Indenture.

 

“Noteholder” or “Holder” has the meaning assigned to such term in the Indenture.

 

“Noteholders’ Interest Carryover Shortfall” means, with respect to any Payment Date, for each Class of Notes, the excess of the Noteholders’ Interest Distributable Amount for such Class of Notes for the preceding Payment Date over the amount that was actually deposited in the Collection Account on such preceding Payment Date on account of the Noteholders’ Interest Distributable Amount for such Class of Notes.

 

“Noteholders’ Interest Distributable Amount” means, with respect to any Payment Date and any Class of Notes, the sum of (i) the Noteholders’ Monthly Interest Distributable Amount for such Class of Notes for such Payment Date, (ii) the Noteholders’ Interest Carryover Shortfall for such Classes of Notes for such Payment Date and (iii) interest on such Noteholders’ Interest Carryover Shortfall for such Class of Notes, to the extent permitted by law, at the applicable Interest Rate from and including the preceding Payment Date to but excluding the current Payment Date.

 

“Noteholders’ Monthly Interest Distributable Amount” means for each Class of Notes (i) for the first Payment Date, an amount equal to the product of (1) the Interest Rate for such Class of Notes, (2) the Original Class Note Balance for such Class of Notes, and (3) a fraction, the numerator of which is the number of days from and including the Closing Date to and including January 14, 2014, and the denominator of which is 360; and (ii) for any Payment Date after the first Payment Date, an amount equal to the product of (1) one-twelfth of the Interest Rate for such Class of Notes and (2) the Note Balance for such Class of Notes as of the close of the preceding Payment Date (after giving effect to all distributions on account of principal on such preceding Payment Date).

 

“Noteholders’ Principal Distributable Amount” means, with respect to any Payment Date, the excess, if any, of (x) the Aggregate Note Balance (after giving effect to any reduction thereof to occur on such Payment Date due to any payments of Class A Parity Deficit Amounts, Class B Parity Deficit Amounts, Class C Parity Deficit Amounts, Class D Parity Deficit Amounts and Class E Parity Deficit Amounts on such Payment Date) over (y)(i) the Collateral Balance as of the end of the related Collection Period less (ii) the Target Pool Overcollateralization Amount.  On any Payment Date after the acceleration of the Notes pursuant to Section 5.2 of the Indenture, the Noteholders’ Principal Distributable Amount shall be the Aggregate Note Balance.

 

“Notes” means the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes, collectively.

 

“Obligor” on a Receivable means the purchaser or co-purchasers of the Financed Vehicle and any other Person who owes payments under the Receivable.

 

“Officer’s Certificate” means a certificate signed by the chairman of the board, the president, any vice chairman of the board, any vice president, the treasurer, the controller or assistant treasurer or any assistant controller, secretary or assistant secretary of CPS, the Seller or the Servicer, as appropriate.

 

“Opinion of Counsel” means a written opinion of counsel who may but need not be counsel to the Seller or the Servicer, which counsel shall be reasonably acceptable to the Trustee and which opinion shall be acceptable in form and substance to the Trustee.

 

“Original Class A Note Balance” means $136,330,000.

 

“Original Class B Note Balance” means $21,500,000.

 

“Original Class C Note Balance” means $10,980,000.

 

“Original Class D Note Balance” means $9,150,000.

 

“Original Class E Note Balance” means $5,040,000.

 

“Original Collateral Balance” means the (i) aggregate Principal Balance of the Initial Receivables as of the Initial Cutoff Date and (ii) the initial Pre-Funded Amount.

 

 “Original Pool Balance” means, as of any date of determination, the sum of (i) the Pool Balance as of the Initial Cutoff Date ($119,600,516.24) and (ii) the aggregate Principal Balance of Subsequent Receivables, if any, as of their respective Subsequent Cutoff Dates.

 

 “Other Conveyed Property” means all property conveyed by the Seller to the Trust pursuant to USections 2.1(b)U through U(j)U of this Agreement and USections 2.2(a)(ii)U through U(x)U.

 

“Outstanding” has the meaning assigned to such term in the Indenture.

 

“Owner Trust Estate” has the meaning assigned to such term in the Trust Agreement.

 

“Owner Trustee” means Wilmington Trust, National Association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement, its successors in interest or any successor Owner Trustee under the Trust Agreement.

 

“Payment Date” means, with respect to each Collection Period, the 15th day of the following calendar month, or if such day is not a Business Day, the immediately following Business Day, commencing on January 15, 2014.

 

“Pending Litigation” means the litigation matters that are described under “CPS – Recent Developments” in the Confidential Private Placement Memorandum dated as of December 10, 2013.

 

“Percentage Interest” has the meaning assigned to such term in the Trust Agreement.

 

“Person” means any individual, corporation, estate, partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.

 

“Placement Agency Agreement” means the Placement Agency Agreement relating to the Notes dated December 10, 2013, among Citigroup Global Markets Inc., for itself and as Representative of the several Placement Agents, CPS and the Seller.

 

“Placement Agent” means Citigroup Global Markets Inc. and CRT Capital Group LLC, and their respective successors and assigns.

 

“Pool Balance” as of any date of determination, means the aggregate Principal Balance of the Receivables (excluding Purchased Receivables, Sold Receivables and Liquidated Receivables) as of such date.

 

“Post Office Box” means the separate post office box in the name of the Trust established and maintained pursuant to Section 4.2U.

 

“Post-Petition Receivable” means a Receivable, the Obligor of which, at the time of application, is or, in the case of Subsequent Receivables, will be the debtor in a Federal, State or other bankruptcy, insolvency or similar proceeding, provided that a Receivable shall no longer be considered a Post-Petition Receivable upon the related Obligor receiving a discharge in the related proceeding.

 

“Pre-Funded Amount” means, with respect to any date of determination, the amount then on deposit in the Pre-Funding Account (exclusive of Pre-Funding Earnings), which initially shall be $63,399,483.76.

 

“Pre-Funding Account” has the meaning specified in USection 5.1(d)U.

 

“Pre-Funding Earnings” means any Investment Earnings on amounts on deposit in the Pre-Funding Account.

 

“Principal Balance” of a Receivable, as of any date of determination, means the Amount Financed minus the sum of the following amounts without duplication:  (i) that portion of all Scheduled Receivable Payments actually received on or prior to such day allocable to principal using the Simple Interest Method; (ii) any payment of the Purchase Amount with respect to the Receivable allocable to principal; (iii) any Cram Down Loss in respect of such Receivable; and (iv) any prepayment in full or any partial prepayment applied to reduce the principal balance of the Receivable; provided, however that the Principal Balance of a Receivable that has become a Liquidated Receivable shall equal zero.

 

“Principal Distribution Account” means the account designated as such, established and maintained pursuant toU Section 5.1(b)U.

 

“Program” has the meaning specified in USection 4.11U.

 

“Purchase Amount” means, with respect to a Receivable, the amount, as of the close of business on the last day of a Collection Period, required to prepay in full such Receivable under the terms thereof, as reduced by the amount of any Cram Down Loss, plus all accrued and unpaid interest thereon to the end of the month of such purchase.

 

“Purchased Receivable” means a Receivable purchased as of the close of business on the last day of a Collection Period by the Servicer or CPS pursuant to USection 4.7U or USection 4.16U, or repurchased by the Seller or CPS pursuant to USection 3.2U, USection 3.4U or USection 11.1(a)U.

 

“Rating Agency” means each of Moody’s and Standard & Poor’s and any successors thereof.  If no such organization or successor maintains a rating on the Notes, “Rating Agency” shall be a nationally recognized statistical rating organization or other comparable Person designated by the Seller, notice of which designation shall be given to the Trustee, the Owner Trustee and the Servicer.

 

“Rating Agency Condition” means, with respect to any action, that each Rating Agency shall have been given 10 days’ (or such shorter period as shall be acceptable to each Rating Agency) prior notice thereof and that each Rating Agency shall have notified the Seller, the Servicer, the Owner Trustee and the Trustee in writing that such action will not result in a reduction or withdrawal of the then current rating of any of the Notes.

 

“Realized Losses” means, with respect to any Receivable that becomes a Liquidated Receivable, the excess of the Principal Balance of such Liquidated Receivable over Net Liquidation Proceeds allocable to principal.

 

“Receivable” means an Initial Receivable or a Subsequent Receivable, as applicable.

 

“Receivable Files” means the documents specified in USection 3.3(a)U.

 

“Receivables Purchase Agreement” means the Receivables Purchase Agreement dated as of December 1, 2013, by and between the Seller and CPS, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, relating to the purchase of the Receivables by the Seller from CPS.

 

“Record Date” means, with respect to any Note, (i) with respect to the first Payment Date, the Closing Date and (ii) with respect to any subsequent Payment Date, the last day of the calendar month preceding the calendar month in which such Payment Date occurs.

 

“Recoveries” means with respect to a Liquidated Receivable, the monies collected from whatever source, during any Collection Period following the Collection Period in which such Receivable first became a Liquidated Receivable, net of the reasonable costs of liquidation plus any amounts required by law to be remitted to the Obligor (without duplication of amounts netted against the amounts realized in calculating the Net Liquidation Proceeds).

 

“Registrar of Titles” means, with respect to any State, the governmental agency or body responsible for the registration of, and, as applicable, the issuance of certificates of titles relating to, motor vehicles and liens thereon.

 

“Repurchase Request” means, with respect to any Receivable, any request or demand from any Person whether oral or written that such Receivable be repurchased or replaced because of a breach of any of CPS’s or the Seller’s representations and warranties concerning the Receivables.

 

“Repurchase Request Recipient” has the meaning assigned to such term in USection 13.15U.

 

“Repurchase Rules and Regulations” has the meaning assigned to such term in USection 13.15U.

 

“Residual Certificateholder” means each person in whose name a Residual Pass-through Certificate is registered on the Certificate Register.

 

“Residual Pass-through Certificate” has the meaning assigned to such term in the Trust Agreement.

 

“Responsible Officer” has the meaning specified in the Trust Agreement.

 

“Rule 15Ga-1” means Rule 15Ga-1 under the Exchange Act.

 

“Rule 15Ga-1 Notice” has the meaning assigned to such term in USection 13.15U.

 

“Sale Amount” means, with respect to any Sold Receivable, the amount received from the related third-party purchaser as payment for such Sold Receivable.

 

“Schedule of Receivables”  means the schedule of Initial Receivables attached hereto as Schedule A and the schedule of Subsequent Receivables attached to each Subsequent Transfer Agreement, collectively (which may be in the form of microfiche), as such schedules may be amended or supplemented from time to time in accordance with the terms of this Agreement.

 

“Scheduled Receivable Payment” means, with respect to any Collection Period for any Receivable, the amount set forth in such Receivable as required to be paid by the Obligor in such Collection Period.  If after the Closing Date, the Obligor’s obligation under a Receivable with respect to a Collection Period has been modified so as to differ from the amount specified in such Receivable (i) as a result of the order of a court in an insolvency proceeding involving the Obligor, (ii) pursuant to the Servicemembers Civil Relief Act, or (iii) as a result of modifications or extensions of the Receivable permitted by USection 4.2(aU), the Scheduled Receivable Payment with respect to such Collection Period shall refer to the Obligor’s payment obligation with respect to such Collection Period as so modified.

 

“Securities” means the Notes and the Residual Pass-through Certificates, collectively.

 

“Securityholders” means the Noteholders and the Residual Certificateholders, collectively.

 

“Seller” means CPS Receivables Five LLC, a Delaware limited liability company, and its successors in interest to the extent permitted hereunder.

 

“Seller’s Contract Purchase Guidelines” means the set of criteria that the Seller has established for purchasing Contracts on a state-by-state basis as reflected in rate cards and the approval authority summary, as the same may be amended from time to time.

 

“Series 2013-D Spread Account” means the account designated as such,  established and maintained pursuant to USection 5.1(c)U.

 

“Servicer” means CPS, as the servicer of the Receivables, and each successor Servicer pursuant to USection 10.3U.

 

“Servicer Termination Event” means an event specified in USection 10.1U.

 

“Servicer’s Certificate” means a certificate completed and executed by a Servicing Officer and delivered pursuant to USection 4.9U, substantially in the form of UExhibit BU.

 

“Servicing Fee” has the meaning specified in USection 4.8U.

 

“Servicing Officer” means any Person whose name appears on a list of Servicing Officers delivered to the Trustee, as the same may be amended from time to time.

 

“Simple Interest Method” means the method of allocating a fixed level payment between principal and interest, pursuant to which the portion of such payment that is allocated to interest is equal to the product of the APR multiplied by the unpaid balance multiplied by the period of time (expressed as a fraction of a year, based on the actual number of days in the calendar month and the actual number of days in the calendar year) elapsed since the preceding payment of interest was made and the remainder of such payment is allocable to principal.

 

“Simple Interest Receivable” means a Receivable under which the portion of the payment allocable to interest and the portion allocable to principal is determined in accordance with the Simple Interest Method.

 

“Skip Receivable” means a Receivable (i) that is delinquent as of the Closing Date; and (ii) with respect to which CPS (a) has concluded that the address or telephone number of the related Obligor maintained by CPS as of the Closing Date is incorrect and CPS has not been able to obtain revised contact information for such Obligor and (b) has designated the status of the Receivable as “A07” or “F07” in accordance with its servicing procedures.

 

“Sold Receivable” means a Receivable that was more than 120 days delinquent and was sold to an unaffiliated third party by the Issuer, at the Servicer’s direction, as of the close of business on the last day of a Collection Period and in accordance with the provisions of USection 4.3(b)U.

 

“Specified Spread Account Requisite Amount” means, as of any date of determination, the lesser of (i) one percent (1.00%) of the Original Pool Balance and (ii) the Aggregate Note Balance; provided, however, that on and after the Aggregate Note Balance has been reduced to zero and all Classes of Notes have been distributed all amounts to which the Holders thereof are entitled under the Basic Documents, the Specified Spread Account Requisite Amount shall be $0.

 

“Standard & Poor’s” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, or its successor.

 

“State” means any one of the 50 states of the United States of America or the District of Columbia.

 

“Subsequent Cutoff Date” with respect to each Subsequent Receivable transferred pursuant to a Subsequent Receivables Purchase Agreement, has the meaning assigned to such term in such Subsequent Receivables Purchase Agreement.

 

“Subsequent Receivables” means each Contract related to a Financed Vehicle transferred to the Issuer pursuant to USection 2.2U (each of which shall be listed on Schedule A to the related Subsequent Transfer Agreement), and all rights and obligations thereunder, except for Subsequent Receivables that shall have become Purchased Receivables or  Sold Receivables.

 

“Subsequent Receivables Purchase Agreement” means an agreement by and between the Seller and CPS pursuant to which the Seller will acquire Subsequent Receivables from CPS during the Funding Period.

 

“Subsequent Spread Account Deposit” means, with respect to each Subsequent Transfer Date, an amount equal to one percent (1.00)% of the aggregate Principal Balance of related Subsequent Receivables as of the related Subsequent Cutoff Date transferred to the Trust on such Subsequent Transfer Date.

 

“Subsequent Transfer Agreement” means an agreement among the Issuer, the Seller and the Servicer, substantially in the form of UExhibit AU.

 

“Subsequent Transfer Date” means, with respect to Subsequent Receivables, any date, occurring not more frequently than twice per calendar month, during the Funding Period on which Subsequent Receivables are transferred to the Trust pursuant to this Agreement.

 

“Subsequent Trust Property” means the property and proceeds conveyed pursuant to USection 2.2U.

 

“Successor Servicing Fee Schedule” means that certain Schedule of Successor Servicing Fees, Expenses and Distributions attached hereto as UExhibit GU.

 

“Target Pool Overcollateralization Amount” means (a) as of any Payment Date prior to the occurrence of a Trigger Event, the greater of (i) 5.00% of the Collateral Balance as of the end of the immediately preceding Collection Period and (ii) 2.50% of the Original Pool Balance; (b) as of any Payment Date on or after the occurrence of a Trigger Event, the greater of (i) 12.50% of the Collateral Balance as of the end of the immediately preceding Collection Period and (ii) 2.50% of the Original Pool Balance.

 

“Texas Franchise Tax” means any tax imposed by the State of Texas pursuant to Tex. Tax Code Ann. § 171.001 (Vernon 2005), as amended by Tex. H.B. 3, 79th Leg., 3d C.S. (2006).

 

“TFC” means The Finance Company, a Virginia corporation.

 

“Three-Month Rolling Average Delinquency Ratio” means, for any date of determination, the average of the Delinquency Ratios for each of the three immediately preceding Collection Periods.

 

“Three-Month Rolling Average Extension Ratio” means, for any date of determination, a rolling three month average of the ratio for each of the three immediately preceding Collection Periods, expressed as a percentage, of (i) the aggregate Principal Balance of the Receivables whose payments are extended during the related Collection Period to (ii) the Pool Balance as of the first day of the related Collection Period prior to giving effect to any payment activity on such date.

 

“Total Distribution Amount” means, for each Payment Date, the sum of the following amounts with respect to the related Collection Period:  (i) all collections on the Receivables; (ii) Net Liquidation Proceeds received during the Collection Period with respect to Liquidated Receivables; (iii) all proceeds from Recoveries with respect to Liquidated Receivables; (iv) all proceeds received during the Collection Period from Insurance Policies (other than funds used for the repair of the related Financed Vehicle or otherwise released by CPS to the related Obligor in accordance with normal servicing procedures); (v) Investment Earnings for the related Payment Date; (vi) all Purchase Amounts deposited in the Collection Account during the related Collection Period, plus the amount of any payments made by CPS to the Trust pursuant to its indemnification obligations under the Basic Documents; (vii) following the acceleration of the Notes pursuant to Section 5.2 of the Indenture, the amount of money or property collected pursuant to Section 5.3 of the Indenture since the preceding Payment Date by the Trustee for distribution pursuant to USection 5.7U hereof; (viii) any amounts released from the Series 2013-D Spread Account in accordance with the terms of USection 5.5(b)U for payment pursuant to clauses U(xxi)U through U(xxiii)U of USection 5.7(a)U; (ix) the proceeds of any purchase or sale of the assets of the Trust described in USections 4.16U or U11.1U hereof; and (x) any Sale Amounts realized by the Servicer in connection with the sale of Sold Receivables pursuant to USection 4.3(b)U.

 

“Transferred Property” has the meaning assigned thereto in the Receivables Purchase Agreement.

 

“Trigger Event” means, for each Payment Date, the Cumulative Net Loss Rate calculated as of the end of the related Collection Period exceeds the percentage set forth on Exhibit D hereto for such Payment Date.

 

“Trust” means the Issuer.

 

“Trust Account Property” means the Trust Accounts, all amounts and investments held from time to time in any Trust Account (whether in the form of deposit accounts, physical property, book-entry securities, uncertificated securities or otherwise), and all proceeds of the foregoing.

 

“Trust Accounts” means, collectively, the Collection Account, the Series 2013-D Spread Account, the Pre-Funding Account and the Principal Distribution Account.

 

“Trust Agreement” means the Trust Agreement dated as of October 1, 2013, by and between CPS Receivables Five LLC, as depositor, and the Owner Trustee, as amended and restated by the Amended and Restated Trust Agreement dated as of December 1, 2013, by and between the Seller, as depositor, and the Owner Trustee, as the same may be further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

 

“Trust Officer” means, (i) in the case of the Trustee, any vice president, any assistant vice president, any assistant secretary, any assistant treasurer, any trust officer, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject, and (ii) in the case of the Owner Trustee, any officer in the Corporate Trust Office of the Owner Trustee or any agent of the Owner Trustee under a power of attorney with direct responsibility for the administration of this Agreement or any of the Basic Documents on behalf of the Owner Trustee.

 

“Trust Paying Agent” means the “Paying Agent” appointed and acting in such capacity pursuant to the Trust Agreement.

 

“Trust Property” means the Initial Trust Property and the Subsequent Trust Property, collectively.

 

“Trustee” means the Person acting as trustee under the Indenture, its successors in interest and any successor trustee under the Indenture.

 

“Trustee Fee Schedule” means the schedule attached hereto as UExhibit HU.

 

“Trustee Fees” means the sum of (A) means the “Monthly Trustee Fee,” “Collateral Custody Fees” and “Account Acceptance Fee” as reflected on the Trustee Fee Schedule; and (B) any amounts payable to the Owner Trustee pursuant to Article VIII of the Trust Agreement, in each case, due and payable on each Payment Date in respect of the immediately preceding Collection Period; UprovidedU, UhoweverU, with respect to the initial Payment Date, the “Monthly Trustee Fee” shall be pro-rated based on the number of days in the period beginning on the Closing Date and ending on the last day of the first Collection Period.

 

“UCC” means the Uniform Commercial Code as in effect in the relevant jurisdiction on the date of the Agreement.

 

(b)    0BCapitalized terms used herein and not otherwise defined herein have the meanings assigned to them in the Indenture or, if not defined therein, in the Trust Agreement.

 

(c)    1BAll terms defined in this Agreement shall have the defined meanings when used in any instrument governed hereby and in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

 

(d)    2BAccounting terms used but not defined or partly defined in this Agreement, in any instrument governed hereby or in any certificate or other document made or delivered pursuant hereto, to the extent not defined, shall have the respective meanings given to them under generally accepted accounting principles as in effect on from time to time or any such instrument, certificate or other document, as applicable.  To the extent that the definitions of accounting terms in this Agreement or in any such instrument, certificate or other document are inconsistent with the meanings of such terms under generally accepted accounting principles, the definitions contained in this Agreement or in any such instrument, certificate or other document shall control.

 

(e)    3B(i) The words “hereof,” “herein,” “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement and (ii) the word “or” is not exclusive.

 

(f)    4BSection, Schedule and Exhibit references contained in this Agreement are references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” shall mean “including without limitation.”

 

(g)    5BThe definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.

 

(h)    6BAny 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 the same may from time to time be amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments and instruments associated therewith; all references to a Person include its permitted successors and assigns.

 

ARTICLE 2

 

CONVEYANCE OF RECEIVABLES

 

SECTION 2.1  UConveyance of Receivables.  UIn consideration of the Issuer’s delivery to or upon the order of the Seller on the Closing Date of the Securities, the Seller does hereby sell, transfer, assign, set over and otherwise convey to the Issuer, without recourse (subject to the obligations set forth herein) all right, title and interest of the Seller, whether now existing or hereafter arising, in, to and under:

 

(a)    7Bthe Initial Receivables listed in Schedule A hereto and all monies received thereunder after the Initial Cutoff Date and all Net Liquidation Proceeds and Recoveries received with respect to such Initial Receivables after the Initial Cutoff Date;

 

(b)    8Bthe security interests in the Financed Vehicles granted by the related Obligors pursuant to the Initial Receivables and any other interest of the Seller in such Financed Vehicles, including, without limitation, the Lien Certificates with respect to such Financed Vehicles;

 

(c)    9Bany proceeds from claims on any physical damage, credit life and credit accident and health insurance policies or certificates relating to the Financed Vehicles securing the Initial Receivables or the Obligors thereunder;

 

(d)    10Ball proceeds from recourse against Dealers or Consumer Lenders with respect to the Initial Receivables;

 

(e)    11Ball of the Seller’s rights and benefits, but none of its obligations or burdens, under the Receivables Purchase Agreement, including a direct right to cause CPS to purchase Initial Receivables from the Issuer and to indemnify the Issuer pursuant to the Receivables Purchase Agreement under the circumstances specified therein;

 

(f)    12Brefunds for the costs of extended service contracts with respect to Financed Vehicles securing the Initial Receivables, refunds of unearned premiums with respect to credit life and credit accident and health insurance policies or certificates covering an Obligor or Financed Vehicle or an Obligor’s obligations with respect to an Initial Receivable or a Financed Vehicle and any recourse to Dealers or Consumer Lenders for any of the foregoing;

 

(g)    13Bthe Receivable File related to each Initial Receivable;

 

(h)    14Ball amounts and property from time to time held in or credited to the Collection Account, the Lockbox Account, the Pre-Funding Account, the Series 2013-D Spread Account and the Principal Distribution Account;

 

(i)    15Ball property (including the right to receive future Net Liquidation Proceeds) that secures an Initial Receivable that has been acquired by or on behalf of CPS or the Seller, pursuant to a liquidation of such Receivable; and

 

(j)    16Ball present and future claims, demands, causes and choses in action in respect of any or all of the foregoing and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights to payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing.

 

SECTION 2.2  UConveyance of Subsequent Receivables.

 

(a)    17BSubject to the conditions set forth in paragraph (b) below, in consideration of the Issuer’s delivery on each related Subsequent Transfer Date to or upon the order of the Seller of the amount described in Section 5.10(a) to be delivered to the Seller, the Seller will, on the related Subsequent Transfer Date, sell, transfer, assign, set over and otherwise convey to the Issuer without recourse (subject to the obligations set forth herein) all right, title and interest of the Seller in, to and under:

 

(i) 183Bthe Subsequent Receivables listed in Schedule A to the related Subsequent Transfer Agreement and all monies received thereunder after the related Subsequent Cutoff Date and all Net Liquidation Proceeds and Recoveries received with respect to such Subsequent Receivables after the related Subsequent Cutoff Date;

 

(ii) 184Bthe security interests in the Financed Vehicles granted by Obligors pursuant to the Subsequent Receivables and any other interest of the Seller in such Financed Vehicles, including, without limitation, the Lien Certificates with respect to such Financed Vehicles;

 

(iii) 185Bany proceeds from claims on any physical damage, credit life and credit accident and health insurance policies or certificates relating to the Financed Vehicles securing the Subsequent Receivables or the Obligors thereunder;

 

(iv) 186Ball proceeds from recourse against Dealers or Consumer Lenders with respect to the related Subsequent Receivables;

 

(v) 187Ball of the Seller’s rights and benefits, but none of its obligations or burdens, under the related Subsequent Receivables Purchase Agreement, including a direct right to cause CPS to purchase Subsequent Receivables from the Issuer under certain circumstances and to indemnify the Issuer pursuant to the Subsequent Receivables Purchase Agreement;

 

(vi) 188Brefunds for the costs of extended service contracts with respect to Financed Vehicles securing Subsequent Receivables, refunds of unearned premiums with respect to credit life and credit accident and health insurance policies or certificates covering an Obligor or Financed Vehicle or an Obligor’s obligations with respect to a Subsequent Receivable or Financed Vehicle and any recourse to Dealers or Consumer Lenders for any of the foregoing;

 

(vii) 189Bthe Receivable File related to each Subsequent Receivable;

 

(viii) 190Ball amounts and property from time to time held in or credited to the Collection Account, the Pre-Funding Account, the Series 2013-D Spread Account and the Principal Distribution Account;

 

(ix) 191Ball property (including the right to receive future Net Liquidation Proceeds) that secured a Subsequent Receivable that has been acquired by or on behalf of CPS or the Seller pursuant to a liquidation of such Receivable;  and

 

(x) 192Ball present and future claims, demands, causes and choses in action in respect of any or all of the foregoing and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights to payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing.

 

(b)    18BThe Seller shall transfer to the Issuer the Subsequent Receivables and the other property and rights related thereto described in paragraph (a) above only upon the satisfaction of each of the following conditions on or prior to the related Subsequent Transfer Date:

 

(i) 193Bthe Seller shall have provided the Trustee, the Owner Trustee and each Rating Agency with an Addition Notice not later than five Business Days prior to such Subsequent Transfer Date and shall have provided any information reasonably requested by any of the foregoing with respect to the related Subsequent Receivables;

 

(ii) 194Bthe Seller shall have delivered to the Owner Trustee and the Trustee a duly executed Subsequent Transfer Agreement which shall include supplements to Schedule A, listing the related Subsequent Receivables;

 

(iii) 195Bthe Seller shall, to the extent required by USection 4.2U, have deposited in the Collection Account all collections in respect of the related Subsequent Receivables;

 

(iv) 196Bas of each Subsequent Transfer Date, (A) the Seller shall not be rendered insolvent as a result of the transfer of Subsequent Receivables on such Subsequent Transfer Date, (B) the Seller shall not intend to incur or believe that it shall incur debts that would be beyond its ability to pay as such debts mature, (C) such transfer shall not have been made with actual intent to hinder, delay or defraud any Person and (D) the assets of the Seller shall not constitute unreasonably small capital to carry out its business as then conducted;

 

(v) 197Bthe Funding Period shall not have terminated;

 

(vi) 198Bafter giving effect to any transfer of Subsequent Receivables on a Subsequent Transfer Date, the Receivables shall meet the following criteria (based on the characteristics of the Initial Receivables on the Initial Cutoff Date and the Subsequent Receivables on the related Subsequent Cutoff Dates): (A) the weighted average APR of such Receivables will be greater than or equal to 20.03%; (B) the weighted average remaining term of such Receivables will be within a range of 12 to 72 months; (C) not more than 92.25% of the aggregate Principal Balance of such Receivables will represent financing of used Financed Vehicles; (D) not more than 1.00% of the aggregate Principal Balance of such Receivables will have an APR in excess of 26.00% and not more than 9.50% of the aggregate Principal Balance of such Receivables will have an APR of less than 17.00%; (E) each Receivable will have an APR between 35.00% and 8.00%; (F) each Receivable will have an original term of no more than seventy-two (72) months and no more than 51.50% of the aggregate Principal Balance of such Receivables will have an original term in excess of sixty (60) months; (G) no more than 11.50% of the aggregate Principal Balance of such Receivables will have been originated in Texas; (H) no more than 11.00% of the aggregate Principal Balance of such Receivables will have been originated in California; (I) no more than 6.75% of the aggregate Principal Balance of such Receivables will have been originated in New Jersey; (J) not less than 73.00% of the aggregate Principal Balance of such Receivables will have been purchased under the Seller’s “Alpha,” “Super Alpha,” “Alpha Plus” or “Preferred” programs; (K) no more than 7.75% of the aggregate Principal Balance of such Receivables will be originated under the Seller’s First Time Buyer program; (L) no more than 9.25% of the aggregate Principal Balance of such Receivables will be originated under the Seller’s Delta program; (M) no less than 11.75% of the aggregate Principal Balance of such Receivables will be originated under the Seller’s Alpha Plus program; (N) no less than 17.75% of the aggregate Principal Balance of such Receivables on an aggregate basis will be originated under the Seller’s Preferred and Super Alpha programs; (O) none of such Receivables will have been originated by Fireside, TFC or their respective subsidiaries; (P) no more than 9.25% of the aggregate Principal Balance of such Receivables will constitute Post-Petition Receivables; (Q) none of such Receivables will have an LTV in excess of 145.00%; (R) the weighted average LTV of such Receivables will be less than or equal to 114.60%; (S) no more than 0.15% of Receivables will have an LTV in excess of 141.00%; and (T) the Trust, the Trustee and the Owner Trustee shall have received written confirmation from a firm of certified independent public accountants as to the satisfaction of the criteria in clauses (A) through (S) above;

 

(vii) 199Beach of the representations and warranties made by the Seller pursuant to USection 3.1U with respect to the related Subsequent Receivables to be transferred on such Subsequent Transfer Date shall be true and correct as of the related Subsequent Transfer Date, and the Seller shall have performed all obligations to be performed by it hereunder on or prior to such Subsequent Transfer Date;

 

(viii) 200Bthe Seller shall, at its own expense, on or prior to the Subsequent Transfer Date indicate in its computer files that the Subsequent Receivables identified in the Subsequent Transfer Agreement have been sold to the Trust pursuant to this Agreement;

 

(ix) 201Bthe Seller shall have taken any action required to maintain the first priority perfected ownership interest of the Issuer in the Owner Trust Estate and the first priority perfected security interest of the Trustee in the Collateral;

 

(x) 202Bno selection procedures adverse to the interests of the Noteholders shall have been utilized in selecting the Subsequent Receivables;

 

(xi) 203Bthe addition of any such Subsequent Receivables shall not result in a material adverse tax consequence to the Trust or the Noteholders;

 

(xii) 204Bthe Seller shall have delivered (A) to the Rating Agencies and each Placement Agent an Opinion of Counsel with respect to the characterization of the transfer of such Subsequent Receivables as a “true sale”, which Opinion of Counsel may be in the form of a “bring down” letter to the Opinion of Counsel delivered to the Rating Agencies and each Placement Agent on the Closing Date, and (B) to the Trustee and each Placement Agent the Opinion of Counsel required by USection 13.2(i)(i)U, which Opinion of Counsel may be in the form of a “bring down” letter to the Opinion of Counsel delivered to the Trustee and each Placement Agent on the Closing Date;

 

(xiii) 205Beach of the Seller and the Issuer shall have received verbal verification from the Rating Agencies that the addition of all such Subsequent Receivables will not result in a qualification, modification or withdrawal of the then current rating of each Class of Notes;

 

(xiv) 206Bthe Servicer shall instruct the Trustee to transfer the Subsequent Spread Account Deposit to the Series 2013-D Spread Account with respect to the related Subsequent Receivables transferred on such Subsequent Transfer Date; and

 

(xv) 207Bthe Seller shall have delivered to the Trustee an Officers’ Certificate confirming the satisfaction of each condition precedent specified in this paragraph (b).

 

The Seller covenants that in the event any of the foregoing conditions precedent are not satisfied with respect to any Subsequent Receivable on the date required as specified above, the Seller will immediately repurchase such Subsequent Receivable from the Issuer, at a price equal to the Purchase Amount thereof, in the manner specified in USection 3.2U.

 

SECTION 2.3  UTransfers Intended as Sales.  UIt is the intention of the Seller that each transfer and assignment contemplated by USections 2.1U or U2.2U shall constitute a sale of the Trust Property from the Seller to the Trust and the beneficial interest in and title to the Trust Property shall not be part of the Seller’s estate in the event of the filing of a bankruptcy petition by or against the Seller under any bankruptcy law.  In the event that, notwithstanding the intent of the Seller as set forth in this USection 2.3U and in USection 13.17U, the transfer and assignment contemplated hereby is held not to be a sale, this Agreement shall constitute a grant of (and the Seller does hereby grant) a security interest in all of the Seller’s right, title and interest in, to and under the Trust Property to the Trust for the benefit of the Securityholders and this Agreement shall constitute a security agreement under New York law.  The Seller shall take such actions as are necessary from time to time in order to maintain the perfection and priority of the Trust’s security interest in the Trust Property.

 

SECTION 2.4  UFurther Encumbrance of Trust Property.

 

(a)    19BImmediately upon the conveyance to the Trust by the Seller of any item of the Trust Property pursuant to USections 2.1U and U2.2U, all right, title and interest of the Seller in and to such item of Trust Property shall terminate, and all such right, title and interest shall vest in the Trust, in accordance with the Trust Agreement and Sections 3802 and 3805 of the Statutory Trust Statute (as defined in the Trust Agreement).

 

(b)    20BImmediately upon the vesting of the Trust Property in the Trust, the Trust shall have the sole right to pledge or otherwise encumber, such Trust Property.  Pursuant to the Indenture, the Trust shall grant a security interest in the Trust Property to secure the repayment of the Notes.  The Residual Pass-through Certificates shall represent beneficial ownership interests in the Trust Property, and the Residual Certificateholders shall be entitled to receive distributions with respect thereto as set forth in USection 5.7(a)(xxiii)U.

 

ARTICLE 3

 

THE RECEIVABLES

 

SECTION 3.1  URepresentations and Warranties of Seller.  The Seller makes the following representations and warranties as to the Receivables to the Issuer and to the Trustee for the benefit of the Noteholders on which the Issuer relies in acquiring the Receivables, and on which the Trustee is deemed to have relied in executing and performing pursuant to this Agreement, the Indenture and the other Basic Documents to which it is a party.  Such representations and warranties speak as of the execution and delivery of this Agreement and as of the Closing Date (in the case of the Initial Receivables) and as of the related Subsequent Transfer Date (in the case of the Subsequent Receivables), but shall survive the sale, transfer and assignment of the Receivables to the Issuer and the pledge thereof to the Trustee for the benefit of the Noteholders pursuant to the Indenture.

 

(i) 208BUCharacteristics of ReceivablesU.  (A)  Each Receivable (1) has been originated in the United States of America by a Dealer or Consumer Lender without any fraud or misrepresentation on the part of such Dealer or Consumer Lender for the retail sale of a Financed Vehicle in the ordinary course of such Dealer’s or Consumer Lender’s business, such Dealer or Consumer Lender had all necessary licenses and permits to originate such Receivable in the State where such Dealer or Consumer Lender was located, has been fully and properly executed by the parties thereto, has been purchased by CPS in connection with the related Obligor’s purchase of the related Financed Vehicle and has been validly assigned by such Dealer or Consumer Lender to CPS, by CPS to the Seller and by the Seller to the Issuer, (2) has created a valid, subsisting, and enforceable first priority perfected security interest in favor of CPS in the Financed Vehicle, which security interest has been assigned by CPS to the Seller, which in turn has assigned such security interest to the Trust which in turn has pledged such security interest to the Trustee, (3) contains customary and enforceable provisions such that the rights and remedies of the holder or assignee thereof shall be adequate for realization against the collateral of the benefits of the security including, without limitation, a right of repossession following a default, (4) provides for level monthly scheduled payments that fully amortize the Amount Financed over the original term (except for the last scheduled payment, which may be different from the level monthly payment) and yield interest at the Annual Percentage Rate, (5) has an Annual Percentage Rate of not less than  8.00% and not greater than 35.00%, (6) is a Simple Interest Receivable, (7) was originated by a Dealer or Consumer Lender and was sold by such Dealer or Consumer Lender without any fraud or misrepresentation on the part of such Dealer or Consumer Lender, (8) is denominated in U.S. dollars and (9) provides, in the case of a prepayment, for the full payment of the Principal Balance thereof plus accrued interest through the date of prepayment based on the Annual Percentage Rate of the Receivable.

 

209B(B) Approximately 91.68%  of the aggregate Principal Balance of the Initial Receivables as of the Initial Cutoff Date represents financing of used automobiles, light trucks, vans or minivans; the remainder of the Initial Receivables represent financing of new vehicles; approximately 2.93% of the aggregate Principal Balance of the Initial Receivables as of the Initial Cutoff Date were originated under the CPS Preferred Program; approximately 42.86% of the aggregate Principal Balance of the Initial Receivables as of the Initial Cutoff Date were originated under the CPS Alpha Program; approximately 8.59% of the aggregate Principal Balance of the Initial Receivables as of the Initial Cutoff Date were originated under the CPS Delta Program; approximately 7.56% of the Initial Receivables as of the Initial Cutoff Date were originated under the CPS First-Time Buyer Program; approximately 10.35% of the aggregate Principal Balance of the Initial Receivables as of the Initial Cutoff Date were originated under the CPS Standard Program; approximately 14.97% of the aggregate Principal Balance of the Initial Receivables as of the Initial Cutoff Date were originated under the CPS Super Alpha Program; approximately 12.74% of the aggregate Principal Balance of the Initial Receivables as of the Initial Cutoff Date were originated under the CPS Alpha Plus Program; all of the Initial Receivables were acquired by the Seller; approximately 8.22% of the aggregate Principal Balance of the Initial Receivables as of the Initial Cutoff Date were Post-Petition Receivables; each Initial Receivable has a final scheduled payment due no later than December 31, 2019; and each Initial Receivable was originated on or before the Initial Cutoff Date.

 

(ii) 210BUAdditional Receivables CharacteristicsU.  (A) As of the Cutoff Date (in the case of the Initial Receivables) or the applicable Subsequent Cutoff Date (in the case of the Subsequent Receivables), no Receivable is more than 30 days contractually past due with respect to any Scheduled Receivable Payment, and no extensions were granted by the Servicer to satisfy such representation; and (B) as of the Closing Date (in the case of the Initial Receivables) or the applicable Subsequent Transfer Date (in the case of the applicable Subsequent Receivables), (I) no Receivable is a Skip Receivable and (II) no Receivable is more than 60 days contractually past due with respect to any Scheduled Receivable Payment.

 

(iii) 211BUSchedule of Receivables; Selection ProceduresU.  The information with respect to the Initial Receivables set forth in Schedule A to this Agreement is true and correct in all material respects as of the close of business on the Initial Cutoff Date; the information with respect to the Subsequent Receivables set forth in Schedule A to the related Subsequent Transfer Agreement is true and correct in all material respects as of the close of business on the related Subsequent Cutoff Date; no selection procedures adverse to the Securityholders have been utilized in selecting the Receivables.

 

(iv) 212BUCompliance with LawU.  Each Receivable, the sale of the Financed Vehicle and the sale of any physical damage, credit life and credit accident and health insurance and any extended warranties or service contracts (A) complied at the time the related Receivable was originated or made and at the execution of this Agreement (or the applicable Subsequent Transfer Agreement) complies in all material respects with all requirements of applicable Federal, State, and local laws, and regulations thereunder including, without limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board’s Regulations B and Z, the Servicemembers Civil Relief Act, the Military Reservist Relief Act, the Texas Consumer Credit Code, the California Automobile Sales Finance Act and State adaptations of the National Consumer Act and of the Uniform Consumer Credit Code, and all other applicable consumer credit laws and equal credit opportunity and disclosure laws, and (B) without limiting the generality of the foregoing, is not subject to liabilities or is not rendered unenforceable based on general theories of contract limitation or relief including, without limitation, theories based on unconscionable, deceptive, unfair, or predatory sales or financing practices.

 

(v) 213BUNo Government ObligorU.  None of the Receivables are due from the United States of America or any State or from any agency, department, or instrumentality of the United States of America or any State.

 

(vi) 214BUSecurity Interest in Financed VehicleU. Immediately subsequent to the sale, assignment and transfer thereof to the Trust, each Receivable shall be secured by a validly perfected first priority security interest in the Financed Vehicle in favor of CPS as secured party which security interest has been validly assigned by CPS to the Seller and by the Seller to the Trust, and validly pledged by the Trust to the Trustee for the benefit of the Noteholders, and such assigned security interest is prior to all other liens upon and security interests in such Financed Vehicle that now exist or may hereafter arise or be created, except, as to priority, for any tax, storage or mechanics’ Liens that may arise after the Closing Date (in the case of the Initial Receivables) or the related Subsequent Transfer Date (in the case of the Subsequent Receivables).

 

(vii) 215BUReceivables in ForceU.  No Receivable has been satisfied, subordinated or rescinded, nor has any Financed Vehicle been released from the lien granted by the related Receivable in whole or in part.

 

(viii) 216BUNo WaiverU.  Except as permitted under USection 4.2U and Uclause (ix)U below, no provision of a Receivable has been waived.

 

(ix) 217BUNo AmendmentsU.  The terms of the related Contract have not been waived, altered, amended or modified (including, without limitation, by way of extension) in any respect, except by instruments or documents identified in the Receivable File with respect thereto, and no such waiver, alteration, amendment or modification has caused such Receivable to fail to meet all of the representations, warranties, and conditions set forth herein with respect thereto.  Such Contract constitutes the entire agreement between the Seller and the related Obligor.

 

(x) 218BUNo DefensesU.  No right of rescission, setoff, counterclaim or defense exists or has been asserted or threatened with respect to any Receivable. The operation of the terms of any Receivable or the exercise of any right thereunder will not render such Receivable unenforceable in whole or in part and such Receivable is not subject to any such right of rescission, setoff, counterclaim, or defense.

 

(xi) 219BUNo LiensU.  As of the applicable Cutoff Date, (a) there are no liens or claims existing or that have been filed for work, labor, storage or materials relating to a Financed Vehicle that are prior to, or equal or coordinate with, the security interest in the Financed Vehicle granted by the Receivable and (b) there is no lien against the related Financed Vehicle for delinquent taxes.

 

(xii) 220BUNo Default; RepossessionU.  Except for payment delinquencies continuing for a period of not more than thirty days as of the applicable Cutoff Date, no default, breach, violation or event permitting acceleration under the terms of any Receivable has occurred; and no continuing condition that with notice or the lapse of time, or both, would constitute a default, breach, violation or event permitting acceleration under the terms of any Receivable has arisen; and the Seller shall not waive and has not waived any of the foregoing (except in a manner consistent with USection 4.2U and clause (ix) above); and no Financed Vehicle shall have been repossessed or assigned for repossession as of the Closing Date (in the case of the Initial Receivables) or the related Subsequent Transfer Date (in the case of the Subsequent Receivables).

 

(xiii) 221BUInsurance; OtherU.  (A) Each Obligor has obtained insurance covering the Financed Vehicle as of the execution of the Receivable insuring against loss and damage due to fire, theft, transportation, collision and other risks generally covered by comprehensive and collision coverage, and each Receivable requires the Obligor to obtain and maintain such insurance naming CPS and its successors and assigns as loss payee or an additional insured, (B) each Receivable that finances the cost of premiums for credit life and credit accident and health insurance is covered by an insurance policy or certificate of insurance naming CPS as policyholder (creditor) under each such insurance policy and certificate of insurance and (C) as to each Receivable that finances the cost of an extended service contract, the respective Financed Vehicle that secures the Receivable is covered by an extended service contract.

 

(xiv) 222BUTitleU.  It is the intention of the Seller that the transfer and assignment herein contemplated constitute a sale of the Receivables and the Other Conveyed Property from the Seller to the Trust and that the beneficial interest in and title to such Receivables and the Other Conveyed Property not be part of the Seller’s estate in the event of the filing of a bankruptcy petition by or against the Seller under any bankruptcy law.  No Receivable or Other Conveyed Property has been sold, transferred, assigned, or pledged by the Seller to any Person other than the Trust.  Immediately prior to the transfer and assignment herein contemplated, the Seller had good and marketable title to each Receivable and the Other Conveyed Property and was the sole owner thereof, free and clear of all liens, claims, encumbrances, security interests, and rights of others, and, immediately upon the transfer thereof, the Trust for the benefit of the Securityholders shall have good and marketable title to each such Receivable and will be the sole owner thereof, free and clear of all liens, encumbrances, security interests, and rights of others, and the transfer has been perfected under the UCC.

 

(xv) 223BULawful AssignmentU.  No Receivable has been originated in, or is subject to the laws of, any jurisdiction under which the sale, transfer, and assignment of such Receivable under this Agreement or pursuant to transfers of the Securities shall be unlawful, void, or voidable.  Neither CPS nor the Seller has entered into any agreement with any account debtor that prohibits, restricts or conditions the assignment of any portion of the Receivables.

 

(xvi) 224BUAll Filings MadeU.  All filings (including, without limitation, UCC filings) necessary in any jurisdiction to give (i) the Seller a first priority perfected security interest in the Receivables and the other Transferred Property, (ii) the Issuer a first priority perfected security interest in the Receivables and the Other Conveyed Property, and (iii) the Trustee a first priority perfected security interest in the Collateral have been made, taken or performed.

 

(xvii) 225BUReceivable File; One OriginalU.  CPS has delivered to the Trustee a complete Receivable File with respect to each Receivable.  There is only one original executed copy of each Receivable.

 

(xviii) 226BUChattel PaperU.  Each Contract constitutes “tangible chattel paper” under the UCC.

 

(xix) 227BUTitle DocumentsU.  The Lien Certificate with respect to each Financed Vehicle shows, or if a new or replacement Lien Certificate is being applied for with respect to such Financed Vehicle, the Lien Certificate will be received within 180 days and will show, the Seller named as the original secured party under the related Receivable as the holder of a first priority security interest in such Financed Vehicle; provided that Lien Certificates related to up to 10% of the Initial Receivables and 10% of the Subsequent Receivables (by Principal Balance) may be received within 240 days.  The Trust has the same rights as such secured party has or would have (if such secured party were still the owner of the Receivable) against all parties claiming an interest in such Financed Vehicle, and such rights have been validly pledged to the Trustee pursuant to the Indenture.  With respect to each Receivable for which the Lien Certificate has not yet been returned from the Registrar of Titles, the Seller has received written evidence from the related Dealer or Consumer Lender that the related Dealer or Consumer Lender has applied for such Lien Certificate showing the Seller as first lienholder.

 

(xx) 228BUValid and Binding Obligation of ObligorU.  Each Receivable is the legal, valid and binding obligation in writing of the Obligor thereunder and is enforceable in accordance with its terms, except only as such enforcement may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally, and all parties to such contract had full legal capacity to execute and deliver such contract and all other documents related thereto and to grant the security interest purported to be granted thereby.

 

(xxi) 229BUCharacteristics of ObligorsU.  As of the date of each Obligor’s application for financing of the vehicle purchase from which the related Receivable arises, such Obligor was domiciled in the United States.  As of the Closing Date (in the case of the Initial Receivables) or the related Subsequent Transfer Date (in the case of the Subsequent Receivables), no Obligor is or will be, to the knowledge of CPS, the subject of any Federal, State or other bankruptcy, insolvency or similar proceeding other than an Obligor related to a Post-Petition Receivable.

 

(xxii) 230BUOrigination DateU.  Each Receivable has an origination date on or after May 1, 2013.

 

(xxiii) 231BUMaturity of ReceivablesU.  Each Receivable has an original term to maturity of not more than 72 months; the weighted average original term to maturity of the Initial Receivables was 62.89 months as of the Initial Cutoff Date; the remaining term to maturity of each Receivable was 72 months or less as of the applicable Cutoff Date; the weighted average remaining term to maturity of the Initial Receivables was 62.36 months as of the Initial Cutoff Date.

 

(xxiv) 232BUScheduled Receivable PaymentsU.  Each Receivable has an original Principal Balance of not more than $40,000.00.

 

(xxv) 233BUOrigination of ReceivablesU.  Based on the billing address of the Obligors and the Principal Balances as of the Initial Cutoff Date, approximately 10.93%, 10.18%, 5.86%, 5.63% and 5.24% of the Receivables (by Principal Balance) had Obligors residing in the States of Texas, California, Georgia, New Jersey and Pennsylvania, respectively. As of the Initial Cutoff Date, no other state represented more than 5.00% of the Initial Receivables (by Principal Balance).

 

(xxvi) 234BUPost Office BoxU.  On or prior to the next billing period after the applicable Cutoff Date, CPS will notify each Obligor to make payments with respect to its respective Receivables after the applicable Cutoff Date directly to the Post Office Box, and will provide each Obligor with a monthly statement in order to enable such Obligors to make payments directly to the Post Office Box.

 

(xxvii) 235BULocation of Receivable FilesU.  A complete Receivable File with respect to each Receivable has been or prior to the Closing Date or the related Subsequent Transfer Date, as applicable, will be delivered to the Trustee at the location listed in Schedule B hereto.

 

(xxviii) 236BUCasualty and ImpoundingU.  No Financed Vehicle has suffered a Casualty and CPS has not received notice that any Financed Vehicle has been impounded.

 

(xxix) 237BUPrincipal Balance/Number of ContractsU.  As of the Initial Cutoff Date, the aggregate Principal Balance of the Initial Receivables was $119,600,516.24.  As of the Initial Cutoff Date, the Receivables are evidenced by 7,799 Contracts.

 

(xxx) 238BUFull Amount AdvancedU.  The full amount of each Receivable has been advanced to each Obligor, and there are no requirements for future advances thereunder.  The Obligor with respect to each Receivable does not have any option under the terms of the related Contract to borrow from any person additional funds secured by the Financed Vehicle.

 

(xxxi) 239BUNo ImpairmentU.  Neither CPS nor the Seller has done anything to convey any right to any Person that would result in such Person having a right to payments due under any Receivables or otherwise to impair the rights of the Purchaser, the Issuer or the Securityholders in any Receivable or the proceeds hereof.

 

(xxxii) 240BUReceivables Not AssumableU.  No Receivable is assumable by another Person in a manner that would release the Obligor thereof from such Obligor’s obligations to CPS or the Seller with respect to such Receivable.

 

(xxxiii) 241BUServicingU.  The servicing of each Receivable and the collection practices relating thereto have been lawful and in accordance with the standards set forth in this Agreement;  other than the Servicer and the Backup Servicer, no other Person has the right to service the Receivables.

 

(xxxiv) 242BUIllinois ReceivablesU.  (a) The Seller does not own a substantial interest in the business of a Dealer within the meaning of Illinois Sales Finance Agency Act Rules and Regulations, Section 160.230(1) and (b) with respect to each Receivable originated in the State of Illinois, (i) the printed or typed portion of the related form of Receivable complies with the requirements of 815 ILCS 375/3(b) and (ii) the Seller has not, and for so long as such Receivable is outstanding shall not, place or cause to be placed on the related Financed Vehicle any collateral protection insurance in violation of 815 ILCS 180/10.

 

(xxxv) 243BUCalifornia ReceivablesU.  Each Receivable originated in the State of California has been, and at all times during the term of the Sale and Servicing Agreement will be, serviced by the Servicer in compliance with Cal. Civil Code § 2981, et seq.

 

(xxxvi) 244BUCreation of Security InterestU.  This Agreement creates a valid and continuing security interest (as defined in the UCC) in the Trust Property in favor of the Issuer for the benefit of the Securityholders, which security interest is prior to all other Liens and is enforceable as such as against creditors of and purchasers from the Seller.

 

(xxxvii) 245BUPerfection of Security Interest in Financed VehiclesU.  CPS has taken all steps necessary to perfect its security interest against the Obligors in the Financed Vehicles securing the Contracts.

 

(xxxviii) 246BUPerfection of Security Interest in Trust PropertyU.  The Seller has caused, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Trust Property granted to the Issuer for the benefit of the Securityholders hereunder pursuant to USection 2.3U.

 

(xxxix) 247BUNo Other Security InterestsU.  Other than the security interest granted to the Issuer for the benefit of the Securityholders pursuant to USection 2.3U, the Seller has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Trust Property.  The Seller has not authorized the filing of and is not aware of any financing statements filed against the Seller that include a description of collateral covering the Trust Property other than any financing statement relating to the security interest granted to the Issuer for the benefit of the Securityholders hereunder or that has been terminated.  The Seller is not aware of any judgment or tax lien filings against the Seller.

 

(xl) 248BUNotations on Contracts; Financing Statement DisclosureU.  The Servicer has in its possession copies of all Contracts that constitute or evidence the Receivables.  The Contracts that constitute or evidence the Receivables do not have any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Issuer and/or the Trustee for the benefit of the Noteholders.  All financing statements filed or to be filed against the Seller in favor of the Issuer in connection herewith describing the Trust Property contain a statement to the following effect:  “A purchase of or security interest in any collateral described in this financing statement will violate the rights of the secured party.”

 

(xli) 249BUTFC and Fireside ReceivablesU.  None of the Receivables were originated by TFC or Fireside or any of their respective subsidiaries.

 

(xlii) 250BUConsumer LendersU.  Each Consumer Lender has obtained all necessary licenses and approvals in all jurisdictions in which the origination and purchase of installment promissory notes and security agreements and the sale thereof requires or shall require such licenses or approvals, except where the failure to obtain such licenses or approvals would not result in a material adverse effect on the value or marketability of any Receivable (including, without limitation, the enforceability or collectability of any Receivable).

 

The representations and warranties set forth above in paragraphs (xiv), (xvi), (xviii) and paragraphs (xxxvi) through (xlii) shall survive the termination of this Agreement and may not be waived in whole or in part.

 

SECTION 3.2  URepurchase upon Breach.

 

(a)    21BThe Seller, the Servicer, the Trustee or (upon actual knowledge of a Responsible Officer thereof) the Owner Trustee, as the case may be, shall inform the other parties to this Agreement promptly, in writing, upon the discovery of any breach of the Seller’s representations and warranties made pursuant to USection 3.1U (without regard to any limitations therein as to the Seller’s knowledge).  Unless the breach shall have been cured by the last day of the second Collection Period following the discovery thereof by CPS or receipt by CPS of notice of such breach, CPS (pursuant to the Receivables Purchase Agreement) shall repurchase any Receivable if the value of such Receivable is materially and adversely affected by the breach as of the last day of such second Collection Period (or, at CPS’s option, the last day of the first Collection Period following the discovery) and, in the event that the breach relates to a characteristic of the Receivables in the aggregate, and if the interests of the Trust or the Securityholders are materially and adversely affected by such breach, unless the breach shall have been cured by the last day of such second Collection Period, CPS shall purchase the aggregate Principal Balance of affected Receivables, such that following such purchase such representation shall be true and correct with respect to the remainder of the Receivables in the aggregate.  In consideration of the purchase of any Receivable, CPS shall remit the Purchase Amount, in the manner specified in USection 5.6U.  For purposes of this Section, the Purchase Amount of a Receivable that is not consistent with the warranty pursuant to USection 3.1(i)(A)(5) Uor U(A)(6)U shall include such additional amount as shall be necessary to provide the full amount of interest as contemplated therein.  The sole remedy of the Issuer, the Owner Trustee, the Trustee and the Securityholders with respect to a breach of representations and warranties pursuant to USection 3.1U shall be to enforce CPS’s obligation to purchase such Receivables pursuant to the Receivables Purchase Agreement; provided, however, that CPS shall indemnify the Trustee, the Owner Trustee, the Backup Servicer, the Trust and the Securityholders against all costs, expenses, losses, damages, claims and liabilities, including reasonable fees and expenses of counsel, that may be asserted against or incurred by any of them as a result of third party claims arising out of the events or facts giving rise to such breach.  Upon receipt of the Purchase Amount and written instructions from the Servicer, the Trustee shall release to CPS or its designee the related Receivables File and shall execute and deliver all reasonable instruments of transfer or assignment, without recourse, as are prepared by the Seller and delivered to the Trustee and necessary to vest in CPS or such designee title to the Receivable including a Trustee’s Certificate in the form of UExhibit F-1U.

 

(b)    22BIf it is determined that consummation of the transactions contemplated by this Agreement and the other transaction documents referenced in this Agreement, the servicing and operation of the Trust pursuant to this Agreement and such other documents, or the ownership of a Note or a Residual Pass-through Certificate by a Holder constitutes a violation of the prohibited transaction rules of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or the Internal Revenue Code of 1986, as amended (the “Code”) or any successor statutes of similar impact, together with the regulations thereunder, to which no statutory exception or administrative exemption applies, such violation shall not be treated as a breach of the Seller’s representations and warranties made pursuant to USection 3.1U if not otherwise such a breach.

 

(c)    23BPursuant to USections 2.1U and U2.2U of this Agreement, the Seller has conveyed to the Trust all of the Seller’s right, title and interest in its rights and benefits, but none of its obligations or burdens, under the Receivables Purchase Agreement and each Subsequent Receivables Purchase Agreement, including the Seller’s rights under the Receivables Purchase Agreement and each Subsequent Receivables Purchase Agreement and the delivery requirements, representations and warranties and the cure, repurchase and indemnity obligations of CPS under the Receivables Purchase Agreement and each Subsequent Receivables Purchase Agreement.  The Seller hereby represents and warrants to the Trust and the Trustee for the benefit of the Noteholders that such assignment is valid, enforceable and effective to permit the Trust to enforce such obligations of CPS under the Receivables Purchase Agreement and each Subsequent Receivables Purchase Agreement.

 

SECTION 3.3  UCustody of Receivables Files.

 

(a)    25BIn connection with the sale, transfer and assignment of the Receivables and the Other Conveyed Property to the Trust pursuant to this Agreement the Trustee shall act as custodian of the following documents or instruments in its possession which shall be delivered to the Trustee by CPS on or before the Closing Date (with respect to each Initial Receivable) or the applicable Subsequent Transfer Date (with respect to each Subsequent Receivable):

 

(i) 251BThe fully executed original of the Receivable reflecting the manual, electronic or facsimile signature of the Obligor and Dealer;

 

(ii) 252BThe Lien Certificate reflecting the security interest of CPS in the Financed Vehicle or, if not yet received, a copy of the application therefor showing CPS as secured party, or a dealer guarantee of title.

 

(b)    26BUpon payment in full of any Receivable, the Servicer will notify the Trustee pursuant to a certificate of an officer of the Servicer (which certificate shall include a statement to the effect that all amounts received in connection with such payments which are required to be deposited in the Collection Account pursuant to USection 4.2U have been so deposited) and shall request delivery of the Receivable and Receivable File to the Servicer.

 

SECTION 3.4  UAcceptance of Receivable Files by Trustee.  The Trustee acknowledges receipt of files that the Seller has represented are the Receivable Files for the Initial Receivables.  The Trustee has reviewed such Receivable Files and has determined that it has received a file for each Initial Receivable identified in Schedule A to this Agreement.  Not less than four (4) Business Days prior to each Subsequent Transfer Date, the Seller will cause to be delivered to the Trustee the Receivable Files for the Subsequent Receivables to be transferred to the Trust on such Subsequent Transfer Date.  The Trustee declares that it holds and will continue to hold such files and any amendments, replacements or supplements thereto and all other assets comprising the Owner Trust Estate as Trustee in trust for the use and benefit of all present and future Securityholders.  The Trustee agrees to review each file delivered to it prior to the Closing Date (in the case of the Initial Receivables) or the applicable Subsequent Transfer Date (in the case of the Subsequent Receivables) to determine whether such Receivable Files contain the documents referred to in  USections 3.3(a)(i)U and U(ii)U.  If the Trustee has found or finds that a file for a Receivable has not been received, or that a file is unrelated to the Receivables identified in USchedule AU to this Agreement or that any of the documents referred to in USection 3.3(a)(i)U or U(ii)U are not contained in a Receivable File, the Trustee shall inform CPS, the Seller and the Owner Trustee promptly, in writing, of the failure to receive a file with respect to such Receivable (or of the failure of any of the aforementioned documents to be included in the Receivable File) or shall return to CPS as the Seller’s designee any file unrelated to a Receivable identified in USchedule AU to this Agreement (in the case of the Initial Receivables) or Schedule A to the related Subsequent Transfer Agreement (in the case of the Subsequent Receivables), it being understood that the Trustee’s obligation to review the contents of any Receivable File shall be limited as set forth in the preceding sentence.  Unless such defect with respect to such Receivable File shall have been cured by the last day of the second Collection Period following discovery thereof by the Trustee, the Trustee shall cause CPS to repurchase any such Receivable as of and by no later than such last day pursuant to the Receivables Purchase Agreement.  For the avoidance of doubt, typographical errors on Schedule A shall not be deemed as defects.  In consideration of the purchase of the Receivable, CPS shall remit the Purchase Amount, in the manner specified in Section 5.6.  The sole remedy of the Trustee, the Trust and the Securityholders with respect to a breach pursuant to this USection 3.4U shall be to require CPS to purchase the applicable Receivables pursuant to this USection 3.4U; provided, however, that CPS shall indemnify the Trustee, the Owner Trustee, the Backup Servicer,  the Trust and the Securityholders against all costs, expenses, losses, damages, claims and liabilities, including reasonable fees and expenses of counsel, which may be asserted against or incurred by any of them as a result of third party claims arising out of the events or facts giving rise to such breach.  Upon receipt of the Purchase Amount and written instructions from the Servicer, the Trustee shall release to CPS or its designee the related Receivable File and shall execute and deliver all reasonable instruments of transfer or assignment, without recourse, as are prepared by CPS and delivered to the Trustee and are necessary to vest in CPS or such designee title to the Receivable including a Trustee’s Certificate in the form of UExhibit F-1U.  The Trustee shall make a list of Receivables for which an application for a Lien Certificate, but no Lien Certificate, is included in the Receivable File as of the date of its review of the Receivable Files and deliver a copy of such list to the Servicer and the Owner Trustee.  On the date which is 180 days following the Closing Date (in the case of the Initial Receivables) or the applicable Subsequent Transfer Date (in the case of the Subsequent Receivables) or, if any such day is not a Business Day, the next succeeding Business Day, the Trustee shall inform CPS and the other parties to this Agreement of any Receivable for which the related Receivable File on such date does not include a Lien Certificate.  By no later than the last day of the related Collection Period, to the extent such Receivables exceed 10% (by Principal Balance) of the then outstanding Initial Receivables or Subsequent Receivables, as applicable, CPS shall repurchase Receivables without a Lien Certificate in the Receivable File in a sufficient amount to ensure that no more than 10% of the Initial Receivables or Subsequent Receivables (by Principal Balance), as applicable, do not have a Lien Certificate in the Receivable File.  On the date that is 240 days following the Closing Date (in the case of the Initial Receivables) or the applicable Subsequent Transfer Date (in the case of the Subsequent Receivables)  or, if any such day is not a Business Day, the next succeeding Business Day, the Trustee shall inform CPS and the other parties to this Agreement of any Receivable for which the related Receivable File on such date does not include a Lien Certificate, and by no later than the last day of the related Collection Period, CPS shall repurchase any such Receivable.

 

SECTION 3.5  UAccess to Receivable Files.  The Trustee shall permit the Servicer access to the Receivable Files at all reasonable times during the Trustee’s normal business hours.  The Trustee shall, within two Business Days of the request of the Servicer or the Owner Trustee, execute such documents and instruments as are prepared by the Servicer or the Owner Trustee and delivered to the Trustee, as the Servicer, the Owner Trustee deems necessary to permit the Servicer, in accordance with its customary servicing procedures, to enforce the Receivable on behalf of the Trust and any related insurance policies covering the Obligor, the Receivable or Financed Vehicle so long as such execution in the Trustee’s sole discretion does not conflict with this Agreement and will not cause it undue risk or liability.  The Trustee shall not be obligated to release any document from any Receivable File unless it receives a release request signed by a Servicing Officer in the form of UExhibit CU hereto (the “URelease RequestU”).  Such Release Request shall obligate the Servicer to return such document(s) to the Trustee when the need therefor no longer exists unless the Receivable shall be liquidated, in which case, the Servicer shall certify in the Release Request that all amounts required to be deposited in the Collection Account with respect to such Receivable have been so deposited.

 

SECTION 3.6  UTrustee to Deliver Monthly Receivable File Report.  Within three Business Days after the end of a month in which the Trustee releases any Receivable Files to the Servicer or after any subsequent month in which such Receivable Files remain outstanding pursuant to USection 3.5U, the Trustee shall deliver to the Servicer a monthly report that identifies all Receivable Files released to the Servicer and not yet returned to the Trustee.

 

SECTION 3.7  UTrustee to Maintain Secure Facilities.  The Trustee shall maintain or cause to be maintained continuous custody of the Receivable Files in secure and fire resistant facilities in accordance with customary standards for such custody.

 

ARTICLE 4

 

ADMINISTRATION AND SERVICING OF RECEIVABLES

 

SECTION 4.1  UDuties of the Servicer.  The Servicer, as agent for the Trust and the Securityholders (to the extent provided herein) shall manage, service, administer and make collections on the Receivables with reasonable care, using that degree of skill and attention customary and usual for institutions which service motor vehicle retail installment contracts or promissory notes and security agreements, in each case, similar to the Receivables and, to the extent more exacting, that the Servicer exercises with respect to all comparable automotive receivables that it services for itself or others.  The Servicer’s duties shall include collection and posting of all payments, responding to inquiries of Obligors on such Receivables, investigating delinquencies, sending payment statements to Obligors, reporting tax information to Obligors, accounting for collections, furnishing monthly and annual statements to the Trustee and the Owner Trustee with respect to distributions.  Without limiting the generality of the foregoing, and subject to the servicing standards set forth in this Agreement, the Servicer is authorized and empowered by the Trust to execute and deliver, on behalf of itself, the Trust or the Securityholders, any and all instruments of satisfaction or cancellation, or partial or full release or discharge, and all other comparable instruments, with respect to such Receivables or to the Financed Vehicles securing such Receivables and/or the Lien Certificates.  If the Servicer shall commence a legal proceeding to enforce a Receivable, the Trust shall thereupon be deemed to have automatically assigned, solely for the purpose of collection, such Receivable to the Servicer.  If in any enforcement suit or legal proceeding it shall be held that the Servicer may not enforce a Receivable on the ground that it shall not be a real party in interest or a holder entitled to enforce such Receivable, the Trust shall, at the Servicer’s expense and direction, take steps to enforce such Receivable, including bringing suit in its name or the name of the Securityholders. The Servicer shall prepare and furnish, and the Trustee and the Owner Trustee shall execute, any powers of attorney and other documents reasonably necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder.

 

SECTION 4.2  UCollection of Receivable Payments; Modifications of Receivables; Lockbox Agreement.

 

(a)    27BConsistent with the standards, policies and procedures required by this Agreement, the Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the Receivables as and when the same shall become due and shall follow such collection procedures as it follows with respect to all comparable automotive receivables that it services for itself or others; provided, however, that promptly after the Closing Date the Servicer shall notify each Obligor to make all payments with respect to the Receivables to the Post Office Box.  The Servicer will provide each Obligor with a monthly statement in order to notify such Obligors to make payments directly to the Post Office Box.  The Servicer shall allocate collections between principal and interest in accordance with the customary servicing procedures it follows with respect to all comparable automotive receivables that it services for itself or others and in accordance with the terms of this Agreement.  Except as provided below, the Servicer may grant extensions on Receivables; provided, however, that the Servicer may not grant more than two extensions per calendar year with respect to a Receivable or grant an extension with respect to a Receivable for more than one calendar month or grant more than six extensions in the aggregate with respect to a Receivable (the “Aggregate Extension Limitation”); provided, further, however, that if the Servicer extends the date for final payment by the Obligor of any Receivable beyond the last day of the penultimate Collection Period preceding the Final Scheduled Payment Date, it shall promptly purchase the Receivable from the Trust in accordance with the terms of USection 4.7U (and for purposes thereof, the Receivable shall be deemed to be materially and adversely affected by such breach).   In addition, if the Servicer grants extensions with respect to any Receivables in excess of the Aggregate Extension Limitation, the Servicer will promptly purchase such Receivables from the Trust in accordance with the terms of USection 4.7U (and for purposes thereof, such Receivables shall be deemed to be materially and adversely affected by such breach).    The Servicer may in its discretion waive any late payment charge or any other fees that may be collected in the ordinary course of servicing a Receivable.  Notwithstanding anything to the contrary contained herein, the Servicer shall not agree to any alteration of the interest rate on any Receivable or of the amount of any Scheduled Receivable Payment on Receivables, other than to the extent that such alteration is required by applicable law or, with respect to Liquidated Receivables, if the Servicer reasonably and in good faith determines that a settlement of the outstanding Principal Balance can be expected to increase the total amount to be received by the Issuer with respect to such Receivable, then the Servicer may accept less than the full unpaid balance with respect to such Receivable.

 

(b)    28BThe Servicer shall establish the Lockbox Account in the name of the Trust for the benefit of the Trustee for the further benefit of the Securityholders.  Pursuant to the Lockbox Agreement, the Trustee has authorized the Servicer to direct dispositions of funds on deposit in the Lockbox Account to the Collection Account (but not to any other account), and no other Person, except the Lockbox Processor and the Trustee, has authority to direct the disposition of funds on deposit in the Lockbox Account.  The Lockbox Agreement shall provide that Lockbox Banks will comply with the instructions originated by the Trustee relating to the disposition of funds on deposit in the Lockbox Account.  The Trustee shall have no liability or responsibility with respect to the Lockbox Processor’s directions or activities as set forth in the preceding sentence.  The Lockbox Account shall be established pursuant to and maintained in accordance with the Lockbox Agreement and shall be a demand deposit account established and maintained with the Lockbox Bank; provided, however, that the Trustee shall give the Servicer prior written notice of any change made in the location of the Lockbox Account.  The Trustee shall establish and maintain the Post Office Box at a United States Post Office Branch in the name of the Trust for the benefit of the Securityholders.

 

(c)    29BNotwithstanding any Lockbox Agreement, or any of the provisions of this Agreement relating to the Lockbox Agreement, the Servicer shall remain obligated and liable to the Trust, the Trustee and Securityholders for servicing and administering the Receivables and the Other Conveyed Property in accordance with the provisions of this Agreement without diminution of such obligation or liability by virtue thereof.

 

(d)    30BIn the event CPS shall for any reason no longer be acting as the Servicer hereunder, the Backup Servicer or a successor Servicer shall thereupon assume all of the rights and obligations of the outgoing Servicer under the Lockbox Agreement arising from and after such assumption.  In such event, the successor Servicer shall be deemed to have assumed all of the outgoing Servicer’s interest therein and to have replaced the outgoing Servicer as a party to the Lockbox Agreement to the same extent as if such Lockbox Agreement had been assigned to the successor Servicer, except that the outgoing Servicer shall not thereby be relieved of any liability or obligations on the part of the outgoing Servicer to the Lockbox Bank under such Lockbox Agreement.  The outgoing Servicer shall, upon request of the Trustee, but at the expense of the outgoing Servicer, deliver to the successor Servicer all documents and records relating to the Lockbox Agreement and an accounting of amounts collected and held by the Lockbox Bank and otherwise use its best efforts to effect the orderly and efficient termination of any Lockbox Agreement and transition of Obligor payments to the successor Servicer or to a lockbox established by the successor Servicer for the receipt of payments made in respect of the Receivables.  The outgoing Servicer, at its expense, shall cause the Lockbox Bank to deliver to the successor Servicer or a successor Lockbox Bank, all documents and records relating to the Receivables and all amounts held (or thereafter received) by the Lockbox Bank (together with an accounting of such amounts).  The outgoing Servicer shall deliver prompt written notice to the Rating Agencies of any change or transfer of the Lockbox arrangements.

 

(e)    31BOn each Business Day, pursuant to the Lockbox Agreement, the Lockbox Processor will transfer any payments from Obligors received in the Post Office Box to the Lockbox Account.  Within two Business Days of receipt of funds into the Lockbox Account, the Servicer shall cause the Lockbox Bank to transfer funds from the Lockbox Account to the Collection Account.  In addition, the Servicer shall remit all payments by or on behalf of the Obligors received by the Servicer with respect to the Receivables (other than Purchased Receivables and Sold Receivables), and all Liquidation Proceeds no later than the Business Day following receipt directly (without deposit into any intervening account) into the Lockbox Account or the Collection Account.  The Servicer shall not commingle its assets and funds with those on deposit in the Lockbox Account.

 

SECTION 4.3  URealization Upon Receivables.

 

(a)    32BOn behalf of the Trust and the Securityholders, the Servicer shall use its best efforts, consistent with the servicing procedures set forth herein, to repossess or otherwise convert the ownership of the Financed Vehicle securing any Receivable as to which the Servicer shall have determined eventual payment in full is unlikely.  The Servicer shall commence efforts to repossess or otherwise convert the ownership of a Financed Vehicle or sell the related Receivable to an unaffiliated third-party on or prior to the date that an Obligor has failed to make more than 90% of a Scheduled Receivable Payment thereon in excess of $10 for 120 days or more; provided, however, that the Servicer may elect not to commence such efforts within such time period if in its good faith judgment it determines either that it would be impracticable to do so or that the proceeds ultimately recoverable with respect to such Receivable would be increased by forbearance.  The Servicer shall follow such customary and usual practices and procedures as it shall deem necessary or advisable in its servicing of automotive receivables, consistent with the standards of care set forth in USection 4.2U, which may include reasonable efforts to realize upon any recourse to Dealers or Consumer Lenders and selling the Financed Vehicle at public or private sale.  The foregoing shall be subject to the provision that, in any case in which the Financed Vehicle shall have suffered damage, the Servicer shall not expend funds in connection with the repair or the repossession of such Financed Vehicle unless it shall determine in its discretion that such repair and/or repossession will increase the proceeds ultimately recoverable with respect to such Receivable by an amount greater than the amount of such expenses.

 

(b)    33BConsistent with the standards, policies and procedures required by this Agreement, the Servicer may use its best efforts to locate a third party purchaser that is not affiliated with the Servicer, the Seller or the Issuer to purchase from the Issuer any Receivable that has become more than 120 days delinquent, and shall have the right to direct the Issuer to sell any such Receivable to such third-party purchaser; provided, that no more than 20% of the number of Receivables in the pool as of the Cutoff Date may be sold by the Issuer pursuant to this USection 4.3(b)U in the aggregate; provided further, that the Servicer may elect to not direct the Issuer to sell a Receivable that has become more than 120 days delinquent if in its good faith judgment the Servicer determines that the proceeds ultimately recoverable with respect to such Receivable would be increased by forbearance. In selecting Receivables to be sold to a third party purchaser pursuant to this USection 4.3(b)U, the Servicer shall use commercially reasonable efforts to locate purchasers for the most delinquent Receivables first.  In any event, the Servicer shall not use any procedure in selecting Receivables to be sold to third party purchasers that is materially adverse to the interest of the Securityholders. The Issuer shall sell each Sold Receivable for the greatest market price possible; provided, however, that aggregate Sale Amounts received by the Issuer for all Receivables sold to a single third-party purchaser on a single date must be at least equal to the sum of the Minimum Sale Prices for all such Receivables. The Servicer shall remit or cause the third-party purchaser to remit all sale proceeds from the sale of Receivables to the Collection Account without deposit into any intervening account as soon as practicable, but in no event later than the Business Day after receipt thereof.

 

SECTION 4.4  UInsurance.

 

(a)    34BThe Servicer, in accordance with the servicing procedures and standards set forth herein, shall require that (i) each Obligor shall have obtained insurance covering the Financed Vehicle, as of the date of the execution of the Receivable, insuring against loss and damage due to fire, theft, transportation, collision and other risks generally covered by comprehensive and collision coverage and each Receivable requires the Obligor to maintain such physical loss and damage insurance naming CPS and its successors and assigns as an additional insured, (ii) each Receivable that finances the cost of premiums for credit life and credit accident and health insurance is covered by an insurance policy or certificate naming CPS as policyholder (creditor) and (iii) as to each Receivable that finances the cost of an extended service contract, the respective Financed Vehicle which secures the Receivable is covered by an extended service contract.

 

(b)    35B To the extent applicable, the Servicer shall not take any action which would result in noncoverage under any of the insurance policies referred to in USection 4.4(a)U which, but for the actions of the Servicer, would have been covered thereunder. The Servicer, on behalf of the Trust, shall take such reasonable action as shall be necessary to permit recovery under any of the foregoing insurance policies.  Any amounts collected by the Servicer under any of the foregoing insurance policies shall be deposited in the Collection Account.

 

SECTION 4.5  UMaintenance of Security Interests in Vehicles.

 

(a)    36BConsistent with the policies and procedures required by this Agreement, the Servicer shall take such steps on behalf of the Trust as are necessary to maintain perfection of the security interest created by each Receivable in the related Financed Vehicle, including but not limited to obtaining the authorization of the Obligors and the recording, registering, filing, re-recording, re-registering and refiling of all security agreements, financing statements and continuation statements or instruments as are necessary to maintain the security interest granted by the Obligors under the respective Receivables.  The Trustee hereby authorizes the Servicer, and the Servicer agrees, to take any and all steps necessary to re-perfect or continue the perfection of such security interest on behalf of the Trust as necessary because of the relocation of a Financed Vehicle or for any other reason. In the event that the assignment of a Receivable to the Trust is insufficient without a notation on the related Financed Vehicle’s tangible certificate of title, or without fulfilling any additional administrative requirements under the laws of the State in which the Financed Vehicle is located (including by way of recordation of the Trustee’s lien in the electronic titling system of the related Registrar of Titles), to perfect a security interest in the related Financed Vehicle in favor of the Trust, the Servicer hereby agrees that CPS’s designation as the secured party on the certificate of title or as reflected in the records of the related Registrar of Titles is in its capacity as Servicer as agent of the Trust.

 

(b)    37BUpon the occurrence of a Servicer Termination Event, the Trustee and the Servicer shall take or cause to be taken, such action as may, in the opinion of counsel to the Trustee, which opinion shall not be an expense of the Trustee, be necessary to perfect or re-perfect the security interests in the Financed Vehicles securing the Receivables in the name of the Trust by amending the title documents of such Financed Vehicles or by such other reasonable means as may, in the opinion of counsel to the Trustee, which opinion shall not be an expense of the Trustee, be necessary or prudent.  The Servicer hereby agrees to pay all expenses related to such perfection or re-perfection and to take all action necessary therefor.

 

SECTION 4.6  UAdditional Covenants of Servicer.  Unless required by law or court order, the Servicer shall not release the Financed Vehicle securing each Receivable from the security interest granted by such Receivable in whole or in part except (i) in the event of payment in full by or on behalf of the Obligor thereunder or payment in full less a deficiency which the Servicer would not attempt to collect in accordance with its customary servicing practices, (ii) upon a sale of such Receivable permitted by USection 4.3(b)U, (iii) in connection with repossession of such Financed Vehicle, or (iv) as may be required by an insurer in order to receive proceeds from any Insurance Policy covering such Financed Vehicle. The Servicer shall not impair the rights of the Securityholders in such Receivables, nor shall the Servicer amend a Receivable, except that extensions and waivers may be granted in accordance with USection 4.2U.  The Servicer shall not create, incur or suffer to exist any Lien or restriction on transferability of the Receivables nor, except as contemplated by the Basic Documents, sign or file under the UCC of any jurisdiction any financing statement that names CPS or the Servicer as debtor, nor sign any security agreement authorizing any secured party thereunder to file such financing statement, with respect to the Receivables.  The Servicer shall take such actions as are necessary from time to time in order to maintain the perfection and priority of the Issuer’s security interest in the Trust Property.

 

SECTION 4.7  UPurchase of Receivables Upon Breach of Covenant

 

(a)    38BU.  Upon discovery by any of the Servicer, the Owner Trustee or the Trustee of a breach of any of the covenants set forth in USections 4.2(a)U, U4.4U, U4.5U or U4.6U, the party discovering such breach shall give prompt written notice to the others; provided, however, that the failure to give any such notice shall not affect any obligation of the Servicer under this USection 4.7U.  Unless the breach shall have been cured by the last day of the second Collection Period following such discovery (or, at the Servicer’s election, the last day of the first following Collection Period), the Servicer shall purchase any Receivable with respect to which the Securityholders’ interest therein or in the related Financed Vehicle is materially and adversely affected by such breach.  In consideration of the purchase of such Receivable, the Servicer shall remit the Purchase Amount in the manner specified in USection 5.6U.  The sole remedy of the Trustee, the Trust, the Owner Trustee and the Securityholders with respect to a breach of USections 4.2(a)U, U4.4U, U4.5U or U4.6U shall be to require the Servicer to repurchase Receivables pursuant to this USection 4.7U; provided, however, that the Servicer shall indemnify the Trustee, the Backup Servicer, the Owner Trustee, the Trust and the Securityholders against all costs, expenses, losses, damages, claims and liabilities, including reasonable fees and expenses of counsel, which may be asserted against or incurred by any of them as a result of third party claims arising out of the events or facts giving rise to such breach.  If it is determined that the management, administration and servicing of the Receivables and operation of the Trust pursuant to this Agreement constitutes a violation of the prohibited transaction rules of ERISA or the Code to which no statutory exception or administrative exemption applies, such violation shall not be treated as a breach of USections 4.2(a)U, U4.4U, U4.5U or U4.6U if not otherwise such a breach.  Upon receipt of the Purchase Amount and written instructions from the Servicer, the Trustee shall release to CPS or its designee the related Receivables File and shall execute and deliver all reasonable instruments of transfer or assignment, without recourse, as are prepared by the Seller and delivered to the Trustee and necessary to vest in CPS or such designee title to the Receivable including a Trustee’s Certificate in the form of UExhibit F-2U.

 

SECTION 4.8  UServicing Fee.  The Servicer shall be entitled to the “Servicing Fee” for each Payment Date, which shall be equal to the greater of (i) the result of one-twelfth times 2.50% of the Pool Balance as of the first day of the related Collection Period and (ii) the product of the number of Receivables serviced by the successor Servicer during the related Collection Period and $15; UprovidedU, UhoweverU, that with respect to the first Payment Date the Servicing Fee will be equal to the product of one-twelfth and 2.50% of the Original Pool Balance.  The Servicer shall also be entitled to receive the Additional Servicing Compensation in accordance with USection 5.7(a)(ii)U as compensation for its duties hereunder.

 

SECTION 4.9  UServicer’s Certificate.  By 9:00 a.m., Minneapolis time, on each Determination Date, the Servicer shall deliver to the Trustee, the Owner Trustee, the Rating Agencies and the Seller a Servicer’s Certificate containing all information necessary to make the distributions pursuant to USections 5.7U and U5.8U (including, if required, withdrawals from the Series 2013-D Spread Account) for the Collection Period preceding the date of such Servicer’s Certificate and all information necessary for the Trustee to send statements to the Securityholders pursuant to USection 5.8(b)U and all information necessary to enable the Backup Servicer to verify the information specified in USection 4.13(b)U.  Receivables to be purchased by the Servicer or to be purchased by CPS shall be identified by the Servicer by account number with respect to such Receivable (as specified in USchedule AU).

 

SECTION 4.10  UAnnual Statement as to Compliance, Notice of Servicer Termination Event.

 

(a)    39BThe Servicer shall deliver to the Owner Trustee, the Trustee, the Backup Servicer and the Rating Agencies, on or before March 31 of each year beginning March 31, 2015, an Officer’s Certificate, dated as of December 31 of the preceding year, stating that (i) a review of the activities of the Servicer during the preceding 12-month period (or, in the case of the first such Officer’s Certificate, from the Closing Date to December 31, 2014) and of its performance under this Agreement has been made under such officer’s supervision and (ii) to the best of such officer’s knowledge, based on such review, the Servicer has fulfilled all its obligations under this Agreement throughout such year (or, in the case of the first such Officer’s Certificate, from the Closing Date to December 31, 2014), or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof.  The Trustee shall forward a copy of such certificate as well as the report referred to in USection 4.11U to each Noteholder and the Owner Trustee shall forward a copy to each Residual Certificateholder.

 

(b)    40BThe Servicer shall deliver to the Owner Trustee, the Trustee, the Backup Servicer and the Rating Agencies, promptly after having obtained knowledge thereof, but in no event later than two (2) Business Days thereafter, written notice in an Officer’s Certificate of any event which with the giving of notice or lapse of time, or both, would become a Servicer Termination Event under USection 10.1U.

 

SECTION 4.11  UAnnual Independent Accountants’ Report.  The Servicer shall cause a firm of nationally recognized independent certified public accountants (the “Independent Accountants”), who may also render other services to the Servicer or to the Seller, to deliver to the Trustee, the Owner Trustee, the Backup Servicer and the Rating Agencies, on or before March 31 of each year beginning March 31, 2015, a report dated as of December 31 of the previous year (the “Accountants’ Report”) and reviewing the Servicer’s activities during the preceding 12-month period, addressed to the Board of Directors of the Servicer, to the Owner Trustee, the Trustee and the Backup Servicer, to the effect that such firm has examined the financial statements of the Servicer and issued its report therefor and that such examination (1) was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as such firm considered necessary in the circumstances; (2) included tests relating to auto loans serviced for others in accordance with the requirements of the Uniform Single Attestation Program for Mortgage Bankers (the “Program”), to the extent the procedures in the Program are applicable to the servicing obligations set forth in this Agreement; (3) included an examination of the delinquency and loss statistics relating to the Servicer’s portfolio of automobile and light truck installment sales contracts; and (4) except as described in the report, disclosed no exceptions or errors in the records relating to automobile and light truck loans serviced for others that, in the firm’s opinion, paragraph four of the Program requires such firm to report.  The accountant’s report shall further state that (A) a review in accordance with agreed upon procedures was made of two randomly selected Servicer Certificates; (B) except as disclosed in the report, no exceptions or errors in the Servicer Certificates were found; and (C) the delinquency and loss information relating to the Receivables and the stated amount of Liquidated Receivables, if any, contained in the Servicer Certificates were found to be accurate.  In the event such firm requires the Trustee, the Owner Trustee and/or the Backup Servicer to agree to the procedures performed by such firm, the Servicer shall direct the Trustee, the Owner Trustee and/or the Backup Servicer, as applicable, in writing to so agree; it being understood and agreed that the Trustee, the Owner Trustee and/or the Backup Servicer will deliver such letter of agreement in conclusive reliance upon the direction of the Servicer, and neither the Trustee, the Owner Trustee nor the Backup Servicer makes any independent inquiry or investigation as to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.

 

The Report will also indicate that the firm is independent of the Servicer within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants.

 

SECTION 4.12  UAccess to Certain Documentation and Information Regarding Receivables.  The Servicer shall provide to representatives of the Trustee, the Owner Trustee, the Backup Servicer and the Rating Agencies reasonable access to the documentation regarding the Receivables.  In each case, such access shall be afforded without charge but only upon reasonable request and during normal business hours.  Nothing in this Section shall derogate from the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors, and the failure of the Servicer to provide access as provided in this Section as a result of such obligation shall not constitute a breach of this Section.

 

SECTION 4.13  UVerification of Servicer’s Certificate.

 

(a)    41BOn or before the fifth calendar day of each month, the Servicer will deliver to the Trustee and the Backup Servicer a computer diskette (or other electronic transmission) in a format acceptable to the Trustee and the Backup Servicer containing information with respect to the Receivables as of the close of business on the last day of the related Collection Period which information is necessary for preparation of the Servicer’s Certificate.  The Backup Servicer shall use such computer diskette (or other electronic transmission) to verify certain information specified in USection 4.13(b)U contained in the Servicer’s Certificate delivered by the Servicer, and the Backup Servicer shall notify the Servicer of any discrepancies on or before the second Business Day following the Determination Date.  In the event that the Backup Servicer reports any discrepancies, the Servicer and the Backup Servicer shall attempt to reconcile such discrepancies prior to the second Business Day prior to the related Payment Date, but in the absence of a reconciliation, the Servicer’s Certificate shall control for the purpose of calculations and distributions with respect to the related Payment Date.  In the event that the Backup Servicer and the Servicer are unable to reconcile discrepancies with respect to a Servicer’s Certificate by the related Payment Date, the Servicer shall cause a firm of independent certified public accountants, at the Servicer’s expense, to audit the Servicer’s Certificate and, prior to the fifth calendar day of the following month, reconcile the discrepancies.  The effect, if any, of such reconciliation shall be reflected in the Servicer’s Certificate for such next succeeding Determination Date.  Other than the duties specifically set forth in this Agreement, the Backup Servicer shall have no obligations hereunder, including, without limitation, to supervise, verify, monitor or administer the performance of the Servicer.  The Backup Servicer shall have no liability for any actions taken or omitted by the Servicer.  The duties and obligations of the Backup Servicer shall be determined solely by the express provisions of this Agreement and no implied covenants or obligations shall be read into this Agreement against the Backup Servicer.

 

(b)    42BThe Backup Servicer shall review each Servicer’s Certificate delivered pursuant to USection 4.13(a)U and shall:

 

(i) 253Bconfirm that such Servicer’s Certificate is complete on its face;

 

(ii) 254Bload the computer diskette (which shall be in a format acceptable to the Backup Servicer) received from the Servicer pursuant to USection 4.13(a)U hereof, confirm that such computer diskette is in a readable form and calculate and confirm the Pool Balance for the most recent Payment Date;

 

(iii) 255Bconfirm, based solely on the information shown on the Servicer’s Certificate, that the Total Distribution Amount, the Noteholders’ Principal Distributable Amount, the Class A Parity Deficit Amount, the Class B Parity Deficit Amount, the Class C Parity Deficit Amount, the Class D Parity Deficit Amount, the Class E Parity Deficit Amount, the Noteholders’ Interest Distributable Amount for each Class of Notes, the amount, if any, to be distributed to the Residual Certificateholders on such Payment Date, the Backup Servicing Fee, the Servicing Fee, the Trustee Fees, the amount on deposit in the Series 2013-D Spread Account and the Pre-Funding Account, the Cumulative Net Loss Rate in the Servicer’s Certificate are accurate based solely on the recalculation of the Servicer’s Certificate and without further investigation;

 

(iv) 256Bconfirm the calculation of the Trigger Events based solely upon the information contained on the applicable computer diskette; and

 

(v) 257Bby the third Business Day following the Backup Servicer’s receipt of the Servicer’s Certificate and following the Backup Servicer’s review of such Servicer’s Certificate and the related monthly tape, the Backup Servicer shall provide the Trustee with a certificate (i) describing those activities it performed in its review of the monthly tape and the Servicer’s Certificate, (ii) listing those parts of the Servicer’s Certificate that it confirmed were correct, (iii) listing those parts of the Servicer’s Certificate that it found to be incorrect, and (iv) describing any discrepancies, inconsistencies, incorrect information or incorrect calculations that were revealed by its review of the Servicer’s Certificate and the related monthly tape.

 

(c)    43BOn or prior to the Closing Date, the Backup Servicer will cause an affiliate of the Back-up Servicer to data map to their servicing system all servicing/loan file information, including all relevant borrower contact information such as address and phone numbers as well as loan balance and payment information, including comment histories and collection notes. On or before the fifth calendar day of each month, the Servicer will provide to an affiliate of the Backup Servicer an electronic transmission of all servicing/loan information,  including all relevant borrower contact information such as address and phone numbers as well as loan balance and payment information, including comment histories and collection notes, and the Backup Servicer will cause such affiliate to review each file to ensure that it is in readable form and verify that the data balances conform to the trial balance reports received from the Servicer.  Additionally, the Backup Servicer shall cause such affiliate to store each such file.

 

SECTION 4.14  U[Reserved].

 

SECTION 4.15  UFidelity Bond.  The Servicer shall maintain a fidelity bond in such form and amount as is customary for entities acting as custodian of funds and documents in respect of consumer contracts on behalf of institutional investors.

 

SECTION 4.16  UOptional Purchase of Certain Receivables.  CPS shall have the right, which right may be assigned by CPS to an Affiliate, but not the obligation, to repurchase on the last day of any Collection Period any Defaulted Texas Receivables at a price equal to at least the fair market value of such Defaulted Texas Receivables, so long as the fair market value is not less than the related aggregate Purchase Amount, plus the costs and expenses of the Servicer and the Trust (including any outstanding reimbursements) in connection with such optional purchase.  To exercise such option, CPS shall (subject to the proviso below) deposit in the Collection Account pursuant to USection 5.6U (or remit to the Servicer, if CPS is not then Servicer) an amount equal to the related aggregate Purchase Amount for such Defaulted Texas Receivables and thereafter shall succeed to all interests of the Trust in and to such Defaulted Texas Receivables.  Upon notice of receipt of the related aggregate Purchase Amount for such Defaulted Texas Receivables and written instructions from the Servicer, the Trustee shall release to CPS or its designee the related Receivables Files and shall execute and deliver all reasonable instruments of transfer or assignment, without recourse, as are prepared by CPS and delivered to the Trustee and necessary to vest in CPS or such designee title to such Defaulted Texas Receivables including a Trustee’s Certificate in the form of UExhibit F-2U.

 

ARTICLE 5

 

TRUST ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS

 

SECTION 5.1  UEstablishment of Trust Accounts.

 

	  

(a)    44BThe Trustee, on behalf of the Securityholders, shall establish and maintain in its own name an Eligible Account (the “Collection Account”), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Trustee on behalf of the Securityholders. On the Closing Date, the Servicer will deposit, on behalf of the Seller, in the Collection Account, an amount equal to $1,199,734.99 representing collections on the Initial Receivables received from and including the day after the Initial Cutoff Date through the Business Day immediately preceding the Closing Date, but not previously deposited into the Collection Account.

 

(b)    45BThe Trustee, on behalf of the Noteholders, shall establish and maintain in its own name an Eligible Account (the “Principal Distribution Account”), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Trustee on behalf of the Noteholders.  The Principal Distribution Account shall initially be established with the Trustee.

 

(c)    46BThe Trustee, on behalf of the Noteholders, shall establish and maintain in its own name an Eligible Account (the “Series 2013-D Spread Account”), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Trustee on behalf of the Noteholders.  The Series 2013-D Spread Account shall initially be established with the Trustee.  On the Closing Date, the Seller shall deposit the Initial Spread Account Deposit in the Series 2013-D Spread Account from the proceeds of the sale of the Notes.

 

(d)    47BThe Trustee, on behalf of the Noteholders, shall establish and maintain in its own name an Eligible Account (the “Pre-Funding Account”), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Trustee on behalf of the Noteholders.  The Pre-Funding Account shall initially be established with the Trustee.

 

(e)    48BFunds on deposit in the Collection Account, the Series 2013-D Spread Account and the Pre-Funding Account shall be invested by the Trustee (or any custodian with respect to funds on deposit in any such account) in Eligible Investments selected in writing by the Servicer (pursuant to standing instructions or otherwise).  Funds on deposit in the Principal Distribution Account shall not be invested. All such Eligible Investments shall be held by or on behalf of the Trustee for the benefit of the Securityholders.  Other than as permitted by the Rating Agencies, funds on deposit in any Trust Account shall be invested in Eligible Investments that will mature so that such funds will be available at the close of business on the Business Day immediately preceding the following Payment Date.  Funds deposited in a Trust Account on the day immediately preceding a Payment Date upon the maturity of any Eligible Investments are not required to be invested overnight.  All Eligible Investments will be held to maturity.

 

(f)    49BAll investment earnings of moneys deposited in the Trust Accounts shall be deposited (or caused to be deposited) by the Trustee in the Collection Account for distribution pursuant to USection 5.7(a)U and any loss resulting from such investments shall be charged to such account.  The Servicer will not direct the Trustee to make any investment of any funds held in any of the Trust Accounts unless the security interest granted and perfected in such account will continue to be perfected in such investment, in either case without any further action by any Person, and, in connection with any direction to the Trustee to make any such investment, if requested by the Trustee, the Servicer shall deliver to the Trustee an Opinion of Counsel, acceptable to the Trustee, to such effect.

 

(g)    50BThe Trustee shall not in any way be held liable by reason of any insufficiency in any of the Trust Accounts resulting from any loss on any Eligible Investment included therein except for losses attributable to the Trustee’s negligence or bad faith or its failure to make payments on such Eligible Investments issued by the Trustee, in its commercial capacity as principal obligor and not as trustee, in accordance with their terms.

 

(h)    51BIf (i) the Servicer shall have failed to give investment directions for any funds on deposit in the Trust Accounts to the Trustee by 1:00 p.m. Eastern Time (or such other time as may be agreed by the Issuer and Trustee) on any Business Day; or (ii) an Event of Default shall have occurred and be continuing but the Notes shall not have been declared due and payable, or, if such Notes shall have been declared due and payable following an Event of Default, amounts collected or receivable from the Trust Property are being applied as if there had not been such a declaration; then the Trustee shall, to the fullest extent practicable, invest and reinvest funds in the Trust Accounts in one or more Eligible Investments described in clause (ii) of the definition thereof.

 

(i)    52BThe Trustee shall possess all right, title and interest in all funds on deposit from time to time in the Trust Accounts and in all proceeds thereof (including all Investment Earnings on the Trust Accounts) and all such funds, investments, proceeds and income shall be part of the Trust Property.  Except as otherwise provided herein, the Trust Accounts shall be under the sole dominion and control of the Trustee.  If at any time any of the Trust Accounts ceases to be an Eligible Account, the Servicer shall within five Business Days establish a new Trust Account as an Eligible Account and shall transfer any cash and/or any investments to such new Trust Account.  The Servicer shall promptly notify the Rating Agencies and the Owner Trustee of any change in the location of any of the aforementioned accounts.  In connection with the foregoing, the Servicer agrees that, in the event that any of the Trust Accounts are not accounts with the Trustee, the Servicer shall notify the Trustee in writing promptly upon any of such Trust Accounts ceasing to be an Eligible Account.

 

(j)    53BNotwithstanding anything to the contrary herein or in any other document relating to a Trust Account, the “securities intermediary’s jurisdiction” (within  the meaning of Section 8-110 of the UCC) or the “bank’s jurisdiction” (with the meaning of 9-304 of the UCC), as applicable, with respect to each Trust Account shall be the State of New York.

 

(k)    54BWith respect to the Trust Account Property, the Trustee agrees that:

 

	
  

	
(A)  any Trust Account Property that is held in deposit accounts shall be held solely in an Eligible Account; and, each such Eligible Account shall be subject to the exclusive custody and control of the Trustee and the Trustee shall have sole signature authority with respect thereto; and

 

	
  

	
(B)  any other Trust Account Property shall be delivered to the Trustee in accordance with the definition of “Delivery”.

 

SECTION 5.2 [UReservedU].

 

SECTION 5.3  UCertain Reimbursements to the Servicer.  The Servicer will be entitled to be reimbursed from amounts on deposit in the Collection Account with respect to a Collection Period for amounts previously deposited in the Collection Account but later determined by the Servicer to have resulted from mistaken deposits or postings or checks returned for insufficient funds.  The amount to be reimbursed hereunder shall be paid to the Servicer on the related Payment Date pursuant to USection 5.7(a)(ii)U upon certification by the Servicer of such amounts and the provision of such information to the Trustee; provided, however, that the Servicer must provide such certification within three months of its becoming aware of such mistaken deposit, posting or returned check.

 

SECTION 5.4  UApplication of Collections.  All collections for each Collection Period shall be applied by the Servicer as follows:

 

With respect to each Receivable (other than a Purchased Receivable or a Sold Receivable), payments by or on behalf of the Obligor shall be applied to interest and principal in accordance with the Simple Interest Method.

 

SECTION 5.5  UWithdrawals from Series 2013-D Spread Account.

 

(a)    55BIn the event that the Servicer’s Certificate with respect to any Determination Date shall state that the Total Distribution Amount with respect to such Determination Date is insufficient to make the payments required to be made on the related Payment Date pursuant to USections 5.7(a)(i)U through U(xix)U (such deficiency being a “UDeficiency Claim AmountU”), then on or prior to the Business Day immediately preceding the related Payment Date, the Trustee shall deliver to the Owner Trustee and the Servicer, by hand delivery, telex or facsimile transmission, a written notice (a “UDeficiency NoticeU”) specifying the Deficiency Claim Amount for such Payment Date.  On the related Payment Date, the Trustee shall transfer an amount equal to such Deficiency Claim Amount from the Series 2013-D Spread Account (to the extent of funds on deposit therein) to the Collection Account for distribution pursuant to USections 5.7(a)(i)U through U(xix)U.

 

(b)    56BOn each Payment Date, to the extent that there are amounts on deposit in the Series 2013-D Spread Account (after the distribution of amounts from the Collection Account in accordance with Sections U5.7(a)(i)U through U(xix)U on such Payment Date) in excess of the Specified Spread Account Requisite Amount, the Trustee shall transfer such amounts to the Collection Account for distribution on such Payment Date pursuant to USections 5.7(xxi)U through U(xxiii)U.

 

SECTION 5.6  UAdditional Deposits.  The Servicer or CPS, as the case may be, shall deposit or cause to be deposited in the Collection Account the aggregate Purchase Amount with respect to Purchased Receivables, the aggregate Sale Amount with respect to Sold Receivables and all amounts to be paid by CPS pursuant to its indemnification obligations under the Basic Documents and the Servicer shall deposit or cause to be deposited therein all amounts to be paid under USections 4.16 Uand U11.1U.  All such deposits made pursuant to USection 4.16U shall be made, in immediately available funds, on the Business Day preceding the related Determination Date.  All such deposits made pursuant to USection 11.1U shall be made, in immediately available funds, on the Business Day preceding the related Payment Date.  On each Payment Date, the Trustee shall remit to the Collection Account any amounts withdrawn from the Series 2013-D Spread Account pursuant to USection 5.5U.

 

SECTION 5.7  UDistributions.

 

(a)    57BOn each Payment Date, the Trustee (based on the information contained in the Servicer’s Certificate delivered on the related Determination Date) shall make the following distributions in the following order of priority:

 

(i) 258Bto the Backup Servicer so long as the Backup Servicer is not acting as the successor Servicer, from the Total Distribution Amount and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, the Backup Servicing Fee and all unpaid Backup Servicing Fees from prior Collection Periods;

 

(ii) 259Bto the Servicer, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclause (i)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, the Servicing Fee and all unpaid Servicing Fees from prior Collection Periods, all Additional Servicing Compensation and all reimbursements to which the Servicer is entitled pursuant to USection 5.3U;

 

(iii) 260Bto the Backup Servicer or such other Person appointed successor Servicer pursuant to USection 10.3(b)U, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U and U(ii)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, to the extent not previously paid by the predecessor Servicer pursuant to this Agreement, reasonable transition expenses (up to a maximum of $150,000 for all such expenses incurred over the term of this Agreement) incurred by such Person in becoming the successor Servicer;

 

(iv) 261Bconcurrently, to the Trustee and the Owner Trustee, pro rata, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(iii)U above) and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, the Trustee Fees and reasonable out-of-pocket expenses thereof (including reasonable counsel fees and expenses), and all unpaid Trustee Fees and unpaid reasonable out-of-pocket expenses (including reasonable counsel fees and expenses) from prior Collection Periods; UprovidedU, UhoweverU, that expenses and other amounts payable to the Trustee and the Owner Trustee pursuant to this Uclause (iv)U shall be limited to a total of $50,000 per annum; UprovidedU UfurtherU, UhoweverU, that if an Event of Default has occurred and is continuing, then such expenses payable pursuant to this Uclause (iv)U shall not be so limited;

 

(v) 262Bto the holders of the Class A Notes, pro rata, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(iv)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, the Noteholders’ Interest Distributable Amount for the Class A Notes for such Payment Date;

 

(vi) 263Bto the Principal Distribution Account, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(v)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, an amount equal to the Class A Parity Deficit Amount;

 

(vii) 264Bif such Payment Date is the Class A Final Scheduled Payment Date, to the Principal Distribution Account, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(vi)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, an amount equal to the Class A Note Balance;

 

(viii) 265Bto the Holders of the Class B Notes, pro rata, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(vii)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(aU), an amount equal to the Noteholders’ Interest Distributable Amount for the Class B Notes for such Payment Date;

 

(ix) 266Bto the Principal Distribution Account, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(viii)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, an amount equal to the Class B Parity Deficit Amount;

 

(x) 267Bif such Payment Date is the Class B Final Scheduled Payment Date, to the Principal Distribution Account, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(ix)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, an amount equal to the Class B Note Balance;

 

(xi) 268Bto the Holders of the Class C Notes, pro rata, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(x)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, an amount equal to the Noteholders’ Interest Distributable Amount for the Class C Notes for such Payment Date;

 

(xii) 269Bto the Principal Distribution Account, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(xi)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, an amount equal to the Class C Parity Deficit Amount;

 

(xiii) 270Bif such Payment Date is the Class C Final Scheduled Payment Date, to the Principal Distribution Account, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(xii)U above), and any amount deposited in the Collection Account pursuant toU Section 5.5(a)U, an amount equal to the Class C Note Balance;

 

(xiv) 271Bto the Holders of the Class D Notes, pro rata, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(xiii)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, an amount equal to the Noteholders’ Interest Distributable Amount for the Class D Notes for such Payment Date;

 

(xv) 272Bto the Principal Distribution Account, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(xiv)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, an amount equal to the Class D Parity Deficit Amount;

 

(xvi) 273Bif such Payment Date is the Class D Final Scheduled Payment Date, to the Principal Distribution Account, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(xv)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, an amount equal to the Class D Note Balance;

 

(xvii) 274Bto the Holders of the Class E Notes, pro rata, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(xvi)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, an amount equal to the Noteholders’ Interest Distributable Amount for the Class E Notes for such Payment Date;

 

(xviii) 275Bto the Principal Distribution Account, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(xvii)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, an amount equal to the Class E Parity Deficit Amount;

 

(xix) 276Bif such Payment Date is the Class E Final Scheduled Payment Date, to the Principal Distribution Account, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments pursuant to Uclauses (i)U through U(xviii)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, an amount equal to the Class E Note Balance;

 

(xx) 277Bto the Trustee, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments made pursuant to Uclauses (i)U through U(xix)U above) for deposit into the Series 2013-D Spread Account, the remaining Total Distribution Amount until the amount in the Series 2013-D Spread Account equals the Specified Spread Account Requisite Amount;

 

(xxi) to the Principal Distribution Account, from the Total Distribution Amount (as such Total Distribution Amount has been reduced by payments made pursuant toU clauses (i)U through U(xx)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, the Noteholders’ Principal Distributable Amount, if any, for such Payment Date;

 

(xxii) 279Bto the Backup Servicer, the Trustee and the Owner Trustee, as applicable, from the Total Distribution Amount (as such Total Distribution has been reduced by payments made pursuant to Uclauses (i)U through U(xxi)U above), and any amount deposited in the Collection Account pursuant to USection 5.5(a)U, any amounts owing to the Backup Servicer, the Trustee and Owner Trustee under the Basic Documents, to the extent not previously paid, and

 

(xxiii) 280Bto the Certificate Distribution Account, for distribution by the Trust Paying Agent in accordance with the provisions of the Trust Agreement, any remaining Total Distribution Amount;

 

provided, however, that, following an acceleration of the Notes pursuant to Section 5.2(a) of the Indenture, the Total Distribution Amount shall be paid pursuant to Section 5.6(a) of the Indenture.

 

(b)    58BIn the event that the Collection Account is maintained with an institution other than the Trustee, the Servicer shall instruct and cause such institution to make all deposits and distributions pursuant to USection 5.7(a)U on the related Payment Date.

 

SECTION 5.8  UPrincipal Distribution Account.

 

(a)    59BOn each Payment Date, the Trustee shall distribute all amounts on deposit in the Principal Distribution Account to the Noteholders in respect of the Notes to the extent of amounts due and unpaid on the Notes for principal in the following amounts and in the following order of priority:

 

(i) 281Bto the Holders of the Class A Notes, pro rata,  in reduction of the Class A Note Balance, all amounts on deposit in the Principal Distribution Account until the outstanding principal amount of the Class A Notes has been reduced to zero;

 

(ii) 282Bto the Holders of the Class B Notes, pro rata, in reduction of the Class B Note Balance, all amounts on deposit in the Principal Distribution Account until the outstanding principal amount of the Class B Notes has been reduced to zero;

 

(iii) 283Bto the Holders of the Class C Notes, pro rata, in reduction of the Class C Note Balance, all amounts on deposit in the Principal Distribution Account until the outstanding principal amount of the Class C Notes has been reduced to zero;

 

(iv) 284Bto the Holders of the Class D Notes, pro rata, in reduction of the Class D Note Balance, all amounts on deposit in the Principal Distribution Account until the outstanding principal amount of the Class D Notes has been reduced to zero; and

 

(v) 285Bto the Holders of the Class E Notes, pro rata, in reduction of the Class E Note Balance, all amounts on deposit in the Principal Distribution Account until the outstanding principal amount of the Class E Notes has been reduced to zero.

 

(b)    60BOn each Payment Date, the Trustee shall provide or make available electronically (or, upon written request, by first class mail or facsimile) to each Noteholder the statement or statements provided to the Trustee by the Servicer pursuant to USection 5.11U hereof on such Payment Date; provided, however, the Trustee shall have no obligation to provide such information described in this USection 5.8(b)U until it has received the requisite information from the Servicer.

 

(c)    61BIn the event that any withholding tax is imposed on the Trust’s payment (or allocations of income) to a Noteholder, such tax shall reduce the amount otherwise distributable to the Noteholder in accordance with this USection 5.8U.  The Trustee is hereby authorized and directed to retain from amounts otherwise distributable to the Noteholders sufficient funds for the payment of any tax that is legally owed by the Trust (but such authorization shall not prevent the Trustee from contesting any such tax in appropriate proceedings, and withholding payment of such tax, if permitted by law, pending the outcome of such proceedings).  The amount of any withholding tax imposed with respect to a Noteholder shall be treated as cash distributed to such Noteholder at the time it is withheld by the Trust and remitted to the appropriate taxing authority.  If, after consultations with experienced counsel, the Trustee determines that there is a reasonable likelihood that withholding tax is payable with respect to a distribution (such as a distribution to a Non-United States Investor), the Trustee may in its sole discretion withhold such amounts in accordance with this clause (c).  In the event that a Noteholder wishes to apply for a refund of any such withholding tax, the Trustee shall reasonably cooperate with such Noteholder in making such claim so long as such Noteholder agrees to reimburse the Trustee for any out-of-pocket expenses incurred.

 

(d)    62BDistributions required to be made to Noteholders on any Payment Date shall be made to each Noteholder of record on the preceding Record Date either by wire transfer, in immediately available funds, to the account of such Noteholder at a bank or other entity having appropriate facilities therefor, if (i) such Holder shall have provided to the Note Registrar appropriate written instructions at least five Business Days prior to such Payment Date and such Holder’s Notes in the aggregate evidence a denomination of not less than $1,000,000 or (ii) such Noteholder is the Seller, or an Affiliate thereof, or, if not, by check mailed to such Noteholder at the address of such holder appearing in the Note Register; provided, however, that, unless Definitive Notes have been issued pursuant to Section 2.12 of the Indenture, with respect to Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), distributions will be made by wire transfer in immediately available funds to the account designated by such nominee.  Notwithstanding the foregoing, the final distribution in respect of any Note (whether on the Final Scheduled Payment Date or otherwise) will be payable only upon presentation and surrender of such Note at the office or agency maintained for that purpose by the Note Registrar pursuant to Section 2.4 of the Indenture.

 

Each Noteholder, by its acceptance of its Note, will be deemed to have consented to the provisions of USections 5.7U and U5.8U relating to the priority of payments, and will be further deemed to have acknowledged that no property rights in any amount or the proceeds of any such amount shall vest in such Noteholder until such amounts have been distributed to such Noteholder pursuant to such provisions; provided, that the foregoing shall not restrict the right of any Noteholder, upon compliance with the provisions hereof from seeking to compel the performance of the provisions hereof by the parties hereto.

 

SECTION 5.9  U[Reserved].

 

SECTION 5.10  UPre-Funding AccountU.

 

(a)    63BOn the Closing Date, the Trustee will deposit, on behalf of the Seller, the Pre-Funded Amount into the Pre-Funding Account from the proceeds of the sale of the Notes.  On each Subsequent Transfer Date, the Servicer shall instruct the Trustee to withdraw from the Pre-Funding Account (i) an amount equal to the excess of (a) the Principal Balance of the Subsequent Receivables transferred to the Issuer on such Subsequent Transfer Date over (b) the Subsequent Spread Account Deposit for such Subsequent Transfer Date, and to distribute such amount to or upon the order of the Seller upon satisfaction of the conditions set forth in this Agreement with respect to such transfer; and (ii) an amount equal to the Subsequent Spread Account Deposit on such Subsequent Transfer Date and deposit such amount into the Series 2013-D Spread Account upon satisfaction of the conditions set forth in this Agreement with respect to such transfer.

 

(b)    64BIf the Pre-Funded Amount has not been reduced to zero on the date on which the Funding Period ends, after giving effect to any reductions in the Pre-Funded Amount on such date, the Servicer shall instruct the Trustee to withdraw from the Pre-Funding Account on the Mandatory Redemption Date the Pre-Funded Amount (exclusive of any Pre-Funding Earnings) and deposit an amount equal to the Note Prepayment Amount into the Principal Distribution Account.

 

(c)    65BAll Pre-Funding Earnings will be deposited in the Collection Account on each Payment Date and deemed to be part of the Total Distribution Amount.

 

SECTION 5.11  UStatements to Securityholders.

 

(a)    66BOn or prior to each Payment Date, the Servicer shall provide to the Trustee and the Owner Trustee (with a copy to the Rating Agencies) for the Trustee and the Owner Trustee to forward or make available to each Securityholder of record (in the case of the Trustee, pursuant to USection 5.8(b)U) the statement or statements provided by the Servicer in substantially the form attached hereto as UExhibit EU setting forth at least the following information:

 

(i) 286Bthe amount of any distributions allocable to principal of each Class of Notes;

 

(ii) 287Bthe amount of such distribution allocable to interest on or with respect to each Class of Notes;

 

(iii) 288Bthe Pool Balance as of the close of business on the last day of the related Collection Period;

 

(iv) 289Bthe Note Balance for each Class of Notes after giving effect to payments allocated to principal reported under clause (i) above;

 

(v) 290Bthe amount of the Servicing Fee paid to the Servicer with respect to the related Collection Period, and the amount of any unpaid Servicing Fees and the change in such amount from the prior Payment Date;

 

(vi) 291Bthe amount of the Backup Servicing Fee and the Trustee Fees paid to the Backup Servicer, the Trustee and the Owner Trustee, as applicable, with respect to the related Collection Period, and the amount of any unpaid Backup Servicing Fees and Trustee Fees and the change in all such amounts from the prior Payment Date;

 

(vii) 292Bthe Noteholders’ Interest Carryover Shortfall for each Class of Notes for such Payment Date;

 

(viii) 293Bthe amount, if any, paid to the Noteholders from the Series 2013-D Spread Account for such Payment Date;

 

(ix) 294Bthe aggregate amount in the Series 2013-D Spread Account and the change in such amount from the previous Payment Date and the Specified Spread Account Requisite Amount for such Payment Date;

 

(x) 295Bthe number of Receivables and the aggregate net balance thereon for which the related Obligors are delinquent in making Scheduled Receivable Payments for (a) 31 to 60 days, (b) 61 to 90 days, and (c) 91 days or more;

 

(xi) 296Bthe number and the aggregate Purchase Amounts for Receivables purchased by CPS or purchased by the Servicer during the related Collection Period and summary information as to losses and delinquencies with respect to such Receivables;

 

(xii) 297Bthe Principal Balance of all Receivables that have become Liquidated Receivables, net of Recoveries, during the related Collection Period;

 

(xiii) 298Bthe cumulative Principal Balance of all Receivables that have become Liquidated Receivables, net of Recoveries, during the period from the Cutoff Date to the last day of the related Collection Period;

 

(xiv) 299Bthe amount of any Texas Franchise Tax due and owing by CPS under the Receivables Purchase Agreement to the taxing authority of the State of Texas on or prior to the related Payment Date or paid by CPS since the prior Payment Date;

 

(xv) 300Bthe Three-Month Rolling Average Extension Ratio, the Cumulative Net Loss Rate, the Delinquency Ratio and the Three-Month Rolling Average Delinquency Ratio;

 

(xvi) 301Bthe aggregate Sale Amount with respect to Sold Receivables, if any, during the related Collection Period;

 

(xvii) 302Bfor any Payment Date during the Funding Period, the Pre-Funded Amount and the change in such amount from the previous Payment Date; and

 

(xviii) 303Bfor the Mandatory Redemption Date, the amount of any remaining Pre-Funded Amount that was not used to fund the purchase of Subsequent Receivables.

 

(b)    67BWithin 60 days after the end of each calendar year, the Servicer shall deliver to the Trustee a statement setting forth the amounts paid during such preceding calendar year in respect of paragraphs (i), (ii), (v) and (vi) above.  The Trustee shall mail a copy of such statement to each person who at any time during such preceding calendar year shall have been a Securityholder of record and received any payment in respect of the Securities.

 

(c)    68BThe Trustee may make available to the Securityholders, via the Trustee’s Internet Website, all statements described herein and, with the consent or at the direction of the Seller, such other information regarding the Notes and/or the Receivables as the Trustee may have in its possession, but only with the use of a password provided by the Trustee.  The Trustee will make no representation or warranties as to the accuracy or completeness of such documents and will assume no responsibility therefor.

 

The Trustee’s Internet Website shall be initially located at “www.CTSLink.com” or at such other address as shall be specified by the Trustee from time to time in writing to the Securityholders.  In connection with providing access to the Trustee’s Internet Website, the Trustee may require registration and the acceptance of a disclaimer.  The Trustee shall not be liable for the dissemination of information in accordance with this Agreement.

 

(d)    69BThe Servicer will supply to the Trustee, at the time and in the manner required by applicable Treasury Regulations, for further distribution to such Persons, and to the extent, required by applicable Treasury Regulations information with respect to any “original issue discount” accruing on the Class D Notes and the Class E Notes.

 

ARTICLE 6

 

[RESERVED]

 

ARTICLE 7

 

[RESERVED]

 

ARTICLE 8

 

THE SELLER

 

SECTION 8.1  URepresentations of the Seller.  The Seller makes the following representations for the benefit of the Securityholders and on which the Issuer is deemed to have relied in acquiring the Receivables and on which the Trustee is deemed to have relied in executing and performing pursuant to this Agreement, the Indenture and the other Basic Documents to which it is a party.  The representations speak as of the execution and delivery of this Agreement, as of the Closing Date and each Subsequent Transfer Date, and shall survive each sale of the Receivables to the Issuer and the pledge thereof to the Trustee pursuant to the Indenture and the issuance of the Notes and the Residual Pass-through Certificates.

 

(a)    70BUOrganization and Good StandingU.  The Seller has been duly formed and is validly existing as a limited liability company solely under the laws of the State of Delaware and is in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted, and had at all relevant times, and now has, power, authority and legal right to acquire, own and sell the Receivables and the Other Conveyed Property transferred to the Trust.

 

(b)    71BUDue QualificationU.  The Seller is duly qualified to do business as a foreign limited liability company in good standing, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business or the consummation of the transactions contemplated by the Basic Documents shall require such qualifications.

 

(c)    72BUPower and AuthorityU.  The Seller has the power and authority to execute and deliver this Agreement and the Basic Documents to which it is a party and to carry out its terms and their terms, respectively; the Seller has full power and authority to sell and assign the Receivables and the Other Conveyed Property to be sold and assigned to and deposited with the Trust by it and has duly authorized such sale and assignment to the Trust by all necessary corporate action; and the execution, delivery and performance of this Agreement and the Basic Documents to which the Seller is a party have been duly authorized by the Seller by all necessary corporate action.

 

(d)    73BUValid Sale, Binding ObligationsU.  This Agreement effects a valid sale, transfer and assignment of the Receivables and the Other Conveyed Property, enforceable against the Seller and creditors of and purchasers from the Seller; and this Agreement and the Basic Documents to which the Seller is a party, when duly executed and delivered, shall constitute legal, valid and binding obligations of the Seller enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law.

 

(e)    74BUNo ViolationU.  The consummation of the transactions contemplated by this Agreement and the Basic Documents and the fulfillment of the terms of this Agreement and the Basic Documents shall not conflict with, result in any breach of any of the terms and provisions of or constitute (with or without notice, lapse of time or both) a default under the certificate of formation or the limited liability company agreement of the Seller, or any indenture, agreement, mortgage, deed of trust or other instrument to which the Seller is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust or other instrument, other than the Basic Documents, or violate any law, order, rule or regulation applicable to the Seller of any court or of any Federal or State regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or any of its properties.

 

(f)    75BUNo ProceedingsU.  There are no proceedings or investigations pending or, to the Seller’s knowledge, threatened against the Seller, before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having jurisdiction over the Seller or its properties (A) asserting the invalidity of this Agreement, the Securities or any of the Basic Documents, (B) seeking to prevent the issuance of the Securities or the consummation of any of the transactions contemplated by this Agreement or any of the Basic Documents, (C) seeking any determination or ruling that might materially and adversely affect the performance by the Seller of its obligations under, or the validity or enforceability of, this Agreement or any of the Basic Documents, or (D) relating to the Seller and which might adversely affect the Federal or State income, excise, franchise or similar tax attributes of the Securities.

 

(g)    76BUNo ConsentsU. No consent, approval, authorization or order of or declaration or filing with any governmental authority is required for the issuance or sale of the Securities or the consummation of the other transactions contemplated by this Agreement, except such as have been duly made or obtained.

 

(h)    77BUFinancial ConditionU.  The Seller is able to and does pay its liabilities as they mature.  The Seller is not in default under any obligation to pay money to any Person except for matters being disputed in good faith that do not involve an obligation of the Seller on a promissory note.  The Seller will not use the proceeds from the transactions contemplated by the Basic Documents to give any preference to any creditor or class of creditors, and such transaction will not leave the Seller with remaining assets which are unreasonably small compared to its ongoing operations.

 

(i)    78BUFraudulent ConveyanceU.  The Seller is not selling the Receivables to the Trust with any intent to hinder, delay or defraud any of its creditors; the Seller will not be rendered insolvent as a result of the sale of the Receivables to the Trust.

 

(j)    79BUTax ReturnsU.  The Seller has filed on a timely basis all tax returns which are required to be filed by it and paid all taxes, including any assessments received by it, to the extent that such taxes have become due (other than taxes, the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided by the books of the Seller).

 

(k)    80BUCertificates, Statements and ReportsU.  Neither this Agreement nor any officer’s certificates, statements, reports or other documents prepared by Seller and furnished by Seller to the Trustee pursuant to this Agreement or any other Basic Document to which it is a party, and in connection with the transactions contemplated hereby or thereby (including but not limited to information regarding loan loss and delinquency experience), when taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained herein or therein not misleading.

 

(l)    81BULegal Counsel, etc.U  Seller consulted with its own legal counsel and independent accountants to the extent it deems necessary regarding the tax, accounting and regulatory consequences of the transactions contemplated hereby, Seller is not participating in such transactions in reliance on any representations of any other party, their affiliates, or their counsel with respect to tax, accounting and regulatory matters.

 

(m)    82BUChief Executive OfficeU.  The chief executive office of the Seller is at  19500 Jamboree Road, Irvine, California 92612.

 

(n)    83BUSeparateness CovenantsU.  The Seller is in compliance in all material respects with Section 9(b) of its limited liability company agreement relating to the separateness of the Seller from any other Person.

 

SECTION 8.2  USale Treatment.  TUhe Seller agrees to treat the conveyances hereunder as secured financings for tax and accounting purposes and as a sale for all other purposes (including without limitation legal and bankruptcy purposes), on all relevant books, records, tax returns, financial statements and other applicable documents.

 

SECTION 8.3  UChanges to Seller’s Contract Purchase Guidelines.  The Seller covenants that it will not make any material changes to the Seller’s Contract Purchase Guidelines, or its classification of Obligors within such programs during the Funding Period unless, after giving effect to any such changes, the Rating Agency Condition is satisfied.

 

SECTION 8.4  ULiability of Seller; Indemnities.  The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement.

 

(a)    84BThe Seller shall indemnify, defend and hold harmless the Issuer, the Owner Trustee, the Securityholders, the Backup Servicer and the Trustee from and against any taxes that may at any time be asserted against any such Person with respect to the transactions contemplated in this Agreement and any of the Basic Documents (except any income taxes arising out of fees paid to the Owner Trustee, the Trustee and the Backup Servicer and except any taxes to which the Owner Trustee, or the Trustee may otherwise be subject), including without limitation any sales, gross receipts, general corporation, tangible personal property, privilege or license taxes (but, in the case of the Issuer and the Securityholders, not including any taxes asserted with respect to federal or other income taxes arising out of distributions on the Notes and the Residual Pass-through Certificates) and costs and expenses in defending against the same.

 

(b)    85BThe Seller shall indemnify, defend and hold harmless the Issuer, the Owner Trustee, the Trustee and the Securityholders from and against any loss, liability or expense incurred by reason of (i) the Seller’s willful misfeasance, bad faith or negligence in the performance of its duties under this Agreement, or by reason of reckless disregard of its obligations and duties under this Agreement and (ii) the Seller’s or the Issuer’s violation of Federal or State securities laws in connection with the offering and sale of the Notes or the Residual Pass-through Certificates.

 

(c)    86BThe Seller shall indemnify, defend and hold harmless each of the Owner Trustee, the Trustee and the Backup Servicer and its respective officers, directors, employees and agents from and against any and all costs, expenses, losses, claims, damages and liabilities arising out of, or incurred in connection with the acceptance or performance of the trusts and duties set forth herein and in the Basic Documents (other than overhead and expenses incurred in the normal course of business) except to the extent that such cost, expense, loss, claim, damage or liability shall be due to such entity’s (or its officers’, directors’, employees’ or agents’) willful misfeasance, bad faith or negligence (except for errors in judgment).

 

Indemnification under this Section shall survive the resignation or removal of the Owner Trustee, the Trustee or the Backup Servicer and the termination of this Agreement or the Indenture or the Trust Agreement, as applicable, and shall include reasonable fees and expenses of counsel and other expenses of litigation.  If the Seller shall have made any indemnity payments pursuant to this Section and the Person to or on behalf of whom such payments are made thereafter shall collect any of such amounts from others, such Person shall promptly repay such amounts to the Seller, without interest.

 

SECTION 8.5  UMerger or Consolidation of, or Assumption of the Obligations of, Seller.  Any Person (a) into which the Seller may be merged or consolidated, (b) which may result from any merger or consolidation to which the Seller shall be a party or (c) which may succeed to the properties and assets of the Seller substantially as a whole, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Seller under this Agreement, shall be the successor to the Seller hereunder without the execution or filing of any document or any further act by any of the parties to this Agreement; provided, however, that (i) immediately after giving effect to such transaction, no representation or warranty made pursuant to USection 3.1U shall have been breached and no Servicer Termination Event, and no event which, after notice or lapse of time, or both, would become a Servicer Termination Event shall have occurred and be continuing, (ii) the Seller shall have delivered to the Owner Trustee and the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply with this Section and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with, (iii) the Rating Agency Condition shall have been satisfied with respect to such transaction and (iv) the Seller shall have delivered to the Owner Trustee and the Trustee an Opinion of Counsel stating that, in the opinion of such counsel, either (A) all financing statements and continuation statements and amendments thereto have been authorized and filed that are necessary fully to preserve and protect the interest of the Owner Trustee and the Trustee, respectively, in the Receivables and the Other Conveyed Property and reciting the details of such filings or (B) no such action shall be necessary to preserve and protect such interest.  Notwithstanding anything herein to the contrary, the execution of the foregoing agreement of assumption and compliance with clauses (i), (ii), (iii) and (iv) above shall be conditions to the consummation of the transactions referred to in  clauses (a), (b) or (c) above.

 

SECTION 8.6  ULimitation on Liability of Seller and Others.  The Seller and any director or officer or employee or agent of the Seller may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising under any Basic Document.  The Seller shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be incidental to its obligations under this Agreement, and that in its opinion may involve it in any expense or liability.

 

SECTION 8.7  USeller May Own Residual Pass-through Certificates or Notes.  The Seller and any Affiliate thereof may in its individual or any other capacity become the owner or pledgee of Securities with the same rights as it would have if it were not the Seller or an Affiliate thereof, except as expressly provided herein or in any Basic Document.  Securities so owned by the Seller or such Affiliate shall have an equal and proportionate benefit under the provisions of the Basic Documents, without preference, priority or distinction as among all of the Securities; provided, however, that any Notes owned by the Seller or any Affiliate thereof, during the time such Securities are so owned by them, shall be without voting rights for any purpose set forth in the Basic Documents.  The Seller shall notify the Owner Trustee and the Trustee promptly after it or any of its Affiliates become the owner of a Security.

 

ARTICLE 9

 

THE SERVICER

 

SECTION 9.1  URepresentations of Servicer.  The Servicer makes the following representations for the benefit of the Securityholders, on which the Issuer is deemed to have relied in acquiring the Receivables and on which the Trustee is deemed to have relied in executing and performing pursuant to this Agreement, the Indenture and the other Basic Documents to which it is a party.  The representations speak as of the execution and delivery of this Agreement and as of the Closing Date, and as of each Subsequent Transfer Date, and shall survive the sale of the Receivables to the Issuer and the pledge thereof to the Trustee pursuant to the Indenture.

 

(a)    87BUOrganization and Good StandingU.  The Servicer has been duly incorporated and is validly existing as a corporation solely under the laws of the State of California, in good standing thereunder, with power, authority and legal right to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted, and had at all relevant times, and shall have, power, authority and legal right to acquire, own and service the Receivables.

 

(b)    88BUDue QualificationU. The Servicer is duly qualified to do business as a foreign corporation in good standing and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business (including the servicing of the Receivables as required by this Agreement) or the consummation of the transactions contemplated by the Basic Documents requires or shall require such qualification.

 

(c)    89BUPower and AuthorityU.  The Servicer has the power and authority to execute and deliver this Agreement and the Basic Documents to which it is a party and to carry out its terms and their terms, respectively, and the execution, delivery and performance of this Agreement and the Basic Documents to which it is a party have been duly authorized by the Servicer by all necessary corporate action.

 

(d)    90BUBinding ObligationU.  This Agreement and the Basic Documents to which the Servicer is a party shall constitute legal, valid and binding obligations of the Servicer enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors’ rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law.

 

(e)    91BUNo ViolationU.  The consummation of the transactions contemplated by this Agreement and the Basic Documents to which to the Servicer is a party, and the fulfillment of the terms of this Agreement and the Basic Documents to which the Servicer is a party, shall not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the articles of incorporation or bylaws of the Servicer, or any indenture, agreement, mortgage, deed of trust or other instrument to which the Servicer is a party or by which it is bound or any of its properties are subject, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust or other instrument, other than the Basic Documents, or violate any law, order, rule or regulation applicable to the Servicer of any court or of any Federal or State regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or any of its properties.

 

(f)    92BUNo ProceedingsU.  There are no proceedings or investigations pending or, to the Servicer’s knowledge, threatened against the Servicer, before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having jurisdiction over the Servicer or its properties (A) asserting the invalidity of this Agreement or any of the Basic Documents, (B) seeking to prevent the issuance of the Securities or the consummation of any of the transactions contemplated by this Agreement or any of the Basic Documents, or (C) except for the Pending Litigation, seeking any determination or ruling that might materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, this Agreement, the Securities or any of the Basic Documents or (D) relating to the Servicer and which might adversely affect the Federal or State income, excise, franchise or similar tax attributes of the Securities.

 

(g)    93BUNo ConsentsU.  No consent, approval, authorization or order of or declaration or filing with any governmental authority is required for the issuance or sale of the Securities or the consummation of the other transactions contemplated by this Agreement, except such as have been duly made or obtained.

 

(h)    94BUTaxesU.  The Servicer has filed on a timely basis all tax returns which are required to be filed by it and paid all taxes, including any assessments received by it, to the extent that such taxes have become due (other than taxes, the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Servicer).

 

(i)    95BUChief Executive OfficeU.  The Servicer hereby represents and warrants to the Trustee that the Servicer’s principal place of business and chief executive office is, and for the four months preceding the date of this Agreement has been, located at: 19500 Jamboree Road, Irvine, California 92612.

 

SECTION 9.2  ULiability of Servicer; Indemnities.

 

(a)    96BThe Servicer (in its capacity as such) shall be liable hereunder only to the extent of the obligations in this Agreement specifically undertaken by the Servicer and the representations made by the Servicer.

 

(i) 304BThe Servicer shall indemnify, defend and hold harmless the Trust, the Trustee, the Owner Trustee, the Backup Servicer and the Securityholders from and against any and all costs, expenses, losses, damages, claims and liabilities, arising out of or resulting from the use, ownership, repossession or operation by the Servicer or any Affiliate or agent or sub-contractor thereof of any Financed Vehicle;

 

(ii) 305BThe Servicer (unless the Backup Servicer is the Servicer) shall indemnify, defend and hold harmless the Trust, the Trustee, the Owner Trustee, the Backup Servicer and the Securityholders from and against any taxes that may at any time be asserted against any of such parties with respect to the transactions contemplated in this Agreement, including, without limitation, any sales, gross receipts, general corporation, tangible personal property, privilege or license taxes (but not including federal or other income taxes, including franchise taxes (other than Texas Franchise Tax, if CPS is the Servicer) asserted with respect to, and as of the date of, the sale of the Receivables and the Other Conveyed Property to the Trust or the issuance and original sale of the Securities and, in the case of the Issuer and the Securityholders, not including any taxes asserted with respect to federal or other income taxes arising out of distributions on the Notes and Residual Pass-through Certificates) and costs and expenses in defending against the same;

 

(iii) 306BThe Servicer shall indemnify, defend and hold harmless the Trust, the Trustee, the Owner Trustee, the Backup Servicer, each Placement Agent, their respective officers, directors, agents and employees and the Securityholders from and against any and all costs, expenses, losses, claims, damages, and liabilities to the extent that such cost, expense, loss, claim, damage, or liability arose out of, or was imposed upon the Trust, the Trustee, the Owner Trustee, the Backup Servicer, each Placement Agent or the Securityholders or such officers, directors, agents or employees through the negligence, willful misfeasance or bad faith of the Servicer in the performance of its duties under this Agreement, by reason of reckless disregard of its obligations and duties under this Agreement or as a result of a breach of any representation or warranty made by the Servicer in this Agreement (without regard to any exception relating to the Pending Litigation).

 

(iv) 307BThe Servicer shall indemnify, defend, and hold harmless the Trustee, the Owner Trustee and the Backup Servicer from and against all costs, expenses, losses, claims, damages, and liabilities arising out of or incurred in connection with the acceptance or performance of the trusts and duties herein contained or in the Trust Agreement, if any, except to the extent that such cost, expense, loss, claim, damage or liability:  (A) shall be due to the willful misfeasance, bad faith, or negligence (except for errors in judgment) of the Trustee, the Owner Trustee or the Backup Servicer, as applicable or (B) relates to any tax other than the taxes with respect to which the Servicer shall be required to indemnify the Trustee, the Owner Trustee or the Backup Servicer.

 

(v) 308BCPS shall indemnify, defend and hold harmless the Trust, the Trustee, the Owner Trustee, the Backup Servicer and the Securityholders against any and all costs, expenses, losses, damages, claims and liabilities arising out of or resulting from CPS’s involvement in, or the effect on any Receivable as a result of, the Pending Litigation.

 

(b)    97BNotwithstanding the foregoing, the Servicer shall not be obligated to defend, indemnify, and hold harmless any Noteholders for any losses, claims, damages or liabilities incurred by any Securityholders arising out of claims, complaints, actions and allegations relating to Section 406 of ERISA or Section 4975 of the Code as a result of the purchase or holding of a Security by such Noteholder with the assets of a plan subject to such provisions of ERISA or the Code or the servicing, management and operation of the Trust.

 

(c)    98BFor purposes of this USection 9.2U, in the event of the termination of the rights and obligations of the Servicer (or any successor thereto pursuant to USection 9.3U) as Servicer pursuant to USection 10.1U, or a resignation by such Servicer pursuant to this Agreement, such Servicer shall be deemed to be the Servicer pending appointment of a successor Servicer pursuant to USection 10.2U.  The provisions of this USection 9.2(c)U shall in no way affect the survival pursuant to USection 9.2(d)U of the indemnification by the Servicer provided by USection 9.2(a)U.

 

(d)    99BIndemnification under this USection 9.2U shall survive the termination of this Agreement and any resignation or removal of CPS as Servicer and shall include reasonable fees and expenses of counsel and expenses of litigation.  If the Servicer shall have made any indemnity payments pursuant to this Section and the recipient thereafter collects any of such amounts from others, the recipient shall promptly repay such amounts to the Servicer, without interest.

 

SECTION 9.3  UMerger or Consolidation of, or Assumption of the Obligations of, the Servicer or Backup Servicer.

 

(a)    100BCPS shall not merge or consolidate with any other person, convey, transfer or lease substantially all its assets as an entirety to another Person, or permit any other Person to become the successor to CPS’s business unless, after the merger, consolidation, conveyance, transfer, lease or succession, the successor or surviving entity shall be capable of fulfilling the duties of CPS contained in this Agreement.  Any corporation (i) into which CPS may be merged or consolidated, (ii) resulting from any merger or consolidation in which CPS shall be a constituent corporation, (iii) which acquires by conveyance, transfer, or lease substantially all of the assets of CPS, or (iv) succeeding to the business of CPS, in any of the foregoing cases shall execute an agreement of assumption to perform every obligation of CPS under this Agreement and, whether or not such assumption agreement is executed, shall be the successor to CPS under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties to this Agreement, anything in this Agreement to the contrary notwithstanding; provided, however, that nothing contained herein shall be deemed to release CPS from any obligation.  CPS shall provide notice of any merger, consolidation or succession pursuant to this Section to the Owner Trustee, the Trustee, the Securityholders and the Rating Agencies.  Notwithstanding the foregoing, CPS shall not merge or consolidate with any other Person or permit any other Person to become a successor to CPS’s business, unless (x) immediately after giving effect to such transaction, no representation, warranty or covenant made pursuant to USections 9.1U (other than Uclause (a)U with respect to its state of incorporation and clause (i)) or U4.6U shall have been breached (for purposes hereof, such representations and warranties shall be deemed made as of the date of the consummation of such transaction) and no event that, after notice or lapse of time, or both, would become a Servicer Termination Event shall have occurred and be continuing, (y) CPS shall have delivered to the Owner Trustee, the Trustee and the Rating Agencies an Officer’s Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply with this Section and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with, and (z) CPS shall have delivered to the Owner Trustee, the Trustee and the Rating Agencies an Opinion of Counsel, stating in the opinion of such counsel, either (A) all financing statements and continuation statements and amendments thereto have been authorized and filed that are necessary to preserve and protect the interest of the Owner Trustee and the Trustee, respectively, in the Receivables and the Other Conveyed Property and reciting the details of the filings or (B) no such action shall be necessary to preserve and protect such interest.

 

(b)    101BAny corporation (i) into which the Backup Servicer may be merged or consolidated, (ii) resulting from any merger or consolidation in which the Backup Servicer shall be a constituent corporation, (iii) which acquires by conveyance, transfer or lease substantially all of the assets of the Backup Servicer, or (iv) succeeding to the business of the Backup Servicer, in any of the foregoing cases shall execute an agreement of assumption to perform every obligation of the Backup Servicer under this Agreement and, whether or not such assumption agreement is executed, shall be the successor to the Backup Servicer under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties to this Agreement, anything in this Agreement to the contrary notwithstanding; provided, however, that nothing contained herein shall be deemed to release the Backup Servicer from any obligation.

 

SECTION 9.4  ULimitation on Liability of Servicer, Backup Servicer and Others.  UNeither the Servicer, the Backup Servicer nor any of the directors or officers or employees or agents of the Servicer or Backup Servicer shall be under any liability to the Trust or the Securityholders, except as provided in this Agreement, for any action taken or for refraining from the taking of any action pursuant to this Agreement; provided, however, that this provision shall not protect the Servicer, the Backup Servicer or any such person against any liability that would otherwise be imposed by reason of a breach of this Agreement or willful misfeasance, bad faith or negligence in the performance of duties.  CPS, the Backup Servicer and any director, officer, employee or agent of CPS or the Backup Servicer may rely in good faith on the written advice of counsel or on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising under this Agreement.  In addition, the Backup Servicer shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be incidental to its obligations under this Agreement, and that in its opinion may involve it in any expense or liability.

 

SECTION 9.5  UDelegation of Duties.  The Servicer may at any time delegate duties under this Agreement to sub-contractors who are in the business of servicing automotive receivables; provided, however, that no such delegation or sub-contracting of duties by the Servicer shall relieve the Servicer of its responsibility with respect to such duties.

 

SECTION 9.6  UServicer and Backup Servicer Not to Resign»

 

(a)    102UB.  Subject to the provisions of USection 9.3U, neither the Servicer nor the Backup Servicer shall resign from the obligations and duties imposed on it by this Agreement as Servicer or Backup Servicer except (i) upon a determination that by reason of a change in legal requirements the performance of its duties under this Agreement would cause it to be in violation of such legal requirements in a manner that would have a material adverse effect on the Servicer or the Backup Servicer, as the case may be, or, (ii) in the case of the Backup Servicer, upon the prior written consent of Holders of a majority of the aggregate outstanding Note Balance of the Controlling Class.  Any such determination permitting the resignation of the Servicer or Backup Servicer shall be evidenced by an Opinion of Counsel to such effect delivered and acceptable to the Trustee and the Owner Trustee.  No resignation of the Servicer shall become effective until the Backup Servicer or a successor Servicer that is an Eligible Servicer shall have assumed the responsibilities and obligations of the Servicer pursuant to USection 10.3.U  No resignation of the Backup Servicer shall become effective until a Person that is an Eligible Servicer shall have assumed the responsibilities and obligations of the Backup Servicer; provided, however, that in the event a successor Backup Servicer is not appointed within 60 days after the Backup Servicer has given notice of its resignation and has provided the Opinion of Counsel required by this USection 9.6U, the Backup Servicer may petition a court for its removal.

 

ARTICLE 10

 

DEFAULT

 

SECTION 10.1  UServicer Termination Event.  For purposes of this Agreement, each of the following shall constitute a “UServicer Termination EventU”:

 

(a)    103BAny failure by the Servicer to deliver to the Trustee for distribution to any Noteholder or to the Trust Paying Agent for distribution to any Residual Certificateholder, or for deposit into the Collection Account or the Series 2013-D Spread Account, any payment required under the terms of this Agreement, which failure continues unremedied for a period of two Business Days (one Business Day with respect to the payment of Purchase Amounts) after the earlier of (i) knowledge thereof by a Responsible Officer of the Servicer and (ii) written notice thereof shall have been given to the Servicer by the Trustee or by Holders of a majority of the aggregate outstanding Note Balance of the Controlling Class; or

 

(b)    104BFailure by the Servicer to deliver to the Trustee the Servicer’s Certificate within three days after the date on which such Servicer’s Certificate is required to be delivered under USection 4.9U; or

 

(c)    105BFailure on the part of the Servicer duly to observe or perform any other covenants or agreements of the Servicer set forth in this Agreement or, if the Servicer is CPS, failure of CPS to duly perform any other covenants or agreements of CPS set forth in this Agreement, which failure (i) materially and adversely affects the rights of Noteholders and (ii) continues unremedied for a period of 30 days after the earlier of knowledge thereof by the Servicer or after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Servicer by the Trustee or by Holders of a majority of the aggregate outstanding Note Balance of the Controlling Class; or

 

(d)    106BThe occurrence of an Insolvency Event with respect to the Servicer or the Seller; or

 

(e)    107BFailure on the part of the Servicer to observe its covenants and agreements relating to (i) merger or consolidation or (ii) preservation of its ownership (or security interest) in repossessed Financed Vehicles delivered for sale to dealers; or

 

(f)    108BAny representation, warranty or statement of the Servicer made in this Agreement or any certificate, report or other writing delivered pursuant hereto shall prove to be incorrect in any material respect as of the time when the same shall have been made (excluding, however, any representation or warranty set forth in this Agreement relating to the characteristics of the Receivables), and the incorrectness of such representation, warranty or statement has a material adverse effect on the Trust or the Securityholders and, within 30 days after the earlier of (i) knowledge thereof by a Responsible Officer of the Servicer or (ii) after written notice thereof shall have been given to the Servicer by the Trustee or by Holders of a majority of the aggregate outstanding Note Balance of the Controlling Class, the circumstances or condition in respect of which such representation, warranty or statement was incorrect shall not have been eliminated or otherwise cured.

 

SECTION 10.2  UConsequences of a Servicer Termination Event.  If a Servicer Termination Event shall occur and be continuing, the Trustee shall terminate, at the written direction of the Holders of Notes evidencing not less than a majority of the aggregate outstanding Note Balance of the Controlling Class by notice given in writing to the Servicer and the Backup Servicer, all of the rights and obligations of the Servicer under this Agreement.  If a Servicer Termination Event shall occur and be continuing on or after the date on which each class of Notes has been repaid in full, the Majority Certificateholders may terminate by notice given in writing to the Servicer and the Backup Servicer all of the rights and obligations of the Servicer under this Agreement.  The Servicer shall be entitled to its pro rata share of the Servicing Fee for the number of days in the Collection Period prior to the effective date of its termination.  On or after the receipt by the Servicer of such written notice or upon the date, if any, specified in such notice, all authority, power, obligations and responsibilities of the Servicer under this Agreement, whether with respect to the Notes, the Residual Pass-through Certificates, the Receivables or the Other Conveyed Property or otherwise, automatically shall pass to, be vested in and become obligations and responsibilities of the Backup Servicer (or such other successor Servicer appointed under USection 10.3U); provided, however, that the successor Servicer shall have no liability with respect to any obligation that was required to be performed by the terminated Servicer prior to the date that the successor Servicer becomes the Servicer or any claim of a third party based on any alleged action or inaction of the terminated Servicer.  The successor Servicer is authorized and empowered by this Agreement to execute and deliver, on behalf of the terminated Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination, whether to complete the transfer and endorsement of the Receivables and the Other Conveyed Property and related documents to show the Trust as lienholder or secured party on the related Lien Certificates, or otherwise.  The terminated Servicer agrees to cooperate with the successor Servicer in effecting the termination of the responsibilities and rights of the terminated Servicer under this Agreement, including, without limitation, the transfer to the successor Servicer for administration by it of all cash amounts that shall at the time be held by the terminated Servicer for deposit, or have been deposited by the terminated Servicer, in the Collection Account or thereafter received with respect to the Receivables and the delivery to the successor Servicer of all Receivable Files that shall at the time be held by the terminated Servicer and a computer tape in readable form as of the most recent Business Day containing all information necessary to enable the successor Servicer to service the Receivables and the Other Conveyed Property.  All reasonable costs and expenses (including reasonable attorneys’ fees and boarding fees) incurred in connection with transferring any Receivable Files to the successor Servicer and amending this Agreement to reflect such succession as Servicer pursuant to this USection 10.2U shall be paid by the terminated Servicer upon presentation of reasonable documentation of such costs and expenses.  In addition, any successor Servicer shall be entitled to payment from the terminated Servicer for reasonable transition expenses incurred in connection with acting as successor Servicer, and to the extent not so paid, such payment shall be made pursuant to USection 5.7(a)U.  Upon receipt of notice of the occurrence of a Servicer Termination Event, the Trustee shall give notice thereof to the Rating Agencies.  The successor Servicer shall terminate the Lockbox Agreement and direct the Obligors to make all payments under the Receivables directly to the successor Servicer (in which event the successor Servicer shall process such payments in accordance with USection 4.2(e)U), or to a lockbox established by the successor Servicer at the successor Servicer’s expense, which shall be reimbursable pursuant to the terms of Uclause (iii)U of USection 5.7(a)U. The terminated Servicer shall grant the Trustee and the successor Servicer reasonable access to the terminated Servicer’s premises at the terminated Servicer’s expense.

 

SECTION 10.3  UAppointment of Successor.

 

(a)    109BOn and after the time the Servicer receives a notice of termination pursuant to USection 10.2U or upon the resignation of the Servicer pursuant to USection 9.6U, the predecessor Servicer shall continue to perform its functions as Servicer under this Agreement, in the case of termination, only until the date specified in such termination notice or, if no such date is specified in a notice of termination, until receipt of such notice, and, in the case of resignation, until a successor Servicer has been appointed (the “Assumption Date”).  Subject to prior selection of a successor Servicer in accordance with Usubsection (b)U below, in the event of a termination or resignation of the Servicer, Wells Fargo Bank, National Association, as Backup Servicer, shall automatically assume the obligations of the Servicer hereunder on the Assumption Date, and shall be subject to all the rights, responsibilities, restrictions, duties, liabilities and termination provisions relating thereto in this Agreement except as otherwise indicated herein.  Notwithstanding the foregoing, if the Backup Servicer is the outgoing Servicer or shall be unwilling or legally unable to act as successor Servicer, the Trustee shall appoint, or petition a court of competent jurisdiction to appoint, an Eligible Servicer as the successor Servicer hereunder.  Pending appointment pursuant to the preceding sentence, the Backup Servicer shall act as successor Servicer unless it is legally unable to do so, in which event the outgoing Servicer shall continue to act as Servicer until a successor has been appointed and accepted such appointment. The Trustee and such successor Servicer shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession.

 

(b)    110BUnless Holders of Notes evidencing not less than a majority of the aggregate outstanding Note Balance of the Controlling Class have previously confirmed in writing that the Backup Servicer shall become successor Servicer upon the Servicer’s resignation or removal, the Holders of Notes evidencing not less than a majority of the aggregate outstanding Note Balance of the Controlling Class may at any time thirty (30) days (i) prior to the effective date of the resignation of the Servicer or (ii) prior to the Assumption Date, appoint a Person that is an Eligible Servicer other than the Backup Servicer to become the successor Servicer in accordance with USection 10.2U on and after the Assumption Date or the resignation of the Servicer.  Prior to such assumption, such successor Servicer shall execute and deliver a written assumption agreement by such Person to serve as Servicer.  If upon the termination of the Servicer pursuant to USection 10.2U or the resignation of the Servicer pursuant to USection 9.6U, the Holders of Notes evidencing not less than a majority of the aggregate outstanding Note Balance of the Controlling Class appoint a successor Servicer other than the Backup Servicer, the Backup Servicer shall not be relieved of its duties as Backup Servicer hereunder, including its obligation to become successor Servicer; provided that pending the assumption of the servicing duties by a successor Servicer appointed by the Holders of Notes evidencing not less than a majority of the aggregate outstanding Note Balance of the Controlling Class, the Backup Servicer shall not be deemed to have assumed any of the obligations of the successor Servicer hereunder.

 

(c)    111BNotwithstanding the Backup Servicer’s assumption of, and its agreement to perform and observe, all duties, responsibilities and obligations of CPS as Servicer under this Agreement arising on and after the Assumption Date, the Backup Servicer shall not be deemed to have assumed or to become liable for, or otherwise have any liability, whether provided for by the terms of this Agreement, arising by operation of law or otherwise, for any duties, responsibilities, obligations or liabilities of CPS or any predecessor Servicer (i) arising under USections 4.7U and U9.2U, regardless of when the liability, duty, responsibility or obligation of CPS or any predecessor Servicer therefor arose, (ii) required to be performed by CPS or any predecessor Servicer prior to the Assumption Date or any claim of any third party based on any alleged action or inaction of CPS or any predecessor Servicer, or (iii) with respect to the payment of any taxes required to be paid by CPS or any predecessor Servicer.  The indemnification obligations of the Backup Servicer, upon becoming a successor Servicer, are expressly limited to those instances of gross negligence or willful misconduct of the Backup Servicer in its role as successor Servicer that occur after the Assumption Date.

 

(d)    112BAny successor Servicer, including the Backup Servicer, shall be entitled to receive the Servicing Fee and Additional Servicing Compensation as compensation and its reimbursable expenses in accordance with the priority of payments set forth in USection 5.7(a)U.

 

(e)    113BNotwithstanding anything contained in this Agreement to the contrary, the successor Servicer is authorized to accept and rely on all of the accounting records (including computer records) and work of the predecessor Servicer relating to the Receivables (collectively, the “Predecessor Servicer Work Product”) without any audit or other examination thereof, and the successor Servicer shall have no duty, responsibility, obligation or liability for the acts and omissions of the predecessor Servicer.  If any error, inaccuracy, omission or incorrect or non-standard practice or procedure (collectively, “Errors”) exists in any Predecessor Servicer Work Product and such Error makes it materially more difficult to service or should cause or materially contribute to the successor Servicer making or continuing any Error (collectively, “Continuing Errors”), the successor Servicer shall have no duty, responsibility, obligation or liability for such Continuing Errors; UprovidedU, UhoweverU, that the successor Servicer agrees to use its best efforts to prevent further Continuing Errors.  If the successor Servicer becomes aware of Errors or Continuing Errors, it shall use its best efforts, at the direction of Holders constituting a majority of the aggregate outstanding Note Balance of the Controlling Class, which shall have been given prior written notice by the Trustee (upon receipt of notice from the successor Servicer) of the nature of such Errors and Continuing Errors, to reconstruct and reconcile such data as is commercially reasonable to correct such Errors and Continuing Errors and to prevent future Continuing Errors.  The successor Servicer shall be entitled to recover its costs expended in connection with such efforts in accordance with USection 5.7(a)U.

 

SECTION 10.4  UNotification to Securityholders.  Upon any termination of, or appointment of a successor to, the Servicer, the Trustee shall give prompt written notice thereof to each Securityholder, the Owner Trustee and to the Rating Agencies.

 

SECTION 10.5  UWaiver of Past Defaults.  The Holders of Notes evidencing not less than a majority of the aggregate outstanding Note Balance of the Controlling Class may, on behalf of all Noteholders, waive any default by the Servicer in the performance of its obligations under this Agreement and the consequences thereof (except a default in making any required deposits to or payments from any of the Trust Accounts in accordance with the terms of this Agreement).  Upon any such waiver of a past default, such default shall cease to exist, and any Servicer Termination Event arising therefrom shall be deemed to have been remedied for every purpose of this Agreement.  No such waiver shall extend to any subsequent or other default or impair any right consequent thereto.

 

SECTION 10.6  UAction Upon Certain Failures of the Servicer.  In the event that a Responsible Officer of the Trustee shall have actual knowledge of any failure of the Servicer specified in USection 10.1U that would give rise to a right of termination under such Section upon the Servicer’s failure to remedy the same after notice, the Trustee shall give notice thereof to the Servicer.  For all purposes of this Agreement (including, without limitation, this USection 10.6U), the Trustee shall not be deemed to have knowledge of any failure of the Servicer as specified in  USections 10.1(c)U through U(f)U unless notified thereof in writing by the Servicer or by a Securityholder.  The Trustee shall be under no duty or obligation to investigate or inquire as to any potential failure of the Servicer specified in USection 10.1U.

 

ARTICLE 11

 

TERMINATION

 

SECTION 11.1  UOptional Purchase of All Receivables.

 

(a)    114BOn any Payment Date on or after the last day of any Collection Period as of which the Pool Balance shall be less than or equal to 10% of the Original Collateral Balance, the Servicer shall have the option to purchase the Owner Trust Estate, other than the Trust Accounts.  To exercise such option, the Servicer shall (subject to the proviso below) deposit in the Collection Account pursuant to USection 5.6U an amount equal to the fair market value of the Receivables (including Liquidated Receivables) as of such date, plus the appraised value of any other property held by the Trust, such value to be determined by an appraiser mutually agreed upon by the Servicer and the Trustee, and shall succeed to all interests in and to the Trust; provided, however, that the amount to be paid for such purchase shall be sufficient to pay the (i) the aggregate outstanding Note Balance, (ii) accrued and unpaid interest on the Notes, and (iii) the unpaid expenses of the Trust, including without limitation expenses incurred by the Trust in connection with the exercise of such repurchase option.  Upon receipt of an amount equal to the fair market value of the Receivables and written instructions from the Servicer, the Trustee shall release to the Servicer or its designee the related Receivables Files and shall execute and deliver all reasonable instruments of transfer or assignment, without recourse, as are prepared by the Seller and delivered to the Trustee and necessary to vest in the Servicer or such designee title to the Receivables including a Trustee’s Certificate in the form of UExhibit F-2U.  To the extent such option to purchase the Owner Trust Estate is rescinded pursuant to Section 10.1 of the Indenture, the Securityholders shall on the related Payment Date receive the payments of interest and principal that would be due to the Securityholders on such Payment Date as if such option to purchase the Owner Trust Estate had never been exercised.

 

(b)    115BNotice of any termination of the Trust shall be given by the Servicer, which notice shall include, among other things, the items specified in Section 9.1(c) of the Trust Agreement, to the Owner Trustee, the Trustee and the Rating Agencies as soon as practicable after the Servicer has received notice thereof.

 

ARTICLE 12

 

ADMINISTRATIVE DUTIES OF THE SERVICER

 

SECTION 12.1  UAdministrative Duties.

 

(a)    116BUDuties with Respect to the IndentureU.  The Servicer shall perform all its duties and the duties of the Issuer under the Indenture.  In addition, the Servicer shall consult with the Owner Trustee as the Servicer deems appropriate regarding the duties of the Issuer under the Indenture.  The Servicer shall monitor the performance of the Issuer and shall advise the Owner Trustee when action is necessary to comply with the Issuer’s duties under the Indenture.  The Servicer shall prepare for execution by the Issuer or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Issuer to prepare, file or deliver pursuant to the Indenture.  In furtherance of the foregoing, the Servicer shall take all necessary action that is the duty of the Issuer to take pursuant to the Indenture, including, without limitation, pursuant to Sections 2.7, 3.5, 3.6, 3.7, 3.9, 3.17, 5.1(b), 8.3, 9.2, 9.3, 11.1 and 11.15 of the Indenture.

 

(b)    117BUDuties with Respect to the IssuerU.

 

(i) 309BIn addition to the duties of the Servicer set forth in this Agreement or any of the Basic Documents, the Servicer shall perform such calculations and shall prepare for execution by the Issuer or the Owner Trustee or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Issuer or the Owner Trustee to prepare, file or deliver pursuant to this Agreement or any of the Basic Documents or under State and Federal tax and securities laws, and at the request of the Owner Trustee shall take all appropriate action that it is the duty of the Issuer to take pursuant to this Agreement or any of the Basic Documents.  In accordance with the directions of the Issuer or the Owner Trustee, the Servicer shall administer, perform or supervise the performance of such other activities in connection with the Collateral (including the Basic Documents) as are not covered by any of the foregoing provisions and as are expressly requested by the Issuer or the Owner Trustee and are reasonably within the capability of the Servicer.  The Servicer shall perform its administrative duties with respect to the Issuer in accordance with the requirements enumerated in Section 6.7 of the Trust Agreement.  The Servicer shall monitor the activities of the Issuer to assure compliance by the Issuer with the requirements of Section 6.7 of the Trust Agreement.  The Servicer shall promptly take such action as may be required to correct any noncompliance by the Issuer with the requirements of Section 6.7 of the Trust Agreement.

 

(ii) 310BNotwithstanding anything in this Agreement or any of the Basic Documents to the contrary, the Servicer shall be responsible for promptly notifying the Owner Trustee and the Trustee in the event that any withholding tax is imposed on the Issuer’s payments (or allocations of income) to a Noteholder as contemplated by this Agreement.  Any such notice shall be in writing and specify the amount of any withholding tax required to be withheld by the Owner Trustee or the Trustee pursuant to such provision.

 

(iii) 311BNotwithstanding anything in this Agreement or the Basic Documents to the contrary, the Servicer shall be responsible for performance of the duties of the Issuer or the Seller set forth in Section 5.1 of the Trust Agreement with respect to, among other things, accounting and reports to Residual Certificateholders; provided, however, that, once prepared by the Servicer, the Owner Trustee shall retain responsibility for the distribution of any such reports or accounting actually provided to the Owner Trustee and necessary to enable each Residual Certificateholder to prepare its Federal and State income tax returns.

 

(iv) 312BThe Servicer shall perform the duties of the Servicer specified in Section 10.2 of the Trust Agreement required to be performed in connection with the resignation or removal of the Owner Trustee, and any other duties expressly required to be performed by the Servicer under this Agreement or any of the Basic Documents.

 

(v) 313BIn carrying out the foregoing duties or any of its other obligations under this Agreement, the Servicer may enter into transactions with or otherwise deal with any of its Affiliates; provided, however, that the terms of any such transactions or dealings shall be in accordance with any directions received from the Issuer and shall be, in the Servicer’s opinion, no less favorable to the Issuer in any material respect.

 

(c)    118BUTax MattersU.  The Servicer shall prepare and file, on behalf of the Seller, all tax returns, tax elections, financial statements and such annual or other reports of the Issuer as are necessary for preparation of tax reports as provided in Article V of the Trust Agreement, including without limitation, Internal Revenue Service Form 1099.  All tax returns will be signed by the person required or authorized to sign such returns under applicable law.

 

(d)    119BUNon-Ministerial MattersU.  With respect to matters that in the reasonable judgment of the Servicer are non-ministerial, the Servicer shall not take any action pursuant to this Article XII unless within a reasonable time before the taking of such action, the Servicer shall have notified the Owner Trustee and the Trustee of the proposed action and the Owner Trustee and, with respect to items (i), (ii), (iii) and (iv) below, the Trustee shall not have withheld consent or provided an alternative direction.  For the purpose of the preceding sentence, “non-ministerial matters” shall include:

 

(i) 314Bthe amendment of or any supplement to the Indenture;

 

(ii) 315Bthe initiation of any claim or lawsuit by the Issuer and the compromise of any action, claim or lawsuit brought by or against the Issuer (other than in connection with the collection of the Receivables);

 

(iii) 316Bthe amendment, change or modification of this Agreement or any of the Basic Documents;

 

(iv) 317Bthe appointment of successor Note Registrars, successor Note Paying Agents and successor Trustees pursuant to the Indenture or the appointment of successor Servicers or the consent to the assignment by the Note Registrar, Note Paying Agent or Trustee of its obligations under the Indenture; and

 

(v) 318Bthe removal of the Trustee.

 

(e)    120BUExceptionsU.  Notwithstanding anything to the contrary in this Agreement except as expressly provided herein or in the other Basic Documents, the Servicer, in its capacity as such hereunder, shall not be obligated to, and shall not, (1) make any payments to the Securityholders under the Basic Documents, (2) sell the Owner Trust Estate pursuant to Section 5.3 of the Indenture, (3) take any other action that the Issuer directs the Servicer not to take on its behalf or (4) in connection with its duties hereunder assume any indemnification obligation of any other Person.

 

(f)    121BULimitation of Successor Servicer’s ObligationsU.  The successor Servicer shall not be responsible for any obligations or duties of the Servicer under this USection 12.1U.

 

SECTION 12.2  URecords.  The Servicer shall maintain appropriate books of account and records relating to services performed under this Agreement, which books of account and records shall be accessible for inspection by the Issuer, the Backup Servicer, the Owner Trustee and the Trustee at any time during normal business hours.

 

SECTION 12.3  UAdditional Information to be Furnished to the Issuer.  The Servicer shall furnish to the Issuer from time to time such additional information regarding the Collateral as the Issuer shall reasonably request.

 

ARTICLE 13

 

MISCELLANEOUS PROVISIONS

 

SECTION 13.1  UAmendment.

 

(a)    122BThis Agreement may be amended from time to time by the parties hereto without the consent of any of the Noteholders, to cure any ambiguity, to correct or supplement any provisions in this Agreement, to comply with any changes in the Code, or to make any other provisions with respect to matters or questions arising under this Agreement that shall not be inconsistent with the provisions of this Agreement; provided, however, that such action shall not, as evidenced by an Opinion of Counsel delivered to the Owner Trustee and the Trustee, adversely affect in any material respect the interests of any Noteholder without such Noteholder’s consent.  Any such amendment shall be deemed to not adversely affect in any material respect the interests of a Noteholder if the Rating Agency Condition with respect to the related Class is satisfied (and upon such satisfaction, no Opinion of Counsel shall be necessary with respect to the related Class).

 

This Agreement may also be amended from time to time by the parties hereto, with the consent of Holders of a majority of the aggregate outstanding Note Balance of the Controlling Class, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Noteholders; provided, however, without the consent of each Noteholder affected thereby, no such amendment shall, (a) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on Receivables or distributions that shall be required to be made for the benefit of the Noteholders, (b) change the date of payment of any installment of principal of or interest on any Note, or reduce the principal amount thereof, the interest rate thereon or the redemption price with respect thereto; (c) reduce the percentage of the Note Balance of each Class of Notes, the Holders of which are required to consent to any such amendment; or (d) adversely affect in any material respect the interests of any  Noteholder.  Any such amendment shall be deemed to not adversely affect in any material respect the interests of a Noteholder if the Rating Agency Condition with respect to the related Class is satisfied.

 

Promptly after the execution of any such amendment or consent, the Trustee shall furnish written notification of the substance of such amendment or consent to each Noteholder and the Rating Agencies.

 

It shall not be necessary for the consent of Noteholders pursuant to this Section to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof.  The manner of obtaining such consents (and any other consents of Noteholders provided for in this Agreement) and of evidencing the authorization of any action by Noteholders shall be subject to such reasonable requirements as the Trustee or the Owner Trustee, as applicable, may prescribe.

 

Prior to the execution of any amendment to this Agreement, the Owner Trustee and the Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and the Opinion of Counsel referred to in USection 13.2(i)(i)U has been delivered.  The Owner Trustee, the Backup Servicer and the Trustee may, but shall not be obligated to, enter into any such amendment which affects the Issuer’s, the Owner Trustee’s, the Backup Servicer’s or the Trustee’s, as applicable, own rights, duties or immunities under this Agreement or otherwise.

 

(b)    123BNotwithstanding the foregoing, no amendment shall be made that would cause the Trust to be classified for United States Federal income tax purposes as an association (or publicly traded partnership) taxable as a corporation.

 

SECTION 13.2  UProtection of Title to Trust.

 

(a)    124BThe Seller or Servicer or both shall authorize and file such financing statements and cause to be authorized and filed such continuation statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of the Issuer and the interests of the Trustee in the Receivables and in the proceeds thereof.  The Seller shall deliver (or cause to be delivered) to the Owner Trustee and the Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing.

 

(b)    125BNeither the Seller nor the Servicer shall change its name, identity, jurisdiction of organization, form of organization or corporate structure in any manner that would, could or might make any financing statement or continuation statement filed in accordance with paragraph (a) above seriously misleading within the meaning of section 9-506(a) of the UCC, unless it shall have given the Owner Trustee and the Trustee at least five days’ prior written notice thereof and shall have promptly filed appropriate amendments to all previously filed financing statements or continuation statements.  Promptly upon such filing, the Seller or the Servicer, as the case may be, shall deliver an Opinion of Counsel to the Issuer, the Owner Trustee and the Trustee  stating either (A) all financing statements and continuation statements have been authorized and filed that are necessary fully to preserve and protect the interest of the Trust and the Trustee in the Receivables, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (B) no such action shall be necessary to preserve and protect such interest.

 

(c)    126BEach of the Seller and the Servicer shall have an obligation to give  the Owner Trustee and the Trustee at least 60 days’ prior written notice of any change in its jurisdiction of organization if, as a result of such change, the applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement and shall promptly file any such amendment or new financing statement.  The Servicer shall at all times maintain its jurisdiction of organization within the United States of America.  Each of the Seller and Servicer shall at all times be organized solely under the laws of one State.

 

(d)    127BThe Servicer shall maintain accounts and records as to each Receivable accurately and in sufficient detail to permit (i) the reader thereof to know at any time the status of such Receivable, including payments and recoveries made and payments owing (and the nature of each) and (ii) reconciliation between payments or recoveries on (or with respect to) each Receivable and the amounts from time to time deposited in the Collection Account in respect of such Receivable.

 

(e)    128BThe Servicer shall maintain its computer systems so that, from and after the time of sale under this Agreement of the Receivables to the Issuer, the Servicer’s master computer records (including any backup archives) that refer to a Receivable shall indicate clearly the interest of the Trust in such Receivable and that such Receivable is owned by the Trust.  Indication of the Trust’s interest in a Receivable shall be deleted from or modified on the Servicer’s computer systems when, and only when, the related Receivable shall have been paid in full or repurchased.

 

(f)    129BIf at any time the Seller or the Servicer shall propose to sell, grant a security interest in or otherwise transfer any interest in automotive receivables to any prospective purchaser, lender or other transferee, the Servicer shall give to such prospective purchaser, lender or other transferee computer tapes, records or printouts (including any restored from backup archives) that, if they shall refer in any manner whatsoever to any Receivable, shall indicate clearly that such Receivable has been sold and is owned by the Trust.

 

(g)    130BThe Servicer shall permit the Trustee, the Backup Servicer, the Owner Trustee and their respective agents at any time during normal business hours to inspect, audit, and make copies of and abstracts from the Servicer’s records regarding any Receivable.

 

(h)    131BUpon request, the Servicer shall furnish to the Owner Trustee or to the Trustee, within five Business Days, a list of all Receivables (by contract number and name of Obligor) then held as part of the Owner Trust Estate, together with a reconciliation of such list to the Schedule of Receivables and to each of the Servicer’s Certificates furnished before such request indicating removal of Receivables from the Owner Trust Estate.

 

(i)    132BThe Servicer shall deliver to the Owner Trustee and the Trustee:

 

(i) 319Bif required pursuant to USection 13.1U, promptly after the execution and delivery of each amendment, waiver or consent, an Opinion of Counsel stating that, in the opinion of such counsel, either (A) all financing statements and continuation statements have been authorized and filed that are necessary fully to preserve and protect the interest of the Trust and the Trustee in the Receivables, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (B) no such action shall be necessary to preserve and protect such interest; and

 

(ii) 320Bwithin 90 days after the beginning of each calendar year beginning with the first calendar year beginning more than three months after the Cutoff Date, an Opinion of Counsel, dated as of a date during such 90-day period, stating that, in the opinion of such counsel, either (A) all financing statements and continuation statements have been authorized and filed that are necessary fully to preserve and protect the interest of the Trust and the Trustee in the Receivables, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (B) no such action shall be necessary to preserve and protect such interest.

 

Each Opinion of Counsel referred to in clause (i) or (ii) above shall specify any action necessary (as of the date of such opinion) to be taken in the following year to preserve and protect such interest.

 

SECTION 13.3  UNotices.

 

(a)    133BAll demands, notices and communications upon or to the Seller, the Servicer, the Owner Trustee, the Trustee or the Rating Agencies under this Agreement shall be in writing, personally delivered, electronically delivered (to the extent provided below), or mailed by certified mail, return receipt requested, and shall be deemed to have been duly given upon receipt (a) in the case of the Seller to CPS Receivables Five LLC, 19500 Jamboree Road, Irvine, CA 92612, (b) in the case of the Servicer to Consumer Portfolio Services, Inc., 19500 Jamboree Road, Irvine, CA 92612, Attention: General Counsel, (c) in the case of the Issuer or the Owner Trustee, at the Corporate Trust Office of the Owner Trustee, (d) in the case of the Trustee or the Backup Servicer, at the Corporate Trust Office, (e) in the case of Standard & Poor’s, via electronic delivery to Servicer_reports@sandp.com; for any information not available in electronic format, send hard copies to: Standard & Poor’s Ratings Services, 55 Water Street, 41st Floor, New York, New York 10041-0003, Attention: ABS Surveillance Group, and (f) in the case of Moody’s, via electronic delivery to Servicerreports@moodys.com; for any information not available in electronic format, send hard copies to:  Moody’s Investors Service, Inc., ABS Monitoring Department, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007.  Any notice required or permitted to be mailed to a Securityholder shall be given by first class mail, postage prepaid, at the address of such Securityholder as shown in the Certificate Register or Note Register, as applicable.  Any notice so mailed within the time prescribed in the Agreement shall be conclusively presumed to have been duly given, whether or not the Securityholder shall receive such notice.

 

(b)  Any notice delivered to the Noteholders or to the Trustee for distribution to the Noteholders shall also be delivered concurrently to the Residual Certificateholders or to the Owner Trustee for distribution to the Residual Certificateholders by the party responsible for delivering such notice to the Noteholders or to the Trustee for distribution to the Noteholders.

 

SECTION 13.4  UAssignment.  UThis Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.  Notwithstanding anything to the contrary contained herein, except as provided in USections 8.5U and U9.3U and as provided in the provisions of this Agreement concerning the resignation of the Servicer, this Agreement may not be assigned by the Seller or the Servicer without the prior written consent of the Owner Trustee, the Trustee, the Backup Servicer and the Holders of Notes evidencing not less than 66 and 2/3% of the Note Balance of each Class of Notes, and prompt written notice to the Rating Agencies.

 

SECTION 13.5  ULimitations on Rights of Others.  UThe provisions of this Agreement are solely for the benefit of the parties hereto and for the benefit of the Owner Trustee, the Residual Certificateholders and the Noteholders, as third-party beneficiaries.   Nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Owner Trust Estate or under or in respect of this Agreement or any covenants, conditions or provisions contained herein.

 

SECTION 13.6  USeverability.  UAny provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

SECTION 13.7  USeparate Counterparts.  UThis Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

 

SECTION 13.8  UHeadings.  UThe headings of the various Articles and Sections herein and the Table of Contents attached hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

 

SECTION 13.9  UGoverning Law.  UEXCEPT AS PROVIDED OTHERWISE IN USECTION 13.17U, THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND THIS AGREEMENT AND ALL MATTERS ARISING OUT OF OR RELATING IN ANY WAY TO THIS AGREEMENT SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

 

SECTION 13.10  UAssignment to Trustee.  UThe Seller hereby acknowledges and consents to any mortgage, pledge, assignment and grant of a security interest by the Issuer to the Trustee pursuant to the Indenture for the benefit of the Issuer Secured Parties of all right, title and interest of the Issuer in, to and under the Receivables and Other Conveyed Property and/or the assignment of any or all of the Issuer’s rights and obligations hereunder to the Trustee.

 

SECTION 13.11  UNonpetition Covenants.

 

(a)    135BNotwithstanding any prior termination of this Agreement, none of the Servicer, the Seller or the Backup Servicer shall, prior to the date which is one year and one day after the termination of this Agreement with respect to the Issuer, 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 Federal or State bankruptcy, insolvency 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 liquidation of the affairs of the Issuer.

 

(b)    136BNotwithstanding any prior termination of this Agreement, none of the Servicer or the Backup Servicer shall, prior to the date that is one year and one day after the termination of this Agreement in accordance with Article XI, with respect to the Seller, acquiesce to, petition or otherwise invoke or cause the Seller to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Seller under any Federal or State bankruptcy, insolvency or similar law, appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator, or other similar official of the Seller or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Seller.

 

SECTION 13.12  ULimitation of Liability of Owner Trustee and Trustee.

 

(a)    137BNotwithstanding anything contained herein to the contrary, this Agreement has been countersigned by Wilmington Trust, National Association not in its individual capacity but solely in its capacity as Owner Trustee of the Issuer and in no event shall Wilmington Trust, National Association in its individual capacity or, except as expressly provided in the Trust Agreement, as Owner Trustee have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer hereunder or in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which recourse shall be had solely to the assets of the Issuer.  For all purposes of this Agreement, in the performance of its duties or obligations hereunder or in the performance of any duties or obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Articles VI, VII and VIII of the Trust Agreement.

 

(b)    138BNotwithstanding anything contained herein to the contrary, this Agreement has been executed and delivered by Wells Fargo Bank, National Association, not in its individual capacity but solely as Trustee and Backup Servicer and in no event shall Wells Fargo Bank, National Association, have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer hereunder or in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which recourse shall be had solely to the assets of the Issuer.

 

(c)    139BIn no event shall Wells Fargo Bank, National Association, in any of its capacities hereunder, be deemed to have assumed any duties of the Owner Trustee under the Delaware Statutory Trust Statute, common law, or the Trust Agreement.

 

SECTION 13.13  UIndependence of the Servicer.  UFor all purposes of this Agreement, the Servicer shall be an independent contractor and shall not be subject to the supervision of the Issuer, the Trustee and Backup Servicer or the Owner Trustee with respect to the manner in which it accomplishes the performance of its obligations hereunder.  Unless expressly authorized by this Agreement, the Servicer shall have no authority to act for or represent the Issuer or the Owner Trustee in any way and shall not otherwise be deemed an agent of the Issuer or the Owner Trustee.

 

SECTION 13.14  UNo Joint Venture.  UNothing contained in this Agreement (i) shall constitute the Servicer and either of the Issuer or the Owner Trustee as members of any partnership, joint venture, association, syndicate, unincorporated business or other separate entity, (ii) shall be construed to impose any liability as such on any of them or (iii) shall be deemed to confer on any of them any express, implied or apparent authority to incur any obligation or liability on behalf of the others.

 

SECTION 13.15  UCovenant of Trustee and Servicer Regarding Rule 15Ga-1

 

If Uthe Seller, CPS, the Servicer or the Trustee (each a “URepurchase Request RecipientU”): (1) receives a Repurchase Request; or (2) receives a withdrawal of a Repurchase Request by the Person making such Repurchase Request, then such party shall give written notice thereof to the Seller and CPS promptly but in any case within ten (10) Business Days from the date of receipt thereof.  Each notice required by this USection 13.15U (a “URule 15Ga-1 NoticeU”) shall include: (i) the date the Repurchase Request was received by the Repurchase Request Recipient or the date the withdrawal of the Repurchase Request was received by the Repurchase Request Recipient, as the case may be; (ii) the identity of the related Receivable; (iii) the identity of the Person making the Repurchase Request, (iv) the basis for the Repurchase Request asserted by the Person making the Repurchase Request, to the extent known to the Repurchase Request Recipient; (v) a statement from the Repurchase Request Recipient as to whether it currently plans to pursue a repurchase pursuant to USection 3.2(a)U with respect to any Receivables related to such Repurchase Request; and (vi) any written correspondence from the Person making the Repurchase Request to the extent related to such Repurchase Request.  Each Rule 15Ga-1 Notice may be delivered by electronic means to the e-mail address of CPS set forth below.

 

None of the Trustee or the Servicer (other than CPS) shall accept any oral Repurchase Request, and each of the Trustee and the Servicer (other than CPS) shall direct any Person making an oral Repurchase Request to submit it in writing (including through email) to CPS.  Such Repurchase Requests must be submitted in writing (including through email) to HUrepurchase@consumerportfolio.comUH  or such other email address as CPS shall designate from time to time) with a subject line of “Repurchase Request – CPS ART 2013-D”.

 

The parties hereto acknowledge and agree that the purpose of this USection 13.15U is to facilitate compliance by CPS and the Seller with Rule 15Ga-1 and Items 1104(e) and 1121(c) of Regulation AB (the “URepurchase Rules and RegulationsU”). The parties hereto acknowledge that interpretations of the requirements of the Repurchase Rules and Regulations may change over time, whether due to interpretive guidance provided by the Securities Exchange Commission or its staff, consensus among participants in the asset-backed securities markets, advice of counsel, or otherwise, and agree to comply with reasonable requests made by CPS and the Seller in good faith for delivery of information under these provisions on the basis of such evolving interpretations. The Trustee shall cooperate fully with CPS and the Seller to deliver any and all records and any other information necessary in the good faith determination of CPS and the Seller to permit them to comply with the provisions of the Repurchase Rules and Regulations.

 

SECTION 13.16  UAcknowledgment of Roles

 

The parties expressly acknowledge and consent to Wells Fargo Bank, National Association acting in the multiple capacities of Backup Servicer and Trustee under the Basic Documents.  The parties agree that Wells Fargo Bank, National Association in such multiple capacities shall not be subject to any claim, defense or liability arising from its performance in any such capacity based on conflict of interest principles, duty of loyalty principles or other breach of fiduciary duties to the extent that any such conflict or breach arises from the performance by Wells Fargo Bank, National Association of any other such capacity or capacities in accordance with this Agreement or any other Basic Documents to which it is a party.

 

SECTION 13.17  UIntention of Parties Regarding Delaware Securitization Act.  UIt is the intention of the Seller and the Issuer that the transfer and assignment of the Trust Property contemplated by USection 2.1U shall constitute a sale of the Trust Property from the Seller to the Issuer, conveying good title thereto free and clear of any liens, and the beneficial interest in and title to the Trust Property shall not be part of the Seller’s estate in the event of the filing of a bankruptcy petition by or against the Seller under any bankruptcy or similar law.  In addition, for purposes of complying with the requirements of the Asset-Backed Securities Facilitation Act of the State of Delaware, 6 Del. C. § 2701A, et seq. (the “Securitization Act”), each of the parties hereto hereby agrees that:

 

(a)    140Bany property, assets or rights purported to be transferred, in whole or in part, by the Seller to the Issuer pursuant to this Agreement shall be deemed to no longer be the property, assets or rights of the Seller;

 

(b)    141Bnone of the Seller, its creditors or, in any insolvency proceeding with respect to the Seller or the Seller’s property, a bankruptcy trustee, receiver, debtor, debtor in possession or similar person, to the extent the issue is governed by Delaware law, shall have any rights, legal or equitable, whatsoever to reacquire (except pursuant to a provision of this Agreement), reclaim, recover, repudiate, disaffirm, redeem or recharacterize as property of the Seller any property, assets or rights purported to be transferred, in whole or in part, by the Seller to the Issuer pursuant to this Agreement;

 

(c)    142Bin the event of a bankruptcy, receivership or other insolvency proceeding with respect to the Seller or the Seller’s property, to the extent the issue is governed by Delaware law, such property, assets and rights shall not be deemed to be part of the Seller’s property, assets, rights or estate; and

 

(d)    143Bthe transaction contemplated by this Agreement shall constitute a “securitization transaction” as such term is used in the Securitization Act.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective duly authorized officers as of the day and the year first above written.

 

CPS AUTO RECEIVABLES TRUST 2013-D

 

By:        WILMINGTON TRUST, NATIONAL ASSOCIATION,

not in its individual capacity, but solely as

Owner Trustee on behalf of the Trust

 

By:  /s/ DORRI COSTELLO                                                            

Name:  Dorri Costello                                                             

Title:    Assistant Vice President               

 

 

CPS RECEIVABLES FIVE LLC, as Seller

 

By:   /s/ MARK CREATURA                                                                 

Name:   Mark Creatura                                                                 

Title:     Vice President                                                               

 

 

CONSUMER PORTFOLIO SERVICES, INC., in its individual capacity and in its capacity as Servicer

 

By:  /s/ ROBERT E. RIEDL                                                                  

Name:   Robert E. Riedl                                                                 

Title:     Senior Vice President                                                               

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Backup Servicer and Trustee

 

By:  /s/ MARIANNA C. STERSHIC                                                                  

Name:   Marianna C. Stershic                                                                 

Title:     Vice PresidentEX 4.1 - Amended and Restated Indenture

Exhibit 4.1

MASONITE INTERNATIONAL CORPORATION
Company

Guarantors party hereto
and

WELLS FARGO BANK, NATIONAL ASSOCIATION
Trustee

AMENDED AND RESTATED INDENTURE

Dated as of January 21, 2014

Senior Notes Due 2021

MASONITE INTERNATIONAL CORPORATION
Reconciliation and tie between Trust Indenture Act
of 1939 and Amended and Restated Indenture, dated as of January 21, 2014
	
		
	Trust Indenture Act Section
	Indenture Section

	§ 310 (a)(1)
	608

	(a)(2)
	608

	(a)(3)
	N.A.

	(a)(4)
	N.A.

	(b)
	608, 609

	§ 311 (a)
	605

	(b)
	605

	(c)
	N.A.

	§ 312 (a)
	701

	(b)
	702

	(c)
	702

	§ 313 (a)
	703

	(a)(4)
	1008

	(b)(1)
	N.A.

	(b)(2)
	703

	(c)(1)
	102

	(c)(2)
	102

	(d)
	703

	(e)
	102

	§ 314 (a)
	1009

	(b)
	N.A.

	(c)(1)
	102

	(c)(2)
	102

	(c)(3)
	N.A.

	(d)
	N.A.

	(e)
	102

	(f)
	1017

	§ 315 (a)
	601

	(b)
	602

	(c)
	601

	(d)
	601

	(e)
	514

	§ 316 (a) (last sentence)
	101(“Outstanding”)

	(a)(1)(A)
	502, 512

	(a)(1)(B)
	513

	(a)(2)
	N.A.

	(b)
	508

	(c)
	104(d)

	§ 317 (a)(1)
	503

	(a)(2)
	504

	(b)
	1003

	§ 318 (a)
	111

	N.A. means Not Applicable.

TABLE OF CONTENTS

	
				
	 
	 
	Page

	 
	 
	 

	ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
	7
	

	 
	 
	 

	SECTION 101.
	Rules of Construction and Incorporation by Reference of Trust Indenture Act
	7
	

	SECTION 102.
	Definitions
	8
	

	SECTION 103.
	Compliance Certificates and Opinions
	43
	

	SECTION 104.
	Form of Documents Delivered to Trustee
	44
	

	SECTION 105.
	Acts of Holders
	44
	

	SECTION 106.
	Notices, Etc., to Trustee, Company, any Guarantor and Agent
	45
	

	SECTION 107.
	Notice to Holders; Waiver
	46
	

	SECTION 108.
	Effect of Headings and Table of Contents
	46
	

	SECTION 109.
	Successors and Assigns
	47
	

	SECTION 110.
	Separability Clause
	47
	

	SECTION 111.
	Benefits of Indenture
	47
	

	SECTION 112.
	Governing Law
	47
	

	SECTION 113.
	Legal Holidays
	47
	

	SECTION 114.
	No Personal Liability of Directors, Officers, Employees and Stockholders
	47
	

	SECTION 115.
	Trust Indenture Act Controls
	47
	

	SECTION 116.
	Counterparts
	48
	

	SECTION 117.
	Waiver of Jury Trial
	48
	

	SECTION 118.
	Force Majeure
	48
	

	SECTION 119.
	Amended and Restated Indenture
	48
	

	 
	 
	 

	ARTICLE TWO THE NOTES
	48
	

	 
	 
	 

	SECTION 201.
	Principal Amount and Maturity
	48
	

	SECTION 202.
	Interest Rates
	48
	

	SECTION 203.
	Form and Dating
	49
	

	SECTION 204.
	Execution, Authentication and Delivery
	49
	

	 
	 
	 

	ARTICLE THREE NOTES FORMS
	50
	

	 
	 
	 

	SECTION 301.
	Title and Terms
	50
	

	SECTION 302.
	Denominations
	51
	

	SECTION 303.
	Temporary Notes
	51
	

	SECTION 304.
	Registration, Registration of Transfer and Exchange
	51
	

	SECTION 305.
	Mutilated, Destroyed, Lost and Stolen Notes
	52
	

	SECTION 306.
	Payment of Interest; Interest Rights Preserved
	53
	

	SECTION 307.
	Persons Deemed Owners
	54
	

	SECTION 308.
	Cancellation
	54
	

	SECTION 309.
	Transfer and Exchange
	54
	

	SECTION 310.
	CUSIP Numbers
	54
	

	SECTION 311.
	Issuance of Additional Notes
	55
	

i

TABLE OF CONTENTS
(continued)

	
				
	 
	 
	Page

	 
	 
	 

	ARTICLE FOUR SATISFACTION AND DISCHARGE
	55
	

	 
	 
	 

	SECTION 401.
	Satisfaction and Discharge of Indenture
	55
	

	SECTION 402.
	Application of Trust Money
	56
	

	 
	 
	 

	ARTICLE FIVE REMEDIES
	57
	

	 
	 
	 

	SECTION 501.
	Events of Default
	57
	

	SECTION 502.
	Acceleration of Maturity; Rescission and Annulment
	59
	

	SECTION 503.
	Collection of Indebtedness and Suits for Enforcement by Trustee
	59
	

	SECTION 504.
	Trustee May File Proofs of Claim
	60
	

	SECTION 505.
	Trustee May Enforce Claims Without Possession of Notes
	61
	

	SECTION 506.
	Application of Money Collected
	61
	

	SECTION 507.
	Limitation on Suits
	61
	

	SECTION 508.
	Unconditional Right of Holders to Receive Principal, Premium and Interest
	62
	

	SECTION 509.
	Restoration of Rights and Remedies
	62
	

	SECTION 510.
	Rights and Remedies Cumulative
	62
	

	SECTION 511.
	Delay or Omission Not Waiver
	62
	

	SECTION 512.
	Control by Holders
	62
	

	SECTION 513.
	Waiver of Past Defaults
	63
	

	SECTION 514.
	Waiver of Stay or Extension Laws
	63
	

	 
	 
	 

	ARTICLE SIX THE TRUSTEE
	63
	

	 
	 
	 

	SECTION 601.
	Duties of the Trustee
	63
	

	SECTION 602.
	Notice of Defaults
	65
	

	SECTION 603.
	Certain Rights of Trustee
	65
	

	SECTION 604.
	Trustee Not Responsible for Recitals or Issuance of Notes
	66
	

	SECTION 605.
	May Hold Notes
	67
	

	SECTION 606.
	Money Held in Trust
	67
	

	SECTION 607.
	Compensation and Reimbursement
	67
	

	SECTION 608.
	Corporate Trustee Required; Eligibility
	68
	

	SECTION 609.
	Resignation and Removal; Appointment of Successor
	68
	

	SECTION 610.
	Acceptance of Appointment by Successor
	69
	

	SECTION 611.
	Merger, Conversion, Consolidation or Succession to Business
	69
	

	SECTION 612.
	Appointment of Authenticating Agent
	70
	

	 
	 
	 

	ARTICLE SEVEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
	71
	

	 
	 
	 

	SECTION 701.
	Company to Furnish Trustee Names and Addresses
	71
	

	SECTION 702.
	Disclosure of Names and Addresses of Holders
	71
	

	SECTION 703.
	Reports by Trustee
	72
	

ii

TABLE OF CONTENTS
(continued)

	
				
	 
	 
	Page

	 
	 
	 

	ARTICLE EIGHT MERGER, CONSOLIDATION OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS
	72
	

	 
	 
	 

	SECTION 801.
	Company May Consolidate, Etc., Only on Certain Terms
	72
	

	SECTION 802.
	Guarantors May Consolidate, Etc., Only on Certain Terms
	73
	

	 
	 
	 

	ARTICLE NINE SUPPLEMENTAL INDENTURES
	74
	

	 
	 
	 

	SECTION 901. 
	Amendments or Supplements Without Consent of Holders
	74
	

	SECTION 902. 
	Amendments, Supplements or Waivers with Consent of Holders
	75
	

	SECTION 903. 
	Execution of Amendments, Supplements or Waivers
	76
	

	SECTION 904. 
	Effect of Amendments, Supplements or Waivers
	77
	

	SECTION 905. 
	Compliance with Trust Indenture Act
	77
	

	SECTION 906. 
	Reference in Notes to Supplemental Indentures
	77
	

	SECTION 907. 
	Notice of Supplemental Indentures
	77
	

	 
	 
	 

	ARTICLE TEN COVENANTS
	77
	

	 
	 
	 

	SECTION 1001.
	Payment of Principal, Premium, if any, and Interest
	77
	

	SECTION 1002.
	Maintenance of Office or Agency
	77
	

	SECTION 1003.
	Money for Notes Payments to Be Held in Trust
	78
	

	SECTION 1004.
	Corporate Existence
	79
	

	SECTION 1005.
	Payment of Taxes and Other Claims
	79
	

	SECTION 1006.
	Maintenance of Properties
	79
	

	SECTION 1007.
	Insurance
	80
	

	SECTION 1008.
	Statement by Officers as to Default
	80
	

	SECTION 1009.
	Reports and Other Information
	80
	

	SECTION 1010.
	Limitation on Restricted Payments
	82
	

	SECTION 1011.
	Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock
	89
	

	SECTION 1012.
	Liens
	95
	

	SECTION 1013.
	Limitations on Transactions with Affiliates
	95
	

	SECTION 1014.
	Limitations on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
	98
	

	SECTION 1015.
	Limitation on Guarantees of Indebtedness by Restricted Subsidiaries
	100
	

	SECTION 1016.
	Change of Control
	101
	

	SECTION 1017.
	Asset Sales
	103
	

	SECTION 1018.
	Limitation on Sale and Lease-Back Transactions
	106
	

	SECTION 1019.
	Termination of Covenants
	106
	

	SECTION 1020.
	Restriction on Secured Debt
	107
	

iii

TABLE OF CONTENTS
(continued)

	
				
	 
	 
	Page

	 
	 
	 

	ARTICLE ELEVEN REDEMPTION OF NOTES
	107
	

	 
	 
	 

	SECTION 1101.
	Right of Redemption
	107
	

	SECTION 1102.
	Applicability of Article
	108
	

	SECTION 1103.
	Election to Redeem; Notice to Trustee
	108
	

	SECTION 1104.
	Selection and Notice by Trustee of Notes to Be Redeemed
	108
	

	SECTION 1105.
	Notice of Redemption
	109
	

	SECTION 1106.
	Deposit of Redemption Price
	110
	

	SECTION 1107.
	Notes Payable on Redemption Date
	110
	

	SECTION 1108.
	Notes Redeemed in Part
	110
	

	 
	 
	 

	ARTICLE TWELVE GUARANTEES
	111
	

	 
	 
	 

	SECTION 1201.
	Guarantees
	111
	

	SECTION 1202.
	Severability
	112
	

	SECTION 1203.
	Restricted Subsidiaries
	113
	

	SECTION 1204.
	Limitation of Guarantors’ Liability
	113
	

	SECTION 1205.
	Contribution
	114
	

	SECTION 1206.
	Subrogation
	114
	

	SECTION 1207.
	Reinstatement
	114
	

	SECTION 1208.
	Release of a Guarantor
	114
	

	SECTION 1209.
	Benefits Acknowledged
	115
	

	 
	 
	 

	ARTICLE THIRTEEN LEGAL DEFEASANCE AND COVENANT DEFEASANCE
	115
	

	 
	 
	 

	SECTION 1301.
	Company's Option to Effect Legal Defeasance or Covenant Defeasance
	115
	

	SECTION 1302.
	Legal Defeasance and Discharge
	115
	

	SECTION 1303.
	Covenant Defeasance
	116
	

	SECTION 1304.
	Conditions to Legal Defeasance or Covenant Defeasance
	116
	

	SECTION 1305.
	Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions
	118
	

	SECTION 1306.
	Reinstatement
	118
	

iv

TABLE OF CONTENTS
(continued)

	
			
	APPENDIX & EXHIBITS

	Rule 144A / Regulation S / IAI Appendix

	EXHIBIT 1 to Rule 144A / Regulation S / IAI Appendix - Form of Initial Note

	EXHIBIT 2 to Rule 144A / Regulation S / IAI Appendix - Form of Transferee

	Letter of Representation

	 
	 
	 

	EXHIBIT A -  Form of Supplemental Indenture

	EXHIBIT B -  Form of Incumbency Certificate

v

AMENDED AND RESTATED INDENTURE dated as of January 21, 2014 (this “Indenture”), among MASONITE INTERNATIONAL CORPORATION, a British Columbia corporation (the “Company”), and certain of the Company’s direct and indirect Subsidiaries (as defined below), as guarantors, each named in the signature pages hereto (the “Guarantors”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Trustee (the “Trustee”).
RECITALS
The Company, the Guarantors and the Trustee are parties to the existing amended and restated indenture dated as of March 9, 2012 (the “Existing Indenture”), relating to the $275,000,000 aggregate principal amount of the Company’s Senior Notes Due 2021 issued on the Original Issue Date (as defined herein) and the $100,000,000 aggregate principal amount of the Company’s Senior Notes Due 2021 issued on March 9, 2012, and wish to amend and restate the Existing Indenture and hereby amend and restate the Existing Indenture, effective as of the date set forth above, to read in its entirety as set forth herein.
The Company has duly authorized the issuance of Senior Notes Due 2021 (the “Notes”) and has duly authorized the issuance of Notes of substantially the tenor and amount hereinafter set forth, and to provide therefor the Company has duly authorized the execution and delivery of this Indenture.
Each of the Guarantors has duly authorized its Guarantee of the Notes and to provide therefor each of the Guarantors has duly authorized the execution and delivery of this Indenture.
All things necessary have been done to make the Notes, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid and legally binding obligations of the Company and to make this Indenture a valid and legally binding agreement of the Company, in accordance with their and its terms.
All things necessary have been done to make the Guarantees, upon execution and delivery of this Indenture, the valid obligations of each of the Guarantors and to make this Indenture a valid and legally binding agreement of each of the Guarantors, in accordance with their and its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and ratable benefit of all Holders, as follows:

6

 
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101.  Rules of Construction and Incorporation by Reference of Trust Indenture Act . (a) For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(1)    the terms defined in this Article have the meanings assigned to them in this Article, and words in the singular include the plural and words in the plural include the singular;
(2)    all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP (as herein defined);
(3)    the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;
(4)    all references to Articles, Sections, Exhibits and Appendices shall be construed to refer to Articles and Sections of, and Exhibits and Appendices to, this Indenture;
(5)    “or” is not exclusive;
(6)    “including” means including without limitation; and
(7)    all references to the date the Notes were originally issued shall refer to the Issue Date.
(b)    This Indenture is subject to the mandatory provisions of the TIA (as herein defined) which are incorporated by reference in and made a part of this Indenture.  The following TIA terms have the following meanings:
(1)    “Commission” means the SEC;
(2)    “indenture securities” means the Notes and the Guarantees;
(3)    “indenture security holder” means a Holder;
(4)    “indenture trustee” or “institutional trustee” means the Trustee; and
(5)    “obligor” on the indenture securities means the Company and each Guarantor and any other obligor on the indenture securities.

7

All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.
SECTION 102.  Definitions.
“ABL Facility” means the credit agreement entered into on May 17, 2011 among the Company, Masonite Corporation, each other Subsidiary of the Company and each other Subsidiary of Masonite Corporation set forth on the signature pages thereto, the lenders party thereto from time to time and, Wells Fargo Capital Finance LLC, as Administrative Agent, including any Notes, mortgages, hypothecs, guarantees, collateral documents, instruments and agreements executed in connection therewith, in each case, as amended, modified, renewed, refunded, restated, restructured, increased, supplemented, replaced or refinanced in whole or in part from time to time, including any replacement, refunding or refinancing facility or agreement that increases the amount permitted to be borrowed thereunder or alters the maturity thereof or adds entities as additional borrowers or guarantors thereunder and whether by the same or any other agent, lender, group of lenders, or otherwise and whether or not any such replacement, refunding, refinancing, amending, renewal, restatement, restructuring, increasing, supplemented or other modification occurs simultaneously with the termination or repayment of the ABL Facility or such successor agreement.
“Acquired Indebtedness” means, with respect to any specified Person,
(1)    Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, including Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of such specified Person; and
(2)    Indebtedness secured by a Lien encumbering any asset acquired by such specified Person; provided that any Indebtedness of such other Person that is extinguished, redeemed, defeased, retired or otherwise repaid at the time of or immediately upon consummation of the transaction pursuant to which such other Person becomes a Subsidiary of the specified Person will not be Acquired Indebtedness.
“Act”, when used with respect to any Holder, has the meaning specified in Section 105 of this Indenture.
“Additional Notes” means any notes issued under this Indenture in addition to the Existing Notes and Initial Notes, having the same terms in all respects as the Existing Notes and Initial Notes, except with respect to the date of issuance, issue price and accrued interest paid or payable on or prior to the first Interest Payment Date after the issuance of such Additional Notes.
“Adjusted Net Assets” has the meaning specified in Section 1206 of this Indenture.
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For purposes of this definition, “control” (including, with correlative meanings, the 

8

terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.
“Affiliate Transaction” has the meaning specified in Section 1013 of this Indenture.
“Agent” means any Note Registrar, co-registrar, Paying Agent or additional paying agent.
“Amalgamation” means the amalgamation of the Company and Masonite Inc., a British Columbia corporation, as one company under the laws of British Columbia, effective as of July 4, 2011.
“Applicable Premium” means, with respect to a Note at any Redemption Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such Redemption Date of (1) the Redemption Price of such Note on April 15, 2015, (such Redemption Price being set forth in the table appearing in Section 1101 plus (2) all required remaining scheduled interest payments due on such note through such date (excluding accrued but unpaid interest to the Redemption Date), computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the principal amount of such note on such Redemption Date, as calculated by the Company or on behalf of the Company by such Person as the Company shall designate; provided that such calculation shall not be a duty or obligation of the Trustee.
“Asset Sale” means
(1)    the sale, conveyance, transfer or other disposition, whether in a single transaction or a series of related transactions, of property or assets (other than by way of a Sale and Lease-Back Transaction that complies with Section 1018) of the Company or any Restricted Subsidiary (each referred to in this definition as a “disposition”); and
(2)    the issuance or sale of Equity Interests of any Restricted Subsidiary, whether in a single transaction or a series of related transactions, 
in each case, other than:
(a)    a disposition of cash, Cash Equivalents or Investment Grade Securities or surplus, damaged, obsolete, unmerchantable, idle or worn out property or assets in the ordinary course of business or any sale or disposition of property or assets in connection with scheduled turnarounds, maintenance and equipment and facility updates or any disposition of inventory or goods held for sale in the ordinary course of business;

9

(b)    the disposition of all or substantially all of the assets of the Company in a manner permitted pursuant to the provisions described in Article Eight or in Section 1016;
(c)    the making of any Permitted Investment or the making of any Restricted Payment that is not prohibited by Section 1010;
(d)    any disposition of property or other assets or issuance or sale of Equity Interests of any Restricted Subsidiary in any transaction or series of transactions with an aggregate fair market value of less than $5 million;
(e)    any disposition of property or assets or issuance of securities by a Restricted Subsidiary to the Company or another Restricted Subsidiary or by the Company to a Restricted Subsidiary;
(f)    to the extent allowable under Section 1031 of the Internal Revenue Code of 1986, any exchange of like property (excluding any boot thereon) for use in a Similar Business;
(g)    the lease, assignment, license, sub-license or sub-lease of any real or personal property in the ordinary course of business;
(h)    any issuance or sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;
(i)    foreclosures or governmental condemnations on assets;
(j)    sales of accounts receivable, or participations therein, in connection with any Receivables Facility;
(k)    the unwinding of any Hedging Obligations;
(l)    the sale, lease, assignment, license, sub-license or sublease of equipment, inventory, accounts receivable or other assets in the ordinary course of business;
(m)    the licensing or sub-licensing of intellectual property in the ordinary course of business or consistent with past practice;
(n)    any sale or other disposition deemed to occur with creating, granting or perfecting a Lien not otherwise prohibited by this Indenture;
(o)    any exchange of assets (including a combination of assets and cash and Cash Equivalents) for Related Business Assets of comparable or greater market value or usefulness to the business of the Company and the Restricted Subsidiaries as a whole, as determined in good faith by the Company;
(p)    the creation or realization of any Lien permitted under this Indenture;

10

(q)    sales or dispositions of Equity Interests in Existing Joint Ventures;
(r)    the sale of Equity Interests in the Company or a Restricted Subsidiary to qualify directors where required by applicable law with respect to the ownership of Equity Interests in Foreign Subsidiaries;
(s)    dispositions of receivables pursuant to Factoring Arrangements, so long as (x) such receivables are sold at no less than the fair market value thereof (which may include a discount customary for transactions of this type) and at least 90% of the consideration therefore is cash or Cash Equivalents and (y) any such Factoring Agreement constitutes a “true sale” transaction and not a financing transaction;
(t)    the surrender or waiver of contract rights or settlement, release or surrender of a contract, tort or other litigation claim in the ordinary course of business; and
(u)    the sale, transfer or disposition of the Easton, PA; Hearne, TX; Watseka, IL; Los Banos, CA; Sacramento, CA; Farmington Hills, MI; South Bend, IN;  Astatula, FL; Ukiah, CA; Limon/Guapiles, Costa Rica; and Hedingham, United Kingdom properties.
“Asset Sale Offer” has the meaning specified in Section 1017 of this Indenture.
“Attributable Debt” in respect of a Sale and Lease-Back Transaction means, as at the time of determination, the present value (discounted at the cash interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Lease-Back Transaction (including any period for which such lease has been extended); provided, however, that if such Sale and Lease-Back Transaction results in a Capitalized Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capitalized Lease Obligation.”
“Authenticating Agent” has the meaning specified in Section 612 of this Indenture.
“Bankruptcy Law” means Title 11, United States Bankruptcy Code of 1978, as amended, or any similar United States federal or state law relating to bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or relief of debtors or any amendment to, succession to or change in any such law.
“Board of Directors” means:
(1)    with respect to a corporation, the board of directors of the corporation;
(2)    with respect to a partnership, the board of directors of the general partner of the partnership; and

11

(3)     with respect to any other Person, the board or committee of such Person serving a similar function.
“Board Resolution” means, with respect to the Company, a duly adopted resolution of the Board of Directors of the Company or any committee thereof.
“Business Day” means each day that is not a Legal Holiday.
“Canadian Subsidiary” means any Wholly-Owned Subsidiary of the Company that is an entity organized or existing under the laws of Canada.
“Capital Stock” means
(1)    in the case of a corporation, corporate stock,
(2)    in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock,
(3)    in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited), and
(4)    any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of the issuing Person.
“Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP.
“Cash Equivalents” means, as to any Person,
(1)    securities issued or directly and fully guaranteed or insured by the United States or any agency, instrumentality or sponsored corporation thereof and backed by the full faith and credit of the United States, and in each case having maturities of not more than 12 months from the date of acquisition;
(2)    U.S. Dollar denominated time deposits, certificates of deposit, overnight bank deposits and bankers’ acceptances having maturities within one year from the date of acquisition thereof issued by any lender under the ABL Facility or any commercial bank of recognized standing, having capital and surplus in excess of $250,000,000;
(3)    repurchase obligations for underlying securities of the types described in clauses (1) and (2) above and entered into with any commercial bank meeting the qualifications specified in clause (2) above;

12

(4)    other investment instruments having maturities within 180 days from the date of acquisition thereof offered or sponsored by financial institutions having capital and surplus in excess of $500,000,000;
(5)    readily marketable direct obligations issued by any state of the United States or any political subdivision thereof having maturities within 180 days from the date of acquisition thereof and having, at the time of acquisition thereof, one of the two highest rating categories obtainable from either Moody’s or S&P (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency);
(6)    commercial paper rated, at the time of acquisition thereof, at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody’s (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency), in each case maturing within one year after the date of acquisition;
(7)    investments in money market funds which invest substantially all their assets in securities of the types described in clauses (1) through (6) above;
(8)    repurchase agreements entered into by any Person with a bank or trust company or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States in which such Person shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations; 
(9)    in the case of any Foreign Subsidiary of the Company, (x) certificates of deposit or bankers’ acceptances of any bank organized under the laws of Canada, Japan or any country that is, or was as of the Original Issue Date, a member of the European economic and monetary union pursuant to the Treaty whose short term commercial paper, at the time of acquisition thereof, is rated at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody’s (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency), or, if no such commercial paper rating is available, a long-term debt rating, at the time of acquisition thereof, of at least A or the equivalent thereof by S&P or at least A-2 or the equivalent thereof by Moody’s (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency), in each case maturing not more than one year from the date of acquisition by such Foreign Subsidiary, (y) overnight deposits and demand deposit accounts maintained with any bank that such Foreign Subsidiary regularly transacts business and (z) securities of the type and maturity described in clause (1/x) above but issued by the principal governmental authority in which such Foreign Subsidiary is organized so long as such security has the highest rating available from either S&P or Moody’s;

13

(10)    Indebtedness or Preferred Stock issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s with maturities of one year or less from the date of acquisition; and
(11)    U.S. Dollars, Canadian dollars, Japanese yen, pounds sterling, Euros or, in the case of any Foreign Subsidiary, such local currencies held by it from time to time in the ordinary course of business.
“Change of Control” means the occurrence of any of the following:
(1)    the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any Person, or
(2)    the Company becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act, or any successor provision), in a single transaction or in a series of related transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of the total voting power of the Voting Stock of the Company or any of its direct or indirect parent companies;
provided, however, that (1) a transaction in which any direct or indirect parent of the Company becomes a Subsidiary of another Person (other than a Person that is an individual, such Person that is not an individual, the “Other Person”) shall not constitute a Change of Control if (a) the shareholders of such parent immediately prior to such transaction “beneficially own” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, at least a majority of the voting power of the outstanding voting stock of such parent, immediately following the consummation of such transaction or (b) immediately following the consummation of such transaction, no “person” (as such term is defined above), other than the Other Person (but including the holders of the Equity Interests of the Other Person), “beneficially owns” (as such term is defined above), directly or indirectly through one or more intermediaries, more than 50% of the voting power of the outstanding Voting Stock of the Other Person; (2) any holding company whose only significant asset is Capital Stock of the Company or any direct or indirect parent of the Company shall not itself be considered a “person” or “group” for purposes of this definition; (3) the transfer of assets between or among the Restricted Subsidiaries and the Company in accordance with the terms of this Indenture shall not itself constitute a Change of Control; and (4) a “person” or “group” shall not be deemed to have beneficial ownership of securities (or “beneficially own” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act)) subject to a stock 

14

purchase agreement, merger agreement or similar agreement (or voting or option agreement related thereto) until the consummation of the transactions contemplated by such agreement.
For the avoidance of doubt, the merger, other consolidation or amalgamation of the Company with or into any Restricted Subsidiary shall not constitute a Change of Control.
“Change of Control Offer” has the meaning specified in Section 1016 of this Indenture.
“Change of Control Payment” has the meaning specified in Section 1016 of this Indenture.
“Change of Control Payment Date” has the meaning specified in Section 1016 of this Indenture.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.
“Company” has the meaning set forth in the first paragraph of this Indenture;  provided that when used in the context of determining the fair market value of an asset or liability under this Indenture, “Company” shall, unless otherwise expressly stated, be deemed to mean the Board of Directors of the Company when the fair market value of such asset or liability is equal to or in excess of $25 million.
“Company Request” or “Company Order” means a written request or order signed in the name of the Company by two Officers or one Officer who is the Treasurer of the Company, and delivered to the Trustee.
“consolidated” or “Consolidated” means, with respect to any Person, such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary.
“Consolidated Depreciation and Amortization Expense” means with respect to any Person for any period, the total amount of depreciation and amortization expense, including the amortization of deferred financing fees and other related noncash charges of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP.
“Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:
(a)    consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income, including
(1)    amortization of original issue discount resulting from the issuance of Indebtedness at less than par,

15

(2)    all commissions, discounts and other fees and charges owed with respect to letters of credit or bankers’ acceptances,
(3)    noncash interest payments (but excluding any noncash interest expense attributable to the movement in the mark-to-market valuation of Hedging Obligations or other derivative instruments pursuant to GAAP),
(4)    the interest component of Capitalized Lease Obligations and
(5)    net payments, if any, pursuant to interest rate Hedging Obligations with respect to Indebtedness, and excluding (i) amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses, (ii) any expensing of bridge, commitment and other financing fees and (iii) commissions, discounts, yield and other fees and charges (including any interest expense) related to any Receivables Facility; plus
(b)    consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; less
(c)    interest income for such period.
For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP
“Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP; provided that, without duplication:
(1)    any net after-tax extraordinary gains or losses or any non-recurring or unusual gains or losses (less all fees and expenses relating thereto) or expenses (including, but not limited to, any expenses relating to severance, relocation and one-time compensation charges and any expenses directly attributable to the implementation of cost-saving initiatives) shall be excluded;
(2)    the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period, whether effected through a cumulative effect adjustment or a retroactive application in each case in accordance with GAAP;
(3)    any net after-tax income (loss) from disposed or discontinued operations and any net after-tax gains or losses on disposal of disposed or discontinued operations shall be excluded;
(4)    any net after-tax gains or losses (less all fees and expenses relating thereto) attributable to asset dispositions or the sale or other disposition of any 

16

Capital Stock of any Person other than in the ordinary course of business, as determined in good faith by the Company, shall be excluded;
(5)    the Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be excluded; provided that Consolidated Net Income of such Person shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period (subject in the case of dividends, distributions or other payments made to a Restricted Subsidiary to the limitations contained in clause (6) below);
(6)    solely for the purpose of determining the amount available for Restricted Payments under clause (c)(1) of the first paragraph of Section 1010, the Net Income for such period of any Restricted Subsidiary (other than any Guarantor) shall be excluded if the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination wholly permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided that Consolidated Net Income of the Company will be increased by the amount of dividends or other distributions or other payments actually paid in cash (or to the extent converted into cash) to the Company or a Restricted Subsidiary thereof in respect of such period, to the extent not already included therein;
(7)    any increase in amortization or depreciation or other noncash charges resulting from the application of purchase accounting in relation to any acquisition that is consummated after the Original Issue Date, net of taxes, shall be excluded;
(8)    any net after-tax income (loss) from the early extinguishment of Indebtedness or Hedging Obligations or other derivative instruments shall be excluded;
(9)    any impairment charge or asset write-off, in each case pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP shall be excluded;
(10)    any net gain or loss resulting in such period from Hedging Obligations shall be excluded; and
(11)    any net gain or loss resulting in such period from currency translation gains or losses related to currency remeasurements of Indebtedness, including intercompany indebtedness, shall be excluded.

17

Notwithstanding the foregoing, for the purpose of Section 1010 only (other than clause (c)(4) thereof), there shall be excluded from Consolidated Net Income any income arising from any sale or other disposition of Restricted Investments made by the Company and the Restricted Subsidiaries, any repurchases and redemptions of Restricted Investments from the  Company and the Restricted Subsidiaries, any repayments to the Company or a Restricted Subsidiary of loans and advances that constitute Restricted Investments, any sale of the stock of an Unrestricted Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such amounts increase the amount of Restricted Payments permitted under such covenant pursuant to clause (c)(4) of Section 1010.
“Consolidated Total Assets” means, as of any date of determination, the total assets, reflected on the consolidated balance sheet of the Company and its Restricted Subsidiaries as at the end of the most recent fiscal quarter for which financial statements are available, determined on a consolidated basis in accordance with GAAP, with such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of Fixed Charge Coverage Ratio.
“Consolidated Total Debt Ratio” means, at the end of a fiscal quarter for which internal financial statements are available, the ratio of (a) Consolidated Total Indebtedness as of such date, to (b) the aggregate amount of EBITDA of the Company and the Restricted Subsidiaries for the period of four consecutive fiscal quarters ended at the end of such quarter (incorporating such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of Fixed Charge Coverage Ratio with such calculations made in good faith by a responsible financial or accounting officer of the Company).
“Consolidated Total Indebtedness” means, as at any date of determination, an amount equal to the sum of (1) the aggregate amount of all outstanding Indebtedness of the Company and the Restricted Subsidiaries on a consolidated basis consisting of Indebtedness for borrowed money, Obligations in respect of Capitalized Lease Obligations, Attributable Debt in respect of Sale and Lease-Back Transactions and debt obligations evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (and excluding (x) any undrawn letters of credit, (y) all obligations relating to Receivables Facilities and (z) any intercompany Indebtedness) and (2) the aggregate amount of all outstanding Disqualified Stock of the Company and all Disqualified Stock and Preferred Stock of the Restricted Subsidiaries (excluding items eliminated in consolidation), with the amount of such Disqualified Stock and Preferred Stock equal to the greater of their respective voluntary or involuntary liquidation preferences and Maximum Fixed Repurchase Prices, in each case determined on a consolidated basis, and only to the extent required to be recorded on a balance sheet, in accordance with GAAP.
For purposes hereof, the “Maximum Fixed Repurchase Price” of any Disqualified Stock or Preferred Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were purchased on any date on which Consolidated Total Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock or Preferred Stock, such fair market value shall be determined reasonably and in good faith by the Company.

18

“Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (the “primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent,
(1)     to purchase any such primary obligation or any property constituting direct or indirect security therefor,
(2)     to advance or supply funds
(A)    for the purchase or payment of any such primary obligation or
(B)    to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, or
(3)     to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.
“Corporate Trust Office” means the designated corporate trust office of the Trustee currently located at (i) for registrar and paying agent functions, Sixth Street & Marquette Avenue, Minneapolis, Minnesota 55479, Attention: Corporate Trust Services - Masonite International and (ii) for all other purposes, 7000 Central Parkway, N.E., Suite 550, Atlanta, Georgia 30328, Attention: Corporate Trust Services - Masonite International, or such other office, designated by the Trustee by written notice to the Company, at which at any particular time its corporate trust business shall be administered.
“Covenant Defeasance” has the meaning set forth in Section 1303 of this Indenture.
“Covenant Termination Date” has the meaning set forth in Section 1019 of this Indenture. 
“Credit Facilities” means if designated by the Company to be included in the definition of Credit Facilities (1) one or more credit facilities (including, without limitation, the ABL Facility), credit agreements, loan agreements or commercial paper facilities providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables or interests in receivables to such lenders or other persons or to special purpose entities formed to borrow from such lenders or other persons against such receivables or sell such receivables or interests in receivables, and including any Receivables Facility), letters of credit or other borrowings, including any mortgages, hypothecs, guarantees, collateral documents, instruments and agreements executed in connection therewith, (2) debt securities, indentures or other forms of debt financing (including convertible or exchangeable debt instruments or bank guarantees or bankers’ acceptances), or (3) instruments or agreements evidencing any other Indebtedness, in each case, with the same or different borrowers, guarantors or lenders or group of lenders, and, in each case, as amended, modified, renewed, 

19

refunded, restated, replaced or refinanced in whole or in part from time to time by other Indebtedness.
“Debtor Relief Laws” means any applicable law relating to liquidation, bankruptcy, insolvency, assignment for the benefit of creditors, moratorium, receivership, winding-up, dissolution, reorganization, restructuring, recapitalization, arrangement or rearrangement, or other similar debtor relief law from time to time in effect, including the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada), the Business Corporations Act (British Columbia), the Canada Business Corporations Act (Canada), and any Bankruptcy Laws.
“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.
“Defaulted Interest” has the meaning specified in Section 306(b) of this Indenture.
“Depositary” means The Depository Trust Company, its nominees and their respective successors.
“Designated Noncash Consideration” means the fair market value of noncash consideration received by the Company or a Restricted Subsidiary in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officers’ Certificate, setting forth the basis of such valuation, executed by an executive vice president and the principal financial officer of the Company (or a parent company thereof), less the amount of cash or Cash Equivalents received in connection with a subsequent sale of such Designated Noncash Consideration.
“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than solely for Capital Stock that is not Disqualified Stock), other than as a result of a Change of Control or asset sale, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, other than as a result of a change of control or asset sale, in whole or in part, in each case prior to the date that is 91 days after the earlier of the maturity date of the Notes and the date the Notes are no longer outstanding; provided that if such Capital Stock is issued pursuant to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.  
“DTC” means the Depository Trust Company.
“EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period,
(1)     increased by (without duplication):

20

(a)    consolidated Fixed Charges of such Person for such period to the extent the same was deducted in computing Consolidated Net Income; plus
(b)    lease expense in respect of synthetic lease obligations, Sale and Lease-Back Transactions and other indebtedness accounted for as operating leases under GAAP; plus
(c)    provision for taxes based on income or profits, plus franchise or similar taxes, of such Person for such period deducted in computing Consolidated Net Income; plus
(d)    Consolidated Depreciation and Amortization Expense of such Person for such period to the extent deducted in computing Consolidated Net Income; plus
(e)    other non-cash items (other than any such non-cash items to the extent it represents amortization of a prepaid cash expense that was paid in a prior period or an accrual of or reserve for cash expenditures in any future period), including without limitation non-cash rent expense, non-cash expense from any employee benefit plan or stock option plan, non-cash loss on sale or disposition of assets, non-cash loss from impairment of assets and non cash expenditures arising out of purchase accounting adjustments with respect to re-valuing assets and liabilities; plus
(f)    expenses, losses or charges arising as part of the Chapter 11 Cases; plus
(g)    any fees, costs, expenses or charges (other than depreciation or amortization expense) related to any Equity Offering, Permitted Investment, acquisition, disposition, recapitalization or the incurrence of Indebtedness permitted to be incurred by this Indenture (including a refinancing thereof) (in each case, whether or not successful), including without limitation (i) such fees, expenses or charges related to the offering of the Notes and the ABL Facility, any dividend, recapitalization or other transactions effecting the return of capital to shareholders and any SEC registration and (ii) any amendment or modification of the Notes and the ABL Facility; plus
(h)    the amount of any restructuring charge, integration costs or other business optimization expenses or reserve deducted in such period in computing Consolidated Net Income, including any one-time costs incurred in connection with acquisitions after the Original Issue Date; plus
(i)    the amount of cost savings projected by the Company in good faith to be realized as a result of actions taken or expected to be taken prior to or during such period (calculated on a pro forma basis as though such cost savings, operational improvements and synergies had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions; provided that (x) such cost savings, operational improvements and synergies are reasonably identifiable and factually supportable and (y) the aggregate amount of cost savings added pursuant to this clause (i) shall not exceed the greater of (i) 

21

$10 million and (ii) 10.0% of EBITDA on a consolidated basis for the Company’s and its Restricted Subsidiaries’ for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of determination (calculated on a pro forma basis as though such cost savings had been realized on the first day of such period), for any four consecutive quarter period (which adjustments may be incremental to pro forma adjustments made pursuant to the second paragraph of the definition of “Fixed Charge Coverage Ratio”); plus
(j)    any costs or expenses incurred by the Company or a Restricted Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or stockholders agreement, to the extent that such costs or expenses are funded with cash proceeds contributed to the capital of the Company or net cash proceeds of issuance of Equity Interests of the Company (other than Disqualified Stock that is Preferred Stock); plus
(k)    the amount of any minority interest expense deducted in computing Consolidated Net Income; plus
(l)    to the extent actually reimbursed (and to the extent such reimbursement proceeds are not included in calculating Consolidated Net Income), expenses incurred to the extent covered by indemnification provisions in any agreement in connection with an acquisition; plus
(m)    fees and expenses in connection with plant closures and layoffs not to exceed $25 million in any consecutive four quarter period and $50 million in the aggregate from the Original Issue Date; plus
(n)     any write offs, write downs or other noncash charges reducing Consolidated Net Income for such period, excluding any such charge that represents an accrual or reserve for a cash expenditure for a future period; and
(2)     decreased by (without duplication) non-cash gains increasing Consolidated Net Income of such Person for such period, excluding any gains that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period (other than such cash charges that have been added back to Consolidated Net Income in computing EBITDA in accordance with this definition).
“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock, but excluding any debt security that is convertible into, or exchangeable for, Capital Stock.
“Equity Offering” means any public or private sale of common shares or Preferred Stock of the Company or any of its direct or indirect parent companies (excluding Disqualified Stock), other than (i) public offerings with respect to the Company’s or any direct or 

22

indirect parent company’s common shares registered on Form S-4 or Form S-8 and (ii) an issuance to any Subsidiary of the Company.
“Event of Default” has the meaning specified in Section 501 of this Indenture.
“Excess Proceeds” has the meaning specified in Section 1017 of this Indenture.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Existing Indebtedness” means Indebtedness of the Company or the Restricted Subsidiaries in existence on the Original Issue Date, plus interest accruing thereon.
“Existing Joint Ventures” means joint ventures in existence on the Original Issue Date.
“Existing Notes” means the $275,000,000 aggregate principal amount of the Company’s Senior Notes Due 2021 issued on the Original Issue Date and the additional $100,000,000 aggregate principal amount of the Company’s Senior Notes Due 2021 issued on March 9, 2012.
“Factoring Arrangement” means with respect to receivables owing from (x) either Home Depot, Inc. or Lowe’s Companies, Inc. or any of their respective subsidiaries or (y) any other Person identified by the Company, a sale of such receivables by the Company or a Restricted Subsidiary to a third Person who is not an Affiliate of the Company on a non-recourse basis (except for customary representations, warranties, covenants and indemnities made in connection with such arrangements).
“Fixed Charge Coverage Ratio” means, with respect to any Person for any period, the ratio of EBITDA of such Person for such period to the Fixed Charges of such Person for such period.  In the event that the Company or any Restricted Subsidiary incurs, assumes, guarantees, redeems, retires or extinguishes any Indebtedness (other than Indebtedness incurred under any revolving credit facility that has been permanently repaid and has not been replaced) or issues or redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to or simultaneously with the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee, redemption, retirement or extinguishing of Indebtedness, or such issuance or redemption of Disqualified Stock or Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter period (the “reference period”).
For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, consolidations and disposed operations (as determined in accordance with GAAP) that have been made by the Company or any Restricted Subsidiary during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, consolidations and disposed 

23

operations (and the change in any associated fixed charges and the change in EBITDA resulting therefrom) had occurred on the first day of the reference period.  If since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Investment, acquisition, disposition, merger, consolidation or disposed operation that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, merger, consolidation or disposed operation had occurred at the beginning of the reference period.
For purposes of this definition, whenever pro forma effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company.  Any such pro forma calculation may include adjustments appropriate to reflect operating expense reductions and other operating improvements or synergies reasonably expected to result from the applicable event.
If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness).  Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.  For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period.  Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Company may designate.
“Fixed Charges” means, with respect to any Person for any period, the sum of
(a)    Consolidated Interest Expense of such Person for such period,
(b)    all cash dividend payments (excluding items eliminated in consolidation) on any series of Preferred Stock made during such period, and
(c)    all cash dividend payments (excluding items eliminated in consolidation) on any series of Disqualified Stock made during such period.
“Foreign Subsidiary” means, with respect to any Person, any Restricted Subsidiary of such Person that is not organized or existing under the laws of the United States of America, any state thereof, the District of Columbia, or any territory thereof.
“GAAP” means generally accepted accounting principles in the United States of America that are in effect from time to time (except with respect to accounting for leases, as to which such principle in effect on the Original Issue Date shall apply).  At any time after the date of this Indenture, the Company may elect to apply IFRS accounting principles in lieu of GAAP 

24

and, upon any such election, references herein to GAAP shall thereafter be construed to mean IFRS (except as otherwise provided in this Indenture); provided that any calculation or determination in this Indenture that requires the application of GAAP for periods that include fiscal quarters ended prior to the Company’s election to apply IFRS shall remain as previously calculated or determined in accordance with GAAP.
“Government Securities” means securities that are
(a)     direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged; or
(b)     obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuers thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt.
“guarantee” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations, and, when used as a verb, shall have a corresponding meaning.
“Guarantee” means a guarantee of all the obligations under this Indenture and the Notes.
“Guarantor” means each Restricted Subsidiary and Luxembourg Guarantor in existence on the Original Issue Date that provides a Guarantee on the Original Issue Date (and any other Restricted Subsidiary that provides a Guarantee in accordance with this Indenture, regardless of whether such Guarantee is required by the terms of this Indenture) provided that upon release or discharge of such Restricted Subsidiary from its Guarantee in accordance with this Indenture, such Restricted Subsidiary ceases to be a Guarantor.
“Hedging Obligations” means, with respect to any Person, the obligations of such Person under currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements and other agreements or arrangements, in each case designed to 

25

protect such Person against fluctuations in currency exchange, interest rates or commodity prices.
“Holder” means the Person in whose name a Note is registered on the Registrar’s books.
“incur” has the meaning specified in Section 1011 of this Indenture.
“incurrence” has the meaning specified in Section 1011 of this Indenture.
“Indebtedness” means, with respect to any Person:
(a)     any indebtedness (including principal and premium) of such Person, whether or not contingent:
(1)    in respect of borrowed money;
(2)    evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without double counting, reimbursement agreements in respect thereof);
(3)    representing the balance deferred and unpaid of the purchase price of any property (including Capitalized Lease Obligations), except any such balance that constitutes a trade payable or similar obligation to a trade creditor, in each case accrued in the ordinary course of business; or
(4)    representing any Hedging Obligations;
if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP;
(b)    to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the obligations of the type referred to in clause (a) of another Person (whether or not such items would appear upon the balance sheet of such obligor or guarantor), other than by endorsement of negotiable instruments for collection in the ordinary course of business;
(c)    to the extent not otherwise included, the obligations of the type referred to in clause (a) of another Person secured by a Lien on any asset owned by such Person, whether or not such obligations are assumed by such Person and whether or not such obligations would appear upon the balance sheet of such Person; provided that the amount of such Indebtedness will be the lesser of the fair market value of such asset at the date of determination and the amount of Indebtedness so secured; and

26

(d)    Attributable Debt in respect of Sale and Lease-Back Transactions;
 provided, however, that notwithstanding the foregoing, Indebtedness will be deemed not to include (A) Contingent Obligations incurred in the ordinary course of business; (B) Obligations under, or in respect of, Receivables Facilities and Factoring Agreements; (C) any operating leases as such an instrument would be determined in accordance with GAAP on the date of this Indenture, (D) in connection with the purchase by the Company or its Restricted Subsidiaries of any business, post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing unless such payments are required under GAAP to appear as a liability on the balance sheet (excluding the footnotes), (E) deferred or prepaid revenues, (F) any Capital Stock other than Disqualified Stock or (G) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty, indemnity or other unperformed obligations of the respective seller.
“Indenture” has the meaning stated in the preamble of this instrument and more particularly means this instrument as originally executed, as amended and restated hereby and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this Indenture and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be part of and govern this instrument and any such supplemental indenture, respectively.
“Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant to Persons engaged in Similar Businesses of nationally recognized standing that is, in the good faith judgment of the Company, qualified to perform the task for which it has been engaged and that is independent of the Company and its Affiliates.
“Initial Notes” means the Company’s Senior Notes Due 2021 issued on the Issue Date.
“Interest Payment Date” means the Stated Maturity of an installment of interest on the Notes.
“Investment Grade Securities” means:
(1)    securities issued or directly and fully guaranteed or insured by the government of the United States of America or any agency or instrumentality thereof (other than Cash Equivalents);
(2)    debt securities or debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by Moody’s or the equivalent of such rating by such rating organization, or, if no rating of S&P or Moody’s then exists, the equivalent of such rating by any other nationally recognized securities rating agency, but excluding any debt securities or instruments constituting loans or advances among the Company and its Subsidiaries;

27

(3)    investments in any fund that invests exclusively in investments of the type described in clauses (1) and (2), which fund may also hold immaterial amounts of cash pending investment or distribution; and
(4)    corresponding instruments in countries other than the United States of America customarily utilized for high quality investments
“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (including by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others, but excluding accounts receivable, trade credit, advances to customers, commission, travel and similar advances to officers and employees, in each case made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet (excluding the footnotes) of such Person in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property.  For purposes of the definition of “Unrestricted Subsidiary” and Section 1010:
(1)    “Investments” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of a Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to:
(x)    the Company’s “Investment” in such Subsidiary at the time of such redesignation; less
(y)    the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and
(2)     any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Company.
“Issue Date” means January 21, 2014.
“Legal Defeasance” has the meaning specified in Section 1302 of this Indenture.
“Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York or Canada.
“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title 

28

retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease be deemed to constitute a Lien.
“Luxembourg” means the Grand Duchy of Luxembourg.
“Luxembourg Guarantor” means Masonite Luxembourg S.A., a public limited liability company (société anonyme) organised under the laws of Luxembourg, having its registered office at 16, av. Pasteur, L-2310 Luxembourg and being registered with the Luxembourg Register of Commerce and Companies under number B 88.921.
“Masonite Corporation” means Masonite Corporation, a Delaware corporation.
“Maturity”, when used with respect to any Note, means the date on which the principal of such Note or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, notice of redemption or otherwise.
“Maturity Date” means April 15, 2021.
“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.
“Net Income” means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends.
“Net Proceeds” means the aggregate cash proceeds received by the Company or any Restricted Subsidiary in respect of any Asset Sale, including any cash received upon the sale or other disposition of any Designated Noncash Consideration received in any Asset Sale, net of the direct costs relating to such Asset Sale and the sale or disposition of such Designated Noncash Consideration, including legal, accounting and investment banking fees, and brokerage and sales commissions, any relocation expenses incurred as a result thereof, other fees and expenses, including title and recordation expenses, taxes or repatriation costs paid or payable as a result thereof (after taking into account any available tax or other credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of principal, premium, if any, and interest on Indebtedness required (other than by Section 1017(b)(1) to be paid as a result of such transaction and any deduction of appropriate amounts to be provided by the Company or a Restricted Subsidiary as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Company or a Restricted Subsidiary after such sale or other disposition thereof, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.
“Non-Payment Default” means an Event of Default other than a Payment Default.

29

“Note Register” and “Note Registrar” have the respective meanings specified in Section 304.
“Notes” has the meaning stated in the first recital of this Indenture and more particularly means any Notes authenticated and delivered under this Indenture.  The Existing Notes, Initial Notes and any Additional Notes shall be treated as a single class for all purposes of this Indenture, and unless the context otherwise requires, all references to the Notes shall include the Existing Notes, Initial Notes and any Additional Notes.
“Obligations” means any principal (including reimbursement obligations with respect to letters of credit whether or not drawn), interest (including, to the extent legally permitted, all interest accrued thereon after the commencement of any insolvency or liquidation proceeding at the rate, including any applicable post-default rate, specified in the applicable agreement), premium (if any), guarantees of payment, fees, indemnifications, reimbursements, expenses, damages and other liabilities payable under the documentation governing any Indebtedness; provided that Obligations with respect to the Notes shall not include fees or indemnification in favor of the Trustee and any other third parties other than the Holders.
“Offering Memorandum” means the final Offering Memorandum dated January 15, 2014 relating to the offering of the Initial Notes.
“Officer” means the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Company.
“Officers’ Certificate” means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements set forth in this Indenture.
“Opinion of Counsel” means a written opinion from legal counsel. The counsel may be an employee of or counsel to the Company.
“Original Issue Date” means April 15, 2011.
“Outstanding” or “Outstanding Notes”, when used with respect to Notes, means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except:
(1)    Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;
(2)    Notes, or portions thereof, for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Notes; provided that, if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;

30

(3)    Notes, except to the extent provided in Sections 1302 and 1303, with respect to which the Company has effected Legal Defeasance or Covenant Defeasance as provided in Article Thirteen; and
(4)    Notes which have been paid pursuant to Section 305 or in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture;
provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Notes have given any request, demand, authorization, direction, consent, notice or waiver hereunder, and for the purpose of making the calculations required by TIA Section 313, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in making such calculation or in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded.
“Paying Agent” means any Person (including the Company acting as Paying Agent) authorized by the Company to pay the principal of (and premium, if any) or interest on any Notes on behalf of the Company.
“Permitted Investments” means:
(a)    any Investment in the Company or any Restricted Subsidiary, including, without limitation, a repurchase or retirement of the Notes;
(b)    any Investment in cash and Cash Equivalents or Investment Grade Securities;
(c)    (i) any Investment by the Company or any Restricted Subsidiary in a Person that is engaged in a Similar Business if as a result of such Investment
(1)    such Person becomes a Restricted Subsidiary; or
(2)    such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary, and
(ii)     any Investment held by such Person;
(d)     any Investment in securities or other assets not constituting cash, Cash Equivalents or Investment Grade Securities and received in connection with an Asset Sale made pursuant to Section 1017 or any other disposition of assets not constituting an Asset Sale;

31

(e)     any Investment existing on the Original Issue Date or made pursuant to legally binding written commitments in existence on the Original Issue Date, and any extension, modification or renewal of such existing Investments, to the extent not involving any additional Investment other than as the result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities, in each case, pursuant to the terms of such Investments as in effect on the Original Issue Date;
(f)    loans and advances to, and guarantees of Indebtedness of, employees of the Company (or any of its direct or indirect parent companies) or a Restricted Subsidiary not in excess of $5 million outstanding at any one time, in the aggregate;
(g)     any Investment acquired by the Company or any Restricted Subsidiary
(1)    (x) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the Person in which such other Investment is made or which is the obligor with respect to such accounts receivable or (y) in good faith settlement of delinquent obligations of, and other disputes with, customers, trade debtors, licensors, licensees and suppliers arising in the ordinary course; or
(2)    as a result of a foreclosure by the Company or any Restricted Subsidiary with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;
(h)     Hedging Obligations permitted under Section 1011(b)(10);
(i)     loans and advances to officers, directors and employees of the Company (or any of its direct or indirect parent companies) or a Restricted Subsidiary for business-related travel expenses (including entertainment expenses), moving expenses, tax advances, payroll advances and other similar expenses, in each case incurred in the ordinary course of business or consistent with past practice or to fund such Person’s purchase of Equity Interests of the Company or any direct or indirect parent company thereof under compensation plans approved by the Board of Directors of the Company in good faith;
(j)     Investments the payment for which consists of Equity Interests of the Company, or any of its direct or indirect parent companies (exclusive of Disqualified Stock); provided that such Equity Interests will not increase the amount available for Restricted Payments under Section 1010(a)(c);
(k)     guarantees of Indebtedness permitted under Section 1011 and performance guarantees in the ordinary course of business;

32

(1)     any transaction to the extent it constitutes an Investment that is permitted and made in accordance with Section 1013(b) (except transactions described in Section 1013(b)(2) of such paragraph);
(m)    Investments consisting of purchases and acquisitions of inventory, supplies, material or equipment or the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons;
(n)    Investments relating to a Receivables Facility; provided that in the case of Receivables Facilities established after the Original Issue Date, such Investments are necessary or advisable (in the good faith determination of the Company) to effect such Receivables Facility;
(o)    additional Investments having an aggregate fair market value, taken together with all other Investments made since the Original Issue Date pursuant to this clause (o) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash or marketable securities), not to exceed the greater of (x) $100 million and (y) 3.5% of Consolidated Total Assets (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);
(p)    Investments consisting of extensions of credit in the nature of accounts receivable or Notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;
(q)    receivables owing to the Company or a Restricted Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or such Restricted Subsidiary deems reasonable under the circumstances;
(r)    advances, loans, rebates and extensions of credit (including the creation of receivables) to suppliers, customers and vendors, and performance guarantees, in each case in the ordinary course of business; and
(s)    the acquisition of assets or Capital Stock solely in exchange for the issuance of common equity securities of the Company.
“Permitted Liens” means, with respect to any Person:
(1)    Liens to secure Indebtedness incurred pursuant to Credit Facilities not to exceed the greater of (a) the aggregate amount of Indebtedness permitted to be incurred pursuant to Section 1011(b)(1); and (b) the maximum principal amount of Indebtedness that, as of the date such Indebtedness was incurred and after giving effect to the incurrence of such Indebtedness, would not cause the Secured 

33

Leverage Ratio of the Company and the Restricted Subsidiaries to exceed 3.5 to 1.0;
(2)    pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits, prepayments or cash pledges to secure bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S.  or Canadian government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business;
(3)    Liens imposed by law, such as landlords’, carriers’, warehousemen’s and mechanics’ Liens and other similar Liens, in each case, for sums not yet overdue for a period of more than 30 days or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review, if adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;
(4)    Liens for taxes, assessments, judgments or other governmental charges or claims not yet overdue for a period of more than 30 days or payable or subject to penalties for nonpayment or which are being contested in good faith by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;
(5)    licenses of intellectual property in the ordinary course of business;
(6)    Liens to secure the performance of tenders, completion guarantees, statutory obligations, surety, environmental or appeal bonds, bids, leases, government contracts, performance bonds or other obligations of a like nature incurred in the ordinary course of business;
(7)    pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA or by the PBA;
(8)    Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;
(9)    Liens arising from the filing of precautionary Uniform Commercial Code or PPSA financing statements or recordations relating solely to non-owned assets, including Operating Leases not prohibited by this Agreement;
(10)    Liens on Receivables and related property sold pursuant to Factoring Arrangements;

34

(11)    minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties, in each case, which were not incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;
(12)    Liens existing on the Original Issue Date;
(13)    Liens securing Hedging Obligations;
(14)    Liens on property or shares of stock of a Person at the time such Person becomes a Subsidiary; provided that such Liens are not created or incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided, further, that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary (other than the proceeds or products of such property or shares of stock or improvements thereon);
(15)    Liens on property at the time the Company or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger, amalgamation or consolidation with or into the Company or any Restricted Subsidiary; provided that such Liens are not created or incurred in connection with, or in contemplation of, such acquisition; provided, further, that the Liens may not extend to any other property owned by the Company or any Restricted Subsidiary (other than the proceeds or products of such property or shares of stock or improvements thereon);
(16)    Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or another Restricted Subsidiary permitted to be incurred in accordance with Section 1011;
(17)    Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(18)    leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) in the ordinary course of business which do not materially interfere with the ordinary conduct of the business of the Company or any of the Restricted Subsidiaries and do not secure any Indebtedness;
(19)    Liens arising from financing statement filings under the Uniform Commercial Code or similar state or provincial laws regarding (i) operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course 

35

of business and (ii) goods consigned or entrusted to or bailed with a Person in connection with the processing, reprocessing, recycling or tolling of such goods;
(20)    Liens in favor of the Company or any Guarantor;
(21)    Liens on inventory or equipment of the Company or any Restricted Subsidiary granted in the ordinary course of business to the client at which such inventory or equipment is located;
(22)    Liens on accounts receivable and related assets incurred in connection with a Receivables Facility;
(23)    Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancing, refunding, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (1), (12), (13) and (15) and the following clause (24); provided that (x) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus proceeds or products of such property or improvements on such property), and (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under the foregoing clauses (1), (12), (13), (15) and the following clause (24) at the time the original Lien became a Permitted Lien under this Indenture, and (B) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement;
(24)    Liens securing Indebtedness permitted to be incurred pursuant to Section 1011(b)(14); provided that such Liens are solely on acquired property or assets of the acquired entity (and proceeds or products of such property or assets or improvements of such property or assets), as the case may be;
(25)    deposits in the ordinary course of business to secure liability to insurance carriers;
(26)    Liens securing judgments for the payment of money not constituting an Event of Default under Section 501(5) so long as such Liens are adequately bonded and any appropriate legal proceedings that may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;
(27)    Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation or exportation of goods in the ordinary course of business;
(28)    Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection, (ii) attaching to commodity trading accounts or other commodity brokerage accounts incurred in 

36

the ordinary course of business and (iii) in favor of banking institutions arising as a matter of law encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking industry;
(29)    Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Company or any of its Restricted Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Company and its Restricted Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Company or any of its Restricted Subsidiaries in the ordinary course of business;
(30)    Liens deemed to exist in connection with Investments in repurchase agreements permitted under Section 1011; provided that such Liens do not extend to any assets other than those assets that are the subject of such repurchase agreement;
(31)    other Liens since the Original Issue Date securing obligations which obligations at the time outstanding do not exceed 2.5% of Consolidated Total Assets;
(32)    restrictions on dispositions of assets to be disposed of pursuant to merger agreements, stock or asset purchase agreements and similar agreements; and
(33)    customary options, put and call arrangements, rights of first refusal and similar rights relating to Investments in joint ventures, partnerships.
“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
“PPSA” shall mean the Personal Property Security Act (or any similar or equivalent or successor statutes), including the regulations thereto, as the same may, from time to time, be in effect in the Province of British Columbia or any other applicable province or territory in Canada.
“Predecessor Note” of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 305 in exchange for a mutilated Note or in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note.
“Preferred Stock” means any Equity Interest with preferential rights of payment of dividends or upon liquidation, dissolution, or winding up.
“Principal Property” means the land, improvements, buildings, fixtures and equipment (including any leasehold interest therein) constituting the Company’s principal 

37

corporate office, any manufacturing plant, or any manufacturing, distribution or research facility (in each case, whether now owned or hereafter acquired) which is owned or leased by the Company or any Restricted Subsidiary, unless the Company’s Board of Directors has determined in good faith that such office, plant or facility is not of material importance to the total business conducted by the Company and its Subsidiaries taken as a whole.
 “Proceeds Payments” means one or more cash dividends, cash distributions, payments in respect of the repurchase of common shares or Preferred Stock (whether pursuant to the exercise of redemption or retraction rights or otherwise), repayments of capital, or other payments that would otherwise constitute a Restricted Payment, by the Company, from the net proceeds received from the offering of the Existing Notes issued on the Original Issue Date; provided that such cash dividends or other payments shall not exceed an aggregate amount of $125 million and shall be made within one year following the Original Issue Date.
“Qualified Proceeds” means assets that are used or useful in, or Capital Stock of any Person engaged in, a Similar Business; provided that the fair market value of any such assets or Capital Stock shall be determined by the Company in good faith.
“Receivables Facility” means one or more receivables financing facilities, as amended, supplemented, modified, extended, renewed, restated, refunded, replaced or refinanced from time to time, the Indebtedness of which is non-recourse (except for standard representations, warranties, covenants and indemnities made in connection with such facilities) to the Company and its Restricted Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries sells its accounts receivable to either (a) a Person that is not a Restricted Subsidiary or (b) a Receivables Subsidiary that in turn sells its accounts receivable to a Person that is not a Restricted Subsidiary.
“Receivables Fees” means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Facility.
“Receivables Subsidiary” means any Subsidiary formed solely for the purpose of engaging, and that engages only, in one or more Receivables Facilities.
“Redemption Date,” when used with respect to any Note to be redeemed, in whole or in part, means the date fixed for such redemption by or pursuant to this Indenture.
“Redemption Price,” when used with respect to any Note to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.
“Refinancing Indebtedness” has the meaning specified in Section 1011 of this Indenture.
“Regular Record Date” has the meaning specified in Section 202 of this Indenture.

38

“Related Business Assets” means assets (other than cash or Cash Equivalents) used or useful in a Similar Business; provided that any assets received by the Company or a Restricted Subsidiary in exchange for assets transferred by the Company or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless upon receipt of the securities of such Person, such Person would become a Restricted Subsidiary.
“Responsible Officer”, when used with respect to the Trustee, means any vice president, any assistant treasurer, any trust officer or assistant trust officer, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above‐designated officers, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject, and in each case who shall have direct responsibility for the administration of this Indenture.
“Restricted Investment” means an Investment other than a Permitted Investment.
“Restricted Payments” has the meaning specified in Section 1010 of this Indenture.
“Restricted Subsidiary” means Magna Foremost Sdn. Bld., a corporation incorporated under the laws of Malaysia, and, at any time, any direct or indirect Subsidiary of the Company (including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary; provided that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of “Restricted Subsidiary.”
“Retired Capital Stock” has the meaning specified in Section 1010 of this Indenture.
“S&P” means Standard & Poor’s, a division of The McGraw‐Hill Companies, Inc., and any successor to its rating agency business.
“Sale and Lease-Back Transaction” means any arrangement with any Person providing for the leasing by the Company or any Restricted Subsidiary of any real or tangible personal property, which property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person in contemplation of such leasing.
“SEC” means the U.S. Securities and Exchange Commission.
“Secured Indebtedness” means any Indebtedness secured by a Lien.
“Secured Leverage Ratio” means, as of any date of determination with respect to any Person, the ratio of (1) Secured Indebtedness of such Person and its Restricted Subsidiaries as of such date of calculation (determined on a consolidated basis in accordance with GAAP) to (2) EBITDA of such Person and its Restricted Subsidiaries for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which financial statements prepared on a consolidated basis in accordance with GAAP are available.  In the event that the Company or any of its Restricted Subsidiaries Incurs or redeems any Secured 

39

Indebtedness subsequent to the commencement of the period for which the Secured Leverage Ratio is being calculated but prior to the event for which the calculation of the Secured Leverage Ratio is made, then the Secured Leverage Ratio shall be calculated giving pro forma effect to such Incurrence or redemption of Indebtedness as if the same had occurred at the beginning of the applicable four fiscal quarter period.  The Secured Leverage Ratio shall be calculated in a manner consistent with the definition of “Fixed Charge Coverage Ratio,” including any pro forma adjustments to EBITDA as set forth therein (including for acquisitions).
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Senior Indebtedness” means with respect to any Person:
(1)    all Indebtedness of such Person, whether outstanding on the Original Issue Date or thereafter incurred; and
(2)    all other Obligations of such Person (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to such Person whether or not post-filing interest is allowed in such proceeding) in respect of Indebtedness described in clause (1) above unless, in the case of clauses (1) and (2), the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness or other Obligations are subordinate in right of payment to the Notes or the Guarantee of such Person, as the case may be; provided that Senior Indebtedness shall not include:
(a)    any obligation of such Person to the Company or any Subsidiary or to any joint venture in which the Company or any Restricted Subsidiary has an interest, other than such obligations outstanding on the Original Issue Date;
(b)    any liability for Federal, state, local, provincial, or other taxes owed or owing by such Person;
(c)    any accounts payable or other liability to trade creditors in the ordinary course of business (including guarantees thereof as instruments evidencing such liabilities);
(d)    any Indebtedness or other Obligation of such Person that is subordinate or junior in right of payment with respect to any other Indebtedness or other Obligation of such Person; or
(e)    that portion of any Indebtedness that at the time of incurrence is incurred in violation of this Indenture.
“Significant Subsidiary” means any Restricted Subsidiary of the Company that would be a “significant subsidiary” as defined in Article One, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such regulation is in effect on the date hereof.

40

“Similar Business” means any business or other activities conducted, or proposed to be conducted (as described in the Offering Memorandum), by the Company and its Subsidiaries on the Original Issue Date or any business or other activities conducted by any entity that is similar, reasonably related, complementary, incidental or ancillary thereto or a reasonable extension, development or expansion thereof.
“Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 306.
“Stated Maturity,” when used with respect to any Note or any installment of principal thereof or interest thereon, means the date specified in such Notes as the fixed date on which the principal of such Notes or such installment of principal or interest is due and payable.
“Subordinated Indebtedness” means
(a)    with respect to the Company, any Indebtedness of the Company that is by its terms subordinated in right of payment to the Notes, and
(b)    with respect to any Guarantor, any Indebtedness of such Guarantor that is by its terms subordinated in right of payment to the Guarantee of such Guarantor.
“Subsidiary” means, with respect to any Person,
(1)    any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof and
(2)    any partnership, joint venture, limited liability company or similar entity of which
(x)    more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise, and
(y)    such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity.
“Successor Company” has the meaning specified in Section 801 of this Indenture.
“Successor Person” has the meaning specified in Section 802 of this Indenture.

41

“Transfer Date” means, for any transfer or sale of Notes, the date upon which such transfer or sale is completed.
“Treasury Rate” means, as of any Redemption Date, the yield to maturity as of such Redemption Date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H. 15 (519) that has become publicly available at least two Business Days prior to the Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the Redemption Date to April 15, 2015; provided, however that if the period from the Redemption Date to April 15, 2015, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
“Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-777bbbb) as in effect on the date hereof.
“Trustee” means Wells Fargo Bank, National Association, until a successor replaces it and, thereafter, means the successor.
“Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to time.
“Unrestricted Subsidiary” means any Subsidiary of the Company that at the time of determination is an Unrestricted Subsidiary (as designated by the Company, as provided below) and any Subsidiary of an Unrestricted Subsidiary.
The Company may designate any Subsidiary of the Company (including any existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, the Company or any Subsidiary of the Company (other than any Subsidiary of the Subsidiary to be so designated or any other Unrestricted Subsidiary); provided that
(a)    any Unrestricted Subsidiary must be an entity of which shares of the Capital Stock or other Equity Interests (including partnership interests) entitled to cast at least a majority of the votes that may be cast by all shares of Capital Stock or Equity Interests having ordinary voting power for the election of directors or other governing body are owned, directly or indirectly, by the Company,
(b)    such designation complies with Section 1010 and
(c)    each of
(1)    the Subsidiary to be so designated and
(2)    its Subsidiaries

42

has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any Restricted Subsidiary.
The Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that, immediately after giving effect to such designation no Default shall have occurred and be continuing and either:
(1)    the Company could incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test described in Section 1011(a) or
(2)    the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries would be greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such designation, in each case on a pro forma basis taking into account such designation.
Any such designation by the Company shall be notified by the Company to the Trustee by promptly filing with the Trustee a copy of any applicable Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.
“U.S. Person” means a U.S. Person as defined in Rule 902(k) promulgated under the Securities Act.
“Vice President”, when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title “vice president”.
“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.
“Weighted Average Life to Maturity” means, when applied to any Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, at any date, the quotient obtained by dividing
(1)    the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock or Preferred Stock multiplied by the amount of such payment, by
(2)    the sum of all such payments.
“Wholly Owned Subsidiary” of any Person means a Subsidiary of such Person, 100% of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person.

43

SECTION 103.  Compliance Certificates and Opinions.  Upon any application or request by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee an Officers’ Certificate stating that all conditions precedent, if any, provided for in this Indenture (including any covenant compliance with which constitutes a condition precedent) relating to the proposed action have been complied with and, other than in connection with the Trustee’s authentication of the Existing Notes, 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 relating to such particular application or request, 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 (other than pursuant to Section 1008(a)) shall include:
(1)    a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;
(2)    a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(3)    a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(4)    a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
SECTION 104.  Form of Documents Delivered to Trustee .  In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company 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 or opinion 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 Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

44

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
SECTION 105.  Acts of Holders.  (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders 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 Trustee and, where it is hereby expressly required, to the Company.  Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders 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 conclusive in favor of the Trustee and the Company, 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 by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof.  Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of authority.  The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.
(c)    The principal amount and serial numbers of Notes held by any Person, and the date of holding the same, shall be proved by the Note Register.
(d)    If the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so.  Notwithstanding TIA Section 316(c), such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders generally in connection therewith and not later than the date such solicitation is completed.  If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Notes have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Notes shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than eleven months after the record date.  Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer 

45

thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Company or any Guarantor in reliance thereon, whether or not notation of such action is made upon such Note.
SECTION 106.  Notices, Etc., to Trustee, Company, any Guarantor and Agent.  Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with,
(1)    the Trustee by any Holder or by the Company or any Guarantor shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing (which may be via facsimile) to or with the Trustee at its Corporate Trust Office; or
(2)    the Company or any Guarantor by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished or delivered in writing and mailed, first‐class postage prepaid, or delivered by recognized overnight courier, to the Company or such Guarantor addressed to it at Masonite International Corporation, 201 North Franklin Street, Suite 300, Tampa, Florida 33602, Attention:  Legal Department, or at any other address previously furnished in writing to the Trustee by the Company or such Guarantor, with a copy (which copy shall not constitute notice) to Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017, Attention: Gary I. Horowitz / Joseph Kaufman.
SECTION 107.  Notice to Holders; Waiver.  Where this Indenture provides for notice of any event to Holders by the Company or the Trustee, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first‐class postage prepaid, to each Holder affected by such event, at his address as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice.  In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders.  Notices given by first-class mail, postage prepaid, shall be deemed given five calendar days after mailing.
In case by reason of the suspension of or irregularities in regular mail service or by reason of any other cause, it shall be impracticable to mail notice of any event to Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice for every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice may be waived in writing by the 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 Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
Notwithstanding anything to the contrary set forth herein, when any Notes are held in global form, notices to be given to the Holders thereof shall be sufficiently given 

46

hereunder if given by the Trustee or the Company to the Depositary in accordance with its applicable procedures.
SECTION 108.  Effect of Headings and Table of Contents.  The Article and Section headings herein, the Table of Contents and the reconciliation and tie between the TIA and this Indenture are for convenience of reference only, are not intended to be considered a part hereof and shall not affect the construction hereof.
SECTION 109.  Successors and Assigns.  All agreements of the Company in this Indenture and the Notes will bind its successors.  All agreements of the Trustee in this Indenture will bind its successors.  All agreements of each Guarantor in this Indenture will bind its successors, except as otherwise provided in Section 1208 hereof.
SECTION 110.    Separability Clause.  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 111.    Benefits of Indenture.  Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto, any Paying Agent, any Notes Registrar and their successors hereunder and the Holders any benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 112.    Governing Law.  This Indenture, the Notes and any Guarantee shall be governed by and construed in accordance with the laws of the State of New York.  This Indenture is subject to the provisions of the Trust Indenture Act that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions.
SECTION 113.  Legal Holidays.  In any case where any Interest Payment Date, Redemption Date or Stated Maturity or Maturity of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of principal (or premium, if any) or interest need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date, or at the Stated Maturity or Maturity; provided that no interest shall accrue for purposes of such payment for the period from and after such Interest Payment Date, Redemption Date, Stated Maturity or Maturity, as the case may be.
SECTION 114.  No Personal Liability of Directors, Officers, Employees and Stockholders.  No director, officer, employee, incorporator or stockholder of the Company, any Successor Company or any Guarantor (other than in the case of stockholders of any Guarantor, the Company, Successor Company or another Guarantor) shall have any liability for any obligations of the Company, Successor Company or the Guarantors under the Notes, the Guarantees and this Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation.  Each Holder by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.  Such waiver may not be effective to waive liabilities under the Federal securities laws and it is the view of the SEC that such a waiver is against public policy.

47

SECTION 115.  Trust Indenture Act Controls.  If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the provision required by the TIA shall control.  If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be.
SECTION 116.  Counterparts.  This Indenture may be executed in any number of counterparts, each of which shall be original; but such counterparts shall together constitute but one and the same instrument.  One signed copy is enough to prove this Indenture.
SECTION 117.  Waiver of Jury Trial.  EACH OF THE COMPANY, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.
SECTION 118.  Force Majeure.  In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
SECTION 119.  Amended and Restated Indenture.  The Existing Indenture is hereby amended and restated, effective as of the date hereof, to read in its entirety as set forth herein.

ARTICLE TWO
THE NOTES
SECTION 201.  Principal Amount and Maturity.  The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is unlimited.  The Initial Notes issued on the date hereof will be in an aggregate principal amount of $125,000,000 and are in addition to the Existing Notes issued on the Original Issue Date or March 9, 2012, as applicable, in the aggregate principal amount of $375,000,000.  In addition, the Company may issue additional notes under this indenture from time to time in accordance with the provisions of this Indenture (the “Additional Notes”).  
The Notes will mature on the Maturity Date.    
SECTION 202.  Interest Rates.  (a) Interest shall be payable semi-annually in arrears on each Interest Payment Date.  The Company will make each interest payment to the 

48

Holders of record of the notes on the immediately preceding April 1 and October 1 (each, a “Regular Record Date”).  Interest on the Existing Notes will accrue from the most recent date to which interest has been paid with respect to the Existing Notes.  Interest on the Initial Notes will accrue from the most recent date to which interest has been paid with respect to the Initial  Notes, or if no interest has been paid with respect to the Initial Notes, from October 15, 2013. Interest on any Additional Notes will accrue from the most recent date to which interest has been paid with respect to such Additional Notes, or if no interest has been paid with respect to such Additional Notes, from the most recent date to which interest has been paid with respect to any Notes.  Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.  Notwithstanding the foregoing, if a payment date is not a Business Day, payment shall be made on the next succeeding day that is a Business Day, and no interest shall accrue on the Notes for the intervening period.  If a regular record date is not a Business Day, the record date shall not be affected.
(b)    Any amount (whether of principal or interest) not paid when due hereunder (whether at the stated maturity, by acceleration or otherwise) shall bear interest, to the extent permitted by law (after as well as before judgment), payable on demand, at the rate that would otherwise be applicable thereto from and including the date of such non-payment to but excluding the date on which such amount is paid in full.
(c)    In no event shall the interest rate on the Notes exceed the highest lawful rate permitted by applicable law.
(d)    The Company or a calculation agent to be appointed by the Company will calculate the amount of interest payable from time to time under the Notes.
SECTION 203.  Form and Dating.  Provisions relating to the Notes are set forth in the Rule 144A / Regulation S / IAI Appendix attached hereto (the “Appendix”) which is hereby incorporated in, and expressly made part of, this Indenture. The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit 1 to the Appendix which is hereby incorporated in, and expressly made a part of, this Indenture.  The Notes may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form reasonably acceptable to the Company).  Each Note shall be dated the date of its authentication.
SECTION 204.  Execution, Authentication and Delivery.  The Notes shall be executed on behalf of the Company by at least one Officer.  The signature of any Officer on the Notes may be manual or facsimile (or other electronic transmission) signatures of such authorized officer and may be imprinted or otherwise reproduced on the Notes.
Notes bearing the manual or facsimile (or other electronic transmission) signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes.

49

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Additional Notes executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Additional Notes, directing the Trustee to authenticate the Additional Notes and an Officers’ Certificate certifying that the issuance of such Additional Notes is in compliance with Article Ten hereof and that all other conditions precedent to the issuance of Notes contained herein have been fully complied with, and the Trustee in accordance with such Company Order and any related Opinion of Counsel shall authenticate and deliver such Additional Notes.  
No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture.
In case the Company or any Guarantor, pursuant to Article Eight of this Indenture, shall be consolidated, amalgamated or merged with or into any other Person or shall convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, and the successor Person resulting from such consolidation or amalgamation, or surviving such merger, or into which the Company or such Guarantor shall have been merged or amalgamated, or the Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid, shall have executed a supplemental indenture hereto with the Trustee pursuant to Article Eight of this Indenture, any of the Notes authenticated or delivered prior to such consolidation, amalgamation, merger, conveyance, transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other Notes executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Notes surrendered for such exchange and of like principal amount; and the Trustee, upon Company Request of the successor Person, shall authenticate and deliver Notes as specified in such request for the purpose of such exchange.  If Notes shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section in exchange or substitution for or upon registration of transfer of any Notes, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Notes at the time Outstanding for Notes authenticated and delivered in such new name.
ARTICLE THREE
NOTES FORMS
SECTION 301.  Title and Terms.  The aggregate principal amount of Notes which may be authenticated and issued under this Indenture is not limited; provided, however that any Additional Notes issued under this Indenture are issued in accordance with Sections 204 and 1011 hereof, as part of the same series as the Existing Notes and the Initial Notes.
The Notes shall be known and designated as the “Senior Notes Due 2021” of the Company.  The Stated Maturity of the Notes shall be April 15, 2021.

50

The principal of (and premium, if any) and interest on the Notes shall be payable at the office or agency of the Company maintained for such purpose in the City of New York, in the city of Minneapolis, Minnesota or, at the option of the Company, payments of interest may be made by check mailed to the Holders of the Notes at their respective addresses set forth in the Note Register of Holders; provided that all payments of principal, premium, if any, and interest with respect to Notes represented by one or more Global Notes registered in the name of or held by the Depositary or its nominee will be made by wire transfer of immediately available funds to the accounts specified by the Holder or Holders thereof.  Until otherwise designated by the Company, the Company's office or agency in New York shall be the office of the Trustee maintained for such purpose and the Company's office or agency in Minneapolis shall be the Corporate Trust Office.
Holders shall have the right to require the Company to purchase their Notes, in whole or in part, in the event of a Change of Control pursuant to Section 1016.  The Notes shall be subject to repurchase pursuant to an Asset Sale Offer as provided in Section 1017.
The Notes shall be redeemable as provided in Article Eleven.
The due and punctual payment of principal of, premium, if any, and interest on the Notes payable by the Company is irrevocably unconditionally guaranteed, to the extent set forth herein, by each of the Guarantors.
SECTION 302.  Denominations.  The Notes shall be issuable only in registered form without coupons and only in denominations of $2,000 and any integral multiples of $1,000 in excess thereof.
SECTION 303.  Temporary Notes.  In the event that definitive Notes are to be issued under the terms of the Indenture, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Notes may determine, as conclusively evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay.  After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company designated for such purpose pursuant to Section 1002, without charge to the Holder.  Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute and, upon receipt of a Company Order, the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations.  Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive Notes.
SECTION 304.  Registration, Registration of Transfer and Exchange.  The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to 

51

Section 1002 being herein sometimes referred to as the “Note Register”) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes.  The Note Register shall be in written form or any other form capable of being converted into written form within a reasonable time.  At all reasonable times, the Note Register shall be open to inspection by the Trustee.  The Trustee is hereby initially appointed as note registrar (the “Note Registrar”) for the purpose of registering Notes and transfers of Notes as herein provided.
Upon surrender for registration of transfer of any Note at the office or agency of the Company designated pursuant to Section 1002, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denomination or denominations of a like aggregate principal amount.
All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Company, 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 (if so required by the Company or the Note Registrar) be duly endorsed, or be accompanied by written instruments of transfer, in form satisfactory to the Company and the Note Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange or redemption of Notes, but the Company may require payment of a sum sufficient to cover any taxes, fees or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Sections 204, 303, 906, 1016, 1017, or 1108 not involving any transfer.
SECTION 305.  Mutilated, Destroyed, Lost and Stolen Notes.  If (1) any mutilated Note is surrendered to the Trustee, or (2) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, and there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then the Company shall execute and upon Company Order the Trustee shall authenticate and deliver, in exchange for any such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

52

Every new Note issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company and each Guarantor, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all 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 306.  Payment of Interest; Interest Rights Preserved.  (a) Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose pursuant to Section 1002; provided, however, that, subject to Section 301 hereof, each installment of interest may at the Company’s option be paid by (1) mailing a check for such interest, payable to or upon the written order of the Person entitled thereto pursuant to Section 307, to the address of such Person as it appears in the Note Register or (2) transfer to an account located in the United States maintained by the payee.
(b)    Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Holder on the Regular Record Date by virtue of having been such Holder, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Notes (such defaulted interest and interest thereon herein collectively called “Defaulted Interest”) may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below:
(1)    The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner.  The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided.  Thereupon the Company shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment.  The Company shall promptly notify the Trustee of such Special Record Date, and the Trustee in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given in the manner provided for in Section 107, not less than 10 days prior to such Special Record Date.  Notice of the proposed payment of such Defaulted Interest and the Special Record Date 

53

therefor having been so given, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2).
(2)    The Company may make payment of any Defaulted Interest in any other lawful manner and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.
(c)    Subject to the foregoing provisions of this Section, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.
SECTION 307.  Persons Deemed Owners.  Prior to the due presentment of a Note for registration of transfer, the Company,  any Guarantor, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Note is registered as the owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 306) interest on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and none of the Company, the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary.
SECTION 308.  Cancellation.  All Notes surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it.  The Company may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Notes previously authenticated hereunder which the Company has not issued and sold, and all Notes so delivered shall be promptly cancelled by the Trustee.  If the Company shall so acquire any of the Notes, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation.  No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section, except as expressly permitted by this Indenture.  All cancelled Notes held by the Trustee shall be disposed of by the Trustee in accordance with its customary procedures unless by Company Order the Company shall direct that cancelled Notes be returned to it.
SECTION 309.  Transfer and Exchange.  The Notes shall be issued in registered form and shall be transferable only upon the surrender of a Note for registration of transfer.  When a Note is presented to the Notes Registrar or a co-registrar with a request to register a transfer, the Notes Registrar shall register the transfer as requested if the requirements of this Indenture are met.  When Notes are presented to the Notes Registrar or a co-registrar with a request to exchange them for an equal principal amount of Notes of other denominations, the Notes Registrar shall make the exchange as requested if the same requirements are met.

54

SECTION 310.  CUSIP Numbers.  The Company in issuing the Notes may use “CUSIP” numbers, ISINs and “Common Code” numbers (in each case, if then generally in use) in addition to serial numbers, and, if so, the Trustee shall use such “CUSIP” numbers, ISINs and “Common Code” numbers in addition to serial numbers in notices of redemption, repurchase or other notices to Holders as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such “CUSIP” numbers, ISINs and “Common Code” numbers either as printed on the Notes or as contained in any notice of a redemption or repurchase and that reliance may be placed only on the serial or other identification numbers printed on the Notes, and any such redemption or repurchase shall not be affected by any defect in or omission of such numbers.  The Company will promptly notify the Trustee in writing of any change in the “CUSIP” numbers, ISINs and “Common Code” numbers applicable to the Notes.
SECTION 311.  Issuance of Additional Notes.  The Company may, subject to Sections 204 and 1011 of this Indenture, issue Additional Notes having identical terms and conditions to the Notes. The Existing Notes, the Initial Notes and any Additional Notes subsequently issued shall be treated as a single class for all purposes under this Indenture.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401.  Satisfaction and Discharge of Indenture.  This Indenture shall upon the Company’s Request and at the Company’s expense cease to be of further effect as to all Notes (except as set forth in the last paragraph of this Section and as to surviving rights of registration of transfer or exchange of Notes expressly provided for herein or pursuant hereto) and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture when:
(1)    either
(A)    all applicable Notes theretofore authenticated and delivered, (except (i) lost, stolen or destroyed Notes which have been replaced or paid as provided in Section 305 and (ii) Notes for whose payment money has theretofore been deposited in trust with the Trustee or any Paying Agent or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003), have been delivered to the Trustee for cancellation; or
(B)    all applicable Notes not theretofore delivered to such Trustee for cancellation,
(i)    have become due and payable by reason of the making of a notice of redemption pursuant to Section 1105 or otherwise,
(ii)    will become due and payable at their Stated Maturity within one year, or

55

(iii)    are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation, for principal, premium, if any, and accrued interest to the date of such deposit (in the case of Notes which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be;
(2)    no Default (other than that resulting from borrowing funds to be applied to make such deposit and the granting of Liens in connection therewith) with respect to this Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit shall not result in a breach or violation of, or constitute a default under any Credit Facility or any other material agreement or instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound;
(3)    the Company has paid or caused to be paid all sums payable by it under this Indenture;
(4)    the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of such Notes at the Stated Maturity or the Redemption Date, as the case may be; and
(5)    the Company has delivered an Officers' Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent herein to the satisfaction and discharge of this Indenture have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607, the obligations of the Company to any Authenticating Agent under Section 612 and, if money or Government Securities shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive such satisfaction and discharge.
SECTION 402.  Application of Trust Money.  Subject to the provisions of the last paragraph of Section 1003, all money or Government Securities deposited with the Trustee pursuant to Section 401 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 (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment 

56

such money or Government Securities has been deposited with the Trustee; but such money or Government Securities need not be segregated from other funds except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 401 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s and any Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 401 until such time as the Trustee or Paying Agent is permitted to apply all such money or Government Securities in accordance with Section 401; provided that if the Company has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.
ARTICLE FIVE
REMEDIES
SECTION 501.  Events of Default.  Each of the following events constitute an Event of Default (each, an “Event of Default”):
(1)    default in payment when due and payable, upon redemption, acceleration or otherwise, of payments of principal of, or premium, if any, on the Notes;
(2)    default for 30 days or more in the payment when due of interest on or with respect to the Notes;
(3)    failure by the Company or any Guarantor for 60 days after receipt of written notice given by the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes issued under this Indenture to comply with any of its other agreements contained in this Indenture or the Notes;
(4)    default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Company or any Restricted Subsidiary or the payment of which is guaranteed by the Company or any Restricted Subsidiary, other than Indebtedness owed to the Company or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists or is created after the issuance of the Notes, if both
(A)     such default either:
(i)    results from the failure to pay any principal of such Indebtedness at its stated final maturity (after giving effect to any applicable grace periods); or

57

(ii)    relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity; and
(B)     the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at its stated final maturity (after giving effect to any applicable grace periods), or the maturity of which has been so accelerated, aggregate $50 million or more at any one time outstanding;
(5)    failure by the Company or any Restricted Subsidiary to pay final judgments aggregating in excess of $50 million, which final judgments remain unpaid, undischarged and unstayed for a period of more than 60 days after such judgment becomes final, and in the event such judgment is covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed;
(6)    (i) a court of competent jurisdiction shall enter a decree or order for relief in respect of the Company or any Significant Subsidiary (or any group of Subsidiaries that together would constitute a Significant Subsidiary) in an involuntary case under any Debtor Relief Law; or any other similar relief shall be granted under any applicable federal, foreign, state or provincial law; or (ii) an involuntary case shall be commenced against the Company or any such Significant Subsidiary (or any group of Subsidiaries that together would constitute a Significant Subsidiary) under any Debtor Relief Law (and such involuntary case shall continue for 60 days without having been dismissed or discharged); or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, trustee, custodian or other officer having similar powers over the Company or any such Significant Subsidiary (or any group of Subsidiaries that together would constitute a Significant Subsidiary), or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of the Company or any such Significant Subsidiary (or any group of Subsidiaries that together would constitute a Significant Subsidiary) for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of the Company or any such Significant Subsidiary (or any group of Subsidiaries that together would constitute a Significant Subsidiary);
(7)    the Company or any Significant Subsidiary (or any group of Subsidiaries that together would constitute a Significant Subsidiary) shall commence a voluntary case under any Debtor Relief Law, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or the Company or any such Significant Subsidiary (or any group of Subsidiaries that together would constitute a Significant Subsidiary) shall make any assignment for the benefit of creditors; or the Company or any such Significant Subsidiary (or any group of 

58

Subsidiaries that together would constitute a Significant Subsidiary) shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the board of directors (or similar governing body) of the Company or any such Significant Subsidiary (or any group of Subsidiaries that together would constitute a Significant Subsidiary) (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to in this subclause (7) or subclause (6) of this Section; or
(8)    the Guarantee of any Significant Subsidiary (or any group of Subsidiaries that together would constitute a Significant Subsidiary) shall for any reason cease to be in full force and effect or be declared null and void or any responsible officer of  any Guarantor that is a Significant Subsidiary (or the responsible officers of any group of Subsidiaries that together would constitute a Significant Subsidiary), as the case may be, denies that it has any further liability under its Guarantee or gives notice to such effect, other than by reason of the termination of this Indenture or the release of any such Guarantee in accordance with this Indenture and such Default continues for 10 days.
SECTION 502.  Acceleration of Maturity; Rescission and Annulment.  (a) If any Event of Default (other than an Event of Default specified in Section 501(6)) occurs and is continuing under this Indenture, then and in every case the Trustee or the Holders of at least 25% in principal amount of Outstanding Notes under this Indenture may declare the principal, premium, if any, interest and any other monetary obligations on all the Outstanding Notes issued under this Indenture to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders).
(b)    Upon the effectiveness of such declaration, such principal of and premium, if any, and interest on the Notes will be due and payable immediately.  Notwithstanding the foregoing, in the case of an Event of Default arising under Section 501(6), all outstanding Notes will become due and payable without further action or notice.  The Trustee may withhold from Holders notice of any continuing Default, except a Default relating to the payment of principal of and premium, if any, and interest on the Notes if it determines that withholding notice is in their interest.  In addition, the Trustee will have no obligation to accelerate the Notes if in the judgment of the Trustee acceleration is not in the interest of the Holders.
SECTION 503.  Collection of Indebtedness and Suits for Enforcement by Trustee.  The Company covenants that if:
(1)    default is made in the payment of any installment of interest on any Note when such interest becomes due and payable and such default continues for a period of 30 days, or
(2)    default is made in the payment of the principal of (or premium on) any Note at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal (and 

59

premium, if any) and interest, and interest on any overdue principal (and premium, if any) and, to the extent that payment of such interest shall be legally enforceable, upon any overdue installment of interest, at the rate borne by the Notes, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company, any Guarantor or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company, any Guarantor or any other obligor upon the Notes, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders under this Indenture and the Guarantees by such appropriate judicial proceedings as the Trustee shall deem necessary to protect and enforce any such rights, including seeking recourse against any Guarantor, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy, including seeking recourse against any Guarantor.
SECTION 504.  Trustee May File Proofs of Claim.  In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor including any Guarantor, upon the Notes or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal, premium, if any, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,
(1)    to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and
(2)    to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, 

60

disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 505.  Trustee May Enforce Claims Without Possession of Notes.  All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders in respect of which such judgment has been recovered.
SECTION 506.  Application of Money Collected.  Subject to Section 1204, any money or property collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST:  To the payment of all amounts due the Trustee hereunder, including under Section 607;
SECOND:  To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest on the Notes in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal (and premium, if any) and interest, respectively; and
THIRD:  The balance, if any, to the Company or as a court of competent jurisdiction may direct in writing; provided that all sums due and owing to the Holders and the Trustee have been paid in full as required by this Indenture.
SECTION 507.  Limitation on Suits.  Except to enforce the right to receive payments of principal of and premium, if any, and interest on the Notes when due, no Holder may pursue any remedy with respect to this Indenture or the Notes unless:
(1)    such Holder has previously given the Trustee notice that an Event of Default is continuing;
(2)    Holders of at least 25% in principal amount of the then outstanding Notes have requested the Trustee to pursue the remedy;

61

(3)    such Holders have offered the Trustee security or indemnity against any loss, liability or expense;
(4)    the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and
(5)    Holders of a majority in principal amount of the Outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.
SECTION 508.  Unconditional Right of Holders to Receive Principal, Premium and Interest.  Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment, as provided herein (including, if applicable, Article Eleven) and in such Note of the principal of (and premium, if any) and (subject to Section 306) interest on such Note on the respective Stated Maturities expressed in such Note (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment on or after such respective dates, and such rights shall not be impaired without the consent of such Holder.
SECTION 509.  Restoration of Rights and Remedies.  If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture or the Guarantees and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, any Guarantor, any other obligor of the Notes, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.
SECTION 510.  Rights and Remedies Cumulative.  Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 305, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders 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 511.  Delay or Omission Not Waiver.  No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 512.  Control by Holders.  The Holders of not less than a majority in principal amount of the Outstanding Notes shall have the right to direct the time, method and 

62

place of conducting any proceeding for exercising any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, provided that:
(1)    such direction shall not be in conflict with any rule of law or with this Indenture,
(2)    subject to Section 315 of the Trust Indenture Act, the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and
(3)    the Trustee need not take any action which might involve it in personal liability or be unjustly prejudicial to the Holders not consenting.
SECTION 513.  Waiver of Past Defaults.  The Holders of a majority in aggregate principal amount of the Outstanding Notes by notice to the Trustee may, on behalf of all Holders, waive any existing Default and its consequences under this Indenture, except a continuing Default in the payment of principal of and premium, if any, or interest on any such Notes held by a non-consenting Holder.  In the event of any Event of Default specified in Section 501 (6) above, such Event of Default and all consequences thereof (excluding any resulting payment default) shall be annulled, waived and rescinded automatically and without any action by the Trustee or the Holders if, within 30 days after such Event of Default arose,
(x)    the Indebtedness or guarantee that is the basis for such Event of Default has been discharged;
(y)    the holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default; or
(z)    the default that is the basis for such Event of Default has been cured; it being understood that in no event shall any acceleration of the principal amount of the Notes as described above be annulled, waived or rescinded upon the happening of any such events.
SECTION 514.  Waiver of Stay or Extension Laws.  Each of the Company, the Guarantors and any other obligor on the Notes covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and each of the Company, the Guarantors and any other obligor on the Notes (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

63

ARTICLE SIX
THE TRUSTEE
SECTION 601.  Duties of the Trustee.  (a) Except during the continuance of a Default or an Event of Default,
(1)    the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(2)    in the absence of negligence, bad faith or willful misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions specifically required by any provision hereof to be provided to it, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture, but not to verify the contents thereof.
(b)    If a Default or an Event of Default has occurred and is continuing of which a Responsible Officer of the Trustee has actual knowledge or of which written notice of such Default or Event of Default shall have been given to the Trustee by the Company, any other obligor of the Notes or by any Holder, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.
(c)    No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, its own bad faith or its own willful misconduct, except that
(1)    this paragraph (c) shall not be construed to limit the effect of paragraph (a) of this Section;
(2)    the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
(3)    the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in aggregate principal amount of the Outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and
(4)    no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have 

64

reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
(d)    The Trustee shall comply with TIA Section 311(a).  A Trustee who has resigned or been removed shall be subject to TIA Section 311(a).
(e)    Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.
SECTION 602.  Notice of Defaults.  Within 30 days after the earlier of receipt from the Company of notice of the occurrence of any Default or Event of Default hereunder or the date when such Default or Event of Default becomes known to the Trustee, the Trustee shall transmit, in the manner and to the extent provided in TIA Section 313(c), notice of such Default or Event of Default hereunder known to the Trustee, unless such Default or Event of Default shall have been cured or waived; provided, however, that, except in the case of a Default or Event of Default in the payment of the principal of (or premium, if any, on) or interest on any Note, the Trustee shall be protected in withholding such notice if and so long as a trust committee of Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders.
SECTION 603.  Certain Rights of Trustee.  Subject to the provisions of TIA Sections 315(a) through 315(d):
(1)    the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document (whether in original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper party or parties;
(2)    any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(3)    whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers’ Certificate;
(4)    the Trustee may consult with counsel of its own selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with the advice or opinion of such counsel;
(5)    the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security 

65

or indemnity satisfactory to it against the costs, expenses, losses and liabilities which might be incurred by it in compliance with such request or direction;
(6)    the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the expense of the Company and shall incur no liability of any kind by reason of such inquiry or investigation;
(7)    the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;
(8)    the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; provided, however, that the Trustee’s conduct does not constitute wilful misconduct or negligence.
(9)    the rights, privileges, protections, immunities and benefits given to the Trustee, including its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder;
(10)    the Trustee may request that the Company deliver a certificate substantially in the form of Exhibit B hereto setting forth the names of individuals or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which certificate may be signed by any person authorized to sign a certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded; and
(11)    the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.
SECTION 604.  Trustee Not Responsible for Recitals or Issuance of Notes.  The recitals contained herein and in the Notes, except for the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness.  The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Notes and perform its obligations hereunder and that 

66

the statements made by it in a Statement of Eligibility on Form T‐1 supplied to the Company are true and accurate, subject to the qualifications set forth therein.  The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof.  Other than requiring an Officers’ Certificate provided pursuant to Section 1008, the Trustee shall have no responsibility to monitor or verify compliance by the Company or any Guarantor of its obligations and covenants hereunder.
SECTION 605.  May Hold Notes.  The Trustee, any Paying Agent, any Note Registrar or any other agent of the Company or of the Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to TIA Sections 310(b) and 311, may otherwise deal with the Company with the same rights it would have if it were not the Trustee, Paying Agent, Note Registrar or such other agent; provided, however, that, if it acquires any conflicting interest, it must eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign.
SECTION 606.  Money Held in Trust.  Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.  The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company.
SECTION 607.  Compensation and Reimbursement.  The Company and the Guarantors, jointly and severally, agree:
(1)    to pay to the Trustee from time to time such compensation as shall be agreed in writing between the Company and the Trustee for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
(2)    except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as shall be determined to have been caused by its own negligence or willful misconduct; and
(3)    to indemnify the Trustee and any predecessor Trustee for, and to hold it harmless against, any and all loss, liability, claim, damage or expense, including taxes (other than the taxes based on the income of the Trustee) incurred without negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim regardless of whether the claim is asserted by the Company, a Guarantor, a Holder or any other Person or liability in connection with the exercise or performance of any of its powers or duties hereunder.
The obligations of the Company under this Section to compensate the Trustee, to pay or reimburse the Trustee for reasonable expenses, disbursements and advances and to indemnify and hold harmless the Trustee shall constitute additional indebtedness hereunder and 

67

shall survive the satisfaction and discharge of this Indenture and resignation or removal of the Trustee.  As security for the performance of such obligations of the Company, the Trustee shall have a claim prior to the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest on particular Notes.
When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(8), the expenses (including the reasonable charges and expenses of its counsel) of and the compensation for such services are intended to constitute expenses of administration under any applicable Bankruptcy Law.
The provisions of this Section shall survive the termination of this Indenture and resignation or removal of the Trustee.
SECTION 608.  Corporate Trustee Required; Eligibility.  There shall be at all times a Trustee hereunder which shall be eligible to act as Trustee under TIA Section 310(a)(1) and shall have a combined capital and surplus of at least $50,000,000.  If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of Federal, State, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.
SECTION 609.  Resignation and Removal; Appointment of Successor.  (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 610.
(b)    The Trustee may resign at any time by giving written notice thereof to the Company.  Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written instrument executed by authority of the Board of Directors, a copy of which shall be delivered to the resigning Trustee and a copy to the successor Trustee.  If the instrument of acceptance by a successor Trustee required by Section 610 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.
(c)    The Trustee may be removed at any time by Act of the Holders of not less than a majority in principal amount of the Outstanding Notes, delivered to the Trustee and to the Company.  If the instrument of acceptance by a successor Trustee required by Section 610 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.

68

(d)    The Trustee shall comply with TIA Section 310(b); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
(e)    If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee.  If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Notes delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company.  If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee.
(f)    The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to the Holders in the manner provided for in Section 107.  Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 610.  Acceptance of Appointment by Successor.  (a) Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.  Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts.
(b)    No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.
SECTION 611.  Merger, Conversion, Consolidation or Succession to Business.  Any corporation or national association into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation or national association resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation or national association succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation or national association shall be otherwise qualified and eligible under this Article, without the execution or 

69

filing of any paper or any further act on the part of any of the parties hereto.  In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes.  In case at that time any of the Notes shall not have been authenticated, any successor Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor Trustee.  In all such cases such certificates shall have the full force and effect which this Indenture provides for the certificate of authentication of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Notes in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.
SECTION 612.  Appointment of Authenticating Agent.  At any time when any of the Notes remain Outstanding, the Trustee may appoint an authenticating agent or agents (each, an “Authenticating Agent”) with respect to the Notes which shall be authorized to act on behalf of the Trustee to authenticate Notes and the Trustee shall give written notice of such appointment to all Holders of Notes with respect to which such Authenticating Agent will serve, in the manner provided for in Section 107.  Notes so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder.  Any such appointment shall be evidenced by an instrument in writing signed by a Responsible Officer of the Trustee, and a copy of such instrument shall be promptly furnished to the Company.  Wherever reference is made in this Indenture to the authentication and delivery of Notes by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent.  Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any state thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50.0 million and subject to supervision or examination by Federal or state authority.  If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect specified in this Section.
Any corporation or national association into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation or national association resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation or national association succeeding to all or substantially all the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation or national association shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

70

An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company.  The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company.  Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give written notice of such appointment to all Holders of Notes, in the manner provided for in Section 107.  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 eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time such compensation for its services under this Section as shall be agreed in writing between the Company and such Authenticating Agent.
If an appointment is made pursuant to this Section, the Notes may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternate certificate of authentication in the following form:
This is one of the Notes designated therein referred to in the within-mentioned Indenture.
	
		
	WELLS FARGO BANK, NATIONAL ASSOCIATION

	 
	as Trustee

	 
	 

	By:
	 

	as Authenticating Agent

ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701.  Company to Furnish Trustee Names and Addresses.  The Company will furnish or cause to be furnished to the Trustee:
(1)    semiannually, not more than 10 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date; and
(2)    at such other times as the Trustee may reasonably request in writing, within 30 days after receipt by the Company of any such request, a list of similar form and content to that in clause (1) hereof as of a date not more than 15 days prior to the time such list is furnished;

71

provided, however, that if and so long as the Trustee shall be the Note Registrar, no such list need be furnished.
SECTION 702.  Disclosure of Names and Addresses of Holders.  Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that none of the Company or the Trustee or any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with TIA Section 312, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under TIA Section 312(b).
SECTION 703.  Reports by Trustee.  Within 60 days after May 15 of each year commencing with May 15, 2012, the Trustee shall transmit to the Holders of Notes (with a copy to the Company at the address specified in Section 106), in the manner and to the extent provided in TIA Section 313(c), a brief report dated as of such May 15 that complies with TIA Section 313(a).  The Trustee also shall comply with TIA Section 313(b).
ARTICLE EIGHT
MERGER, CONSOLIDATION OR SALE
OF ALL OR SUBSTANTIALLY ALL ASSETS
SECTION 801.  Company May Consolidate, Etc., Only on Certain Terms.  (a)  The Company may not, consolidate, amalgamate or merge with or into or wind up into (whether or not the Company is the surviving entity), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to any Person unless:
(1)     the Company is the surviving corporation or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is (i) a corporation or (ii) a limited partnership or limited liability company and is (or has previously been) joined by a corporation as a co-issuer of the Notes, in each case organized or existing under the laws of Canada, any province thereof, the United States of America, any state thereof, the District of Columbia, or any territory thereof (the Company or such Person, as the case may be, being herein called the “Successor Company”);
(2)     in the case of a transaction involving the Company, the Successor Company, if other than the Company, expressly assumes all the obligations of the Company under this Indenture and the Notes pursuant to supplemental indentures or other documents or instruments in form reasonably satisfactory to the Trustee;
(3)     immediately after such transaction, no Default or Event of Default exists;
(4)     immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period;

72

(A)    the Successor Company and the Restricted Subsidiaries on a consolidated basis would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 1011(a); or
(B)    the Fixed Charge Coverage Ratio for the Successor Company and the Restricted Subsidiaries on a consolidated basis would be greater than such ratio for the Company and the Restricted Subsidiaries immediately prior to such transaction;
(5)     each Guarantor, unless it is the other party to the transactions described above, in which case Section 802(a)(A)(2) shall apply, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person’s obligations under this Indenture and the Notes; and
(6)     the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, amalgamation, merger or transfer and such supplemental indentures, if any, comply with this Indenture.
(b)    The Successor Company shall succeed to, and be substituted for, the Company under this Indenture and the Notes.  Without complying with the foregoing clauses (3) and (4),
(a)    any Restricted Subsidiary may consolidate with, merge or amalgamate into or transfer all or part of its properties and assets to, the Company; and
(b)    the Company may merge with an Affiliate of such entity incorporated solely for the purpose of reincorporating or continuing such entity in another province of Canada or any state of the United States of America so long as the amount of Indebtedness of the Company and the Restricted Subsidiaries is not increased thereby.
(c)    Section 801 shall not apply to any sale, assignment, transfer, lease, conveyance or other disposition of assets between or among the Company and the Guarantors; provided, however, that a Guarantor that is a transferee under this provision may not subsequently release its Guarantee unless such Guarantor has consolidated with or merged into the Company.
SECTION 802.  Guarantors May Consolidate, Etc., Only on Certain Terms.  (a)  Subject to Section 1209, each Guarantor shall not, and the Company shall not permit any Guarantor to, consolidate or merge with or into or wind up into (whether or not such Guarantor is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, any Person unless:
(A)     (1)    such Guarantor is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) or 

73

to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of Canada, any province thereof, the United States of America, any state thereof, the District of Columbia, or any territory thereof or Luxembourg (such Guarantor or such Person, as the case may be, being herein called the “Successor Person”);
(2)    the Successor Person, if other than such Guarantor, expressly assumes all the obligations of such Guarantor under this Indenture and such Guarantor’s Guarantee, pursuant to supplemental indentures or other documents or instruments in form reasonably satisfactory to the Trustee,
(3)    immediately after such transaction, no Default exists; and
(4)    the Company shall have delivered to the Trustee an Officers’ Certificate and an opinion of counsel, each stating that such consolidation, merger or transfer and such supplemental indentures, if any, comply with this Indenture; or
(B)     the transaction is permitted by the covenant described under “-Repurchase at the Option of Holders-Asset Sales.”
(b)    Subject to Section 1208 hereof, the Successor Person shall succeed to, and be substituted for, such Guarantor under this Indenture and such Guarantor’s Guarantee.  Notwithstanding the foregoing, (a) any Guarantor may merge or amalgamate into or with or transfer all or part of its properties and assets to another Guarantor or the Company and (b) any Guarantor may convert into a corporation, partnership, limited partnership, limited liability company or trust organized under the laws of the jurisdiction of organization of such Guarantor.
(c)    For purposes of Article Eight, the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Restricted Subsidiaries of the Company (other than to the Company or a Guarantor in compliance with the terms of this Indenture), which properties and assets, if held by the Company instead of such Restricted Subsidiaries, would constitute all or substantially all of the properties and assets of the Company and its Restricted Subsidiaries on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901.  Amendments or Supplements Without Consent of Holders.  Without the consent of any Holder, the Company, any Guarantor (with respect to a Guarantee or this Indenture to which it is a party) and the Trustee, at any time and from time to time, may amend or supplement this Indenture, any Guarantee or the Notes, in form satisfactory to the Trustee, for any of the following purposes:

74

(1)    to cure any ambiguity, omission, mistake, defect or inconsistency;
(2)    to provide for uncertificated Notes in addition to or in place of certificated Notes;
(3)    to comply with Article Eight hereof;
(4)    to provide the assumption of the Company’s or any Guarantor’s obligations to Holders;
(5)    to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under this Indenture of any such Holder;
(6)    to provide for uncertificated Notes in addition to or in place of a certificated Note (provided that such uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(b) of the Code;
(7)    to add covenants for the benefit of the Holders or to surrender any right or power conferred in this Indenture upon the Company or any Guarantor;
(8)    to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act;
(9)    to evidence and provide for the acceptance and appointment under this Indenture of a successor Trustee pursuant to the requirements of Sections 609 and 610 hereof;
(10)    to add a Guarantor under this Indenture; 
(11)    to conform the text of this Indenture, the Guarantees or the Notes to any provision under the caption “Description of Notes” in the Offering Memorandum to the extent that such provision in this Indenture, the Guarantees or the Notes was intended to be a substantially verbatim recitation of a provision under the caption “Description of Notes” in the Offering Memorandum, as evidenced by an Officers' Certificate delivered by the Company to the Trustee;
(12)    to mortgage, pledge, hypothecate or grant any other Lien in favor of the Trustee for the benefit of the Holders of the Notes, as security for the payment and performance of all or any portion of the Notes, in any property or assets;
(13)    to comply with the rules of any applicable securities depositary; and
(14)    to make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes; provided, however, that (A) compliance with this Indenture as so amended would not result in Notes being transferred in violation of the 

75

Securities Act or any applicable securities law and (B) such amendment does not materially and adversely affect the rights of Holders to transfer Notes.
SECTION 902.  Amendments, Supplements or Waivers with Consent of Holders.  With the consent of the Holders of at least a majority in principal amount of the Outstanding Notes, by Act of said Holders delivered to the Company and the Trustee, the Company and any Guarantor (with respect to any Guarantee or this Indenture to which it is a party), when authorized by Board Resolutions of their respective Board of Directors, and the Trustee may amend or supplement this Indenture, any Guarantee or the Notes for the purpose of adding any provisions hereto or thereto, changing in any manner or eliminating any of the provisions or of modifying in any manner the rights of the Holders hereunder or thereunder (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes) and any existing Default, Event of Default or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of at least a majority in principal amount of the Outstanding Notes, other than Notes beneficially owned by the Company or its Affiliates (including consents obtained in connection with a purchase of, or tender offer or exchange offer for Notes); provided, however, that no such amendment or waiver shall, without the consent of the Holder of each Outstanding Note affected thereby:
(1)    reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver,
(2)    reduce the principal of or change the Stated Maturity of any such Note or alter or waive the provisions with respect to the redemption of the Notes (other than Sections 1016 and 1017),
(3)    reduce the rate of or change the time for payment of interest on any Note,
(4)    waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes issued under this Indenture, except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Outstanding Notes and a waiver of the payment default that resulted from such acceleration, or in respect of a covenant or provision contained in this Indenture or any guarantee which cannot be amended or modified without the consent of all Holders,
(5)    make any Note payable in money other than that stated in the Notes,
(6)    make any change in Section 513 or the rights of Holders to receive payments of principal of or premium, if any, or interest on the Notes,
(7)    make any change in these amendment and waiver provisions,
(8)    impair the right of any Holder to receive payment of principal of, or interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes, or
(9)    make any change in the ranking of this Indenture and the Notes that would adversely affect the Holders.

76

Consent of the Holders is not necessary under this Section 902 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.
SECTION 903.  Execution of Amendments, Supplements or Waivers.  In executing, or accepting the additional trusts created by, any amendment, supplement or waiver permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be provided with, and shall be fully protected in relying upon, an Officers’ Certificate and Opinion of Counsel stating that the execution of such amendment, supplement or waiver is authorized or permitted by this Indenture and all conditions precedent thereto have been satisfied.  The Trustee may, but shall not be obligated to, enter into any such amendment, supplement or waiver which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.
SECTION 904.    Effect of Amendments, Supplements or Waivers.  Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such amendment, supplement or waiver shall form a part of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 905.  Compliance with Trust Indenture Act.  Every supplemental indenture executed pursuant to the Article shall comply with the requirements of the Trust Indenture Act as then in effect.
SECTION 906.  Reference in Notes to Supplemental Indentures.  Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture.  If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Notes.
SECTION 907.  Notice of Supplemental Indentures.  Promptly after the execution by the Company, any Guarantor and the Trustee of any supplemental indenture pursuant to the provisions of Section 902, the Company shall give notice thereof to the Holders of each Outstanding Note affected, in the manner provided for in Section 107, setting forth in general terms the substance of such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001.  Payment of Principal, Premium, if any, and Interest.  The Company covenants and agrees for the benefit of the Holders that it will duly and punctually pay the principal of (and premium, if any) and interest on the Notes in accordance with the terms of the Notes and this Indenture.

77

The Company shall pay interest on overdue principal at the rate specified therefor in the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
SECTION 1002.  Maintenance of Office or Agency.  The Company will maintain in The City of New York or in the City of Minneapolis, Minnesota, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served.  The designated office of the Trustee shall be such office or agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes.  The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency.  If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices or agencies (in or outside of The City of New York and the City of Minneapolis, Minnesota) where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation.  The Company will give prompt written notice to the Trustee of any such designation or rescission and any change in the location of any such other office or agency.
SECTION 1003.  Money for Notes Payments to Be Held in Trust.  If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (or premium, if any) or interest on any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal of (or premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the Notes, it will, on or before each due date of the principal of (or premium, if any) or interest on any Notes, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of such action or any failure so to act.
The Company will cause each Paying Agent (other than the Trustee) to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will:
(1)    hold all sums held by it for the payment of the principal of (and premium, if any) or interest on 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;

78

(2)    give the Trustee notice of any Default by the Company (or any other obligor upon the Notes) in the making of any payment of principal (and premium, if any) or interest; and
(3)    at any time during the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (or premium, if any) or interest on any Note and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as Trustee thereof, shall thereupon cease.
SECTION 1004.  Corporate Existence.  Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect the corporate existence and that of each Restricted Subsidiary and the corporate rights (charter and statutory) and franchises of the Company and each Restricted Subsidiary; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries as a whole.
SECTION 1005.  Payment of Taxes and Other Claims.  The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary and (2) all lawful claims for labor, materials and supplies, which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which appropriate reserves, if necessary (in the good faith judgment of management of the Company) are being maintained in accordance with GAAP.
SECTION 1006.  Maintenance of Properties.  The Company will cause all properties owned by the Company or any Restricted Subsidiary or used or held for use in the conduct of its business or the business of any Restricted Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will 

79

cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Restricted Subsidiary.
SECTION 1007.  Insurance.  The Company will at all times keep all of its and its Subsidiaries’ properties which are of an insurable nature insured with insurers, believed by the Company to be responsible, against loss or damage to the extent that property of similar character is usually so insured by corporations similarly situated and owning like properties.
SECTION 1008.  Statement by Officers as to Default.  (a) The Company will deliver to the Trustee within 120 days after the end of each fiscal year (commencing with the fiscal year ending December 31, 2011), an Officers’ Certificate which shall comply with Section 314(a)(4) of the TIA stating that a review of the activities of the Company and its Restricted Subsidiaries during the preceding fiscal year has been made under the supervision of the signing officers with a view to determining whether it has kept, observed, performed and fulfilled, and has caused each of its Restricted Subsidiaries to keep, observe, perform and fulfill its obligations under this Indenture and further stating, as to each such officer signing such certificate, that, to the best of his or her knowledge, the Company during such preceding fiscal year has kept, observed, performed and fulfilled, and has caused each of its Restricted Subsidiaries to keep, observe, perform and fulfill each and every such covenant contained in this Indenture and no Default or Event of Default occurred during such year, and at the date of such certificate there is no Default or Event of Default which has occurred and is continuing or, if such signers do know of such Default or Event of Default, the certificate shall describe its status, with particularity and that, to the best of his or her knowledge, no event has occurred and remains by reason of which payments on the account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action each is taking or proposes to take with respect thereto.  The Officers’ Certificate shall also notify the Trustee should the Company elect to change the manner in which it fixes its fiscal year-end.  For purposes of this Section 1008(a), such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture.
The Company shall deliver to the Trustee, as soon as possible and in any event within five Business Days after the Company becomes aware of the occurrence of any Event of Default or an event which, with notice or the lapse of time or both, would constitute an Event of Default, an Officers' Certificate setting forth the details of such Event of Default or default and the action which the Company proposes to take with respect thereto.
(b)    (1) When any Default or Event of Default has occurred and is continuing under this Indenture, or (2) if the trustee for or the holder of any other evidence of Indebtedness of the Company or any Restricted Subsidiary gives any notice or takes any other action with respect to a claimed default (other than with respect to Indebtedness in the principal amount of less than $50,000,000), the Company shall deliver to the Trustee by registered or certified mail or facsimile transmission an Officers’ Certificate specifying such event, notice or other action within five Business Days of its occurrence.

80

SECTION 1009.  Reports and Other Information.  (a) Whether or not the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, so long as any Notes are outstanding, the Company shall have its annual consolidated financial statements audited by a nationally recognized firm of independent registered accountants and its interim consolidated financial statements reviewed by a nationally recognized firm of independent registered accountants in accordance with Statement on Auditing Standards No. 116 issued by the American Institute of Certified Public Accountants (or any similar replacement standard).
(b)    So long as any Notes are outstanding, the Company will furnish to the Holders of the Notes (with a copy to the Trustee):
(1)    (x) all annual and quarterly financial information that would be required to be contained in a filing with the SEC on Forms 10-K and 10-Q if the Company were required to file such forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; (y) with respect to the annual and quarterly information, a presentation of Adjusted Net Income, EBITDA and Adjusted EBITDA of the Company substantially consistent with the presentation thereof in the Offering Memorandum and derived from such financial information; and (z) with respect to the annual information only, a report on the annual financial statements by the Company’s independent registered public accounting firm; provided, however, that the Company will not be required to comply with Section 302 or Section 404 of the Sarbanes Oxley Act of 2002, or related Items 307 and 308 of Regulation S-K promulgated by the SEC, Item 10(e) of Regulation S-K (with respect to any non-GAAP financial measures contained therein) or provide the information required by Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities Act, but the Company shall include a narrative description of total revenues, EBITDA, assets and Indebtedness attributable to those Subsidiaries of the Company that are not Guarantors in all reports delivered to holders of the Notes pursuant to this clause (1); and
(2)    within ten Business Days following the occurrence of any of the events set forth in Form 8-K, all current reports that would be required to be filed with the SEC on Form 8-K pursuant to Items 1.03, 2.01, 2.03, 2.04, 2.06, 4.01, 4.02, 5.01, 5.02 and 5.03 and successors to the foregoing items if the Company were required to file such reports.
All such annual reports shall be furnished within 120 days after the end of the fiscal year to which they relate, and all such quarterly reports shall be furnished within 60 days after the end of the fiscal quarter to which they relate.
(c)    To the extent not satisfied by the foregoing, for so long as any Notes are outstanding, the Company will furnish to Holders and to securities analysts and prospective purchasers of the Notes, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.  The requirements set forth in this paragraph and the preceding paragraph may be satisfied by delivering such information to the Trustee and posting copies of such information on a website (which may be nonpublic and may be maintained by the 

81

Company or a third party) to which access will be given by the Company to Holders and prospective purchasers of the Notes (which prospective purchasers will be limited to “qualified institutional buyers” within the meaning of Rule 144A of the Securities Act, non-U.S. persons (as defined in Regulation S under the Securities Act) or Accredited Investors (within the meaning of Rule 501 (a)(1), (2), (3) or (7) under the Securities Act) that certify their status as such to the reasonable satisfaction of the Company).
(d)    The Company shall hold a teleconference with the Holders of the Notes once during each fiscal quarter.  The Company will notify the Holders at least five Business Days prior to the date of any teleconference required to be held in accordance with this paragraph, of the time and date of such teleconference and including all information necessary to access such teleconference or directing Holders to contact the appropriate person at the Company to obtain such information with a copy of such notice to be provided to the Trustee.
SECTION 1010.  Limitation on Restricted Payments.  (a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly:
		
	(1) 
	declare or pay any dividend or make any distribution on account of the Company’s or any Restricted Subsidiary’s Equity Interests, including any dividend or distribution payable in connection with any merger, amalgamation or consolidation other than:

(A)     dividends or distributions by the Company payable in Equity Interests (other than Disqualified Stock) of the Company or in options, warrants or other rights to purchase such Equity Interests (other than Disqualified Stock); or
(B)     dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary other than a Wholly Owned Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities;
		
	(2) 
	purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of the Company or any direct or indirect parent of the Company, including in connection with any merger or consolidation;

		
	(3) 
	make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value in each case, prior to any scheduled repayment, sinking fund payment or maturity, any Subordinated Indebtedness, other than:

(A)    Indebtedness permitted under Section 1011(b)(7) and Section 1011(b)(8); or
(B)    the purchase, repurchase or other acquisition of Subordinated Indebtedness purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase or acquisition; or

82

		
	(4) 
	make any Restricted Investment;

(all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”), unless, at the time of such Restricted Payment:
		
	(a)
	no Default shall have occurred and be continuing or would occur as a consequence thereof;

		
	(b)
	immediately after giving effect to such transaction on a pro forma basis, the Company could incur $1.00 of additional Indebtedness under Section 1011(a); and

		
	(c)
	such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and the Restricted Subsidiaries after the Original Issue Date pursuant to Section 1010(a) or clauses (1), (7) and (9) of Section 1010(b) (and excluding, for the avoidance of doubt, all other Restricted Payments made pursuant to Section 1010(b)), is less than the sum, without duplication, of:

		
	(1) 
	50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from April 1, 2011 to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment, or, in the case such Consolidated Net Income for such period is a deficit, minus 100% of such deficit, plus

		
	(2) 
	100% of the aggregate net cash proceeds and the fair market value, as determined in good faith by the Company, of marketable securities received by the Company after the Original Issue Date from:

		
	(x)
	(i) the issue and sale of Equity Interests of the Company, including Retired Capital Stock (as defined below), but excluding cash proceeds and the fair market value, as determined in good faith by the Company of marketable securities received from the sale of Equity Interests to any future, present or former employees, directors, managers or consultants of the Company or any of the Company’s Subsidiaries after the Original Issue Date to the extent such amounts have been applied to Restricted Payments made in accordance with clause (4) of Section 1010(b); and (ii) capital contributions, or

		
	(y)
	the issue and sale of debt securities of the Company that have been converted into or exchanged for such Equity Interests of the Company;

provided that this clause (2) shall not include the proceeds from (a) Equity Interests of the Company or debt securities of the Company that have been converted into or exchanged for Equity Interests of the Company sold to a 

83

Restricted Subsidiary or the Company, as the case may be, or (b) Disqualified Stock or debt securities that have been converted into or exchanged for Disqualified Stock, plus
		
	(3)
	with respect to Restricted Investments made by the Company and its Restricted Subsidiaries after the Original Issue Date, an amount equal to (x) the amount returned in cash and the fair market value, as determined in good faith by the Company, of marketable securities to the Company or any Restricted Subsidiary of the Company on or with respect to such Restricted Investments, whether resulting from payments of interest on Indebtedness, dividends or distributions, liquidations, repayments of loans or advances in cash or other payments, or from the net cash proceeds from the sale of any such Restricted Investment, (y) upon the designation of any Unrestricted Subsidiary to be a Restricted Subsidiary, the fair market value of the Company’s or its Restricted Subsidiary’s equity interest in such Subsidiary as determined by the Company in good faith or if, in the case of an Unrestricted Subsidiary, such fair market value may exceed $50 million, in writing by an Independent Financial Advisor, at the time of such designation, or (z) upon the release of any Guarantee (except to the extent any amounts are paid under such Guarantee), the amount of the Guarantee released, in each case, but only if and to the extent such amounts are not included in the calculation of Consolidated Net Income and not to exceed the amount of the Restricted Investment previously made by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary, plus

		
	(4)
	to the extent not already included in Consolidated Net Income, 100% of the aggregate amount received in cash and the fair market value, as determined in good faith by the Company, of marketable securities received after the Original Issue Date by means of the sale (other than to the Company or a Restricted Subsidiary) of the Capital Stock of an Unrestricted Subsidiary or a distribution from an Unrestricted Subsidiary (other than in each case to the extent the Investment in such Unrestricted Subsidiary was made by the Company or a Restricted Subsidiary pursuant to clause (12) of Section 1010(b) or to the extent such Investment constituted a Permitted Investment), or a dividend from an Unrestricted Subsidiary.

(b)    The foregoing provisions shall not prohibit:
		
	(1)
	the payment of any dividend or distribution within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of this Indenture;

		
	(2)
	the redemption, repurchase, retirement or other acquisition of any Equity Interests (“Retired Capital Stock”) or Subordinated Indebtedness of the Company or any Equity Interests of any direct or indirect parent company 

84

of the Company, in exchange for, or out of the proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary) of, Equity Interests of any direct or indirect parent of the Company or the Company or contributions to capital of the Company (in each case, other than any Disqualified Stock);
		
	(3) 
	the defeasance, redemption, repurchase or other acquisition or retirement of

		
	(a)
	Subordinated Indebtedness of the Company or a Restricted Subsidiary made by exchange for, or out of the proceeds of the substantially concurrent sale of, new Indebtedness of such Person or

		
	(b)
	Disqualified Stock of the Company or a Restricted Subsidiary made by exchange for, or out of the proceeds of the substantially concurrent sale of, Disqualified Stock of such Person that, in each case, is incurred in compliance with Section 1011 so long as:

		
	(A)
	the principal amount of such new Indebtedness or liquidation preference of such new Disqualified Stock does not exceed the principal amount (or accreted value, if applicable) of the Subordinated Indebtedness or the liquidation preference of the Disqualified Stock being so defeased, redeemed, repurchased, acquired or retired for value, plus the amount of any reasonable premium required to be paid under the terms of the instrument governing the Subordinated Indebtedness or Disqualified Stock being so defeased, redeemed, repurchased, acquired or retired and any reasonable fees and expenses incurred in connection with the issuance of such new Indebtedness or Disqualified Stock;

		
	(B)
	such Indebtedness is subordinated to the Notes at least to the same extent as such Subordinated Indebtedness so defeased, redeemed, repurchased, acquired or retired;

		
	(C)
	such Indebtedness or Disqualified Stock has a final scheduled maturity date equal to or later than (x) the final scheduled maturity date of the Subordinated Indebtedness or Disqualified Stock being so defeased, redeemed, repurchased, acquired or retired or (y) 91 days after the final stated maturity of the Notes; and

		
	(D)
	such Indebtedness or Disqualified Stock has a Weighted Average Life to Maturity equal to or greater than (x) the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness or Disqualified Stock being so defeased, redeemed, repurchased, acquired or retired or (y) 91 days after the final stated maturity of the Notes;

		
	(4) 
	a Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement for value of Equity Interests (other than Disqualified Stock) of the Company or any of its direct or indirect parent 

85

companies held by any future, present or former employee, director, manager or consultant of the Company, any of its Subsidiaries or any of its direct or indirect parent companies, or their estates or the beneficiaries of such estates, pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement; provided that the aggregate Restricted Payments made under this clause (4) do not exceed in any calendar year $10 million (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $15 million in any calendar year); provided, further, that such amount in any calendar year may be increased by an amount not to exceed
		
	(A)
	the cash proceeds from the sale of Equity Interests (other than Disqualified Stock) of the Company and, to the extent contributed to the Company, Equity Interests of any of the Company’s direct or indirect parent companies, in each case to members of management, directors, managers or consultants of the Company, any of its Subsidiaries or any of its direct or indirect parent companies that occurs after the Original Issue Date, to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of clause (c) of the preceding paragraph, plus

		
	(B)
	the cash proceeds of key man life insurance policies received by the Company and the Restricted Subsidiaries after the Original Issue Date, less

		
	(C)
	the amount of any Restricted Payments previously made pursuant to clauses (A) and (B) of this clause (4):

provided, that the Company may elect to apply all or any portion of the aggregate increase contemplated by subclauses (A) and (B) above in any calendar year.
and provided, further, that cancellation of Indebtedness owing to the Company  from members of management, directors, managers or consultants of the Company, any of its direct or indirect parent companies or any Restricted Subsidiary in connection with a repurchase of Equity Interests of the Company or any of its direct or indirect parent companies shall not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of this Indenture;
		
	(5)
	the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company or any Restricted Subsidiary issued in accordance with Section 1011 to the extent such dividends are included in the definition of Fixed Charges;

86

		
	(6)
	repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants (a) if such Equity Interests represent a portion of the exercise price of such options or warrants and (b) for purposes of tax withholding by the Company in connection with such exercise;

		
	(7)
	the declaration and payment of dividends on the Company’s common shares following the first public offering of the Company’s common shares or the common shares of any of its direct or indirect parent companies after the Original Issue Date, of up to 6.0% per annum of the net proceeds received by or contributed to the Company in or from any such public offering, other than public offerings with respect to the Company’s common shares registered on Form S-4 or Form S-8;

		
	(8)
	the declaration and payment of dividends by the Company to, or the making of loans to, one or more direct or indirect parent companies of the Company in amounts required for such direct or indirect parent companies to pay:

		
	(A)
	franchise taxes and other fees, taxes and expenses required to maintain their corporate existence;

		
	(B)
	U.S. or Canadian federal, state and local income taxes, to the extent such income taxes are attributable to the income of the Company and the Restricted Subsidiaries and, to the extent of the amount actually received from its Unrestricted Subsidiaries, in amounts required to pay such taxes to the extent attributable to the income of such Unrestricted Subsidiaries;

		
	(C)
	customary salary, bonus and other benefits payable to officers and employees of such direct or indirect parent company to the extent such salaries, bonuses and other benefits are attributable to the ownership or operation of the Company and the Restricted Subsidiaries;

		
	(D)
	general corporate overhead expenses of such direct or indirect parent company (including indemnification claims made by directors or officers of such direct or indirect parent company) to the extent such expenses are attributable to the ownership or operation of the Company and the Restricted Subsidiaries;

		
	(E)
	reasonable fees and expenses incurred in connection with any unsuccessful debt or equity offering by such direct or indirect parent company; and

		
	(F)
	any non-cash “deemed dividend” resulting from such parent company offsetting income against losses of the Company which does not involve any cash distribution by the Company.

87

		
	(9)
	the repurchase, redemption or other acquisition or retirement for value of any Subordinated Indebtedness in connection with events similar to those described under Section 1016 and Section 1017; provided that, prior to such repurchase, redemption or other acquisition, the Company (or a third party to the extent permitted by this Indenture) shall have made a Change of Control Offer or Asset Sale Offer, as the case may be, with respect to the Notes and shall have repurchased all Notes validly tendered and not withdrawn in connection with such Change of Control Offer or Asset Sale Offer;

		
	(10)
	distributions or payments of Receivables Fees;

		
	(11)
	payments since the Original Issue Date not to exceed $2.5 million in the aggregate to enable the Company to make payments to holders of its Equity Interests in lieu of fractional shares of its Equity Interests;

		
	(12)
	other Restricted Payments in an amount which, when taken together with all other Restricted Payments made since the Original Issue Date pursuant to this clause (12) and then outstanding, does not exceed $25 million;

		
	(13)
	the Proceeds Payments (for the avoidance of doubt, the first $125 million in aggregate amount of cash distributions to equity holders or similar payments of the type described in the definition of “Proceeds Payments” made within one year following the Original Issue Date will be deemed Proceeds Payments incurred pursuant to this clause (13)); and

		
	(14)
	at any time after financial statements are available beginning with the fiscal quarter ending September 30, 2011, when the Consolidated Total Debt Ratio as of the end of each of the last four prior consecutive fiscal quarters for which internal financial statements are available did not exceed 2.00 to 1.00, the Company may make Restricted Payments in such amounts and at such times as the Company may determine; provided that, immediately after making any such Restricted Payment, the Consolidated Total Debt Ratio would not exceed 2.00 to 1.00, calculated as of the end of such four consecutive fiscal quarters on a pro forma basis after making any such Restricted Payment and giving effect to the incurrence of any Indebtedness to finance such payment (incorporating such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of Fixed Charge Coverage Ratio with such calculations made in good faith by a responsible financial or accounting officer of the Company),

provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clause (5) or (12) no Default shall have occurred and be continuing or would occur as a consequence thereof.

88

(c)    In determining whether any Restricted Payment is permitted by this Section 1010, the Company and the Restricted Subsidiaries may allocate all or any portion of such Restricted Payment among the categories described in clauses (1) through (14) of Section 1010(b) or among such categories and the types of Restricted Payments described in Section 1010(a) (including categorization in whole or in part as a Permitted Investment); provided that, at the time of such allocation, all such Restricted Payments, or allocated portions thereof, would be permitted under the various provisions of this covenant and provided further that the Company and the Restricted Subsidiaries may reclassify all or a portion of such Restricted Payment or Permitted Investment in any manner that complies with this covenant (based on circumstances existing at the time of such reclassification), and following such reclassification such Restricted Payment or Permitted Investment shall be treated as having been made pursuant to only the clause or clauses of this covenant to which such Restricted Payment or Permitted Investment has been reclassified.
(d)    As of the time of issuance of the Notes, all of the Company’s Subsidiaries shall be Restricted Subsidiaries.  The Company shall not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the penultimate paragraph of the definition of “Unrestricted Subsidiary” in Section 102 of this Indenture. For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Company and the Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated shall be deemed to be Restricted Payments in an amount determined as set forth in the last sentence of the definition of “Investments.” Such designation shall be permitted only if a Restricted Payment in such amount would be permitted at such time, whether pursuant to Section 1010(a) or Section 1010(b)(12) or pursuant to the definition of “Permitted Investments,” and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.  Unrestricted Subsidiaries shall not be subject to any of the restrictive covenants set forth in this Indenture.
SECTION 1011.  Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock.  (a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness), and the Company shall not issue any shares of Disqualified Stock and shall not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or Preferred Stock; provided that the Company may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Guarantor may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock or issue shares of Preferred Stock, if the Fixed Charge Coverage Ratio on a consolidated basis for the Company’s and the Restricted Subsidiaries’ most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or Preferred Stock is issued would have been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or Preferred Stock had been issued, as the case may be, and the application of the proceeds therefrom had occurred at the beginning of such four-quarter period.

89

(b)    The foregoing limitations shall not apply to any of the following items (collectively, “Permitted Debt”):
(1)     Indebtedness incurred pursuant to Credit Facilities by the Company or any Restricted Subsidiary; provided that immediately after giving pro forma effect to any such incurrence (including a pro forma application of the net proceeds therefrom), the aggregate principal amount of all Indebtedness incurred under this clause (a) and then outstanding shall not exceed the greater of (i) $250 million, and (ii) the sum of (A) 70.0% of the net book value of accounts receivable of the Company and its Restricted Subsidiaries and (B) 60.0% of the net book value of inventory of the Company and its Restricted Subsidiaries (with accounts receivable and inventory calculated on the basis that all Investments, acquisitions, dispositions, mergers, consolidations and disposed operations that have been made by the Company and its Restricted Subsidiaries prior to or substantially contemporaneous with the date of any calculation shall be included or excluded, as the case may be, on a pro forma basis with such calculations made in good faith by a responsible financial or accounting officer of the Company); provided, further, that the aggregate principal amount of all Indebtedness incurred under this clause (a) and then outstanding by any Restricted Subsidiaries that are not Guarantors shall not exceed the sum of (A) 70.0% of the net book value of accounts receivable of all Restricted Subsidiaries that are not Guarantors and (B) 60.0% of the net book value of inventory of all Restricted Subsidiaries that are not Guarantors (with accounts receivable and inventory calculated on the same basis as above);
(2)    the incurrence by the Company and any Guarantor of Indebtedness represented by the Notes issued on the Original Issue Date and the Guarantees thereof (other than the Initial Notes, the Notes issued on March 9, 2012 and any Additional Notes);
(3)    Existing Indebtedness (other than Indebtedness described in clauses (1) and (2));
(4)    Indebtedness (including Capitalized Lease Obligations), Disqualified Stock and Preferred Stock incurred by the Company or any of the Restricted Subsidiaries, to finance the development, construction, purchase, lease (other than the lease, pursuant to Sale and Lease-Back Transactions) of property (real or personal), equipment or other fixed or capital assets owned by the Company or any Restricted Subsidiary as of the Original Issue Date or acquired by the Company or any Restricted Subsidiary after the Original Issue Date in exchange for, or with the proceeds of the sale of, such assets owned by the Company or any Restricted Subsidiary as of the Original Issue Date, repairs, additions or improvement of property (real or personal), equipment or other fixed or capital assets that are used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and any Refinancing Indebtedness incurred to refund, replace or refinance any Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to this clause (4); provided that the aggregate amount of Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to this clause (4) (including any such Refinancing Indebtedness) does not exceed $25 million at any one time outstanding;

90

(5)    Indebtedness incurred by the Company or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims;
(6)    Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (6);
(7)    Indebtedness of the Company to any Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not a Guarantor is subordinated in right of payment to the Notes; provided, further, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the Company or another Restricted Subsidiary) shall be deemed, in each case, to be an incurrence of such Indebtedness;
(8)    Indebtedness of a Restricted Subsidiary to the Company or another Restricted Subsidiary; provided that if a Guarantor incurs such Indebtedness to a Restricted Subsidiary that is not a Guarantor such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor; provided, further, that any subsequent issuance or transfer of Capital Stock or any other event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Indebtedness (except to the Company or another Restricted Subsidiary) shall be deemed, in each case, to be an incurrence of such Indebtedness;
(9)    Preferred Stock of a Restricted Subsidiary issued to the Company or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Company or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of such shares of Preferred Stock;
(10)    Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes) for the purpose of managing: (A) interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding, (B) exchange rate risk with respect to any currency exchange or (C) commodity pricing risk with respect to any commodity;

91

(11)    Indebtedness and obligations in respect of (x) self-insurance and obligations in respect of performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by the Company or any Restricted Subsidiary in the ordinary course of business, (y) deferred compensation or other similar arrangements incurred by the Company or any of its Restricted Subsidiaries and (z) the financing of insurance premiums or take-or-pay obligations contained in supply arrangements incurred in the ordinary course of business;
(12)    (x) any guarantee by the Company or a Restricted Subsidiary of Indebtedness or other Obligations of any Restricted Subsidiary, so long as the incurrence of such Indebtedness by such Restricted Subsidiary is permitted under the terms of this Indenture, or (y) any guarantee by a Restricted Subsidiary of Indebtedness or other Obligations of the Company permitted to be incurred under the terms of this Indenture; provided that such guarantee is incurred in accordance with Section 1015;
(13)    the incurrence by the Company or any Restricted Subsidiary of Indebtedness, Disqualified Stock or Preferred Stock that serves to extend, replace, refund, refinance, renew, defease or retire any Indebtedness, Disqualified Stock or Preferred Stock incurred as permitted under Section 1011(a) and clauses (2) and (3) above and this clause (13) and clause (14) below or any Indebtedness, Disqualified Stock or Preferred Stock issued to so extend, replace, refund, refinance, renew, defease or retire such Indebtedness, Disqualified Stock or Preferred Stock including additional Indebtedness, Disqualified Stock or Preferred Stock incurred to pay premiums and fees in connection therewith (the “Refinancing Indebtedness”) prior to its respective maturity; provided, however, that such Refinancing Indebtedness:
(A)     has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred which is not less than (x) the remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being extended, replaced, refunded, refinanced, renewed, defeased or retired or (y) one year after the final stated maturity of the Notes;
(B)    to the extent such Refinancing Indebtedness extends, replaces, refunds, refinances, renews or defeases (i) Indebtedness subordinated in right of payment to the Notes or any Guarantee, such Refinancing Indebtedness is subordinated in right of payment to the Notes or such Guarantee at least to the same extent as the Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased or (ii) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness must be Disqualified Stock or Preferred Stock, respectively; and
(C)    shall not include:
(x)    Indebtedness, Disqualified Stock or Preferred Stock of a Subsidiary that is not a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred Stock of the Company;

92

(y)    Indebtedness, Disqualified Stock or Preferred Stock of a Subsidiary that is not a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred Stock of a Guarantor; or
(z)    Indebtedness, Disqualified Stock or Preferred Stock of the Company or a Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of an Unrestricted Subsidiary;
(14)    Indebtedness, Disqualified Stock or Preferred Stock of Persons that are acquired by the Company or any Restricted Subsidiary or merged into the Company or a Restricted Subsidiary in accordance with the terms of this Indenture; provided that (i) after giving effect to such acquisition or merger, the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 1011(a) and (ii) such Indebtedness, Disqualified Stock or Preferred Stock has not been incurred in contemplation of such acquisition or merger;
(15)    Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such Indebtedness is extinguished within five Business Days of its incurrence;
(16)    endorsements or negotiable instruments for deposit or collection or similar transactions in the ordinary course of business;
(17)    Indebtedness issued by the Company or any Restricted Subsidiary to current or former employees, directors, managers and consultants thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of the Company or any direct or indirect parent company of the Company to the extent described in Section 1010(b)(4); and
(18)    Indebtedness deemed incurred with respect to receivables sold pursuant to Factoring Arrangements as a result of recharacterization by a court of competent jurisdiction;
(19)    Indebtedness representing deferred compensation or other similar arrangements to employees and directors of the Company, any direct or indirect parent of the Company or any Subsidiary incurred in the ordinary course of business;
(20)    Indebtedness, Disqualified Stock and Preferred Stock of the Company or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which, when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to this clause (20) and then outstanding, does not at any one time outstanding exceed $75 million; and
(21)     Indebtedness, Disqualified Stock and Preferred Stock of any Restricted Subsidiary that is not a Guarantor, in an aggregate principal amount or liquidation preference, which, when aggregated with the principal amount and liquidation preference 

93

of all other Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to this clause (21), does not at any one time outstanding exceed the greater of (x) $40 million and (y) 3.0% of Consolidated Total Assets.
(c)    For purposes of determining compliance with this Section 1011,
(1)    in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (21) above or is entitled to be incurred pursuant Section 1011(a), the Company, in its sole discretion, will classify or reclassify, or later divide, classify or reclassify (based on circumstances existing at the time of such reclassification), such item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) and will only be required to include the amount and type of such Indebtedness, Disqualified Stock or Preferred Stock in one or more of the above clauses; provided that all Indebtedness outstanding under the ABL Facility on the Original Issue Date will be deemed to have been incurred on such date in reliance on Section 1011(b)(1); and
(2)    at the time of incurrence, the Company will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described in Sections 1011(a) and (b) without giving pro forma effect to the Indebtedness incurred pursuant to Section 1011(b) when calculating the amount of Indebtedness that may be incurred pursuant to Section 1011(a).
The accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness, Disqualified Stock or Preferred Stock will not be deemed to be an incurrence of Indebtedness, Disqualified Stock or Preferred Stock for purposes of this Section 1011.
(d)    For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed or incurred (as determined by the Company), in the case of revolving credit debt; provided that if such Indebtedness is incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased, as calculated at the relevant currency exchange rate in effect on such extension, replacement, refunding, refinancing, renewal or defeasance.
(e)    The principal amount of any Indebtedness incurred to extend, replace, refund, refinance, renew or defease other Indebtedness, if incurred in a different currency from 

94

the Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance.
SECTION 1012.  Liens.  The Company shall not, and shall not permit any of the Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien (except Permitted Liens) that secures obligations under any Indebtedness on any asset or property of the Company or any Restricted Subsidiary now owned or hereafter acquired, or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless:
(1)    in the case of Liens securing Subordinated Indebtedness, the Notes or the applicable Guarantee of a Guarantor, as the case may be, are secured by a Lien on such property or assets that is senior in priority to such Liens; and
(2)    in all other cases, the Notes or the applicable Guarantee of a Guarantor, as the case may be, are equally and ratably secured;
provided that any Lien which is granted to secure the Notes under this Section 1012 shall be discharged at the same time as the discharge of the Lien (other than through the exercise of remedies with respect thereto) that gave rise to the obligation to so secure the Notes.

SECTION 1013.  Limitations on Transactions with Affiliates.  (a) The Company shall not, and shall not permit any Restricted Subsidiary to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each of the foregoing, an “Affiliate Transaction”) involving an aggregate payments or consideration in excess of $10 million, unless 
(1)     such Affiliate Transaction is on terms that are not materially less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and 
(2)     the Company delivers to the Trustee (i) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate payments or consideration in excess of $10 million, a Board Resolution adopted by the majority of the members of the Board of Directors of the Company approving such Affiliate Transaction and set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (1) above and (ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate payments or consideration in excess of $50 million, an opinion as to the fairness to the Company or the relevant Restricted Subsidiary of such Affiliate Transaction from an Independent Financial Advisor.
(b)    The foregoing provisions shall not apply to the following:

95

(1)    transactions between or among the Company or any of the Restricted Subsidiaries;
(2)    Restricted Payments (or transfers or issuances that would constitute Restricted Payments but for the exclusions from the definition thereof) that do not violate Section 1010 and the definition of “Permitted Investments” in Section 102;
(3)    transactions pursuant to compensatory, benefit and incentive plans and agreements with officers, directors, managers or employees of the Company or any of its Restricted Subsidiaries approved by a majority of the Board of Directors of the Company in good faith;
(4)    the payment of reasonable and customary fees and reimbursements paid to, and indemnities provided on behalf of, officers, directors, managers, employees or consultants of the Company, any of its direct or indirect parent companies or any Restricted Subsidiary;
(5)    payments by the Company or any Restricted Subsidiary to one or more stockholders for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including in connection with acquisitions or divestitures, and any customary indemnities related thereto, which payments are approved by a majority of the members of the Board of Directors;
(6)    payments of indemnification obligations to officers, managers and directors of the Company, any of its direct or indirect parent companies or any Restricted Subsidiary to the extent required by the organizational documents of such entity or applicable law;
(7)    transactions in which the Company or any Restricted Subsidiary, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to such person from a financial point of view or meets the requirements of Section 1013(a);
(8)    payments or loans (or cancellations of loans) to employees or consultants of the Company, any of its direct or indirect parent companies or any Restricted Subsidiary in the ordinary course of business consistent with past practice, and employment agreements, employee benefit plans, stock option plans, collective bargaining agreements and other compensatory or severance arrangements with such employees or consultants that are, in each case, approved by the Company in good faith;
(9)    any agreement, instrument or arrangement as in effect as of the Original Issue Date, or any amendment thereto (so long as any such amendment is not disadvantageous to the Holders in any material respect as compared to the applicable agreement as in effect on the Original Issue Date as reasonably determined by the Company in good faith, as evidenced by an Officers’ Certificate);
(10)    the existence of, or the performance by the Company or any of the Restricted Subsidiaries of its obligations under the terms of, any stockholders agreement 

96

or its equivalent (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Original Issue Date and any similar agreements which it may enter into thereafter; provided, however that the existence of, or the performance by the Company or any Restricted Subsidiary of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Original Issue Date shall only be permitted by this clause (10) to the extent that the terms of any such existing agreement together with all amendments thereto, taken as a whole, or new agreement are not otherwise more disadvantageous to the Holders in any material respect than the terms of the original agreement in effect on the Original Issue Date as reasonably determined in good faith by the Company;
(11)    transactions with customers, clients, suppliers, joint venture partners or purchasers or sellers of goods or services (including pursuant to joint venture agreements), in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture that are fair to the Company and the Restricted Subsidiaries, in the reasonable determination of the Board of Directors or the senior management of Company, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;
(12)    the issuance of Equity Interests (other than Disqualified Stock) of the Company to any director, manager, officer, employee or consultant of the Company or any direct or indirect parent company thereof;
(13)    sales of accounts receivable, or participations therein, in connection with any Receivables Facility;
(14)    transactions with Affiliates solely in their capacity as holders of Indebtedness or Equity Interests of the Company or any of its Subsidiaries, so long as such transaction is with all holders of such class (and there are such non-Affiliate holders) and such Affiliates are treated no more favorably than all other holders of such class generally; provided, however, that with regard to an issue of indebtedness of the Company or any of its Subsidiaries, such Affiliate holds no more than 15% of such issue;
(15)    any transaction in which the only consideration paid by the Company or any Restricted Subsidiary consists of Equity Interests (other than Disqualified Stock) of the Company;
(16)    transactions with any joint venture or special purpose entity engaged in a Similar Business; provided that all the outstanding ownership interests of such joint venture or special purpose entity are owned only by the Company, its Restricted Subsidiaries and Persons that are not Affiliates of the Company;
(17)    any merger, amalgamation, consolidation or reorganization of the Company with an Affiliate permitted under Article Eight;
(18)    any agreement that provides customary registration rights to the equityholders of the Company or any parent of the Company and the performance of such agreements; and

97

(19)    transactions between the Company or any Restricted Subsidiary and any person that is an Affiliate of the Company or any Restricted Subsidiary solely because a director of such Person is also a director of the Company or any direct or indirect parent of the Company; provided that such director abstains from voting as a director of the Company or any direct or indirect parent, as the case may be, on any matter involving such other Person; and
(20)    any contribution to the capital of the Company;
(21)    intercompany transactions undertaken in good faith (as certified in an Officer’s Certificate) for the purpose of improving the consolidated tax efficiency of the Company and its Subsidiaries and not for the purpose of circumventing any covenant set forth in this Indenture

SECTION 1014.  Limitations on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.  The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any such Restricted Subsidiary to:

		
	(a) 
	(1)     pay dividends or make any other distributions to the Company or any Restricted Subsidiary on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits or

		
	(2)
	pay any Indebtedness owed to the Company or any Restricted Subsidiary;

		
	(3)
	make loans or advances to the Company or any Restricted Subsidiary; or

		
	(b) 
	sell, lease or transfer any of its properties or assets to the Company or any Restricted Subsidiary;

except (in each case) for such encumbrances or restrictions existing under or by reason of:
		
	(1)
	contractual encumbrances or restrictions in effect on the Original Issue Date;

		
	(2)
	this Indenture, the Notes, any Additional Notes permitted to be incurred under this Indenture and the Guarantees thereof;

		
	(3)
	purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions of the nature discussed in clause (b) above on the property so acquired;

		
	(4)
	applicable law or any applicable rule, regulation or order;

		
	(5)
	any agreement or other instrument of a Person acquired by the Company or any Restricted Subsidiary in existence at the time of such acquisition (but not created in connection therewith or in contemplation thereof), which encumbrance or 

98

restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired;
		
	(6)
	any encumbrance or restriction or any property at the time the property was acquired by the Company or a Restricted Subsidiary (but not created in connection therewith or in contemplation thereof) so long as the restriction applies solely to the property acquired;

		
	(7)
	contracts for the sale or disposition of assets, including customary restrictions with respect to a Subsidiary pursuant to an agreement that has been entered into for the sale or disposition of Capital Stock or assets pending the closing of such sale or disposition;

		
	(8)
	Secured Indebtedness otherwise permitted to be incurred pursuant to Sections 1011 and 1012;

		
	(9)
	restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

		
	(10)
	other Indebtedness, Disqualified Stock or Preferred Stock of Restricted Subsidiaries permitted to be incurred after the Original Issue Date pursuant to Section 1011;

		
	(11)
	customary provisions in joint venture agreements, partnership agreements, limited liability organizational governance documents, asset sale agreements, sale and leaseback agreements and other similar agreements;

		
	(12)
	customary provisions contained in leases and other agreements entered into in the ordinary course of business;

		
	(13)
	encumbrances or restrictions contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such encumbrances or restricts restrict the transfer of assets subject to such security agreements or mortgages;

		
	(14)
	restrictions created in connection with any Receivables Facility; provided that in the case of Receivables Facilities established after the Original Issue Date, such restrictions are necessary or advisable, in the good faith determination of the Company, to effect such Receivables Facility;

		
	(15)
	restrictions or conditions contained in any trading, netting, operating, construction, service, supply, purchase, sale or other agreement to which the Company or any of its Restricted Subsidiaries is a party entered into in the ordinary course of business; provided that such agreement prohibits the encumbrance of solely the property or assets of the Company or such Restricted Subsidiary that are the subject of such agreement, the payment rights arising thereunder or the proceeds thereof and does not extend to any other asset or 

99

property of the Company or such Restricted Subsidiary or the assets or property of any other Restricted Subsidiary; and
		
	(16)
	any encumbrances or restrictions of the type referred to in clauses (a) and (b) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (15) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company, not materially more restrictive with respect to such encumbrance and other restrictions than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing; provided, further, that with respect to contracts, instruments or obligations existing on the Original Issue Date, any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are not materially more restrictive with respect to such encumbrances and other restrictions than those contained in such contracts, instruments or obligations as in effect on the Original Issue Date.

For purposes of determining compliance with this Section 1014, (1) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common shares shall not be deemed to be a restriction on the ability to make distributions on Capital Stock and (2) the subordination of loans or advances made to the Company or a Restricted Subsidiary to other Indebtedness shall not be deemed a restriction on the ability to make loans or advances.
SECTION 1015.  Limitation on Guarantees of Indebtedness by Restricted Subsidiaries.  The Company shall not permit any of its Restricted Subsidiaries to guarantee the payment of any Indebtedness of the Company or any other Guarantor unless:
		
	(1)
	such Restricted Subsidiary within 30 days executes and delivers a supplemental indenture to this Indenture providing for a Guarantee by such Restricted Subsidiary, except that with respect to a guarantee of Indebtedness of the Company or any Guarantor, that is by its express terms subordinated in right of payment to the Notes or such Guarantor’s Guarantee, any such guarantee by such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to such Guarantee substantially to the same extent as such Indebtedness is subordinated to the Notes;

		
	(2)
	such Restricted Subsidiary waives and shall not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee; and

		
	(3)
	such Restricted Subsidiary shall deliver to the Trustee an opinion of counsel to the effect that:

100

		
	(a)
	such Guarantee has been duly executed and authorized; and

		
	(b)
	such Guarantee constitutes a valid, binding and enforceable obligation of such Restricted Subsidiary, except insofar as enforcement thereof may be limited by bankruptcy, insolvency or similar laws (including, without limitation, all laws relating to fraudulent transfers) and except insofar as enforcement thereof is subject to general principles of equity, provided that this Section 1015 shall not be applicable to any guarantee of any Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary.

SECTION 1016.  Change of Control.  (a) If a Change of Control occurs, the Company shall make an offer to purchase all of the Notes pursuant to the offer described below (the “Change of Control Offer”) at a price in cash (the “Change of Control Payment”) equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest to, but not including, the date of purchase, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date, except to the extent the Company has elected to redeem the Notes as described in Article Eleven.” Within 30 days following any Change of Control, except to the extent the Company has elected to redeem the Notes as described in Article Eleven, the Company will send notice of such Change of Control Offer electronically or by first class mail, with a copy to the Trustee, to each Holder to the address of such Holder appearing in the register of Holders with a copy to the Trustee, with the following information:
(1)    a Change of Control Offer is being made pursuant to Section 1016 and all Notes properly tendered pursuant to such Change of Control Offer shall be accepted for payment;
(2)    the purchase price and the purchase date, which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”);
(3)    any note not properly tendered shall remain outstanding and continue to accrue interest;
(4)    unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest on the Change of Control Payment Date;
(5)    Holders electing to have any Notes purchased pursuant to a Change of Control Offer shall be required to surrender the Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Notes completed, to the Paying Agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;
(6)    Holders shall be entitled to withdraw their tendered Notes and their election to require the Company to purchase such Notes; provided that the Paying Agent 

101

receives, not later than the close of business on the third Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased; and
(7)    Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $2,000 or an integral multiple of $1,000 in excess thereof.
(b)    While the Notes are in global form and the Company makes a Change of Control Offer, a Holder may exercise its option to elect for the purchase of the Notes through the facilities of DTC, subject to its rules and regulations.
(c)    The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder or under the applicable securities laws and regulations of Canada or any province thereof to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to a Change of Control Offer.  To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in this Indenture by virtue thereof.
(d)    On the Change of Control Payment Date, the Company shall, to the extent permitted by law,
(1)    accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer;
(2)    deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered; and
(3)     deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officers’ Certificate stating that such Notes or portions thereof have been tendered to and purchased by the Company.
(e)    The Paying Agent shall promptly mail to each Holder the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and deliver to each Holder a new note equal in principal amount to any unpurchased portion of the Notes surrendered, if any, provided that each such new note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.  The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.
(f)    The Company shall not be required to make a Change of Control Offer following a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the time and otherwise in compliance with the requirements set forth in this Indenture 

102

applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer or (2) a notice of redemption has been given for all of the Notes pursuant to Article Eleven, unless and until there is a default in payment of the applicable Redemption Price.  A Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.
SECTION 1017.  Asset Sales.  (a) The Company shall not, and shall not permit any Restricted Subsidiary to, cause, make or suffer to exist an Asset Sale, unless:
(1)    the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (as determined in good faith by the Company) of the assets sold or otherwise disposed of; and
(2)    at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; provided that the amount of
(a)    any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet or in the Notes thereto) of the Company or such Restricted Subsidiary, other than liabilities that are by their terms subordinated to the Notes, that are assumed by the transferee of any such assets (or a third party on behalf of the transferee) and for which the Company or such Restricted Subsidiary has been validly released by all creditors in writing;
(b)    any securities, Notes or other obligations or assets received by the Company or such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received) within 180 days following the closing of such Asset Sale; and
(c)    any Designated Noncash Consideration received by the Company or such Restricted Subsidiary in such Asset Sale having an aggregate fair market value, taken together with all other Designated Noncash Consideration received pursuant to this clause (d) that has not previously been converted to cash, not to exceed the greater of (x) $100 million and (y) 3.0% of Consolidated Total Assets at the time of receipt of such Designated Noncash Consideration, with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value;
shall be deemed to be cash for purposes of this provision and for no other purpose.
(b)    Within 365 days after any of the Company’s or any Restricted Subsidiary’s receipt of the Net Proceeds of any Asset Sale, the Company or such Restricted Subsidiary may, at its option, apply the Net Proceeds from such Asset Sale:

103

(1)     to permanently reduce
(x)    Obligations under the ABL Facility or any other Senior Indebtedness, in each case, of the Company or any Guarantor and, in the case of Obligations under revolving credit facilities or other similar Indebtedness, to correspondingly permanently reduce commitments with respect thereto (other than Obligations owed to the Company or a Restricted Subsidiary); provided that if the Company or any Restricted Subsidiary shall so reduce Obligations under any Senior Indebtedness that is not Secured Indebtedness, the Company or such Guarantor shall, equally and ratably, reduce Obligations under the Notes by, at its option, (A) redeeming Notes if the Notes are then redeemable as provided in Article Eleven, (B) making an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all Holders to purchase their Notes at 100% of the principal amount thereof, plus the amount of accrued and unpaid interest on the principal amount of Notes to be repurchased or (C) purchasing Notes through open market purchases (to the extent such purchases are at a price equal to or higher than 100% of the principal amount thereof) in a manner that complies with this Indenture and applicable securities law; or
(y)    Indebtedness of a Restricted Subsidiary which is not a Guarantor, other than Indebtedness owed to the Company or another Restricted Subsidiary; or
(2)     to make an investment in (a) any one or more businesses; provided that such investment in any business is in the form of the acquisition of Capital Stock and results in the Company or any Restricted Subsidiary owning an amount of the Capital Stock of such business such that it constitutes a Restricted Subsidiary, (b) properties, (c) capital expenditures and (d) acquisitions of other assets, that in each of (a), (b), (c) and (d), are used or useful in a Similar Business or replace the businesses, properties and assets that are the subject of such Asset Sale; or
(3)     any combination of the foregoing.
(c)    Any Net Proceeds from any Asset Sale that are not invested or applied in accordance with Section 1017(b) within 365 days from the date of the receipt of such Net Proceeds will be deemed to constitute “Excess Proceeds”; provided that if during such 365-day period the Company or a Restricted Subsidiary enters into a definitive binding agreement committing it to apply such Net Proceeds in accordance with the requirements of clause (2) of the immediately preceding paragraph after such 365th day, such 365th day period will be extended with respect to the amount of Net Proceeds so committed until such Net Proceeds are required to be applied in accordance with such agreement (but such extension will in no event be for a period longer than 270 days) (or, if earlier, the date of termination of such agreement).  When the aggregate amount of Excess Proceeds exceeds $10 million, the Company shall make an offer to all Holders and to holders of other Senior Indebtedness, if required by the terms of such Senior Indebtedness or at the 

104

option of the Company (other than with respect to Hedging Obligations) on a pro rata basis according to principal at maturity (an “Asset Sale Offer”), to purchase the maximum aggregate principal amount of Notes and such Senior Indebtedness that is an amount equal to at least $2,000 that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the date fixed for the closing of such offer, in accordance with the procedures set forth in this Indenture.  The Company shall commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after the date that Excess Proceeds exceed $10 million by mailing or electronically sending the notice required pursuant to the terms of this Indenture, with a copy to the Trustee.  The Company may satisfy the foregoing obligations with respect to any Net Proceeds from an Asset Sale by making an Asset Sale Offer with respect to such Net Proceeds prior to the expiration of the relevant 365 days (or such longer period provided above) or with respect to Excess Proceeds of $10 million or less.
(d)    To the extent that the aggregate amount of Notes and such Senior Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the  Company may use any remaining Excess Proceeds for general corporate purposes, subject to the other covenants contained in this Indenture.  If the aggregate principal amount of Notes or the Senior Indebtedness surrendered by such holders thereof exceeds the amount of Excess Proceeds, the Company shall select or cause to be selected the Notes and such Senior Indebtedness to be purchased on a pro rata basis based on the accreted value or principal amount of the Notes or such Senior Indebtedness tendered.  Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds related to such Asset Sale Offer shall be reset at zero.
(e)    Pending the final application of any Net Proceeds pursuant to this Section 1017, the Company or the applicable Restricted Subsidiary may apply such Net Proceeds temporarily to reduce Indebtedness outstanding under a revolving credit facility or otherwise invest such Net Proceeds in any manner not prohibited by this Indenture.
(f)    The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder or under the applicable securities laws and regulations of Canada or any province thereof to the extent such laws or regulations are applicable in connection with the repurchase of Notes pursuant to an Asset Sale Offer.  To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in this Indenture by virtue thereof.
(g)    If less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes to be redeemed on a pro rata basis, by lot or by such other method as may be prescribed in DTC’s applicable procedures to the extent practicable; provided that no such Notes of $2,000 or less shall be purchased or redeemed in part.
(h)    Notices of purchase or redemption shall be mailed by first class mail, postage prepaid, at least 30 but not more than 60 days before the purchase or Redemption Date to each Holder of Notes to be purchased or redeemed at such Holder's registered address, except that redemption notices may be mailed more than 60 days prior to a Redemption Date if the notice is 

105

issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture. If any Note is to be purchased or redeemed in part only, any notice of purchase or redemption that relates to such Note shall state the portion of the principal amount thereof that has been or is to be purchased or redeemed.
(i)    A new Note in principal amount equal to the unredeemed portion of any Note redeemed in part shall be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the Redemption Date, interest shall cease to accrue on Notes or portions thereof called for redemption.
SECTION 1018.  Limitation on Sale and Lease-Back Transactions.  The Company shall not, and shall not permit any Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction with respect to any property unless:
(1)    the Company or such Restricted Subsidiary would be entitled to (A) incur Indebtedness in an amount equal to the Attributable Debt with respect to such Sale and Lease-Back Transaction pursuant to Section 1011 and (B) create a Lien on such property securing such Attributable Debt without equally and ratably securing the Notes pursuant to Section 1012; and
(2)    the Company applies the proceeds of such transaction in the manner required with respect to Net Proceeds under Section 1017.

SECTION 1019.  Termination of Covenants.  (a) If on any date following the date of this Indenture:
(1)    the Notes are rated Baa3 or better by Moody’s and BBB- or better by S&P (or, if either such entity ceases to rate the Notes for reasons outside of the control of the Company, the equivalent investment grade credit rating from any other “nationally recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the Company as a replacement agency); and
(2)    no Default or Event of Default shall have occurred and be continuing, 
then, beginning on that day (the “Covenant Termination Date”), the Company and its Restricted Subsidiaries will no longer be subject to the following provisions of this Indenture:
(1)    Section 801(a)(4);
(2)    Section 1010;
(3)    Section 1011;
(4)    Section 1013;
(5)    Section 1014;
(6)    Section 1015;

106

(7)    Section 1017; and
(8)    Section 1018
(b)    On the Covenant Termination Date, Section 1012 will be replaced by Section 1020.
(c)    The Company shall give the Trustee prompt (and in any event not later than five business days after the Covenant Termination Date) written notice of the Covenant Termination Date.  In the absence of such notice, the Trustee shall assume the terminated covenants apply and are in full force and effect.
SECTION 1020.  Restriction on Secured Debt.  Beginning on the Covenant Termination Date, the Company shall not, nor shall the Company permit any Restricted Subsidiary to, directly or indirectly, issue, assume or guarantee any Indebtedness secured by a pledge, mortgage, security interest, lien or other encumbrance (pledges, mortgages, security interests, liens and other encumbrances are called “liens”) upon any Principal Property or upon any shares of capital stock or Indebtedness of any Significant Subsidiary (whether such Principal Property, shares or Indebtedness is now existing or owed or is hereafter created or acquired), without in any such case effectively providing that all of the Notes are secured equally and ratably.  Notwithstanding the restrictions in the preceding sentence, the Company and the Restricted Subsidiaries shall be permitted to incur Indebtedness (i) secured by liens existing on the date this provision becomes effective and (ii) secured by liens otherwise prohibited by this covenant which do not exceed 10.0% of Consolidated Total Assets measured at the date of incurrence of such lien.

ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101.  Right of Redemption.  Except as set forth in this Section 1101, the Company will not be entitled to redeem the Notes prior to April 15, 2015.   
At any time prior to April 15, 2015, the Company may redeem all or a part of the Notes, upon not less than 30 nor more than 60 days' prior notice mailed by first‐class mail to each Holder's registered address, at a Redemption Price equal to 100% of the principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, but not including, the Redemption Date, subject to the rights of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date.
From and after April 15, 2015, the Company may redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days’ prior notice by first-class mail, postage prepaid, with a copy to the Trustee, to each Holder of Notes to the address of such Holder appearing in the Note Register at the Redemption Prices set forth in the table below, plus accrued and unpaid interest thereon, to, but not including, the applicable Redemption Date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant 

107

Interest Payment Date, if redeemed during the twelve-month period beginning on April 15 of each of the years indicated below:
	
		
	Year
	Percentage

	2015
	106.188%

	2016
	104.125%

	2017
	102.063%

	2018 and thereafter
	100.000%

In addition, until April 15, 2014, the Company may, at its option, redeem up to 35% of the sum of the original aggregate principal amount of the Existing Notes and Initial Notes (and the original principal amount of any Additional Notes) issued by it under this Indenture at a Redemption Price equal to 108.25% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon to, but not including, the Redemption Date, subject to the right of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date, with the net cash proceeds of one or more Equity Offerings of the Company or any direct or indirect parent of the Company to the extent such net cash proceeds are contributed to the Company; provided that at least 65% of the sum of the aggregate principal amount of Notes originally issued under this Indenture, the aggregate principal amount of Notes issued under this Indenture on the Issue Date and the aggregate principal amount of any Additional Notes issued under the Indenture after the Original Issue Date remain outstanding immediately after the occurrence of each such redemption; and each such redemption occurs within 180 days of the date of closing of each such Equity Offering.
The Trustee shall select the Notes to be purchased in the manner described under Section 1104.
SECTION 1102.  Applicability of Article.  Redemption of Notes at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article.
SECTION 1103.  Election to Redeem; Notice to Trustee.  The election of the Company to redeem any Notes pursuant to Section 1101 above shall be evidenced by a Board Resolution.  In case of any redemption at the election of the Company, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Notes to be redeemed and shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Notes to be redeemed pursuant to Section 1104.

108

SECTION 1104.  Selection and Notice by Trustee of Notes to Be Redeemed.  If the Company is redeeming less than all of the Notes at any time, the Trustee shall select the Notes to be redeemed (a) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which such Notes are listed or (b) if such Notes are not so listed, on a pro rata basis, by lot or by such other method as may be prescribed by DTC’s applicable procedures to the extent practicable; provided that no such Notes of $2,000 or less shall be redeemed in part.

Notices of redemption shall be mailed by first-class mail, postage prepaid, at least 30 days but not more than 60 days before the Redemption Date to each Holder at such Holder’s registered address, except that notices of redemption may be mailed more than 60 days prior to a Redemption Date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture. If any Note is to be redeemed in part only, any notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed.
A new Note in principal amount equal to the unredeemed portion of any Note redeemed in part shall be issued in the name of the Holder thereof upon cancellation of the original Note.  Notes called for redemption become due and payable on the Redemption Date.  On and after the Redemption Date, unless the Company defaults in the redemption payment, interest shall cease to accrue on the Note or portions thereof called for redemption.
SECTION 1105.  Notice of Redemption.  Notice of redemption shall be given in the manner provided for in Section 107 not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder to be redeemed.
All notices of redemption shall state:
(1)    the Redemption Date,
(2)    the Redemption Price and the amount of accrued interest to the Redemption Date payable as provided in Section 1106, if any,
(3)    if less than all Outstanding Notes are to be redeemed, the identification (and, in the case of a partial redemption, the principal amounts) of the particular Notes to be redeemed,
(4)    in case any Note is to be redeemed in part only, the notice which relates to such Note shall state that on and after the Redemption Date, upon surrender of such Note, the Holder shall receive, without charge, a new Note or Notes of authorized denominations for the principal amount thereof remaining unredeemed,
(5)    that on the Redemption Date the Redemption Price (and accrued interest, if any, to the Redemption Date payable as provided in Section 1106) shall become due and payable upon each such Note, or the portion thereof, to be redeemed, and that interest thereon shall cease to accrue on and after said date,

109

(6)    the place or places where such Notes are to be surrendered for payment of the Redemption Price and accrued interest, if any,
(7)    the name and address of the Paying Agent,
(8)    that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price,
(9)    the “CUSIP” number, ISIN or “Common Code” number and that no representation is made as to the accuracy or correctness of the “CUSIP” number, ISIN or “Common Code” number, if any, listed in such notice or printed on the Notes, and
(10)    the paragraph of the Notes pursuant to which the Notes are to be redeemed.
Notice of redemption of Notes to be redeemed at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company.
In connection with any redemption of Notes (including with the net cash proceeds of an Equity Offering), any such redemption may, at the Company’s discretion, be subject to one or more conditions precedent, including any related Equity Offering.  In addition, if such redemption or notice is subject to satisfaction of one or more conditions precedent, such notice shall state that, in the Company’s discretion, the Redemption Date may be delayed until such time as any or all such conditions shall be satisfied, or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the Redemption Date, or by the Redemption Date so delayed.
SECTION 1106.  Deposit of Redemption Price.  Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and accrued interest, if any, on, all the Notes which are to be redeemed on that date.
SECTION 1107.  Notes Payable on Redemption Date.  Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified (together with accrued interest, if any, to, but not including, the Redemption Date), and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Notes shall cease to bear interest.  Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to, but not including, the Redemption Date and such Notes shall be canceled by the Trustee; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Notes, or one or more Predecessor Notes, registered as such at the close of business on the relevant record dates according to their terms and the provisions of Section 306.

110

If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Notes.
SECTION 1108.  Notes Redeemed in Part.  Any Note which is to be redeemed only in part (pursuant to the provisions of this Article) shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 1002 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered.
ARTICLE TWELVE
GUARANTEES
SECTION 1201.  Guarantees.  Each of the Guarantors hereby jointly and severally, irrevocably and unconditionally guarantees the Notes and obligations of the Company hereunder and thereunder, and guarantees to each Holder of a Note authenticated and delivered by the Trustee, and to the Trustee for itself and on behalf of such Holder, that: (1) the principal of (and premium, if any) and interest on the Notes will be paid in full when due, whether at Stated Maturity, by acceleration or otherwise (including the amount that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Law), together with interest on the overdue principal, if any, and interest on any overdue interest, to the extent lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be paid in full or performed, all in accordance with the terms hereof and thereof; and (2) in case of any extension of time of payment or renewal of any Notes or of any such other obligations, the same shall be paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise, subject, however, in the case of clauses (1) and (2) above, to the limitation set forth in Section 1204 hereof.  
The Luxembourg Guarantor and the Company shall cause each direct and indirect Canadian Subsidiary existing on the Original Issue Date or subsequently organized to jointly and severally, irrevocably and unconditionally guarantee, on a senior unsecured basis, the performance and full and punctual payment when due, whether at the Stated Maturity, by acceleration or otherwise, of all Obligations of the Company under this Indenture and the Notes, whether for payment of principal of, or interest on the Notes, expenses, indemnification or otherwise, on the terms set forth in this Indenture.
Each of the Guarantors hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, any release of any Guarantor, the recovery of 

111

any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of any Guarantor.
Each of the Guarantors hereby waives (to the extent permitted by law) the benefits of diligence, presentment, demand for payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company or any other Person, protest, notice and all demands whatsoever and covenants that the Guarantee of any such Guarantor shall not be discharged as to any Note except by complete performance of the obligations contained in such Note, this Indenture and such Guarantee.  Each of the Guarantors acknowledges that the Guarantee is a guarantee of payment, performance and compliance when due and not of collection.  Each of the Guarantors hereby agrees that, in the event of a default in payment of principal (or premium, if any) or interest on such Note, whether at its Stated Maturity, by acceleration or otherwise, legal proceedings may be instituted by the Trustee on behalf of, or by, the Holder of such Note, subject to the terms and conditions set forth in this Indenture, directly against each of the other Guarantors to enforce such Person’s Guarantee without first proceeding against the Company or any Guarantor.  Each of the Guarantors agrees that if, after the occurrence and during the continuance of an Event of Default, the Trustee or any of the Holders are prevented by applicable law from exercising their respective rights to accelerate the Maturity of the Notes, to collect interest on the Notes, or to enforce or exercise any other right or remedy with respect to the Notes, any such Guarantor shall pay to the Trustee for the account of the Holder, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Trustee or any of the Holders.
If any Holder or the Trustee is required by any court or otherwise to return to any Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to any Guarantor, any amount paid by any of them to the Trustee or such Holder, the Guarantee of each Guarantor, to the extent theretofore discharged, shall be reinstated in full force and effect.  Each of the Guarantors further agrees that, as between each of the Guarantors, on the one hand, and the Holders and the Trustee on the other hand, (1) subject to this Article Twelve, the Maturity of the obligations guaranteed hereby may be accelerated as provided in Article Five hereof for the purposes of the Guarantee of such Guarantor notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any acceleration of such obligation as provided in Article Five hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by each of the Guarantors for the purpose of the Guarantee of such Person.
Each Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation, reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company’s assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes, whether as a “voidable preference”, “fraudulent transfer” or otherwise, all as though such payment or performance had not been made.  In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, 

112

be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
SECTION 1202.  Severability.  In case any provision of any Guarantee 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 to the extent permitted by applicable law.
SECTION 1203.  Restricted Subsidiaries.  The Company shall cause any Restricted Subsidiary required to guarantee payment of the Notes pursuant to the terms and provisions of Section 1015 to (1) execute and deliver to the Trustee any amendment or supplement to this Indenture in accordance with the provisions of Article Nine of this Indenture pursuant to which such Restricted Subsidiary shall guarantee all of the obligations on the Notes, whether for principal, premium, if any, interest (including interest accruing after the filing of, or which would have accrued but for the filing of, a petition by or against the Company under any Bankruptcy Law, whether or not such interest is allowed as a claim after such filing in any proceeding under such law) and other amounts due in connection therewith (including any fees, expenses and indemnities), on an unsecured senior basis and (2) deliver to such Trustee an Opinion of Counsel reasonably satisfactory to such Trustee to the effect that such amendment or supplement has been duly executed and delivered by such Restricted Subsidiary and is in compliance with the terms of this Indenture.  Upon the execution of any such amendment or supplement, the obligations of the Guarantors and any such Restricted Subsidiary under their respective Guarantees shall become joint and several and each reference to the “Guarantor” in this Indenture shall, subject to Section 1208, be deemed to refer to all Guarantors, including such Restricted Subsidiary.  Such Guarantee shall be released in accordance with Section 803 and Section 1209.
SECTION 1204.  Limitation of Guarantors’ Liability.  Each of the Guarantors, and by its acceptance hereof each Holder, confirms that it is the intention of all such parties that the guarantee by each such Person pursuant to its Guarantee (i) not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal, state or foreign law to the extent applicable to the Guarantee, (ii) not be inconsistent with the provisions of its local law relating to corporate benefit, capital preservation, financial assistance or fraudulent conveyance, or (iii) not cause the directors of a Guarantor to contravene their fiduciary duties, incur civil or criminal liability or contravene any legal prohibition.  To effectuate the foregoing intention, the Holders and each Guarantor (other than the Luxembourg Guarantor) hereby irrevocably agree that the Obligations of such Person under its Guarantee shall be limited to the maximum amount that will not, after giving effect to all other contingent and fixed liabilities of such Person and after giving effect to any collections from or payments made by or on behalf of any other Guarantor (other than the Luxembourg Guarantor) in respect of the obligations of such other Guarantor (other than the Luxembourg Guarantor) under its Guarantee or pursuant to this Section 1204, result in the obligations of each Guarantor under its Guarantee constituting such fraudulent transfer or conveyance; provided that this Section 1204 may not be effective to protect a Guarantee from being voided under fraudulent transfer or conveyance law, or may reduce the Guarantor’s Obligation to an amount that effectively makes its Guarantee worthless, and (ii) the Company agrees to pay to the Luxembourg Guarantor or cause the Luxembourg Guarantor (or 

113

such assignee or assignees as it may designate) to be paid, as consideration for such Guarantee for so long as any of the Notes are outstanding, a guarantee fee under a letter dated on or about the date of this Indenture between the Company and the Luxembourg Guarantor in relation to such guarantee fee.
SECTION 1205.  Contribution.  In order to provide for just and equitable contribution among the Guarantors, each of the Guarantors agree, inter se, that in the event any payment or distribution is made by any Guarantor (a “Funding Guarantor”) under a Guarantee, such Funding Guarantor shall be entitled to a contribution from all other Guarantors in a pro rata amount based on the Adjusted Net Assets (as defined below) of each Guarantor (including the Funding Guarantor) for all payments, damages and expenses incurred by that Funding Guarantor in discharging the Company’s obligations with respect to the Notes or any other obligations of any Guarantor with respect to the Guarantee of such Person.  For the purposes of this Article Twelve, the “Adjusted Net Assets” of such Person at any date shall mean the lesser of (1) the amount by which the fair value of the property of such Person exceeds the total amount of liabilities, including contingent liabilities (after giving effect to all other fixed and contingent liabilities incurred or assumed on such date), but excluding liabilities under the Guarantee of such Person at such date and (2) the amount by which the present fair salable value of the assets of such Person at such date exceeds the amount that will be required to pay the probable liability of such Person on its debts (after giving effect to all other fixed and contingent liabilities incurred or assumed on such date), excluding debt in respect of the Guarantee of such Person, as they become absolute and matured.
SECTION 1206.  Subrogation.  Each of the Guarantors shall be subrogated to all rights of Holders against the Company in respect of any amounts paid by any Guarantor pursuant to the provisions of Section 1201; provided, however, that, if an Event of Default has occurred and is continuing, none of the Guarantors shall be entitled to enforce or receive any payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Company under this Indenture or the Notes shall have been paid in full.
SECTION 1207.  Reinstatement.  Each Guarantor hereby agrees (and each Person who becomes a Guarantor shall agree) that the Guarantee provided for in Section 1201 shall continue to be effective or be reinstated, as the case may be, if at any time, payment, or any part thereof, of any obligations or interest thereon is rescinded or must otherwise be restored by a Holder to the Company upon the bankruptcy or insolvency of the Company or any Guarantor.
SECTION 1208.  Release of a Guarantor.  The Guarantee of a Guarantor shall automatically and unconditionally be released and discharged upon:
(1)    (A)    in the case of a Guarantor, the sale, disposition or other transfer (including through merger, amalgamation or consolidation) of all of the Capital Stock (or any sale, disposition or other transfer of Capital Stock following which such Guarantor is no longer a Restricted Subsidiary), or all or substantially all the assets, of such Guarantor (other than a sale, disposition or other transfer to a Restricted Subsidiary) if such sale, disposition or other transfer is permitted by the applicable provisions of this Indenture;

114

(B)    in the case of a Guarantor, the designation by the Company of such Guarantor as an Unrestricted Subsidiary in accordance with Section 1010 and the definition of “Unrestricted Subsidiary” set forth in Section 102;
(C)    in the case of a Guarantor, the release or discharge of such Guarantor from its guarantee of Indebtedness under the ABL Facility or the guarantee that resulted in the obligation of such Guarantor to guarantee the Notes, in each case, if such Guarantor would not then otherwise be required to guarantee the Notes pursuant Section 1015 (treating any guarantees of such Guarantor that remain outstanding as incurred at least 30 days prior to such release or discharge); or
(D)    the exercise by the Company of its Legal Defeasance option under Section 1302 hereof, or its Covenant Defeasance option under Section 1303 hereof, or if the Company’s Obligations under this Indenture are discharged in accordance with Section 401.
(2)    in the case of clause (1)(A) above, the release or discharge of such Guarantor from its guarantee, if any, of and all pledges and security, if any, granted by such Guarantor in connection with, the ABL Facility; and
(3)    such Guarantor has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to such transaction have been complied with.
SECTION 1209.  Benefits Acknowledged.  Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and from its guarantee and waivers pursuant to the Guarantees under this Article Twelve.
ARTICLE THIRTEEN
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301.  Company’s Option to Effect Legal Defeasance or Covenant Defeasance.  The Company may, at its option by Board Resolution, at any time, with respect to the Notes, elect to have either Section 1302 or Section 1303 be applied to all Outstanding Notes upon compliance with the conditions set forth below in this Article Thirteen.
SECTION 1302.  Legal Defeasance and Discharge.  Upon the Company’s exercise under Section 1301 of the option applicable to this Section 1302, each of the Company and the Guarantors shall be deemed to have been discharged from its respective obligations with respect to all Outstanding Notes and the Guarantees on the date the conditions set forth in Section 1304 are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, such Legal Defeasance means that each of the Company and the Guarantors shall be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Notes, which shall thereafter be deemed to be “Outstanding” only for the purposes of Section 1305 and the other Sections of this Indenture referred to in (1) and (2) below, and to have satisfied all its other 

115

obligations under such Notes and this Indenture insofar as such Notes are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same) and cure all existing Events of Default, except for the following which shall survive until otherwise terminated or discharged hereunder: (1) the rights of Holders of Outstanding Notes to receive payments in respect of the principal of and premium, if any, and interest on such Notes when such payments are due solely out of the trust described in Section 1304, (2) the Company’s obligations with respect to such Notes under Sections 303, 304, 305, 1002 and 1003, (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder, and the obligations of each of the Company and the Guarantors in connection therewith and (4) this Article Thirteen.  Subject to compliance with this Article Thirteen, the Company may exercise its option under this Section 1302 notwithstanding the prior exercise of its option under Section 1303 with respect to the Notes.
SECTION 1303.  Covenant Defeasance.  Upon the Company’s exercise under Section 1301 of the option applicable to this Section 1303, each of the Company and the Guarantors shall be released from its respective obligations under any covenant contained in Sections 801, 802 and in Sections 1005, 1006, 1007 and 1009 through and including 1018 with respect to the Outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, “Covenant Defeasance”), and the Notes shall thereafter be deemed not to be “Outstanding” for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “Outstanding” for all other purposes hereunder.  For this purpose, such Covenant Defeasance means that, with respect to the Outstanding Notes, the Company or any Guarantor, as applicable, may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Sections 501(4), 501(5) and 501(6) and, with respect to only any Significant Subsidiary and not the Company, Section 501(7), but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby.  
SECTION 1304.  Conditions to Legal Defeasance or Covenant Defeasance.  The following shall be the conditions to application of either Section 1302 or Section 1303 to the Outstanding Notes:
(1)    The Company shall irrevocably have deposited with the Trustee (or another trustee satisfying the requirements of Section 608 who shall agree to comply with the provisions of this Article Thirteen applicable to it), in trust, for the benefit of the Holders, (A) cash in U.S. dollars, (B) non-callable Government Securities, or (C) a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, the principal of, premium, if any, and interest due on the Outstanding Notes on the Stated Maturity (or Redemption Date, if applicable); provided that the Trustee shall have been irrevocably instructed to apply such cash or the proceeds of such Government Securities to said payments with respect to the Notes.  Before such a deposit, the Company may give to the Trustee, in accordance with 

116

Section 1103 hereof, a notice of its election to redeem all of the Outstanding Notes at a future date in accordance with Article Eleven hereof, which notice shall be irrevocable.  Such irrevocable redemption notice, if given, shall be given effect in applying the foregoing;
(2)    in the case of Legal Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions,
(A)    the Company has received from, or there has been published by, the United States Internal Revenue Service a ruling, or
(B)    since the Original Issue Date, there has been a change in the applicable U.S. federal income tax law,
in either case to the effect that, and based thereon such Opinion of Counsel in the United States shall confirm that, subject to customary assumptions and exclusions, the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(3)    in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders of the Outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to such tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(4)    in the case of Legal Defeasance or Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in Canada reasonably acceptable to the Trustee confirming that Holders who are not resident in Canada will not recognize income, gain or loss for Canadian federal, provincial or territorial income tax or other tax purposes as a result of such Legal Defeasance or Covenant Defeasance, as applicable, and will only be subject to Canadian federal, provincial or territorial income tax and other taxes on the same amounts, in the same manner and at the same times as would have been the case had if such Legal Defeasance or Covenant Defeasance, as applicable, had not occurred;
(5)    no Default or Event of Default (other than that resulting from borrowing funds to be applied to make such deposit and the granting of Liens in connection therewith) shall have occurred and be continuing on the date of such deposit;
(6)    such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under any Credit Facility or any other material agreement or instrument (other than this Indenture) to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound; and

117

(7)    the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel in the United States (which Opinion of Counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with.
Notwithstanding the foregoing, the Opinion of Counsel required by clause (2) above with respect to Legal Defeasance need not be delivered if all Notes not theretofore delivered to the Trustee for cancellation (A) have become due and payable by reason of the making of a notice of redemption or otherwise, (B) will become due and payable within one year or (C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company.

SECTION 1305.  Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions.  Subject to the provisions of the last paragraph of Section 1003, all cash and Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 1305, the “Qualifying Trustee”) pursuant to Section 1304 in respect of the Outstanding Notes shall be held in trust and applied by the Qualifying Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Qualifying Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal (and premium, if any) and interest, but such money or Government Securities need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Qualifying Trustee against any tax, fee or other charge imposed on or assessed against the Government Securities deposited pursuant to Section 1304 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Notes.
Anything in this Article Thirteen to the contrary notwithstanding, the Qualifying Trustee shall deliver or pay to the Company from time to time upon Company Request any money or Government Securities held by it as provided in Section 1304 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Qualifying Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance, as applicable, in accordance with this Article.
SECTION 1306.  Reinstatement.  If the Trustee or any Paying Agent is unable to apply any money or Government Securities in accordance with Section 1305 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s and each Guarantor’s obligations under this Indenture and the Outstanding Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 1302 or 1303, as the case may be, until such time as the Trustee or Paying Agent is permitted to apply all such money or Government Securities in accordance with Section 1305; provided, however, that if the Company makes any payment of principal of (or premium, if any) or interest on any Note following the reinstatement of its obligations, the 

118

Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

[Signature pages follow]

119

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.

	
		
	MASONITE INTERNATIONAL CORPORATION

	By:

	 
	/s/ Mark J. Erceg

	 
	Name:Mark J. Erceg

	 
	Title:Executive Vice President and Chief Financial Officer

	 
	 

	CROWN DOOR CORPORATION

	By:

	 
	/s/ Joanne Freiberger

	 
	Name:Joanne Freiberger

	 
	Title:Vice President and Treasurer

	 

	MASONITE LUXEMBOURG S.A.

	By:

	 
	/s/ Christopher A. Virostek

	 
	Name:Christopher A. Virostek

	 
	Title:Class A Director

 
    

120

	
		
	WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE

	By:

	 
	/s/ Stefan Victory

	 
	Name:Stefan Victory

	 
	Title:Vice President

121

Rule 144A / Regulation S / IAI Appendix

PROVISIONS RELATING TO NOTES

1.     Definitions.
1.1    Definitions.
For the purposes of this Appendix the following terms shall have the meanings indicated below:
“Definitive Note” means a certificated Original Note, Initial Note or Additional Note bearing, if required, the appropriate restricted Notes legend set forth in Section 2.3(e).
“Depositary” means The Depository Trust Company, its nominees and their respective successors.
“Distribution Compliance Period”, with respect to any Notes, means the period of 40 consecutive days beginning on and including the later of (i) the day on which such Notes are first offered to Persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S and (ii) the issue date with respect to such Notes.
“Existing Notes” means the $275,000,000 aggregate principal amount of the Company’s Senior Notes Due 2021 issued on the Original Issue Date and the additional $100,000,000 aggregate principal amount of the Company’s Senior Notes Due 2021 issued on March 9, 2012.
“IAI” means an institutional “accredited investor”, as defined in Rule 501(a)(1), (2), (3) and (7) of Regulation D under the Securities Act.
“Initial Notes” means the Company’s Senior Notes Due 2021 issued on January 21, 2014.
“Notes” means the Existing Notes, Initial Notes and Additional Notes, if any, issued in a transaction exempt from the registration requirements of the Securities Act.
“Notes Custodian” means the custodian with respect to a Global Notes (as appointed by the Depositary), or any successor Person thereto and shall initially be the Trustee.
“QIB” means a “qualified institutional buyer” as defined in Rule 144A.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the U.S. Securities and Exchange Commission promulgated thereunder.
“Transfer Restricted Notes” means Notes that bear or are required to bear the legend relating to restrictions on transfer relating to the Securities Act set forth in Section 2.3(e) hereto.

1.2    Other Definitions.
	
		
	Term
	Defined in Section:

	“Agent Members”
	2.1(b)

	“Global Notes”
	2.1(a)

	“IAI Global Note”
	2.1(a)

	“Regulation S”
	2.1(a)

	“Regulation S Global Note”
	2.1(a)

	“Rule 144A”
	2.1(a)

	“Rule 144A Global Note”
	2.1(a)

2. The Notes.
2.1    (a)  Form and Dating.  The Notes shall be issued by the Company in accordance with Section 204 of this Indenture.  The Notes will be resold initially only to (i) QIBs in reliance on Rule 144A under the Securities Act (“Rule 144A”) and (ii) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S under the Securities Act (“Regulation S”).  Notes may thereafter be transferred to, among others, QIBs, IAIs and purchasers in reliance on Regulation S, subject to the restrictions on transfer set forth herein.  Notes initially resold pursuant to Rule 144A shall be issued initially in the form of one or more global Notes in definitive, fully registered form (collectively, the “Rule 144A Global Note”); Notes initially resold to IAIs shall be issued initially in the form of one or more global Notes in definitive, fully registered form (collectively, the “IAI Global Note”); and Notes initially resold pursuant to Regulation S shall be issued initially in the form of one or more global Notes in definitive, fully registered form (collectively, the “Regulation S Global Note”), in each case without interest coupons and with the global Notes legend and the applicable restricted Notes legend set forth in Exhibit 1 hereto, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Notes Custodian and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as provided in this Indenture.  Except as set forth in this Section 2.1(a), beneficial ownership interests in the Regulation S Global Note, after the expiration of the Distribution Compliance Period, may be exchanged for interests in a Rule 144A Global Note or an IAI Global Note only upon certification in form reasonably satisfactory to the Trustee that (i) beneficial ownership interests in such Regulation S Global Note are owned either by non-U.S. persons or U.S. persons who purchased such interests in a transaction that did not require registration under the Securities Act and (ii) in the case of an exchange for an IAI Global Note, certification (and, if requested by the Company, an opinion of counsel acceptable to the Company that such transfer is in compliance with the Securities Act) that the interest in the Regulation S Global Note is being transferred to 

2

an “accredited investor” under the Securities Act that is an institutional accredited investor acquiring the Notes for its own account or for the account of an institutional accredited investor.
Beneficial interests in Regulation S Global Notes or IAI Global Notes may be exchanged for interests in Rule 144A Global Notes if the transferor of the beneficial interest in the Regulation S Global Note or the IAI Global Note, as applicable, first delivers to the Trustee the assignment form substantially in the form included in Exhibit 1 hereto.
Beneficial interests in Regulation S Global Notes and Rule 144A Global Notes may be exchanged for an interest in IAI Global Notes if the transferor of the Regulation S Global Note or Rule 144A Global Note, as applicable, first delivers to the trustee a written certificate substantially in the form of Exhibit 2 hereto (and, if requested by the Company, an opinion of counsel acceptable to the Company that such transfer is in compliance with the Securities Act).
Beneficial interests in a Rule 144A Global Note or an IAI Global Note may be transferred to a Person who takes delivery in the form of an interest in a Regulation S Global Note, whether before or after the expiration of the Distribution Compliance Period, only if the transferor first delivers to the Trustee the assignment form substantially in the form included in Exhibit 1 hereto to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S or Rule 144.
The Rule 144A Global Note, the IAI Global Note and the Regulation S Global Note are collectively referred to herein as “Global Notes.”  The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee as hereinafter provided.
(b)    Book-Entry Provisions.  This Section 2.1(b) shall apply only to a Global Note deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b), authenticate and deliver initially one or more Global Notes that (a) shall be registered in the name of the Depositary for such Global Note or Global Notes or the nominee of such Depositary and (b) shall be held by the Trustee as custodian for the Depositary.
Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary or by the Trustee as the custodian of the Depositary or under such Global Note, and the Company, the Trustee and any agent of the Company or the Trustee shall be entitled to treat the Depositary as the absolute owner of such Global Note for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note.
(c)    Definitive Notes.  Except as provided in this Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in Global Notes shall not be entitled to receive physical delivery of Definitive Notes.

3

2.2    Authentication.  The Trustee shall:  (1) on the Original Issue Date and the Issue Date, authenticate and deliver Notes in an aggregate principal amount specified in the applicable written order of the Company pursuant to Section 204 of this Indenture, (2) at any time and from time to time after the execution and delivery of this Indenture, in accordance with Article Two, at the direction of  Company Order, credit the DTC participant accounts as directed and make such confirmations as are required by the Company in order for the Company may issue Notes pursuant to the existing Global Notes, and (3) authenticate and deliver any Additional Notes for an original issue in an aggregate principal amount specified in the written order of the Company pursuant to Section 204 of this Indenture, with such a written order signed by two Officers or by one Officer who is the Treasurer of the Company.  Such order shall specify the amount of the Notes to be authenticated and the date on which the original issue of Notes is to be authenticated and, in the case of any issuance of Additional Notes pursuant to Section 311 of this Indenture, shall certify that such issuance is in compliance with Section 1011 of this Indenture.
2.3    Transfer and Exchange.  (a)    Transfer and Exchange of Definitive Notes.  When Definitive Notes are presented to the Registrar with a request:
		
	(x)
	to register the transfer of such Definitive Notes; or

		
	(y)
	to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations,

the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Notes surrendered for transfer or exchange:
(i)    shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar, duly executed by the Holder thereof or its attorney duly authorized in writing; and
(ii)    if such Definitive Notes are required to bear a restricted Notes legend, they are being transferred or exchanged pursuant to an effective registration statement under the Securities Act, pursuant to Section 2.3(b) or pursuant to clause (A), (B) or (C) below, and are accompanied by the following additional information and documents, as applicable:
(A)    if such Definitive Notes are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect; or
(B)    if such Definitive Notes are being transferred to the Company, a certification to that effect; or
(C)    if such Definitive Notes are being transferred (x) pursuant to an exemption from registration in accordance with Rule 144A, Regulation S or Rule 144 under the Securities Act; or (y) in reliance upon another exemption from the requirements of the Securities Act: (i) a certification to that effect (in the form set forth on the reverse of the Note) 

4

and (ii) if the Company so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 2.3(e)(i).
(b)    Restrictions on Transfer of a Definitive Note for a Beneficial Interest in a Global Note.  A Definitive Note may not be exchanged for a beneficial interest in a Rule 144A Global Note, an IAI Global Note or a Regulation S Global Note except upon satisfaction of the requirements set forth below.  Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with:
(i)    certification, in the form set forth on the reverse of the Note, that such Definitive Note is either (A) being transferred to a QIB in accordance with Rule 144A, (B) being transferred to an IAI (and, if requested by the Company, an opinion of counsel acceptable to the Company that such transfer is in compliance with the Securities Act) or (C) being transferred after expiration of the Distribution Compliance Period by a Person who initially purchased such Note in reliance on Regulation S to a buyer who elects to hold its interest in such Note in the form of a beneficial interest in the Regulation S Global Note; and
(ii)    written instructions directing the Trustee to make, or to direct the Notes Custodian to make, an adjustment on its books and records with respect to such Rule 144A Global Note (in the case of a transfer pursuant to clause (b)(i)(A)), IAI Global Note (in the case of a transfer pursuant to clause (b)(1)(B)) or Regulation S Global Note (in the case of a transfer pursuant to clause (b)(i)(B)) to reflect an increase in the aggregate principal amount of the Notes represented by the Rule 144A Global Note, IAI Global Note or Regulation S Global Note, as applicable, such instructions to contain information regarding the Depositary account to be credited with such increase,
then the Trustee shall cancel such Definitive Note and cause, or direct the Notes Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Notes Custodian, the aggregate principal amount of Notes represented by the Rule 144A Global Note, IAI Global Note or Regulation S Global Note, as applicable, to be increased by the aggregate principal amount of the Definitive Note to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Rule 144A Global Note, IAI Global Note or Regulation S Global Note, as applicable, equal to the principal amount of the Definitive Note so canceled.  If no Rule 144A Global Notes, IAI Global Notes or Regulation S Global Notes, as applicable, are then outstanding, the Company shall issue and the Trustee shall authenticate, upon written order of the Company in the form of an Officers’ Certificate of the Company, a new Rule 144A Global Note, IAI Global Note or Regulation S Global Note, as applicable, in the appropriate principal amount.

5

(c)    Transfer and Exchange of Global Notes.
(i)    The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depositary therefor.
(ii)    If the proposed transfer is a transfer of a beneficial interest in one Global Note to a beneficial interest in another Global Note, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of the Global Note from which such interest is being transferred.
(iii)    Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4), a Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.
(iv)    In the event that Global Note is exchanged for Definitive Notes to Section 2.4 of this Appendix, prior to the consummation of a Registered Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Notes, such Notes may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Initial Notes intended to ensure that such transfers comply with Rule 144A, Regulation S or another applicable exemption under the Securities Act, as the case may be) and such other procedures as may from time to time be adopted by the Company.
(d)    Legend.
(i)    Except as permitted by the following paragraphs (ii), (iii) and (iv), each Note certificate evidencing the Global Notes (and all Notes issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form:
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE 

6

EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD,  PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) (a) TO A PERSON WHO IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) IN A PRINCIPAL AMOUNT AT MATURITY OF NOT LESS THAN $250,000, TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, DELIVERS TO THE TRUSTEE A DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM THE TRUSTEE) RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (AND, IF REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT), OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (ii) TO THE COMPANY, OR (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY.
Each Definitive Note shall also bear the following additional legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS THE INDENTURE REQUIRES TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

7

(ii)    Upon any sale or transfer of a Transfer Restricted Note (including any Transfer Restricted Note represented by a Global Note) pursuant to Rule 144 under the Securities Act, the Registrar shall permit the transferee thereof to exchange such Transfer Restricted Note for a certificated Note that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Note, if the transferor thereof certifies in writing to the Registrar that such sale or transfer was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Note).
(e)    Cancellation or Adjustment of Global Note.  At such time as all beneficial interests in a Global Note have either been exchanged for Definitive Notes, redeemed, purchased or canceled, such Global Note shall be returned to the Depositary for cancellation or retained and canceled by the Trustee.  At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for certificated Notes, redeemed, purchased or canceled, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Notes Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction.
(f)    No Obligation of the Trustee.
(i)    The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a member of, or a participant in the Depositary or other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Notes.  All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of a Global Note).  The rights of beneficial owners in any Global Note shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary.  The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners.
(ii)    The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

8

2.4    Definitive Notes.
(a)    A Global Note deposited with the Depositary or with the Trustee as Notes Custodian for the Depositary pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of Definitive Notes in an aggregate principal amount equal to the principal amount of such Global Note, in exchange for such Global Note, only if such transfer complies with Section 2.3 hereof and (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Global Note and the Depositary fails to appoint a successor Depositary or if at any time such Depositary ceases to be a “clearing agency” registered under the Exchange Act, in either case, and a successor Depositary is not appointed by the Company within 90 days of such notice, or (ii) an Event of Default has occurred and is continuing and the Noteholders request such transfer and exchange or (iii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes under this Indenture.
(b)    Any Global Note that is transferable to the beneficial owners thereof pursuant to this Section 2.4 shall be surrendered by the Depositary to the Trustee located at its principal corporate trust office, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount of Definitive Notes of authorized denominations.  Any portion of a Global Note transferred pursuant to this Section 2.4 shall be executed, authenticated and delivered only in denominations of $2,000 principal amount and any integral multiple of $1,000 in excess thereof and registered in such names as the Depositary shall direct.  Any Definitive Note delivered in exchange for an interest in the Transfer Restricted Note shall, except as otherwise provided by Section 2.3(e) hereof, bear the applicable restricted Notes legend and definitive Notes legend set forth in Exhibit 1 hereto.
(c)    Subject to the provisions of Section 2.4(b) hereof, the registered Holder of a Global Note shall be entitled to grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.
(d)    In the event of the occurrence of one of the events specified in Section 2.4(a) hereof, the Company shall promptly make available to the Trustee a reasonable supply of Definitive Notes in definitive, fully registered form without interest coupons.  In the event that such Definitive Notes are not issued, the Company expressly acknowledges, with respect to the right of any Holder to pursue a remedy pursuant to this Indenture, including pursuant to Section 507, the right of any beneficial owner of Notes to pursue such remedy with respect to the portion of the Global Note that represents such beneficial owner’s Notes as if such Definitive Notes had been issued.

9

EXHIBIT 1
to Rule 144A / Regulation S / IAI Appendix

 [FORM OF FACE OF NOTE]
[Global Notes Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE 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 HEREON 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 SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[[FOR REGULATION S GLOBAL NOTE ONLY] [UNTIL 40 DAYS AFTER THE LATER OF COMMENCEMENT OR COMPLETION OF THE OFFERING, AN OFFER OR SALE OF SECURITIES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE SECURITIES ACT) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.]
[Restricted Notes Legend]
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD,  PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) (a) TO A PERSON WHO IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) IN A PRINCIPAL 

AMOUNT AT MATURITY OF NOT LESS THAN $250,000, TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, DELIVERS TO THE TRUSTEE A DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM THE TRUSTEE) RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (AND, IF REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT), OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (ii) TO THE COMPANY, OR (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY.
[Definitive Notes Legend]
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS THE INDENTURE REQUIRES TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

2

	
		
	CUSIP No. [      ]
	 

	 
	 

	No. [        ]
	$____

Senior Notes Due 2021
MASONITE INTERNATIONAL CORPORATION, a British Columbia corporation, promises to pay to CEDE & CO. or registered assigns, the principal sum of ________ Dollars on April 15, 2021 (or such other amount as may be increased or decreased on the “Schedule of Increases or Decreases in Global Note” attached hereto).
Interest Payment Dates:  semiannually in arrears on April 15 and October 15 of each year.
Record Dates:  April 1 and October 1.
Additional provisions of this Note are set forth on the other side of this Note.    

3

Dated:
	
		
	MASONITE INTERNATIONAL CORPORATION

	By

	 
	Name:

	 
	Title:

	 
	 

	By
	 

	 
	Name:

	 
	Title:

	 
	 

4

TRUSTEE’S CERTIFICATE OF AUTHENTICATION
	
			
	WELLS FARGO BANK, NATIONAL ASSOCIATION

	as Trustee, certifies that this is one of the Notes referred to in the Indenture.
	 

	By
	 
	 

	 
	Name:
	 

	 
	Title:
	 

Date:

5

[FORM OF REVERSE SIDE OF NOTE]
Senior Note Due 2021
1.    Principal and Interest.
The Company will pay the principal of this Note on April 15, 2021.
The Company promises to pay interest on the principal amount of this Note on each Interest Payment Date, as set forth below, at the rate of 8.250% per annum, which shall accrue from the most recent date to which interest has been paid on any Notes or, if no interest has been paid on any Notes, from October 15, 2013;  provided that, if there is no existing default in the payment of interest and if this Note is authenticated between a Regular Record Date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such Interest Payment Date.
Interest will be payable semi-annually (to the Holders of record of the Notes (or any Predecessor Notes) at the close of business on April 15 and October 15 of each year (each, an “Interest Payment Date”), commencing on the first Interest Payment Date following the issue date of this Note.
Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.  Notwithstanding the foregoing, if a payment date is not a Business Day, payment shall be made on the next succeeding day that is a Business Day, and no interest shall accrue on the Notes for the intervening period.  If a regular record date is not a Business Day, the record date shall not be affected.
(a)    Any amount (whether of principal or interest) not paid when due hereunder (whether at the stated maturity, by acceleration or otherwise) shall bear interest, to the extent permitted by law (after as well as before judgment), payable on demand, at the rate that would otherwise be applicable thereto from and including the date of such non-payment to but excluding the date on which such amount is paid in full.
(b)    In no event shall the interest rate on the Notes exceed the highest lawful rate permitted by applicable law.
(c)    The Company or a calculation agent to be appointed by the Company will calculate the amount of interest payable from time to time under the Notes.
2.    Method of Payment.
The Company will pay interest (except defaulted interest) on the principal amount of this Note at the close of business on April 15 and October 15 of each year to the Persons who are Holders (as reflected in the Note Register at the close of business on April 1 and October 1 immediately preceding the Interest Payment Date), in each case, even if this Note is cancelled on registration of transfer or registration of exchange after such Regular Record Date; provided that, with respect to the payment of principal, the Company will make payment to the Holder that surrenders this Note to any Paying Agent on or after April 15, 2021.

6

The Company will pay principal (premium, if any) and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts.  However, the Company may pay principal (premium, if any) and interest by its check payable in such money.  The Company may pay interest on this Note either (a) by mailing a check for such interest to a Holder’s registered address (as reflected in the Note Register) or (b) by wire transfer to an account located in the United States maintained by the payee.  If a payment date is a date other than a Business Day at a place of payment, payment may be made at that place on the next succeeding day that is a Business Day and no interest shall accrue for the intervening period.
3.    Paying Agent and Note Registrar.
Initially, Wells Fargo Bank, National Association (the “Trustee”) will act as Paying Agent and Note Registrar.  The Company may change any Paying Agent or Note Registrar upon written notice thereto.  The Company, any Subsidiary or any Affiliate of any of them may act as Paying Agent, Note Registrar or co-registrar.
4.    Indenture.
The Company issued the Notes under an Amended and Restated Indenture dated as of January 21, 2014 (the “Indenture”), among the Company, the Guarantors and the Trustee.  Capitalized terms herein are used as defined in the Indenture unless otherwise indicated.  The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act.  The Notes are subject to all such terms, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of all such terms.  To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Note and the terms of the Indenture, the terms of the Indenture shall control.
The Notes are unsecured senior obligations of the Company.  The Indenture does not limit the aggregate principal amount of the Notes.
5.    Redemption.
Except as set forth below, the Company will not be entitled to redeem the Notes prior to April 15, 2015.   
At any time prior to April 15, 2015, the Company may redeem all or a part of the Notes, upon not less than 30 nor more than 60 days' prior notice mailed by first‐class mail to each Holder's registered address, at a Redemption Price equal to 100% of the principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, but not including, the Redemption Date, subject to the rights of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date.
From and after April 15, 2015, the Company may redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days’ prior notice by first-class mail, postage prepaid, with a copy to the Trustee, to each Holder of Notes to the address of such Holder appearing in the Note Register at the Redemption Prices set forth in the table below, plus accrued and unpaid interest thereon to, but not including the applicable Redemption Date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant 

7

Interest Payment Date, if redeemed during the twelve-month period beginning on April 15 of each of the years indicated below:
	
		
	Year
	Percentage

	2015
	106.188%

	2016
	104.125%

	2017
	102.063%

	2018 and thereafter
	100.000%

In addition, until April 15, 2014, the Company may, at its option, redeem up to 35% of the sum of the original aggregate principal amount of the Existing Notes and the Initial Notes (and the original principal amount of any Additional Notes) issued by it under the Indenture at a Redemption Price equal to 108.25% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon to, but not including, the Redemption Date, subject to the right of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date, with the net cash proceeds of one or more Equity Offerings of the Company or any direct or indirect parent of the Company to the extent such net cash proceeds are contributed to the Company; provided that at least 65% of the sum of the aggregate principal amount of Notes originally issued under the Indenture and the aggregate principal amount of any Additional Notes remain outstanding immediately after the occurrence of each such redemption; and each such redemption occurs within 180 days of the date of closing of each such Equity Offering.
6.    Repurchase upon a Change of Control and Asset Sales.
Upon the occurrence of (a) a Change of Control, each Holders of Notes will have the right to require that the Company purchase such Holder’s outstanding Notes, in whole or in part, at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase and (b) an Asset Sale, the Company may be obligated to make offers to purchase Notes and Senior Indebtedness of the Company with a portion of the Net Proceeds of such Asset Sales at a Redemption Price of 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase.
7.    Denominations; Transfer; Exchange.
The Notes are in registered form without coupons and only in denominations of $2,000 and any integral multiples of $1,000 in excess thereof. A Holder may transfer or exchange Notes in accordance with the Indenture.  The Note Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  The Note Registrar need not register the transfer or exchange of any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) or any Notes for a period of 15 days before a selection of Notes to be redeemed or 15 days before an interest payment date.

8

8.    Persons Deemed Owners.
A registered Holder may be treated as the owner of a Note for all purposes.
9.    Unclaimed Money.
If money for the payment of principal (premium, if any) or interest remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company at its written request.  After that, Holders entitled to the money must look to the Company for payment, unless an abandoned property law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease.
10.    Defeasance Prior to Redemption or Maturity.
If the Company irrevocably deposits, or causes to be deposited, with the Trustee, in trust, for the benefit of the Holders, (A) cash in U.S. dollars, (B) non-callable Government Securities, or (C) a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, the principal of, premium, if any, and interest due on the Outstanding Notes on the Stated Maturity (or Redemption Date, if applicable), the Company will be discharged from certain covenants set forth in the Indenture.
11.    Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Outstanding Notes, and any existing Default or compliance with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Notes.  Without notice to or the consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, omission, mistake, defect or inconsistency and make any change that does not adversely affect the rights of any Holder.
12.    Restrictive Covenants.
The Indenture contains certain covenants, including covenants with respect to the following matters: (i) Restricted Payments; (ii) incurrence of Indebtedness and Issuance of Disqualified Stock; (iii) Liens; (iv) transactions with Affiliates; (v) dividend and other payment restrictions affecting Restricted Subsidiaries; (vi) guarantees of Indebtedness by Restricted Subsidiaries; (vii) merger and certain transfers of assets; (viii) purchase of Notes upon a Change in Control; and (ix) disposition of proceeds of Asset Sales.  Within 120 days (or the successor time period then in effect under the rules and regulations of the Exchange Act) after the end of each fiscal year, the Company must report to the Trustee on compliance with such limitations.

9

13.    Successor Persons.
When a successor Person or other entity assumes all the obligations of its predecessor under the Notes and the Indenture, the predecessor Person will be released from those obligations.
14.    Remedies for Events of Default.
If an Event of Default, as defined in the Indenture, occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Outstanding Notes may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes issued under the Indenture to be due and payable immediately. If a bankruptcy or insolvency default with respect to the Company or any Significant Subsidiary (or any group of Subsidiaries that together would constitute a Significant Subsidiary) occurs and is continuing, the Notes automatically become immediately due and payable.  Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any rights or powers under the Indenture at the request or direction of any of the Holders of the Notes unless such Holders have offered to the Trustee indemnity or security against any loss, liability or expense.  Subject to certain restrictions, the Holders of a majority in principal amount of the Outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee.  The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder of a Note or that would involve the Trustee in personal liability.
15.    Guarantees.
The Company’s obligations under the Notes are fully, irrevocably and unconditionally guaranteed on an unsecured senior basis, to the extent set forth in the Indenture, by each of the Guarantors.
16.    Authentication.
This Note shall not be valid until the Trustee signs the certificate of authentication on the other side of this Note.
17.    Abbreviations.
Customary abbreviations may be used in the name of a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
18.    CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the 

10

Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
20.    Governing Law.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
The Company will furnish to any Holder upon written request and without charge a copy of the Indenture.  Requests may be made to Masonite International Corporation, 201 North Franklin Street, Suite 300, Tampa, Florida  33602, Attention: General Counsel.
Capitalized terms used herein but not defined herein shall have the meanings given to such terms in the Indenture.

11

	
	
	 

ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Print or type assignee’s name, address and zip code)
(Insert assignee’s soc. sec. or tax I.D. No.)
and irrevocably appoint ___________________ agent to transfer this Note on the books of the Company.  The agent may substitute another to act for him.
	
		
	Date:
	Your Signature:

Sign exactly as your name appears on the other side of this Note.
In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144 under the Securities Act after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Notes are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
to the Company; or
		
	(1) 
	pursuant to an effective registration statement under the Securities Act of 1933; or

		
	(2) 
	inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or

		
	(3)
	outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or

		
	(4)
	pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933; or

12

		
	(5)
	to an institutional “accredited investor” (as defined in Rule 501(a)(1),(2),(3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements relating to the transfer of this Note (the form of which can be obtained from the Trustee) and, if requested by the Company, an opinion of counsel acceptable to the Company that such transfer is in compliance with the Securities Act.

Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (4) is checked, the Trustee shall be entitled to require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.
	
		
	Signature
	 

Signature Guarantee:	
			
	 

	Signature must be guaranteed
	 
	Signature

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Notes Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Notes Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
	
	
	 

13

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.
	
			
	Dated:
	 

	 
	Notice: To be executed by an executive officer

14

[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been made:

	
					
	Date of
Exchange
	Amount of increase in Principal amount of this Global Note
	Principal amount of this Global Note following such decrease or increase)
	Signature of authorized officer of Trustee or Notes Custodian

15

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 1016 or 1017 of the Indenture, check the box:     
  If you want to elect to have only part of this Note purchased by the Company pursuant to Section 1016 or 1017 of the Indenture, state the amount in principal amount:  $
	
			
	Dated:
	Your Signature:
	 

	 
	(Sign exactly as your name appears on the other side of this Note.)

	 

	Signature Guarantee:

	 
	(Signature must be guaranteed)

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Notes Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Notes Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act

16

EXHIBIT 2
to Rule 144A / Regulation S / IAI Appendix

Form of
Transferee Letter of Representation

MASONITE INTERNATIONAL CORPORATION
201 North Franklin Street, Suite 300
Tampa, Florida  33602

In care of
[          ]
[          ]
[          ]

Ladies and Gentlemen:
This certificate is delivered to request a transfer of $_________ principal amount of the Senior Notes Due 2021 (the “Notes”) of MASONITE INTERNATIONAL CORPORATION, a British Columbia corporation (the “Company”).
Upon transfer, the Notes would be registered in the name of the new beneficial owner as follows:
Name:________________________
Address:______________________
Taxpayer ID Number:____________
The undersigned represents and warrants to you that:
1.    We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the “Securities Act”)), purchasing for our own account or for the account of such an institutional “accredited investor” at least $250,000 principal amount of the Notes, and we are acquiring the Notes not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act.  We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we invest in or purchase securities similar to the Notes in the normal course of our business.  We, and any accounts for which we are acting, are each able to bear the economic risk of our or its investment.
2.    We understand that the Notes have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence.  We agree on our own behalf and on behalf of any investor account for which we are purchasing Notes to offer, sell or otherwise transfer such Notes prior to the date that is one year after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Notes (or any predecessor thereto) (the “Resale Restriction Termination Date”) only (i) to the Company, (ii) in the United States to a person whom the seller reasonably believes is a qualified institutional buyer in a transaction meeting the requirements of Rule 144A, (iii) to an institutional “accredited investor” within the meaning of Rule 501(a)(1), 

(2), (3) or (7) under the Securities Act that is an institutional accredited investor purchasing for its own account or for the account of an institutional accredited investor, in each case in a minimum principal amount of the Notes of $250,000, (iv) outside the United States in a transaction complying with the provisions of Rule 904 under the Securities Act, (v) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if available) or (vi) pursuant to an effective registration statement under the Securities Act, in each of cases (i) through (vi) subject to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws.  The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date.  If any resale or other transfer of the Notes is proposed to be made pursuant to clause (iii) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Company and the Trustee, which shall provide, among other things, that the transferee is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Notes for investment purposes and not for distribution in violation of the Securities Act.  Each purchaser acknowledges that the Company and the Trustee reserve the right prior to the offer, sale or other transfer prior to the Resale Restriction Termination Date of the Notes pursuant to clause (iii), (iv) or (v) above to require the delivery of an opinion of counsel, certifications or other information satisfactory to the Company and the Trustee.
TRANSFEREE:___________________________,
by: _____________________________________

2

EXHIBIT A

FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
Supplemental Indenture (this “Supplemental Indenture”), dated as of ________________, 20__, among __________________ (the “Guaranteeing Subsidiary”), a subsidiary of MASONITE INTERNATIONAL CORPORATION (or its permitted successor), a British Columbia corporation (the “Company”), the other Guarantors (as defined in the Indenture referred to herein) and Wells Fargo Bank, National Association, as trustee under the Indenture referred to below (the “Trustee”).
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture, dated as of April 15, 2011, amended and restated as of January 21, 2014 (as so amended and restated, the “Indenture”) providing for the issuance of Senior Notes Due 2021 (the “Notes”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “Guarantee”); and
WHEREAS, pursuant to Section 901 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
1.    Capitalized Terms.  Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
2.    Agreement to Guarantee.  The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Guarantee and in the Indenture including but not limited to Article Twelve thereof.
3.    No Recourse Against Others.  No director, officer, employee, incorporator or stockholder of the Company, any Successor Company or any Guarantor (other than in the case of stockholders of any Guarantor, the Company, Successor Company or another Guarantor) shall have any liability for any obligations of the Company, Successor Company or the Guarantors under the Notes, the Guarantees and the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation.  Each Holder by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.  Such waiver may not be effective to waive liabilities under the Federal securities laws and it is the view of the SEC that such a waiver is against public policy.

4.    GOVERNING LAW.  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
5.    Counterparts.  The parties may sign any number of copies of this Supplemental Indenture.  Each signed copy (which may be provided via facsimile or other electronic transmission) shall be an original, but all of them together represent the same agreement.
6.    Effect of Headings.  The Section headings herein are for convenience only and shall not affect the construction hereof.
7.    The Trustee.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company.

2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.
Dated:  _______________, 20___
	
		
	[GUARANTEEING SUBSIDIARY]

	By:

	 
	Name:

	 
	Title:

	 
	 

	MASONITE INTERNATIONAL CORPORATION

	By:

	 
	Name:

	 
	Title:

	 

	[EXISTING GUARANTORS]

	By:

	 
	Name:

	 
	Title:

	 
	 

	WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE

	By:

	 
	Name:

	 
	Title:

3

EXHIBIT B

INCUMBENCY CERTIFICATE
The undersigned, ____________, being the ____________ of ____________ (the “Company”) does hereby certify that the individuals listed below are qualified and acting officers of the Company as set forth in the right column opposite their respective names and the signatures appearing in the extreme right column opposite the name of each such officer is a true specimen of the genuine signature of such officer and such individuals have the authority to execute documents to be delivered to, or upon the request of, Wells Fargo Bank, National Association, as Trustee under the Amended and Restated Indenture dated as of January 21, 2014, among the Company, the Guarantors and Wells Fargo Bank, National Association.
	
					
	Name
	 
	Title
	 
	Signature

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Certificate as of the ____ day of ________, 20__.
_____________________________
Name: 
Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}]]