Document:

EXECUTION VERSION

______________________________________________________________________________

CREDIT AGREEMENT

dated as of

June 30, 2016

among

LINCOLN NATIONAL CORPORATION,

as an Account Party and Guarantor

The SUBSIDIARY ACCOUNT PARTIES,

as additional Account Parties

The BANKS Party Hereto

and

JPMORGAN CHASE BANK, N.A.

as Administrative Agent

___________________

$2,500,000,000

___________________

J.P. MORGAN CHASE BANK, N.A.,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

and

WELLS FARGO SECURITIES, LLC,

as Joint Lead Arrangers and Joint Bookrunners

BANK OF AMERICA, N.A.,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Syndication Agents

______________________________________________________________________________

TABLE OF CONTENTS

Page

ARTICLE I  DEFINITIONS                                                                            1

SECTION 1.01.  Definitions                                                                                                                                                                              1

SECTION 1.02.  Accounting Terms and Determinations                                                                                                                14  

SECTION 1.03.  Types of Borrowings                                                                                                                                         15

ARTICLE II  THE CREDITS                                                                                                                                                              15

SECTION 2.01.  Letters of Credit                                                                                                                                               15

SECTION 2.02.  Issuance and Administration of Syndicated Letters of Credit                                                                      18

SECTION 2.03.  Reimbursement for LC Disbursements, Cover, Etc.                                                                                     18

SECTION 2.04.  Loans                                                                                                                                                                  21

SECTION 2.05.  Notice of Borrowings; Interest Elections                                                                                                      22

SECTION 2.06.  Funding of Loans                                                                                                                                              23

SECTION 2.07.  Evidence of Loans                                                                                                                                            24

SECTION 2.08.  Maturity of Loans                                                                                                                                             24

SECTION 2.09.  Interest Rates of Loans                                                                                                                                    24

SECTION 2.10.  Fees                                                                                                                                                                    25

SECTION 2.11.  Termination, Reduction or Increase of Commitments                                                                                  26

SECTION 2.12.  Optional Prepayments                                                                                                                                      28

SECTION 2.13.  Payments Generally; Pro Rata Treatment                                                                                                       28

SECTION 2.14.  Funding Losses                                                                                                                                                  29

SECTION 2.15.  Computation of Interest and Fees                                                                                                                    29

SECTION 2.16.  Provisions Relating to NAIC Approved Banks                                                                                               30

SECTION 2.17.  Defaulting Banks                                                                                                                                               32

ARTICLE III  CONDITIONS                                                                                                                                                               36

SECTION 3.01.  Each Credit Extension                                                                                                                                       36

SECTION 3.02.  Effectiveness                                                                                                                                                      36

ARTICLE IV  REPRESENTATIONS AND WARRANTIES                                                                                                             38

SECTION 4.01.  Corporate Existence and Power                                                                                                                       38

SECTION 4.02.  Corporate and Governmental Authorization; Contravention                                                                          38

SECTION 4.03.  Binding Effect                                                                                                                                                    38

SECTION 4.04.  Financial Information                                                                                                                                        38

SECTION 4.05.  Litigation                                                                                                                                                            39

SECTION 4.06.  Compliance with ERISA                                                                                                                                    39

SECTION 4.07.  Taxes                                                                                                                                                                   39 

SECTION 4.08.  Subsidiaries                                                                                                                                                        39

SECTION 4.09.  Not an Investment Company                                                                                                                             40

SECTION 4.10.  Obligations to be Pari Passu                                                                                                                             40

SECTION 4.11.  No Default                                                                                                                                                          40

SECTION 4.12.  Restricted Subsidiaries                                                                                                                                     40

SECTION 4.13.  Environmental Matters                                                                                                                                      40

SECTION 4.14.  Full Disclosure                                                                                                                                                  40

SECTION 4.15.  Separate Representations of Subsidiary Account Parties                                                                              40

SECTION 4.16.  Instruments                                                                                                                                                         41

 

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SECTION 4.17.  Sanctioned Persons; Anti-Corruption Laws; Patriot Act                                                                                41

SECTION 4.18.  EEA Financial Institutions                                                                                                                                 42

ARTICLE V  COVENANTS                                                                                                                                                                 42

SECTION 5.01.  Information                                                                                                                                                          42

SECTION 5.02.  Payment of Obligations                                                                                                                                      44

SECTION 5.03.  Conduct of Business and Maintenance of Existence                                                                                       45

SECTION 5.04.  Maintenance of Property; Insurance                                                                                                                  45

SECTION 5.05.  Compliance with Laws                                                                                                                                        45

SECTION 5.06.  Inspection of Property, Books and Records                                                                                                     45

SECTION 5.07.  Financial Covenants                                                                                                                                            46

SECTION 5.08.  Negative Pledge                                                                                                                                                   46

SECTION 5.09.  Consolidations, Mergers and Sales of Assets                                                                                                  46

SECTION 5.10.  Use of Credit                                                                                                                                                       46

SECTION 5.11.  Obligations to be Pari Passu                                                                                                                              46

SECTION 5.12.  Certain Indebtedness                                                                                                                                           46

ARTICLE VI  DEFAULTS                                                                                                                                                                    47

SECTION 6.01.  Events of Default                                                                                                                                                 47

SECTION 6.02.  Notice of Default                                                                                                                                                49

ARTICLE VII  THE ADMINISTRATIVE AGENT                                                                                                                              49

SECTION 7.01.  Appointment and Authorization                                                                                                                         49

SECTION 7.02.  Agent's Fee                                                                                                                                                          50

SECTION 7.03.  Agent and Affiliates                                                                                                                                            50

SECTION 7.04.  Action by Agent                                                                                                                                                   50

SECTION 7.05.  Consultation with Experts                                                                                                                                  50

SECTION 7.06.  Liability of Agent                                                                                                                                                50

SECTION 7.07.  Indemnification                                                                                                                                                   50

SECTION 7.08.  Credit Decision                                                                                                                                                   51

SECTION 7.09.  Successor Agent                                                                                                                                                  51

SECTION 7.10.  Delegation to Affiliates                                                                                                                                      51

SECTION 7.11.  Joint Lead Arrangers and Other Agents                                                                                                             51

ARTICLE VIII  CHANGE IN CIRCUMSTANCES                                                                                                                             52

SECTION 8.01.  Basis for Determining Interest Rate Inadequate or Unfair                                                                              52

SECTION 8.02.  Illegality                                                                                                                                                               52

SECTION 8.03.  Increased Cost and Reduced Return                                                                                                                  52

SECTION 8.04.  Base Rate Loans Substituted for Affected Euro-Dollar Loans                                                                       53

SECTION 8.05.  Taxes                                                                                                                                                                     54

SECTION 8.06.  Regulation D Compensation                                                                                                                              56

SECTION 8.07.  Mitigation Obligations; Replacement of Banks                                                                                               56

ARTICLE IX  GUARANTY                                                                                                                                                                  57

SECTION 9.01.  The Guaranty                                                                                                                                                        57

SECTION 9.02.  Guaranty Unconditional                                                                                                                                      57

SECTION 9.03.  Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances                                       58

SECTION 9.04.  Waiver by the Company                                                                                                                                      58

SECTION 9.05.  Subrogation                                                                                                                                                          58

 

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ARTICLE X  MISCELLANEOUS                                                                                                                                                       58

SECTION 10.01.  Notices                                                                                                                                                              58

SECTION 10.02.  No Waivers                                                                                                                                                       59

SECTION 10.03.  Expenses;  Indemnification;  Non-Liability of Banks                                                                                   59

SECTION 10.04.  Sharing of Payments                                                                                                                                         60

SECTION 10.05.  Amendments and Waivers                                                                                                                                60

SECTION 10.06.  Successors and Assigns                                                                                                                                    61

SECTION 10.07.  Collateral                                                                                                                                                           62

SECTION 10.08.  New York Law                                                                                                                                                   62

SECTION 10.09.  Judicial Proceedings                                                                                                                                         62

SECTION 10.10.  Counterparts; Integration; Headings                                                                                                                63

SECTION 10.11.  Confidentiality                                                                                                                                                  63

SECTION 10.12.  WAIVER OF JURY TRIAL                                                                                                                              64

SECTION 10.13.  Joinder and Termination of Subsidiary Account Party                                                                                  64

SECTION 10.14.  USA PATRIOT Act                                                                                                                                           65

SECTION 10.15.  No Fiduciary Duty                                                                                                                                            65

SECTION 10.16.  Acknowledgement and Consent to Bail-In of EEA Financial Institutions                                                   66

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Schedule I    Commitments

	Schedule II	Continued Existing Letters of Credit

Schedule III             Restricted Subsidiaries

Schedule IV    Existing Instruments

EXHIBIT A             Form of Note

	EXHIBIT B	Opinion of Counsel of the Company

	EXHIBIT C	Opinion of Milbank, Tweed, Hadley & McCloy LLP, Special New York Counsel to JPMorgan

EXHIBIT D            Form of Assignment and Assumption

EXHIBIT E             Form of Confirming Bank Agreement

EXHIBIT F              Form of Subsidiary Joinder Agreement

EXHIBIT G             Subsidiary Termination Notice

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CREDIT AGREEMENT dated as of June 30, 2016 among: LINCOLN NATIONAL CORPORATION, the SUBSIDIARY ACCOUNT PARTIES party hereto, the BANKS party hereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent.

 

The Account Parties have requested that the Banks issue letters of credit for their account and make loans to them in an aggregate face or principal amount not exceeding $2,500,000,000 at any one time outstanding, and the Banks are prepared to issue such letters of credit and make such loans upon the terms and conditions hereof.  Accordingly, the parties hereto agree as follows:

 

ARTICLE I

 DEFINITIONS

 

SECTION 1.01.  Definitions.  The following terms, as used herein, have the following meanings:

 

"Account Party" means any of the Company and the Subsidiary Account Parties, as the context may require, and "Account Parties" means all of the foregoing.

 

"Additional Commitment Bank" means (a) a Bank or (b) any other Person which is a NAIC Approved Bank, in each case that agrees to provide a Commitment or (in the case of a Bank) agrees to increase the amount of its Commitment pursuant to Section 2.11(c), with the consent of the Administrative Agent (such consent not to be unreasonably withheld).

 

"Adjusted Consolidated Net Worth" means, at any date, without duplication, the sum of (a) the consolidated shareholders' equity of the Company and its Consolidated Subsidiaries, plus (without duplication) (b) the aggregate amount of Instruments, to the extent given equity credit by S&P and/or Moody's; provided that (i) for purposes of clause (b) above, (A) in the case such Instruments are given equity credit by both S&P and Moody's, the higher of the two amounts shall apply and (B) the equity credit treatment given by S&P or Moody's to any Instrument outstanding as of the Effective Date (and listed on Schedule IV hereto) shall be deemed to apply to such Instrument to the extent such Instrument remains outstanding, irrespective of any change in the equity credit treatment given by either such rating agency to such Instrument at any time after the Effective Date (for avoidance of doubt, any change in the amount or percentage of the equity credit given to such Instrument that is contemplated in the equity credit treatment given to such Instrument as of the Effective Date, including without limitation any such change resulting from the life to maturity of such Instrument or the amount of all such Instruments as a percentage of total adjusted capital (as determined by S&P), shall continue to be given effect after the Effective Date for purposes of clause (b) above); (ii) there shall be excluded from "Adjusted Consolidated Net Worth" (A) accumulated other comprehensive income (or loss), as shown on the relevant consolidated balance sheet of the Company and its Consolidated Subsidiaries most recently filed with the SEC, (B) all obligations of the Company and its Subsidiaries in respect of Disqualified Capital Stock and (C) all noncontrolling interests in subsidiaries (as determined in accordance with the Statement of Financial Accounting Standards No. 160, entitled "Noncontrolling Interests in Consolidated Financial Statements"); and (iii) the calculation of "Adjusted Consolidated Net Worth" shall not give effect to any election under the Statement of Financial Accounting Standards No. 159, entitled "The Fair Value Option for Financial Assets and Financial Liabilities" (or any similar accounting principle) permitting a Person to value its financial liabilities at the fair value thereof.

 

"Administrative Agent" means JPMorgan, in its capacity as agent for the Banks hereunder, and its successors in such capacity.

 

 

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"Administrative Questionnaire" means, with respect to each Bank, an administrative questionnaire in the form prepared by the Administrative Agent and submitted to the Administrative Agent (with a copy to the Company) duly completed by 

"Affiliate" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person.  A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise.

 

"Agreement" means this Credit Agreement, as it may be amended or modified and in effect from time to time.

 

"Anti-Corruption Laws" has the meaning set forth in Section 4.17.

 

"Anti-Money Laundering Laws" has the meaning set forth in Section 4.17.

 

"Applicable Lending Office" means, as to each Bank, its office, branch or Affiliate located at its address set forth in its Administrative Questionnaire or such other office, branch or Affiliate of such Bank as it may hereafter designate as its Applicable Lending Office for purposes hereof by notice to the Company and the Administrative Agent.

 

"Applicable Facility Fee Rate", "Applicable Letter of Credit Commission" and "Applicable Margin" means, for any day, with respect to the facility fees payable hereunder or with respect to the letter of credit fees payable under Section 2.10(b) or with respect to the interest margin on any Base Rate Loan or Euro‐Dollar Loan, as the case may be, the applicable rate per annum set forth below under the caption "Applicable Facility Fee Rate", "Applicable Letter of Credit Commission", "Applicable Margin (Base Rate Loans)" or "Applicable Margin (Euro-Dollar Loans)", respectively, based upon the ratings by Moody's and S&P, respectively, applicable on such date to the Index Debt:

 

	 	
Index Debt Ratings

(S&P/

Moody's)

	
Applicable Facility Fee Rate

	
Applicable Letter of Credit Commission

	
Applicable Margin (Base Rate Loans)

	
Applicable Margin (Euro-Dollar Loans)

	
Category 1

	
> A1 / A+

	
0.100%

	
0.775%

	
0.00%

	
0.90%

	
Category 2

	
A / A2

	
0.125%

	
0.875%

	
0.00%

	
1.00%

	
Category 3

	
A- / A3

	
0.15%

	
0.975%

	
0.10%

	
1.10%

	
Category 4

	
BBB+ / Baa1

	
0.175%

	
1.075%

	
0.20%

	
1.20%

	
Category 5

	
< BBB / Baa2

	
0.225%

	
1.275%

	
0.40%

	
1.40%

For purposes of the foregoing, (a) if the ratings established or deemed to have been established by Moody's and S&P for the Index Debt shall fall within different Categories that are one Category apart, the Applicable Facility Fee Rate, the Applicable Letter of Credit Commission and the

 

 

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Applicable Margin shall be determined by reference to the Category of the higher of the two ratings; (b) if the ratings established or deemed to have been established by Moody's and S&P for the Index Debt shall fall within different Categories that are more than one Category apart, the Applicable Facility Fee Rate, the Applicable Letter of Credit Commission and the Applicable Margin shall be determined by reference to the Category next below that of the higher of the two ratings; (c) if only one of Moody's and S&P shall have in effect a rating for the Index Debt, the Applicable Facility Fee Rate, the Applicable Letter of Credit Commission and the Applicable Margin shall be determined by reference to the Category of such rating; (d) if neither Moody's nor S&P shall have in effect a rating for the Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), then the applicable rating shall be determined by reference to Category 5; and (e) if the ratings established or deemed to have been established by Moody's and S&P for the Index Debt shall be changed (other than as a result of a change in the rating system of Moody's or S&P), such change shall be effective as of the date on which it is first announced by the applicable rating agency, irrespective of when notice of such change shall have been furnished by the Company to the Administrative Agent and the Banks pursuant to Section 5.01 or otherwise.  Each change in the Applicable Facility Fee Rate, the Applicable Letter of Credit Commission and the Applicable Margin shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change.  If the rating system of Moody's or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporate debt obligations, the Company and the Banks shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Applicable Facility Fee Rate, the Applicable Letter of Credit Commission and the Applicable Margin shall be determined by reference to the rating of Moody's and/or S&P, as the case may be, most recently in effect prior to such change or cessation.  References herein to "Applicable Margin" shall refer to the Applicable Margin for the relevant Type of Loan, as applicable.

 

"Applicable Percentage" means, with respect to any Bank, the percentage of the total Commitments represented by such Bank's Commitment; provided that in the case of Section 2.17 when a Defaulting Bank shall exist, "Applicable Percentage" shall mean the percentage of the total Commitments (disregarding any Defaulting Bank's Commitment) represented by such Bank's Commitment.  If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments and to any Bank's status as a Defaulting Bank at the time of determination.

 

"Assignee" has the meaning set forth in Section 10.06(c).

 

"Assignment and Assumption" means an assignment and assumption entered into by a Bank and an assignee (with the consent of any party whose consent is required by Section 10.06), and accepted by the Administrative Agent, in the form of Exhibit D or any other form approved by the Administrative Agent.

 

"Bail-In Action" means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

"Bail-In Legislation" means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

"Bank" means each Person listed under the caption "BANKS" on the signature pages hereof, and each other Person that shall become a party hereto as a Bank pursuant to this Agreement

 

 

4

 

(other than any such Person that ceases to be a Bank by means of assignment pursuant to this Agreement), together with its successors.  For purposes of clarification, the term "Bank" shall include each Fronting Issuing Bank.

 

"Bankruptcy Event" means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a governmental body, agency or official or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such governmental body, agency or official or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

 

"Base Rate" means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus 1⁄2 of 1% and (c) the LIBO Rate for a one month Interest Period (the "Relevant LIBO Rate") on such day (or if such day is not a Euro-Dollar Business Day, the immediately preceding Euro-Dollar Business Day) plus 1%, provided that for the purpose of this definition,  the LIBO Rate for any day shall be based on the LIBO Screen Rate (or if the LIBO Screen Rate is not available for such one month Interest Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such day.  Any change in the Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Relevant LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Relevant LIBO Rate, respectively.

 

"Base Rate Loan" means a Loan to be made by a Bank pursuant to Section 2.04 as a Base Rate Loan in accordance with the applicable Notice of Borrowing or Article VIII.

 

"Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group.

 

"Borrowing" has the meaning set forth in Section 1.03.

 

"Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing.

 

"Code" means the Internal Revenue Code of 1986, as amended, or any successor statute.

 

"Collateral Account" has the meaning set forth in Section 2.03(e).

 

"Commitment" means, with respect to any Bank, the commitment of such Bank (a) to issue Syndicated Letters of Credit under Section 2.01(a) and to acquire participations in Fronted Letters of Credit and/or (b) to make Loans hereunder, in each case expressed as an amount representing the maximum aggregate amount of such Bank's Credit Exposure hereunder, as such commitment may be reduced or increased from time to time pursuant to this Agreement (including pursuant to assignments by

 

 

5

 

or to such Bank pursuant to Section 10.06).  The initial amount of each Bank's Commitment is set forth on Schedule I hereto or in the Assignment and Assumption or other instrument executed and delivered hereunder pursuant to which such Bank shall have assumed its Commitment, as applicable.  The aggregate amount of the Banks' Commitments is $2,500,000,000 as of the Effective Date.  The Commitments of the Banks are several and not joint and no Bank shall be responsible for any other Bank's failure (a) to issue Syndicated Letters of Credit under Section 2.01(a) and to acquire participations in Fronted Letters of Credit and/or (b) to make Loans hereunder.

 

"Commitment Availability Period" means the period from and including the Effective Date to but excluding earlier of the Commitment Termination Date and the date of termination of the Commitments.

 

"Commitment Termination Date" means June 30, 2021 or, if such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.

 

"Company" means Lincoln National Corporation, an Indiana corporation, and its successors.

 

"Company's 2015 Form 10-K" means the Company's annual report on Form 10-K for 2015, as filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended.

 

"Confirming Bank" means, with respect to any Bank, any other bank that has agreed, by delivery of a confirming bank agreement in substantially the form of Exhibit E (a "Confirming Bank Agreement"), that such other bank will itself honor the obligations of such Bank in respect of a draft complying with the terms of a Letter of Credit as if, and to the extent, such other bank were the "Issuing Bank" named in such Letter of Credit.

 

"Confirming Bank Agreement" has the meaning set forth in the definition of "Confirming Bank".

 

"Consolidated Subsidiary" means, at any date, any Subsidiary or other entity the accounts of which would be consolidated with those of the Company in its consolidated financial statements if such statements were prepared as of such date.

 

"Consolidated Total Capitalization" means, at any date, the sum of Consolidated Total Indebtedness and Adjusted Consolidated Net Worth.

 

"Consolidated Total Indebtedness" means, at any date, the aggregate amount of all Non-Operating Indebtedness of the Company and its Consolidated Subsidiaries.

 

"Continued Existing Fronted Letters of Credit" means each Fronted Letter of Credit under (and as defined in) the Existing Credit Agreement outstanding as of the Effective Date and listed on Part A of Schedule II, which, in each case, shall be deemed issued and continued as a Fronted Letter of Credit hereunder pursuant to the third paragraph of Section 2.01(a).

"Continued Existing Syndicated Letters of Credit" means each Syndicated Letter of Credit under (and as defined in) the Existing Credit Agreement outstanding as of the Effective Date and listed on Part B of Schedule II, which, in each case, shall be deemed issued and continued as a Syndicated Letter of Credit hereunder pursuant to the second paragraph of Section 2.01(a) (and amended in accordance with the terms thereof).

 

 

6

 

"Credit Documents" means (a) this Agreement, (b) the Notes, (c) with respect to any Subsidiary Account Party, the Subsidiary Joinder Agreement to which it is a party and (d) with respect to any Letter of Credit, collectively, any application therefor and any other agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (i) the rights and obligations of the parties concerned or at risk with respect to such Letter of Credit or (ii) any collateral security for any of such obligations, each as the same may be modified and supplemented and in effect from time to time.

 

"Credit Exposure" means, with respect to any Bank at any time, the sum of (a) the aggregate principal amount of such Bank's Loans and (b) the aggregate amount of such Bank's LC Exposure, in each case, outstanding at such time.

 

"Credit Party" means the Administrative Agent, each Fronting Issuing Bank or any Bank.

 

"Debt" of any Person means, at any date, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (d) all obligations of such Person as lessee under capital leases, (e) all non-contingent obligations of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit or similar instrument, (f) all Debt of others secured by a Lien on any asset of such Person, whether or not such Debt is assumed by such Person, (g) all Debt of others Guaranteed by such Person, (h) all obligations of such Person in respect of Disqualified Stock and (i) all Instruments of such Person to the extent they would not be included in Adjusted Consolidated Net Worth; provided that the definition of "Debt" does not include any obligations of such Person (i) to purchase securities (or other property) which arise out of or in connection with the sale of the same or substantially similar securities (or other property) or (ii) to return collateral consisting of securities arising out of or in connection with the loan of the same or substantially similar securities.

 

"Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.

 

"Defaulting Bank" means any Bank that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its obligations in respect of Letters of Credit (including its participations in Fronted Letters of Credit) or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Bank notifies the Administrative Agent in writing that such failure is the result of such Bank's good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Company or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Bank's good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by the Administrative Agent or any Fronting Issuing Bank, acting in good faith, to provide a certification in writing from an authorized officer of such Bank that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and obligations in respect of then outstanding Letters of Credit (including its participations in then outstanding Fronted Letters of Credit) under this Agreement, provided that such Bank shall cease to be a Defaulting Bank pursuant to this clause (c) upon receipt by the Administrative

 

 

7

 

Agent or such Fronting Issuing Bank of such certification in form and substance satisfactory to the Administrative Agent and (if applicable) such Fronting Issuing Bank, (d) has become the subject of (A) a Bankruptcy Event or (B) a Bail-In Action, or (e) ceases to be a NAIC-Approved Bank and has failed to comply with its obligations under Section 2.16(b).

 

"Derivative Financial Products" of any Person means all obligations (including whether pursuant to any master agreement or any particular agreement or transaction) of such Person in respect of any rate swap transaction, basis swap, forward rate transaction, interest rate future, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency future, currency option or any other similar transaction (including any option with respect to any of the foregoing) or any combination thereof.

 

"Disqualified Capital Stock" means that portion of any Capital Stock (other than Capital Stock that is solely redeemable, or at the election of the issuer thereof (not subject to any condition), may be redeemed, with Capital Stock that is not Disqualified Capital Stock) which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof, on or prior to 180 days after the first anniversary of the Commitment Termination Date.

 

"Dollars" and the sign "$" means lawful money in the United States of America.

 

"Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close.

 

"EEA Financial Institution" means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent;

 

"EEA Member Country" means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

"EEA Resolution Authority" means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

"Effective Date" means the date this Agreement becomes effective in accordance with Section 3.02.

 

"Environmental Laws" means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes or the clean-up or other remediation thereof.

 

 

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"Equity Issuance" means, with respect to any Person, (a) any issuance or sale by such Person of (i) any Capital Stock, (ii) any warrants or options exercisable in respect of Capital Stock (other than any warrants or options issued to directors, officers or employees of such Person in their capacity as such and any Capital Stock issued upon the exercise thereof) or (iii) any other security or instrument representing Capital Stock (or the right to obtain any Capital Stock) in such Person or (b) the receipt by such Person of any contribution to its capital (whether or not evidenced by any equity security) by any other Person; provided that Equity Issuance shall not include, with respect to any Subsidiary of the Company, any such issuance or sale by such Subsidiary to the Company or another Subsidiary or any capital contribution by the Company or another Subsidiary to such Subsidiary.

 

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute.

 

"ERISA Group" means the Company and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company, are treated as a single employer under Section 414(b) or 414(c) of the Code.

 

"EU Bail-In Legislation Schedule" means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

 

"Euro-Dollar Business Day" means any Domestic Business Day on which commercial banks are open for international business (including dealings in Dollar deposits) in London.

 

"Euro-Dollar Loan" means a Loan to be made by a Bank pursuant to Section 2.04 as a Euro-Dollar Loan in accordance with the applicable Notice of Borrowing.

 

"Euro-Dollar Reserve Percentage" means, for any day, that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Bank to United States residents).

 

"Event of Default" has the meaning set forth in Section 6.01.

 

"Existing Credit Agreement" means the Credit Agreement dated as of May 29, 2013 among the Company, the Subsidiary Account Parties, the banks party thereto and JPMorgan, as Administrative Agent, as amended and in effect immediately prior to the effectiveness of this Agreement.

 

"Federal Funds Rate" means, for any day, the rate calculated by the NYFRB based on such day's federal funds transactions by depositary institutions (or on any such day that is not a Domestic Business Day, on the immediately preceding Domestic Business Day), as determined in such manner as the NYFRB shall set forth on its public website from time to time, and published on the next succeeding Domestic Business Day by the NYFRB as the federal funds effective rate.

 

"Fronted LC Commitment" means, with respect to any Fronting Issuing Bank, the maximum aggregate undrawn face amount of Fronted Letters of Credit which such Fronting Issuing Bank shall have agreed to issue hereunder (as set forth (i) in the case of any Fronting Issuing Bank party hereto as of the Effective Date, beneath the signature of such Fronting Issuing Bank on its signature page hereto

 

 

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or (ii) in the case of any Bank that shall become a Fronting Issuing Bank after the Effective Date, in the written instrument referred to in the definition of "Fronting Issuing Bank" by which it agrees to be a Fronting Issuing Bank hereunder), as such maximum amount may be changed from time to time in accordance with Section 2.01(a).

 

"Fronted LC Exposure" means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Fronted Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements under Fronted Letters of Credit that have not yet been reimbursed by or on behalf of the Account Parties at such time.  The Fronted LC Exposure of any Bank shall at any time be its Applicable Percentage of the total Fronted LC Exposure at such time.

 

"Fronted Letter of Credit" means a letter of credit issued by a Fronting Issuing Bank as the sole issuing bank, and shall include the Continued Existing Fronted Letters of Credit.

 

"Fronting Issuing Bank" means each Bank that has agreed to be a Fronting Issuing Bank and to issue Fronted Letters of Credit hereunder, as evidenced by such Bank's execution of a signature page to this Agreement in its capacity as a "Fronting Issuing Bank" or, if such Bank shall have so agreed with the Company at any time after the Effective Date, by a written instrument executed by such Bank and the Company and delivered to the Administrative Agent hereunder (which instrument shall be in form and substance satisfactory to the Administrative Agent), whereupon such Bank shall become a Fronting Issuing Bank hereunder.

 

"Guarantee" by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business.  The term "Guarantee" used as a verb has a corresponding meaning.

 

"Guarantor" means the Company in its capacity as guarantor of the obligations of each other Account Party pursuant to the provisions of Article IX.

 

"Impacted Interest Period" has the meaning set forth in Section 2.09(b).

 

"Index Debt" means senior, unsecured, long‐term indebtedness for borrowed money of the Company that is not guaranteed by any other Person or subject to any other credit enhancement.

 

"Instruments" means Securities (as defined below) that are given equity credit by S&P or Moody's (and as to which, in the case of any Instrument issued after the Effective Date, the Company shall have provided evidence of such credit to the Administrative Agent), provided that the term "Instruments" shall exclude any Securities that are recorded in the shareholder's equity section of the consolidated balance sheet of the Company and its Consolidated Subsidiaries most recently filed with the SEC. As used herein "Securities" means any stock, share, partnership interest, membership interest in a limited liability company, voting trust certificate, certificate of interest or participation in any profit-sharing agreement or arrangement, option, warrant, bond, debenture, note, or other evidence of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities" or any certificates of interest, shares or participations in temporary or

 

 

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interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.

 

"Insurance Subsidiary" means any Restricted Subsidiary which is subject to the regulation of, and is required to file statements with, any governmental body, agency or official in any State or territory of the United States or the District of Columbia which regulates insurance companies or the doing of an insurance business therein.

 

"Interest Election Request" means a request by an Account Party to convert or continue a Borrowing in accordance with Section 2.05(b).

 

"Interest Period" means, with respect to each Euro-Dollar Borrowing, the period commencing on the date of such Borrowing and ending one, two, three or six months thereafter, as the applicable Account Party may elect in the applicable Notice of Borrowing or Interest Election Request; provided that:

 

(a)            any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day;

 

(b)            any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Euro-Dollar Business Day of a calendar month; and

 

(c)            any Interest Period which begins before the Commitment Termination Date and would otherwise end after the Commitment Termination Date shall end on the Commitment Termination Date.

 

For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

"Interpolated  Rate" means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBO Screen Rate for the longest period for which the LIBO Screen Rate is available for Dollars that is shorter than the Impacted Interest Period; and (b) the LIBO Screen Rate for the shortest period (for which that LIBO Screen Rate is available for Dollars) that exceeds the Impacted Interest Period, in each case, at such time.

 

"JPMorgan" means JPMorgan Chase Bank, N.A.

 

"LC Disbursement" means a payment made by a Bank pursuant to a Letter of Credit.

 

"LC Exposure" means, at any time, the sum of (a) the Syndicated LC Exposure at such time plus (b) the Fronted LC Exposure at such time.  The LC Exposure of any Bank shall at any time be the sum of (a) its Syndicated LC Exposure at such time plus (b) its Fronted LC Exposure at such time.

 

"LC Reimbursement Loan" means a Loan the proceeds of which are used solely to finance the reimbursement of LC Disbursements as contemplated by Section 2.03(a).

 

 

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"Letters of Credit" means letters of credit issued under Section 2.01 and shall include Syndicated Letters of Credit and Fronted Letters of Credit.

 

"LIBO Rate" has the meaning set forth in Section 2.09(b).

 

"LIBO Screen Rate" has the meaning set forth in Section 2.09(b).

 

"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset.  For the purposes of this Agreement, the Company or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or beneficially holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

 

"Loan" means a Base Rate Loan or a Euro-Dollar Loan and "Loans" means Base Rate Loans or Euro-Dollar Loans or any combination of the foregoing.

 

"Material Adverse Effect" means a material adverse effect on (a) business, financial condition, results of operations or prospects of the Company and its Consolidated Subsidiaries, taken as a whole or (b) the validity or enforceability of any of the Credit Documents or the material rights and remedies of the Banks under the Credit Documents.

 

"Material Subsidiary" means any Subsidiary of the Company with assets of $150,000,000 or more.

 

"Moody's" means Moody's Investors Service, Inc.

 

"Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five-year period.

 

"NAIC" means the National Association of Insurance Commissioners and any successor thereto.

 

"NAIC Approved Bank" means (a) any Bank that is a bank listed on the most current "Bank List" of banks approved by the NAIC (the "NAIC Approved Bank List") or (b) any Bank as to which its Confirming Bank is a bank listed on the NAIC Approved Bank List.

 

"NAIC Approved Bank List" has the meaning set forth in the definition of "NAIC Approved Bank".

 

"Net Proceeds" means, with respect to any Equity Issuance, the aggregate cash proceeds received in respect of such Equity Issuance, net of all reasonable fees and out-of-pocket expenses paid to third parties (other than Affiliates of the Company) in connection therewith; provided that Net Proceeds of any Equity Issuance shall not include any proceeds received in respect of the exercise of stock options held by officers, directors, employees, or consultants of the Company or any of its Subsidiaries.

 

"Newly Acquired Subsidiary" means any Subsidiary that is not a Subsidiary on the date hereof but that becomes a Subsidiary after the date hereof, but only during the 180 days after the first date on which such Subsidiary became a Subsidiary.

 

 

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"Newly Acquired Subsidiary Debt" has the meaning set forth in Section 6.01(e).

 

"Non-Defaulting Banks" means any Bank that is not a Defaulting Bank.

 

"Non-Operating Indebtedness" of any Person means, at any date, all Debt (other than Operating Indebtedness) of such Person.

 

"Notes" means a promissory note or notes of an Account Party, substantially in the form of Exhibit A hereto, evidencing the obligation of such Account Party to repay the Loans made to it hereunder, and "Note" means any one of such promissory notes issued hereunder.

 

"Notice of Borrowing" has the meaning set forth in Section 2.05(a).

 

"NYFRB" means the Federal Reserve Bank of New York.

 

"NYFRB Rate" means, for any day, the greater of (a) the Federal Funds Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Domestic Business Day, for the immediately preceding Domestic Business Day); provided that if none of such rates are published for any day that is a Domestic Business Day, the term "NYFRB Rate" means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received to the Administrative Agent from a Federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

 

"Operating Indebtedness" of any Person means, at any date, without duplication, any Debt of such Person (a) in respect of AXXX, XXX and other similar life reserve requirements, (b) incurred in connection with repurchase agreements and securities lending, (c) to the extent the proceeds of which are used directly or indirectly (including for the purpose of funding portfolios that are used to fund trusts in order) to support AXXX, XXX and other similar life reserves, (d) to the extent the proceeds of which are used to fund discrete customer-related assets or pools of assets (and related hedge instruments and capital) that are at least notionally segregated from other assets and have sufficient cash flow to pay principal and interest thereof, with insignificant risk of other assets of the Company and its Subsidiaries being called upon to make such principal and interest payments or (e) excluded from financial leverage by both S&P and Moody's in their evaluation of such Person.

 

"Overnight Bank Funding Rate" means, for any day, the rate comprised of both overnight federal funds and overnight Eurodollar borrowings by United Sates-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on its public website from time to time, and published on the next succeeding Domestic Business Day by the NYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate).

 

"Parent" means, with respect to any Bank, any Person as to which such Bank is, directly or indirectly, a subsidiary.

 

"Participant" has the meaning set forth in Section 10.06(b).

 

"Participant Register" has the meaning set forth in Section 10.06(e).

 

"Patriot Act" has the meaning set forth in Section 4.17.

 

 

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"Payment Account" means an account designated by the Administrative Agent in a notice to the Account Parties and the Banks to which payments hereunder are to be made.

 

"PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

 

"Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

 

"Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group.

 

"Prime Rate" means the rate of interest publicly announced from time to time by JPMorgan as its prime rate as in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

 

"Quarterly Dates" means the last day of March, June, September and December in each year, the first of which shall be the first such day after the date hereof.

 

"Regulation S‐X" means Regulation S-X promulgated under the Securities Act of 1933, as amended from time to time, and as interpreted by the SEC.

 

"Regulations T, U and X" means Regulations T, U and X, respectively, of the Board of Governors of the Federal Reserve System, in each case as in effect from time to time.

 

"Related Parties" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates.

 

"Required Banks" means at any time Banks having Commitments representing more than 50% of the aggregate amount of the Commitments at such time; provided that, if the Commitments have expired or been terminated, "Required Banks" means Banks having more than 50% of the aggregate amount of the Credit Exposures of the Banks at such time.

 

"Restricted Subsidiary" means (a) any Subsidiary that has total assets in excess of 10% of the total assets of the Company and its Consolidated Subsidiaries (based upon and as of the date of the filing of the most recent consolidated balance sheet of the Company furnished pursuant to Section 4.04 or 5.01), (b) any Subsidiary formed or organized after the Effective Date that owns, directly or indirectly, greater than 10% of Capital Stock in any other Restricted Subsidiary and (c) each Subsidiary Account Party (so long as it remains a Subsidiary Account Party hereof). In the event that the aggregate total assets of the Restricted Subsidiaries represents less than 80% of the consolidated total assets of the Company and its Consolidated Subsidiaries (as reported on the Company's most recent consolidated balance sheet furnished pursuant to Section 4.04 or 5.01), the Company shall promptly designate an additional Subsidiary or Subsidiaries as Restricted Subsidiaries in order that, after such designation, the aggregate total assets of the Restricted Subsidiaries represent at least 80% of the consolidated total assets of the

 

 

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Company and its Consolidated Subsidiaries (as reported on the Company's most recent consolidated balance sheet furnished pursuant to Section 4.04 or 5.01).

 

"Sanctions" has the meaning set forth in Section 4.17.

 

"Sanctions Laws" has the meaning set forth in Section 4.17.

 

"S&P" means Standard and Poor's Ratings Services.

 

"SEC" means Securities and Exchange Commission or any governmental body, agency or official succeeding to its principal functions.

 

"Secured Obligations" has the meaning set forth in Section 2.03(e).

 

"Subsidiary" means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by the Company.

 

"Subsidiary Account Parties" means each Subsidiary of the Company that is listed on the signature pages hereof under the caption "SUBSIDIARY ACCOUNT PARTIES " and each other Subsidiary of the Company that shall become a Subsidiary Account Party pursuant to Section 10.13, so long as such Subsidiary shall remain a Subsidiary Account Party hereunder.

 

"Syndicated LC Exposure" means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Syndicated Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements under Syndicated Letters of Credit that have not yet been reimbursed by or on behalf of the Account Parties at such time.  The Syndicated LC Exposure of any Bank shall at any time be its Applicable Percentage of the total Syndicated LC Exposure at such time.

 

"Syndicated Letter of Credit" means a single multi-bank letter of credit issued by all of the Banks (acting through the Administrative Agent in accordance with the provisions hereof) in which each Bank, as an issuing bank thereunder, has a several (but not joint) obligation in respect of a specified portion of the amount of such letter of credit, and shall include the Continued Existing Syndicated Letters of Credit.

 

"Type", when used in reference to any Loan or Borrowing, refers to whether the Loan is a Base Rate Loan or a Euro-Dollar Loan.

 

"Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all benefits under such Plan exceeds (ii) the fair market value of all Plan assets allocable to such benefits (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA.

 

"Write-Down and Conversion Powers" means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

 

SECTION 1.02.  Accounting Terms and Determinations.  Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made and all financial statements required to be delivered hereunder shall be prepared in

 

 

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accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Company's independent public accountants) with the most recent audited consolidated financial statements of the Company and its Consolidated Subsidiaries delivered to the Banks; provided that if the Company notifies the Administrative Agent that the Company wishes to amend any covenant in Article V to eliminate the effect of any change in generally accepted accounting principles on the operation of such covenant (or if the Administrative Agent notifies the Company that the Required Banks wish to amend Article V for such purpose), then the Company's compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Banks.

 

SECTION 1.03.  Types of Borrowings.  The term "Borrowing" denotes the aggregation of Loans to be made to an Account Party pursuant to Section 2.04, or converted or continued pursuant to Section 2.05(b), on a single date and for a single Interest Period.  Borrowings are classified for purposes of this Agreement by reference to the pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans).

 

ARTICLE II

 THE CREDITS

SECTION 2.01.  Letters of Credit.

 

(a)            General.  Subject to the terms and conditions set forth herein, at the request of any Account Party, at any time and from time to time during the Commitment Availability Period, (i) each Bank agrees to issue Syndicated Letters of Credit and (ii) each Fronting Issuing Bank agrees to issue Fronted Letters of Credit, in each case denominated in Dollars for the account of such Account Party, that will not result in (x) the aggregate outstanding amount of the Credit Exposures of the Banks exceeding the aggregate amount of the Commitments of the Banks, (y) the aggregate outstanding amount of the Credit Exposure of such Bank exceeding the aggregate amount of the Commitment of such Bank and (z) with respect to Fronted Letters of Credit, the aggregate undrawn face amount of Fronted Letters of Credit issued by such Fronting Issuing Bank exceeding its Fronted LC Commitment.

 

Each Syndicated Letter of Credit shall be a standby letter of credit in such form as the relevant Account Party shall request and which (i) the Administrative Agent shall determine in good faith does not contain any obligations, or diminish any rights, of any Bank with respect thereto or other terms thereof that are inconsistent with the terms hereof or (ii) the Required Banks shall approve.  Without the prior consent of each Bank, no Syndicated Letter of Credit may be issued that would vary the several and not joint nature of the obligations of the Banks thereunder, and each Syndicated Letter of Credit shall be issued by all of the Banks having Commitments at the time of issuance as a single multi-bank letter of credit, but the obligation of each Bank thereunder shall be several and not joint, based upon its Applicable Percentage of the aggregate undrawn amount of such Letter of Credit.  Subject to the terms and conditions hereof, as of the Effective Date, each Continued Existing Syndicated Letter of Credit shall automatically be deemed issued and continued as a Syndicated Letter of Credit hereunder by all of the Banks having Commitments on the Effective Date.  From and after the Effective Date, the obligation of each Bank in respect of each Continued Existing Syndicated Letter of Credit shall be several and not joint, based upon its Applicable Percentage and the aggregate undrawn amount thereof, and each Continued Existing Syndicated Letter of Credit shall be a Syndicated Letter of Credit for all purposes of this Agreement.  The Administrative Agent shall, on the Effective Date or as promptly as practicable thereafter, amend each Continued Existing Syndicated Letter of Credit as to, as of the Effective Date, the names of the Banks that

 

 

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will be issuing banks under, and party to, each Continued Existing Syndicated Letter of Credit and the Banks' respective Applicable Percentages thereunder.

 

Each Fronted Letter of Credit shall be a standby letter of credit in such form as the relevant Account Party shall request and reasonably acceptable to the Administrative Agent and the applicable Fronting Issuing Bank with respect thereto.  Each Fronted Letter of Credit shall be issued by, and be the sole obligation as issuing bank of, the applicable Fronting Issuing Bank.  No Bank shall have any obligation hereunder to become a Fronting Issuing Bank hereunder and any election to do so shall be in the sole discretion of each Bank.  Notwithstanding anything herein to the contrary, any addition or removal of a Fronting Issuing Bank hereunder or change in its Fronted LC Commitment may be effected only with the agreement of such Fronting Issuing Bank and the Company (and with the consent of Administrative Agent (such consent not to be unreasonably withheld)) (provided that no such change shall increase the Commitment of any Bank).  Subject to the terms and conditions hereof, as of the Effective Date, each Continued Existing Fronted Letter of Credit shall automatically be deemed issued and continued as a Fronted Letter of Credit hereunder by JPMorgan as the applicable Fronting Issuing Bank with respect thereto, and each Bank shall have a participation in each Continued Existing Fronted Letter of Credit equal to such Bank's Applicable Percentage of the aggregate amount available to be drawn thereunder in accordance with the terms hereof.

 

(b)            Notice of Issuance, Amendment, Renewal or Extension.  To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), an Account Party shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Administrative Agent) to the Administrative Agent and (in the case of a Fronted Letter of Credit) the applicable Fronting Issuing Bank (if by hand delivery or telecopy, not later than noon (New York City time) on the Domestic Business Day prior to, and if by approved electronic communication, not later than 10:00 a.m. (New York City time) on the date of, the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Syndicated Letter of Credit or Fronted Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension, as the case may be (which shall be a Domestic Business Day), the date on which such Letter of Credit is to expire (which shall comply with Section 2.01(d)), the amount of such Letter of Credit, the name and address of the beneficiary thereof and the terms and conditions of (and such other information as shall be necessary to prepare, amend, renew or extend, as the case may be) such Letter of Credit.

 

If requested by the Administrative Agent or (in the case of any Fronted Letter of Credit) the applicable Fronting Issuing Bank through the Administrative Agent, such Account Party also shall submit a letter of credit application on standard form of the Person that is serving as Administrative Agent or such Fronting Issuing Bank, as applicable, in connection with any request for a Letter of Credit.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by any Account Party to, or entered into by any Account Party with, the Person that is serving as Administrative Agent or such Fronting Issuing Bank, as applicable, relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

If any Letter of Credit shall provide for the automatic extension of the expiry date thereof unless the Administrative Agent or (in the case of any Fronted Letter of Credit) the applicable Fronting Issuing Bank shall give notice to the beneficiary thereof on or before the time specified therein that such expiry date shall not be extended (each such Letter of Credit, an "Evergreen Letter of Credit" and such notice, a "Non-Extension Notice"), then the Administrative Agent or such Fronting Issuing Bank, as applicable, will give a Non-Extension Notice under such Evergreen Letter of Credit in accordance with its terms if requested to do so by notice given to the Administrative Agent or such Fronting Issuing Bank

 

 

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(through the Administrative Agent) by (i) at any time a Default shall have occurred and be continuing, the Required Banks, (ii) at any time on or after the date that the Commitments are terminated, any Bank or (iii) the applicable Account Party or the Company.

 

(c)            Limitations on Amounts and Daily Transactions.  Each Letter of Credit shall be issued, amended, renewed or extended if and only if (and upon such issuance, amendment, renewal or extension of each Letter of Credit the Account Parties shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, the aggregate outstanding amount of the Credit Exposures of the Banks shall not exceed the aggregate amount of the Commitments of the Banks.

 

In no event may more than 25 issuances, amendments, renewals and/or extensions of Letters of Credit occur on any day, unless the Administrative Agent shall otherwise agree.

 

(d)            Expiry Date.  Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (provided that such Letter of Credit may contain "evergreen" provisions for the renewal or extension thereof to a date not later than one year after the then current expiry date thereof) or (ii) the first anniversary of the Commitment Termination Date.  The Company shall cause any Letter of Credit outstanding on or after the date that is ten Business Days prior to the Commitment Termination Date to be cash collateralized in accordance with Section 2.03(e) on or prior to such date and for so long as such Letter of Credit is outstanding.

 

(e)            Obligation of Banks.  With respect to any Syndicated Letter of Credit, the obligation of any Bank under such Syndicated Letter of Credit shall be several and not joint and shall at any time be in an amount equal to such Bank's Applicable Percentage of the aggregate undrawn amount of such Letter of Credit, and each Syndicated Letter of Credit shall expressly so provide.

 

By the issuance of a Fronted Letter of Credit (or an amendment to a Fronted Letter of Credit increasing the amount thereof) (including the deemed issuance hereunder of the Continued Existing Fronted Letters of Credit) by any Fronting Issuing Bank, and without any further action on the part of any Fronting Issuing Bank or the Banks, the applicable Fronting Issuing Bank hereby grants to each Bank, and each Bank hereby acquires from such Fronting Issuing Bank, a participation in such Fronted Letter of Credit equal to such Bank's Applicable Percentage of the aggregate amount available to be drawn under such Fronted Letter of Credit.  Each Bank acknowledges and agrees that its obligation to acquire participations in respect of Fronted Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Fronted Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments.  In consideration and in furtherance of the foregoing, each Bank hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for account of the applicable Fronting Issuing Bank, such Bank's Applicable Percentage of each LC Disbursement made by such Fronting Issuing Bank in respect of any Fronted Letter of Credit, promptly upon the request of such Fronting Issuing Bank at any time from the time such LC Disbursement is made until such LC Disbursement is reimbursed by the applicable Account Party or at any time after any reimbursement payment is required to be refunded to such Account Party for any reason.  Such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Promptly following receipt by the Administrative Agent of any payment from the applicable Account Party pursuant to Section 2.03(a) in respect of any Fronted Letter of Credit, the Administrative Agent shall distribute such payment to the applicable Fronting Issuing Bank or, to the extent that the Banks have made payments pursuant to this paragraph to reimburse such Fronting Issuing Bank, then to the Banks and such Fronting Issuing Bank as their interests may appear.  Any payment made by a Bank pursuant to this paragraph to reimburse the applicable Fronting Issuing Bank for

 

 

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any LC Disbursement shall not relieve any Account Party of its obligation to reimburse such LC Disbursement.

 

(f)            Adjustment of Applicable Percentages.  Upon (i) each addition of a new Bank hereunder and (ii) each change in the Commitment of a Bank pursuant to this Agreement, then (A) in the case of each outstanding Syndicated Letter of Credit, with the consent of the beneficiary thereunder to the extent required by the terms thereof or under applicable law (including, if applicable, the Uniform Customs and Practices for Documentary Credits governing such Syndicated Letter of Credit), the Administrative Agent shall promptly amend such Syndicated Letter of Credit to specify the Banks that are parties thereto, after giving effect to such event, and such Banks' respective Applicable Percentages as of the effective date of such amendment and (B) in the case of each outstanding Fronted Letter of Credit, the participation interest of each Bank therein shall automatically be adjusted to reflect, and each Bank shall have a participation in such Fronted Letter of Credit equal to, such Bank's Applicable Percentage of the aggregate amount available to be drawn under such Fronted Letter of Credit after giving effect to such event.

 

SECTION 2.02.  Issuance and Administration of Syndicated Letters of Credit.  With respect to each Syndicated Letter of Credit, such Syndicated Letter of Credit shall be executed and delivered by the Administrative Agent in the name and on behalf of, and as attorney-in-fact for, the Banks party to such Syndicated Letter of Credit, and the Administrative Agent shall act as the agent of each such Bank to (a) receive drafts, other demands for payment and other documents presented by the beneficiary under such Syndicated Letter of Credit, (b) determine whether such drafts, demands and documents are in compliance with the terms and conditions of such Syndicated Letter of Credit and (c) notify such Bank, the Company and the applicable Account Party that a valid drawing has been made and the date that the related LC Disbursement is to be made; provided that the Administrative Agent shall have no obligation or liability for any LC Disbursement under such Syndicated Letter of Credit, and each Syndicated Letter of Credit shall expressly so provide.  Each Bank hereby irrevocably appoints and designates the Administrative Agent as its attorney-in-fact, acting through any duly authorized officer of the Person that is serving as the Administrative Agent, to execute and deliver in the name and on behalf of such Bank each Syndicated Letter of Credit to be issued by the Banks hereunder.  Promptly upon the request of the Administrative Agent, each Bank will furnish to the Administrative Agent such powers of attorney or other evidence as any beneficiary of any such Letter of Credit may reasonably request in order to demonstrate that the Administrative Agent has the power to act as attorney-in-fact for such Bank to execute and deliver each Syndicated Letter of Credit.

 

SECTION 2.03.  Reimbursement for LC Disbursements, Cover, Etc.

 

(a)            Reimbursement.  If any Bank shall make any LC Disbursement in respect of any Letter of Credit, the Account Party with respect to such Letter of Credit shall reimburse such Bank in respect of any such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than noon, New York City time, on (A) the Domestic Business Day that the Company and such Account Party receive notice of such LC Disbursement, if such notice is received prior to 10:00 a.m., New York City time, or (B) the Domestic Business Day immediately following the day that the Company and such Account Party receive such notice, if such notice is received on a day which is not a Domestic Business Day or is not received prior to 10:00 a.m., New York City time, on a Domestic Business Day; provided that, at any time during the Commitment Availability Period, such Account Party may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.05(a) that such payment be financed with a Base Rate Borrowing in an equivalent amount and, to the extent so financed, such Account Party's obligation to make such payment shall be discharged and replaced by the resulting Base Rate Borrowing.

 

 

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(b)            Reimbursement Obligations Absolute.  The Account Parties' obligations to reimburse LC Disbursements as provided in Section 2.03(a) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, (iv) at any time or from time to time, without notice to any Account Party, the time for any performance of or compliance with any of such reimbursement obligations of any other Account Party shall be waived, extended or renewed, (v) any of such reimbursement obligations of any other Account Party shall be amended or otherwise modified in any respect, or the Guarantee of any of such reimbursement obligations or any security therefor shall be released, substituted or exchanged in whole or in part or otherwise dealt with, (vi) any lien or security interest granted to, or in favor of, the Administrative Agent or any of the Banks as security for any of such reimbursement obligations shall fail to be perfected, (vii) the occurrence of any Default, (viii) the existence of any proceedings of the type described in Section 6.01(g) or (h) with respect to any other Account Party or the Guarantor of any of such reimbursement obligations, (ix) any lack of validity or enforceability of any of such reimbursement obligations against any other Account Party or the Guarantor of any of such reimbursement obligations, or (x) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the obligations of any Account Party hereunder.

 

Neither the Administrative Agent nor any Bank nor any of their Related Parties shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond their control; provided that the foregoing shall not be construed to excuse the Administrative Agent or a Bank from liability to any Account Party to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Account Parties to the extent permitted by applicable law) suffered by any Account Party that are caused by (x) the gross negligence or willful misconduct of the Administrative Agent or such Bank, as the case may be, or (y) in the case of any Bank, its failure to make an LC Disbursement in respect of any drawing properly made under a Letter of Credit as provided in Section 2.03(c), in the case of each of the foregoing clauses (x) and (y), as determined by a court of competent jurisdiction.  The parties hereto expressly agree that:

 

(i)            the Administrative Agent or (in the case of any Fronted Letter of Credit) the applicable Fronting Issuing Bank may accept documents that appear on their face to be in substantial compliance with the terms of a Letter of Credit without responsibility for further investigation, regardless of any notice or information to the contrary, and may make payment upon presentation of documents that appear on their face to be in substantial compliance with the terms of such Letter of Credit;

 

(ii)            the Administrative Agent or (in the case of any Fronted Letter of Credit) the applicable Fronting Issuing Bank shall have the right, in its sole discretion, to decline to accept such documents and to make such payment if such documents are not in strict compliance with the terms of such Letter of Credit; and

 

 

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(iii)            this sentence shall establish the standard of care to be exercised by the Administrative Agent or (in the case of any Fronted Letter of Credit) the applicable Fronting Issuing Bank when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof (and the parties hereto hereby waive, to the extent permitted by applicable law, any standard of care inconsistent with the foregoing).

 

(c)            Disbursement Procedures.  (i)  The following provisions shall apply to any Syndicated Letter of Credit.  The Administrative Agent shall, within a reasonable time following its receipt thereof, examine all documents purporting to represent a demand for payment under any Syndicated Letter of Credit.  The Administrative Agent shall promptly after such examination (A) notify each of the Banks, the Company and the Account Party by telephone (confirmed by telecopy) of such demand for payment and (B) deliver to each Bank a copy of each document purporting to represent a demand for payment under such Syndicated Letter of Credit.  With respect to any drawing properly made under any such Syndicated Letter of Credit, each Bank will make an LC Disbursement in respect of such Syndicated Letter of Credit in accordance with its liability under such Syndicated Letter of Credit and this Agreement, such LC Disbursement to be made to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Banks.  The Administrative Agent will make any such LC Disbursement available to the beneficiary of such Syndicated Letter of Credit by promptly crediting the amounts so received, in like funds, to the account identified by such beneficiary in connection with such demand for payment.  Promptly following any LC Disbursement by any Bank in respect of any such Syndicated Letter of Credit, the Administrative Agent will notify the Company and the applicable Account Party of such LC Disbursement; provided that any failure to give or delay in giving such notice shall not relieve such Account Party of its obligation to reimburse the Banks with respect to any such LC Disbursement or the Guarantor of its guarantee of such obligation.

 

(ii)            The following provisions shall apply to any Fronted Letter of Credit.  The applicable Fronting Issuing Bank shall, within a reasonable time following its receipt thereof, examine all documents purporting to represent a demand for payment under a Fronted Letter of Credit.  The applicable Fronting Issuing Bank shall promptly after such examination notify the Administrative Agent and the Company by telephone (confirmed by telecopy) of such demand for payment and whether such Fronting Issuing Bank has made or will make a LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the applicable Account Party of its obligation to reimburse such Fronting Issuing Bank and the Banks with respect to any such LC Disbursement.

 

(d)            Interim Interest.  If any LC Disbursement is made, then, unless the Account Parties shall reimburse such LC Disbursement in full on the date such LC Disbursement is made (without regard for when notice thereof is given), the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the applicable Account Party reimburses such LC Disbursement, at the rate per annum equal to (i) 1% plus the Base Rate plus the Applicable Margin to but excluding the date three Domestic Business Days after such LC Disbursement and (ii) from and including the date three Domestic Business Days after such LC Disbursement, 3% plus the Base Rate plus the Applicable Margin.

 

(e)            Provision of Cover.  In the event the Company and the Account Parties shall have provided (or be required to provide) cash collateral for outstanding Letters of Credit pursuant to Section 2.01(d), Section 2.17 or Section 6.01, the Administrative Agent will establish a separate cash collateral account (the "Collateral Account"), which may be a "securities account" (as defined in Section 8-501 of the Uniform Commercial Code as in effect in New York (the "NY UCC")), in the name and under the sole dominion and control of the Administrative Agent (and, in the case of a securities account, in respect of which the Administrative Agent is the "entitlement holder" (as defined in Section 8-102(a)(7) of the NY UCC)) into which there shall be deposited from time to time such amounts paid to

 

 

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the Administrative Agent as cash collateral for the applicable LC Exposure.  As collateral security for the prompt payment in full when due of all reimbursement obligations in respect of LC Disbursements, all interest thereon, and all other obligations of the Account Parties under the Credit Documents whether or not then outstanding or due and payable (such obligations being herein collectively called the "Secured Obligations"), each of the Company and the other Account Parties hereby pledges and grants to the Administrative Agent, for the benefit of the Banks and the Administrative Agent as provided herein, a security interest in all of its right, title and interest in and to the Collateral Account and the balances from time to time in the Collateral Account (including the investments and reinvestments therein provided for below).  The balances from time to time in the Collateral Account shall not constitute payment of any Secured Obligations until applied by the Administrative Agent as provided herein.  Anything in this Agreement to the contrary notwithstanding, funds held in the Collateral Account shall be subject to withdrawal only as provided in this Section 2.03(e).  Amounts on deposit in the Collateral Account shall be invested and reinvested by the Administrative Agent in such short-term investments as the Administrative Agent shall determine in its sole discretion.  All such investments and reinvestments shall be held in the name and be under the sole dominion and control of the Administrative Agent and shall be credited to the Collateral Account.  At any time, and from time to time, while an Event of Default has occurred and is continuing, the Administrative Agent shall, if instructed by the Required Banks in their sole discretion, liquidate any such investments and reinvestments and credit the proceeds thereof to the Collateral Account and apply or cause to be applied such proceeds and any other balances in the Collateral Account to the payment of any of the Secured Obligations due and payable.  If at any time (i) no Default has occurred and is continuing and (ii) all of the Secured Obligations then due have been paid in full but Letters of Credit remain outstanding, the Administrative Agent shall, from time to time, at the request of the Company, deliver to the Company, against receipt but without any recourse, warranty or representation whatsoever, such of the balances in the Collateral Account as exceed the aggregate undrawn face amount of all outstanding Letters of Credit.  When all of the Secured Obligations shall have been paid in full, all Letters of Credit have expired or been terminated and the Commitments have terminated, the Administrative Agent shall promptly deliver to the Company, for account of the Company and the other Account Parties, as applicable, against receipt but without any recourse, warranty or representation whatsoever, the balances remaining in the Collateral Account.

 

SECTION 2.04.  Loans.   At any time and from time to time during the Commitment Availability Period each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make loans in Dollars to the Account Parties pursuant to this Section in amounts such that (x) the aggregate outstanding amount of the Credit Exposures of the Banks shall not exceed the aggregate amount of the Commitments of the Banks and (y) the aggregate outstanding amount of the Credit Exposure of such Bank shall not exceed the Commitment of such Bank; provided that the aggregate outstanding principal amount of Loans (other than LC Reimbursement Loans) shall not exceed $750,000,000.  Each Borrowing shall be in an aggregate principal amount of $25,000,000 or any larger multiple of $1,000,000 and shall be made from the several Banks ratably in proportion to their respective Commitments; provided that, notwithstanding the foregoing, a Base Rate Borrowing may be in an amount that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.03(a).  Within the foregoing limits, the Account Parties may borrow under this Section, repay or, to the extent permitted by Section 2.12, prepay Loans and reborrow at any time during the Commitment Availability Period under this Section.  Each Bank may, at its option, make any Loan available to any Subsidiary Account Party that is organized under the laws of a jurisdiction other than of the United States or a political subdivision thereof by causing any foreign or domestic branch or Affiliate of such Bank to make such Loan; provided that any exercise of such option shall not affect the obligation of such Subsidiary Account Party to repay such Loan in accordance with the terms of this Agreement.

 

 

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SECTION 2.05.  Notice of Borrowings; Interest Elections.

 

(a)            The applicable Account Party shall give the Administrative Agent notice (a "Notice of Borrowing") not later than 11:00 a.m. (New York City time) on (x) the date of each Base Rate Borrowing by such Account Party and (y) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing by such Account Party, specifying:

 

(i)            the date of such Borrowing, which shall be a Domestic Business Day in the case of a Base Rate Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing,

 

(ii)            the aggregate amount (in Dollars) of such Borrowing,

 

(iii)            whether the Loans comprising such Borrowing are to be Base Rate Loans or Euro-Dollar Loans,

 

(iv)            in the case of a Euro-Dollar Borrowing, the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period, and

 

(v)            whether the Loans comprising such Borrowing are to be LC Reimbursement Loans.

 

(b)            Interest Elections.  Each Borrowing initially shall be of the Type specified in the applicable Notice of Borrowing and, in the case of a Euro-Dollar Borrowing, shall have an initial Interest Period as specified in such Notice of Borrowing.  Thereafter, the applicable Account Party may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Euro-Dollar Borrowing, may elect Interest Periods therefor, all as provided in this subsection (b).  The applicable Account Party may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Banks holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.  To make an election pursuant to this Section, the applicable Account Party shall notify the Administrative Agent of such election by telephone by the time that a Notice of Borrowing would be required under Section 2.05(a) if such Account Party were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election.  Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by such Account Party.  Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.04:

 

(i)            the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

 

(ii)            the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)            whether the resulting Borrowing is to be a Base Rate Borrowing or a Euro-Dollar Borrowing; and

 

 

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(iv)            if the resulting Borrowing is a Euro-Dollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period".

 

If any such Interest Election Request requests a Euro-Dollar Borrowing but does not specify an Interest Period, then the applicable Account Party shall be deemed to have selected an Interest Period of one month's duration.  Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Bank of the details thereof and of such Bank's portion of each resulting Borrowing.  If the applicable Account Party fails to deliver a timely Interest Election Request with respect to a Euro-Dollar Revolving Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to a Base Rate Borrowing.  Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Banks, so notifies the Account Parties, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Euro-Dollar Borrowing and (ii) unless repaid, each Euro-Dollar Borrowing shall be converted to a Base Rate Borrowing at the end of the Interest Period applicable thereto.

 

SECTION 2.06.  Funding of Loans.

 

(a)            Upon receipt of a Notice of Borrowing, the Administrative Agent shall promptly notify each Bank of the contents thereof and of such Bank's share of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the applicable Account Party.

 

(b)            Not later than 12:00 noon (New York City time) (or 1:00 p.m. (New York City time) in the case of any Base Rate Borrowing) on the date of each Borrowing, each Bank participating therein shall (except as provided in subsection (c) of this Section) make available its share of such Borrowing, in Federal or other funds immediately available in New York City, to the Administrative Agent at its address specified in or pursuant to Section 10.01.  Unless the Administrative Agent determines that any applicable condition specified in Article III has not been satisfied, the Administrative Agent will make the funds so received from the Banks available to the applicable Account Party at the Administrative Agent's aforesaid address.

 

(c)            If any Bank makes a new Loan hereunder to an Account Party on a day on which such Account Party is to repay all or any part of an outstanding Loan or unreimbursed LC Disbursement from such Bank, such Bank shall apply the proceeds of its new Loan to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed and the amount being repaid shall be made available by such Bank to the Administrative Agent as provided in subsection (b) of this Section, or remitted by such Account Party to the Administrative Agent as provided in Section 2.13, as the case may be.

 

(d)            Unless the Administrative Agent shall have received notice from a Bank prior to the time of any Borrowing that such Bank will not make available to the Administrative Agent such Bank's share of such Borrowing, the Administrative Agent may assume that such Bank has made such share available to the Administrative Agent on the date of such Borrowing in accordance with subsections (b) and (c) of this Section and the Administrative Agent may, in reliance upon such assumption, make available to the applicable Account Party on such date a corresponding amount.  If and to the extent that such Bank shall not have so made such share available to the Administrative Agent, such Bank and such Account Party severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to such Account Party until the date such amount is repaid to the Administrative Agent, at (i) in

 

 

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the case of such Account Party, a rate per annum equal to the higher of the Federal Funds Rate and the interest rate applicable thereto pursuant to Section 2.09 and (ii) in the case of such Bank, the higher of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.  If such Bank shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Bank's Loan included in such Borrowing for purposes of this Agreement.

 

SECTION 2.07.  Evidence of Loans.

 

(a)            Each Bank shall maintain in accordance with its usual practice records evidencing the indebtedness of each Account Party to such Bank resulting from each Loan made by such Bank, including the amounts of principal and interest payable and paid to such Bank from time to time hereunder, and setting forth the Commitments of the Banks.

 

(b)            The Administrative Agent, acting solely for this purpose as an agent of the Account Parties, shall maintain a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Banks and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Bank from time to time (the "Register").  The entries in the Register shall be conclusive absent clear error, and the Account Parties, the Administrative Agent and the Banks shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Bank hereunder for all purposes of this Agreement.  The Register shall be available for inspection by the Account Parties and any Bank at any reasonable time and from time to time upon reasonable prior notice.

 

(c)            The failure of any Bank or the Administrative Agent to maintain such records required by this Section 2.07 or any error therein shall not in any manner affect the obligations of the Account Parties to repay the Loans in accordance with the terms of this Agreement.

 

(d)            Any Bank may request that the Loans of such Bank to an Account Party be evidenced by a single Note, in substantially the form of Exhibit A hereto with appropriate modifications to reflect the fact that it evidences solely Loans of the relevant Type, payable by such Account Party to such Bank for the account of its Applicable Lending Office.  In such event, such Account Party shall prepare, execute and deliver to such Bank a Note payable to such Bank (or, if requested by such Bank, to such Bank and its registered assigns).  Thereafter, once recorded in and to the extent consistent with the information contained in the Register, the Loans evidenced by such Note and interest thereon shall at all times (including after assignment pursuant to Section 10.06) be represented by one or more Notes in such form payable to the payee named therein (or, to such payee and its registered assigns).  For any Loan evidenced by a Note pursuant to this clause (d), any transfer of a Note must be recorded in the Register in order to be effective.

 

SECTION 2.08.  Maturity of Loans.  Each Loan shall mature, and each Account Party hereby unconditionally promises to pay the unpaid principal of each Loan made to such Account Party (together with accrued interest thereon), on the Commitment Termination Date.

 

SECTION 2.09.  Interest Rates of Loans.

 

(a)            Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the sum of the Base Rate for such day plus the Applicable Margin.  Such interest shall accrue and be payable quarterly in arrears on each Quarterly Date and on the date of termination of the Commitments in their entirety (and, if later, the date the Loans shall be paid in full).  Any overdue principal of or interest

 

 

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on any Base Rate Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the Base Rate for such day plus the Applicable Margin.

 

(b)            Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the applicable LIBO Rate plus the Applicable Margin.  Such interest shall be payable (i) for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof and (ii) in the event of any conversion of any Euro-Dollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Euro-Dollar Loan shall be payable on the effective date of such conversion.

 

The "LIBO Rate" applicable to any Interest Period means, with respect to any Euro-Dollar Loan for any Interest Period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two Euro-Dollar Business Days prior to the commencement of such Interest Period; provided that if the LIBO Screen Rate shall not be available at such time for such Interest Period (an "Impacted Interest Period") with respect Dollars then the LIBO Rate shall be the Interpolated Rate.

 

"LIBO Screen Rate" means, for any day and time, with respect to any Euro-Dollar Loan for any Interest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for Dollars for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion), provided that if the LIBO Screen Rate shall be less than zero, such rate shall be deemed to zero for the purposes of this Agreement.

 

(c)            Any overdue principal of any Euro-Dollar Loan shall bear interest, payable on demand, for each day from and including the date payment thereof was due to but excluding the date of actual payment, at a rate per annum equal to the sum of 2% plus the Applicable Margin plus the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum (as of the date of determination) at which one-day (or, if such amount due remains unpaid more than three Euro-Dollar Business Days, then for such other period of time not longer than six months as the Administrative Agent may select) deposits in Dollars in an amount approximately equal to such overdue payment due to the Person serving as the Administrative Agent are offered to such Person in the London interbank market for the applicable period determined as provided above (or, if the circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the Base Rate for such day plus the Applicable Margin).  Any overdue interest on any Euro-Dollar Loan shall bear interest, payable on demand, for each day from and including the date payment thereof is due to but excluding the date of actual payment, at a rate per annum equal to the sum of 2% plus the Base Rate for such day plus the Applicable Margin.

 

(d)            The Administrative Agent shall determine each interest rate applicable to the Loans and other amounts hereunder.  The Administrative Agent shall give prompt notice to the applicable Account Party and the Banks of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error.

 

SECTION 2.10.  Fees.

 

(a)            The Company agrees to pay to the Administrative Agent for account of each Bank a facility fee, which shall accrue at the Applicable Facility Fee Rate, (i) prior to the termination of

 

 

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such Bank's Commitment, on the daily amount of the Commitment of such Bank (whether used or unused) during the period from and including the Effective Date to but excluding the date that the Commitments terminate and (ii) if such Bank continues to have any Credit Exposure after its Commitment terminates, on the daily amount of such Bank's Credit Exposure from and including the date its Commitment terminates to but excluding the date such Bank ceases to have any Credit Exposure.  Accrued facility fees shall be payable on each Quarterly Date, commencing on the first such date after the Effective Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after such date shall be payable on demand.

 

(b)            The Company agrees to pay to the Administrative Agent for account of each Bank a letter of credit fee with respect to Letters of Credit, which shall accrue at the Applicable Letter of Credit Commission on the average daily aggregate undrawn amount of all outstanding Letters of Credit during the period from and including the Effective Date to but excluding the later of the date on which such Bank's Commitment terminates and the date on which such Bank ceases to have any LC Exposure.  Letter of credit fees accrued through and including each Quarterly Date shall be payable on the third Business Day following such Quarterly Date, commencing on the first such Business Day to occur; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after such date shall be payable on demand.

 

(c)            The Company agrees to pay to the Administrative Agent for account of each Fronting Issuing Bank a fronting fee with respect to each Fronted Letter of Credit issued by such Fronting Issuing Bank, which shall accrue at a rate per annum agreed in writing between the Company and such Fronting Issuing Bank (and notified to the Administrative Agent) on the average daily aggregate undrawn amount of each such Fronted Letters of Credit during the period from and including the date of issuance thereof to but excluding the later of the expiry date thereof and the date on which there ceases to be any LC Exposure thereunder.  Fronting fees accrued through and including each Quarterly Date shall be payable on the third Business Day following such Quarterly Date, commencing on the first such Business Day to occur; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after such date shall be payable on demand.

 

(d)            The Account Parties agree to pay, on demand, to the Administrative Agent (with respect to Syndicated Letters of Credit) and each Fronting Issuing Bank (with respect to Fronted Letters of Credit issued by it), in each case for its own account, all commissions, charges, costs and expenses with respect to the issuance, amendment, renewal and extension of each such Letter of Credit and drawings and other transactions relating thereto in amounts customarily charged from time to time in like circumstances by the Person that is serving as the Administrative Agent or such Fronting Issuing Bank, as the case may be, or, as may be separately agreed from time to time by the Company on behalf of the Account Parties and the Administrative Agent or such Fronting Issuing Bank, as the case may be.

 

(e)            All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, as applicable, to the Banks entitled thereto.  Fees paid hereunder shall not be refundable under any circumstances.

 

SECTION 2.11.  Termination, Reduction or Increase of Commitments.

 

(a)            Unless previously terminated, the Commitments shall automatically terminate on the Commitment Termination Date.

 

 

(b)            The Company may, upon at least three Domestic Business Days' notice to the Administrative Agent, terminate at any time, or proportionately and permanently reduce from time to time by an aggregate amount of $10,000,000 or any larger multiple of $5,000,000, the aggregate amount of the

 

 

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Commitments, provided that, after giving effect to such termination or any such reduction, the aggregate outstanding amount of the Credit Exposures of the Banks shall not exceed the aggregate amount of the Commitments of the Banks.  Upon receipt of such a notice, the Administrative Agent shall promptly notify each Bank of the contents thereof and of such Bank's ratable share of such reduction (if such notice is a notice of reduction) and such notice shall not thereafter be revocable by the Company.  Any termination or reduction of the Commitments shall be permanent.

 

(c)            The Company shall have the right, at any time or from time to time prior to the date that is 30 days prior to the Commitment Termination Date, to increase the aggregate Commitments hereunder by an aggregate amount of up to $500,000,000, by causing one or more Additional Commitment Banks (which may include any existing Bank) to provide a (or, in the case of an existing Bank, to increase its) Commitment (each such increase, an "Commitment Increase"), provided that (i) no Bank shall have any obligation hereunder to become an Additional Commitment Bank and any election to do so shall be in the sole discretion of each Bank, (ii) each Additional Commitment Bank shall have entered into an agreement in form and substance satisfactory to the Company and the Administrative Agent pursuant to which such Additional Commitment Bank shall provide a Commitment (or, if such Additional Commitment Bank is an existing Bank, pursuant to which its Commitment shall be increased), (iii) unless the Administrative Agent otherwise agrees, such Commitment of any Additional Commitment Bank which is not an existing Bank shall be in an amount of at least $25,000,000 and (iv) unless the Administrative Agent otherwise agrees, each Commitment Increase shall be in an amount of at least $25,000,000.  Each such Additional Commitment Bank shall enter into an agreement in form and substance satisfactory to the Company and the Administrative Agent pursuant to which such Additional Commitment Bank shall, as of effective date of such Commitment Increase (which shall be a Domestic Business Day and, unless the Administrative Agent otherwise agrees, on which no issuance, amendment, renewal or extension of any Letter of Credit is scheduled to occur, provide a Commitment (or, if any such Additional Commitment Bank is an existing Bank, increase its Commitment in the amount specified therein and (if not an existing Bank) become a Bank hereunder.  Notwithstanding the foregoing, no Commitment Increase pursuant to this Section shall be effective unless:

 

(i)            the Company shall have given the Administrative Agent notice of any such increase at least three Domestic Business Days prior to the relevant effective date of such Commitment Increase;

 

(ii)            no Default shall have occurred and be continuing on such effective date; and

 

(iii)            each of the representations and warranties of each Account Party contained in this Agreement (other than the representations and warranties set forth in Sections 4.04(e) and 4.05 as to any matter which has theretofore been disclosed in writing by the Account Parties to the Banks) shall be true on and as of such effective date with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

 

Each notice under clause (i) above shall be deemed to constitute a representation and warranty by the Company and the Subsidiary Account Parties as to the matters specified in clauses (ii) and (iii) above.  On the effective date of each Commitment Increase, the Company shall simultaneously (i) prepay in full the outstanding Loans (if any) held by the Banks immediately prior to giving effect to the relevant Commitment Increase, (ii) if the Company shall have so requested in accordance with this Agreement, borrow new Loans from all Banks (including, if applicable, any new Banks) such that, after giving effect thereto, the Loans are held ratably by the Banks in accordance with their respective Commitments (after giving effect to such Commitment Increase) and (iii) pay to the Banks the amounts, if any, payable under Section 2.14.

 

 

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SECTION 2.12.  Optional Prepayments.

 

(a)            An Account Party may, upon at least one Domestic Business Day's notice to the Administrative Agent, prepay any Base Rate Borrowing made to such Account Party in whole at any time, or from time to time in part in amounts aggregating $5,000,000 or any larger multiple of $1,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment.

 

(b)            An Account Party may, upon notice to the Administrative Agent by 10:00 a.m., New York City time, at least three Domestic Business Days prior to the date of prepayment, prepay any Euro-Dollar Borrowing made to such Account Party in whole at any time, or from time to time in part in amounts aggregating $5,000,000 or any larger multiple of $1,000,000, by paying the principal amount to be prepaid together with (x) accrued interest thereon to the date of prepayment and (y) all losses and expenses (if any) relating thereto which are (i) determined pursuant to Section 2.14 and (ii) notified to such Account Party by the relevant Bank at least one Domestic Business Day prior to the date of such prepayment, provided that the failure of any Bank to so notify such Account Party of the amount of any such loss or expense shall not relieve such Account Party of its obligation to pay the same.

 

(c)            Each prepayment pursuant to this Section shall be applied to prepay ratably the Loans of the several Banks included in the relevant Borrowing being prepaid.  Upon receipt of a notice of prepayment pursuant to this Section, the Administrative Agent shall promptly notify each Bank of the contents thereof and of such Bank's ratable share (if any) of such prepayment and such notice shall not thereafter be revocable by the applicable Account Party.

 

SECTION 2.13.  Payments Generally; Pro Rata Treatment.

 

(a)            Each Account Party shall make each payment required to be made by it hereunder (whether reimbursement of LC Disbursements, principal of or interest on the Loans, fees, amounts under Article VIII or otherwise) or under any other Credit Document (except to the extent otherwise provided therein) not later than 2:00 p.m., New York City time, on the date when due, in immediately available funds, without set‐off or counterclaim.  Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Domestic Business Day for purposes of calculating interest thereon.  All such payments shall be made to the Administrative Agent at its Payment Account, except as otherwise expressly provided in the relevant Credit Document, and except that payments pursuant to Section 10.03 and Article VIII shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any such payments received by it for account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a day that is not a Domestic Business Day or Euro-Dollar Business Day (as applicable), the date for payment shall be extended to the next succeeding Domestic or Euro-Dollar Business Day (as applicable) and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.  All payments hereunder or under any other Credit Document shall be made in Dollars.

 

(b)            If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of unreimbursed LC Disbursements in respect of Letters of Credit or interest thereon, principal of or interest on the Loans and fees then due hereunder, such funds shall be applied (i) first, to pay interest and fees then due hereunder in respect of such Letters of Credit or Loans (as applicable), pro rata among the Banks in accordance with the amounts of interest and fees then due to the Banks, and (ii) second, to pay such unreimbursed LC Disbursements or principal in respect of Loans (as applicable) then due hereunder, pro rata among the Banks in accordance with the amounts of unreimbursed LC Disbursements or principal of Loans then due to the Banks.

 

 

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(c)            Except to the extent otherwise provided herein:  (i) each reimbursement of LC Disbursements in respect of Letters of Credit and each payment of principal in respect of Loans shall be for account of the Banks, pro rata in accordance with the amounts of unreimbursed LC Disbursements or principal of Loans (as the case may be) then due and payable to the Banks; (ii) each termination or reduction of the amount of Commitments under Section 2.11 shall be applied to the respective Commitments of the Banks, pro rata in accordance with their respective Applicable Percentages; and (iii) each payment of interest, facility fees and letter of credit fees shall be for account of the Banks, pro rata in accordance with the amounts of interest, facility fees and letter of credit fees (as the case may be) then due and payable to the Banks.

 

(d)            Unless the Administrative Agent shall have received notice from the Company or the applicable Account Party prior to the date on which any payment is due to the Administrative Agent for account of the Banks hereunder that neither the Company nor such Account Party will make such payment, the Administrative Agent may assume that the Company or such Account Party made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Banks the amount due.  In such event, if the Company or such Account Party has not in fact made such payment, then each of the Banks severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the higher of the Federal Funds Rate and a rate determined by Administrative Agent in accordance with banking industry rules for interbank compensation.

 

(e)            If any Bank shall fail to make any payment required to be made by it pursuant to Section 2.01(e), 2.03(a), 2.06(d), 2.13(d) or 7.07, then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent for the account of such Bank for the benefit of the Administrative Agent or the applicable Fronting Issuing Bank to satisfy such Bank's obligations to it or any such Fronting Issuing Bank under such Section until all such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Bank under any such Section, in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

 

SECTION 2.14.  Funding Losses.  If an Account Party makes any payment of principal with respect to any Euro-Dollar Loan (pursuant to Article VI or VIII or otherwise), or converts any Euro-Dollar Loan, on any day other than the last day of the Interest Period applicable thereto, or the end of an applicable period fixed pursuant to Section 2.09(c), or if an Account Party fails to borrow, convert, continue or prepay any Euro-Dollar Loans after notice has been given to any Bank in accordance with Section 2.05(a), 2.05(b) or 2.12(b), as applicable, such Account Party shall reimburse each Bank within 15 days after demand for any resulting loss or expense incurred by it (or by an existing or prospective participant in the related Loan), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin for the period after any such payment or failure to borrow, provided that such Bank shall have delivered to such Account Party a certificate as to the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error.

 

SECTION 2.15.  Computation of Interest and Fees.  Interest based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day).  All other interest and fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day).

 

 

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SECTION 2.16.  Provisions Relating to NAIC Approved Banks.

 

(a)            Each Bank agrees to use commercially reasonable efforts in order to, at all times, (i) be listed on the NAIC Approved Bank List or (ii) maintain in effect a Confirming Bank Agreement with a Person which is listed on the NAIC Approved Bank List to act as a Confirming Bank for such Bank in respect of its obligations under the Syndicated Letters of Credit (which Person, prior to entering in such Confirming Bank Agreement, shall be subject to the prior written consent of each of the Company and the Administrative Agent, such consent, in each case, shall not be unreasonably withheld).  If any Bank shall enter into a Confirming Bank Agreement hereunder at any time, it shall promptly furnish a copy thereof to the Company and the Administrative Agent.  If at any time any Bank shall cease to be a NAIC Approved Bank, such Bank shall promptly notify the Company and the Administrative Agent and forthwith comply with its obligations under this subsection (a).

 

(b)            If at any time any Bank shall not be listed on the NAIC Approved Bank List and shall not have in effect a Confirming Bank Agreement with a Person which is so listed (provided such Bank is not a Defaulting Bank at such time), such Bank shall be obligated to provide cash collateral for its LC Exposure on the following terms:

 

(i)            With respect to any then existing Fronted LC Exposure of such Bank, at the option of the applicable Fronting Issuing Bank, such Bank shall forthwith deliver to the Administrative Agent an amount in cash equal to the maximum amount of such Fronted LC Exposure (such amount provided in respect of such Fronted LC Exposure being herein called "Fronted LC Cash Collateral").  Upon receipt of any Fronted LC Cash Collateral (including any additional cash collateral provided under clause (iii) below that constitutes Fronted LC Cash Collateral), the Administrative Agent will establish one or more cash collateral accounts (which, in each case, may be a "securities account" (as defined in Section 8-501 of the NY UCC, in the name and under the sole dominion and control of the Administrative Agent (and, in the case of a securities account, in respect of which the Administrative Agent is the "entitlement holder" (as defined in Section 8-102(a)(7) of the NY UCC)) (each such cash collateral account, a "Fronted LC Collateral Account") and deposit therein the relevant portion of such Fronted LC Cash Collateral (including the relevant portion of any additional cash collateral provided by such Bank in respect of its additional Fronted LC Exposure pursuant to clause (iii) below) as collateral solely for the benefit of the applicable Fronting Issuing Bank to secure such Bank's obligations in respect of the Fronted LC Exposure with respect to Fronted Letters of Credit issued by such Fronting Issuing Bank and such Bank hereby pledges and grants to the Administrative Agent, for the benefit of the applicable Fronting Issuing Bank, a security interest in all of its right, title and interest in and to each Fronted LC Collateral Account and the balances from time to time therein (including the investments and reinvestments therein provided for below).  The balances from time to time in a Fronted LC Collateral Account shall not constitute payment of any such obligations until applied by the Administrative Agent as provided herein.

 

(ii)            With respect to any then existing Syndicated LC Exposure of such Bank, subject to the payment by such Bank of a fee reasonably determined by JPMorgan, JPMorgan agrees to act as a Confirming Bank for (and to enter into a Confirming Bank Agreement with) such Bank with respect to such Bank's then existing Syndicated LC Exposure (and such additional Syndicated LC Exposure of such Bank, to the extent provided in clause (iii) below) and (unless not required by JPMorgan in its sole discretion) such Bank shall forthwith deliver to the Administrative Agent an amount in cash equal to the maximum amount of such Syndicated LC Exposure (such amount provided in respect of such Syndicated LC Exposure being herein called the "Syndicated LC Cash Collateral").  Upon receipt of any Syndicated LC Cash Collateral (including any additional cash collateral provided under clause (iii) below that constitutes

 

 

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Syndicated LC Cash Collateral) by the Administrative Agent from such Bank, the Administrative Agent will establish a cash collateral account (of the type described in clause (i) above) (the "Syndicated LC Collateral Account" and, together with each Fronted LC Collateral Account, each a "LC Collateral Account") and deposit therein such Syndicated LC Cash Collateral (including any additional cash collateral provided by such Bank in respect of its additional Syndicated LC Exposure pursuant to clause (iii) below) as collateral solely for the benefit of JPMorgan to secure such Bank's obligations to JPMorgan under such Confirming Bank Agreement in respect of such Bank's Syndicated LC Exposure and such Bank hereby pledges and grants to the Administrative Agent, for the benefit of JPMorgan, a security interest in all of its right, title and interest in and to the Syndicated LC Collateral Account and the balances from time to time therein (including the investments and reinvestments therein provided for below).  The balances from time to time in the Syndicated LC Collateral Account shall not constitute payment of any such obligations until applied by the Administrative Agent as provided herein.

 

(iii)            If at any time thereafter the Account Parties shall request additional Letters of Credit and at such time such Bank shall not be a NAIC-Approved Bank (provided such Bank is not a Defaulting Bank), such Bank shall provide additional cash collateral in respect of its Applicable Percentage of the maximum amount of the LC Exposure under such Letter of Credit in accordance with clause (i) or (ii) above, as applicable (provided that, with respect to any Fronted LC Exposure, such collateral shall be provided only at the option of the applicable Fronting Issuing Bank) and, upon receipt of such collateral, the Administrative Agent shall deposit, hold and apply such collateral as Fronted LC Cash Collateral or Syndicated LC Cash Collateral, as applicable, in accordance with this subsection (b).

 

(iv)            Anything in this Agreement to the contrary notwithstanding, funds held in any LC Collateral Account established under this subsection (b) shall be subject to withdrawal only as provided herein.  Amounts on deposit in each LC Collateral Account shall be invested and reinvested by the Administrative Agent in such short-term investments as the Administrative Agent shall determine in its sole discretion or, in the case of any Fronted LC Collateral Account, as the applicable Fronting Issuing Bank for whose benefits the funds therein have been pledged may direct the Administrative Agent or, in the case of the Syndicated LC Collateral Account, as JPMorgan may direct the Administrative Agent.  All such investments and reinvestments shall be held in the name and be under the sole dominion and control of the Administrative Agent and shall be credited to the relevant LC Collateral Account for the benefit of the Person for which such funds are being held.  At any time, and from time to time, the Administrative Agent shall, if instructed by (in the case of any Fronted LC Collateral Account) the applicable Fronting Issuing Bank in its sole discretion or (in the case of the Syndicated LC Collateral Account) JPMorgan in its sole discretion, as the case may be, liquidate any such investments and reinvestments and credit the proceeds thereof to such LC Collateral Account and apply or cause to be applied the balances therein to the payment of such Bank's obligations then due and payable which are secured by such balances.

 

(v)            If at any time the Letters of Credit in respect of any LC Exposure for which cash collateral has been provided by such Bank under this subsection (b) shall no longer exist, the Administrative Agent shall, at the request of such Bank, deliver to such Bank (with the concurrence of the applicable Fronting Issuing Bank or JPMorgan, as applicable), against receipt but without any recourse, warranty or representation whatsoever, the remaining balance in the relevant LC Collateral Account.

 

(vi)            If at any time such Bank shall have become a NAIC Approved Bank, subject, in the case of any Syndicated LC Exposure of such Bank, to (x) the termination of the Confirming

 

 

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Bank Agreement entered into between JPMorgan and such Bank releasing JPMorgan's obligation thereunder to act a Confirming Bank for such Bank and (y) with the consent of the beneficiary under each Syndicated Letter of Credit to the extent required by the terms thereof or under applicable law (including, if applicable, the Uniform Customs and Practices for Documentary Credits governing such Syndicated Letter of Credit), the amendment of each such Syndicated Letter of Credit by the Administrative Agent to reinstate such Bank's liability thereunder (and terminate JPMorgan's liability thereunder as such Confirming Bank), the Administrative Agent shall, at the request of such Bank, deliver to such Bank (with the concurrence of the applicable Fronting Issuing Bank (with respect to any Fronted LC Exposure) or JPMorgan (with respect to any Syndicated LC Exposure)), against receipt but without any recourse, warranty or representation whatsoever, the remaining balance in the relevant LC Collateral Account.

 

(c)            Notwithstanding anything herein to the contrary, so long as any Bank shall not be a NAIC Approved Bank, the Company may, upon notice to such Bank and the Administrative Agent, require such Bank, at the expense of such Bank, to assign, without recourse (in accordance with and subject to the restrictions contained in Section 10.06), all its interests, rights and obligations under this Agreement and the Letters of Credit issued, or participated in, by such Bank to any Person that shall assume such obligations (which assignee may be another Bank, if it accepts such assignment) with (and subject to) the consent of the Administrative Agent (which consent shall not unreasonably be withheld); provided that such Bank shall have received payment of an amount equal to the outstanding amount of its LC Disbursements (including participations therein), principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding LC Disbursements, Loans and accrued interest and fees) or the applicable Account Parties (in the case of all other amounts) (provided that the Account Parties may deduct, or cause such assignee to deduct, from amounts payable by them or it, as applicable, to such Bank hereunder all fees, costs and expenses reasonably incurred by the Account Parties in effecting such assignment).

 

SECTION 2.17.  Defaulting Banks.  Notwithstanding any provision of this Agreement to the contrary, if any Bank becomes a Defaulting Bank, then the following provisions shall apply for so long as such Bank is a Defaulting Bank:

 

(a)            facility fees shall cease to accrue on the Commitment of such Defaulting Bank pursuant to Section 2.10(a);

 

(b)            the Commitment and Credit Exposure of such Defaulting Bank shall not be included in determining whether the Required Banks have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 10.05); provided that this clause (b) shall not apply to the vote of a Defaulting Bank in the case of an amendment, waiver or other modification requiring the consent of such Bank or each Bank affected thereby;

 

(c)            with respect to any Fronted LC Exposure (if any):

 

(i)            all or any part of the Fronted LC Exposure of such Defaulting Bank (other than such Fronted LC Exposure that is cash collateralized pursuant to Section 2.16(b)) shall be reallocated among the Non-Defaulting Banks in accordance with their respective Applicable Percentages but only to the extent (x) the sum of all Non-Defaulting Banks' Credit Exposures plus such Defaulting Bank's LC Exposure does not exceed the total of all Non-Defaulting Banks' Commitments and (y) such reallocation does not, as to any non-Defaulting Bank, cause such non-Defaulting Bank's Credit Exposure to exceed its Commitment (and, if such reallocation can only partially be effected, such reallocation shall be made ratably among the then outstanding Fronted

 

 

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Letters of Credit, unless otherwise agreed by the Fronting Issuing Banks and the Administrative Agent);

 

(ii)            if the reallocation described in clause (i) above cannot, or can only partially, be effected, the relevant Account Party under each outstanding Fronted Letter of Credit shall within one Business Day following notice by the Administrative Agent cash collateralize for the benefit of the applicable Fronting Issuing Bank only such Account Party's obligations in respect thereof corresponding to such Defaulting Bank's Fronted LC Exposure thereunder (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.03(e) for so long as such Fronted LC Exposure is outstanding;

 

(iii)            if the Account Parties cash collateralizes any portion of such Defaulting Bank's Fronted LC Exposure pursuant to clause (ii) above, the Company shall not be required to pay any letter of credit fees to such Defaulting Bank pursuant to Section 2.10(b) with respect to such Defaulting Bank's Fronted LC Exposure during the period and to the extent that such Defaulting Bank's Fronted LC Exposure is cash collateralized;

 

(iv)            if the Fronted LC Exposure of the Non-Defaulting Banks is reallocated pursuant to clause (i) above, then the letter of credit fees payable to the Banks pursuant to Section 2.10(b) shall be adjusted in accordance with such Non-Defaulting Banks' Applicable Percentages;

 

(v)            if all or any portion of such Defaulting Bank's Fronted LC Exposure is neither reallocated nor cash collateralized pursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of any applicable Fronting Issuing Bank or any other Bank hereunder, all facility fees that otherwise would have been payable to such Defaulting Bank (solely with respect to the portion of such Defaulting Bank's Commitment that was utilized by such Fronted LC Exposure) and letter of credit fees payable under Section 2.10(b) with respect to such Defaulting Bank's Fronted LC Exposure shall be payable to the applicable Fronting Issuing Banks until and to the extent that such Fronted LC Exposure is reallocated and/or cash collateralized;

 

(vi)            so long as such Bank is a Defaulting Bank, no Fronting Issuing Bank shall be required to issue, amend or increase any Fronted Letter of Credit, unless it is satisfied that the related exposure and the Defaulting Bank's then outstanding Fronted LC Exposure will be 100% covered by the Commitments of the Non-Defaulting Banks and/or cash collateral will be provided by the Account Parties in accordance with Section 2.17(c), and participating interests in any newly issued or increased Fronted Letter of Credit shall be allocated among Non-Defaulting Banks in a manner consistent with Section 2.17(c)(i) (and such Defaulting Bank shall not participate therein); and

 

(vii)            if (i) a Bankruptcy Event or a Bail-In Action with respect to a Parent of any Bank shall occur following the date hereof and for so long as such event shall continue or (ii) any Fronting Issuing Bank has a good faith belief that any Bank has defaulted in fulfilling its obligations under one or more other agreements in which such Bank commits to extend credit, such Fronting Issuing Bank shall not be required to issue, amend or increase any Fronted Letter of Credit, unless such Fronting Issuing Bank shall have entered into arrangements with the Account Parties or such Bank, satisfactory to such Fronting Issuing Bank, to defease any risk to it in respect of such Bank hereunder;

 

(d)            with respect to any Syndicated LC Exposure (if any):

 

 

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(i)            letter of credit fees shall cease to accrue on such Defaulting Bank's Syndicated LC Exposure pursuant to Section 2.10(b);

 

(ii)            with respect to any Syndicated Letter of Credit outstanding at the time such Bank becomes a Defaulting Bank, with the consent of the beneficiary thereunder to the extent required by the terms thereof or under applicable law (including, if applicable, the Uniform Customs and Practices for Documentary Credits governing such Syndicated Letter of Credit), (x) all or any part of the Syndicated LC Exposure of such Defaulting Bank (other than any such Syndicated LC Exposure for which JPMorgan is then acting as a Confirming Bank for such Defaulting Bank pursuant to Section 2.16(b)) shall be reallocated among the Non-Defaulting Banks in accordance with their respective Applicable Percentages but only to the extent (I) the sum of all Non-Defaulting Banks' Credit Exposures plus such Defaulting Bank's LC Exposure does not exceed the total of all Non-Defaulting Banks' Commitments and (II) such reallocation does not, as to any non-Defaulting Bank, cause such non-Defaulting Bank's Credit Exposure to exceed its Commitment and (y) each such Syndicated Letter of Credit (other than any Syndicated Letter of Credit in respect of which JPMorgan is then acting as a Confirming Bank for such Bank pursuant to Section 2.16(b)) shall be amended by the Administrative Agent to specify the Banks that are parties to such Syndicated Letter of Credit (excluding, for avoidance of doubt, such Bank), after giving effect to such event, and such Banks' respective Applicable Percentages as of the effective date of such amendment;

 

(iii)            if the Syndicated LC Exposure of the Non-Defaulting Banks is reallocated with respect to any Syndicated Letter of Credit pursuant to clause (ii) above, then the letter of credit fees payable to the Banks with respect to such Syndicated Letter of Credit pursuant to Section 2.10(b) shall be adjusted in accordance with such Non-Defaulting Banks' Applicable Percentages; and

 

(iv)            the Syndicated LC Exposures of the Banks in respect of any newly issued Syndicated Letter of Credit shall be allocated among Non-Defaulting Banks in a manner consistent with clause (ii) above (and such Defaulting Bank shall have no obligation under each such Syndicated Letter of Credit to the extent such Syndicated LC Exposures in respect thereof are so reallocated);

 

(e)            until such time as the readjustments with respect to such Defaulting Bank are effected pursuant to subsection (f) of this Section, the Company may, upon notice to such Defaulting Bank and the Administrative Agent, require such Bank, at the expense of such Defaulting Bank, to assign, without recourse (in accordance with and subject to the restrictions contained in Section 10.06), all its interests, rights and obligations under this Agreement and the Letters of Credit issued, or participated in, by such Defaulting Bank to any Person that shall assume such obligations (which assignee may be another Bank, if it accepts such assignment) with (and subject to) the consent of the Administrative Agent (which consent shall not unreasonably be withheld); provided that (i) such Defaulting Bank shall have received payment of an amount equal to the outstanding amount of its LC Disbursements (including participations therein), principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding LC Disbursements, Loans and accrued interest and fees) or the applicable Account Parties (in the case of all other amounts) (provided that the Account Parties may deduct, or cause such assignee to deduct, from amounts payable by them or it, as applicable, to such Bank hereunder all fees, costs and expenses reasonably incurred by the Account Parties in effecting such assignment) and (ii) concurrently with such assignment, to the extent any LC Exposure of such Defaulting Bank theretofore shall have been reallocated pursuant to this Section, the Credit Exposures of the Banks (including, after giving effect to such assignment, such assignee) shall be readjusted (and payments made by the relevant parties) in a manner consistent with

 

 

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subsection (f) of this Section, such that, after giving effect thereto, the Banks (including such assignee, but not such Defaulting Bank) shall hold the Credit Exposures then outstanding in accordance with their respective Applicable Percentages; and

 

(f)            in the event that the Administrative Agent, the Account Parties and (to the extent there shall be Fronted Letters of Credit then outstanding) each Fronting Issuing Bank each agrees that a Defaulting Bank has adequately remedied all matters that caused such Bank to be a Defaulting Bank, then such Bank shall cease to be a Defaulting Bank and the Credit Exposures of the Banks shall be readjusted as follows:

 

(i)            with respect to any Fronted LC Exposure then outstanding, such Fronting LC Exposure shall be readjusted to reflect the inclusion of such Bank's Commitment and such Bank shall purchase at par such of the unreimbursed LC Disbursements then outstanding (if any) of the other Banks in respect of such Fronted LC Exposure as the Administrative Agent shall determine may be necessary in order for such Bank to hold such LC Disbursements in accordance with its Applicable Percentage;

 

(ii)            with respect to any Syndicated LC Exposure then outstanding, (x) with the consent of the beneficiary under each outstanding Syndicated Letter of Credit to the extent required by the terms thereof or under applicable law (including, if applicable, the Uniform Customs and Practices for Documentary Credits governing such Syndicated Letter of Credit) and to the extent such Syndicated Letter of Credit was theretofore amended or issued pursuant to subsection (d)(ii) or (d)(iv), as applicable, of this Section to reflect the exclusion of such Bank's Commitment, (I) each such Syndicated Letter of Credit shall be amended by the Administrative Agent to specify the Banks (including such Bank) that are then parties to such Syndicated Letter of Credit and such Banks' respective Applicable Percentages, in each case reflecting the inclusion of such Bank's Commitment, as of the effective date of such amendment and (II) if such Syndicated Letter of Credit was not theretofore amended pursuant to subsection (d)(ii) of this Section to reflect the exclusion of such Bank's Commitment thereunder, but instead the face amount of such Syndicated Letter of Credit was increased or a new Letter of Credit was issued hereunder in favor of the beneficiary of such Syndicated Letter of Credit in order to provide such beneficiary with an aggregate undrawn face amount of Letters of Credit from the Non-Defaulting Banks (including, if applicable, the applicable Fronting Issuing Banks) in the amount required by such beneficiary, the amount of such Syndicated Letter of Credit or new Letter of Credit shall be amended by the Administrative Agent to decrease the amount thereof, or the Company shall arrange for such new Letter of Credit to be surrendered by such beneficiary to the Administrative Agent or the applicable Fronting Issuing Bank, in order to reflect the inclusion of such Bank's Commitment pursuant to the amendment to such Syndicated Letter of Credit under sub-clause (I) above (provided that, notwithstanding anything herein to the contrary, the Company shall not be required to pay any letter of credit fees to such Bank pursuant to Section 2.10(b) until such amendments with respect to such Letters of Credit shall have become effective); (y) (subject to clause (x) being satisfied with respect to a Syndicated Letter of Credit) the Syndicated LC Exposure of the Banks with respect to such Syndicated Letter of Credit shall be readjusted to reflect the inclusion of such Bank's Commitment; and (z) (subject to clause (x) being satisfied with respect to a Syndicated Letter of Credit) such Bank shall purchase at par such of the unreimbursed LC Disbursements then outstanding (if any) of the other Banks with respect to such Syndicated Letter of Credit as the Administrative Agent shall determine may be necessary in order for such Bank to hold such LC Disbursements in accordance with its Applicable Percentage; and

 

 

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(iii)            with respect to any Loans then outstanding, such Bank shall purchase at par such of the Loans of the other Banks as the Administrative Agent shall determine may be necessary in order for such Bank to hold such Loans in accordance with its Applicable Percentage.

 

ARTICLE III

 CONDITIONS

 

SECTION 3.01.  Each Credit Extension.  The obligation of each Bank to issue, amend, renew or extend any Letter of Credit or to make any Loan is subject to the satisfaction of the following conditions:

 

(a)            in the case of a Letter of Credit, receipt by the Administrative Agent of a notice of issuance, amendment, renewal or extension, as the case may be, with respect to such Letter of Credit, as required by Section 2.01(b) or, in the case of a Borrowing, receipt by the Administrative Agent of a Notice of Borrowing as required by Section 2.05(a);

 

(b)            the fact that, immediately before and after issuance, amendment, renewal or extension of such Letter of Credit or such Loan no Default shall have occurred and be continuing; and

 

(c)            the fact that the representations and warranties of each Account Party contained in this Agreement (other than the representations and warranties set forth in Sections 4.04(e) and 4.05 as to any matter which has theretofore been disclosed in writing by the Account Parties to the Banks) shall be true on and as of the date of such issuance, amendment, renewal or extension of such Letter of Credit or such Loan (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date), provided that the exception in the first parenthetical phrase in this clause (c) shall not apply in the case of any issuance, amendment, renewal or extension of a Letter of Credit or the making of a Loan on the Effective Date or with respect to the certificate under clause (d) of Section 3.02.

 

Each issuance, amendment, renewal or extension of a Letter of Credit and the making of any Loan hereunder shall be deemed to be a representation and warranty by the applicable Account Party on the date of such issuance, amendment, renewal or extension or Loan, as the case may be, as to the facts specified in clauses (b) and (c) of this Section.

 

SECTION 3.02.  Effectiveness.  This Agreement shall become effective on the first date that all of the following conditions shall have been satisfied (or waived in accordance with Section 10.05):

 

(a)            receipt by the Administrative Agent of counterparts hereof signed by each of the Persons listed on the signature pages hereto (or, in the case of any Bank as to which an executed counterpart shall not have been received, receipt by the Administrative Agent in form satisfactory to it of telecopy or other written confirmation from such Bank of execution and delivery of a counterpart hereof by such Bank);

 

(b)            receipt by the Administrative Agent of an opinion of counsel of the Company reasonably satisfactory to the Administrative Agent, substantially in the form of Exhibit B hereto;

 

 

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(c)            receipt by the Administrative Agent of an opinion of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to JPMorgan, substantially in the form of Exhibit C hereto;

 

(d)            receipt by the Administrative Agent of a certificate, dated the Effective Date and signed by a senior financial officer of the Company, certifying as to clauses (b) and (c) of Section 3.01;

 

(e)            receipt by the Administrative Agent of a copy of the resolutions of the Board of Directors of the Company, in form and substance satisfactory to the Administrative Agent, authorizing the execution, delivery and performance of this Agreement and other Credit Documents;

 

(f)            receipt by the Administrative Agent of all documents, opinions and instruments as it may reasonably request relating to the existence of each Account Party (including information required to comply with "know your customer" or similar identification requirements of any Bank), the corporate authority for and the validity and enforceability of this Agreement and the other Credit Documents, and any other matters related hereto, all in form and substance satisfactory to the Administrative Agent; and

 

(g)            receipt by the Administrative Agent of evidence as of the Effective Date as to (i) payment of all fees required to be paid, and all expenses required to be paid or reimbursed for which invoices have been presented (including, without limitation, fees and disbursements of counsel to JPMorgan) in connection with this Agreement, on or before the Effective Date; (ii) payment by the Company and Subsidiary Account Parties of all unpaid principal of and interest on any outstanding loan and all unpaid fees, expenses and other amounts accrued or owing as of the Effective Date under the Existing Credit Agreement (including all fees with respect to letters of credit outstanding thereunder accrued to but not including the Effective Date) and the termination of the commitments of the banks thereunder as of the Effective Date; (iii) there being no Fronted Letters of Credit outstanding under (and as defined in) the Existing Credit Agreement (other than the Continued Existing Fronted Letters of Credit); (iv) with respect to each Syndicated Letter of Credit outstanding under (and as defined in) the Existing Credit Agreement that is not a Continued Existing Syndicated Letter of Credit, the cancellation of such Syndicated Letter of Credit and surrender thereof to the administrative agent under the Existing Credit Agreement (or arrangements shall have been made for such cancellation and/or surrender satisfactory to such administrative agent) and (v) each Account Party shall have executed a Continuing Agreement for Standby Letters of Credit in form and substance satisfactory to JPMorgan and the Account Parties; and, by its execution of this Agreement, each Bank party hereto that is party to the Existing Credit Agreement hereby waives any prior notice requirement with respect to any prepayment of amounts and/or termination of commitments under the Existing Credit Agreement contemplated by this clause (g), which payments and termination will be effective as of the Effective Date;

 

provided that this Agreement shall not become effective or be binding on any party hereto unless all of the foregoing conditions are satisfied not later than 3:00 p.m. (New York City time) July 18, 2016 or such later date as may be agreed in writing by the Company and all of the Banks.  The Administrative Agent shall promptly notify the Company and the Banks of the Effective Date, and such notice shall be conclusive and binding on all parties hereto.

 

 

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ARTICLE IV

 REPRESENTATIONS AND WARRANTIES

 

Each of the Company (other than with respect to Section 4.15) and the Subsidiary Account Parties (with respect to Section 4.15 only) represents and warrants that:

 

SECTION 4.01.  Corporate Existence and Power.  The Company (a) is a corporation duly incorporated and validly existing under the laws of the State of Indiana, (b) has all corporate power and authority and all material governmental licenses, authorizations, consents and approvals required to own or lease its assets and carry on its business as now conducted and (c) is duly qualified and is licensed and, as applicable, in good standing under the laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, except in each case referred to in the foregoing clauses (b) and (c) to the extent that such failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

SECTION 4.02.  Corporate and Governmental Authorization; Contravention.  The execution, delivery and performance by the Company of this Agreement and the other Credit Documents to which it is a party are within the Company's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the articles of incorporation or by-laws of the Company or of any material agreement, judgment, injunction, order, decree or other instrument binding upon the Company or any of its Restricted Subsidiaries or result in the creation or imposition of any Lien on any asset of the Company or any of its Restricted Subsidiaries.

 

SECTION 4.03.  Binding Effect.  This Agreement and the other Credit Documents to which it is a party constitute the legal, valid and binding obligations of the Company, in each case enforceable in accordance with their respective terms, except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity.

 

SECTION 4.04.  Financial Information.

 

(a)            The consolidated balance sheets of the Company and its Consolidated Subsidiaries as of December 31, 2015 and the related consolidated statements of income, cash flows and shareholders' equity for the fiscal year then ended, reported on by Ernst & Young LLP and set forth in the Company's 2015 Form 10-K, a copy of which has been delivered to the Administrative Agent on behalf of each of the Banks, fairly present, in conformity with generally accepted accounting principles, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and changes in financial position for such fiscal year.

 

(b)            The unaudited consolidated balance sheets of the Company and its Consolidated Subsidiaries as of March 31, 2016 and the related unaudited consolidated statements of income, cash flows and shareholders' equity for the three months then ended, set forth in the Company's quarterly report for the fiscal quarter ended March 31, 2016 as filed with the SEC on Form l0-Q, a copy of which has been delivered to the Administrative Agent on behalf of each of the Banks, fairly present, in conformity with generally accepted accounting principles applied on a basis consistent with the financial statements referred to in subsection (a) of this Section, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and changes in financial position for such three month period (subject to normal year-end adjustments and, to the extent permitted by Regulation S-X, the absence of footnotes).

 

 

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(c)            A copy of a duly completed and signed Annual Statement or other similar report of or for each Insurance Subsidiary that is a Restricted Subsidiary in the form filed with the governmental body, agency or official which regulates insurance companies in the jurisdiction in which such Insurance Subsidiary is domiciled for the year ended December 31, 2015 has been delivered to the Administrative Agent on behalf of each of the Banks and fairly presents, in accordance with statutory accounting principles, the information contained therein.

 

(d)            A copy of a duly completed and signed Quarterly Statement or other similar report of or for each Insurance Subsidiary that is a Restricted subsidiary in the form filed with the governmental body, agency or official which regulates insurance companies in the jurisdiction in which such Insurance Subsidiary is domiciled for the quarter ended March 31, 2016 has been delivered to the Administrative Agent on behalf of each of the Banks and fairly presents, in accordance with statutory accounting principles, the information contained therein.

 

(e)            Since December 31, 2015 and as of the Effective Date, there has been no material adverse change in the business, financial condition, results of operations or prospects of the Company and its Consolidated Subsidiaries, considered as a whole.

 

SECTION 4.05.  Litigation.  As of the Effective Date, there is no action, suit or proceeding pending against, or to the knowledge of the Company threatened against, the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official (a) which has or would be reasonably expected to have a Material Adverse Effect, or (b) which in any manner draws into question the validity or enforceability of this Agreement or any other Credit Document.

 

SECTION 4.06.  Compliance with ERISA.  Except as would not result in a Material Adverse Effect, each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each Plan.  Except as would not result in a Material Adverse Effect, no member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA.

 

SECTION 4.07.  Taxes.  United States Federal income tax returns of the Company and its Subsidiaries have been examined and closed through the fiscal year ended December 31, 2011.  The Company and its Subsidiaries have filed all income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or, except for any such taxes that are being contested in good faith by appropriate proceedings and for which adequate reserves have been made, pursuant to any assessment received by the Company or any Subsidiary, except in each to the extent that the failure to do so would not reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of taxes are, in the opinion of the Company, adequate.

 

SECTION 4.08.  Subsidiaries.  Each of the Company's Restricted Subsidiaries (a) is a corporation duly incorporated, validly existing and (except where such concept is not applicable) in good standing under the laws of its jurisdiction of incorporation, (b) has all corporate power and authority and all material governmental licenses, authorizations, consents and approvals required to own or lease its assets and carry on its business as now conducted and (c) is duly qualified and is licensed and, as

 

 

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applicable, in good standing under the laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, except in each case referred to in the foregoing clauses (b) and (c) to the extent that such failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

SECTION 4.09.  Not an Investment Company.  The Company is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

 

SECTION 4.10.  Obligations to be Pari Passu.  The Company's obligations under this Agreement and each other Credit Document to which it is a party rank pari passu as to priority of payment and in all other respects with all other material unsecured and unsubordinated Debt of the Company, with the exception of those obligations that are mandatorily preferred by law and not by contract.

 

SECTION 4.11.  No Default.  No event has occurred and is continuing which constitutes, or which, with the passage of time or the giving of notice or both, would constitute, a default under or in respect of any material agreement, instrument or undertaking to which the Company or any Restricted Subsidiary is a party or by which either the Company or any Restricted Subsidiary or any of their respective assets is bound, unless such default would not have or be reasonably expected to have a Material Adverse Effect.

 

SECTION 4.12.  Restricted Subsidiaries.  Set forth as Schedule III hereto is a true, correct and complete list of each Restricted Subsidiary as of the date hereof.

 

SECTION 4.13.  Environmental Matters.  The Company has reasonably concluded that Environmental Laws are unlikely to have a Material Adverse Effect.

 

SECTION 4.14.  Full Disclosure.  None of the reports, financial statements, certificates or other information furnished by or on the behalf of the Company or any other Account Party to the Administrative Agent or any Bank in connection with the negotiation of this Agreement and the other Credit Documents or delivered hereunder or thereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading as of the date made; provided that, with respect to projected or pro forma financial information, the Company represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time furnished (it being understood that such projections and forecasts are subject to uncertainties and contingencies and no assurances can be given that such projections or forecasts will be realized).

 

SECTION 4.15.  Separate Representations of Subsidiary Account Parties.  Each of the Subsidiary Account Parties represents and warrants that:

 

(a)            Such Subsidiary Account Party (i) is a company duly organized and validly existing under the laws of the jurisdiction of its organization, (ii) has all corporate power and authority and all material governmental licenses, authorizations, consents and approvals required to own or lease its assets and carry on its business as now conducted and (iii) is duly qualified and is licensed and, as applicable, in good standing under the laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, except in each case referred to in the foregoing clauses (ii) and (iii) to the extent that such failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

 

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(b)            The execution, delivery and performance by such Subsidiary Account Party of this Agreement and each other Credit Document to which it is a party are within such Subsidiary Account Party's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of any organizational document of such Subsidiary Account Party or of any material agreement, judgment, injunction, order, decree or other instrument binding upon such Subsidiary Account Party or result in the creation or imposition of any Lien on any asset of such Subsidiary Account Party.

 

(c)            The Credit Documents (including this Agreement) to which such Subsidiary Account Party is a party constitute the legal, valid and binding obligations of such Subsidiary Account Party, in each case enforceable in accordance with their respective terms, except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity.

 

(d)            Such Subsidiary Account Party is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

 

(e)            Such Subsidiary Account Party's obligations under this Agreement to which it is a party rank pari passu as to priority of payment and in all other respects with all other material unsecured and unsubordinated Debt of such Subsidiary Account Party, with the exception of those obligations that are mandatorily preferred by law and not by contract.

 

(f)            No event has occurred and is continuing which constitutes or which, with the passage of time or the giving of notice or both, would constitute, a default under or in respect of any material agreement, instrument or undertaking to which such Subsidiary Account Party is a party or by which either such Subsidiary Account Party or any of its assets is bound, unless such default would not have or be reasonably expected to have a Material Adverse Effect.

 

(g)            Such Subsidiary Account Party is not the subject of (i) any winding up (whether compulsory or otherwise) or any other corporate, judicial or administrative proceeding or action which could result in the winding up of such Subsidiary Account Party or (ii) any other proceeding or action relating to the insolvency, bankruptcy, liquidation, moratorium on the payment of obligations or any other similar condition of or relating to such Subsidiary Account Party, and such Subsidiary Account Party has taken no action in furtherance of any of the foregoing.

 

SECTION 4.16.  Instruments.  Set forth as Schedule IV hereto is a true, correct and complete list of each Instrument of the Company and its Consolidated Subsidiaries outstanding as of the date hereof, specifying in each case the equity credit treatment given to each such Instrument by S&P and/or Moody's as of the date hereof.

 

SECTION 4.17.  Sanctioned Persons; Anti-Corruption Laws; Patriot Act.  None of the Company or any of its Subsidiaries or, to the knowledge of the Company, any of their respective directors, officers, employees, agents or Affiliates is subject to any sanctions or economic embargoes administered or enforced by the U.S. Department of State or the Office of Foreign Asset Control of the U.S. Department of Treasury (collectively, "Sanctions", and the associated laws, rules, regulations and orders, collectively, "Sanctions Laws"), except to the extent that being subject to such Sanctions would not reasonably be expected to have a Material Adverse Effect or reasonably be expected to result in any Lender violating any Sanctions Laws.  Each of the Company and its Subsidiaries and their respective

 

 

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directors, officers and, to the knowledge of the Company, employees, agents and Affiliates is in compliance, in all material respects, with (i) all Sanctions Laws, (ii) the United States Foreign Corrupt Practices Act of 1977, as amended, and any other applicable anti-bribery or anti-corruption laws, rules, regulations and orders (collectively, "Anti-Corruption Laws") and (iii) USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001) the "Patriot Act")  and any other applicable terrorism and money laundering laws, rules, regulations and orders (collectively, "Anti-Money Laundering Laws"), except in each case to the extent that such non-compliance therewith would not reasonably be expected to have a Material Adverse Effect or reasonably be expected to result in any Lender violating any such Sanctions Laws, Anti-Corruption Laws or Anti-Money Laundering Laws.  No part of the proceeds of the Loans or Letters of Credit will be used by any Account Party, directly or indirectly, (A) for the purpose of funding, financing or facilitating any activities or business of or with, or making any payments to, any Person or in any country or territory in violation of any Sanctions Law or (B) for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of any Anti-Corruption Law, except in each case to the extent that such use would not reasonably be expected to have a Material Adverse Effect or reasonably be expected to result in any Bank violating any Sanctions Laws, Anti-Corruption Laws or Anti-Money Laundering Laws.

 

SECTION 4.18.  EEA Financial Institutions.  No Account Party is an EEA Financial Institution.

 

ARTICLE V

 COVENANTS

 

Until all Commitments have expired or been terminated, the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, the Company and (in the case of Sections 5.01(k), 5.02, 5.03, 5.04, 5.05, 5.06, 5.08, 5.10, 5.11 and 5.12) the Subsidiary Account Parties agree that:

 

SECTION 5.01.  Information.

 

The Company (and, in the case of Section 5.01(k), each Subsidiary Account Party, but only as to information concerning such Subsidiary Account Party and its Subsidiaries) will deliver to each of the Banks:

 

(a)            within 90 days after the end of each fiscal year of the Company, the consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income, cash flows and shareholders' equity for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the SEC by Ernst & Young LLP or other independent public accountants of nationally recognized standing;

 

(b)            within 45 days after the end of each of the first three quarters of each fiscal year of the Company, the consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of income, cash flows and shareholders' equity for such quarter and for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year, all certified (subject to normal year-end adjustments and, to the extent permitted by Regulation S-X,

 

 

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the absence of footnotes) as to fairness of presentation, generally accepted accounting principles and consistency with the most recent audited consolidated financial statements of the Company and its Consolidated Subsidiaries delivered to the Banks (except for changes concurred in by the Company's independent public accountants) by the chief financial officer or the chief accounting officer of the Company;

 

(c)            (I) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above a certificate of the chief financial officer or the chief accounting officer of the Company (i) setting forth in reasonable detail the calculations required to establish whether the Company was in compliance with the requirements of Sections 5.07 and 5.12 on the date of such financial statements and (ii) stating that such chief financial officer or chief accounting officer, as the case may be, has no knowledge of any Default existing on the date of such certificate or, if such chief financial officer or chief accounting officer has knowledge of the existence on such date of any Default, setting forth the details thereof and the action which the Company or the applicable Subsidiary Account Party, as the case may be is taking or proposes to take with respect thereto and (II) simultaneously with the delivery of each set of financial statements referred to in clause (a) above a certificate of the chief financial officer or the chief accounting officer of the Company specifying any changes to the list of Restricted Subsidiaries as of the last day of the fiscal period to which such financial statements relate;

 

(d)            within 120 days after the end of each fiscal year of each Insurance Subsidiary that is a Restricted Subsidiary, a copy of a duly completed and signed Annual Statement (or any successor form thereto) required to be filed by such Insurance Subsidiary with the governmental body, agency or official which regulates insurance companies in the jurisdiction in which such Insurance Subsidiary is domiciled, in the form submitted to such governmental body, agency or official;

 

(e)            within 60 days after the end of each of the first three fiscal quarters of each Insurance Subsidiary that is a Restricted Subsidiary, a copy of a duly completed and signed Quarterly Statement (or any successor form thereto) required to be filed by such Insurance Subsidiary with the governmental body, agency or official which regulates insurance companies in the jurisdiction in which such Insurance Subsidiary is domiciled, in the form submitted to such governmental body, agency or official;

 

(f)            forthwith upon learning of the occurrence of any Default, a certificate of the chief financial officer or the chief accounting officer of the Company setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto;

 

(g)            promptly upon the mailing thereof to the shareholders of the Company generally, if and only to the extent not duplicative of information otherwise provided pursuant to clause (h) below, copies of all financial statements, reports and proxy statements so mailed;

 

(h)            promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which any Account Party shall have filed with the SEC;

 

(i)            if and when, and only if the liability for the Company and its Subsidiaries from the applicable event could reasonably be expected to exceed $75,000,000, any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA), with respect to any Plan which might constitute grounds for a

 

 

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termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer, any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security, a certificate of the chief financial officer or the chief accounting officer of the Company setting forth details as to such occurrence and action, if any, which the Company or applicable member of the ERISA Group is required or proposes to take;

 

(j)            promptly after Moody's or S&P shall have announced a change in the rating established or deemed to have been established for the Index Debt, written notice of such rating change; and

 

(k)            from time to time such additional information regarding the financial position or business of any Account Party as the Administrative Agent, at the request of any Bank, may reasonably request.

 

Documents required to be delivered pursuant to Section 5.01 (a), (b), (d), (e), (g) or (h) may be delivered electronically on the following Internet websites: (a) the Company's website www.lfg.com, (b) with respect to Section 5.01(a), (b), (g) or (h) the SEC's website www.sec.com (to the extent that any such documents are included in materials otherwise filed with the SEC) or (c) such other third party website that shall have been identified by the Company in a notice to the Administrative Agent and the Lenders and that is accessible by the Lenders without charge, and in each case if so delivered shall be deemed to have been delivered on the date such materials are publically available; provided that (i) the Company shall deliver paper copies of such information to any Lender promptly upon the request of such Lender through the Administrative Agent and (ii) the Company shall have notified the Administrative Agent of the posting of such documents delivered pursuant to Section 5.01(a), (b), (d), (e) and (g). The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Company with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

 

SECTION 5.02.  Payment of Obligations.  The Company will pay and discharge, and will cause each Restricted Subsidiary and Subsidiary Account Party to pay and discharge, at or before maturity, all their respective material obligations and liabilities, including, without limitation, tax liabilities, that if not paid, would reasonably be expected to result in a Material Adverse Effect, except where (a) the same may be contested in good faith by appropriate proceedings, (b) the Company or such Restricted Subsidiary has set aside, in accordance with generally accepted accounting principles, appropriate reserves for the accrual of any of the same and (c) the failure to make payment pending such contest would not reasonably be expected to result in a Material Adverse Effect; provided that, for avoidance of doubt, solely with respect to tax liabilities an obligation shall be considered to be delinquent

 

 

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or in default for purposes of this Section only if there has first been notice and demand therefore (as defined in Section 6306 of the Code and similar provisions of applicable law) by a tax authority.

 

SECTION 5.03.  Conduct of Business and Maintenance of Existence.  The Company will continue, and will cause each Restricted Subsidiary and Subsidiary Account Party to continue, to engage in business of the same general type as conducted by the Company and its Restricted Subsidiaries, taken as a whole, on the date hereof and will preserve, renew and keep in full force and effect, and will cause each Restricted Subsidiary to preserve, renew and keep in full force and effect (a) their respective corporate existence and (b) their respective rights, privileges, licenses and franchises, other than, in the case of the foregoing clause (b), the loss of which would not reasonably be expected to result in a Material Adverse Effect; except that if at the time thereof and immediately after giving effect thereto no Default has occurred and is continuing, (i) any Restricted Subsidiary may merge with or into the Company, provided that the Company shall be the surviving entity, (ii) any Restricted Subsidiary may merge with or into any other Subsidiary, provided that such Restricted Subsidiary shall be the surviving entity or, if such Restricted Subsidiary is not the surviving entity, the surviving entity shall be deemed a Restricted Subsidiary, and (iii) any Restricted Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Company or to another Restricted Subsidiary.

 

SECTION 5.04.  Maintenance of Property; Insurance.

 

(a)            The Company will keep, and will cause each Restricted Subsidiary and Subsidiary Account Party to keep, all property useful and necessary in its business in good working order and condition, except, in each case, to the extent that failure to do so would not be reasonably expected to result in a Material Adverse Effect.

 

(b)            The Company will maintain, and will cause each Restricted Subsidiary and Subsidiary Account Party to maintain (either in the name of the Company or in such Subsidiary's own name) with financially sound and responsible insurance companies, insurance on all their respective properties and against at least such risks, in each case as is consistent with sound business practice for companies in substantially the same industry as the Company, the Restricted Subsidiaries and the Subsidiary Account Parties; and the Company will furnish to the Banks, upon request from the Administrative Agent, information presented in reasonable detail as to the insurance so carried.

 

SECTION 5.05.  Compliance with Laws.  The Company will comply, and will cause each Subsidiary to comply, in all material respects with all applicable laws, ordinances, rules, regulations and requirements of governmental bodies, agencies and officials (including, without limitation, Sanctions Laws, Anti-Corruption Laws, Anti-Money-Laundering Laws, Environmental Laws and ERISA and the rules and regulations thereunder) except where the necessity of compliance therewith is contested in good faith by appropriate proceedings, except where such non-compliance therewith would not reasonably be expected to have a Material Adverse Effect (or, in the case of the laws, rules, regulations and orders referred to in Section 4.17, reasonably be expected to result in any Lender violating such laws, rules, regulations or orders).

 

SECTION 5.06.  Inspection of Property, Books and Records.  The Company will keep, and will cause each Restricted Subsidiary and Subsidiary Account Party to keep, proper books of record and account in which entries that are full, true and correct in all material respects shall be made of all dealings and transactions in relation to its business and activities; and, subject in all cases to Section 10.11, will permit, and will cause each Restricted Subsidiary and Subsidiary Account Party to permit, representatives of any Bank to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees, actuaries and independent public

 

 

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accountants, all upon reasonable notice, at such reasonable times during ordinary business hours and as often as may reasonably be desired; provided that neither the Company nor any of its Subsidiaries shall be required to disclose any information subject to its attorney-client privilege.

 

SECTION 5.07.  Financial Covenants.

 

(a)            Minimum Adjusted Consolidated Net Worth.  The Company will not at any time permit Adjusted Consolidated Net Worth to be less than the sum of (a) $10,477,500,000 plus (b) 50% of the aggregate Net Proceeds received by the Company or any of its Subsidiaries from Equity Issuances of the Company and its Subsidiaries (including from any issuance or incurrence of Instruments, but only to the extent such Instruments are included, at the time of issuance, in Adjusted Consolidated Net Worth) after March 31, 2016.

 

(b)            Total Indebtedness to Total Capitalization Ratio.  The Company will not at any time permit the ratio of (a) Consolidated Total Indebtedness to (b) Consolidated Total Capitalization to exceed 0.35 to 1.00.

 

SECTION 5.08.  Negative Pledge.  The Company will not, and will not permit any Subsidiary to, create or suffer to exist any Lien upon any present or future capital stock or any other Ownership Interests (as defined below) of any of its Material Subsidiaries (other than any Subsidiary established primarily for the purpose of reinsuring redundant reserve insurance liabilities of the Company or any other Insurance Subsidiary). As used herein "Ownership Interests" means, with respect to any Person, all of the shares of Capital Stock of such Person and all debt securities of such Person that can be converted or exchanged for Capital Stock of such Person, whether voting or nonvoting, and whether or not such Capital Stock or debt securities are outstanding on any date of determination.

 

SECTION 5.09.  Consolidations, Mergers and Sales of Assets.  The Company will not (a) consolidate or merge with or into any other Person or (b) sell, lease or otherwise transfer, directly or indirectly, all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any other Person; provided that the Company may merge with another Person if (i) the Company is the corporation surviving such merger and (ii) immediately after giving effect to such merger, no Default shall have occurred and be continuing.

 

SECTION 5.10.  Use of Credit.  Each Account Party shall use each Letter of Credit issued under this Agreement for its general corporate purposes.  The proceeds of each Loan made to any Account Party hereunder will be used for its general corporate purposes (including to finance the reimbursement of LC Disbursements as contemplated by Section 2.03(a)).  No Letter of Credit or proceeds of Loans will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any "margin stock" within the meaning of Regulations T, U and X.

 

SECTION 5.11.  Obligations to be Pari Passu.  Each Account Party's obligations under this Agreement and the other Credit Documents to which it is a party will rank at all times pari passu as to priority of payment and in all other respects with all other material unsecured and unsubordinated Debt of such Account Party with the exception of those obligations that are mandatorily preferred by law and not by contract.

 

SECTION 5.12.  Certain Indebtedness.  The Company will not at any time permit the sum of (a) Non-Operating Indebtedness of the Company that is secured by a Lien on any property or assets of the Company and its Subsidiaries and (b) Non-Operating Indebtedness of the Subsidiaries of the Company to exceed 3.5% of Consolidated Total Capitalization.

 

 

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ARTICLE VI

 DEFAULTS

 

SECTION 6.01.  Events of Default.  If one or more of the following events ("Events of Default") shall have occurred and be continuing:

 

(a)            (i) any Account Party shall fail to pay when due any principal of any Loan or any reimbursement obligation in respect of an LC Disbursement or (ii) any Account Party shall fail to pay when due any interest on any Loan or LC Disbursement or any fees or any other amounts payable hereunder and such failure under this clause (ii) shall continue for four Domestic Business Days;

 

(b)            any Account Party shall fail to observe or perform any covenant contained in Sections 5.03(a), 5.07 through 5.12, inclusive, or its obligation to provide cash collateral pursuant to the last sentence of Section 2.01(d);

 

(c)            any Account Party shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clause (a) or (b) above) for 30 days after written notice thereof has been given to the Company by the Administrative Agent at the request of any Bank;

 

(d)            any representation, warranty, certification or statement made by any Account Party in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect when made (or deemed made);

 

(e)            the Company or any Subsidiary (other than a Newly Acquired Subsidiary) shall fail to make any payment in respect of any Debt (other than Loans and other extensions of credit hereunder and any Debt solely of a Newly Acquired Subsidiary existing at the time such Person becomes a Subsidiary and not created in contemplation of such event ("Newly Acquired Subsidiary Debt")) having a principal amount then outstanding of not less than $150,000,000 when due and such failure shall continue beyond any applicable grace period or the Company or any Subsidiary (other than a Newly Acquired Subsidiary) shall fail to make any payment in an amount at least equal to $150,000,000 in respect of any Derivative Financial Product when due and such failure shall continue beyond any applicable grace period;

 

(f)            any event or condition shall occur which results in the acceleration of the maturity of any Debt (other than Loans and other extensions of credit hereunder and Newly Acquired Subsidiary Debt) having a principal or face amount then outstanding of not less than $150,000,000 of the Company or any Subsidiary or enables (or, with the giving of notice or lapse of time or both, would enable) the holder of such Debt or any Person acting on such holder's behalf to accelerate the maturity thereof;

 

(g)            any Account Party or Restricted Subsidiary (other than a Newly Acquired Subsidiary) shall commence a voluntary case or other proceeding seeking rehabilitation, dissolution, conservation, liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, rehabilitator, dissolver, conservator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or

 

 

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other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing;

 

(h)            an involuntary case or other proceeding shall be commenced against any Account Party or Restricted Subsidiary (other than a Newly Acquired Subsidiary) seeking rehabilitation, dissolution, conservation, liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, rehabilitator, dissolver, conservator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against any Account Party or such Restricted Subsidiary under the federal bankruptcy laws as now or hereafter in effect; or any governmental body, agency or official shall apply for, or commence a case or other proceeding to seek, an order for the rehabilitation, conservation, dissolution or other liquidation of Account Party or Restricted Subsidiary or of the assets or any substantial part thereof of any Account Party or Restricted Subsidiary or any other similar remedy;

 

(i)            any of the following events or conditions shall occur, which, in the aggregate, reasonably could be expected to involve possible taxes, penalties and other liabilities in an aggregate amount in excess of $150,000,000:  (i) any member of the ERISA Group shall fail to pay when due any amount or amounts which it shall have become liable to pay under Title IV of ERISA; (ii) notice of intent to terminate a Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; (iii) the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer, any Plan; (iv) a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Plan must be terminated; or (v) there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans;

 

(j)            a judgment or order for the payment of money in excess of the greater of (i) $150,000,000 or (ii) 3% of the consolidated shareholders' equity of the Company and its Consolidated Subsidiaries (after (without duplication) the actual amounts of insurance recoveries, offsets and contributions received and amounts thereof not yet received but which the insurer thereon has acknowledged in writing its obligation to pay) shall be rendered against any Account Party or Restricted Subsidiary and such judgment or order shall continue unsatisfied and unstayed for a period of 90 days after entry of such judgment (and, for purposes of this clause, a judgment shall be stayed if, among other things, an appeal is timely filed and such judgment cannot be enforced);

 

(k)            (i) any person or group of persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC under said Act) of 20% or more of the outstanding shares of common stock of the Company; or (ii) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Company by Persons who were neither (x) nominated by the board of directors of the Company or (y) appointed by directors so nominated; or

 

(l)            any Subsidiary Account Party shall cease for any reason to be a Consolidated Subsidiary, unless (i) such Subsidiary Account Party shall have been consolidated or merged with

 

 

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or into a wholly owned Subsidiary or the Company or (ii) Subsidiary Account Party shall have been terminated as an Account Party hereunder pursuant to Section 10.13;

 

then, and in every such event, and at any time thereafter during the continuance of such event, the Administrative Agent shall, if requested by the Required Banks, by notice to the Company take any or all of the following actions, at the same or different times:  (i) terminate the Commitments and they shall thereupon terminate, (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Account Parties accrued hereunder shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Account Party and the Guarantor, (iii) notify (or, in the case of any Fronted Letter of Credit, request the applicable Fronting Issuing Bank (and such Fronting Issuing Bank agrees upon such request) to notify) each beneficiary of an outstanding Letters of Credit of the existence of an Event of Default hereunder and cause a drawing of the aggregate undrawn amount thereunder (if such Letters of Credit so permit) and (iv) demand cash collateral from the Account Parties and the Guarantor in immediately available funds in an amount equal to the then aggregate undrawn amount of all Letters of Credit pursuant to Section 2.03(e); provided that, in the case of any of the Events of Default specified in clause (g) or (h) above (A) with respect to the Company, without any notice to any Account Party or the Guarantor or any other act by the Administrative Agent or the Banks, the Commitments shall thereupon terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Account Parties accrued hereunder, and the obligations to provide cash collateral under clause (iv) above, shall automatically become due and payable without presentment, demand, protest or notice of any kind, all of which are hereby waived by each Account Party and the Guarantor and (B) with respect to any Account Party (other than the Company), without any notice to any Account Party or the Guarantor or any other act by the Administrative Agent or the Banks, the Commitments to issue Letters of Credit for the account of, and to make Loans to, such Account Party shall thereupon terminate, the principal of the Loans made to such Account Party then outstanding, together with accrued interest thereon and all fees and other obligations of such Account Party accrued hereunder, and the obligations of such Account Party to provide cash collateral under clause (iv) above, shall automatically become due and payable without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Account Parties and the Guarantor; provided, further, that, in the case of an Event of Default under Section 6.01(b) resulting from a default by any Subsidiary Account Party under Section 5.08, 5.10 or 5.11 or under Section 6.01(c) or (d) (in the latter case, resulting from a default by any Subsidiary Account Party under Section 4.15), the termination of the Commitments, the acceleration of all fees and other obligations of the Account Parties accrued hereunder and the causing of drawings under Letters of Credit shall apply only to the Commitments, fees, obligations in respect of such Subsidiary Account Party and to the Letters of Credit with respect to which it is the Account Party.

 

SECTION 6.02.  Notice of Default.  The Administrative Agent shall give notice to the Company under Section 6.01(c) promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof.

 

ARTICLE VII

 THE ADMINISTRATIVE AGENT

 

SECTION 7.01.  Appointment and Authorization.  Each Bank irrevocably appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers

 

 

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under this Agreement and the other Credit Documents as are delegated to the Administrative Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto.

 

SECTION 7.02.  Agent's Fee.  The Company shall pay to the Administrative Agent for its own account fees in the amounts and at the times previously agreed upon between the Company and the Administrative Agent.

 

SECTION 7.03.  Agent and Affiliates.  JPMorgan shall have the same rights and powers under this Agreement as any other Bank and may exercise or refrain from exercising the same as though it were not the Administrative Agent, and JPMorgan and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Company or any Subsidiary or Affiliate of any thereof as if it were not the Administrative Agent hereunder.

 

SECTION 7.04.  Action by Agent.  The obligations of the Administrative Agent hereunder are only those expressly set forth herein.  The Administrative Agent shall not have any duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement unless it shall be requested in writing to do so by the Required Banks.  Without limiting the generality of the foregoing, the Administrative Agent shall not be required to take any action with respect to any Default, except as expressly provided in Article VI.  The Administrative Agent shall have no duty to disclose to the Banks information that is not required to be furnished by an Account Party to the Administrative Agent at such time, but is voluntarily furnished by an Account Party to the Administrative Agent (either in its capacity as Administrative Agent or in its individual capacity).

 

SECTION 7.05.  Consultation with Experts.  The Administrative Agent may consult with legal counsel (who may be counsel for any Account Party ), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts.

 

SECTION 7.06.  Liability of Agent.  Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable to any Bank for any action taken or not taken by it in connection herewith (i) with the consent or at the request of the Required Banks or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by an Account Party or a Bank.  Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be responsible to any Bank for or have any duty to any Bank to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement or any borrowing hereunder or the issuance, amendment, renewal or extension of any Letter of Credit; (ii) the performance or observance of any of the covenants or agreements of any Account Party; (iii) the satisfaction of any condition specified in Article III, except receipt of items required to be delivered to the Administrative Agent; (iv) the validity, effectiveness or genuineness of this Agreement, any other Credit Document or any other instrument or writing furnished in connection herewith; (v) the existence or possible existence of any Default; (vi) the financial condition of any Account Party or any Account Party's Subsidiaries; or (vii) the contents of any certificate, report or other document delivered hereunder or in connection herewith.  The Administrative Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing believed by it in good faith to be genuine or to be signed by the proper party or parties.

 

SECTION 7.07.  Indemnification.  Each Bank shall, ratably in accordance with its Commitment (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), indemnify the Administrative Agent (to the extent not reimbursed by the Company) against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability

 

 

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(except such as result from the Administrative Agent's gross negligence or willful misconduct as determined by a court of competent jurisdiction) that the Administrative Agent may suffer or incur in connection with this Agreement or any action taken or omitted by the Administrative Agent hereunder.  The Administrative Agent shall be fully justified in failing or refusing to take any action hereunder unless it shall first be indemnified to its satisfaction by the Banks pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action.

 

SECTION 7.08.  Credit Decision.  Each Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement.

 

SECTION 7.09.  Successor Agent.  The Administrative Agent may resign at any time by giving written notice thereof to the Banks and the Company.  Upon any such resignation, the Required Banks shall have the right to appoint a successor Administrative Agent, which successor Administrative Agent shall be satisfactory to the Company, provided that no Default is continuing.  If no successor Administrative Agent shall have been so appointed by the Required Banks, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent gives notice of resignation, then the retiring Administrative Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a commercial bank organized or licensed under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $100,000,000 and (unless a Default has occurred and is continuing) shall otherwise be subject to the consent of the Company, which consent shall not be unreasonably withheld.  Upon the acceptance of its appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder.  After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent.

 

SECTION 7.10.  Delegation to Affiliates.  The Account Party and the Banks agree that the Administrative Agent may delegate any of its duties under this Agreement to any of its Affiliates.  Any such Affiliate (and such Affiliate's directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver and other protective provisions to which the Administrative Agent is entitled under Articles VII and X.

 

SECTION 7.11.  Joint Lead Arrangers and Other Agents.  Notwithstanding anything herein to the contrary, none of the Joint Lead Arrangers and Joint Bookrunners, the Syndication Agent or the Documentation Agents listed on the cover page of this Agreement shall have any right, power, obligation, liability, responsibility or duty under this Agreement in its capacity as such, except in its respective capacity, if any, as a Bank.

 

 

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ARTICLE VIII

 CHANGE IN CIRCUMSTANCES

 

SECTION 8.01.  Basis for Determining Interest Rate Inadequate or Unfair.  If on or prior to the first day of any Interest Period for any Euro-Dollar Borrowing:

 

(a)            the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the LIBO Rate for such Interest Period, or

 

(b)            the Required Banks advise the Administrative Agent that the LIBO Rate as determined by the Administrative Agent will not adequately and fairly reflect the cost to such Banks of funding their Euro-Dollar Loans for such Interest Period,

 

the Administrative Agent shall forthwith give notice thereof to the Company and the Banks, whereupon until the Administrative Agent notifies the Company that the circumstances giving rise to such suspension no longer exist, the obligations of the Banks to make Euro-Dollar Loans shall be suspended.  Unless the applicable Account Party notifies the Administrative Agent at least two Domestic Business Days before the date of any Euro-Dollar Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, such Borrowing shall instead be made as a Base Rate Borrowing.

 

SECTION 8.02.  Illegality.  If, after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Bank (or its Applicable Lending Office) to make, continue, maintain or fund its Euro-Dollar Loans and such Bank shall so notify the Administrative Agent, the Administrative Agent shall forthwith give notice thereof to the other Banks and the Company, whereupon until such Bank notifies the Company and the Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Bank to make Euro-Dollar Loans shall be suspended.  Before giving any notice to the Administrative Agent pursuant to this Section, such Bank shall designate a different Applicable Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank.  If such Bank shall determine that it may not lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans to maturity and shall so specify in such notice, the applicable Account Parties shall immediately prepay in full the then outstanding principal amount of each such Euro-Dollar Loan, together with accrued interest thereon.  Concurrently with prepaying each such Euro-Dollar Loan, the applicable Account Parties shall borrow Base Rate Loans in an equal principal amount from such Bank (on which interest and principal shall be payable contemporaneously with the related Euro-Dollar Loans of the other Banks), and such Bank shall make such Base Rate Loans.

 

SECTION 8.03.  Increased Cost and Reduced Return.

 

(a)            If on or after the date hereof, in the case of any Loan or any obligation to make Loans or in the case of any Letter of Credit or any obligation to issue, participate in, renew or extend any Letter of Credit, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or

 

 

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compliance by any Bank (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar Reserve Percentage), special deposit, compulsory loan, insurance assessment or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its Applicable Lending Office) or the London interbank market any other condition affecting its Euro-Dollar Loans, its Notes or its obligation to make Euro-Dollar Loans or its obligation to issue or participate in Letters of Credit, any outstanding Letters of Credit or reimbursement claims in respect of LC Disbursements and the result of any of the foregoing is to increase the cost or expense to such Bank (or its Applicable Lending Office) of making, continuing, converting to or maintaining any Euro-Dollar Loan or of issuing, participating in or maintaining any Letter of Credit, or to reduce the amount of any sum received or receivable by such Bank (or its Applicable Lending Office) under this Agreement or under other Credit Document with respect thereto, by an amount deemed by such Bank to be material, then, within 15 days after demand by such Bank (with a copy to the Administrative Agent), the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction.

 

(b)            If any Bank shall have determined that, after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any applicable law, rule or regulation regarding capital adequacy or liquidity requirements, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy or liquidity requirements (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on capital of such Bank (or its Parent) as a consequence of such Bank's obligations hereunder to a level below that which such Bank (or its Parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 15 days after demand by such Bank (with a copy to the Administrative Agent), the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank (or its Parent) for such reduction.

 

(c)            Each Bank will promptly notify the Company and the Administrative Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to compensation pursuant to this Section.  A certificate of any Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder and, in reasonable detail, such Bank's computation of such amount or amounts, shall be conclusive in the absence of manifest error.  In determining such amount, such Bank may use any reasonable averaging and attribution methods.

 

(d)            Notwithstanding anything herein to the contrary, for purposes of this Section, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to have gone into effect after the date hereof, regardless of the date enacted, adopted or issued.

 

SECTION 8.04.  Base Rate Loans Substituted for Affected Euro-Dollar Loans.  If (i) the obligation of any Bank to make or continue Euro-Dollar Loans has been suspended pursuant to

 

 

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Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03(a) or 8.05 and the Company shall, by at least five Euro-Dollar Business Days' prior notice to such Bank through the Administrative Agent, have elected that the provisions of this Section shall apply to such Bank, then, unless and until such Bank notifies the Company that the circumstances giving rise to such suspension or demand for compensation no longer apply:

 

(a)            all Loans which would otherwise be made, or continued, by such Bank as Euro-Dollar Loans shall be made instead as, or converted into, Base Rate Loans (on which interest and principal shall be payable contemporaneously with the related Euro-Dollar Loans of the other Banks), and

 

(b)            after each of its Euro-Dollar Loans has been repaid, all payments of principal which would otherwise be applied to repay such Euro-Dollar Loans shall be applied to repay its Base Rate Loans instead.

 

SECTION 8.05.  Taxes.

 

(a)            For purposes of this Section, the following terms have the following meanings:

 

"Domestic Taxes" has the meaning set forth in the definition of Taxes in this Section 8.05(a).

 

"FATCA" means Sections 1471 through 1474 of the Code and any regulations or official interpretations thereof.

 

"Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings of any nature with respect to any payment by any Account Party or the Guarantor pursuant to this Agreement or any other Credit Document, and all liabilities with respect thereto ( excluding, in the case of each Bank and the Administrative Agent, (i) taxes imposed on its net income, and franchise or similar taxes imposed on it, by a jurisdiction under the laws of which such Bank or the Administrative Agent (as the case may be) is organized or in which its principal executive office is located or, in the case of each Bank, in which its Applicable Lending Office is located (all such excluded taxes being hereinafter referred to as "Domestic Taxes") and (ii) any U.S. Federal withholding Taxes imposed by FATCA).  If the form provided by a Bank pursuant to Section 8.05(d) at the time such Bank first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, any United States interest withholding tax at such rate imposed on payments by the Company under this Agreement or any other Credit Document shall be excluded from the definition of "Taxes".

 

"Other Taxes" means any present or future stamp or documentary taxes and any other excise or property taxes, or similar charges or levies, which arise from any payment made pursuant to this Agreement or any other Credit Document or from the execution, delivery, registration or enforcement of, or otherwise with respect to, this Agreement or any other Credit Document.

 

"Withholding Agent" means any Account Party or the Administrative Agent.

(b)            Any and all payments by any Account Party or the Guarantor to or for the account of any Bank or the Administrative Agent hereunder or under any other Credit Document shall be made free and clear and without deduction or withholding for any Taxes or Other Taxes; provided that, if any Account Party or the Guarantor shall be required by law to deduct any Taxes or Other Taxes from any such payments, (i) the sum payable shall be increased as necessary so that after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums

 

 

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payable under this Section) such Bank or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions or withholdings been made, (ii) such Account Party or the Guarantor (as the case may be) shall make such deductions or withholdings, (iii) such Account Party or the Guarantor (as the case may be) shall pay the full amount deducted or withheld to the relevant taxation authority or other authority in accordance with applicable law and (iv) such Account Party or the Guarantor (as the case may be) shall promptly furnish to the Administrative Agent, at its address referred to in Section 10.01, the original or a certified copy of a receipt evidencing payment thereof, and, if such receipt relates to Taxes or Other Taxes in respect of a sum payable to any Bank, the Administrative Agent shall promptly deliver such original or certified copy to such Bank.

 

(c)            The Company agrees to indemnify each Bank and the Administrative Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section), whether or not correctly or legally imposed, paid by such Bank or the Administrative Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto.  In addition, the Company agrees to indemnify each Bank and the Administrative Agent for all Domestic Taxes of such Bank or the Administrative Agent (calculated based on a hypothetical basis at the maximum marginal rate for a corporation) and any liability (including penalties, interest and expenses to the extent not attributable to the gross negligence or willful misconduct of each Bank or the Administrative Agent, as the case may be, as determined by a court of competent jurisdiction) arising therefrom or with respect thereto, in each case to the extent that such Domestic Taxes result from any payment or indemnification pursuant to this Section for any taxes imposed by any jurisdiction for which the Company or any Account Party is responsible under Section 8.05(a), (b) or (c).  This indemnification shall be paid within 30 days after such Bank or Agent, as the case may be, makes demand therefor.

 

(d)            At least five Domestic Business Days prior to the first date on which interest or fees are payable hereunder for the account of any Bank, each Bank that is not incorporated under the laws of the United States of America or a state thereof agrees that it will deliver to each of the Company and the Administrative Agent two duly completed copies of United States Internal Revenue Service Form W-8BEN, W-8BEN-E or W-8ECI, certifying in either case that such Bank is entitled to receive payments under this Agreement and the Notes without deduction or withholding of any United States federal income taxes.  Each Bank which so delivers a Form W-8BEN, W-8BEN-E or W-8ECI further undertakes to deliver to each of the Company and the Administrative Agent two additional copies of such form (or successor form) on or before the date that such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by the Company or the Administrative Agent, in each case certifying that such Bank is entitled to receive payments under this Agreement and the Notes without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Bank from duly completing and delivering any such form with respect to it and such Bank advises the Company and the Administrative Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax.

 

(e)            If a payment made to a Bank under any Credit Document would be subject to U.S. federal withholding tax imposed by FATCA if such Bank fails to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Bank shall deliver to the Withholding Agent documentation reasonably requested by the Withholding Agent sufficient for the Withholding Agent to comply with its obligations under FATCA

 

 

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and to determine that such Bank has complied with such applicable reporting requirements or to determine the amount to deduct and withhold from such payment.

 

(f)            For any period with respect to which a Bank has failed to provide the Company or the Administrative Agent with the appropriate form as required by Section 8.05(d) (whether or not such Bank is lawfully able to do so, unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which such form originally was required to be provided), such Bank shall not be entitled to indemnification under Section 8.05(b) or (c) with respect to any withholding of the United States federal income tax resulting from such failure; provided that if a Bank, which is otherwise exempt from or subject to a reduced rate of withholding tax, becomes subject to Taxes because of its failure to deliver a form required hereunder, the Company shall take such steps as such Bank shall reasonably request to assist such Bank to recover such Taxes.

 

(g)            Each Bank and the Administrative Agent shall, at the request of the Company, use reasonable efforts (consistent with applicable legal and regulatory restrictions) to file any certificate or document requested by the Company if the making of such a filing would avoid the need for or reduce the amount of any such additional amounts payable to or for the account of such Bank or the Administrative Agent (as the case may be) pursuant to this Section which may thereafter accrue and would not, in the sole judgment of such Bank or the Administrative Agent, require such Bank or the Administrative Agent to disclose any confidential or proprietary information or be otherwise disadvantageous to such Bank or the Administrative Agent.

 

(h)            Notwithstanding the foregoing, nothing in this Section shall interfere with the rights of any Bank to conduct its fiscal or tax affairs in such manner as it deems fit.

 

SECTION 8.06.  Regulation D Compensation.  For so long as any Bank maintains reserves against "Eurocurrency liabilities" (or any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of such Bank to United States residents), and as a result the cost to such Bank (or its Applicable Lending Office) of making or maintaining its Euro-Dollar Loans is increased, then such Bank may require the applicable Account Parties to pay, contemporaneously with each payment of interest on the Euro-Dollar Loans, additional interest on the related Euro-Dollar Loans of such Bank at a rate per annum up to but not exceeding the excess of (i) (A) the applicable LIBO Rate divided by (B) one minus the Euro-Dollar Reserve Percentage over (ii) the applicable LIBO Rate.  Any Bank wishing to require payment of such additional interest (x) shall so notify the applicable Account Parties and the Administrative Agent, in which case such additional interest on the Euro-Dollar Loans of such Bank shall be payable to such Bank at the place indicated in such notice with respect to each Interest Period commencing at least three Euro-Dollar Business Days after the giving of such notice and (y) shall furnish to the applicable Account Parties at least five Euro-Dollar Business Days prior to each date on which interest is payable on the Euro-Dollar Loans an officer's certificate setting forth the amount to which such Bank is then entitled under this Section (which shall be consistent with such Bank's good faith estimate of the level at which the related reserves are maintained by it).  Each such certificate shall be accompanied by such information as the applicable Account Parties may reasonably request as to the computation set forth therein.

 

SECTION 8.07.  Mitigation Obligations; Replacement of Banks.

 

(a)            If any Bank requests compensation under Section 8.03, or if any Account Party is required to pay any additional amount to any Bank or any governmental body, agency or official for the account of any Bank pursuant to Section 8.05, then such Bank shall use reasonable efforts to designate a different Applicable Lending Office for funding or booking its Loans and/or other Credit Exposure

 

 

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hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Bank (with the concurrence of the Company), such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 8.03 or 8.05, as the case may be, in the future and (ii) would not subject such Bank to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Bank.  The Company hereby agrees to pay all reasonable costs and expenses incurred by any Bank in connection with any such designation or assignment.

 

(b)            If any Bank requests compensation under Section 8.03 or if any Account Party is required to pay any additional amount to any Bank or any governmental body, agency or official for the account of any Bank pursuant to Section 8.05, then the Company may, at its sole expense and effort, upon notice to such Bank and the Administrative Agent, require such Bank to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 10.06(c)), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Bank, if a Bank accepts such assignment); provided that (i) the Company shall have received the prior written consent of the Administrative Agent (and, if a Commitment is being assigned, each Fronting Issuing Banks), which consent shall not unrea-sonably be withheld, (ii) such Bank shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Company (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 8.03 or payments required to be made pursuant to Section 8.05, such assignment will result in a reduction in such compensation or payments.  A Bank shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Bank or otherwise, the circumstances entitling the Company to require such assignment and delegation cease to apply.

 

ARTICLE IX

 GUARANTY

 

SECTION 9.01.  The Guaranty.  The Company hereby unconditionally guarantees the full and punctual payment of the principal and interest on the Loans and all reimbursement obligations in respect of LC Disbursements and all interest thereon payable by each Subsidiary Account Party pursuant to this Agreement (including, without limitation, any Subsidiary Account Party that shall become party hereto after the date hereof pursuant to Section 10.13), and the full and punctual payment of all other amounts payable by each Subsidiary Account Party under this Agreement, including amounts payable as cash collateral pursuant to Sections 2.03(e) and 6.01.  Upon failure by any Subsidiary Account Party to pay punctually any such amount, the Company shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Agreement.  This guarantee is a continuing guarantee and shall apply to all obligations of the Subsidiary Account Parties under this Agreement whenever arising, and is a guarantee of payment and is not merely a guarantee of collection.

 

SECTION 9.02.  Guaranty Unconditional.  The obligations of the Company hereunder shall be unconditional, absolute and continuing and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by:

 

(i)            any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of any Subsidiary Account Party under this Agreement, by operation of law or otherwise;

 

 

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(ii)            any modification or amendment of or supplement to this Agreement;

 

(iii)            any release, impairment, non-perfection or invalidity of any direct or indirect security for any obligation of any Subsidiary Account Party under this Agreement;

 

(iv)            any change in the corporate existence, structure or ownership of any Subsidiary Account Party, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Subsidiary Account Party or its assets or any resulting release or discharge of any obligation of any Subsidiary Account Party contained in this Agreement;

 

(v)            the existence of any claim, set-off or other rights which the Company may have at any time against any Subsidiary Account Party, the Administrative Agent, any Bank or any other Person, whether in connection herewith or any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim;

 

(vi)            any invalidity or unenforceability relating to or against any Subsidiary Account Party for any reason of this Agreement, or any provision of applicable law or regulation purporting to prohibit the payment by any Subsidiary Account Party of any reimbursement obligation, interest or any other amount payable by it under this Agreement;

 

(vii)            any other act or omission to act or delay of any kind by Subsidiary Account Party, the Administrative Agent, any Bank or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to the Company's obligations hereunder; or

 

(viii)            any Bank and its Affiliates accepting deposits from, lending money to, or otherwise engaging in any kind of business with the Company, its Subsidiaries, the Subsidiary Account Parties or the Affiliates of any thereof.

 

SECTION 9.03.  Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances.  The Company's obligations hereunder shall remain in full force and effect until the Commitments shall have terminated and all reimbursement obligations, interest and all other amounts payable by the Company and each Subsidiary Account Party under this Agreement shall have been paid in full.  If at any time any payment of reimbursement obligation, interest or any other amount payable by any Subsidiary Account Party under this Agreement is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of such Subsidiary Account Party or otherwise, the Company's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time.

 

SECTION 9.04.  Waiver by the Company.  The Company irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Subsidiary Account Parties or any other Person.

 

SECTION 9.05.  Subrogation.  Upon making any payment with respect to the obligations of any Subsidiary Account Party hereunder, the Company shall be subrogated to the rights of the payee against such Subsidiary Account Party with respect to such payment; provided that the Company shall not enforce any payment by way of subrogation against such Subsidiary Account Party so long as (i) any Bank has any Commitment hereunder or (ii) any amount payable hereunder remains unpaid.

 

 

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ARTICLE X

 MISCELLANEOUS

 

SECTION 10.01.  Notices.  All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission, or by electronic communication, if arrangements for doing so have been approved by such party) and shall be given to such party:  (a) in the case of any Account Party, at the Company's address or telecopier number set forth on the Company's signature page hereof, (b) in the case of the Administrative Agent, at its address or telecopier number set forth on its respective signature page hereof, (c) in the case of any Bank, at its address or telecopier number set forth in its Administrative Questionnaire or (d) in the case of any party, such other address or telecopier number as such party may hereafter specify for the purpose by notice to the Administrative Agent and the Company.  Each such notice, request or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid and return receipt requested, (ii) if given by telecopier, when transmitted to the telecopier number specified in this Section or (iii) if given by any other means, when delivered at the relevant address specified by such party pursuant to this Section; provided that notices to the Administrative Agent under Article II or Article VIII shall not be effective until received.

 

Notices and other communications to the Banks hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Bank.  The Administrative Agent or the Account Parties may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

 

SECTION 10.02.  No Waivers.  No failure or delay by the Administrative Agent or any Bank in exercising any right, power or privilege hereunder or under any other Credit Document shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

SECTION 10.03.  Expenses;  Indemnification;  Non-Liability of Banks.

 

(a)            The Company shall pay (i) all out-of-pocket expenses of the Administrative Agent, including reasonable fees and disbursements of special counsel for the Administrative Agent, in connection with the preparation of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the Administrative Agent and each Bank, including fees and disbursements of counsel including costs allocated to in-house counsel, in connection with such Event of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom.

 

(b)            The Company agrees to indemnify the Administrative Agent, each Bank and each Confirming Bank, their Affiliates and the respective directors, officers, agents, advisors and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel and costs of settlement, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto or whether such proceeding is brought by the Company, its equity holders or its creditors) relating to or arising out of (i) the execution or delivery of

 

 

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this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or any other transactions contemplated hereby; (ii) any Loan or Letter of Credit or the use of proceeds therefrom (including any refusal by any Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not comply with the terms of such Letter of Credit); or (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort, or any other theory and regardless of whether any Indemnitee is a party thereto; provided that no Indemnitee shall have the right to be indemnified hereunder for (x) its own gross negligence or willful misconduct or (y) the material breach by such Indemnitee of its obligations hereunder or, in the case of a Confirming Bank, under its Confirming Bank Agreement, in the case of each of the foregoing clauses (x) and (y), as determined by a court of competent jurisdiction.

 

SECTION 10.04.  Sharing of Payments.  Each Bank agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and interest due with respect to any Loan made by it or reimbursement obligation or interest due with respect to any LC Disbursement made by it under a Letter of Credit which is greater than the proportion received by any other Bank in respect of the aggregate amount of principal and interest due with respect to any Loan made by such other Bank or reimbursement obligation or interest due, as the case may be, with respect to any LC Disbursement made by such other Bank under such Letter of Credit, the Bank receiving such proportionately greater payment shall purchase such participations in the Loans held by or the LC Exposure by the other Banks under such Letter of Credit, as applicable, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Loans and reimbursement obligations and interest with respect to LC Disbursements made by the Banks under such Letter of Credit shall be shared by the Banks pro rata; provided that (i) nothing in this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the applicable Account Party other than its indebtedness under this Agreement and (ii) the provisions of this Section shall not be construed to apply to any payment made by any Account Party pursuant to and in accordance with the express terms of this Agreement.  Each Account Party agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in any Loan or LC Exposure, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of such Account Party in the amount of such participation.

 

SECTION 10.05.  Amendments and Waivers.  Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by each Account Party and the Required Banks or by the Administrative Agent (with the consent of the Required Banks) (and, if the rights or duties of the Administrative Agent or any Fronting Issuing Bank, in such capacity, are affected thereby, by the Administrative Agent or such Fronting Issuing Bank, as the case may be); provided that the Administrative Agent may, with the consent of the Company (which shall not be unreasonably withheld), specify by notice to the Banks modifications in the procedures set forth in Section 2.01(b); provided, further, that no such amendment or waiver shall (i) increase the amount or extend the expiry date of the Commitment of any Bank or increase the LC Exposure of any Bank, without the written consent of such Bank, (ii) reduce the principal amount of any Loan or the amount of any reimbursement obligation of any Account Party in respect of any LC Disbursement, the rate or amount of interest thereon or any fees payable to any Bank hereunder, without the written consent of each Bank affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or for reimbursement of any LC Disbursement, or any interest thereon, or any fees payable hereunder, or waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Bank affected thereby, (iv) change Section 2.13(b) or (c) or Section 10.04 in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of

 

 

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each Bank affected thereby, (v) change any of the provisions of this Section or the definition of "Required Banks" or any other provision hereof specifying the number or percentage of Banks required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Bank, (vi) the release of any of the collateral provided for the LC Exposure pursuant to Sections 2.03(e) and 6.01 (other than as expressly provided in Section 2.03(e)), without the written consent of each Bank, or (vii) any change in the obligations of the Company under Article IX, without the written consent of each Bank.

 

SECTION 10.06.  Successors and Assigns.

 

(a)            The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that no Account Party may assign or otherwise transfer any of its rights or obligations under this Agreement, without the prior written consent of each Bank.

 

(b)            Any Bank may at any time grant to one or more banks or other institutions (each a "Participant") participating interests in its Commitment or the Loans or any or all of its Letters of Credit.  In the event of any such grant by a Bank of a participating interest to a Participant, whether or not upon notice to the Company and the Administrative Agent, such Bank shall remain solely responsible for the performance of its obligations hereunder, and the Account Parties and the Administrative Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement.  Any agreement pursuant to which any Bank may grant such a participating interest shall provide that such Bank shall retain the sole right and responsibility to enforce the obligations of the Account Parties hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Bank will not agree to any modification, amendment or waiver of this Agreement described in the proviso of Section 10.05 without the consent of the Participant.  Each Account Party agrees that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Article VIII with respect to its participating interest.  An assignment or other transfer which is not permitted by subsection (c) or (d) of this Section shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b).  Each Lender that grants a participation shall, acting solely for this purpose as a non-fiduciary agent of the Account Parties, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant's interest in the Loans, Letters of Credit or other obligations under this Agreement (the "Participant Register"); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant's interest in any Commitment, Loan, Letter of Credit or other obligations under any Loan Document) except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

 

(c)            Any Bank may at any time assign to one or more NAIC Approved Banks (each an "Assignee") all, or a proportionate part of all, of its rights and obligations under this Agreement, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption executed by such Assignee and such transferor Bank, with (and subject to) the consent (which in each case shall not be unreasonably withheld, conditioned or delayed) of each of the Company, the

 

 

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Administrative Agent and each Fronting Issuing Bank; provided that (i) if an Assignee is an Affiliate of any Bank or was a Bank immediately prior to such assignment, no such consent of the Company shall be required and (ii) if an Assignee was a Bank immediately prior to such assignment, no such consent of the Administrative Agent or any Fronting Issuing Bank shall be required; provided, further, that (x) the Company shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten Business Days after having received notice thereof and (y) if an Event of Default occurs and is continuing, no such consent of the Company shall be required; and provided, further, that any such assignment (other than an assignment to another Bank or an Affiliate of any Bank or an assignment of the entire remaining amount of the transferor Bank's Commitment and interests in outstanding Loans and Letters of Credit) shall be in an amount that is at least $5,000,000 unless otherwise agreed by the Account Parties and the Administrative Agent.  Upon execution and delivery of such Assignment and Assumption and payment by such Assignee to such transferor Bank of an amount equal to the purchase price agreed between such transferor Bank and such Assignee, such Assignee shall be a Bank party to this Agreement and shall have all the rights and obligations of a Bank with a Commitment as set forth in such instrument of assumption, and the transferor Bank shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required.  In connection with any such assignment, the transferor Bank or Assignee shall pay to the Administrative Agent an administrative fee for processing such assignment in the amount of $3,500.  If the Assignee is not incorporated under the laws of the United States of America or a state thereof, it shall, prior to the first date on which interest or fees are payable hereunder for its account, deliver to the Company and the Administrative Agent certification as to exemption from deduction or withholding of any United States federal income taxes in accordance with Section 8.05(d).

 

(d)            Any Bank may at any time assign all or any portion of its rights under this Agreement to any Person to secure obligations of such Bank, including, without limitation, to one or more of the Federal Reserve Banks which comprise the Federal Reserve System or other central banks.  No such assignment shall release the transferor Bank from its obligations hereunder.

 

(e)            No Assignee, Participant or other transferee of any Bank's rights shall be entitled to receive any greater payment under Section 8.03, 8.05 or 8.06 than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made (i) with the Company's prior written consent, (ii) by reason of the provisions of Section 8.02 or 8.07 requiring such Bank to designate a different Applicable Lending Office under certain circumstances or (iii) at a time when the circumstances giving rise to such greater payment did not exist.

 

SECTION 10.07.  Collateral.  Each of the Banks represents to the Administrative Agent and each of the other Banks that it in good faith is not relying upon any "margin stock" (as defined in Regulation U) as collateral in the extension or maintenance of the credit provided for in this Agreement.

 

SECTION 10.08.  New York Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

 

SECTION 10.09.  Judicial Proceedings.

 

(a)            Submission to Jurisdiction.  Each Account Party hereby submits to the exclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City, borough of Manhattan, for purposes of all legal proceedings arising out of or relating to this Agreement or any other Credit Document or the transactions contemplated hereby.  Each Account Party irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought

 

 

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in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.

 

(b)            Appointment of Agent for Service of Process.  Each Subsidiary Account Party irrevocably designates and appoints the Company, and the Company hereby accepts such appointment, at its office in Radnor, Pennsylvania set forth beneath the Company's signature on the signature page hereof, as the authorized agent of such Subsidiary Account Party, to accept and acknowledge on its behalf, service of any and all process which may be served in any suit, action or proceeding of the nature referred to in subsection (a) of this Section in any federal or New York State court sitting in New York City.  Said designation and appointment shall be irrevocable by each Subsidiary Account Party until all reimbursement obligations, interest thereon and all other amounts payable hereunder shall have been paid in full in accordance with the provisions hereof and thereof or, if earlier, when such Subsidiary Account Party is terminated as an Account Party hereunder pursuant to Section 10.13.

 

(c)            Service of Process.  Each Account Party hereby consents to process being served in any suit, action or proceeding of the nature referred to in subsection (a) of this Section in any federal or New York State court sitting in New York City by service of process upon its agent appointed as provided in subsection (b) of this Section; provided that, to the extent lawful and possible, notice of said service upon such agent shall be mailed by registered or certified air mail, postage prepaid, return receipt requested, to such Account Party at its address specified on the signature page hereof (or, in the case of any Subsidiary Account Party, on the signature page of the Subsidiary Joinder Agreement to which it is a party) or to any other address of which such Account Party shall have given written notice to the applicable Bank.  Each Account Party irrevocably waives, to the fullest extent permitted by law, all claim of error by reason of any such service in such manner and agrees that such service shall be deemed in every respect effective service of process upon such Account Party in any such suit, action or proceeding and shall, to the fullest extent permitted by law, be taken and held to be valid and personal service upon and personal delivery to such Account Party.

 

(d)            No Limitation on Service or Suit.  Nothing in this Section shall affect the right of the Administrative Agent or any Bank to serve process in any other manner permitted by law or limit the right of the Administrative Agent or any Bank to bring proceedings against any Account Party in the courts of any jurisdiction or jurisdictions.

 

SECTION 10.10.  Counterparts; Integration; Headings.  This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

 

SECTION 10.11.  Confidentiality.  The Administrative Agent and each Bank agree that they will maintain the confidentiality of, and will not use for any purpose (other than exercising its rights and enforcing its remedies hereunder and under the other Credit Documents), any written or oral information provided under this Agreement by or on behalf of the Account Parties (hereinafter collectively called "Confidential Information"), subject to the Administrative Agent's and each Bank's (a) obligation to disclose any such Confidential Information pursuant to a request or order under applicable laws and regulations or by a self-regulatory body or pursuant to a subpoena or other legal process, (b) right to disclose any such Confidential Information to its bank examiners, auditors, counsel and other professional advisors and to other Banks and to its subsidiaries and Affiliates and the subsidiaries and Affiliates of its holding company, provided that the Administrative Agent or such Bank,

 

 

64

 

as the case may be, shall cause each such subsidiary or Affiliate to maintain the Confidential Information on the same terms as the terms provided herein, (c) right to disclose any such Confidential Information in connection with any litigation or dispute involving the Banks and the Company or any of its Subsidiaries and Affiliates and (d) right to provide such information to participants, prospective participants, prospective assignees or assignees pursuant to Section 10.06, to its prospective Confirming Bank or Confirming Bank or (with the consent of the Company (such consent not to be unreasonably withheld)) to its agents if prior thereto such participant, prospective participant, prospective assignee, prospective Confirming Bank, Confirming Bank or agent agrees in writing to maintain the confidentiality of such information on terms substantially similar to those of this Section as if it were a "Bank" party hereto.  Notwithstanding the foregoing, any such information supplied to a Bank, participant, prospective participant, prospective assignee, prospective Confirming Bank or Confirming Bank under this Agreement shall cease to be Confidential Information if it is or becomes known to such Person by other than unauthorized disclosure, or if it is, at the time of disclosure, or becomes a matter of public knowledge.  In addition, the Administrative Agent and the Banks may disclose the existence of this Agreement and information about this Agreement to market data collectors and other service providers to the lending industry and service providers to the Administrative Agent and the Banks in connection with the administration of this Agreement, the other Credit Documents and the Commitments.

 

SECTION 10.12.  WAIVER OF JURY TRIAL.  EACH OF THE ACCOUNT PARTIES, THE ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

SECTION 10.13.  Joinder and Termination of Subsidiary Account Party.

 

(a)            Any direct or indirect wholly-owned Subsidiary of the Company that is organized, licensed or regulated under applicable law as an insurance or reinsurance company may, upon the request of the Company at any time, upon not less than seven Business Days' notice to the Administrative Agent in the case of any Subsidiary that is organized under the laws of a jurisdiction other than of the United States or a political subdivision thereof (a "Foreign Subsidiary") and upon not less than three Business Days' notice to the Administrative Agent in the case of any other Subsidiary, become a party to this Agreement as an Account Party by delivering an executed Subsidiary Joinder Agreement, substantially in the form of Exhibit F hereto, to the Administrative Agent for acceptance by it (which shall promptly notify the Banks), provided that on and as of the date of acceptance of such Subsidiary Joinder Agreement by the Administrative Agent (i) no Default shall have occurred and be continuing, (ii) each of the representations and warranties contained in this Agreement (other than the representations and warranties set forth in Sections 4.04(e) and 4.05 as to any matter which has theretofore been disclosed in writing by the Account Parties to the Banks) shall be true with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date), (iii) such Subsidiary Account Party shall be deemed to have appointed the Company as its authorized agent pursuant to Section 10.09(b) to accept service of any and all process which may be served in any suit, action or proceeding of any nature in any federal or New York State court sitting in New York City arising out of or relating to this Agreement or any other Credit Document or the transactions contemplated hereby and (iv) the Administrative Agent shall have received such other documents as the Administrative Agent shall reasonably request, which may include opinions of counsel and other documents that are consistent with conditions set forth in Section 3.02, each in form and substance satisfactory to the Administrative Agent.  Following the giving of any such notice pursuant to this Section if the designation of such Subsidiary Account Party obligates the Administrative Agent or any Bank to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Company shall, promptly upon the

 

 

65

 

request of the Administrative Agent or any Bank, supply such documentation and other evidence as is reasonably requested by the Administrative Agent or any Bank in order for the Administrative Agent or such Bank to carry out and be satisfied it has complied with the results of all necessary "know your customer" or other similar checks under all applicable laws and regulations, and such Bank's satisfaction, acting reasonably, shall be a condition precedent to the effectiveness of the designation of such Subsidiary Account Party.

 

Notwithstanding the foregoing, as soon as practicable after receiving notice from the Administrative Agent of the Company's intent to designate a Foreign Subsidiary to become a Subsidiary Account Party, and in any event at least two Business Days' prior to the delivery of an executed Subsidiary Joinder Agreement pursuant to this subsection (a), any Bank that may not legally lend to, establish credit for the account of and/or do any business whatsoever with such Foreign Subsidiary directly or through an Affiliate of such Bank (a "Protesting Bank") shall so notify the Company and the Administrative Agent in writing.  With respect to each Protesting Bank, the Company shall, effective on or before the date that such Foreign Subsidiary shall become a Subsidiary Account Party, either (A) notify the Administrative Agent and such Protesting Bank that the Commitment of such Protesting Bank shall be terminated, provided that such Protesting Bank shall have received payment of an amount equal to the outstanding principal of its Loans and/or its LC Disbursement reimbursement obligations, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal, LC Disbursements and accrued interest and fees) or the Company or the relevant Subsidiary Account Party (in the case of all other amounts) or (B) cancel the request to designate such Foreign Subsidiary as a Subsidiary Account Party hereunder.

 

(b)            The Company may, at any time at which a Subsidiary Account Party shall not be an Account Party with respect to an outstanding Letter of Credit and which shall have no unpaid LC Disbursements or unpaid interest on any LC Disbursements, terminate such Subsidiary Account Party as an Account Party hereunder by delivering an executed notice thereof, substantially in the form of Exhibit G hereto, to the Administrative Agent (which shall promptly notify the Banks).  Immediately upon the receipt by the Administrative Agent of such notice, all commitments of the Banks to issue Letters of Credit for the account of such Subsidiary Account Party and all rights of such Subsidiary Account Party hereunder, shall terminate and such Subsidiary Account Party shall immediately cease to be an Account Party hereunder; provided that all obligations of such Subsidiary Account Party as an Account Party hereunder arising in respect of any period in which such Subsidiary Account Party was, or on account of any action or inaction by such Subsidiary Account Party as, an Account Party hereunder shall survive such termination.

 

SECTION 10.14.  USA PATRIOT Act.  Each Bank hereby notifies the Account Parties that pursuant to the requirements of the Patriot Act, such Bank may be required to obtain, verify and record information that identifies the Account Parties, which information includes the name and address of the Account Parties and other information that will allow such Bank to identify the Account Parties in accordance with said Act.

 

SECTION 10.15.  No Fiduciary Duty.  The Administrative Agent, each Bank and their Affiliates (collectively, solely for purposes of this Section, the "Banks"), may have economic interests that conflict with those of the Account Parties, their respective stockholders and/or their affiliates.  The Account Parties agree that nothing in the Credit Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Bank, on the one hand, and any Account Party, its stockholders or its affiliates, on the other.  The Account Parties acknowledge and agree that (i) the transactions contemplated by the Credit Documents (including the exercise of rights and remedies hereunder and thereunder) are arm's-length commercial transactions between the Banks, on the one hand, and the Account Parties, on the other, and (ii) in connection

 

 

66

 

therewith and with the process leading thereto, (x) no Bank has assumed an advisory or fiduciary responsibility in favor of any Account Party, its stockholders or its affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Bank has advised, is currently advising or will advise any Account Party, its stockholders or its Affiliates on other matters) or any other obligation to the Account Parties except the obligations expressly set forth in the Credit Documents and (y) each Bank is acting solely as principal and not as the agent or fiduciary of any Account Party, its management, stockholders or creditors or any other Person.  Each Account Party acknowledges and agrees that such Account Party has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. Each Account Party agrees that it will not claim that any Bank has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to such Account Party, in connection with such transaction or the process leading thereto.

 

SECTION 10.16.  Acknowledgement and Consent to Bail-In of EEA Financial Institutions.  Notwithstanding anything to the contrary in any Credit Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Credit Document may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

 

(a)            the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

 

(b)            the effects of any Bail-In Action on any such liability, including, if applicable: (i) a reduction in full or in part or cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Credit Document; or (iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

 

 

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

 

    

	
 

	
 

	
LINCOLN NATIONAL CORPORATION

	
 

	
 

	
 

	
 

	
 

	
By: /s/ Randal J. Freitag

	
 

	
 

	
Name:  Randal J. Freitag

	
 

	
 

	
Title:  EVP and CFO

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Jeffrey D. Coutts

	
 

	
 

	
Name:  Jeffrey D. Coutts

	
 

	
 

	
Title:  SVP and Treasurer

	
 

	
 

	
 

	
 

	
 

	
U.S. Federal Tax Identification No.:  35-1140070

	
 

	
 

	
 

	
 

	
 

	
150 North Radnor Chester Road

	
 

	
 

	
Radnor, PA  19087

	
 

	
 

	
Attention:  Treasurer's Office

	
 

	
 

	
Tel:  (484) 583-1432

	
 

	
 

	
Fax:  (484) 583-3957

	
 

	
 

	
 

	
 

	
 

	
with a copy to:

	
 

	
 

	
 

	
 

	
 

	
Lincoln National Corporation

	
 

	
 

	
150 North Radnor Chester Road

	
 

	
 

	
Radnor, PA 19087

	 	 	Attention: General Counsel

 

 

 

 

 

 

 

 

 

 

 

SUBSIDIARY ACCOUNT PARTIES

 

	
 

	
 

	
LINCOLN NATIONAL REINSURANCE 

COMPANY (BARBADOS) LIMITED

	
 

	
 

	
 

	
 

	
 

	
By: /s/ Jeffery D. Coutts

	
 

	
 

	
Name:  Randal J. Freitag

	
 

	
 

	
Title:  SVP and Treasurer

	 	 	 
	 	 	 

U.S. Federal Tax Identification No.:  35-1716060

	 	 	 
	 	 	THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Jeffrey D. Coutts

	
 

	
 

	
Name:  Jeffrey D. Coutts

	
 

	
 

	
Title:  SVP and Treasurer

	
 

	
 

	
 

	
 

	
 

	
U.S. Federal Tax Identification No.:  35-0472300

	
 

 

 

 

BANKS

 

	
 

	
 

	
JPMORGAN CHASE BANK, N.A.,

	
 

	
 

	
individually, as a Fronting Issuing Bank solely in respect to its

	
 

	
 

	
 

	
 

	
 

	
By:  /s/Kristen M. Murphy

	
 

	
 

	
Name:  Kristen Murphy

	
 

	
 

	
Title:  Vice President

	
 

	
 

	
 

	
 

	
 

	
Address for Notices (for the Administrative Agent):

	
 

	
 

	
 

	
 

	
 

	
JPMorgan Chase Bank, N.A.

	
 

	
 

	
500 Stanton Christiana Road

	
 

	
 

	
Ops 2, Floor 03

	
 

	
 

	
Newark, Delaware  19713-2107

	
 

	
 

	
Attention:  Loan and Agency Services

	
 

	
 

	
Tel:         (302) 634-8802

	
 

	
 

	
Fax:        (302) 634-4733

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

  

 

 

 

 

 

 

 

    

	
 

	
 

	
 

	
 

	
 

	
BANK OF AMERICA, N.A.

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Chris Choi

	
 

	
 

	
Name:  Chris Choi

	
 

	
 

	
Title:  Director

	
 

	
 

	
 

 

 

 

 

	
 

	
 

	
 

	
 

	
 

	
WELLS FARGO BANK, NATIONAL  ASSOCIATION

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Kimberly Shaffer

	
 

	
 

	
Name:  Kimberly Shaffer

	
 

	
 

	
Title:  Managing Director

	
 

	
 

	
 

 

 

 

 

 

 

	
 

	
 

	
 

	
 

	
 

	
THE BANK OF NEW YORK MELLON

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Tatiana Ross

	
 

	
 

	
Name:  Tatiana Ross

	
 

	
 

	
Title:  Vice President

	
 

	
 

	
 

 

 

 

	
 

	
 

	
 

	
 

	
 

	
BARCLAYS BANK PLC

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Ronnie Glenn

	
 

	
 

	
Name:  Ronnie Glenn

	
 

	
 

	
Title:  Vice President

	
 

	
 

	
 

 

 

	
 

	
 

	
BNP PARIBAS

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Monica Hanson

	
 

	
 

	
Name:  Monica Hanson

	
 

	
 

	
Title:  Managing Director

	
 

	
 

	
 

	 	 	 By:  /s/ Nair P. Raghu
	 	 	 Name:  Nair P. Ragu
	 	 	 Title:  Vice President
	 	 	 
	
 

	
 

	
 

 

 

	
 

	
 

	
 

	
 

	
 

	
CITIBANK, N.A.

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Peter Bickford

	
 

	
 

	
Name:  Peter Bickford

	
 

	
 

	
Title:  Managing Director and Vice President

	
 

	
 

	
 

 

 

 

 

 

	
 

	
 

	
 

	
 

	
 

	
CREDIT SUISSE AG, NEW YORK BRANCH

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Doreen Barr

	
 

	
 

	
Name:  Doreen Barr

	
 

	
 

	
Title:  Authorized Signatory

	
 

	
 

	
 

	 	 	By:  /s/ William O'Daly
	 	 	Name:  William O'Daly
	 	 	Title:  Authorized Signatory
	 	 	 
	 	 	 

 

 

 

 

 

	
 

	
 

	
DEUTSCHE BANK AG NEW YORK BRANCH

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Virginia Cosenza

	
 

	
 

	
Name:  Virginia Cosenza

	
 

	
 

	
Title:  Vice President

	 	 	 
	 	 	By:  /s/ Ming K. Chu
	 	 	Name:  Ming K. Chu
	 	 	Title:  Director
	
 

	
 

	
 

	
 

	
 

	
 

 

 

 

 

	
 

	
 

	
 

	
 

	
 

	
GOLDMAN SACHS BANK USA

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Rebecca Kratz

	
 

	
 

	
Name:  Rebecca Kratz

	
 

	
 

	
Title:  Authorized Signatory

	
 

	
 

	
 

 

 

 

 

 

	
 

	
 

	
 

	
 

	
 

	
UBS AG, STAMFORD BRANCH

	 	 	 
	
 

	
 

	
By:  /s/ Craig Pearson

	
 

	
 

	
Name:  Craig Pearson

	
 

	
 

	
Title:  Associate Director

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Darlene Arias

	
 

	
 

	
Name:  Darlene Arais

	
 

	
 

	
Title:  Director

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

 

 

 

	
 

	
 

	
 

	
 

	
 

	
THE NORTHERN TRUST COMPANY

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Peter J. Hallan

	
 

	
 

	
Name:  Peter J. Hallan

	
 

	
 

	
Title:  Vice President

	
 

	
 

	
 

 

 

 

 

 

 

 

	
 

	
 

	
PNC BANK, NATIONAL ASSOCIATION

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Nicole Limberg

	
 

	
 

	
Name:  Nicole Limberg

	
 

	
 

	
Title:  Vice President

	
 

	
 

	
 

	
 

	
 

	
 

 

 

 

 

	
 

	
 

	
 

	
 

	
 

	
U.S. BANK, NATIONAL ASSOCIATION

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Evan Glass

	
 

	
 

	
Name:  Evan Glass

	
 

	
 

	
Title Senior Vice President

	
 

	
 

	
 

 

 

 

 

 

	
 

	
 

	
 

	
 

	
 

	
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.

	
 

	
 

	
 

	
 

	
 

	
By:  /s/ Glenn Schuermann

	
 

	
 

	
Name:  Glenn Schuermann

	
 

	
 

	
Title:  Director

	
 

	
 

	
 

 

 

 

	
 

	
 

	
 

	
 

	
 

	
CITIZENS BANK, N.A.

	
 

	
 

	
 

	
 

	
 

	
By: /s/ Sean Riordan

	
 

	
 

	
Name:  Sean Riordan

	
 

	
 

	
Title:  Assistant Vice President

	
 

	
 

	
 

 

 

 

 

 

 

 

SCHEDULE I

 

	
 

	
Banks

	
 

	
 

	
Commitments ($)

	
 

	
 

	
JPMorgan Chase Bank, N.A.

	
 

	
 

	
$200,000,000

	
 

	
 

	
Bank of America, N.A. 

	
 

	
 

	
$200,000,000

	
 

	
 

	
Wells Fargo Bank, National Association 

	
 

	
 

	
$200,000,000

	
 

	
 

	
The Bank of New York Mellon

	
 

	
 

	
$185,000,000

	
 

	
 

	
Barclays Bank PLC 

	
 

	
 

	
$185,000,000

	
 

	
 

	
BNP Paribas 

	
 

	
 

	
$185,000,000

	
 

	
 

	
Citibank, N.A. 

	
 

	
 

	
$185,000,000

	
 

	
 

	
Credit Suisse AG, New York Branch 

	
 

	
 

	
$185,000,000

	
 

	
 

	
Deutsche Bank AG New York Branch 

	
 

	
 

	
$185,000,000

	
 

	
 

	
Goldman Sachs Bank USA 

	
 

	
 

	
$185,000,000

	
 

	
 

	
UBS AG, Stamford Branch 

	
 

	
 

	
$145,000,000

	
 

	
 

	
The Northern Trust Company

	
 

	
 

	
$100,000,000

	
 

	
 

	
PNC Bank, National Association 

	
 

	
 

	
$100,000,000

	
 

	
 

	
U.S. Bank, National Association 

	
 

	
 

	
$100,000,000

	
 

	
 

	
The Bank of Tokyo-Misubishi UFJ, Ltd. 

	
 

	
 

	
$80,000,000

	
 

	
 

	
Citizens Bank, N.A.

	
 

	
 

	
$80,000,000

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
TOTAL COMMITMENTS

	
 

	
 

	
$2,500,000,000

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

  

SCHEDULE II

Continued Existing Letters of Credit

Part A – Continued Existing Fronted Letters of Credit

	
Applicant

	
JPMorgan Reference Number

	 	
Global Outstanding Amount

	 	
Issuance Date

	
 

Maturity Date

	
Beneficiary Name

	
Lincoln National Corporation

	
CUCS-421486

	 	
$

	
500,000

	 	
October 23, 2014

	
 

August 1, 2017

	
SENTRY INSURANCE A MUTUAL COMPANY

Part B – Continued Existing Syndicated Letters of Credit

	
Applicant

	
JPMorgan Reference Number

	 	
Global Outstanding Amount

	 	
Issuance Date

	
 

Maturity Date

	
Beneficiary Name

	
The Lincoln National Life Insurance Company

	
TUTS-578021

	 	
$

	
100,000

	 	
May 29, 2013

	
 

January 3, 2017

	
COMBINED INSURANCE COMPANY

	
The Lincoln National Life Insurance Company

	
TUTS-578023

	 	
$

	
500,000

	 	
May 29, 2013

	
 

January 3, 2017

	
COMPANION LIFE INSURANCE COMPANY

	
The Lincoln National Life Insurance Company

	
TUTS-578031

	 	
$

	
4,450,000

	 	
May 29, 2013

	
 

December 31, 2016

	
EMPIRE FIDELITY INVESTMENTS LIFE

	
The Lincoln National Life Insurance Company

	
TUTS-578032

	 	
$

	
8,500,000

	 	
May 29, 2013

	
 

December 31, 2016

	
RELIASTAR LIFE INSURANCE COMPANY

	
The Lincoln National Life Insurance Company

	
TUTS-578033

	 	
$

	
25,000

	 	
May 29, 2013

	
 

January 3, 2017

	
EMPLOYERS REASSURANCE CORPORATION

	
The Lincoln National Life Insurance Company

	
TUTS-578035

	 	
$

	
25,000

	 	
May 29, 2013

	
 

December 31, 2016

	
AMERITAS LIFE INSURANCE CORP

	
The Lincoln National Life Insurance Company

	
TUTS-578038

	 	
$

	
475,000

	 	
May 29, 2013

	
 

January 3, 2017

	
GREAT-WEST LIFE & ANNUITY COMPANY OF NEW YORK

	
The Lincoln National Life Insurance Company

	
TUTS-578050

	 	
$

	
290,000

	 	
May 29, 2013

	
 

January 3, 2017

	
PRESIDENTIAL LIFE INSURANCE COMPANY

	
The Lincoln National Life Insurance Company

	
TUTS-578052

	 	
$

	
2,350,000

	 	
May 29, 2013

	
 

January 3, 2017

	
RIVERSOURCE LIFE INSURANCE

	
The Lincoln National Life Insurance Company

	
TUTS-578067

	 	
$

	
216,735

	 	
May 29, 2013

	
 

January 3, 2017

	
TIAA-CREF LIFE INSURANCE COMPANY

	
The Lincoln National Life Insurance Company

	
TUTS-578069

	 	
$

	
175,000

	 	
May 29, 2013

	
 

December 31, 2016

	
WORKMEN'S BENEFIT FUND OF USA

	
The Lincoln National Life Insurance Company

	
TUTS-578101

	 	
$

	
326,000

	 	
May 29, 2013

	
 

December 31, 2016

	
PHOENIX LIFE INSURANCE COMPANY

	
Lincoln National Reinsurance Company (Barbados) Ltd

	
U-695851

	 	
$

	
1,000,000

	 	
May 29, 2013

	
 

January 3, 2017

	
LINCOLN LIFE AND ANNUITY COMPANY

	
Lincoln National Reinsurance Company (Barbados) Ltd

	
U-811310

	 	
$

	
5,000,000

	 	
May 29, 2013

	
 

December 31, 2016

	
THE PAUL REVERE LIFE INSURANCE

	
Lincoln National Reinsurance Company (Barbados) Ltd

	
CUCS-421484

	 	
$

	
1,000

	 	
August 9, 2013

	
 

December 31, 2016

	
THE LINCOLN NATIONAL LIFE INSURANCE

 

 

 SCHEDULE III

 

Restricted Subsidiaries

 

The Lincoln National Life Insurance Company

 

Lincoln National Reinsurance Company (Barbados) Limited

 

 

SCHEDULE IV

 

Existing Instruments

	 	
Percentage Equity Credit – S&P

	
 

Percentage Equity Credit – Moody's

 

	
6.05% Capital Securities due 2067

	
100%

	
25%

	
7% Capital Securities due 2066

	
100%

	
25%

The equity treatment given to the Instruments by S&P and Moody's as of the Effective Date contemplates that the equity credit of any Instrument decreases as such Instrument approaches maturity.  No such decrease is contemplated by S&P or Moody's to occur with respect to any Instrument before the first anniversary of the Commitment Termination Date.

The equity treatment given to the Instruments by S&P limits the aggregate amount of equity credit given to all Instruments of the Company and its Consolidated Subsidiaries to 15% of the total adjusted capital (as determined by S&P) of the Company and its Consolidated Subsidiaries.

 

 

EXHIBIT A

 

NOTE

 

New York, New York

                         , 20__

 

For value received, [Insert name of Account Party], a[n] [Insert jurisdiction of organization of Account Party] corporation (the "Account Party"), promises to pay to  __________ (the "Bank"), for the account of its Applicable Lending Office, the unpaid principal amount of each Loan made by the Bank to the Account Party pursuant to the Credit Agreement referred to below on the date provided for in the Credit Agreement.  The Account Party promises to pay interest on the unpaid principal amount of each such Loan on the dates and at the rate or rates provided for in the Credit Agreement.  All such payments of principal and interest shall be made in lawful money of the United States in Federal or other immediately available funds at the office of JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, New York.

 

All Loans made by the Bank, the respective dates, amounts, types and maturities thereof and all repayments of the principal thereof shall be recorded on its books by the Bank and, prior to any transfer hereof, appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding shall be endorsed by the Bank on the schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof; provided that the failure of the Bank to make any such recordation or endorsement shall not affect the obligations of the Account Party hereunder or under the Credit Agreement.

 

This note is one of the Notes referred to in the Credit Agreement dated as of June 30, 2016 among Lincoln National Corporation, the Subsidiary Account Parties party thereto, the Banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (as the same may be amended from time to time, the "Credit Agreement").  Terms defined in the Credit Agreement are used herein with the same meanings.  Reference is made to the Credit Agreement for provisions for the prepayment hereof and the acceleration of the maturity hereof.

 

This Note shall be governed by, and construed in accordance with, the law of the State of New York, United States of America.

    

 

                            [INSERT NAME OF ACCOUNT PARTY]

                            By___________________________

                            Title:

 

 

Note (cont'd)

 

LOANS AND PAYMENTS OF PRINCIPAL

            

 

	
 

Date

	
Amount 

of Loan

	
 

Type 

of Loan

	
 

Amount of 

Principal 

Repaid

	
 

Maturity 

Date

	
 

Notation 

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EXHIBIT B

OPINION OF COUNSEL OF THE COMPANY

 

June 30, 2016

 

To the Banks and the Administrative Agent

referred to below

c/o JPMorgan Chase Bank, N.A.,

as Administrative Agent

270 Park Avenue

New York, NY  10017

 

Dear Sirs:

 

I refer to the Credit Agreement (the "Credit Agreement") dated as of  June 30, 2016 among Lincoln National Corporation (the "Company"), and the Subsidiary Account Parties party thereto, the Banks party thereto and the Administrative Agent.  Terms defined in the Credit Agreement are used herein as therein defined.  I am a Vice President and Senior Counsel of the Company and am admitted to practice law in the State of Indiana.  This opinion is being rendered to you at the request of the Company.

 

I have examined originals or copies, certified or otherwise identified to my satisfaction, of such documents, corporate records, certificates of public officials and other instruments, and have conducted such other investigations of fact and law, as I have deemed necessary or advisable for purposes of this opinion.  I have also assumed that the Credit Agreement has been duly authorized, executed and delivered by each of the Banks referred to therein and the Administrative Agent and is enforceable in accordance with its terms against such parties.  As to certain matters of fact, I have relied upon information obtained from officers and employees of the Company and from public officials believed by me to be responsible.

 

In rendering this opinion, I have assumed without inquiry the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to me as originals, the conformity to original documents of documents submitted to me as certified or photostatic copies and the authenticity of the originals of such latter documents.

 

Upon the basis of the foregoing and subject to the qualifications, exceptions and assumptions herein, I am of the opinion that:

 

1. The Company is a corporation duly incorporated and validly existing under the laws of the State of Indiana, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to own or lease its assets and carry on its business as now conducted.  The Company is duly qualified and licensed to do business, and is validly existing or in good standing, as applicable, in every other jurisdiction where such qualification or license is required, except as would not result in a Material Adverse Effect.

 

2. The execution, delivery and performance by the Company of the Credit Agreement and the Notes are within the Company's corporate power, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the articles of incorporation or

 

 

 

by-laws of the Company or of any material agreement, injunction, order, decree or other instrument binding upon the Company or any of its Restricted Subsidiaries or result in the creation or imposition of any Lien on any asset of the Company or any of its Restricted Subsidiaries, except in each case as would not, individually or in the aggregate, result in a Material Adverse Effect.

 

3. The Credit Agreement has been duly executed and delivered by the Company.

 

4. If the Credit Agreement and the Notes were stated to be governed by and construed in accordance with the law of the State of Indiana or if a court of the State of Indiana were to apply the law of the State of Indiana to the Credit Agreement and the Notes, the Credit Agreement and the Notes would constitute a valid and binding agreement of the Company in each case enforceable in accordance with their respective terms.

 

5. There is no action, suit or proceeding pending against, or to the best of my knowledge after reasonable inquiry, threatened, against the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official (a) which reasonably would be expected to have a Material Adverse Effect, or (b) which in any manner draws into question the validity or enforceability of the Credit Agreement.

 

6. Each of the Company's Restricted Subsidiaries is a corporation validly existing under the laws of its jurisdiction of incorporation, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted.

 

The foregoing opinions are subject to the following comments and qualifications:

 

(A) The opinions set forth in paragraph 4 above are subject to the qualification that the binding effect and enforceability of the Credit Agreement and the Notes may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws of general applicability affecting the enforcement of creditors' rights, and (ii) the application of general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

 

(B)            The enforceability of Sections 7.06, 7.07 and 10.03 of the Credit Agreement may be limited by laws limiting the enforceability of provisions exculpating or exempting a party from, or requiring indemnification of a party for, liability for its own action or inaction, to the extent the action or inaction involves gross negligence, recklessness, willful misconduct or unlawful conduct.

 

(C) The enforceability of provisions in the Credit Agreement to the effect that terms may not be waived or modified except in writing may be limited under certain circumstances.

 

(D) Section 9.02 of the Credit Agreement may not be enforceable to the extent that the obligations of any Subsidiary Account Party under the Credit Agreement are materially modified.

 

(E) I express no opinion as to (i) the effect of the laws of any jurisdiction in which any Bank is located (other than the State of Indiana) that limit the interest, fees or other charges such Bank may impose for the loan or use of money or other credit, (ii) the last sentence of Section 10.04 of the Credit Agreement, (iii) the first sentence of Section 10.09(a) of the Credit Agreement, insofar as such sentence relates to the subject matter jurisdiction of the United States District Court for the Southern District of New York to adjudicate any controversy related to the

 

 

 

Credit Agreement and (iv) the waiver of inconvenient forum set forth in the last sentence of Section 10.09(a) of the Credit Agreement with respect to proceedings in the United States District Court for the Southern District of New York.

 

(F)            I also wish to point out that provisions of the Credit Agreement and the Notes which permit the Administrative Agent or the Banks to take actions or make determinations may be subject to a requirement that such actions be taken or such determinations be made on a reasonable basis and in good faith.

 

I do not herein express any opinion as to any matters governed by any law other than the law of the State of Indiana and the United States of America.

 

This opinion is rendered only with respect to law in effect as of the date hereof.  I assume no responsibility for updating this opinion to take into account any event, action, interpretation or change of law or change of facts occurring subsequent to the date hereof which may affect the validity of any of the opinions expressed herein.

 

This opinion is furnished by me solely for your benefit for use in connection with the transactions contemplated by the Credit Agreement and it may not be relied upon by any other Person.

 

Very truly yours,

[Name]

 [Title]

 

 

EXHIBIT C

 

OPINION OF

MILBANK, TWEED, HADLEY & MCCLOY LLP,

SPECIAL NEW YORK COUNSEL TO JPMORGAN

 

June 30, 2016

 

To the Banks and the Administrative Agent

referred to below

c/o JPMorgan Chase Bank, N.A.,

as Administrative Agent

270 Park Avenue

New York, NY  10017

 

Dear Sirs:

 

We have acted as special New York counsel to JPMorgan Chase Bank, N.A., in connection with the Credit Agreement (the "Credit Agreement") dated as of June 30, 2016, among Lincoln National Corporation (the "Company"), Lincoln National Reinsurance Company (Barbados) Limited ("LN (Barbados)") and The Lincoln National Life Insurance Company, as Subsidiary Account Parties party thereto (the "Subsidiary Account Parties "), the Banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.  Terms defined in the Credit Agreement are used herein as defined therein.  This opinion letter is being delivered pursuant to Section 3.02(c) of the Credit Agreement.  The Company and the Subsidiary Account Parties party to the Credit Agreement on the date hereof are herein referred to as the "Obligors".

 

In rendering the opinions expressed below, we have examined an executed counterpart of the Credit Agreement.  In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with authentic original documents of all documents submitted to us as copies.  When relevant facts were not independently established, we have relied upon representations made in or pursuant to the Credit Agreement.  We have also assumed that the Credit Agreement has been duly authorized, executed and delivered by, and (except, to the extent set forth in the opinions expressed below, as to the Obligors) constitutes a legal, valid, binding and enforceable obligation of, all of the parties thereto, that all signatories thereto have been duly authorized, that all of the parties thereto are duly organized and validly existing and have the power and authority (corporate or other) to execute, deliver and perform the same, and that all authorizations, approvals or consents of (including without limitation all foreign exchange control approvals), that all filings or registrations with, any governmental or regulatory authority of Barbados (including the central bank thereof) required for the making and performance by LN (Barbados) of the Credit Agreement have been obtained or made and are in effect and that, upon the delivery of this opinion, the Administrative Agent will have notified the Company and the Banks of the Effective Date pursuant to Section 3.02 of the Credit Agreement.

 

Based upon and subject to the foregoing and subject also to the comments and qualifications set forth below, and having considered such questions of law as we have deemed necessary as a basis for the opinions expressed below, we are of the opinion that the Credit Agreement constitutes the legal, valid and binding obligation of each Obligor party thereto, enforceable against such Obligor in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer or other similar laws relating to or affecting the rights of creditors generally and to the possible judicial application of foreign laws or governmental action affecting the rights of creditors generally and except as the enforceability of the Credit Agreement is subject to the application of general principles of equity (regardless of whether considered in a proceeding

 

 

 

in equity or at law), including (a) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (b) concepts of materiality, reasonableness, good faith and fair dealing.

 

The foregoing opinions are subject to the following comments and qualifications:

 

(A)  The enforceability of Section 10.03 of the Credit Agreement may be limited by laws limiting the enforceability of provisions exculpating or exempting a party from, or requiring indemnification of a party for, liability for its own action or inaction, to the extent the action or inaction involves gross negligence, recklessness, willful misconduct or unlawful conduct.

 

(B)  The enforceability of provisions in the Credit Agreement to the effect that terms may not be waived or modified except in writing may be limited under certain circumstances.

 

(C)  Section 9.02 of the Credit Agreement may not be enforceable to the extent that the obligations of any Subsidiary Account Party under the Credit Agreement are materially modified.

 

(D)  We express no opinion as to (i) the effect of the laws of any jurisdiction in which any Bank is located (other than the State of New York) that limit the interest, fees or other charges such Bank may impose for the loan or use of money or other credit, (ii) the last sentence of Section 10.04 of the Credit Agreement, (iii) the first sentence of Section 10.09(a) of the Credit Agreement, insofar as such sentence relates to the subject-matter jurisdiction of the United States District Court for the Southern District of New York to adjudicate any controversy related to the Credit Agreement and (iv) the waiver of inconvenient forum set forth in the last sentence of Section 10.09(a) of the Credit Agreement with respect to proceedings in the United States District Court for the Southern District of New York.

 

The foregoing opinions are limited to matters involving the Federal laws of the United States and the law of the State of New York, and we do not express any opinion as to the laws of any other jurisdiction.

 

At the request of our client, this opinion letter is, pursuant to Section 3.02(c) of the Credit Agreement, provided to you by us in our capacity as special New York counsel to JPMorgan Chase Bank, N.A., and may not be relied upon by any other person or for any purpose other than in connection with the transactions contemplated by the Credit Agreement without, in each instance, our prior written consent.

 

Very truly yours,

 

 

BT/EKM

 

 

EXHIBIT D

 

Form of Assignment and Assumption

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the "Assignment and Assumption") is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the "Assignor") and [Insert name of Assignee] (the "Assignee").  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the "Credit Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor's rights and obligations in its capacity as a Bank under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the facility identified below and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Bank) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the credit transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the "Assigned Interest").  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

1.            Assignor:                                                      ______________________________

 

      

	2.            	Assignee:                                                      	______________________________

                                                          [and is an Affiliate of [identify Bank]]

 

	3.            	Account Party:                                                      	[______________________]

	4.            	Administrative Agent:                                                                                    	JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement

	5.            	Credit Agreement:                                                      	The $2,500,000,000 Credit Agreement dated as of June 30, 2016 between Lincoln National Corporation, the Subsidiary Account Parties party thereto, the Banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent

	6.	Assigned Interest:

 

 

 

 

	
 

 

Facility Assigned1

	 	
Aggregate Amount of Commitment/LC Exposure for all Banks

	 	
Amount of Commitment/LC Exposure Assigned

	 	
Percentage Assigned of Commitment/LC Exposure2

	 
	 	 	
$

	 	 	
 

	 	
$

	
%

	 
	 	 	
$

	 	 	
 

	 	
$

	
%

	 
	 	 	
$

	 	 	
 

	 	
$

	
%

	 

 

 

Effective Date:   _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

1 Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g. "Revolving Commitment," "Term Loan Commitment," etc.).

2 Set forth, to at least 9 decimals, as a percentage of the Commitment/LC Exposure of all Banks thereunder.

 

 

 

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

 

ASSIGNOR

 

[NAME OF ASSIGNOR]

By:______________________________

                                    Name:

                                     Title:

 

ASSIGNEE

 

[NAME OF ASSIGNEE]

By:______________________________

                                    Name:

                                     Title:

 

 

 

 

 

[Consented to and]3 Accepted:

 

 

JPMORGAN CHASE BANK, N.A.,

 as Administrative Agent

By_________________________________

     Name:

      Title:

 

[Consented to:]4

 

[NAME OF FRONTING ISSUING BANK]

By________________________________

    Name:

     Title:

 

[Consented to:]5

 

LINCOLN NATIONAL CORPORATION

By________________________________

    Name:

     Title:

3 To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

4 To be added only if the consent of Fronting Issuing Banks is required by the terms of the Credit Agreement.

5 To be added only if the consent of the Company is required by the terms of the Credit Agreement.

 

 

 

ANNEX 1

 

STANDARD TERMS AND CONDITIONS FOR

 

ASSIGNMENT AND ASSUMPTION

 

1.  Representations and Warranties.

 

1.1   Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any collateral thereunder, (iii) the financial condition of the Company, any of its Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement or (iv) the performance or observance by the Company, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Credit Agreement.

 

1.2.  Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Bank under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Bank, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Bank thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Bank thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Bank, and (v) if it is a Bank that is not incorporated under the laws of the United States of America or any state thereof, attached to this Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Bank.

 

2.   Payments.    From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of reimbursement obligations, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

 

3.  General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

 

 

EXHIBIT E

 

[Form of Confirming Bank Agreement]

[Letterhead of Issuing Bank]

      ____________________, 20__

[Name of Confirming Bank]

[Address]

Ladies and Gentlemen:

Reference is made to the Credit Agreement dated as of June 30, 2016 (as amended, restated, supplemented and otherwise modified and in effect on the date hereof, the "Credit Agreement"), among Lincoln National Corporation, the Subsidiary Account Parties party thereto, the Banks party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent for the Banks.  Terms defined in the Credit Agreement are used herein with the same meanings.

The undersigned is an issuing Bank (the "Issuing Bank") under the Credit Agreement but is not on the date hereof a bank listed on the most current Bank List of banks approved by the NAIC.  Accordingly, in order to be an "NAIC Approved Bank" for the purposes of the Credit Agreement, the undersigned hereby requests that you be a Confirming Bank with respect to the undersigned for the purposes of the Credit Agreement and each Letter of Credit issued by the Issuing Bank thereunder.

By your signature below, you undertake that any draft drawn under and in strict compliance with the terms of any Letter of Credit issued by the Issuing Bank under the Credit Agreement will be duly honored by you as if, and to the extent, you were the Issuing Bank under such Letter of Credit.  Notwithstanding the foregoing, your liability under all Letters of Credit at any one time issued under the Credit Agreement shall be limited to an amount (the "Liability Limit") equal to the Commitment of the undersigned under the Credit Agreement in effect on the date hereof (an amount equal to $_________), as such Liability Limit may be increased after the date hereof with your prior written consent by reason of an increase in the Commitment of the undersigned under the Credit Agreement.  In addition, you hereby irrevocably appoint and designate the Administrative Agent as your attorney-in-fact, acting through any duly authorized officer of JPMorgan, to execute and deliver, at any time prior to the Commitment Termination Date in effect on the date of this letter agreement, in your name and on your behalf each Letter of Credit to be confirmed by you in accordance herewith and with the Credit Agreement.  You agree that, promptly upon the request of the Administrative Agent, you will furnish to the Administrative Agent such powers of attorney or other evidence as any beneficiary of any Letter of Credit may reasonably request in order to demonstrate that the Administrative Agent has the power to act as attorney-in-fact for you in connection with the execution and delivery of such Letter of Credit.

In consideration of the foregoing, the undersigned agrees that if you shall make any LC Disbursement in respect of any Letter of Credit, regardless of the identity of the account party of such Letter of Credit, the undersigned shall reimburse you by paying to you an amount equal to the amount of the LC Disbursement made by you, such payment to be made not later than noon, New York City time, on (i) the Business Day that the undersigned receives notice of such LC Disbursement, if such notice is received prior to 10:00 a.m., New York City time, or (ii) the Business Day immediately following the day that the undersigned receives such notice, if such notice is received on a day which is not a Business Day or is not received prior to 10:00 a.m., New York City time, on a Business Day.  The undersigned's obligations to reimburse you as provided in the foregoing sentence shall be absolute, unconditional and

 

 

 

irrevocable, and shall be performed strictly in accordance with the terms of this letter agreement under any and all circumstances whatsoever, and irrespective of any event or circumstance of the type described in Section 2.11(b) of the Credit Agreement (or of any analogous event or circumstance relating to the undersigned).

If any LC Disbursement is made by you, then, unless the undersigned shall reimburse the amount of such LC Disbursement to you in full on the date such LC Disbursement is made by you, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date of reimbursement, at the rate per annum equal to (i) the Federal Funds Rate to but excluding the date three Business Days after such LC Disbursement and (ii) from and including the date three Business Days after such LC Disbursement, 2% plus the Federal Funds Rate.

This letter agreement shall be governed by and construed in accordance with the law of the State of New York.

Please indicate your acceptance of the foregoing terms and conditions by signing the three enclosed copies of this letter agreement and returning (a) one such signed copy to the undersigned at the address indicated above, (b) one such signed copy to the Administrative Agent at JPMorgan Chase Bank, N.A., 500 Stanton Christiana Road, Ops 2, Floor 03, Newark, Delaware 19713-2107, Attention:  Loan and Agency Services (Tel. No. (302) 634-8802; Fax No. (302) 634-4733) and (c) one such signed copy to the Company at its address specified in Section 10.01 of the Credit Agreement.

[NAME OF ISSUING BANK]

By____________________________

  Title:

AGREED AS AFORESAID:

[NAME OF CONFIRMING BANK]

By___________________________

Title:

 

 

 

EXHIBIT F

 

[Form of Subsidiary Joinder Agreement]

[________], 201[_]

To JPMorgan Chase Bank, N.A.,

as Administrative Agent

270 Park Avenue

New York, New York 10017

Each of the Banks party to the

Credit Agreement referred to below

Re:  Subsidiary Joinder Agreement

 

Ladies and Gentlemen:

Reference is made to the Credit Agreement (the "Credit Agreement") dated as of June 30, 2016 among Lincoln National Corporation (the "Company"), the Subsidiary Account Parties party thereto, the Banks party thereto and JPMorgan Chase Bank, N.A., as the Administrative Agent (the "Administrative Agent").  Capitalized terms used but not defined herein shall have the respective meanings assigned to such terms in the Credit Agreement.

The Company and the "Subject Subsidiary" (as identified on the signature pages below), have executed and hereby deliver this Subsidiary Joinder Agreement, pursuant to Section 10.13(a) of the Credit Agreement, in order to designate the Subject Subsidiary as a Subsidiary Account Party to the Credit Agreement.

Accordingly, the Company and the Subject Subsidiary hereby represent and warrant and agree that as of the "Effective Date" (as defined below):

1.  the Subject Subsidiary is a direct or indirect wholly-owned Subsidiary of the Company;

 

2.  the Subject Subsidiary is subject to and bound by each of the obligations, of an Account Party, including a Subsidiary Account Party, contained in the Credit Agreement as if the Subject Subsidiary were an original signatory to such Credit Agreement;

 

3.  each of the representations and warranties contained in the Credit Agreement (other than the representations and warranties set forth in Sections 4.04(e) and 4.05 thereof as to any matter which has theretofore been disclosed in writing by the Account Parties to the Banks) are true with the same force and effect as if made on and as of the Effective Date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);

 

4.  the Guarantee of the Company contained in Article IX of the Credit Agreement applies to all of the obligations of the Subject Subsidiary pursuant thereto;

 

5.  the Subject Subsidiary's addresses for notices, other communications and service of process provided for in the Credit Agreement shall be given in the manner, and with the effect,

 

 

 

specified in Sections 10.01 and 10.09(c) of the Credit Agreement to it at its "Address for Notices" specified on the signature pages below; and

This Subsidiary Joinder Agreement shall become effective as of the date (the "Effective Date") on which the Administrative Agent accepts this Subsidiary Joinder Agreement as provided on the signature pages below.  As of the Effective Date, the Subject Subsidiary shall be entitled to the rights, and subject to the obligations, of an Account Party, including a Subsidiary Account Party, contained in the Credit Agreement.  Except as expressly herein agreed with respect to the joinder of the Subject Subsidiary as a Subsidiary Account Party, the Credit Agreement shall remain unchanged and in full force and effect.

This Subsidiary Joinder Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same agreement.  This Subsidiary Joinder Agreement shall be governed by, and construed in accordance with, the law of the State of New York.

 

 

 

COMPANY

LINCOLN NATIONAL CORPORATION

By:________________________

     Name:

     Title:

SUBJECT SUBSIDIARY

[_____________________]

a [__________________] [corporation]

By:______________________

     Name:

     Title:

Address for Notices

[______________________]

[______________________]

[______________________]

Attn:____________________

Tel:[________________]

Fax:[________________]

Agreed and Accepted:

this [______] [th] day of

[________], 201[_]

JPMORGAN CHASE BANK, N.A.,

  as Administrative Agent

By:___________________________

     Name:

     Title

 

 

 

EXHIBIT G

SUBSIDIARY TERMINATION NOTICE

[Date]

To:                   JPMorgan Chase Bank, N.A. (the "Administrative Agent")

From:              Lincoln National Corporation (the "Company")

Re:         Credit Agreement (the "Credit Agreement") dated as of June 30, 2016 among the Company, the Subsidiary Account Parties party thereto, the Banks party thereto (the "Banks") and the Administrative Agent

The Company hereby gives notice pursuant to Section 10.13(b) of the Credit Agreement that, effective as of the date hereof, [________] is terminated as an Account Party under the Credit Agreement and all commitments by the Banks to issue Letters of Credit for account of such Account Party under the Credit Agreement are hereby terminated.

Pursuant to Section 10.13(b) of the Credit Agreement, the Company hereby certifies that there is no LC Exposure outstanding with respect to any Letter of Credit with respect to which [_________] is the Account Party.

All obligations of [________] arising in respect of any period in which [_________] was, or on account of any action or inaction taken by [________] as, an Account Party under the Credit Agreement shall survive the termination effected by this notice.

Terms used herein have the meanings assigned to them in the Credit Agreement.

LINCOLN NATIONAL CORPORATION

By____________________________

Authorized OfficerExhibit 4.1

FORM OF INDENTURE

between

BMW VEHICLE OWNER TRUST 2016-A,

 as Issuer,

and

U.S. BANK NATIONAL ASSOCIATION,

 as Indenture Trustee

Dated as of July 20, 2016

TABLE OF CONTENTS

Page

	
ARTICLE I.

	
DEFINITIONS AND INCORPORATION BY REFERENCE

	
2

	
SECTION 1.01.

	
Definitions

	
2

	
SECTION 1.02.

	
Other Definitional Provisions

	
10

	
SECTION 1.03.

	
Incorporation by Reference of Trust Indenture Act

	
11

	
ARTICLE II.

	
THE NOTES

	
11

	
SECTION 2.01.

	
Form

	
11

	
SECTION 2.02.

	
Execution, Authentication and Delivery

	
12

	
SECTION 2.03.

	
Temporary Notes

	
12

	
SECTION 2.04.

	
Registration; Registration of Transfer and Exchange

	
13

	
SECTION 2.05.

	
[Reserved]

	
14

	
SECTION 2.06.

	
Mutilated, Destroyed, Lost or Stolen Notes

	
14

	
SECTION 2.07.

	
Persons Deemed Owners

	
15

	
SECTION 2.08.

	
Payment of Principal and Interest; Defaulted Interest

	
15

	
SECTION 2.09.

	
Cancellation

	
16

	
SECTION 2.10.

	
Book-Entry Notes

	
17

	
SECTION 2.11.

	
Notices to Clearing Agency

	
17

	
SECTION 2.12.

	
Definitive Notes

	
18

	
SECTION 2.13.

	
Authenticating Agents

	
18

	
SECTION 2.14.

	
Tax Treatment

	
19

	
ARTICLE III.

	
COVENANTS

	
19

	
SECTION 3.01.

	
Payment of Principal and Interest

	
19

	
SECTION 3.02.

	
Maintenance of Office or Agency

	
19

	
SECTION 3.03.

	
Money for Payments To Be Held in Trust

	
19

	
SECTION 3.04.

	
Existence

	
21

	
SECTION 3.05.

	
Protection of Trust Estate

	
21

	
SECTION 3.06.

	
Opinions as to Trust Estate

	
22

	
SECTION 3.07.

	
Performance of Obligations; Servicing of Receivables

	
22

	
SECTION 3.08.

	
Negative Covenants

	
24

	
SECTION 3.09.

	
Annual Statement and Assessment as to Compliance

	
24

	
SECTION 3.10.

	
Issuer May Consolidate, etc., Only on Certain Terms

	
25

	
SECTION 3.11.

	
Successor or Transferee

	
27

 

ii

	
SECTION 3.12.

	
No Other Business

	
27

	
SECTION 3.13.

	
No Borrowing

	
27

	
SECTION 3.14.

	
Servicer’s Obligations

	
27

	
SECTION 3.15.

	
Guarantees, Loans, Advances and Other Liabilities

	
27

	
SECTION 3.16.

	
Capital Expenditures

	
28

	
SECTION 3.17.

	
Removal of Administrator

	
28

	
SECTION 3.18.

	
Restricted Payments

	
28

	
SECTION 3.19.

	
Notice of Events of Default

	
28

	
SECTION 3.20.

	
Further Instruments and Acts

	
28

	
SECTION 3.21.

	
Perfection Representations

	
28

	
ARTICLE IV.

	
SATISFACTION AND DISCHARGE

	
29

	
SECTION 4.01.

	
Satisfaction and Discharge of Indenture

	
29

	
SECTION 4.02.

	
Application of Trust Money

	
30

	
SECTION 4.03.

	
Repayment of Moneys Held by Paying Agent

	
30

	
SECTION 4.04.

	
Release of Collateral

	
30

	
ARTICLE V.

	
REMEDIES

	
30

	
SECTION 5.01.

	
Events of Default

	
30

	
SECTION 5.02.

	
Acceleration of Maturity; Rescission and Annulment

	
32

	
SECTION 5.03.

	
Collection of Indebtedness and Suits for Enforcement by Indenture Trustee

	
33

	
SECTION 5.04.

	
Remedies; Priorities

	
35

	
SECTION 5.05.

	
Optional Preservation of the Receivables

	
37

	
SECTION 5.06.

	
Limitation of Suits

	
38

	
SECTION 5.07.

	
Unconditional Rights of Noteholders To Receive Principal and Interest

	
38

	
SECTION 5.08.

	
Restoration of Rights and Remedies

	
39

	
SECTION 5.09.

	
Rights and Remedies Cumulative

	
39

	
SECTION 5.10.

	
Delay or Omission Not a Waiver

	
39

	
SECTION 5.11.

	
Control by Noteholders

	
39

	
SECTION 5.12.

	
Waiver of Past Defaults

	
40

	
SECTION 5.13.

	
Undertaking for Costs

	
40

	
SECTION 5.14.

	
Waiver of Stay or Extension Laws

	
40

	
SECTION 5.15.

	
Action on Notes

	
41

 

iii

	
SECTION 5.16.

	
Performance and Enforcement of Certain Obligations

	
41

	
ARTICLE VI.

	
THE INDENTURE TRUSTEE

	
42

	
SECTION 6.01.

	
Duties of Indenture Trustee

	
42

	
SECTION 6.02.

	
Rights of Indenture Trustee

	
44

	
SECTION 6.03.

	
Individual Rights of Indenture Trustee

	
45

	
SECTION 6.04.

	
Indenture Trustee’s Disclaimer

	
45

	
SECTION 6.05.

	
Notice of Defaults

	
46

	
SECTION 6.06.

	
Reports by Indenture Trustee to Holders

	
46

	
SECTION 6.07.

	
Compensation and Indemnity

	
46

	
SECTION 6.08.

	
Replacement of Indenture Trustee

	
47

	
SECTION 6.09.

	
Successor Indenture Trustee by Merger

	
48

	
SECTION 6.10.

	
Appointment of Co-Indenture Trustee or Separate Indenture Trustee

	
48

	
SECTION 6.11.

	
Eligibility; Disqualification

	
49

	
SECTION 6.12.

	
Preferential Collection of Claims Against Issuer

	
49

	
SECTION 6.13.

	
Waiver of Setoffs

	
50

	
SECTION 6.14.

	
Licenses

	
50

	
SECTION 6.15.

	
Additional Duties

	
50

	
ARTICLE VII.

	
NOTEHOLDERS’ LISTS AND REPORTS

	
50

	
SECTION 7.01.

	
Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders

	
50

	
SECTION 7.02.

	
Preservation of Information; Communications to Noteholders

	
50

	
SECTION 7.03.

	
Reports by Issuer

	
51

	
SECTION 7.04.

	
Reports by Indenture Trustee

	
52

	
ARTICLE VIII.

	
ACCOUNTS, DISBURSEMENTS AND RELEASES

	
52

	
SECTION 8.01.

	
Collection of Money

	
52

	
SECTION 8.02.

	
Trust Accounts

	
52

	
SECTION 8.03.

	
General Provisions Regarding Accounts

	
54

	
SECTION 8.04.

	
Release of Trust Estate

	
55

	
SECTION 8.05.

	
Opinion of Counsel

	
55

	
ARTICLE IX.

	
SUPPLEMENTAL INDENTURES

	
56

 

iv

	
SECTION 9.01.

	
Supplemental Indentures Without Consent of Noteholders

	
56

	
SECTION 9.02.

	
Supplemental Indentures with Consent of Noteholders

	
57

	
SECTION 9.03.

	
Execution of Supplemental Indentures

	
58

	
SECTION 9.04.

	
Effect of Supplemental Indenture

	
59

	
SECTION 9.05.

	
Reference in Notes to Supplemental Indentures

	
59

	
SECTION 9.06.

	
Conformity with Trust Indenture Act

	
59

	
ARTICLE X.

	
REDEMPTION OF NOTES

	
59

	
SECTION 10.01.

	
Redemption

	
59

	
SECTION 10.02.

	
Form of Redemption Notice

	
60

	
SECTION 10.03.

	
Notes Payable on Redemption Date

	
60

	
ARTICLE XI.

	
MISCELLANEOUS

	
60

	
SECTION 11.01.

	
Compliance Certificates and Opinions, etc

	
60

	
SECTION 11.02.

	
Form of Documents Delivered to Indenture Trustee

	
62

	
SECTION 11.03.

	
Acts of Noteholders

	
63

	
SECTION 11.04.

	
Notices, etc., to Indenture Trustee, Issuer and Rating Agencies

	
63

	
SECTION 11.05.

	
Notices to Noteholders; Waiver

	
64

	
SECTION 11.06.

	
Effect of Headings and Table of Contents

	
64

	
SECTION 11.07.

	
Successors and Assigns

	
64

	
SECTION 11.08.

	
Separability

	
65

	
SECTION 11.09.

	
Benefits of Indenture

	
65

	
SECTION 11.10.

	
Legal Holidays

	
65

	
SECTION 11.11.

	
Governing Law

	
65

	
SECTION 11.12.

	
Counterparts

	
65

	
SECTION 11.13.

	
Recording of Indenture

	
65

	
SECTION 11.14.

	
Trust Obligation

	
65

	
SECTION 11.15.

	
No Petition

	
66

	
SECTION 11.16.

	
Inspection

	
66

	
SECTION 11.17.

	
Conflict with Trust Indenture Act

	
66

	
SECTION 11.18.

	
Limitation of Liability

	
66

	
SECTION 11.19.

	
Intent of the Parties; Reasonableness

	
67

	
SECTION 11.20.

	
Communications with Rating Agencies

	
67

 

v

	
ARTICLE XII.

	
COMPLIANCE WITH THE FDIC RULE

	
68

	
SECTION 12.01.

	
Purpose

	
68

	
SECTION 12.02.

	
Requirements of the FDIC Rule

	
69

	
SECTION 12.03.

	
Performance

	
71

	
SECTION 12.04.

	
Effect of Section 941 Rules

	
71

	
SECTION 12.05.

	
Actions Upon Repudiation

	
71

	
SECTION 12.06.

	
Notice

	
73

	
SECTION 12.07.

	
Reservation of Rights

	
73

	
ARTICLE XIII.

	
ASSET REPRESENTATIONS REVIEW

	
74

	
SECTION 13.01.

	
Noteholder and Note Owner Requests for Vote on Asset Representations Review

	
74

	
SECTION 13.02.

	
Noteholder and Note Owner Vote on Asset Representations Review

	
74

	
SECTION 13.03.

	
Evaluation of Review Report

	
75

	
SECTION 13.04.

	
Dispute Resolution

	
75

SCHEDULES AND EXHIBITS

	
SCHEDULE A

	
Schedule of Receivables

	
SCHEDULE B

	
Perfection Representations, Warranties and Covenants

	
EXHIBIT A-1

	
Form of Class A-1 Note

	
EXHIBIT A-2

	
Form of Class A-2a Note

	
EXHIBIT A-3

	
Form of Class A-2b Note

	
EXHIBIT A-4

	
Form of Class A-3 Note

	
EXHIBIT A-5

	
Form of Class A-4 Note

	
EXHIBIT B

	
Servicing Criteria to be Addressed in Assessment of Compliance

vi

THIS INDENTURE, dated as of July 20, 2016, is between BMW VEHICLE OWNER TRUST 2016-A, a Delaware statutory trust (the “Issuer”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee and not in its individual capacity (the “Indenture Trustee”).

Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Issuer’s 0.62000% Asset Backed Notes, Class A-1 (the “Class A-1 Notes”), 0.99% Asset Backed Notes, Class A-2a (the “Class A-2a Notes”), LIBOR plus 0.24% Asset Backed Notes, Class A-2b (the “Class A-2b Notes”), 1.16% Asset Backed Notes, Class A-3 (the “Class A-3 Notes”) and 1.37% Asset Backed Notes, Class A-4 (the “Class A-4 Notes” and, collectively with the Class A-1 Notes, the Class A-2a Notes, the Class A-2b Notes and the Class A-3 Notes, the “Notes”):

GRANTING CLAUSE

The Issuer hereby Grants to the Indenture Trustee at the Closing Date, as Indenture Trustee for the benefit of the Holders of the Notes, all of the Issuer’s right, title and interest in and to the following assets and property, whether now owned or existing or hereafter acquired or arising: (a) the Receivables and all moneys received thereon after the close of business on May 31, 2016; (b) the security interests in the Financed Vehicles and any accessions thereto granted by Obligors pursuant to the Receivables and any other interest of the Issuer in such Financed Vehicles; (c) any Liquidation Proceeds and Recoveries, and any other proceeds with respect to the Receivables from claims on any theft, physical damage, credit life or disability insurance policies covering Financed Vehicles or Obligors, including any vendor’s single interest or other collateral protection insurance policy; (d) all proceeds from any Receivables repurchased by a Dealer pursuant to a Dealer Agreement; (e) any property that shall have secured a Receivable and that shall have been acquired by or on behalf of a Seller, the Depositor, the Servicer, or the Issuer; (f) all documents and other items contained in the Receivable Files; (g) the Trust Accounts and all funds on deposit from time to time in the Trust Accounts and in all investments therein and proceeds thereof (including all Investment Earnings thereon); (h) the Issuer’s rights and benefits, but none of its obligations, under the Sale and Servicing Agreement (including the Issuer’s right to cause the Sellers or the Servicer, as the case may be, to repurchase Receivables from the Issuer under the circumstances described therein); (i) the Depositor’s and the Issuer’s rights and benefits under the Receivables Purchase Agreements, including the representations and warranties and the cure and repurchase obligations of the Sellers thereunder, and the Sale and Servicing Agreement; and (j) all present and future claims, demands, causes of action 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 thereof, 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 that at any time constitute all or part of or are included in the proceeds of any of the foregoing (collectively, the “Collateral”).

The foregoing Grant is made in trust to secure the payment of principal of and interest on, and any other amounts owing in respect of, the Notes, equally and ratably without 

1

prejudice, priority or distinction, and to secure compliance with the provisions of this Indenture, all as provided in this Indenture.

The Indenture Trustee, on behalf of the Holders of the Notes, acknowledges such Grant, accepts the trusts under this Indenture in accordance with the provisions of this Indenture and agrees to perform its duties required in this Indenture to the best of its ability to the end that the interests of the Holders of the Notes may be adequately and effectively protected.

ARTICLE I.

 DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.     Definitions.

(a)     Definitions.  Except as otherwise specified herein or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Indenture.

“Act” has the meaning specified in Section 11.03(a).

“Administration Agreement” means the Owner Trust Administration Agreement, dated as of July 20, 2016, among the BMW FS, as owner trust administrator, the Issuer and the Indenture Trustee.

“Administrator” means BMW FS, or any successor owner trust administrator under the Administration Agreement.

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

“Asset Representations Review Agreement” means the Asset Representations Review Agreement, dated as of July 20, 2016, among the Asset Representations Reviewer, the Issuer and the Servicer.

“Asset Representations Reviewer” means Clayton Fixed Income Services LLC, or any successor Asset Representations Reviewer under the Asset Representations Review Agreement.

“Authenticating Agents” has the meaning specified in Section 2.13.

“Authorized Officer” means, with respect to the Issuer, any officer of the Owner Trustee who is authorized to act for the Owner Trustee in matters relating to the Issuer and, so long as the Administration Agreement is in effect, any Vice President or more senior officer of the Administrator who is authorized to act for the Administrator in matters relating to the Issuer

2

and to be acted upon by the Administrator pursuant to the Administration Agreement and who is identified on the list of Authorized Officers delivered by the Administrator to the Indenture Trustee on the Closing Date (as such list may be modified or supplemented from time to time thereafter).

“BMW Bank” means BMW Bank of North America and its successors and assigns.

“BMW FS” means BMW Financial Services NA, LLC, a Delaware limited liability company, and its successors and assigns.

“Book-Entry Notes” means a beneficial interest in the Notes, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.10.

“Business Day” shall have the meaning assigned thereto in the Sale and Servicing Agreement.

“Class A-1 Notes” means the 0.62000% Asset Backed Notes, Class A-1, substantially in the form of Exhibit A-1.

“Class A-1 Rate” means 0.62000% per annum.

“Class A-2a Notes” means the 0.99% Asset Backed Notes, Class A-2a, substantially in the form of Exhibit A-2.

“Class A-2a Rate” means 0.99% per annum.

“Class A-2b Notes” means the LIBOR plus 0.24% Asset Backed Notes, Class A-2b, substantially in the form of Exhibit A-3.

“Class A-2b Rate” means LIBOR plus 0.24% per annum.

“Class A-3 Notes” means the 1.16% Asset Backed Notes, Class A-3, substantially in the form of Exhibit A-4.

“Class A-3 Rate” means 1.16% per annum.

“Class A-4 Notes” means the 1.37% Asset Backed Notes, Class A-4, substantially in the form of Exhibit A-5.

“Class A-4 Rate” means 1.37% per annum.

“Clearing Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act.

“Clearing Agency Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.

3

“Closing Date” means July 20, 2016.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and Treasury Regulations promulgated thereunder.

“Collateral” has the meaning specified in the Granting Clause of this Indenture.

“Corporate Trust Office” means the office of the Indenture Trustee at which at any particular time the Indenture is administered, which office at the date of execution of this Indenture is located at (i) solely for the purposes of the transfer, surrender or exchange of Notes, U.S. Bank National Association, 111 Fillmore Avenue East, EP-MN-WS2N, St. Paul, Minnesota 55107, Attn: Bondholder Services/BMW Vehicle Owner Trust 2016-A, and (ii) for all other purposes, U. S. Bank National Association, 190 South LaSalle Street, 7th Floor, Chicago, Illinois 60603, Attn: BMW Vehicle Owner Trust 2016-A, or at such other address as the Indenture Trustee may designate from time to time by notice to the Noteholders and the Issuer, or the principal corporate trust office of any successor Indenture Trustee at the address designated by such successor Indenture Trustee by notice to the Noteholders and the Issuer.

“Debt Opinion” means one or more written tax opinions to the effect that the Notes “will be debt” for U.S. federal income tax purposes from counsel which counsel shall be reasonably satisfactory to the Issuer, the Owner Trustee and the Indenture Trustee.

“Default” means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default.

“Definitive Notes” has the meaning specified in Section 2.10.

“Deposit Date” means the Business Day prior to each Payment Date.

“Depositor” means BMW FS Securities LLC and its successors and assigns.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

“Event of Default” has the meaning specified in Section 5.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Executive Officer” means, with respect to any corporation, the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, President, any Executive Vice President, any Senior Vice President, any Vice President, the Secretary, the Controller or the Treasurer of such corporation; and with respect to any partnership, any general partner thereof.

“FDIC” means the Federal Deposit Insurance Corporation.

“FDIC Principal Amount” means, with respect to the applicable distribution date pursuant to Section 12.05, an amount equal to the sum of the First Priority Principal Distribution Amount and the Regular Principal Distribution Amount, if any; provided, that, if such

4

distribution date occurs on a day that is not also a Payment Date, then for purposes of calculating the First Priority Principal Distribution Amount and the Regular Principal Distribution Amount (and the related Target Overcollateralization Amount, Adjusted Pool Balance, Pool Balance and Yield Supplement Overcollateralization Amount referenced in those defined terms), the “Payment Date” as of which such amounts are calculated will be the applicable distribution date under Section 12.05.

“FDIC Rule” means the FDIC’s rule regarding the treatment by the FDIC, as receiver or conservator of an insured depository institution, of financial assets transferred by the institution in connection with a securitization or participation (12 C.F.R. § 360.6).

“FDIC Rule Parties” means, collectively, BMW Financial Services NA, LLC, BMW FS Securities LLC, BMW Vehicle Owner Trust 2016-A and BMW Bank of North America.

“Final Scheduled Payment Date” means the Class A-1 Final Scheduled Payment Date, the Class A-2a Final Scheduled Payment Date, the Class A-2b Final Scheduled Payment Date, the Class A-3 Final Scheduled Payment Date or the Class A-4 Final Scheduled Payment Date, as applicable, as those terms are defined in the Sale and Servicing Agreement.

“Force Majeure” means any delay or failure in performance caused by acts beyond the applicable party’s reasonable control, including acts of God, war, vandalism, sabotage, accidents, fires, floods, strikes, labor disputes, mechanical breakdown, shortages or delays in obtaining suitable parts or equipment, material, labor, or transportation, acts of subcontractors, interruption of utility services, acts of any unit of government or governmental agency, or any similar or dissimilar cause.

“Grant” means mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, create, and grant a lien upon and a security interest in and a right of set-off against, deposit, set over and confirm pursuant to this Indenture.  A Grant of the Collateral or of any other agreement or instrument shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for principal and interest payments in respect of the Collateral and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the granting party or otherwise, and generally to do and receive anything that the granting party is or may be entitled to do or receive thereunder or with respect thereto.

“Holder” or “Noteholder” means a Person in whose name a Note is registered on the Note Register.

“Indenture Trustee” means U.S. Bank National Association, a national banking association, not in its individual capacity, but as Indenture Trustee under this Indenture, or any successor Indenture Trustee under this Indenture.

“Indenture Trustee Fee” means an annual fee equal to $2,700, payable on the Payment Date occurring in August of each year, commencing in August 2017.

5

“Independent” means, when used with respect to any specified Person, that such Person (a) is in fact independent of the Issuer, any other obligor on the Notes, the Sellers and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the Issuer, any such other obligor, the Sellers or any Affiliate of any of the foregoing Persons and (c) is not connected with the Issuer, any such other obligor, the Sellers or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.

“Independent Certificate” means a certificate or opinion to be delivered to the Indenture Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.01, made by an Independent appraiser or other expert appointed by an Issuer Order, and such opinion or certificate shall state that the signer has read the definition of “Independent” in this Indenture and that the signer is Independent within the meaning thereof.

“Interest Rate” means the Class A-1 Rate, the Class A-2a Rate, the Class A-2b Rate, the Class A-3 Rate or the Class A-4 Rate, as the context may require.

“Issuer” means BMW Vehicle Owner Trust 2016-A until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the Notes.

“Issuer Order” or “Issuer Request” means a written order or request signed in the name of the Issuer by any one of its Authorized Officers and delivered to the Indenture Trustee.

“Later Sold Note” has the meaning specified in Section 2.04.

“Note” means a Class A-1 Note, Class A-2a Note, Class A-2b Note, Class A-3 Note or Class A-4 Note, as the context may require.

“Note Depository Agreement” means the letter of representations relating to the Notes, dated July 20, 2016, executed by the Issuer and delivered to The Depository Trust Company, as the initial Clearing Agency.

“Note Owner” means, with respect to a Book-Entry Note, the Person who is the beneficial owner of such Book-Entry Note, as reflected on the books of the Clearing Agency or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency).

“Note Register” and “Note Registrar” have the respective meanings specified in Section 2.04.

“Officer’s Certificate” means a certificate signed by any Authorized Officer of the Issuer, under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.01, and delivered to the Indenture Trustee.  Unless otherwise specified, any reference in this Indenture to an Officer’s Certificate shall be to an Officer’s Certificate of any Authorized Officer of the Issuer.

6

“Opinion of Counsel” means one or more written opinions of counsel who may, except as otherwise expressly provided in this Indenture, be an employee of or counsel to the Issuer or the Administrator and who shall be satisfactory to the Indenture Trustee, and which opinion or opinions shall be addressed to the Indenture Trustee, shall comply with any applicable requirements of Section 11.01 and shall be in form and substance satisfactory to the Indenture Trustee.

“Outstanding” means, as of any date of determination, all Notes theretofore authenticated and delivered under this Indenture except:

(i)     Notes theretofore cancelled by the Note Registrar or  delivered to the Note Registrar for cancellation;

(ii)     Notes or portions thereof the payment for which money  in the necessary amount has been theretofore deposited with the  Indenture Trustee or any Paying Agent in trust for the Holders of  such Notes (provided, however, that if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to this  Indenture or provision for such notice has been made, satisfactory to the Indenture Trustee); and

(iii)     Notes in exchange for or in lieu of which other  Notes have been authenticated and delivered pursuant to this  Indenture unless proof satisfactory to the Indenture Trustee is  presented that any such Notes are held by a bona fide purchaser;

provided, however, that in determining whether the Holders of the requisite Outstanding Amount of the Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any Basic Document, Notes owned by the Issuer, the Depositor, the Sponsor, the Servicer (so long as BMW FS of one of its affiliates is the Servicer), the Sellers or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes that a Responsible Officer of the Indenture Trustee actually knows to be so owned shall be so disregarded.  Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Issuer, the Depositor, the Servicer, the Sellers or any Affiliate of any of the foregoing Persons.

“Outstanding Amount” means, as of any date of determination and as to any Notes, the aggregate principal amount of such Notes Outstanding as of such date of determination.

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

“Paying Agent” means the Indenture Trustee or any other Person that meets the eligibility standards for the Indenture Trustee specified in Section 6.11 and is authorized by the

7

Issuer to make payments to and distributions from the Collection Account, the Note Distribution Account and the Reserve Account, including payments of principal of or interest on the Notes on behalf of the Issuer.

“Payment Date” means the 25th day of each month, or if any such date is not a Business Day, the next succeeding Business Day, commencing in August 2016.

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

“Predecessor Note” means, with respect to any particular Note, every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section 2.06 in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note.

“Proceeding” means any suit in equity, action at law or other judicial or administrative proceeding.

“Receivables” means any contract listed on Schedule A (which Schedule may be in the form of microfiche).

“Receivables Purchase Agreement” means each of (i) the Receivables Purchase Agreement, dated as of July 20, 2016, between BMW FS, as Seller, and the Depositor and (ii) the Receivables Purchase Agreement, dated as of July 20, 2016, between BMW Bank, as Seller, and the Depositor.

“Record Date” means, as to any Payment Date or the Redemption Date (i) if the Notes are issued in book-entry form, the close of business on the Business Day immediately preceding such Payment Date or the Redemption Date and (ii) if the Notes are issued in definitive form, the last Business Day of the month preceding such Payment Date or the Redemption Date.

“Redemption Date” means, as the context requires, in the case of a redemption of the Notes pursuant to Section 10.01, the Payment Date specified by the Servicer or the Issuer pursuant to Section 10.01.

“Redemption Price” means in the case of a redemption of the Notes pursuant to Section 10.01, an amount equal to the unpaid principal amount of the Notes redeemed plus accrued and unpaid interest thereon at the Interest Rate for each Note being so redeemed on such Redemption Date.

“Registered Holder” means the Person in whose name a Note is registered on the Note Register on the applicable Record Date.

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“Regulation AB” means Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1125, as such may be amended from time to time, and subject to such clarification and interpretation as have been provided by the Commission in the adopting releases (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005) and Asset-Backed Securities Disclosure and Registration, Securities Act Release No. 33-9638, 79 Fed. Reg. 57,184 (Sept. 24, 2014)) or by the staff of the Commission, or as may be provided by the Commission or its staff from time to time.

“Responsible Officer” means, with respect to the Indenture Trustee or Owner Trustee, as applicable, any officer within the Corporate Trust Office or successor group of the Indenture Trustee or the Owner Trustee, respectively, including any Vice President, Assistant Vice President, Assistant Treasurer, Assistant Secretary or any other officer of the Indenture Trustee or the Owner Trustee, respectively, customarily performing functions similar to those performed by any of the above designated officers and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject, in each case having direct responsibility for the administration of the Basic Documents.

“Retained Notes” means the portion of the Notes retained by the Issuer or its affiliates on the Closing Date.

“Sale and Servicing Agreement” means the Sale and Servicing Agreement, dated as of July 20, 2016, among the Issuer, the Depositor, BMW FS, as Sponsor, Servicer, Custodian and Administrator, and the Indenture Trustee.

“Schedule of Receivables” means the list of Receivables set forth in Schedule A (which Schedule may be in the form of microfiche).

“Securities Act” means the Securities Act of 1933, as amended.

“Seller” means each of (i) BMW FS and (ii) BMW Bank, each in its capacity as Seller under the applicable Receivables Purchase Agreement, and their respective successors in interest.

“Servicer” means BMW FS, in its capacity as servicer under the Sale and Servicing Agreement, and any Successor Servicer thereunder.

“Servicing Criteria” means the “servicing criteria” set forth in Item 1122(d) of Regulation AB, as such may be amended from time to time.

“Sponsor” means BMW FS, in its capacity as sponsor under the Sale and Servicing Agreement, and any successor Sponsor thereunder.

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

“Successor Servicer” has the meaning specified in Section 3.07(f).

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“Trust Agreement” means the Amended and Restated Trust Agreement, dated as of July 20, 2016, between the Depositor and Wilmington Trust, National Association, as Owner Trustee.

“Trust Estate” means all money, instruments, rights and other property that are subject or intended to be subject to the lien and security interest of this Indenture for the benefit of the Noteholders (including, without limitation, all property and interests Granted to the Indenture Trustee), including all proceeds thereof.

“Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939, as amended and as in force on the date hereof, unless otherwise specifically provided.

“UCC” means, unless the context otherwise requires, the Uniform Commercial Code as in effect in the relevant jurisdiction, as amended from time to time.

“Verified Note Owner” has the meaning specified in Section 13.01.

(b)     Except as otherwise specified herein or as the context may otherwise require, capitalized terms used herein but not otherwise defined shall have the meanings ascribed thereto in the Sale and Servicing Agreement.

SECTION 1.02.     Other Definitional Provisions.

(a)     All terms defined in this Indenture shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

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

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

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

(e)     Any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or

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statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; references to a Person are also to its permitted successors and assigns.

SECTION 1.03.     Incorporation by Reference of Trust Indenture Act.  Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in and made a part of this Indenture.  The following TIA terms used in this Indenture have the following meanings:

“Commission” means the Securities and Exchange Commission.

“indenture securities” means the Notes.

“indenture security holder” means a Noteholder.

“indenture to be qualified” means this Indenture.

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

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

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

ARTICLE II.

 THE NOTES

SECTION 2.01.     Form.  The Class A-1 Notes, the Class A-2a Notes, the Class A-2b Notes, the Class A-3 Notes and the Class A-4 Notes, in each case together with the Indenture Trustee’s certificate of authentication, shall be in substantially the form set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4 and Exhibit A-5, respectively, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistent herewith, be determined by the officers executing the Notes, as evidenced by their execution of the Notes.  Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of such Note.

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

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

SECTION 2.02.     Execution, Authentication and Delivery.  The Notes shall be executed on behalf of the Issuer by any of its Authorized Officers.  The signature of any such Authorized Officer on the Notes may be manual or facsimile.

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

The Indenture Trustee shall upon Issuer Order authenticate and deliver Class A-1 Notes for original issue in an aggregate principal amount of $329,000,000, Class A-2a Notes for original issue in an aggregate principal amount of $325,000,000, Class A-2b Notes for original issue in an aggregate principal amount of $125,000,000, Class A-3 Notes for original issue in an aggregate principal amount of $356,000,000 and Class A-4 Notes for original issue in an aggregate principal amount of $115,000,000.  The aggregate principal amount of Class A-1 Notes, Class A-2a Notes, Class A-2b Notes, Class A-3 Notes and Class A-4 Notes outstanding at any time may not exceed such respective amounts except as provided in Section 2.06.

The Notes shall be issuable as registered Notes in minimum denominations of $1,000 and in integral multiples of $1,000 in excess thereof (except for one Note of each class which may be issued in a denomination other than an integral multiple of $1,000).

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

SECTION 2.03.     Temporary Notes.  Pending the preparation of Definitive Notes, the Issuer may execute, and upon receipt of an Issuer Order the Indenture Trustee shall authenticate and deliver, temporary Notes that are printed, lithographed, typewritten, mimeographed or otherwise produced, of the tenor of the Definitive Notes in lieu of which they are issued and with such variations not inconsistent with the terms of this Indenture as the officers executing such Notes may determine, as evidenced by their execution of such Notes.

If temporary Notes are issued, the Issuer shall cause Definitive Notes to be prepared without unreasonable delay.  After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender of the temporary Notes at the office or agency of the Issuer to be maintained as provided in Section 3.02, without charge to the Holder.  Upon surrender for cancellation of any one or more temporary Notes, the Issuer shall execute, and the Indenture Trustee shall authenticate and deliver in exchange therefor, a like principal amount of Definitive Notes of authorized denominations.  Until so exchanged, the

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

SECTION 2.04.     Registration; Registration of Transfer and Exchange.  The Issuer shall cause to be kept a register (the “Note Register”) in which, subject to such reasonable regulations as it may prescribe, the Note Registrar shall provide for the registration of Notes and the registration of all transfers of Notes.  The Indenture Trustee initially shall be the “Note Registrar” for the purpose of registering Notes and transfers of Notes as herein provided.  Upon any resignation of any Note Registrar, the Issuer shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Note Registrar.

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

Upon surrender for registration of transfer of any Note at the office or agency of the Issuer to be maintained as provided in Section 3.02, if the requirements of Section 8-401(a) of the UCC are met, the Issuer shall execute, and the Indenture Trustee shall authenticate and the Noteholder shall obtain from the Indenture Trustee, in the name of the designated transferee or transferees, one or more new Notes of the same Class in any authorized denominations, of a like aggregate principal amount.

At the option of the Holder, Notes may be exchanged for other Notes of the same Class in any authorized denominations, of a like aggregate principal amount, upon surrender of the Notes to be exchanged at the office or agency of the Issuer maintained as provided in Section 3.02.  Whenever any Notes are so surrendered for exchange, if the requirements of Section 8-401(a) of the UCC are met, the Issuer shall execute, and the Indenture Trustee, without having to verify that the requirements of 8-401(a) have been met, shall authenticate and the Noteholder shall obtain from the Indenture Trustee, the Notes that the Noteholder making the exchange is entitled to receive.

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

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

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“signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Exchange Act.

No service charge shall be made to a Holder for any registration of transfer or exchange of Notes, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 2.03 or 9.05 not involving any transfer.

The preceding provisions of this Section notwithstanding, the Issuer shall not be required to make and the Note Registrar need not register transfers or exchanges of Notes selected for redemption or of any Note for a period of 15 days preceding the due date for any payment with respect to the Note.

No Note, or any interest therein, may be transferred to an “employee benefit plan” within the meaning of Section 3(3) of ERISA, a “plan” described in Section 4975(e)(1) of the Code, any entity that is deemed to hold “plan assets” of any of the foregoing by reason of an employee benefit plan’s or other plan’s investment in such entity, unless such transferee represents, warrants and covenants that its purchase and holding of such note will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code because it will satisfy the requirements of an applicable prohibited transaction exemption and will not cause a non-exempt violation of any applicable law that is substantially similar to ERISA or Section 4975 of the Code.  By its acquisition of a Note in book-entry form or any interest therein, each transferee will be deemed to have represented, warranted and covenanted that it satisfies the foregoing requirements and the Indenture Trustee may relay conclusively on the same for purposes hereof.

With respect to any Retained Notes that are sold or otherwise transferred after the Closing Date (a “Later-Sold Note”), such sale or transfer shall not be effective unless (A) the Issuer, the Owner Trustee and the Indenture Trustee receive a Debt Opinion with respect to such sale or transfer of such Later-Sold Note (which such opinion shall include the Class, principal amount and CUSIP number of such Later-Sold Note) and (B) either (i) such Later-Sold Note has a CUSIP number that is different than that of any other outstanding Note immediately prior to such sale or can otherwise be separately tracked for reporting of original issue discount or (ii) for U.S. federal income tax purposes, such Later-Sold Note has the same issue price and issue date as any outstanding Notes that have the same CUSIP number as such Later-Sold Note.

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the transfer of Notes.

SECTION 2.05.     [Reserved].

SECTION 2.06.     Mutilated, Destroyed, Lost or Stolen Notes.  If (i) any mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the Indenture Trustee such security or indemnity as may be required by it to hold the Issuer and the Indenture Trustee harmless, then, in the absence of notice to the Issuer, the Note

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Registrar or a Responsible Officer of the Indenture Trustee that such Note has been acquired by a bona fide purchaser, and provided that the requirements of Section 8-405 of the UCC are met, the Issuer shall execute, and upon an Issuer Order the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note of the same Class; provided, however, that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall have become or within 15 days shall be due and payable, or shall have been called for redemption, instead of issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so due or payable or upon the Redemption Date without surrender thereof.  If, after the delivery of such replacement Note or payment of a destroyed, lost or stolen Note, a bona fide purchaser of the original Note in lieu of which such replacement Note was issued presents for payment such original Note, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Note (or such payment) from the Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such replacement Note was delivered or any assignee of such Person, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection therewith.

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

Every replacement Note issued pursuant to this Section in replacement of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

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

SECTION 2.07.     Persons Deemed Owners.  Prior to due presentment for registration of transfer of any Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name any Note is registered (as of the day of determination) as the owner of such Note for the purpose of receiving payments of principal of and interest, if any, on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and none of the Issuer, the Indenture Trustee or any agent of the Issuer or the Indenture Trustee shall be affected by notice to the contrary.

SECTION 2.08.     Payment of Principal and Interest; Defaulted Interest.

(a)     The Class A-1 Notes, the Class A-2a Notes, the Class A-2b Notes, the Class A-3 Notes and the Class A-4 Notes shall accrue interest at the Class A-1 Rate, the Class A-2a Rate, the Class A-2b Rate, the Class A-3 Rate and the Class A-4 Rate, respectively, as set

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forth in Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4 and Exhibit A-5, respectively, and such interest shall be payable on each Payment Date as specified therein, subject to Section 3.01.  Any installment of interest or principal payable on a Note that is punctually paid or duly provided for by the Issuer on the applicable Payment Date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered on the Record Date by wire transfer as directed by such Holder provided such Holder has provided written wiring instructions to the Indenture Trustee and otherwise by check mailed first-class postage prepaid to such Person’s address as it appears on the Note Register on such Record Date, except that, unless Definitive Notes have been issued pursuant to Section 2.12, with respect to Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payment shall be made by wire transfer in immediately available funds to the account designated by such nominee; provided, however, that the final installment of principal payable with respect to such Note on a Payment Date or on the related Final Scheduled Payment Date (including the Redemption Price for any Note called for redemption pursuant to Section 10.01) shall be payable as provided in paragraph (b) below.  The funds represented by any such checks returned undelivered shall be held in accordance with Section 3.03.

(b)     The principal of each Note shall be payable in installments on each Payment Date as provided in Section 3.01 and on any applicable distribution date pursuant to Section 12.05 and the forms of the Notes set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4 and Exhibit A-5.  Notwithstanding the foregoing, the entire unpaid principal amount of the Notes may be declared immediately due and payable, if not previously paid, in the manner provided in Section 5.02 on any date on which an Event of Default shall have occurred and be continuing by the Indenture Trustee or the Indenture Trustee acting at the direction of the Holders of Notes representing not less than a majority of the Outstanding Amount of the Notes.  All principal payments on each Class of Notes shall be made pro rata to the Noteholders of the related Class entitled thereto.  Upon written notice thereof, the Indenture Trustee shall notify the Person in whose name a Note is registered at the close of business on the Record Date preceding the Payment Date on which the Issuer expects the final installment of principal of and interest on such Note to be paid; provided, that such notice shall be not less than 15 days and not more than 30 days prior to such date.  Such notice shall specify that such final installment will be payable only upon presentation and surrender of such Note and shall specify the place where such Note may be presented and surrendered for payment of such installment.  Notices in connection with redemptions of Notes shall be mailed to Noteholders as provided in Section 10.02.

(c)     If the Issuer defaults in a payment of interest on the Notes, the Issuer shall pay defaulted interest (plus interest on such defaulted interest to the extent lawful) at the applicable Interest Rate in any lawful manner on the next Payment Date.

SECTION 2.09.     Cancellation.  All Notes surrendered for payment, registration of transfer, exchange or redemption shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly cancelled by the Indenture Trustee.  The Issuer may at any time deliver to the Indenture Trustee for cancellation any Notes previously authenticated and delivered hereunder that the Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Indenture Trustee.  No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section, except as expressly permitted by this Indenture.  All cancelled Notes

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may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time unless the Issuer shall direct by an Issuer Order that they be destroyed or returned to it; provided, that such Issuer Order is timely and the Notes have not been previously disposed of by the Indenture Trustee.

SECTION 2.10.     Book-Entry Notes.  The Notes, upon original issuance, will be issued in the form of typewritten Notes representing the Book-Entry Notes, to be delivered to the Indenture Trustee, as custodian for The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Issuer.  The Book-Entry Notes shall be registered initially on the Note Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Note Owner thereof will receive a Definitive Note representing such Note Owner’s interest in such Note, except as provided in Section 2.12.  Unless and until definitive, fully registered Notes (the “Definitive Notes”) have been issued to such Note Owners pursuant to Section 2.12:

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

(ii)     the Note Registrar and the Indenture Trustee shall be entitled to deal with the Clearing Agency for all purposes of this Indenture (including the payment of principal of and interest on the Notes and the giving of instructions or directions hereunder) as the sole Holder of the Notes, and shall have no obligation to the Note Owners;

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

(iv)     the rights of Note Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Note Owners and the Clearing Agency or the Clearing Agency Participants pursuant to the Note Depository Agreement.  Unless and until Definitive Notes are issued pursuant to Section 2.12, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit payments of principal of and interest on the Notes to such Clearing Agency Participants; and

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

SECTION 2.11.     Notices to Clearing Agency.  Whenever a notice or other communication to the Noteholders is required under this Indenture, unless and until Definitive Notes shall have been issued to such Note Owners pursuant to Section 2.12, the Indenture Trustee shall give all such notices and communications specified herein to be given to Holders of the Notes to the Clearing Agency, and shall have no obligation to such Note Owners.

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SECTION 2.12.     Definitive Notes.  If (i) the Administrator advises the Indenture Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities with respect to the Book-Entry Notes and the Administrator is unable to locate a qualified successor, (ii) the Depositor or the Administrator, at its option, with the consent of the Clearing Agency participants, advises the Indenture Trustee in writing that it elects to terminate the book-entry system, or (iii) after the occurrence of an Event of Default or a Servicer Termination Event, Note Owners of the Book-Entry Notes representing beneficial interests aggregating at least a majority of the Outstanding Amount of such Notes advise the Indenture Trustee through the Clearing Agency in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of such Note Owners, then the Clearing Agency shall notify all Note Owners, the Administrator and the Indenture Trustee of the occurrence of any such event and of the availability of Definitive Notes to Note Owners requesting the same.  Upon surrender to the Indenture Trustee of the typewritten Notes representing the Book-Entry Notes by the Clearing Agency, accompanied by registration instructions, the Issuer shall execute and the Indenture Trustee upon an Issuer Order shall authenticate the Definitive Notes in accordance with the written instructions of the Clearing Agency.  None of the Issuer, the Note Registrar, the Administrator or the Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions.  Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes as Noteholders.

The Indenture Trustee shall not be liable if a qualified successor Cleary Agency cannot be located.  The Definitive Notes shall be typewritten, printed, lithographed or engraved or produced by any combination of such methods (with or without steel engraved borders), all as determined by the officers executing the Notes, as evidenced by their execution of the Notes.

SECTION 2.13.     Authenticating Agents.  Upon the request of the Issuer, the Indenture Trustee shall, and if the Indenture Trustee so chooses the Indenture Trustee may, appoint one or more authenticating agents (“Authenticating Agents”) with power to act on its behalf and subject to its direction in the authentication of Notes in connection with issuance, transfers and exchanges under Sections 2.02, 2.04, 2.06 and 9.05, as fully to all intents and purposes as though each such Authenticating Agent had been expressly authorized by such Sections to authenticate such Notes.  For all purposes of this Indenture, the authentication of Notes by an Authenticating Agent pursuant to this Section shall be deemed to be the authentication of Notes by the Indenture Trustee.

Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, without the execution or filing of any further act on the part of the parties hereto or such Authenticating Agent or such successor corporation.

Any Authenticating Agent may at any time resign by giving written notice of resignation to the Indenture Trustee and the Issuer.  The Indenture Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Issuer.  Upon receiving such notice of resignation or upon such

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termination, the Indenture Trustee shall promptly appoint a successor Authenticating Agent and shall give written notice of such appointment to the Issuer.

The Issuer agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services and reimbursement for its reasonable expenses relating thereto.  The provisions of Sections 2.09 and 6.04 shall be applicable to any Authenticating Agent.

SECTION 2.14.     Tax Treatment.  The Issuer has entered into this Indenture, and the Notes will be issued, with the intention that, for purposes of federal and state income tax, franchise tax and any other tax measured in whole or in part by income, the Notes held by parties unrelated to the holders of the Certificates will qualify as indebtedness secured by the Trust Estate.  The Issuer, by entering into this Indenture, and each Noteholder, by its acceptance of a Note (and each Note Owner by its acceptance of a beneficial interest in the applicable Book-Entry Note), agree to treat the Notes for such purposes as indebtedness.

ARTICLE III.

 COVENANTS

SECTION 3.01.     Payment of Principal and Interest.  The Issuer will duly and punctually pay the principal of and interest, if any, on the Notes in accordance with the terms of the Notes and this Indenture.  Without limiting the foregoing, on each Payment Date and on any applicable distribution date pursuant to Section 12.05, the Issuer will cause to be distributed all amounts deposited pursuant to the Sale and Servicing Agreement or this Indenture, as applicable, into the Note Distribution Account in accordance with the priorities and amounts set forth herein and in the Sale and Servicing Agreement (i) for the benefit of the Class A-1 Notes, to the Class A-1 Noteholders, (ii) for the benefit of the Class A-2a Notes, to the Class A-2a Noteholders, (iii) for the benefit of the Class A-2b Notes, to the Class A-2b Noteholders, (iv) for the benefit of the Class A-3 Notes, to the Class A-3 Noteholders and (v) for the benefit of the Class A-4 Notes, to the Class A-4 Noteholders.  Amounts properly withheld under the Code by any Person from a payment to any Noteholder of interest or principal shall be considered as having been paid by the Issuer to such Noteholder for all purposes of this Indenture.

SECTION 3.02.     Maintenance of Office or Agency.  The Issuer will maintain at the applicable Corporate Trust Office, an office or agency where Notes may be surrendered for registration of transfer or exchange, and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served.  The Issuer hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes.  The Issuer will give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency.  If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent to receive all such surrenders, notices and demands.

SECTION 3.03.     Money for Payments To Be Held in Trust.  All payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the Collection Account, the Note Distribution Account and the Reserve Account shall be

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made on behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from the Collection Account, the Note Distribution Account or the Reserve Account for payments of Notes shall be paid to the Issuer except as provided in this Section.

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

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

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

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

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

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

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

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

Subject to applicable laws with respect to escheat of funds, any money held by the Indenture Trustee or any Paying Agent in trust for the payment of any amount due with respect

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

SECTION 3.04.     Existence.  Except as otherwise permitted by the provisions of Section 3.10, the Issuer will keep in full effect its existence, rights and franchises as a statutory trust under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes, organized under the laws of any other State or of the United States of America, in which case the Issuer will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the Notes, the Collateral and each other instrument or agreement included in the Trust Estate.

SECTION 3.05.     Protection of Trust Estate.  The Issuer will from time to time execute and deliver all such supplements and amendments hereto and all such financing statements, continuation statements, instruments of further assurance and other instruments, all as prepared by the Administrator and delivered to the Issuer, and shall take such other action necessary or advisable to:

(i)     Grant more effectively all or any portion of the Trust Estate;

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

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

(iv)     enforce any of the Collateral;

(v)     preserve and defend title to the Trust Estate and the rights of the Indenture Trustee and the Noteholders in such Trust Estate against the claims of all Persons and parties; or

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(vi)     pay all taxes or assessments levied or assessed upon the Trust Estate when due.

The Issuer hereby designates the Indenture Trustee, as its agent and attorney-in-fact, to execute upon an Issuer Order any financing statement, continuation statement or other instrument required to be executed pursuant to this Section 3.05.

SECTION 3.06.     Opinions as to Trust Estate.

(a)     On the Closing Date, the Issuer shall cause to be furnished to the Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken with respect to the recording and filing of this Indenture, any indentures supplemental hereto, and any other requisite documents, and with respect to the execution and filing of any financing statements and continuation statements, as are necessary to perfect and make effective the lien and security interest of this Indenture and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to make such lien and security interest effective.

(b)     On or before April 30, in each calendar year, beginning in 2017, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and with respect to the execution and filing of any financing statements and continuation statements as is necessary to maintain the lien and security interest created by this Indenture and reciting the details of such action, or stating that in the opinion of such counsel no such action is necessary to maintain such lien and security interest.  Such Opinion of Counsel shall also describe the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and the execution and filing of any financing statements and continuation statements that will, in the opinion of such counsel, be required to maintain the lien and security interest of this Indenture until April 30 of the following calendar year.

SECTION 3.07.     Performance of Obligations; Servicing of Receivables.

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

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

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

(d)     If the Issuer shall have knowledge of the occurrence of a Servicer Termination Event under the Sale and Servicing Agreement, the Issuer shall promptly notify the Indenture Trustee and the Rating Agencies thereof, and shall specify in such notice the action, if any, the Issuer is taking with respect to such default.

(e)     [Reserved.]

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

(g)     Without limitation of the absolute nature of the assignment granted to the Indenture Trustee under this Indenture or the rights of the Indenture Trustee hereunder, the Issuer agrees (i) except to the extent otherwise provided in any Basic Document, that it will not, without the prior written consent of the Indenture Trustee acting at the direction of the Holders of at least a majority in Outstanding Amount of the Notes, amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, supplement, termination, waiver or surrender of, the terms of any Collateral (except to the extent otherwise provided in the Sale and Servicing Agreement) or the Basic Documents, or waive timely performance or observance by the Servicer under the Sale and Servicing Agreement or a Seller under the related Receivables Purchase Agreement; and (ii) that any such amendment shall not (A) increase or reduce in any manner the amount of, or accelerate or delay the timing of, distributions that are required to be made for the benefit of the Noteholders or (B) reduce the aforesaid percentage of the Notes that is required to consent to any such amendment, without the consent of the Holders of all Outstanding Notes; provided, however, that the Indenture Trustee shall be entitled to an Opinion of Counsel that any such amendment, modification, supplement or waiver is authorized or permitted hereby and all conditions precedent thereto have been satisfied, and that the Indenture Trustee shall not be obligated to take any such action that affects the Indenture Trustee’s own rights, duties liabilities or immunities.  If the Indenture Trustee acting at the direction of such Holders agrees to any such amendment, modification, supplement or waiver, the Indenture Trustee agrees, promptly following a request by the Issuer to do so, to execute and deliver, at the Issuer’s own expense, such agreements, instruments, consents and other documents prepared by the Issuer as the Issuer may deem necessary or appropriate in the circumstances.

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SECTION 3.08.     Negative Covenants.  So long as any Notes are Outstanding, the Issuer shall not:

(i)     except as expressly permitted by this Indenture, the Receivables Purchase Agreements or the Sale and Servicing Agreement, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Issuer, including those included in the Trust Estate;

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

(iii)     (A) permit the validity or effectiveness of this Indenture to be impaired, or permit the lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Notes under this Indenture except as may be expressly permitted hereby, (B) permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance (other than the lien of this Indenture) to be created on or extend to or otherwise arise upon or burden the Trust Estate or any part thereof or any interest therein or the proceeds thereof (other than tax liens, mechanics’ liens and other liens that arise by operation of law, in each case on any of the Financed Vehicles and arising solely as a result of an action or omission of the related Obligor and the lien of this Indenture) or (C) permit the lien of this Indenture not to constitute a valid first priority (other than with respect to any such tax, mechanics’ or other lien) security interest in the Trust Estate;

(iv)     assume or incur any indebtedness other than indebtedness incurred in accordance with the Basic Documents; or

(v)     except as otherwise permitted by the Basic Documents, dissolve or liquidate in whole or in part.

SECTION 3.09.     Annual Statement and Assessment as to Compliance.

(a)     The Issuer will deliver to the Indenture Trustee, within 90 days after the end of each fiscal year of the Issuer (commencing with fiscal year 2016), an Officer’s Certificate stating, as to the Authorized Officer signing such Officer’s Certificate, that:

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

(ii)     to the best of such Authorized Officer’s knowledge, based on such review, the Issuer has complied with all conditions and covenants under this Indenture throughout such year or, if there has been a default in its compliance

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with any such condition or covenant, specifying each such default known to such Authorized Officer and the nature and status thereof.

(b)     The Issuer shall supply to the Indenture Trustee such summaries of any information, documents and reports required to be filed by the Issuer pursuant to clauses (i) and (ii) of Section 3.09(a) as may be required pursuant to rules and regulations prescribed from time to time by the Commission.

(c)     So long as the Issuer is required to file reports with the Commission pursuant to the Exchange Act, on or before March 15th of each calendar year, commencing in 2017, the Indenture Trustee shall:

(i)     deliver to the Issuer and the Administrator a report (in form and substance reasonably satisfactory to the Administrator, acting on behalf of the Issuer) regarding the Indenture Trustee’s assessment of compliance with the Servicing Criteria during the immediately preceding calendar year, as required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB.  Such report shall be signed by an authorized officer of the Indenture Trustee, and shall address each of the Servicing Criteria specified on Exhibit B hereto; and

(ii)     deliver to the Issuer and the Administrator a report of a registered public accounting firm that attests to, and reports on, the assessment of compliance made by the Indenture Trustee and delivered pursuant to the preceding paragraph.  Such attestation shall be in accordance with Rules 13a-18 and 15d-18 of the Securities Act and the Exchange Act and Item 1122 of Regulation AB.

SECTION 3.10.     Issuer May Consolidate, etc., Only on Certain Terms.

(a)     The Issuer shall not consolidate or merge with or into any other Person, unless:

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

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

(iii)     each Rating Agency shall not have notified the Indenture Trustee, the Administrator or the Owner Trustee, within 10 days after receiving notice of a consolidation or merger, that such consolidation or merger will result in a reduction or withdrawal of its then current rating on any Class of Notes;

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

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

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

(b)     The Issuer shall not convey or transfer any of its properties or assets, including those included in the Trust Estate, to any Person other than pursuant to the terms of the Basic Documents, unless:

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

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

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

(iv)     the Issuer shall have received an Opinion of Counsel (and shall have delivered copies thereof to the Indenture Trustee) to the effect that such

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transaction will not have any material adverse federal income tax consequences to the Issuer, any Noteholder or any Certificateholder;

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

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

SECTION 3.11.     Successor or Transferee.

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

(b)     Upon a conveyance or transfer of all the assets and properties of the Issuer pursuant to Section 3.10(b), BMW Vehicle Owner Trust 2016-A will be released from every covenant and agreement of this Indenture to be observed by or performed on the part of the Issuer with respect to the Notes immediately upon the delivery of documents and Opinions of Counsel set forth in Section 3.10 and a written notice to the Indenture Trustee stating that BMW Vehicle Owner Trust 2016-A is to be so released.

SECTION 3.12.     No Other Business.  The Issuer shall not engage in any business other than financing, purchasing, owning, selling and managing the Receivables in the manner contemplated by this Indenture and the Basic Documents and any activities incidental thereto.

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

SECTION 3.14.     Servicer’s Obligations.  The Issuer shall cause the Servicer to comply with the Sale and Servicing Agreement, including Sections 4.09, 4.10 and 4.11 and Article VII thereof.

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

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

SECTION 3.17.     Removal of Administrator.  So long as any Notes are Outstanding, the Issuer shall not remove the Administrator unless the Rating Agency Condition shall have been satisfied with respect to each Rating Agency in connection with such removal and the Indenture Trustee receives written notice of the foregoing and consents thereto.

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

SECTION 3.19.     Notice of Events of Default.  The Issuer shall give the Indenture Trustee and the Rating Agencies prompt written notice of each Event of Default hereunder, and of each default on the part of (i) the Servicer of its obligations under the Sale and Servicing Agreement and (ii) the Sellers under the Receivables Purchase Agreements.

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

SECTION 3.21.     Perfection Representations.

(a)     The representations, warranties and covenants set forth in Schedule B hereto shall be a part of this Indenture for all purposes.

(b)     Notwithstanding any other provision of this Indenture or any other Basic Document, the perfection representations contained in Schedule B hereto shall be continuing, and remain in full force and effect until such time as all obligations under this Indenture have been finally and fully paid and performed.

(c)     The parties to this Indenture: (i) shall not waive any of the perfection representations contained in Schedule B hereto; (ii) shall provide the Administrator with prompt written notice of any breach of the perfection representations contained in Schedule B hereto;

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and (iii) shall not waive a breach of any of the perfection representations contained in Schedule B hereto.

ARTICLE IV.

 SATISFACTION AND DISCHARGE

SECTION 4.01.     Satisfaction and Discharge of Indenture.  This Indenture shall cease to be of further effect with respect to the Notes except as to (i) rights of registration of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.05, 3.08, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16 and 3.18, (v) the rights, obligations and immunities of the Indenture Trustee hereunder (including the rights of the Indenture Trustee under Section 6.07 and the obligations of the Indenture Trustee under Section 4.02) and (vi) the rights of Noteholders as beneficiaries hereof with respect to the property so deposited with the Indenture Trustee payable to all or any of them, and the Indenture Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Notes, when

(A)         either:

(1)        all Notes theretofore authenticated and delivered (other than (i) Notes that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.06 and (ii) Notes for the payment of which money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter paid to the Persons entitled thereto or discharged from such trust, as provided in Section 3.03) have been delivered to the Indenture Trustee for cancellation; or

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

a.  have become due and payable,

b.  will become due and payable at the Class A-4 Final Scheduled Payment Date within one year, or

c.  are to be called for redemption within one year under arrangements satisfactory to the Indenture Trustee for the giving of notice of redemption by the Indenture Trustee in the name, and at the expense, of the Issuer;

and the Issuer, in the case of a, b, or c above, has irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee cash or direct obligations of or obligations guaranteed by the United States of America (that will mature prior to the date such amounts are payable), in trust for such purpose, in an amount sufficient to pay and discharge the entire indebtedness on such Notes (including interest and any fees due and

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payable to the Servicer, the Owner Trustee, the Indenture Trustee or the Asset Representations Reviewer) not theretofore delivered to the Indenture Trustee for cancellation when due to the applicable Final Scheduled Payment Date or Redemption Date (if Notes shall have been called for redemption pursuant to Section 10.01), as the case may be;

		(B)	the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer including, but not limited to, fees and expenses due to the Indenture Trustee; and

		(C)	the Issuer has delivered to the Indenture Trustee an Officer’s Certificate, an Opinion of Counsel and (if required by the TIA or the Indenture Trustee) an Independent Certificate from a firm of certified public accountants, each meeting the applicable requirements of Section 11.01(a) and, subject to Section 11.02, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this  Indenture have been complied with (and, in the case of an Officer’s Certificate, stating that the Rating Agency Condition has been satisfied with respect to each Rating Agency).

SECTION 4.02.     Application of Trust Money.  All moneys deposited with the Indenture Trustee pursuant to Section 4.01 shall be held in trust and applied by it in accordance with the provisions of the Notes and this Indenture to the payment, either directly or through any Paying Agent, as the Indenture Trustee may determine, to the Holders of the particular Notes for the payment or redemption of which such moneys have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal and interest.

SECTION 4.03.     Repayment of Moneys Held by Paying Agent.  In connection with the satisfaction and discharge of this Indenture with respect to the Notes, all moneys then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture with respect to such Notes shall, upon written demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to Section 3.03; and thereupon, such Paying Agent shall be released from all further liability with respect to such moneys.

SECTION 4.04.     Release of Collateral.  Subject to Section 11.01 and the terms of the Basic Documents, the Indenture Trustee shall release property from the lien of this Indenture only upon receipt by it of an Issuer Request accompanied by an Officer’s Certificate, an Opinion of Counsel and Independent Certificates in accordance with TIA § 314(c) and 314(d)(1) or an Opinion of Counsel in lieu of such Independent Certificates to the effect that the TIA does not require any such Independent Certificates.

ARTICLE V.

 REMEDIES

SECTION 5.01.     Events of Default.  “Event of Default”, wherever used herein, means any one of the following events (whatever the reason for such Event of Default

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and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

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

(ii)     default in the payment of the principal of any Note on the related Final Scheduled Payment Date or Redemption Date;

(iii)     default in the observance or performance of any representation, warranty, covenant or agreement of the Issuer made in this Indenture (other than (x) a covenant or agreement, a default in the observance or performance of which is elsewhere in this Section specifically dealt with or (y) a covenant or agreement set forth in Section 12.02) or in any certificate or other writing delivered pursuant hereto or in connection herewith proving to have been incorrect in any material respect as of the time when the same shall have been made, and such default shall continue or not be cured, or the circumstance or condition in respect of which such misrepresentation or warranty was incorrect shall not have been eliminated or otherwise cured, for a period of 30 days after there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least 25% of the Outstanding Amount of the Notes, a written notice specifying such default or incorrect representation or warranty and requiring it to be remedied and stating that such notice is a notice of Default hereunder;

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

(v)     the commencement by the Issuer of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer  to the entry of an order for relief in an involuntary case under any such law, or the consent by the Issuer to the appointment of or taking of possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Trust Estate, or the making by the Issuer of any general assignment for the benefit of creditors, or the failure  by the Issuer generally to pay its debts as such debts become due, or  the taking of any action by the Issuer in furtherance of any of the  foregoing.

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Notwithstanding the foregoing, a delay in or failure of performance referred to under clause (i) for a period of 45 days or less, under clause (ii) for a period of 60 days or less or under clause (iii) for a period of 120 days or less, will not constitute an Event of Default if that failure or delay was caused by Force Majeure or other similar occurrence.

The Issuer shall promptly deliver to the Indenture Trustee written notice in the form of an Officer’s Certificate of any event that with the giving of notice and the lapse of time would become an Event of Default, its status and what action the Issuer is taking or proposes to take with respect thereto.

Subject to the provisions herein relating to the duties of the Indenture Trustee, if an Event of Default occurs and is continuing, the Indenture Trustee shall be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any Noteholders or Verified Note Owners, other than requests, demands or directions required to be honored by the Indenture Trustee by Sections 13.01, 13.02 or 13.03(a) of this Indenture, Section 11.01 of the Sale and Servicing Agreement or Section 23 of the Administration Agreement, if the Indenture Trustee reasonably believes that it will not be adequately indemnified against the costs, expenses and liabilities that might be incurred by it in complying with such request.  Subject to such provisions for indemnification and certain limitations contained herein, Noteholders holding not less than a majority of the Outstanding Amount shall have the right to direct the time, method and place of conducting any proceeding or any remedy available to the Indenture Trustee or exercising any trust power conferred on the Indenture Trustee, and Noteholders holding not less than a majority of the Outstanding Amount may, in certain cases, waive any default with respect thereto, except a default in the payment of principal or interest or a default in respect of a covenant or provision of the Indenture that cannot be modified without the waiver or consent of all of the Holders of the Outstanding Notes.

SECTION 5.02.     Acceleration of Maturity; Rescission and Annulment.

(a)     If an Event of Default shall occur and be continuing, then and in every such case the Indenture Trustee may, or the Indenture Trustee as directed in writing by the Holders of Notes representing not less than a majority of the Outstanding Amount of the Notes shall, declare all the Notes to be then immediately due and payable, by a notice in writing to the Issuer, and upon any such declaration the Outstanding Amount of such Notes, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable as provided in the Notes.  Notwithstanding anything to the contrary in this paragraph (a), if an Event of Default specified in clauses (iv) or (v) of Section 5.01 shall have occurred and be continuing the Notes shall become immediately due and payable at par, together with accrued interest thereon.

(b)     [Reserved.]

(c)     At any time after such declaration of acceleration of maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter provided in this Article V, the Holders of Notes representing at least a majority of the Outstanding Amount of the Notes, by written notice to the Issuer and the Indenture Trustee, may rescind and annul such declaration and its consequences if:

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

A.  all payments of principal of and interest on the Notes and all other amounts that would then be due hereunder or upon such Notes if the Event of Default giving rise to such acceleration had not occurred; and

B.  all sums paid by the Indenture Trustee hereunder and the reasonable compensation, expenses and disbursements of the Indenture Trustee and its agents and counsel and the reasonable compensation, expenses and disbursements of the Owner Trustee and its agents and counsel; and

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

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

SECTION 5.03.     Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.

(a)     The Issuer covenants that if (i) a default is made in the payment of any interest on any Note when the same becomes due and payable, and such default continues for a period of five days, or (ii) a default is made in the payment of the principal of or any installment of the principal of any Note when the same becomes due and payable, the Issuer will, upon demand of the Indenture Trustee, pay to it, for the benefit of the Holders of the Notes, the entire amount then due and payable on such Notes in respect of principal and interest, with interest on the overdue principal and, to the extent payment at such rate of interest shall be legally enforceable, on overdue installments of interest at the related Interest Rate and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses and disbursements of the Indenture Trustee and its agents and counsel.

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

(c)     If an Event of Default occurs, the Indenture Trustee may, or shall at the direction of the Holders of at least a majority of the Outstanding Amount of the Notes, proceed to protect and enforce its rights and the rights of the Noteholders, by such appropriate Proceedings as the Indenture Trustee or the Indenture Trustee at the direction of the Holders of at least a majority of the Outstanding Amount of the Notes shall reasonably deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or

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agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture or by law.

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

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

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

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

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

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

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Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or bad faith, and any other amounts due the Indenture Trustee under Section 6.07.

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

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

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

SECTION 5.04.     Remedies; Priorities.

(a)     If an Event of Default shall have occurred and be continuing, the Indenture Trustee may do one or more of the following (subject to Section 5.05):

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

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

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

(iv)     after an acceleration of the maturity of the Notes pursuant to Section 5.02, sell the Trust Estate or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law;

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provided that the Indenture Trustee may not sell or otherwise liquidate the Trust Estate following an Event of Default pursuant to clause (iv) above unless:

		(A)	the Event of Default is of the type described in Section 5.01(i) or (ii); or

		(B)	with respect to an Event of Default described in Section 5.01(iii):

(i)     the Noteholders of all Outstanding Notes consent thereto; or

(ii)     the proceeds of such sale or liquidation are sufficient to pay in full the principal of and accrued interest on the Outstanding Notes at the date of sale; or

		(C)	with respect to any Event of Default described in Section 5.01(iv) and (v):

(i)     the Noteholders of all Outstanding Notes consent thereto; or

(ii)     the proceeds of such sale or liquidation are sufficient to pay in full the principal of and the accrued interest on the Outstanding Notes; or

(iii)     the Indenture Trustee:

(x)  determines (but shall have no obligation to make such determination) that the Trust Estate will not continue to provide sufficient funds for the payment of principal of and interest on the Notes as they would have become due if the Notes had not been declared due  and payable; and

(y)  the Indenture Trustee obtains the consent of Noteholders of Notes evidencing not less than 66 2/3% of the Outstanding Amount of the Notes.

In determining such sufficiency or insufficiency with respect to clause (B)(ii) and (C)(ii) or (C)(iii)(x), Indenture Trustee may, but need not, obtain at the Issuer’s expense, and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose.

(b)     (i)     Notwithstanding the provisions of Section 8.02, following the occurrence and during the continuation of an Event of Default specified in Section 5.01 that has resulted in an acceleration of the Notes, if Indenture Trustee collects any money or property, it shall pay out such money or property (and other amounts including amounts held on deposit in the Reserve Account) held as Collateral for the benefit of the Noteholders, in the following order:

FIRST: to the Indenture Trustee, the Owner Trustee and the Asset Representations Reviewer, pro rata, based on amounts due to each such party, for payment of any Trustee and Reviewer Fees and other amounts required to be paid to such party pursuant to the terms of the Indenture, the Trust Agreement or the

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Asset Representations Review Agreement, respectively (including, without limitation, expenses and indemnification amounts);

SECOND: to the Servicer for due and unpaid Servicing Fees and unreimbursed Advances;

THIRD: to the Noteholders for amounts due and unpaid on the Notes in respect of interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes in respect of interest;

FOURTH: to Holders of the Class A-1 Notes for amounts due  and unpaid on the Class A-1 Notes in respect of principal, ratably, without preference or priority of any kind, according to the amounts due and payable on the Class A-1 Notes in respect of principal, until the Outstanding Amount of the Class A-1 Notes is reduced to zero;

FIFTH: to Holders of the Class A-2a Notes, Class A-2b Notes, Class A-3 Notes and Class A-4 Notes for amounts due and unpaid on the Class A-2a Notes, Class A-2b Notes, Class A-3 Notes and Class A-4 Notes in respect of principal, ratably, without preference or priority of any kind, according to the amounts due and payable on the Class A-2a Notes, Class A-2b Notes, Class A-3 Notes and Class A-4 Notes in respect of principal, until the Outstanding Amounts of the  Class A-2a Notes, Class A-2b Notes, Class A-3 Notes and Class A-4 Notes are reduced to zero; and

SIXTH: to the Certificate Distribution Account, for distribution to the Certificateholders.

The Indenture Trustee may fix a Record Date and Payment Date for any payment to Noteholders pursuant to this Section.  At least 15 days before such Record Date, the Issuer shall mail to each Noteholder and the Indenture Trustee a notice that states the Record Date, the Payment Date and the amount to be paid.

(ii)     Except as provided in Section 5.04(b)(i), the Indenture Trustee shall make all payments and distributions of the Trust Estate in accordance with Section 8.02.

SECTION 5.05.     Optional Preservation of the Receivables.  If the Notes have been declared to be due and payable under Section 5.02 following an Event of Default, and such declaration and its consequences have not been rescinded and annulled, the Indenture Trustee may, but need not, elect to maintain possession of the Trust Estate and continue to apply collections as provided herein.  It is the desire of the parties hereto and the Noteholders that there be at all times sufficient funds for the payment of principal of and interest on the Notes, and the Indenture Trustee shall take such desire into account when determining whether or not to maintain possession of the Trust Estate.  In determining whether or not to maintain possession of the Trust Estate, the Indenture Trustee may, at the expense of the Issuer and paid in the priority set forth in Section 5.06(b) of the Sale and Servicing Agreement, but need not, obtain and conclusively rely upon an opinion of an Independent investment banking or accounting firm of

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national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose.

SECTION 5.06.     Limitation of Suits.  No Holder of any Note shall have any right to institute any Proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

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

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

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

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

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

It is understood and intended that no one or more Holders of Notes shall have any right in any manner whatsoever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Notes or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided.

In the event the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Holders of Notes pursuant to this Section, each representing less than a majority of the Outstanding Amount of the Notes, the Indenture Trustee shall act at the direction of the group representing the greater percentage of the Outstanding Amount of Notes and if there is no such group then in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture.

SECTION 5.07.     Unconditional Rights of Noteholders To Receive Principal and Interest.  Notwithstanding any other provisions in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest, if any, on such Note on or after the respective due dates thereof expressed in such Note or in this Indenture (or, in the case of redemption, on or after the Redemption Date) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.

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SECTION 5.08.     Restoration of Rights and Remedies.  If the Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee or to such Noteholder, then and in every such case the Issuer, the Indenture Trustee and the Noteholders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Noteholders shall continue as though no such Proceeding had been instituted.

SECTION 5.09.     Rights and Remedies Cumulative.  No right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

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

SECTION 5.11.     Control by Noteholders.  Subject to the provisions of Sections 5.06, 6.02(f) and 6.02(g), Noteholders holding not less than a majority of the Outstanding Amount of the Notes shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Notes or exercising any trust or power conferred on the Indenture Trustee; provided that:

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

(ii)     subject to the express terms of Section 5.04, any direction to the Indenture Trustee to sell or liquidate the Trust Estate shall be by Holders of Notes representing not less than 100% of the Outstanding Amount of the Notes;

(iii)     if the conditions set forth in Section 5.05 have been satisfied and the Indenture Trustee elects to retain the Trust Estate pursuant to such Section, then any written direction to the Indenture Trustee by Holders of Notes representing less than 100% of the Outstanding Amount of the Notes to sell or liquidate the Trust Estate shall be of no force and effect; and

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

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Notwithstanding the rights of Noteholders set forth in this Section, subject to Section 6.01, the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Noteholders not consenting to such action.

SECTION 5.12.     Waiver of Past Defaults.  Prior to the declaration of the acceleration of the maturity of the Notes as provided in Section 5.02, the Holders of Notes of not less than a majority of the Outstanding Amount of the Notes may waive any past Default or Event of Default and its consequences except a Default (a) in the deposit of collections or other required amounts, or any required payment from amounts held in any trust account in respect of amounts due on the Notes, (b) in payment of principal of, or interest or amounts due on any of the Notes or (c) in respect of a covenant or provision hereof that cannot be modified or amended without the consent of the Holder of each Note.  In the case of any such waiver, the Issuer, the Indenture Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto.

Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.

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

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

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SECTION 5.15.     Action on Notes.  The Indenture Trustee’s right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture.  Neither the lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Trust Estate or upon any of the assets of the Issuer.  Any money or property collected by the Indenture Trustee as a recovery of any judgment on the Notes or under this Indenture shall be applied in accordance with Section 5.04(b) as provided therein, and otherwise in accordance with Section 8.02.

SECTION 5.16.     Performance and Enforcement of Certain Obligations.

(a)     Promptly following a request from the Indenture Trustee to do so and at the Administrator’s expense, the Issuer shall take all such lawful action as the Indenture Trustee may request to compel or secure the performance and observance by a Seller, the Servicer or the Asset Representations Reviewer, as applicable, of each of their obligations under or in connection with the Sale and Servicing Agreement, the Receivables Purchase Agreements and the Asset Representations Review Agreement, as applicable, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale and Servicing Agreement, the Receivables Purchase Agreements and the Asset Representations Review Agreement to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of default on the part of any of the Sellers, the Servicer or the Asset Representations Reviewer thereunder and the institution of legal or administrative actions or proceedings to compel or secure performance by a Seller, the Servicer or the Asset Representations Reviewer, as applicable, of each of their obligations under the Sale and Servicing Agreement, the Receivables Purchase Agreements and the Asset Representations Review Agreement; provided, however, nothing herein shall in any way impose on the Indenture Trustee the duty to monitor the performance of the Sellers, the Servicer or the Asset Representations Reviewer of any of their liabilities, duties or obligations under any Basic Document.

(b)     If an Event of Default has occurred, the Indenture Trustee may, and at the direction (which direction shall be in writing) of the Holders of not less than a majority of the Outstanding Amount of the Notes shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Sellers, the Servicer and the Asset Representations Reviewer under or in connection with the Sale and Servicing Agreement, the Receivables Purchase Agreements and the Asset Representations Reviewer, including the right or power to take any action to compel or secure performance or observance by a Seller, the Servicer or the Asset Representations Reviewer, as the case may be, of each of their obligations thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Sale and Servicing Agreement, the Receivables Purchase Agreements and the Asset Representations Review Agreement, as the case may be, and any right of the Issuer to take such action shall be suspended.

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ARTICLE VI.

 THE INDENTURE TRUSTEE

SECTION 6.01.     Duties of Indenture Trustee.

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

(b)     Except during the continuance of an Event of Default:

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

(ii)     in the absence of bad faith or negligence on its part, the Indenture Trustee may conclusively rely, as to the truth of  the statements and the correctness of the opinions expressed therein, upon the face value of the certificates, reports, resolutions, documents, orders, opinions or other instruments furnished to the Indenture Trustee and conforming to the requirements of this Indenture; provided, however, that the Indenture Trustee shall not be responsible for the accuracy or content of any such resolution, certificate, statement, opinion, report, document, order or other instrument; provided, further, however, the Indenture Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.  If any such instrument is found not to conform in any material respect to the  requirements of this Indenture, the Indenture Trustee shall notify the Noteholders of such instrument in the event that the Indenture Trustee, after so requesting, does not receive a satisfactorily corrected instrument.

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

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

(ii)     the Indenture Trustee shall not be liable for any error of judgment made in good faith by the Indenture Trustee unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; and

(iii)     the Indenture Trustee shall not be liable with  respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to the terms of this Indenture or any other Basic Documents.

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(d)     Notwithstanding anything to the contrary contained herein, in no event shall the Indenture Trustee be liable for special, punitive, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Indenture Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(e)     The Indenture Trustee shall not be liable for indebtedness evidenced by or arising under any of the Basic Documents, including principal of or interest on the Notes, or interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuer.

(f)     [Reserved.]

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

(h)     Every provision of this Indenture that in any way relates to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section and to the provisions of the TIA.

(i)     Except as otherwise specifically set forth in the Sale and Servicing Agreement, in no event shall the Indenture Trustee be required to perform, or be responsible for the manner of performance of, any of the obligations of the Servicer or any other party under the Sale and Servicing Agreement.

(j)     The Indenture Trustee shall have no duty (A) to see to any recording, filing, or depositing of this Indenture or any agreement referred to herein or any financing statement or continuation statement evidencing a security interest, or to see to the maintenance of any such recording or filing or depositing or to any rerecording, refiling or redepositing of any thereof, (B) to see to any insurance, or (C) to see to the payment or discharge of any tax, assessment, or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against, any part of the Trust Estate.

(k)     The Indenture Trustee shall determine LIBOR as of each LIBOR Determination Date for so long as the Class A-2b Notes are Outstanding.  All determinations of LIBOR by the Indenture Trustee, in absence of manifest error, shall be conclusive for all purposes and binding on the Noteholders.

(l)     The Indenture Trustee shall not be deemed to have knowledge of any Event of Default, Default, Servicer Termination Event, breach of representation or warranty or other event unless a Responsible Officer has actual knowledge thereof or has received written notice thereof in accordance with the provisions of this Indenture or the other Basic Documents.  For the avoidance of doubt, receipt by the Indenture Trustee of a Review Report under the Asset Representations Review Agreement shall not constitute knowledge of any such breach.

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SECTION 6.02.     Rights of Indenture Trustee.

(a)     The Indenture Trustee may conclusively rely and shall be protected in acting upon or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, note, direction, demand, election or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper person.  The Indenture Trustee need not investigate any fact or matter stated in the document.

(b)     Before the Indenture Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel from the appropriate party.  The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on an Officer’s Certificate or Opinion of Counsel from the appropriate party.  The right of the Indenture Trustee to perform any discretionary act enumerated in this Indenture or in any Basic Document shall not be construed as a duty of the Indenture Trustee and the Indenture Trustee shall not be answerable for other than its negligence, bad faith or willful misconduct in the performance of such discretionary act.

(c)     The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, the Administrator, any co-trustee or separate trustee appointed in accordance with the provisions of Section 6.10 or any other such agent, attorney, custodian or nominee appointed with due care by it hereunder.

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

(e)     The Indenture Trustee may consult with counsel, at the Issuer’s expense and paid in the priority set forth in Section 5.06(b) of the Sale and Servicing Agreement, and the written advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

(f)     The Indenture Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture or to institute, conduct or defend any litigation under this Indenture or in relation to this Indenture or to honor the requests, demands or direction of any Noteholders or Verified Note Owners pursuant to this Indenture, other than requests, demands or directions required to be honored by the Indenture Trustee pursuant to Sections 13.01, 13.02 or 13.03(a) of this Indenture, Section 11.01 of the Sale and Servicing Agreement or Section 23 of the Administration Agreement, unless such Noteholders or Verified Note Owners, as applicable, shall have offered to the Indenture Trustee security or indemnity satisfactory to it against the reasonable costs, expenses, disbursements, advances and liabilities that might be incurred by it, its agents and its counsel in compliance with such request, demand or direction.

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(g)     The Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document, unless requested in writing to do so by Noteholders evidencing not less than 50% of the Outstanding Amount; provided, however, that if the payment within a reasonable time to the Indenture Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Indenture Trustee, not reasonably assured to the Indenture Trustee by the security afforded to it by the terms of this Indenture, the Indenture Trustee may require indemnity satisfactory to it against such cost, expense or liability as a condition to so proceeding.  The reasonable expense of each such investigation shall be paid by the Person making such request, or, if paid by the Indenture Trustee, shall be reimbursed by the Person making such request upon demand.

(h)     Any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by an Issuer Request.

(i)     In the event that the Indenture Trustee is also acting as Paying Agent, Note Registrar, Certificate Registrar, authenticating agent (under the Trust Agreement), Paying Agent (under the Trust Agreement) or collateral agent, the rights and protections afforded to the Indenture Trustee pursuant to this Article VI shall be afforded to it in such capacities.

(j)     The right of the Indenture Trustee to perform any discretionary act enumerated in this Indenture shall not be construed as a duty, and the Indenture Trustee shall not be answerable for other than its negligence or willful misconduct in the performance of such act.

(k)     The Indenture Trustee shall not be required to give any bond or surety in respect of the powers granted hereunder.

(l)       The Indenture Trustee will not be responsible or liable for a failure or delay in the performance of its obligations under this Indenture from or caused by, directly or indirectly, forces beyond its control, including strikes, work stoppages, acts of war, terrorism, civil or military disturbances, nuclear catastrophes, fires, floods, earthquakes, storms, hurricanes or other natural catastrophes and interruptions, unforeseeable loss or failures of mechanical, electronic or communication systems.  The Indenture Trustee will use reasonable efforts consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

SECTION 6.03.     Individual Rights of Indenture Trustee.  The Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Indenture Trustee.  Any Paying Agent, Note Registrar, co-registrar or co-paying agent may do the same with like rights.  However, the Indenture Trustee must comply with Sections 6.11 and 6.13.

SECTION 6.04.     Indenture Trustee’s Disclaimer.  The Indenture Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Trust Estate or the Notes, it shall not be accountable for the Issuer’s use of the

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proceeds from the Notes, and it shall not be responsible for any statement of the Issuer in the Indenture, any Basic Document, any document issued in connection with the sale of the Notes or the Notes other than the Indenture Trustee’s certificate of authentication.

SECTION 6.05.     Notice of Defaults.  If a Default occurs and is continuing and if it is actually known to a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail to each Noteholder notice of the Default within 30 days after it occurs.  Except in the case of a Default in payment of principal of or interest on any Note (including payments pursuant to the mandatory redemption provisions of such Note), the Indenture Trustee may withhold the notice to Noteholders if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the best interests of Noteholders.

SECTION 6.06.     Reports by Indenture Trustee to Holders.  The Indenture Trustee, upon written request, shall deliver to each Noteholder such information as may be required to enable such holder to prepare its federal and state income tax returns.

SECTION 6.07.     Compensation and Indemnity.  The Indenture Trustee shall be entitled to the Indenture Trustee Fee as compensation for its services hereunder.  The Issuer shall pay the Indenture Trustee Fee and reimburse the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services.  Such expenses shall include the reasonable out-of-pocket compensation and expenses, disbursements and advances of the Indenture Trustee’s agents, counsel, accountants and experts.  The Issuer shall indemnify the Indenture Trustee and any of its directors, officers, employees and agents (each, an “Indemnified Party”) for, and hold it harmless against, any and all loss, liability or expense (including reasonable attorneys’ fees and expenses, including those incurred by an Indemnified Party in connection with the enforcement of any indemnification or other obligation of the Issuer) incurred by it in connection with the administration of this trust and the performance of the Indenture Trustee’s duties hereunder or under the Sale and Servicing Agreement or under any other Basic Document.    The fees, expenses and indemnities described in this Section 6.07 shall be paid by the Issuer pursuant to the terms of Section 5.06(b) of the Sale and Servicing Agreement and Section 5.04(b), as applicable.  The Indenture Trustee shall notify the Issuer and the Administrator promptly of any claim for which it may seek indemnity.  Failure by the Indenture Trustee to so notify the Issuer and the Administrator shall not relieve the Issuer of its obligations hereunder if no prejudice to the Issuer shall have resulted from such failure.  The Issuer shall, or shall cause the Administrator to, defend any such claim, and the Indenture Trustee may have separate counsel and the Issuer shall pay the fees and expenses of such counsel.  The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Indenture Trustee through the Indenture Trustee’s own willful misconduct, negligence or bad faith, except that the Indenture Trustee shall not be liable (i) for any error of judgment made by it in good faith unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts, (ii) with respect to any action it takes or omits to take in good faith in accordance with a direction received by it from the Noteholders in accordance with the terms of this Indenture and (iii) for interest on any money received by it except as the Indenture Trustee and the Issuer may agree in writing.  The Indenture Trustee shall not be deemed to have knowledge of any event unless a Responsible Officer of the Indenture Trustee has actual knowledge thereof or has received written notice thereof.

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The Issuer’s payment obligations and indemnities to the Indenture Trustee pursuant to this Section shall survive the discharge of this Indenture or the earlier resignation or removal of the Indenture Trustee.  When the Indenture Trustee incurs expenses after the occurrence of a Default specified in Section 5.01(iv) or (v) with respect to the Issuer, the expenses are intended to constitute expenses of administration under Title 11 of the United States Bankruptcy Code or any other applicable federal or State bankruptcy, insolvency or similar law.

SECTION 6.08.     Replacement of Indenture Trustee.  No resignation or removal of the Indenture Trustee and no appointment of a successor Indenture Trustee shall become effective until the acceptance of appointment by the successor Indenture Trustee pursuant to this Section.  The Indenture Trustee may resign with 30 days’ prior written notice to the Issuer, the Servicer and the Administrator (and the Administrator shall make such notice available to each Rating Agency).  The Holders of a majority of the Outstanding Amount of the Notes may remove the Indenture Trustee by notifying the Indenture Trustee if:

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

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

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

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

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

A successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring Indenture Trustee and to the Issuer.  Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee under this Indenture.  The retiring Indenture Trustee shall be paid all amounts owed to it upon its resignation or removal.

The successor Indenture Trustee shall mail a notice of its succession to Noteholders.  The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the successor Indenture Trustee.  The retiring Indenture Trustee shall not be liable for the acts or omissions of any successor Indenture Trustee.

If a successor Indenture Trustee does not take office within 60 days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Issuer or the Holders of a majority of the  Outstanding Amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee.

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

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Notwithstanding the replacement of the Indenture Trustee pursuant to this Section, the Issuer’s and the Administrator’s obligations under Section 6.07 shall continue for the benefit of the retiring Indenture Trustee. Any costs associated with the resignation or removal of the Indenture Trustee shall be paid by the Administrator.

SECTION 6.09.     Successor Indenture Trustee by Merger.  If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Indenture Trustee; provided, that such corporation or banking association shall be qualified and eligible under Section 6.11.  The Indenture Trustee shall provide the Administrator notice of any such transaction.

If at the time such successor or successors by merger, conversion or consolidation to the Indenture Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee and deliver such Notes so authenticated; and if at that time any of the Notes shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates authenticated by the successor Indenture Trustee shall have the full force and effect for purposes of this Indenture and the Notes as any certificate of authentication executed and delivered by the predecessor Indenture Trustee.

SECTION 6.10.     Appointment of Co-Indenture Trustee or Separate Indenture Trustee.

(a)     Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Trust Estate may at the time be located, the Indenture Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the Trust, and to vest in such Person or Persons, in such capacity and for the benefit of the Noteholders, such title to the Trust Estate, or any part thereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable.  No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.11 and no notice to Noteholders of the appointment of any co-trustee or separate trustee shall be required under Section 6.08.

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

(i)     all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent

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that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Estate or any portion thereof in any  such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee;

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

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

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

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

SECTION 6.11.     Eligibility; Disqualification.  The Indenture Trustee shall at all times satisfy the requirements of TIA § 310(a) and shall in addition have a combined capital and surplus of at least $50,000,000 (as set forth in its most recent published annual report of condition) and a long-term debt rating of “A” or better by, or be otherwise acceptable to, each Rating Agency.  The Indenture Trustee shall comply with TIA § 310(b), including the optional provision permitted by the second sentence of TIA § 310(b)(9); provided, however, that there shall be excluded from the operation of TIA § 310(b)(1) any indenture or indentures under which other securities of the Issuer are outstanding if the requirements for such exclusion set forth in TIA § 310(b)(1) are met.

SECTION 6.12.     Preferential Collection of Claims Against Issuer.  The Indenture Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b).     An Indenture Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.

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SECTION 6.13.     Waiver of Setoffs.  The Indenture Trustee hereby expressly waives any and all rights of setoff that the Indenture Trustee may otherwise at any time have under applicable law with respect to any Trust Account and agrees that amounts in the Trust Accounts shall at all times be held and applied solely in accordance with the provisions hereof and of the other Basic Documents.

SECTION 6.14.     Licenses.  The Issuer shall take such action as, in its reasonable judgment, shall be necessary to maintain the effectiveness of all sales finance company licenses required under the Maryland Code Financial Institutions, Title 11, Subtitle 4 and all licenses required under the Pennsylvania Motor Vehicle Sales Finance Act, in connection with this Indenture and the transactions contemplated hereby until the lien and security interest of this Indenture shall no longer be in effect in accordance with the terms hereof.

SECTION 6.15.     Additional Duties.  U.S. Bank National Association agrees to perform the duties of Certificate Registrar, authenticating agent and Paying Agent as set forth under and pursuant to the Trust Agreement including, without limitation, those specified in Sections 3.07, 3.08, 3.09, and 5.01 of the Trust Agreement, and shall be entitled to all of the rights and indemnities of the Indenture Trustee in the performance of such duties.

ARTICLE VII.

 NOTEHOLDERS’ LISTS AND REPORTS

SECTION 7.01.     Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders.  The Issuer will furnish or cause to be furnished to the Indenture Trustee (a) not more than five days after the earlier of (i) each Record Date and (ii) three months after the last Record Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Holders of Notes as of such Record Date, and (b) at such other times as the Indenture Trustee may request in writing, within 30 days after receipt by the Issuer of any such request, a list of similar form and content as of a date not more than 10 days prior to the time such list is furnished; provided, however, that so long as the Indenture Trustee is the Note Registrar, no such list shall be required to be furnished.

SECTION 7.02.     Preservation of Information; Communications to Noteholders.

(a)     The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders of Notes contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.01 and the names and addresses of Holders of Notes received by the Indenture Trustee in its capacity as Note Registrar.  The Indenture Trustee may destroy any list furnished to it as provided in such Section 7.01 upon receipt of a new list so furnished.  The Indenture Trustee shall make such list available to the Owner Trustee on written request, and to the Noteholders upon written request of three or more Noteholders or one or more Noteholders evidencing not less than 25% of the Outstanding Amount of the Notes.  Upon receipt by the Indenture Trustee of any request by a Noteholder to receive a copy of the current list of Noteholders, the Indenture Trustee shall promptly notify the

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Administrator thereof by providing to the Administrator a copy of such request and a copy of the list of Noteholders in response thereto.

(b)     Noteholders may communicate pursuant to TIA § 312(b) with other Noteholders with respect to their rights under this Indenture or under the Notes.

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

(d)     Not later than the fifth business day of each calendar month (or, if such day is not a Business Day, the immediately following Business Day), beginning in August 2016, the Indenture Trustee shall provide to BMW FS and the Depositor a notice with respect to any written requests received by a Responsible Officer of the Indenture Trustee from a Noteholder during the immediately preceding calendar month (or, in the case of the initial notice, since the Closing Date) that any Receivable or Financed Vehicle be repurchased.  Such notices shall be provided (i) to BMW FS at: BMW Financial Services NA, LLC at 300 Chestnut Ridge Road, Woodcliff Lake, NJ 07677, (telecopier no. (201) 307‐9286), Attention: General Counsel, E-mail: ABS.Operations@bmwfs.com, or at such other address or by such other means of communication as may be specified by BMW FS to the Indenture Trustee from time to time; and (ii) to the Depositor at: BMW FS Securities LLC, 300 Chestnut Ridge Road, Woodcliff Lake, NJ 07677, Attention: General Counsel, E-mail: ABS.Operations@bmwfs.com, or at such other address or by such other means of communication as may be specified by the Depositor to the Indenture Trustee from time to time.  The Indenture Trustee and the Issuer acknowledge and agree that the purpose of this subsection is to facilitate compliance by BMW FS and the Depositor with Rule 15Ga-1 under the Exchange Act. The Indenture Trustee agrees to comply with reasonable requests made by BMW FS and the Depositor in good faith for delivery of information under these provisions on the basis of evolving interpretations of such rule. The Indenture Trustee shall cooperate fully with all reasonable requests of BMW FS and the Depositor to deliver any and all records and any other information, in each case in its possession, necessary to permit BMW FS and the Depositor to comply with the provisions of such rule.

SECTION 7.03.     Reports by Issuer.

(a)     The Issuer shall:

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

(ii)     make available to the Indenture Trustee and the Commission in accordance with rules and regulations prescribed from time to time by the Commission such additional information, documents and reports with respect to compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and

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(iii)     supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Noteholders described in TIA § 313(c)) such summaries of any information, documents and reports  required to be filed by the Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) and by rules and regulations prescribed from time to time by the Commission.

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

SECTION 7.04.     Reports by Indenture Trustee.  If required by TIA § 313(a), within 60 days after each December 31 beginning with December 31, 2016, the Indenture Trustee shall mail to each Noteholder as required by TIA § 313(c) a brief report dated as of such date that complies with TIA § 313(a).  The Indenture Trustee also shall comply with TIA § 313(b).

A copy of each report at the time of its mailing to Noteholders shall be filed by the Indenture Trustee with the Commission and each stock exchange, if any, on which the Notes are listed.  The Issuer shall notify the Indenture Trustee if and when the Notes are listed on any stock exchange.

ARTICLE VIII.

 ACCOUNTS, DISBURSEMENTS AND RELEASES

SECTION 8.01.     Collection of Money.  Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture.  The Indenture Trustee shall apply all such money received by it as provided in this Indenture.  Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Trust Estate, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate Proceedings.  Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in Article V.

SECTION 8.02.     Trust Accounts.

(a)     On or prior to the Closing Date, the Issuer shall cause the Indenture Trustee to establish and maintain, in the name of the Indenture Trustee, for the benefit of the Noteholders and, in the case of the Collection Account and the Reserve Account, the Certificateholders, the Trust Accounts as provided in Section 5.01 of the Sale and Servicing Agreement.

(b)     On or before each Deposit Date, the Issuer shall cause the Servicer to deposit all Available Amounts with respect to the Collection Period preceding such Payment Date in the Collection Account as provided in Section 5.01(e), 5.02, 5.04 and 5.11 of the Sale and Servicing Agreement.  On or before each Deposit Date, all amounts required to be

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withdrawn from the Reserve Account and deposited in the Collection Account pursuant to Section 5.07 of the Sale and Servicing Agreement shall be withdrawn by the Indenture Trustee from the Reserve Account and deposited to the Collection Account as provided therein, as to which Issuer shall cause Servicer to timely provide the related instructions.

(c)     On each Payment Date, the Indenture Trustee (based on the information contained in the Servicer’s Certificate delivered on or before the related Determination Date pursuant to Section 4.09 of the Sale and Servicing Agreement) shall make the withdrawals from the Collection Account and make deposits, distributions and payments, to the extent of funds on deposit in the Collection Account with respect to the Collection Period preceding such Payment Date (including funds, if any, deposited therein from the Reserve Account), in accordance with the provisions of Section 5.06(b) of the Sale and Servicing Agreement or Section 5.04(b), as applicable.

(d)     On each Payment Date, the Indenture Trustee (based on the information contained in the Servicer’s Certificate delivered on or before the related Determination Date pursuant to Section 4.09 of the Sale and Servicing Agreement) shall withdraw the funds on deposit in the Interest Distribution Account with respect to the Collection Period preceding such Payment Date and make distributions and payments to the Noteholders, in an amount equal to the accrued and unpaid interest on the Notes; provided that if there are not sufficient funds available to pay the entire amount of the accrued and unpaid interest on the Notes, the amounts available shall be applied to the payment of such interest on the Notes on a pro rata basis based upon the amount of interest due on each Class of Notes.

(e)     On each Payment Date, the Indenture Trustee (based on the information contained in the Servicer’s Certificate delivered on or before the related Determination Date pursuant to Section 4.09 of the Sale and Servicing Agreement) shall withdraw the funds on deposit in the Principal Distribution Account with respect to the Collection Period preceding such Payment Date (including, if applicable, any amount deposited by the Indenture Trustee in respect of damages received from the FDIC pursuant to Section 12.05(e)) and, so long as the maturity of the Notes has not been accelerated pursuant to Section 5.02, make distributions and payments in the following order of priority:

(i)     first, to the Noteholders of the Class A-1 Notes in reduction of principal until the Outstanding Amount of the Class A-1 Notes has been paid in full; provided that if there are not sufficient funds available to pay the Outstanding Amount of the Class A-1 Notes in full, the amounts available shall be applied to the payment of principal on the Class A-1 Notes on a pro rata basis;

(ii)     second, to the Noteholders of the Class A-2a Notes and Class A-2b Notes, pro rata, based on their respective Outstanding Amounts, in reduction of principal until the Outstanding Amounts of the Class A-2a Notes and Class A-2b Notes have been paid in full; provided that if there are not sufficient funds available to pay the Outstanding Amounts of the Class A-2a Notes and Class A-2b Notes in full, the amounts available shall be applied to the payment of principal on the Class A-2a Notes and Class A-2b Notes on a pro rata basis;

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(iii)     third, to the Noteholders of the Class A-3 Notes in reduction of principal until the Outstanding Amount of the Class A-3 Notes has been paid in full; provided that if there are not sufficient funds available to pay the  Outstanding Amount of the Class A-3 Notes in full, the amounts available shall be applied to the payment of principal on the Class A-3 Notes on a pro rata basis;

(iv)     fourth, to the Noteholders of the Class A-4 Notes in reduction of principal until the Outstanding Amount of the Class A-4 Notes has been paid in full; provided that if there are not sufficient funds available to pay the  Outstanding Amount of the Class A-4 Notes in full, the amounts available shall be applied to the payment of principal on the Class A-4 Notes on a pro rata basis; and

(v)     fifth, any remaining amounts, to the Certificate Distribution Account, for distribution to the Certificateholders;

provided, however, that following the acceleration of the Notes pursuant to Section 5.02, distributions shall be made as provided in clauses FOURTH and FIFTH of Section 5.04(b)(i).

SECTION 8.03.     General Provisions Regarding Accounts.  The Indenture 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 Indenture Trustee’s failure to make payments on such Eligible Investments issued by the Indenture Trustee, in its commercial capacity as principal obligor and not as trustee, in accordance with their terms. If (i) the Servicer shall have failed to give investment directions for any funds on deposit in the Reserve Account to the Indenture Trustee by 11:00 a.m., New York City time (or such other time as may be agreed by the Administrator and Indenture Trustee), on any Business Day or (ii) a Default or Event of Default of which a Responsible Officer of the Indenture Trustee shall have actual knowledge shall have occurred and be continuing with respect to the Notes but the Notes shall not have been declared due and payable pursuant to Section 5.02 or (iii) if the Notes shall have been declared due and payable following an Event of Default and amounts collected or receivable from the Trust Estate are being applied in accordance with Section 5.05 as if there had not been such a declaration, then the Indenture Trustee shall, to the fullest extent practicable, invest and reinvest funds in investments that are Eligible Investments in accordance with standing instructions most recently given in writing by the Servicer.

Except as otherwise provided hereunder or agreed in writing among the parties hereto, the Servicer shall retain the authority to institute, participate and join in any plan of reorganization, readjustment, merger or consolidation with respect to the issuer of any securities held hereunder in the Trust Accounts, and, in general, to exercise each and every other power or right with respect to each such asset or investment as individuals generally have and enjoy with respect to their own assets and investment, including power to vote on any securities.

The Indenture Trustee is authorized to deposit uninvested funds in non-interest bearing, unsecured demand deposit accounts at affiliated banks, purchase and sell investment securities through or from affiliated banks and broker-dealers, invest funds in registered investment

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companies that receive investment management and custodial services from the Indenture Trustee or its affiliates, subject to the limitations set forth herein.

The Issuer acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Issuer the right or option to receive individual confirmations of security transactions at no additional cost, as they occur, the Issuer specifically waives the option to receive such confirmation to the extent permitted by law.  The Indenture Trustee will furnish the Issuer periodic cash transaction statements that include detail for all investment transactions made by the Indenture Trustee hereunder.

SECTION 8.04.     Release of Trust Estate.

(a)     Subject to the payment of its fees and expenses pursuant to Section 6.07, the Indenture Trustee may, and when required by the provisions of this Indenture shall, execute instruments to release property from the lien of this Indenture, or convey the Indenture Trustee’s interest in the same, in a manner and under circumstances that are not inconsistent with the provisions of this Indenture.  No party relying upon an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys.

(b)     The Indenture Trustee shall, at such time as there are no Notes Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07 have been paid in full, release any remaining portion of the Trust Estate that secured the Notes from the lien of this Indenture and release to the Issuer or any other Person entitled thereto any funds then on deposit in the Trust Accounts.  The Indenture Trustee shall release property from the lien of this Indenture pursuant to this Section 8.04(b) only upon receipt by it of an Issuer Request accompanied by an Officer’s Certificate, an Opinion of Counsel and (if required by the TIA) Independent Certificates in accordance with TIA §§ 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.01.

(c)     The Issuer agrees, upon request by the Servicer and representation by the Servicer that it has complied with the procedure in Section 9.01 of the Sale and Servicing Agreement, to render the Issuer Request to the Indenture Trustee in accordance with Section 4.04, and take such other actions as are required in that Section.

SECTION 8.05.     Opinion of Counsel.  The Indenture Trustee shall receive at least seven days’ prior written notice when requested by the Issuer to take any action pursuant to Section 8.04(b), accompanied by copies of any instruments involved, and the Indenture Trustee shall also require, as a condition to such action, an Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee, stating the legal effect of any such action, outlining the steps required to complete the same, and concluding that all conditions precedent to the taking of such action have been complied with and such action will not materially and adversely impair the security for the Notes or the rights of the Noteholders in contravention of the provisions of this Indenture; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Trust Estate.  Counsel rendering any such opinion may rely,

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without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action.

ARTICLE IX.

 SUPPLEMENTAL INDENTURES

SECTION 9.01.     Supplemental Indentures Without Consent of Noteholders.

(a)     Without the consent of the Holders of any Notes, but with prior written notice made available to the Rating Agencies by the Administrator (with copy to the Indenture Trustee), the Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into one or more supplemental indentures hereto (which shall conform to the provisions of the Trust Indenture Act as in force at the date of the execution thereof), in form satisfactory to the Indenture Trustee, for any of the following purposes:

(i)     to correct or amplify the description of any property at any time subject to the lien of this Indenture, or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the lien of this Indenture, or to subject to the lien of this Indenture additional property;

(ii)     to evidence the succession, in compliance with the applicable provisions hereof, of another person to the Issuer, and the assumption by any such successor of the covenants of the Issuer contained herein and in the Notes;

(iii)     to add to the covenants of the Issuer, for the benefit of the Holders of the Notes, or to surrender any right or power herein conferred upon the Issuer;

(iv)     to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee;

(v)     to cure any ambiguity, to correct or supplement any provision herein or in any supplemental indenture that may be inconsistent with any other provision herein or in any supplemental indenture or to add any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture; provided, that such action shall not adversely affect the interests of the Holders of the Notes, as evidenced by an Officer’s Certificate of the Issuer;

(vi)     to evidence and provide for the acceptance of the appointment hereunder by a successor trustee with respect to the Notes and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Article VI; or

(vii)     to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under

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the TIA or under any similar federal statute hereafter enacted and to add to this Indenture such other provisions as may be expressly required by the TIA.

The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained.

(b)     The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, also without the consent of any of the Holders of the Notes but with prior notice made available to the Rating Agencies by the Administrator, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Notes under this Indenture; provided, however, that such action shall not, as evidenced by an Opinion of Counsel, adversely affect in any material respect the interests of any Noteholder; provided, further, that such action shall be deemed not to adversely affect in any material respect the interests of any Noteholder and no Opinion of Counsel to that effect shall be required if the Rating Agency Condition is satisfied with respect to each Rating Agency.

SECTION 9.02.     Supplemental Indentures with Consent of Noteholders.  The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may, with prior notice made available to the Rating Agencies by the Administrator and with the consent of the Holders of not less than a majority of the Outstanding Amount of the Notes, by Act of such Holders delivered to the Issuer and the Indenture Trustee, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Notes under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Note affected thereby:

(i)     change the date of payment of any installment of principal of or interest on any Note, or reduce the principal amount thereof, the interest rate thereon or the Redemption Price with respect thereto, change the provisions of this Indenture relating to the application of collections on, or the proceeds of the sale of, the Trust Estate to payment of principal of or interest on the Notes, or change any place of payment where, or the coin or currency in which, any Note or the interest thereon is payable, or impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of funds available therefor, as provided in Article V, to the payment of any such amount due on the Notes on or after the respective due dates thereof (or, in the case of redemption, on or after the Redemption Date);

(ii)     reduce the percentage of the Outstanding Amount of the Notes, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture;

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(iii)     modify or alter the provisions of the proviso to the definition of “Outstanding”;

(iv)     reduce the percentage of the Outstanding Amount of the Notes, required to direct the Indenture Trustee to direct the Issuer to sell or liquidate the Trust Estate pursuant to Section 5.04;

(v)     modify any provision of this Section except to increase any percentage specified herein or to provide that certain additional provisions of this Indenture or the Basic Documents cannot be modified or waived without the consent of the Holder of each Outstanding Note affected thereby;

(vi)     modify any of the provisions of this Indenture in such manner as to affect the calculation of the amount of any payment of interest or principal due on any Note on any Payment Date (including the calculation of any of the individual components of such calculation) or to affect the rights of the Holders of Notes to the benefit of any provisions for the mandatory redemption of the Notes contained herein; or

(vii)     permit the creation of any lien ranking prior to or on a parity with the lien of this Indenture with respect to any part of the Trust Estate or, except as otherwise permitted or contemplated herein, terminate the lien of this Indenture on any property at any time subject hereto or deprive the Holder of any Note of the security provided by the lien of this Indenture.

It shall not be necessary for any Act of Noteholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture pursuant to this Section, the Indenture Trustee shall mail to the Holders of the Notes to which such amendment or supplemental indenture relates a notice setting forth in general terms the substance of such supplemental indenture.  Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

SECTION 9.03.     Execution of Supplemental Indentures.  In executing, or permitting the additional trusts created by, any supplemental indenture permitted by this Article IX or the modification thereby of the trusts created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent thereto have been met.  The Indenture Trustee and the Owner Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee’s or the Owner Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise.  Any supplemental indenture affecting the rights, duties, immunities or liabilities of the Owner Trustee shall require

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the Owner Trustee’s written consent.  The Administrator shall provide a fully executed copy of any supplemental indentures to this Indenture to each Rating Agency.

SECTION 9.04.     Effect of Supplemental Indenture.  Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and shall be deemed to be modified and amended in accordance therewith with respect to the Notes affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

SECTION 9.05.     Reference in Notes to Supplemental Indentures.  Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture.  If the Issuer or the Indenture Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Indenture Trustee and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for Outstanding Notes.

SECTION 9.06.     Conformity with Trust Indenture Act.  Every amendment of this Indenture and every supplemental indenture executed pursuant to this Article IX shall conform to the requirements of the Trust Indenture Act as then in effect so long as this Indenture shall then be qualified under the Trust Indenture Act.

ARTICLE X.

 REDEMPTION OF NOTES

SECTION 10.01.     Redemption.  The Notes are subject to redemption in whole, but not in part, at the direction of the Servicer pursuant to Section 9.01 of the Sale and Servicing Agreement, on any Payment Date on which the Servicer exercises its option to purchase the Trust Estate pursuant to said Section 9.01, for a purchase price equal to the Redemption Price; provided, that the Issuer has available funds sufficient to pay the Redemption Price.  The Servicer or the Issuer shall furnish the Rating Agencies and the Indenture Trustee notice of such redemption.  If the Notes are to be redeemed pursuant to this Section 10.01, the Servicer shall furnish notice of such election to the Indenture Trustee not later than 20 days prior to the Redemption Date and shall deposit on the Business Day prior to the Redemption Date with the Indenture Trustee in the Note Distribution Account the Redemption Price of the Notes to be redeemed, whereupon all such Notes shall be due and payable on the Redemption Date upon the furnishing of a notice complying with Section 10.02 to each Holder of the Notes.  For the avoidance of doubt, the Trust Accounts need not be closed until 30 days after the receipt of such notice.

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SECTION 10.02.     Form of Redemption Notice.  Notice of redemption under Section 10.01 shall be given by the Indenture Trustee by first-class mail, postage prepaid, or by facsimile mailed or transmitted not later than 10 days prior to the applicable Redemption Date to each Noteholder, as of the close of business on the Record Date preceding the applicable Redemption Date, at such Holder’s address or facsimile number appearing in the Note Register.

All notices of redemption shall state:

(i)     the Redemption Date;

(ii)     the Redemption Price;

(iii)     the place where such Notes are to be surrendered for payment of the Redemption Price (which shall be the office or agency of the Issuer to be maintained as provided in Section 3.02); and

(iv)     that interest on the Notes shall cease to accrue on the Redemption Date.

Notice of redemption of the Notes shall be given by the Indenture Trustee in the name and at the expense of the Issuer.  Failure to give notice of redemption, or any defect therein, to any Holder of any Note shall not impair or affect the validity of the redemption of any other Note.

SECTION 10.03.     Notes Payable on Redemption Date.  The Notes or portions thereof to be redeemed shall, following notice of redemption as required by Section 10.02 (in the case of redemption pursuant to Section 10.01), on the Redemption Date become due and payable at the Redemption Price and (unless the Issuer shall default in the payment of the Redemption Price) no interest shall accrue on the Redemption Price for any period after the date to which accrued interest is calculated for purposes of calculating the Redemption Price.

ARTICLE XI.

 MISCELLANEOUS

SECTION 11.01.     Compliance Certificates and Opinions, etc.

(a)     Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Indenture Trustee (i) an Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with and (iii) (if required by the TIA) an Independent Certificate from a firm of certified public accountants meeting the applicable requirements of this Section, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished.

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Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

(i)     a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto;

(ii)     a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(iii)     a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv)     a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with.

(b)     (i) Prior to the deposit of any Collateral or other property or securities with the Indenture Trustee that is to be made the basis for the release of any property or securities subject to the lien of this Indenture, the Issuer shall, in addition to any obligation imposed in Section 11.01(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days of such deposit) to the Issuer of the Collateral or other property or securities to be so deposited.

(ii)     Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signatory thereof as to the matters described in clause (i) above, the Issuer shall also deliver to the Indenture Trustee an Independent Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited and of all other such securities made the basis of any such withdrawal or  release since the commencement of the then-current fiscal year of the Issuer, as set forth in the certificates delivered pursuant to clause (i) above and this clause (ii), is 10% or more of the Outstanding Amount of the Notes, but such a certificate need not be furnished with respect to any securities so deposited, if the fair value thereof to the Issuer as set forth in the related Officer’s Certificate is less than $25,000 or less than one percent of the Outstanding Amount of the Notes.

(iii)     Whenever any property or securities are to be released from the lien of this Indenture, the Issuer shall also furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days of such release) of the property or securities proposed to be released and stating that in the opinion of such person the proposed release will not impair the security under this Indenture in contravention of the provisions hereof.

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(iv)     Other than with respect to the release of any Purchased Receivable, the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signer thereof as to the matters described in clause (iii) above and the Issuer shall also furnish to the Indenture Trustee an Independent Certificate as to the same matters if the fair value of the property or securities and of all other property, other than property as contemplated by clause (v) below, or securities released from the lien of this Indenture since the commencement of the then-current calendar year, as set forth in the certificates required by clause (iii) above and this clause (iv), equals 10% or more of the Outstanding Amount of the Notes, but such certificate need not be furnished in the case of any release of property or securities if the fair value thereof as set forth in the related Officer’s Certificate is less than $25,000 or less than one percent of the then Outstanding Amount of the Notes.

(v)     Notwithstanding Section 4.04 or any other provision of this Section, the Issuer may, without compliance with the requirements of the other provisions of this Section, (A) collect, liquidate, sell or otherwise dispose of Receivables and Financed Vehicles as and to the extent permitted or required by the Basic Documents and (B) make cash payments out of the Trust Accounts as and to the extent permitted or required by the Basic Documents.

SECTION 11.02.     Form of Documents Delivered to Indenture Trustee.  In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an Authorized Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which such officer’s certificate or opinion is based are erroneous.  Any such certificate of an Authorized Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Servicer, a Seller, the Issuer or the Administrator, stating that the information with respect to such factual matters is in the possession of the Servicer, a Seller, the Issuer or the Administrator, 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.

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.

Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Issuer shall deliver any document as a

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condition of the granting of such application, or as evidence of the Issuer’s compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report.  The foregoing shall not, however, be construed to affect the Indenture Trustee’s right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI.

SECTION 11.03.     Acts of Noteholders.

(a)     Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, where it is hereby expressly required, to the Issuer.  Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Noteholders signing such instrument or instruments.  Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section.

(b)     The fact and date of the execution by any person of any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient.

(c)     The ownership of Notes shall be proved by the Note Register.

(d)     Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Notes shall bind the Holder of every Note issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note.

SECTION 11.04.     Notices, etc., to Indenture Trustee, Issuer and Rating Agencies.  Any request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders or other documents provided or permitted by this Indenture shall be in writing and, if such request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders is to be made upon, given or furnished to or filed with:

(i)     the Indenture Trustee by any Noteholder or by the Issuer, shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Indenture Trustee at its Corporate Trust Office; or

(ii)     the Issuer by the Indenture Trustee or by any Noteholder, shall be sufficient for every purpose hereunder if in writing and mailed first-class, postage prepaid to the Issuer, addressed to: BMW Vehicle Owner Trust 2016-A, in care of Wilmington Trust, National Association, as Owner Trustee, 1100 North Market

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Street, Wilmington, Delaware 19890, or at any other address previously furnished in writing to the Indenture Trustee by the Issuer or the Administrator.  The Issuer shall promptly transmit any notice received by it from the Noteholders to the Indenture Trustee.

Notices required to be given to the Rating Agencies shall be in writing, personally delivered or mailed by certified mail, return receipt requested, to (i) in the case of Moody’s, at the following address: Moody’s Investors Service, Inc., ABS/RMBS Monitoring Department, 7 World Trade Center, 250 Greenwich Street, 25th Floor, New York, New York 10007; (ii) in the case of Fitch, at the following address: Fitch Ratings, Inc., 33 Whitehall Street, New York, New York 10004, Attention: Asset Backed Surveillance; or as to each of the foregoing, at such other address as shall be designated by written notice to the other parties.

SECTION 11.05.     Notices to Noteholders; Waiver.  Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid to each Noteholder affected by such event, at such Holder’s address as it appears on the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice.  In any case where notice to Noteholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given.

Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Noteholders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver.

In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice.

Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder, and shall not under any circumstance constitute a Default or Event of Default.

SECTION 11.06.     Effect of Headings and Table of Contents.  The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

SECTION 11.07.     Successors and Assigns.  All covenants and agreements in this Indenture and the Notes by the Issuer shall bind its successors and assigns, whether so expressed or not.  All agreements of the Indenture Trustee in this Indenture shall bind its successors, co-trustees and agents.

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SECTION 11.08.     Separability.  In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 11.09.     Benefits of Indenture.  Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Noteholders, the Owner Trustee, any other party secured hereunder, and any other Person with an ownership interest in any part of the Trust Estate, any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 11.10.     Legal Holidays.  In any case where the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Notes or this Indenture) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date, except in the case of the Class A-1 Notes and the Class A-2b Notes.

SECTION 11.11.     Governing Law.  THIS INDENTURE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

SECTION 11.12.     Counterparts.  This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

SECTION 11.13.     Recording of Indenture.  If this Indenture is subject to recording in any appropriate public recording offices, such recording is to be effected by the Issuer and at the expense of the Servicer accompanied by an Opinion of Counsel (which may be counsel to the Indenture Trustee or any other counsel reasonably acceptable to the Indenture Trustee) to the effect that such recording is necessary either for the protection of the Noteholders or any other Person secured hereunder or for the enforcement of any right or remedy granted to the Indenture Trustee under this Indenture.

SECTION 11.14.     Trust Obligation.  No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (i) the Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director, employee or agent of the Indenture Trustee or the Owner Trustee in its individual capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and the Owner Trustee have no such obligations

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in their individual capacity) except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity.  For all purposes of this Indenture, in the performance of any duties or obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.

SECTION 11.15.     No Petition.  The Indenture Trustee, by entering into this Indenture, each Noteholder, by accepting a Note, and each Note Owner, by accepting a beneficial interest in a Note, hereby covenant and agree that they will not, at any time, petition or otherwise invoke or cause the Issuer or the Depositor to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer or the Depositor 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 the Depositor or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer or the Depositor.

SECTION 11.16.     Inspection.  The Issuer agrees that, on reasonable prior notice, it will permit any representative of the Indenture Trustee, during the Issuer’s normal business hours, to examine all the books of account, records, reports and other papers of the Issuer, to make copies and extracts therefrom, to cause such books to be audited by Independent certified public accountants, and to discuss the Issuer’s affairs, finances and accounts with the Issuer’s officers, employees and Independent certified public accountants, all at such reasonable times and as often as may be reasonably requested; provided, however, that the Indenture Trustee may only cause the books of the Issuer to be audited on an annual basis, unless there occurs an Event of Default hereunder.  The Indenture Trustee shall, and shall cause its representatives to, hold in confidence all such information except to the extent such information is publicly available or such disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Indenture Trustee may reasonably determine with the advice of counsel and after consultation with the Issuer that such disclosure is consistent with its obligations hereunder.

SECTION 11.17.     Conflict with Trust Indenture Act.  If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

The provisions of TIA §§ 310 through 317 that impose duties on any person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein.

SECTION 11.18.     Limitation of Liability.  It is expressly understood and agreed by the parties hereto that (a) this Indenture is executed and delivered by Wilmington Trust, National Association, not individually or personally but solely as Owner Trustee of BMW Vehicle Owner Trust 2016-A, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the

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Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Trust, National Association but is made and intended for the purpose for binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust, National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto and (d) under no circumstances shall Wilmington Trust, National Association be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Indenture or any other related documents.  Wilmington Trust, National Association has made no independent investigations as to the accuracy or completeness of any of the representations or warranties hereunder.

SECTION 11.19.     Intent of the Parties; Reasonableness.

The Indenture Trustee and Issuer acknowledge and agree that the purpose of Section 3.09 and this Section 11.19 is to facilitate compliance by the Issuer and the Depositor with the provisions of Regulation AB and related rules and regulations of the Commission.

Neither the Issuer nor the Administrator (acting on behalf of the Issuer) shall exercise its right to request delivery of information or other performance under these provisions other than in good faith, or for purposes other than compliance with the Securities Act, the Exchange Act and the rules and regulations of the Commission thereunder (or the provision in a private offering of disclosure comparable to that required under the Securities Act).  Each of the parties agrees that (a) the obligations of the parties hereunder shall be interpreted in such a manner as to accomplish compliance with Regulation AB and (b) the parties’ obligations hereunder will be supplemented and modified as necessary to be consistent with any such amendments, interpretive guidance provided by the Commission or its staff, or consensus among participants in the asset-backed securities markets, in respect of the requirements of Regulation AB, and the parties shall comply with reasonable requests made by the Issuer, the Administrator or the Indenture Trustee in good faith for delivery of additional or different information to the extent such information is freely available and deliverable (provided that, in the good faith determination of the Issuer, the Administrator or the Indenture Trustee, such additional or different information is required to comply with the provisions of Regulation AB).

The Issuer (or the Administrator, acting on behalf of the Issuer) shall cooperate with the Indenture Trustee by providing timely notice of requests for information under these provisions and by reasonably limiting such requests to information required, in the reasonable judgment or the Issuer to comply with Regulation AB.

SECTION 11.20.     Communications with Rating Agencies. If the Indenture Trustee shall receive any written or oral communication from any Rating Agency (or any of their respective officers, directors or employees) with respect to the transactions contemplated hereby or under the Basic Documents or in any way relating to the Notes, the Indenture Trustee agrees to refrain from communicating with such Rating Agency and to promptly (and, in any event, within one Business Day) notify the Administrator of such communication.  The Indenture Trustee agrees to act at the direction of the Administrator with respect to any communication to a

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Rating Agency and further agrees that in no event shall the Indenture Trustee engage in any oral communication with respect to the transactions contemplated hereby or under the Basic Documents or in any way relating to the Notes with any Rating Agency (or any of their respective officers, directors or employees) without the participation of the Administrator.

ARTICLE XII.

 COMPLIANCE WITH THE FDIC RULE

SECTION 12.01.     Purpose.

(a)     Each of the Noteholders, by its acceptance of the Notes or a beneficial interest therein, each of the Certificateholders, by its acceptance of the Certificates, the FDIC Rule Parties and the Indenture Trustee acknowledges and agrees that the purpose of this Article XII is to facilitate compliance by the FDIC Rule Parties with the provisions of the FDIC Rule.  Each of the Noteholders, the Certificateholders, the FDIC Rule Parties and the Indenture Trustee acknowledges that the interpretations of the requirements of the FDIC Rule may change over time, whether due to interpretive guidance provided by the FDIC or its staff, consensus among participants in the asset-backed securities markets, advice of counsel, or otherwise, and agrees that the provisions set forth in this Article XII shall have the effect and meanings that are appropriate under the FDIC Rule as such effect and meanings change over time on the basis of evolving interpretations of the FDIC Rule.

(b)     If any provision of the FDIC Rule is amended, or any interpretive guidance regarding the FDIC Rule is provided by the FDIC or its staff, as a result of which the Issuer determines that an amendment to this Article XII is necessary or desirable, then the Issuer and the Indenture Trustee shall be authorized and entitled to amend this Article XII in accordance with such FDIC Rule amendment or guidance notwithstanding the requirements set forth in Sections 9.01 and 9.02, provided that the Issuer delivers to the Indenture Trustee an Opinion of Counsel to the effect that such amendment is required in order to remain in compliance with the FDIC Rule.  Nothing in this Section 12.01(b) shall limit the rights of the Indenture Trustee or the Owner Trustee pursuant to Section 9.03, and the Indenture Trustee and the Owner Trustee shall have no duty to monitor or enforce the ongoing compliance by the FDIC Rule Parties with the FDIC Rule or this Article XII.

(c)     As used in this Article XII, but subject to the rules of interpretation specified in Section 12.01(a) and Section 12.01(b), references to (i) the “sponsor” shall mean BMW Bank, (ii) the “issuing entity” shall mean, collectively, the Depositor, BMW FS and the Issuer (except in Section 12.02(e), where such term shall have the meaning assigned thereto in the FDIC Rule), (iii) the “servicer” shall mean the Servicer or the Administrator, as applicable, (iv) “obligations” or “securitization obligations” shall be deemed to refer to the Notes, but only to the extent secured by the Receivables sold by BMW Bank to the Depositor under the related Receivables Purchase Agreement, and (v) “financial assets” shall mean the Receivables transferred to the Depositor by BMW Bank (except in Section 12.02(e), where such term shall have the meaning assigned thereto in the FDIC Rule).  As a practical matter, and subject to certain limited exceptions, the transactions contemplated by the Basic Documents do not distinguish between Receivables sold by BMW Bank to the Depositor and Receivables sold by

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BMW FS to the Depositor, and the provisions of Section 12.02(a) and Section 12.02(b) are true for all of the Receivables and all of the Notes for so long as any Receivables sold by BMW Bank to the Depositor are owned by the Issuer.

(d)       Each of the FDIC Rule Parties believes that the transactions and actions contemplated by the Basic Documents and the related prospectus comply with the requirements of Section 12.02.

SECTION 12.02.     Requirements of the FDIC Rule.  As required by the FDIC Rule:

(a)     Payment of principal and interest on the securitization obligations must be primarily based on the performance of financial assets that are transferred to the Issuer and, except for interest rate or currency mismatches between the financial assets and the obligations, shall not be contingent on market or credit events that are independent of such financial assets.

(b)       The sponsor, issuing entity, and/or servicer, as appropriate, shall make available to investors, information describing the financial assets, obligations, capital structure, compensation of relevant parties, and relevant historical performance data set forth below:

(i)     On or prior to issuance of obligations and at the time of delivery of any periodic distribution report and, in any event, at least once per calendar quarter, while obligations are outstanding, information about the obligations and the financial assets shall be disclosed to all potential investors at the financial asset or pool level, as appropriate for the financial assets, and security-level to enable evaluation and analysis of the credit risk and performance of the obligations and financial assets. Such information and its disclosure, at a minimum, shall comply with the requirements of Regulation AB or any successor disclosure requirements for public issuances, even if the obligations are issued in a private placement or are not otherwise required to be registered; provided that information that is unknown or not available to the sponsor or the issuing entity after reasonable investigation may be omitted if the issuing entity includes a statement in the offering documents disclosing that the specific information is otherwise unavailable;

(ii)     On or prior to issuance of obligations, the structure of the securitization and the credit and payment performance of the obligations shall be disclosed, including the capital or tranche structure, the priority of payments and specific subordination features; representations and warranties made with respect to the financial assets, the remedies for and the time permitted for cure of any breach of representations and warranties, including the repurchase of financial assets, if applicable; liquidity facilities and any credit enhancements permitted by the FDIC Rule, any waterfall triggers or priority of payment reversal features; and policies governing delinquencies, servicer advances, loss mitigation, and write-offs of financial assets;

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(iii)     While obligations are outstanding, the issuing entity shall provide to investors information with respect to the credit performance of the obligations and the financial assets, including periodic and cumulative financial asset performance data, delinquency and modification data for the financial assets, substitutions and removal of financial assets, servicer advances, as well as losses that were allocated to such tranche and the remaining balance of financial assets supporting such tranche, if applicable, and the percentage of each tranche in relation to the securitization as a whole; and

(iv)     In connection with the issuance of the obligations, the nature and amount of compensation paid to the originator, sponsor, rating agency or third-party advisor, any mortgage or other broker, and the servicer(s), and the extent to which any risk of loss on the underlying assets is retained by any of them for such securitization shall be disclosed. The issuing entity shall provide to investors while any obligations are outstanding any changes to such information and the amount and nature of payments of any deferred compensation or similar arrangements to any of the parties.

(c)       Subject to Section 12.04, the sponsor shall retain an economic interest in a material portion, defined as not less than five (5) percent, of the credit risk of the financial assets, which retained interest will be in the form of a representative sample of the financial assets equal to not less than five (5) percent of the principal amount of the financial assets at transfer. This retained interest may not be sold or pledged or hedged, except for the hedging of interest rate or currency risk, during the term of the securitization.

(d)       The obligations shall not be predominantly sold to an affiliate (other than a wholly-owned subsidiary consolidated for accounting and capital purposes with the sponsor) or an affiliated broker-dealer who purchases such obligations with a view to promptly reselling such obligations to persons or entities that are neither affiliates (other than wholly-owned subsidiaries of the sponsor consolidated for accounting and capital purposes with the sponsor) nor insiders of the sponsor in the ordinary course of such broker-dealer’s business pursuant to an underwriting or similar agreement entered into in the ordinary course of business; provided that (i) at the time the obligations are sold to the affiliated broker-dealer, such broker-dealer sells not less than 51% of the principal amount of the obligations to persons and entities that are not affiliates (other than wholly-owned subsidiaries of the sponsor consolidated for accounting and capital purposes with the sponsor) or insiders of the sponsor; (ii) at all times after such obligations are sold to the affiliated broker-dealer, such broker-dealer holds the unsold portion of the obligations with the intent to sell such unsold portion to persons or entities that are not affiliates (other than wholly-owned subsidiaries of the sponsor consolidated for accounting and capital purposes with the sponsor) or insiders of the sponsor and (iii) the other requirements of the FDIC Rule, including, without limitation, the requirements of Sections 360.6(c)(3) and (4) of the FDIC Rule, are satisfied.

(e)       The sponsor shall separately identify in its financial asset data bases the financial assets transferred into any securitization and shall maintain an electronic or paper copy of the closing documents for such securitization in a readily accessible form, and a current list of all of its outstanding securitizations and issuers, and the most recent Form 10-K, if applicable, or

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other periodic financial report for each securitization and issuer. The sponsor shall make these records readily available for review by the FDIC promptly upon written request.

(f)       To the extent serving as servicer, custodian or paying agent for the securitization, the sponsor shall not commingle amounts received with respect to the financial assets with its own assets except for the time, not to exceed two Business Days, necessary to clear any payments received.

SECTION 12.03.     Performance.  The Issuer agrees to perform the obligations set forth in Section 12.02, except to the extent any such obligation is specifically imposed exclusively upon the servicer or the sponsor, and to the extent the performance of such obligations is necessary to facilitate compliance with this Article XII by all FDIC Rule Parties.

SECTION 12.04.     Effect of Section 941 Rules.  Section 12.02(c) hereof shall not be construed to require the sponsor to retain any greater economic interest in the credit risk of the financial assets than is required to comply with the FDIC Rule and other applicable law. Accordingly, upon the effective date of regulations promulgated under Section 15G of the Securities Exchange Act, 15 U.S.C. 78a et seq., added by Section 941(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (such regulations, the “Section 941 Rules” and such date, the “Section 941 Effective Date”) and thereafter, the sponsor shall have the option to adjust the amount of credit risk that it retains for purposes of the FDIC Rule, or the terms under which such credit risk is retained for purposes of the FDIC Rule, the method by which such credit risk is retained or the restrictions applicable to the credit risk retained for purposes of the FDIC Rule, to the greatest extent elected by the sponsor, so long as the sponsor’s retention shall be in compliance with the Section 941 Rules.  Within a reasonable time after the sponsor has so adjusted the amount or terms of the credit risk it retains, the sponsor shall give notice thereof to the Noteholders and the Certificateholders, and each of the Indenture Trustee and the FDIC Rule Parties is authorized and entitled to amend Section 12.02(c), in accordance with and to the extent the Issuer determines necessary or appropriate, to reflect the requirements of the Section 941 Rules.

SECTION 12.05.     Actions Upon Repudiation.

(a)     In the event that the sponsor becomes the subject of an insolvency proceeding and the FDIC, as receiver or conservator for the sponsor, exercises its right of repudiation as contemplated by paragraph (d)(4)(ii) of the FDIC Rule, the Servicer shall ascertain whether the FDIC in such capacity will pay damages as provided in such paragraph (d)(4)(ii). Upon making such determination, the Servicer shall promptly, and in any event no more than one Business Day thereafter (or, if the Servicer fails to act, the Noteholders representing not less than a majority of the Outstanding Amount of the Notes or the Certificateholders representing a majority of the Certificate Percentage Interests may), notify the Indenture Trustee and the Owner Trustee.

(b)     Upon receipt of the notice specified in Section 12.05(a) indicating that a payment will be made, the Indenture Trustee shall determine the date (the “applicable distribution date”) for making a distribution to Noteholders and, if applicable, Certificateholders of such damages, which date shall be the earlier of (i) the next Payment Date on which such

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damages could be distributed and (ii) the earliest practicable date by which the Indenture Trustee could declare a special distribution date, in each case subject to all applicable provisions of this Indenture, applicable law and the procedures of any applicable Clearing Agency.

(c)       When the applicable distribution date is determined, the Indenture Trustee shall cause the Servicer to promptly compute the amount of interest to be paid on each Class of Notes on the applicable distribution date, which interest shall be the amount accruing up to the applicable distribution date and which (unless such applicable distribution date is a Payment Date) shall be computed by pro rating the amount that would otherwise be payable on the next succeeding Payment Date following the applicable distribution date on the basis of (x) the number (in the case of Notes other than the Class A-1 Notes, not to exceed 30) of days elapsed from and including the preceding Payment Date to such applicable distribution date divided by (y) 30.

(d)       If the applicable distribution date is a special distribution date, the Indenture Trustee shall (i) declare such special distribution date (the record date for which shall be the close of business on the day immediately preceding such special distribution date), (ii) declare a special distribution to Noteholders and (iii) deliver notice to the Noteholders and the Owner Trustee of such special distribution date and the amount to be distributed on such date.

(e)       Following payment by the FDIC of damages as provided in paragraph (d)(4)(ii) of the FDIC Rule, the Indenture Trustee shall cause the amount of such damages to be deposited in the Note Distribution Account.  If, as of the applicable distribution date, (x) the maturity of the Notes has been accelerated pursuant to Section 5.02, such damages shall be distributed on such distribution date in the order and priority set forth in clauses THIRD, FOURTH and FIFTH of Section 5.04(b)(i) or (y) the maturity of the Notes has not been accelerated pursuant to Section 5.02, such damages shall be distributed on such distribution date in accordance with the following order of priority:

(i)     first, to the Holders of the Notes, ratably, interest on the Notes in the amount computed by the Servicer pursuant to Section 12.05(c); provided that if there are not sufficient funds available to pay the entire amount of the accrued and unpaid interest on the Notes, the amounts available shall be applied to the payment of such interest on the Notes on a pro rata basis based upon the amount of interest due on each Class of Notes;

(ii)     second, to the Holders of the applicable Notes in the order and priority set forth in Section 8.02(e)(i)-(iv), in an amount equal to the FDIC Principal Amount for such distribution date;

(iii)     third, to the Reserve Account, the amount, if any, necessary to cause the amount on deposit in the Reserve Account to equal the Reserve Account Required Amount (calculated as if such distribution date is a Payment Date); and

(iv)     fourth, any remaining amounts, to the Certificate Distribution Account, for distribution to the Certificateholders.

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(f)     Notwithstanding anything in this Indenture or the other Basic Documents to the contrary, if any applicable distribution date is not a Payment Date, for purposes of calculating (i) the First Priority Principal Distribution Amount and the Regular Principal Distribution Amount for the Payment Date immediately following the applicable distribution date, the phrase “preceding Payment Date” shall be deemed to refer to such applicable distribution date, (ii) the Servicing Fee for the Payment Date immediately following the applicable distribution date, such fee shall be adjusted, as applicable, for any period of time in the related Collection Period in respect of which the Servicer was not servicing any related Receivables on behalf of the Issuer, and (iii) interest payable on the Notes pursuant to Section 5.06(b) of the Sale and Servicing Agreement for the Payment Date immediately following the applicable distribution date, the phrase “preceding Payment Date” shall be deemed to refer to such applicable distribution date and the phrase “prior Payment Dates” shall be deemed to include such applicable distribution date.

SECTION 12.06.     Notice.

(a)     In the event that BMW Bank becomes the subject of an insolvency proceeding and the FDIC, as receiver or conservator, provides a written notice of repudiation as contemplated by paragraph (d)(4)(ii) of the FDIC Rule, the party receiving such notice shall promptly deliver such notice to each of the FDIC Rule Parties, the Indenture Trustee and the Owner Trustee.

(b)       If the FDIC (i) is appointed as a conservator or receiver of BMW Bank and (ii) is in default due to its failure to pay principal or interest when due following the expiration of any cure period hereunder or under the other Basic Documents, the Indenture Trustee at the direction of the Noteholders representing not less than a majority of the Outstanding Amount of the Notes, the Servicer or the Certificateholders representing not less than a majority of the Certificate Percentage Interests shall be entitled to deliver written notice to the FDIC requesting the exercise of contractual rights hereunder and under the other Basic Documents. Upon delivery of such notice, the Indenture Trustee may exercise any contractual rights it may have in accordance with the Basic Documents and the FDIC Rule. The Indenture Trustee shall, at the written direction of the Noteholders representing not less than a majority of the Outstanding Amount of the Notes, or the Owner Trustee shall, at the written direction of the Certificateholders representing not less than a majority of the Certificate Percentage Interests, exercise such contractual rights.

SECTION 12.07.     Reservation of Rights.  Neither the inclusion of this Article XII in this Indenture nor the compliance by any Person with, or the acknowledgment by any Person of, this Article’s provisions constitutes an agreement or acknowledgment by any Person that, in the case of an insolvency proceeding with respect to BMW Bank, a receiver or conservator will have any rights with respect to the Trust Estate.

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ARTICLE XIII.

 ASSET REPRESENTATIONS REVIEW

SECTION 13.01.     Noteholder and Note Owner Requests for Vote on Asset Representations Review.  If the Indenture Trustee receives a notice from the Servicer pursuant to Section 11.01 of the Sale and Servicing Agreement regarding the occurrence of a Delinquency Trigger, then the Indenture Trustee shall promptly provide directions to the Administrator regarding the method by which Noteholders and Note Owners may contact the Indenture Trustee in order to request a vote whether to cause the ARR Receivables to be reviewed by the Asset Representations Reviewer pursuant to the terms of the Asset Representations Review Agreement.  The Indenture Trustee shall promptly notify the Servicer and the Administrator upon the receipt of any request by Noteholders and Note Owners regarding a vote on whether to cause the ARR Receivables to be reviewed by the Asset Representations Reviewer pursuant to the terms of the Asset Representations Review Agreement.  Noteholders and Note Owners may request a vote not later than ninety (90) days after the date on which the Form 10-D describing the occurrence of such Delinquency Trigger shall have been filed by the Administrator pursuant to the terms of Section 1.1(AA) of the Administration Agreement; provided that, if the requesting party is a Note Owner and not a Noteholder, the Note Owner must include with its request a written certification that the requesting party is a Note Owner, together with one of the following additional forms of documentation of the requesting party’s status as a Note Owner: (A) a trade confirmation; (B) an account statement; (C) a letter from a broker-dealer that is acceptable to the Indenture Trustee or Administrator, as applicable; or (D) any other form of documentation that is acceptable to the Indenture Trustee or Administrator, as applicable (any such Note Owner who provides the required certification and documentation, a “Verified Note Owner”).  The Indenture Trustee shall promptly notify the Servicer and the Administrator if Noteholders and Verified Note Owners representing at least 5% of the outstanding aggregate principal amount of all Outstanding Notes (such requesting Noteholders and Verified Note Owners, collectively, the “Requesting Noteholders”) properly and timely request a vote to cause the ARR Receivables to be reviewed by the Asset Representations Reviewer pursuant to the terms of the Asset Representations Review Agreement.

SECTION 13.02.     Noteholder and Note Owner Vote on Asset Representations Review.  Beginning promptly after receipt from the Administrator of a copy of a notice sent to Noteholders and Note Owners pursuant to Section 23 of the Administration Agreement, the Indenture Trustee shall cause the initiation of a review of ARR Receivables to be submitted to a yes or no vote of the Noteholders (with respect to Book-Entry Notes, as directed by the related Note Owners via the applicable Clearing Agency pursuant to its procedures for such votes) of record as of the most recent Record Date.  If, by no earlier than the deadline specified by the Administrator pursuant to Section 23 of the Administration Agreement, a majority of the Noteholders of Outstanding Notes casting a vote so direct (provided that such affirmative votes represent votes by Noteholders holding at least 5% of the aggregate outstanding principal amount of all Outstanding Notes), the Indenture Trustee will promptly notify the Servicer, the Sellers, the Administrator and the Asset Representations Reviewer that the requisite Noteholders have directed the Asset Representations Reviewer to perform a review of the ARR Receivables for the purpose of determining whether such ARR Receivables were in compliance with the

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representations and warranties made by the Sellers pursuant to Section 3.02(b) of the applicable Receivables Purchase Agreement.

SECTION 13.03.     Evaluation of Review Report.

(a)     If a Noteholder or a Verified Note Owner notifies the Indenture Trustee in writing that it considers any non-compliance of any representation with respect to any ARR Receivable to be a breach of the applicable Basic Document, or requests in writing that any Receivable (including any ARR Receivable) be repurchased (including, for the avoidance of doubt, as described in Section 11.02 of the Sale and Servicing Agreement), the Indenture Trustee will promptly forward that written notice to the related Seller, as applicable.

(b)     The Indenture Trustee shall have no obligation to pursue or otherwise be involved in resolving any repurchase request, including any such request that is the subject of a dispute resolution proceeding, unless it is directed to do so by Noteholders representing not less than a majority of the Outstanding Amount and such Noteholders shall have offered to the Indenture Trustee security or indemnity satisfactory to it against the reasonable costs, expenses, disbursements, advances and liabilities that might be incurred by it, its agents and its counsel in compliance with such direction. For the avoidance of doubt, if the Indenture Trustee does not agree to pursue or otherwise be involved in resolving any reallocation request, the related Noteholders may independently pursue dispute resolution in respect of such reallocation request in accordance with Section 11.02 of the Sale and Servicing Agreement.

(c)     The related Seller will have the sole ability to determine if there was non-compliance with any representation or warranty made by it in Section 3.02(b) of the applicable Receivables Purchase Agreement, respectively, that constitutes a breach that materially and adversely affects the interests of the Issuer, the Indenture Trustee, the Owner Trustee, the Certificateholders or the Noteholders in any Receivable, and whether to repurchase the related ARR Receivable from the Issuer in accordance with the terms of Section 6.02 of the related Receivables Purchase Agreement.

SECTION 13.04.     Dispute Resolution.  Any Noteholder or Note Owner may pursue dispute resolution procedures as set forth in Section 11.02 of the Sale and Servicing Agreement.  With respect to any dispute resolution, if so directed by the Servicer, the Indenture Trustee will notify the Requesting Party of the date when the 180-day period related to such dispute resolution proceeding ends without resolution by the appropriate party and that the Requesting Party has 30 days to notify the related Seller and the Servicer if it wishes to pursue dispute resolution.  For the avoidance of doubt, the Indenture Trustee shall be under no obligation to monitor repurchase activity or to independently determine whether a repurchase request remains unresolved at the end of the related 180-day period.

* * * * *

 

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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Indenture to be duly executed by their respective officers, thereunto duly authorized and duly attested, all as of the day and year first above written.

	 	
BMW VEHICLE OWNER TRUST 2016-A

	 	 
	 	
By:

	
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee

	 	 	 
	 	
By:

	
                                                            

	 	 	
Name:

	 	 	
Title:

	 	 	 
	 	
U.S. BANK NATIONAL ASSOCIATION,

	 	
not in its individual capacity but solely as Indenture Trustee

	 	 
	 	
By:

	
                                                            

	 	 	
Name:

	 	 	
Title:

	
STATE OF DELAWARE

	
}

	 
	 	
}

	
ss.:

	
COUNTY OF NEW CASTLE

	
}

	 

BEFORE ME, the undersigned authority, a Notary Public in and for said county and state, on this day personally appeared ________________, a _____________ of WILMINGTON TRUST NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee of BMW Vehicle Owner Trust 2016-A, a Delaware statutory trust (the “Trust”) known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said Trust, and that s/he executed the same as the act of said Trust for the purpose and consideration therein expressed, and in the capacities therein stated.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ___ day of July, 2016.

	 	
_____________________________________

	 	
Notary Public in and for the State of Delaware

My commission expires:

	
STATE OF ______________

	
}

	 
	 	
}

	
ss.:

	
COUNTY OF ______________

	
}

	 

BEFORE ME, the undersigned authority, a Notary Public in and for said county and state, on this day personally appeared _____________, known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of U.S. BANK NATIONAL ASSOCIATION, a national banking association, and that s/he executed the same as the act of said corporation for the purpose and consideration therein stated.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ___ day of July, 2016.

	 	
_______________________________________

	 	
Notary Public in and for the State of ______________

My commission expires:

SCHEDULE A

Schedule of Receivables

 [Delivered to the Owner Trustee on the Closing Date.]

Sch. A-1

SCHEDULE B

PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS

In addition to the representations, warranties and covenants contained in the Indenture, the Issuer hereby represents, warrants and covenants to the Indenture Trustee as follows on the Closing Date:

1.     The Indenture creates a valid and continuing security interest (as defined in the applicable UCC) in the Receivables and the other Collateral in favor of the Indenture Trustee, which security interest is prior to all other Liens, and is enforceable as such against creditors of and purchasers from the Issuer.

2.     The Receivables constitute “chattel paper” (including “tangible chattel paper” and “electronic chattel paper”) within the meaning of the applicable UCC.

3.     Each Trust Account constitutes either a “deposit account” or a “securities account” within the meaning of the UCC.

4.     The Issuer owns and has good and marketable title to each Receivable free and clear of all Liens and rights of others (other than pursuant to the Basic Documents).

5.     The Issuer has caused or will have caused, within ten days after the Closing Date, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Receivables granted to the Indenture Trustee hereunder.  All financing statements referred to in this paragraph 5 contain a statement that: “A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Secured Party.”

6.     With respect to Receivables that constitute tangible chattel paper, such tangible chattel paper is in the possession of the Servicer, and the Servicer (in its capacity as custodian) is holding such tangible chattel paper solely on behalf and for the benefit of the Issuer and the Indenture Trustee, as pledgee of the Issuer.  With respect to Receivables that constitute electronic chattel paper, the Servicer has “control” of such electronic chattel paper within the meaning of Section 9-105 of the applicable UCC and the Servicer (in its capacity as custodian) is maintaining control of such electronic chattel paper solely on behalf and for the benefit of the Issuer and the Indenture Trustee, as pledgee of the Issuer.  No person other than the Servicer has “control” of any Receivable that is evidenced by electronic chattel paper.

7.     The Servicer, in its capacity as custodian, has in its possession (i) the original copy of each Receivable that constitutes tangible chattel paper, (ii) the “authoritative copy” of each Receivable that constitutes electronic chattel paper and (iii) all financing statements referred to in paragraph 5.  With respect to any Receivable constituting electronic chattel paper, there is only one “authoritative copy” of the Receivable and with respect to any Receivable constituting tangible chattel paper, there is no more than one original executed copy of such Receivable.

Sch. B-1

8.     Neither the Issuer nor a custodian or vaulting agent thereof holding any Receivable that is electronic chattel paper has communicated an “authoritative copy” (as such term is used in Section 9-105 of the UCC) of any loan agreement that constitutes or evidences such Receivable to any Person other than the Servicer.

9.     With respect to the Trust Accounts that constitute deposit accounts, either:

(i)     the Issuer has delivered to the Indenture Trustee a fully executed agreement pursuant to which the bank maintaining the deposit accounts has agreed to comply with all instructions originated by the Indenture Trustee directing disposition of the funds in such Trust Accounts without further consent by the Issuer; or

(ii)     the Issuer has taken all steps necessary to cause the Indenture Trustee to become the account holder of such Trust Accounts.

10.     With respect to the Trust Accounts that constitute securities accounts or securities entitlements, either:

(i)     the Issuer has delivered to the Indenture Trustee a fully executed agreement pursuant to which the securities intermediary has agreed to comply with all instructions originated by the Indenture Trustee relating to such Trust Accounts without further consent by the Issuer; or

(ii)     the Issuer has taken all steps necessary to cause the securities intermediary to identify in its records the Indenture Trustee as the Person having a security entitlement against the securities intermediary in each of such Trust Accounts.

11.     Other than the security interest granted to the Indenture Trustee under the Indenture, the Issuer has not pledged, assigned, sold or granted a security interest in, or otherwise conveyed any of the Receivables.

12.     The Issuer has not authorized the filing of, and is not aware of any financing statements against the Issuer that include a description of collateral covering the Receivables other than any financing statement (i) relating to the conveyance of the Receivables by the Sellers to the Depositor under the Receivables Purchase Agreements, (ii) relating to the conveyance of the Receivables by the Depositor to the Issuer under the Sale and Servicing Agreement, (iii) relating to the security interest granted to the Indenture Trustee under the Indenture or (iv) that has been terminated.  The Issuer is not aware of any material judgment, ERISA or tax lien filings against the Issuer.

13.     The tangible chattel paper or electronic chattel paper 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 Depositor, the Issuer or the Indenture Trustee.

Sch. B-2

14.     No Trust Account that constitutes a securities account or securities entitlement is in the name of any Person other than the Issuer or the Indenture Trustee. The Issuer has not consented to the securities intermediary of any such Trust Account to comply with entitlement orders of any Person other than the Indenture Trustee.

15.     No Trust Account that constitutes a deposit account is in the name of any Person other than the Issuer or the Indenture Trustee. The Issuer has not consented to the bank maintaining such Trust Account to comply with instructions of any Person other than the Indenture Trustee.

16.     Notwithstanding any other provision of the Indenture or any other Basic Document, the perfection representations, warranties and covenants contained in this Schedule B shall be continuing, and remain in full force and effect until such time as all obligations under the Indenture have been finally and fully paid and performed.

17.     The parties to this Indenture shall provide the Administrator with prompt written notice of any material breach of the perfection representations, warranties and covenants contained in this Schedule B, and shall not, without satisfying the Rating Agency Condition, waive a breach of any of such perfection representations, warranties or covenants.

18.     The Issuer covenants that, in order to evidence the interests of the Indenture Trustee under this Indenture, the Issuer shall take such action, or execute and deliver such instruments as may be necessary or advisable to maintain and perfect, as a first priority interest, the Indenture Trustee’s security interest in the Receivables. The Issuer shall, from time to time and within the time limits established by law, prepare and file, all financing statements, amendments, continuations, initial financing statements in lieu of a continuation statement, terminations, partial terminations, releases or partial releases, or any other filings necessary or advisable to continue, maintain and perfect the Indenture Trustee’s security interest in the Receivables as a first-priority interest.

Sch. B-3

EXHIBIT A-1

[FORM OF CLASS A-1 NOTE]

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.  OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

A-1-1

	
REGISTERED

	
$329,000,000(1)

	
CUSIP NO. 05582Q AA5

	
No.  R-1

	 	 

BMW VEHICLE OWNER TRUST 2016-A

0.62000% ASSET BACKED NOTE, CLASS A-1

BMW VEHICLE OWNER TRUST 2016-A, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of THREE HUNDRED TWENTY-NINE MILLION DOLLARS, payable on each Payment Date in an amount equal to the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class A-1 Notes pursuant to Section 3.01 of the Indenture dated as of July 20, 2016 (the “Indenture”), between the Issuer and U.S. Bank National Association, a national banking association, as Indenture Trustee (the “Indenture Trustee”); provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the earlier of July 15, 2017 (the “Class A-1 Final Scheduled Payment Date”) and the Redemption Date, if any, pursuant to Section 10.01 of the Indenture. Capitalized terms used but not defined herein are defined in or pursuant to the Indenture, which also contains rules as to construction that shall be applicable herein.

The Issuer will pay interest on this Note at the rate per annum set forth above, on each Payment Date until the principal of this Note is paid or made available for payment, on the principal amount of this Note outstanding on the preceding Payment Date after giving effect to all payments of principal made on the preceding Payment Date, (or on the initial principal balance of this Note from and including the Closing Date in the case of the first Payment Date), subject to certain limitations contained in the last sentence of Section 3.01 of the Indenture.  Interest on this Note will accrue for each Payment Date from and including the prior Payment Date (or, in the case of the first Payment Date, from the Closing Date) to but excluding such Payment Date.  Interest will be computed on the basis of the actual number of days elapsed in the related Interest Period and a 360-day year.  Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof.

The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note.

Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.

Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.

________________

 (1) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.

A-1-2

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer, as of the date set forth below.

	
Date:

	
BMW VEHICLE OWNER TRUST 2016-A

	 	 	 	 
	 	
By:

	
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee under the Trust Agreement

	 	 	 	 
	 	 	
By:

	
_____________________________

	 	 	 	
Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Notes designated above and referred to in the within-mentioned Indenture.

	
Date:

	
U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity but solely as Indenture Trustee

	 	 	 
	 	
By:

	
_______________________________

	 	 	
Authorized Officer

A-1-3

REVERSE OF CLASS A-1 NOTE

This Note is one of a duly authorized issue of Notes of the Issuer, designated as its 0.62000% Asset Backed Notes, Class A-1 (herein called the “Class A-1 Notes”), all issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes.  The Class A-1 Notes are subject to all terms of the Indenture.

The Class A-1 Notes, Class A-2a Notes, Class A-2b Notes, Class A-3 Notes and Class A-4 Notes (collectively, the “Notes”) are and will be secured by the collateral pledged as security therefor as provided in the Indenture.

Principal of the Class A-1 Notes will be payable on each Payment Date in an amount described on the face hereof.  “Payment Date” means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing in August 2016.

As described above, the entire unpaid principal amount of this Note shall be due and payable on the earlier of the Class A-1 Final Scheduled Payment Date and the Redemption Date, if any, pursuant to Section 10.01 of the Indenture.  Notwithstanding the foregoing, if an Event of Default occurs, the Indenture Trustee may, or at the direction of Holders of Notes representing not less than a majority of the Outstanding Amount of the Notes shall, declare the Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class A-1 Notes shall be made pro rata to the Class A-1 Noteholders entitled thereto.

Payments of interest on this Note due and payable on each Payment Date, together with the installment of principal, if any, to the extent not in full payment of this Note, shall be made by wire transfer as directed by such Holder provided such Holder has provided written wiring instructions to the Indenture Trustee and otherwise by check mailed to the Person whose name appears as the Registered Holder of this Note (or one or more Predecessor Notes) on the Note Register as of the close of business on each Record Date, except that 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.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee.  Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Note be submitted for notation of payment.  Any reduction in the principal amount of this Note (or any one or more Predecessor Notes) effected by any payments made on any Payment Date shall be binding upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon.  If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the Registered Holder hereof as of the Record Date preceding such Payment Date by notice mailed or transmitted by facsimile prior to such Payment Date, and the amount then due and payable shall be payable only upon presentation and

A-1-4

surrender of this Note at the applicable Corporate Trust Office of the Indenture Trustee or such other address as is selected by the Indenture Trustee pursuant to the terms of the Indenture.

The Issuer shall pay interest on overdue installments of interest at the Class A-1 Rate to the extent lawful.

As provided in the Indenture, the Notes may be redeemed in whole, but not in part, at the option of the Servicer, on any Payment Date, following the last day of the Collection Period as of which the Pool Balance is equal to or less than 5% of the Initial Pool Balance.

As provided in the Indenture and subject to the limitations set forth therein and on the face hereof, the transfer of this Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which requirements include membership or participation in the Securities Transfer Agent’s Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended, and thereupon one or more new Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees.  No service charge will be charged for any registration of transfer or exchange of this Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange subject to certain exceptions set forth in the Indenture.

Each Noteholder or Note Owner, by acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Sellers, the Servicer, the Indenture Trustee or the Owner Trustee in their respective individual capacities, (ii) any owner of a beneficial interest in the Issuer, including the Sellers, or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Sellers, the Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity, any holder of a beneficial interest in the Issuer, the Sellers, the Servicer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity.

Each Noteholder or Note Owner, by acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, covenants and agrees by accepting the benefits of the Indenture that such Noteholder or Note Owner will not, at any time, petition or otherwise invoke or cause the Issuer or the Depositor to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer or the Depositor

A-1-5

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 the Depositor or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer or the Depositor.

The Issuer has entered into the Indenture and this Note is issued with the intention that, for purposes of federal and state income tax, franchise tax and any other tax measured in whole or in part by income, the Notes held by parties unrelated to the holders of the Certificates will qualify as indebtedness secured by the Trust Estate.  Each Noteholder, by acceptance of this Note (and each Note Owner by acceptance of a beneficial interest in this Note), agrees to treat this Note for such purposes as indebtedness.

This Note, or any interest herein, may not be transferred to an “employee benefit plan” within the meaning of Section 3(3) of ERISA, a “plan” described in Section 4975(e)(1) of the Code, any entity that is deemed to hold “plan assets” of any of the foregoing by reason of an employee benefit plan’s or other plan’s investment in such entity, unless such transferee represents, warrants and covenants that its purchase and holding of such note will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code because it will satisfy the requirements of an applicable prohibited transaction exemption and will not cause a non-exempt violation of any applicable law that is substantially similar to ERISA or Section 4975 of the Code.  By its acquisition of a Note in book-entry form or any interest therein, each transferee will be deemed to have represented, warranted and covenanted that it satisfies the foregoing requirements and the Indenture Trustee may relay conclusively on the same for purposes hereof.

Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Notes under the Indenture at any time by the Issuer with the consent of the Holders of Notes representing at least a majority of the Outstanding Amount of all Notes at the time Outstanding.  The Indenture also contains provisions permitting Holders of Notes representing specified percentages of the Outstanding Amount of the Notes, on behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Note (or any one or more Predecessor Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note.  The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Notes issued thereunder.

A-1-6

The term “Issuer” as used in this Note includes any successor to the Issuer under the Indenture.

This Note is issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth.

This Note and the Indenture shall be governed by and construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws.

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency herein prescribed.

Each Noteholder, by acceptance of this Note or a beneficial interest herein, acknowledges and agrees that the purpose of Article XII of the Indenture is to facilitate compliance by the FDIC Rule Parties with the provisions of the FDIC Rule and that the interpretations of the requirements of the FDIC Rule may change over time, whether due to interpretive guidance provided by the FDIC or its staff, consensus among participants in the asset-backed securities markets, advice of counsel, or otherwise, and agrees that the provisions set forth in Article XII of the Indenture shall have the effect and meanings that are appropriate under the FDIC Rule as such effect and meanings change over time on the basis of evolving interpretations of the FDIC Rule.

Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, none of Wilmington Trust, National Association, in its individual capacity, U.S. Bank National Association, in its individual capacity, any owner of a beneficial interest in the Issuer, the Sellers, the Servicer, or any of their respective partners, beneficiaries, agents, officers, directors, employees or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on this Note or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in the Indenture.  The Holder of this Note by its acceptance hereof agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuer for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note.

A-1-7

ASSIGNMENT

Social Security or taxpayer I.D.  or other identifying number of assignee:

__________________________________________________

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:

_______________________________________________________________________

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ____________________________________________, attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

	
Dated:

	
*/

	 	
Signature Guaranteed:

	 	
*/

_________________

	*/	NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.  Such signature must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which requirements include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

A-1-8

EXHIBIT A-2

[FORM OF CLASS A-2a NOTE]

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.  OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

A-2-1

	
REGISTERED

	
$325,000,000(1)

	
 CUSIP NO. 05582Q AB3

	
No.  R-1

	 	 

BMW VEHICLE OWNER TRUST 2016-A

0.99% ASSET BACKED NOTE, CLASS A-2a

BMW VEHICLE OWNER TRUST 2016-A, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of THREE HUNDRED TWENTY-FIVE MILLION DOLLARS, payable on each Payment Date in an amount equal to the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class A-2a Notes pursuant to Section 3.01 of the Indenture dated as of July 20, 2016 (the “Indenture”), between the Issuer and U.S. Bank National Association, a national banking association, as Indenture Trustee (the “Indenture Trustee”); provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the earlier of May 28, 2019 (the “Class A-2a Final Scheduled Payment Date”) and the Redemption Date, if any, pursuant to Section 10.01 of the Indenture. Except as otherwise provided in the Indenture, no payments of principal of the Class A-2a Notes shall be made until the Class A-1 Notes have been paid in full.  Capitalized terms used but not defined herein are defined in or pursuant to the Indenture, which also contains rules as to construction that shall be applicable herein.

The Issuer will pay interest on this Note at the rate per annum set forth above, on each Payment Date until the principal of this Note is paid or made available for payment, on the principal amount of this Note outstanding on the preceding Payment Date after giving effect to all payments of principal made on the preceding Payment Date (or, on the initial principal balance of this Note from and including the Closing Date in the case of the first Payment Date), subject to certain limitations contained in the last sentence of Section 3.01 of the Indenture.  Interest on this Note will accrue for each Payment Date from and including the 25th day of the calendar month preceding the month of such Payment Date (or, in the case of the first Payment Date, from the Closing Date) to but excluding the 25th day of the calendar month of such Payment Date.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.  Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof.

The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note.

Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.

_______________

 (1) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.

A-2-2

Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.

A-2-3

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer, as of the date set forth below.

	
Date:

	
BMW VEHICLE OWNER TRUST 2016-A

	 	 	 	 
	 	
By:

	
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee under the Trust Agreement

	 	 	 	 
	 	 	
By:

	
_____________________________

	 	 	 	
Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Notes designated above and referred to in the within-mentioned Indenture.

	
Date:

	
U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity but solely as Indenture Trustee

	 	 	 
	 	
By:

	
_______________________________

	 	 	
Authorized Officer

A-2-4

REVERSE OF CLASS A-2a NOTE

This Note is one of a duly authorized issue of Notes of the Issuer, designated as its 0.99% Asset Backed Notes, Class A-2a (herein called the “Class A-2a Notes”), all issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes.  The Class A-2a Notes are subject to all terms of the Indenture.

The Class A-1 Notes, the Class A-2a Notes, the Class A-2b Notes, the Class A-3 Notes and the Class A-4 Notes (collectively, the “Notes”) are and will be secured by the collateral pledged as security therefor as provided in the Indenture.

Principal of the Class A-2a Notes will be payable on each Payment Date in an amount described on the face hereof only after the Class A-1 Notes are paid in full and have no Outstanding Amount.  “Payment Date” means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing in August 2016.

As described above, the entire unpaid principal amount of this Note shall be due and payable on the earlier of the Class A-2a Final Scheduled Payment Date and the Redemption Date, if any, pursuant to Section 10.01 of the Indenture.  Notwithstanding the foregoing, if an Event of Default occurs, the Indenture Trustee may, or at the direction of the Holders of Notes representing not less than a majority of the Outstanding Amount of the Notes shall, declare the Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class A-2a Notes shall be made pro rata to the Class A-2a Noteholders entitled thereto.

Payments of interest on this Note due and payable on each Payment Date, together with the installment of principal, if any, to the extent not in full payment of this Note, shall be made by wire transfer as directed by such Holder provided such Holder has provided written wiring instructions to the Indenture Trustee and otherwise by check mailed to the Person whose name appears as the Registered Holder of this Note (or one or more Predecessor Notes) on the Note Register as of the close of business on each Record Date, except that 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.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee.  Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Note be submitted for notation of payment.  Any reduction in the principal amount of this Note (or any one or more Predecessor Notes) effected by any payments made on any Payment Date shall be binding upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon.  If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the Registered Holder hereof as of the Record Date preceding such Payment Date by notice mailed or transmitted by facsimile prior to such Payment Date, and the amount then due and payable shall be payable only upon presentation and

A-2-5

surrender of this Note at the applicable Corporate Trust Office of the Indenture Trustee or such other address as is selected by the Indenture Trustee pursuant to the terms of the Indenture.

The Issuer shall pay interest on overdue installments of interest at the Class A-2a Rate to the extent lawful.

As provided in the Indenture, the Notes may be redeemed in whole, but not in part, at the option of the Servicer on any Payment Date following the last day of the Collection Period as of which the Pool Balance is equal to or less than 5% of the Initial Pool Balance.

As provided in the Indenture and subject to the limitations set forth therein and on the face hereof, the transfer of this Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which requirements include membership or participation in the Securities Transfer Agent’s Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended, and thereupon one or more new Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees.  No service charge will be charged for any registration of transfer or exchange of this Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange subject to certain exceptions set forth in the Indenture.

Each Noteholder or Note Owner, by acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Sellers, the Servicer, the Indenture Trustee or the Owner Trustee in their respective individual capacities, (ii) any owner of a beneficial interest in the Issuer, including the Sellers, or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Sellers, the Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity, any holder of a beneficial interest in the Issuer, the Sellers, the Servicer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity.

Each Noteholder or Note Owner, by acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, covenants and agrees by accepting the benefits of the Indenture that such Noteholder or Note Owner will not, at any time, petition or otherwise invoke or cause the Issuer or the Depositor to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer or the Depositor

A-2-6

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 the Depositor or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer or the Depositor.

The Issuer has entered into the Indenture and this Note is issued with the intention that, for purposes of federal and state income tax, franchise tax and any other tax measured in whole or in part by income, the Notes held by parties unrelated to the holders of the Certificates will qualify as indebtedness secured by the Trust Estate.  Each Noteholder, by acceptance of this Note (and each Note Owner by acceptance of a beneficial interest in this Note), agrees to treat this Note for such purposes as indebtedness.

This Note, or any interest herein, may not be transferred to an “employee benefit plan” within the meaning of Section 3(3) of ERISA, a “plan” described in Section 4975(e)(1) of the Code, any entity that is deemed to hold “plan assets” of any of the foregoing by reason of an employee benefit plan’s or other plan’s investment in such entity, unless such transferee represents, warrants and covenants that its purchase and holding of such note will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code because it will satisfy the requirements of an applicable prohibited transaction exemption and will not cause a non-exempt violation of any applicable law that is substantially similar to ERISA or Section 4975 of the Code.  By its acquisition of a Note in book-entry form or any interest therein, each transferee will be deemed to have represented, warranted and covenanted that it satisfies the foregoing requirements and the Indenture Trustee may relay conclusively on the same for purposes hereof.

Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Notes under the Indenture at any time by the Issuer with the consent of the Holders of Notes representing at least a majority of the Outstanding Amount of all Notes at the time Outstanding.  The Indenture also contains provisions permitting Holders of Notes representing specified percentages of the Outstanding Amount of the Notes, on behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Note (or any one or more Predecessor Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note.  The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Notes issued thereunder.

A-2-7

The term “Issuer” as used in this Note includes any successor to the Issuer under the Indenture.

This Note is issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth.

This Note and the Indenture shall be governed by and construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws.

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency herein prescribed.

Each Noteholder, by acceptance of this Note or a beneficial interest herein, acknowledges and agrees that the purpose of Article XII of the Indenture is to facilitate compliance by the FDIC Rule Parties with the provisions of the FDIC Rule and that the interpretations of the requirements of the FDIC Rule may change over time, whether due to interpretive guidance provided by the FDIC or its staff, consensus among participants in the asset-backed securities markets, advice of counsel, or otherwise, and agrees that the provisions set forth in Article XII of the Indenture shall have the effect and meanings that are appropriate under the FDIC Rule as such effect and meanings change over time on the basis of evolving interpretations of the FDIC Rule.

Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, none of Wilmington Trust, National Association, in its individual capacity, U.S. Bank National Association, in its individual capacity, any owner of a beneficial interest in the Issuer, the Sellers, the Servicer, or any of their respective partners, beneficiaries, agents, officers, directors, employees or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on this Note or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in the Indenture.  The Holder of this Note by its acceptance hereof agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuer for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note.

A-2-8

ASSIGNMENT

Social Security or taxpayer I.D.  or other identifying number of assignee:

__________________________________________________

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:

_______________________________________________________________________

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ____________________________________________, attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

	
Dated:

	
*/

	 	
Signature Guaranteed:

	 	
*/

_________________

	*/	NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.  Such signature must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which  requirements include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

A-2-9

EXHIBIT A-3

[FORM OF CLASS A-2b NOTE]

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.  OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

A-3-1

	
REGISTERED

	
$125,000,000(1)

	
 CUSIP NO. 05582Q AC1

	
No.  R-1

	 	 

BMW VEHICLE OWNER TRUST 2016-A

LIBOR plus 0.24% ASSET BACKED NOTE, CLASS A-2b

BMW VEHICLE OWNER TRUST 2016-A, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of ONE HUNDRED TWENTY-FIVE MILLION DOLLARS, payable on each Payment Date in an amount equal to the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class A-2b Notes pursuant to Section 3.01 of the Indenture dated as of July 20, 2016 (the “Indenture”), between the Issuer and U.S. Bank National Association, a national banking association, as Indenture Trustee (the “Indenture Trustee”); provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the earlier of May 28, 2019 (the “Class A-2b Final Scheduled Payment Date”) and the Redemption Date, if any, pursuant to Section 10.01 of the Indenture. Except as otherwise provided in the Indenture, no payments of principal of the Class A-2b Notes shall be made until the Class A-1 Notes have been paid in full.  Capitalized terms used but not defined herein are defined in or pursuant to the Indenture, which also contains rules as to construction that shall be applicable herein.

The Issuer will pay interest on this Note at the rate per annum set forth above, on each Payment Date until the principal of this Note is paid or made available for payment, on the principal amount of this Note outstanding on the preceding Payment Date after giving effect to all payments of principal made on the preceding Payment Date, (or on the initial principal balance of this Note from and including the Closing Date in the case of the first Payment Date), subject to certain limitations contained in the last sentence of Section 3.01 of the Indenture.  Interest on this Note will accrue for each Payment Date from and including the prior Payment Date (or, in the case of the first Payment Date, from the Closing Date) to but excluding such Payment Date.  Interest will be computed on the basis of the actual number of days elapsed in the related Interest Period and a 360-day year.  Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof.

The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note.

Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.

_______________

 (1) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.

A-3-2

Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.

A-3-3

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer, as of the date set forth below.

	
Date:

	
BMW VEHICLE OWNER TRUST 2016-A

	 	 	 	 
	 	
By:

	
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee under the Trust Agreement

	 	 	 	 
	 	 	
By:

	
_____________________________

	 	 	 	
Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Notes designated above and referred to in the within-mentioned Indenture.

	
Date:

	
U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity but solely as Indenture Trustee

	 	 	 
	 	
By:

	
_______________________________

	 	 	
Authorized Officer

 

A-3-4

REVERSE OF CLASS A-2b NOTE

This Note is one of a duly authorized issue of Notes of the Issuer, designated as its LIBOR plus 0.24% Asset Backed Notes, Class A-2b (herein called the “Class A-2b Notes”), all issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes.  The Class A-2b Notes are subject to all terms of the Indenture.

The Class A-1 Notes, the Class A-2a Notes, the Class A-2b Notes, the Class A-3 Notes and the Class A-4 Notes (collectively, the “Notes”) are and will be secured by the collateral pledged as security therefor as provided in the Indenture.

Principal of the Class A-2b Notes will be payable on each Payment Date in an amount described on the face hereof only after the Class A-1 Notes are paid in full and have no Outstanding Amount.  “Payment Date” means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing in August 2016.

As described above, the entire unpaid principal amount of this Note shall be due and payable on the earlier of the Class A-2b Final Scheduled Payment Date and the Redemption Date, if any, pursuant to Section 10.01 of the Indenture.  Notwithstanding the foregoing, if an Event of Default occurs, the Indenture Trustee may, or at the direction of the Holders of Notes representing not less than a majority of the Outstanding Amount of the Notes shall, declare the Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class A-2b Notes shall be made pro rata to the Class A-2b Noteholders entitled thereto.

Payments of interest on this Note due and payable on each Payment Date, together with the installment of principal, if any, to the extent not in full payment of this Note, shall be made by wire transfer as directed by such Holder provided such Holder has provided written wiring instructions to the Indenture Trustee and otherwise by check mailed to the Person whose name appears as the Registered Holder of this Note (or one or more Predecessor Notes) on the Note Register as of the close of business on each Record Date, except that 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.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee.  Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Note be submitted for notation of payment.  Any reduction in the principal amount of this Note (or any one or more Predecessor Notes) effected by any payments made on any Payment Date shall be binding upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon.  If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the Registered Holder hereof as of the Record Date preceding such Payment Date by notice mailed or transmitted by facsimile prior to such Payment Date, and the amount then due and payable shall be payable only upon presentation and

A-3-5

surrender of this Note at the applicable Corporate Trust Office of the Indenture Trustee or such other address as is selected by the Indenture Trustee pursuant to the terms of the Indenture.

The Issuer shall pay interest on overdue installments of interest at the Class A-2b Rate to the extent lawful.

As provided in the Indenture, the Notes may be redeemed in whole, but not in part, at the option of the Servicer on any Payment Date following the last day of the Collection Period as of which the Pool Balance is equal to or less than 5% of the Initial Pool Balance.

As provided in the Indenture and subject to the limitations set forth therein and on the face hereof, the transfer of this Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which requirements include membership or participation in the Securities Transfer Agent’s Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended, and thereupon one or more new Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees.  No service charge will be charged for any registration of transfer or exchange of this Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange subject to certain exceptions set forth in the Indenture.

Each Noteholder or Note Owner, by acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Sellers, the Servicer, the Indenture Trustee or the Owner Trustee in their respective individual capacities, (ii) any owner of a beneficial interest in the Issuer, including the Sellers, or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Sellers, the Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity, any holder of a beneficial interest in the Issuer, the Sellers, the Servicer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity.

Each Noteholder or Note Owner, by acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, covenants and agrees by accepting the benefits of the Indenture that such Noteholder or Note Owner will not, at any time, petition or otherwise invoke or cause the Issuer or the Depositor to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer or the Depositor

A-3-6

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 the Depositor or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer or the Depositor.

The Issuer has entered into the Indenture and this Note is issued with the intention that, for purposes of federal and state income tax, franchise tax and any other tax measured in whole or in part by income, the Notes held by parties unrelated to the holders of the Certificates will qualify as indebtedness secured by the Trust Estate.  Each Noteholder, by acceptance of this Note (and each Note Owner by acceptance of a beneficial interest in this Note), agrees to treat this Note for such purposes as indebtedness.

This Note, or any interest herein, may not be transferred to an “employee benefit plan” within the meaning of Section 3(3) of ERISA, a “plan” described in Section 4975(e)(1) of the Code, any entity that is deemed to hold “plan assets” of any of the foregoing by reason of an employee benefit plan’s or other plan’s investment in such entity, unless such transferee represents, warrants and covenants that its purchase and holding of such note will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code because it will satisfy the requirements of an applicable prohibited transaction exemption and will not cause a non-exempt violation of any applicable law that is substantially similar to ERISA or Section 4975 of the Code.  By its acquisition of a Note in book-entry form or any interest therein, each transferee will be deemed to have represented, warranted and covenanted that it satisfies the foregoing requirements and the Indenture Trustee may relay conclusively on the same for purposes hereof.

Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Notes under the Indenture at any time by the Issuer with the consent of the Holders of Notes representing at least a majority of the Outstanding Amount of all Notes at the time Outstanding.  The Indenture also contains provisions permitting Holders of Notes representing specified percentages of the Outstanding Amount of the Notes, on behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Note (or any one or more Predecessor Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note.  The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Notes issued thereunder.

A-3-7

The term “Issuer” as used in this Note includes any successor to the Issuer under the Indenture.

This Note is issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth.

This Note and the Indenture shall be governed by and construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws.

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency herein prescribed.

Each Noteholder, by acceptance of this Note or a beneficial interest herein, acknowledges and agrees that the purpose of Article XII of the Indenture is to facilitate compliance by the FDIC Rule Parties with the provisions of the FDIC Rule and that the interpretations of the requirements of the FDIC Rule may change over time, whether due to interpretive guidance provided by the FDIC or its staff, consensus among participants in the asset-backed securities markets, advice of counsel, or otherwise, and agrees that the provisions set forth in Article XII of the Indenture shall have the effect and meanings that are appropriate under the FDIC Rule as such effect and meanings change over time on the basis of evolving interpretations of the FDIC Rule.

Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, none of Wilmington Trust, National Association, in its individual capacity, U.S. Bank National Association, in its individual capacity, any owner of a beneficial interest in the Issuer, the Sellers, the Servicer, or any of their respective partners, beneficiaries, agents, officers, directors, employees or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on this Note or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in the Indenture.  The Holder of this Note by its acceptance hereof agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuer for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note.

A-3-8

ASSIGNMENT

Social Security or taxpayer I.D.  or other identifying number of assignee:

__________________________________________________

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:

_______________________________________________________________________

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ____________________________________________, attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

	
Dated:

	
*/

	 	
Signature Guaranteed:

	 	
*/

_________________

	*/	NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.  Such signature must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which  requirements include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

A-3-9

EXHIBIT A-4

[FORM OF CLASS A-3 NOTE]

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.  OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

A-4-1

	
REGISTERED

	
$356,000,000(1)

	
CUSIP NO. 05582Q AD9

	
No.  R-1

	 	 

BMW VEHICLE OWNER TRUST 2016-A

1.16% ASSET BACKED NOTE, CLASS A-3

BMW VEHICLE OWNER TRUST 2016-A, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of THREE HUNDRED FIFTY-SIX MILLION DOLLARS, payable on each Payment Date in an amount equal to the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class A-3 Notes pursuant to Section 3.01 of the Indenture dated as of July 20, 2016 (the “Indenture”), between the Issuer and U.S. Bank National Association, a national banking association, as Indenture Trustee (the “Indenture Trustee”); provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the earlier of November 25, 2020 (the “Class A-3 Final Scheduled Payment Date”) and the Redemption Date, if any pursuant to Section 10.01 of the Indenture. Except as otherwise provided in the Indenture, no payments of principal of the Class A-3 Notes shall be made until the Class A-1 Notes, the Class A-2a Notes and the Class A-2b Notes have been paid in full. Capitalized terms used but not defined herein are defined in or pursuant to the Indenture, which also contains rules as to construction that shall be applicable herein.

The Issuer will pay interest on this Note at the rate per annum set forth above, on each Payment Date until the principal of this Note is paid or made available for payment, on the principal amount of this Note outstanding on the preceding Payment Date after giving effect to all payments of principal made on the preceding Payment Date (or, on the initial principal balance of this Note from and including the Closing Date in the case of the first Payment Date), subject to certain limitations contained in the last sentence of Section 3.01 of the Indenture.  Interest on this Note will accrue for each Payment Date from and including the 25th day of the calendar month preceding the month of such Payment Date (or, in the case of the first Payment Date, from the Closing Date) to but excluding the 25th day of the calendar month of such Payment Date.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.  Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof.

The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note.

Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.

______________________

 (1) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.

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Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.

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IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer, as of the date set forth below.

	
Date:

	
BMW VEHICLE OWNER TRUST 2016-A

	 	 	 	 
	 	
By:

	
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee under the Trust Agreement

	 	 	 	 
	 	 	
By:

	
_____________________________

	 	 	 	
Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Notes designated above and referred to in the within-mentioned Indenture.

	
Date:

	
U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity but solely as Indenture Trustee

	 	 	 
	 	
By:

	
_______________________________

	 	 	
Authorized Officer

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REVERSE OF CLASS A-3 NOTE

This Note is one of a duly authorized issue of Notes of the Issuer, designated as its 1.16% Asset Backed Notes, Class A-3 (herein called the “Class A-3 Notes”), all issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes.  The Class A-3 Notes are subject to all terms of the Indenture.

The Class A-1 Notes, the Class A-2a Notes, the Class A-2b Notes, the Class A-3 Notes and the Class A-4 Notes (collectively, the “Notes”) are and will be secured by the collateral pledged as security therefor as provided in the Indenture.

Principal of the Class A-3 Notes will be payable on each Payment Date in an amount described on the face hereof only after the Class A-1 Notes, the Class A-2a Notes and the Class A-2b Notes are paid in full and have no Outstanding Amount.  “Payment Date” means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing in August 2016.

As described above, the entire unpaid principal amount of this Note shall be due and payable on the earlier of the Class A-3 Final Scheduled Payment Date and the Redemption Date, if any, pursuant to Section 10.01 of the Indenture.  Notwithstanding the foregoing, if an Event of Default occurs, the Indenture Trustee may, or at the direction of the Holders of Notes representing not less than a majority of the Outstanding Amount of the Notes shall, declare the Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class A-3 Notes shall be made pro rata to the Class A-3 Noteholders entitled thereto.

Payments of interest on this Note due and payable on each Payment Date, together with the installment of principal, if any, to the extent not in full payment of this Note, shall be made by wire transfer as directed by such Holder provided such Holder has provided written wiring instructions to the Indenture Trustee and otherwise by check mailed to the Person whose name appears as the Registered Holder of this Note (or one or more Predecessor Notes) on the Note Register as of the close of business on each Record Date, except that 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.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee.  Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Note be submitted for notation of payment.  Any reduction in the principal amount of this Note (or any one or more Predecessor Notes) effected by any payments made on any Payment Date shall be binding upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon.  If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the Registered Holder hereof as of the Record Date preceding such Payment Date by notice mailed or transmitted by facsimile prior to such Payment

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Date, and the amount then due and payable shall be payable only upon presentation and surrender of this Note at the applicable Corporate Trust Office of the Indenture Trustee or such other address as is selected by the Indenture Trustee pursuant to the terms of the Indenture.

The Issuer shall pay interest on overdue installments of interest at the Class A-3 Rate to the extent lawful.

As provided in the Indenture, the Notes may be redeemed in whole, but not in part, at the option of the Servicer on any Payment Date following the last day of the Collection Period as of which the Pool Balance is equal to or less than 5% of the Initial Pool Balance.

As provided in the Indenture and subject to the limitations set forth therein and on the face hereof, the transfer of this Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which requirements include membership or participation in the Securities Transfer Agent’s Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended, and thereupon one or more new Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees.  No service charge will be charged for any registration of transfer or exchange of this Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange subject to certain exceptions set forth in the Indenture.

Each Noteholder or Note Owner, by acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Sellers, the Servicer, the Indenture Trustee or the Owner Trustee in their respective individual capacities, (ii) any owner of a beneficial interest in the Issuer, including the Sellers, or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Sellers, the Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity, any holder of a beneficial interest in the Issuer, the Sellers, the Servicer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity.

Each Noteholder or Note Owner, by acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, covenants and agrees by accepting the benefits of the Indenture that such Noteholder or Note Owner will not, at any time, petition or otherwise invoke or cause the Issuer or the Depositor to invoke the process of any court or government

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authority for the purpose of commencing or sustaining a case against the Issuer or the Depositor 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 the Depositor or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer or the Depositor.

The Issuer has entered into the Indenture and this Note is issued with the intention that, for purposes of federal and state income tax, franchise tax and any other tax measured in whole or in part by income, the Notes held by parties unrelated to the holders of the Certificates will qualify as indebtedness secured by the Trust Estate.  Each Noteholder, by acceptance of this Note (and each Note Owner by acceptance of a beneficial interest in this Note), agrees to treat this Note for such purposes as indebtedness.

This Note, or any interest herein, may not be transferred to an “employee benefit plan” within the meaning of Section 3(3) of ERISA, a “plan” described in Section 4975(e)(1) of the Code, any entity that is deemed to hold “plan assets” of any of the foregoing by reason of an employee benefit plan’s or other plan’s investment in such entity, unless such transferee represents, warrants and covenants that its purchase and holding of such note will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code because it will satisfy the requirements of an applicable prohibited transaction exemption and will not cause a non-exempt violation of any applicable law that is substantially similar to ERISA or Section 4975 of the Code.  By its acquisition of a Note in book-entry form or any interest therein, each transferee will be deemed to have represented, warranted and covenanted that it satisfies the foregoing requirements and the Indenture Trustee may relay conclusively on the same for purposes hereof.

Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Notes under the Indenture at any time by the Issuer with the consent of the Holders of Notes representing at least a majority of the Outstanding Amount of all Notes at the time Outstanding.  The Indenture also contains provisions permitting Holders of Notes representing specified percentages of the Outstanding Amount of the Notes, on behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Note (or any one or more Predecessor Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note.  The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Notes issued thereunder.

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The term “Issuer” as used in this Note includes any successor to the Issuer under the Indenture.

This Note is issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth.

This Note and the Indenture shall be governed by and construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws.

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency herein prescribed.

Each Noteholder, by acceptance of this Note or a beneficial interest herein, acknowledges and agrees that the purpose of Article XII of the Indenture is to facilitate compliance by the FDIC Rule Parties with the provisions of the FDIC Rule and that the interpretations of the requirements of the FDIC Rule may change over time, whether due to interpretive guidance provided by the FDIC or its staff, consensus among participants in the asset-backed securities markets, advice of counsel, or otherwise, and agrees that the provisions set forth in Article XII of the Indenture shall have the effect and meanings that are appropriate under the FDIC Rule as such effect and meanings change over time on the basis of evolving interpretations of the FDIC Rule.

Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, none of Wilmington Trust, National Association, in its individual capacity, U.S. Bank National Association, in its individual capacity, any owner of a beneficial interest in the Issuer, the Sellers, the Servicer, or any of their respective partners, beneficiaries, agents, officers, directors, employees or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on this Note or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in the Indenture.  The Holder of this Note by its acceptance hereof agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuer for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note.

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ASSIGNMENT

Social Security or taxpayer I.D.  or other identifying number of assignee:

__________________________________________________

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:

_______________________________________________________________________

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ____________________________________________, attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

	
Dated:

	
*/

	 	
Signature Guaranteed:

	 	
*/

_________________

	*/	NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.  Such signature must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which  requirements include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

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EXHIBIT A-5

[FORM OF CLASS A-4 NOTE]

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.  OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

A-5-1

	
REGISTERED

	
$115,000,000(1)

	
CUSIP NO. 05582Q AE7

	
No.  R-1

	 	 

BMW VEHICLE OWNER TRUST 2016-A

1.37% ASSET BACKED NOTE, CLASS A-4

BMW VEHICLE OWNER TRUST 2016-A, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of ONE HUNDRED FIFTEEN MILLION DOLLARS, payable on each Payment Date in an amount equal to the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class A-4 Notes pursuant to Section 3.01 of the Indenture dated as of July 20, 2016 (the “Indenture”), between the Issuer and U.S. Bank National Association, a national banking association, as Indenture Trustee (the “Indenture Trustee”); provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the earlier of December 27, 2022 (the “Class A-4 Final Scheduled Payment Date”) and the Redemption Date, if any, pursuant to Section 10.01 of the Indenture.  Except as otherwise provided in the Indenture, no payments of principal of the Class A-4 Notes shall be made until the Class A-1 Notes, the Class A-2a Notes, the Class A-2b Notes and the Class A-3 Notes have been paid in full.  Capitalized terms used but not defined herein are defined in the Indenture, which also contains rules as to construction that shall be applicable herein.

The Issuer will pay interest on this Note at the rate per annum set forth above, on each Payment Date until the principal of this Note is paid or made available for payment, on the principal amount of this Note outstanding on the preceding Payment Date after giving effect to all payments of principal made on the preceding Payment Date (or on the initial principal balance of this Note from and including the Closing Date in the case of the first Payment Date), subject to certain limitations contained in the last sentence of Section 3.01 of the Indenture.  Interest on this Note will accrue for each Payment Date from and including the 25th day of the calendar month preceding the month of such Payment Date (or, in the case of the first Payment Date, from the Closing Date) to but excluding the 25th day of the calendar month of such Payment Date.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.  Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof.

The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note.

Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.

___________________

 (1) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.

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Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.

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IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer, as of the date set forth below.

	
Date:

	
BMW VEHICLE OWNER TRUST 2016-A

	 	 	 	 
	 	
By:

	
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee under the Trust Agreement

	 	 	 	 
	 	 	
By:

	
_____________________________

	 	 	 	
Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Notes designated above and referred to in the within-mentioned Indenture.

	
Date:

	
U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity but solely as Indenture Trustee

	 	 	 
	 	
By:

	
_______________________________

	 	 	
Authorized Officer

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REVERSE OF CLASS A-4 NOTE

This Note is one of a duly authorized issue of Notes of the Issuer, designated as its 1.37% Asset Backed Notes, Class A-4 (herein called the “Class A-4 Notes”), all issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes.  The Class A-4 Notes are subject to all terms of the Indenture.

The Class A-1 Notes, the Class A-2a Notes, the Class A-2b Notes, the Class A-3 Notes and the Class A-4 Notes (collectively, the “Notes”) are and will be secured by the collateral pledged as security therefor as provided in the Indenture.

Principal of the Class A-4 Notes will be payable on each Payment Date in an amount described on the face hereof only after the Class A-1 Notes, the Class A-2a Notes, the Class A-2b Notes and the Class A-3 Notes are paid in full and have no Outstanding Amount.  “Payment Date” means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing in August 2016.

As described above, the entire unpaid principal amount of this Note shall be due and payable on the earlier of the Class A-4 Final Scheduled Payment Date and the Redemption Date, if any, pursuant to Section 10.01 of the Indenture.  Notwithstanding the foregoing, if an Event of Default occurs, the Indenture Trustee may, or at the direction of the Holders of Notes representing not less than a majority of the Outstanding Amount of the Notes shall, declare the Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class A-4 Notes shall be made pro rata to the Class A-4 Noteholders entitled thereto.

Payments of interest on this Note due and payable on each Payment Date, together with the installment of principal, if any, to the extent not in full payment of this Note, shall be made by wire transfer as directed by such Holder provided such Holder has provided written wiring instructions to the Indenture Trustee and otherwise by check mailed to the Person whose name appears as the Registered Holder of this Note (or one or more Predecessor Notes) on the Note Register as of the close of business on each Record Date, except that 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.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee.  Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Note be submitted for notation of payment.  Any reduction in the principal amount of this Note (or any one or more Predecessor Notes) effected by any payments made on any Payment Date shall be binding upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon.  If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the Registered Holder hereof as of the Record Date preceding such Payment Date by notice mailed or transmitted by facsimile prior to such Payment

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Date, and the amount then due and payable shall be payable only upon presentation and surrender of this Note at the applicable Corporate Trust Office of the Indenture Trustee or such other address as is selected by the Indenture Trustee pursuant to the terms of the Indenture.

The Issuer shall pay interest on overdue installments of interest at the Class A-4 Rate to the extent lawful.

As provided in the Indenture, the Notes may be redeemed in whole, but not in part, at the option of the Servicer on any Payment Date following the last day of the Collection Period as of which the Pool Balance is equal to or less than 5% of the Initial Pool Balance.

As provided in the Indenture and subject to the limitations set forth therein and on the face hereof, the transfer of this Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which requirements include membership or participation in the Securities Transfer Agent’s Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended, and thereupon one or more new Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees.  No service charge will be charged for any registration of transfer or exchange of this Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange subject to certain exceptions set forth in the Indenture.

Each Noteholder or Note Owner, by acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Sellers, the Servicer, the Indenture Trustee or the Owner Trustee in their respective individual capacities, (ii) any owner of a beneficial interest in the Issuer, including the Sellers, or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Sellers, the Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity, any holder of a beneficial interest in the Issuer, the Sellers, the Servicer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity.

Each Noteholder or Note Owner, by acceptance of this Note or, in the case of a Note Owner, a beneficial interest in this Note, covenants and agrees by accepting the benefits of the Indenture that such Noteholder or Note Owner will not, at any time, petition or otherwise invoke or cause the Issuer or the Depositor to invoke the process of any court or government

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authority for the purpose of commencing or sustaining a case against the Issuer or the Depositor 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 the Depositor or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer or the Depositor.

The Issuer has entered into the Indenture and this Note is issued with the intention that, for purposes of federal and state income tax, franchise tax and any other tax measured in whole or in part by income, the Notes held by parties unrelated to the holders of the Certificates will qualify as indebtedness secured by the Trust Estate.  Each Noteholder, by acceptance of this Note (and each Note Owner by acceptance of a beneficial interest in this Note), agrees to treat this Note for such purposes as indebtedness.

This Note, or any interest herein, may not be transferred to an “employee benefit plan” within the meaning of Section 3(3) of ERISA, a “plan” described in Section 4975(e)(1) of the Code, any entity that is deemed to hold “plan assets” of any of the foregoing by reason of an employee benefit plan’s or other plan’s investment in such entity, unless such transferee represents, warrants and covenants that its purchase and holding of such note will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code because it will satisfy the requirements of an applicable prohibited transaction exemption and will not cause a non-exempt violation of any applicable law that is substantially similar to ERISA or Section 4975 of the Code.  By its acquisition of a Note in book-entry form or any interest therein, each transferee will be deemed to have represented, warranted and covenanted that it satisfies the foregoing requirements and the Indenture Trustee may relay conclusively on the same for purposes hereof.

Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Notes under the Indenture at any time by the Issuer with the consent of the Holders of Notes representing at least a majority of the Outstanding Amount of all Notes at the time Outstanding.  The Indenture also contains provisions permitting Holders of Notes representing specified percentages of the Outstanding Amount of the Notes, on behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Note (or any one or more Predecessor Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note.  The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Notes issued thereunder.

A-5-7

The term “Issuer” as used in this Note includes any successor to the Issuer under the Indenture.

This Note is issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth.

This Note and the Indenture shall be governed by and construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws.

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency herein prescribed.

Each Noteholder, by acceptance of this Note or a beneficial interest herein, acknowledges and agrees that the purpose of Article XII of the Indenture is to facilitate compliance by the FDIC Rule Parties with the provisions of the FDIC Rule and that the interpretations of the requirements of the FDIC Rule may change over time, whether due to interpretive guidance provided by the FDIC or its staff, consensus among participants in the asset-backed securities markets, advice of counsel, or otherwise, and agrees that the provisions set forth in Article XII of the Indenture shall have the effect and meanings that are appropriate under the FDIC Rule as such effect and meanings change over time on the basis of evolving interpretations of the FDIC Rule.

Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, none of Wilmington Trust, National Association, in its individual capacity, U.S. Bank National Association, in its individual capacity, any owner of a beneficial interest in the Issuer, the Sellers, the Servicer, or any of their respective partners, beneficiaries, agents, officers, directors, employees or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on this Note or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in the Indenture.  The Holder of this Note by its acceptance hereof agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuer for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note.

A-5-8

ASSIGNMENT

Social Security or taxpayer I.D.  or other identifying number of assignee:

__________________________________________________

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:

_______________________________________________________________________

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ____________________________________________, attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

	
Dated:

	
*/

	 	
Signature Guaranteed:

	 	
*/

_________________

	*/	NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.  Such signature must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which requirements include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with  the Securities Exchange Act of 1934, as amended.

A-5-9

EXHIBIT B

SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE

The assessment of compliance to be delivered by the Indenture Trustee, shall address, at a minimum, the criteria identified as below as “Applicable Servicing Criteria”:

	
Reference

	
Criteria

	 
	
 

	
 

General Servicing Considerations

 

	 
	
1122(d)(1)(i)

	
Policies and procedures are instituted to monitor any performance or other triggers and events of default in accordance with the transaction agreements.

	 
	
1122(d)(1)(ii)

	
If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third party’s performance and compliance with such servicing activities.

	 
	
1122(d)(1)(iii)

	
Any requirements in the transaction agreements to maintain a back-up servicer for the receivables are maintained.

	 
	
1122(d)(1)(iv)

	
A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements.

	 
	
1122(d)(1)(v)

	
Aggregation of information, as applicable, is mathematically accurate and the information conveyed accurately reflects the information.

	 
	
 

	
 

Cash Collection and Administration

 

	 
	
1122(d)(2)(i)

	
Payments on receivables are deposited into the appropriate custodial bank accounts and related bank clearing accounts no more than two business days following receipt, or such other number of days specified in the transaction agreements.

	 
	
1122(d)(2)(ii)

	
Disbursements made via wire transfer on behalf of an obligor or to an investor are made only by authorized personnel.

	
x

	
1122(d)(2)(iii)

	
Advances of funds or guarantees regarding collections, cash flows or distributions, and any interest or other fees charged for such advances, are made, reviewed and approved as specified in the transaction agreements.

	 
	
1122(d)(2)(iv)

	
The related accounts for the transaction, such as cash reserve accounts or accounts established as a form of overcollateralization, are separately maintained (e.g., with respect to commingling of cash) as set forth in the transaction agreements.

	 
	
1122(d)(2)(v)

	
Each custodial account is maintained at a federally insured depository institution as set forth in the transaction agreements. For purposes of this criterion, “federally insured depository institution” with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.

	 
	
1122(d)(2)(vi)

	
Unissued checks are safeguarded so as to prevent unauthorized access.

	 
	
1122(d)(2)(vii)

	
 Reconciliations are prepared on a monthly basis for all asset-backed securities related bank accounts, including custodial accounts and related bank clearing accounts. These reconciliations are (A) mathematically accurate; (B) prepared within 30 calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements; (C) reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items. These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the transaction agreements.

	 

 

B-1

	
Reference

	
Criteria

	 

	
 

	
 

Investor Remittances and Reporting

 

	 
	
1122(d)(3)(i)

	
Reports to investors, including those to be filed with the Commission, are maintained in accordance with the transaction agreements and applicable Commission requirements. Specifically, such reports (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements; (B) provide information calculated in accordance with the terms specified in the transaction agreements; (C) are filed with the Commission as required by its rules and regulations; and (D) agree with investors’ or the trustee’s records as to the total unpaid principal balance and number of receivables serviced by the Servicer.

	 
	
1122(d)(3)(ii)

	
Amounts due to investors are allocated and remitted in accordance with timeframes, distribution priority and other terms set forth in the transaction agreements.

	
x

	
1122(d)(3)(iii)

	
Disbursements made to an investor are posted within two business days to the Servicer’s investor records, or such other number of days specified in the transaction agreements.

	
x

	
1122(d)(3)(iv)

	
Amounts remitted to investors per the investor reports agree with cancelled checks, or other form of payment, or custodial bank statements.

	
x

	
 

	
 

Pool Asset Administration

 

	 
	
1122(d)(4)(i)

	
Collateral or security on receivables is maintained as required by the transaction agreements or related receivables documents.

	 
	
1122(d)(4)(ii)

	
Receivables and related documents are safeguarded as required by the transaction agreements

	 
	
1122(d)(4)(iii)

	
Any additions, removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or requirements in the transaction agreements.

	 
	
1122(d)(4)(iv)

	
Payments on receivables, including any payoffs, made in accordance with the related receivables documents are posted to the Servicer’s obligor records maintained no more than two business days after receipt, or such other number of days specified in the transaction agreements, and allocated to principal, interest or other items (e.g., escrow) in accordance with the related receivables documents.

	 
	
1122(d)(4)(v)

	
The Servicer’s records regarding the receivables agree with the Servicer’s records with respect to an obligor’s unpaid principal balance.

	 
	
1122(d)(4)(vi)

	
Changes with respect to the terms or status of an obligor’s receivables (e.g., loan modifications or re-agings) are made, reviewed and approved by authorized personnel in accordance with usual customary procedures.

	 
	
1122(d)(4)(vii)

	
Loss mitigation or recovery actions (e.g., forbearance plans, modifications and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are initiated, conducted and concluded in accordance with usual customary procedures.

	 
	
1122(d)(4)(viii)

	
Records documenting collection efforts are maintained during the period a receivable is delinquent in accordance with the transaction agreements. Such records are maintained on at least a monthly basis, or such other period specified in the transaction agreements, and describe the entity’s activities in monitoring delinquent receivables including, for example, phone calls, letters and payment rescheduling plans in cases where delinquency is deemed temporary (e.g., illness or unemployment).

	 
	
1122(d)(4)(ix)

	
Adjustments to interest rates or rates of return for receivables with variable rates are computed based on the related receivables documents.

	 

 

B-2

	
Reference

	
Criteria

	 

	
1122(d)(4)(x)

	
Regarding any funds held in trust for an obligor (such as escrow accounts): (A) such funds are analyzed, in accordance with the obligor’s receivables documents, on at least an annual basis, or such other period specified in the transaction agreements; (B) interest on such funds is paid, or credited, to obligors in accordance with applicable receivables documents and state laws; and (C) such funds are returned to the obligor within 30 calendar days of full repayment of the related receivables, or such other number of days specified in the transaction agreements.

	 
	
1122(d)(4)(xi)

	
Payments made on behalf of an obligor (such as tax or insurance payments) are made on or before the related penalty or expiration dates, as indicated on the appropriate bills or notices for such payments, provided that such support has been received by the servicer at least 30 calendar days prior to these dates, or such other number of days specified in the transaction agreements.

	 
	
1122(d)(4)(xii)

	
Any late payment penalties in connection with any payment to be made on behalf of an obligor are paid from the servicer’s funds and not charged to the obligor, unless the late payment was due to the obligor’s error or omission.

	 
	
1122(d)(4)(xiii)

	
Disbursements made on behalf of an obligor are posted within two business days to the obligor’s records maintained by the servicer, or such other number of days specified in the transaction agreements.

	 
	
1122(d)(4)(xiv)

	
 Delinquencies, charge-offs and uncollectible accounts are recognized and recorded in accordance with the transaction agreements.

	 
	
1122(d)(4)(xv)

	
Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction agreements.

	 

	 	
By:

	
_______________________________

	 	 	
Name:

	 	 	
Title:

B-3

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