Document:

Exhibit 10.1

 

Execution Version

 

INDENTURE

 

Dated as of October 3, 2014

 

 

SPRINGCASTLE AMERICA FUNDING, LLC

SPRINGCASTLE CREDIT FUNDING, LLC

SPRINGCASTLE FINANCE FUNDING, LLC

CO-ISSUERS

 

SpringCastle Funding Asset Backed Notes 2014-A

 

 

among

 

SPRINGCASTLE AMERICA FUNDING, LLC, SPRINGCASTLE CREDIT FUNDING,
 LLC and SPRINGCASTLE FINANCE FUNDING, LLC,
  as Co-Issuers,

 

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Loan Trustee for each of the SpringCastle America Funding Trust, the SpringCastle Credit

Funding Trust and the SpringCastle Finance Funding Trust,

 

SPRINGLEAF FINANCE, INC.,
  as Servicer,

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,
 as Paying Agent and Note Registrar

 

and

 

U.S. BANK NATIONAL ASSOCIATION,
  as Indenture Trustee

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE I
    
	
Definitions
    
	
 
    	
 
    
	
SECTION 1.01
    	
Definitions
    	
3
    
	
 
    	
 
    
	
ARTICLE II
    
	
The Notes
    
	
 
    	
 
    
	
SECTION 2.01
    	
Form Generally
    	
3
    
	
SECTION 2.02
    	
Denominations
    	
4
    
	
SECTION 2.03
    	
Execution, Authentication and Delivery
    	
4
    
	
SECTION 2.04
    	
Book-Entry Notes
    	
4
    
	
SECTION 2.05
    	
Registration of and Limitations on Transfer and Exchange of   Notes; Appointment of Note Registrar
    	
6
    
	
SECTION 2.06
    	
Mutilated, Destroyed, Lost or Stolen Notes
    	
15
    
	
SECTION 2.07
    	
Persons Deemed Owners
    	
16
    
	
SECTION 2.08
    	
Cancellation
    	
16
    
	
SECTION 2.09
    	
Notices to Clearing Agency
    	
16
    
	
SECTION 2.10
    	
Definitive Notes
    	
17
    
	
SECTION 2.11
    	
CUSIP Numbers
    	
18
    
	
SECTION 2.12
    	
Appointment of Paying Agent
    	
18
    
	
 
    	
 
    
	
ARTICLE III
    
	
Representations and   Covenants of Co-Issuers and Loan Trustees
    
	
 
    	
 
    
	
SECTION 3.01
    	
Payment of Principal and   Interest
    	
19
    
	
SECTION 3.02
    	
Maintenance of Office or Agency
    	
19
    
	
SECTION 3.03
    	
Money for Note Payments to Be Held in Trust
    	
19
    
	
SECTION 3.04
    	
Existence
    	
20
    
	
SECTION 3.05
    	
Protection of Trust
    	
21
    
	
SECTION 3.06
    	
Opinions as to Trust Estate
    	
22
    
	
SECTION 3.07
    	
Performance of Obligations; Servicing of Loans
    	
22
    
	
SECTION 3.08
    	
Negative Covenants
    	
23
    
	
SECTION 3.09
    	
Statements as to Compliance
    	
23
    
	
SECTION 3.10
    	
Co-Issuers’ Name, Location, etc.
    	
24
    
	
SECTION 3.11
    	
Amendments
    	
24
    
	
SECTION 3.12
    	
No Borrowing
    	
25
    
	
SECTION 3.13
    	
Guarantees, Loans, Advances and Other Liabilities
    	
25
    
	
SECTION 3.14
    	
Tax Treatment
    	
25
    
	
SECTION 3.15
    	
Notice of Events of Default
    	
25
    
	
SECTION 3.16
    	
No Other Business
    	
27
    
	
SECTION 3.17
    	
Further Instruments and Acts
    	
27
    
	
SECTION 3.18
    	
Maintenance of Separate Existence
    	
27
    
	
SECTION 3.19
    	
Perfection Representations, Warranties and Covenants
    	
27
    
	
SECTION 3.20
    	
Other Representations of the Co-Issuers and the Loan   Trustees
    	
27
    
	
SECTION 3.21
    	
Compliance with Laws
    	
28
    

 

 

TABLE OF CONTENTS
  (continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    
	
Satisfaction and   Discharge
    
	
 
    	
 
    	
 
    
	
SECTION 4.01
    	
Satisfaction and Discharge   of this Indenture
    	
28
    
	
SECTION 4.02
    	
Application of Trust Money
    	
29
    
	
 
    	
 
    
	
ARTICLE V
    
	
Defaults and   Remedies
    
	
 
    	
 
    
	
SECTION 5.01
    	
Reserved
    	
29
    
	
SECTION 5.02
    	
Events of Default
    	
29
    
	
SECTION 5.03
    	
Acceleration of Maturity; Rescission and Annulment
    	
31
    
	
SECTION 5.04
    	
Collection of Indebtedness and Suits for Enforcement by   Indenture Trustee
    	
32
    
	
SECTION 5.05
    	
Remedies; Priorities
    	
34
    
	
SECTION 5.06
    	
Optional Preservation of the Trust Estate
    	
35
    
	
SECTION 5.07
    	
Limitation on Suits
    	
35
    
	
SECTION 5.08
    	
Unconditional Rights of Noteholders to Receive Principal   and Interest
    	
36
    
	
SECTION 5.09
    	
Restoration of Rights and Remedies
    	
37
    
	
SECTION 5.10
    	
Rights and Remedies Cumulative
    	
37
    
	
SECTION 5.11
    	
Delay or Omission Not Waiver
    	
37
    
	
SECTION 5.12
    	
Control by Noteholders
    	
37
    
	
SECTION 5.13
    	
Waiver of Past Defaults
    	
38
    
	
SECTION 5.14
    	
Undertaking for Costs
    	
38
    
	
SECTION 5.15
    	
Waiver of Stay or Extension Laws
    	
38
    
	
SECTION 5.16
    	
Action on Notes
    	
39
    
	
SECTION 5.17
    	
Sale of Loans
    	
39
    
	
SECTION 5.18
    	
Performance and Enforcement of Certain Obligations
    	
40
    
	
 
    	
 
    
	
ARTICLE VI
    
	
The Indenture   Trustee, Paying Agent and Note Registrar
    
	
 
    	
 
    
	
SECTION 6.01
    	
Duties of the Indenture   Trustee
    	
40
    
	
SECTION 6.02
    	
Notice of Event of Default
    	
42
    
	
SECTION 6.03
    	
Certain Matters Affecting the Indenture Trustee
    	
42
    
	
SECTION 6.04
    	
Not Responsible for Recitals or Issuance of Notes
    	
44
    
	
SECTION 6.05
    	
Indenture Trustee, Paying Agent and Note Registrar   May Hold Notes
    	
45
    
	
SECTION 6.06
    	
Money Held in Trust
    	
45
    
	
SECTION 6.07
    	
Compensation, Reimbursement and Indemnification
    	
45
    
	
SECTION 6.08
    	
Replacement of Indenture Trustee
    	
46
    
	
SECTION 6.09
    	
Successor Indenture Trustee by Merger
    	
47
    
	
SECTION 6.10
    	
Appointment of Co-Indenture Trustee or Separate Indenture   Trustee
    	
48
    
	
SECTION 6.11
    	
Eligibility; Disqualification
    	
49
    
	
SECTION 6.12
    	
Representations and Warranties of the Indenture Trustee
    	
49
    
	
SECTION 6.13
    	
Execution of Transaction Document
    	
49
    
	
SECTION 6.14
    	
Performance Support Agreement
    	
49
    
	
SECTION 6.15
    	
Rule 15Ga-1 Compliance
    	
50
    

 

ii

 

TABLE OF CONTENTS
  (continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 6.16
    	
Duties of the Paying Agent and Note Registrar
    	
50
    
	
SECTION 6.17
    	
Certain Matters Affecting the Paying Agent and the Note   Registrar
    	
52
    
	
SECTION 6.18
    	
Not Responsible for Recitals or Issuance of Notes
    	
55
    
	
SECTION 6.19
    	
Money Held in Trust
    	
55
    
	
SECTION 6.20
    	
Compensation, Reimbursement and Indemnification
    	
55
    
	
SECTION 6.21
    	
Successor Paying Agent or Note Registrar by Merger
    	
56
    
	
SECTION 6.22
    	
Eligibility; Disqualification
    	
56
    
	
SECTION 6.23
    	
Representations and Warranties of the Paying Agent or the Note   Registrar
    	
57
    
	
 
    	
 
    
	
ARTICLE VII
    
	
Noteholders’ List   and Reports
    
	
 
    	
 
    
	
SECTION 7.01
    	
Co-Issuers to Furnish   Indenture Trustee Names and Addresses of Noteholders
    	
57
    
	
SECTION 7.02
    	
Preservation of Information; Communications to Noteholders
    	
57
    
	
 
    	
 
    
	
ARTICLE VIII
    
	
Allocation and   Application of Collections
    
	
 
    	
 
    
	
SECTION 8.01
    	
Collection of Money
    	
58
    
	
SECTION 8.02
    	
Establishment of the Note Accounts
    	
58
    
	
SECTION 8.03
    	
Collections and Allocations
    	
61
    
	
SECTION 8.04
    	
Rights of Noteholders
    	
61
    
	
SECTION 8.05
    	
Release of Trust Estate
    	
61
    
	
SECTION 8.06
    	
Application of Available Funds, the Reserve Account Draw   Amount and the Advance Reserve Account Draw Amount
    	
63
    
	
SECTION 8.07
    	
Optional Redemption of the Notes
    	
66
    
	
SECTION 8.08
    	
Distributions and Payments to Noteholders
    	
67
    
	
SECTION 8.09
    	
Reports and Statements to Noteholders
    	
68
    
	
 
    	
 
    
	
ARTICLE IX
    
	
Supplemental   Indentures
    
	
 
    	
 
    
	
SECTION 9.01
    	
Supplemental Indentures   Without Consent of Noteholders
    	
68
    
	
SECTION 9.02
    	
Supplemental Indentures With Consent of Noteholders
    	
70
    
	
SECTION 9.03
    	
Execution of Supplemental Indentures
    	
71
    
	
SECTION 9.04
    	
Effect of Supplemental Indenture
    	
72
    
	
SECTION 9.05
    	
Reference in Notes to Supplemental Indentures
    	
72
    
	
 
    	
 
    
	
ARTICLE X
    
	
Termination
    
	
 
    	
 
    
	
SECTION 10.01
    	
Termination of Indenture
    	
72
    
	
SECTION 10.02
    	
Final Distribution
    	
72
    
	
 
    	
 
    	
 
    
	
ARTICLE XI
    
	
Miscellaneous
    
	
 
    	
 
    	
 
    
	
SECTION 11.01
    	
Compliance Certificates
    	
73
    

 

iii

 

TABLE OF CONTENTS
  (continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 11.02
    	
Form of Documents Delivered to Indenture Trustee
    	
74
    
	
SECTION 11.03
    	
Acts of Noteholders
    	
74
    
	
SECTION 11.04
    	
Notices, Etc.
    	
75
    
	
SECTION 11.05
    	
Notices to Noteholders; Waiver
    	
75
    
	
SECTION 11.06
    	
Effect of Headings and Table of Contents
    	
76
    
	
SECTION 11.07
    	
Successors and Assigns
    	
76
    
	
SECTION 11.08
    	
Separability
    	
76
    
	
SECTION 11.09
    	
Benefits of Indenture
    	
76
    
	
SECTION 11.10
    	
Legal Holidays
    	
76
    
	
SECTION 11.11
    	
Governing Law
    	
76
    
	
SECTION 11.12
    	
Counterparts
    	
77
    
	
SECTION 11.13
    	
Recording of Indenture
    	
77
    
	
SECTION 11.14
    	
Inspection
    	
77
    
	
SECTION 11.15
    	
Co-Issuers Obligations
    	
77
    
	
SECTION 11.16
    	
No Bankruptcy Petition; Disclaimer and Subordination
    	
78
    
	
SECTION 11.17
    	
Tax Matters; Administration of Transfer Restrictions
    	
78
    

 

	
EXHIBITS & SCHEDULES
    
	
 
    	
 
    
	
Exhibit A
    	
Forms   of Notes
    
	
 
    	
 
    
	
Exhibit B
    	
Forms   of Transfer Certificates
    
	
 
    	
 
    
	
Exhibit C
    	
Form of   Monthly Servicer Report
    
	
 
    	
 
    
	
Exhibit D
    	
Rule 15Ga-1   Information
    
	
 
    	
 
    
	
Schedule   I
    	
Part A   - Definitions Schedule
    
	
 
    	
 
    
	
 
    	
Part B   — Rules of Construction
    
	
 
    	
 
    
	
Schedule   II
    	
Perfection   Representations, Warranties and Covenants
    

 

iv

 

This INDENTURE, dated as of October 3, 2014 (herein, as amended, modified or supplemented from time to time as permitted hereby, called this “Indenture”), among SPRINGCASTLE AMERICA FUNDING, LLC, a limited liability company formed under the laws of the State of Delaware, as a co-issuer (a “Co-Issuer”), SPRINGCASTLE CREDIT FUNDING, LLC, a limited liability company formed under the laws of the State of Delaware, as a Co-Issuer, SPRINGCASTLE FINANCE FUNDING, LLC, a limited liability company formed under the laws of the State of Delaware, as a Co-Issuer, WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association, as trustee for the benefit of the respective Co-Issuer under the SpringCastle America Funding Trust, SpringCastle Credit Funding Trust, and the SpringCastle Finance Funding Trust (in each such capacity, a “Loan Trustee”), SPRINGLEAF FINANCE, INC., an Indiana corporation, as Servicer, (in such capacity, the “Servicer”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as paying agent (the “Paying Agent”) and as note registrar (the “Note Registrar”) and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as indenture trustee (in such capacity, the “Indenture Trustee” or the “2014-A Indenture Trustee”).  Each of the Co-Issuers is a co-issuer of the Notes (as defined below) issued under this Indenture and as such shall be jointly and severally liable for the Notes and all obligations as an issuer under this Indenture.  Each of the Loan Trustees is an owner and pledgor of legal title to the Loans (as defined below) pledged under this Indenture.

 

PRELIMINARY STATEMENT

 

The Co-Issuers have duly authorized the execution and delivery of this Indenture to provide for asset backed notes (the “Notes”) as provided in this Indenture.

 

The Co-Issuers and the Loan Trustees, through this Indenture, wish to provide security for such obligations to the extent and as provided herein.  All covenants and agreements made by the Co-Issuers and the Loan Trustees herein are for the benefit and security of the Indenture Trustee and the Noteholders.

 

The Co-Issuers and the Loan Trustees are entering into this Indenture, and the Indenture Trustee is accepting the trusts created hereby, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.  All things necessary have been done to make the Notes, when executed by the Co-Issuers and authenticated and delivered by the Note Registrar hereunder and duly issued by the Co-Issuers, the valid obligations of the Co-Issuers, and to make this Indenture a valid agreement of the Co-Issuers, in accordance with their and its terms.

 

Each of the Co-Issuers entered into a Loan Purchase Agreement pursuant to which each of the Sellers and its related Seller Loan Trustee conveyed to the related Co-Issuer and its related Loan Trustee all of its right, title and beneficial interest in, to and under the Loans conveyed pursuant to the applicable Loan Purchase Agreement.

 

The Servicer entered into a Servicing Agreement pursuant to which the Servicer will continue to service the Loans and make collections thereon in accordance with the terms thereof.

 

 

GRANTING CLAUSES

 

To secure the Co-Issuers’ joint and several obligations under the Notes, (a) each of the Co-Issuers hereby Grants to the Indenture Trustee, for the benefit of the Indenture Trustee and the Noteholders, all of such Co-Issuer’s right, title and interest, and (b) each of the Loan Trustees hereby Grants to the Indenture Trustee, for the benefit of the Indenture Trustee and the Noteholders, all of such Loan Trustee’s right, title and interest, in each case, whether now owned or hereafter acquired, in, to and under the following:

 

(i)                                     the Loans, whether now existing or hereafter acquired, and all rights to payment and amounts due or to become due with respect to all of the foregoing and the related Purchased Assets;

 

(ii)                                  all money, instruments, investment property and other property (together with all earnings, dividends, distributions, income, issues, and profits relating thereto) distributed or distributable in respect of the Loans;

 

(iii)                               the Note Accounts and all Eligible Investments and all money, investment property, instruments and other property from time to time on deposit in or credited to the Note Accounts, together with all earnings, dividends, distributions, income, issues and profits relating thereto;

 

(iv)                              all rights, remedies, powers, privileges and claims of the Co-Issuer under or with respect to the Loan Purchase Agreement and each other Transaction Document (whether arising pursuant to the terms of the related Loan Purchase Agreement or any other Transaction Document or otherwise available to the Co-Issuer at law or in equity), including, without limitation, the rights of the Co-Issuer to enforce the related Loan Purchase Agreement or any other Transaction Document, and to give or withhold any and all consents, requests, notices, directions, approvals, extensions or waivers under or with respect to the related Loan Purchase Agreement or any other Transaction Document to the same extent as the Co-Issuer could but for the assignment and security interest granted hereunder;

 

(v)                                 all proceeds of any credit insurance policies or collateral protection insurance policies relating to any Loans, to the extent of the applicable Seller’s interest therein;

 

(vi)                              all accounts, chattel paper, deposit accounts, documents, general intangibles, payment intangibles, goods, instruments, investment property, letter-of-credit rights, letters of credit and money, consisting of, arising from, purporting to secure, or relating to, any of the foregoing;

 

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

 

2

 

the conversion, voluntary or involuntary, into cash or other property, all cash and non-cash proceeds, and other property consisting of, arising from or relating to all or any part of any of the foregoing or any proceeds thereof; and

 

(viii)                        all proceeds of the foregoing.

 

The property described in the preceding sentence shall constitute the “Trust Estate”; provided, however, that the Trust Estate shall not include, and the lien of this Indenture shall not extend to, any assets or amounts released from the Lien of this Indenture in accordance with the express terms hereof.

 

Such Grants are made in trust to secure the Notes equally and ratably without prejudice, priority or distinction between any Note and any other Notes of the same Class.

 

The Indenture Trustee, as Indenture Trustee on behalf of the Noteholders, acknowledges such Grants and accepts the trusts hereunder in accordance with the provisions hereof.

 

LIMITED RECOURSE

 

The obligation of the Co-Issuers to make payments of principal of and interest on the Notes are limited recourse obligations of the Co-Issuers that are secured solely by and are payable solely from the related Trust Estate and only to the extent proceeds and distributions on such Trust Estate are allocated for their benefit under the terms of this Indenture.  The holders of the Notes shall have no recourse to any other assets of the Co-Issuers.  In the event the Trust Estate has been exhausted and any of the Notes have not been paid in full, then any and all amounts that are still due on such Notes shall be extinguished and shall not revive, and such Notes shall be cancelled.

 

ARTICLE I
 Definitions

 

SECTION 1.01     Definitions.

 

Certain capitalized terms in this Indenture are defined in and shall have the respective meanings assigned to them in Part A of Schedule I hereto (together with Part B of such Schedule I, the “Definitions Schedule”).  The rules of construction set forth in Part B of the Definitions Schedule shall be applicable to this Indenture.

 

ARTICLE II
 The Notes

 

SECTION 2.01     Form Generally.

 

The Notes shall be designated as the “SpringCastle Funding Asset-Backed Notes 2014-A”.  The Notes shall be in substantially the form attached as Exhibit A hereto.  Except as otherwise expressly provided herein, the Notes will be issued in fully registered form only and shall be numbered serially for identification. The terms of the Notes set forth in Exhibit A to this

 

3

 

Indenture are part of the terms of this Indenture. The Notes shall be typewritten, word processed, printed, lithographed or engraved or produced by any combination of these methods, all as determined by the Authorized Officers executing such Notes, as evidenced by their execution of such Notes.

 

SECTION 2.02     Denominations.

 

The Class A, Class B, and Class C Notes shall be issued in fully registered form in minimum amounts of $100,000 and in integral multiples of $1,000 in excess thereof.  The Class D Notes shall be issued in fully registered form in minimum amounts of $5,000,000 and in integral multiples of $1,000 in excess thereof.  The Class E Notes shall be issued in fully registered form in minimum amounts of $10,000,000 and in integral multiples of $1,000 in excess thereof.

 

SECTION 2.03     Execution, Authentication and Delivery.

 

Each Note shall be executed by manual or facsimile signature on behalf of the Co-Issuers by an Authorized Officer of the Co-Issuers.

 

Notes bearing the manual or facsimile signature of an individual who was, at the time when such signature was affixed, authorized to sign on behalf of the Co-Issuers shall not be rendered invalid, notwithstanding the fact that such individual ceased to be so authorized prior to the authentication and delivery of such Notes or does not hold such office at the date of issuance of such Notes.

 

On the Closing Date, the Note Registrar shall authenticate and deliver Class A Notes for original issue in an aggregate principal amount of $1,601,280,000, Class B Notes for original issue in an aggregate principal amount of $427,000,000, Class C Notes for original issue in an aggregate principal amount of $331,200,000, Class D Notes for original issue in an aggregate principal amount of $199,810,000 and Class E Notes for original issue in an aggregate principal amount of $61,580,000.  At any time and from time to time after the execution and delivery of this Indenture, the Co-Issuers may deliver Notes executed by all of the Co-Issuers to the Note Registrar for authentication and delivery, and the Note Registrar, upon an Issuer Order executed by the Co-Issuers, shall authenticate and deliver such Notes as provided in this Indenture and not otherwise.

 

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 or on behalf of the Note Registrar by the manual signature of a duly authorized signatory, 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 2.04     Book-Entry Notes.

 

The Class A, Class B, Class C and Class D Notes, upon original issuance, shall be issued in the form of one or more Notes representing the Book-Entry Notes, to be delivered to the Note Registrar as custodian for the Clearing Agency on behalf of the Co-Issuers.  The Class

 

4

 

E Notes will be issued only in the form of one or more Definitive Notes.  The Class A, Class B, Class C and Class D Notes shall initially be registered on the Note Register in the name of the Clearing Agency or of its nominee, and no Beneficial Owner of any of the Class A, Class B, Class C or Class D Notes will receive a Definitive Note representing such Beneficial Owner’s interest in such Note, except as provided in Section 2.10.  Unless and until Definitive Notes have been issued to the applicable Beneficial Owners pursuant to Section 2.10:

 

(a)           the provisions of this Section 2.04 shall be in full force and effect;

 

(b)           the Co-Issuers, the Note Registrar, the Paying Agent and the Indenture Trustee shall be entitled to communicate directly with the Clearing Agency and the Clearing Agency Participants for all purposes of this Indenture (including distributions) as the authorized representatives of the Beneficial Owners of the Notes;

 

(c)           to the extent that the provisions of this Section 2.04 conflict with any other provisions of this Indenture, the provisions of this Section 2.04 shall control;

 

(d)           the rights of Beneficial Owners shall be exercised only through the Clearing Agency and the applicable Clearing Agency Participants and shall be limited to those established by law and agreements between such owners and the Clearing Agency and/or the Clearing Agency Participants.  Unless and until Definitive Notes of such Class are issued pursuant to Section 2.10, the initial Clearing Agency shall make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal and interest on the related Notes to such Clearing Agency Participants and, without limiting the Co-Issuers’, the Note Registrar’s, the Paying Agent’s or the Indenture Trustee’s duties and obligations set forth elsewhere herein, none of the Co-Issuers, the Note Registrar, the Paying Agent nor the Indenture Trustee shall have any responsibility therefor; and

 

(e)           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 Aggregate Note Principal Balance, the Class A Note Balance, the Class B Note Balance, the Class C Note Balance or the Class D Note Balance, as applicable, the Clearing Agency shall be deemed to represent such percentage with respect to the Notes only to the extent that it has received instructions to such effect from Beneficial Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in such Notes and has delivered such instructions to the Indenture Trustee.  For the avoidance of doubt, irrespective of whether such Clearing Agency has received such instructions, the determination as to whether such Clearing Agency has received such instructions, the determination as to whether any Note is “Outstanding” shall be made in accordance with the definition thereof.

 

None of the Co-Issuers, the Indenture Trustee, the Paying Agent or the Note Registrar shall have any liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Book-Entry Notes or for maintaining, supervising or reviewing any records relating to beneficial ownership interests or transfers thereof.

 

5

 

Except as provided in the next succeeding paragraph of this Section 2.04, the rights of Beneficial Owners with respect to the Book-Entry Notes shall be limited to those established by law and agreements between such Beneficial Owners and the Clearing Agency and Clearing Agency Participants.  Except as provided in Section 2.10 hereof, Beneficial Owners shall not be entitled to Definitive Notes in exchange for the Book-Entry Notes as to which they are the Beneficial Owners.  Requests and directions from, and votes of, the Clearing Agency as Holder of the Notes shall not be deemed inconsistent if they are made with respect to different Beneficial Owners.  The Indenture Trustee may establish a reasonable record date in connection with solicitations of consents from or voting by Noteholders and give notice to the Clearing Agency of such record date.  Other than pursuant to Section 2.10, without the consent of the Co-Issuers, the Note Registrar, the Paying Agent and the Indenture Trustee, no Book-Entry Note may be transferred by the Clearing Agency except to a successor Clearing Agency that agrees to hold such Note for the account of the Beneficial Owners.

 

The Depository Trust Company shall be the initial Clearing Agency.  In the event that The Depository Trust Company resigns or is removed as Clearing Agency, the Indenture Trustee may designate a successor Clearing Agency.  If no successor Clearing Agency has been designated within thirty (30) days of the effective date of the Clearing Agency’s resignation or removal, each Beneficial Owner shall be entitled to Definitive Notes representing the Notes it beneficially owns in the manner prescribed in Section 2.10.

 

SECTION 2.05     Registration of and Limitations on Transfer and Exchange of Notes; Appointment of Note Registrar.

 

(a)           Wells Fargo Bank, National Association is hereby appointed as the note registrar (in such capacity, the “Note Registrar”) to provide for the registration of Notes, and transfers and exchanges of Notes as herein provided, and Wells Fargo Bank, National Association hereby accepts such appointment.  The Note Registrar shall keep a register (the “Note Register”) in which, subject to such reasonable regulations as it may prescribe, the registration of Notes and the registration of transfers of Notes shall be provided.  The Note Registrar shall act solely for the purpose of maintaining the Note Register as an agent of the Co-Issuers.  Any transfer of an interest in a Definitive Note shall be reflected in the Note Register and entries in the Note Register shall be presumed correct.  The Co-Issuers hereby have the right to examine the Note Register at any time upon reasonable notice to the Note Registrar.  Any reference in this Indenture to the Note Registrar shall include any co-note registrar unless the context requires otherwise.  The Co-Issuers may revoke such power and remove the Note Registrar if the Co-Issuers determine in their sole discretion that the Note Registrar shall have failed to perform its obligations under this Indenture in any material respect.  The Note Registrar may resign at any time upon sixty (60) days’ prior written notice to the Co-Issuers and the Servicer.  In the event that any Note Registrar shall resign, the Co-Issuers shall appoint a successor to act as Note Registrar, which successor shall be reasonably satisfactory to the Servicer; provided, however, that such resignation shall not be effective and the Note Registrar shall continue to perform its duties as Note Registrar until the Co-Issuers have appointed a successor Note Registrar (which may be the Indenture Trustee).

 

(b)           No transfer, sale, pledge or other disposition of any Note or interest therein shall be made unless that transfer, sale, pledge or other disposition is exempt from the

 

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registration and/or qualification requirements of the Securities Act and any applicable state securities laws, or is otherwise made in accordance with the Securities Act and such state securities laws.  None of the Co-Issuers, the Indenture Trustee or the Note Registrar is obligated to register or qualify any Notes under the Securities Act or any other securities law or to take any action not otherwise required under this Indenture to permit the transfer of any Note or interest therein without registration or qualification.  Any Noteholder desiring to effect a transfer of Notes or interests therein shall, and does hereby agree to, indemnify the Co-Issuers, the Indenture Trustee and the Note Registrar against any liability that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws.  Any attempted transfer, sale, pledge or other disposition of any Note or interest therein in contravention of this  Section 2.05 will be void ab initio and the purported transferor will continue to be treated as the owner of the Notes for all purposes.

 

(c)           The Notes are being offered and sold by the Initial Purchasers only to QIBs in transactions meeting the requirements of Rule 144A or, in the case of the Class A, Class B and Class C Notes only, to persons (other than “U.S. persons” as defined in Regulation S) outside the United States pursuant to the requirements of Regulation S. Neither the Class D Notes nor the Class E Notes may be sold outside the United States in reliance on Regulation S. If it is acquiring any Class A, Class B or Class C Notes or any interest or participation therein in an “offshore transaction” (as defined to Regulation S), the purchaser is deemed to acknowledge that those notes will initially be represented by a temporary global note with the applicable legends set forth in Exhibit A (the “Temporary Regulation S Global Note”) in fully-registered form without interest coupons and that transfers thereof or any interest or participation therein are restricted as set forth in this Section 2.05.  The Class A, Class B and Class C Notes that are not sold in offshore transactions in reliance on Regulation S and the Class D Notes shall initially be issued in the form of one or more permanent global notes with the applicable legends set forth in Exhibit A (each, a “Rule 144A Global Note”) in fully-registered form without interest coupons.  The principal amount of a Global Note may from time to time be increased or decreased by adjustments made on the records of the custodian for DTC, DTC’s nominee or any other authorized person, to reflect the transfers of interest described in this Section or other transactions under this Indenture.  The Class D Notes and the Class E Notes will be offered and sold only to QIBs in reliance on Rule 144A and, in the case of the Class E Notes, issued only in the form of one or more fully-registered Definitive Notes without interest coupons.

 

Any ownership interest represented by a beneficial interest in a Rule 144A Global Note may be transferred to another entity who wishes to hold Notes in the form of an interest in a Rule 144A Global Note; provided, that, the applicable transferor and transferee are deemed to have represented and warranted that such transfer is being made to a transferee that the transferor reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A.

 

Through and including the fortieth day after the later of the commencement of the offering of the Notes (which shall not include Class D Notes or Class E Notes) to persons other than distributors in reliance upon Regulation S and the Closing Date (that period through and including that fortieth day, the “Distribution Compliance Period”), any ownership interest represented by a beneficial interest in the Temporary Regulation S Global Note may be transferred to a person who wishes to hold Notes in the form of an interest in the Temporary Regulation S Global Note; provided, that, the applicable transferee is deemed to have

 

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represented and warranted that it is not a “U.S. person” (as defined in Regulation S) and such transfer is being made in accordance with Rule 903 or Rule 904 of Regulation S and all other applicable securities laws.

 

All distributions in respect of Notes represented by a Temporary Regulation S Global Note will be made only with respect to that portion of the Temporary Regulation S Global Note in respect of which Euroclear or Clearstream shall have delivered to the Indenture Trustee, the Note Registrar and the Paying Agent a certificate or certificates substantially in the form of Exhibit B-4.  The delivery to the Indenture Trustee, the Note Registrar and the Paying Agent by Euroclear or Clearstream of a certificate or certificates referred to above may be relied upon by the Co-Issuers, the Note Registrar, the Paying Agent and the Indenture Trustee as conclusive evidence that the certificate or certificates referred to therein has or have been delivered to Euroclear or Clearstream pursuant to the terms of this Indenture and the Temporary Regulation S Global Note.

 

Transfers of an interest in a Regulation S Global Note for an interest in a Rule 144A Global Note, and vice versa (except that no interest in a Class D Note or a Class E Note may be transferred for an interest in a Regulation S Global Note), may be made at any time; provided that the intended transferor and transferee are each able to represent and warrant that such transferee satisfies the conditions set forth above to hold a beneficial interest in the applicable Global Note and the transferor provides a transfer certificate in the form of Exhibit B-1, Exhibit B-2 or Exhibit B-3, as applicable.  Any interest in the Notes represented by an interest in a Rule 144A Global Note that is transferred to a person who takes delivery in the form of an interest in a Regulation S Global Note, and vice versa, will, upon transfer, cease to be an interest in such original Rule 144A Global Note or Regulation S Global Note, as the case may be, and become an interest in a Regulation S Global Note or a Rule 144A Global Note, as applicable, and accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to an interest in the applicable form of Global Note.

 

Interests in a Temporary Regulation S Global Note as to which the Indenture Trustee, the Note Registrar and the Paying Agent have received from Euroclear or Clearstream, as the case may be, a certificate substantially in the form of Exhibit B-4 to the effect that Euroclear or Clearstream, as applicable, has received a certificate substantially in the form of Exhibit B-5 from the holder of a beneficial interest in such Note, will be exchanged on and after the last day of the Distribution Compliance Period for interests in a permanent global note with the applicable legends set forth in Exhibit A (a “Permanent Regulation S Global Note” and, together with the Temporary Regulation S Global Note, the “Regulation S Global Notes”) in fully-registered form without interest coupons.  The delivery of the certificate or certificates referred to above to the Indenture Trustee, the Note Registrar and the Paying Agent by Euroclear or Clearstream may be relied upon by the Co-Issuers, the Note Registrar, the Paying Agent and the Indenture Trustee as conclusive evidence that the certificate or certificates referred to therein has or have been delivered to Euroclear or Clearstream pursuant to the terms of this Indenture and the Temporary Regulation S Global Note.

 

In the event that a Rule 144A Global Note is exchanged for one or more Definitive Notes (a “Rule 144A Definitive Note”) or a Regulation S Global Note is exchanged for one or more Definitive Notes (a “Regulation S Definitive Note”) pursuant to Section 2.10 of

 

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the Indenture, the related Beneficial Owner shall be required to deliver a representation letter with respect to the matters described in this Section 2.05.  Such Rule 144A Definitive Notes and Regulation S Definitive Notes may be exchanged for one another only upon delivery of a representation letter with respect to the matters described in Section 2.05 and in accordance with such procedures as are substantially consistent with the provisions above (including certification requirements intended to insure that such transfers comply with Rule 144A or, other than in the case of Class D Notes and Class E Notes, are to Persons who are not “U.S. persons” (as defined in Regulation S), or otherwise comply with Regulation S, as the case may be) and as may be from time to time adopted by the Co-Issuers, the Note Registrar, the Paying Agent and the Indenture Trustee.  The Note Registrar shall destroy the applicable Global Note upon its exchange in full for Definitive Notes.

 

Each purchaser of a Note that represents a beneficial interest in a Global Note will be deemed to have represented and agreed, and each purchaser of a Definitive Note will be required to certify to the Indenture Trustee, the Paying Agent and Note Registrar in writing that:

 

(i)            (1) the purchaser is a QIB and is acquiring such Notes for its own account or as a fiduciary or agent for others (which others are also QIBs) for investment purposes and not for distribution in violation of the Securities Act, and it is able to bear the economic risk of an investment in the Notes and has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of purchasing the Notes, or (2) solely in the case of Class A, Class B and Class C Notes, the purchaser is a not a “U.S. person” (as defined in Regulation S) (and is not purchasing for the account or benefit of a “U.S. person” as defined in Regulation S), is outside the United States and is acquiring the Notes pursuant to an exemption from registration in accordance with Rule 903 or Rule 904 of Regulation S;

 

(ii)           the purchaser understands that the Notes are being offered only in a transaction that does not require registration of the Notes under the Securities Act and, if such purchaser decides to resell, pledge or otherwise transfer such Notes, then it agrees that it will resell, pledge or transfer such Notes only (1) so long as such Notes are eligible for resale pursuant to Rule 144A, to a person who the seller reasonably believes is a QIB acquiring the Notes for its own account or as a fiduciary or agent for others (which others must also be QIBs) to whom notice is given that the resale or other transfer is being made in reliance on Rule 144A, or, if applicable and solely in the case of Class A, Class B and Class C Notes, (2) to a purchaser who is not a “U.S. person” (as defined in Regulation S) (and is not purchasing for the account or benefit of a “U.S. person” as defined in Regulation S), is outside the United States and is acquiring the Notes pursuant to an exemption from registration under the Securities Act in accordance with Rule 903 or Rule 904 of Regulation S and, in each case, in accordance with any applicable United States state securities or “Blue Sky” laws or any securities laws of any other jurisdiction;

 

(iii)          unless the applicable legend set forth in Exhibit A has been removed, the purchaser shall notify each transferee of the Notes that (1) the Notes have not been registered under the Securities Act, (2) the holder of Notes is subject to the restrictions on the resale or other transfer thereof described in paragraph (ii) above, and (3) such transferee shall be deemed to have represented (x) as to its status as a QIB purchasing the

 

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Notes in reliance on Rule 144A or, solely in the case of the Class A, Class B and Class C Notes, as not a “U.S. person” (as defined in Regulation S) (and is not purchasing for the account or benefit of a “U.S. person” as defined in Regulation S) and as outside the United States, acquiring the Notes pursuant to an exemption from registration under the Securities Act in accordance with Rule 903 or Rule 904 of Regulation S, as the case may be, (y) if such transferee is a QIB, that such transferee is acquiring the Notes for its own account or as a fiduciary or agent for others (which others also must be QIBs), and (z) that such transferee shall be deemed to have agreed to notify its subsequent transferees as to the foregoing;

 

(iv)          in the case of the Class D Notes and the Class E Notes, (A) either (I) the purchaser is not and will not become for U.S. federal income tax purposes a partnership, Subchapter S corporation or grantor trust (or a disregarded entity the single owner of which is any of the foregoing) (each such entity a “flow-through entity”) or (II) if the purchaser is or becomes a flow-through entity, then (x) none of the direct or indirect beneficial owners of any of the interests in such flow-through entity has or ever will have more than 50% of the value of its interest in such flow-through entity attributable to the beneficial interest of such flow-through entity in the Notes, other interest (direct or indirect) in any Co-Issuer, or any interest created under this Indenture and (y) the purchaser is not and will not be a principal purpose of the arrangement involving the flow-through entity’s beneficial interest in the Notes to permit any partnership to satisfy the 100 partner limitation of Section 1.7704-1(h)(1)(ii) of the Treasury Regulations necessary for such partnership not to be classified as a publicly traded partnership under the Internal Revenue Code, (B)  the purchaser is not acquiring any Note or beneficial interest therein, the purchaser will not sell, transfer, assign, participate, pledge or otherwise dispose of any Note(s) or beneficial interest therein, and the purchaser will not cause any Note(s) or beneficial interests therein to be marketed, in each case on or through an “established securities market” within the meaning of Section 7704(b) of the Internal Revenue Code, including, without limitation, an interdealer quotation system that regularly disseminates firm buy or sell quotations, (C) the purchaser’s beneficial interest in the Notes is not and will not be in an amount that is less than the minimum denomination for such Note set forth in this Indenture, and the purchaser does not and will not hold any interest on behalf of any person whose beneficial interest in a Note is in an amount that is less than the minimum denomination for the Notes set forth in this Indenture, (D) the purchaser will not sell, assign, transfer, pledge or otherwise dispose of any Note or beneficial interest therein, or enter into any financial instrument or contract the value of which is determined by reference in whole or in part to any Note or beneficial interest therein, in each case if the effect of doing so would be that the beneficial interest of any person in such Note would be in an amount that is less than the minimum denomination for the Notes set forth in this Indenture, (E) the purchaser will not use any Note as collateral for the issuance of any securities that could cause any Co-Issuer to be treated as an association or publicly traded partnership taxable as corporation for U.S. federal income tax purposes, (F) the purchaser will not transfer a Note or any beneficial interest therein (directly, through a participation, or otherwise) unless, prior to the transfer, the transferee shall have executed and delivered to the Indenture Trustee and the Note Registrar, or any of their respective successors and assigns, a transferee certification substantially in the form of Exhibit B-6 or Exhibit B-7 to this Indenture, as

 

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applicable, and (G) in the case of the Class E Notes, the purchaser is a “United States person” as defined in Section 7701(a)(30) of the Internal Revenue Code and will not transfer to, or cause such Class E Note or beneficial interest therein to be transferred to, any person other than a “United States person,” as defined in Section 7701(a)(30) of the Internal Revenue Code; provided, however, that, notwithstanding the foregoing representations and warranties in clauses (A)-(G) herein, the purchaser (i) may engage in any repurchase transaction (repo) the subject matter of which is a Note or any beneficial interest therein if the terms of such repurchase transaction are generally consistent with prevailing market practice and (ii) may pledge a Note or any beneficial interest therein if doing so will not result in any person (other than the purchaser) being treated for U.S. federal income tax purposes as the owner of all or any portion of a Note or beneficial interest therein;

 

(v)           the purchaser, and each person for which it is acting, understands that any sale or transfer to a person that does not comply with the requirements set forth herein will be null and void ab initio;

 

(vi)          (1) the purchaser understands that each Rule 144A Global Note and any Rule 144A Definitive Note will bear the legends set forth in Exhibit A hereto and (2) the purchaser understands that each Regulation S Global Note and any Regulation S Definitive Note will bear the legends set forth in Exhibit A; and

 

(vii)         either (a) it is not and is not acting on behalf or using the assets of (1) an “employee benefit plan,” as defined in Section 3(3) of ERISA, that is subject to Title I of ERISA, (2) a “plan,” as defined in Section 4975(e)(1) of the Internal Revenue Code, that is subject to Section 4975 of the Internal Revenue Code, (3) an entity whose underlying assets include “plan assets” by reason of such employee benefit plan’s or plan’s investment in the entity (within the meaning of Department of Labor Regulation 29 C.F.R. 2510.3-101, as modified by Section 3(42) of ERISA), or (4) any governmental, church, non-U.S. or other plan that is subject to any non-U.S., federal, state or local law that is substantially similar to Section 406 of ERISA or Section 4975 of the Internal Revenue Code (“Similar Law”) or an entity whose underlying assets include assets of any such plan; or (b) solely in the case of the Class A Notes, Class B and Class C Notes, the acquisition, continued holding and disposition of the Notes (or any interest therein) will not give rise to a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Internal Revenue Code or result in a non-exempt prohibited transaction or violation of any Similar Law.

 

(d)           At any time when the Co-Issuers are not subject to Section 13 or 15(d) of the Exchange Act and are not exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, upon the request of a Noteholder or Beneficial Owner, the Co-Issuers shall promptly furnish or cause to be furnished Rule 144A Information to such Noteholder or Beneficial Owner, to a prospective purchaser of such Note designated by such Noteholder or Beneficial Owner or to the Note Registrar for delivery to such Noteholder or Beneficial Owner or a prospective purchaser designated by such Noteholder or Beneficial Owner, as the case may be, in order to permit compliance by such Noteholder or Beneficial Owner with Rule 144A in connection with the resale of a Note by such Noteholder or Beneficial Owner.

 

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(e)                                  Notwithstanding anything to the contrary herein, no transfer of a Class D Note or beneficial interest therein shall be effective, and any such attempted transfer shall be void ab initio, unless, prior to and as a condition to each such transfer, the prospective transferee (including the initial beneficial owner as initial transferee) and any subsequent transferee represents and warrants, in writing, substantially in the form of the transferee certification set forth in Exhibit B-6 to this Indenture, to the Indenture Trustee and the Note Registrar, and any of their respective successors and assigns, that: (A) either (I) it is not and will not become for U.S. federal income tax purposes a partnership, Subchapter S corporation or grantor trust (or a disregarded entity the single owner of which is any of the foregoing) (each such entity a “flow-through entity”) or (II) if it is or becomes a flow-through entity, then (x) none of the direct or indirect beneficial owners of any of the interests in such flow-through entity has or ever will have more than 50% of the value of its interest in such flow-through entity attributable to the beneficial interest of such flow-through entity in the Notes, other interest (direct or indirect) in any Co-Issuer, or any interest created under this Indenture and (y) it is not and will not be a principal purpose of the arrangement involving the flow-through entity’s beneficial interest in any Class D Note to permit any partnership to satisfy the 100 partner limitation of Section 1.7704-1(h)(1)(ii) of the Treasury Regulations necessary for such partnership not to be classified as a publicly traded partnership under the Internal Revenue Code, (B)  it is not acquiring any Class D Note or beneficial interest therein, it will not sell, transfer, assign, participate, pledge or otherwise dispose of any Class D Note(s) or beneficial interest therein, and it will not cause any Class D Note(s) or beneficial interests therein to be marketed, in each case on or through an “established securities market” within the meaning of Section 7704(b) of the Internal Revenue Code, including, without limitation, an interdealer quotation system that regularly disseminates firm buy or sell quotations, (C) its beneficial interest in the Class D Notes is not and will not be in an amount that is less than the minimum denomination for such Class D Note set forth in this Indenture, and it does not and will not hold any interest on behalf of any person whose beneficial interest in a Class D Note is in an amount that is less than the minimum denomination for the Class D Notes set forth in this Indenture, (D) it will not sell, assign, transfer, pledge or otherwise dispose of any Class D Note or beneficial interest therein, or enter into any financial instrument or contract the value of which is determined by reference in whole or in part to any Class D Note or beneficial interest therein, in each case if the effect of doing so would be that the beneficial interest of any person in the Class D Note would be in an amount that is less than the minimum denomination for the Class D Notes set forth in this Indenture, (E) it will not use any Class D Note as collateral for the issuance of any securities that could cause any Co-Issuer to be treated as an association or publicly traded partnership taxable as corporation for U.S. federal income tax and (F) it will not transfer a Class D Note or any beneficial interest therein (directly, through a participation, or otherwise) unless, prior to the transfer, the transferee shall have executed and delivered to the Indenture Trustee and the Note Registrar, and any of their respective successors and assigns, a transferee certification substantially in the form of Exhibit B-6 to this Indenture.  Notwithstanding the foregoing, a transferee (i) may engage in any repurchase transaction (repo) the subject matter of which is a Class D Note or any beneficial interest therein if the terms of such repurchase transaction are generally consistent with prevailing market practice and (ii) may pledge a Class D Note or any beneficial interest therein if doing so will not result in any person (other than the transferee) being treated for U.S. federal income tax purposes as the owner of all or any portion of a Class D Note or beneficial interest therein.

 

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(f)                                   Notwithstanding anything to the contrary herein, no transfer of a Class E Note or beneficial interest therein shall be effective, and any such attempted transfer shall be void ab initio, unless, prior to and as a condition to each such transfer, the prospective transferee (including the initial beneficial owner as initial transferee) and any subsequent transferee represent and warrants, in writing, substantially in the form of the transferee certification set forth in Exhibit B-7 to this Indenture, to the Indenture Trustee and the Note Registrar, and any of their respective successors and assigns, that: (A) either (I) it is not and will not become for U.S. federal income tax purposes a partnership, Subchapter S corporation or grantor trust (or a disregarded entity the single owner of which is any of the foregoing) (each such entity a “flow-through entity”) or (II) if it is or becomes a flow-through entity, then (x) none of the direct or indirect beneficial owners of any of the interests in such flow-through entity has or ever will have more than 50% of the value of its interest in such flow-through entity attributable to the beneficial interest of such flow-through entity in the Notes, other interest (direct or indirect) in any Co-Issuer, or any interest created under this Indenture and (y) it is not and will not be a principal purpose of the arrangement involving the flow-through entity’s beneficial interest in any Class E Note to permit any partnership to satisfy the 100 partner limitation of Section 1.7704-1(h)(1)(ii) of the Treasury Regulations necessary for such partnership not to be classified as a publicly traded partnership under the Internal Revenue Code, (B)  it is not acquiring any Class E Note or any beneficial interest therein, it will not sell, transfer, assign, participate, pledge or otherwise dispose of any Class E Note(s) or beneficial interest therein, and it will not cause any Class E Note(s) or beneficial interest therein to be marketed, in each case on or through an “established securities market” within the meaning of Section 7704(b) of the Internal Revenue Code, including, without limitation, an interdealer quotation system that regularly disseminates firm buy or sell quotations, (C) its beneficial interest in the Class E Notes is not and will not be in an amount that is less than the minimum denomination for such Class E Note set forth in this Indenture, and it does not and will not hold any interest on behalf of any person whose beneficial interest in a Class E Note is in an amount that is less than the minimum denomination for the Class E Notes set forth in this Indenture, (D) it will not sell, assign, transfer, pledge or otherwise dispose of any Class E Note or beneficial interest therein, or enter into any financial instrument or contract the value of which is determined by reference in whole or in part to any Class E Note or beneficial interest therein, in each case if the effect of doing so would be that the beneficial interest of any person in the Class E Note would be in an amount that is less than the minimum denomination for the Class E Notes set forth in this Indenture, (E) it will not use any Class E Note as collateral for the issuance of any securities that could cause any Co-Issuer to be treated as an association or publicly traded partnership taxable as corporation for U.S. federal income tax purposes, (F) it will not transfer a Class E Note or any beneficial interest therein (directly, through a participation, or otherwise) unless, prior to the transfer, the transferee shall have executed and delivered to the Indenture Trustee and the Note Registrar, and any of their respective successors and assigns, a transferee certification substantially in the form of Exhibit B-7 to this Indenture, and (G) it is a “United States person” as defined in Section 7701(a)(30) of the Internal Revenue Code and will not transfer to, or cause such Class E Note or beneficial interest therein to be transferred to, any person other than a “United States person,” as defined in Section 7701(a)(30) of the Internal Revenue Code.  Notwithstanding the foregoing, a transferee (i) may engage in any repurchase transaction (repo) the subject matter of which is a Class E Note or any beneficial interest therein if the terms of such repurchase transaction are generally consistent with prevailing market practice and (ii) may pledge a Class E Note or any 

 

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beneficial interest therein if doing so will not result in any person (other than the transferee) being treated for U.S. federal income tax purposes as the owner of all or any portion of a Class E Note or beneficial interest therein.

 

(g)                                  In the case of a transfer of a Class D Note or Class E Note to the Sellers, the representations set forth in Section 2.05(e) or Section 2.05(f), as applicable, shall not be required and shall not serve as a condition to such transfer.

 

(h)                                 With respect to any outstanding Notes retained by the Co-Issuers or conveyed to the Sellers, and later sold to an unrelated purchaser, the requirements set forth in Section 3.14(c) must be met prior to any such later sale.  In addition, to the extent any such Notes are Class D Notes or Class E Notes, the requirements of this Section 2.05 must be satisfied prior to such later sale.

 

(i)                                     If a Person is acquiring any Note or interest therein as a fiduciary or agent for one or more accounts, such Person shall be required to deliver to the Note Registrar a certification (which in the case of the Book-Entry Notes, the prospective transferee will be deemed to have represented such certification) to the effect that it has (i) sole investment discretion with respect to each such account and (ii) full power to make the foregoing acknowledgments, representations, warranties, certifications and agreements with respect to each such account as set forth in this Section 2.05.

 

(j)                                    Subject to the preceding provisions of this Section 2.05, upon surrender for registration of transfer of any Note at the offices or agency of the Note Registrar maintained for such purpose, the Co-Issuers shall execute and the Note Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of a like Denomination and of the same Class.  As of the Closing Date, the offices of the Note Registrar maintained for such purpose are located at Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attention: Corporate Trust Services—SpringCastle Funding Asset-Backed Notes.

 

(k)                                 At the option of any Noteholder, its Notes may be exchanged for other Notes of authorized denominations of the same Class and of a like aggregate denomination, upon surrender of the Notes to be exchanged at the offices of the Note Registrar maintained for such purpose. Whenever any Notes are so surrendered for exchange, the Co-Issuers shall execute and the Note Registrar as authenticating agent shall authenticate and deliver the Notes which the Noteholder making the exchange is entitled to receive.

 

(l)                                     Every Note presented or surrendered for transfer or exchange shall (if so required by the Note Registrar) be duly endorsed by, or be accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder thereof or his attorney duly authorized in writing.

 

(m)                             Every Note issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Co-Issuers, jointly and severally, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration or exchange.

 

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(n)                                 No service charge shall be imposed for any transfer or exchange of Notes, but the Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Notes.

 

(o)                                 All Notes surrendered for transfer and exchange shall be physically canceled by the Note Registrar, and the Note Registrar shall dispose of such canceled Notes in accordance with its standard procedures.

 

(p)                                 The Note Registrar shall provide to the Co-Issuers, upon reasonable written request, and at the expense of the requesting party, an updated copy of the Note Register.  The Co-Issuers shall have the right to inspect the Note Register or to obtain a copy thereof at all reasonable times, and to rely conclusively upon a certificate of the Note Registrar as to the information set forth in the Note Register.

 

SECTION 2.06              Mutilated, Destroyed, Lost or Stolen Notes.

 

If (a) any mutilated Note is surrendered to the Note Registrar, or the Note Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (b) in case of destruction, loss or theft there is delivered to the Note Registrar, as the case may be, such security or indemnity as may be required by it to hold the Co-Issuers, the Note Registrar harmless, then, in the absence of written notice to the Co-Issuers or the Note Registrar that such Note has been acquired by a “protected purchaser” (as contemplated by Article 8 of the UCC), the Co-Issuers shall execute, and upon Issuer Order executed by each of the Co-Issuers, the Note Registrar shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note of like tenor and aggregate principal amount, bearing a number not contemporaneously outstanding; provided, however, that if any such mutilated, destroyed, lost or stolen Note shall have become or within seven (7) days shall be due and payable, or shall have been selected or called for redemption, instead of issuing a replacement Note, the Co-Issuers may pay such Note without surrender thereof, except that any mutilated Note shall be surrendered.  If, after the delivery of such replacement Note or payment of a destroyed, lost or stolen Note pursuant to the proviso to the preceding sentence, a “protected purchaser” (as contemplated by Article 8 of the UCC) of the original Note in lieu of which such replacement Note was issued presents for payment such original Note, the Co-Issuers and the Note Registrar Agent 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 “protected purchaser” (as contemplated by Article 8 of the UCC), 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 Co-Issuers or the Note Registrar in connection therewith.

 

In connection with the issuance of any replacement Note under this Section 2.06, the Co-Issuers or the Note Registrar 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 reasonable fees and expenses of the Note Registrar) connected therewith.

 

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Any replacement Note issued pursuant to this Section in replacement of any mutilated, destroyed, lost or stolen Note shall constitute complete and indefeasible evidence of a debt of the Co-Issuers, as if originally issued, whether or not the destroyed, lost or stolen Note shall be found at any time, 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 2.06 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.

 

The Indenture Trustee, the Note Registrar, the Paying Agent, the Co-Issuers and any agent of any of them may prior to due presentation of a Note for registration of transfer, treat the Person in whose name any Note is registered as the holder of such Note for the purpose of receiving distributions pursuant to the terms of this Indenture and for all other purposes whatsoever, and, in any such case, none of the Indenture Trustee, the Note Registrar, the Paying Agent, the Co-Issuers nor any agent of any of them shall be affected by any notice to the contrary.  Upon any request or inquiry by a Noteholder, the Indenture Trustee, the Paying Agent or the Note Registrar shall be entitled to receive a certification in form reasonably satisfactory to the Indenture Trustee, the Paying Agent and the Note Registrar, to enable the Indenture Trustee, the Paying Agent and the Note Registrar to confirm the status of such entity as a Noteholder.

 

SECTION 2.08              Cancellation.

 

All Notes surrendered for payment, registration of transfer, exchange or redemption shall, if surrendered to any Person other than the Note Registrar, be delivered to the Note Registrar and shall be promptly cancelled by the Note Registrar and shall no longer be considered Outstanding for any purpose hereunder.  The Co-Issuers may at any time deliver to the Note Registrar for cancellation any Notes previously authenticated and delivered hereunder which the Co-Issuers may have acquired in any lawful manner whatsoever.  All Notes delivered by the Co-Issuers or any other Person for cancellation shall be promptly cancelled by the Note Registrar and such cancellation shall be recorded in the Note Register.  No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section, except as expressly permitted by this Indenture.  All cancelled Notes held by the Note Registrar shall be destroyed or retained in accordance with its standard document retention or disposal policy in effect at such time unless the Co-Issuers shall direct prior to destruction that they be returned to the Co-Issuers.

 

SECTION 2.09              Notices to Clearing Agency.

 

Whenever a notice or other communication is required to be given to the Noteholders of any Class with respect to which Book-Entry Notes have been issued, unless and until Definitive Notes shall have been issued to the related Beneficial Owners pursuant to Section 2.10 and there are no Book-Entry Notes outstanding, the Indenture Trustee shall give all such notices and communications to the Clearing Agency.

 

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SECTION 2.10              Definitive Notes.

 

If Book-Entry Notes have been issued with respect to any Class and (i) (a) the Co-Issuers advises the Indenture Trustee and the Note Registrar that the Clearing Agency is no longer willing or able to discharge properly its responsibilities with respect to such Class and (b) the Co-Issuers is unable to locate and reach an agreement on satisfactory terms with a qualified successor, (ii) to the extent permitted by law, the Co-Issuers, at its option, advises the Indenture Trustee and the Note Registrar in writing that it elects to terminate the book-entry system through the Clearing Agency with respect to such Class or (iii) after the occurrence of a Servicer Default or an Event of Default, Beneficial Owners with respect to such Class representing not less than 50% of the principal amount of the Book-Entry Notes of such Class advise the Indenture Trustee, the Note Registrar and the applicable Clearing Agency in writing through the applicable Clearing Agency Participants that the continuation of a book-entry system with respect to the Notes of such Class is no longer in the best interests of the Beneficial Owners with respect to such Class, then the Indenture Trustee shall notify all Beneficial Owners with respect to such Class, through the Clearing Agency of the occurrence of such event and of the availability of Definitive Notes to Beneficial Owners with respect to such Class.  Upon surrender to the Note Registrar of such Notes by the Clearing Agency, accompanied by registration instructions from the applicable Clearing Agency for registration, the Co-Issuers shall execute and the Note Registrar shall authenticate Definitive Notes of such Class and shall recognize the registered holders of such Definitive Notes as Noteholders under this Indenture.  None of the Co-Issuers, the Note Registrar or the Indenture Trustee shall be liable for any delay in delivery of such instructions, and the Co-Issuers, the Note Registrar and the Indenture Trustee may conclusively rely on, and shall be protected in relying on, such instructions.  Upon the issuance of Definitive Notes of such Class, the Indenture Trustee, the Note Registrar and the Paying Agent shall recognize the registered Holders of such Definitive Notes of such Class as Noteholders of such Class hereunder.  Definitive Notes will be transferable and exchangeable at the offices of the Note Registrar.

 

Pending the preparation of Definitive Notes, the Co-Issuers may execute, and upon receipt of an Issuers Order executed by each of the Co-Issuers, the Note Registrar shall authenticate and deliver, temporary Notes which 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 Co-Issuers 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 Co-Issuers 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 Co-Issuers shall execute and the Note Registrar, upon Issuer Order executed by all of the Co-Issuers, shall authenticate and deliver in exchange therefor a like principal amount of Definitive Notes of authorized denominations. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as Definitive Notes.

 

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SECTION 2.11              CUSIP Numbers.

 

The Co-Issuers in issuing the Notes may use “CUSIP” numbers (if then generally in use), and, if so, the Indenture Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Noteholders; provided, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers.  The Co-Issuers will promptly notify the Indenture Trustee in writing of any change in the “CUSIP” numbers.

 

SECTION 2.12                                      Appointment of Paying Agent.

 

(a)                                 The Co-Issuers hereby appoint Wells Fargo Bank, National Association, as a paying agent (the “Paying Agent”) to make distributions to Noteholders from the Collection Account pursuant to the provisions of Article VIII hereof.  The Paying Agent shall have the revocable power to withdraw funds from the Collection Account for the purpose of making the distributions referred to above.  The Co-Issuers may revoke such power and remove the Paying Agent if the Co-Issuers determine in their sole discretion that the Paying Agent shall have failed to perform its obligations under this Indenture in any material respect.  The Paying Agent may resign at any time upon sixty (60) days’ prior written notice to the Co-Issuers and the Servicer.  In the event that any Paying Agent shall resign, the Co-Issuers shall appoint a successor to act as Paying Agent, which successor shall be reasonably satisfactory to the Servicer; provided, however, that such resignation shall not be effective and the Paying Agent shall continue to perform its duties as Paying Agent until the Co-Issuers have appointed a successor Paying Agent (which may be the Indenture Trustee).  The Co-Issuers shall cause any successor Paying Agent to execute and deliver to the Co-Issuers and the Indenture Trustee a written instrument in which such Paying Agent shall agree with the Co-Issuers to do each of the actions described in clause (b) below.

 

(b)                                 The Paying Agent agrees that it 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 written notice of any default by the Co-Issuers (or any other obligor upon the Notes) in the making of any payment required to be made with respect to the Notes of which it has actual knowledge;

 

(iii)                               at any time after the acceleration of the maturity of the Notes after an Event of 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 (or to a successor Paying Agent appointed by the Co-Issuers) all sums held by it in trust for the payment of Notes if at any time it ceases to

 

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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 Internal Revenue 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.

 

ARTICLE III
 Representations and Covenants of Co-Issuers and Loan Trustees

 

SECTION 3.01              Payment of Principal and Interest.

 

(a)                                 The Co-Issuers will duly and punctually pay principal of and interest on the Notes, in each case in accordance with the terms of the Notes and as specified in this Indenture including without limitation Section 8.06 hereof.

 

(b)                                 On each Payment Date, the Noteholders of each Class as of the related Record Date shall be entitled to the interest accrued at the applicable Interest Rate and principal payable on such Payment Date as specified in this Indenture including without limitation Section 8.06 hereof.  All payment obligations under a Note are discharged to the extent such payments are made to the Noteholder of record as of such related Record Date.

 

SECTION 3.02              Maintenance of Office or Agency.

 

The Note Registrar will maintain its Corporate Trust Office at Wells Fargo Center, Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attention: Corporate Trust Services—SpringCastle Funding Asset-Backed Notes, where Notes may be presented or surrendered for payment and where Notes may be surrendered for registration of transfer or exchange.  The Note Registrar will give prompt written notice to the Co-Issuers, the Indenture Trustee and the Noteholders of any change in the location of any such office or agency.

 

SECTION 3.03              Money for Note Payments to Be Held in Trust.

 

As specified in Section 8.02, all payments of amounts due and payable on or with respect to the Notes, which are to be made from amounts withdrawn from the Collection Account, shall be made on behalf of the Co-Issuers by the Paying Agent, and no amounts so withdrawn from the Collection Account shall be paid over to the Co-Issuers except as provided in this Indenture.

 

Subject to Requirements of Law with respect to escheat of funds, and after such notice required with respect to Notes not surrendered for cancellation pursuant to Section 10.02(b) is given, any money held by the Paying Agent in trust for the payment of any amount due with respect to any Note remaining unclaimed for two years after such amount has become due and payable shall be discharged from such trust, and the Paying Agent shall give prompt notice of such occurrence to the Co-Issuers and shall release such money to the Co-Issuers on Issuer Order executed by each of the Co-Issuers; and the Holder of such Note shall 

 

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thereafter, as an unsecured general creditor, look only to the Co-Issuers (and then only to the extent of the amounts so paid to the Co-Issuers) for payment thereof, and all liability of the Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Paying Agent, before being required to make any such repayment, shall at the direction of the Co-Issuers 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 date shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Co-Issuers.  The cost of any such notice or publication shall be paid out of funds in the Collection Account.  The Paying Agent shall also adopt and employ, at the expense of the Co-Issuers, to be paid out of funds in the Collection Account, 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 Paying Agent, at the last address of record for each such Holder).

 

SECTION 3.04              Existence.

 

(a)                                 Subject to the following clause (b), (i) each of the Co-Issuers will keep in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Delaware 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 Trust Estate and each other related instrument or agreement included in the Trust Estate and (ii)  none of the Co-Issuers shall consolidate or merge with or into any other Person and shall not (except as provided herein) convey or transfer its properties and assets substantially as an entirety to any Person.  Each of the Loan Trustees will keep in full effect its existence, rights and franchises as a common law trust under the laws of the State of Delaware.  None of the Loan Trustees shall consolidate or merge with or into any other Person and shall not (except as provided herein) convey or transfer its properties and assets substantially as an entirety to any Person.

 

(b)                                 No Co-Issuer shall dissolve, liquidate, consolidate with or merge into any other corporation, limited liability company or other entity or convey, transfer or sell (other than conveyances hereunder) its properties and assets substantially as an entirety to any Person unless:

 

(i)                                     the entity formed by such consolidation or into which such Co-Issuer is merged or the Person which acquires by conveyance, transfer or sale the properties and assets of such Co-Issuer substantially as an entirety shall be, if such Co-Issuer is not the surviving entity, organized and existing under the laws of the state of Delaware, and shall be a special purpose corporation or other special purpose entity whose powers and activities are limited and, if such Co-Issuer is not the surviving entity, such entity or Person shall expressly assume, by a written agreement supplemental hereto, executed and delivered to the Servicer,

 

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the Co-Issuers and the Indenture Trustee, in form reasonably satisfactory to the Servicer, the Co-Issuers and the Indenture Trustee, the performance of every covenant and obligation of such Co-Issuer hereunder;

 

(ii)                                  such Co-Issuer or the surviving entity, as the case may be, has delivered to the Indenture Trustee (A) an Officer’s Certificate of such Co-Issuer or such entity stating that such consolidation, merger, conveyance, transfer or sale and such supplemental agreement complies with this Section 3.04 and that all conditions precedent herein provided for relating to such transaction have been complied with and (B) an Officer’s Certificate of such Co-Issuer or such entity and an Opinion of Counsel each stating that such supplemental agreement is a valid and binding obligation of such surviving entity enforceable against such surviving entity in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally from time to time in effect or general principles of equity; and

 

(iii)                               the Indenture Trustee and the Servicer shall have received an Officer’s Certificate of such Co-Issuer or such entity, as applicable, to the effect that in the reasonable belief of such Co-Issuer or such entity, such consolidation, merger, conveyance, transfer or sale will not have an Adverse Effect.

 

SECTION 3.05              Protection of Trust.

 

The Co-Issuers will from time to time take all actions, including without limitation preparing, or causing to be prepared, authorizing, executing and delivering all such supplements and amendments hereto and all such financing statements, amendments to financing statements, continuation statements, if any, instruments of further assurance and other instruments, necessary or advisable to:

 

(a)                                 grant more effectively all or any portion of the Trust Estate as security for the Notes;

 

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

 

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

 

(d)                                 preserve and defend title to the Trust Estate and the rights therein of the Indenture Trustee and the Noteholders secured thereby against the claims of all Persons and parties.

 

The Co-Issuers and the Loan Trustees hereby designate the Indenture Trustee its agent and attorney-in-fact to execute any instrument required pursuant to this Section 3.05; provided, however, such appointment shall in no way be deemed to be an assumption of any of the duties or obligations of the Co-Issuers under this Section 3.05.  Financing statements filed pursuant to such appointment may describe the Trust Estate in the same manner as described herein or may describe the collateral subject thereto as “All of the Debtor’s personal property

 

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and other assets, whether now owned or existing or hereafter acquired or arising, together with all products and proceeds thereof, substitutions and replacements therefor, and additions and accessions thereto.”

 

The Co-Issuers shall pay or cause to be paid any taxes levied on all or any part of the Trust Estate from amounts available for such purpose pursuant to this Indenture.

 

SECTION 3.06              Opinions as to Trust Estate.

 

On or before March 31 of each calendar year, beginning in 2015, the Co-Issuers will furnish to the Indenture Trustee an Opinion of Counsel either stating that, (i) in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of this Indenture and any other requisite documents and with respect to the authorization, 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 (ii) in the opinion of such counsel no such action is necessary to maintain such lien and security interest.  Such Opinion of Counsel will also describe the recording, filing, re-recording and refiling of this Indenture 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 March 31 of the following calendar year.

 

SECTION 3.07              Performance of Obligations; Servicing of Loans.

 

(a)                                 The Co-Issuers shall not take any action and shall use their 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 applicable Loan Purchase Agreements or such other instrument or agreement.

 

(b)                                 The Co-Issuers may contract with other Persons to assist it in performing their duties under this Indenture, and any performance of such duties by a Person identified to the Indenture Trustee, the Paying Agent and the Note Registrar in an Officer’s Certificate of the Co-Issuers shall satisfy the obligations of the Co-Issuers with respect thereto and shall be deemed to be an action taken by the Co-Issuers.

 

(c)                                  The Co-Issuers will punctually perform and observe all of its obligations and agreements contained in this Indenture, the other Transaction Documents and in the instruments and agreements relating to the Trust Estate, including but not limited to preparing, authorizing and filing or causing to be filed all UCC financing statements and amendments to financing statements required to be filed by the terms of this Indenture and the other Transaction Documents in accordance with and within the time periods provided for herein and therein.

 

(d)                                 If the Co-Issuers shall have knowledge of the occurrence of a Servicer Default under the Servicing Agreement, the Co-Issuers shall promptly notify the Indenture Trustee and shall specify in such notice the action, if any, being taken with respect to such

 

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default.  If a Servicer Default shall arise from the failure of the Servicer to perform any of its duties or obligations under the Servicing Agreement with respect to the Trust Estate, the Co-Issuers shall take all reasonable steps available to it or as may be directed by the Indenture Trustee (acting at the written direction of the Required Noteholders) to remedy such failure or to cause such failure to be remedied.

 

(e)                                  Each of the Co-Issuers shall deliver the Loan Schedule received by it pursuant to the applicable Loan Purchase Agreement on the Closing Date to the Indenture Trustee.

 

(f)                                   The Co-Issuers shall pay all Other Co-Issuer Obligations as and when the same shall become due and owing from funds available for such purpose pursuant to Section 8.06(a).

 

SECTION 3.08              Negative Covenants.

 

So long as any Notes are Outstanding, none of the Co-Issuers or any of the Loan Trustees shall:

 

(a)                                 sell, transfer, convey, exchange, pledge or otherwise dispose of any part of the Trust Estate except as expressly permitted by the Indenture;

 

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

 

(c)                                  (1) 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, (2) 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, except for Permitted Liens or (3) permit the lien of this Indenture not to constitute a valid first priority perfected security interest in the Trust Estate, subject only to Permitted Liens; or

 

(d)                                 voluntarily dissolve or liquidate in whole or in part.

 

SECTION 3.09              Statements as to Compliance.

 

The Co-Issuers will deliver to the Indenture Trustee, no later than April 30th of each year so long as any Note is Outstanding (commencing April 30, 2015), an Officer’s Certificate stating, as to the Authorized Officer signing such Officer’s Certificate, that:

 

(a)                                 a review of the activities of the Co-Issuers during the most recently ended fiscal year (or in the case of the fiscal year ending December 31, 2014, the period from the

 

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Closing Date to December 31, 2014) and of performance under this Indenture has been made under such Authorized Officer’s supervision; and

 

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

 

SECTION 3.10              Co-Issuers’ Name, Location, etc.

 

(a)                                 The exact legal name of each Co-Issuer is, and at all times have been, the names that appears for it on the signature page hereto.

 

(b)                                 None of the Co-Issuers has used any trade or assumed names.

 

(c)                                  Each of the Co-Issuers is, and at all time has been, a “registered organization” (within the meaning of Article 9 of the UCC), organized solely under the laws of the State of Delaware.

 

(d)                                 None of the Co-Issuers will change its name, its type or jurisdiction of organization, or its organizational identification number unless it has given the Indenture Trustee at least thirty (30) days prior written notice of such change.

 

SECTION 3.11              Amendments.

 

Without derogating from the absolute nature of the assignment granted to the Indenture Trustee under this Indenture or the rights of the Indenture Trustee hereunder, each of the Co-Issuers and each of the Loan Trustees agree that it will not (i) terminate, amend, waive, supplement or otherwise modify any of, or consent to the assignment by any party of, the Transaction Documents to which it is a party, and (ii) to the extent that a Co-Issuer has the right to consent to any termination, waiver, amendment, supplement or other modification of, or any assignment by any party of, any Transaction Document to which it is not a party, give such consent, unless, in each case (a) either (x) such termination, amendment, waiver, supplement or other modification or such assignment, as applicable, would not materially adversely affect the Noteholders, conclusive evidence of which may be established by delivery of an Officer’s Certificate of the Servicer as to such determination or (y) the Required Noteholders have consented in writing thereto; and (b) the other requirements with respect to such termination, amendment, waiver, supplement or other modification, or such assignment, as applicable, contained in the Transaction Documents (including this Section 3.11) are satisfied.

 

Notwithstanding the foregoing, the Co-Issuers may amend, modify, waive, supplement or agree to any amendment, modification, supplement or waiver of the terms of this Indenture in accordance with Section 9.01 hereof without the consent of any Holders of Notes, but subject to any other conditions set forth in Section 9.01 hereof applicable thereto.

 

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SECTION 3.12              No Borrowing.

 

The Co-Issuers shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except as expressly contemplated by the Transaction Documents and the Notes.

 

SECTION 3.13              Guarantees, Loans, Advances and Other Liabilities.

 

Except as expressly contemplated by the Loan Purchase Agreements or this Indenture and the other Transaction Documents, the Co-Issuers shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another’s payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person other than another Co-Issuer.

 

SECTION 3.14              Tax Treatment.

 

(a)                                 The Co-Issuers have entered into this Indenture, and the Notes (to the extent and upon the date such Notes are issued for U.S. federal income tax purposes) will be issued, with the intention that, for federal, state and local income and franchise tax purposes, (i) the Notes qualify as indebtedness secured by the assets of the Co-Issuers and (ii) none of the Co-Issuers will be treated as an association, taxable mortgage pool or publicly traded partnership taxable as a corporation.  The Co-Issuers, by entering into this Indenture, and each Noteholder, by the acceptance of any such Note (and each beneficial owner of a Note, by its acceptance of an interest in the applicable Note), agree to treat such Notes for federal, state and local income and franchise tax purposes as indebtedness, and to file all federal, state and local income tax and information returns and reports required to be filed with respect to any of the Notes, under any federal, state or local tax statute, rule or regulation, consistently with indebtedness characterization. Each Holder of such Note agrees that it will cause any owner of a security entitlement to such Note acquiring an interest in a Note through it to comply with this Indenture as to treatment of indebtedness under applicable tax law, as described in this Section 3.14.  The parties hereto agree that they shall not cause or permit the making, as applicable, of any election under Treasury Regulation Section 301.7701-3 whereby the Co-Issuers or any portion thereof would be treated as a corporation for federal income tax purposes.  The provisions of this Indenture shall be construed in furtherance of the foregoing intended tax treatment.

 

(b)                                 Notwithstanding the preceding paragraph, if (a) any taxing authority asserts that any of the Notes are not properly classifiable as indebtedness for income tax purposes (“Recharacterized Notes”) and (b) any such assertion is successful, the Co-Issuers and the Noteholders agree that (i) the Holders of the Recharacterized Notes shall be treated for all income tax purposes as members of a partnership from the inception of the Co-Issuers and agree to file all tax returns and reports consistent with such treatment, (ii) payments on the Recharacterized Notes (other than principal payments) shall be treated as “guaranteed payments” under Section 707 of the Internal Revenue Code and (iii) all items of taxable income, gain, loss,

 

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deduction, or credit of the partnership for such taxable year and any separately allocable items thereof shall be allocated to the Sellers.  In the event it is determined that such payments on the Recharacterized Notes are not properly treated as “guaranteed payments” in accordance with clause (ii) of the preceding sentence, then, prior to the application of clause (iii) of the preceding sentence, items of gross income of the partnership for each taxable year of the partnership, in an amount corresponding to such aggregate distributions to the Holders of Recharacterized Notes made pursuant to the terms of the Indenture during such taxable year, shall be specially allocated to the Holders of the Recharacterized Notes pro rata in the proportion that the amount of such distributions received by each such Holder during such taxable year bears to the aggregate amount of such distributions received by all Holders of Recharacterized Notes pursuant to the terms of the Indenture during such taxable year, provided, that to the extent that such distributions to the Holders of Recharacterized Notes pursuant to the terms of the Indenture during any taxable year exceed the gross income of the partnership during such taxable year, the amount of such excess shall be specially allocated to such Holders in accordance with the preceding provisions of this Section 3.14(b) in any subsequent taxable year or years of the partnership to the extent of the gross income of the partnership in such subsequent taxable year or years.  The foregoing provisions of this Section 3.14(b) are intended to comply with the requirements of Section 704 of the Internal Revenue Code and the Treasury Regulations promulgated thereunder, including, without limitation, the “qualified income offset” requirement of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and the partner minimum gain chargeback provisions of Treasury Regulation Section 1.704-2, and shall be interpreted and applied in a manner consistent therewith.

 

(c)                                  With respect to any outstanding Class A, Class B, Class C, Class D and Class E Notes retained by the Co-Issuers or conveyed to the Sellers and sold to an unrelated purchaser at a later time (a “Later-Sold Note”), such sale will not be effective unless (A) the Co-Issuers receive a Tax Opinion with respect to such sale and (B) either (i) such Later-Sold Note has a CUSIP number that is different than that of any other Notes outstanding immediately prior to such sale, or (ii) the Co-Issuers receive an Opinion of Counsel that, for U.S. federal income tax purposes, such Later-Sold Note (1) has the same issue price and issue date as any outstanding Notes that have the same CUSIP number as the Later-Sold Note and (2) are not subject to materially different tax treatment than any outstanding Notes that have the same CUSIP number as the Later-Sold Note.  In addition, with respect to the sale of a Later-Sold Note that is a Class A, Class B or Class C Note, such sale will not be effective unless the Co-Issuers receive an Opinion of Counsel that such Class A, Class B or Class C Note will be characterized as indebtedness for U.S. federal income tax purposes, and with respect to the sale of a Later-Sold Note that is a Class D Note, such sale will not be effective unless the Co-Issuers receive an Opinion of Counsel that such Class D Note should be characterized as indebtedness for U.S. federal income tax purposes.  Finally, to the extent that the Later-Sold Note is a Class D Note or a Class E Note, such sale will not be effective unless the requirements of Section 2.05 are satisfied prior to such sale.

 

SECTION 3.15              Notice of Events of Default.

 

The Co-Issuers agree to give the Indenture Trustee, the Paying Agent and each Noteholder prompt written notice of each Event of Default and any breach in any material

 

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respect by any Seller or Seller Loan Trustee of its obligations under any Loan Purchase Agreement.

 

The Co-Issuers shall deliver to the Indenture Trustee and the Paying Agent written notice of any Insolvency Event with respect to any Co-Issuer, within five (5) days after the occurrence thereof.

 

SECTION 3.16              No Other Business.

 

None of the Co-Issuers shall engage in any business other than the transactions contemplated by the Transaction Documents and all activities incidental thereto, including, without limitation, payment of Other Co-Issuer Obligations.

 

SECTION 3.17              Further Instruments and Acts.

 

Upon written request of the Indenture Trustee, the Co-Issuers and each of the Loan Trustees will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

 

SECTION 3.18              Maintenance of Separate Existence.

 

Each Co-Issuer shall comply with the covenants set forth in Section 9(j) of such Co-Issuer’s Co-Issuer LLC Agreement.

 

SECTION 3.19              Perfection Representations, Warranties and Covenants.

 

The perfection representations and warranties attached hereto as Schedule II shall be deemed to be part of this Indenture for all purposes.

 

SECTION 3.20              Other Representations of the Co-Issuers and the Loan Trustees.

 

On the Closing Date, each of the Co-Issuers and each of the Loan Trustees make the following representations and warranties for the benefit of the Noteholders:

 

(a)                                 Binding Obligation.  The Transaction Documents to which any of the Co-Issuers or any of the Loan Trustees, as applicable, is a party or by which it is bound constitutes the legal, valid and binding obligation of the Co-Issuers or of the Loan Trustees, as applicable, enforceable against the Co-Issuers or the Loan Trustees, as applicable, in accordance with its respective terms, except as such enforceability may be limited by Debtor Relief Laws and general principals of equity (whether considered in a suit at law or in equity).

 

(b)                                 No Violation. The consummation of the transactions contemplated by the Transaction Documents to which any of the Co-Issuers or any of the Loan Trustees, as applicable, is a party or by which it is bound and the fulfillments of the terms hereof and thereof will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, the Certificate of Formation or

 

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LLC Agreement of any of the Co-Issuers, or any of the Loan Trustee Trust Agreements, as applicable, or any other agreement or document to which any of the Co-Issuers or any of the Loan Trustees is a party or by which it or any of its property is bound or is subject or (ii) violate any Requirements of Law applicable to any of the Co-Issuers or to or any of the Loan Trustees.

 

(c)                                  No Proceedings.  There is no litigation, proceeding or investigation pending before any Governmental Authority or, to the best knowledge of any of the Co-Issuers or any of the Loan Trustees, threatened against any of the Co-Issuers or any of the Loan Trustees, (i) asserting the invalidity of any Transaction Document to which any of the Co-Issuers or any of the Loan Trustees is a party or by which it is bound, (ii) seeking to prevent the consummation of any of the transactions contemplated by such Transaction Documents or (iii) seeking any determination or ruling that could reasonably be expected to have an Adverse Effect.

 

SECTION 3.21              Compliance with Laws.

 

The Co-Issuers shall comply with any Requirements of Law applicable to the Co-Issuers, the non-compliance with which would, individually or in the aggregate, materially adversely affect the ability of the Co-Issuers to perform its obligations under the Notes, this Indenture or the Loan Purchase Agreements.

 

ARTICLE IV
 Satisfaction and Discharge

 

SECTION 4.01              Satisfaction and Discharge of this Indenture.

 

This Indenture shall cease to be of further effect except as to (a) rights of registration of transfer and exchange, (b) substitution of mutilated, destroyed, lost or stolen Notes, (c) the rights of Noteholders to receive payments of principal thereof and interest thereon, (d) Sections 3.03, 3.08 and 3.09, (e) the rights and immunities of the Indenture Trustee, the Note Registrar and the Paying Agent hereunder, including the rights under Section 6.07, and the obligations of the Paying Agent under Section 4.02, and (f) the rights of such Noteholders as beneficiaries hereof with respect to the property so deposited with the Paying Agent and payable to all or any of them, and the Paying Agent, on demand of and at the expense of the Co-Issuers, to be paid out of funds in the Collection Account, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture when:

 

(i)                                     either:

 

(A)                               all Notes theretofore authenticated and delivered (other than (1) any Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.05, and (2) any Notes for whose full payment money is held in trust by the Paying Agent and thereafter released to the Co-Issuers or discharged from such trust, as provided in Section 3.03) have been delivered to the Note Registrar for cancellation; or

 

(B)                               all Notes not theretofore delivered to the Note Registrar for cancellation:

 

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(I)                                   have become due and payable; or

 

(II)                              are to be called for redemption within one year under arrangements satisfactory to the Note Registrar for the giving of notice of redemption by the Indenture Trustee in the name, and at the expense, of the Co-Issuers, to be paid out of funds in the Collection Account;

 

and the Co-Issuers, in the case of (I) or (II) above, have irrevocably deposited or caused to be irrevocably deposited with the Paying Agent cash or direct obligations of or obligations guaranteed by the United States of America (which will mature prior to the date such amounts are payable), in trust for such purpose, in an amount sufficient to pay and discharge the entire indebtedness on such Notes (to the extent not theretofore delivered to the Note Registrar for cancellation) in accordance with Section 8.06 hereof when due and payable or on the applicable final Payment Date (if Notes shall have been called for redemption pursuant to Section 8.07), as the case may be;

 

(ii)                                  the Co-Issuers have paid or caused to be paid all other sums payable hereunder by the Co-Issuers with respect to the Notes and with respect to the Indenture Trustee, the Paying Agent and the Note Registrar; and

 

(iii)                               the Co-Issuers have delivered to the Indenture Trustee, the Paying Agent and the Note Registrar an Officer’s Certificate of the Co-Issuers and of the Administrator and an Opinion of Counsel, each meeting the applicable requirements of Section 11.01(a) and each stating that all conditions precedent herein relating to the satisfaction and discharge of this Indenture have been complied with.

 

SECTION 4.02              Application of Trust Money.

 

All monies deposited with the Paying Agent pursuant to Section 4.01 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to make payments to the Noteholders for the payment in respect of which such monies have been deposited with the Paying Agent, of all sums due and to become due thereon for principal and interest; but such monies need not be segregated from other funds except to the extent required herein or required by law.

 

ARTICLE V
 Defaults and Remedies

 

SECTION 5.01              Reserved.

 

SECTION 5.02              Events of Default.

 

An “Event of Default” means any one of the following events:

 

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(a)                                 an Insolvency Event with respect to any of the Co-Issuers shall have occurred; or

 

(b)                                 the Indenture Trustee shall cease to have a first-priority perfected security interest in all or material portion of the Trust Estate; or

 

(c)                                  any of the Co-Issuers shall have become subject to regulation by the SEC as an “investment company” under the Investment Company Act; or

 

(d)                                 any of the Co-Issuers shall become taxable as an association, a taxable mortgage pool or a publicly traded partnership taxable as a corporation under the Internal Revenue Code;

 

(e)                                  a default in the payment of any interest on any Class A Note and such default shall continue for a period of five (5) Business Days; or

 

(f)                                   a failure to pay the principal of all Outstanding Notes of any Class, together with all accrued and unpaid interest thereon, in full on the Stated Maturity Date for such Class; or

 

(g)                                  either (x) a failure on the part of any of the Co-Issuers or on the part of any of the Loan Trustees duly to observe or perform any other covenants or agreements of the Co-Issuers or of the Loan Trustees, as applicable, set forth in this Indenture, or (y) a failure on the part of any of the Sellers duly to observe or perform any covenants or agreements of such Seller in respect of the repurchase of any Loan set forth in the related Loan Purchase Agreement, which failure has a material adverse effect on the interests of the Noteholders (as determined by the Required Noteholders) and which continues unremedied for a period of sixty (60) days after the earlier of (i) the date on which any of the Co-Issuers, Sellers or Indenture Trustee has actual knowledge of such failure and (ii) the date on which notice of such failure, requiring the same to be remedied, shall have been given by registered or certified mail to the Co-Issuers, the Loan Trustees or the Sellers, as applicable, by the Indenture Trustee, or to the Co-Issuers, the Loan Trustees or the Sellers, as applicable, and the Indenture Trustee by the Required Noteholders; or

 

(h)                                 either (x) any representation, warranty or certification made by any of the Co-Issuers or by any of the Loan Trustees in this Indenture or in any certificate delivered pursuant to this Indenture shall prove to have been inaccurate when made or deemed made or (y) any representation, warranty or certification made by any of the Sellers with respect to any Loan in the related Loan Purchase Agreement or in any certificate delivered pursuant to such Loan Purchase Agreement shall prove to have been inaccurate when made or deemed made and, in either case, such inaccuracy has a material adverse effect on the Noteholders (as determined by the Required Noteholders) and which continues unremedied for a period of thirty (30) days after the earlier of (i) the date on which any of the Co-Issuers, Sellers or Indenture Trustee has actual knowledge of such incorrect representation or warranty and (ii) the date on which a notice specifying such incorrect representation or warranty and requiring the same to be remedied, shall have been given by registered or certified mail to the Co-Issuers, the Loan Trustees or the

 

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Sellers, as applicable, by the Indenture Trustee, or to the Co-Issuers, the Loan Trustees or the Sellers, as applicable, and the Indenture Trustee by the Required Noteholders; it being understood that any repurchase of a Loan by the applicable Seller and Seller Loan Trustee pursuant to a Loan Purchase Agreement shall be deemed to remedy any incorrect representation or warranty with respect to such Loan; or

 

(i)                                     the Internal Revenue Service shall file notice of a lien pursuant to Section 430 or Section 6321 of the Internal Revenue Code with regard to any Co-Issuer and such lien shall not have been released within thirty (30) days;

 

provided, however, that a failure of performance under any of clauses (e), (f), (g) or (h) above for a period of fifteen (15) days (beyond any cure periods provided for therein) shall not constitute an Event of Default if such failure could not be prevented by the exercise of reasonable diligence by the Co-Issuers or the Indenture Trustee and such failure was caused by a Force Majeure Event.  For the avoidance of doubt, an Event of Default shall occur in the event that such failure of performance has not been cured as of the expiration of such fifteen (15) day period.

 

SECTION 5.03              Acceleration of Maturity; Rescission and Annulment.

 

(a)                                 If an Event of Default described in clauses (b) through (i) of Section 5.02 shall have occurred and be continuing, then in every such case the Indenture Trustee, at the written direction of the Required Noteholders, shall declare all the Notes to be immediately due and payable, by a notice in writing to the Co-Issuers, and upon any such declaration the unpaid principal amount of the Notes, together with accrued or accreted and unpaid interest thereon through the date of acceleration, shall become immediately due and payable.

 

(b)                                 If an Event of Default described in clause (a) of Section 5.02 shall have occurred and be continuing, then the unpaid principal of all Notes, together with the accrued or accreted and unpaid interest thereon through the date of acceleration, shall automatically become, and shall be considered to be declared, due and payable.

 

(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 in this Article V provided, the Required Noteholders, by written notice to the Co-Issuers and the Indenture Trustee, may rescind and annul such declaration and its consequences if:

 

(i)                                     the Co-Issuers have paid or deposited with the Paying Agent 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 the Notes if the Event of Default giving rise to such acceleration had not occurred; and

 

(B)                               all sums paid or advanced by the Indenture Trustee, Paying Agent and Note Registrar hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, Paying Agent and Note Registrar and their agents and outside counsel; and

 

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(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 5.13.

 

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

 

SECTION 5.04              Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.

 

(a)                                 Each of the Co-Issuers covenants that if (i) 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 (5) Business Days following the date on which it became due and payable or (ii) default is made in the payment of principal of any Note, if and to the extent not previously paid when the same becomes due and payable, the Co-Issuer will, upon demand of the Indenture Trustee, immediately pay to the Paying Agent for the benefit of the Noteholders the whole amount then due and payable on such Notes for principal and interest, with interest upon the overdue principal and, to the extent that payments of such interest shall be legally enforceable, upon overdue installments of interest at the applicable Interest Rate and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, the Paying Agent and the Note Registrar, their agents and outside counsel.

 

(b)                                 If a Co-Issuer fails to pay such amounts forthwith 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 Co-Issuers or other obligor upon such Notes and collect in the manner provided by law out of the Trust Estate or the property of another obligor on the Notes, wherever situated, the monies adjudged or decreed to be payable in the manner provided by law.

 

(c)                                  If an Event of Default occurs and is continuing, the Indenture Trustee may, subject to the provisions of Section 5.03, Section 5.05, Section 5.12, Section 6.01 and Section 6.03, proceed to protect and enforce its rights and the rights of the Noteholders under this Indenture by such appropriate Proceedings as the Indenture Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, 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 any of the Co-Issuers or any other obligor upon the Notes or any Person having or claiming an ownership interest in the related Trust Estate, Proceedings under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or other similar law, now or hereafter in effect or in case a receiver, conservator, assignee, trustee in bankruptcy, liquidator, sequestrator, custodian or other similar official shall have been appointed for or taken possession of any of the Co-Issuers or its property or such other obligor or Person, or in case of any other comparable judicial Proceedings relative to any of the Co-Issuers or the creditors or property of any of the

 

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Co-Issuers or such other obligor or Person, the Indenture Trustee, regardless whether the principal of any Notes shall then be due and payable as therein expressed or by declaration or otherwise and regardless whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section 5.04, shall be entitled and empowered, by intervention in such Proceedings or otherwise:

 

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

 

(ii)                                  unless prohibited by Requirements of Law, to vote on behalf of the Noteholders, in any election of a trustee or a standby trustee in bankruptcy or a Person performing similar functions; and

 

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

 

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

 

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

 

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

 

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and their respective agents and attorneys, shall be for the benefit of the Holders of the Notes as provided herein.

 

(g)                                  In any Proceedings brought by the Indenture Trustee (except with respect to 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 Noteholders, and it shall not be necessary to make any such Noteholder party to any such Proceedings.

 

SECTION 5.05              Remedies; Priorities.

 

(a)                                 If an Event of Default shall have occurred and be continuing, and the Notes have been accelerated under Section 5.03, the Indenture Trustee shall, upon the written direction of the Required Noteholders (subject to Section 5.06), do one or more of the following:

 

(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 of acceleration or otherwise, enforce any judgment obtained, and collect from the Co-Issuers the Trust Estate and from any other obligor upon such Notes monies adjudged due;

 

(ii)                                  sell, on a servicing released basis, Loans and the Purchased Assets related thereto, as shall constitute a part of the related Trust Estate (or rights or interest therein), at one or more public or private sales called and conducted in any manner permitted by law;

 

(iii)                               direct the Co-Issuers to exercise rights, remedies, powers, privileges or claims under the Loan Purchase Agreements and the Performance Support Agreement pursuant to Section 5.18 hereof; and

 

(iv)                              take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee or the Noteholders hereunder;

 

provided, however, that the Indenture Trustee may not exercise the remedy in subparagraph (ii) above or otherwise sell or liquidate the Trust Estate substantially as a whole (in one or more sales), or institute Proceedings in furtherance thereof, unless (A) the Holders of 100% of the aggregate unpaid principal amount of the Outstanding Notes direct such remedy, (B) the Indenture Trustee determines that the anticipated proceeds of such sale distributable to the Noteholders are sufficient to discharge in full all amounts then due and unpaid upon the Notes for principal and interest (after giving effect to the payment of any amounts that are senior in priority to such principal and interest) or (C) the Indenture Trustee determines (based on the information provided to it by the Servicer) that the Trust Estate may not continue to provide sufficient funds for the payment of principal of and interest on the Notes as they would have become due if the Notes had not been declared due and payable, and the Indenture Trustee is directed to take such remedy by the Holders of not less than 66 2/3% of the aggregate unpaid principal amount of the Outstanding Notes.  In determining such sufficiency or insufficiency with respect to clauses (B) and (C), the Indenture Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation

 

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as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose.  The cost of such opinion shall be reimbursed to the Indenture Trustee from amounts held in the Collection Account in accordance with Section 8.06.

 

The remedies provided in this Section 5.05(a) are the exclusive remedies provided to the Noteholders with respect to the Trust Estate and each of the Noteholders (by their acceptance of their respective interests in the Notes) and the Indenture Trustee hereby expressly waive any other remedy that might have been available under the applicable UCC.

 

(b)                                 If the Indenture Trustee collects any money or property pursuant to this Article V following the acceleration of the maturities of the Notes pursuant to Section 5.03 (so long as such declaration shall not have been rescinded or annulled), it shall pay out the money or property in accordance with Section 8.06 hereof or, in the case of an acceleration as a result of an Event of Default described in clause (a) of Section 5.02, as may otherwise be directed by a court of competent jurisdiction.

 

(c)                                  Following the sale of the Trust Estate and the application of the proceeds of such sale and other amounts, if any, then held in the Collection Account in accordance with Section 8.06 hereof, any and all amounts remaining due on the Notes and all other Obligations shall be extinguished and shall not revive, the Notes shall be cancelled, and the Notes shall no longer be Outstanding.

 

(d)                                 The Indenture Trustee may fix a record date and Payment Date for any payment to Noteholders pursuant to this Section.  At least fifteen (15) days before such record date, the Indenture Trustee shall mail to each Noteholder and the Co-Issuers a notice that states the record date, the Payment Date and the amount to be paid.

 

SECTION 5.06              Optional Preservation of the Trust Estate.

 

Subject to Section 5.05(a), if the Notes have been declared to be due and payable under Section 5.03 following an Event of Default and such declaration and its consequences have not been rescinded and annulled, and the Indenture Trustee has not received directions from the Noteholders to the contrary under Section 5.12, the Indenture Trustee may, but need not, elect to maintain possession of the Trust Estate.  It is the desire of the parties hereto and the Noteholders that there be at all times sufficient funds for the payment of principal of and interest on the Notes, and the Indenture Trustee shall take such desire into account when determining whether or not to maintain possession of the Trust Estate.  In determining whether to maintain possession of the Trust Estate, the Indenture Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of any proposed action and as to the sufficiency of the Trust Estate for such purpose.  The cost of such opinion shall be reimbursed to the Indenture Trustee from amounts held in the Collection Account pursuant to Section 8.06 hereof.

 

SECTION 5.07              Limitation on Suits.

 

No Noteholder shall have any right to institute any Proceedings, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

 

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(a)                                 the Holders of not less than 10% of the aggregate unpaid principal amount of all Outstanding Notes have made written request to the Indenture Trustee to institute such Proceeding in its own name as Indenture Trustee under this Indenture;

 

(b)                                 such Noteholder or Noteholders has previously given written notice to the Indenture Trustee of a continuing Event of Default;

 

(c)                                  such Noteholder or Noteholders has offered to the Indenture Trustee indemnity reasonably satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such request;

 

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

 

(e)                                  no direction inconsistent with such written request has been given to the Indenture Trustee during such sixty-day period Holders of a majority of the aggregate unpaid principal amount of all Outstanding Notes;

 

it being understood and intended that no one or more Noteholders 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 Noteholders or to obtain or to seek to obtain priority or preference over any other Noteholders 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 (2) or more groups of Noteholders, each representing less than a majority of the aggregate unpaid principal amount of all Outstanding Notes of the Notes, the Indenture Trustee shall act at the direction of the group representing a greater percentage of the aggregate unpaid principal amount of all Outstanding Notes, or if both groups are equal, the Indenture Trustee in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture.

 

SECTION 5.08              Unconditional Rights of Noteholders to Receive Principal and Interest.

 

Notwithstanding any other provisions in this Indenture, the Holder of any Note will have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Note on the Stated Maturity Date (and such principal shall be due and payable on such Stated Maturity Date) expressed in such Note and to institute suit for the enforcement of any such payment, and such right will not be impaired without the consent of such Holder; provided, however, that notwithstanding any other provision of this Indenture to the contrary, the obligation to pay principal of or interest on the Notes or any other amount payable to any Noteholder will be without recourse to the Co-Issuers (except to the Trust Estate), the Indenture Trustee, the Servicer or any Affiliate, officer, employee or director of any of them, and the obligation of the Co-Issuers to pay principal of or interest on the Notes or any other amount payable to any Noteholder will be subject to Article VIII.

 

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SECTION 5.09              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, or has been determined adversely to the Indenture Trustee or such Noteholder, then and in every such case the Co-Issuers, the Indenture Trustee or such Noteholder 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 5.10              Rights and Remedies Cumulative.

 

Except as provided in Section 5.05, no right, remedy, power or privilege herein conferred upon or reserved to the Indenture Trustee or the Noteholders is intended to be exclusive of any other right, remedy, power or privilege, and every right, remedy, power or privilege shall, to the extent permitted by law, be cumulative.  The assertion or exercise of any right or remedy shall not preclude any other further assertion or the exercise of any other appropriate right or remedy.

 

SECTION 5.11              Delay or Omission Not Waiver.

 

No failure to exercise and no delay in exercising, on the part of the Indenture Trustee or of any Noteholder or other Person, any right or remedy occurring hereunder upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article V may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as the case may be.

 

SECTION 5.12              Control by Noteholders.

 

The Holders of a majority of the aggregate unpaid principal amount of all Outstanding Notes, if an Event of Default has occurred and is continuing, shall have the right to direct the time, method and place of conducting any Proceeding for any right or remedy available to the Indenture Trustee with respect to the Notes or exercising any trust or power conferred on the Indenture Trustee with respect to the Notes; provided, however, that, subject to Section 6.01 and Section 6.03(d):

 

(a)                                 the Indenture Trustee shall have the right to decline any such direction if the Indenture Trustee, after being advised by counsel, determines that the action so directed is in conflict with any applicable Requirements of Law or with this Indenture; and

 

(b)                                 the Indenture Trustee shall have the right to decline any such direction with respect to such Proceeding if the Indenture Trustee in good faith shall determine that the Proceedings so directed would be illegal or involve the Indenture Trustee in liability for which it has not been indemnified in accordance with Article VI or be unjustly prejudicial to the Noteholders not parties to such direction.

 

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SECTION 5.13              Waiver of Past Defaults.

 

The Required Noteholders may, on behalf of all Noteholders, waive in writing any past default with respect to the Notes and its consequences (including an Event of Default), except that:

 

(a)                                 a default in the payment of the principal or interest in respect of any Note cannot be waived without the consent of each Noteholder of each Outstanding Note affected thereby;

 

(b)                                 a default as a result of an Insolvency Event with respect to any of the Co-Issuers or the Sellers cannot be waived without the consent of each Noteholder;

 

(c)                                  a default in respect of a covenant or provision hereof that under Section 9.02 hereof cannot be modified or amended without the consent of the Noteholder of each Outstanding Note or each Noteholder of each Outstanding Note affected thereby cannot be waived without the consent of each such Noteholder.

 

Upon any such written waiver, such default, and any Event of Default arising therefrom, shall cease to exist and shall be deemed to have been cured for every purpose of this Indenture; provided, that no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.

 

SECTION 5.14              Undertaking for Costs.

 

All parties to this Indenture agree, and each Noteholder by its acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided, that 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 compliance with Section 5.07), in each case holding in the aggregate more than 10% of the aggregate unpaid principal amount of all Outstanding Notes, or (c) any suit instituted by any Noteholder for the enforcement of the payment of the principal of or interest on any Note on or after the date on which any of such amounts was due pursuant to the terms of such Note (or, in the case of redemption, on or after the applicable Redemption Date).

 

SECTION 5.15              Waiver of Stay or Extension Laws.

 

Each of the Co-Issuers covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may adversely affect the covenants or the performance of this Indenture; and each Co-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

 

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of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

 

SECTION 5.16              Action on Notes.

 

The Indenture Trustee’s right to seek and recover judgment on the Notes or under the Indenture shall not be affected by the seeking or obtaining of or application for any other relief under or with respect to the Indenture.  Neither the lien of the 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 Co-Issuers 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 Co-Issuers.  Any money or property collected by the Indenture Trustee shall be applied as specified in Section 5.03.

 

SECTION 5.17              Sale of Loans.

 

(a)                                 If all or a portion of the Loans and the Purchased Assets related thereto are to be sold under the terms of Section 5.05(a)(ii), the Indenture Trustee, or its agents, shall, unless another method of sale is directed in writing by the Required Noteholders, use its commercially reasonable efforts to sell, dispose or otherwise liquidate all or a portion of the Loans and such related Purchased Assets by the solicitation of competitive bids.  The Indenture Trustee may from time to time postpone any sale by public announcement made at the time and place of such sale.  The Indenture Trustee hereby expressly waives its right to any amount fixed by law as compensation for any sale.

 

(b)                                 The Indenture Trustee is hereby irrevocably appointed the agent and attorney-in-fact of the Co-Issuers in connection with any sale of Loans and the Purchased Assets related thereto pursuant to Section 5.05(a)(ii).  No purchaser or transferee at any such sale shall be bound to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any monies.

 

(c)                                  If all or a portion of the Loans and the Purchased Assets related thereto are to be sold under the terms of Section 5.05(a)(ii), the Indenture Trustee shall solicit bids for such Loans from Permitted Assignees (identified in writing by the Servicer).  The Indenture Trustee shall sell such Loans and such related Purchased Assets to the bidder with the highest cash purchase offer.  The proceeds of any such sale shall be applied in accordance with Section 5.05(b).  In connection with any such sale of Loans and the Purchased Assets related thereto, the Indenture Trustee may contract with agents to assist in such sales, the cost of which and the other costs of such sale shall be paid from the proceeds of any such sale.

 

(d)                                 At any sale of all or a portion of the Loans and the Purchased Assets related thereto under Section 5.05(a)(ii), the Indenture Trustee or the Noteholders may bid for and purchase the property offered for sale and, upon compliance with the terms of sale, may hold, retain and dispose of such property without further accountability therefor.

 

(e)                                  Upon completion of any sale under Section 5.05(a)(ii), the Co-Issuers will deliver or cause to be delivered all of the property sold to the purchaser or purchasers at such sale on the date of sale, or within a reasonable time thereafter if it shall be impractical to make

 

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immediate delivery, but in any event full title and right of possession to such property shall pass to such purchaser or purchasers forthwith upon the completion of such sale.  If so requested by the Indenture Trustee or by any purchaser, the Co-Issuers shall confirm any such sale or transfer by executing and delivering to such purchaser all proper instruments of conveyance and transfer and release as may be designated in any such request.

 

SECTION 5.18              Performance and Enforcement of Certain Obligations. If an Event of Default has occurred and is continuing, the Indenture Trustee shall, at the written direction of the Required Noteholders, direct the Co-Issuers to exercise all rights, remedies, powers, privileges and claims the Co-Issuers may have against the Sellers, the Seller Loan Trustees, the Performance Support Provider and the Servicer under or in connection with the Loan Purchase Agreements, the Servicing Agreement and the Performance Support Agreement, as applicable, including the right or power to take any action to compel or secure performance or observance by the Servicer, the Performance Support Provider, the Sellers or the Seller Loan Trustees of their respective obligations thereunder.

 

ARTICLE VI
 The Indenture Trustee, Paying Agent and Note Registrar

 

SECTION 6.01              Duties of the Indenture Trustee.

 

(a)                                 If an Event of Default or Servicer Default has occurred and is continuing and a Responsible Officer shall have actual knowledge or written notice of such Event of Default or Servicer Default, the Indenture Trustee shall, prior to the receipt of directions, if any, from the Required Noteholders, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

 

(b)                                 At all times (except during the continuation of an Event of Default or Servicer 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 duties or covenants by the Indenture Trustee shall be read into this Indenture; 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 certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture; provided, however, that the Indenture Trustee, upon receipt of any resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Indenture Trustee which are specifically required to be furnished pursuant to any provision of this Indenture, shall examine them to determine whether they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).  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 in the event that the Indenture Trustee, after so requesting, does not receive a satisfactorily corrected instrument.

 

(c)                                  No provision of this Indenture shall be construed to relieve the Indenture Trustee from liability for its own negligent action, its own negligent failure to act, or its own fraud, bad faith or willful misconduct; provided, however, that:

 

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(i)                                     this paragraph (c) shall not be construed to limit the effect of paragraphs (a) or (b) of this Section 6.01;

 

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

 

(iii)                               the Indenture Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with this Indenture and/or the direction of the Required Noteholders as to the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee or for exercising any trust or power conferred upon the Indenture Trustee under this Indenture;

 

(iv)                              the Indenture Trustee shall not be deemed to have notice or knowledge of any Event of Default or any other default unless a Responsible Officer of the Indenture Trustee has actual knowledge or shall have received written notice thereof.  In the absence of such actual knowledge or receipt of such notice, the Indenture Trustee may conclusively assume that none of such events have occurred and the Indenture Trustee shall not have any obligation or duty to determine whether any Event of Default or any other default has occurred; and

 

(v)                                 the Indenture Trustee shall not have any duty (A) to see to any recording, filing or depositing of this Indenture or any agreement referred to herein or any financing statement or amendments to a financing 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 other than from funds available in the Collection Account.

 

(d)                                 No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if there is reasonable ground for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

 

(e)                                  Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Indenture Trustee is subject to subsections (a), (b), (c) and (d) of this Section 6.01.

 

(f)                                   Except as expressly provided in this Indenture, the Indenture Trustee shall have no power to vary the Trust Estate, including, without limitation, by (i) accepting any substitute payment obligation for a Loan initially transferred to the Co-Issuers under the Loan Purchase Agreements, (ii) adding any other investment, obligation or security to the Co-Issuers

 

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or the Trust Estate or (iii) withdrawing from the Trust Estate any Loans (except as otherwise provided herein or in the Loan Purchase Agreement).

 

(g)                                  The Indenture Trustee shall not have any responsibility or liability for investment losses on Eligible Investments (other than as an obligor on any Eligible Investments on which the institution acting as Indenture Trustee is an obligor).  The Indenture Trustee or its Affiliates are permitted to receive additional compensation that could be deemed to be in the Indenture Trustee’s economic self-interest for (i) serving as investment adviser, administrator, shareholder, servicing agent, custodian or subcustodian with respect to certain of the Eligible Investments, (ii) using Affiliates to effect transactions in certain Eligible Investments and (iii) effecting transactions in certain Eligible Investments.  Such compensation is not payable or reimbursable under Section 6.07 of this Indenture.

 

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

 

SECTION 6.02              Notice of Event of Default.

 

Upon the occurrence of any Event of Default of which a Responsible Officer of the Indenture Trustee has actual knowledge or has received notice thereof at the Corporate Trust Office of the Indenture Trustee, the Indenture Trustee shall transmit by mail to all Noteholders as their names and addresses appear on the Note Register, notice of such Event of Default within ten (10) Business Days after such Responsible Officer receives such notice or obtains actual knowledge.

 

SECTION 6.03              Certain Matters Affecting the Indenture Trustee.

 

Except as otherwise provided in Section 6.01 hereof:

 

(a)                                 the Indenture Trustee may conclusively rely and shall fully be protected in acting or refraining from acting in accordance with any resolution, certificate, statement, instrument, Officer’s Certificate, opinion, report, notice, request, direction, consent, order, bond, note, or other paper or document reasonably believed by it to be genuine and to have been signed or presented to it pursuant to this Indenture by the proper party or parties and shall be under no obligation to inquire as to the adequacy, accuracy or sufficiency of any such information or be under any obligation to make any calculation or verifications in respect of any such information and shall not be liable for any loss that may be occasioned thereby;

 

(b)                                 before the Indenture Trustee acts or refrains from acting, it may require and shall be entitled to receive an Officer’s Certificate of the Co-Issuers and/or an Opinion of Counsel.  The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel;

 

(c)                                  as a condition to the taking, suffering or omitting of any action by it hereunder, the Indenture Trustee may consult with counsel and the advice or opinion of such counsel with respect to legal matters relating to the Indenture or the Notes shall be full and 

 

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complete authorization and protection from any liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

 

(d)                                 the Indenture Trustee shall not be under any obligation to exercise any of the rights or powers vested in it by this Indenture, or to honor the request or direction of any of the Noteholders pursuant to this Indenture to institute, conduct or defend any litigation hereunder in relation hereto, unless such Noteholders shall have offered to the Indenture Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; provided, however, that nothing contained herein shall relieve the Indenture Trustee of the obligations, upon the occurrence of an Event of Default (which has not been cured or waived) to exercise such of the rights and powers vested in it by this Indenture and to use the same degree of care or skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs;

 

(e)                                  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, direction, consent, order, bond, note or other paper or document, believed by it to be genuine, but the Indenture Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Co-Issuers and the Servicer, personally or by agent or attorney;

 

(f)                                   the Indenture Trustee shall not be liable for any actions taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon the Indenture Trustee by this Indenture;

 

(g)                                  the Indenture Trustee shall not be required to make any initial or periodic examination of any documents or records related to any of the Trust Estate for the purpose of establishing the presence or absence of defects, the compliance by the Co-Issuers with its representations and warranties or for any other purpose;

 

(h)                                 whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section;

 

(i)                                     the Indenture Trustee shall not have any liability with respect to the acts or omissions of the Servicer (except and to the extent the Indenture Trustee is the Servicer), including acts or omissions in connection with the servicing, management or administration of Loans; calculations made by the Servicer whether or not reported to the Co-Issuers or Indenture Trustee; and deposits into or withdrawals from any accounts or funds established pursuant to the terms of this Indenture;

 

(j)                                    the Indenture Trustee shall not be responsible or liable in any manner whatsoever, for calculation, determination and/or verification of the allocations of Collections, determinations of monthly interest or the applications of Available Funds pursuant to this Indenture;

 

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(k)                                 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;

 

(l)                                     the Indenture Trustee shall not be required to give any bond or surety in respect of the execution of the Note Accounts created hereby or in the powers granted hereunder;

 

(m)                             the Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees, and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of any agent, attorney, custodians or nominees appointed with due care by it hereunder; provided, that the Indenture Trustee shall remain obligated and be liable to the Co-Issuers and the Noteholders for the execution of its trusts and powers and performance of its duties hereunder without diminution of such obligations and liability by virtue of the appointment of any such agent, attorney, custodian or nominee, and to the same extent and under the same terms and conditions as if the Indenture Trustee alone were individually executing or performing such obligations; provided, however, that no successor Indenture Trustee shall be liable for the execution or performance of any such obligations of the Indenture Trustee by any of the original parties (including any successors or assigns) to the Transaction Documents;

 

(n)                                 the Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers so long as the Indenture Trustee’s conduct does not constitute willful misconduct, negligence or bad faith;

 

(o)                                 in no event shall the Indenture Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, without limitation, loss of profit) irrespective of whether the Indenture Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action; and

 

(p)                                 the Indenture Trustee may request that the Co-Issuers, or the Administrator on behalf of the Co-Issuers, deliver an Officer’s Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officer’s Certificate may be signed by any person authorized to sign an Officer’s Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.

 

SECTION 6.04              Not Responsible for Recitals or Issuance of Notes.

 

The recitals contained herein and in the Notes shall not be taken as the statements of the Indenture Trustee, and the Indenture Trustee does not assume any responsibility for their correctness.  The Indenture Trustee does not make any representation as to the validity or sufficiency of the Indenture, the Notes or any related document or as to the perfection or priority of any security interest therein.  The Indenture Trustee shall not be accountable for the use or application by the Co-Issuers of the proceeds from the Notes.

 

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SECTION 6.05              Indenture Trustee, Paying Agent and Note Registrar May Hold Notes.

 

The Indenture Trustee, the Note Registrar, the Paying Agent or any other agent of the Co-Issuers, in its individual or any other capacity, may become the owner or pledgee of Notes and subject to Section 6.11, may otherwise deal with the Co-Issuers or its affiliates with the same rights it would have if it were not Indenture Trustee, Note Registrar, the Paying Agent or such other agent.

 

SECTION 6.06              Money Held in Trust.

 

Money held by the Indenture Trustee in trust hereunder need not be segregated from other funds held by the Indenture Trustee in trust hereunder except to the extent required herein or required by law.  The Indenture Trustee shall not be under any liability for interest on any money received by it hereunder except (i) as otherwise agreed upon in writing by the Indenture Trustee and the Co-Issuers and (ii) as an obligor with respect to Eligible Investments on which the institution acting as Indenture Trustee is an obligor.

 

SECTION 6.07              Compensation, Reimbursement and Indemnification.

 

(a)                                 The Indenture Trustee shall be entitled to recover, on each Payment Date and, in accordance with the priority set forth in Section 8.06 hereof, compensation a fee equal to one-twelfth (1/12th) of $27,500 (which compensation shall not be limited by any law on compensation of a trustee of an express trust).  In addition to compensation for its services, the Co-Issuers shall reimburse the Indenture Trustee, in each case in accordance with the priority set forth in Section 8.06 hereof, for all reasonable out-of-pocket expenses incurred or made by it (including without limitation expenses incurred in connection with notices or other communications to the Noteholders), disbursements and advances incurred or made by the Indenture Trustee in accordance with any of the provisions of this Indenture (including but in no way limited to any expenses incurred pursuant to Section 5.04, Section 5.05, Section 5.06 and Section 5.07), or any of the Transaction Documents.  Such expenses shall include the reasonable fees and out-of-pocket expenses, disbursements and advances of any agents, any co-trustee, counsel, accountants and experts, except any such expense, disbursement or advance as may arise from its negligence or bad faith.  In no event shall the Indenture Trustee or any agent of the Indenture Trustee advance any funds for the payment of principal, interest or premium on any Notes.  The Co-Issuers shall, in accordance with the priority set forth in Section 8.06, jointly and severally indemnify the Indenture Trustee and its officers, directors, agents and employees against any and all loss, suit, claim, judgment, liability or expense (including the reasonable fees and expenses of counsel) incurred by it in connection with the administration of this trust and the performance of its duties hereunder and under the Transaction Documents.  The Indenture Trustee shall notify the Co-Issuers and the Servicer promptly of any claim for which it may seek indemnity.  Failure by the Indenture Trustee to so notify the Co-Issuers and the Servicer shall not relieve the Co-Issuers of its obligations hereunder unless such loss, liability or expense could have been avoided with such prompt notification and then only to the extent of such loss, expense or liability which could have been so avoided.  The Co-Issuers shall defend any claim against the Indenture Trustee; provided, however, the Indenture Trustee may have separate 

 

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counsel and, if it does, the Co-Issuers shall reimburse the Indenture Trustee for payment of the fees and expenses of such counsel, in accordance with the priority set forth in Section 8.06.  Neither the Co-Issuers nor the Servicer shall be required to 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, fraud or bad faith.

 

(b)                                 The provisions of this Section shall survive the resignation and removal of the Indenture Trustee and the discharge of this Indenture.  When the Indenture Trustee incurs expenses after the occurrence of an Event of Default specified in Section 5.02(d) with respect to the Co-Issuers, the expenses are intended to constitute expenses of administration under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or similar law.

 

(c)                                  Notwithstanding anything herein to the contrary, the Indenture Trustee’s right to enforce any of the Co-Issuers’ payment obligations pursuant to this Section 6.07 shall be subject to the provisions of Section 11.16(a).

 

SECTION 6.08              Replacement of Indenture Trustee.

 

(a)                                 No resignation or removal of the Indenture Trustee and no appointment of a successor Indenture Trustee shall become effective until the acceptance of appointment by the successor Indenture Trustee pursuant to this Section 6.08.  The Indenture Trustee may resign at any time by giving sixty (60) days prior written notice to the Co-Issuers.  The Required Noteholders may remove the Indenture Trustee and any or all of its agents by so notifying the Indenture Trustee and may appoint a successor Indenture Trustee.  The Co-Issuers shall remove the Indenture Trustee by giving sixty (60) days prior written notice to the Indenture Trustee if:

 

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

 

(ii)                                  the Indenture Trustee shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to the Indenture Trustee or all or substantially all of its property, or a decree or order of a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against the Indenture Trustee; or the Indenture Trustee shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations; or

 

(iii)                               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 the Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Co-Issuers shall promptly appoint a successor Indenture Trustee, which successor shall be reasonably satisfactory to the Servicer.

 

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(b)                                 Any resignation or removal of the Indenture Trustee and appointment of successor indenture trustee pursuant to any of the provisions of this Section shall not become effective until acceptance of appointment by the successor indenture trustee as provided in this Section 6.08(b).

 

(i)                                     Any successor indenture trustee appointed as provided herein shall execute, acknowledge and deliver to the Co-Issuers, to the Loan Trustees, to the Servicer and to its predecessor indenture trustee, as applicable, an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor indenture trustee shall become effective and such successor indenture trustee without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as Indenture Trustee herein.  The predecessor indenture trustee shall deliver to the successor indenture trustee all documents or copies thereof and statements and all money and other property held by it hereunder; and the Co-Issuers and the predecessor indenture trustee shall execute and deliver such instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor indenture trustee all such rights, powers, duties and obligations.

 

(ii)                                  No successor indenture trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor indenture trustee shall be eligible under the provisions of Section 6.11.

 

(iii)                               Upon acceptance of appointment by a successor indenture trustee as provided in this Section, such successor indenture trustee shall provide notice of such succession hereunder to all Noteholders.

 

(c)                                  If a successor Indenture Trustee does not take office within thirty (30) days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Co-Issuers or the Holders of a majority of the aggregate unpaid principal amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee.

 

(d)                                 If the Indenture Trustee ceases to be eligible in accordance 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.

 

(e)                                  No Indenture Trustee under this Indenture shall be liable for any action or omission of any successor indenture trustee.

 

SECTION 6.09              Successor Indenture Trustee by Merger.

 

If the Indenture Trustee consolidates with, merges or converts into, or transfers or sells all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Indenture Trustee; provided, that such corporation or banking association shall be otherwise qualified and eligible under Section 6.11.

 

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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 Estate, 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 hereof, 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 hereof.

 

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

 

(i)                                     all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the 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 separate trustee or co-trustee hereunder shall be personally liable by reason of any act or omission of any other separate trustee or co-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.

 

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(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 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 its long-term unsecured debt shall be rated at least Baa3 by Moody’s and at least BBB- by Standard & Poor’s.  The Indenture Trustee (1) shall meet the requirements of Section 26(a)(1) of the Investment Company Act, (2) shall not be an Affiliate of any of the Co-Issuers or the Servicer and (3) shall not offer or provide credit or credit enhancement to the Co-Issuers.  In case at any time the Indenture Trustee shall cease to be eligible in accordance with the provisions of this Section, the Indenture Trustee shall resign immediately in the manner and with the effect specified in Section 6.08.

 

SECTION 6.12              Representations and Warranties of the Indenture Trustee.

 

The Indenture Trustee represents and warrants that:

 

(i)                                     the Indenture Trustee is duly organized and validly existing under the laws of the jurisdiction of its organization;

 

(ii)                                  the Indenture Trustee has full power and authority to deliver and perform this Indenture and has taken all necessary action to authorize the execution, delivery and performance by it of this Indenture and each other Transaction Document to which it is a party;

 

(iii)                               each of this Indenture and each other Transaction Document to which it is a party has been duly executed and delivered by the Indenture Trustee and constitutes its legal, valid and binding obligation in accordance with its terms; and

 

(iv)                              the Indenture Trustee meets the eligibility requirements set forth in Section 6.11.

 

SECTION 6.13              Execution of Transaction Document.

 

The Co-Issuers and the Noteholders hereby direct the Indenture Trustee to execute the Back-up Servicing Agreement, the Performance Support Agreement and each other Transaction Document to which the Indenture Trustee is contemplated to be a party.

 

SECTION 6.14              Performance Support Agreement.

 

The Indenture Trustee shall, at the written direction of the Holders of the Notes representing not less than a majority of the aggregate unpaid principal amount of all Notes Outstanding, make a demand for any payments due to the Indenture Trustee, for its benefit and for the benefit of the Noteholders, under the Performance Support Agreement.

 

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SECTION 6.15              Rule 15Ga-1 Compliance.

 

(a)                                 To the extent a Responsible Officer of the Indenture Trustee receives a demand for the repurchase of a Loan based on a breach of a representation or warranty made by the Seller of such Loan (each, a “Demand”), the Indenture Trustee agrees (i) if such Demand is in writing, promptly to forward such Demand to the Co-Issuers and such Seller, and (ii) if such Demand is oral, to instruct the requesting party to submit such Demand in writing to the Indenture Trustee and the Sellers.

 

(b)                                 In connection with the repurchase of a Loan pursuant to a Demand, any dispute with respect to a Demand, or the withdrawal or final rejection of a Demand by the Seller of such Loan, the Indenture Trustee agrees, to the extent a Responsible Officer of the Indenture Trustee has actual knowledge thereof, promptly to notify the Co-Issuers in writing.

 

(c)                                  The Indenture Trustee will (i) notify the Co-Issuers, as soon as practicable and in any event within five (5) Business Days of the receipt thereof and in the manner set forth in Exhibit D hereof, of all Demands and provide to the Co-Issuers any other information reasonably requested to facilitate compliance by it with Rule 15Ga-1 under the Exchange Act, and (ii) if requested in writing by the Co-Issuers, provide a written certification no later than fifteen (15) days following any calendar quarter or calendar year that the Indenture Trustee has not received any Demands for such period, or if Demands have been received during such period, that the Indenture Trustee has provided all the information reasonably requested under clause (i) above with respect to such demands.  For purposes of this Agreement, references to any calendar quarter shall mean the related preceding calendar quarter ending in March, June, September, or December, as applicable.  The Indenture Trustee has no duty or obligation to undertake any investigation or inquiry related to any repurchases of Loans, or otherwise assume any additional duties or responsibilities, other than those express duties or responsibilities the Indenture Trustee hereunder or under the Transaction Documents, and no such additional obligations or duties are otherwise implied by the terms of this Indenture.  The Co-Issuers have full responsibility for compliance with all related reporting requirements associated with the transaction completed by the Transaction Documents and for all interpretive issues regarding this information.

 

SECTION 6.16              Duties of the Paying Agent and Note Registrar.

 

(a)                                 With respect to the Paying Agent and Note Registrar at all times:  (i) each of the Paying Agent and the Note Registrar undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied duties or covenants by the Paying Agent or the Note Registrar shall be read into this Indenture; and (ii) in the absence of bad faith or negligence on its part, each of the Paying Agent and the Note Registrar may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Paying Agent or the Note Registrar, as 

 

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applicable, and conforming to the requirements of this Indenture; provided, however, that each of the Paying Agent and the Note Registrar, upon receipt of any resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to it which are specifically required to be furnished pursuant to any provision of this Indenture, shall examine them to determine whether they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).  If any such instrument is found not to conform in any material respect to the requirements of this Indenture, each of the Paying Agent and the Note Registrar shall notify the Indenture Trustee and the Noteholders in the event that the Paying Agent or the Note Registrar, as applicable, after so requesting, does not receive a satisfactorily corrected instrument.

 

(b)                                 No provision of this Indenture shall be construed to relieve the Paying Agent or the Note Registrar from liability for its own negligent action, its own negligent failure to act, or its own fraud, bad faith or willful misconduct; provided, however, that:

 

(i)                                     this paragraph (b) shall not be construed to limit the effect of paragraph (a) of this Section 6.16;

 

(ii)                                  neither the Paying Agent nor the Note Registrar shall be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proven in a court of competent jurisdiction that the Indenture Trustee was negligent in ascertaining the pertinent facts;

 

(iii)                               neither the Paying Agent nor the Note Registrar shall be liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with this Indenture and/or the direction of the Required Noteholders as to the time, method and place of conducting any proceeding for any remedy available to the Paying Agent or the Note Registrar, as applicable, or for exercising any trust or power conferred upon it under this Indenture;

 

(iv)                              neither the Paying Agent nor the Note Registrar shall be deemed to have notice or knowledge of any Event of Default or any other default unless a Responsible Officer of the Paying Agent or the Note Registrar, as applicable, has actual knowledge or shall have received written notice thereof.  In the absence of such actual knowledge or receipt of such notice, each of the Paying Agent and the Note Registrar may conclusively assume that none of such events have occurred and neither the Paying Agent nor the Note Registrar shall have any obligation or duty to determine whether any Event of Default or any other default has occurred; and

 

(v)                                 neither the Paying Agent nor the Note Registrar shall have any duty (A) to see to any recording, filing or depositing of this Indenture or any agreement referred to herein or any financing statement or amendments to a financing 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

 

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lien or encumbrance of any kind owing with respect to, assessed or levied against, any part of the Trust Estate other than from funds available in the Collection Account.

 

(c)                                  No provision of this Indenture shall require the Paying Agent or the Note Registrar to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if there is reasonable ground for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

 

(d)                                 Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Paying Agent or the Note Registrar is subject to subsections (a), (b) and (c) of this Section 6.16.

 

(e)                                  Except as expressly provided in this Indenture, neither the Paying Agent nor the Note Registrar shall have any power to vary the Trust Estate, including, without limitation, by (i) accepting any substitute payment obligation for a Loan initially transferred to the Co-Issuers under the Loan Purchase Agreements, (ii) adding any other investment, obligation or security to the Co-Issuers or the Trust Estate or (iii) withdrawing from the Trust Estate any Loans (except as otherwise provided herein or in the Loan Purchase Agreements).

 

(f)                                   Neither the Paying Agent nor the Note Registrar shall have any responsibility or liability for investment losses on Eligible Investments (other than as an obligor on any Eligible Investments on which the institution acting as the Paying Agent or the Note Registrar, as applicable, is an obligor).  Each of the Paying Agent and the Note Registrar and its Affiliates is permitted to receive additional compensation that could be deemed to be in the Paying Agent’s or the Note Registrar’s economic self-interest, as applicable, for (i) serving as investment adviser, administrator, shareholder, servicing agent, custodian or subcustodian with respect to certain of the Eligible Investments, (ii) using Affiliates to effect transactions in certain Eligible Investments and (iii) effecting transactions in certain Eligible Investments.  Such compensation is not payable or reimbursable under Section 6.22 of this Indenture.

 

(g)                                  Every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to the Paying Agent or the Note Registrar, as applicable, shall be subject to the provisions of this Section.

 

SECTION 6.17              Certain Matters Affecting the Paying Agent and the Note Registrar.

 

Except as otherwise provided in Section 6.16 hereof:

 

(a)                                 each of the Paying Agent and the Note Registrar may conclusively rely and shall fully be protected in acting or refraining from acting in accordance with any resolution, certificate, statement, instrument, Officer’s Certificate, opinion, report, notice, request, direction, consent, order, bond, note, or other paper or document reasonably believed by it to be genuine and to have been signed or presented to it pursuant to this Indenture by the proper party or parties and shall be under no obligation to inquire as to the adequacy, accuracy or sufficiency of any 

 

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such information or be under any obligation to make any calculation or verifications in respect of any such information and shall not be liable for any loss that may be occasioned thereby;

 

(b)                                 before the Paying Agent or the Note Registrar acts or refrains from acting, it may require and shall be entitled to receive an Officer’s Certificate of the Co-Issuers and/or an Opinion of Counsel.  Neither the Paying Agent nor the Note Registrar shall be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel;

 

(c)                                  as a condition to the taking, suffering or omitting of any action by it hereunder, each of the Paying Agent and the Note Registrar may consult with counsel and the advice or opinion of such counsel with respect to legal matters relating to the Indenture or the Notes shall be full and complete authorization and protection from any liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

 

(d)                                 neither the Paying Agent nor the Note Registrar shall be under any obligation to exercise any of the rights or powers vested in it by this Indenture, or to honor the request or direction of any of the Noteholders pursuant to this Indenture to institute, conduct or defend any litigation hereunder in relation hereto, unless such Noteholders shall have offered to the Paying Agent or the Note Registrar, as applicable, reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;

 

(e)                                  neither the Paying Agent nor the Note Registrar shall be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note or other paper or document, believed by it to be genuine, but the Paying Agent or the Note Registrar, as applicable, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Paying Agent or the Note Registrar shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Co-Issuers and the Servicer, personally or by agent or attorney;

 

(f)                                   neither the Paying Agent nor the Note Registrar shall be liable for any actions taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon the Paying Agent or the Note Registrar, as applicable, by this Indenture;

 

(g)                                  neither the Paying Agent nor the Note Registrar shall be required to make any initial or periodic examination of any documents or records related to any of the Trust Estate for the purpose of establishing the presence or absence of defects, the compliance by the Co-Issuers with its representations and warranties or for any other purpose;

 

(h)                                 whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Paying Agent or the Note Registrar shall be subject to the provisions of this Section;

 

(i)                                     neither the Paying Agent nor the Note Registrar shall have any liability with respect to the acts or omissions of the Servicer, including acts or omissions in connection 

 

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with the servicing, management or administration of Loans; calculations made by the Servicer whether or not reported to the Co-Issuers, the Paying Agent or the Note Registrar; and deposits into or withdrawals from any accounts or funds established pursuant to the terms of this Indenture;

 

(j)                                    neither the Paying Agent nor the Note Registrar shall be responsible or liable in any manner whatsoever, for calculation, determination and/or verification of the allocations of Collections, determinations of monthly interest or the applications of Available Funds pursuant to this Indenture;

 

(k)                                 the right of the Paying Agent or the Note Registrar to perform any discretionary act enumerated in this Indenture shall not be construed as a duty, and neither the Paying Agent nor the Note Registrar shall be answerable for other than its negligence or willful misconduct in the performance of such act;

 

(l)                                     neither the Paying Agent nor the Note Registrar shall be required to give any bond or surety in respect of the execution of the Note Accounts created hereby or in the powers granted hereunder;

 

(m)                             each of the Paying Agent and the Note Registrar may execute any of the powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees, and neither the Paying Agent nor the Note Registrar shall not be responsible for any misconduct or negligence on the part of any agent, attorney, custodians or nominees appointed with due care by it hereunder; provided, that each of the Paying Agent and the Note Registrar shall remain obligated and be liable to the Co-Issuers and the Noteholders for the execution of their respective powers and performance of their respective duties hereunder without diminution of such obligations and liability by virtue of the appointment of any such agent, attorney, custodian or nominee, and to the same extent and under the same terms and conditions as if the Paying Agent or the Note Registrar, as applicable, alone were individually executing or performing such obligations; provided, however, that no successor Paying Agent or successor Note Registrar shall be liable for the execution or performance of any such obligations of the Paying Agent or the Note Registrar, as applicable, by any of the original parties (including any successors or assigns) to the Transaction Documents;

 

(n)                                 neither the Paying Agent nor the Note Registrar shall be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers so long as the Paying Agent’s or the Note Registrar’s conduct, as applicable, does not constitute willful misconduct, negligence or bad faith;

 

(o)                                 in no event shall the Paying Agent or the Note Registrar be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, without limitation, loss of profit) irrespective of whether Paying Agent or the Note Registrar, as applicable, has been advised of the likelihood of such loss or damage and regardless of the form of action; and

 

(p)                                 the Paying Agent or the Note Registrar may request that the Co-Issuers, or the Administrator on behalf of the Co-Issuers, deliver an Officer’s Certificate setting forth the 

 

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names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officer’s Certificate may be signed by any person authorized to sign an Officer’s Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.

 

SECTION 6.18              Not Responsible for Recitals or Issuance of Notes.

 

The recitals contained herein and in the Notes, except with respect to the Note Registrar and its certificate of authentication, shall not be taken as the statements of the Paying Agent or the Note Registrar, and neither the Paying Agent nor the Note Registrar assumes any responsibility for their correctness.  Neither the Paying Agent nor the Note Registrar makes any representation as to the validity or sufficiency of the Indenture, the Notes or any related document or as to the perfection or priority of any security interest therein.  Neither the Paying Agent nor the Note Registrar shall be accountable for the use or application by the Co-Issuers of the proceeds from the Notes.

 

SECTION 6.19              Money Held in Trust.

 

Money held by the Paying Agent or the Note Registrar in trust hereunder need not be segregated from other funds held by the Paying Agent or the Note Registrar, as applicable, in trust hereunder except to the extent required herein or required by law.  Neither the Paying Agent nor the Note Registrar shall have any liability for interest on any money received by it hereunder except (i) as otherwise agreed upon in writing by the Paying Agent or the Note Registrar, as applicable, and the Co-Issuers and (ii) as an obligor with respect to Eligible Investments on which the institution acting the Paying Agent or the Note Registrar is an obligor.

 

SECTION 6.20              Compensation, Reimbursement and Indemnification.

 

(a)                                 The Paying Agent and the Note Registrar shall be entitled to recover, on each Payment Date and, in accordance with the priority set forth in Section 8.06 hereof, compensation of a fee equal to one-twelfth (1/12th) of $12,000 (which compensation shall not be limited by any law on compensation of a trustee of an express trust). In addition to compensation for its services, the Co-Issuers shall reimburse each of the Paying Agent and the Note Registrar, in each case in accordance with the priority set forth in Section 8.06 hereof, for all reasonable out-of-pocket expenses incurred or made by it (including without limitation expenses incurred in connection with notices or other communications to the Noteholders), disbursements and advances incurred or made by the Paying Agent and the Note Registrar in accordance with any of the provisions of this Indenture or any of the Transaction Documents.  Such expenses shall include the reasonable fees and out-of-pocket expenses, disbursements and advances of any agents, any co-trustee, counsel, accountants and experts, except any such expense, disbursement or advance as may arise from its negligence or bad faith.  In no event shall the Paying Agent or the Note Registrar or any agent thereof advance any funds for the payment of principal, interest or premium on any Notes.  The Co-Issuers shall, in accordance with the priority set forth in Section 8.06, jointly and severally indemnify the Paying Agent and the Note Registrar and its officers, directors, agents and employees against any and all loss, suit, claim, judgment, liability or expense (including the reasonable fees and expenses of counsel) incurred by it in connection 

 

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with the administration of this trust and the performance of its duties hereunder and under the Transaction Documents.  Each of the Paying Agent and the Note Registrar shall notify the Co-Issuers and the Servicer promptly of any claim for which it may seek indemnity.  Failure by the Paying Agent or the Note Registrar to so notify the Co-Issuers and the Servicer shall not relieve the Co-Issuers of its obligations hereunder unless such loss, liability or expense could have been avoided with such prompt notification and then only to the extent of such loss, expense or liability which could have been so avoided.  The Co-Issuers shall defend any claim against each of the Paying Agent and the Note Registrar; provided, however, the Paying Agent or the Note Registrar, as applicable, may have separate counsel and, if it does, the Co-Issuers shall reimburse it for payment of the fees and expenses of such counsel, in accordance with the priority set forth in Section 8.06.  Neither the Co-Issuers nor the Servicer shall be required to reimburse any expense or indemnify against any loss, liability or expense incurred by the Paying Agent or the Note Registrar through its own willful misconduct, negligence, fraud or bad faith.

 

(b)                                 The provisions of this Section shall survive the resignation and removal of the Paying Agent or the Note Registrar, as applicable, and the discharge of this Indenture.

 

(c)                                  Notwithstanding anything herein to the contrary, the Paying Agent’s and the Note Registrar’s respective rights to enforce any of the Co-Issuers’ payment obligations pursuant to this Section 6.21 shall be subject to the provisions of Section 11.16(a).

 

SECTION 6.21              Successor Paying Agent or Note Registrar by Merger.

 

If the Paying Agent or the Note Registrar consolidates with, merges or converts into, or transfers or sells all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Paying Agent or Note Registrar, as applicable; provided, that such corporation or banking association shall be otherwise qualified and eligible under Section 6.22.

 

In case at the time such successor by merger, conversion, consolidation or transfer to the Note Registrar shall succeed such position any of the Notes shall have been authenticated but not delivered, any such successor to the Note Registrar may adopt the certificate of authentication of any predecessor indenture trustee and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Note Registrar may authenticate such Notes in the name of the successor to the Note Registrar; and in all such cases such certificates shall have the full force which it is anywhere provided in the Notes or in this Indenture that the certificate of the Note Registrar shall have.

 

SECTION 6.22              Eligibility; Disqualification.

 

The Paying Agent and the Note Registrar shall at all times each 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 its long-term unsecured debt shall be rated at least Baa3 by Moody’s and at least BBB- by Standard & Poor’s.  Each of the Paying Agent and the Note Registrar (1) shall meet the requirements of Section 26(a)(1) of the Investment Company Act, (2) shall not be an 

 

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Affiliate of any of the Co-Issuers or the Servicer and (3) shall not offer or provide credit or credit enhancement to the Co-Issuers.  In case at any time the Paying Agent or the Note Registrar shall cease to be eligible in accordance with the provisions of this Section, the Paying Agent or the Note Registrar, as applicable, shall resign immediately in the manner and with the effect specified in Section 2.05 or 2.12, as applicable.

 

SECTION 6.23              Representations and Warranties of the Paying Agent or the Note Registrar.

 

Each of the Paying Agent and the Note Registrar represents and warrants that:

 

(i)                                     it is duly organized and validly existing under the laws of the jurisdiction of its organization;

 

(ii)                                  it has full power and authority to deliver and perform this Indenture and has taken all necessary action to authorize the execution, delivery and performance by it of this Indenture and each other Transaction Document to which it is a party;

 

(iii)                               each of this Indenture and each other Transaction Document to which it is a party has been duly executed and delivered by it and constitutes its legal, valid and binding obligation in accordance with its terms; and

 

(iv)                              it meets the eligibility requirements set forth in Section 6.22.

 

ARTICLE VII
 Noteholders’ List and Reports

 

SECTION 7.01              Co-Issuers to Furnish Indenture Trustee Names and Addresses of Noteholders.

 

The Co-Issuers, or the Administrator on behalf of the Co-Issuers, will furnish or cause to be furnished to the Indenture Trustee and the Paying Agent (a) not more than five (5) Business Days after each Record Date, a list, in such form as the Indenture Trustee, the Paying Agent and the Note Registrar, as applicable, may reasonably require, of the names, addresses and taxpayer identification numbers of the Holders of Notes as they appear on the Note Register as of the most recent Record Date, and (b) at such other times as the Indenture Trustee, the Paying Agent and the Note Registrar may request in writing, within thirty (30) days after receipt by the Co-Issuers of any such request, a list of similar form and content as of a date not more than ten (10) Business Days prior to the time such list is furnished.

 

SECTION 7.02              Preservation of Information; Communications to Noteholders.

 

(a)                                 The Note Registrar shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Noteholders contained in the most recent list 

 

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furnished to the Note Registrar as provided in Section 7.01 and the names, addresses and taxpayer identification numbers of the Noteholders.  The Note Registrar may destroy any list furnished to it as provided in Section 7.01 hereof upon receipt of a new list so furnished.

 

(b)                                 Noteholders may communicate with other Noteholders with respect to their rights under this Indenture or under the Notes.

 

ARTICLE VIII
 Allocation and Application of Collections

 

SECTION 8.01              Collection of Money.

 

The Paying Agent shall apply all such money and property received by it in trust for the related Noteholders and shall apply 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 Transaction Document, the Indenture Trustee may, and upon the written request of the Required Noteholders shall, take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate Proceedings.  Any such action shall be without prejudice to any right to claim an Event of Default under this Indenture and to proceed thereafter as provided in Article V hereof.

 

SECTION 8.02              Establishment of the Note Accounts.

 

(a)                                 Note Accounts.

 

(i)                                     The Servicer, for the benefit of the Noteholders, shall establish and maintain with the Paying Agent and in the name of the Paying Agent, on behalf of the Indenture Trustee and the Co-Issuers, an Eligible Account bearing a designation clearly indicating that such account is the “Collection Account” hereunder and that the funds and other property credited thereto are held for the benefit of the Noteholders (the “Collection Account”).

 

(ii)                                  The Servicer, for the benefit of the Noteholders, shall establish and maintain with the Paying Agent and in the name of the Paying Agent, on behalf of the Co-Issuers, an Eligible Account bearing a designation clearly indicating that such account is the “Principal Distribution Account” hereunder and that the funds and other property credited thereto are held for the benefit of the Noteholders (the “Principal Distribution Account”).  The Co-Issuers may deposit or cause the deposit into the Principal Distribution Account from time to time of funds available to the Co-Issuers that are not required to be deposited into another Note Account or otherwise allocated or to be held in trust on behalf of any Person in accordance with this Indenture or any other Transaction Document.

 

(iii)                               The Servicer, for the benefit of the Noteholders, shall cause to be established and maintained with the Paying Agent and in the name of the Paying Agent, on behalf of the Co-Issuers, an Eligible Deposit Account that shall bear a designation clearly indicating that the funds deposited therein are held for the benefit of the Noteholders (the “Reserve Account”).  On the Closing Date, the 

 

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Co-Issuers shall cause to be deposited in the Reserve Account the Required Reserve Account Amount.  No later than 5:00 p.m., New York City time on the Business Day preceding each Payment Date, the Indenture Trustee, based solely upon written instructions furnished to the Indenture Trustee by the Servicer (which instruction may be included in the Monthly Servicer Report), shall withdraw from the Reserve Account and deposit to the Collection Account, the Reserve Account Draw Amount for such Payment Date, which amount shall constitute Available Funds for application in accordance with Section 8.06 hereof.

 

(iv)                              The Servicer, for the benefit of the Noteholders, shall cause to be established and maintained with the Paying Agent and in the name of the Paying Agent, on behalf of the Indenture Trustee and the Co-Issuers, an Eligible Account that shall bear a designation clearly indicating that the funds deposited therein are held for the benefit of the Noteholders (the “Advance Reserve Account”).  On the Closing Date, the Co-Issuers shall cause to be deposited in the Advance Reserve Account the Required Advance Reserve Account Amount.  On each Payment Date funds in an amount up to the Required Advance Reserve Amount will be remitted to the Paying Agent for deposit to the Advance Reserve Account to the extent available in accordance with the Section 8.06.  The Advance Reserve Account will be used to pay to the Servicer such amounts as are required pursuant to the terms of any outstanding Loans to be funded to the Loan Obligors to the extent that the aggregate amount of intra-month draws by the Loan Obligors exceeds amounts on deposit in the Collection Account as provided in Section 2.01(c) of the Servicing Agreement and Section 8.05(g) hereof.  On the final Payment Date, any amounts remaining on deposit in the Advance Reserve Account shall be released to the Allocation Agent for remittance to the Co-Issuers and separately agreed among the Allocation Agent and the Co-Issuers.

 

(b)                                 Each of the parties hereto hereby agrees that (i) each Note Account will be a “securities account” as such term is defined in Section 8-501(a) of the UCC, (ii) the Paying Agent shall be a “securities intermediary” (as defined in 8-102(a)(14) of the UCC) with respect to each such Note Account; (iii) New York shall be the “securities intermediary’s jurisdiction” (as defined in 8-110 of the UCC) for any purpose associated with the Note Accounts;  (iv)  all Eligible Investments and other assets in the Note Accounts shall be treated as “financial assets” (as defined in 8-102(a)(9) of the UCC); and (v) all securities or other property underlying any financial assets credited to such accounts shall be registered in the name of the Paying Agent, indorsed to the Paying Agent and in no case will any financial asset credited to any Note Account be registered in the name of any Co-Issuer or the Servicer, payable to the order of any Co-Issuer or the Servicer or specially indorsed to any Co-issuer or the Servicer except to the extent the foregoing have been specially indorsed to the Paying Agent at which such accounts are maintained or in blank.  The Note Accounts shall be under the sole dominion and control of the Paying Agent for the benefit of the Indenture Trustee for the benefit of the Noteholders, and the Paying Agent agrees that it will comply with all “entitlement orders” (as defined in 8-102(a)(8) of the UCC) with respect to the Note Accounts and any instructions directing disposition of any funds on deposit therein that are originated by the Indenture Trustee without further consent of any Co-Issuer.  Notwithstanding such control by the Indenture Trustee, the Indenture Trustee agrees that the Servicer shall have the right to issue entitlement orders and to 

 

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give instructions to the Paying Agent as expressly contemplated herein unless and until the Indenture Trustee revokes the Servicer’s authority to give such instructions .  Except as expressly provided in this Indenture and the Servicing Agreement, the Servicer agrees that it shall have no right of setoff or banker’s lien against, and no right to otherwise deduct from, any funds and other property held in the Note Accounts for any amount owed to it by the Indenture Trustee, the Co-Issuers or any Noteholder.  Pursuant to the Servicing Agreement, the Servicer shall instruct the Paying Agent to make withdrawals and payments from the Collection Account for the purposes of carrying out the Servicer’s, the Co-Issuers’ or the Paying Agent’s duties hereunder and under the Servicing Agreement.

 

(c)                                  Funds (other than investment earnings and amounts deposited pursuant to Section 10.02 of this Indenture) on deposit in the Note Accounts shall, at the written direction of the Servicer, be invested by the Paying Agent in Eligible Investments selected by the Servicer.  All such Eligible Investments shall be held by the Paying Agent for the benefit of the Noteholders pursuant to Section 6.06.  In the absence of written directions from the Servicer, the Paying Agent may (but shall not be obligated) to invest such funds in Eligible Investments described in clause (d) of the definition thereof.  Funds representing Collections collected during any Collection Period shall be invested in Eligible Investments that will mature no later than the Business Day immediately prior to the Payment Date following the end of such Collection Period.  No such Eligible Investment shall be disposed of prior to its maturity; provided, however, that the Paying Agent may sell, liquidate or dispose of any such Eligible Investment before its maturity, at the written direction of the Servicer, if such sale, liquidation or disposal would not result in a loss of all or part of the principal portion of such Eligible Investment or if, prior to the maturity of such Eligible Investment, a default occurs in the payment of principal, interest or any other amount with respect to such Eligible Investment.  Unless directed by the Servicer, funds deposited in the Note Accounts on the Business Day immediately prior to a related Payment Date are not required to be invested overnight.  On each Payment Date, all interest and other investment earnings (net of losses and investment expenses) on funds on deposit in the Collection Account that are to be distributed on such Payment Date shall be treated as “Collections” received during the related Collection Period.  The Paying Agent shall not bear any responsibility or liability for any losses resulting from investment or reinvestment of any funds in accordance with this Section nor for the selection of Eligible Investments in accordance with the provisions of this Indenture.  In addition, the Paying Agent shall not have any liability in respect of the losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or the failure of the Servicer to provide timely written investment direction.

 

(d)                                 The Servicer shall notify the Paying Agent of any payment to be credited to the Collection Account as soon as practicable on the Business Day before payment into the Collection Account.  The Paying Agent shall only be obligated to make payments from the Collection Account to the extent such amounts are deposited therein.

 

(e)                                  If, at any time, a Note Account ceases to be an Eligible Account, the Paying Agent (or the Servicer on its behalf) shall within ten (10) Business Days establish a new Note Account meeting the applicable conditions specified above, transfer any money, instruments, investment property and other property to such new Note Account and from the date such new account is established, it shall be the applicable Note Account.

 

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SECTION 8.03              Collections and Allocations.

 

The Servicer shall apply, or shall instruct the Paying Agent in writing (which instruction may be included in the Monthly Servicer Report) to apply and the Paying Agent shall apply, all funds on deposit in the Collection Account as described in this Article VIII.  Except as otherwise provided below, the Servicer shall deposit Collections that it is not entitled to retain for its own account hereunder into the Collection Account as promptly as possible after the date of processing of such Collections by the Servicer, but in no event later than the second Business Day following such date of processing. Notwithstanding anything else in this Indenture or the Servicing Agreement to the contrary, for so long as:  (i) no Servicer Default has occurred and is continuing; and (ii) the Servicer maintains a long-term rating of “A” or higher and a short-term rating of “A-1” or higher from S&P, the Servicer need not make the deposits of Collections into the Collection Account as provided in the preceding sentence, but may make a single deposit in the Collection Account in immediately available funds not later than 11:00 a.m., New York City time, on the Business Day preceding each Payment Date in an amount equal to the Collections received during the related Collection Period.  The Servicer may retain funds constituting Collections in an amount equal to its accrued and unpaid Servicing Fee and shall not be required to deposit such funds in the Collection Account.  The Servicer may also retain funds constituting Collections in an amount equal to Intra-Month Draw Advances and Premium Advances funded by the Servicer to the extent the Servicer has not otherwise been reimbursed therefor as contemplated in this Indenture or the Servicing Agreement, and the Servicer shall not be required to deposit such withheld funds in the Collection Account.

 

SECTION 8.04              Rights of Noteholders.

 

As set forth in the Granting Clauses, the Trust Estate secures the obligation of the Co-Issuers jointly and severally to pay the Holders of the Notes the principal and interest thereon and the other amounts payable pursuant to this Indenture.

 

SECTION 8.05              Release of Trust Estate.

 

(a)                                 Subject to Section 11.01, the Indenture Trustee may, and when required by the provisions of this Indenture shall, upon Issuer Order executed by each of the Co-Issuers, execute instruments prepared by and at the expense of the Co-Issuers 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 which 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 monies.

 

(b)                                 The Indenture Trustee upon Issuer Order executed by each of the Co-Issuers shall authorize the Servicer to execute in the name and on behalf of the Indenture Trustee instruments of satisfaction or cancellation, or of partial or full release or discharge, and other comparable instruments with respect to the Loans (and the Indenture Trustee shall execute any such documents on request of the Servicer), subject to the obligations of the Servicer under the Servicing Agreement and only to the extent necessary to permit the Servicer to carry out its servicing obligations thereunder.

 

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(c)                                  Upon Issuer Order executed by each of the Co-Issuers, the Indenture Trustee shall, at such time as there are no Outstanding Notes, release and transfer, without recourse, any remaining portion of the Trust Estate (other than any cash held for the payment of the Notes pursuant to Section 4.02 and any other amounts to be applied to make payments on the Notes) from the lien of this Indenture and release to the Co-Issuers or any other Person entitled thereto any funds and other property then credited to the Collection Account and any other account established pursuant to Section 8.02.  The Indenture Trustee shall release property from the lien of this Indenture pursuant to this Section only upon receipt of an Issuer Order executed by each of the Co-Issuers accompanied by an Officer’s Certificate of the Co-Issuers and an Opinion of Counsel to the effect that all conditions precedent to such release have been satisfied.

 

(d)                                 Upon receipt in the Collection Account of the Repurchase Price with respect to any Loan that is to be repurchased in accordance with Section 6.01 or 6.02 of any of the Loan Purchase Agreements, such repurchased Loan (together with all other Purchased Assets relating thereto existing on such date or thereafter arising, and any and all proceeds of the Loan or any such Purchased Assets) shall automatically be released from the lien of this Indenture, without further action of any party hereto.

 

(e)                                  Upon receipt in the Collection Account of the amount to be deposited by the Servicer with respect to any Loan that is to be assigned and transferred to the Servicer in accordance with Section 2.03 of the Servicing Agreement, such Loan (together with all other Purchased Assets relating thereto existing on such date or thereafter arising, and any and all proceeds of the Loan or any such Purchased Assets) shall automatically be released from the lien of this Indenture, without further action of any party hereto.

 

(f)                                   On the date when any Loan becomes a Charged-Off Loan in accordance with the Credit and Collection Policy, there shall automatically be released from the lien of this Indenture, without further action of any party hereto, such Charged-Off Loan, all rights to payment and amounts due or to become due with respect to all of the foregoing, and all proceeds thereof; provided, that all recoveries and other amounts collected by any Co-Issuer or the Servicer with respect to any Charged-Off Loan in accordance with the Credit and Collection Policy, including any insurance proceeds allocable to such Loan, shall be paid to the Co-Issuers, shall be deposited in the Collection Account, shall be subject to the lien of this Indenture, and shall be applied as provided herein.

 

(g)                                  On the date of any Intra-Month Draw Advance, which must be a Business Day, based solely upon written instruction furnished to the Paying Agent by the Servicer at least one Business Day prior to such date, the Paying Agent shall distribute to the Servicer first, from amounts on deposit in the Collection Account and second, from amounts on deposit in the Advance Reserve Account, the aggregate amount to be distributed by the Servicer on such date as Intra-Month Draw Advances as specified in the applicable written instruction furnished to the Paying Agent by the Servicer, and such funds, upon distribution by the Paying Agent to the Servicer pursuant to this Section 8.05(g), shall automatically be released from the lien of this Indenture, without further action of any party hereto.

 

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(h)                                 The Indenture Trustee shall release the Loans and related Purchased Assets from the lien of this Indenture in connection with an optional redemption pursuant to Section 8.07 hereof.

 

SECTION 8.06              Application of Available Funds, the Reserve Account Draw Amount and the Advance Reserve Account Draw Amount.

 

(a)                                 The Paying Agent shall distribute on each Payment Date, based solely upon written instruction furnished to the Paying Agent by the Servicer (which instruction may be included in the Monthly Servicer Report), the Available Funds with respect to such Payment Date, in the following order of priority:

 

(i)                                     (1) first, pro rata (based on amounts owing), (A) to the Indenture Trustee, the Paying Agent and the Note Registrar for amounts due to the Indenture Trustee, the Paying Agent or the Note Registrar pursuant to the applicable provisions of the Indenture, (B) to the Loan Trustees all fees and all reasonable out-of-pocket expenses then due to the Loan Trustees pursuant to the terms of the Loan Trust Agreements, (C) to the Back-up Servicer, any expenses of the Back-up Servicer (other than Servicing Transition Costs) reimbursable pursuant to the Back-up Servicing Agreement, if any, that have not been paid by the Servicer and (D) to the Custodian, an amount equal to all fees and all reasonable out-of-pocket expenses then due to the Custodian pursuant to the terms of the Custodial Agreement; and (2) second, to the Indenture Trustee and any other Person entitled thereto, pro rata (based on amounts owing), any indemnified amounts due and owing from the Co-Issuers pursuant to any Transaction Document; provided, that the aggregate amount paid under the foregoing clauses (1) (A), (B), (C) and (2) above shall not exceed $200,000 during any calendar year; provided, further that if an Event of Default shall have occurred and be continuing as of such Payment Date, the foregoing cap shall not apply;

 

(ii)                                  to the Back-up Servicer, (x) an amount equal to the Back-up Servicing Fee for such Payment Date, plus the amount of any Back-up Servicing Fee previously due but not previously paid to the Back-up Servicer; and (y) in the event that a Servicing Transition Period has commenced under the Back-up Servicing Agreement, an amount equal to the Servicing Transition Costs, if any, that have not been paid by the Servicer pursuant to the Back-up Servicing Agreement; provided, that the aggregate amount paid pursuant to this clause (y) on all Payment Dates shall not exceed $400,000;

 

(iii)                               pro rata (based on amounts owing) (A) to the Servicer, an amount equal to the Servicing Fee for such Payment Date, plus the amount of any Servicing Fee previously due but not previously paid to the Servicer, and (B) to the Administrator, an amount equal to the Administration Fee for such Payment Date, plus the amount of any Administration Fee previously due but not previously paid to the Administrator;

 

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(iv)                              to the Advance Reserve Account, an amount equal to the lesser of (x) the Advance Reserve Account Shortfall Amount and (y) all funds remaining after giving effect to the distributions in clause (i) through (iii) above;

 

(v)                                 to the Class A Noteholders, an amount equal to the Class A Monthly Interest Amount for such Payment Date, plus the amount of any Class A Monthly Interest Amount previously due but not previously paid to the Class A Noteholders with interest thereon at the Class A Interest Rate;

 

(vi)                              to the Principal Distribution Account, an amount equal to the lesser of (x) the First Priority Principal Payment for such Payment Date and (y) all funds remaining after giving effect to the distributions in clauses (i) through (v) above;

 

(vii)                           to the Class B Noteholders, an amount equal to the Class B Senior Interest Amount for such Payment Date, plus the amount of any Class B Senior Interest previously due but not previously paid to the Class B Noteholders with interest thereon at the Class B Interest Rate from the date such payment was due;

 

(viii)                        to the Principal Distribution Account, an amount equal to the lesser of (x) the Second Priority Principal Payment for such Payment Date and (y) all funds remaining after giving effect to the distributions in clauses (i) through (vii) above;

 

(ix)                              to the Class B Noteholders, an amount equal to the Class B Subordinated Interest Amount for such Payment Date, plus the amount of any Class B Subordinated Interest Amount previously due but not previously paid to the Class B Noteholders with interest thereon at the Class B Interest Rate from the date such payment was due;

 

(x)                                 to the Class C Noteholders, an amount equal to the Class C Monthly Interest Amount for such Payment Date, plus the amount of any Class C Monthly Interest Amount previously due but not previously paid to the Class C Noteholders with interest thereon at the Class C Interest Rate;

 

(xi)                              to the Principal Distribution Account, an amount equal to the lesser of (x) the Third Priority Principal Payment for such Payment Date and (y) all funds remaining after giving effect to the distributions in clauses (i) through (x) above;

 

(xii)                           to the Class C Noteholders, an amount equal to the Class C Subordinated Interest Amount for such Payment Date, plus the amount of any Class C Subordinated Interest Amount previously due but not previously paid to the Class C Noteholders with interest thereon at the Class C Interest Rate from the date such payment was due;

 

(xiii)                        to the Class D Noteholders, an amount equal to the Class D Senior Interest Amount for such Payment Date, plus the amount of any Class D Senior 

 

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Interest previously due but not previously paid to the Class D Noteholders with interest thereon at the Class D Interest Rate from the date such payment was due;

 

(xiv)                       to the Principal Distribution Account, an amount equal to the lesser of (x) the Fourth Priority Principal Payment for such Payment Date and (y) all funds remaining after giving effect to the distributions in clauses (i) through (xiii) above;

 

(xv)                          to the Class D Noteholders, an amount equal to the Class D Subordinated Interest Amount for such Payment Date, plus the amount of any Class D Subordinated Interest Amount previously due but not previously paid to the Class D Noteholders with interest thereon at the Class D Interest Rate from the date such payment was due;

 

(xvi)                       to the Class E Noteholders, an amount equal to the Class E Senior Interest Amount for such Payment Date, plus the amount of any Class E Senior Interest previously due but not previously paid to the Class E Noteholders with interest thereon at the Class E Interest Rate from the date such payment was due;

 

(xvii)                    an amount equal to the lesser of (x) the Fifth Priority Principal Payment for such Payment Date and (y) all funds remaining after giving effect to the distributions in clauses (i) through (xvi) above, to be deposited into the Principal Distribution Account;

 

(xviii)                 to the Class E Noteholders, an amount equal to the Class E Subordinated Interest Amount for such Payment Date, plus the amount of any Class E Subordinated Interest Amount previously due but not previously paid to the Class E Noteholders with interest thereon at the Class E Interest Rate from the date such payment was due;

 

(xix)                       to the Reserve Account, an amount equal to the lesser of (x) the Required Reserve Account Amount and (y) all funds remaining after giving effect to the distributions in clauses (i) through (xviii) above;

 

(xx)                          an amount equal to the lesser of (x) the Regular Principal Distribution Amount and (y) all funds remaining after giving effect to the distributions in clauses (i) through (xix) above, to be deposited into the Principal Distribution Account;

 

(xxi)                       to the Indenture Trustee, the Custodian, the Note Registrar, the Paying Agent, the Loan Trustees, the Servicer, the Administrator and the Back-up Servicer, as applicable, an amount equal to the lesser of (x) pro rata (based on amounts owing), fees and reasonable out-of-pocket expenses and indemnity amounts to the extent not paid in full pursuant to clause (i) above (and, in the case of the Back-up Servicer, which are reimbursable pursuant to the Back-up Servicing Agreement, if any, not paid by the Servicer) and (y) all funds remaining after giving effect to the distributions in clauses (i) through (xx) above;

 

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(xxii)                    to the Co-Issuers for payment of Other Co-Issuer Obligations then due and owing; and

 

(xxiii)                 any remainder to the Allocation Agent for payment to the Co-Issuers as separately agreed among the Allocation Agent and the Co-Issuers.

 

(b)                                 On each Payment Date, any amounts allocated to the Principal Distribution Account pursuant to Section 8.06(a) above shall be applied as follows:

 

(i)                                     first, to the Class A Noteholders in reduction of the Class A Note Balance, until the Class A Note Balance has been reduced to zero;

 

(ii)                                  second, to the Class B Noteholders in reduction of the Class B Note Balance, until the Class B Note Balance has been reduced to zero;

 

(iii)                               third, to the Class C Noteholders in reduction of the Class C Note Balance, until the Class C Note Balance has been reduced to zero;

 

(iv)                              fourth, to the Class D Noteholders in reduction of the Class D Note Balance, until the Class D Note Balance has been reduced to zero; and

 

(v)                                 fifth, to the Class E Noteholders in reduction of the Class E Note Balance, until the Class E Note Balance has been reduced to zero.

 

SECTION 8.07              Optional Redemption of the Notes.

 

(a)                                 The Co-Issuers shall retire the Notes in the event that the Servicer exercises its option, subject to the consent of the members of the Sellers, to purchase all of the Loans from the Co-Issuers, the proceeds of which will be used to retire the Notes, at any time on or after the Payment Date on which the Aggregate Principal Balance of the Outstanding Notes (prior to any principal payments to be made on such Payment Date) is less than or equal to twenty percent (20%) of the Aggregate Principal Balance of the Outstanding Notes on the Closing Date.

 

(b)                                 The aggregate redemption price for the remaining Loans (together with all other Purchased Assets relating thereto) in connection with exercise of the option described in clause (a) will be equal to the sum of (i) the aggregate Loan Principal Balance of each remaining Loan, plus accrued and unpaid interest thereon and (ii) any expenses, indemnification amounts or other reimbursements owed to the Indenture Trustee, the Servicer, the Custodian, the Loan Trustees, the Paying Agent, the Note Registrar or the Back-up Servicer, and in any event must be at least equal to the amount necessary to redeem the Notes in full on the final Payment Date in accordance with Section 8.06.

 

(c)                                  The Co-Issuers may, at their option, redeem the Notes in whole on any Payment Date on or after the Payment Date occurring in October 2015.  With respect to any redemption of Notes occurring on or after the Payment Date occurring in October 2015 but prior to the Payment Date in October 2016, the redemption price for any Class of Notes shall be the sum of (i) 100% of the outstanding principal balance of the Notes of the applicable Class to be 

 

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redeemed, plus (ii) in the case of Class A Notes, Class B Notes, Class C Notes or Class D Notes, the applicable Specified Call Premium Amount for such Notes, plus (iii) accrued and unpaid interest and fees in respect of such Notes.  With respect to any redemption of Notes occurring on or after the Payment Date occurring in October 2016, the redemption price for any Class of Notes shall be the sum of (i) 100% of the outstanding principal balance of the Notes of the applicable Class to be redeemed, plus (ii) accrued and unpaid interest and fees in respect of such Notes.  The payment of any redemption price and the determination of any Specified Call Premium Amount will be based on the Note Balance of the Notes after payments are made in respect of the Loans and application, if any, of amounts on deposit in the Reserve Account on such redemption date.

 

(d)                                 In order to redeem Notes as set forth in clause (a) or (c) above, the Co-Issuers (in such capacity, the “Redeeming Party”), shall provide written notice of its exercise of such option to the Indenture Trustee and Note Registrar at least fifteen (15) days (or such shorter period as may be acceptable to the Note Registrar) prior to its exercise.  Following receipt of such notice, the Note Registrar, shall provide written notice to the applicable Noteholders of the proposed final payment on the Notes; provided, however, that such notice may and shall be revoked upon direction of the Co-Issuers at any time prior to the deposit of the Redemption Price with the Paying Agent as described below in this Section 8.07(d).  Such notice to Noteholders shall to the extent practicable be mailed no later than five (5) Business Days prior to such final Payment Date and shall specify that payment of the principal amount, any Specified Call Premium Amount and any interest due with respect to such Note at the final Payment Date 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 such final payment.  No interest shall accrue on the Notes on or after the Stated Maturity Date or any such other final Payment Date. Prior to 10:00 a.m., New York City time on the Payment Date on which such purchase or redemption is to be made, the Redeeming Party shall deposit the Redemption Price, including any applicable Specified Call Premium Amount, with the Paying Agent, who shall, on such Payment Date after receipt of the funds, apply such funds to make payments of all amounts owing to the transaction parties, pursuant to any Transaction Document and make final payments of principal and interest on the Notes in accordance with Section 8.06 hereof and this Indenture shall be discharged subject to the provisions of Section 4.01 hereof.

 

SECTION 8.08              Distributions and Payments to Noteholders.

 

(a)                                 Payments shall be made to, and reports shall be provided to, Noteholders as set forth herein and in the Servicing Agreement.  The identity of the Noteholders with respect to distributions and reports shall be determined as of the immediately preceding Record Date.

 

(b)                                 Subject to the provisions of Section 5.05 hereof, on each Payment Date, the Paying Agent, in accordance with the Monthly Servicer Report and Section 8.06, shall pay to each Noteholder of record on the related Record Date (other than as provided in Section 10.02 hereof) or to such other Person as may be specified in Section 8.06, such amounts held by the Paying Agent that are allocated and available on such Payment Date to pay amounts payable to the Noteholders or such other Person pursuant to Section 8.06.

 

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(c)                                  Except as provided in Section 10.02 hereof with respect to a final distribution, distributions to Noteholders hereunder shall be made by wire transfer of same day funds to the account that has been designated by the applicable Noteholders not less than five (5) Business Days prior to such Payment Date.

 

SECTION 8.09              Reports and Statements to Noteholders.

 

(a)                                 Not later than the second Business Day preceding each Payment Date, the Servicer shall deliver to the Co-Issuers, the Back-up Servicer, the Paying Agent and the Indenture Trustee, a Monthly Servicer Report, substantially in the form of Exhibit C hereto, prepared by the Servicer.

 

(b)                                 A copy of each Monthly Servicer Report and Officer’s Certificate delivered pursuant to Section 2.07 of the Servicing Agreement may be obtained by any Noteholder or any beneficial owner thereof by a request in writing to the Servicer.  The Paying Agent shall make each Monthly Servicer Report and each such Officer’s Certificate available to the Noteholders via its website at http://www.ctslink.com.

 

(c)                                  On or before March 31 of each calendar year, beginning with calendar year 2015, the Paying Agent, shall, upon written request, furnish or cause to be furnished to each Person who at any time during the preceding calendar year was a Noteholder, a report prepared by the Servicer containing the information which is required to be contained in the Monthly Servicer Report delivered pursuant to paragraph (a) above aggregated for such calendar year or the applicable portion thereof during which such Person was a Noteholder, together with other information as is required to be provided by an Co-Issuers of indebtedness under the Internal Revenue Code.  Such obligation of the Servicer shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the Paying Agent pursuant to any requirements of the Internal Revenue Code as from time to time in effect.

 

ARTICLE IX
 Supplemental Indentures

 

SECTION 9.01              Supplemental Indentures Without Consent of Noteholders.

 

(a)                                 Without the consent of the Holders of any Notes, the Co-Issuers, the Servicer, the Paying Agent, the Note Registrar and the Indenture Trustee, when authorized by an Issuer Order executed by each of the Co-Issuers, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Indenture Trustee and the Paying Agent, 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;

 

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(ii)                                  to add to the covenants of the Co-Issuers, for the benefit of the Holders of the Notes, or to surrender any right or power herein conferred upon the Co-Issuers;

 

(iii)                               to convey, transfer, assign, mortgage or pledge any property to the Indenture Trustee;

 

(iv)                              to cure any ambiguity, to correct or supplement any provision herein or in any supplemental indenture that may be inconsistent with any other provision herein or in any supplemental indenture or to make any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture, including without limitation to cure any ambiguity or make any correction as a result of any discrepancy or inconsistency between any offering materials used by the Co-Issuers in connection with the sale of the Notes and the provisions of this Indenture or of any supplemental indenture; provided, that such action shall not adversely affect the interests of the Holders of any Notes in any material respect; or

 

(v)                                 to evidence and provide for the acceptance of the appointment hereunder by a successor indenture trustee and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one indenture trustee, pursuant to the requirements of Article VI.

 

The Indenture Trustee, the Paying Agent and the Note Registrar are 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 Co-Issuers, the Servicer, the Paying Agent, the Note Registrar and the Indenture Trustee, when authorized by an Issuer Order executed by each of the Co-Issuers, may, also without the consent of any Noteholders of any Notes, 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 (i) the Co-Issuers, at their own expense, shall have delivered to the Indenture Trustee an Opinion of Counsel and an Officer’s Certificate, each dated the date of any such supplemental indenture action and stating that such supplemental indenture will not have an Adverse Effect and is permitted by this agreement, and (ii) the Co-Issuers shall have delivered to the Indenture Trustee a Tax Opinion, dated the date of any such action, addressing such action.

 

(c)                                  Additionally, the Co-Issuers, the Paying Agent, the Note Registrar and the Indenture Trustee, when authorized by an Issuer Order executed by each of the Co-Issuers, may, without the consent of any Noteholders, enter into an indenture or indentures supplemental hereto to add, modify or eliminate such provisions as may be necessary or advisable in order to enable all or any portion of the Co-Issuers to avoid the imposition of state or local income or franchise taxes imposed on the Co-Issuers’ property or its income; provided, however, that (i) such amendment does not affect the rights, duties or obligations of the Indenture Trustee, the 

 

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Paying Agent or the Note Registrar hereunder without their consent, as applicable, and (ii) the Co-Issuers deliver to the Indenture Trustee and the Paying Agent a Tax Opinion, dated the date of any such action, addressing such action.

 

SECTION 9.02              Supplemental Indentures With Consent of Noteholders.

 

The Co-Issuers, the Servicer, the Paying Agent, the Note Registrar and the Indenture Trustee, when authorized by an Issuer Order executed by each of the Co-Issuers, also may, with the consent of the Holders of not less than a majority of the aggregate unpaid principal amount of the Outstanding Notes, by Act of such Holders delivered to the Co-Issuers, the Paying Agent, the Note Registrar and the Indenture Trustee, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Noteholders under this Indenture; provided, however, that the Co-Issuers shall have delivered to the Indenture Trustee and the Paying Agent a Tax Opinion, dated the date of any such action, addressing such action; and provided, further, that, notwithstanding anything to the contrary contained herein, including, without limitation, Section 9.01, no supplemental indenture shall, without the consent of the Holder of each Outstanding Note affected thereby:

 

(a)                                 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 specified 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, all or any portion 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 any 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, the Redemption Date);

 

(b)                                 reduce the percentage of the aggregate unpaid principal amount of all Outstanding 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 the provisions of this Indenture or defaults hereunder and their consequences as provided for in this Indenture;

 

(c)                                  reduce the percentage of the aggregate unpaid principal amount of any Outstanding Notes, the consent of the Holders of which is required to direct the Indenture Trustee to sell or liquidate the Trust Estate if the proceeds of such sale would be insufficient to pay the principal amount and accrued but unpaid interest on the Outstanding Notes;

 

(d)                                 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;

 

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(e)                                  modify or alter the provisions of this Indenture prohibiting the voting of Notes held by the Co-Issuers or by any other obligor on the Notes;

 

(f)                                   permit the creation of any Lien ranking prior to or on a parity with the lien of this Indenture or, except as otherwise permitted or contemplated herein, terminate the Lien of this Indenture on any part of the Trust Estate or deprive the Holder of any Note of the security provided by the Lien of this Indenture;

 

(g)                                  modify or alter any provisions (including any relevant definitions) relating to the pro rata treatment of payments to any Class of Notes; or

 

(h)                                 (w) reduce the Required Overcollateralization Amount or change the manner in which the Adjusted Loan Principal Balance is calculated or structured, (x) modify the definition of “First Priority Principal Payment”, “Second Priority Principal Payment”, “Third Priority Principal Payment”, “Fourth Priority Principal Payment”, “Fifth Priority Principal Payment”, “Regular Principal Distribution Amount”, “Advance Reserve Account Shortfall Amount” or “Event of Default” (or any defined term used therein), (x) modify the provisions of this Section 9.02, (y) amend or supplement Section 8.03 hereof with respect to the provisions of permitting monthly deposits of Collections by the Servicer or Section 8.05 hereof with respect to the provisions permitting the release of Loans from the lien of the Indenture or (z) amend or supplement Section 8.06 hereof with respect to the priority and distribution of Available Funds.

 

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 Co-Issuers, the Servicer, the Paying Agent, the Note Registrar 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 written 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 any supplemental indenture permitted by this Article IX or the modification thereby of the trusts created by this Indenture, the Indenture Trustee and the Paying Agent 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.

 

The Indenture Trustee, the Paying Agent and the Note Registrar may, but shall not be obligated to, enter into any supplemental indenture that affects its (as such or in its individual capacity) own rights, duties, liabilities, benefits, protections, privileges or immunities under this Indenture or otherwise.

 

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Any supplemental indenture affecting the right, duties, immunities or liabilities of the Loan Trustees shall require the Loan Trustees’ written consent.

 

SECTION 9.04              Effect of Supplemental Indenture.

 

Upon the execution of any supplemental indenture under this Article IX, this Indenture shall 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 Paying Agent, the Note Registrar, the Co-Issuers, the Loan Trustees, the Servicer and the Holders of the Notes shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and the terms and conditions of any such supplemental indenture shall be deemed to be a part 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 Co-Issuers or 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 Co-Issuers shall so determine, new Notes so modified as to conform, in the opinion of the Indenture Trustee and the Co-Issuers, to any such supplemental indenture may be prepared and executed by the Co-Issuers and authenticated and delivered by the Note Registrar in exchange for the Outstanding Notes.

 

ARTICLE X
 Termination

 

SECTION 10.01       Termination of Indenture.

 

The respective obligations and responsibilities of the Co-Issuers, the Loan Trustees, the Servicer, the Paying Agent, the Note Registrar and the Indenture Trustee created hereby (other than those which by their terms survive) shall terminate upon payment in full of all Outstanding Notes and the satisfaction in full of all other obligations of the Co-Issuers, the Loan Trustees, the Servicer, the Paying Agent, the Note Registrar and the Indenture Trustee pursuant to this Indenture.

 

SECTION 10.02       Final Distribution.

 

(a)                                 The Servicer shall give the Indenture Trustee, the Paying Agent and the Note Registrar at least fifteen (15) days prior written notice of the Payment Date on which the Noteholders may surrender their Notes for payment of the final distribution on and cancellation of such Notes.  Such notice shall be accompanied by an Officer’s Certificate of the Servicer setting forth the information specified in Section 2.07 of the Servicing Agreement covering the period during the then-current calendar year through the date of such notice.  To the extent practicable, not later than five (5) Business Days prior to such final Payment Date, the Indenture Trustee shall provide notice to Noteholders specifying (i) the date upon which final payment of the Notes will be made upon presentation and surrender of such Notes at the office or offices therein designated, (ii) the amount of any such final payment and (iii) that the Record Date 

 

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otherwise applicable to such Payment Date is not applicable, payments being made only upon presentation and surrender of such Notes at the office or offices therein specified.  The Indenture Trustee shall give such notice to the Note Registrar and the Paying Agent (if other than the Indenture Trustee) at the time such notice is given to Noteholders.

 

(b)                                 Notwithstanding a final distribution to the Noteholders (or the termination of the Co-Issuers), except as otherwise provided in this paragraph, all funds then on deposit in the Collection Account, shall continue to be held in trust for the benefit of such Noteholders and the Indenture Trustee shall pay such funds to such Noteholders upon surrender of their Notes.  In the event that all such Noteholders shall not surrender their Notes for cancellation within six (6) months after the date specified in the notice from the Indenture Trustee described in paragraph (a), the Indenture Trustee shall give a second notice to the remaining such Noteholders to surrender their Notes for cancellation and receive the final distribution with respect thereto.  If within one (1) year after the second notice all such Notes shall not have been surrendered for cancellation, the Indenture Trustee may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining such Noteholders concerning surrender of their Notes pursuant to and as described in Section 3.03.  The Indenture Trustee shall pay to the Co-Issuers any monies held by them for the payment of principal or interest that remains unclaimed for two (2) years pursuant to and as described in Section 3.03.  After payment to the Co-Issuers, Noteholders entitled to the money must look to the Co-Issuers for payment as general creditors unless an applicable abandoned property law designates another Person.

 

ARTICLE XI
 Miscellaneous

 

SECTION 11.01       Compliance Certificates.

 

Upon any application or request by the Co-Issuers to the Indenture Trustee to take any action under any provision of this Indenture, the Co-Issuers shall furnish to the Indenture Trustee an Officer’s Certificate of the Co-Issuers stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with.

 

Every certificate 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 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 contained in such certificate 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

 

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(iv)                              a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with.

 

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 Co-Issuers may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Authorized 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 Authorized 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, the Co-Issuers or the Administrator, stating that the information with respect to such factual matters is in the possession of the Servicer, the Co-Issuers or the Administrator, unless such Authorized Officer or 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 (2) or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

 

SECTION 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 an agent duly appointed in writing and satisfying any requisite percentages as to minimum number or Dollar value of aggregate unpaid principal amount represented by such Noteholders; 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 Co-Issuers.  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 conclusive in favor of the Indenture Trustee and the Co-Issuers, if made in the manner provided in this Section 11.03.

 

(b)                                 The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner which the Indenture Trustee deems sufficient.

 

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(c)                                  The ownership of Notes shall be proved by the Note Register.

 

(d)                                 Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Notes shall bind the Holder (and any transferee thereof) of every Note issued upon the registration thereof, in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Co-Issuers in reliance thereon, whether or not notation of such action is made upon such Note.

 

SECTION 11.04       Notices, Etc.

 

Any request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders or other documents provided or permitted by the Indenture to be in writing and shall be made upon, given or furnished to, or filed with:

 

(a)                                 the Indenture Trustee shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to a Responsible Officer, by facsimile transmission or by other means acceptable to the Indenture Trustee to or with the Indenture Trustee at its Corporate Trust Office; or

 

(b)                                 the Co-Issuers shall be sufficient for every purpose hereunder if in writing and mailed, first-class postage prepaid, to the Co-Issuers addressed to it at SpringCastle Funding Asset-Backed Notes, c/o Springleaf Finance, Inc., 601 NW Second Street, Evansville Indiana 47708, Attention: General Counsel, Facsimile: (812) 468-5396, or at any other address previously furnished in writing to the Indenture Trustee by the Co-Issuers.

 

The Co-Issuers shall promptly transmit any notice received by it from the Noteholders to the Indenture Trustee.

 

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 by first-class mail postage prepaid or national overnight courier service to each Noteholder affected by such event, at its 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 which 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 waiver.

 

In the event that, by reason of the suspension of regular mail service, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given 

 

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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.

 

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 by the Co-Issuers, the Loan Trustees and the Servicer shall bind their respective successors and assigns, whether so expressed or not.  All covenants and agreements of the Indenture Trustee in this Indenture shall bind its successors and assigns. Notwithstanding the foregoing, no party hereto may assign its rights or obligations under this Indenture without the prior written consent of each other party hereto.

 

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, the Noteholders, and their respective successors hereunder, 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.

 

SECTION 11.11       Governing Law.

 

(a)                                 THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

 

(b)                                 Regardless of any provision in any other agreement, for purposes of the UCC, the State of New York shall be deemed to be the “bank’s jurisdiction” (within the meaning of Section 9-304 of the UCC) and the “securities intermediary’s jurisdiction” (within the meaning of Section 8-110 of the UCC) for each of the Paying Agent and the Indenture Trustee.

 

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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 Co-Issuers and at its expense accompanied by an Opinion of Counsel (which shall be 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       Inspection.

 

The Co-Issuers agrees that, on reasonable prior notice, it will permit any representative of the Indenture Trustee, during the Co-Issuers’ normal business hours, to examine all the books of account, records, reports, and other papers of the Co-Issuers, to make copies and extracts therefrom, to cause such books to be audited by Independent certified public accountants, and to discuss the Co-Issuers’ affairs, finances and accounts with the Co-Issuers’ officers, employees, and Independent certified public accountants, all at such reasonable times and as often as may be reasonably requested.  The Indenture Trustee shall, and shall cause its representatives, to hold in confidence all such information except to the extent 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 that such disclosure is consistent with its obligations hereunder or is required by the UCC.

 

SECTION 11.15       Co-Issuers Obligations.

 

No recourse may be taken, directly or indirectly, with respect to the obligations of the Co-Issuers, the Loan Trustees, or the Indenture Trustee on the Notes or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (i) the Indenture Trustee in its individual capacity, (ii) any owner of a beneficial interest in the Co-Issuers or (iii) any partner, owner, beneficiary, agent, officer, director, employee or agent of the Indenture Trustee in its individual capacity, any holder of a beneficial interest in the Co-Issuers, the Loan Trustees or the Indenture Trustee or of any successor or assign of the Indenture Trustee in its individual capacity.

 

Each Loan Trustee is entering into this Indenture not in its individual capacity but solely as Loan Trustee and, accordingly, each Loan Trustee shall incur no personal liability in connection herewith or the transactions contemplated hereby.

 

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SECTION 11.16       No Bankruptcy Petition; Disclaimer and Subordination.

 

(a)                                 Each of the Servicer, the Indenture Trustee and each Noteholder (by acceptance of the applicable Notes) covenants and agrees that it will not institute against any of the Sellers or the Co-Issuers, or solicit or join in or cooperate with or encourage any other Person in instituting against any of the Sellers or the Co-Issuers, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceedings under the laws of the United States of America or any state of the United States of America.  The parties hereto agree that the obligations under this Section 11.16 shall survive termination of this Indenture.

 

(b)                                 The provisions of this Section 11.16 shall be for the third party benefit of those entitled to rely thereon and shall survive the termination of this Indenture.

 

SECTION 11.17       Tax Matters; Administration of Transfer Restrictions.

 

(a)                                 Notwithstanding anything to the contrary herein, each of the Servicer and Paying Agent (or any other applicable withholding agent) shall be entitled to withhold any amount in respect of a Note that it determines in its sole discretion is required to be withheld pursuant to applicable law and such amount shall be deemed to have been paid for all purposes of the Indenture.

 

(b)                                 Each Noteholder agrees that prior to the date on which the first interest payment hereunder is due thereto, it will provide to the Servicer and the Paying Agent (i) if such Noteholder is not a “United States person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code, two duly completed copies of the United States Internal Revenue Service Form W-8ECI, Form W-8IMY, Form W-8BEN, or Form W-8BEN-E, as applicable, or in each case successor applicable or required forms, (ii) in any other case, a duly completed copy of United States Internal Revenue Service Form W-9 or successor applicable or required forms, and (iii) upon request, such other forms and information as may be reasonably required to confirm the availability of any applicable exemption from any United States federal, state or local withholding taxes (including pursuant to the Foreign Account Tax Compliance Act). Each Noteholder agrees to provide to the Servicer and the Paying Agent like additional subsequent duly completed forms (subject to like consent) satisfactory to the Servicer and the Paying Agent on or before the date that any such form expires or becomes obsolete, or upon the occurrence of any event requiring an amendment, resubmission or change in the most recent form previously delivered by it, and to provide such extensions or renewals as may be reasonably requested by the Servicer or the Paying Agent.  Each Noteholder certifies, represents and warrants that as of the date of this Indenture, or in the case of a Noteholder which is an assignee as of the date of such assignment, that it is entitled (x) to receive payments under this Indenture without deduction or withholding of any United States federal income taxes and any United States taxes imposed under the Foreign Account Tax Compliance Act and (y) to an exemption from United States backup withholding tax.  Each Noteholder represents and warrants that it shall pay any taxes imposed on such Noteholder attributable to its interest in the Notes.

 

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(c)                                  The Paying Agent shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under the Indenture with respect to any transfer of any interest in any Note (including any transfers between or among Holders) other than to require delivery of such certificates as are expressly required by, and to do so if and when expressly required by, this Indenture (including, without limitation, the Internal Revenue Service Forms required by this Section 11.17(b) and the transferee certifications, as set forth in Exhibits B-6 and B-7, respectively, required by Section 2.05 in connection with a transfer of Class D or Class E Notes), and to examine the same to determine material compliance as to form with the express requirements hereof.

 

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IN WITNESS WHEREOF, the Co-Issuers, the Loan Trustees, the Servicer and the Indenture Trustee have caused this Indenture to be duly executed by their respective officers thereunto duly authorized, all as of the date first above written.

 

 

	
 
    	
SPRINGCASTLE   AMERICA FUNDING, LLC, as Co-Issuer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Rhonda Jenkins
    
	
 
    	
 
    	
Name:   Rhonda Jenkins
    
	
 
    	
 
    	
Title:   Assistant Treasurer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SPRINGCASTLE   CREDIT FUNDING, LLC, as Co-Issuer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Rhonda Jenkins
    
	
 
    	
 
    	
Name:   Rhonda Jenkins
    
	
 
    	
 
    	
Title:   Assistant Treasurer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SPRINGCASTLE   FINANCE FUNDING, LLC, as Co-Issuer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Rhonda Jenkins
    
	
 
    	
 
    	
Name:   Rhonda Jenkins
    
	
 
    	
 
    	
Title:   Assistant Treasurer
    

 

 

	
 
    	
WILMINGTON TRUST, NATIONAL ASSOCIATION, not   in its individual capacity, but solely as Loan Trustee on behalf of   SpringCastle America Funding, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Dorri Costello
    
	
 
    	
Name:
    	
Dorri   Costello
    
	
 
    	
Title:
    	
Assistant   Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WILMINGTON TRUST, NATIONAL ASSOCIATION, not   in its individual capacity, but solely as Loan Trustee on behalf of   SpringCastle Credit Funding, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Dorri Costello
    
	
 
    	
Name:
    	
Dorri   Costello
    
	
 
    	
Title:
    	
Assistant   Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WILMINGTON TRUST, NATIONAL ASSOCIATION, not   in its individual capacity, but solely as Loan Trustee on behalf of   SpringCastle Finance Funding, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Dorri Costello
    
	
 
    	
Name:
    	
Dorri   Costello
    
	
 
    	
Title:
    	
Assistant   Vice President
    

 

 

	
 
    	
SPRINGLEAF   FINANCE, INC., as Servicer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Rhonda Jenkins
    
	
 
    	
 
    	
Name:   Rhonda Jenkins
    
	
 
    	
 
    	
Title:   Assistant Treasurer
    

 

2

 

	
 
    	
WELLS   FARGO BANK, NATIONAL
   ASSOCIATION, as Paying Agent and Note
   Registrar
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Marianna C. Stershic
    
	
 
    	
 
    	
Name:   Marianna C. Stershic
    
	
 
    	
 
    	
Title:   Vice President
    

 

3

 

	
 
    	
U.S.   BANK NATIONAL ASSOCIATION, as
   Indenture Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   John L. Linssen
    
	
 
    	
 
    	
Name:   John L. Linssen
    
	
 
    	
 
    	
Title:   Vice President
    

 

4

 

EXHIBIT A

 

FORM OF CLASS [A][B][C][D][E] NOTE

 

[For Rule 144A Notes, with (i) the italicized language in brackets to be included only in the Class A, Class B and Class C Notes, (ii) the italicized and underscored language in brackets to be included only in the Class A, Class B, Class C and Class D Notes, (iii) underscored language in brackets to be included only in the Class D Notes and (iv) the bolded language in brackets to be included only in the Class E Notes, which shall only be issued as Definitive Notes, unless, in any case, determined otherwise in accordance with applicable law.]

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY UNITED STATES STATE SECURITIES OR “BLUE SKY” LAWS OR ANY SECURITIES LAWS OF ANY OTHER JURISDICTION, AND, AS A MATTER OF U.S. LAW, MAY NOT BE OFFERED OR SOLD IN VIOLATION OF THE SECURITIES ACT OR SUCH OTHER LAWS.  THIS NOTE, AND ANY BENEFICIAL INTEREST HEREIN, MAY BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF [$100,000]1 [$5,000,000]2 [$10,000,000]3 AND $1,000 INCREMENTS IN EXCESS THEREOF.  THE HOLDER HEREOF, BY PURCHASING OR ACCEPTING THIS NOTE, IS HEREBY DEEMED TO HAVE AGREED FOR THE BENEFIT OF THE CO-ISSUERS AND THE INITIAL PURCHASERS THAT IT WILL RESELL, PLEDGE OR OTHERWISE TRANSFER THIS NOTE, AS A MATTER OF U.S. LAW, ONLY [(1)] SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE, PURSUANT TO RULE 144A PROMULGATED UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, AS DEFINED IN RULE 144A (A “QUALIFIED INSTITUTIONAL BUYER”), THAT IS ACQUIRING THIS NOTE FOR ITS OWN ACCOUNT OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS MUST ALSO BE QUALIFIED INSTITUTIONAL BUYERS) TO WHOM NOTICE IS GIVEN THAT THE RESALE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, [OR (2) TO A PERSON WHO IS NOT A “U.S. PERSON” (AS DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT (“REGULATION S”)) OUTSIDE THE UNITED STATES ACQUIRING THIS NOTE IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S,] IN EACH CASE IN ACCORDANCE WITH ANY UNITED STATES STATE SECURITIES OR “BLUE SKY” LAWS OR ANY SECURITIES LAWS OF ANY OTHER JURISDICTION.

 

EACH NOTEHOLDER OR BENEFICIAL OWNER, BY ACCEPTANCE OF THIS NOTE, OR, IN THE CASE OF A BENEFICIAL OWNER, A BENEFICIAL INTEREST IN THIS NOTE, WILL BE DEEMED TO REPRESENT AND WARRANT THAT [EITHER (I)] IT IS NOT AND IS NOT ACTING ON BEHALF OF, OR USING THE ASSETS OF (A) AN “EMPLOYEE BENEFIT PLAN,” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), THAT IS

 

1 For Class A, Class B and Class C Notes.

 

2 For Class D Notes.

 

3 For Class E Notes.

 

A-1

 

SUBJECT TO TITLE I OF ERISA, (B) A “PLAN,” AS DEFINED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “INTERNAL REVENUE CODE”), THAT IS SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE, (C) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF SUCH EMPLOYEE BENEFIT PLAN’S OR PLAN’S INVESTMENT IN THE ENTITY (WITHIN THE MEANING OF DEPARTMENT OF LABOR REGULATION 29 C.F.R. 2510.3-101, AS MODIFIED BY SECTION 3(42) OF ERISA) OR (D) ANY GOVERNMENTAL, CHURCH, NON-U.S. OR OTHER PLAN THAT IS SUBJECT TO ANY NON-U.S., FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF THE INTERNAL REVENUE CODE (“SIMILAR LAW”) OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE ASSETS OF ANY SUCH PLAN [OR (II) ITS ACQUISITION, CONTINUED HOLDING, AND DISPOSITION OF THIS NOTE (OR ANY INTEREST HEREIN) WILL NOT GIVE RISE TO A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE INTERNAL REVENUE CODE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION OR VIOLATION OF ANY SIMILAR LAW].

 

[EXCEPT AS SET FORTH IN SECTION 2.05 OF THE INDENTURE, NO TRANSFER OF A CLASS D NOTE OR BENEFICIAL INTEREST THEREIN SHALL BE EFFECTIVE, AND ANY SUCH ATTEMPTED TRANSFER SHALL BE VOID AB INITIO, UNLESS, PRIOR TO AND AS A CONDITION TO EACH SUCH TRANSFER, THE PROSPECTIVE TRANSFEREE (INCLUDING THE INITIAL BENEFICIAL OWNER AS INITIAL TRANSFEREE) AND ANY SUBSEQUENT TRANSFEREE REPRESENTS AND WARRANTS, IN WRITING, SUBSTANTIALLY IN THE FORM OF THE TRANSFEREE CERTIFICATION SET FORTH IN EXHIBIT B-6 TO THE INDENTURE, TO THE INDENTURE TRUSTEE AND THE NOTE REGISTRAR, AND ANY OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, THAT: (A) EITHER (I) IT IS NOT AND WILL NOT BECOME FOR U.S. FEDERAL INCOME TAX PURPOSES A PARTNERSHIP, SUBCHAPTER S CORPORATION OR GRANTOR TRUST (OR A DISREGARDED ENTITY THE SINGLE OWNER OF WHICH IS ANY OF THE FOREGOING) (EACH SUCH ENTITY A “FLOW-THROUGH ENTITY”) OR (II) IF IT IS OR BECOMES A FLOW-THROUGH ENTITY, THEN (X) NONE OF THE DIRECT OR INDIRECT BENEFICIAL OWNERS OF ANY OF THE INTERESTS IN SUCH FLOW-THROUGH ENTITY HAS OR EVER WILL HAVE MORE THAN 50% OF THE VALUE OF ITS INTEREST IN SUCH FLOW-THROUGH ENTITY ATTRIBUTABLE TO THE BENEFICIAL INTEREST OF SUCH FLOW-THROUGH ENTITY IN THE NOTES, OTHER INTEREST (DIRECT OR INDIRECT)  IN ANY OF THE CO-ISSUERS, OR ANY INTEREST CREATED UNDER THE INDENTURE AND (Y) IT IS NOT AND WILL NOT BE A PRINCIPAL PURPOSE OF THE ARRANGEMENT INVOLVING THE FLOW-THROUGH ENTITY’S BENEFICIAL INTEREST IN ANY CLASS D NOTE TO PERMIT ANY PARTNERSHIP TO SATISFY THE 100 PARTNER LIMITATION OF SECTION 1.7704-1(h)(1)(ii) OF THE TREASURY REGULATIONS NECESSARY FOR SUCH PARTNERSHIP NOT TO BE CLASSIFIED AS A PUBLICLY TRADED PARTNERSHIP UNDER THE INTERNAL REVENUE CODE, (B)  IT IS NOT ACQUIRING ANY CLASS D NOTE OR BENEFICIAL INTEREST THEREIN, IT WILL NOT SELL, TRANSFER, ASSIGN, PARTICIPATE, PLEDGE OR OTHERWISE DISPOSE OF ANY CLASS D NOTE(S) OR BENEFICIAL INTEREST THEREIN, AND IT WILL NOT CAUSE ANY CLASS D NOTE(S) OR BENEFICIAL INTEREST THEREIN TO

 

A-2

 

BE MARKETED, IN EACH CASE ON OR THROUGH AN “ESTABLISHED SECURITIES MARKET” WITHIN THE MEANING OF SECTION 7704(b) OF THE INTERNAL REVENUE CODE, INCLUDING, WITHOUT LIMITATION, AN INTERDEALER QUOTATION SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS, (C) ITS BENEFICIAL INTEREST IN THE CLASS D NOTES IS NOT AND WILL NOT BE IN AN AMOUNT THAT IS LESS THAN THE MINIMUM DENOMINATION FOR SUCH CLASS D NOTE SET FORTH IN THE INDENTURE, AND IT DOES NOT AND WILL NOT HOLD ANY INTEREST ON BEHALF OF ANY PERSON WHOSE BENEFICIAL INTEREST IN A CLASS D NOTE IS IN AN AMOUNT THAT IS LESS THAN THE MINIMUM DENOMINATION FOR THE CLASS D NOTES SET FORTH IN THE INDENTURE, (D) IT WILL NOT SELL, ASSIGN, TRANSFER, PLEDGE OR OTHERWISE DISPOSE OF ANY CLASS D NOTE OR ANY BENEFICIAL INTEREST THEREIN, OR ENTER INTO ANY FINANCIAL INSTRUMENT OR CONTRACT THE VALUE OF WHICH IS DETERMINED BY REFERENCE IN WHOLE OR IN PART TO ANY CLASS D NOTE OR BENEFICIAL INTEREST THEREIN, IN EACH CASE IF THE EFFECT OF DOING SO WOULD BE THAT THE BENEFICIAL INTEREST OF ANY PERSON IN THE CLASS D NOTE WOULD BE IN AN AMOUNT THAT IS LESS THAN THE MINIMUM DENOMINATION FOR THE CLASS D NOTES SET FORTH IN THE INDENTURE, (E) IT WILL NOT USE ANY CLASS D NOTE AS COLLATERAL FOR THE ISSUANCE OF ANY SECURITIES THAT COULD CAUSE ANY CO-ISSUER TO BE TREATED AS AN ASSOCIATION OR PUBLICLY TRADED PARTNERSHIP TAXABLE AS CORPORATION FOR U.S. FEDERAL INCOME TAX AND (F) IT WILL NOT TRANSFER A CLASS D NOTE OR ANY BENEFICIAL INTEREST THEREIN (DIRECTLY, THROUGH A PARTICIPATION, OR OTHERWISE) UNLESS, PRIOR TO THE TRANSFER, THE TRANSFEREE SHALL HAVE EXECUTED AND DELIVERED TO THE INDENTURE TRUSTEE AND THE NOTE REGISTRAR, AND ANY OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, THAT A TRANSFEREE CERTIFICATION SUBSTANTIALLY IN THE FORM OF EXHIBIT B-6 TO THE INDENTURE. NOTWITHSTANDING THE FOREGOING, A TRANSFEREE (i) MAY ENGAGE IN ANY REPURCHASE TRANSACTION (REPO) THE SUBJECT MATTER OF WHICH IS A CLASS D NOTE OR ANY BENEFICIAL INTEREST THEREIN IF THE TERMS OF SUCH REPURCHASE TRANSACTION ARE GENERALLY CONSISTENT WITH PREVAILING MARKET PRACTICE AND (ii) MAY PLEDGE A CLASS D NOTE OR ANY BENEFICIAL INTEREST THEREIN IF DOING SO WILL NOT RESULT IN ANY PERSON (OTHER THAN THE TRANSFEREE) BEING TREATED FOR U.S. FEDERAL INCOME TAX  PURPOSES AS THE OWNER OF ALL OR ANY PORTION OF A CLASS D NOTE OR BENEFICIAL INTEREST THEREIN.]

 

[EXCEPT AS SET FORTH IN SECTION 2.05 OF THE INDENTURE, NO TRANSFER OF A CLASS E NOTE OR BENEFICIAL INTEREST THEREIN SHALL BE EFFECTIVE, AND ANY SUCH ATTEMPTED TRANSFER SHALL BE VOID AB INITIO, UNLESS, PRIOR TO AND AS A CONDITION TO EACH SUCH TRANSFER, THE PROSPECTIVE TRANSFEREE (INCLUDING THE INITIAL BENEFICIAL OWNER AS INITIAL TRANSFEREE) AND ANY SUBSEQUENT TRANSFEREE REPRESENTS AND WARRANTS, IN WRITING, SUBSTANTIALLY IN THE FORM OF THE TRANSFEREE CERTIFICATION SET FORTH IN EXHIBIT B-7 TO THE INDENTURE, TO THE INDENTURE TRUSTEE AND THE NOTE REGISTRAR, AND 

 

A-3

 

ANY OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, THAT: (A) EITHER (I) IT IS NOT AND WILL NOT BECOME FOR U.S. FEDERAL INCOME TAX PURPOSES A PARTNERSHIP, SUBCHAPTER S CORPORATION OR GRANTOR TRUST (OR A DISREGARDED ENTITY THE SINGLE OWNER OF WHICH IS ANY OF THE FOREGOING) (EACH SUCH ENTITY A “FLOW-THROUGH ENTITY”) OR (II) IF IT IS OR BECOMES A FLOW-THROUGH ENTITY, THEN (X) NONE OF THE DIRECT OR INDIRECT BENEFICIAL OWNERS OF ANY OF THE INTERESTS IN SUCH FLOW-THROUGH ENTITY HAS OR EVER WILL HAVE MORE THAN 50% OF THE VALUE OF ITS INTEREST IN SUCH FLOW-THROUGH ENTITY ATTRIBUTABLE TO THE BENEFICIAL INTEREST OF SUCH FLOW-THROUGH ENTITY IN THE NOTES, OTHER INTEREST (DIRECT OR INDIRECT) IN ANY CO-ISSUER, OR ANY INTEREST CREATED UNDER THE INDENTURE AND (Y) IT IS NOT AND WILL NOT BE A PRINCIPAL PURPOSE OF THE ARRANGEMENT INVOLVING THE FLOW-THROUGH ENTITY’S BENEFICIAL INTEREST IN ANY CLASS E NOTE TO PERMIT ANY PARTNERSHIP TO SATISFY THE 100 PARTNER LIMITATION OF SECTION 1.7704-1(h)(1)(ii) OF THE TREASURY REGULATIONS NECESSARY FOR SUCH PARTNERSHIP NOT TO BE CLASSIFIED AS A PUBLICLY TRADED PARTNERSHIP UNDER THE INTERNAL REVENUE CODE, (B)  IT IS NOT ACQUIRING ANY CLASS E NOTE OR BENEFICIAL INTEREST THEREIN, IT WILL NOT SELL, TRANSFER, ASSIGN, PARTICIPATE, PLEDGE OR OTHERWISE DISPOSE OF ANY CLASS E NOTE(S) OR BENEFICIAL INTEREST THEREIN, AND IT WILL NOT CAUSE ANY CLASS E NOTE(S) OR BENEFICIAL INTEREST THEREIN TO BE MARKETED, IN EACH CASE ON OR THROUGH AN “ESTABLISHED SECURITIES MARKET” WITHIN THE MEANING OF SECTION 7704(b) OF THE INTERNAL REVENUE CODE, INCLUDING, WITHOUT LIMITATION, AN INTERDEALER QUOTATION SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS, (C) ITS BENEFICIAL INTEREST IN THE CLASS E NOTES IS NOT AND WILL NOT BE IN AN AMOUNT THAT IS LESS THAN THE MINIMUM DENOMINATION FOR SUCH CLASS E NOTE SET FORTH IN THE INDENTURE, AND IT DOES NOT AND WILL NOT HOLD ANY INTEREST ON BEHALF OF ANY PERSON WHOSE BENEFICIAL INTEREST IN A CLASS E NOTE IS IN AN AMOUNT THAT IS LESS THAN THE MINIMUM  DENOMINATION FOR THE CLASS E NOTES SET FORTH IN THE INDENTURE, (D) IT WILL NOT SELL, ASSIGN, TRANSFER, PLEDGE OR OTHERWISE DISPOSE OF ANY CLASS E NOTE OR ANY BENEFICIAL INTEREST THEREIN, OR ENTER INTO ANY FINANCIAL INSTRUMENT OR CONTRACT THE VALUE OF WHICH IS DETERMINED BY REFERENCE IN WHOLE OR IN PART TO ANY CLASS E NOTE OR BENEFICIAL INTEREST THEREIN, IN EACH CASE IF THE EFFECT OF DOING SO WOULD BE THAT THE BENEFICIAL INTEREST OF ANY PERSON IN THE CLASS E NOTE WOULD BE IN AN AMOUNT THAT IS LESS THAN THE MINIMUM DENOMINATION FOR THE CLASS E NOTES SET FORTH IN THE INDENTURE, (E) IT WILL NOT USE ANY CLASS E NOTE AS COLLATERAL FOR THE ISSUANCE OF ANY SECURITIES THAT COULD CAUSE ANY CO-ISSUER TO BE TREATED AS AN ASSOCIATION OR PUBLICLY TRADED PARTNERSHIP TAXABLE AS CORPORATION FOR U.S. FEDERAL INCOME TAX PURPOSES, (F) IT WILL NOT TRANSFER A CLASS E NOTE OR ANY BENEFICIAL INTEREST THEREIN

 

A-4

 

(DIRECTLY, THROUGH A PARTICIPATION, OR OTHERWISE) UNLESS, PRIOR TO THE TRANSFER, THE TRANSFEREE SHALL HAVE EXECUTED AND DELIVERED TO THE INDENTURE TRUSTEE AND THE NOTE REGISTRAR, AND ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS, A TRANSFEREE CERTIFICATION SUBSTANTIALLY IN THE FORM OF EXHIBIT B-7 TO THE INDENTURE, AND (G) IT IS A “UNITED STATES PERSON” AS DEFINED IN SECTION 7701(a)(30) OF THE INTERNAL REVENUE CODE AND WILL NOT TRANSFER TO, OR CAUSE SUCH CLASS E NOTE OR BENEFICIAL INTEREST THEREIN TO BE TRANSFERRED TO, ANY PERSON OTHER THAN A “UNITED STATES PERSON,” AS DEFINED IN SECTION 7701(a)(30) OF THE INTERNAL REVENUE CODE.  NOTWITHSTANDING THE FOREGOING, A TRANSFEREE (i) MAY ENGAGE IN ANY REPURCHASE TRANSACTION (REPO) THE SUBJECT MATTER OF WHICH IS A CLASS E NOTE OR ANY BENEFICIAL INTEREST THEREIN IF THE TERMS OF SUCH REPURCHASE TRANSACTION ARE GENERALLY CONSISTENT WITH PREVAILING MARKET PRACTICE AND (ii) MAY PLEDGE A CLASS E NOTE OR ANY BENEFICIAL INTEREST THEREIN IF DOING SO WILL NOT RESULT IN ANY PERSON (OTHER THAN THE TRANSFEREE) BEING TREATED FOR U.S. FEDERAL INCOME TAX PURPOSES AS THE OWNER OF ALL OR ANY PORTION OF A CLASS E NOTE OR BENEFICIAL INTEREST THEREIN.]

 

THIS NOTE AND RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON AND PROCEDURES UNDERTAKEN OR REPRESENTED BY THE HOLDER, FOR RESALES AND OTHER TRANSFERS OF THIS NOTE, TO REFLECT ANY CHANGE IN, OR TO MAKE USE OF OTHER, APPLICABLE LAWS OR REGULATIONS (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO RESALES OR OTHER TRANSFERS OF RESTRICTED SECURITIES GENERALLY.  THE HOLDER OF THIS NOTE AND ANY BENEFICIAL OWNER OF ANY INTEREST THEREIN SHALL BE DEEMED, BY ITS ACCEPTANCE OR PURCHASE HEREOF OR THEREOF, TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT (EACH OF WHICH SHALL BE CONCLUSIVE AND BINDING ON THE HOLDER HEREOF AND ALL FUTURE HOLDERS OF THIS NOTE AND ANY NOTES ISSUED IN EXCHANGE OR SUBSTITUTION THEREFOR, WHETHER OR NOT ANY NOTATION THEREOF IS MADE HEREON) AND AGREES TO TRANSFER THIS NOTE ONLY IN ACCORDANCE WITH SUCH RELATED DOCUMENTATION AS SO AMENDED OR SUPPLEMENTED AND IN ACCORDANCE WITH APPLICABLE LAW IN EFFECT AT THE DATE OF SUCH TRANSFER.

 

[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE NOTE REGISTRAR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON

 

A-5

 

IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

 

THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE MAY BE REDUCED FROM TIME TO TIME BY DISTRIBUTIONS ON THIS NOTE ALLOCABLE TO PRINCIPAL. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THIS NOTE, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE MAY BE DIFFERENT FROM THE INITIAL PRINCIPAL AMOUNT SHOWN BELOW.  ANYONE ACQUIRING THIS NOTE MAY ASCERTAIN THE CURRENT OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE BY INQUIRY OF THE NOTE REGISTRAR.  ON THE DATE OF THE INITIAL ISSUANCE OF THIS NOTE, THE NOTE REGISTRAR IS WELLS FARGO BANK, NATIONAL ASSOCIATION.

 

THE HOLDER OF THIS NOTE, BY ACCEPTANCE OF THIS NOTE, AND EACH OWNER OF A BENEFICIAL INTEREST HEREIN, AGREES TO TREAT THE NOTES AS INDEBTEDNESS FOR APPLICABLE UNITED STATES FEDERAL, STATE, AND LOCAL INCOME AND FRANCHISE TAX LAW AND FOR PURPOSES OF ANY OTHER TAX IMPOSED ON, OR MEASURED BY, INCOME.

 

[For Regulation S Global Notes, which include only Class A Notes, Class B Notes and Class C Notes, in lieu of the foregoing legends, the following legends shall be included.]

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY UNITED STATES STATE SECURITIES OR “BLUE SKY” LAWS OR ANY SECURITIES LAWS OF ANY OTHER JURISDICTION, AND, AS A MATTER OF U.S. LAW, PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING OF THE NOTES AND THE CLOSING OF THE OFFERING OF THE NOTES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A “U.S. PERSON” (AS DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IN ACCORDANCE WITH RULE 903 OR 904 UNDER REGULATION S PROMULGATED UNDER THE SECURITIES ACT AND PURSUANT TO AND IN ACCORDANCE WITH ANY UNITED STATES STATE SECURITIES OR “BLUE SKY” LAWS OR ANY SECURITIES LAWS OF ANY OTHER JURISDICTION.  THIS NOTE, AND ANY BENEFICIAL INTEREST HEREIN, MAY BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF $100,000 AND $1,000 INCREMENTS IN EXCESS THEREOF.

 

EACH NOTEHOLDER OR BENEFICIAL OWNER, BY ACCEPTANCE OF THIS NOTE, OR, IN THE CASE OF A BENEFICIAL OWNER, A BENEFICIAL INTEREST IN THIS NOTE, WILL BE DEEMED TO REPRESENT AND WARRANT THAT EITHER (I) IT IS NOT AND IS NOT ACTING ON BEHALF OF, OR USING THE ASSETS OF (A) AN “EMPLOYEE BENEFIT PLAN,” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), THAT IS SUBJECT TO TITLE I OF ERISA, (B) A “PLAN,” AS DEFINED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “INTERNAL

 

A-6

 

REVENUE CODE”), THAT IS SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE, (C) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF SUCH EMPLOYEE BENEFIT PLAN OR PLAN’S INVESTMENT IN THE ENTITY (WITHIN THE MEANING OF DEPARTMENT OF LABOR REGULATION 29 C.F.R. 2510.3-101, AS MODIFIED BY SECTION 3(42) OF ERISA) OR (D) ANY GOVERNMENTAL, CHURCH, NON-U.S. OR OTHER PLAN THAT IS SUBJECT TO ANY NON-U.S., FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF THE INTERNAL REVENUE CODE (“SIMILAR LAW”) OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE ASSETS OF ANY SUCH PLAN OR (II) THE PURCHASER IS ACQUIRING CLASS A NOTES OR CLASS B NOTES AND ITS ACQUISITION, CONTINUED HOLDING AND DISPOSITION OF SUCH NOTES (OR ANY INTEREST THEREIN) WILL NOT GIVE RISE TO A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE INTERNAL REVENUE CODE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION OR VIOLATION OF ANY SIMILAR LAW.

 

THIS NOTE AND RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON AND PROCEDURES UNDERTAKEN OR REPRESENTED BY THE HOLDER, FOR RESALES AND OTHER TRANSFERS OF THIS NOTE, TO REFLECT ANY CHANGE IN, OR TO MAKE USE OF OTHER, APPLICABLE LAWS OR REGULATIONS (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO RESALES OR OTHER TRANSFERS OF RESTRICTED SECURITIES GENERALLY.  THE HOLDER OF THIS NOTE AND ANY BENEFICIAL OWNER OF ANY INTEREST THEREIN SHALL BE DEEMED, BY ITS ACCEPTANCE OR PURCHASE HEREOF OR THEREOF, TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT (EACH OF WHICH SHALL BE CONCLUSIVE AND BINDING ON THE HOLDER HEREOF AND ALL FUTURE HOLDERS OF THIS NOTE AND ANY NOTES ISSUED IN EXCHANGE OR SUBSTITUTION THEREFOR, WHETHER OR NOT ANY NOTATION THEREOF IS MADE HEREON) AND AGREES TO TRANSFER THIS NOTE ONLY IN ACCORDANCE WITH SUCH RELATED DOCUMENTATION AS SO AMENDED OR SUPPLEMENTED AND IN ACCORDANCE WITH APPLICABLE LAW IN EFFECT AT THE DATE OF SUCH TRANSFER.

 

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE NOTE REGISTRAR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE MAY BE REDUCED FROM TIME TO TIME BY DISTRIBUTIONS ON THIS NOTE ALLOCABLE TO PRINCIPAL. 

 

A-7

 

ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THIS NOTE, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE MAY BE DIFFERENT FROM THE INITIAL PRINCIPAL AMOUNT SHOWN BELOW.  ANYONE ACQUIRING THIS NOTE MAY ASCERTAIN THE CURRENT OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE BY INQUIRY OF THE NOTE REGISTRAR.  ON THE DATE OF THE INITIAL ISSUANCE OF THIS NOTE, THE NOTE REGISTRAR IS WELLS FARGO BANK, NATIONAL ASSOCIATION.

 

THE HOLDER OF THIS NOTE, BY ACCEPTANCE OF THIS NOTE, AND EACH OWNER OF A BENEFICIAL INTEREST HEREIN, AGREES TO TREAT THE NOTES AS INDEBTEDNESS FOR APPLICABLE UNITED STATES FEDERAL, STATE, AND LOCAL INCOME AND FRANCHISE TAX LAW AND FOR PURPOSES OF ANY OTHER TAX IMPOSED ON, OR MEASURED BY, INCOME.

 

A-8

 

	
Registered
    	
[Initial Principal Amount:][up to] $                   
    
	
 
    	
 
    
	
No. R-
    	
CUSIP NO.   [      ]
    
	
 
    	
ISIN NO.   [             ]
    

 

SPRINGCASTLE AMERICA FUNDING, LLC,

 

SPRINGCASTLE CREDIT FUNDING, LLC,

 

SPRINGCASTLE FINANCE FUNDING, LLC

 

SPRINGCASTLE FUNDING ASSET BACKED NOTES 2014-A, CLASS [A][B][C][D][E]

 

SpringCastle America Funding, LLC, a Delaware limited liability company, SpringCastle Credit Funding, LLC, a Delaware limited liability company, and SpringCastle Finance Funding, LLC, a Delaware limited liability company, as Co-Issuers (herein referred to collectively as the “Co-Issuers”), hereby promise jointly and severally to pay to [            ], or registered assigns, subject to the following provisions, the principal sum set forth above [(reduced or increased as set forth on Schedule I hereto)]4, or such lesser amount, as determined in accordance with the Indenture (referred to herein), on the Stated Maturity Date, except as otherwise provided below or in the Indenture.  The Co-Issuers will pay interest on the unpaid principal amount of this Note at the Class [A][B][C][D][E] Interest Rate on each Payment Date until the principal amount of this Note is paid, subject to certain limitations in the Indenture.  Interest on this Note will accrue for each Payment Date from and including the most recent Payment Date on which interest has been paid to but excluding such Payment Date or, for the initial Payment Date, from and including the Closing Date to but excluding such Payment Date.  Interest will be computed as provided in the Indenture.  Principal of this Note will 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.

 

Reference is made to the further provisions of this Note set forth on the reverse hereof, which will 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 or on behalf of the Note Registrar, by manual signature, this Note will not be entitled to any benefit under the Indenture or be valid for any purpose.

 

4 For Global Notes.

 

A-9

 

IN WITNESS WHEREOF, each of the Co-Issuers has caused this Note to be duly executed.

 

 

	
 
    	
SPRINGCASTLE   AMERICA FUNDING, LLC, as Co-Issuer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SPRINGCASTLE   CREDIT FUNDING, LLC, as Co-Issuer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SPRINGCASTLE   FINANCE FUNDING, LLC, as Co-Issuer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
Dated: October [·], 2014
    	
 
    

 

 

NOTE REGISTRAR’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes of the Series described therein and referred to in the within-mentioned Indenture.

 

	
 
    	
WELLS FARGO BANK, NATIONAL ASSOCIATION, not   in its individual capacity, but solely as Note Registrar
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

A-10

 

SPRINGCASTLE AMERICA FUNDING, LLC,

 

SPRINGCASTLE CREDIT FUNDING, LLC,

 

SPRINGCASTLE FINANCE FUNDING, LLC

 

SPRINGCASTLE FUNDING ASSET BACKED NOTES 2014-A, CLASS [A][B][C][D][E]

 

This Note is one of a duly authorized issue of Notes of the Co-Issuers, designated as the SpringCastle Funding Asset Backed Notes 2014-A, Class [A][B][C][D][E] (the “Notes”), issued under the Indenture, dated as of October [·], 2014 (the “Indenture”), among SpringCastle America Funding, LLC, a Delaware limited liability company, SpringCastle Credit Funding, LLC, a Delaware limited liability company, and SpringCastle Finance Funding, LLC, a Delaware limited liability company, as Co-Issuers (herein referred to collectively as the “Co-Issuers”), Springleaf Finance, Inc., as Servicer (the “Servicer”), Wilmington Trust, National Association, as Loan Trustee on behalf of each of the Co-Issuers, Wells Fargo Bank, National Association, as paying agent (the “Paying Agent”) and as note registrar (the “Note Registrar”) and U.S. Bank National Association, as indenture trustee (the “Indenture Trustee”), and representing the right to receive certain payments from the Co-Issuers.  The Notes are subject to all of the terms, provisions and conditions of the Indenture, as it may be amended, supplemented or modified from time to time.  All terms used in this Note that are defined in Part A of Schedule I to the Indenture (together with Part B of such Schedule I, the “Definitions Schedule”) have the meanings assigned to them therein or pursuant thereto, as applicable.  In the event of any conflict or inconsistency between the Definitions Schedule and this Note, the Definitions Schedule controls.

 

The Noteholder, by its acceptance of this Note, agrees that it will look solely to the property of the Co-Issuers allocated to the payment of this Note for payment hereunder and that the Indenture Trustee is not liable to the Noteholders for any amount payable under this Note or the Indenture or, except as expressly provided in the Indenture, subject to any liability under the Indenture.

 

This Note does not purport to summarize the Indenture and reference is made to the Indenture for the interests, rights and limitations of rights, benefits, obligations and duties evidenced thereby, and the rights, duties and immunities of the Indenture Trustee.

 

The initial Class [A][B][C][D][E] Note Balance is $[                    ].  The Class [A][B][C][D][E] Note Balance on any date of determination will be an amount equal to (a) the initial Class [A][B][C][D][E] Note Balance minus (b) the aggregate amount of principal payments made to the Holders of Class [A][B][C][D][E] Notes and which have not been rescinded on or before such date.  Payments of principal of the Notes will be made in accordance with the provisions of, and subject to the limitations in, the Indenture.

 

On each Payment Date, the Paying Agent will distribute to each Noteholder of record on the related Record Date (except for the final distribution in respect of this Note) such Noteholder’s pro rata share of the amounts held by the Paying Agent that are allocated and available on such Payment Date to pay interest and principal on the Class [A][B][C][D][E] Notes 

 

A-11

 

pursuant to the Indenture.  Except as provided in the Indenture with respect to a final distribution, distributions to the Noteholders shall be made (i) on the due date thereof, to an account designated by the holder of this Note, in United States dollars and in immediately available funds and (ii) without presentation or surrender of any Note or the making of any notation thereon.  Final payment of this Note will be made only upon presentation and surrender of this Note at the office or agency specified in the notice of final distribution delivered by the Paying Agent to the Noteholders in accordance with the Indenture.

 

Upon the exercise of the Servicer’s option to purchase the remaining Loans (together with all other Purchased Assets relating thereto) of the Co-Issuers pursuant to the Transaction Documents, the Co-Issuers will retire the Notes and redeem the Notes from the proceeds of such purchase.

 

This Note does not represent an obligation of, or an interest in, any of the Sellers or Springleaf Finance, Inc., the Indenture Trustee, the Note Registrar, the Paying Agent or any Affiliate of any of them (other than the Co-Issuers) and is not insured or guaranteed by any governmental agency or instrumentality or any other Person.

 

Each Noteholder, by accepting a Note, and each beneficial owner of such Note hereby covenants and agrees that it will not at any time institute against any of the Co-Issuers or any of the Sellers, or join in instituting against any of the Co-Issuers or any of the Sellers, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law.

 

The Co-Issuers, the Indenture Trustee, the Paying Agent, the Note Registrar and any agent of the Co-Issuers, the Paying Agent, the Note Registrar or the Indenture Trustee will treat the person in whose name this Note is registered as the owner hereof for all purposes, and none of the Co-Issuers, the Indenture Trustee, the Paying Agent, the Note Registrar or any agent of the Co-Issuers, the Paying Agent, the Note Registrar or the Indenture Trustee will be affected by notice to the contrary.

 

THIS NOTE 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 SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

A-12

 

ASSIGNMENT

 

Social Security 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:
    	
 
    	
5
    
	
 
    	
 
    	
 
    
	
Signature Guaranteed:
    	
 
    

 

5                                      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.

 

A-13

 

SCHEDULE I

 

The initial principal amount of this [Rule 144A][Temporary Regulation S][Permanent Regulation S] Global Note is $[          ].  The aggregate principal amount of this Global Note issued, cancelled or exchanged for a Definitive Note or another Global Note is as follows:

 

	
Date
    	
 
    	
Principal Amount
   Issued,
   Cancelled or
   Exchanged
    	
 
    	
Remaining Principal
   Amount of this
   Global Note
    	
 
    	
Notation
   Made by or on
   Behalf of
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

A-1

 

EXHIBIT B-1

 

FORM OF TRANSFER CERTIFICATE
 FOR EXCHANGE OR TRANSFER FROM RULE 144A GLOBAL NOTE TO TEMPORARY REGULATION S GLOBAL NOTE

 

Wells Fargo Bank, National Association,
 as Note Registar

Sixth Street and Marquette Avenue

MAC N9311-161

Minneapolis, Minnesota 55479

Attention: Corporate Trust Services—SpringCastle Funding Asset-Backed Notes 2014-A

 

Re:                             SpringCastle Funding Asset-Backed Notes 2014-A

 

Reference is hereby made to the Indenture, dated as of October [·], 2014 (the “Indenture”), among SpringCastle America Funding, LLC, a Delaware limited liability company, SpringCastle Credit Funding, LLC, a Delaware limited liability company, and SpringCastle Finance Funding, LLC, a Delaware limited liability company, as Co-Issuers (herein referred to collectively as the “Co-Issuers”), Springleaf Finance, Inc., as Servicer, Wilmington Trust, National Association, as Loan Trustee on behalf of each of the Co-Issuers, Wells Fargo Bank, National Association, as paying agent (the “Paying Agent”) and as note registrar (the “Note Registrar”) and U.S. Bank National Association, as indenture trustee (the “Indenture Trustee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

This letter relates to $                         principal amount of Class [A][B][C] Notes represented by a beneficial interest in the Rule 144A Global Note (CUSIP No.     ) held with DTC by or on behalf of [transferor] as beneficial owner (the “Transferor”).  The Transferor has requested an exchange or transfer of its beneficial interest for an interest in the Temporary Regulation S Global Note (CUSIP (CINS) No.       ) to be held with [Euroclear] [Clearstream] (ISIN Code            (Common Code )) through DTC.

 

In connection with such request and in respect of such Note, the Transferor does hereby certify that such exchange or transfer has been effected in accordance with the transfer restrictions set forth in the Notes and pursuant to and in accordance with Rule 903 or 904 of Regulation S under the Securities Act, and accordingly the Transferor does hereby certify that:

 

(1)                                 the offer of the Notes was not made to a person in the United States;

 

(2)                                 (A)                               at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the transferee was outside the United States, or

 

B-1-1

 

(B)                               the transaction was executed in, on or through (x) a physical trading floor of an established foreign securities exchange that is located outside the United States or (y) the facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was prearranged with a buyer in the United States;

 

(3)                                 no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or 904(b) of Regulation S, as applicable;

 

(4)                                 the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and

 

(5)                                 upon completion of the transaction, the beneficial interest being transferred as described above was held with DTC through Euroclear or Clearstream or both (Common Code          (ISIN Code         )).

 

This certificate and the statements contained herein are made for your benefit and the benefit of the Co-Issuers.

 

	
 
    	
[INSERT NAME OF TRANSFEROR]
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
Date:                      ,   20
    	
 
    

 

B-1-2

 

EXHIBIT B-2

 

FORM OF TRANSFER CERTIFICATE FOR EXCHANGE OR TRANSFER
 FROM RULE 144A GLOBAL NOTE TO PERMANENT REGULATION S GLOBAL NOTE

 

Wells Fargo Bank, National Association,
 as Note Registar

Sixth Street and Marquette Avenue

MAC N9311-161

Minneapolis, Minnesota 55479

Attention: Corporate Trust Services—SpringCastle Funding Asset-Backed Notes 2014-A

 

Re:                             SpringCastle Funding Asset-Backed Notes2014-A

 

Reference is hereby made to the Indenture, dated as of October [·], 2014 (the “Indenture”), among SpringCastle America Funding, LLC, a Delaware limited liability company, SpringCastle Credit Funding, LLC, a Delaware limited liability company, and SpringCastle Finance Funding, LLC, a Delaware limited liability company, as Co-Issuers (herein referred to collectively as the “Co-Issuers”), Springleaf Finance, Inc., as Servicer, Wilmington Trust, National Association, as Loan Trustee on behalf of each of the Co-Issuers, Wells Fargo Bank, National Association, as paying agent (the “Paying Agent”) and as note registrar (the “Note Registrar”) and U.S. Bank National Association, as indenture trustee (the “Indenture Trustee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

This letter relates to $                     principal amount of Class [A][B][C] Notes represented by, a beneficial interest in the Rule 144A Global Note (CUSIP No. held with DTC by or on behalf of [transferor] as beneficial owner (the “Transferor”).  The Transferor has requested an exchange or transfer of its beneficial interest for an interest in the Permanent Regulation S Global Note (CUSIP (CINS) No.         ).

 

In connection with such request and in respect of such Notes, the Transferor does hereby certify that such exchange or transfer has been effected in accordance with the transfer restrictions set forth in the Notes and that, with respect to transfers made in reliance on Rule 903 or 904 of Regulation S under the Securities Act:

 

(1)                                 the offer of the Notes was not made to a person in the United States;

 

(2)                                 (A)                               at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that transferee was outside the United States, or

 

(B)                               the transaction was executed in, on or through (x) a physical trading floor of an established foreign securities exchange that is located outside the United States or (y) the 

 

B-2-1

 

facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was prearranged with a buyer in the United States;

 

(3)                                 no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or 904(b) of Regulation S, as applicable; and

 

(4)                                 the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

 

This certificate and the statements contained herein are made for your benefit and the benefit of the Co-Issuers.

 

	
 
    	
[INSERT NAME OF TRANSFEROR]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
Date:                      ,   20
    	
 
    

 

B-2-2

 

EXHIBIT B-3

 

FORM OF TRANSFER CERTIFICATE FOR TRANSFER OR EXCHANGE FROM [TEMPORARY][PERMANENT] REGULATION S
 GLOBAL NOTE TO RULE 144A GLOBAL NOTE

 

Wells Fargo Bank, National Association,
 as Note Registar

Sixth Street and Marquette Avenue

MAC N9311-161

Minneapolis, Minnesota 55479

Attention: Corporate Trust Services—SpringCastle Funding Asset-Backed Notes 2014-A

 

Re:                             SpringCastle Funding Asset-Backed Notes 2014-A

 

Reference is hereby made to the Indenture, dated as of October [·], 2014 (the “Indenture”), among SpringCastle America Funding, LLC, a Delaware limited liability company, SpringCastle Credit Funding, LLC, a Delaware limited liability company, and SpringCastle Finance Funding, LLC, a Delaware limited liability company, as Co-Issuers (herein referred to collectively as the “Co-Issuers”), Springleaf Finance, Inc., as Servicer, Wilmington Trust, National Association, as Loan Trustee on behalf of each of the Co-Issuers, Wells Fargo Bank, National Association, as paying agent (the “Paying Agent”) and as note registrar (the “Note Registrar”) and U.S. Bank National Association, as indenture trustee (the “Indenture Trustee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

This letter relates to                                principal amount of Class [A][B][C] Notes which are held in the form of the [Temporary][Permanent] Global Regulation S Global Note (CUSIP (CINS) No. with Euroclear/Clearstream6 (ISIN Code           ) (Common Code         ) through DTC by or on behalf of [transferor] as beneficial owner (the “Transferor”).  The Transferor has requested an exchange or transfer of its beneficial interest in the Notes for an interest in the Rule 144A Global Note (CUSIP No.           ).

 

In connection with such request, and in respect of such Notes, the Transferor does hereby certify that such Notes are being transferred in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), to a transferee that the Transferor reasonably believes is purchasing the Notes for its own account or an account with respect to which the transferee exercises sole investment discretion and the transferee and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, in each case in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction.

 

6 Select appropriate depositary.

 

B-3-1

 

This certificate and the statements contained herein are made for your benefit and the benefit of the Co-Issuers.

 

	
 
    	
[INSERT NAME OF TRANSFEROR]
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
Date:                      ,   20
    	
 
    

 

B-3-2

 

EXHIBIT B-4

 

FORM OF CLEARING SYSTEM CERTIFICATE

 

Wells Fargo Bank, National Association,
 as Note Registar

Sixth Street and Marquette Avenue

MAC N9311-161

Minneapolis, Minnesota 55479

Attention: Corporate Trust Services—SpringCastle Funding Asset-Backed Notes 2014-A

 

Re:                             SpringCastle Funding Asset-Backed Notes 2014-A

 

Reference is hereby made to the Indenture, dated as of October [·], 2014 (the “Indenture”), among SpringCastle America Funding, LLC, a Delaware limited liability company, SpringCastle Credit Funding, LLC, a Delaware limited liability company, and SpringCastle Finance Funding, LLC, a Delaware limited liability company, as Co-Issuers (herein referred to collectively as the “Co-Issuers”), Springleaf Finance, Inc., as Servicer, Wilmington Trust, National Association, as Loan Trustee on behalf of each of the Co-Issuers, Wells Fargo Bank, National Association, as paying agent (the “Paying Agent”) and as note registrar (the “Note Registrar”) and U.S. Bank National Association, as indenture trustee (the “Indenture Trustee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

This is to certify that, based solely on certificates we have received in writing, by tested telex or by electronic transmissions from noteholders (our “Noteholders”) appearing in our records as persons being entitled to a portion of the original principal amount of the Class [A][B][C] Notes (the “Notes”) substantially to the effect set forth in Exhibit B-5 to the Indenture, U.S. $                         principal balance of Notes held by us or on our behalf are beneficially owned by non-U.S. persons.  As used in this paragraph the term “U.S. person” has the meaning given to it by Regulation S under the Act.

 

We further certify (i) that we are not making available herewith for exchange any portion of the Temporary Regulation S Global Note excepted in such certificates and (ii) that as of the date hereof we have not received any notification from any of our Noteholders to the effect that the statements made by such Noteholder with respect to any portion of the part submitted herewith for exchange are no longer true and cannot be relied upon as at the date hereof.  We understand that this certification is required in connection with certain securities laws of the United States.

 

B-4-1

 

In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certification to any interested party in such proceedings.

 

	
Dated:                           ,   20   7
    	
 
    
	
 
    	
 
    
	
 
    	
Yours faithfully,
    
	
 
    	
 
    
	
 
    	
[MORGAN GUARANTY TRUST
    
	
 
    	
COMPANY OF NEW YORK, Brussels office, as   operator of the Euroclear System]
    
	
 
    	
 
    
	
 
    	
[OR]
    
	
 
    	
 
    
	
 
    	
[CLEARSTREAM LUXEMBOURG]
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

7 To be dated no earlier than the first day following the completion of the Distribution Compliance Period.

 

B-4-2

 

EXHIBIT B-5

 

FORM OF CERTIFICATE OF BENEFICIAL OWNERSHIP

 

Re:                             SpringCastle Funding Asset-Backed Notes 2014-A

 

Reference is hereby made to the Indenture, dated as of October [·], 2014 (the “Indenture”), among SpringCastle America Funding, LLC, a Delaware limited liability company, SpringCastle Credit Funding, LLC, a Delaware limited liability company, and SpringCastle Finance Funding, LLC, a Delaware limited liability company, as Co-Issuers (herein referred to collectively as the “Co-Issuers”), Springleaf Finance, Inc., as Servicer, Wilmington Trust, National Association, as Loan Trustee on behalf of each of the Co-Issuers, Wells Fargo Bank, National Association, as paying agent (the “Paying Agent”) and as note registrar (the “Note Registrar”) and U.S. Bank National Association, as indenture trustee (the “Indenture Trustee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

The Securities are of the category contemplated in Section 230.903(c)(3) of Regulation S under the Securities Act of 1933, as amended (the “Act”), and therefore this is to certify that, except as set forth below, the SpringCastle Funding Asset-Backed Notes (the “Securities”) described herein are beneficially owned by non-U.S. persons.  As used in this paragraph the terms “U.S. person” has the meaning given to it by Regulation S under the Act.

 

We undertake to advise you promptly by tested telex on or prior to the date on which you intend to submit your certification relating to the Securities held by you for our account in accordance with your operating procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification, applies as of such date.

 

This certification excepts and does not relate to U.S. $                           of such interest in the above Securities in respect of which we are not able to certify and as to which we understand exchange and delivery of definitive Securities (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify.

 

We understand that this certification is required in connection with certain securities laws of the United States.  In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorize you to produce this certification to any interested party in such proceedings.

 

Date:                  , 20   8

 

8 Not earlier than 15 days prior to the certification event to which the certification relates.

 

B-5-1

 

	
 
    	
By:
    	
 
    
	
 
    	
 
    	
as, or as agent for, the beneficial owner(s)
    
	
 
    	
 
    	
of the Securities to which this certificate   relates
    

 

B-5-2

 

EXHIBIT B-6

 

FORM OF TRANSFEREE CERTIFICATION FOR TRANSFER OF CLASS D NOTES REQUIRED UNDER SECTION 2.05 OF THE INDENTURE

 

U.S. Bank National Association
 [Address]

 

Wells Fargo Bank, National Association

[Address]

 

Re:                             SpringCastle Funding Asset-Backed Notes 2014-A

 

Reference is hereby made to the Indenture, dated as of October [·], 2014 (the “Indenture”), among SpringCastle America Funding, LLC, SpringCastle Credit Funding, LLC and SpringCastle Finance Funding, LLC, as Co-Issuers, Wilmington Trust, National Association, as Loan Trustee for each of the Co-Issuers, Springleaf Finance, Inc., as Servicer, Wells Fargo Bank, National Association, as Paying Agent and Note Registrar and U.S. Bank National Association, as Indenture Trustee.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

The undersigned (the “Transferee”) intends to purchase a beneficial interest in a Class D Note representing $           principal balance of a Class D Note from [transferor].   In connection with the transfer of such beneficial interest in a Class D Note (the “Transfer”), the Transferee does hereby certify that:

 

(i)  Either (a) it is not and will not become for U.S. federal income tax purposes a partnership, Subchapter S corporation or grantor trust (or a disregarded entity the single owner of which is any of the foregoing) (each such entity a “flow-through entity”) or (b) if it is or becomes a flow-through entity, then (I) none of the direct or indirect beneficial owners of any of the interests in such flow-through entity has or ever will have more than 50% of the value of its interest in such flow-through entity attributable to the beneficial interest of such flow-through entity in the Notes, other interest (direct or indirect) in any Co-Issuer, or any interest created under the Indenture and (II) it is not and will not be a principal purpose of the arrangement involving the flow-through entity’s beneficial interest in any Class D Note to permit any partnership to satisfy the 100-partner limitation of Section 1.7704-1(h)(1)(ii) of the Treasury Regulations necessary for such partnership not to be classified as a publicly traded partnership under the Internal Revenue Code.

 

(ii)  It is not acquiring any Class D Note or beneficial interest therein, it will not sell, transfer, assign, participate, or otherwise dispose of any Class D Note or beneficial interest therein, and it will not cause any Class D Note or beneficial interest therein to be marketed, in each case on or through an “established securities market” within the 

 

B-6-1

 

meaning of Section 7704(b) of the Internal Revenue Code, including, without limitation, an interdealer quotation system that regularly disseminates firm buy or sell quotations.

 

(iii)  Its beneficial interest in the Class D Notes is not and will not be in an amount that is less than the minimum denomination for the Class D Notes set forth in the Indenture, and it does not and will not hold any interest in a Class D Note on behalf of any Person whose beneficial interest in a Class D Note is in an amount that is less than the minimum denomination for the Class D Notes set forth in the Indenture.

 

(iv)  It will not sell, transfer, assign, participate, or otherwise dispose of any Class D Note or any beneficial interest therein, or enter into any financial instrument or contract the value of which is determined by reference in whole or in part to any Class D Note or any beneficial interest therein, in each case if the effect of doing so would be that the beneficial interest of any Person in a Class D Note would be in an amount that is less than the minimum denomination for the Class D Notes set forth in the Indenture.

 

(v)  It will not use any Class D Note as collateral for the issuance of any securities that could cause any Co-Issuer to be treated as an association or publicly traded partnership taxable as a corporation for U.S. federal income tax purposes.

 

(vi)  It will not transfer any Class D Note or any beneficial interest therein (directly, through a participation thereof, or otherwise) unless, prior to the transfer, the transferee shall have executed and delivered to the Indenture Trustee and the Note Registrar, and any of their respective successors or assigns, a Transferee Certification substantially in the form of Exhibit B-6 of the Indenture.

 

(vii)   This Transferee Certification has been duly executed and delivered to the Indenture Trustee and Note Registrar and constitutes the legal, valid and binding obligation of the Transferee, enforceable against the Transferee in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the enforcement of creditors’ rights generally and general principles of equity, and indemnification sought in respect of securities laws violations may be limited by public policy.

 

(viii)   It acknowledges that the Co-Issuers, the Indenture Trustee and the Note Registrar will rely on the truth and accuracy of the foregoing representations and warranties, and agrees that if it becomes aware that any of the foregoing made by it or deemed to have been made by it are no longer accurate, it shall promptly notify the Co-Issuers.

 

Pursuant to Section 2.05 of the Indenture, no representation or warranty set forth in this Transferee Certificate shall prohibit the Transferee from (i) engaging in any repurchase transaction (repo) the subject matter of which is a Class D Note or beneficial interest therein, provided the terms of such repurchase transaction are generally consistent with prevailing market practice, or (ii) pledging a Class D Note or beneficial interest therein, provided doing so will not 

 

B-6-2

 

result in any Person (other than the Transferee) being treated for U.S. federal income tax purposes as the owner of all or any portion of a Class D Note or beneficial interest therein.

 

B-6-3

 

THE UNDERSIGNED HEREBY ACKNOWLEDGES THAT ANY TRANSFER TO OR BY THE UNDERSIGNED IN VIOLATION OF ANY OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO OR BY THE TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE CO-ISSUERS, THE INDENTURE TRUSTEE OR ANY OTHER PERSON.

 

 

	
 
    	
[TRANSFEREE]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
					

 

B-6-4

 

EXHIBIT B-7

 

FORM OF TRANSFEREE CERTIFICATION FOR TRANSFER OF CLASS E NOTES REQUIRED UNDER SECTION 2.05 OF THE INDENTURE

 

U.S. Bank National Association
 [Address]

 

Wells Fargo Bank, National Association

[Address]

 

Re:                             SpringCastle Funding Asset-Backed Notes 2014-A

 

Reference is hereby made to the Indenture, dated as of [            ], 2014 (the “Indenture”), among SpringCastle America Funding, LLC, SpringCastle Credit Funding, LLC and SpringCastle Finance Funding, LLC, as Co-Issuers, Wilmington Trust, National Association, as Loan Trustee for each of the Co-Issuers, Springleaf Finance, Inc., as Servicer, Wells Fargo Bank, National Association, as Paying Agent and Note Registrar and U.S. Bank National Association, as Indenture Trustee.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

The undersigned (the “Transferee”) intends to purchase $       principal balance of Class E Note from [transferor].  In connection with the transfer of such beneficial interest in a Class E Note (the “Transfer”), the Transferee does hereby certify that:

 

(i)  Either (a) it is not and will not become for U.S. federal income tax purposes a partnership, Subchapter S corporation or grantor trust (or a disregarded entity the single owner of which is any of the foregoing) (each such entity a “flow-through entity”) or (b) if it is or becomes a flow-through entity, then (I) none of the direct or indirect beneficial owners of any of the interests in such flow-through entity has or ever will have more than 50% of the value of its interest in such flow-through entity attributable to the beneficial interest of such flow-through entity in the Notes, other interest (direct or indirect) in any Co-Issuer, or any interest created under the Indenture and (II) it is not and will not be a principal purpose of the arrangement involving the flow-through entity’s beneficial interest in any Class E Note to permit any partnership to satisfy the 100-partner limitation of Section 1.7704-1(h)(1)(ii) of the Treasury Regulations necessary for such partnership not to be classified as a publicly traded partnership under the Internal Revenue Code.

 

(ii)  It is not acquiring any Class E Note or beneficial interest therein, it will not sell, transfer, assign, participate, or otherwise dispose of any Class E Note or beneficial interest therein, and it will not cause any Class E Note or beneficial interest therein to be marketed, in each case on or through an “established securities market” within the meaning of Section 7704(b) of the Internal Revenue Code, including, without limitation, an interdealer quotation system that regularly disseminates firm buy or sell quotations.

 

B-7-1

 

(iii)  Its beneficial interest in the Class E Notes is not and will not be in an amount that is less than the minimum denomination for the Class E Notes set forth in the Indenture, and it does not and will not hold any interest in a Class E Note on behalf of any Person whose beneficial interest in a Class E Note is in an amount that is less than the minimum denomination for the Class E Notes set forth in the Indenture.

 

(iv)  It will not sell, transfer, assign, participate, or otherwise dispose of any Class E Note or any beneficial interest therein, or enter into any financial instrument or contract the value of which is determined by reference in whole or in part to any Class E Note or any beneficial interest therein, in each case if the effect of doing so would be that the beneficial interest of any Person in a Class E Note would be in an amount that is less than the minimum denomination for the Class E Notes set forth in the Indenture.

 

(v)  It will not use any Class E Note as collateral for the issuance of any securities that could cause any Co-Issuer to be treated as an association or publicly traded partnership taxable as a corporation for U.S. federal income tax purposes.

 

(vi) It will not transfer any Class E Note or any beneficial interest therein (directly, through a participation thereof, or otherwise) unless, prior to the transfer, the transferee shall have executed and delivered to the Indenture Trustee and the Note Registrar, and any of their respective successors or assigns, a Transferee Certification substantially in the form of Exhibit B-7 of the Indenture.

 

(vii) It is a “United States person,” as defined in Section 7701(a)(30) of the Internal Revenue Code and will not transfer to, or cause such Class E Note to be transferred to, any person other than a “United States person,” as defined in Section 7701(a)(30) of the Internal Revenue Code.

 

(viii) This Transferee Certification has been duly executed and delivered to the Indenture Trustee and Note Registrar and constitutes the legal, valid and binding obligation of the Transferee, enforceable against the Transferee in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the enforcement of creditors’ rights generally and general principles of equity, and indemnification sought in respect of securities laws violations may be limited by public policy.

 

(ix) It acknowledges that the Co-Issuers, the Indenture Trustee and the Note Registrar will rely on the truth and accuracy of the foregoing representations and warranties, and agrees that if it becomes aware that any of the foregoing made by it or deemed to have been made by it are no longer accurate, it shall promptly notify the Co-Issuers.

 

Pursuant to Section 2.05 of the Indenture, no representation or warranty set forth in this Transferee Certificate shall prohibit the Transferee from (i) engaging in any repurchase transaction (repo) the subject matter of which is a Class E Note or beneficial interest therein, provided the terms of such repurchase transaction are generally consistent with prevailing market 

 

B-7-2

 

practice, or (ii) pledging a Class E Note or beneficial interest therein, provided doing so will not result in any Person (other than the Transferee) being treated for U.S. federal income tax purposes as the owner of all or any portion of a Class E Note or beneficial interest therein.

 

THE UNDERSIGNED HEREBY ACKNOWLEDGES THAT ANY TRANSFER TO OR BY THE UNDERSIGNED IN VIOLATION OF ANY OF THE FOREGOING WILL BE OF NO

 

FORCE AND EFFECT, WILL BE VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO OR BY THE TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE CO-ISSUERS, THE INDENTURE TRUSTEE OR ANY OTHER PERSON.

 

	
 
    	
[TRANSFEREE]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
					

 

B-7-3

 

EXHIBIT C

 

FORM OF MONTHLY SERVICER REPORT

 

See attached.

 

C-1

 

SpringCastle Funding Asset-Backed Notes 2014-A

Monthly Servicer Report

 

	
Collection Period
    	
 
    	
 
    	
 
    
	
Beginning Date
    	
 
    	
9/1/2014
    	
 
    
	
Ending Date
    	
 
    	
10/31/2014
    	
 
    
	
Payment Date
    	
 
    	
11/25/2014
    	
 
    
	
Transaction Month
    	
 
    	
1
    	
 
    
	
30/360 Days
    	
 
    	
30
    	
 
    

 

I.  ORIGINAL DEAL PARAMETERS

 

	
Initial Cut-Off Date:
    	
 
    	
August 31, 2014
    	
 
    
	
Closing Date:
    	
 
    	
October 3, 2014
    	
 
    

 

	
 
    	
 
    	
Dollars
    	
 
    	
No of Loans
    	
 
    	
WAC
    	
 
    	
 
    	
 
    
	
Initial Loan Principal Balance:
    	
 
    	
$
    	
2,737,242,150.82
    	
 
    	
295,633
    	
 
    	
18.085
    	
%
    	
 
    	
 
    
											

 

	
 
    	
 
    	
Note Balance
    	
 
    	
% of Loan Prin Bal
    	
 
    	
Interest Rate
    	
 
    	
Stated Maturity Date
    	
 
    
	
Class A Notes
    	
 
    	
$
    	
1,601,280,000.00
    	
 
    	
58.50
    	
%
    	
2.700
    	
%
    	
May 25, 2023
    	
 
    
	
Class B Notes
    	
 
    	
$
    	
427,000,000.00
    	
 
    	
15.60
    	
%
    	
4.610
    	
%
    	
October 25, 2027
    	
 
    
	
Class C Notes
    	
 
    	
$
    	
331,200,000.00
    	
 
    	
12.10
    	
%
    	
5.590
    	
%
    	
October 25, 2033
    	
 
    
	
Class D Notes
    	
 
    	
$
    	
199,810,000.00
    	
 
    	
7.30
    	
%
    	
6.820
    	
%
    	
April 25, 2034
    	
 
    
	
Class E Notes
    	
 
    	
$
    	
61,580,000.00
    	
 
    	
2.25
    	
%
    	
6.820
    	
%
    	
April 25, 2035
    	
 
    
	
Aggregate Note Principal Balance
    	
 
    	
$
    	
2,620,870,000.00
    	
 
    	
95.75
    	
%
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Overcollateralization Amount
    	
 
    	
$
    	
116,372,150.82
    	
 
    	
4.25
    	
%
    	
 
    	
 
    	
 
    	
 
    
	
Initial Loan Principal Balance:
    	
 
    	
$
    	
2,737,242,150.82
    	
 
    	
100.00
    	
%
    	
 
    	
 
    	
 
    	
 
    

 

II.  NOTE AND LOAN PRINCIPAL BALANCE INFORMATION

 

	
 
    	
 
    	
Beginning of Period
    	
 
    	
Ending of Period
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Note Balance
    	
 
    	
Note Factor
    	
 
    	
Note Balance
    	
 
    	
Pool Factor
    	
 
    	
Principal Collected
    	
 
    
	
Class A Notes
    	
 
    	
$
    	
1,601,280,000.00
    	
 
    	
1.0000000
    	
 
    	
$
    	
—
    	
 
    	
—
    	
 
    	
$
    	
—
    	
 
    
	
Class B Notes
    	
 
    	
$
    	
427,000,000.00
    	
 
    	
1.0000000
    	
 
    	
$
    	
—
    	
 
    	
—
    	
 
    	
$
    	
—
    	
 
    
	
Class C Notes
    	
 
    	
$
    	
331,200,000.00
    	
 
    	
1.0000000
    	
 
    	
$
    	
—
    	
 
    	
—
    	
 
    	
$
    	
—
    	
 
    
	
Class D Notes
    	
 
    	
$
    	
199,810,000.00
    	
 
    	
1.0000000
    	
 
    	
$
    	
—
    	
 
    	
—
    	
 
    	
$
    	
—
    	
 
    
	
Class E Notes
    	
 
    	
$
    	
61,580,000.00
    	
 
    	
1.0000000
    	
 
    	
$
    	
—
    	
 
    	
—
    	
 
    	
$
    	
—
    	
 
    
	
Aggregate Note Principal Balance
    	
 
    	
$
    	
2,028,280,000.00
    	
 
    	
0.7738957
    	
 
    	
$
    	
—
    	
 
    	
—
    	
 
    	
$
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Pool Information
    	
 
    	
Beginning of Period
    	
 
    	
Ending of Period
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Weighted Avg. Coupon (WAC)
    	
 
    	
18.09
    	
%
    	
0.00
    	
%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Loan Principal Balance:
    	
 
    	
$
    	
2,737,242,150.82
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Number of Loans
    	
 
    	
295,633
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Performing Balance
    	
 
    	
 
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Advance Rate Cap
    	
 
    	
 
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
																

 

III.  LOAN PRINCIPAL BALANCE

 

	
Beginning Loan Principal Balance
    	
 
    	
$
    	
2,737,242,150.82
    	
 
    
	
Principal Collections (Scheduled Principal and   Prepayments)
    	
 
    	
$
    	
(100,000,000.00
    	
)
    
	
Charged-Off Loans
    	
 
    	
$
    	
—
    	
 
    
	
Advances
    	
 
    	
$
    	
—
    	
 
    
	
Other Customer Charges Net Increase / (Decrease)
    	
 
    	
$
    	
—
    	
 
    
	
Ending Loan Principal Balance Prior to Payment   Waterfall
    	
 
    	
$
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Reassigned Loans
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Ending Loan Principal Balance
    	
 
    	
$
    	
—
    	
 
    

 

IV.  COLLECTIONS

 

	
Principal:
    	
 
    	
 
    	
 
    
	
Principal Collections
    	
 
    	
$
    	
—
    	
 
    
	
Advances
    	
 
    	
$
    	
—
    	
 
    
	
Recoveries/Liquidation Proceeds
    	
 
    	
$
    	
—
    	
 
    
	
Total Principal Collections
    	
 
    	
$
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Interest:
    	
 
    	
 
    	
 
    
	
Interest Collections
    	
 
    	
$
    	
—
    	
 
    
	
Total Interest Collections
    	
 
    	
$
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Collection Account Interest
    	
 
    	
$
    	
—
    	
 
    
	
Principal Distribution Account Interest
    	
 
    	
$
    	
—
    	
 
    
	
Advance Reserve Account Interest
    	
 
    	
$
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Advance Reserve Draw Amount
    	
 
    	
$
    	
—
    	
 
    
	
Reserve Account
    	
 
    	
$
    	
13,686,210.75
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Principal Distribution Account Draw Amount
    	
 
    	
$
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total Collections
    	
 
    	
$
    	
13,686,210.75
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total Gross Collections
    	
 
    	
$
    	
13,686,210.75
    	
 
    
	
Collections Retained by Servicer
    	
 
    	
$
    	
—
    	
 
    
	
Total Net Collections
    	
 
    	
$
    	
13,686,210.75
    	
 
    

 

 

V.  DISTRIBUTIONS

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
Calculated Amount
    	
 
    	
Amount Paid
    	
 
    	
Shortfall
    	
 
    	
Carryover Shortfall
    	
 
    	
Remaining Available Funds
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
1
    	
Indenture   Trustee/Note Registrar/Back-up Servicer Expense/ Loan Trustee/ Custodial Fee
    	
 
    	
 
    	
 
    	
$
    	
3,291.67
    	
 
    	
$
    	
3,291.67
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
13,682,919.08
    	
 
    
	
2
    	
Back-up   Servicing Fee and Servicing Transition Costs 
    	
 
    	
0.025
    	
%
    	
$
    	
57,025.88
    	
 
    	
$
    	
57,025.88
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
13,625,893.21
    	
 
    
	
3
    	
Servicing   Fee/ Administration Fee 
    	
 
    	
2.25
    	
%
    	
$
    	
5,133,995.70
    	
 
    	
$
    	
5,133,995.70
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
8,491,897.51
    	
 
    
	
4
    	
Fund   the Advance Reserve Account
    	
 
    	
 
    	
 
    	
$
    	
5,000,000.00
    	
 
    	
$
    	
5,000,000.00
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
3,491,897.51
    	
 
    
	
5
    	
Class A   Monthly Interest Amount
    	
 
    	
 
    	
 
    	
$
    	
3,602,880.00
    	
 
    	
$
    	
3,602,880.00
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
(110,982.49
    	
)
    
	
6
    	
First   Priority Principal Payment
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
7
    	
Class B   Monthly Senior Interest Amount
    	
 
    	
 
    	
 
    	
$
    	
1,640,391.67
    	
 
    	
$
    	
1,640,391.67
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
(1,751,374.16
    	
)
    
	
8
    	
Second   Priority Principal Payment
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
9
    	
Class B   Subordinate Interest Amount
    	
 
    	
 
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
(1,751,374.16
    	
)
    
	
10
    	
Class C   Monthly Interest Amount
    	
 
    	
 
    	
 
    	
$
    	
1,542,840.00
    	
 
    	
$
    	
1,542,840.00
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
(3,294,214.16
    	
)
    
	
11
    	
Third   Priority Principal Payment
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
12
    	
Class C   Subordinate Interest Amount
    	
 
    	
 
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
(3,294,214.16
    	
)
    
	
13
    	
Class D   Monthly Senior Interest Amount
    	
 
    	
 
    	
 
    	
$
    	
1,135,586.83
    	
 
    	
$
    	
1,135,586.83
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
14
    	
Fourth   Priority Principal Payment
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
15
    	
Class D   Subordinate Interest Amount
    	
 
    	
 
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
16
    	
Class E   Monthly Interest Amount
    	
 
    	
 
    	
 
    	
$
    	
349,979.67
    	
 
    	
$
    	
349,979.67
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
17
    	
Fifth   Priority Principal Payment
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
18
    	
Class E   Subordinate Interest Amount
    	
 
    	
 
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
19
    	
Fund   the Reserve Account
    	
 
    	
 
    	
 
    	
$
    	
13,686,210.75
    	
 
    	
$
    	
13,686,210.75
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
20
    	
Regular   Principal Payment Amount
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
21
    	
Fees &   Out of pocket expenses not paid pursuant to 1 above
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
22
    	
Co-Issuers   Obligations
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
23
    	
To   Allocation (SLFS) Agent-payment to Co-Issuers
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Total
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
32,152,202.17
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
VI. ADVANCE RESERVE ACCOUNT  
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Beginning   Period Advance Reserve Account Amount
    	
 
    	
$
    	
5,000,000.00
    	
 
    
	
Advance   Reserve Draw Amount
    	
 
    	
$
    	
—
    	
 
    
	
Advance   Reserve Shortfall Amount
    	
 
    	
$
    	
—
    	
 
    
	
Advance   Reserve Deposit Amount
    	
 
    	
$
    	
—
    	
 
    
	
Ending   Period Advance Reserve Account Amount
    	
 
    	
$
    	
—
    	
 
    
	
Change   in Advance Reserve Account Balance
    	
 
    	
$
    	
—
    	
 
    
	
Required   Advance Reserve Account Amount 
    	
 
    	
$
    	
5,000,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
VII. RESERVE ACCOUNT
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Beginning   Period Reserve Account Amount
    	
 
    	
$
    	
13,686,210.75
    	
 
    
	
Reserve   Draw Amount
    	
 
    	
$
    	
—
    	
 
    
	
Reserve   Deposit Amount
    	
 
    	
$
    	
—
    	
 
    
	
Ending   Period Reserve Account Amount
    	
 
    	
$
    	
—
    	
 
    
	
Change   in Reserve Account Balance
    	
 
    	
$
    	
(13,686,210.75
    	
)
    
	
Required   Reserve Account Amount equal to the greater of .5% aggregate Loan Principal   Balance and .15% of the aggregate Loan Principal Balance as of the cut-Off   Date
    	
 
    	
$
    	
13,686,210.75
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
VIII.  PRINCIPAL DISTRIBUTION ACCOUNT
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Beginning   Period Principal Distribution Account Amount
    	
 
    	
$
    	
—
    	
 
    
	
Principal   Distribution Draw Amount
    	
 
    	
$
    	
—
    	
 
    
	
Ending   Principal Distribution Account Amount Prior to Payment Waterfall
    	
 
    	
$
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Distribution   to Noteholders
    	
 
    	
#REF!
    	
 
    
	
Class A   Noteholders
    	
 
    	
#REF!
    	
 
    
	
Class B   Noteholders
    	
 
    	
#REF!
    	
 
    
	
Class C   Noteholders
    	
 
    	
$
    	
—
    	
 
    
	
Class D   Noteholders
    	
 
    	
$
    	
—
    	
 
    
	
Class E   Noteholders
    	
 
    	
$
    	
—
    	
 
    
	
Ending   Period Principal Distribution Account Amount
    	
 
    	
#REF!
    	
 
    
	
Change   in Principal Distribution Account Amount
    	
 
    	
#REF!
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IX.  OVERCOLLATERALIZATION
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Required   Overcollateralization Amount
    	
 
    	
$
    	
68,431,053.77
    	
 
    
	
Total   Overcollateralization Amount 
    	
 
    	
$
    	
—
    	
 
    

 

 

X.  DELINQUENCY AND NET LOSS ACTIVITY

 

	
 
    	
 
    	
Number of Loans
    	
 
    	
Number of Loans %
    	
 
    	
Loan Prin Balance
    	
 
    	
Loan Prin Balance %
    	
 
    
	
Current
    	
 
    	
0
    	
 
    	
#DIV/0!
    	
 
    	
$
    	
—
    	
 
    	
#DIV/0!
    	
 
    
	
1 - 29 Days
    	
 
    	
0
    	
 
    	
#DIV/0!
    	
 
    	
$
    	
—
    	
 
    	
#DIV/0!
    	
 
    
	
30 - 59 Days
    	
 
    	
0
    	
 
    	
#DIV/0!
    	
 
    	
$
    	
—
    	
 
    	
#DIV/0!
    	
 
    
	
60 - 89 Days
    	
 
    	
0
    	
 
    	
#DIV/0!
    	
 
    	
$
    	
—
    	
 
    	
#DIV/0!
    	
 
    
	
90 + Days
    	
 
    	
0
    	
 
    	
#DIV/0!
    	
 
    	
$
    	
—
    	
 
    	
#DIV/0!
    	
 
    
	
 
    	
 
    	
0
    	
 
    	
#DIV/0!
    	
 
    	
$
    	
—
    	
 
    	
#DIV/0!
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total Delinquent Loans
    	
 
    	
0
    	
 
    	
#DIV/0!
    	
 
    	
0.00
    	
 
    	
#DIV/0!
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Charged-Offs Loans
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Current Period Charged-Off Loans
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Beginning Period Loan Principal Balance 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
2,737,242,150.82
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Cumulative Net Loss Percentage
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
0.00
    	
%
    

 

XII.  PORTFOLIO COMPOSITION

 

	
 
    	
 
    	
Beginning of Period
    	
 
    	
Ending of Period
    	
 
    
	
 
    	
 
    	
Balance
    	
 
    	
WAC
    	
 
    	
Balance
    	
 
    	
WAC
    	
 
    
	
PUL Revolving
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
PUL Closed-End
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
PHL Revolving
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
PHL Closed-End
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

EXHIBIT D

 

RULE 15Ga-1 INFORMATION

 

Reporting Period:        

 

o            Check here if nothing to report.

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Servicer
    	
 
    	
Outstanding
    	
 
    	
 
    	
 
    	
Indicate Repurchase Activity During the Reporting Period by Checkmark or by Date
   Reference (as applicable)
    	
 
    
	
Asset
   Class
    	
 
    	
Shelf
    	
 
    	
Series
   Name
    	
 
    	
CIK
    	
 
    	
Originator
    	
 
    	
Loan
   No.
    	
 
    	
Loan
   No.
    	
 
    	
Principal
   Balance
    	
 
    	
Repurchase
   Type
    	
 
    	
Subject to
   Demand
    	
 
    	
Repurchased
   or Replaced
    	
 
    	
Repurchase
   Pending
    	
 
    	
Demand
   in Dispute
    	
 
    	
Demand
   Withdrawn
    	
 
    	
Demand
   Rejected
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Terms and Definitions:

 

NOTE: Any date included on this report is subject to the descriptions below.  Dates referenced on this report for this Transaction where the Servicer is not the Repurchase Enforcer (as defined below), availability of such information may be dependent upon information received from other parties.

 

References to “Repurchaser” shall mean the party obligated under the Transaction Documents to repurchase a Loan.  References to “Repurchase Enforcer” shall mean the party authorized under the Transaction Documents to enforce the obligations of any Repurchaser.

 

Outstanding Principal Balance:  For purposes of this report, the Outstanding Principal Balance of a Loan in this Transaction equals the remaining outstanding principal balance of the Loan reflected on the distribution or payment reports at the end of the related reporting period, or if the Loan has been liquidated prior to the end of the related reporting period, the final outstanding principal balance of the Loan reflected on the distribution or payment reports prior to liquidation.

 

D-1

 

Subject to Demand:  The date when a demand for repurchase is identified and coded by the Servicer or Indenture Trustee as a repurchase related request.

 

Repurchased or Replaced:  The date when a Loan is repurchased or replaced.  To the extent such date is unavailable, the date upon which the Servicer or Indenture Trustee obtained actual knowledge a Loan has been repurchased or replaced.

 

Repurchase Pending:  A Loan is identified as “Repurchase Pending” when a demand notice is sent by the Indenture Trustee, as Repurchase Enforcer, to the Repurchaser.  A Loan remains in this category until (i) a Loan has been Repurchased, (ii) a request is determined to be a “Demand in Dispute,” (iii) a request is determined to be a “Demand Withdrawn,” or (iv) a request is determined to be a “Demand Rejected.”

 

With respect to the Servicer only, a Loan is identified as “Repurchase Pending” on the date (y) the Servicer sends notice of any request for repurchase to the related Repurchase Enforcer, or (z) the Servicer receives notice of a repurchase request but determines it is not required to take further action regarding such request pursuant to its obligations under the applicable Transaction Documents.  The Loan will remain in this category until the Servicer receives actual knowledge from the related Repurchase Enforcer, Repurchaser, or other party, that the repurchase request should be changed to “Demand in Dispute”, “Demand Withdrawn”, “Demand Rejected”, or “Repurchased.”

 

Demand in Dispute: Occurs (i) when a response is received from the Repurchaser which refutes a repurchase request, or (ii) upon the expiration of any applicable cure period.

 

Demand Withdrawn:  The date when a previously submitted repurchase request is withdrawn by the original requesting party.  To the extent such date is not available, the date when the Servicer or the Indenture Trustee receives actual knowledge of any such withdrawal.

 

Demand Rejected: The date when the Indenture Trustee, as Repurchase Enforcer, has determined that it will no longer pursue enforcement of a previously submitted repurchase request.  To the extent such date is not otherwise available, the date when the Servicer receives actual knowledge from the Indenture Trustee, as Repurchase Enforcer that it has determined not to pursue a repurchase request.

 

D-2

 

SCHEDULE I

 

DEFINITIONS SCHEDULE

 

Schedule I - 1

 

PART A - DEFINITIONS SCHEDULE

 

“Act” or “Act of Noteholder” shall have the meaning specified in Section 11.03(a) of the Indenture.

 

“Adjusted Loan Principal Balance” shall mean the aggregate Loan Principal Balance of all Loans, excluding Charged-Off Loans.

 

“Administration Agreement” shall mean the Administration Agreement dated as of October 3, 2014, among the Co-Issuers and the Administrator.

 

“Administration Fee” shall mean a fee payable to the Administrator on each Payment Date for acting as Administrator on behalf of the Co-Issuers pursuant to the Administration Agreement equal to one-twelfth (1/12th) of $20,000.

 

“Administrator” shall mean the Person acting in such capacity from time to time pursuant to and in accordance with the Administration Agreement, which shall initially be Springleaf.

 

“Advance Rate Cap” for any Payment Date is the amount equal to 50% of the Performing Collateral Balance as of the end of the related Collection Period.

 

“Advance Reserve Account” shall have the meaning set forth in Section 8.02(a)(iv) of the Indenture.

 

“Advance Reserve Account Shortfall Amount” shall mean, for any Payment Date, the excess of (x) the Required Advance Reserve Amount over (y) the amount on deposit in the Advance Reserve Account as of the Monthly Determination Date with respect to such Payment Date.

 

“Adverse Effect” shall mean, with respect to any action, that such action will (a) result in the occurrence of an Event of Default or (b) materially and adversely affect the amount or timing of distributions to be made to the Noteholders for any Class pursuant to the Servicing Agreement or the Indenture.

 

“Affiliate” of any specified Person shall mean any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition, “control” when used with respect to any specified Person shall mean 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.

 

“Aggregate Note Principal Balance” shall mean, as of any date of determination, the sum of the aggregate Class A Note Balance, the aggregate Class B Note Balance, the aggregate Class C Note Balance, the aggregate Class D Note Balance and the aggregate Class E Note Balance, in each case as of such date of determination.

 

“Allocation Agent” shall mean Springleaf.

 

 

“Applicable Purchase Percentage” shall mean at any time (i) with respect to any Loan that was not a Non-Performing Loan as of the Cut-Off Date, 100% and (ii) with respect to any Loan that was a Non-Performing Loan as of the Cut-Off Date, 70%.  For avoidance of doubt, the Applicable Purchase Percentages set forth in clauses (i) and (ii) of this definition are determined for each Loan as of the Closing Date and such Applicable Purchase Percentages will not change for any Loan in the event that any Loan becomes a Non-Performing Loan after the Closing Date.

 

“Asset Redemption Price” shall have the meaning specified in Section 8.07(b) of the Indenture.

 

“Asset Repurchase Activity” shall mean any written request, demand, or claim, or any response or rebuttal to such request, demand, or claim, or other activity relating to the repurchase of a Loan.

 

“Authorized Officer” shall mean:

 

(a)                                 with respect to any Co-Issuer, any officer of the Co-Issuer, or of any member or manager thereof, who is authorized to act for the Co-Issuer and who is identified on the list of Authorized Officers, containing the specimen signature of each such Person, delivered by the Co-Issuer, or by the Administrator on its behalf, to the Indenture Trustee and the Paying Agent on the Closing Date (as such list may be modified or supplemented from time to time thereafter) and any officer of the Administrator who is authorized to act for the Administrator in matters relating to the Co-Issuers and who is identified on the list of Authorized Officers (containing the specimen signatures of such officers) delivered by the Administrator to the Indenture Trustee and the Paying Agent on the Closing Date (as such list may be modified or supplemented from time to time thereafter);

 

(b)                                 with respect to the Servicer, any Servicing Officer;

 

(c)                                  with respect to a Seller, any Vice President or more senior officer; and

 

(d)                                 with respect to the Indenture Trustee or the Paying Agent, any Responsible Officer.

 

“Available Funds” shall mean for any Payment Date, the Collections received in the Collection Account during the Collection Period relating to such Payment Date.

 

“Back-up Servicer” shall mean, initially, Wells Fargo Bank, N.A., and at any other time, the Person then acting as “Back-up Servicer” pursuant to and in accordance with the Back-up Servicing Agreement.

 

“Back-up Servicing Agreement” shall mean the Back-up Servicing Agreement dated as of October 3, 2014, as amended, among the Co-Issuers, the Loan Trustees, the Servicer, the Indenture Trustee and the Back-up Servicer, pursuant to which the Back-up Servicer has agreed to perform the back-up servicing duties specified therein for the benefit of the Co-Issuers, the Loan Trustees and the Noteholders.

 

 

“Back-up Servicing Fee” shall mean, with respect to any Payment Date, an amount equal to the greater of (x) $15,000 and (y) the product of 0.025% per annum and the aggregate Loan Principal Balance of all Loans as of the first day of the related Collection Period (or, with respect to the first Payment Date, the Cut-Off Date).

 

“Beneficial Owner” shall mean with respect to any Book-Entry Note, the Person who is the beneficial owner of such 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 indirectly through a Clearing Agency Participant, in accordance with the rules of the Clearing Agency).

 

“Book-Entry Notes” shall mean security entitlements to the Notes, ownership and transfers of which shall be made through book entries by a Clearing Agency, as described in Section 2.04 of the Indenture.

 

“Business Day” shall mean any day other than (a) a Saturday or Sunday or (b) any other day on which banking institutions in New York, New York, Minneapolis, Minnesota or any other city in which the principal executive offices of the Servicer or the Co-Issuers, as the case may be, are located, are authorized or obligated by law, executive order or governmental decree to be closed or on which the fixed income markets in New York, New York are closed.

 

“Call Premium Rate” shall mean, with respect to the Class B Notes, 0.75%, with respect to the Class C Notes, 1.00% and with respect to the Class D Notes, 2.00%.

 

“Charged-Off Loan” shall mean any Loan (i) that was more than 180 days (or such longer period as permitted for certain Loans subject to charge-off exceptions in accordance with the Credit and Collection Policy) past due (as reflected on the records of the Servicer (or any applicable subservicer)), or (ii) the entire Loan Principal Balance of which has been charged-off in accordance with the Credit and Collection Policy; provided, that determinations of charged-off status with respect to any Loan shall be made as of the last day of the Collection Period in which the event or circumstance giving rise to the charged-off classification occurs.

 

“Class” shall mean the Class A, Class B, Class C, Class D or Class E Notes, as the context may require.

 

“Class A Interest Rate” shall mean 2.70% per annum.

 

“Class A Monthly Interest Amount” shall mean, for any Payment Date, the amount of interest accrued during the related Interest Period at the Class A Interest Rate on the Class A Note Balance as of the close of business on the immediately preceding Payment Date (calculated on the basis of a 360-day year consisting of twelve 30-day months).

 

“Class A Note” shall mean any one of the 2.70% Class A Notes executed by the Co-Issuers and authenticated by the Note Registrar, substantially in the applicable form attached as Exhibit A to the Indenture.

 

 

“Class A Note Balance” shall initially mean $1,601,280,000.00, and thereafter, shall equal the initial Class A Note Balance reduced by all previous payments to the Class A Noteholders in respect of the principal of the Class A Notes that have not been rescinded.

 

“Class B Interest Rate” shall mean 4.61% per annum.

 

“Class B Monthly Interest Amount” shall mean, for any Payment Date, the amount of interest accrued during the related Interest Period at the Class B Interest Rate on the Class B Note Balance as of the close of business on the immediately preceding Payment Date (calculated on the basis of a 360-day year consisting of twelve 30-day months).

 

“Class B Note” shall mean any one of the 4.61% Class B Notes executed by the Co-Issuers and authenticated by the Note Registrar, substantially in the applicable form attached as Exhibit A to the Indenture.

 

“Class B Note Balance” shall initially mean $427,000,000.00, and thereafter, shall equal the initial Class B Note Balance reduced by all previous payments to the Class B Noteholders in respect of the principal of the Class B Notes that have not been rescinded.

 

“Class B Senior Interest Amount” for any Payment Date, shall mean the lesser of (x) the Class B Monthly Interest Amount for such Payment Date and (y) an amount equal to the product of (a) one-twelfth (1/12th) of the Class B Interest Rate and (b) the excess, if any of (i) the Adjusted Loan Principal Balance as of the end of the Collection Period immediately preceding the related Collection Period, over (ii) the Class A Note Balance as of the close of business on the immediately preceding Payment Date.

 

“Class B Subordinated Interest Amount” for any Payment Date, shall mean the excess of (x) the Class B Monthly Interest Amount for such Payment Date over (y) the Class B Senior Interest Amount for such Payment Date.

 

“Class C Interest Rate” shall mean 5.59% per annum.

 

“Class C Monthly Interest Amount” shall mean, for any Payment Date, the amount of interest accrued during the related Interest Period at the Class C Interest Rate on the Class C Note Balance as of the close of business on the immediately preceding Payment Date (calculated on the basis of a 360-day year consisting of twelve 30-day months).

 

“Class C Note” shall mean any one of the 5.59% Class C Notes executed by the Co-Issuers and authenticated by the Note Registrar, substantially in the applicable form attached as Exhibit A to the Indenture.

 

“Class C Note Balance” shall initially mean $331,200,000.00, and thereafter, shall equal the initial Class C Note Balance reduced by all previous payments to the Class C Noteholders in respect of the principal of the Class C Notes that have not been rescinded.

 

“Class C Senior Interest Amount” for any Payment Date, shall mean the lesser of (x) the Class C Monthly Interest Amount for such Payment Date and (y) an amount equal to the product of (a) one-twelfth (1/12th) of the Class C Interest Rate and (b) the excess, if any of (i) the 

 

 

Adjusted Loan Principal Balance as of the end of the Collection Period immediately preceding the related Collection Period, over (ii) the sum of the Class A Note Balance and the Class B Note Balance as of the close of business on the immediately preceding Payment Date.

 

“Class C Subordinated Interest Amount” for any Payment Date, shall mean be the excess of (x) the Class C Monthly Interest Amount for such Payment Date over (y) the Class C Senior Interest Amount for such Payment Date.

 

“Class D Interest Rate” shall mean 6.82% per annum.

 

“Class D Monthly Interest Amount” shall mean, for any Payment Date, the amount of interest accrued during the related Interest Period at the Class D Interest Rate on the Class D Note Balance as of the close of business on the immediately preceding Payment Date (calculated on the basis of a 360-day year consisting of twelve 30-day months).

 

“Class D Note” shall mean any one of the 6.82% Class D Notes executed by the Co-Issuers and authenticated by the Note Registrar, substantially in the applicable form attached as Exhibit A to the Indenture.

 

“Class D Note Balance” shall initially mean $199,810,000.00, and thereafter, shall equal the initial Class D Note Balance reduced by all previous payments to the Class D Noteholders in respect of the principal of the Class D Notes that have not been rescinded.

 

“Class D Senior Interest Amount” for any Payment Date, shall mean the lesser of (x) the Class D Monthly Interest Amount for such Payment Date and (y) an amount equal to the product of (a) one-twelfth (1/12th) of the Class D Interest Rate and (b) the excess, if any of (i) the Adjusted Loan Principal Balance as of the end of the Collection Period immediately preceding the related Collection Period, over (ii) the sum of the Class A Note Balance, the Class B Note Balance and the Class C Note Balance as of the close of business on the immediately preceding Payment Date.

 

“Class D Subordinated Interest Amount” for any Payment Date, shall mean the excess of (x) the Class D Monthly Interest Amount for such Payment Date over (y) the Class D Senior Interest Amount for such Payment Date.

 

“Class E Interest Rate” shall mean 6.82% per annum.

 

“Class E Monthly Interest Amount” shall mean, for any Payment Date, the amount of interest accrued during the related Interest Period at the Class E Interest Rate on the Class E Note Balance as of the close of business on the immediately preceding Payment Date (calculated on the basis of a 360-day year consisting of twelve 30-day months).

 

“Class E Note” shall mean any one of the 6.82% Class E Notes executed by the Co-Issuers and authenticated by the Note Registrar, substantially in the applicable form attached as Exhibit A to the Indenture.

 

 

“Class E Note Balance” shall initially mean $61,580,000.00, and thereafter, shall equal the initial Class E Note Balance reduced by all previous payments to the Class E Noteholders in respect of the principal of the Class E Notes that have not been rescinded.

 

“Class E Senior Interest Amount” for any Payment Date, shall mean the lesser of (x) the Class E Monthly Interest Amount for such Payment Date and (y) an amount equal to the product of (a) one-twelfth (1/12th) of the Class E Interest Rate and (b) the excess, if any of (i) the Adjusted Loan Principal Balance as of the end of the Collection Period immediately preceding the related Collection Period, over (ii) the sum of the Class A Note Balance, the Class B Note Balance, the Class C Note Balance and the Class D Note Balance as of the close of business on the immediately preceding Payment Date.

 

“Class E Subordinated Interest Amount” for any Payment Date, shall mean the excess of (x) the Class E Monthly Interest Amount for such Payment Date over (y) the Class E Senior Interest Amount for such Payment Date.

 

“Clearing Agency” shall mean an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act and serving as a clearing agency for a Series or Class of Book-Entry Notes.

 

“Clearing Agency Participant” shall mean 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.

 

“Clearstream” or “Clearstream, Luxembourg” shall mean Clearstream Banking, société anonyme, a professional depository incorporated under the laws of Luxembourg, and its successors.

 

“Closed End Loan” shall mean any Loan (other than a Non-Performing Loan) with respect to which the related Loan Obligor is not permitted to make additional draws on such Loan.

 

“Closing Date” shall mean October 3, 2014.

 

“Co-Issuer” shall mean each of SpringCastle America Funding, LLC, a Delaware limited liability company, SpringCastle Credit Funding, LLC, a Delaware limited liability company and SpringCastle Finance Funding, LLC, a Delaware limited liability company.

 

“Co-Issuer LLC Agreements” shall mean the Limited Liability Company Agreements of each of the Co-Issuers, as amended by Amendment No. 1 thereto, dated as of October 3, 2014.

 

“Collateral Documents” shall mean the Mortgages, security agreements, assignments, collateral assignments and any other documents and instruments from time to time executed and delivered pursuant to the Loan Documents for PHLs to grant, perfect and continue a security interest in the Loan Collateral, and any documents or instruments amending or supplementing the same.

 

 

“Collection Account” shall have the meaning specified in Section 8.02(a)(i) of the Indenture.

 

“Collection Period” shall mean, with respect to each Payment Date, the preceding calendar month.  The initial Collection Period will commence on the day after the Cut-Off Date and end on October 31, 2014.

 

“Collections” shall mean all amounts collected on or in respect of the Loans on and after the Closing Date, including scheduled loan payments (whether received in whole or in part, whether related to a current, future or prior due date, whether paid voluntarily by a Loan Obligor or received in connection with the realization of the amounts due and to become due under any defaulted Loan or upon the sale of any property acquired in respect thereof), all partial prepayments, all full prepayments, recoveries, or any other form of payment.  The term “Collections” shall not include Servicer Collection Charges, Credit Insurance Fees or premium payments with respect to Credit Insurance.

 

“Convenience Check” shall have the meaning specified in Section 2.11(c) of the Servicing Agreement.

 

“Corporate Trust Office” shall have the meaning (a) when used in respect of the Paying Agent and the Note Registrar, Wells Fargo Center, Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attention: Corporate Trust Services—SpringCastle Funding Asset-Backed Notes, and (b) when used in respect of the Indenture Trustee, U.S. Bank National Association, 60 Livingston Ave., EP-MN-WS3D, St. Paul, Minnesota 55107, Attn:  Structured Finance/SpringCastle 2014-A; Telephone: (651) 466-5049; Facsimile Number: (651) 466-7363.

 

“Credit and Collection Policy” shall mean the Servicer’s customary and usual servicing and collection procedures in effect from time to time for servicing consumer loans comparable to the Loans in the jurisdiction where either the applicable Loan Obligor resides or, in the case of a mortgage loan, the mortgaged property is located, subject to the Required Servicing Protocols.  If the Back-up Servicer is appointed as Successor Servicer, “Credit and Collection Policy” shall mean the customary and usual servicing, administration and collection practices and procedures used by servicing companies of comparable experience to the Successor Servicer for servicing consumer loans comparable to the Loans which the Successor Servicer services for its own account, subject to the Required Servicing Protocols.

 

“Credit Insurance” shall mean, with respect to any Loan, any credit life, credit disability, credit property and/or credit involuntary unemployment insurance policy in effect that provides benefits to the holder of the related Loan Agreement and/or the related Loan Obligor, including all riders and endorsements thereto.

 

“Credit Insurance ASA” shall mean any credit insurance administrative services agreement or other agreement entered into by any Co-Issuer or any of its Affiliates with a provider of Credit Insurance pursuant to which such Co-Issuer or Affiliate agrees to administer such Credit Insurance and which has been approved by the Servicer.

 

 

“Credit Insurance Fees” shall mean the fees due to a Co-Issuer or any Affiliate of a Co-Issuer under any Credit Insurance ASA in consideration for such Co-Issuer’s or Affiliate’s performance of its administrative obligations thereunder.

 

“Cumulative Net Loss” shall mean with respect to any Collection Period, shall mean a fraction, expressed as a percentage, (x) the numerator of which is (i) the aggregate Loan Principal Balance of all Loans that became Charged-Off Loans since the Cut-Off Date, minus (ii) all Recoveries received since the Cut-Off Date, and (y) the denominator of which is the aggregate Loan Principal Balance of all Loans as of the Cut-Off Date.

 

“Custodial Agreement” shall mean the Custodial Agreement dated as of October 3, 2014, as amended, among the Co-Issuers, the Loan Trustees, the Servicer and the Custodian, pursuant to which the Custodian has agreed to perform custodial duties specified therein for the benefit of the Co-Issuers and the Noteholders.

 

“Custodian” shall mean U.S. Bank National Association, in its capacity as custodian under the Custodial Agreement, its successors in interest and any successor custodian under the Custodial Agreement.

 

“Cut-Off Date” shall mean August 31, 2014.

 

“Debtor Relief Laws” shall mean (i) the United States Bankruptcy Code and (ii) all other applicable liquidation, conservatorship, bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization, suspension of payments, adjustment of debt, marshalling of assets or similar debtor relief laws of the United States, any state or any foreign country from time to time in effect affecting the rights of creditors generally.

 

“Definitive Notes” shall mean, for any Class, the Notes issued in fully registered, certificated form issued to the owners of such Class or their nominee.

 

“Delaware Secretary of State” shall mean the Office of the Secretary of State of the State of Delaware.

 

“Delinquent Loan” shall mean a Loan which is more than 29 days past due as reflected in the records of the Servicer (or any subservicer with respect to the Servicer), as applicable, in accordance with the Credit and Collection Policy.

 

“Demand” shall have the meaning specified in Section 6.15(a) of the Indenture.

 

“Directing Holder” shall mean (i) so long as the Indenture shall not have terminated, the Required Noteholders, and (ii) in all other instances, the Co-Issuers acting jointly.

 

“Distribution Compliance Period” shall have the meaning specified in Section 2.05(c) of the Indenture.

 

“Dollars”, “$” or “U.S. $” shall mean (a) United States dollars or (b) denominated in United States dollars.

 

 

“Eligible Account” shall mean either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States or any one of the states thereof, including the District of Columbia (or any domestic branch of a foreign bank), and acting as a trustee for funds deposited in such account, so long as any of the unsecured, unguaranteed senior debt securities of such depository institution shall have a credit rating from each of Moody’s and Standard & Poor’s in one of its generic credit rating categories that signifies “BBB” / “Baa2” or higher.

 

“Eligible Institution” shall mean a depository institution organized under the laws of the United States of America or any one of the states thereof, including the District of Columbia (or any domestic branch of a foreign bank), which at all times has (a)(i) a long-term unsecured debt rating of “Baa1” or better by Moody’s and (ii) a certificate of deposit rating of “P-2” by Moody’s and (b), either (x) a long-term unsecured debt rating of “BBB+” by Standard & Poor’s or (y) a certificate of deposit rating of “A-2” by Standard & Poor’s.  If so qualified, the Indenture Trustee, the Paying Agent or the Administrator may be considered an Eligible Institution for the purposes of this definition.

 

“Eligible Investments” shall mean book-entry securities, negotiable instruments or securities represented by instruments in bearer or registered form which have maturities of no later than the Business Day immediately prior to the next succeeding Payment Date (unless payable on demand, in which case such securities or instruments may mature on such next succeeding Payment Date) and which evidence:

 

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

 

(b)                                 demand deposits, time deposits or certificates of deposit (having original maturities of no more than 365 days) of depository institutions or trust companies incorporated under the laws of the United States of America or any state thereof (or domestic branches of foreign banks) and subject to supervision and examination by federal or state banking or depository institution authorities; provided that at the time of the Co-Issuers’ investment or contractual commitment to invest therein, the short-term debt rating of such depository institution or trust company will be rated “A-2” or higher by any Rating Agency;

 

(c)                                  commercial paper (having remaining maturities of no more than 30 days) having, at the time of the Co-Issuers’ investment or contractual commitment to invest therein, a rating not lower than “A-2” from any Rating Agency;

 

(d)                                 investments in money market funds rated “AA-mg” or higher by any Rating Agency or otherwise approved in writing by any Rating Agency;

 

(e)                                  demand deposits, time deposits and certificates of deposit which are fully insured by the Federal Deposit Insurance Corporation;

 

(f)                                   notes or bankers’ acceptances (having original maturities of no more than 365 days) issued by any depository institution or trust company referred to in (b) above; or

 

 

(g)                                  time deposits, other than as referred to in clause (e) above, with a Person (i) the commercial paper of which is rated “A-2” or higher by any Rating Agency or (ii) that has a long-term unsecured debt rating of “BBB+” or higher by any Rating Agency.

 

Eligible Investments may be purchased by or through the Paying Agent or any of its Affiliates.

 

“Eligible Servicer” shall mean the Indenture Trustee, Springleaf, the Back-up Servicer or an entity which, at the time of its appointment as Servicer, (i) (a) is either (x) the surviving Person of a merger or consolidation with, or the transferee of all or substantially all of the assets of, Springleaf in a transaction otherwise complying with Section 4.02 of the Servicing Agreement or (y) an Affiliate of Springleaf, (b) is servicing a portfolio of consumer loans, (c) is legally qualified (either directly or through a subservicer) and has the capacity to service and administer the Loans in accordance with the Servicing Agreement, (d) is reasonably qualified to use the software that is then being used to service the Loans or obtains the right to use or has its own software which is adequate to perform its duties under the Servicing Agreement, (e) has demonstrated the ability to service professionally and competently a portfolio of loans which are similar to the Loans in accordance with high standards of skill and care similar to the Servicing Standard and (f) is reasonably qualified to use the software that is then being used to service the Loans or obtains the right to use or has its own software which is adequate to perform its duties under the Servicing Agreement.

 

“Encumbrance” shall mean any security interest, mortgage, claim, charge (fixed or floating), deed of trust, pledge, hypothecation, assignment, deposit arrangement, equity interest, encumbrance, lien (statutory or other), preference, participation interest, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including any conditional sale or other title retention agreement, or any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the UCC or comparable law of any jurisdiction to evidence any of the foregoing; provided, however, that each of (1) the lien created in favor of the Co-Issuers under the Loan Purchase Agreements and (2) the lien created in favor of the Indenture Trustee under the Indenture shall not be deemed to constitute an Encumbrance.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

“Euroclear” shall mean the Euroclear System.

 

“Euroclear Operator” shall mean Euroclear Bank S.A./N.V., as operator of Euroclear, and its successor and assigns in such capacity.

 

“Event of Default” shall have the meaning specified in Section 5.02 of the Indenture.

 

“Evidence of Debt” shall mean, with respect to any Loan, each Loan Note, Loan Agreement or other agreement, instrument or record evidencing an obligation of the Loan Obligor to repay such Loan.

 

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

 

 

“Fees” shall mean any and all income, revenue, fees, expenses, charges or other monies that a servicer is entitled to receive, collect or retain in accordance with the terms of the Loan Documents or Applicable Law, including annual fees, late charge fees, bad check or insufficient funds fees, assumption fees, ACH fees and other similar fees and charges collected from or assessed against Loan Obligors to the extent payable to a servicer in accordance with the terms of the Loan Documents or applicable Law, but excluding any premiums, fees or other income related to Credit Insurance (other than any collection fees payable to a Portfolio Seller pursuant to any applicable Credit Insurance ASA).

 

“Fifth Priority Principal Payment” shall mean, for any Payment Date, (x) at any time prior to the occurrence of an Event of Default, an amount equal to the excess (if any) of (A) the sum of the Class A Note Balance, the Class B Note Balance, the Class C Note Balance and the Class D Note Balance as of the end of the related Collection Period minus the amount on deposit in the Principal Distribution Account (after giving effect to any allocations to the Principal Distribution Account pursuant to clauses (vi), (viii), (xi) and (xiv) of Section 8.06(a))  over (B) the Adjusted Loan Principal Balance as of the end of the related Collection Period and (y) at any time from and after the occurrence of an Event of Default or on or after the Stated Maturity Date in respect of the Class D Notes, the sum of the Class A Note Balance, the Class B Note Balance, the Class C Note Balance and the Class D Note Balance minus the amount on deposit in the Principal Distribution Account (after giving effect to any allocations to the Principal Distribution Account pursuant to clauses (vi), (viii), (xi) and (xiv) of Section 8.06(a)).

 

“First Priority Principal Payment” shall mean, for any Payment Date, (x) at any time prior to the occurrence of an Event of Default, an amount equal to the excess (if any) of (A) the Class A Note Balance as of the end of the related Collection Period over (B) the Adjusted Loan Principal Balance as of the end of the related Collection Period and (y) at any time from and after the occurrence of an Event of Default or on or after the Stated Maturity Date in respect of the Class A Notes, the Class A Note Balance.

 

“Force Majeure Event” shall mean an event that occurs as a result of an act of God, an act of the public enemy, acts of declared or undeclared war (including acts of terrorism), public disorder, rebellion, sabotage, epidemics, landslides, lightning, fire, hurricane, earthquakes, floods or similar causes.

 

“Forward Flow Agreements” shall mean: (a) that certain Account Purchase and Sale Agreement, dated December 20, 2012, by and among certain of the Sellers and Fortis Capital IV, LLC, as amended; (b) that certain Account Purchase and Sale Agreement, dated December 21, 2012, by and among certain of the Sellers and Atlantic Credit & Finance Special Finance Unit III, LLC, as amended; (c) that certain Purchase and Sale Agreement, dated as of December 17, 2012, by and among certain of the Sellers and Absolute Resolutions Corp., as amended; and (d) the Purchase and Servicing Agreement for Forward Flow Accounts, dated February 12, 2009, as amended, by and among HSBC Consumer Lending (USA) Inc., Portfolio Recovery Associates, LLC and PRA Receivables Management, LLC, as amended.

 

“Fourth Priority Principal Payment” shall mean, for any Payment Date, (x) at any time prior to the occurrence of an Event of Default, an amount equal to the excess (if any) of (A) the Aggregate Note Balance as of the end of the related Collection Period minus the amount on 

 

 

deposit in the Principal Distribution Account (after giving effect to any allocations to the Principal Distribution Account pursuant to clauses (vi), (viii) and (xi) of Section 8.06(a))  over (B) the Adjusted Loan Principal Balance as of the end of the related Collection Period and (y) at any time from and after the occurrence of an Event of Default or on or after the Stated Maturity Date in respect of the Class D Notes, the sum of the Class A Note Balance, the Class B Note Balance, the Class C Note Balance and the Class D Note Balance minus the amount on deposit in the Principal Distribution Account (after giving effect to any allocations to the Principal Distribution Account pursuant to clauses (vi), (viii) and (xi) of Section 8.06(a)).

 

“Global Note” shall have the meaning specified in Section 2.05(c) of the Indenture.

 

“Governmental Authority” shall mean any federal, state, municipal, national, local or other governmental department, court, commission, board, bureau, agency, intermediary, carrier or instrumentality or political subdivision thereof, or any entity or officer exercising executive, legislative, judicial, quasi-judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case, whether of the United States or a state, territory or possession thereof or the District of Columbia.

 

“Grant” shall mean to grant, bargain, sell, warrant, alienate, remise, demise, release, convey, assign, transfer, mortgage, pledge, grant a security interest in, create a right of set-off against, deposit, set over and confirm.  A Grant of any item of the Trust Estate shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including without limitation the immediate and continuing right to claim for, collect, receive and give receipt for principal and interest payments in respect of such item of the Trust Estate, and all other monies payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring any suit in equity, action at law or other judicial or administrative proceeding in the name of the granting party or otherwise, and generally to do and receive anything that the granting party may be entitled to do or receive thereunder or with respect thereto.

 

“HSBC” shall mean HSBC Bank and/or HSBC Finance Corporation, as the context may require.

 

“HSBC Finance” shall mean HSBC Finance Corporation, a Delaware corporation.

 

“HSBC Bank” shall mean HSBC Bank USA, National Association.

 

“HSBC Party” shall mean any Portfolio Seller and HSBC in its capacities as a party to the Portfolio Loan Purchase Agreement.

 

“Indenture” shall mean the Indenture, dated as of October 3, 2014, among the Co-Issuers, the Loan Trustees, the Indenture Trustee, the Paying Agent, the Note Registrar and the Servicer, as the same may be amended, supplemented or otherwise modified from time to time.

 

“Indenture Trustee” shall mean U.S. Bank National Association, in its capacity as indenture trustee under the Indenture, its successors in interest and any successor indenture trustee under the Indenture.

 

 

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

 

“Independent Manager” shall have the meaning specified in the respective Co-Issuer LLC Agreements.

 

“Initial Note Principal Balance” shall mean $2,620,870,000.00.

 

“Initial Purchasers” shall mean Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Suisse Securities (USA) LLC, Barclays Capital Inc. and Natixis Securities Americas LLC.

 

“Insolvency Event” with respect to any Person, shall occur if (i) such Person shall file a petition or commence a Proceeding (A) to take advantage of any Debtor Relief Law or (B) for the appointment of a trustee, conservator, receiver, liquidator, or similar official for or relating to such Person or all or substantially all of its property, or for the winding up or liquidation of its affairs, (ii) such Person shall consent or fail to object to any such petition filed or Proceeding commenced against or with respect to it or all or substantially all of its property, or any such petition or Proceeding shall not have been dismissed or stayed within sixty (60) days of its filing or commencement, or a court, agency, or other supervisory authority with jurisdiction shall have decreed or ordered relief with respect to any such petition or Proceeding, (iii) such Person shall admit in writing its inability to pay its debts generally as they become due, (iv) such Person shall make an assignment for the benefit of its creditors, (v) such Person shall voluntarily suspend payment of its obligations, or (vi) such Person shall take any action in furtherance of any of the foregoing.

 

“Interest Period” shall mean, with respect to any Payment Date, the period from and including the Payment Date immediately preceding such Payment Date to but excluding such Payment Date (or, in the case of the first Payment Date, the period from and including the Closing Date to but excluding such Payment Date).

 

“Interest Rate” shall mean, with respect to the Class A Notes, the Class A Interest Rate, with respect to the Class B Notes, the Class B Interest Rate, with respect to the Class C Notes, the Class C Interest Rate, with respect to the Class D Notes, the Class D Interest Rate and with respect to the Class E Notes, the Class E Interest Rate.

 

“Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Intra-Month Draw Advance” shall have the meaning specified in Section 2.01(c) of the Servicing Agreement.

 

“Investment Company Act” shall mean the Investment Company Act of 1940, as amended.

 

 

“Issuer Order” shall mean a written order or request signed in the name of the Co-Issuers by an Authorized Officer and delivered to the Indenture Trustee.

 

“Lien” shall mean, with respect to any property, any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, equity interest, encumbrance, lien (statutory or other), preference, participation interest, priority or other security agreement or preferential arrangement of any kind or nature whatsoever relating to that property, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC or comparable law of any jurisdiction to evidence any of the foregoing.

 

“Loan” shall mean each of the PULs and PHLs identified on the Loan Schedules.

 

“Loan Agreement” shall mean, with respect to any Loan, all promissory notes, installment sales contracts, loan agreements, or other agreements between the assignee of the applicable originator and the related Loan Obligor containing the terms and conditions applicable to such Loan and any applicable truth in lending disclosure statements related thereto, in each case, as amended and in effect from time to time, representative copies of which have been made available to the applicable Co-Issuer and will be delivered to the applicable Co-Issuer upon request.

 

“Loan Collateral” shall mean, with respect to any PHL, the residential real property and all other collateral securing repayment of such PHL.

 

“Loan Documents” shall mean, with respect to any Loan, any application, payment check, Evidence of Debt (including originals thereof, if any), Mortgage (including originals thereof, if any), Collateral Documents (if any), riders (including, if applicable, arbitration riders and home equity credit line revolving loan agreement riders), disclosures (including, if applicable, truth-in-lending disclosures, insurance disclosures, section 32 disclosures, high cost loan disclosures and state law disclosures), notices (including, if applicable, notices of right to cancel), HUD1A settlement statements (if any), good faith estimates (if any), revolving loan vouchers (if any) or other agreements and documents exclusively relating to such Loan, and any amendments or supplements thereto or modifications thereof, executed by the Loan Obligor or the Originator thereof in connection with such Loan.

 

“Loan File” shall mean, with respect to any Loan, an imaged or electronic file and/or a physical file containing all Loan Documents, Collateral Documents (if any) and all other documents, reports, billing statements, insurance certificates and material written notices exclusively relating to such Loan, the Loan Documents or the Collateral Documents (if any), in each case within the possession or control of the Seller.

 

“Loan Note” shall mean, with respect to any Loan, a promissory note or notes or other evidence of debt with respect to such Loan, together with any assignment, reinstatement, extension, endorsement or modification thereof.

 

“Loan Obligor” shall mean any maker, co-maker, guarantor, or other obligor with respect to a Loan.  In respect of each Loan, if there is more than one Loan Obligor (husband and wife, 

 

 

for example), references herein to Loan Obligor shall mean any or all of such Loan Obligors, as the context may require.

 

“Loan Payment” shall mean, with respect to any Loan, the amount to be paid by the Loan Obligor in accordance with the terms of (a) the related Evidence of Debt, (b) with respect to any Loan for which the Originator or its Affiliates has engaged a collection agent, the ledger maintained by such collection agent or (c) with respect to any Loan for which the related Loan Obligor is the debtor in any bankruptcy proceeding, the ledger maintained by the applicable bankruptcy servicer; provided, that such amount (i) shall include, with respect to any Loan that is an open-end line of credit, the amount to be paid in respect of Credit Insurance premium advances made by the Originator thereof to the applicable insurer on behalf of the related Loan Obligor, (ii) shall include amounts to be paid to the Originator thereof as beneficiary on Credit Insurance claims and (iii) shall not include Fees and, except as set forth above, any premiums, fees and other income related to Credit Insurance.

 

“Loan Principal Balance” shall mean as of any determination date with respect to any Loan, the sum of (i) the unpaid principal balance of such Loan at such time, plus (ii) the aggregate unpaid amount of any forborne interest charges with respect to such Loan at such time. The Loan Principal Balance of any Loan (other than a Charged-Off Loan)  a portion of which has been charged-off in accordance with the Credit and Collection Policy shall be reduced by the portion so charged-off.

 

“Loan Purchase Agreements” shall mean each Loan Purchase Agreement, dated as of April 1, 2013, among a Seller, a Seller Loan Trustee with respect to such Seller, a Co-Issuer and a Loan Trustee with respect to such Co-Issuer, as amended by Amendment No. 1 thereto, dated as of October 3, 2014.

 

“Loan Schedule” shall mean a complete schedule prepared by (or on behalf of) a Seller identifying all Loans sold by such Seller (and the related Seller Loan Trustee) to the related Co-Issuer on the Closing Date, which is attached as Schedule IA to each of the applicable Loan Trust Agreement and the applicable Loan Purchase Agreement.  The Loan Schedule may take the form of a computer file, a microfiche list, or another tangible medium that is commercially reasonable.  Each Loan Schedule shall identify each applicable Loan by loan number and Loan Principal Balance as of the Cut-Off Date.

 

“Loan Trust” shall mean each of the common law trusts established pursuant to the applicable Loan Trust Agreement under the laws of the State of Delaware to own legal record title to the Loans for the related Co-Issuer.

 

“Loan Trust Agreements” shall mean each of the Loan Trust Agreements, dated as of April 1, 2013, between a Co-Issuer and Wilmington Trust, National Association, as the Loan Trustee, as amended by Amendment No. 1 thereto, dated as of October 3, 2014.

 

“Loan Trustee” shall mean Wilmington Trust, National Association, not in its individual capacity but solely in its capacity as loan trustee under a Loan Trust Agreement, its successors in interest and any successor loan trustee under such Loan Trust Agreement.

 

“Loss” shall have the meaning specified in Section 4.04 of the Servicing Agreement.

 

 

“Material Adverse Effect” shall mean, in respect of any Person, a material adverse change in the business, assets or operations of such Person.

 

“Monthly Determination Date” shall mean, with respect to any Collection Period, the 22nd calendar day of the calendar month occurring after the Collection Period, or if such 22nd day is not a Business Day, the next succeeding Business Day; provided, that the first Monthly Determination Date shall be November 24, 2014.

 

“Monthly Servicer Report” shall mean, with respect to each Payment Date, the report delivered by the Servicer pursuant to Section 2.06 of the Servicing Agreement with respect to such Payment Date, in the form attached as Exhibit C to the Indenture.

 

“Moody’s” shall mean Moody’s Investors Service, Inc.

 

“Mortgage” shall mean, with respect to any PHL, a mortgage, deed of trust or other security instrument creating a lien upon the residential real property interest described therein and securing the Loan Note evidencing such PHL, as such mortgage, deed of trust or other security instrument may have been amended, modified or extended from time to time.

 

“Non-Performing Loan” shall mean any Loan with respect to which the related Loan Obligor is 90 or more days delinquent with its payments on such Loan.

 

“Note” shall mean a note issued by the Co-Issuers pursuant to the Indenture.

 

“Note Account” shall mean the Collection Account, the Principal Distribution Account, the Advance Reserve Account and the Reserve Account, as applicable.

 

“Note Purchase Agreement” shall mean that certain Note Purchase Agreement dated as of September 18, 2014, among the Co-Issuers, the Sellers and the Initial Purchasers.

 

“Note Register” shall mean the register maintained pursuant to Section 2.05(a) of the Indenture in which the Notes are registered.

 

“Note Registrar” shall have the meaning specified in Section 2.05(a) of the Indenture.

 

“Noteholder” or “Holder” shall mean the Person in whose name a Note is registered in the Note Register, or such other Person deemed to be a “Noteholder” or “Holder” pursuant to the Indenture.

 

“NYUCC” shall mean the Uniform Commercial Code as in effect in the State of New York.

 

“Officer’s Certificate” shall mean, except to the extent otherwise specified, a certificate signed by an Authorized Officer of a Co-Issuer, the Servicer, a Seller, the Paying Agent, the Note Registrar or the Indenture Trustee, as applicable.

 

“Opinion of Counsel” shall mean a written opinion of counsel, who may be counsel for, or an employee of, the Person providing the opinion and who shall be reasonably acceptable to 

 

 

the Person to whom the opinion is to be provided; provided, however, that any Tax Opinion or other opinion relating to U.S. federal income tax matters shall be an opinion of nationally recognized tax counsel.

 

“Other Co-Issuer Obligations” shall mean any payment obligations arising under provisions of indentures or agreements entered into by the Co-Issuers in connection with notes previously issued by the Co-Issuer which notes have been retired but which provisions survive the termination of such indentures or agreements.

 

“Outstanding” shall mean, as of any date of determination, all Notes previously authenticated and delivered under the Indenture except,

 

(1)                                 Notes previously cancelled by the Note Registrar or delivered to the Note Registrar for cancellation;

 

(2)                                 Notes for whose payment or redemption money in the necessary amount has been previously deposited with the Paying Agent for the Holders of such Notes; provided, that if such Notes are to be redeemed, any required notice of such redemption pursuant to the Indenture or provision for such notice satisfactory to the Note Registrar has been made; and

 

(3)                                 Notes that have been paid under Section 2.06 of the Indenture or in exchange for or in lieu of which other Notes have been authenticated and delivered under the Indenture, other than any such Notes for which there shall have been presented to the Note Registrar proof satisfactory to it that such Notes are held by a protected purchaser;

 

provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Notes have given any request, demand, authorization, direction, notice, consent or waiver under the Indenture, Notes owned by any Co-Issuer, any other obligor upon the Notes, the Performance Support Provider, the Servicer (or any subservicer with respect to the Servicer that is an Affiliate of the Servicer) or any Seller shall be disregarded and considered not to be Outstanding, except that, in determining whether the Indenture Trustee, the Paying Agent and the Note Registrar 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, the Paying Agent or the Note Registrar, as the case may be, has actual knowledge of being 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 Paying Agent and the Note Registrar the pledgee’s right so to act for such Notes and that the pledgee is not any Co-Issuer, any other obligor upon the Notes, the Performance Support Provider, the Servicer, any Seller (or any subservicer with respect to the Servicer that is an Affiliate of the Servicer).  In making any such determination, the Indenture Trustee, the Paying Agent and the Note Registrar may rely on the representations of the pledgee and shall not be required to undertake any independent investigation.

 

“Paying Agent” shall have the meaning specified in Section 2.12(a) of the Indenture.

 

“Payment Date” shall mean, with respect to any Collection Period, the 25th calendar day of the calendar month occurring after such Collection Period, or if such 25th day is not a Business 

 

 

Day, the next succeeding Business Day; provided, that the first Payment Date shall be November 25, 2014.

 

“Performance Support Agreement” shall mean the Performance Support Agreement dated as of October 3, 2014, by Springleaf in favor of the Indenture Trustee in respect of the obligations of the Sellers under the Loan Purchase Agreements.

 

“Performing Collateral Balance” shall mean, with respect for any Collection Period, the aggregate Loan Principal Balance of all Loans other than Delinquent Loans as of the last day of such Collection Period.

 

“Periodic Filing” shall mean any filing or submission that any Co-Issuer is required to make with any federal, state or local authority or regulatory agency.

 

“Permanent Regulation S Global Note” shall have the meaning specified in Section 2.05(c) of the Indenture.

 

“Permitted Assignee” shall mean any Person who, if it were to purchase Loans in connection with a sale under Sections 5.05 and 5.17 of the Indenture, would not cause any Co-Issuer to be taxable as a publicly traded partnership for federal income tax purposes.

 

“Permitted Lien” shall mean (i) Liens for taxes not delinquent or for taxes being contested in good faith and by appropriate proceedings, and with respect to which adequate reserves have been established, and are being maintained, in accordance with generally accepted accounting principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors and successors from time to time, (ii) mechanics’, materialmen’s, landlords’, warehousemen’s, garagemen’s and carriers’ Liens, and other like Liens imposed by law, securing obligations arising in the ordinary course of business, (iii) motor vehicle accident liens and towing and storage liens and (iv) any Lien created by the Indenture for the benefit of the Trustee on behalf of the Noteholders.

 

“Person” shall mean any legal person, including any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, governmental entity or other entity of any nature.

 

“PHL” shall mean a fixed or variable rate personal homeowner closed-end loan or open-end line of credit.

 

“Portfolio Called Loan” shall mean any Loan required to be reassigned to HSBC Finance Corporation or one of its Affiliates or designees pursuant to the terms of the Portfolio Loan Purchase Agreement.

 

“Portfolio Loan Purchase Agreement” shall mean that certain Purchase Agreement dated as of March 5, 2013 by and among the Portfolio Sellers, HSBC Finance Corporation, a Delaware corporation, each of the Sellers and each of the Seller Loan Trustees, as amended.

 

“Portfolio Sellers” shall mean each of the Persons party to the Portfolio Loan Purchase Agreement as a “Seller”.

 

 

“Principal Distribution Account” shall have the meaning set forth in Section 8.02(a)(ii) of the Indenture.

 

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

 

“PUL” shall mean a fixed or variable rate personal unsecured closed-end loan or open-end line of credit.

 

“Purchase Price” with respect to any Loan, shall have the meaning set forth in Section 3.01(a) of the related Loan Purchase Agreement.

 

“Purchased Assets” with respect to any Loan, shall mean the “Purchased Assets” under and as defined in the related Loan Purchase Agreement.

 

“QIB” shall mean a “qualified institutional buyer” as defined in Rule 144A.

 

“Rating Agency” shall mean Kroll.

 

“Rating Agency Notice Requirement” shall mean, with respect to any action, that the Rating Agency shall have received ten (10) days’ written notice thereof and shall not have notified the Servicer, any Co-Issuer or Loan Trustee or the Indenture Trustee in writing (including by means of a press release) within such 10-day period that such action will result in a reduction or withdrawal of the then existing ratings of the Notes.

 

“Recharacterized Note” shall have the meaning specified in Section 3.14(b) of the Indenture.

 

“Record Date” shall mean, with respect to any Payment Date, the last Business Day of the related Collection Period; provided, that the first Record Date shall be the Closing Date.

 

“Recoveries” shall mean, with respect to any Charged-Off Loan, monies collected in respect thereof from whatever source, net of the sum of any reasonable expenses incurred by and reimbursable to the Servicer in connection with the collection, repossession and disposition of such Loan and the related Loan Collateral, if any, and any amounts required by law to be remitted to the related Loan Obligor; provided that Recoveries with respect to any Charged-Off Loan shall in no event be less than zero.

 

“Redemption Price” shall mean the price to be paid to redeem the Notes pursuant to Section 8.07(c) of the Indenture.

 

“Registered Noteholder” shall mean the Holder of a Definitive Note.

 

“Regular Principal Distribution Amount” shall mean, with respect to any Payment Date, an amount equal to the excess (if any) of (i) the Aggregate Note Principal Balance as of the end of the related Collection Period minus the amount on deposit in the Principal Distribution Account (after giving effect to any allocations on such Payment Date to the Principal Distribution Account pursuant to clauses (vi), (viii), (xi), (xiv) and (xvii) of Section 8.06(a)) over

 

 

an amount not less than zero, (ii) the Adjusted Loan Principal Balance as of the end of the related Collection Period minus (B) the Required Overcollateralization Amount.

 

“Regulation S” shall mean Regulation S promulgated under the Securities Act.

 

“Regulation S Definitive Note” shall have the meaning specified in Section 2.05(c) of the Indenture.

 

“Regulation S Global Note” shall have the meaning specified in Section 2.05(c) of the Indenture.

 

“Repurchase Price” with respect to any Loan, shall have the meaning set forth in Section 6.01(b) of the related Loan Purchase Agreement.

 

“Required Advance Reserve Amount” shall mean $5,000,000.

 

“Required Noteholders” shall mean, at any time, the Holders of Notes evidencing more than 50% of the Outstanding Notes.

 

“Required Overcollateralization Amount” shall mean (i) on the Closing Date $116,372,150.82 and (ii) on each Payment Date, the greater of (a) the lesser of (x) $116,372,150.82 and (y) 8.50% of the aggregate Loan Principal Balance as of the end of the most recent Collection Period and (b) 2.50% of the aggregate Loan Principal Balance of the Loans as of the Cut-Off Date.

 

“Required Reserve Account Amount” shall mean (i) on the Closing Date $13,686,210.75 and (ii) on each Payment Date an amount equal to the greater of (a) 0.50% of the aggregate Loan Principal Balance as of the end of the most recent Collection Period and (b) 0.15% of the aggregate Loan Principal Balance as of the Cut-Off Date.

 

“Required Servicing Protocols” shall mean the servicing procedures set forth on Schedule I to the Servicing Agreement.

 

“Requirements of Law” shall mean, for any Person, (a) any certificate of incorporation, certificate of formation, articles of association, bylaws, limited liability company agreement, or other organizational or governing documents of that Person, (b) any federal, state and local law, treaty, statute, regulation, or rule, or any determination by a Governmental Authority or arbitrator, that is applicable to or binding on that Person or to which that Person is subject, and (c) all contractual obligations of that Person, including those contractual obligations of the Person contained in the Servicing Agreement or in a Loan Agreement for which such Person is responsible.  This term includes usury laws, the Truth in Lending Act, and Regulation Z and Regulation B.

 

“Reserve Account” shall have the meaning set forth in Section 8.02(a)(iii) of the Indenture.

 

“Reserve Account Draw Amount” shall mean, with respect to any Payment Date, all amounts on deposit in the Reserve Account as of the related Monthly Determination Date.

 

 

“Responsible Officer” shall mean, with respect to the Indenture Trustee, any Loan Trustee or the Paying Agent, any officer within the Corporate Trust Office of the Indenture Trustee, such Loan Trustee or the Paying Agent, as applicable, as the case may be, including any Vice President, Assistant Vice President, Assistant Treasurer, Assistant Secretary, or any other officer of the Indenture Trustee, such Loan Trustee or the Paying Agent, as applicable, 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 Indenture and the other Transaction Documents on behalf of the Indenture Trustee or the Paying Agent or the applicable Trust Agreement on behalf of such Loan Trustee, as applicable.

 

“Revolving Loan” shall mean any Loan (other than a Non-Performing Loan) with respect to which the related Loan Obligor either is or at one time was permitted to make additional draws on such Loan.

 

“Rule 144A” shall mean Rule 144A promulgated under the Securities Act.

 

“Rule 144A Definitive Note” shall have the meaning specified in Section 2.05(c) of the Indenture.

 

“Rule 144A Global Note” shall have the meaning specified in Section 2.05(c) of the Indenture.

 

“Rule 15Ga-1 Information” shall have the meaning specified in Section 6.15(c) of the Indenture.

 

“S&P” and “Standard & Poor’s” shall mean Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, or any successor.

 

“SEC” shall mean the United States Securities and Exchange Commission.

 

“Second Priority Principal Payment” shall mean, for any Payment Date, (x) at any time prior to the occurrence of an Event of Default, an amount equal to the excess (if any) of (A) the sum of (I) the Class A Note Balance as of the end of the related Collection Period plus (II) the Class B Note Balance as of the end of the related Collection Period minus the amount on deposit in the Principal Distribution Account (after giving effect to any allocations to the Principal Distribution Account pursuant to Section 8.06(a)(vi)) over (B) the Adjusted Loan Principal Balance as of the end of the related Collection Period and (y) at any time from and after the occurrence of an Event of Default or on or after the Stated Maturity Date in respect of the Class B Notes, the sum of the Class A Note Balance and the Class B Note Balance minus the amount on deposit in the Principal Distribution Account (after giving effect to any allocations to the Principal Distribution Account pursuant to Section 8.06(a)(vi)).

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

 

“Seller” or “Sellers” shall mean SpringCastle America, LLC, a Delaware limited liability company, SpringCastle Credit LLC, a Delaware limited liability company and SpringCastle Finance LLC, a Delaware limited liability company.

 

“Seller Loan Trust Agreements” shall mean each of the Loan Trust Agreements, dated as of April 1, 2013, between a Seller and Wilmington Trust, National Association, as the Loan Trustee, as amended by Amendment No. 1 thereto, dated as of October 3, 2014.

 

“Seller Loan Trustee” shall mean Wilmington Trust, National Association, not in its individual capacity but solely in its capacity as loan trustee under a Seller Loan Trust Agreement, its successors in interest and any successor loan trustee under such Seller Loan Trust Agreement.

 

“Servicer” shall mean (i) initially Springleaf, in its capacity as servicer pursuant to the Servicing Agreement and any Person that becomes the successor thereto pursuant to Section 4.02 of the Servicing Agreement or any assignee thereof pursuant to Section 4.05 of the Servicing Agreement, and (ii) after any Successor Servicing Transfer Date, the Successor Servicer.

 

“Servicer Collection Charges” shall mean, with respect to any Loan, any and all income, revenue, fees, administrative fees, annual fees, expenses, charges or other monies that a servicer is entitled to receive, collect or retain in accordance with the terms of the Loan Documents or Requirements of Law, including late charge fees, bad check fees, ACH fees, partial release fees, release deed and satisfaction fees and other similar fees and charges collected from Loan Obligors, and any other incidental fees permissible under Requirements of Law, but excluding any premiums, fees or other income related to Credit Insurance (other than any collection fees payable to the Servicer pursuant to a Credit Insurance ASA in accordance with Section 2.01(b)(ii)).

 

“Servicer Default” shall have the meaning specified in Section 5.01 of the Servicing Agreement.

 

“Servicing Agreement” shall mean the Servicing Agreement, dated as of October 3, 2014, among the Servicer, the Co-Issuers and the Loan Trustees.

 

“Servicing Fee” shall have the meaning specified in Section 2.02 of the Servicing Agreement.

 

“Servicing Officer” shall mean any officer of the Servicer or an attorney in fact of the Servicer who in either case is involved in, or responsible for, the administration and servicing of the Loans and whose name appears on a list of servicing officers furnished to the Paying Agent, the Note Registrar and the Indenture Trustee by the Servicer, as such list may from time to time be amended.

 

“Servicing Standard” shall have the meaning specified in Section 2.01(b) of the Servicing Agreement.

 

“Servicing Transition Costs” shall have the meaning specified in the Back-up Servicing Agreement.

 

 

“Servicing Transition Period” shall have the meaning specified in the Back-up Servicing Agreement.

 

“Similar Law” shall have the meaning specified in Section 2.05(c)(v) of the Indenture.

 

“Specified Call Premium Amount” on any Payment Date for any Class of Notes shall mean (i) in the case of Class A Notes, an amount equal to 1.00% of the outstanding principal balance of the Class A Notes to be redeemed and (ii) in the case of the Class B Notes, the Class C Notes and the Class D Notes, an amount equal to (a) the product of (1) the Call Premium Rate with respect to such Class of Notes, times (2) the outstanding principal balance of the Notes of such Class to be redeemed on such Payment Date, times (3) the number of days, computed on a 30/360 basis, from and including such Payment Date to but excluding the Payment Date occurring in October 2016, divided by (b) 360.

 

“Springleaf” shall mean Springleaf Finance, Inc., an Indiana corporation.

 

“State” shall mean any of the fifty (50) states in the United States of America or the District of Columbia.

 

“Stated Maturity Date” shall mean with respect to the Class A Notes, the May 2023 Payment Date; with respect to the Class B Notes, the October 2027 Payment Date; with respect to the Class C Notes, the October 2033 Payment Date; with respect to the Class D Notes, the April 2034 Payment Date; and with respect to the Class E Notes, the April 2035 Payment Date.

 

“Successor Servicer” shall mean the successor servicer appointed in accordance with Section 5.02 of the Servicing Agreement.

 

“Successor Servicing Transfer Date” shall mean the date on which a Successor Servicer has assumed all of the duties and obligations of the Servicer under the Servicing Agreement (other than in the case of the Back-up Servicer, any such duty or obligation that it is not required to assume under the terms of the Back-up Servicing Agreement) after the resignation or termination of the Servicer.

 

“Tax Opinion” shall mean, with respect to any action, an Opinion of Counsel to the effect that, for U.S. federal income tax purposes, (a) such action will not adversely affect the tax characterization as debt of any Note of any Outstanding Class with respect to which an Opinion of Counsel was delivered at the time of its original issuance as to the characterization of such Note as debt for U.S. federal income tax purposes, (b) such action will not cause or constitute an event in which gain or loss would be recognized by any Noteholder, and (c) such action will not cause any Co-Issuer to be deemed to be an association, taxable mortgage pool or publicly traded partnership taxable as a corporation.

 

“Temporary Regulation S Global Note” shall have the meaning specified in Section 2.05(c) of the Indenture.

 

“Termination Notice” shall have the meaning specified in Section 5.01 of the Servicing Agreement.

 

 

“Third Priority Principal Payment” shall mean, for any Payment Date, (x) at any time prior to the occurrence of an Event of Default, an amount equal to the excess (if any) of (A) the sum of (I) the Class A Note Balance as of the end of the related Collection Period plus (II) the Class B Note Balance as of the end of the related Collection Period plus (III) the Class C Note Balance as of the end of the related Collection Period minus the amount on deposit in the Principal Distribution Account (after giving effect to any allocations to the Principal Distribution Account pursuant to clauses (vi) and (viii) in Section 8.06(a)) over (B) the Adjusted Loan Principal Balance as of the end of the related Collection Period and (y) at any time from and after the occurrence of an Event of Default or on or after the Stated Maturity Date in respect of the Class C Notes, the sum of the Class A Note Balance, the Class B Note Balance and the Class C Note Balance minus the amount on deposit in the Principal Distribution Account (after giving effect to any allocations to the Principal Distribution Account pursuant to clauses (vi) and (viii) in Section 8.06(a)).

 

“Transaction” shall have the meaning specified in Section 6.15(c) of the Indenture.

 

“Transaction Documents” shall mean the Note Purchase Agreement, the Servicing Agreement, the Loan Purchase Agreements, the Loan Trust Agreements, the Indenture, the Performance Support Agreement, the Administration Agreement, the Back-up Servicing Agreement, and such other documents and certificates delivered in connection the foregoing.

 

“Trust Estate” shall have the meaning set forth in the Granting Clause of the Indenture.

 

“UCC” shall mean the Uniform Commercial Code of the applicable jurisdiction.

 

“United States Bankruptcy Code” shall mean Title 11 of the United States Code, 11.  U.S.C. §§ 101 et seq., as amended.

 

 

PART B - RULES OF CONSTRUCTION

 

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

 

(b)                                 As used in this Appendix or any Transaction Document, accounting terms that are not defined herein or therein, and accounting terms partly defined herein or therein shall have the respective meanings given to them under generally accepted accounting principles.  To the extent that the definitions of accounting terms in this Appendix or any Transaction Document are inconsistent with the meanings of such terms under generally accepted accounting principles, the definitions contained in this Appendix or such Transaction Document will control.

 

(c)                                  With respect to any Payment Date, the “related Collection Period” will mean the Collection Period that is the second calendar month immediately preceding the month in which such Payment Date occurs, and the “related Monthly Determination Date” will mean the 27th day of the calendar month (unless such day is not a Business Day, then the next succeeding Business Day following the 27th day of the calendar month) immediately preceding the month in which such Payment Date occurs and the relationships among Collection Periods and Monthly Determination Dates will be correlative to the foregoing relationships.

 

(d)                                 Each defined term used in this Appendix or any Transaction Document has a comparable meaning when used in its plural or singular form.  Each gender-specific term used in this Appendix or any Transaction Document has a comparable meaning whether used in a masculine, feminine or gender-neutral form.

 

(e)                                  Unless otherwise specified, references in this Appendix or any Transaction Document to any amount as on deposit or outstanding on any particular date shall mean such amount at the close of business on such day.

 

(f)                                   The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Appendix or any Transaction Document shall refer to this Appendix or such Transaction Document as a whole and not to any particular provision or subdivision of this Appendix or such Transaction Document; references to any subsection, Section, Schedule or Exhibit contained in this Appendix or any Transaction Document are references to subsections, Sections, Schedules and Exhibits in or to this Appendix or such Transaction Document unless otherwise specified; and the term “including” shall mean “including without limitation.” The word “or” when used in this Appendix or any Transaction Document is not exclusive. Whenever the term “including” (whether or not followed by the phrase “but not limited to” or “without limitation” or words of similar effect) is used in this Appendix or any Transaction Document in connection with a listing of items within a particular classification, that listing will be interpreted to be illustrative only and will not be interpreted as a limitation on, or exclusive listing of, the items within that classification.

 

 

(g)                                  Terms used in this Appendix or any Transaction Document herein that are defined in the NYUCC and not otherwise defined shall have the meanings set forth in the NYUCC unless the context requires otherwise.

 

(h)                                 Any reference in this Appendix or any Transaction Document to the “Appendix,” this “Appendix,” the “Agreement,” this “Agreement” or words of like import shall be a reference to this Appendix or such Transaction Document as it may be amended, supplemented or modified from time to time.  Any definition of or reference to any agreement, instrument or other document in this Appendix or any Transaction Document shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth in any Transaction Document).

 

(i)                                     Any reference in this Appendix or any Transaction Document to a “beneficial interest” in a security also shall mean a security entitlement with respect to such security, and any reference herein to a “beneficial owner” or “beneficial holder” of a security also shall mean the holder of a security entitlement with respect to such security.

 

(j)                                    Any reference in this Appendix or any Transaction Document to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time.

 

 

SCHEDULE II

 

PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS

 

In addition to the representations, warranties and covenants contained in the Indenture, the Co-Issuers hereby represents, warrants, and covenants to the Indenture Trustee as follows on the Closing Date:

 

General

 

1.              This Indenture creates a valid and continuing security interest (as defined in the applicable UCC) in the Loans in favor of the Indenture Trustee, which security interest is prior to all other Liens, and is enforceable as such as against creditors of and purchasers from the Co-Issuers.

 

2.              The Loans constitute “tangible chattel paper”, “accounts,” “instruments” or “general intangibles” within the meaning of the UCC.

 

3.              Each Note Account constitutes either a “deposit account” or a “securities account” within the meaning of the UCC.

 

Creation

 

4.              Immediately prior to the sale, transfer, assignment and conveyance of the Loans by each of the Sellers to each of the Co-Issuers pursuant to the Loan Purchase agreement, the applicable Seller owned and had good, indefeasible, and marketable title to such Loans free and clear of any Lien (other than Permitted Liens) and immediately after the sale, transfer, assignment and conveyance of such Loans to the Co-Issuers, the Co-Issuers will have good and marketable title to such Loans free and clear of any Lien (other than Permitted Liens).

 

5.              The Custodian or the Servicer has in its possession all original copies of the instruments and chattel paper, if any, that constitute or evidence such Loan.

 

Perfection

 

6.              The Co-Issuers have caused or will have caused, within ten days after the effective date of this Indenture, 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 Loans granted to the Indenture Trustee hereunder, and all financing statements referred to in this paragraph 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/Purchaser”.

 

7.              With respect to the Note Accounts that constitute deposit accounts, either:

 

(i)                                     the Co- Issuers have delivered to the Indenture Trustee a fully executed agreement pursuant to which the bank maintaining the deposit accounts has agreed to comply with 

 

Schedule II - 1

 

all instructions originated by the Indenture Trustee directing disposition of the funds in such Note Accounts without further consent by the Co-Issuers; or

 

(ii)                                  the Co-Issuers have taken all steps necessary to cause the Indenture Trustee to become the account holder of such Note Accounts.

 

8.              With respect to the Note Accounts that constitute securities accounts or securities entitlements, either:

 

(i)                                     the Co-Issuers have 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 Note Accounts without further consent by the Co-Issuers; or

 

(ii)                                  the Co-Issuers have 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 Note Accounts.

 

Priority

 

9.              The Co-Issuers have not authorized the filing of, or is not aware of, any financing statements against the Co-Issuers that include a description of collateral covering the Loans other than any financing statement (i) relating to the conveyance of the Loans by the applicable Seller to the Co-Issuers under the related Loan Purchase Agreement, (ii) relating to the security interest granted to the Indenture Trustee hereunder or (iii) that has been terminated.

 

10.       None of the Co-Issuers is aware of any material judgment, ERISA or tax lien filings against any of the Co-Issuers.

 

11.       None of the instruments, tangible chattel paper or electronic chattel paper that constitute or evidence the Loans has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than to the Co-Issuers or the Indenture Trustee.

 

12.       No Note Account that constitutes a securities account or securities entitlement is in the name of any person other than the Indenture Trustee. The Co-Issuers have not consented to the securities intermediary of any such Note Account to comply with entitlement orders of any person other than the Indenture Trustee.

 

13.       No Note Account that constitutes a deposit account is in the name of any person other than the Indenture Trustee. The Co-Issuers have not consented to the bank maintaining such Note Account to comply with instructions of any person other than the Indenture Trustee.

 

Schedule II - 2

 

Survival of Perfection Representations

 

14.       Notwithstanding any other provision of this Indenture or any other Transaction Document, the perfection representations, warranties and covenants contained in this Schedule II 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.

 

No Waiver

 

15.       The parties to the Indenture shall provide the each with prompt written notice of any material breach of the perfection representations, warranties and covenants contained in this Schedule II, and shall not, without satisfying the Rating Agency Notice Requirement, waive a breach of any of such perfection representations, warranties or covenants.

 

Issuer to Maintain Perfection and Priority

 

16.       Each Co-Issuer covenants that, in order to evidence the interests of the Indenture Trustee under this Indenture, the Co-Issuer shall take such action, or execute and deliver such instruments as may be necessary or advisable (including, without limitation, such actions as are requested by the Indenture Trustee) to maintain and perfect, as a first priority interest, the Indenture Trustee’s security interest in the Loans.  The Co-Issuers 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 Loans as a first-priority interest.

 

Schedule II - 3Exhibit 4.3

	
 
    

 

 

INDENTURE

 

Dated as of July 12, 2011

 

Among

 

INC RESEARCH, LLC, as Issuer

 

the Guarantors named herein,
 as Guarantors,

 

and

 

WILMINGTON TRUST, NATIONAL ASSOCIATION
 as Trustee

 

 11.5% SENIOR NOTES DUE 2019

 

	
 
    

 

 

CROSS-REFERENCE TABLE*

 

	
Trust Indenture Act Section
    	
 
    	
Indenture Section
    
	
310   (a)(1)
    	
 
    	
7.10
    
	
(a)(2)
    	
 
    	
7.10
    
	
(a)(3)
    	
 
    	
N.A.
    
	
(a)(4)
    	
 
    	
N.A.
    
	
(a)(5)
    	
 
    	
7.10
    
	
(b)
    	
 
    	
7.10
    
	
(c)
    	
 
    	
N.A.
    
	
311   (a)
    	
 
    	
7.11
    
	
(b)
    	
 
    	
7.11
    
	
(c)
    	
 
    	
N.A.
    
	
312   (a)
    	
 
    	
2.05
    
	
(b)
    	
 
    	
12.03
    
	
(c)
    	
 
    	
12.03
    
	
313   (a)
    	
 
    	
7.06
    
	
(b)(1)
    	
 
    	
N.A.
    
	
(b)(2)
    	
 
    	
7.06; 7.07
    
	
(c)
    	
 
    	
7.06; 12.02
    
	
(d)
    	
 
    	
7.06
    
	
314   (a)
    	
 
    	
4.03; 4.04; 12.02; 12.05
    
	
(b)
    	
 
    	
N.A.
    
	
(c)(1)
    	
 
    	
12.04
    
	
(c)(2)
    	
 
    	
12.04
    
	
(c)(3)
    	
 
    	
N.A.
    
	
(d)
    	
 
    	
N.A.
    
	
(e)
    	
 
    	
12.05
    
	
(f)
    	
 
    	
N.A.
    
	
315   (a)
    	
 
    	
7.01
    
	
(b)
    	
 
    	
7.05; 12.02
    
	
(c)
    	
 
    	
7.01
    
	
(d)
    	
 
    	
7.01
    
	
(e)
    	
 
    	
6.14
    
	
316   (a)(last sentence)
    	
 
    	
2.09
    
	
(a)(1)(A)
    	
 
    	
6.05
    
	
(a)(1)(B)
    	
 
    	
6.04
    
	
(a)(2)
    	
 
    	
N.A.
    
	
(b)
    	
 
    	
6.07
    
	
(c)
    	
 
    	
2.12; 9.04
    
	
317   (a)(1)
    	
 
    	
6.08
    
	
(a)(2)
    	
 
    	
6.12
    
	
(b)
    	
 
    	
2.04
    
	
318   (a)
    	
 
    	
12.01
    
	
(b)
    	
 
    	
N.A.
    
	
(c)
    	
 
    	
12.01
    

 

N.A. means not applicable.

*  This Cross-Reference Table is not part of the Indenture.

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE I
    
	
 
    
	
DEFINITIONS AND INCORPORATION BY REFERENCE
    
	
 
    
	
Section 1.01
    	
Definitions
    	
1
    
	
Section 1.02
    	
Other Definitions
    	
31
    
	
Section 1.03
    	
Incorporation by Reference of Trust Indenture Act
    	
32
    
	
Section 1.04
    	
Rules of Construction
    	
32
    
	
Section 1.05
    	
Acts of Holders
    	
33
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    
	
 
    
	
THE NOTES
    
	
 
    
	
Section 2.01
    	
Form and Dating; Terms
    	
34
    
	
Section 2.02
    	
Execution and Authentication
    	
35
    
	
Section 2.03
    	
Registrar and Paying Agent
    	
36
    
	
Section 2.04
    	
Paying Agent To Hold Money in Trust
    	
36
    
	
Section 2.05
    	
Holder Lists
    	
36
    
	
Section 2.06
    	
Transfer and Exchange
    	
37
    
	
Section 2.07
    	
Replacement Notes
    	
47
    
	
Section 2.08
    	
Outstanding Notes
    	
47
    
	
Section 2.09
    	
Treasury Notes
    	
47
    
	
Section 2.10
    	
Temporary Notes
    	
48
    
	
Section 2.11
    	
Cancellation
    	
48
    
	
Section 2.12
    	
Defaulted Interest
    	
48
    
	
Section 2.13
    	
CUSIP or ISIN Numbers
    	
48
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    
	
 
    
	
REDEMPTION
    
	
 
    
	
Section 3.01
    	
Notices To Trustee
    	
49
    
	
Section 3.02
    	
Selection of Notes To Be Redeemed or Purchased
    	
49
    
	
Section 3.03
    	
Notice of Redemption
    	
49
    
	
Section 3.04
    	
Effect of Notice of Redemption
    	
50
    
	
Section 3.05
    	
Deposit of Redemption or Purchase Price
    	
50
    
	
Section 3.06
    	
Notes Redeemed or Purchased in Part
    	
51
    
	
Section 3.07
    	
Optional Redemption
    	
51
    
	
Section 3.08
    	
Mandatory Redemption
    	
52
    
	
Section 3.09
    	
Offers To Repurchase by Application of Excess Proceeds
    	
52
    

 

i

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    
	
 
    
	
COVENANTS
    
	
 
    
	
Section 4.01
    	
Payment of Notes
    	
54
    
	
Section 4.02
    	
Maintenance of Office or Agency
    	
54
    
	
Section 4.03
    	
Reports and Other Information
    	
54
    
	
Section 4.04
    	
Compliance Certificate
    	
56
    
	
Section 4.05
    	
Taxes
    	
56
    
	
Section 4.06
    	
Stay, Extension and Usury Laws
    	
56
    
	
Section 4.07
    	
Limitation on Restricted Payments
    	
57
    
	
Section 4.08
    	
Dividend and Other Payment Restrictions Affecting   Restricted Subsidiaries
    	
63
    
	
Section 4.09
    	
Limitation on Incurrence of Indebtedness and Issuance of   Disqualified Stock and Preferred Stock
    	
65
    
	
Section 4.10
    	
Asset Sales
    	
70
    
	
Section 4.11
    	
Transactions with Affiliates
    	
72
    
	
Section 4.12
    	
Liens
    	
75
    
	
Section 4.13
    	
Existence
    	
75
    
	
Section 4.14
    	
Offer To Repurchase Upon Change of Control
    	
75
    
	
Section 4.15
    	
Subsidiary Guarantors
    	
77
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    
	
 
    	
 
    	
 
    
	
SUCCESSORS
    
	
 
    
	
Section 5.01
    	
Merger, Consolidation or Sale of All or Substantially All   Assets
    	
78
    
	
Section 5.02
    	
Successor Corporation Substituted
    	
80
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    
	
 
    
	
DEFAULTS AND REMEDIES
    
	
 
    
	
Section 6.01
    	
Events of Default
    	
80
    
	
Section 6.02
    	
Acceleration
    	
82
    
	
Section 6.03
    	
Other Remedies
    	
83
    
	
Section 6.04
    	
Waiver of Past Defaults
    	
83
    
	
Section 6.05
    	
Control by Majority
    	
83
    
	
Section 6.06
    	
Limitation on Suits
    	
83
    
	
Section 6.07
    	
Rights of Holders of Notes To Receive Payment
    	
84
    
	
Section 6.08
    	
Collection Suit by Trustee
    	
84
    
	
Section 6.09
    	
Restoration of Rights and Remedies
    	
84
    
	
Section 6.10
    	
Rights and Remedies Cumulative
    	
84
    
	
Section 6.11
    	
Delay or Omission Not Waiver
    	
85
    
	
Section 6.12
    	
Trustee May File Proofs of Claim
    	
85
    
	
Section 6.13
    	
Priorities
    	
85
    
	
Section 6.14
    	
Undertaking for Costs
    	
86
    

 

ii

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    
	
 
    
	
TRUSTEE
    
	
 
    
	
Section 7.01
    	
Duties of Trustee
    	
86
    
	
Section 7.02
    	
Rights of Trustee
    	
87
    
	
Section 7.03
    	
Individual Rights of Trustee
    	
88
    
	
Section 7.04
    	
Trustee’s Disclaimer
    	
88
    
	
Section 7.05
    	
Notice of Defaults
    	
88
    
	
Section 7.06
    	
Reports by Trustee to Holders of the Notes
    	
88
    
	
Section 7.07
    	
Compensation and Indemnity
    	
89
    
	
Section 7.08
    	
Replacement of Trustee
    	
90
    
	
Section 7.09
    	
Successor Trustee by Merger, etc.
    	
91
    
	
Section 7.10
    	
Eligibility; Disqualification
    	
91
    
	
Section 7.11
    	
Preferential Collection of Claims Against Issuer
    	
91
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII
    
	
 
    	
 
    	
 
    
	
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
    
	
 
    	
 
    	
 
    
	
Section 8.01
    	
Option To Effect Legal Defeasance or Covenant Defeasance
    	
91
    
	
Section 8.02
    	
Legal Defeasance and Discharge
    	
91
    
	
Section 8.03
    	
Covenant Defeasance
    	
92
    
	
Section 8.04
    	
Conditions to Legal or Covenant Defeasance
    	
92
    
	
Section 8.05
    	
Deposited Money and Government   Securities To Be Held in Trust; Other Miscellaneous Provisions
    	
93
    
	
Section 8.06
    	
Repayment to Issuer
    	
94
    
	
Section 8.07
    	
Reinstatement
    	
94
    
	
 
    	
 
    	
 
    
	
ARTICLE IX
    
	
 
    	
 
    	
 
    
	
AMENDMENT, SUPPLEMENT AND WAIVER
    
	
 
    
	
Section 9.01
    	
Without Consent of Holders of Notes
    	
95
    
	
Section 9.02
    	
With Consent of Holders of Notes
    	
96
    
	
Section 9.03
    	
Compliance with Trust Indenture Act
    	
97
    
	
Section 9.04
    	
Revocation and Effect of Consents
    	
97
    
	
Section 9.05
    	
Notation on or Exchange of Notes
    	
98
    
	
Section 9.06
    	
Trustee To Sign Amendments, etc.
    	
98
    
	
 
    	
 
    	
 
    
	
ARTICLE X
    
	
 
    	
 
    	
 
    
	
GUARANTEES
    
	
 
    
	
Section 10.01
    	
Guarantee
    	
98
    
	
Section 10.02
    	
Limitation on Guarantor Liability
    	
100
    
	
Section 10.03
    	
Execution and Delivery
    	
100
    
	
Section 10.04
    	
Subrogation
    	
100
    

 

iii

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 10.05
    	
Benefits Acknowledged
    	
100
    
	
Section 10.06
    	
Release of Guarantees
    	
101
    
	
 
    	
 
    	
 
    
	
ARTICLE XI
    
	
 
    
	
SATISFACTION AND DISCHARGE
    
	
 
    
	
Section 11.01
    	
Satisfaction and Discharge
    	
101
    
	
Section 11.02
    	
Application of Trust Money
    	
102
    
	
 
    	
 
    	
 
    
	
ARTICLE XII
    
	
 
    
	
MISCELLANEOUS
    
	
 
    
	
Section 12.01
    	
Trust Indenture Act Controls
    	
102
    
	
Section 12.02
    	
Notices
    	
102
    
	
Section 12.03
    	
Communication by Holders of Notes with Other Holders of   Notes
    	
104
    
	
Section 12.04
    	
Certificate and Opinion as to Conditions Precedent
    	
104
    
	
Section 12.05
    	
Statements Required in Certificate or Opinion
    	
104
    
	
Section 12.06
    	
Rules by Trustee and Agents
    	
105
    
	
Section 12.07
    	
No Personal Liability of Directors, Officers, Employees and   Stockholders, etc.
    	
105
    
	
Section 12.08
    	
Governing Law
    	
105
    
	
Section 12.09
    	
Waiver of Jury Trial
    	
105
    
	
Section 12.10
    	
Force Majeure
    	
105
    
	
Section 12.11
    	
No Adverse Interpretation of Other Agreements
    	
105
    
	
Section 12.12
    	
Successors
    	
105
    
	
Section 12.13
    	
Severability
    	
106
    
	
Section 12.14
    	
Counterpart Originals
    	
106
    
	
Section 12.15
    	
Table of Contents, Headings, etc.
    	
106
    
	
Section 12.16
    	
U.S.A. Patriot Act
    	
106
    
	
 
    	
 
    	
 
    
	
EXHIBITS
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Exhibit A
    	
Form of   Note
    	
 
    
	
Exhibit B
    	
Form of   Certificate of Transfer
    	
 
    
	
Exhibit C
    	
Form of   Certificate of Exchange
    	
 
    
	
Exhibit D
    	
Form of   Supplemental Indenture To Be Delivered by Subsequent Guarantors
    	
 
    

 

iv

 

INDENTURE, dated as of July 12, 2011 among INC Research, LLC., a Delaware limited liability company (the “Issuer”), the entities named in the signature page hereto as Guarantors, and Wilmington Trust, National Association, as Trustee.

 

W I T N E S S E T H

 

WHEREAS, the Issuer has duly authorized the creation of an issue of $300,000,000 aggregate principal amount of  11.5% Senior Notes due 2019 (the “Initial Notes” together with any Additional Notes, the “Notes”).  The Initial Notes and any Additional Notes shall be treated as a single class for all purposes under this Indenture, including waivers, amendments, redemptions and offers to purchase.

 

WHEREAS, the Issuer has duly authorized the execution and delivery of this Indenture.

 

WHEREAS, each Guarantor has duly authorized its Guarantee of the Notes and to provide therefor each Guarantor has duly authorized the execution and delivery of this Indenture.

 

NOW, THEREFORE, the Issuer and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Notes.

 

ARTICLE I

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01                                       Definitions.

 

“144A Global Note” means a Global Note substantially in the form of Exhibit A hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold or to be sold in reliance on Rule 144A.

 

“Acquired Indebtedness” means, with respect to any specified Person,

 

(1)           Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, including Indebtedness assumed or incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person, and

 

(2)           Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

 

“Acquisition” means (i) the acquisition by the Issuer or any Restricted Subsidiary of Issuer of either Capital Stock of a Person such that such Person shall become a Restricted Subsidiary of the Issuer or all or substantially all of the properties and assets of a Person or (ii) any other acquisition of Capital Stock or property or assets other than in the ordinary course of business.

 

“Additional Notes” means any additional Notes issued after the Issue Date having identical terms and conditions to the Initial Notes, except for issue date, issue price, first interest payment date (so long as not otherwise prohibited by the terms of this Indenture, including, without limitation, Section 4.09 hereof).

 

 

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. No Person (other than the Issuer or any Subsidiary of the Issuer) in whom a Receivables Subsidiary makes an Investment in connection with a financing of accounts receivable will be deemed to be an Affiliate of the Issuer or any of its Subsidiaries solely by reason of such Investment.

 

“Applicable Premium” means, with respect to any Note on any Redemption Date, the greater of:

 

(1)           1.0% of the principal amount of such Note; and

 

(2)           the excess, if any, of (a) the present value at such Redemption Date of (i) the redemption price of such Note at July 15, 2015 (such redemption price being set forth in the table appearing above under the caption “Optional Redemption”), plus (ii) all required interest payments due on such Note through July 15, 2015 (excluding accrued but unpaid interest to the Redemption Date), computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points; over (b) the then-outstanding principal amount of such Note.

 

“Applicable Procedures” means, with respect to any transfer, redemption, tender or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and/or Clearstream that apply to such transfer or exchange.

 

“Asset Sale” means:

 

(1)           the sale, conveyance, transfer or other disposition, whether in a single transaction or a series of related transactions, of property or assets (including by way of a Sale and Lease-Back Transaction) of the Issuer or any of the Restricted Subsidiaries (each referred to in this definition as a “disposition”); or

 

(2)           the issuance or sale of Equity Interests of any Restricted Subsidiary, whether in a single transaction or a series of related transactions (other than Preferred Stock of Restricted Subsidiaries issued in compliance with Section 4.09 hereof);

 

in each case, other than:

 

(a)           any disposition of Cash Equivalents or obsolete, damaged or worn out equipment in the ordinary course of business or inventory (or other assets) held for sale in the ordinary course of business;

 

(b)           the disposition of all or substantially all of the assets of the Issuer in a manner permitted pursuant to the provisions described under Section 5.01 hereof or any disposition that constitutes a Change of Control pursuant to this Indenture;

 

(c)           the making of any Restricted Payment or Permitted Investment that is permitted to be made, and is made, under Section 4.07 hereof;

 

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(d)           any disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary in any transaction or series of related transactions with an aggregate fair market value of less than $5 million;

 

(e)           any disposition of property or assets or issuance of securities by a Restricted Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary to another Restricted Subsidiary;

 

(f)            to the extent allowable under Section 1031 of the Code, any exchange of like property (excluding any boot thereon) for use in a Similar Business;

 

(g)           the lease, assignment, sublease, license or sublicense of any real or personal property in the ordinary course of business;

 

(h)           foreclosures, condemnations or any similar actions on assets;

 

(i)            any financing transaction with respect to property built or acquired by the Issuer or any Restricted Subsidiary after the Issue Date, including Sale and Lease-Back Transactions permitted by this Indenture;

 

(j)            licenses or sub-licenses of intellectual property in the ordinary course of business;

 

(k)           the creation of any Lien permitted under this Indenture;

 

(l)            any issuance or sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

 

(m)          the surrender or waiver of contract rights or settlement, release or surrender of a contract, tort or other litigation claim in the ordinary course of business;

 

(n)           a disposition of accounts receivable and related assets by a Receivables Subsidiary in a Qualified Receivables Financing;

 

(o)           the dispositions of Investments or receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in connection with bankruptcy proceedings;

 

(p)           the abandonment of intellectual property rights in the ordinary course of business, which in the good faith determination of the Issuer are not material to the conduct of the business of the Issuer and its Restricted Subsidiaries taken as a whole; and

 

(q)           any disposition of Specified Assets.

 

“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.

 

“Business Day” means each day which is not a Legal Holiday.

 

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“Capital Stock” means:

 

(1)           in the case of a corporation, corporate stock;

 

(2)           in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

 

(3)           in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

 

(4)           any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

 

“Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP; provided that any obligations of the Issuer or its Restricted Subsidiaries either existing on the Issue Date or created prior to any recharacterization described below (i) that were not included on the consolidated balance sheet of the Issuer as capital lease obligations and (ii) that are subsequently recharacterized as capital lease obligations due to a change in accounting treatment or otherwise, shall for all purposes under this Indenture (including, without limitation, the calculation of Consolidated Net Income and EBITDA) not be treated as capital lease obligations, Capitalized Lease Obligations or Indebtedness).

 

“Cash Equivalents” means:

 

(1)           United States dollars;

 

(2)           (a)  euro, or any national currency of any participating member of the EMU; or

 

(b)           in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held by them from time to time in the ordinary course of business;

 

(3)           securities issued or directly and fully and unconditionally guaranteed or insured by the U.S. government or any agency or instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of 12 months or less from the date of acquisition;

 

(4)           marketable direct EEA Government Obligations with maturities of 12 months or less from the date of acquisition;

 

(5)           certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus of not less than $500.0 million;

 

(6)           repurchase obligations for underlying securities of the types described in clauses (3), (4) and (5) entered into with any financial institution meeting the qualifications specified in clause (5) above;

 

4

 

(7)           commercial paper rated at least P-1 by Moody’s or at least A-1 by S&P and in each case maturing within 24 months after the date of creation thereof;

 

(8)           marketable short-term money market and similar securities having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively, and in each case maturing within 24 months after the date of creation thereof;

 

(9)           readily marketable direct obligations issued by any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof having one of the two highest ratings obtainable from either Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized ratings agency) with maturities of 24 months or less from the date of acquisition;

 

(10)         investment funds investing 90% of their assets in securities of the types described in clauses (1) through (9) above; and

 

(11)         in the case of any Restricted Subsidiary organized or having its principal place of business outside of the United States, Investments of comparable tenor and credit quality to those described in the foregoing clauses (3) through (10) customarily utilized in countries in which such Restricted Subsidiary operates.

 

Notwithstanding the foregoing, “Cash Equivalents” shall include amounts denominated in currencies other than those set forth in clauses (1) and (2) above, provided that such amounts are converted into any currency listed in clauses (1) and (2) as promptly as practicable and in any event within ten Business Days following the receipt of such amounts.

 

“Change of Control” means the occurrence of any of the following:

 

(1)           any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the ultimate “beneficial owner” (as such term is used in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (1) such person or group shall be deemed to have “beneficial ownership” of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the Voting Stock of the Issuer, and the Permitted Holders beneficially own (as so defined), in the aggregate, directly or indirectly, a lesser percentage of the Voting Stock of the Issuer than such other person or group and do not have the right or ability by voting power, contract or otherwise, directly or indirectly, to elect or designate for election a majority of the board of directors or Equivalent Managing Body of the Issuer; or

 

(2)           after the consummation of an initial public offering, during any period of two consecutive years, individuals who at the beginning of such period constituted the board of directors or Equivalent Managing Body of the Issuer (together with any new individuals whose election by such board of directors or Equivalent Managing Body or whose nomination for election was approved by a vote of a majority of the directors or Equivalent Managing Body then still in office were members of such board or body at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the persons then in office on such board of directors or Equivalent Managing Body of the Issuer; or

 

5

 

(3)           (a) all or substantially all of the assets of the Issuer and the Restricted Subsidiaries are sold or otherwise transferred to any Person other than a Wholly Owned Restricted Subsidiary or one or more Permitted Holders or (b) the Issuer consolidates or merges with or into another Person or any Person consolidates or merges with or into the Issuer, in either case under this clause (3), in one transaction or a series of related transactions in which immediately after the consummation thereof Persons beneficially owning (as defined above in clause (1)), directly or indirectly, Voting Stock representing in the aggregate a majority of the total voting power of the Voting Stock of the Issuer immediately prior to such consummation do not beneficially own (as defined above in clause (1)), directly or indirectly, Voting Stock representing a majority of the total voting power of the Voting Stock of the Issuer or the surviving or transferee Person; or

 

(4)           the adoption by the stockholders of the Issuer of a plan or proposal for the liquidation or dissolution of the Issuer.

 

“Class C Agreement” means the Class C Agreement among an Affiliate of Ontario Teachers’ Pension Plan Board, INC Research Holdings, Inc., INC Research Intermediate LLC and the Issuer as in effect on the Issue Date and giving effect to amendments thereto that, taken as a whole, are not materially adverse to the interests of the Holders of the Notes.

 

“Clearstream” means Clearstream Banking, Société Anonyme, and any successor thereto.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Consolidated Depreciation and Amortization Expense” means, with respect to any Person for any period, the total amount of depreciation and amortization expense, including the amortization of goodwill and other intangibles, deferred financing fees of such Person and its Restricted Subsidiaries, for such period on a consolidated basis and otherwise determined in accordance with GAAP.

 

“Consolidated Interest Expense” means, with respect to any Person for any period, without duplication, the sum of:

 

(1)           consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted (and not added back) in computing Consolidated Net Income, including (a) amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (b) all commissions, discounts and other fees and charges owed with respect to letters of credit or bankers acceptances, (c) non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in the mark to market valuation of Hedging Obligations or other derivative instruments pursuant to GAAP), (d) the interest component of Capitalized Lease Obligations, and (e) net payments, if any, pursuant to interest rate Hedging Obligations with respect to Indebtedness, and excluding, (w) penalties and interest related to taxes (x) amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses and (y) any expensing of bridge, commitment and other financing fees; plus

 

(2)           consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; less

 

(3)           interest income of such Person and its Restricted Subsidiaries for such period.

 

6

 

For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.

 

“Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the Net Income, of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP; provided, however, that, without duplication,

 

(1)           any after-tax effect of extraordinary, non-recurring or unusual gains or losses (less all fees and expenses relating thereto) or costs, charges and expenses (including relating to the Transactions), including, without limitation, any severance costs, integration costs, relocation costs, and curtailments or modifications to pension and post-retirement employee benefit plans, shall be excluded,

 

(2)           the cumulative effect of a change in accounting principles during such period shall be excluded,

 

(3)           any after-tax effect of income (loss) from disposed or discontinued operations and any net after-tax gains or losses on disposal of disposed, abandoned or discontinued operations shall be excluded,

 

(4)           any after-tax effect of gains or losses (less all fees and expenses relating thereto) attributable to asset dispositions (including sales or other dispositions under a Qualified Receivables Financing) other than in the ordinary course of business, as determined in good faith by the Issuer, shall be excluded,

 

(5)           the Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be excluded; provided that Consolidated Net Income of the Issuer shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period by such Person,

 

(6)           solely for the purpose of determining the amount available for Restricted Payments under clause (3)(a) of the Section 4.07(a) the Net Income for such period of any Restricted Subsidiary (other than any Guarantor) shall be excluded if the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination permitted, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided that Consolidated Net Income of the Issuer will be increased by the amount of dividends or other distributions or other payments actually paid in cash (or to the extent converted into cash) to the Issuer or a Restricted Subsidiary thereof in respect of such period, to the extent not already included therein,

 

(7)           effects of adjustments (including the effects of such adjustments pushed down to the Issuer and its Restricted Subsidiaries) in the property and equipment, software and other intangible assets, deferred revenue and debt line items in such Person’s consolidated financial statements pursuant to GAAP resulting from the application of purchase accounting in relation to any consummated acquisition or the amortization or write-off of any amounts thereof, net of taxes, shall be excluded,

 

(8)           (i) any non-cash compensation expense recorded from grants of stock appreciation or similar rights, stock options, restricted stock or other rights and non-cash charges associated with 

 

7

 

the rollover, acceleration or payout of Equity Interests by management of the Issuer or any of its direct or indirect parent companies in connection with the Transactions or other acquisitions and (ii) the amount of any contingent payments related to the Trident Acquisition that are treated as compensation expense in accordance with GAAP shall be excluded;

 

(9)           any impairment charge or asset write-off or write-down, in each case, pursuant to GAAP and the amortization of intangibles and other assets arising pursuant to GAAP shall be excluded,

 

(10)         any net gain or loss in such period (i) due solely to fluctuations in currency values or (ii) resulting from currency translation gains or losses related to currency remeasurements of Indebtedness (including any net loss or gain resulting from Hedging Obligations for currency exchange risk) shall be excluded,

 

(11)         any increase in amortization or depreciation or other non-cash charges resulting from the application of purchase accounting in relation to any acquisition that is consummated after the Issue Date, net of taxes, shall be excluded,

 

(12)         any after-tax effect of income (loss) from early extinguishment or cancellation of Indebtedness or Hedging Obligations or other derivative instruments shall be excluded,

 

(13)         any net gain or loss in such period from Hedging Obligations or embedded derivatives that require similar accounting treatment and the application of Accounting Standards Codification Topic 815 and related pronouncements shall be excluded,

 

(14)         any fees, charges, costs and expenses incurred in connection with the Transactions or accruals and reserves that are established within 12 months of the Issue Date that are required to be established as a result of the Transactions in accordance with GAAP shall be excluded, and

 

(15)         any expenses or charges (other than depreciation or amortization expense) related to any Equity Offering, Permitted Investment, acquisition, disposition, recapitalization or the incurrence of Indebtedness permitted to be incurred by the Indenture (including a refinancing thereof) (whether or not successful), including (i) such fees, expenses or charges related to the offering of the Notes and the Credit Facilities and any Qualified Receivables Financing and (ii) any amendment or other modification of the Notes, the Credit Facilities and any Qualified Receivables Financing shall be excluded.

 

In addition, to the extent not already included in the Net Income of such Person and its Restricted Subsidiaries, notwithstanding anything to the contrary in the foregoing, Consolidated Net Income shall include the amount of proceeds received from business interruption insurance and reimbursements of any expenses and charges that are covered by indemnification or other reimbursement provisions in connection with any Permitted Investment or any sale, conveyance or other disposition of assets permitted under the Indenture.

 

Notwithstanding the foregoing, for the purpose of Section 4.07 hereof only (other than clause (3)(e) of Section 4.07(a) hereof), there shall be excluded from Consolidated Net Income any income arising from any sale or other disposition of Restricted Investments made by the Issuer and its Restricted Subsidiaries, any repurchases and redemptions of Restricted Investments from the Issuer and its Restricted Subsidiaries, any repayments of loans and advances which constitute Restricted Investments by the Issuer or any of its Restricted Subsidiaries, any sale of the stock of an Unrestricted Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such amounts increase the amount of Restricted Payments permitted under clause (3)(e) of Section 4.07(a) hereof.

 

8

 

“Consolidated Secured Debt Ratio” means, as of any date of determination, the ratio of (1) Consolidated Total Indebtedness of the Issuer and its Restricted Subsidiaries that is secured by any Lien, as of the end of the most recent fiscal period for which internal financial statements are available immediately preceding the date on which such event for which such calculation is being made shall occur to (2) Issuer’s EBITDA for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such event for which such calculation is being made shall occur, in each case with such pro forma adjustments to Consolidated Total Indebtedness and EBITDA as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of Fixed Charge Coverage Ratio.

 

“Consolidated Total Indebtedness” means, as at any date of determination, an amount equal to the sum of the aggregate amount of all outstanding Indebtedness of the Issuer and its Restricted Subsidiaries on a consolidated basis consisting of Indebtedness for borrowed money, Obligations in respect of Capitalized Lease Obligations and debt obligations evidenced by promissory notes and similar instruments.

 

“Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent,

 

(1)           to purchase any such primary obligation or any property constituting direct or indirect security therefor,

 

(2)           to advance or supply funds

 

(a)           for the purchase or payment of any such primary obligation, or

 

(b)           to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, or

 

(3)           to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.

 

“Corporate Trust Office” means the principal office of the Trustee at which at any time its corporate trust business shall be administered, which office at the date hereof is located at 246 Goose Lane, Suite 105, Guilford, CT 06437, Attention:  Corporate Trust Services - Administrator for INC Research, LLC., or such other address as the Trustee may designate from time to time by notice to the Holders and the Issuer, or the principal corporate trust office of any successor Trustee (or such address as such successor Trustee may designate from time to time by notice to the Holders and the Issuer).

 

“Credit Facilities” means, with respect to the Issuer or any of its Restricted Subsidiaries, one or more debt facilities, including the Senior Secured Credit Facility, or other financing arrangements (including, without limitation, commercial paper facilities or indentures) providing for revolving credit loans, term loans, letters of credit or other long-term indebtedness, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof and any indentures or credit facilities or commercial paper facilities that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount permitted to be borrowed thereunder

 

9

 

or alters the maturity thereof (provided that such increase in borrowings is permitted under Section 4.09(b)(1) hereof) or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, lender or group of lenders.

 

“Custodian” means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto.

 

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

 

“Definitive Note” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06(c) hereof, substantially in the form of Exhibit A hereto, except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

 

“Depositary” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as Depositary hereunder and having become such pursuant to the applicable provisions of this Indenture.

 

“Designated Non-cash Consideration” means the fair market value of non-cash consideration received by the Issuer or a Restricted Subsidiary in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officer’s Certificate, setting forth the basis of such valuation, executed by the principal financial officer of the Issuer, less the amount of cash and Cash Equivalents received in connection with a subsequent sale of or collection of such Designated Non-cash Consideration.

 

“Designated Preferred Stock” means Preferred Stock of the Issuer or any parent company thereof (in each case other than Disqualified Stock) that is issued for cash (other than to a Restricted Subsidiary or an employee stock ownership plan or trust established by the Issuer or any of its Subsidiaries) and is so designated as Designated Preferred Stock, pursuant to an Officer’s Certificate executed by the principal financial officer of the Issuer or the applicable parent company thereof, as the case may be, on the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in clause (3) of Section 4.07(a).

 

“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is putable or exchangeable), or upon the happening of any event, matures or is mandatorily redeemable (other than solely as a result of a change of control or asset sale) pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than solely as a result of a change of control or asset sale), in whole or in part, in each case prior to the date 91 days after the earlier of the maturity date of the Notes or the date the Notes are no longer outstanding; provided, however, that if such Capital Stock is issued to any plan for the benefit of employees of the Issuer or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Issuer or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.

 

“Domestic Restricted Subsidiary” means a Restricted Subsidiary incorporated or otherwise organized or existing under the laws of the United States, any state thereof or the District of Columbia.

 

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“EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period

 

(1)           increased (without duplication) by:

 

(a)           Permitted Tax Distributions and any other provision for taxes based on income or profits or capital gains, including, without limitation, state, franchise and similar taxes and foreign withholding taxes of such Person paid or accrued during such period deducted (and not added back) in computing Consolidated Net Income; plus

 

(b)           Fixed Charges of such Person for such period plus amounts excluded from the definition of Consolidated Interest Expense pursuant to clauses 1(x) and 1(y) thereof to the extent the same was deducted (and not added back) in calculating such Consolidated Net Income; plus

 

(c)           Consolidated Depreciation and Amortization Expense of such Person for such period to the extent the same were deducted (and not added back) in computing Consolidated Net Income; plus

 

(d)           the amount of any restructuring charge or reserve deducted (and not added back) in such period in computing Consolidated Net Income, including any one-time costs incurred in connection with acquisitions after the Issue Date and costs related to the closure and/or consolidation of facilities; plus

 

(e)           any other non-cash charges, including any write offs, write downs or impairment charges, reducing Consolidated Net Income for such period (provided that if any such non-cash charges represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period); plus

 

(f)            any costs or expense incurred by the Issuer or a Restricted Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, to the extent that such cost or expenses are funded with cash proceeds contributed to the capital of the Issuer or net cash proceeds of an issuance of Equity Interest of the Issuer (other than Disqualified Stock) solely to the extent that such net cash proceeds are excluded from the calculation set forth in clause (3) of Section 4.07(a) hereof; plus

 

(g)           (i) the amount of transaction, management, monitoring, consulting and advisory fees and related expenses and indemnification payments paid (or any accruals related to such fees or related expenses) during such period to the Sponsors, not to exceed the amounts permitted by Section 4.07 (b)(14); (ii) the amount of any directors’ fees or reimbursements, in each case, not to exceed the amounts permitted by Section 4.07 (b)(12) and to the extent permitted under Section 4.11 and (iii) the amount of distributions and dividends paid in such period pursuant to the Class C Agreement not to exceed the amounts permitted by 4.07(b)(14); plus

 

(h)           cash receipts (or any netting arrangements resulting in reduced cash expenditures) not representing EBITDA or Net Income in any period to the extent non-cash

 

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gains relating to such income were deducted in the calculation of EBITDA pursuant to clause (2) below for any previous period and not added back; plus

 

(i)            any net loss included in the consolidated financial statements due to the application of Financial Accounting Standards No. 160 “Non-controlling Interests in Consolidated Financial Statements” (“FAS 160”); plus

 

(j)            rent expense as determined in accordance with GAAP not actually paid in cash during such period (net of rent expense paid in cash during such period over and above rent expense as determined in accordance with GAAP); plus

 

(k)           the amount of loss on sale of receivables and related assets in connection with a Qualified Receivables Financing deducted (and not added back) in computing Consolidated Net Income; plus

 

(l)            the amount of  “run-rate” cost savings, operating expense reductions, restructuring charges and expenses and cost-saving synergies projected by the Issuer in good faith to be realized as a result of actions taken or expected to be taken during such period (calculated on a pro forma basis as though such cost savings, operating expense reductions, restructuring charges and expenses and cost-saving synergies had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions, which, for the avoidance of doubt, will include up to $29.9 million of cost savings expected to be realized in connection with the Transactions; provided that (v) such cost savings, operating expense reductions, restructuring charges and expenses and cost-saving synergies are reasonably identifiable and factually supportable, (w) such cost savings, operating expense reductions, restructuring charges and expenses and cost-saving synergies are commenced within 12 months of the date hereof in connection with such actions, (x) no cost savings, operating expense reductions, restructuring charges and expenses and cost-saving synergies may be added pursuant to this clause (l) to the extent duplicative of any expenses or charges relating thereto that are either excluded in computing Consolidated Net Income or included (i.e., added back) in computing “EBITDA” for such period, (y) such adjustments may be incremental to (but not duplicative of) pro forma adjustments made pursuant to the second paragraph of the definition of “Fixed Charge Coverage Ratio”) and (z) the aggregate amount of cost savings, operating expense reductions, restructuring charges and expenses and cost-saving synergies added pursuant to this clause (l) shall not, except with respect to the $29.9 million of cost savings expected to be realized in connection with the Transactions, exceed the greater of 10% of combined EBITDA for such four quarter period (calculated on a pro forma basis) and the amount of such cost savings, operating expense reductions, restructuring charges and expenses and cost-saving synergies that would be compliant with Regulation S-X under the Securities Act.; and

 

(2)           decreased by (without duplication) non-cash gains increasing Consolidated Net Income of such Person for such period, excluding any non-cash gains to the extent they represent the reversal of an accrual or reserve for a potential cash item that reduced EBITDA in any prior period.

 

all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP.

 

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“EEA Government Obligation” means any direct non-callable obligation of any European Union member for the payment of which obligation the full faith and credit of the respective nation is pledged; provided that such nation has a credit rating at least equal to that of the highest rated member nation of the European Economic Area.

 

“EMU” means the economic and monetary union as contemplated in the Treaty on European Union.

 

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock, but excluding any debt security that is convertible into, or exchangeable for, Capital Stock.

 

“Equity Offering” means any public or private sale of common stock or Preferred Stock of the Issuer or any of its direct or indirect parent companies (excluding Disqualified Stock), other than:

 

(1)           public offerings with respect to the Issuer’s or any direct or indirect parent company’s common stock registered on Form S-8;

 

(2)           issuances to any Subsidiary or Affiliate of the Issuer; and

 

(3)           any such public or private sale that constitutes an Excluded Contribution.

 

“Equivalent Managing Body” means (i) with respect to a manager managed limited liability company, the board of managers, (ii) with respect to a member managed limited liability company, the board of directors of its most direct corporate parent company, which, for the avoidance of doubt, for the Issuer on the Issue Date is Holdings and (iii) with respect to a partnership, the board of directors of the general partner to the extent such general partner is a corporation, or the Equivalent Managing Body of the general partner if such general partner is not a corporation.

 

“euro” means the single currency of participating member states of the EMU.

 

“Euroclear” means Euroclear S.A./N.V., as operator of the Euroclear system, and any successor thereto.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“Excluded Contribution” means net cash proceeds, marketable securities or Qualified Proceeds received by the Issuer from:

 

(a)           contributions to its common equity capital; and

 

(b)           the sale (other than to a Subsidiary of the Issuer or to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of the Issuer) of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of the Issuer, in each case designated as Excluded Contributions pursuant to an Officers’ Certificate of the Issuer on the date such capital contributions are made or the date such Equity Interests are sold, as the case may be, which are excluded from the calculation set forth in Section 4.07(a)(3).

 

“Expense Reimbursement Agreement” means the Expense Reimbursement Agreement among Avista Capital Holdings, L.P., an affiliate of Ontario Teachers’ Pension Plan Board, INC Research Holdings, Inc., INC Research Intermediate LLC and the Issuer, as in effect on the Issue Date and giving

 

13

 

effect to amendments thereto that, taken as a whole, are not materially adverse to the interests of the Holders of the Notes.

 

“fair market value” means, with respect to any asset or liability, the fair market value of such asset or liability as determined by the Issuer in good faith; provided that if the fair market value is equal to or exceeds $25.0 million, such determination shall be made in good faith by the board of directors or Equivalent Managing Body of the Issuer.

 

“Fixed Charge Coverage Ratio” means, with respect to any Person for any period, the ratio of EBITDA of such Person for such period to the Fixed Charges of such Person for such period.  In the event that the Issuer or any Restricted Subsidiary incurs, assumes, guarantees, redeems, retires or extinguishes any Indebtedness (other than Indebtedness incurred under any revolving credit facility or other incurrence of Indebtedness for working capital purposes pursuant to working capital facilities unless, in each case, such Indebtedness has been permanently repaid and has not been replaced) or issues or redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to or simultaneously with the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Fixed Charge Coverage Ratio Calculation Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee, redemption, retirement or extinguishment of Indebtedness, or such issuance or redemption of Disqualified Stock or Preferred Stock, as if the same had occurred at the beginning of the applicable period.

 

For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, consolidations and discontinued operations (as determined in accordance with GAAP) that have been made (or committed to be made pursuant to a definitive agreement) by the Issuer or any of its Restricted Subsidiaries during the reference period or subsequent to such reference period and on or prior to or simultaneously with the Fixed Charge Coverage Ratio Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, consolidations and discontinued operations (and the change in any associated Fixed Charges and the change in EBITDA resulting therefrom) had occurred on the first day of the reference period.  If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any of its Restricted Subsidiaries since the beginning of such period shall have made any Investment, acquisition, disposition, merger, consolidation or discontinued operation that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, merger, consolidation or discontinued operation had occurred at the beginning of the applicable period.

 

For purposes of this definition, whenever pro forma effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Issuer and may include, without duplication, cost savings, operating expense reductions, restructuring charges and expenses and cost-saving synergies resulting from such Investment, acquisition, disposition, merger, consolidation or discontinued operation (including the Transactions) or other transaction, in each case calculated in the manner described in, and not to exceed the amount set forth in clause (1) of, the definition of “EBITDA” herein.  For the avoidance of doubt, the actual adjustments described in Adjusted EBITDA elsewhere in the Offering Memorandum shall be deemed to comply with the standards set forth in the immediately preceding sentence.  If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Fixed Charge Coverage Ratio Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness).  Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial

 

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or accounting officer of the Issuer to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.  For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period except as set forth in the first paragraph of this definition.  Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Issuer may designate.

 

“Fixed Charges” means, with respect to any Person for any period, the sum, without duplication, of:

 

(1)           Consolidated Interest Expense of such Person for such period;

 

(2)           all cash dividends or other distributions paid (excluding items eliminated in consolidation) on any series of Preferred Stock of such Person during such period; and

 

(3)           all cash dividends or other distributions paid or accrued (excluding items eliminated in consolidation) on any series of Disqualified Stock of such Person during such period.

 

“Foreign Subsidiary” means, with respect to any Person, any Restricted Subsidiary other than a Domestic Restricted Subsidiary.

 

“GAAP” means generally accepted accounting principles in the United States which are in effect on the Issue Date.

 

“Global Note Legend” means the legend set forth in Section 2.06(f)(ii) hereof, which is required to be placed on all Global Notes issued under this Indenture.

 

“Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A hereto, issued in accordance with Section 2.01, 2.06(b) or 2.06(d) hereof.

 

“Government Securities” means securities that are:

 

(1)           direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged; or

 

(2)           obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America.

 

“guarantee” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.

 

“Guarantee” means the guarantee by any Guarantor of the Issuer’s Obligations under this Indenture.

 

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“Guarantor” means, each Person that Guarantees the Notes in accordance with the terms of this Indenture.

 

“Hedging Obligations” means, with respect to any Person, the obligations of such Person under:

 

(1)           any interest rate protection agreements including, without limitation, interest rate swap agreements, interest rate cap agreements and interest rate collar agreements;

 

(2)           any foreign exchange contracts, currency swap agreements or other agreements or arrangements designed to protect such Person against fluctuations in interest rates or foreign exchange rates;

 

(3)           any commodity futures contract, commodity option or other similar arrangement or agreement designed to protect such Person against fluctuations in the prices of commodities; and

 

(4)           indemnity agreements and arrangements entered into in connection with the agreements and arrangements described in clauses (1), (2) and (3).

 

“Holder” means the Person in whose name a Note is registered on the Registrar’s books.

 

“Holdings” means INC Research Holdings, Inc.

 

“Indebtedness” means, with respect to any Person, without duplication:

 

(1)           any indebtedness (including principal and premium) of such Person, whether or not contingent:

 

(a)           in respect of borrowed money;

 

(b)           evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof);

 

(c)           representing the balance deferred and unpaid of the purchase price of any property (including Capitalized Lease Obligations), except (i) any such balance that constitutes an accrued expense or trade payable or similar obligation to a trade creditor, in each case, accrued in the ordinary course of business that are not overdue by 90 days or more or are being contested in good faith and (ii) any earn-out obligations until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP; or

 

(d)           representing any Hedging Obligations;

 

if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP;

 

(2)           to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the obligations of the type referred to in

 

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clause (1) of a third Person (whether or not such items would appear upon the balance sheet of the such obligor or guarantor), other than by endorsement of negotiable instruments for collection in the ordinary course of business; and

 

(3)           to the extent not otherwise included, the obligations of the type referred to in clause (1) of a third Person secured by a Lien on any asset owned by such first Person, whether or not such Indebtedness is assumed by such first Person; provided that if such Indebtedness has not been so assumed the amount of such Indebtedness shall be the lesser of (A) the fair market value of such asset at the date of determination and (B) the amount of the Indebtedness so secured;

 

provided, however, that notwithstanding the foregoing, Indebtedness shall be deemed not to include Contingent Obligations incurred in the ordinary course of business.

 

“Indenture” means this Indenture, as amended or supplemented from time to time in accordance with Article 9 hereof.

 

“Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant of nationally recognized standing that is, in the good faith judgment of the Issuer, qualified to perform the task for which it has been engaged.

 

“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

 

“Initial Notes” has the meaning set forth in the preamble to this Indenture.

 

“Initial Purchasers” means Morgan Stanley & Co. LLC, ING Financial Markets LLC, RBC Capital Markets, LLC and Natixis Securities North America Inc.

 

“interest” means, with respect to the Notes, interest on the Notes (regardless of whether so stated).

 

“Interest Payment Date” means July 15 and January 15 of each year to stated maturity.

 

“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit, advances to customers, commission, travel and similar advances to officers and employees, in each case made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet (excluding the footnotes) of the Issuer in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property.  For purposes of the definition of “Unrestricted Subsidiary” and Section 4.07 hereof:

 

(1)           “Investments” shall include the portion (proportionate to the Issuer’s equity interest in such Subsidiary) of the fair market value of the net assets of a Subsidiary of the Issuer at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Issuer shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to:

 

17

 

(a)           the Issuer’s “Investment” in such Subsidiary at the time of such redesignation; less

 

(b)           the portion (proportionate to the Issuer’s equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and

 

(2)           any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer.

 

“Issue Date” means July 12, 2011.

 

“Issuer” has the meaning set forth in the preamble to this Indenture, until a successor replaces it and, thereafter, means the successor, in accordance with Section 5.01.

 

“Issuer Order” means a written request or order signed on behalf of the Issuer by an Officer of the Issuer, and delivered to the Trustee.

 

“Legal Holiday” means a Saturday, a Sunday or a day on which commercial banking institutions are not required to be open in the State of New York.

 

“Lien” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease be deemed to constitute a Lien.

 

“Management Agreement” means the Management Services Agreement among Avista Capital Holdings, L.P., INC Research Holdings, Inc., INC Research Intermediate LLC and the Issuer as in effect on the Issue Date and giving effect to amendments thereto that, taken as a whole, are not materially adverse to the interests of the Holders of the Notes.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.

 

“Net Income” means, with respect to any Person, the net income (loss) of such Person, determined on a consolidated basis in accordance with GAAP and before any reduction in respect of Preferred Stock dividends.

 

“Net Proceeds” means the aggregate cash proceeds received by the Issuer or any of its Restricted Subsidiaries in respect of any Asset Sale, net of the direct costs relating to such Asset Sale, including legal, accounting and investment banking fees, and brokerage and sales commissions, any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of principal, premium, if any, and interest on Secured Indebtedness required (other than required by clause (1) of Section 4.10(b) hereof) to be paid as a result of such transaction, and any deduction of appropriate amounts to be provided by the Issuer or any of the Restricted Subsidiaries as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Issuer or any of the Restricted Subsidiaries after such sale or other disposition

 

18

 

thereof, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations (fixed or contingent) associated with such transaction.

 

“Non-U.S. Person” means a Person who is not a U.S. Person.

 

“Notes” has the meaning set forth in the preamble to this Indenture.

 

“Obligations” means any principal, interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable state, federal or foreign law), penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters of credit and banker’s acceptances), damages and other liabilities, and guarantees of payment of such principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any Indebtedness; provided that Obligations with respect to the Notes shall not include fees or indemnification obligations in favor of the Trustee and other third parties other than the Holders.

 

“Offering Memorandum” means the offering memorandum, dated July 7, 2011, relating to the sale of the Notes.

 

“Officer” means the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer, any Assistant Treasurer, the Controller or the Secretary of the Issuer.

 

“Officer’s Certificate” means a certificate signed on behalf of the Issuer by an Officer of the Issuer that meets the requirements set forth in this Indenture.

 

“Opinion of Counsel” means a written opinion from legal counsel that meets the requirements set forth in this Indenture who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Issuer or the Trustee.

 

“Pari Passu Indebtedness” means, with respect to the Issuer or any Guarantor, Indebtedness of the Issuer or such Guarantor unless, with respect to any item of Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding or any other agreement governing the terms of such Indebtedness expressly provides that such Indebtedness shall be subordinated in right of payment to any other item of Indebtedness of the Issuer or such Guarantor.  Notwithstanding the foregoing, “Pari Passu Indebtedness” shall not include:

 

(i)           Indebtedness of the Issuer owed to any Restricted Subsidiary of the Issuer or Indebtedness of any such Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary of such Restricted Subsidiary;

 

(ii)            Indebtedness incurred in violation of this Indenture.

 

“Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear and Clearstream).

 

“Permitted Asset Swap” means the concurrent purchase and sale or exchange of Replacement Assets or a combination of Replacement Assets and cash or Cash Equivalents between the Issuer

 

19

 

or any of its Restricted Subsidiaries and another Person; provided, that any cash or Cash Equivalents received must be applied in accordance with Section 4.10 hereof.

 

“Permitted Holders” means (i) each of the Sponsors, (ii) members of management of the Issuer (or its direct or indirect parent or Subsidiary) on the Issue Date who are holders of Equity Interests of the Issuer (or any of its direct or indirect parent companies), (iii) any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members; provided that, in the case of such group and without giving effect to the existence of such group or any other group, the Sponsors and such members of management, collectively, have beneficial ownership of more than 50% of the total voting power of the Voting Stock of the Issuer or any of its direct or indirect parent companies, and (iv) any Person that, directly or indirectly, holds or acquires 100% of the total voting power of the Voting Stock of the Issuer, and of which no other Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) other than any of the Permitted Holders specified in clauses (i), (ii), and (iii) above holds more than 50% of the total voting power of the Voting Stock thereof.

 

“Permitted Investments” means:

 

(1)           any Investment in the Issuer or any of its Restricted Subsidiaries;

 

(2)           any Investment in cash and Cash Equivalents;

 

(3)           any Investment by the Issuer or any of its Restricted Subsidiaries in a Person that is engaged in a Similar Business if as a result of such Investment:

 

(a)           such Person becomes a Restricted Subsidiary; or

 

(b)           such Person, in one transaction or a series of related transactions, is merged or consolidated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Issuer or a Restricted Subsidiary,

 

and, in each case, any Investment held by such Person; provided, that such Investment was not acquired by such Person in contemplation of such acquisition, merger, consolidation or transfer;

 

(4)           any Investment in securities or other assets not constituting cash or Cash Equivalents and received in connection with an Asset Sale made pursuant to the provisions of Section 4.10 hereof or any other disposition of assets not constituting an Asset Sale;

 

(5)           any Investment existing on the Issue Date and any extension, modification or renewal of any Investments existing on the Issue Date, but only to the extent not involving additional advances, contributions or other Investments of cash or other assets or other increases thereof (other than as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities, in each case, pursuant to the terms of such Investment as in effect on the Issue Date);

 

(6)           any Investment acquired by the Issuer or any of its Restricted Subsidiaries in compromise of, or in respect of, obligations of, claims against or dispute with, any Person (other than the Issuer or any Restricted Subsidiary or Affiliate), including, but not limited to:

 

(a)           in exchange for any other Investment or accounts receivable held by the Issuer or any such Restricted Subsidiary in connection with or as a result of a bankruptcy,

 

20

 

workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable; or

 

(b)           as a result of a foreclosure by the Issuer or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

 

(7)           Hedging Obligations permitted under clause (10) of Section 4.09(b) hereof;

 

(8)           Investments made with the net cash proceeds of, or the payment for which consists of, Equity Interests (exclusive of Disqualified Stock) of the Issuer, or any of its direct or indirect parent companies; provided, however, in each case, that such cash proceeds or such Equity Interests, as the case may be, will not increase the amount available for Restricted Payments under clause (3) of Section 4.07(a) hereof;

 

(9)           guarantees of Indebtedness permitted under Section 4.09 hereof;

 

(10)         any transaction to the extent it constitutes an Investment that is permitted under this Indenture and made in accordance with the provisions of Section 4.11(b) hereof (except transactions described in clauses (2), (4) and (13) of Section 4.11(b) hereof);

 

(11)         any Investment by the Issuer or any Restricted Subsidiary in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Financing; provided, however that any Investment in a Receivables Subsidiary is in the form of a purchase money note, contribution of additional receivables or an Equity Interest;

 

(12)         additional Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (12) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash or marketable securities), not to exceed the greater of (x) $25.0 million and (y) 2.00% of Total Assets (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

 

(13)         loans and advances to, or guarantees of Indebtedness of, officers, directors and employees in an amount not to exceed $3.0 million at any time outstanding;

 

(14)         loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case incurred in the ordinary course of business consistent with past practice;

 

(15)         advances to customers or suppliers in the ordinary course of business that are, in conformity with GAAP, recorded as accounts receivable, prepaid expenses or deposits on the balance sheet of the Issuer or the Restricted Subsidiaries and endorsements for collection or deposit arising in the ordinary course of business;

 

(16)         lease, utility and other similar deposits in the ordinary course of business;

 

(17)         Investments consisting of the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons, in each case in the ordinary course of business;

 

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(18)         Investments consisting of purchases and acquisitions of inventory, supplies, materials and equipment or purchases of contract rights or licenses or leases of intellectual property, in each case in the ordinary course of business.

 

(19)         open market repurchases of the Notes and other Pari Passu Indebtedness, provided that any Notes or Pari Passu Indebtedness so repurchased are promptly retired;

 

(20)         Investments in minority equity interests in customers received by such customers as part of fee arrangements entered into in the ordinary course of business or otherwise consistent with industry practice; and

 

(21)         Investments in joint ventures in an aggregate amount not to exceed $10.0 million outstanding at any one time in the aggregate.

 

“Permitted Liens” means, with respect to any Person:

 

(1)           pledges or deposits by such Person under workers’ compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S. government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business;

 

(2)           Liens, imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet overdue for a period of more than 30 days or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review and for which adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;

 

(3)           Liens for taxes, assessments or other governmental charges not yet overdue for a period of more than 30 days or payable or subject to penalties for nonpayment or which are being contested in good faith by appropriate proceedings diligently conducted, and for which adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;

 

(4)           Liens to secure public or statutory obligations, surety, stay, appeal, indemnity, bid, performance and similar bonds or with respect to other regulatory requirements or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

 

(5)           survey exceptions, encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental, to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

 

22

 

(6)          Liens securing Indebtedness permitted to be incurred pursuant to clause (4) or (17) Section 4.09 (b) hereof; provided that such Liens incurred pursuant to (i) clause (4) extend only to the property or equipment purchased, leased, constructed, installed, repaired or improved (except for accessions to such assets); provided that individual financings of property or equipment provided by one lender may be cross collateralized to other financings of property or equipment provided by such lender and (ii) clause (17) extends only to the assets of Foreign Subsidiaries;

 

(7)           Liens existing on the Issue Date (other than Liens in favor of secured parties under the Senior Secured Credit Facility);

 

(8)           Liens on property or shares of stock of a Person at the time such Person becomes a Subsidiary; provided, however, such Liens are not created or incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided further, however, that such Liens may not extend to any other property owned by the Issuer or any of its Restricted Subsidiaries;

 

(9)           Liens on property at the time the Issuer or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into the Issuer or any of its Restricted Subsidiaries; provided, however, that such Liens are not created or incurred in connection with, or in contemplation of, such acquisition; provided further, however, that the Liens may not extend to any other property owned by the Issuer or any of its Restricted Subsidiaries;

 

(10)         Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Issuer or another Restricted Subsidiary permitted to be incurred in accordance with Section 4.09 hereof;

 

(11)         Liens securing Hedging Obligations;

 

(12)         Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

 

(13)         leases, subleases, licenses or sublicenses granted to others in the ordinary course of business which do not materially interfere with the ordinary conduct of the business of the Issuer or any of its Restricted Subsidiaries and do not secure any Indebtedness;

 

(14)         Liens arising from Uniform Commercial Code financing statement filings regarding operating leases or consignments entered into by the Issuer and its Restricted Subsidiaries in the ordinary course of business;

 

(15)         Liens in favor of the Issuer or any Guarantor;

 

(16)         Liens on equipment of the Issuer or any of its Restricted Subsidiaries granted in the ordinary course of business to the Issuer’s clients;

 

(17)         Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancing, refunding, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (6), (7), (8) and (9) and

 

23

 

any Lien permitted by Section 4.12(a)(2)(C); provided, however, that (a) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on such property), and (b) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (i) the outstanding principal amount or in the case of Indebtedness described under clauses (6), (7), (8) and (9) only, if greater, committed amount of the Indebtedness described under clauses (6), (7), (8) and (9) at the time the original Lien became a Permitted Lien under this Indenture, and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement;

 

(18)         deposits made in the ordinary course of business to secure liability to insurance carriers;

 

(19)         other Liens securing obligations incurred in the ordinary course of business which obligations do not exceed $15.0 million at any one time outstanding;

 

(20)         Liens securing judgments for the payment of money not constituting an Event of Default under Section 6.01(5) hereof so long as such Liens are adequately bonded and any appropriate legal proceedings that may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

 

(21)         Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation and exportation of goods in the ordinary course of business;

 

(22)         Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code (or any comparable or successor provision) on items in the course of collection, (ii) attaching to commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business, and (iii) in favor of banking institutions arising as a matter of law encumbering deposits (including the right of setoff) and which are within the general parameters customary in the banking industry;

 

(23)         Liens deemed to exist in connection with Investments in repurchase agreements permitted under Section 4.09 hereof; provided that such Liens do not extend to any assets other than those that are the subject of such repurchase agreement;

 

(24)         Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;

 

(25)         Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Issuer or any of its Restricted Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Issuer and its Restricted Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Issuer or any of its Restricted Subsidiaries in the ordinary course of business;

 

(26)         Liens on accounts receivable and related assets contemplated by a Qualified Receivables Financing;

 

24

 

(27)         Liens on property or assets securing Indebtedness used to defease or to satisfy and discharge the Notes in their entirety; provided that the incurrence of such Indebtedness and such defeasance or satisfaction and discharge were not prohibited by this Indenture;

 

(28)         Non-recourse Liens on the Equity Interests of an Unrestricted Subsidiary to secure Obligations of such Unrestricted Subsidiary;

 

(29)         Liens on Equity Interests deemed to exist in connection with any options, put and call arrangements, rights of first refusal and similar rights relating to Investments in Persons that are not Subsidiaries under this Indenture; and

 

(30)         Liens incurred to secure Obligations in respect of any Indebtedness permitted to be incurred pursuant to Section 4.09 provided that, with respect to Liens securing Obligations permitted under this clause (30), at the time of incurrence and after giving pro forma effect thereto, the Consolidated Secured Debt Ratio would be no greater than 2.35 to 1.0 provided that, for purposes of calculating the Consolidated secured Debt Ratio, the maximum amount of Indebtedness under Credit Facilities then permitted under Section 4.09(b)(1) shall be deemed to be drawn.

 

For purposes of this definition, the term “Indebtedness” shall be deemed to include interest on such Indebtedness. For purposes of determining compliance with this definition, (A) Permitted Liens need not be incurred solely by reference to one category of Permitted Liens described above, but are permitted to be incurred in part under any combination thereof and (B) in the event that a Lien (or any portion thereof) meets the criteria of one or more of the categories of Permitted Liens described above, the Issuer may in its sole discretion, classify or reclassify such item of Permitted Liens (or any portion thereof) in any manner that complies with this definition and the Issuer may divide and classify a Lien in more than one of the types of Permitted Liens in the above clauses.

 

“Permitted Tax Distributions” means any payments, dividends or distributions by the Issuer to any direct or indirect parent in order to pay consolidated, combined, unitary or affiliated federal, state or local taxes not payable directly by the Issuer or any of their Subsidiaries which payments by the Issuer are not in excess of the tax liabilities that would have been payable by the Issuer and its Subsidiaries on a consolidated basis (were the Issuer the common parent of a consolidated group consisting of the Issuer and the Issuer’s Subsidiaries).

 

“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

 

“Preferred Stock” means any Equity Interest with preferential rights of payment of dividends or upon liquidation, dissolution, or winding up.

 

“Private Placement Legend” means the legend set forth in Section 2.06(f)(i) hereof to be placed on all Notes issued under this Indenture, except where otherwise permitted by the provisions of this Indenture.

 

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

 

“Qualified Proceeds” means assets that are used or useful in, or Capital Stock of any Person engaged in, a Similar Business; provided that the fair market value of any such assets or Capital Stock shall be determined in good faith by the Issuer.

 

25

 

“Qualified Receivables Financing” means any transaction or series of transactions entered into by the Issuer or any of its Restricted Subsidiaries pursuant to which the Issuer or any of its Restricted Subsidiaries sells, conveys or otherwise transfers to (i) a Receivables Subsidiary (in the case of a transfer by the Issuer or any of its Restricted Subsidiaries) and (ii) any other Person (in the case of a transfer by a Receivables Subsidiary), or grants a security interest in, any accounts receivable (whether now existing or arising in the future) of the Issuer or any of its Restricted Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted.

 

“Rating Agencies” mean Moody’s and S&P; provided that if S&P, Moody’s or any Successor Rating Agency (as defined below) shall cease to be in the business of providing rating services for debt securities generally, the Issuer shall be entitled to replace any such Rating Agency or Successor Rating Agency, as the case may be, which has ceased to be in the business of providing rating services for debt securities generally with a security rating agency which is in the business of providing rating services for debt securities generally and which is nationally recognized in the United States (such rating agency, a “Successor Rating Agency”).

 

“Receivables Subsidiary” means a Subsidiary of the Issuer (or another Person formed for the purposes of engaging in a Qualified Receivables Financing with the Issuer or its Restricted Subsidiaries in which the Issuer or any Restricted Subsidiary of the Issuer makes an Investment and to which the Issuer or any Restricted Subsidiary of the Issuer transfers accounts receivable and related assets) which engages in no activities other than in connection with the financing of accounts receivable of the Issuer and its Restricted Subsidiaries, all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and which is designated by the board of directors or Equivalent Managing Body of the Issuer (as provided below) as a Receivables Subsidiary and:

 

(a)           no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Issuer or any of its Restricted Subsidiaries (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Issuer or any other Subsidiary of the Issuer in any way other than pursuant to Standard Securitization Undertakings, or (iii) subjects any property or asset of the Issuer or any other Subsidiary of the Issuer, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings,

 

(b)           with which neither the Issuer nor any of its Restricted Subsidiaries has any material contract, agreement, arrangement or understanding other than on terms which the Issuer reasonably believes to be no less favorable to the Issuer or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Issuer, and

 

(c)           to which neither the Issuer nor any of its Restricted Subsidiaries has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.

 

Any such designation by the board of directors or Equivalent Managing Body of the Issuer shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the board of directors or Equivalent Managing Body of the Issuer giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the foregoing conditions.

 

26

 

“Record Date” for the interest payable on any applicable Interest Payment Date means January 1 or July 1 (whether or not a Business Day) next preceding such Interest Payment Date.

 

“Regulation S” means Regulation S promulgated under the Securities Act.

 

“Regulation S Global Note” means a Global Note substantially in the form of Exhibit A hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes sold or to be sold in reliance on Rule 903.

 

“Replacement Assets” means (a) substantially all the assets of a business operating or engaged in a Similar Business, (b) Capital Stock in any Person operating or engaged in a Similar Business that results in the Issuer or another of the Restricted Subsidiaries, as the case may be, owning an amount of the Capital Stock of such Person such that it constitutes a Restricted Subsidiary or (c) any other property or assets, in the case of each of clauses (a) through (c), used or useful in a Similar Business.

 

“Responsible Officer” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, trust officer, assistant trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

 

“Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.

 

“Restricted Global Note” means a Global Note bearing the Private Placement Legend.

 

“Restricted Investment” means an Investment other than a Permitted Investment.

 

“Restricted Period” means the 40-day distribution compliance period as defined in Regulation S.

 

“Restricted Subsidiary” means, at any time, any direct or indirect Subsidiary of the Issuer (including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary; provided, however, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of “Restricted Subsidiary.”

 

“Rule 144” means Rule 144 promulgated under the Securities Act.

 

“Rule 144A” means Rule 144A promulgated under the Securities Act.

 

“Rule 903” means Rule 903 promulgated under the Securities Act.

 

“Rule 904” means Rule 904 promulgated under the Securities Act.

 

“S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and any successor to its rating agency business.

 

“Sale and Lease-Back Transaction” means any arrangement providing for the leasing by the Issuer or any of its Restricted Subsidiaries of any real or tangible personal property, which property

 

27

 

has been or is to be sold or transferred by the Issuer or such Restricted Subsidiary to a third Person in contemplation of such leasing.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Secured Indebtedness” means any Indebtedness of the Issuer or any of its Restricted Subsidiaries secured by a Lien.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“Senior Secured Credit Facility” means the Credit Facility under the Credit Agreement to be entered into as of the Issue Date, by and among, the Issuer, as borrower, the lenders party thereto, and General Electric Capital Corporation, as administrative agent, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings or refinancings thereof and any indentures or credit facilities or commercial paper facilities with banks or other institutional lenders or investors that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof (provided that such increase in borrowings is permitted under Section 4.09).

 

“Significant Subsidiary” means any Restricted Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such regulation is in effect on the Issue Date.

 

“Similar Business” means any business conducted or proposed to be conducted by the Issuer and its Restricted Subsidiaries on the Issue Date or any business that is similar, reasonably related, incidental or ancillary thereto.

 

“Specified Assets” means the Issuer’s interest in that certain Joint Venture and Shareholders Agreement dated as of March 13, 2007 between the Issuer and GVK Biosciences Private Limited and that certain Amended and Restated Cooperative Joint Venture Contract dated as of July 5, 2000 between Acer/Excel Inc. and Beijing Wits Science & Technology Co., Ltd.

 

“Sponsors” means any of Avista Capital Partners II, LP, Avista Capital Partners II GP, LLC and Ontario Teachers’ Pension Plan Board and each of their respective Affiliates other than any portfolio company thereof.

 

“Standard Securitization Undertakings” means representations, warranties, covenants, indemnities and guarantees of performance entered into by the Issuer or any Subsidiary of the Issuer which the Issuer has determined in good faith to be customary in an accounts receivable securitization transaction.

 

“Subordinated Indebtedness” means, with respect to the Notes or the Guarantee of a Guarantor,

 

(1)           any Indebtedness of the Issuer which is by its terms subordinated in right of payment to the Notes, and

 

28

 

(2)           any Indebtedness of any Guarantor which is by its terms subordinated in right of payment to the Guarantee of such entity of the Notes or the Guarantee of a Guarantor.

 

“Subsidiary” means, with respect to any Person:

 

(1)           any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof or is consolidated under GAAP with such Person at such time; and

 

(2)           any partnership, joint venture, limited liability company or similar entity of which

 

(x)           more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise, and

 

(y)           such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

 

“Total Assets” means the total assets of the Issuer and its Restricted Subsidiaries on a consolidated basis, as shown on the most recent consolidated balance sheet of the Issuer and its Restricted Subsidiaries and computed in accordance with GAAP.  Total Assets shall be calculated after giving pro forma effect to the transaction giving rise to the need to calculate Total Assets.

 

“Transactions” means the transactions contemplated by the Transaction Agreement, the issuance of the Notes and the entry into and borrowings under the Senior Secured Credit Facility and repayment of existing indebtedness, to be consummated in connection with the foregoing on the Issue Date.

 

“Transaction Agreement” means the Agreement and Plan of Merger dated as of May 4, 2011, by and among INC Research LLC, Triangle Two Acquisition Corp and Kendle International, Inc.

 

“Treasury Rate” means, as of any Redemption Date, the yield to maturity as of such Redemption Date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the Redemption Date to July 15, 2015; provided, however, that if the period from the Redemption Date to July 15, 2015 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

 

“Trident Acquisition” means the acquisition of Trident Clinical Research Pty Ltd by the Issuer on June 1, 2011.

 

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended (15 U.S.C §§ 77aaa-77bbbb).

 

29

 

“Trustee” means Wilmington Trust, National Association, as trustee, until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

 

“Unrestricted Definitive Note” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.

 

“Unrestricted Global Note” means a permanent Global Note, substantially in the form of Exhibit A attached hereto, that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that do not bear the Private Placement Legend.

 

“Unrestricted Subsidiary” means:

 

(1)           any Subsidiary of the Issuer which at the time of determination is an Unrestricted Subsidiary (as designated by the Issuer, as provided below); and

 

(2)           any Subsidiary of an Unrestricted Subsidiary.

 

The Issuer may designate any Subsidiary of the Issuer (including any existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on any property of, the Issuer or any Subsidiary of the Issuer(other than solely any Subsidiary of the Subsidiary to be so designated); provided that

 

(1)           any Unrestricted Subsidiary must be an entity of which the Equity Interests entitled to cast at least a majority of the votes that may be cast by all Equity Interests having ordinary voting power for the election of directors or Persons performing a similar function are owned, directly or indirectly, by the Issuer;

 

(2)           such designation complies with Section 4.07 hereof; and

 

(3)           each of:

 

(a)           the Subsidiary to be so designated; and

 

(b)           its Subsidiaries

 

has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Issuer or any Restricted Subsidiary.

 

The Issuer may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that, immediately after giving effect to such designation, no Default shall have occurred and be continuing and the Issuer could incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test described in Section 4.09(a) hereof.

 

Any such designation by the Issuer shall be notified by the Issuer to the Trustee by promptly filing with the Trustee a copy of the resolution of the board of directors of the Issuer or any committee thereof giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the foregoing provisions.

 

30

 

“U.S. Person” means a U.S. person as defined in Rule 902(k) promulgated under the Securities Act.

 

“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote, directly or indirectly, in the election of the board of directors or Equivalent Managing Body of such Person and, in the case of Holdings, the Class A common stock of Holdings issued as of the Issue Date or any other Capital Stock of Holdings having equivalent rights.

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, at any date, the quotient obtained by dividing:

 

(1)           the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock or Preferred Stock multiplied by the amount of such payment; by

 

(2)           the sum of all such payments.

 

“Wholly-Owned Restricted Subsidiary” of any Person means a Restricted Subsidiary of such Person that is a Wholly-Owned Subsidiary.

 

“Wholly-Owned Subsidiary” of any Person means a Subsidiary of such Person, 100% of the outstanding Equity Interests of which (other than directors’ qualifying shares) shall at the time be owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person.

 

Section 1.02                                       Other Definitions.

 

	
Term
    	
 
    	
Defined in
   Section
    	
 
    
	
“Affiliate Transaction”
    	
 
    	
4.11
    	
 
    
	
“Asset Sale Offer”
    	
 
    	
4.10
    	
 
    
	
“Authentication Order”
    	
 
    	
2.02
    	
 
    
	
“Change of Control Offer”
    	
 
    	
4.14
    	
 
    
	
“Change of Control Payment”
    	
 
    	
4.14
    	
 
    
	
“Change of Control Payment Date”
    	
 
    	
4.14
    	
 
    
	
“Covenant Defeasance”
    	
 
    	
8.03
    	
 
    
	
“DTC”
    	
 
    	
2.03
    	
 
    
	
“Event of Default”
    	
 
    	
6.01
    	
 
    
	
“Excess Proceeds”
    	
 
    	
4.10
    	
 
    
	
“incur”
    	
 
    	
4.09
    	
 
    
	
“Initial Lien”
    	
 
    	
4.12
    	
 
    
	
“Legal Defeasance”
    	
 
    	
8.02
    	
 
    
	
“Note Register”
    	
 
    	
2.03
    	
 
    
	
“Offer Amount”
    	
 
    	
3.09
    	
 
    
	
“Offer Period”
    	
 
    	
3.09
    	
 
    
	
“Paying Agent”
    	
 
    	
2.03
    	
 
    
	
“Purchase Date”
    	
 
    	
3.09
    	
 
    
	
“Redemption Date”
    	
 
    	
3.07
    	
 
    
	
“Refinancing   Indebtedness”
    	
 
    	
4.09
    	
 
    
	
“Registrar”
    	
 
    	
2.03
    	
 
    

 

31

 

	
Term
    	
 
    	
Defined in
   Section
    	
 
    
	
“Restricted Payments”
    	
 
    	
4.07
    	
 
    
	
“Reversion Date”
    	
 
    	
4.16
    	
 
    
	
“Successor Company”
    	
 
    	
5.01
    	
 
    
	
“Successor Person”
    	
 
    	
5.01
    	
 
    
	
“Suspended Covenants”
    	
 
    	
4.16
    	
 
    
	
“Suspension Date”
    	
 
    	
4.16
    	
 
    
	
“Suspension Period”
    	
 
    	
4.16
    	
 
    
	
“Treasury Capital Stock”
    	
 
    	
4.07
    	
 
    
	
“Tax Group”
    	
 
    	
4.07
    	
 
    

 

Section 1.03                                       Incorporation by Reference of Trust Indenture Act.

 

Whenever this Indenture expressly refers to a provision of the Trust Indenture Act, the provision is incorporated by reference in and made a part of this Indenture.

 

The following Trust Indenture Act term used in this Indenture has the following meanings:

 

“obligor” on the Notes and the Guarantees means the Issuer and the Guarantors, respectively, and any successor obligor upon the Notes and the Guarantees, respectively.

 

All other terms used in this Indenture that are defined by the Trust Indenture Act, defined by Trust Indenture Act reference to another statute or defined by SEC rule under the Trust Indenture Act have the meanings so assigned to them.

 

Section 1.04                                       Rules of Construction.

 

Unless the context otherwise requires:

 

(a)           a term has the meaning assigned to it;

 

(b)           an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

 

(c)           words in the singular include the plural, and in the plural include the singular;

 

(d)           “will” shall be interpreted to express a command;

 

(e)           references to sections of, or rules under, the Securities Act or the Exchange Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;

 

(f)            unless the context otherwise requires, any reference to an “Article,” “Section” or “clause” refers to an Article, Section or clause, as the case may be, of this Indenture;

 

(g)           the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not any particular Article, Section, clause or other subdivision;

 

32

 

(h)           words used herein implying any gender shall apply to both genders; and

 

(i)            the words “including,” “includes” and similar words shall be deemed to be followed by “without limitation.”

 

Section 1.05                                       Acts of Holders.

 

(a)           Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing.  Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Issuer.  Proof of execution of any such instrument or of a writing appointing any such agent, or the holding by any Person of a Note, shall be sufficient for any purpose of this Indenture and (subject to Section 7.01) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Section 1.05.

 

(b)           The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof.  Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same.  The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.

 

(c)           The 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 Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of any action taken, suffered or omitted by the Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note.

 

(e)           The Issuer may, in the circumstances permitted by the Trust Indenture Act, set a record date for purposes of determining the identity of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or take any other act, or to vote or consent to any action by vote or consent authorized or permitted to be given or taken by Holders.  Unless otherwise specified, if not set by the Issuer prior to the first solicitation of a Holder made by any Person in respect of any such action, or in the case of any such vote, prior to such vote, any such record date, if there is to be a record date, shall be a date not earlier than the date 30 days prior to the first solicitation of such consent and not later than the date such solicitation is completed.

 

(f)            Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.  Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount pursuant to this paragraph shall have the same effect as if given or taken by separate Holders of each such different part.

 

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(g)           Without limiting the generality of the foregoing, a Holder, including DTC, that is the Holder of a Global Note, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and any Person that is the Holder of a Global Note, including DTC, may provide its proxy or proxies to the beneficial owners of interests in any such Global Note through such depositary’s standing instructions and customary practices.

 

ARTICLE II

 

THE NOTES

 

Section 2.01                                       Form and Dating; Terms.

 

(a)           General.  The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto.  The Notes may have notations, legends or endorsements required by law, stock exchange rules or usage in addition to those set forth on Exhibit A.  Each Note shall be dated the date of its authentication.  The Notes shall be in minimum amounts of $2,000 and integral multiples of $1,000 in excess of $2,000.

 

(b)           Global Notes.  Notes issued in global form shall be substantially in the form of Exhibit A attached hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto).  Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto).  Each Global Note shall represent such aggregate principal amount of the outstanding Notes as shall be specified in the “Schedule of Exchanges of Interests in the Global Note” attached thereto and each shall provide that it shall represent up to the aggregate principal amount of Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as applicable, to reflect exchanges and redemptions and transfers of interests therein.  Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof.

 

(c)           Participants shall have no rights under this Indenture or any Global Note with respect to any Global Note held on their behalf by the Depositary or by the Trustee as custodian for the Depositary, and the Depositary shall be treated by the Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Participants, the Applicable Procedures or the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note.

 

(d)           Terms.  The aggregate principal amount of Initial Notes that may be authenticated and delivered under this Indenture on the Issue Date is $300,000,000, and the aggregate amount of Additional Notes that may be authenticated and delivered under this Indenture is unlimited (so long as not otherwise prohibited by the terms of this Indenture, including Section 4.09 hereof).  With respect to any Additional Notes, the Issuer shall set forth in (1) a Board Resolution and (2) (i) an Officer’s Certificate or (ii) one or more indentures supplemental hereto, the following information:

 

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(A)          the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;

 

(B)          the issue price and the issue date of such Additional Notes, including the date from which interest shall accrue; and

 

(C)          whether such Additional Notes shall be either Restricted Definitive Notes or Restricted Global Notes.

 

In authenticating and delivering Additional Notes, the Trustee shall be entitled to receive and shall be fully protected in relying upon, in addition to the Opinion of Counsel and Officer’s Certificate required by Section 12.04, an Opinion of Counsel as to the due authorization, execution, delivery, validity and enforceability of such Additional Notes.

 

The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Issuer, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.  However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

 

The Notes shall be subject to repurchase by the Issuer pursuant to an Asset Sale Offer as provided in Section 4.10 hereof or a Change of Control Offer as provided in Section 4.14 hereof.  The Notes shall not be redeemable, other than as provided in Article 3.

 

(e)           Euroclear and Clearstream Procedures Applicable.  The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests in the Regulation S Global Note that are held by Participants through Euroclear or Clearstream.

 

Section 2.02                                       Execution and Authentication.

 

One Officer shall execute the Notes on behalf of the Issuer by manual or facsimile signature.

 

If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.

 

A Note shall not be entitled to any benefit under this Indenture or be valid or obligatory for any purpose until authenticated substantially in the form of Exhibit A attached hereto, as the case may be, by the manual signature of the Trustee.  The signature shall be conclusive evidence that the Note has been duly authenticated and delivered under this Indenture.

 

On the Issue Date, the Trustee shall, upon receipt of an Issuer Order directing authentication (an “Authentication Order”), authenticate and deliver the Initial Notes specified in such Authentication Order. In addition, at any time, from time to time, the Trustee shall upon receipt of an Authentication Order authenticate and deliver any Additional Notes for an aggregate principal amount specified in such Authentication Order for such Additional Notes issued hereunder.

 

The Trustee may appoint an authenticating agent acceptable to the Issuer to authenticate Notes.  Unless otherwise provided in such appointment, an authenticating agent may authenticate Notes

 

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whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.  An authenticating agent shall have the same rights as the Trustee to deal with Holders, the Issuer or an Affiliate of the Issuer.

 

Section 2.03                                       Registrar and Paying Agent.

 

The Issuer shall maintain at an office or agency designated pursuant to Section 4.02 a register in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Notes and the transfer or exchange of Notes (the “Note Register”).  The Issuer may appoint one or more co-registrars and one or more additional paying agents.  The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent.  The Issuer may change any Paying Agent or Registrar without notice to any Holder but upon written notice to such Registrar or Paying Agent and to the Trustee; provided, however, that no such removal shall become effective until (i) acceptance of any appointment by a successor as evidenced by an appropriate agreement entered into by the Issuer and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee and the passage of any waiting or notice periods required by DTC procedures or (ii) written notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i) above.  The Registrar or Paying Agent may resign at any time upon written notice to the Issuer and the Trustee.  The Issuer shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture.  If the Issuer fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such.  The Issuer or any of its Subsidiaries may act as Paying Agent or Registrar.

 

The Issuer initially appoints The Depository Trust Company (“DTC”) to act as Depositary with respect to the Global Notes.

 

The Issuer initially appoints the Trustee to act as the Paying Agent and Registrar for the Notes and to act as Custodian with respect to the Global Notes.

 

Section 2.04                                       Paying Agent To Hold Money in Trust.

 

The Issuer shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and shall notify the Trustee in writing of any default by the Issuer in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee.  The Issuer at any time may require a Paying Agent to pay all money held by it relating to the Notes to the Trustee.  Upon payment over to the Trustee, the Paying Agent (if other than the Issuer or a Subsidiary) shall have no further liability for the money.  If the Issuer or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent.  Upon any Event of Default under Sections 6.01(6) or (7), the Trustee shall serve as Paying Agent for the Notes.

 

Section 2.05                                       Holder Lists.

 

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with Trust Indenture Act Section 312(a).  If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee at least two Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Issuer shall otherwise comply with Trust Indenture Act Section 312(a).

 

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Section 2.06                                       Transfer and Exchange.

 

(a)           Transfer and Exchange of Global Notes.  Except as otherwise set forth in this Section 2.06, a Global Note may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor Depositary or a nominee of such successor Depositary or by a nominee of the Depositary to the Depositary or to another nominee of the Depositary or to a successor of the Depositary or a nominee or such successor.  A beneficial interest in a Global Note may not be exchanged for a Definitive Note unless (i) the Depositary (x) notifies the Issuer that it is unwilling or unable to continue as Depositary for such Global Note or (y) has ceased to be a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Issuer within 90 days; (ii) there shall have occurred and be continuing an Event of Default with respect to the Notes, or (iii) the Issuer, at its option, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes; provided that in no event shall the Regulation S Global Note be exchanged by the Issuer for Definite Notes prior to the expiration of the Restricted Period.  Upon the occurrence of any of the preceding events in (i), (ii) or (iii) above, Definitive Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the Depositary (in accordance with its customary procedures).  Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.  Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note, except for Definitive Notes issued subsequent to any of the preceding events in (i) or (ii) above and pursuant to Section 2.06(c) hereof.  A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); provided, however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) hereof.

 

(b)           Transfer and Exchange of Beneficial Interests in the Global Notes.  The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures.  None of the Issuer, the Trustee, Paying Agent, nor any agent of the Issuer shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownerships interests in a Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.  Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act.  Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

 

(i)            Transfer of Beneficial Interests in the Same Global Note.  Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend and any Applicable Procedures; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser).  Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note.  Except as may be required by any Applicable Procedures, no written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i).

 

(ii)           All Other Transfers and Exchanges of Beneficial Interests in Global Notes.  In connection with all transfers and exchanges of beneficial interests that are not subject to Section

 

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2.06(b)(i) hereof, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) if permitted under Section 2.06(a), a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903.  Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(f) hereof.

 

(iii)          Transfer of Beneficial Interests to Another Restricted Global Note.  A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) hereof and the Registrar receives the following:

 

(A)          if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; or

 

(B)          if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.

 

(iv)          Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note.  A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) hereof and the Registrar receives the following:

 

(1)           if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

 

(2)           if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

 

and, in each such case set forth in this subparagraph (B), if the Registrar or the Issuer so requests or the Applicable Procedures so requires, an Opinion of Counsel in form reasonably acceptable to

 

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the Issuer and the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

 

If any such transfer is effected pursuant to subparagraph (A) or (B) above at a time when an Unrestricted Global Note has not yet been issued, the Issuer shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (A) or (B) above.

 

Beneficial interests in an Unrestricted Global Note may not be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

 

(c)           Transfer or Exchange of Beneficial Interests for Definitive Notes.

 

(i)            Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes.  If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon the occurrence of any of the events in paragraph (i) or (ii) of Section 2.06(a) hereof and receipt by the Registrar of the following documentation:

 

(A)          if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

 

(B)          if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;

 

(C)          if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;

 

(D)          if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof; or

 

(E)           if such beneficial interest is being transferred to the Issuer or any of its Restricted Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof,

 

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Issuer shall execute and the Trustee shall authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount.  Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant.  The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered.  Any Definitive Note issued in

 

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exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

 

(ii)           Beneficial Interests in Regulation S Global Note to Definitive Notes.  Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

 

(iii)          Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes.  A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only upon the occurrence of any of the events in subsection (i) or (ii) of Section 2.06(a) hereof and if the Registrar receives the following:

 

(1)           if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or

 

(2)           if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;

 

and, in each such case set forth in this subparagraph (B), if the Registrar or the Issuer so requests or if the Applicable Procedures so requires, an Opinion of Counsel in form reasonably acceptable to the Issuer and the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

 

(iv)          Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes.  If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon the occurrence of any of the events in subsection (i) or (ii) of Section 2.06(a) hereof and satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Issuer shall execute and the Trustee shall authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount.  Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from or through the Depositary and the Participant or Indirect Participant.  The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered.  Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend.

 

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(d)           Transfer and Exchange of Definitive Notes for Beneficial Interests.

 

(i)            Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes.  If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:

 

(A)          if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

 

(B)          if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;

 

(C)          if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;

 

(D)          if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof; or

 

(E)           if such Restricted Definitive Note is being transferred to the Issuer or any of its Restricted Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof,

 

the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of, in the case of clause (A) above, the applicable Restricted Global Note, in the case of clause (B) above, the applicable 144A Global Note, and in the case of clause (C) above, the applicable Regulation S Global Note.

 

(ii)           Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes.  A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:

 

(1)           if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or

 

(2)           if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;

 

and, in each such case set forth in this subparagraph (B), if the Registrar or the Issuer so requests or if the Applicable Procedures so requires, an Opinion of Counsel in form reasonably acceptable to the Issuer and the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that

 

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the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

 

Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of the Unrestricted Global Note.

 

(iii)          Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes.  A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time.  Upon receipt of a written request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of one of the Unrestricted Global Notes.

 

If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraph (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Issuer shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.

 

(e)           Transfer and Exchange of Definitive Notes for Definitive Notes.  Upon written request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes.  Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing.  In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e):

 

(i)            Restricted Definitive Notes to Restricted Definitive Notes.  Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

 

(A)          if the transfer will be made to a QIB in accordance with Rule 144A, then the transferor must deliver a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;

 

(B)          if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; or

 

(C)          if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications required by item (3) thereof, if applicable.

 

(ii)           Restricted Definitive Notes to Unrestricted Definitive Notes.  Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:

 

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(1)           if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

 

(2)           if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;

 

and, in each such case set forth in this subparagraph (B), if the Registrar or the Issuer so requests or if the Applicable Procedures so requires, an Opinion of Counsel in form reasonably acceptable to the Issuer and the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

 

(iii)          Unrestricted Definitive Notes to Unrestricted Definitive Notes.  A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note.  Upon receipt of a written request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.

 

(f)            Legends.  The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture:

 

(i)            Private Placement Legend.

 

(A)          Except as permitted by subparagraphs (B), (C) and (D) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:

 

“THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

 

(1) REPRESENTS THAT IT IS NOT AN ‘‘AFFILIATE’’ (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF INC RESEARCH, LLC AND (A) IT IS A ‘‘QUALIFIED INSTITUTIONAL BUYER’’ (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A ‘‘Q1B’’), OR (B) IT HAS ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT;

 

(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN EXCEPT (A) TO INC RESEARCH, LLC, THE ISSUER, OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE

 

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ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER AND THE TRUSTEE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND

 

(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

 

AS USED HEREIN, THE TERMS ‘‘OFFSHORE TRANSACTIONS’’ AND ‘‘UNITED STATES’’ HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.”

 

(B)          Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.

 

(ii)           Global Note Legend.  Each Global Note shall bear a legend in substantially the following form:

 

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06(g) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.  UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY

 

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SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE 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.”

 

IN THE CASE OF THE REGULATION S GLOBAL NOTE: “BENEFICIAL INTERESTS IN A RULE 144A GLOBAL NOTE MAY BE TRANSFERRED TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN THE REGULATION S GLOBAL NOTE, WHETHER BEFORE OR AFTER THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, ONLY IF THE TRANSFEROR FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT SUCH TRANSFER IS BEING MADE IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S OR RULE 144 (IF AVAILABLE).”

 

(g)           Cancellation and/or Adjustment of Global Notes.  At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof.  At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and, if the Registrar and the Trustee are not the same entity, notice to the Trustee of such exchange or transfer an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, the aggregate principal amount of such other Global Note shall be increased in a corresponding amount pursuant to this Section 2.06(g) and if the Registrar and the Trustee are not the same entity, notice to the Trustee of such exchange or transfer an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

 

(h)           General Provisions Relating to Transfers and Exchanges.

 

(i)            To permit registrations of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 hereof or at the Registrar’s written request.

 

(ii)           No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Issuer or the

 

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Trustee may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.07, 2.10, 3.06, 3.09, 4.10, 4.14 and 9.05 hereof).

 

(iii)          Neither the Registrar nor the Issuer shall be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.

 

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

 

(v)           The Issuer shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of the sending of a notice of redemption of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day such notice was sent, (B) to register the transfer of or to exchange any Note so selected for redemption or tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer or an Asset Sale Offer in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.

 

(vi)          Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuer may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuer shall be affected by notice to the contrary.

 

(vii)         Upon surrender for registration of transfer of any Note at the office or agency of the Issuer designated pursuant to Section 4.02 hereof, the Issuer shall execute, and the Trustee shall authenticate and mail, in the name of the designated transferee or transferees, one or more replacement Notes of any authorized denomination or denominations of a like aggregate principal amount.

 

(viii)        At the option of the Holder, subject to Section 2.06(a), Notes may be exchanged for other Notes of any authorized denomination or denominations of a like aggregate principal amount upon surrender of the Notes to be exchanged at such office or agency.  Whenever any Global Notes or Definitive Notes are so surrendered for exchange, the Issuer shall execute, and the Trustee shall authenticate and mail, the replacement Global Notes and Definitive Notes to which the Holder making the exchange is entitled in accordance with the provisions of Section 2.02 hereof.

 

(ix)          All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile or electronically (in PDF format).

 

(x)           The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary Participants or beneficial owners of interests in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

 

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Neither the Trustee nor any Trustee agent shall have any responsibility or liability for any actions taken or not taken by the Depositary.

 

Section 2.07                                       Replacement Notes.

 

If any mutilated Note is surrendered to the Trustee, the Registrar or the Issuer and the Trustee receives evidence to their satisfaction of the ownership and destruction, loss or theft of any Note, the Issuer shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee’s requirements are met.  An indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuer to protect the Issuer, the Trustee, the Registrar and the Paying Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced.  At the Issuer’s request, such Holder shall reimburse the Issuer for its expenses in replacing a Note.

 

Every replacement Note issued in accordance with this Section 2.07 is a contractual obligation of the Issuer and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.

 

Section 2.08                                       Outstanding Notes.

 

The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding.  Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Note.

 

If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser.

 

If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

 

If the Paying Agent (other than the Issuer, a Subsidiary or an Affiliate of any thereof) holds, on a Redemption Date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.

 

Section 2.09                                       Treasury Notes.

 

In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer, or by any Affiliate of the Issuer shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded.  Notes so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to deliver any such direction, waiver or consent with respect to the pledged Notes and that the pledgee is not the Issuer or any obligor upon the Notes or any Affiliate of the Issuer or of such other obligor.

 

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Section 2.10                                       Temporary Notes.

 

Until certificates representing Definitive Notes are ready for delivery, the Issuer may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes.  Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Issuer consider appropriate for temporary Notes.  Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate Definitive Notes in exchange for temporary Notes.

 

Holders and beneficial holders, as the case may be, of temporary Notes shall be entitled to all of the benefits accorded to Holders, or beneficial holders, respectively, of Definitive Notes under this Indenture.

 

Section 2.11                                      Cancellation.

 

The Issuer at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment.  The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of cancelled Notes in accordance with its customary procedures (subject to the record retention requirement of the Exchange Act).  The Issuer may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.  Certification of the cancellation of all cancelled Notes shall upon the written request of the Issuer be delivered to the Issuer.

 

Section 2.12                                       Defaulted Interest.

 

If the Issuer defaults in a payment of interest on the Notes, the Issuer shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest to the Persons who are Holders on a special record date, which may be after the existing record date, in each case at the rate provided in the Notes and in Section 4.01 hereof.  The Issuer shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment.  The Trustee shall fix or cause to be fixed each such special record date and payment date; provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest.  The Trustee shall promptly notify the Issuer of such special record date and in any event at least 20 days before such special record date.  At least 15 days before the special record date, the Issuer (or, upon the written request of the Issuer, the Trustee in the name and at the expense of the Issuer) shall send or cause to be sent, via electronic transmission or by first-class postage prepaid, to each Holder a notice at his or her address as it appears in the Note Register that states the special record date, the related payment date and the amount of such interest to be paid.

 

Subject to the foregoing provisions of this Section 2.12 and for greater certainty, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

 

Section 2.13                                       CUSIP or ISIN Numbers.

 

The Issuer in issuing the Notes may use CUSIP and/or ISIN numbers (if then generally in use) and, if so, the Trustee shall use CUSIP and/or ISIN numbers in notices, including notices of redemption, exchange or offers to purchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as

 

48

 

contained in any notice and that reliance may be placed only on the other identification numbers printed on the Notes, and any related redemption, exchange or offers to purchase shall not be affected by any defect in or omission of such numbers.  The Issuer will as promptly as practicable notify the Trustee in writing of any change in the CUSIP and/or ISIN numbers.  Additional Notes issued under this Indenture may have the same or differing CUSIP and/or ISIN numbers as those given to the Initial Notes.

 

ARTICLE III

 

REDEMPTION

 

Section 3.01                                       Notices To Trustee.

 

If the Issuer elects to redeem Notes pursuant to Section 3.07 hereof, it shall furnish to the Trustee, at least 30 but not more than 60 days before a Redemption Date, an Officer’s Certificate setting forth (i) the paragraph or subparagraph of such Note and/or Section of this Indenture pursuant to which the redemption shall occur, (ii) the Redemption Date, (iii) the principal amount of the Notes to be redeemed and (iv) the redemption price.

 

Section 3.02                                       Selection of Notes To Be Redeemed or Purchased.

 

If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Notes to be redeemed or purchased (a) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed (and such listing is known to the Trustee); (b) on a pro rata basis to the extent practicable (or, in the case of Global Notes, the Trustee will select Notes for redemption based on DTC’s method that most nearly approximates, a pro rata selection); or (c) by lot or such other similar method in accordance with the procedures of DTC.

 

The Trustee shall promptly notify the Issuer in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased.  Notes and portions of Notes selected shall be in amounts of $2,000 or whole multiples of $1,000 in excess of $2,000; no Notes of $2,000 or less can be redeemed in part, except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed or purchased.  Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase.

 

Section 3.03                                       Notice of Redemption.

 

Subject to Section 3.09 hereof, the Issuer shall send or cause to be sent by electronic delivery or first-class mail notices of redemption at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at such Holder’s registered address, with a copy to the Trustee, except that redemption notices may be sent more than 60 days prior to a redemption date if the notice is issued in connection with Article 8 or Article 11 hereof.  Except as provided for in Section 3.07(c), notices of redemption may not be conditional.

 

The notice shall identify the Notes (including the CUSIP and ISIN numbers) to be redeemed and shall state:

 

(a)           the Redemption Date;

 

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(b)           the redemption price;

 

(c)           if any Note is to be redeemed in part only, the portion of the principal amount of that Note that is to be redeemed and that, after the Redemption Date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion of the original Note representing the same indebtedness to the extent not redeemed will be issued in the name of the Holder of the Notes upon cancellation of the original Note;

 

(d)           the name and address of the Paying Agent;

 

(e)           that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

 

(f)            that, unless the Issuer defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;

 

(g)           the paragraph or subparagraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and

 

(h)           that no representation is made as to the correctness or accuracy of the CUSIP or ISIN number, if any, listed in such notice or printed on the Notes.

 

At the Issuer’s request, the Trustee shall give the notice of redemption in the Issuer’s name and at its expense; provided that the Issuer shall have delivered to the Trustee, at least 15 days before notice of redemption is required to be sent or caused to be sent to Holders pursuant to this Section 3.03 (unless a shorter notice shall be agreed to by the Trustee), an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.

 

Section 3.04                                       Effect of Notice of Redemption.

 

Once notice of redemption is sent in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the Redemption Date at the redemption price, subject to one or more conditions precedent to the extent permitted under this Indenture.  The notice, if sent in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice.  In any case, failure to give such notice or any defect in the notice to the Holder of any Note designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Note.  Subject to Section 3.05 hereof, on and after the Redemption Date, interest ceases to accrue on Notes or portions of Notes called for redemption.

 

Section 3.05                                       Deposit of Redemption or Purchase Price.

 

Prior to 11:00 a.m. (New York City time) on the redemption or purchase date, the Issuer shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued and unpaid interest on all Notes to be redeemed or purchased on that date.  The Trustee or the Paying Agent shall promptly return to the Issuer any money deposited with the Trustee or the Paying Agent by the Issuer in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest on, all Notes to be redeemed or purchased.

 

If the Issuer complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest shall cease to accrue on the Notes or the portions of Notes called for

 

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redemption or purchase.  Redemption amounts shall only be paid upon presentation and surrender of any such Notes to be redeemed.  If a Note is redeemed or purchased on or after a Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest to the redemption or purchase date shall be paid to the Person in whose name such Note was registered at the close of business on such Record Date.  If any Note called for redemption or purchase shall not be so paid upon surrender for redemption or purchase because of the failure of the Issuer to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest accrued to the redemption or purchase date not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.

 

Payment of the redemption price and performance of the Issuer’s obligations in connection with any redemption may be performed by another Person.

 

Section 3.06                                       Notes Redeemed or Purchased in Part.

 

Upon surrender of a Note that is redeemed or purchased in part, the Issuer shall issue and the Trustee shall authenticate for the Holder at the expense of the Issuer a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered representing the same indebtedness to the extent not redeemed or purchased; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000.  It is understood that, notwithstanding anything in this Indenture to the contrary, only an Authentication Order and not an Opinion of Counsel or Officer’s Certificate is required for the Trustee to authenticate such new Note.

 

Section 3.07                                       Optional Redemption.

 

(a)           On and after July 15, 2015, the Issuer may redeem the Notes, in whole or in part, upon prior notice as provided in Section 3.03, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon, if any to, but not including, the applicable Redemption Date, subject to the right of Holders of Notes of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date, if redeemed during the twelve-month period beginning on July 15 of each of the years indicated below:

 

	
Year
    	
 
    	
Percentage
    	
 
    
	
2015 
    	
 
    	
105.750
    	
%
    
	
2016 
    	
 
    	
102.875
    	
%
    
	
2017 and thereafter 
    	
 
    	
100.000
    	
%
    

 

(b)           At any time prior to July 15, 2015, the Issuer may redeem all or a part of the Notes, upon prior notice as provided in Section 3.03, at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any to, but not including, the date of redemption (the “Redemption Date”), subject to the rights of Holders of Notes on the relevant Record Date to receive interest due on the relevant Interest Payment Date.

 

(c)           Until July 15, 2014, the Issuer may, at its option, on one or more occasions, redeem up to 35% of the aggregate principal amount of Notes at a redemption price equal to 111.5% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, to, but not including, the applicable Redemption Date, subject to the right of Holders of Notes of record on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of the sum of the original aggregate principal amount of Notes issued under this Indenture and the original principal amount of any Additional Notes issued

 

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under this Indenture after the Issue Date remains outstanding immediately after the occurrence of each such redemption; provided further that each such redemption occurs within 90 days of the date of closing of each such Equity Offering. Notice of any redemption upon any Equity Offering may be given prior to the redemption thereof, and any such redemption or notice may, at the Issuer’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.

 

Section 3.08                                       Mandatory Redemption.

 

The Issuer shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.  However, the Issuer may at any time and from time to time purchase Notes in the open market or otherwise.

 

Section 3.09                                       Offers To Repurchase by Application of Excess Proceeds.

 

(a)           In the event that, pursuant to Section 4.10 hereof, the Issuer shall be required to commence an Asset Sale Offer, it shall follow the procedures specified below.

 

(b)           The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the “Offer Period”).  No later than five Business Days after the termination of the Offer Period (the “Purchase Date”), the Issuer shall apply all Excess Proceeds (the “Offer Amount”) to the purchase of Notes and, if required, Pari Passu Indebtedness (on a pro rata basis, if applicable), or, if less than the Offer Amount has been tendered, all Notes and Pari Passu Indebtedness tendered in response to the Asset Sale Offer.  Payment for any Notes so purchased shall be made in the same manner as interest payments are made.

 

(c)           If the Purchase Date is on or after a Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest up to but excluding the Purchase Date, shall be paid to the Person in whose name a Note is registered at the close of business on such Record Date..

 

(d)           Upon the commencement of an Asset Sale Offer, the Issuer shall send or cause to be sent, by first-class mail or electronic delivery, a notice to each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer.  The Asset Sale Offer shall be made to all Holders and, if required, holders of Pari Passu Indebtedness.  The notice, which shall govern the terms of the Asset Sale Offer, shall state:

 

(i)            that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open;

 

(ii)           the Offer Amount, the purchase price and the Purchase Date;

 

(iii)          that any Note not tendered or accepted for payment shall continue to accrue interest;

 

(iv)          that, unless the Issuer defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest after the Purchase Date;

 

(v)           that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in a minimum amount of $2,000, or integral multiples of $1,000 in excess thereof;

 

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(vi)          that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” attached to the Note completed, or transfer such Note by book-entry transfer, to the Issuer, the Depositary, if appointed by the Issuer, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date;

 

(vii)         that Holders shall be entitled to withdraw their election if the Issuer, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;

 

(viii)        that, if the aggregate principal amount of Notes and Pari Passu Indebtedness surrendered by the holders thereof exceeds the Offer Amount, the Trustee shall select the Notes and the Issuer or agent of such Pari Passu Indebtedness shall select such Pari Passu Indebtedness to be purchased on a pro rata basis based on the accreted value or principal amount of the Notes or such Pari Passu Indebtedness tendered (with such adjustments as may be deemed appropriate by the Trustee so that only Notes in a minimum amount of $2,000, or integral multiples of $1,000 in excess thereof, shall be purchased); and

 

(ix)          that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer) representing the same indebtedness to the extent not repurchased.

 

(e)           On or before the Purchase Date, the Issuer shall, to the extent lawful, (1) accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof validly tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered and (2) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate principal amount of Notes or portions thereof so tendered.

 

(f)            The Issuer, the Depositary or the Paying Agent, as the case may be, shall promptly mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes properly tendered by such Holder and accepted by the Issuer for purchase, and the Issuer shall promptly issue a new Note, and the Trustee, upon receipt of an Authentication Order, shall authenticate and mail or deliver (or cause to be transferred by book-entry) such new Note to such Holder (it being understood that, notwithstanding anything in this Indenture to the contrary except the Officer’s Certificate required under Section 3.09(e), no Opinion of Counsel or Officer’s Certificate is required for the Trustee to authenticate and mail or deliver such new Note) in a principal amount equal to any unpurchased portion of the Note surrendered representing the same indebtedness to the extent not repurchased; provided that each such new Note shall be in a minimum principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.  Any Note not so accepted shall be promptly mailed or delivered by the Issuer to the Holder thereof.  If required by applicable law, the Issuer shall publicly announce the results of the Asset Sale Offer on or as soon as practicable after the Purchase Date.

 

Other than as specifically provided in this Section 3.09 or Section 4.10 hereof, any purchase pursuant to this Section 3.09 shall be made pursuant to the applicable provisions of Sections 3.01 through 3.06 hereof.

 

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ARTICLE IV

 

COVENANTS

 

Section 4.01                                      Payment of Notes.

 

The Issuer shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes.  Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Issuer or a Subsidiary, holds as of 11:00 a.m. New York City time on the due date money deposited by the Issuer in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.  Such Paying Agent shall, upon written request by the Issuer, return to the Issuer promptly, and in any event no later than five Business Days following such request, any money that exceeds such amount of principal, premium, if any, and interest paid on the Notes. If a payment date is not a Business Day, payment may be made on the next succeeding date that is a Business Day, and no interest shall accrue on such payment for the intervening period.

 

Section 4.02                                       Maintenance of Office or Agency.

 

The Issuer shall maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served.  The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency.  If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office.

 

The Issuer may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Issuer of its obligation to maintain an office or agency for such purposes.  The Issuer shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

 

The Issuer hereby designates the Corporate Trust Office as one such office or agency of the Issuer in accordance with Section 2.03 hereof.

 

Section 4.03                                       Reports and Other Information.

 

(a)           So long as any Notes are outstanding, the Issuer will furnish to the Holders of the Notes and the Trustee:

 

(1)           within 90 days (120 days for the fiscal years ended December 31, 2011) after the end of each fiscal year of the Issuer, (a) audited year-end consolidated financial statements of the Issuer and its Subsidiaries (including a balance sheet, statement of operations and statement of cash flows, but excluding any consolidating financial information required by Rule 3-10 of Regulation S-X under the Securities Act) prepared in accordance with GAAP and (b) a “Management’s Discussion and Analysis of Financial Condition and Results of Operations section as described in Item 303 of Regulation S-K under the Securities Act of the Issuer and its Subsidiaries (“MD&A”);

 

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(2)           within 45 days (or 60 days for any such quarter ending prior to December 31, 2012 after the end of each of the first three fiscal quarters of each fiscal year, (a) unaudited quarterly consolidated financial statements of the Issuer and its Subsidiaries (including a balance sheet, statement of operations and statement of cash flows and also including, for the second fiscal quarter of 2011, financial statements of Kendle and its subsidiaries) prepared in accordance with GAAP and subject to normal year-end adjustments and (b) an MD&A; and

 

(3)           within 5 Business Days after the occurrence of any of the following events, including a description in reasonable detail of such event: (i) any change in the executive officers or directors of the Issuer, (ii) any incurrence of any material on-balance sheet or material off-balance sheet long-term debt obligation or capital lease obligation (each as defined in Item 303 of Regulation S-K under the Securities Act) of or relating to the Issuer or any of its Restricted Subsidiaries, (iii) the acceleration of any Indebtedness of the Issuer or any of its Restricted Subsidiaries, (iv) any issuance or sale by the Issuer of Equity Interests of the Issuer (excluding any issuance or sale pursuant to any stock option plan in the ordinary course of business), (v) the entry into of any agreement by the Issuer or any of its Subsidiaries relating to a transaction that has resulted or may result in a Change of Control, (vi) any resignation or termination of the independent accountants of the Issuer or any engagement of any new independent accountants of the Issuer, (vii) any determination by the Issuer or the receipt of advice or notice by the Issuer from its independent accounts, in either case, relating to non-reliance on previously issued financial statements, a related audit opinion or a completed interim review, (viii) the completion by the Issuer or any of its Restricted Subsidiaries of the acquisition or disposition of a significant amount of assets, otherwise than in the ordinary course of business and (ix) the entry into, amendment of or termination of a material definitive agreement (including, without limitation, the Indenture), in each case to the extent such information would be required from an SEC registrant in a Form 8-K.

 

(b)           So long as any Notes are outstanding, the Issuer will also:

 

(1)           issue a press release to an internationally recognized wire service prior to posting on the website of the annual and quarterly reports required by Sections 4.03(a)(1) and (2), as contemplated by Section 4.03(b)(4), announcing the date on which such reports will be posted and directing note holders, prospective investors, broker-dealers and securities analysts to the website to obtain copies of such reports;

 

(2)           hold a conference call to discuss its results of operations and allow participants to ask questions at the end of each call within 90 days from the end of each fiscal year (or 120 days for the 2011 and 2012 fiscal years) and within 45 days from the end of each of the first three fiscal quarters of each fiscal year (or 60 days for each such quarter ending in the 2011 and 2012 fiscal years);

 

(3)           issue a press release to an internationally recognized wire service prior to the date of the conference call required to be held in accordance with clause (2) of this Section 4.03(b), announcing the time and date of such conference call and either including all information necessary to access the call or directing note holders, prospective investors, broker-dealers and securities analysts to contact the appropriate person at the Issuer to obtain such information; and

 

(4)           maintain a website (which may be password protected) to which all of the reports and press releases required by this Section 4.03 are posted.

 

If any Subsidiary of the Issuer is an Unrestricted Subsidiary, then the quarterly and annual financial information required by this Section 4.03 will include a reasonably detailed presentation, either on the

 

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face of the financial statements or in the footnotes thereto, and in the “MD&A” section in the Offering Memorandum, of the financial condition and results of operations of the Issuer and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Issuer.

 

For so long as any Notes remain outstanding, the Issuer will furnish to the Holders and to securities analysts and prospective investors that certify that they are qualified institutional buyers, upon their request, the information described in this Section 4.03 as well as all information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

Notwithstanding anything to the contrary contained herein, so long as INC Research Intermediate, or any direct or indirect parent company of the Issuer, is a Guarantor of the Notes, the reports and other information required to be provided as described hereunder may, at the Issuer’s option, be provided by INC Research Intermediate or such other direct or indirect parent company of the Issuer rather than the Issuer.

 

Section 4.04                                       Compliance Certificate.

 

(a)           The Issuer and each Guarantor (to the extent that such Guarantor is so required under the Trust Indenture Act) shall deliver to the Trustee, within 120 days after the end of each fiscal year ending after the Issue Date, a certificate from the principal executive officer, principal financial officer or principal accounting officer stating that a review of the activities of the Issuer and the Restricted Subsidiaries during the preceding fiscal year has been made under the supervision of the signing officer with a view to determining whether the Issuer has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to such officer signing such certificate, that to the best of his or her knowledge the Issuer has, during such fiscal year, kept, observed, performed and fulfilled each and every condition and covenant contained in this Indenture and is not in Default in the performance or observance of any of the terms, provisions, covenants and conditions of this Indenture (or, if a Default shall have occurred and be continuing, describing all such Defaults of which he or she may have knowledge).

 

(b)           The Issuer shall within 10 Business Days after the Issuer becomes aware that any Default has occurred and is continuing deliver to the Trustee by registered or certified mail or by facsimile transmission an Officer’s Certificate specifying such event.

 

Section 4.05                                      Taxes.

 

The Issuer shall pay or discharge, and shall cause each of the Restricted Subsidiaries to pay or discharge, prior to delinquency, all material taxes, material lawful assessments, and material governmental levies except such as are being contested in good faith and by appropriate actions or where the failure to effect such payment or discharge would not reasonably be expected to be adverse in any material respect to the Holders of the Notes.

 

Section 4.06                                       Stay, Extension and Usury Laws.

 

The Issuer and each of the Guarantors covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer and each of the Guarantors (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant that they shall not, by resort to any such law, hinder, delay or impede the execution

 

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of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.

 

Section 4.07                                       Limitation on Restricted Payments.

 

(a)           The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:

 

(I)            declare or pay any dividend or make any payment or distribution on account of the Issuer’s or any of its Restricted Subsidiaries’ Equity Interests, including any dividend or distribution payable in connection with any merger or consolidation other than:

 

(A)          dividends, payments or distributions by the Issuer payable solely in Equity Interests (other than Disqualified Stock) of the Issuer; or

 

(B)          dividends, payments or distributions by a Restricted Subsidiary so long as, in the case of any dividend, payment or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary that is not a Wholly-Owned Subsidiary, the Issuer or a Restricted Subsidiary receives at least its pro rata share of such dividend, payment or distribution in accordance with its Equity Interests in such class or series of securities;

 

(II)          purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of the Issuer or any direct or indirect parent of the Issuer, including in connection with any merger or consolidation;

 

(III)        make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value or give any irrevocable notice of redemption with respect thereto, in each case, prior to any scheduled repayment, sinking fund payment or maturity, any Subordinated Indebtedness, other than:

 

(A)          Indebtedness permitted under clauses (7) and (8) of Section 4.09(b) hereof; or

 

(B)          the purchase, repurchase or other acquisition of Subordinated Indebtedness purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase or acquisition; or

 

(C)          the giving of an irrevocable notice of redemption with respect to the transactions described in clauses (2) and (3) of Section 4.07(b); or

 

(IV)         make any Restricted Investment (all such payments and other actions set forth in clauses (I) through (IV) above being collectively referred to as “Restricted Payments”), unless, at the time of such Restricted Payment:

 

(1)           no Default shall have occurred and be continuing or would occur as a consequence thereof;

 

(2)           immediately after giving effect to such transaction on a pro forma basis, the Issuer could incur $1.00 of additional Indebtedness under Section 4.09(a) hereof; and

 

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(3)           such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Issuer and its Restricted Subsidiaries after the Issue Date (including Restricted Payments permitted by clauses (1), (6), (8), (9), (10) and (11) of Section 4.07(b) hereof, but excluding all other Restricted Payments permitted by Section 4.07(b) hereof), is less than the sum of (without duplication):

 

(a)           50% of the Consolidated Net Income of the Issuer for the period (taken as one accounting period) beginning with the fiscal quarter of the Issuer commencing June 26, 2011 to the end of the Issuer’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment, or, in the case such Consolidated Net Income for such period is a deficit, minus 100% of such deficit; plus

 

(b)           100% of the aggregate net cash proceeds and the fair market value of marketable securities or other property received by the Issuer since immediately after the Issue Date (other than net cash proceeds to the extent such net cash proceeds have been used to incur Indebtedness, Disqualified Stock or Preferred Stock pursuant to clause 12(a) of Section 4.09(b) from the issue or sale of:

 

(i)            (A) Equity Interests of the Issuer, including Treasury Capital Stock (as defined below), but excluding cash proceeds and the fair market value of marketable securities or other property received from the sale of:

 

(x)           Equity Interests to members of management, directors or consultants of the Issuer, any direct or indirect parent company of the Issuer and the Issuer’s Subsidiaries after the Issue Date to the extent such amounts have been applied to Restricted Payments made in accordance with clause (4) of Section 4.07(b) hereof; and

 

(y)           Designated Preferred Stock; and

 

(B)          to the extent such net cash proceeds are actually contributed to the Issuer, Equity Interests of the Issuer’s direct or indirect parent companies (excluding contributions of the proceeds from the sale of Designated Preferred Stock of such companies or contributions to the extent such amounts have been applied to Restricted Payments made in accordance with clause (4) of Section 4.07(b) hereof); or

 

(ii)           debt securities of the Issuer that have been converted into or exchanged for such Equity Interests of the Issuer or its direct or indirect parent companies;

 

provided, however, that this clause (b) shall not include the proceeds from (X) Equity Interests or convertible debt securities of the Issuer sold to a Restricted Subsidiary, as the case may be, (Y) Disqualified Stock or debt securities that have been converted into Disqualified Stock or (Z) Excluded Contributions; plus

 

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(c)           100% of the aggregate amount of cash and the fair market value of marketable securities or other property contributed to the capital of the Issuer following the Issue Date (other than (i) net cash proceeds to the extent such net cash proceeds have been used to incur Indebtedness Disqualified Stock or Preferred Stock pursuant to Section 4.09(b)(12), (ii) by a Restricted Subsidiary and (iii) from any Excluded Contribution); plus

 

(d)           100% of the aggregate amount received in cash and the fair market value of marketable securities or other property received by means of:

 

(i)           the sale or other disposition (other than to the Issuer or a Restricted Subsidiary) of Restricted Investments made by the Issuer or its Restricted Subsidiaries and repurchases and redemptions of such Restricted Investments from the Issuer or its Restricted Subsidiaries and repayments of loans or advances, and releases of guarantees, which constitute Restricted Investments by the Issuer or its Restricted Subsidiaries, in each case after the Issue Date; or

 

(ii)            the sale (other than to the Issuer or a Restricted Subsidiary) of the stock of an Unrestricted Subsidiary or a distribution from an Unrestricted Subsidiary (other than in each case to the extent the Investment in such Unrestricted Subsidiary constituted a Permitted Investment) or a dividend from an Unrestricted Subsidiary after the Issue Date; plus

 

(e)           in the case of the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary after the Issue Date, the fair market value of the Investment in such Unrestricted Subsidiary at the time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary, other than an Unrestricted Subsidiary to the extent the Investment in such Unrestricted Subsidiary constituted a Permitted Investment.

 

(b)           The foregoing provisions shall not prohibit:

 

(1)           the payment of any dividend or distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration thereof or the giving of the irrevocable redemption notice, as applicable, if at the date of declaration or notice such payment would have complied with the provisions of this Indenture;

 

(2)           the redemption, repurchase, defeasance, retirement or other acquisition of any Equity Interests of the Issuer or of a direct or indirect parent company (“Treasury Capital Stock”) or Subordinated Indebtedness of the Issuer or a Guarantor in exchange for, or out of the proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary) of, Equity Interests of the Issuer or of a direct or indirect parent company (in each case, other than any Disqualified Stock); provided that the amount of any proceeds that are utilized for any such redemption, repurchase, retirement or other acquisition shall be excluded from clauses (b) and (c) of the preceding paragraph;

 

(3)           the redemption, repurchase, retirement, defeasance or other acquisition of Subordinated Indebtedness of the Issuer or a Guarantor made by exchange for, or out of the proceeds of, the substantially concurrent sale of, new Indebtedness of the Issuer or a Guarantor, as the case may be, which is incurred in compliance with Section 4.09 hereof so long as:

 

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(a)           the principal amount (or accreted value, if applicable) of such new Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus any accrued and unpaid interest on, the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired for value, plus the amount of any premium paid (including tender premiums), defeasance costs and any reasonable fees and expenses incurred in connection with such redemption, repurchase, retirement, defeasance or other acquisition and the issuance of such new Indebtedness;

 

(b)           such new Indebtedness is subordinated to the Notes or the applicable Guarantee at least to the same extent as such Subordinated Indebtedness so purchased, exchanged, redeemed, repurchased, acquired or retired for value;

 

(c)           such new Indebtedness has a final scheduled maturity date equal to or later than the earlier of (x) the final scheduled maturity date of the Subordinated Indebtedness being so redeemed, repurchased, defeased, acquired or retired and (y) 60 days after the maturity date of the Notes; and

 

(d)           such new Indebtedness has a Weighted Average Life to Maturity equal to or greater than the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness being so redeemed, repurchased, defeased, acquired or retired;

 

(4)           a Restricted Payment to pay for the repurchase, retirement or other acquisition of Equity Interests of the Issuer or any of its direct and indirect parent companies held by any future, present or former employee, director or consultant of the Issuer, any of its Subsidiaries or any of its direct or indirect parent companies (or any spouses, successors, executors, administrators, heirs or legatees of the foregoing) pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or arrangement; provided, however, that the aggregate Restricted Payments made under this clause (4) do not exceed in any calendar year $5 million (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $10 million in any calendar year); provided, further, that such amount in any calendar year may be increased by an amount not to exceed:

 

(a)           the cash proceeds from the sale of Equity Interests (other than Disqualified Stock) of the Issuer or any of its direct and indirect parent companies to members of management, directors or consultants of the Issuer or any of its Subsidiaries or any of its direct and indirect parent companies that occurs after the Issue Date, to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of clause (3) of Section 4.07(a) hereof ; plus

 

(b)           the cash proceeds of key man life insurance policies received by the Issuer or its Restricted Subsidiaries after the Issue Date; less

 

(c)           the amount of any Restricted Payments made in any prior calendar year pursuant to clauses (a) and (b) of this clause (4);

 

provided that the cancellation of indebtedness owing to the Issuer or any of its Restricted Subsidiaries from employees, officers, directors or consultants of the Issuer, any of its Subsidiaries or direct or indirect parent companies in connection with a repurchase of Equity Interests of the Issuer or any direct or indirect

 

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parent company will not be deemed to constitute a Restricted Payment for purposes of this Section 4.07 or any other provisions of the Indenture;

 

(5)           [Reserved];

 

(6)           (a)           the declaration and payment of dividends and distributions to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) issued by the Issuer after the Issue Date; provided that the amount of dividends paid pursuant to this clause (a) shall not exceed the aggregate amount of cash actually received by the Issuer from the sale of such Designated Preferred stock; or

 

(b)           the declaration and payment of dividends and distributions to a direct or indirect parent company of the Issuer, the proceeds of which will be used to fund the payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) of such parent company issued after the Issue Date; provided that the amount of dividends paid pursuant to this clause (b) shall not exceed the aggregate amount of cash actually contributed to the Issuer from the sale of such Designated Preferred Stock; or

 

(c)           the declaration and payment of dividends and distributions on Treasury Capital Stock that is Preferred Stock in excess of the dividends declarable and payable thereon pursuant to 4.07(b)(2);

 

provided, however, in the case of each of (a), (b) and (c) of this Section 4.07(b)(6), that for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Designated Preferred Stock, after giving effect to such issuance or declaration on a pro forma basis, the Issuer and its Restricted Subsidiaries on a consolidated basis would have had a Fixed Charge Coverage Ratio of at least 2.00 to 1.00;

 

(7)           repurchases of Equity Interests of the Issuer or any of its direct or indirect parents deemed to occur upon exercise or vesting of stock options, warrants or similar rights if such Equity Interests represent all or a portion of the exercise price of such options or warrants or are surrendered in connection with satisfying any federal or state income tax obligation incurred in connection with such exercise or vesting;

 

(8)           the repurchase, redemption or other acquisition for value of Equity Interests of the Issuer or any direct or indirect parent representing fractional shares of such Equity Interests of the Issuer or any of its direct or indirect parents in connection with a stock dividend, split or combination or any merger, consolidation, amalgamation or other combination involving the Issuer or any direct or indirect parent;

 

(9)           the redemption, repurchase, retirement or other acquisition, in each case for nominal value per right, of any rights granted to all holders of Equity Interests of the Issuer or any direct or indirect parent pursuant to any stockholders’ rights plan adopted for the purpose of protecting stockholders from unfair takeover tactics, provided that any such redemption, repurchase, retirement or other acquisition of such rights shall not be for the purpose of evading the limitations described under this Section 4.07;

 

(10)         payments or distributions to dissenting stockholders pursuant to applicable law in connection with a merger, consolidation or transfer of all or substantially all of the Issuer’s property or assets that complies with this Indenture, provided that as a result of such merger, consolidation

 

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or transfer of all or substantially all of the Issuer’s property or assets, the Issuer shall have made a Change of Control Offer or Asset Sale Offer and all Notes tendered by Holders in connection therewith shall have been repurchased, redeemed or acquired for value;

 

(11)         the declaration and payment of dividends on the Issuer’s common stock (or the payment of dividends to any direct or indirect parent to fund a payment of dividends on such entity’s common stock) following the first public offering of the Issuer’s common stock or the common stock of any of its direct or indirect parent companies after the Issue Date, of up to 6% per annum of the net proceeds received by or contributed to the Issuer in or from any such public offering, other than public offerings with respect to the Issuer’s common stock registered on Form S-4 or Form S-8;

 

(12)         the declaration and payment of dividends by the Issuer to, or the making of loans to, its direct or indirect parent company, in amounts required for the Issuer’s direct or indirect parent companies to pay:

 

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

 

(b)           Permitted Tax Distributions;

 

(c)           customary salary, bonus and other benefits payable to directors, officers and employees of any direct or indirect parent company of the Issuer to the extent such salaries, bonuses and other benefits are attributable to the ownership or operation of the Issuer and the Restricted Subsidiaries and reimbursement of reasonable out-of-pocket costs of such directors in the ordinary course of business;

 

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

 

(e)           reasonable fees and expenses incurred in connection with any debt or equity offering (whether or not successful) by such direct or indirect parent company of the Issuer; and

 

(f)            taxes with respect to income of any direct or indirect parent company of the Issuer derived from funding made available to the Issuer or its Restricted Subsidiaries by such direct or indirect parent company;

 

(13)         Restricted Payments in the amount of Excluded Contributions;

 

(14)         (a) the payment of annual fees to any Sponsor or any of its Affiliates pursuant to the Management Agreement in an aggregate amount per annum not to exceed $500,000, (b) dividends or distributions pursuant to the Class C Agreement in an aggregate amount per annum not to exceed $500,000; (c) (i) payments of indemnification and third-party expense reimbursements under the Expense Reimbursement Agreement and Management Agreement and (ii) other payments under the Expense Reimbursement Agreement or other fees under the Management Agreement and the Class C Agreement in an aggregate amount not to exceed $15 million, provided that payments pursuant to this clause (ii) in any calendar year do not exceed $5 million, in

 

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each case as such agreements are in effect on the Issue Date or as such agreements may be amended accordance with Section 4.11;

 

(15)         other Restricted Payments in an aggregate amount taken together with all other Restricted Payments made pursuant to this clause (15) not to exceed $17.5 million;

 

(16)         the repurchase, redemption retirement, defeasance or other acquisition of any Preferred Stock or Subordinated Indebtedness required in accordance with provisions applicable thereto similar to those described under Sections 4.10 and 4.14; provided that all Notes tendered by Holders in connection with a Change of Control Offer or Asset Sale Offer, as applicable, have been repurchased, redeemed or acquired for value; and

 

(17)         any Restricted Payment used to fund the Transactions and the fees and expenses related thereto or used to fund amounts owed to Affiliates, in each case as described in the Offering Memorandum and to the extent permitted under Section 4.11,

 

provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clause (15) and (16) of this Section 4.07(b), no Default shall have occurred and be continuing or would occur as a consequence thereof.

 

(c)           As of the Issue Date, all of the Issuer’s Subsidiaries shall be Restricted Subsidiaries.  The Issuer shall not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the last sentence of the definition of “Unrestricted Subsidiary.”  For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Issuer and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated shall be deemed to be Restricted Payments in an amount determined as set forth in the last sentence of the definition of “Investment.”  Such designation shall be permitted only if a Restricted Payment and/or Permitted Investment in such amount would be permitted at such time pursuant to this Section 4.07(c) and/or the definition of “Permitted Investments,” and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.  Unrestricted Subsidiaries shall not be subject to any of the restrictive covenants set forth in this Indenture.

 

(d)           In the event that a Restricted Payment or Permitted Investment meets the criteria of more than one of the types of Restricted Payments described in the above clauses (including, without limitation Section 4.07(a)) or Permitted Investment described in the definition thereof, the Issuer, in its sole discretion, may classify or reclassify, such Restricted Payment or Permitted Investment in any manner that complies with this Section 4.07 and such Restricted Payment or Permitted Investment shall be treated as having been made pursuant to only one of such clauses of this Section 4.07 or of the definition of “Permitted Investment.”

 

Section 4.08                                       Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.

 

(a)           The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any such Restricted Subsidiary to:

 

(1)           (A)  pay dividends or make any other distributions to the Issuer or any of the Restricted Subsidiaries on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, or

 

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(B)  pay any Indebtedness owed to the Issuer or any of the Restricted Subsidiaries;

 

(2)           make loans or advances to the Issuer or any of the Restricted Subsidiaries; or

 

(3)           sell, lease or transfer any of its properties or assets to the Issuer or any of the Restricted Subsidiaries.

 

(b)           the foregoing shall not apply (in each case) to such encumbrances or restrictions existing under or by reason of:

 

(1)           contractual encumbrances or restrictions in effect on the Issue Date, including pursuant to the Senior Secured Credit Facility and the related documentation;

 

(2)           this Indenture and the Notes;

 

(3)           purchase money obligations and capital lease obligations for property acquired in the ordinary course of business that impose restrictions of the nature discussed in clause (3) of this Section 4.08(a) on the property so acquired;

 

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

 

(5)           any agreement or other instrument of a Person acquired by the Issuer or any of its Restricted Subsidiaries in existence at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired;

 

(6)           contracts for the sale of assets, including customary restrictions with respect to a Subsidiary of the Issuer pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary, that impose restrictions on the assets to be sold;

 

(7)           Secured Indebtedness otherwise permitted to be incurred pursuant to Section 4.09 hereof and Section 4.12 hereof that limit the right of the debtor to dispose of the assets securing such Indebtedness or place any restriction on the Issuer’s or its Restricted Subsidiaries’ use of the assets securing such Secured Indebtedness;

 

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

 

(9)           other Indebtedness, Disqualified Stock or Preferred Stock of Foreign Subsidiaries permitted to be incurred subsequent to the Issue Date pursuant to the provisions of Section 4.09 hereof that impose restrictions solely on Foreign Subsidiaries party thereto;

 

(10)         customary provisions in joint venture agreements and other similar agreements relating solely to such joint venture;

 

(11)         customary provisions contained in leases or licenses of intellectual property and other agreements, in each case, entered into in the ordinary course of business;

 

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(12)         contractual requirements of a Receivables Subsidiary in connection with a Qualified Receivables Financing, provided that such restrictions apply only to such Receivables Subsidiary or the receivables that are subject to the Qualified Receivables Financing;

 

(13)         protective Liens filed in connection with a sale and leaseback transaction permitted under this Indenture;

 

(14)         any other agreement governing Indebtedness entered into after the Issue Date that contains encumbrances and restrictions that are not materially more restrictive with respect to the Issuer or any Restricted Subsidiary than those in effect on the Issue Date pursuant to agreements in effect on the Issue Date; and

 

(15)         any encumbrances or restrictions of the type referred to in clauses (1), (2) and (3) of this Section 4.08(a) imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (14) of this Section 4.08(b); provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Issuer, not materially more restrictive with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

 

Section 4.09                                       Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock.

 

(a)           The Issuer shall not, and shall not permit any of the Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and the Issuer shall not issue any shares of Disqualified Stock and shall not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or Preferred Stock; provided, however, that the Issuer may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of Preferred Stock, if the Fixed Charge Coverage Ratio on a consolidated basis for the Issuer and its Restricted Subsidiaries’ most recently ended four fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or Preferred Stock is issued would have been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or Preferred Stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such four-quarter period; provided that the amount of Indebtedness (including Acquired Indebtedness), Disqualified Stock and Preferred Stock that may be incurred or issued, as applicable, pursuant to the foregoing by Restricted Subsidiaries that are not Guarantors shall not exceed $15 million at any one time outstanding.

 

(b)           The provisions of Section 4.09(a) hereof shall not apply to:

 

(1)           the incurrence of Indebtedness under the Credit Facilities by the Issuer or any of its Restricted Subsidiaries and the issuance and creation of letters of credit and bankers’ acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof), up to an aggregate principal amount of $475 million outstanding at any one time, less (i) the amount of Indebtedness then outstanding under

 

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clause (19) and (ii) any permanent payments (with respect to revolving borrowings and letters of credit, only to the extent revolving commitments are correspondingly reduced) actually made by the borrower thereunder following the Issue Date in respect of Indebtedness thereunder with Net Proceeds from an Asset Sale;

 

(2)           the incurrence by the Issuer and any Guarantor of Indebtedness represented by the Notes (including any Guarantee) other than any Additional Notes;

 

(3)           Indebtedness of the Issuer and its Restricted Subsidiaries in existence on the Issue Date (other than Indebtedness described in clauses (1) and (2) of this Section 4.09(b));

 

(4)           Indebtedness (including Capitalized Lease Obligations), Disqualified Stock and Preferred Stock incurred by the Issuer or any of its Restricted Subsidiaries to finance the purchase, lease, construction, installation, repair or improvement of property (real or personal) or equipment (other than software) that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets, in an aggregate principal amount, not to exceed at any time outstanding the greater of (x) $15 million and (y) 1.5% of Total Assets;

 

(5)           Indebtedness incurred by the Issuer or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, unemployment insurance and other types of social security or property, casualty or liability insurance or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims; provided, however, that, upon the drawing of such letters of credit, such obligations are reimbursed within 30 days following such drawing;

 

(6)           Indebtedness arising from agreements of the Issuer or its Restricted Subsidiaries providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that (a) such Indebtedness is not reflected on the balance sheet of the Issuer, or any of its Restricted Subsidiaries (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (6)(a)) and (b) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including non cash proceeds (the fair market value of such non cash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Issuer and its Restricted Subsidiaries in connection with such disposition;

 

(7)           Indebtedness of the Issuer to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not a Guarantor is expressly subordinated in right of payment to the Notes; provided, further, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such other Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the Issuer or another Restricted Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case, to be an incurrence of such Indebtedness not permitted by this clause (7);

 

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(8)           Indebtedness of a Restricted Subsidiary to the Issuer or another Restricted Subsidiary; provided that if a Guarantor incurs such Indebtedness to a Restricted Subsidiary that is not a Guarantor, such Indebtedness is expressly subordinated in right of payment to the Guarantee of the Notes of such Guarantor; provided  further that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such other Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Indebtedness (except to the Issuer or another Restricted Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case, to be an incurrence of such Indebtedness not permitted by this clause (8);

 

(9)           shares of Preferred Stock of a Restricted Subsidiary issued to the Issuer or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such other Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Issuer or another of its Restricted Subsidiaries) shall be deemed in each case to be an issuance of such shares of Preferred Stock not permitted by this clause (9);

 

(10)         Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes) for the purpose of limiting interest rate risk exchange rate risk or commodity pricing risk;

 

(11)         obligations in respect of performance, bid, appeal and surety bonds and completion guarantees and other obligations of a like nature provided by the Issuer or any of its Restricted Subsidiaries in the ordinary course of business;

 

(12)         (a) Indebtedness or Disqualified Stock of the Issuer and Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or any Restricted Subsidiary equal to 100% of the net cash proceeds received by the Issuer since immediately after the Issue Date from the issue or sale of Equity Interests of the Issuer or cash contributed to the capital of the Issuer (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or Designated Preferred Stock or sales of Equity Interests to the Issuer or any of its Subsidiaries or amounts applied to make a Restricted Payment in accordance with clause (2) of Section 4.07(a) as determined in accordance with clauses 3(b) and 3(c) of Section 4.07(b)  to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 4.07(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (1) and (3) of the definition thereof) (together with amounts applied under clause (13) to refinance Indebtedness or Disqualified Stock initially incurred in reliance on this clause (12)(a)) and (b) Indebtedness or Disqualified Stock of the Issuer and Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock then outstanding and incurred pursuant to this clause (12)(b), does not at any one time outstanding exceed $20 million;

 

(13)         the incurrence by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness, Disqualified Stock or Preferred Stock which serves to refund, replace or refinance any Indebtedness, Disqualified Stock or Preferred Stock incurred as permitted under Section 4.09(a) hereof and clauses (2) and (3) above and this clause (13) and clause (14) below of this Section 4.09(b) or any Indebtedness, Disqualified Stock or Preferred Stock issued to so refund, replace or refinance such Indebtedness, Disqualified Stock or Preferred Stock including additional Indebtedness,

 

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Disqualified Stock or Preferred Stock incurred to pay premiums (including tender premiums), defeasance costs and fees in connection therewith (the “Refinancing Indebtedness”) prior to its respective maturity; provided, however, that such Refinancing Indebtedness:

 

(A)          has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being refunded or refinanced,

 

(B)          to the extent such Refinancing Indebtedness refinances (i) Indebtedness subordinated or pari passu to the Notes or any Guarantee thereof, such Refinancing Indebtedness is subordinated or pari passu to the Notes or the Guarantee at least to the same extent as the Indebtedness being refinanced or refunded, or (ii) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness must be Disqualified Stock or Preferred Stock, respectively, and

 

(C)          shall not include:

 

(i)            Indebtedness, Disqualified Stock or Preferred Stock of a Subsidiary of the Issuer that is not a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred Stock of the Issuer;

 

(ii)           Indebtedness, Disqualified Stock or Preferred Stock of a Subsidiary of the Issuer, that is not a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred Stock of a Guarantor; or

 

(iii)          Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or a Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of an Unrestricted Subsidiary;

 

(14)         Indebtedness, Disqualified Stock or Preferred Stock of Persons that are acquired (whether by asset acquisition or otherwise) by the Issuer or any Guarantor or merged into the Issuer or a Guarantor in accordance with the terms of the Indenture; provided that such Indebtedness, Disqualified Stock or Preferred Stock is not incurred in connection with or in contemplation of, or to provide all or any portion of the funds or credit support utilized to consummate, such acquisition or merger and, provided further that, after giving pro forma effect to such acquisition or merger, either

 

(a)           the Issuer would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of this Section 4.09, or

 

(b)           the Fixed Charge Coverage Ratio of the Issuer and the Restricted Subsidiaries is greater than immediately prior to such acquisition or merger;

 

(15)         Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness is extinguished within five Business Days of its incurrence;

 

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(16)         (a)  any guarantee by the Issuer or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as the incurrence of such Indebtedness incurred by such Restricted Subsidiary is permitted under the terms of this Indenture; or

 

(b)           any guarantee by a Restricted Subsidiary of Indebtedness of the Issuer; provided that such guarantee is incurred in accordance with Section 4.15 hereof;

 

(17)         Indebtedness of Foreign Subsidiaries of the Issuer not to exceed at any one time outstanding and together with any other Indebtedness incurred under this clause (17) the greater of (x) $25 million and (y) 8% of the Total Assets of the Foreign Subsidiaries of the Issuer;

 

(18)         Indebtedness of the Issuer or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements, in each case, incurred in the ordinary course of business;

 

(19)         Indebtedness incurred by a Receivables Subsidiary in a Qualified Receivables Financing that is not recourse to the Issuer or any Restricted Subsidiary other than a Receivables Subsidiary (except for Standard Securitization Undertakings);

 

(20)         cash management obligations and Indebtedness in respect of netting services, employee credit card programs and similar arrangements in connection with cash management and deposit accounts;

 

(21)         Indebtedness owed on a short-term basis of no longer than 30 days to banks and other financial institutions incurred in the ordinary course of business of the Issuer and its Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary cash management activities of the Issuer and its Restricted Subsidiaries; and

 

(22)         Indebtedness of the Issuer or any of its Restricted Subsidiaries supported by a letter of credit issued pursuant to the Credit Facilities, in a principal amount not in excess of the stated amount of such letter of credit.

 

(c)           For purposes of determining compliance with this Section 4.09:

 

(1)           in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) meets the criteria of more than one of the categories of permitted Indebtedness, Disqualified Stock or Preferred Stock described in clauses (1) through (22) of Section 4.09(b) hereof or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Issuer, in its sole discretion, shall classify or reclassify such item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) and shall only be required to include the amount and type of such Indebtedness, Disqualified Stock or Preferred Stock in one of the above clauses; provided that all Indebtedness outstanding under the Credit Facilities on the Issue Date shall at all times be deemed to be outstanding in reliance on Section 4.09(b)(1) hereof; and

 

(2)           at the time of incurrence, the Issuer shall be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described in Sections 4.09(a) and 4.09(b) hereof.

 

(d)           Accrual of interest, the accretion of accreted value, the amortization of original issue discount, and the payment of interest or dividends in the form of additional Indebtedness, Disqualified Stock or Preferred Stock, as applicable, the accretion of liquidation preference and increases in the

 

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amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies will not be deemed to be an incurrence of Indebtedness, Disqualified Stock or Preferred Stock for purposes of this Section 4.09.  Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that are otherwise included in the determination of a particular amount of Indebtedness shall not be included in the determination of such amount of Indebtedness, provided that the incurrence of the Indebtedness represented by such guarantee or letter of credit, as the case may be, was in compliance with this Section 4.09.

 

(e)           For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced plus the amount of any reasonable premium (including reasonable tender premiums), defeasance costs and any reasonable fees and expenses incurred in connection with the issuance of such new Indebtedness.

 

(f)            The Issuer shall not, and shall not permit any Guarantor to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness) that is subordinated or junior in right of payment to any Indebtedness of the Issuer or such Guarantor, as the case may be, unless such Indebtedness is expressly subordinated in right of payment to the Notes or such Guarantor’s Guarantee substantially to the extent and in the same manner as such Indebtedness is subordinated to other Indebtedness of the Issuer or such Guarantor, as the case may be.

 

(g)           For purposes of this Indenture, (1) unsecured Indebtedness is not deemed to be subordinated or junior to Secured Indebtedness merely because it is unsecured or (2) Indebtedness is not deemed to be subordinated or junior to any other Indebtedness merely because it has a junior priority with respect to the same collateral.

 

Section 4.10                                       Asset Sales.

 

(a)           The Issuer shall not, and shall not permit any of the Restricted Subsidiaries to, cause, make or suffer to exist an Asset Sale, unless:

 

(1)           the Issuer or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of; and

 

(2)           except in the case of a Permitted Asset Swap, at least 75% of the consideration therefor received by the Issuer or such Restricted Subsidiary, as the case may be, is in the form of (a) cash or Cash Equivalents (b) Replacement Assets or (c) any combination of the consideration specified in clauses (a) and (b); provided that the amount of:

 

(A)          any liabilities (as shown on the Issuer’s or such Restricted Subsidiary’s most recent balance sheet or in the footnotes thereto, or if incurred or accrued subsequent to the date of such balance sheet, such liabilities that would have been shown on the Issuer or such Restricted Subsidiary’s balance sheet or in the footnotes thereto if such incurrence

 

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or accrual had taken place on or prior to the date of such balance sheet, as determined in good faith by the Issuer) of the Issuer or such Restricted Subsidiary, other than liabilities that are by their terms subordinated to the Notes, that are assumed by the transferee of any such assets (or a third party on behalf of such transferee) and for which the Issuer and all of its Restricted Subsidiaries have been validly released by all creditors in writing,

 

(B)          any securities, notes or other obligations received by the Issuer or such Restricted Subsidiary from such transferee that are converted by the Issuer or such Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received) within 180 days following the closing of such Asset Sale,

 

(C)          any Designated Non-cash Consideration received by the Issuer or any of its Restricted Subsidiaries in such Asset Sale having an aggregate fair market value, taken together with all other Designated Non-cash Consideration received since the date of this Indenture pursuant to this clause (C) that is at that time outstanding, not to exceed the greater of (x) $25 million and (y) 2.0% of Total Assets at the time of the receipt of such Designated Non-cash Consideration (with the fair market value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value); and

 

(D)          any securities publicly-traded on a national securities exchange;

 

shall be deemed to be cash or Cash Equivalents for purposes of this provision and for no other purpose.

 

(b)           Within 365 days after the receipt of any Net Proceeds of any Asset Sale, the Issuer or such Restricted Subsidiary, at its option, may apply the Net Proceeds from such Asset Sale,

 

(1)           to permanently reduce:

 

(A)          Secured Indebtedness under one or more Credit Facilities or any other Secured Indebtedness to the extent such Lien is permitted by this Indenture; or

 

(B)          Obligations under Pari Passu Indebtedness (and to correspondingly reduce commitments with respect thereto); provided that the Issuer shall equally and ratably (based on the aggregate principal amounts (or accreted value, as applicable )) reduce Obligations under the Notes as provided under Section 3.07 hereof, through open-market purchases (to the extent such purchases are at or above 100% of the principal amount thereof) or by making an offer (in accordance with the procedures set forth under Section 4.10(c) hereof) to all Holders to purchase their Notes at 100% of the principal amount thereof, plus the amount of accrued but unpaid interest, if any, on the amount of Notes that would otherwise be prepaid; or

 

(2)           to make (a) an Investment in any one or more businesses; provided that such Investment in any business is in the form of the acquisition of Capital Stock and results in the Issuer or another of its Restricted Subsidiaries, as the case may be, owning an amount of the Capital Stock of such business such that it constitutes a Restricted Subsidiary, (b) capital expenditures or (c) acquisitions of other assets, in each of (a), (b) and (c), used or useful in a Similar Business or that replace the businesses, properties and/or assets that are the subject of such Asset Sale.

 

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(c)           Any Net Proceeds from the Asset Sale that are not invested or applied as provided and within the time period set forth in Section 4.10(b) shall be deemed to constitute “Excess Proceeds;” provided, however, that if during such 365-day period the Issuer or a Restricted Subsidiary enters into a definitive binding agreement committing it to apply such Net Proceeds in accordance with the requirements of clause (2) of Section 4.10(b) after such 365th day, such 365 day period will be extended with respect to the amount of Net Proceeds so committed until such Net Proceeds are required to be applied in accordance with such agreement (but such extension will in no event be for a period longer than 180 days or, if earlier, the date of termination of the agreement). When the aggregate amount of Excess Proceeds exceeds $15 million, the Issuer shall make an offer to all Holders, and, if required by the terms of any Pari Passu Indebtedness, to the holders of such Pari Passu Indebtedness (an “Asset Sale Offer”), to purchase the maximum aggregate principal amount (or accreted value, as applicable) of the Notes and such Pari Passu Indebtedness that is a minimum amount of $2,000 and in an integral multiple of $1,000 in excess thereof that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof (or accreted value, as applicable), plus accrued and unpaid interest, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in this Indenture.  The Issuer will commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after the date that Excess Proceeds exceed $15 million by mailing the notice required pursuant to the terms of this Indenture, with a copy to the Trustee.

 

To the extent that the aggregate principal amount (or accreted value, as applicable) of Notes and such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Issuer may use any remaining Excess Proceeds for general corporate purposes, subject to the other covenants contained in this Indenture and they will no longer constitute Excess Proceeds.  If the aggregate principal amount (or accreted value, as applicable) of Notes or the Pari Passu Indebtedness surrendered by such holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and the Issuer or agent for such Pari Passu Indebtedness shall select the Pari Passu Indebtedness to be purchased on a pro rata basis (or, in the case of Notes in global form, the Trustee will select Notes for redemption based on DTC’s method that most nearly approximates a pro rata selection or by such other method that the Trustee shall deem fair and appropriate) based on the accreted value or principal amount of the Notes or such Pari Passu Indebtedness tendered.  Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

 

(d)           Pending the final application of any Net Proceeds pursuant to this Section 4.10, the holder of such Net Proceeds may apply such Net Proceeds temporarily to reduce Indebtedness outstanding under a revolving credit facility or otherwise invest such Net Proceeds in any manner not prohibited by this Indenture.

 

(e)           The Issuer shall comply with the applicable requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer.  To the extent that the applicable provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in this Indenture by virtue thereof.

 

Section 4.11                                       Transactions with Affiliates.

 

(a)           The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Issuer

 

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(each of the foregoing, an “Affiliate Transaction”) involving aggregate payments or consideration in excess of $5.0 million unless:

 

(1)           such Affiliate Transaction is on terms that are not materially less favorable to the Issuer or its relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Issuer or such Restricted Subsidiary with an unrelated Person on an arm’s-length basis;

 

(2)           the Issuer delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate payments or consideration in excess of $15 million, a resolution adopted by the majority of the board of directors or Equivalent Managing Body of the Issuer approving such Affiliate Transaction and set forth in an Officer’s Certificate certifying that such Affiliate Transaction complies with clause (1) of this Section 4.11(a); and

 

(3)           the Issuer delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate payments or consideration in excess of $25 million, a copy of a written opinion to the board of directors or Equivalent Managing Body of the Issuer from an Independent Financial Advisor to the effect that such Affiliate Transaction is fair, from a financial point of view, to the Issuer and its Restricted Subsidiaries or is not less favorable to the Issuer and its Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an arms length transaction with a Person who was not an Affiliate;

 

(b)           The foregoing provisions of Section 4.11(a) hereof will not apply to the following:

 

(1)           transactions between or among the Issuer or any of its Restricted Subsidiaries;

 

(2)           Restricted Payments permitted by Section 4.07 hereof and the Investments constituting “Permitted Investments”;

 

(3)           the payment of transaction, management, consulting, monitoring and advisory fees and related expenses and indemnification payments to the Sponsors and their Affiliates pursuant to the Management Agreement, the Class C Agreement and the Expense Reimbursement Agreement, in each case not to exceed permitted payment set forth in Section 4.07(b)(14) and as in effect on the Issue Date and the termination fees pursuant to the Management Agreement, Class C Agreement or Expense Reimbursement Agreement, or any amendments thereto (so long as any such amendment is not materially disadvantageous in the good faith judgment of the Issuer to the Holders, when taken as a whole);

 

(4)           the payment of reasonable and customary fees, compensation, benefits and incentive arrangements paid or provided to, and indemnities provided on behalf of officers, directors, employees or consultants of Issuer, any of its direct or indirect parent companies or any of its Restricted Subsidiaries;

 

(5)           any agreement as in effect as of the Issue Date, or any amendment or replacement agreement thereto (so long as any such amendment is not materially disadvantageous in the good faith judgment of the Issuer to the Holders when taken as a whole as compared to the applicable agreement as in effect on the Issue Date);

 

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(6)           the existence of, or the performance by the Issuer or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issue Date and any similar agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by the Issuer or any of its Restricted Subsidiaries of obligations under any future amendment or replacement agreement to any such existing agreement or under any similar agreement entered into after the Issue Date shall only be permitted by this clause (5) to the extent that the terms of any such amendment or new agreement are not otherwise materially disadvantageous in the good faith judgment of the Issuer to the Holders when taken as a whole;

 

(7)           any transaction effected as part of a Qualified Receivables Financing permitted hereunder;

 

(8)           any non-recourse pledge of Equity Interests of an Unrestricted Subsidiary to support the Indebtedness of such Unrestricted Subsidiary;

 

(9)           the Transactions and the payment of all fees and expenses related to the Transactions, in each case as disclosed in the Offering Memorandum;

 

(10)         transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture which are fair to the Issuer and its Restricted Subsidiaries, in the good faith judgment of the Issuer or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;

 

(11)         the sale or issuance of Equity Interests (other than Disqualified Stock) of the Issuer;

 

(12)         payments or loans (or cancellation of loans) to employees or consultants of the Issuer, any of its direct or indirect parent companies or any of its Restricted Subsidiaries and employment agreements, stock option plans and other similar arrangements with such employees or consultants which, in each case, are approved by the Issuer in good faith;

 

(13)         transactions in which the Issuer or any Restricted Subsidiary, as the case may be, delivers to the trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Issuer or such Restricted Subsidiary from a financial point of view or meets the requirements of Section 4.11(a)(1) hereof; provided, however that with regard to an issue of Indebtedness of the Issuer or any of its Subsidiaries, such Affiliate holds no more than 15% of such issue (25% in the case of the Senior Secured Credit Facilities);

 

(14)         transactions with Affiliates solely in their capacity as holders of Indebtedness or Equity Interests of the Issuer or any of its Subsidiaries, so long as such transaction is with all holders of such class (and there are such non-Affiliate holders) and such Affiliates are treated no more favorably than all other holders of such class generally;

 

(15)         transactions in the ordinary course of business with (i) Unrestricted Subsidiaries or (ii) joint ventures in which the Issuer or a Subsidiary of the Issuer holds or acquires an ownership interest (whether by way of Capital Stock or otherwise) so long as the terms of any such transactions are, in each case, at least as favorable as might reasonably have been obtained at such time by an unaffiliated party; and

 

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(16)                          transactions between the Issuer or any Restricted Subsidiary and any person that is an Affiliate of the Issuer or any Restricted Subsidiary solely because a director of such Person is also a director of the Issuer or any direct or indirect parent of the Issuer; provided that such director abstains from voting as a director of the Issuer or any direct or indirect parent, as the case may be, on any matter involving such other Person.

 

Section 4.12                                       Liens.

 

(a)                                 The Issuer shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist any Lien (an “Initial Lien”) (except Permitted Liens) that secures obligations under any Indebtedness or any related guarantee, on any asset or property of the Issuer or any Restricted Subsidiary, or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless:

 

(1)                                 in the case of Liens securing Subordinated Indebtedness, the Notes and related Guarantees are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens; or

 

(2)                                 in all other cases, the Notes or the Guarantees are equally and ratably secured, except that the foregoing shall not apply to (A) Liens securing the Notes and the related Guarantees and (B) Liens securing Indebtedness (including any letter of credit facility relating thereto) incurred under the Credit Facilities, including any letter of credit facility relating thereto, that was permitted by the terms of this Indenture to be incurred pursuant to Section 4.09(b)(1) hereof.

 

(b)                                 Any Lien created for the benefit of the holders of Notes pursuant to Section 4.12(a) hereof shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon discharge of the Initial Lien.

 

Section 4.13                                       Existence.

 

Subject to Article 5 hereof, the Issuer shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its limited liability company existence, and the corporate, partnership or other existence of each of the Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of such Issuer or any such Restricted Subsidiary and (ii) the material rights (charter and statutory), licenses and franchises of the Issuer and the Restricted Subsidiaries; provided that the Issuer shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of the Restricted Subsidiaries, if the Issuer in good faith shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Issuer and the Restricted Subsidiaries, taken as a whole and provided further that the Issuer shall be permitted to convert to a corporation.

 

Section 4.14                                       Offer To Repurchase Upon Change of Control.

 

(a)                                 If a Change of Control occurs, unless the Issuer has previously or concurrently mailed a redemption notice with respect to all the outstanding Notes as described under Section 3.07 hereof, the Issuer shall make an offer to purchase all of the Notes pursuant to the offer described below (the “Change of Control Offer”) at a price in cash (the “Change of Control Payment”) equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to, but not including, the date of purchase, subject to the right of Holders of the Notes of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date.  Within 30 days following any Change of Control, the Issuer shall send notice of such Change of Control Offer by first-class mail or electronically, with 

 

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a copy to the Trustee, to each Holder of Notes at the address of such Holder appearing in the security register, with the following information:

 

(1)                                 that a Change of Control Offer is being made pursuant to this Section 4.14 and that all Notes properly tendered pursuant to such Change of Control Offer will be accepted for payment by the Issuer;

 

(2)                                 the purchase price and the purchase date, which will be no earlier than 30 days nor later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”);

 

(3)                                 that any Note not properly tendered will remain outstanding and continue to accrue interest;

 

(4)                                 that unless the Issuer defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date;

 

(5)                                 that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of such Notes completed, to the paying agent specified in the notice at the address specified in the notice prior to the close of business on the Business Day preceding the Change of Control Payment Date;

 

(6)                                 that Holders shall be entitled to withdraw their tendered Notes and their election to require the Issuer to purchase such Notes, provided that the paying agent receives, not later than the close of business on the second Business Day prior to the Change of Control Payment Date, a facsimile transmission or letter setting forth the name of the Holder of the Notes, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased;

 

(7)                                 that if the Issuer is redeeming less than all of the Notes, the Holders of the remaining Notes will be issued new Notes and such new Notes will be equal in principal amount to the unpurchased portion of the Notes surrendered.  The unpurchased portion of the Notes must be equal to $2,000 or an integral multiple of $1,000 in excess thereof;

 

(8)                                 if such notice is mailed prior to the occurrence of a Change of Control, stating the Change of Control Offer is conditional on the occurrence of such Change of Control; and

 

(9)                                 the other instructions, as determined by the Issuer, consistent with this Section 4.14, that a Holder must follow in order to have its Notes repurchased.

 

The notice, if sent in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice.  If (a) the notice is sent in a manner herein provided and (b) any Holder fails to receive such notice or a Holder receives such notice but it is defective, such Holder’s failure to receive such notice or such defect shall not affect the validity of the proceedings for the purchase of the Notes as to all other Holders that properly received such notice without defect.  The Issuer shall comply with the applicable requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer.  To the extent that the applicable provisions of any securities laws or regulations conflict with the provisions of this Section 

 

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4.14, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Indenture by virtue thereof.

 

(b)                                 On the Change of Control Payment Date, the Issuer shall, to the extent permitted by law,

 

(1)                                 accept for payment all Notes issued by it or portions thereof properly tendered pursuant to the Change of Control Offer,

 

(2)                                 deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered, and

 

(3)                                 deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officer’s Certificate to the Trustee stating that such Notes or portions thereof have been tendered to and purchased by the Issuer.

 

(c)                                  The Issuer shall not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.14 applicable to a Change of Control Offer made by the Issuer and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.  Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.

 

(d)                                 Other than as specifically provided in this Section 4.14, any purchase pursuant to this Section 4.14 shall be made pursuant to the provisions of Sections 3.02, 3.05 and 3.06 hereof.

 

Section 4.15                                       Subsidiary Guarantors.

 

(a)                                 If the Issuer or any of its Restricted Subsidiaries organizes, acquires, transfers assets to or otherwise invests in any Domestic Restricted Subsidiary (other than a Foreign Subsidiary, Disregarded Domestic Subsidiary, Domestic Subsidiary that is a direct or indirect subsidiary of a Foreign Subsidiary, Immaterial Subsidiary or Domestic Restricted Subsidiary that is prohibited by law or by the terms of any debt acquired pursuant to Section 4.09(b)(14) from issuing such Guarantee), then such Domestic Restricted Subsidiary shall:

 

(1)                                 within ten Business Days execute, and deliver to the Trustee a supplemental indenture in form satisfactory to the Trustee pursuant to which such Domestic Restricted Subsidiary shall unconditionally Guarantee all of the Issuer’s obligations under the Notes and this Indenture on the terms set forth in this Indenture; and

 

(2)                                 deliver to the Trustee an Opinion of Counsel that such supplemental indenture has been duly authorized, executed and delivered by such Domestic Restricted Subsidiary and constitutes a legal, valid, binding and enforceable obligation of such Domestic Restricted Subsidiary.

 

Thereafter, such Domestic Restricted Subsidiary shall be a Guarantor for all purposes of this Indenture.  Notwithstanding the foregoing, an Opinion of Counsel shall not be required in connection with the addition of any Guarantor under this Indenture on the Issue Date upon execution and delivery by such Guarantor and the Trustee of a Supplemental Indenture to this Indenture.

 

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(b)                                 Notwithstanding the foregoing, from and after the Issue Date, the Issuer will not permit any of its Restricted Subsidiaries, directly or indirectly, by way of pledge, intercompany note or otherwise, to assume, guarantee or in any other manner become liable with respect to any Indebtedness (other than the Notes) of the Issuer or any Domestic Restricted Subsidiary of the Issuer, unless, in any such case, such Restricted Subsidiary executes and delivers a supplemental indenture (and the related Opinion of Counsel) to the Indenture providing a Guarantee of the Notes by such Restricted Subsidiary; provided that no Restricted Subsidiary shall be required to Guarantee the Notes if and to the extent it is prohibited by law from Guaranteeing the Notes.  The obligations of each Guarantee by a Restricted Subsidiary will be limited as necessary to prevent the Guarantee from constituting a fraudulent conveyance or fraudulent transfer under applicable law.

 

For purposes of this Section 4.15, the following terms shall have the following meanings:

 

“Foreign Subsidiary”:  any direct or indirect subsidiary of the Issuer (i) that is organized under the laws of any jurisdiction other than the United States, any state thereof or the District of Columbia or (ii) that solely owns equity in one or more Foreign Subsidiaries.

 

“Disregarded Domestic Person”:  any direct or indirect Domestic Subsidiary of the Issuer that is treated as a disregarded entity for federal income tax purposes if it directly (or indirectly through one or more Disregarded Domestic Persons) owns the equity of one or more direct or indirect Foreign Subsidiaries.

 

“Immaterial Subsidiary”:  each Subsidiary of the Issuer now existing or hereafter acquired or formed and each successor thereto, (a) which accounts for not more than (i) 2.5% of the consolidated gross revenues (after intercompany eliminations) of the Issuer and its Subsidiaries or (ii) 1.75% of the consolidated assets (after intercompany eliminations) of the Issuer and its Subsidiaries, in each case, as of the last day of the most recently completed fiscal quarter as reflected on the financial statements for such quarter after giving pro forma effect to the acquisition; and (b) if the Subsidiaries that constitute Immaterial Subsidiaries pursuant to clause (a) above account for, in the aggregate, more than 5% of such consolidated gross revenues and more than 3.5% of the consolidated assets, each as described in clause (a) above, then the term “Immaterial Subsidiary” shall not include each such Subsidiary necessary to account for at least 95% of the consolidated gross revenues and 96.5% of the consolidated assets, each as described in clause (a) above.

 

ARTICLE V

 

SUCCESSORS

 

Section 5.01                                       Merger, Consolidation or Sale of All or Substantially All Assets.

 

(a)                                 The Issuer may not consolidate or merge with or into or wind up into (whether or not the Issuer is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to any Person unless:

 

(1)                                 the Issuer is the surviving Person or the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation, partnership, limited liability company or similar entity organized or existing under the laws of the jurisdiction of organization of the United States, any state thereof, the District of Columbia, or any territory thereof (such Person, as the case may be, being herein called the “Successor Company”);

 

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(2)                                 the Successor Company, if other than the Issuer, expressly assumes all the obligations of the Issuer under the Notes pursuant to supplemental indentures or other documents or instruments in form reasonably satisfactory to the Trustee;

 

(3)                                 immediately after such transaction, no Default exists;

 

(4)                                 immediately after giving pro forma effect to such transaction and any related financing transactions, as if such transactions had occurred at the beginning of the applicable four-quarter period, (a) the Successor Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof or (b) the Fixed Charge Coverage Ratio of the Successor Company  and its Restricted Subsidiaries would be equal to or greater than such ratio for the Issuer and its Restricted Subsidiaries immediately prior to such transaction;

 

(5)                                 each Guarantor, unless it is the other party to the transactions described above, in which case Section 5.01(c)(1)(B) hereof shall apply, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person’s obligations under this Indenture and the Notes; and

 

(6)                                 the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indentures, if any, comply with this Indenture.

 

(b)                                 The Successor Company shall succeed to, and be substituted for the Issuer, as the case may be, under this Indenture, the Guarantees and the Notes, as applicable.  Notwithstanding clauses (3) and (4) of Section 5.01(a) hereof,

 

(1)                                 any Restricted Subsidiary may consolidate with or merge into or transfer all or part of its properties and assets to the Issuer or a Guarantor,

 

(2)                                 the Issuer may merge with an Affiliate of the Issuer solely for the purpose of reincorporating the Issuer in a State of the United States so long as the amount of Indebtedness of the Issuer and its Restricted Subsidiaries is not increased thereby, and

 

(3)                                 Kendle International, Inc. may merge with a wholly owned Restricted Subsidiary of the Issuer solely for the purpose of converting to a limited liability company.

 

(c)                                  Subject to certain limitations described in this Indenture governing the release of a Guarantee upon the sale, disposition or transfer of a Guarantor, no Guarantor shall, and the Issuer shall not permit any Guarantor to, consolidate or merge with or into or wind up into (whether or not the Issuer or Guarantor is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to any Person unless:

 

(1)                                 (A)  such Guarantor is the surviving Person or the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation, partnership, limited partnership, limited liability company or trust or similar entity organized or existing under the laws of the jurisdiction of organization of such Guarantor, as the case may be, or the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (such Guarantor or such Person, as the case may be, being herein called the “Successor Person”);

 

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(B)                               the Successor Person, if other than such Guarantor, expressly assumes all the obligations of such Guarantor under this Indenture and such Guarantor’s related Guarantee pursuant to supplemental indentures or other documents or instruments in form reasonably satisfactory to the Trustee;

 

(C)                               immediately after such transaction, no Default exists; and

 

(D)                               the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indentures, if any, comply with this Indenture; notwithstanding the foregoing, an Officer’s Certificate and an Opinion of Counsel shall not be required in connection with the addition of any Guarantor under this Indenture on the Issue Date upon execution and delivery by such Guarantor and the Trustee of a Supplemental Indenture to this Indenture; or

 

(2)                                 the transaction is made in compliance with Section 4.10 hereof.

 

(d)                                 In the case of clause (c)(1) above, the Successor Person shall succeed to, and be substituted for, such Guarantor under this Indenture and such Guarantor’s Guarantee.  Notwithstanding the foregoing, any Guarantor may merge into or transfer all or part of its properties and assets to another Guarantor or the Issuer.

 

Section 5.02                                       Successor Corporation Substituted.

 

Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Issuer in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Issuer is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the Issuer shall refer instead to the successor corporation and not to the Issuer), and may exercise every right and power of the Issuer under this Indenture with the same effect as if such successor Person had been named as the Issuer herein; provided that the predecessor Issuer shall not be relieved from the obligation to pay the principal of and interest, if any, on the Notes except in the case of a sale, assignment, transfer, conveyance or other disposition of all of the Issuer’s assets that meets the requirements of Section 5.01 hereof.

 

ARTICLE VI

 

DEFAULTS AND REMEDIES

 

Section 6.01                                       Events of Default.

 

An “Event of Default” wherever used herein, means any one of the following events:

 

(1)                                 default in payment when due and payable, upon redemption, acceleration or otherwise, of principal of, or premium, if any, on the Notes;

 

(2)                                 default for 30 days or more in the payment when due of interest on or with respect to the Notes;

 

(3)                                 failure by the Issuer or any Restricted Subsidiary to comply with any of its obligations, covenants or agreements (other than a default referred to in clauses (1) and (2) above) 

 

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contained in this Indenture or the Notes for 60 days after receipt of written notice given to the Issuer by the Trustee or the Holders of not less than 25% in principal amount of the Notes to comply with any of its other agreements in the Indenture or the Notes;

 

(4)                                 default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Issuer or any of its Restricted Subsidiaries or the payment of which is guaranteed by the Issuer or any of its Restricted Subsidiaries, other than Indebtedness owed to the Issuer or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists or is created after the issuance of the Notes, if both:

 

(a)                                 such default either results from the failure to pay any principal of such Indebtedness at its stated final maturity (after giving effect to any applicable grace periods) or relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity; and

 

(b)                                 the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at stated final maturity (after giving effect to any applicable grace periods), or the maturity of which has been so accelerated, aggregate $30 million or more at any one time outstanding;

 

(5)                                 failure by the Issuer or any Significant Subsidiary (or group of Restricted Subsidiaries that taken together would constitute a Significant Subsidiary) to pay final judgments aggregating in excess of $30 million, which final judgments remain unpaid, undischarged and unstayed for a period of more than 60 days after such judgment becomes final, and in the event such judgment is covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed;

 

(6)                                 the Issuer or any Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary (as of the date of the most recent consolidated financial statements of the Issuer delivered pursuant to Section 4.03), pursuant to or within the meaning of any Bankruptcy Law:

 

(i)                                     commences proceedings to be adjudicated bankrupt or insolvent;

 

(ii)                                  consents to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under applicable Bankruptcy Law;

 

(iii)                               consents to the appointment of a receiver, liquidator, assignee, trustee, sequestrator or other similar official of it or for all or substantially all of its property;

 

(iv)                              makes a general assignment for the benefit of its creditors; or

 

(v)                                 generally is not paying its debts as they become due;

 

(7)                                 a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

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(i)                                     is for relief against the Issuer or any Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary (as of the date of the most recent consolidated financial statements of the Issuer delivered pursuant to Section 4.03), in a proceeding in which the Issuer, any Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, is to be adjudicated bankrupt or insolvent;

 

(ii)                                  appoints a receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Issuer or any Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary (as of the date of the most recent consolidated financial statements of the Issuer delivered pursuant to Section 4.03), or for all or substantially all of the property of the Issuer or any Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary (as of the date of the most recent consolidated financial statements of the Issuer); or

 

(iii)                               orders the liquidation of the Issuer or any Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary (as of the date of the most recent consolidated financial statements of the Issuer delivered pursuant to Section 4.03);

 

and the order or decree remains unstayed and in effect for 60 consecutive days; or

 

(8)                                 the Guarantee of any Significant Subsidiary (or group of Guarantors that taken together would constitute a Significant Subsidiary) shall for any reason cease to be in full force and effect or be declared null and void or any responsible officer of such Guarantor, as the case may be, denies that it has any further liability under its Guarantee or gives notice to such effect, other than by reason of the termination of this Indenture or the release of any such Guarantee in accordance with this Indenture and such default continues for 10 Business Days.

 

Section 6.02                                       Acceleration.

 

If any Event of Default (other than a type specified in clause (6) or (7) of Section 6.01 hereof, in either case, with respect to the Issuer) occurs and is continuing under this Indenture, the Trustee (by written notice to the Issuer) or the Holders of at least 25% in principal amount of the then total outstanding Notes (by written notice to the Issuer and the Trustee) may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately.

 

Upon the effectiveness of such declaration, such principal and interest shall be due and payable immediately.  The Trustee may withhold from the Holders notice of any continuing Default, except a Default relating to the payment of principal, premium, if any, or interest if it determines that withholding notice is in their interest.

 

Notwithstanding the foregoing, in the case of an Event of Default arising under clause (6) or (7) of Section 6.01 hereof with respect to the Issuer, all outstanding Notes shall be due and payable immediately without further action or notice.

 

The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of 

 

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Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived.

 

Section 6.03                                       Other Remedies.

 

If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

 

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  All remedies are cumulative to the extent permitted by law.

 

Section 6.04                                       Waiver of Past Defaults.

 

Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default and its consequences hereunder, except a continuing Default in the payment of the principal of, premium, if any, or interest on, any Note held by a non-consenting Holder (including in connection with an Asset Sale Offer or a Change of Control Offer) or a continuing Default in respect of a covenant or provision of this Indenture which may not be amended or modified without the consent of all Holders; provided, subject to Section 6.02 hereof, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration.  Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

 

Section 6.05                                       Control by Majority.

 

Holders of a majority in aggregate principal amount of the then total outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee with respect to the Notes.  The Trustee, however, may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder of a Note or that would involve the Trustee in personal liability.

 

Section 6.06                                       Limitation on Suits.

 

Subject to Section 6.07 hereof, no Holder of a Note may pursue any remedy with respect to this Indenture or the Notes unless:

 

(1)                                 such Holder has previously given the Trustee written notice that an Event of Default is continuing;

 

(2)                                 Holders of at least 25% in aggregate principal amount of the total outstanding Notes have requested the Trustee to pursue the remedy;

 

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(3)                                 Holders of the Notes have offered the Trustee security or indemnity satisfactory to it against any loss, liability or expense;

 

(4)                                 the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and

 

(5)                                 Holders of a majority in principal amount of the total outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.

 

A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders).

 

Section 6.07                                       Rights of Holders of Notes To Receive Payment.

 

Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an Asset Sale Offer or a Change of Control Offer), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

 

Section 6.08                                       Collection Suit by Trustee.

 

If an Event of Default specified in Section 6.01(1) or (2) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuer for the whole amount of principal of, premium, if any, and interest then due and owing on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

 

Section 6.09                                       Restoration of Rights and Remedies.

 

If the Trustee or any Holder 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 Trustee or to such Holder, then and in every such case, subject to any determination in such proceedings, the Issuer, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding has been instituted.

 

Section 6.10                                       Rights and Remedies Cumulative.

 

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.07 hereof, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

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Section 6.11                                       Delay or Omission Not Waiver.

 

No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

 

Section 6.12                                       Trustee May File Proofs of Claim.

 

The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Issuer (or any other obligor upon the Notes including the Guarantors), its creditors or its property and shall be entitled and empowered to participate as a member in any official committee of creditors appointed in such matter and to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof.  To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise.  Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

 

Section 6.13                                       Priorities.

 

If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order:

 

(i)                                     to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

 

(ii)                                  to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and

 

(iii)                               to the Issuer or to such party as a court of competent jurisdiction shall direct including a Guarantor, if applicable.

 

The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.13.

 

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Section 6.14                                       Undertaking for Costs.

 

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 6.14 does not apply to a suit by the Trustee, a suit by the Issuer, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes.

 

ARTICLE VII

 

TRUSTEE

 

Section 7.01                                       Duties of Trustee.

 

(a)                                 If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its 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 duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

 

(ii)                                  in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture.  However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein.

 

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

 

(i)                                     this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

 

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

 

(iii)                               the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.

 

(d)                                 Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.

 

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(e)                                  The Trustee shall be under no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any Holder of the Notes unless such Holder has offered to the Trustee indemnity or security satisfactory to it against any loss, liability or expense.

 

(f)                                   The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer.  Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

 

Section 7.02                                       Rights of Trustee.

 

(a)                                 The Trustee may conclusively rely upon and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document believed by it to be genuine and to have been signed or presented by the proper Person.  The Trustee need not investigate any fact or matter stated in the document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney at the sole cost of the Issuer and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

 

(b)                                 Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both.  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel.  The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

 

(c)                                  The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.

 

(d)                                 The 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 the rights or powers conferred upon it by this Indenture.

 

(e)                                  Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer shall be sufficient if signed by an Officer of the Issuer.

 

(f)                                   None of the provisions of this Indenture shall require the Trustee to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, 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 for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured to it.

 

(g)                                  The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default is received by the Trustee at the Corporate Trust Office, and such notice references the Notes and this Indenture.

 

(h)                                 In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

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(i)                                     The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

 

(j)                                    The permissive rights of the Trustee enumerated herein shall not be construed as duties.

 

(k)                                 The Trustee may request that the Issuer delivers an Officer’s Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

 

(l)                                     The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

 

Section 7.03                                       Individual Rights of Trustee.

 

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or any Affiliate of the Issuer with the same rights it would have if it were not Trustee.  However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign.  The Paying Agent or Registrar do the same with like rights and duties.  The Trustee is also subject to Sections 7.10 and 7.11 hereof.

 

Section 7.04                                       Trustee’s Disclaimer.

 

The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuer’s use of the proceeds from the Notes or any money paid to the Issuer or upon the Issuer’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

 

Section 7.05                                       Notice of Defaults.

 

If a Default occurs and is continuing and if it is known to a Responsible Officer of the Trustee, the Trustee shall send to Holders of Notes a notice of the Default within the later of 90 days after it occurs or 30 days after a Responsible Officer of the Trustee obtains actual knowledge of such Default.  Except in the case of a Default relating to the payment of principal, premium, if any, or interest on any Note, the Trustee may withhold from the Holders notice of any continuing Default if and so long as it in good faith determines that withholding the notice is in the interests of the Holders of the Notes.  The Trustee shall not be deemed to know of any Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is such a Default is received by the Trustee at the Corporate Trust Office.

 

Section 7.06                                       Reports by Trustee to Holders of the Notes.

 

Within 60 days after each June 15, beginning with June 15, 2012, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with Trust Indenture Act Section 313(a) (but if no event described in 

 

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Trust Indenture Act Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted).  The Trustee also shall comply with Trust Indenture Act Section 313(b)(2).  The Trustee shall also transmit by mail all reports as required by Trust Indenture Act Section 313(c).

 

A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Issuer and filed with the SEC and each stock exchange on which the Notes are listed in accordance with Trust Indenture Act Section 313(d).  The Issuer shall promptly notify the Trustee in writing when the Notes are listed on any stock exchange or delisted therefrom.

 

Section 7.07                                       Compensation and Indemnity.

 

The Issuer and the Guarantors, jointly and severally, shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder as the parties shall agree in writing from time to time.  The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Issuer and the Guarantors, jointly and severally, shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services.  Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

 

The Issuer and the Guarantors, jointly and severally, shall indemnify the Trustee for, and hold the Trustee harmless against, any and all loss, damage, claims, liability or expense (including attorneys’ fees and expenses and taxes (other than taxes based upon the income of the Trustee)) incurred by it in connection with the acceptance or administration of this trust and the performance of its duties hereunder (including the costs and expenses of enforcing this Indenture against any Issuer or any of the Guarantors (including this Section 7.07) or defending itself against any claim whether asserted by any Holder, any Issuer or any Guarantor, or liability in connection with the acceptance, exercise or performance of any of its powers or duties hereunder).  The Trustee shall notify the Issuer promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the Issuer shall not relieve the Issuer of its obligations hereunder except to the extent actually prejudiced thereby.  The Issuer shall defend the claim, and the Trustee shall cooperate in the defense of such claim.  The Trustee may have separate counsel if the Trustee shall have been advised by counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the Issuer and in the reasonable judgment of such counsel it is advisable for the Trustee to engage separate counsel, and the Issuer shall pay the reasonable and documented fees and expenses of any one such separate counsel  (as well as such fees and expenses of one firm of local counsel in each jurisdiction in which the primary counsel is not admitted to practice and where local counsel is necessary or advisable).  The Issuer need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld.  The Issuer need not reimburse any expense or indemnify against any loss, damage, claim, liability or expense incurred as determined in a final judgment by a court of competent jurisdiction, by the Trustee through the Trustee’s own willful misconduct or negligence.

 

The obligations of the Issuer under this Section 7.07 shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee.

 

To secure the payment obligations of the Issuer and the Guarantors in this Section 7.07, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal, premium (if any) and interest on particular Notes.  Such Lien shall survive the satisfaction and discharge of this Indenture.

 

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When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

 

The Trustee shall comply with the provisions of Trust Indenture Act Section 313(b)(2) to the extent applicable.

 

Section 7.08                                       Replacement of Trustee.

 

A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.08.  The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Issuer.  The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuer in writing not less than 30 days prior to the effective date of such removal.  The Issuer may remove the Trustee if:

 

(a)                                 the Trustee fails to comply with Section 7.10 hereof;

 

(b)                                 the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

 

(c)                                  a custodian or public officer takes charge of the Trustee or its property; or

 

(d)                                 the Trustee becomes incapable of acting.

 

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer shall promptly appoint a successor Trustee.  Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuer.

 

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the Issuer’s expense), the Issuer or the Holders of at least 10% in principal amount of the then outstanding Notes may, at the expense of the Issuer, petition any court of competent jurisdiction for the appointment of a successor Trustee.

 

If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer.  Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of its succession to Holders.  The retiring Trustee shall, at the expense of the Issuer, promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof.  Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Issuer’s obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee.  The predecessor Trustee shall have no liability for any action or inaction by any successor Trustee.

 

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Section 7.09                                       Successor Trustee by Merger, etc.

 

If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee.

 

Section 7.10                                       Eligibility; Disqualification.

 

There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.

 

This Indenture shall always have a Trustee who satisfies the requirements of Trust Indenture Act Sections 310(a)(1), (2) and (5).  The Trustee is subject to Trust Indenture Act Section 310(b).

 

Section 7.11                                       Preferential Collection of Claims Against Issuer.

 

The Trustee is subject to Trust Indenture Act Section 311(a), excluding any creditor relationship listed in Trust Indenture Act Section 311(b).  A Trustee who has resigned or been removed shall be subject to Trust Indenture Act Section 311(a) to the extent indicated therein.

 

ARTICLE VIII

 

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

 

Section 8.01                                       Option To Effect Legal Defeasance or Covenant Defeasance.

 

The Issuer may, at its option and at any time, elect to have either Section 8.02 or 8.03 hereof applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8.

 

Section 8.02                                       Legal Defeasance and Discharge.

 

Upon the Issuer’s exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Issuers and the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes and Guarantees on the date the conditions set forth below are satisfied (“Legal Defeasance”).  For this purpose, Legal Defeasance means that the Issuer shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture including that of the Guarantors (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging the same) and cure all then existing Events of Default, except for the following provisions which shall survive until otherwise terminated or discharged hereunder:

 

(a)                                 the rights of Holders of Notes to receive payments in respect of the principal of, premium, if any, and interest on the Notes when such payments are due solely out of the trust created pursuant to this Indenture referred to in Section 8.04 hereof;

 

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(b)                                 the Issuer’s obligations with respect to Notes concerning issuing temporary Notes, registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;

 

(c)                                  the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s obligations in connection therewith; and

 

(d)                                 this Section 8.02.

 

Subject to compliance with this Article 8, the Issuer may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.

 

Section 8.03                                       Covenant Defeasance.

 

Upon the Issuer’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Issuer and the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from their obligations under the covenants contained in Sections 4.03, 4.04, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.14 and 4.15 hereof and the operation of Section 5.01 with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are satisfied (“Covenant Defeasance”), and the Notes shall thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes).  For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Issuer may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby.  In addition, upon the Issuer’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(3), 6.01(4), 6.01(5), 6.01(6) (solely with respect to Restricted Subsidiaries that are Significant Subsidiaries), 6.01(7) (solely with respect to Restricted Subsidiaries that are Significant Subsidiaries) and 6.01(8) hereof shall not constitute Events of Default.

 

Section 8.04                                       Conditions to Legal or Covenant Defeasance.

 

The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes:

 

In order to exercise either Legal Defeasance or Covenant Defeasance with respect to the Notes:

 

(1)                                 the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized investment banking firm, appraisal firm or firm of independent public accountants, to pay the principal of, premium, if any, and interest due on the Notes on the stated maturity date or on the redemption date, as the case may be, of such principal, premium, if any, or interest on such Notes and the Issuer must specify whether such Notes are being defeased to maturity or to a particular redemption date;

 

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(2)                                 in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions,

 

(a)                                 the Issuer has received from, or there has been published by, the United States Internal Revenue Service a ruling, or

 

(b)                                 since the issuance of the Notes, there has been a change in the applicable U.S. federal income tax law,

 

in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, subject to customary assumptions and exclusions, the Holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes, as applicable, as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

 

(3)                                 in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to such tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

 

(4)                                 no Default (other than that resulting from borrowing funds to be applied to make such deposit and the granting of Liens in connection therewith) shall have occurred and be continuing on the date of such deposit;

 

(5)                                 such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under any Credit Facility or any other material agreement or instrument (other than this Indenture) to which the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound (other than that resulting from borrowing funds to be applied to make such deposit and the granting of Liens in connection therewith);

 

(6)                                 the Issuer shall have delivered to the Trustee an Officer’s Certificate stating that the deposit was not made by the Issuer with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuer or any Guarantor or others; and

 

(7)                                 the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with.

 

Section 8.05                                       Deposited Money and Government Securities To Be Held in Trust; Other Miscellaneous Provisions.

 

Subject to Section 8.06 hereof, all money and Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “Trustee”) pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer or a Guarantor 

 

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acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.

 

The Issuer shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.

 

Anything in this Article VIII to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuer from time to time upon the written request of the Issuer any money or Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized investment banking firm, appraisal firm or firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04 hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

 

Section 8.06                                       Repayment to Issuer.

 

The Trustee shall promptly, upon the written request of the Issuer, and in any event no later than five Business Days after such request, pay to the Issuer after request therefore, any excess money held with respect to the Notes at such time in excess of amounts required to pay any of the Issuer’s Obligations then owing with respect to the Notes.

 

Subject to any applicable abandoned property law, any money deposited with the Trustee or any Paying Agent, or then held by the Issuer, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for one year after such principal and premium, if any, or interest has become due and payable shall be paid to the Issuer on its written request or (if then held by the Issuer) shall be discharged from such trust; and the Holder of such Note shall thereafter look only to the Issuer for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuer as trustee thereof, shall thereupon cease.

 

Section 8.07                                       Reinstatement.

 

If the Trustee or Paying Agent is unable to apply any United States dollars or Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuer’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided that, if the Issuer makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.

 

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ARTICLE IX

 

AMENDMENT, SUPPLEMENT AND WAIVER

 

Section 9.01                                       Without Consent of Holders of Notes.

 

Notwithstanding Section 9.02 hereof, the Issuer, any Guarantor (with respect to a Guarantee or this Indenture) and the Trustee may amend or supplement this Indenture and any Guarantee or Notes without the consent of any Holder:

 

(1)                                 to cure any ambiguity, omission, mistake, defect or inconsistency;

 

(2)                                 to provide for uncertificated Notes of such series in addition to or in place of certificated Notes;

 

(3)                                 to comply with Section 5.01 hereof;

 

(4)                                 to provide for the assumption of the Issuer’s or any Guarantor’s obligations to the Holders;

 

(5)                                 to make any change that would provide any additional rights or benefits to the Holders or that does not materially adversely affect the rights under this Indenture of any such Holder;

 

(6)                                 to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Issuer or any Guarantor;

 

(7)                                 to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act;

 

(8)                                 to evidence and provide for the acceptance and appointment under this Indenture of a successor Trustee thereunder pursuant to the requirements thereof;

 

(9)                                 to provide for the issuance of exchange notes or private exchange notes, which are identical to exchange notes except that they are not freely transferable;

 

(10)                          to add a Guarantor or release any Guarantor from its Guarantee if such release is in accordance with the terms under this Indenture;

 

(11)                          to conform the text of this Indenture, Guarantees or the Notes to any provision of the “Description of Notes” section of the Offering Memorandum to the extent that such provision in such “Description of Notes” section was intended to be a verbatim recitation of a provision of this Indenture, Guarantee or Notes, as provided in an Officer’s Certificate;

 

(12)                          to provide for the issuance of Additional Notes in accordance with the limitations set forth in this Indenture; or

 

(13)                          to make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes as permitted by this Indenture, including, without limitation, to facilitate the issuance and administration of the Notes; provided, however, that (i) compliance with this Indenture as so amended would not result in Notes being transferred in violation of the Securities 

 

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Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer Notes;

 

Upon the written request of the Issuer accompanied by a resolution of the Issuer’s board of directors authorizing the execution of any such amended or supplemental indenture, and upon receipt by the Trustee of the documents described in Sections 7.02 and 9.06, the Trustee shall join with the Issuer and the Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise.

 

Section 9.02                                       With Consent of Holders of Notes.

 

Except as provided below in this Section 9.02, the Issuer and the Trustee may amend or supplement this Indenture, the Notes and the Guarantees with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding voting as a single class (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes).  Section 2.08 hereof and Section 2.09 hereof shall determine which Notes are considered to be “outstanding” for the purposes of this Section 9.02.

 

Upon the written request of the Issuer accompanied by a resolution of the Issuer’s board of directors authorizing the execution of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Sections 7.02 and 9.06 hereof, the Trustee shall join with the Issuer in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental indenture.

 

The consent of the Holders is not necessary under this Indenture to approve the particular form of any proposed amendment.  It is sufficient if such consent approves the substance of the proposed amendment.

 

After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Issuer shall send to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver.  Any failure of the Issuer to send such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.

 

Without the consent of each affected Holder of Notes, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder):

 

(1)                                 reduce the principal amount of such Notes whose Holders must consent to an amendment, supplement or waiver;

 

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(2)                                 reduce the principal of or change the fixed final maturity of any such Note or alter or waive the provisions with respect to the redemption of such Notes (other than provisions relating to Section 3.09, Section 4.10 and Section 4.14);

 

(3)                                 reduce the rate of or change the time for payment of interest on any Note;

 

(4)                                 waive a Default in the payment of principal of or premium, if any, or interest on the Notes, except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration;

 

(5)                                 make any Note payable in currency other than that stated therein;

 

(6)                                 make any change in the provisions of this Indenture relating to the rights of Holders to receive payments of principal of or premium, if any, or interest on the Notes;

 

(7)                                 make any change to this paragraph of Section 9.02;

 

(8)                                 impair the right of any Holder to receive payment of principal of, or interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;

 

(9)                                 make any change to or modify the ranking of the Notes that would adversely affect the Holders; or

 

(10)                          except as expressly permitted by this Indenture, modify the Guarantee of any Significant Subsidiary in any manner adverse to the Holders of the Notes.

 

Section 9.03                                       Compliance with Trust Indenture Act.

 

Every amendment or supplement to this Indenture or the Notes shall be set forth in an amended or supplemental indenture that complies with the Trust Indenture Act as then in effect.

 

Section 9.04                                       Revocation and Effect of Consents.

 

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note.  However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective.  An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

 

The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement, or waiver.  If a record date is fixed, then, notwithstanding the preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only such Persons, shall be entitled to consent to such amendment, supplement, or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date.  No such consent shall be valid or effective for more than 120 days after such record date unless the consent of the requisite number of Holders has been obtained.

 

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Section 9.05                                       Notation on or Exchange of Notes.

 

The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated.  The Issuer in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.

 

Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

 

Section 9.06                                       Trustee To Sign Amendments, etc.

 

The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article 9 if the amendment, supplement or waiver does not adversely affect the rights, duties, liabilities or immunities of the Trustee.  The Issuer may not sign an amendment, supplement or waiver until its board of directors approves it.  In executing any amendment, supplement or waiver, the Trustee shall be provided with and (subject to Section 7.01 hereof) shall be fully protected in conclusively relying upon, in addition to the documents required by Section 12.04 hereof, an Officer’s Certificate and an Opinion of Counsel, each stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid and binding obligation of the Issuer and any Guarantors party thereto, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof (including Section 9.03).  Notwithstanding the foregoing, an Officer’s Certificate and an Opinion of Counsel shall not be required in connection with the addition of any Guarantor under this Indenture on the Issue Date upon execution and delivery by such Guarantor and the Trustee of a Supplemental Indenture to this Indenture.

 

ARTICLE X

 

GUARANTEES

 

Section 10.01                                Guarantee.

 

Subject to this Article 10, each of the Guarantors hereby, jointly and severally, fully and unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Issuer hereunder or thereunder, that:  (a) the principal of, interest and premium, if any, on the Notes, subject to any applicable grace period, shall be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, to the extent lawful, and all other Obligations of the Issuer to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.  Failing payment by the Issuer when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately.  Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.

 

The Guarantors hereby agree that their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions 

 

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hereof or thereof, the recovery of any judgment against the Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor (other than payment in full of all of the Obligations of the Issuer hereunder and under the Notes).  Each Guarantor hereby waives (to the extent permitted by law) diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever and covenants that this Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture or by release in accordance with the provisions of this Indenture.

 

Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ and agents’ fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section 10.01.

 

If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantors, any amount paid either to the Trustee or such Holder, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.

 

Each Guarantor agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Guarantee.  The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantees.

 

Each Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Issuer for liquidation, reorganization, should the Issuer become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Issuer’s assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes or Guarantees, whether as a “voidable preference,” “fraudulent transfer” or otherwise, all as though such payment or performance had not been made.  In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

In case any provision of any Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

The Guarantee issued by any Guarantor shall be a general unsecured obligation of such Guarantor and shall rank equally in right of payment to all existing and future Senior Indebtedness of such Guarantor, if any.

 

Each payment to be made by a Guarantor in respect of its Guarantee shall be made without set-off, counterclaim, reduction or diminution of any kind or nature.

 

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Section 10.02                                Limitation on Guarantor Liability.

 

Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Guarantee.  To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of each Guarantor shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 10, result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law.  Each Guarantor that makes a payment under its Guarantee shall be entitled upon payment in full of all guaranteed obligations under this Indenture to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

 

Section 10.03                                Execution and Delivery.

 

To evidence its Guarantee set forth in Section 10.01 hereof, each Guarantor hereby agrees that this Indenture shall be executed on behalf of such Guarantor by an authorized officer.

 

Each Guarantor hereby agrees that its Guarantee set forth in Section 10.01 hereof shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.

 

If an officer of a Guarantor whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates the Note, the Guarantee of such Guarantor shall be valid nevertheless.

 

The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantors.

 

If required by Section 4.15 hereof, the Issuer shall cause any newly created or acquired Restricted Subsidiary to comply with the provisions of Section 4.15 hereof and this Article 10, to the extent applicable.

 

Section 10.04                                Subrogation.

 

Each Guarantor shall be subrogated to all rights of Holders of Notes against the Issuer in respect of any amounts paid by any Guarantor pursuant to the provisions of Section 10.01 hereof; provided that no Guarantor shall be entitled to enforce or receive any payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Issuer under this Indenture or the Notes shall have been paid in full.

 

Section 10.05                                Benefits Acknowledged.

 

Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the guarantee and waivers made by it pursuant to its Guarantee are knowingly made in contemplation of such benefits.

 

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Section 10.06                                Release of Guarantees.

 

A Guarantee by any Guarantor other than INC Research Intermediate shall be automatically and unconditionally released and discharged upon:

 

(1)                                 (A)  any sale, exchange or transfer (by merger or otherwise) of (i) the Capital Stock of such Guarantor (including any sale, exchange or transfer), after which the applicable Guarantor is no longer a Restricted Subsidiary or (ii) all or substantially all the assets of such Guarantor, provided that such sale, exchange or transfer of Capital Stock or assets is made in compliance with the applicable provisions of this Indenture;

 

(B)                               the release or discharge of the Guarantee by such Guarantor of the Senior Secured Credit Facility or the release or discharge of the Indebtedness that pursuant to Section 4.15 resulted in the creation of such Guarantee;

 

(C)                               the proper designation of any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary; or

 

(D)                               the Issuer exercising their Legal Defeasance option in accordance with Section 8.02 hereof or the Issuer’s obligations under this Indenture being discharged in accordance with the terms of this Indenture; and

 

(2)                                 the Issuer delivering to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in this Indenture relating to such transaction have been complied with.

 

The Guarantee of INC Research Intermediate or any other direct or indirect parent company may be released at any time.

 

ARTICLE XI

 

SATISFACTION AND DISCHARGE

 

Section 11.01                                Satisfaction and Discharge.

 

This Indenture will be discharged and will cease to be of further effect as to all Notes, when either:

 

(1)                                 all Notes theretofore authenticated and delivered, except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust, have been delivered to the Trustee for cancellation; or

 

(2)                                 (A)  all Notes not theretofore delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise, will become due and payable within one year or are to be called for redemption and redeemed within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuer and the Issuer or any Guarantor have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders of the Notes, cash in U.S. dollars, Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on the Notes not theretofore delivered to the 

 

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Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption, as the case may be;

 

(B)                               the Issuer has paid or caused to be paid all sums payable by it under this Indenture; and

 

(C)                               the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be.

 

In addition, the Issuer must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

 

Notwithstanding the satisfaction and discharge of this Indenture, if money shall have been deposited with the Trustee pursuant to subclause (A) of clause (2) of this Section 11.01, the provisions of Section 11.02 and Section 8.06 hereof shall survive such satisfaction and discharge.

 

Section 11.02                                Application of Trust Money.

 

Subject to the provisions of Section 8.06 hereof, all money deposited with the Trustee pursuant to Section 11.01 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.

 

If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 11.01 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer’s and any Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 hereof; provided that if the Issuer has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

 

ARTICLE XII

 

MISCELLANEOUS

 

Section 12.01                                Trust Indenture Act Controls.

 

If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Trust Indenture Act Section 318(c), the imposed duties shall control.

 

Section 12.02                                Notices.

 

Any notice or communication by the Issuer, any Guarantor or the Trustee to the others is duly given if in writing and delivered in person or mailed by first-class mail (registered or certified, return receipt requested), electronic delivery (in PDF format), fax or overnight air courier guaranteeing next day delivery, to the others’ address:

 

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If to the Issuer and/or any Guarantor:

 

c/o INC Research, LLC
 3201 Beechleaf Court, Suite 600 
 Raleigh, NC 27604-1547 

Attention:  General Counsel
 Fax:  919-334-3666

 

with a copies to:

 

Weil, Gotshal & Manges
 767 Fifth Avenue
 New York, NY 10153
 Attention:  Corey Chivers
 Fax:  212-310-8007

 

If to the Trustee:

 

Wilmington Trust, National Association

246 Goose Lane, Suite 105
 Guilford, CT  06437

Attention:  Corporate Trust Services - 
 Administrator for INC Research, LLC

Fax:  203-453-1183

 

The Issuer, any Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

 

All notices and communications (other than those sent to Holders) shall be deemed to have been duly given:  as of the date so delivered if delivered electronically, in PDF format; at the time delivered by hand, if personally delivered; five calendar days after being deposited in the mail, postage prepaid, if mailed by first-class mail; when receipt acknowledged, if faxed; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery; provided that any notice or communication delivered to the Trustee shall be deemed effective upon actual receipt thereof.

 

Any notice or communication to a Holder shall be sent electronically, mailed by first-class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar.  Any notice or communication shall also be so mailed to any Person described in Trust Indenture Act Section 313(c), to the extent required by the Trust Indenture Act.  Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.

 

If a notice or communication is mailed or otherwise delivered in the manner provided above within the time prescribed, such notice or communication shall be deemed duly given, whether or not the addressee receives it.

 

The Trustee agrees to accept and act upon facsimile or electronically sent (in PDF format) transmission of written instructions and/or directions pursuant to this Indenture given by the Issuer,

 

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provided, however that: (i) if requested, such Issuer, subsequent to such facsimile transmission of written instructions and/or directions, shall provide the originally executed instructions and/or directions to the Trustee in a timely manner and (ii) such originally executed instructions and/or directions shall be signed by an Authorized Officer of the Issuer.

 

If the Issuer sends a notice or communication to Holders, it shall send a copy to the Trustee and each Agent at the same time.

 

Section 12.03                                Communication by Holders of Notes with Other Holders of Notes.

 

Holders may communicate pursuant to Trust Indenture Act Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes.  The Issuer, the Trustee, the Registrar and anyone else shall have the protection of Trust Indenture Act Section 312(c).

 

Section 12.04                                Certificate and Opinion as to Conditions Precedent.

 

Upon any request or application by the Issuer or any of the Guarantors to the Trustee to take any action under this Indenture, the Issuer or such Guarantor, as the case may be, shall furnish to the Trustee:

 

(a)                                 An Officer’s Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and

 

(b)                                 An Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.

 

Section 12.05                                Statements Required in Certificate or Opinion.

 

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 4.04 hereof or Trust Indenture Act Section 314(a)(4)) shall comply with the provisions of Trust Indenture Act Section 314(e) and shall include, as required by Section 314(e):

 

(a)                                 a statement that the Person making such certificate or opinion has read such covenant or condition;

 

(b)                                 a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

(c)                                  a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

 

(d)                                 a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.

 

With respect to matters of fact, an Opinion of Counsel may rely on an Officers’ Certificate, certificates of public officials or reports or opinions of experts.

 

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Section 12.06                                Rules by Trustee and Agents.

 

The Trustee may make reasonable rules for action by or at a meeting of Holders.  The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

 

Section 12.07                                No Personal Liability of Directors, Officers, Employees and Stockholders, etc..

 

No past, present or future director, officer, employee, incorporator or stockholder, member or limited partner of the Issuer or any Restricted Subsidiary or any of their direct or indirect parent companies shall have any liability for any obligations of the Issuer or the Guarantors under the Notes, the Guarantees or this Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation.  Each Holder by accepting Notes waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.

 

Section 12.08                                Governing Law.

 

THIS INDENTURE, THE NOTES AND ANY GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

 

Section 12.09                                Waiver of Jury Trial.

 

THE ISSUER, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 12.10                                Force Majeure.

 

In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused by, directly or indirectly, forces beyond its reasonable control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services.

 

Section 12.11                                No Adverse Interpretation of Other Agreements.

 

This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuer or the Restricted Subsidiaries or of any other Person.  Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

 

Section 12.12                                Successors.

 

All agreements of the Issuer in this Indenture and the Notes shall bind their successors.  All agreements of the Trustee in this Indenture shall bind its successors.  All agreements of each Guarantor in this Indenture shall bind its successors, except as otherwise provided in Section 10.06 hereof.

 

105

 

Section 12.13                                Severability.

 

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 12.14                                Counterpart Originals.

 

The parties may sign any number of copies of this Indenture which, when taken together, shall constitute one instrument.  Each signed copy shall be an original, but all of them together represent the same agreement.  The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 12.15                                Table of Contents, Headings, etc.

 

The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

 

Section 12.16                                U.S.A. Patriot Act.

 

The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee.  The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.

 

[Signatures on following page]

 

106

 

	
 
    	
INC   RESEARCH, LLC,
    
	
 
    	
as   Issuer
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   James Ogle
    
	
 
    	
Name:   James Ogle
    
	
 
    	
Title:   President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INC   RESEARCH INTERMEDIATE, LLC,
    
	
 
    	
as   Guarantor
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   James Ogle
    
	
 
    	
Name:   James Ogle
    
	
 
    	
Title:   President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TRIANGLE   TWO ACQUISITION CORP.,
    
	
 
    	
as   Guarantor
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   James Ogle
    
	
 
    	
Name:   James Ogle
    
	
 
    	
Title:   President and Chief Executive Officer
    

 

Signature Page Indenture

 

 

	
 
    	
WILMINGTON   TRUST, NATIONAL ASSOCIATION, as Trustee
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Joseph P. O’Donnell
    
	
 
    	
 
    	
Name:
    	
Joseph   P. O’Donnell
    
	
 
    	
 
    	
Title:
    	
Vice   President
    

 

Signature Page Indenture

 

 

EXHIBIT A

 

[Face of Note]

 

[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]

 

[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]

 

A-1

 

CUSIP  [                     ]

ISIN  [                     ](1)

 

[RULE 144A][REGULATION S] GLOBAL NOTE
 representing up to
 $[        ]

11.5% Senior Notes due 2019

 

	
No.    
    	
[$                            ]
    

 

INC RESEARCH, LLC

 

promises to pay to CEDE & CO. or registered assigns, the principal sum [set forth on the Schedule of Exchanges of Interests in the Global Note attached hereto] [of                                                  United States Dollars] on July 15, 2019.

 

Interest Payment Dates:  July 15 and January 15

Record Dates:  July 1 and January 1

 

(1)                                 Rule 144A Note CUSIP:  44981U AA2

Rule 144A Note ISIN:  US44981UAA25

Regulation S Note CUSIP:  U45208AA0

Regulation S Note ISIN:  USU45208AA06

 

A-2

 

IN WITNESS HEREOF, the Issuer has caused this instrument to be duly executed.

 

	
 
    	
INC   RESEARCH, LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

This is one of the Notes referred to in the within-mentioned Indenture:

 

Dated: July 12, 2011

 

	
 
    	
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized Signatory
    

 

A-3

 

[Back of Note]

 

11.5% Senior Notes due 2019

 

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

 

1.                                      INTEREST.  INC Research, LLC, a Delaware corporation (the “Issuer”), promises to pay interest on the principal amount of this Note at 11.5% per annum from July 12, 2011 until maturity.  The Issuer will pay interest semi-annually in arrears on July 15 and January 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”).  Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that the first Interest Payment Date shall be January 15, 2012. The Issuer shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to the then applicable interest rate on the Notes to the extent lawful; and shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

2.                                      METHOD OF PAYMENT.  The Issuer will pay interest on the Notes to the Persons who are registered Holders of Notes at the close of business on the July 1 or January 1 (whether or not a Business Day), as the case may be, next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest.  Payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders, provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest and premium on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuer or the Paying Agent at least five Business Days in advance of the applicable Interest Payment Date.  Such payment shall be 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.

 

3.                                      PAYING AGENT AND REGISTRAR.  Initially, Wilmington Trust, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar.  The Issuer may change any Paying Agent or Registrar without notice to the Holders.  The Issuer or any of its Subsidiaries may act in any such capacity.

 

4.                                      INDENTURE.  The Issuer issued the Notes under an Indenture, dated as of July 12, 2011, as may be amended, restated, supplemented or otherwise modified from time to time (the “Indenture”), between INC Research, LLC, the guarantors party thereto and the Trustee.  This Note is one of a duly authorized issue of notes of the Issuer designated as its 11.5% Senior Notes due 2019.  The Issuer shall be entitled to issue Additional Notes pursuant to the Indenture. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).  The Notes are subject to all such terms, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of such terms.  To the extent any provision of this Note conflicts with the provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

 

A-4

 

5.                                      OPTIONAL REDEMPTION.

 

(a)                                 Except as described below under clauses 5(c) and 5(d) hereof, the Notes will not be redeemable at the Issuer’s option before July 15, 2015.

 

(b)                                 On and after July 15, 2015, the Issuer may redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days’ prior notice sent by first-class mail or by electronic delivery to each Holder of Notes to be redeemed at such Holder’s registered address, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon to, but not including, the applicable date of redemption (the “Redemption Date”), subject to the right of Holders of Notes of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date, if redeemed during the twelve-month period beginning on July 15 of each of the years indicated below:

 

	
Year
    	
 
    	
Percentage
    	
 
    
	
2015 
    	
 
    	
105.750
    	
%
    
	
2016 
    	
 
    	
102.875
    	
%
    
	
2017 and thereafter 
    	
 
    	
100.000
    	
%
    

 

(c)                                  At any time prior to July 15, 2015, the Issuer may redeem all or a part of the Notes, upon not less than 30 nor more than 60 days’ prior notice sent by first-class mail or by electronic delivery to each Holder of Notes  to be redeemed at such Holder’s registered address, at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest to, but not including, the Redemption Date, subject to the rights of Holders of Notes on the relevant Record Date to receive interest due on the relevant Interest Payment Date

 

(d)                                 Until July 15, 2014, the Issuer may, at its option, on one or more occasions, redeem up to 35% of the aggregate principal amount of Notes at a redemption price equal to 111.5% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, to, but not including, the applicable Redemption Date, subject to the right of Holders of Notes of record on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of the sum of the original aggregate principal amount of Notes issued under this Indenture and the original principal amount of any Additional Notes issued under the Indenture after the Issue Date remains outstanding immediately after the occurrence of each such redemption; provided further that each such redemption occurs within 90 days of the date of closing of each such Equity Offering. Notice of any redemption upon any Equity Offering may be given prior to the redemption thereof, and any such redemption or notice may, at the Issuer’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.

 

(e)                                   Any redemption pursuant to this paragraph 5 shall be made pursuant to the provisions of Sections 3.01 through 3.06 of the Indenture.

 

6.                                      MANDATORY REDEMPTION.  The Issuer shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.

 

7.                                      NOTICE OF REDEMPTION.  Subject to Section 3.03 of the Indenture, notice of redemption will be sent by first-class mail or electronic delivery at least 30 days but not more than 60 days before the Redemption Date (except that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Article VIII or Article XI of the Indenture) to each Holder whose Notes are to be redeemed at its registered address.  Notes in denominations larger than 

 

A-5

 

$2,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed.  On and after the Redemption Date interest ceases to accrue on Notes or portions thereof called for redemption. Redemption amounts shall only be paid upon presentation and surrender of any such Notes to be redeemed. Payment of the redemption price and performance of the Issuer’s obligations in connection with any redemption may be performed by another Person.

 

8.                                      OFFERS TO REPURCHASE.

 

(a)                                 Upon the occurrence of a Change of Control, the Issuer shall make an offer (a “Change of Control Offer”) to each Holder to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of each Holder’s Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to, but not including, the date of purchase (the “Change of Control Payment”).  The Change of Control Offer shall be made in accordance with Section 4.14 of the Indenture.

 

(b)                                 The Issuer is, subject to certain conditions and exceptions, obligated to make an offer to purchase Notes and certain other pari passu Indebtedness at 100% of their principal amount, plus accrued and unpaid interest thereon to, but not including, the date of repurchase, with certain Excess Proceeds of Asset Sales in accordance with the Indenture.

 

9.                                      DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are in registered form without coupons in a minimum amount of $2,000 and integral multiples of $1,000.  The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture.  The Issuer need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part.  Also, the Issuer need not exchange or register the transfer of any Notes for a period of 15 days before the sending of a notice of redemption of Notes to be redeemed or any Notes selected for redemption or tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer or Asset Sale Offer.

 

10.                               PERSONS DEEMED OWNERS.  The registered Holder of a Note may be treated as its owner for all purposes.

 

11.                               AMENDMENT, SUPPLEMENT AND WAIVER.  The Indenture, the Guarantees or the Notes may be amended or supplemented as provided in the Indenture.

 

12.                               DEFAULTS AND REMEDIES.  The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture.  If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately.  Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency relating to the Issuer, all outstanding Notes will become due and payable immediately without further action or notice.  Holders may not enforce the Indenture, the Notes or the Guarantees except as provided in the Indenture.  Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of the Notes notice of any continuing Default (except a Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest.  The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or and its consequences under the Indenture except a continuing Default in 

 

A-6

 

payment of the principal of, premium, if any, or interest on, any of the Notes held by a non-consenting Holder.  The Issuer and each Guarantor (to the extent that such Guarantor is so required under the Trust Indenture Act) are required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuer is required within ten Business Days after becoming aware of any Default, to deliver to the Trustee a statement specifying such Default.

 

13.                               AUTHENTICATION.  This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.

 

14.                               GOVERNING LAW.  THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE GUARANTEES, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

 

15.                               CUSIP NUMBERS.  Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

 

The Issuer will furnish to any Holder upon written request and without charge a copy of the Indenture.  Requests may be made to the Issuer at the following address:

 

c/o INC Research, LLC
 3201 Beechleaf Court, Suite 600 
 Raleigh, NC 27604-1547 
 Attention:  General Counsel
 Fax:  919-334-3666

 

A-7

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

	
(I) or   (we) assign and transfer this Note to:
    	
 
    
	
 
    	
(Insert assignee’s legal name)
    

 

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 

 

(Print or type assignee’s name, address and zip code)

and irrevocably appoint                                                                                                                                                                     to transfer this Note on the books of the Issuer.  The agent may substitute another to act for him.

 

	
Date:
    	
 
    	
 
    

 

	
 
    	
Your   Signature:
    	
 
    
	
 
    	
 
    	
(Sign   exactly as your name appears on the face of this Note)
    

 

	
Signature   Guarantee*:
    	
 
    	
 
    

 

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

A-8

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.10 or 4.14 of the Indenture, check the appropriate box below:

 

o Section 4.10        o Section 4.14

 

If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased:

 

$                    

 

	
Date:
    	
 
    	
 
    

 

	
 
    	
Your   Signature:
    	
 
    
	
 
    	
 
    	
(Sign   exactly as your name appears on the face of this Note)
    
	
 
    	
 
    
	
 
    	
Tax   Identification No.:
    	
 
    
				

 

	
Signature   Guarantee*:
    	
 
    	
 
    

 

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

A-9

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

 

The initial outstanding principal amount of this Global Note is $                    .  The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global or Definitive Note for an interest in this Global Note, have been made:

 

	
Date of
   Exchange
    	
 
    	
Amount of
   decrease
   in Principal
   Amount
    	
 
    	
Amount of increase
   in Principal
   Amount of this
   Global Note
    	
 
    	
Principal Amount
   of
   this Global Note
   following such
   decrease or
   increase
    	
 
    	
Signature of
   authorized
   signatory
   of Trustee or 
   Custodian
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

*This schedule should be included only if the Note is issued in global form.

 

A-10

 

EXHIBIT B

 

FORM OF CERTIFICATE OF TRANSFER

 

INC Research, LLC
 3201 Beechleaf Court, Suite 600
 Raleigh, NC 27604-1547 
 Attention: General Counsel
 Fax: 919-334-3666
 Attention:  General Counsel

 

Wilmington Trust, National Association,

246 Goose Lane, Suite 105
 Guilford, CT  06437

Fax:  203-453-1183

Attention:  Corporate Trust Services - 
 Administrator for INC Research, LLC

 

Re:  11.5% Senior Notes due 2019

 

Reference is hereby made to the Indenture, dated as of July 12, 2011, as may be amended, restated, supplemented or otherwise modified from time to time (the “Indenture”), between INC Research, LLC, the guarantors party thereto and the Trustee.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

(the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $                       in such Note[s] or interests (the “Transfer”), to                                (the “Transferee”), as further specified in Annex A hereto.  In connection with the Transfer, the Transferor hereby certifies that:

 

[CHECK ALL THAT APPLY]

 

1.                                      o CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A.  The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States.

 

2.                                      o CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S.  The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 promulgated under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) 

 

B-1

 

the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S promulgated under the Securities Act (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser).  Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Indenture and the Securities Act.

 

3.                                      o CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S.  The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

 

(a)                                 o such Transfer is being effected pursuant to and in accordance with Rule 144 promulgated under the Securities Act;

 

or

 

(b)                                 o such Transfer is being effected to the Issuer or a subsidiary thereof;

 

or

 

(c)                                  o such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act.

 

4.                                      o CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.

 

(a)                                 o CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 promulgated under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

 

B-2

 

(b)                                 o CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 promulgated under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

 

(c)                                  o CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION.  (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

 

B-3

 

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.

 

	
 
    	
[Insert   Name of Transferor]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
					

 

B-4

 

ANNEX A TO CERTIFICATE OF TRANSFER

 

1.                                      The Transferor owns and proposes to transfer the following:

 

[CHECK ONE OF (a) OR (b)]

 

(a)                                 o a beneficial interest in the:

 

(i)                                 o 144A Global Note (CUSIP [                     ]), or

 

(ii)                                   o Regulation S Global Note (CUSIP [                      ]), or

 

(b)                                 o a Restricted Definitive Note.

 

2.                                      After the Transfer the Transferee will hold:

 

[CHECK ONE]

 

(a)                                 o a beneficial interest in the:

 

(i)                                 o 144A Global Note (CUSIP [                      ]), or

 

(ii)                                   o Regulation S Global Note (CUSIP[                      ]), or

 

(b)                                 o a Restricted Definitive Note; or

 

(c)                                  o an Unrestricted Definitive Note, in accordance with the terms of the Indenture.

 

B-5

 

EXHIBIT C

 

FORM OF CERTIFICATE OF EXCHANGE

 

INC Research, LLC
 3201 Beechleaf Court, Suite 600 
 Raleigh, NC 27604-1547 
 Attention: General Counsel
 Fax: 919-334-3666
 Attention:  General Counsel

 

Wilmington Trust, National Association,

246 Goose Lane, Suite 105
 Guilford, CT  06437

Fax:  203-453-1183

Attention:  Corporate Trust Services - 
 Administrator for INC Research, LLC

 

Re:  11.5% Senior Notes due 2019

 

Reference is hereby made to the Indenture, dated as of July 12, 2011, as may be amended, restated, supplemented or otherwise modified from time to time (the “Indenture”), between INC Research, LLC, the guarantors party thereto and the Trustee.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

                        (the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $                     in such Note[s] or interests (the “Exchange”).  In connection with the Exchange, the Owner hereby certifies that:

 

1)            EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE

 

a)            o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE.  In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

 

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b)            o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE.  In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

 

c)             o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE.  In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

 

d)            o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE.  In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

 

2)            EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES

 

a)            o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE.  In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer.  Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

 

b)            o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE.  In connection with the Exchange 

 

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of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE]  [   ] 144A Global Note  [   ] Regulation S Global Note, with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

 

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer and are dated                                             .

 

	
 
    	
[Insert   Name of Transferor]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
Dated:
    	
 
    	
 
    	
 
    
					

 

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EXHIBIT D

 

[FORM OF SUPPLEMENTAL INDENTURE
 TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

 

Supplemental Indenture (this “Supplemental Indenture”), dated as of                     , among INC Research, LLC a Delaware limited liability company (the “Issuer”), [           ], a subsidiary of the Issuer and a [   ] [corporation] (the “Subsidiary Guarantor”), the other Guarantors party hereto, and Wilmington Trust, National Association, as trustee (the “Trustee”).

 

W I T N E S S E T H

 

WHEREAS, the Issuer and the other Guarantors party thereto has heretofore executed and delivered to the Trustee an indenture (the “Indenture”), dated as of July 12, 2011, providing for the issuance of an unlimited aggregate principal amount of 11.5% Senior Notes due 2019 (the “Notes”);

 

WHEREAS, the Indenture provides that under certain circumstances the Subsidiary Guarantor shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Subsidiary Guarantor shall unconditionally guarantee all of the Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and

 

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture without the consent of any Holder.

 

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

 

(1)           Capitalized Terms.  Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

 

(2)           Agreement to Guarantee.  The Subsidiary Guarantor hereby agrees as follows:

 

(a)           The Subsidiary Guarantor hereby becomes a party to the Indenture as a Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Guarantor under the Indenture, subject to the terms and conditions set forth in the Indenture.

 

(b)           The Subsidiary Guarantor agrees, on a joint and several basis with all the existing Guarantors, to fully and unconditionally Guarantee to each Holder of the Notes and the Trustee the Obligations in accordance with the terms set forth in Article 10 of the Indenture on a senior basis.

 

(3)           No Personal Liability of Directors, Officers, Employees and Stockholders.  No past, present or future director, officer, employee, incorporator, stockholder, agent, member or limited partner of the Issuer or any Restricted Subsidiary or any of their direct or indirect parent companies shall have any liability for any obligations of the Issuer or any Guarantor under the Notes, the Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder of the Notes by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.  Such waiver may 

 

D-1

 

not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

 

(5)           Execution and Delivery.  The Subsidiary Guarantor agrees that the Guarantee shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.

 

(6)           Governing Law.  THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

 

(7)           Counterparts.  The parties may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

(8)           Effect of Headings.  The Section headings herein are for convenience only and shall not affect the construction hereof.

 

(9)           The Trustee.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Subsidiary Guarantor.

 

(10)         Benefits Acknowledged.  The Subsidiary Guarantor’s Guarantee is subject to the terms and conditions set forth in the Indenture.  The Subsidiary Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.

 

(11)         Successors.  All agreements of the Subsidiary Guarantor in this Supplemental Indenture shall bind its successors, except as otherwise provided in the Indenture (including without limitation Section 10.06 of the Indenture).  All agreements of the Trustee in this Supplemental Indenture shall bind its successors.

 

(12)         Amendments.  No amendment or waiver of any provision of this Supplemental Indenture, not any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by all of the parties hereto.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

 

	
 
    	
[SUBSIDIARY   GUARANTOR]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

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