Exhibit 4.2

EXECUTION VERSION

AMENDMENT NO. 9 TO THE AMENDED AND RESTATED BASE INDENTURE

THIS AMENDMENT NO. 9 TO THE AMENDED AND RESTATED BASE INDENTURE, dated and effective (subject to Section 2 below) as of October 5, 2022 (this “Amendment”), is entered into by and among (i) DRIVEN BRANDS FUNDING, LLC, a Delaware limited liability company, as a co-issuer (the “Issuer”), (ii) DRIVEN BRANDS CANADA FUNDING CORPORATION, a Canadian corporation, as a co-issuer (the “Canadian Co-Issuer” and together with the Issuer, the “Co-Issuers”), and (iii) CITIBANK, N.A., a national banking association, not in its individual capacity, but solely in its capacity as the trustee under the Indenture referred to below (together with its successors and assigns in such capacity, the “Trustee”). Capitalized terms used and not defined herein shall have the meanings set forth or incorporated by reference in the Indenture.

RECITALS

WHEREAS, the Co-Issuers (including the Canadian Co-Issuer as of the Series 2020-1 Closing Date) and the Trustee have entered into the Amended and Restated Base Indenture, dated as of April 24, 2018, as amended by Amendment No. 1 to the Amended and Restated Base Indenture, dated as of March 19, 2019, Amendment No. 2 to the Amended and Restated Base Indenture, dated as of June 15, 2019, Amendment No. 3 to the Amended and Restated Base Indenture, dated as of September 17, 2019, Amendment No. 4 to the Amended and Restated Base Indenture, dated as of July 6, 2020, Amendment No. 5 to the Amended and Restated Base Indenture, dated as of December 14, 2020, Amendment No. 6 to the Amended and Restated Base Indenture, dated as of March 30, 2021, Amendment No. 7 to the Amended and Restated Base Indenture, dated as of March 30, 2021 and Amendment No. 8 to the Amended and Restated Base Indenture, dated as of September 29, 2021 (as the same may be further amended, supplemented or otherwise modified from time to time prior to the date hereof and exclusive of the Series Supplements thereto, the “Base Indenture”; and together with each Series Supplement entered into on or prior to the date hereof and any additional Series Supplements thereto entered into from time to time, the “Indenture”).

WHEREAS, (x) Section 13.1(a) of the Base Indenture provides, among other things, that the Issuer and the Trustee, without the consent of any Noteholder, the Control Party, the Controlling Class Representative or any other Secured Party, may at any time, and from time to time, make certain amendments, waivers and other modifications to the Base Indenture, including the types of certain amendments set forth in this Amendment, and (y) Section 13.2(a) of the Base Indenture provides, among other things, that the Co-Issuers and the Trustee, with the consent of the Control Party (acting at the direction of the Controlling Class Representative), may at any time, and from time to time, make certain amendments, waivers and other modifications to the Base Indenture, including the types of certain of the amendments set forth in this Amendment.

WHEREAS, with respect to certain amendments set forth in this Amendment which are indicated to be effective as of the 2022 Springing Amendments Implementation Date, (a) the Holders of the Series 2022-1 Notes (as defined in the Series 2022-1 Supplement, dated as of the date hereof, to the Base Indenture referenced herein) have, by their purchase of such Series 2022-1 Notes, consented to such amendments and (b) any Holders of Additional Notes will be deemed to consent to such amendments by their purchase thereof. Therefore, effective as of the 2022 Springing Amendments Implementation Date, all Holders of the Notes will have consented to such amendments such that the separate consent of the Control Party is not also required pursuant to Section 13.2(a) of the Base Indenture.

 

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WHEREAS, Section 11.4 of the Base Indenture and Section 2.4 of the Servicing Agreement authorize the Control Party to provide its consent if there is no Person acting as the Controlling Class Representative and, as of the date hereof, there is no Person acting as the Controlling Class Representative.

WHEREAS, the Co-Issuers desire to amend the Base Indenture in certain respects, as hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged by the parties hereto, the parties hereto agree as follows:

1. Amendments to the Base Indenture. The Base Indenture, including Annex A thereto and Exhibit F, Exhibit H, Exhibit I, Exhibit J and Exhibit K thereto, but excluding all other annexes, schedules, and exhibits attached thereto, is hereby amended as reflected in the marked copy of the Base Indenture attached as Exhibit A to this Amendment, with certain of such amendments, as indicated in Exhibit A in this Amendment taking effect upon the 2022 Springing Amendments Implementation Date, to delete the stricken text (indicated textually in the same manner as the following example: stricken text and stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text and double-underlined text).

2. Effect of Amendment. Except as expressly amended and modified by this Amendment, all provisions of the Base Indenture shall remain in full force and effect and each reference to the Base Indenture and words of similar import in the Base Indenture, as amended hereby, shall be a reference to the Base Indenture as amended hereby and as the same may be further amended, supplemented or otherwise modified and in effect from time to time. This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of the Base Indenture other than as set forth herein. This Amendment may not be amended, supplemented or otherwise modified except in accordance with the terms of the Base Indenture. This Amendment constitutes a Supplement pursuant to Section 13.3 of the Base Indenture. This Amendment shall inure to the benefit of and be binding on the respective successors and assigns of the parties hereto, each Noteholder and each other Secured Party.

3. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

 

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4. Counterparts. This Amendment may be executed by the parties hereto in several counterparts (including by facsimile, email, electronic signature or other electronic means of communication), each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same agreement. The parties agree that this Amendment may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures in Global and National Commerce Act, Title 15, United States Code, Sections 7001 et seq., the Uniform Electronic Transaction Act and any applicable state law.

5. Matters relating to the Trustee. The Trustee makes no representations or warranties as to the correctness of the recitals contained herein, which shall be taken as statements of the Co-Issuers, or the validity or sufficiency of this Amendment and the Trustee shall not be accountable or responsible for or with respect to nor shall the Trustee have any responsibility for any provisions thereof. In entering into this Amendment, the Trustee shall have all of the rights, powers, duties and obligations of the Trustee under the Base Indenture and any other Transaction Document to which the Trustee is party and, for the avoidance of doubt, shall be entitled to the benefit of every provision thereunder relating to the conduct of or affecting the liability of or affording protection to the Trustee.

6. Representations and Warranties. Each party hereto represents and warrants to each other party hereto that this Amendment has been duly and validly executed and delivered by such party and constitutes its legal, valid and binding obligation, enforceable against such party in accordance with its terms.

[The remainder of this page is intentionally left blank.]

 

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

 

Amendment No. 9 to Amended and Restated Base Indenture

Amendment No. 9 to Amended and Restated Base Indenture

CONSENT AND DIRECTION OF SERVICER AND CONTROL PARTY:

In accordance with Section 2.4 of the Servicing Agreement, Midland Loan Services, a division of PNC Bank, National Association, as Servicer and in its capacity as Control Party, hereby consents to the execution and delivery by the Co-Issuers and the Trustee of this Amendment (but for the avoidance of doubt, will be deemed not to consent to any provisions of this Amendment (including any provisions in the Indenture) to which it is not required to consent under the Base Indenture or Indenture). The Servicer’s consent is granted solely to the extent that the amendment of the Indenture pursuant to this Amendment materially increases the Servicer’s obligations or liabilities, or materially decreases the Servicer’s rights or remedies under the Servicing Agreement, the Indenture or any other Transaction Document, and in each such case, only for such limited purpose.

 

MIDLAND LOAN SERVICES,
a division of PNC Bank, National Association, as Control Party and Servicer
By:
		Name:
		Title:

Amendment No. 9 to Amended and Restated Base Indenture

Exhibit A

Redline of the Base Indenture

[see attached]

Amendment No. 9 to Amended and Restated Base Indenture

CONFORMED THROUGH AMENDMENT NO. 89

EXECUTION VERSION

 

 

DRIVEN BRANDS FUNDING, LLC,

as Issuer,

DRIVEN BRANDS CANADA FUNDING CORPORATION,

as Canadian Co-Issuer,

and

CITIBANK, N.A.,

as Trustee and Securities Intermediary

 

 

AMENDED AND RESTATED BASE INDENTURE

Dated as of April 24, 2018

 

 

 

TABLE OF CONTENTS

 

				Page
Article I DEFINITIONS AND INCORPORATION BY REFERENCE					2
Section 1.1		Definitions			2
Section 1.2		Cross-References			2
Section 1.3		Accounting and Financial Determinations; No Duplication			2
Section 1.4		Rules of Construction			2
Article II THE NOTES					3
Section 2.1		Designation and Terms of Notes			3
Section 2.2		Notes Issuable in Series			4
Section 2.3		Series Supplement for Each Series			9
Section 2.4		Execution and Authentication			10
Section 2.5		Registrar and Paying Agent			11
Section 2.6		Paying Agent to Hold Money in Trust			1011
Section 2.7		Noteholder List			12
Section 2.8		Transfer and Exchange			12
Section 2.9		Persons Deemed Owners			14
Section 2.10		Replacement Notes			1314
Section 2.11		Treasury Notes			15
Section 2.12		Book-Entry Notes			1415
Section 2.13		Definitive Notes			1516
Section 2.14		Cancellation			17
Section 2.15		Principal and Interest			1617
Section 2.16		Tax Treatment			1718
Article III SECURITY					18
Section 3.1		Grant of Security Interest			18
Section 3.2		Certain Rights and Obligations of the Issuer Unaffected			21
Section 3.3		Performance of Collateral Documents			21
Section 3.4		Stamp, Other Similar Taxes and Filing Fees			2122
Section 3.5		Authorization to File Financing Statements			2122
Section 3.6		ULC Shares			23
Article IV REPORTS					24
Section 4.1		Reports and Instructions to Trustee			24
Section 4.2		Annual Noteholders’ Tax Statement			2729
Section 4.3		Rule 144A Information			2829
Section 4.4		Reports, Financial Statements and Other Information to Noteholders			2829
Section 4.5		Managers			2931
Section 4.6		No Constructive Notice.			2931

 

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Article V ALLOCATION AND APPLICATION OF COLLECTIONS					2931
Section 5.1		Management Accounts			2931
Section 5.2		Senior Notes Interest Reserve Accounts			3133
Section 5.3		Senior Subordinated Notes Interest Reserve Accounts.			3234
Section 5.4		Cash Trap Reserve Accounts			3335
Section 5.5		Collection Accounts			3335
Section 5.6		Collection Account Administrative Accounts			3436
Section 5.7		Securitization-Owned Location Concentration Accounts; Product Sourcing Concentration Accounts; Claims Management Concentration Accounts.			3739
Section 5.8		Trustee as Securities Intermediary			4042
Section 5.9		Establishment of Series Accounts; Legacy Accounts			4244
Section 5.10		Collections; Investment Income; Currency Conversions			4244
Section 5.11		Application of Weekly Collections on Weekly Allocation Dates			5253
Section 5.12		Quarterly Payment Date Applications			5861
Section 5.13		Determination of Quarterly Interest			7375
Section 5.14		Determination of Quarterly Principal			7375
Section 5.15		Prepayment of Principal			7375
Section 5.16		Retained Collections Contributions			7376
Section 5.17		Interest Reserve Letters of Credit.			7476
Section 5.18		Replacement of Ineligible Accounts.			7577
Article VI DISTRIBUTIONS					7578
Section 6.1		Distributions in General			7578
Article VII REPRESENTATIONS AND WARRANTIES					7678
Section 7.1		Existence and Power			7679
Section 7.2		Company and Governmental Authorization			7679
Section 7.3		No Consent			7679
Section 7.4		Binding Effect			7779
Section 7.5		Litigation			7780
Section 7.6		Employee Benefit Plans			7780
Section 7.7		Tax Filings and Expenses			7880
Section 7.8		Disclosure			7881
Section 7.9		Investment Company Act			7881
Section 7.10		Regulations T, U and X			7881
Section 7.11		Solvency			7881
Section 7.12		Ownership of Equity Interests; Subsidiaries			7981
Section 7.13		Security Interests			7982
Section 7.14		Transaction Documents			8083
Section 7.15		Non-Existence of Other Agreements			8083
Section 7.16		Compliance with Contractual Obligations and Laws			8083

 

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Section 7.17		Other Representations			8083
Section 7.18		Insurance			8183
Section 7.19		Environmental Matters			8183
Section 7.20		Intellectual Property			8284
Section 7.21		Payments on the Notes			8285
Article VIII COVENANTS					8285
Section 8.1		Payment of Notes			8285
Section 8.2		Maintenance of Office or Agency			8386
Section 8.3		Payment and Performance of Obligations			8386
Section 8.4		Maintenance of Existence			8386
Section 8.5		Compliance with Laws			8486
Section 8.6		Inspection of Property; Books and Records			8487
Section 8.7		Actions under the Transaction Documents			8488
Section 8.8		Notice of Defaults and Other Events			8689
Section 8.9		Notice of Material Proceedings			8689
Section 8.10		Further Requests			8689
Section 8.11		Further Assurances			8691
Section 8.12		Liens			8891
Section 8.13		Other Indebtedness			8891
Section 8.14		Employee Benefit Plans			8992
Section 8.15		Mergers			8993
Section 8.16		Asset Dispositions			8993
Section 8.17		Acquisition of Assets.			9094
Section 8.18		Dividends, Officers’ Compensation, etc.			9094
Section 8.19		Legal Name, Location			9194
Section 8.20		Charter Documents			9195
Section 8.21		Investments			9295
Section 8.22		No Other Agreements			9295
Section 8.23		Other Business			9297
Section 8.24		Maintenance of Separate Existence			9298
Section 8.25		Covenants Regarding the Securitization IP			9498
Section 8.26		Insurance			9699
Section 8.27		Litigation			9699
Section 8.28		Environmental			9699
Section 8.29		Derivatives Generally			96100
Section 8.30		Future Securitization Entities and Future Brands			97100
Section 8.31		Tax Lien Reserve Amount			98101
Section 8.32		Bankruptcy or Insolvency Proceedings.			98101
Section 8.33		Take 5 Accounts.			101

 

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Article IX REMEDIES					99102
Section 9.1		Rapid Amortization Events			99102
Section 9.2		Events of Default			100102
Section 9.3		Rights of the Control Party and Trustee upon Event of Default			103106
Section 9.4		Waiver of Appraisal, Valuation, Stay and Right to Marshaling			106109
Section 9.5		Limited Recourse			106109
Section 9.6		Optional Preservation of the Collateral			106109
Section 9.7		Waiver of Past Events			106109
Section 9.8		Control by the Control Party			107110
Section 9.9		Limitation on Suits			107110
Section 9.10		Unconditional Rights of Noteholders to Receive Payment			108111
Section 9.11		The Trustee May File Proofs of Claim			108111
Section 9.12		Undertaking for Costs			108111
Section 9.13		Restoration of Rights and Remedies			109112
Section 9.14		Rights and Remedies Cumulative			109112
Section 9.15		Delay or Omission Not Waiver			109112
Section 9.16		Waiver of Stay or Extension Laws			109112
Article X THE TRUSTEE					109112
Section 10.1		Duties of the Trustee			109112
Section 10.2		Rights of the Trustee			113116
Section 10.3		Individual Rights of the Trustee			115119
Section 10.4		Notice of Events of Default and Defaults			115119
Section 10.5		Compensation and Indemnity			116119
Section 10.6		Replacement of the Trustee			116120
Section 10.7		Successor Trustee by Merger, etc.			117121
Section 10.8		Eligibility Disqualification			117121
Section 10.9		Appointment of Co-Trustee or Separate Trustee			118122
Section 10.10		Representations and Warranties of Trustee			119123
Article XI CONTROLLING CLASS REPRESENTATIVE AND CONTROL PARTY					119123
Section 11.1		Controlling Class Representative.			119126
Section 11.2		Resignation or Removal of the Controlling Class Representative			122126
Section 11.3		Expenses and Liabilities of the Controlling Class Representative.			122127
Section 11.4		Control Party.			123128
Section 11.5		Note Owner List.			124129
Article XII DISCHARGE OF INDENTURE					125129
Section 12.1		Termination of the Co-Issuers’ and Guarantors’ Obligations			125129
Section 12.2		Application of Trust Money			128132
Section 12.3		Repayment to the Co-Issuers			128132
Section 12.4		Reinstatement			128132

 

iv

Article XIII AMENDMENTS					129132
Section 13.1		Without Consent of the Controlling Class Representative or the Noteholders			129132
Section 13.2		With Consent of the Controlling Class Representative or the Noteholders			131139
Section 13.3		Supplements			132139
Section 13.4		Revocation and Effect of Consents			132139
Section 13.5		Notation on or Exchange of Notes			133139
Section 13.6		The Trustee to Sign Amendments, etc.			133139
Section 13.7		Amendments and Fees.			133139
Article XIV MISCELLANEOUS					133140
Section 14.1		Notices.			133140
Section 14.2		Communication by Noteholders With Other Noteholders			137143
Section 14.3		Officers’ Certificate as to Conditions Precedent			137143
Section 14.4		Statements Required in Certificate			137143
Section 14.5		Rules by the Trustee			137143
Section 14.6		Benefits of Indenture			137143
Section 14.7		Payment on Business Day			138144
Section 14.8		Governing Law			138144
Section 14.9		Successors			138144
Section 14.10		Severability			138144
Section 14.11		Counterpart Originals			138144
Section 14.12		Table of Contents, Headings, etc.			138144
Section 14.13		No Bankruptcy Petition Against the Securitization Entities			138144
Section 14.14		Recording of Indenture			139145
Section 14.15		Waiver of Jury Trial			139145
Section 14.16		Submission to Jurisdiction; Waivers			139145
Section 14.17		Calculation of Driven Brands Leverage Ratio and Senior Leverage Ratio			139145
Section 14.18		Permitted Asset Dispositions and Permitted Brand Dispositions; Release of Collateral			142148
Section 14.19		FX Agent			142148
Section 14.20		Amendment and Restatement.			142148
Section 14.21		Currency Indemnity.			143149
Section 14.22		Hypothecary Representative			143149
Section 14.23		Electronic Signatures and Transmission			144150

 

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ANNEXES
Annex A		Base Indenture Definitions List
EXHIBITS
Exhibit A		Form of Weekly Manager’s Certificate
Exhibit B		FX Exchange Report
Exhibit C		Form of Quarterly Noteholders’ Report
Exhibit C-1		Form of Quarterly Noteholders’ Allocation Report
Exhibit D-1		Form of Notice of Grant of Security Interest in Trademarks
Exhibit D-2		Form of Notice of Grant of Security Interest in Patents
Exhibit D-3		Form of Notice of Grant of Security Interest in Copyrights
Exhibit E-1		Form of Supplemental Notice of Grant of Security Interest in Trademarks
Exhibit E-2		Form of Supplemental Notice of Grant of Security Interest in Patents
Exhibit E-3		Form of Supplemental Notice of Grant of Security Interest in Copyrights
Exhibit F		Form of Investor RequestPermitted Recipient Certification
Exhibit G		[Reserved]
Exhibit H		Form of CCR ElectionNomination Notice
Exhibit I		Form of CCR Nomination for Controlling Class Representative
Exhibit J		Form of CCR Ballot for Controlling Class Representative
Exhibit K		Form of CCR Acceptance Letter
Exhibit L		Form of Note Owner Certificate
SCHEDULES
Schedule 7.3		Consents
Schedule 7.7		Proposed Tax Assessments
Schedule 7.18		Insurance
Schedule 7.20		Pending Actions or Proceedings Relating to the Securitization IP
Schedule 8.11		Non-Perfected Liens
Schedule 8.14		Employee Benefit Plans

 

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AMENDED AND RESTATED BASE INDENTURE, dated as of April 24, 2018 (as amended by Amendment No. 1 thereto, dated as of March 19, 2019, as further amended by Amendment No. 2 thereto, dated as of June 15, 2019, as further amended by Amendment No. 3 thereto, dated as of September 17, 2019, as further amended by Amendment No. 4 thereto, dated as of July 6, 2020, as further amended by Amendment No. 5 thereto, dated as of December 14, 2020, as further amended by Amendment No. 6 thereto, dated as of March 30, 2021, as further amended by Amendment No. 7 thereto, dated as of March 30, 2021, as further amended by Amendment No. 8 thereto, dated as of September 29, 2021, as further amended by Amendment No. 9 thereto, dated as of October 5, 2022 and as further amended, supplemented or otherwise modified from time to time, exclusive of any Series Supplements, the “Base Indenture”), by and among DRIVEN BRANDS FUNDING, LLC, a Delaware limited liability company (the “Issuer”), DRIVEN BRANDS CANADA FUNDING CORPORATION, a corporation amalgamated under the laws of Canada (the “Canadian Co-Issuer” and together with the Issuer, the “Co-Issuers”), and CITIBANK, N.A., a national banking association, as trustee (in such capacity, the “Trustee”) and as securities intermediary.

W I T N E S S E T H:

WHEREAS, the Issuer and the Trustee previously entered into that certain Base Indenture, dated as of July 31, 2015 (as amended, restated, supplemented or otherwise modified prior to April 24, 2018, the “Original Base Indenture”), to provide for the issuance from time to time of one or more series of notes (the “Notes”) and amended and restated the Original Base Indenture on April 24, 2018 (as amended, restated, supplemented or otherwise modified prior to July 6, 2020, the “Original Amended and Restated Base Indenture”);

WHEREAS, the Issuer amended the Original Amended and Restated Base Indenture pursuant to Amendment No. 4 to the Original Amended and Restated Base Indenture in the manner set forth herein to add the Canadian Co-Issuer as a party to the Original Amended and Restated Base Indenture as a co-issuer and a co-issuer of each Series of Notes previously issued in the manner provided in this Base Indenture, and the Co-Issuers further amended the Original Amended and Restated Base Indenture pursuant to Amendment No. 5 to the Original Amended and Restated Base Indenture, Amendment No. 6 to the Original Amended and Restated Base Indenture, Amendment No. 7 to the Original Amended and Restated Base Indenture and Amendment No. 8 to the Original Amended and Restated Base Indenture in the manner set forth herein, and the Co-Issuers desire to further amend the Original Amended and Restated Base Indenture pursuant to Amendment No. 89 to the Original Amended and Restated Base Indenture in the manner set forth herein, and to provide for the issuance on the Series 2021-12022-1 Closing Date and from time to time thereafter of one or more series of Notes in the manner provided in this Base Indenture and in supplements to this Base Indenture and the Series Supplements hereto; and

WHEREAS, each Co-Issuer has duly authorized the execution and delivery of this Base Indenture and all other things necessary to make this Base Indenture a legal, valid and binding agreement of such Co-Issuer, in accordance with its terms, have been done, and such Co-Issuer proposes to do all the things necessary to make the Notes, when executed by such Co-Issuer and authenticated and delivered by the Trustee (or registered in the case of Uncertificated Notes) hereunder and duly issued by such Co-Issuer, the legal, valid and binding obligations of such Co-Issuer as hereinafter provided; and

WHEREAS, the Control Party previously consented to the amendments of the Original Amended and Restated Base Indenture as set forth in the Amendment No. 4 and Amendment No. 6 to the Original Amended and Restated Base Indenture and the Control Party and Trustee have received the Officers’ Certificate of the Co-Issuers and an Opinion of Counsel as described in Section 13.6 of the Original Amended and Restated Base Indenture.

WHEREAS, the amendment of the Original Amended and Restated Base Indenture as set forth in Amendment No. 7 to the Original Amended and Restated Base Indenture was effective as of the date of the execution thereof;

WHEREAS, the amendment of the Original Amended and Restated Base Indenture as set forth in Amendment No. 5 to the Original Amended and Restated Base Indenture will be effective as of the Amendment No. 5 Trigger Date;

NOW, THEREFORE, for and in consideration of the premises and the receipt of the Notes by the Noteholders, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Noteholders (in accordance with the priorities set forth herein and in any Series Supplement), as follows:

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.1 Definitions.

(a) Capitalized terms used herein (including the preamble and the recitals hereto) and not otherwise defined herein shall have the meanings assigned to such terms in the Base Indenture Definitions List attached hereto as Annex A (as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof, the “Base Indenture Definitions List”).

(b) Any terms used in the Indenture (including, without limitation, for purposes of Article III) that are defined in the UCC or the PPSA and pertaining to Collateral shall be construed and defined as set forth in the UCC or the PPSA, as applicable, as the context may require, unless otherwise defined in the Indenture.

Section 1.2 Cross-References.

Unless otherwise specified, references in the Indenture and in each other Transaction Document to any Article or Section are references to such Article or Section of the Indenture or such other Transaction Document, as the case may be, and, unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such Article, Section or definition.

Section 1.3 Accounting and Financial Determinations; No Duplication.

Where the character or amount of any asset or liability or item of income or expense is required to be determined, or any accounting computation is required to be made, for the purpose of the Indenture or any other Transaction Document, such determination or calculation shall be made, to the extent applicable and except as otherwise specified in the Indenture or such other Transaction Document, in accordance with GAAP. When used herein, the term “financial statement” shall include the notes and schedules thereto. All accounting determinations and computations hereunder or under any other Transaction Documents shall be made without duplication.

Section 1.4 Rules of Construction.

In the Indenture and the other Transaction Documents, unless the context otherwise requires:

(a) the singular includes the plural and vice versa;

 

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(b) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by the Indenture and the other applicable Transaction Documents, as the case may be, and reference to any Person in a particular capacity only refers to such Person in such capacity;

(c) reference to any gender includes the other gender;

(d) reference to any Requirement of Law means such Requirement of Law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time;

(e) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term;

(f) the word “or” is always used inclusively herein (for example, the phrase “A or B” means “A or B or both”, not “either A or B but not both”), unless used in an “either... or” construction;

(g) reference to any contract or agreement, including any Transaction Document, means such contract or agreement as amended, restated, amended and restated, supplemented or otherwise modified from time to time;

(h) with respect to the determination of any period of time, except as otherwise specified, “from” means “from and including” and “to” means “to but excluding”;

(i) without derogation of the joint and several liability of the Co-Issuers under the Indenture and unless the context otherwise requires, all references to representations, warranties, covenants and agreements of the Canadian Co-Issuer, as to itself and the other Canadian Securitization Entities (as of the Series 2020-1 Closing Date), herein or any other Transaction Document shall be made as of, and from, respectively, the Series 2020-1 Closing Date;

(j) except to the extent otherwise specified in this Base Indenture, for purposes of measuring the quantum of Canadian Dollars that would be expressed in U.S. Dollars on a Weekly Allocation Date, it shall be assumed that any such Canadian Dollar amounts are settled pursuant to a Currency Conversion to U.S. Dollars as of such Weekly Allocation Date, based on the Spot Rate for any Currency Conversion settled for such Weekly Allocation Date or otherwise calculated based on the Deemed Spot Rate;

(k) except to the extent otherwise specified in this Base Indenture, for purposes of measuring the quantum of Canadian Dollars that would be expressed in U.S. Dollars for purposes of computing financial ratios it shall be assumed that any such Canadian Dollar amounts are settled pursuant to a Currency Conversion to U.S. Dollars as of the applicable date of measurement and based on the Deemed Spot Rate as of such date.

ARTICLE II

THE NOTES

Section 2.1 Designation and Terms of Notes.

(a) Each Series of Notes shall be substantially in the form specified in the applicable Series Supplement and shall bear, upon its face, the designation for such Series to which it belongs as selected by the Co-Issuers, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted hereby or by the applicable Series Supplement and may have such letters,

 

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numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined to be appropriate by the Authorized Officer of each Co-Issuer executing such Notes, as evidenced by execution of such Notes by such Authorized Officer. All Notes of any Series shall, except as specified in the applicable Series Supplement and in this Base Indenture, be equally and ratably entitled as provided herein to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery (or registration in the case of Uncertificated Notes), all in accordance with the terms and provisions of this Base Indenture and any applicable Series Supplement. The aggregate principal amount of Notes which may be authenticated and delivered (or with respect to Uncertificated Notes, registered) under this Base Indenture is unlimited. The Notes of each Series shall be issued in the denominations set forth in the applicable Series Supplement.

(b) With respect to the Series 2019-3 Class A-1 Note Purchase Agreement, the Series 2022-1 Class A-1 Note Purchase Agreement and any other Class A-1 Note Purchase Agreement entered into by the Co-Issuers in connection with the issuance of any Class A-1 Notes, whether or not any of the following shall have been specifically provided for in the applicable provision of the Indenture Documents, the following shall be true (except to the extent that the Series Supplement with respect to such Class of Notes or such Class A-1 Note Purchase Agreement provides otherwise):

(i) for purposes of any provision of any Indenture Document relating to any vote, consent, direction, waiver or the like to be given by such Class on any date, with respect to the related Class A-1 Notes Outstanding, the relevant principal amount of such Class A-1 Notes to be used in tabulating the percentage of such Class voting, consenting, directing, waiving or the like will be deemed to be the related Class A-1 Notes Voting Amount;

(ii) for purposes of any provisions of any Indenture Document relating to termination, discharge or the like, such Class shall continue to be deemed Outstanding unless and until all commitments to extend credit under such Class A-1 Note Purchase Agreement have been terminated thereunder and the Outstanding Principal Amount of such Class shall have been reduced to zero; and

(iii) notwithstanding the foregoing, and for the avoidance of doubt, a Series Supplement or such Class A-1 Note Purchase Agreement may provide for different treatment of commitments of a Noteholder of a Class A-1 Note subject to such Series Supplement or such Class A-1 Note Purchase Agreement that has failed to make a payment required to be made by it under the terms of such Class A-1 Note Purchase Agreement, that has provided written notification that it does not intend to make a payment required to be made by it thereunder when due or that has become the subject of an Event of Bankruptcy.

Section 2.2 Notes Issuable in Series.

(a) The Notes may be issued in one or more Series. Each Series of Notes shall be created by a Series Supplement. Any series of Class A-1 Notes may be uncertificated if provided for in the related Series Supplement.

(b) So long as each of the certifications described in clause (iii)(I) and clause (vi) below are true and correct as of the applicable Series Closing Date, Notes of a new Series may from time to time be executed by the Co-Issuers and delivered to the Trustee for authentication and thereupon the same shall be authenticated and delivered by the Trustee (or with respect to Uncertificated Notes, registered) upon the receipt by the Trustee of a Company Request at least five (5) Business Days (except in the case of the issuance of the Series of Notes on the Series 2015-1 Closing Date or in connection with a Series Refinancing Event) in advance of the related Series Closing Date (which Company Request will be revocable by the Co-Issuers upon notice to the Trustee no later than 5:00 p.m. (New York City time) two (2) Business Days prior to the related Series Closing Date) and upon performance or delivery by the Co-Issuers to the Trustee and the Control Party, and receipt by the Trustee and the Control Party, of the following:

 

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(i) a Company Order authorizing and directing the authentication and delivery (or with respect to Uncertificated Notes, registration) of the Notes of such new Series by the Trustee and specifying the designation of such new Series, the Initial Principal Amount (or the method for calculating the Initial Principal Amount) of such new Series to be authenticated and the Note Rate with respect to such new Series;

(ii) a Series Supplement satisfying the criteria set forth in Section 2.3 executed by the Co-Issuers and the Trustee and specifying the Principal Terms of such new Series;

(iii) in the case of any Additional Notes, if there is one or more Series of Notes Outstanding (apart from such Additional Notes) on the applicable Series Closing Date (unless all Series of Notes Outstanding (apart from such Additional Notes) will be repaid in full from the proceeds of the issuance of the Additional Notes or otherwise on the applicable Series Closing Date):

(A) no Cash Trapping Period is in effect or will commence as a result of the issuance of such Additional Notes;

(B) written confirmation from either the Co-Issuers or their respective Managers that the Rating Agency Condition with respect to the issuance of such Additional Notes has been satisfied;

(C) no Rapid Amortization Event, Default or Event of Default has occurred and is continuing or will occur as a result of the issuance of such Additional Notes;

(D) no Manager Termination Event has occurred and is continuing or will occur as a result of the issuance of such Additional Notes;

(E) the New Series Pro Forma DSCR is greater than or equal to 2.00:1.00;

(F) the Senior Leverage Ratio and the Driven Brands Leverage Ratio as of the applicable Series Closing Date are each less than or equal to 7.00:1.00 after giving pro forma effect to the issuance of such Additional Notes and any repayment of existing Indebtedness from such Additional Notes;

(G) (i) prior to the Amendment No. 5 Trigger Date, the anticipated repayment date for such Additional Notes will not be prior to the anticipated repayment date of any Class of Notes then Outstanding (other than in the case of an issuance of Class A-1 Notes) and (ii) on and after the Amendment No. 5 Trigger Date, [RESERVED];

(H) the legal final maturity date for such Additional Notes will not be prior to the legal final maturity of any Class of Notes then Outstanding;

(I) one or more Officers’ Certificates, each executed by an Authorized Officer of each Co-Issuer, dated as of the applicable Series Closing Date, certifying to the matters set forth in clauses (A) through (H) above and to the effect that:

 

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(1) all conditions precedent with respect to the authentication and delivery of such Additional Notes provided in this Base Indenture, the related Series Supplement and, if applicable, the related Note Purchase Agreement and any other related note purchase agreement executed in connection with the issuance of such Additional Notes have been satisfied or waived;

(2) the Guarantee and Collateral Agreements are in full force and effect as to such Additional Notes;

(3) each of the parties to the Transaction Documents with respect to such Additional Notes has covenanted and agreed in the Transaction Documents that, prior to the date which is one year and one day after the payment in full of the latest maturing Note, it will not institute against, or join with any other Person in instituting against, any Securitization Entity any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings, under any federal, state or Canadian bankruptcy or insolvency or similar law; and

(4) all representations and warranties of the Co-Issuers in this Base Indenture and the other Transaction Documents are true and correct, and will continue to be true and correct after giving effect to such issuance on the Series Closing Date, in all material respects (other than any representation or warranty that, by its terms, is made only as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date in all material respects);

(J) the proposed issuance does not alter or change the terms of any Series of Notes Outstanding or the Series Supplement relating thereto without such consents as are required under this Base Indenture or the applicable Series Supplement;

(K) all costs, fees and expenses with respect to the issuance of such new Series of Notes or relating to the actions taken in connection with such issuance that are required to be paid on the applicable Series Closing Date have been paid or will be paid from the proceeds of the issuance of such new Series of Notes; and

(L) if such new Series of Notes includes Subordinated Debt, the terms of such new Series of Notes include the Subordinated Debt Provisions to the extent applicable.

(iv) a Tax Opinion, dated the applicable Series Closing Date; provided that, if there are no Notes Outstanding or if all Series of Notes Outstanding will be repaid in full from the proceeds of the issuance of such new Series of Notes or otherwise on the applicable Series Closing Date, only the opinions set forth in clauses (b) and (c) of the definition of “Tax Opinion” will be required to be given in connection with the issuance of such new Series of Notes;

(v) one or more Opinions of Counsel, subject to the assumptions and qualifications stated therein, and in a form reasonably acceptable to the Control Party, dated the applicable Series Closing Date, substantially to the effect that:

(A) all of the instruments described in this Section 2.2(b) furnished to the Trustee and the Control Party conform to the requirements of this Base Indenture and the related Series Supplement and such new Series of Notes are permitted to be

 

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authenticated (or registered in the case of Uncertificated Notes) by the Trustee pursuant to the terms of this Base Indenture and the related Series Supplement (except that no such Opinion of Counsel shall be required to be delivered in connection with the issuance of Notes on the Series 2015-1 Closing Date);

(B) the related Series Supplement has been duly authorized, executed and delivered by each Co-Issuer and constitutes a legal, valid and binding agreement of such Co-Issuer, enforceable against such Co-Issuer in accordance with its terms;

(C) such new Series of Notes have been duly authorized by each Co-Issuer, and, when such Notes have been duly authenticated and delivered (or registered in the case of Uncertificated Notes) by the Trustee, such Notes will be legal, valid and binding obligations of such Co-Issuer, enforceable against such Co-Issuer in accordance with their terms;

(D) none of the Securitization Entities is required to be registered under the Investment Company Act within the meaning of Section 3(a)(1) thereof;

(E) the Lien and the security interests created by this Base Indenture and the Guarantee and Collateral Agreements on the Collateral remain perfected as required by this Base Indenture and the Guarantee and Collateral Agreements, and such Lien and security interests extend to any assets transferred to the Securitization Entities in connection with the issuance of such new Series of Notes;

(F) (x) based on a reasoned analysis, the assets and liabilities of each U.S. Securitization Entity as a debtor in a bankruptcy proceeding in the United States would not be substantively consolidated with the assets and liabilities of the U.S. Manager, and (y) based on a reasoned analysis, the assets and liabilities of each Canadian Securitization Entity as a debtor in a bankruptcy or insolvency proceeding in Canada would not be substantively consolidated with the assets and liabilities of DBI or the Canadian Manager;

(G) neither the execution and delivery by each Co-Issuer of such Notes (or registration in the case of Uncertificated Notes) and the Series Supplement nor the performance by such Co-Issuer of its respective obligations under each of such Notes and the Series Supplement (i) conflicts with the Charter Documents of such Co-Issuer, (ii) constitutes a violation of, or a default under, any material agreement to which such Co-Issuer is a party (which agreements may be set forth in a schedule to such opinion), or (iii) contravenes any order or decree that is applicable to such Co-Issuer (which orders and decrees may be set forth in a schedule to such opinion);

(H) neither the execution and delivery by each Co-Issuer of such Notes (or registration in the case of Uncertificated Notes) and the Series Supplement nor the performance by such Co-Issuer of its respective payment obligations under each of such Notes and the Series Supplement (i) violates any law, rule or regulation of any relevant jurisdiction or (ii) requires the consent, approval, licensing or authorization of, or any filing, recording or registration with, any governmental authority under any law, rule or regulation of any relevant jurisdiction except for those consents, approvals, licenses and authorizations already obtained and those filings, recordings and registrations already made;

 

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(I) there is no action, proceeding or investigation pending or threatened against DBI or any of its Subsidiaries before any court or administrative agency that may reasonably be expected to have a Material Adverse Effect on the business or assets of the Securitization Entities;

(J) unless such Notes are being offered pursuant to a registration statement that has been declared effective under the Securities Act, it is not necessary in connection with the offer and sale of such Notes by the Co-Issuers to the initial purchaser thereof or by the initial purchaser to the initial investors in such Notes to register such Notes under the Securities Act; and

(K) all conditions precedent to such issuance have been satisfied and the related Series Supplement is authorized or permitted pursuant to the terms and conditions of the Indenture (except that no such Opinion of Counsel relating to the satisfaction of conditions precedent shall be required to be delivered in connection with the issuance of Notes on the Series 2015-1 Closing Date);

(vi) one or more Officers’ Certificates, each executed by an Authorized Officer of each Co-Issuer, dated as of the applicable Series Closing Date to the effect that:

(A) the related Series Supplement has been duly authorized, executed and delivered by such Co-Issuers and constitutes a legal, valid and binding agreement of such Co-Issuer, enforceable against such Co-Issuer in accordance with its terms; and

(B) all conditions precedent to such issuance have been satisfied and the related Series Supplement is authorized or permitted pursuant to the terms and conditions of the Indenture; and

(vii) such other documents, instruments, certifications, agreements or other items as the Trustee may reasonably require.

(c) Upon satisfaction, or waiver by the Control Party (as directed by the Controlling Class Representative) (which waiver shall be in writing), of the conditions set forth in Section 2.2(b), the Trustee shall authenticate and deliver (or register in the case of Uncertificated Notes), as provided above, such Additional Notes upon execution thereof by the Co-Issuers.

(d) With regard to any new Series of Notes issued pursuant to this Section 2.2, the proceeds from such issuance may only be used to repay (i) Senior Subordinated Notes and Subordinated Notes if all Senior Notes have been repaid and (ii) Subordinated Notes if all Senior Notes and Senior Subordinated Notes have been repaid; provided that at any time on or after the Series Anticipated Repayment Date for any Series of Notes, the proceeds from the issuance of Subordinated Notes may only be used to repay Senior Notes, Senior Subordinated Notes or all Outstanding Classes of Senior Notes and Senior Subordinated Notes.

(e) The issuance of Additional Notes shall not be subject to the consent of the Holders of any Series of Notes Outstanding. Additional Notes may be issued for any purpose consistent with the Transaction Documents, including acquisitions and refinancings of acquisitions by the Securitization Entities.

 

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Section 2.3 Series Supplement for Each Series.

In conjunction with the issuance of a new Series, the parties hereto shall execute a Series Supplement, which shall specify the relevant terms with respect to such new Series of Notes, which may include, without limitation:

(a) its name or designation;

(b) the Initial Principal Amount with respect to such Series;

(c) the Note Rate with respect to such Series or each Class of such Series and the applicable Default Rate;

(d) the Series Closing Date;

(e) the Series Anticipated Repayment Date, if any;

(f) the Series Legal Final Maturity Date;

(g) the principal amortization schedule with respect to such Series, if any;

(h) each Rating Agency rating such Series;

(i) the name of the Clearing Agency, if any;

(j) the names of the Series Distribution Accounts and any other Series Accounts to be used with respect to such Series and the terms governing the operation of any such account and the use of moneys therein;

(k) the method of allocating amounts deposited into any Series Distribution Account with respect to such Series;

(l) whether the Notes of such Series will be issued in multiple Classes or Subclasses and the rights and priorities of each such Class or Subclass;

(m) any deposit of funds to be made in any Base Indenture Account or any Series Account on the Series Closing Date and whether any such Base Indenture Account or Series Account shall be U.S. Dollar-denominated or Canadian Dollar-denominated;

(n) whether the Notes of such Series may be issued as either Definitive Notes, Uncertificated Notes or Book-Entry Notes and any limitations imposed thereon;

(o) whether the Notes of such Series include Senior Notes, Senior Subordinated Notes and/or Subordinated Notes;

(p) whether the Notes of such Series include Class A-1 Notes or subfacilities of Class A-1 Notes issued pursuant to a Class A-1 Note Purchase Agreement; and

(q) any other relevant terms of such Series of Notes (all such terms, the “Principal Terms” of such Series).

 

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Section 2.4 Execution and Authentication.

(a) The Notes (other than Uncertificated Notes) shall, upon issuance pursuant to Section 2.2, be executed on behalf of each Co-Issuer by an Authorized Officer of such Co-Issuer and delivered by the Co-Issuers to the Trustee for authentication and redelivery as provided herein. The signature of such Authorized Officers on the Notes may be manual or facsimile. If an Authorized Officer of a Co-Issuer whose signature is on a Note no longer holds that office at the time the Note is authenticated, the Note shall nevertheless be valid.

(b) At any time and from time to time after the execution and delivery of this Base Indenture, the Co-Issuers may deliver Notes (other than Uncertificated Notes) of any particular Series (issued pursuant to Section 2.2) executed by the Co-Issuers to the Trustee for authentication, together with one or more Company Orders for the authentication and delivery of such Notes (or registration in the case of Uncertificated Notes), and the Trustee, in accordance with such Company Order and this Base Indenture, shall authenticate and deliver such Notes (or register in the case of Uncertificated Notes).

(c) No Note (other than Uncertificated Notes) shall be entitled to any benefit under the Indenture or be valid for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for below, duly executed by the Trustee by the manual, facsimile, or electronic signature of a Trust Officer (and the Luxembourg agent (the “Luxembourg Agent”) if applicable, if the Notes of the Series to which such Note belongs are listed on the Luxembourg Stock Exchange). Such signatures on such certificate shall be conclusive evidence, and the only evidence, that the Note has been duly authenticated under this Base Indenture. The Trustee may appoint an authenticating agent acceptable to the Issuer to authenticate Notes. Unless limited by the term of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Base Indenture to authentication by the Trustee includes authentication by such authenticating agent. The Trustee’s certificate of authentication shall be in substantially the following form:

“This is one of the Notes of a Series issued under the within mentioned Indenture.

 

(d) Each Note (other than Uncertificated Notes) shall be dated and issued as of the date of its authentication by the Trustee.

(e) Notwithstanding the foregoing, if any Note shall have been authenticated and delivered hereunder but never issued and sold by the Co-Issuers, and a Co-Issuer (or the Co-Issuers) shall deliver such Note to the Trustee for cancellation as provided in Section 2.14 together with a written statement to the Trustee and the Servicer (which need not comply with Section 14.3) stating that such Note has never been issued and sold by the Co-Issuers, for all purposes of the Indenture such Note shall be deemed never to have been authenticated and delivered hereunder and shall not be entitled to the benefits of the Indenture.

 

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Section 2.5 Registrar and Paying Agent.

(a) The Co-Issuers shall (i) maintain an office or agency in the United States where Notes may be presented for registration of transfer or for exchange (or de-registration in the case of Uncertificated Notes) (the “Registrar”) and (ii) appoint a paying agent (which shall satisfy the eligibility criteria set forth in Section 10.8(a)) (the “Paying Agent”) at whose office or agency Notes (or evidence of ownership of Uncertificated Notes) may be presented for payment. The Registrar shall keep a register of the Notes (including the name and address of each such Noteholder) and of their transfer and exchange. The Trustee shall indicate in its books and records the commitment of each Noteholder, if applicable, and the principal amount owing to each Noteholder from time to time. The Co-Issuers may appoint one or more co-registrars and one or more additional paying agents. The term “Paying Agent” shall include any additional paying agent, and the term “Registrar” shall include any co-registrars. The Co-Issuers may change the Paying Agent or the Registrar without prior notice to any Noteholder. The Co-Issuers shall notify the Trustee in writing of the name and address of any Agent not a party to this Base Indenture. The Trustee is hereby initially appointed as the Registrar and the Paying Agent and shall send copies of all notices and demands received by the Trustee (other than those sent by the Co-Issuers to the Trustee and those addressed to the Co-Issuers) in connection with the Notes to the Co-Issuers. Upon any resignation or removal of the Registrar, the Co-Issuers shall promptly appoint a successor Registrar or, in the absence of such appointment, the Issuer (on behalf of itself and as agent for the Canadian Co-Issuer) shall assume the duties of the Registrar.

(b) The Co-Issuers shall enter into an appropriate agency agreement with any Agent not a party to this Base Indenture. Such agency agreement shall implement the provisions of this Base Indenture that relate to such Agent. If the Co-Issuers fail to maintain a Registrar or the Co-Issuers fail to maintain a Paying Agent, the Trustee hereby agrees to act as such, and shall be entitled to appropriate compensation in accordance with this Base Indenture until the Co-Issuers shall appoint one or more replacement Registrar or Paying Agent, as applicable.

Section 2.6 Paying Agent to Hold Money in Trust.

(a) The Co-Issuers will cause the Paying Agent (if the Paying Agent is not the Trustee) to execute and deliver to the Trustee an instrument in which the Paying Agent shall agree with the Trustee (and if the Trustee is the Paying Agent, it hereby so agrees), subject to the provisions of this Section 2.6, that the Paying Agent will:

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

(ii) give the Trustee notice of any Default by the Co-Issuers of which it has Actual Knowledge in the making of any payment required to be made with respect to the Notes;

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

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

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

 

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(b) The Co-Issuers may at any time, for the purpose of obtaining the satisfaction and discharge of the Indenture or for any other purpose, by Company Order direct the Paying Agent to pay to the Trustee all sums held in trust by the Paying Agent, such sums to be held by the Trustee in trust upon the same terms as those upon which the sums were held in trust by the Paying Agent. Upon such payment by the Paying Agent to the Trustee, the Paying Agent shall be released from all further liability with respect to such money.

(c) Subject to applicable laws with respect to escheat of funds, any money held by the Trustee or the Paying Agent in trust for the payment of any amount due with respect to any Note and remaining unclaimed for two years after such amount has become due and payable shall be discharged from such trust and be paid to the Co-Issuers upon delivery of a Company Request, which payment shall be made to each Co-Issuer based on its contribution of such funds. The Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Co-Issuers for payment thereof (but only to the extent of the amounts so paid to the Co-Issuers), and all liability of the Trustee or the Paying Agent with respect to such trust money paid to the Co-Issuers shall thereupon cease; provided, however, that the Trustee or the Paying Agent, before being required to make any such repayment, may, at the expense 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 New York City, in newspapers published in the English or French language, customary published on each Business Day and of general circulation in Toronto or Montreal, respectively, and in a newspaper customarily published on each Business Day and of general circulation in London and Luxembourg (if the related Series of Notes has been listed on the Luxembourg Stock Exchange), if applicable, notice that such money remains unclaimed and that, after a date specified therein, which 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 Trustee may also adopt and employ, at the expense of the Co-Issuers, any other commercially reasonable means of notification of such repayment.

Section 2.7 Noteholder List.

(a) The Trustee will furnish or cause to be furnished by the Registrar to the Co-Issuers, the Managers, the Control Party, the Controlling Class Representative or the Paying Agent, within five (5) Business Days after receipt by the Trustee of a request therefor from the Co-Issuers, the Managers, the Control Party, the Controlling Class Representative or the Paying Agent, respectively, in writing, the names and addresses of the Noteholders of each Series as of the most recent Record Date for payments to such Noteholders. Every Noteholder, by receiving and holding a Note, agrees that none of the Trustee, the Registrar, either Co-Issuer, the Servicer, the Controlling Class Representative nor any of their respective agents shall be held accountable by reason of any disclosure of any such information as to the names and addresses of the Noteholders in the Note Register.

(b) 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 Noteholders of each Series of Notes. If the Trustee is not the Registrar, the Co-Issuers shall furnish to the Trustee at least seven (7) Business Days before each Quarterly Payment Date and at such other time 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 Noteholders of each Series of Notes.

Section 2.8 Transfer and Exchange.

(a) Upon surrender for registration of transfer of any Note (or as set forth in any Series Supplement with respect to the transfer and registration or de-registration of any Uncertificated Note) at the office or agency of the Registrar, if the requirements of Section 2.8(f) and Section 8-401(a) of the New York UCC are met, the Co-Issuers shall (except in the case of Uncertificated Notes) execute and, after the

 

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Co-Issuers have executed, the Trustee shall authenticate and deliver to the Noteholder, in the name of the designated transferee or transferees, one or more new Notes, in any authorized denominations, of the same Series and Class (and, if applicable, Subclass) and a like original aggregate principal amount of the Notes so transferred. At the option of any Noteholder, Notes may be exchanged (or de-registered) for other Notes (or in the case of an exchange for Uncertificated Notes, registered) of the same Series and Class in authorized denominations of like original aggregate principal amount of the Notes so exchanged, upon surrender (or de-registration) of the Notes to be exchanged (or de-registered) at any office or agency of the Registrar maintained for such purpose. Whenever Notes of any Series are so surrendered for exchange, if the requirements of Section 2.8(f) and Section 8-401(a) of the New York UCC are met, the Co-Issuers shall execute (other than Uncertificated Notes) and, after the Co-Issuers have executed, the Trustee shall authenticate (or register) and deliver to the Noteholder the Notes (other than Uncertificated Notes) which the Noteholder making the exchange is entitled to receive.

(b) Every Note (other than Uncertificated Notes) presented or surrendered for registration of transfer or exchange shall be (i) duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Trustee, the Co-Issuers and the Registrar duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing with a medallion signature guarantee and (ii) accompanied by such other documents as the Trustee and the Registrar may require to document the identities and/or signatures of the transferor and the transferee. The Co-Issuers shall execute and deliver to the Trustee or the Registrar, as applicable, Notes in such amounts and at such times as are necessary to enable the Trustee to fulfill its responsibilities under the Indenture and the Notes.

(c) All Notes issued and authenticated upon any registration of transfer or exchange of the Notes (including any transfer of Uncertificated Notes) shall be the valid obligations of each Co-Issuer, evidencing the same indebtedness, and entitled to the same benefits under the Indenture, as the Notes surrendered (or de-registered) upon such registration of transfer or exchange.

(d) The preceding provisions of this Section 2.8 notwithstanding, (i) the Trustee, the Co-Issuers or the Registrar, as the case may be, shall not be required (A) to issue, register the transfer of or exchange (or de-register) any Note of any Series for a period beginning at the opening of business fifteen (15) days preceding the selection of any Series of Notes for redemption and ending at the close of business on the day of the mailing of the relevant notice of redemption or (B) to register the transfer of or exchange any Note so selected for redemption, and (ii) no assignment or transfer of a Note or any commitment in respect thereof shall be effective until such assignment or transfer shall have been recorded in the Note Register and in the books and records of the Trustee, as applicable, pursuant to Section 2.5(a) or as otherwise set forth in a Series Supplement with respect to Uncertificated Notes.

(e) No service charge shall be payable for any registration of transfer or exchange (or de-registration) of Notes, but the Registrar or the Trustee, as the case may be, may require payment by the Noteholder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange (or de-registration) of Notes.

(f) Unless otherwise provided in the applicable Series Supplement, registration of transfer of Notes containing a legend relating to the restrictions on transfer of such Notes (which legend shall be set forth in the applicable Series Supplement) shall be effected only if the conditions set forth in such applicable Series Supplement are satisfied. Notwithstanding any other provision of this Section 2.8 and except as otherwise provided in Section 2.13, the typewritten Note or Notes representing Book-Entry Notes for any Series may be transferred, in whole but not in part, only to another nominee of the Clearing Agency for such Series, or to a successor Clearing Agency for such Series selected or approved by the Co-Issuers or to a nominee of such successor Clearing Agency, only if in accordance with this Section 2.8 and Section 2.12.

 

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(g) If the Notes of any Series are listed on the Luxembourg Stock Exchange, the Trustee or the Luxembourg Agent, as the case may be, shall send to the Co-Issuers upon any transfer or exchange of any such Note information reflected in the copy of the register for the Notes maintained by the Registrar or the Luxembourg Agent, as the case may be.

Section 2.9 Persons Deemed Owners.

Prior to due presentment for registration of transfer of any Note, the (or any other transfer and de-registration of Uncertificated Notes), the Trustee, the Servicer, the Controlling Class Representative, any Agent and the Co-Issuers may deem and treat the Person in whose name any Note is registered (as of the day of determination) as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Note and for all other purposes whatsoever (other than purposes in which the vote or consent of a Note Owner is expressly required pursuant to this Base Indenture or the applicable Series Supplement), whether or not such Note is overdue, and none of the Trustee, the Servicer, the Controlling Class Representative, any Agent nor the Co-Issuers shall be affected by notice to the contrary.

Section 2.10 Replacement Notes.

(a) If (i) any mutilated Note is surrendered to the Trustee, or the Trustee receives evidence to its reasonable satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the Co-Issuers and the Trustee such security or indemnity as may be required by them to hold the Co-Issuers and the Trustee harmless, then, provided that the requirements of Section 2.8(f) and Section 8-405 of the New York UCC are met, the Co-Issuers shall (other than with respect to Uncertificated Notes) execute and, upon its request, the Trustee or an authenticating agent appointed by the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note; provided, however, that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall have become, or within seven (7) days shall be, due and payable, instead of issuing a replacement Note, the Co-Issuers may pay such destroyed, lost or stolen Note when so due or payable without surrender thereof. If, after the delivery of such replacement Note or payment of a destroyed, lost or stolen Note pursuant to the preceding sentence, a protected purchaser (within the meaning of Section 8-303 of the New York 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 Trustee shall be entitled to recover such replacement Note (or such payment) from the Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such replacement Note was delivered or any assignee of such Person, except a protected purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Co-Issuers or the Trustee in connection therewith.

(b) Upon the issuance of any replacement Note (or registration of Uncertificated Notes) under this Section 2.10, the Co-Issuers may require the payment by the Holder of such Note of a sum sufficient to cover any Tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Trustee and the Registrar) connected therewith.

(c) Every replacement Note issued (or registered in the case of Uncertificated Notes) pursuant to this Section 2.10 in replacement of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Co-Issuers and such replacement Note shall be entitled to all the benefits of the Indenture equally and proportionately with any and all other Notes duly issued under the Indenture (in accordance with the priorities and other terms set forth herein and in each applicable Series Supplement).

 

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(d) The provisions of this Section 2.10 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 2.11 Treasury Notes.

In determining whether the Noteholders of the required Aggregate Outstanding Principal Amount of Notes or the required Outstanding Principal Amount of any Series or any Class of any Series of Notes, as the case may be, have concurred in any direction, waiver or consent, Notes owned, legally or beneficially, by a Co-Issuer or any Affiliate of a Co-Issuer shall be considered as though they are not Outstanding, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes of which a Trust Officer has received written notice of such ownership shall be so disregarded. Absent written notice to a Trust Officer of such ownership, the Trustee shall not be deemed to have knowledge of the identity of the individual Note Owners.

Section 2.12 Book-Entry Notes.

(a) Unless otherwise provided in any applicable Series Supplement, the Notes (including with respect to Uncertificated Notes) of each Class of each Series, upon original issuance, shall be issued in the form of typewritten Notes representing Book-Entry Notes and delivered to the depository (or its custodian) specified in such Series Supplement (the “Depository”) which shall be the Clearing Agency on behalf of such Series or such Class. The Notes of each Class of each Series shall, unless otherwise provided in the applicable Series Supplement (including with respect to Uncertificated Notes), initially be registered on the Note Register in the name of the Clearing Agency or the nominee of the Clearing Agency. No Note Owner will receive a definitive note representing such Note Owner’s interest in the related Series of Notes, except as provided in Section 2.13. Unless and until definitive, fully registered Notes of any Series or any Class of any Series (“Definitive Notes”) have been issued to Note Owners pursuant to Section 2.13 (or as otherwise set forth in any applicable Series Supplement with respect to Uncertificated Notes):

(i) the provisions of this Section 2.12 shall be in full force and effect with respect to each such Series;

(ii) the Co-Issuers, the Paying Agent, the Registrar, the Trustee, the Servicer and the Controlling Class Representative may deal with the Clearing Agency and the applicable Clearing Agency Participants for all purposes (including the payment of principal of, premium, if any, and interest on the Notes and the giving of instructions or directions hereunder or under the applicable Series Supplement) as the sole Holder of the Notes, and shall have no obligation to the Note Owners;

(iii) to the extent that the provisions of this Section 2.12 conflict with any other provisions of the Indenture, the provisions of this Section 2.12 shall control with respect to each such Class or Series of the Notes;

(iv) subject to the rights of the Servicer and the Controlling Class Representative under the Indenture, and except for the rights granted pursuant to Section 11.5, the rights of Note Owners of each such Class or Series of Notes 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 Note Owners and the Clearing Agency and/or the Clearing Agency Participants, and all references in the Indenture to actions by the Noteholders shall refer to actions taken by the Clearing Agency upon instructions from the Clearing Agency Participants, and all references in the Indenture to distributions, notices,

 

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reports and statements to the Noteholders shall refer to distributions, notices, reports and statements to the Clearing Agency, as registered holder of the Notes of such Series for distribution to the Note Owners in accordance with the procedures of the Clearing Agency; and

(v) subject to the rights of the Servicer and the Controlling Class Representative under the Indenture, and except for rights granted pursuant to Section 11.5, whenever the Indenture requires or permits actions to be taken based upon instructions or directions of Noteholders evidencing a specified percentage of the Aggregate Outstanding Principal Amount of Notes or the Outstanding Principal Amount of a Series or Class of a Series of Notes, the applicable Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Note Owners and/or their related Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Outstanding Notes or such Series or such Class of such Series of Notes Outstanding, as the case may be, and has delivered such instructions in writing to the Trustee.

(b) Pursuant to the Depository Agreement applicable to a Series, unless and until Definitive Notes of such Series are issued pursuant to Section 2.13 (or as otherwise set forth in any applicable Series Supplement with respect to Uncertificated Notes), the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal, premium, if any, and interest on the Notes to such Clearing Agency Participants.

(c) Whenever notice or other communication to the Noteholders is required under the Indenture, unless and until Definitive Notes shall have been issued to Note Owners pursuant to Section 2.13, the Trustee and the Co-Issuers shall give all such notices and communications specified herein to be given to Noteholders to the applicable Clearing Agency for distribution to the Note Owners in accordance with the Applicable Procedures of the Clearing Agency.

Section 2.13 Definitive Notes.

(a) The Notes of any Series or Class of any Series, to the extent provided in the related Series Supplement, upon original issuance, may be issued in the form of Definitive Notes or Uncertificated Notes. All Class A-1 Notes of any Series shall be issued in the form of Definitive Notes or Uncertificated Notes. The applicable Series Supplement shall set forth the legend relating to the restrictions on transfer of such Definitive Notes (or transfer and de-registration with respect to Uncertificated Notes) and such other restrictions as may be applicable.

(b) With respect to the Notes of any Series issued in the form of typewritten Notes representing Book-Entry Notes, if (i) (A) the Co-Issuers advise the Trustee in writing that the Clearing Agency with respect to any such Series of Notes is no longer willing or able to discharge properly its responsibilities under the applicable Depository Agreement and (B) the Trustee or the Co-Issuers are unable to locate a qualified successor or (ii) after the occurrence of a Rapid Amortization Event, with respect to any Series of Notes Outstanding, Note Owners holding a beneficial interest in excess of 50% of the aggregate Outstanding Principal Amount of such Series of Notes advise the Trustee and the applicable Clearing Agency through the applicable Clearing Agency Participants in writing that the continuation of a book-entry system through the applicable Clearing Agency is no longer in the best interests of such Note Owners, in each case, the Trustee shall notify all Note Owners of such Series, through the applicable Clearing Agency Participants, of the occurrence of any such event and of the availability of Definitive Notes (or Uncertificated Notes) to Note Owners of such Series. Upon surrender to the Trustee of the Notes of such Series by the applicable Clearing Agency, accompanied by registration instructions from the applicable Clearing Agency for registration, the Co-Issuers shall execute (other than with respect to Uncertificated Notes) and the Trustee shall authenticate, upon receipt of a Company Order, and deliver an

 

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equal aggregate principal amount of Definitive Notes in accordance with the instructions of the Clearing Agency. Neither the Co-Issuers nor the Trustee shall be liable for any delay in delivery of such instructions and may each conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Notes of such Series of Notes, all references herein to obligations imposed upon or to be performed by the applicable Clearing Agency shall be deemed to be imposed upon and performed by the Trustee, to the extent applicable with respect to such Definitive Notes, and the Trustee shall recognize the Holders of the Definitive Notes of such Series as Noteholders of such Series hereunder and under the applicable Series Supplement.

Section 2.14 Cancellation.

The Co-Issuers may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered (or registered in the case of Uncertificated Notes) hereunder which a Co-Issuer or an Affiliate thereof may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Trustee. Immediately upon the delivery of any Notes by the Co-Issuers to the Trustee for cancellation pursuant to this Section 2.14 (or as otherwise set forth in any applicable Series Supplement with respect to Uncertificated Notes), the security interest of the Secured Parties in such Notes shall automatically be deemed to be released by the Trustee, and the Trustee shall execute and deliver to the Co-Issuers any and all documentation reasonably requested and prepared by the Co-Issuers at their expense to evidence such automatic release. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel (or de-register) all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation. Except as provided in any Note Purchase Agreement executed and delivered in connection with the issuance of any Series or any Class of any Series of Notes, the Co-Issuers may not issue new Notes to replace Notes that the Co-Issuers have redeemed or paid or that have been delivered to the Trustee for cancellation (or de-registration). All cancelled Notes held by the Trustee shall be disposed of in accordance with the Trustee’s standard disposition procedures unless the Co-Issuers shall direct that cancelled Notes be returned to either Co-Issuer for destruction pursuant to a Company Order. No cancelled (or de-registered) Notes may be reissued. No provision of this Base Indenture or any Supplement that relates to prepayment procedures, penalties, fees, make-whole payments or any other related matters shall be applicable to any Notes cancelled (or de-registered) pursuant to and in accordance with this Section 2.14.

Section 2.15 Principal and Interest.

(a) The principal of and premium, if any, on each Series of Notes shall be due and payable at the times and in the amounts set forth in the applicable Series Supplement and in accordance with the Priority of Payments.

(b) Each Series of Notes shall accrue interest as provided in the applicable Series Supplement and such interest shall be due and payable for such Series on each Quarterly Payment Date in accordance with the Priority of Payments.

(c) Except as provided in the following sentence, the Person in whose name any Note is registered at the close of business on any Record Date with respect to a Quarterly Payment Date for such Note shall be entitled to receive the principal, premium, if any, and interest payable on such Quarterly Payment Date notwithstanding the cancellation (or de-registration) of such Note upon any registration of transfer, exchange or substitution of such Note subsequent to such Record Date. Any interest payable at maturity shall be paid to the Person to whom the principal of such Note is payable.

(d) Pursuant to the authority of the Paying Agent under Section 2.6(a)(v), except as otherwise provided pursuant to any Class A-1 Note Purchase Agreement to the extent that the Paying Agent has been notified in writing of such exception by the Co-Issuers or the applicable Class A-1 Administrative Agent, the Paying Agent shall make all payments of interest on the Notes net of any applicable withholding taxes and Noteholders shall be treated as having received as payments of interest any amounts withheld with respect to such withholding taxes.

 

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(e) For the purpose of disclosure pursuant to the Interest Act (Canada) as-applied to the Canadian Co-Issuer, the yearly rate of interest to which any rate of interest payable under the Indenture that is calculated on any basis other than a full calendar year is equivalent may be determined by multiplying such rate by a fraction the numerator of which is the actual number of days in the calendar year in which such yearly rate of interest is to be ascertained and the denominator of which is the number of days comprising such other basis. The rates of interest stipulated in the Indenture or in any of the Notes as-applied to the Canadian Co-Issuer are intended to be nominal rates and not effective rates or yields. The principle of deemed reinvestment of interest as-applied to the Canadian Co-Issuer shall not apply to any interest calculation under the Indenture or under the Notes.

(f) If any provision of the Indenture would oblige the Co-Issuers to make any payment of interest or other amount payable to any Noteholder in an amount or calculated at a rate which would be prohibited by Requirements of Law or would result in a receipt by that Noteholder of “interest” at a “criminal rate” (as such terms are construed under the Criminal Code (Canada)), then, notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by Requirements of Law or so result in a receipt by that Noteholder of “interest” at a “criminal rate”, such adjustment to be effected, to the extent necessary (but only to the extent necessary), by reducing any fees, commissions, costs, expenses, premiums and other amounts required to be paid to the affected Noteholder which would constitute interest for purposes of section 347 of the Criminal Code (Canada).

Section 2.16 Tax Treatment.

The Co-Issuers have structured this Base Indenture and the Notes have been (or will be) issued with the intention that the Notes will qualify under applicable tax law in the United States as indebtedness of the Co-Issuers or, if a Co-Issuer is treated as a division of another entity for applicable tax purposes, such other entity, and any entity acquiring any direct or indirect interest in any Note by acceptance of its Notes (or, in the case of a Note Owner, by virtue of such Note Owner’s acquisition of a beneficial interest therein) agrees to treat the Notes (or beneficial interests therein) (or registration of an Uncertificated Note) for all purposes of federal, state, provincial, territorial and local and other income or franchise taxes, and any other tax imposed on or measured by income, as indebtedness of the Co-Issuers or, if a Co-Issuer is treated as a division of another entity for applicable tax purposes, such other entity.

ARTICLE III

SECURITY

Section 3.1 Grant of Security Interest.

(a) To secure its Obligations, each Co-Issuer (as of the date such Co-Issuer became party to this Base Indenture) hereby pledges, mortgages, charges, assigns, conveys, delivers, transfers and sets over to the Trustee, for the benefit of the Secured Parties, and hereby grants to the Trustee, for the benefit of the Secured Parties, a security interest in such Co-Issuer’s right, title and interest in, to and under all of the following property to the extent now owned or at any time hereafter acquired by such Co-Issuer (collectively, the “Indenture Collateral”):

 

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(i) the Equity Interests of any Person (including, without limitation, Franchisor Holdco, SPV Product Sales Holder, Radiator Product Sales Holder, Take 5 Properties, FUSA Properties, the Canadian SPV Franchising Entity LPs, Driven Canada Product Sourcing, Driven Canada Claims Management and the Canadian Securitization Entity GPs) owned by such Co-Issuer and all rights as a member, shareholder or partner of each such Person under the Charter Documents of each such Person;

(ii) the Accounts of such Co-Issuer and all amounts on deposit in or otherwise credited to such Accounts;

(iii) any rights in and to any Interest Reserve Letter of Credit;

(iv) the books and records (whether in physical, electronic or other form) of such Co-Issuer;

(v) the rights, powers, remedies and authorities of such Co-Issuer under each of the Transaction Documents (other than the Indenture and the Notes) to which it is a party;

(vi) to the extent contributed to such Co-Issuer, all real and personal property of any Securitization-Owned Locations;

(vii) any and all other property of such Co-Issuer now or hereafter acquired, including, without limitation, all accounts (including, without limitation, the rights to receive payments under short-term notes in respect of delinquent royalty payments from Franchisees), chattel paper, commercial tort claims, deposit accounts, futures accounts, documents, documents of title, equipment, fixtures, general intangibles, intangibles, health-care-insurance receivables, instruments, inventory, securities, securities accounts and other investment property and letter-of-credit rights; and

(viii) all payments, proceeds, supporting obligations and accrued and future rights to payment with respect to the foregoing;

provided that (A) the Indenture Collateral shall exclude the Collateral Exclusions; (B) the Co-Issuers shall not be required to pledge, and the Collateral shall not include, more than 65% of the Voting Equity Interests (and any rights associated with such Voting Equity Interests) of any foreign Subsidiary of any of the Co-Issuers that is a corporation for United States federal income tax purposes (other than the Canadian Securitization Entities); (C) the security interest in (1) the Senior Notes Interest Reserve Accounts, the Series Distribution Accounts with respect to the Senior Notes and the funds or securities deposited therein or credited thereto shall only be for the benefit of the Senior Noteholders and the Trustee, in its capacity as trustee for the Senior Noteholders, (2) the Senior Subordinated Notes Interest Reserve Accounts, the Series Distribution Accounts with respect to the Senior Subordinated Notes and the funds or securities deposited therein or credited thereto shall only be for the benefit of the Senior Subordinated Noteholders and the Trustee, in its capacity as trustee for the Senior Subordinated Noteholders, (3) the Series Distribution Accounts with respect to the Subordinated Notes and the funds or securities deposited therein or credited thereto shall only be for the benefit of the Subordinated Noteholders and the Trustee, in its capacity as trustee for the Subordinated Noteholders, (4) each Pre-Funding Account and the funds or securities deposited therein or credited thereto shall only be for the benefit of the applicable Noteholders identified in the Series Supplement establishing such Pre-Funding Account and (5) each Pre-Funding Reserve Account and the funds or securities deposited therein or credited thereto shall only be for the benefit of the applicable Noteholders identified in the Series Supplement establishing such Pre-Funding Reserve Account; and (D) any cash collateral deposited by any Non-Securitization Entities with a Co-Issuer to secure such Non-Securitization Entities’ obligations under any Letter of Credit Reimbursement Agreement will not constitute Indenture Collateral until such time (if any) as such Co-Issuer is entitled to withdraw such funds

 

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from the applicable bank account pursuant to the terms of such Letter of Credit Reimbursement Agreement to reimburse such Co-Issuer for any amounts due by such Non-Securitization Entities to such Co-Issuer pursuant to such Letter of Credit Reimbursement Agreement that such Non-Securitization Entities have not paid to such Co-Issuer in accordance with the terms thereof. The Trustee, on behalf of the Secured Parties, acknowledges that it shall have no security interest in any Collateral Exclusions. If the grant of the security interests hereunder by the Canadian Co-Issuer with respect to any contract, Intellectual Property or Permit would result in the termination or breach of such contract, Intellectual Property or Permit or is otherwise prohibited or ineffective (whether by the terms thereof or under applicable law), then such contract, Intellectual Property or Permit shall not be subject to the security interests granted hereunder but shall be held in trust by the Canadian Co-Issuer for the benefit of the Trustee (for its own benefit and for the benefit of the other Secured Parties) and, on the exercise by the Trustee of any of its rights or remedies under this Base Indenture following an Event of Default shall be assigned by the Canadian Co-Issuer as directed by the Trustee; provided that: (x) the security interests granted hereunder shall attach to such contract, Intellectual Property or Permit, or applicable portion thereof, immediately at such time as the condition causing such termination or breach is remedied, and (y) if a term in a contract that prohibits or restricts the grant of the security interests granted hereunder in the whole of an Account or Chattel Paper forming part of the Indenture Collateral is unenforceable against the Trustee under applicable law, then the exclusion from the security interests set out above shall not apply to such Account or Chattel Paper. In addition, the security interests granted hereunder do not attach to consumer goods (as defined in the PPSA) or extend to the last day of the term of any lease or agreement for lease of real property. Such last day shall be held by the Canadian Co-Issuer in trust for the Trustee (for its own benefit and for the benefit of the other Secured Parties) and, on the exercise by the Trustee of any of its rights or remedies under this Agreement following an Event of Default, shall be assigned by the Canadian Co-Issuer as directed by the Trustee. For greater certainty, no Intellectual Property in any trade-mark, get-up or trade dress is presently assigned to the Trustee by sole virtue of the grant of the security interests contained herein.

(b) The foregoing grant is made by each Co-Issuer in trust to secure the Obligations and to secure compliance by the Co-Issuers with the provisions of this Base Indenture and any Series Supplements, all as provided in this Base Indenture. The Trustee, on behalf of the Secured Parties, acknowledges such grant, accepts the trusts under this Base Indenture in accordance with the provisions of this Base Indenture and agrees to perform its duties required in this Base Indenture. The Indenture Collateral shall secure the Obligations equally and ratably without prejudice, priority or distinction (except, with respect to any Series of Notes, as otherwise stated in the applicable Series Supplement or in the applicable provisions of this Base Indenture).

(c) The parties hereto agree and acknowledge that each certificated Equity Interest may be held by a custodian on behalf of the Trustee.

(d) Each Co-Issuer confirms that value has been given by the Secured Parties to such Co-Issuer, that such Co-Issuer has rights in its Indenture Collateral existing at the date of this Base Indenture and that such Co-Issuer and the Trustee have not agreed to postpone the time for attachment of the security interests granted pursuant to Section 3.1(a) to any of the Indenture Collateral of such Co-Issuer. The security interests granted pursuant to Section 3.1(a) with respect to the Indenture Collateral of the Canadian Co-Issuer created by this Base Indenture shall have effect and be deemed to be effective whether or not the Obligations of the Canadian Co-Issuer or any part thereof are owing or in existence before or after or upon the date of this Base Indenture. Neither the execution and delivery of this Base Indenture nor the provision of any financial accommodation by any Secured Party shall oblige any Secured Party to make any financial accommodation or further financial accommodation available to the Canadian Co-Issuer or any other Person.

 

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Section 3.2 Certain Rights and Obligations of the Issuer Unaffected.

(a) Notwithstanding the grant of the security interest in the Indenture Collateral hereunder to the Trustee, on behalf of the Secured Parties, each Co-Issuer acknowledges that the U.S. Manager, on behalf of the Issuer and the Service Recipients organized in the United States or any State thereof, and the Canadian Manager, on behalf of the Canadian Co-Issuer and the Service Recipients organized in Canada or any province or territory thereof, shall, subject to the terms and conditions of the applicable Management Agreement, nevertheless have the right, subject to the Trustee’s right to revoke such right, in whole or in part, in the event of the occurrence of an Event of Default, (i) to give, in accordance with the applicable Managing Standard, all consents, requests, notices, directions, approvals, extensions and waivers, if any, which are required or permitted to be given by such Co-Issuer under the Collateral Documents, and to enforce all rights, remedies, powers, privileges and claims of such Co-Issuer under the Collateral Documents, (ii) to give, in accordance with the applicable Managing Standard, all consents, requests, notices, directions and approvals, if any, which are required or permitted to be given by such Co-Issuer under any IP License Agreement to which such Co-Issuer is a party and (iii) to take any other actions required or permitted under the terms of the applicable Management Agreement.

(b) The grant of the security interest by each Co-Issuer in the Indenture Collateral to the Trustee on behalf of the Secured Parties shall not (i) relieve such Co-Issuer from the performance of any term, covenant, condition or agreement on such Co-Issuer’s part to be performed or observed under or in connection with any of the Collateral Documents or (ii) impose any obligation on the Trustee or any of the other Secured Parties to perform or observe any such term, covenant, condition or agreement on such Co-Issuer’s part to be so performed or observed or impose any liability on the Trustee or any of the other Secured Parties for any act or omission on the part of such Co-Issuer or from any breach of any representation or warranty on the part of such Co-Issuer.

(c) Each Co-Issuer hereby, jointly and severally, agrees to indemnify and hold harmless the Trustee and each other Secured Party (including their respective directors, officers, employees and agents) from and against any and all losses, liabilities (including liabilities for penalties), claims, demands, actions, suits, judgments, reasonable out-of-pocket costs and expenses arising out of or resulting from the security interest granted hereby, whether arising by virtue of any act or omission on the part of such Co-Issuer, the other Co-Issuer or otherwise, including, without limitation, the reasonable out-of-pocket costs, expenses and disbursements (including reasonable attorneys’ fees and expenses) incurred by the Trustee or any other Secured Party in enforcing the Indenture or any other Transaction Document or preserving any of its rights to, or realizing upon, any of the Collateral; provided, however, that the foregoing indemnification shall not extend to any action by the Trustee or any other Secured Party which constitutes gross negligence, bad faith or willful misconduct by the Trustee or such other Secured Party or any other indemnified person hereunder. The indemnification provided for in this Section 3.2 shall survive the removal of, or a resignation by, any Person as Trustee as well as the termination of this Base Indenture or any Series Supplement.

Section 3.3 Performance of Collateral Documents.

Upon the occurrence of a default or breach (after giving effect to any applicable grace or cure periods) by any Person party to (a) a Transaction Document or (b) a Franchise Document (only if a Manager Termination Event with respect to the Manager of the related Co-Issuer or an Event of Default has occurred and is continuing), promptly following a request from the Trustee to do so and at the Co-Issuers’ expense, each Co-Issuer agrees to take all such lawful action as permitted under this Base Indenture as the Trustee (acting at the direction of the Control Party (at the direction of the Controlling Class Representative)) may reasonably request to compel or secure the performance and observance by such Person of its obligations to such Co-Issuer, and to exercise any and all rights, remedies, powers and

 

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privileges lawfully available to such Co-Issuer to the extent and in the manner directed by the Trustee (acting at the direction of the Control Party (at the direction of the Controlling Class Representative)), including, without limitation, the transmission of notices of default and the institution of legal or administrative actions or proceedings to compel or secure performance by such Person of its obligations thereunder. If (i) either Co-Issuer shall have failed, within ten (10) Business Days of receiving the direction of the Trustee, to take commercially reasonable action to accomplish such directions of the Trustee, (ii) any such Co-Issuer refuses to take any such action, as reasonably determined by the Trustee in good faith, or (iii) the Control Party (at the direction of the Controlling Class Representative) reasonably determines that such action must be taken immediately, in any such case the Control Party (at the direction of the Controlling Class Representative) may, but shall not be obligated to, take, and the Trustee shall take (if so directed by the Control Party (at the direction of the Controlling Class Representative)), at the expense of the Co-Issuers, such previously directed action and any related action permitted under this Base Indenture which the Control Party (at the direction of the Controlling Class Representative) thereafter determines is appropriate (without the need under this provision or any other provision under this Base Indenture to direct either Co-Issuer to take such action), on behalf of the Co-Issuers and the Secured Parties.

Section 3.4 Stamp, Other Similar Taxes and Filing Fees.

Each Co-Issuer shall, jointly and severally, indemnify and hold harmless the Trustee and each other Secured Party from any present or future claim for liability for any stamp, documentary or other similar tax, and any penalties or interest and expenses with respect thereto, that may be assessed, levied or collected by any jurisdiction in connection with the Indenture, any other Transaction Document or any Indenture Collateral. Each Co-Issuer shall, jointly and severally, pay, and indemnify and hold harmless each Secured Party against, any and all amounts in respect of all search, filing, recording and registration fees, taxes, excise taxes and other similar imposts that may be payable or determined to be payable in respect of the execution, delivery, performance and/or enforcement of the Indenture or any other Transaction Document.

Section 3.5 Authorization to File Financing Statements.

(a) Each Co-Issuer hereby irrevocably authorizes the Servicer on behalf of the Secured Parties at any time and from time to time to file or record in any filing office in any applicable jurisdiction financing statements, financing change statements, and other filing or recording documents or instruments with respect to the Indenture Collateral, including, without limitation, any and all Securitization IP (to the extent set forth in Section 8.25(c)), to perfect the security interests of the Trustee for the benefit of the Secured Parties under this Base Indenture. Each Co-Issuer authorizes the filing of any such financing statement, financing change statement, document or instrument naming the Trustee as secured party and indicating that the Indenture Collateral includes “all assets” , “all present and after-acquired personal property” or words of similar effect or import regardless of whether any particular assets comprised in the Indenture Collateral fall within the scope of Article 9 of the UCC or the PPSA, as applicable, including, without limitation, any and all Securitization IP, or as being of an equal or lesser scope or with greater detail. Each Co-Issuer agrees to furnish any information necessary to accomplish the foregoing promptly upon the Servicer’s request. Each Co-Issuer also hereby ratifies and authorizes the filing on behalf of the Secured Parties of any financing statement and/or financing change statement with respect to the Indenture Collateral made prior to the date hereof.

(b) Each Co-Issuer acknowledges that the Indenture Collateral includes certain rights of such Co-Issuer as a secured party under the Transaction Documents. Each Co-Issuer hereby irrevocably appoints the Trustee as its representative with respect to all financing statements and/or financing change statements filed to perfect such security interests and authorizes the Servicer on behalf of the Secured Parties to make such filings as it deems necessary to reflect the Trustee as secured party of record with respect to such financing statements.

 

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(c) Each Co-Issuer acknowledges receipt of an executed copy of this Base Indenture and, to the extent permitted by applicable law, waives the right to receive a copy of any financing statement or financing change statement registered in connection with this Base Indenture or any verification statement issued with respect to any such financing statement or financing change statement.

Section 3.6 ULC Shares.

The Canadian Co-Issuer acknowledges that certain of the Indenture Collateral of the Canadian Co-Issuer may in the future consist of ULC Shares, and that neither the Trustee nor any other Secured Party shall under any circumstances prior to realization thereon be a “member” or a “shareholder”, as applicable, of a ULC for the purposes of any ULC Laws. Therefore, notwithstanding any provisions to the contrary contained in this Base Indenture or any other Transaction Document, where the Canadian Co-Issuer is the registered owner of ULC Shares which are Indenture Collateral of the Canadian Co-Issuer, the Canadian Co-Issuer shall remain the sole registered owner of such ULC Shares until such time as such ULC Shares are effectively transferred into the name of the Trustee or its designee, any other Secured Party, or any other Person on the books and records of the applicable ULC. Accordingly, the Canadian Co-Issuer shall be entitled to receive and retain for its own account any dividend on or other distribution, if any, with respect to such ULC Shares (except for any dividend or distribution comprised of Canadian Collections required to be deposited to the Accounts in accordance with the terms hereof) and shall have the right to vote such ULC Shares and to control the direction, management and policies of the applicable ULC to the same extent as the Canadian Co-Issuer would if such ULC Shares were not pledged to the Trustee for the benefit of the Secured Parties pursuant hereto. Nothing in this Base Indenture or any other Transaction Document is intended to, and nothing in this Base Indenture or any other Transaction Document shall, constitute the Trustee, any other Secured Party, or any other Person other than the Canadian Co-Issuer, a member or shareholder of a ULC for the purposes of any ULC Laws (whether listed or unlisted, registered or beneficial), until such time as notice is given to such the Canadian Co-Issuer and further steps are taken pursuant hereto or thereto so as to register the Trustee or its designee, any other Secured Party, or such other Person, as specified in such notice, as the holder of the ULC Shares. To the extent any provision hereof would have the effect of constituting the Trustee, its designee or any other Secured Party as a member or a shareholder, as applicable, of any ULC prior to such time, such provision shall be severed herefrom and shall be ineffective with respect to ULC Shares which are Indenture Collateral of the Canadian Co-Issuer without otherwise invalidating or rendering unenforceable this Base Indenture or invalidating or rendering unenforceable such provision insofar as it relates to Indenture Collateral of the Canadian Co-Issuer which is not ULC Shares. Except upon the exercise of rights of the Trustee to sell, transfer or otherwise dispose of ULC Shares in accordance with this Base Indenture, the Canadian Co-Issuer shall not cause or permit, or enable any ULC in which it holds ULC Shares to cause or permit, the Trustee, its designee or any other Secured Party to: (a) be registered as a shareholder or member of such ULC; (b) have any notation entered in their favor in the share register of such ULC; (c) be held out as shareholders or members of such ULC; (d) receive, directly or indirectly, any dividends, property or other distributions from such ULC by reason of the grant of a security interest over the ULC Shares in favor of the Trustee; or (e) act as a shareholder of such ULC, or exercise any rights of a shareholder including the right to attend a meeting of shareholders of such ULC or to vote its ULC Shares.

 

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ARTICLE IV

REPORTS

Section 4.1 Reports and Instructions to Trustee.

(a) Weekly Manager’s Certificate. By 4:30 p.m. (New York City time) on (i) the fourth (4^th) Business Day following the last day of a Weekly Collection Period for a Currency Conversion Opt-Out Weekly Allocation Date or (ii) the sixth (6th) Business Day following the last day of a Weekly Collection Period for a Currency Conversion Weekly Allocation Date, in each case, the Managers will provide to the Trustee, the Servicer and the Back-Up Manager certificates substantially in the applicable form of Exhibit A specifying the allocation of Collections on the following Weekly Allocation Date (each, a “Weekly Manager’s Certificate”); provided that such Weekly Manager’s Certificate shall be considered confidential information and shall not be disclosed by such recipients to any Noteholder, Note Owner or other Person without the prior written consent of the Co-Issuers. Notwithstanding anything herein to the contrary, (x) the Weekly Manager’s Certificate delivered after the Series 2018-1 Closing Date shall not be required to account for U.S. Collections in respect of any Take 5 Company Locations, and amounts credited to the Accounts in respect of such Take 5 Company Locations shall not be required to be allocated pursuant to the Priority of Payments, until the first Weekly Allocation Date that occurs after the date that is 21 days after the Series 2018-1 Closing Date; provided, however, that (x) the first Weekly Manager’s Certificate that includes the Take 5 Company Locations shall include allocations of any amounts in respect of the Take 5 Company Locations received during the period from the Series 2018-1 Closing Date until the last day of the relevant Weekly Collection Period and (y) the Weekly Manager’s Certificate delivered after the Series 2020-1 Closing Date shall not be required to account for Canadian Collections, and amounts credited to the Accounts in respect of such Canadian Collections shall not be required to be allocated pursuant to the Priority of Payments, until the first Weekly Allocation Date following the first full weekly fiscal period following the Series 2020-1 Closing Date; provided, however, that at the election of the Managers pursuant to the Weekly Manager’s Certificate for the applicable Weekly Collection Period, the first Weekly Collection Period following the Series 2020-1 Closing Date with respect to any Canadian Collections will end at 11:59 p.m. (New York City time) on the Saturday of the second full weekly fiscal period following the Series 2020-1 Closing Date. Following the end of the first Weekly Collection Period with respect to Canadian Collections described in clause (y) of the previous sentence, the Weekly Manager’s Certificate for the following Weekly Allocation Date will provide that all U.S. Collections and Canadian Collections remaining in the Collection Accounts after giving effect to Section 5.11(b) for the Weekly Allocation Dates occurring during such Weekly Collection Period will be allocated or paid pursuant to the Priority of Payments on a pro forma basis in the manner set forth in the Series Supplement for the Series 2020-1 Notes as if such U.S. Collections and Canadian Collections had been available for distribution on such previous Weekly Allocation Dates (and taking into account any allocations or payments previously made pursuant to priorities (i)-(iii) and (v) of the Priority of Payments on such Weekly Allocation Dates).

(b) FX Exchange Reports. By 12:00 p.m. (New York City time) on the fourth (4th) Business Day following the last day of a Weekly Collection Period for a Currency Conversion Weekly Allocation Date, the Managers will provide to the Trustee and the Servicer a statement substantially in the form of Exhibit B directing the FX Agent to settle a Currency Conversion that will result in a specified amount of U.S. Collections or Canadian Collections (each, a “FX Exchange Report”) on such Weekly Allocation Date. The FX Exchange Reports will be deemed confidential information and will not be disclosed by the Trustee to any Noteholder, Note Owner or other Person without the prior written consent of the Co-Issuers.

(c) Quarterly Noteholders’ Allocation Report and Quarterly Noteholders’ Report.

 

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(i) On or before the third (3rd) Business Day prior to each Quarterly Payment Date, the Co-Issuers shall furnish, or cause the Managers to furnish, (x) a statement, substantially in the form of Exhibit C-1 and which shall be substantially in the form of Exhibit C other than the exclusion of certain specified line items, with respect to each Series of Notes (each, a “Quarterly Noteholders’ Allocation Report”), together with any applicable FX Exchange Report, and (y) a preliminary Quarterly Noteholders’ Report, which shall be preliminary as to the calculation of Parent Adjusted EBITDA of the Driven Brands EntitiesParent and Parent Consolidated Subsidiaries for purposes of the Driven Brands Leverage Ratio and as to any other system information set forth on the quarterly report, with respect to the first three fiscal quarters of each fiscal year, or annual report, with respect to the fourth fiscal quarter of such fiscal year, for such fiscal year of any Manager or Parent or any of their respective parent entities filed with the SEC pursuant to the Exchange Act, in each case, in respect of such Quarterly Payment Date, to the Trustee, each Rating Agency (solely as to the Quarterly Noteholders’ Allocation Report), the Servicer and each Payment Agent, with a copy to the Back-Up Manager. Each Person furnished such preliminary Quarterly Noteholders’ Report shall be deemed to acknowledge and agree (i) such preliminary Quarterly Noteholders’ Report is provided to the recipient solely for informational purposes, (ii) the recipient understands the preliminary Quarterly Noteholders’ Report contains material nonpublic information and (iii) the recipient shall, subject to the confidentiality provisions of any Transaction Document to which it is a party, keep the information set forth thereon confidential and not disclose it to any other Person without the prior written consent of the Co-Issuers. The Trustee shall not post the preliminary Quarterly Noteholders’ Report on the Trustee’s internet website.

(ii) On or before the third (3^rd)  Business Day following the date when any Manager or Parent or any of their respective parent entities files its or their quarterly report, with respect to the first three fiscal quarters of each fiscal year, or annual report, with respect to the fourth fiscal quarter of such fiscal year, for such fiscal year with the SEC pursuant to the Exchange Act, the Co-Issuers shall furnish, or cause the Managers to furnish, a statement substantially in the form of Exhibit C with respect to each Series of Notes (each such statement for the immediately preceding Quarterly Payment Date, which shall be substantially identical to the preliminary Quarterly Noteholders’ Report for such Quarterly Payment Date, except as to any superseding calculation of Parent Adjusted EBITDA of the Driven Brands EntitiesParent and Parent Consolidated Subsidiaries for purposes of the Driven Brands Leverage Ratio or superseding reporting of any other system information described in clause (y) of the first sentence of Section 4.1(c)(i) to the extent required for such calculation or other system information to be consistent with the calculation or other system information set forth on such foregoing quarterly report or annual report, as applicable, together with the Quarterly Noteholders’ Allocation Report for such Quarterly Payment Date supplemented by such statement, a “Quarterly Noteholders’ Report”), together with any applicable FX Exchange Report in respect of such Quarterly Payment Date, to the Trustee, each Rating Agency, the Servicer and each Paying Agent, with a copy to the Back-Up Manager.

 

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(iii) For purposes of each Series Supplement entered into on or prior to the Series 2020-2 Closing Date and each other Transaction Document, all references to the Co-Issuers (or the Managers on their behalf) furnishing, or causing to be furnished, certain information set forth on a Quarterly Noteholders’ Report on or before each Quarterly Payment Date shall be deemed to refer to (x) such information set forth on a Quarterly Noteholders’ Allocation Report to the extent set forth thereon and (y) such information set forth on a Quarterly Noteholders’ Report to the extent solely set forth thereon and in respect of the immediately preceding Quarterly Payment Date, in each case, pursuant to this Base Indenture mutatis mutandis.

(iv) If at any time neither Manager nor Parent nor any of their respective parent entities is then subject to Section 13 or Section 15(d) of the Exchange Act, then Section 4.1(c)(i) and Section 4.1(c)(iii) shall be disregarded in their entirety and the Quarterly Noteholders’ Report furnished pursuant to Section 4.1(c)(ii) shall be furnished on or before the third (3^rd) Business Day prior to each Quarterly Payment Date and no Quarterly Noteholders’ Allocation Report or preliminary Quarterly Noteholders’ Report shall be required to be furnished under the Base Indenture.

(d) Quarterly Compliance Certificates. On or before the third (3^rd) Business Day prior to each Quarterly Payment Date, the Co-Issuers shall furnish, or cause the Managers to furnish, to the Trustee and each Rating Agency (with a copy to each of the Servicer and the Back-Up Manager) an Officers’ Certificate to the effect that, except as provided in a notice delivered pursuant to Section 8.8, no Potential Rapid Amortization Event, Rapid Amortization Event, Default or Event of Default has occurred or is continuing (each, a “Quarterly Compliance Certificate”).

(e) Scheduled Principal Payments Deficiency Notices. On the Quarterly Calculation Date with respect to any Quarterly Fiscal Period, the Co-Issuers shall furnish, or cause the Managers to furnish, to the Trustee and each Rating Agency (with a copy to each of the Servicer and the Back-Up Manager) written notice of any Scheduled Principal Payments Deficiency Event with respect to any Class or Series of Notes that occurred with respect to such Quarterly Fiscal Period (any such notice, a “Scheduled Principal Payments Deficiency Notice”).

(f) Annual Accountants’ Reports. Within one hundred and twentyfifty (120150 ) days after the end of each fiscal year, commencing with the fiscal year ending on or around December 30, 2017, each of the Co-Issuers shall furnish, or cause the applicable Manager to furnish, to the Trustee, the Servicer, the Back-Up Manager (to the extent such report is not being provided by the Back-Up Manager) and each Rating Agency the reports of the Independent Auditors or the Back-Up Manager required to be delivered to such Co-Issuer by the applicable Manager pursuant to the applicable Management Agreement.

(g) Securitization Entity Financial Statements. The Managers on behalf of the U.S. Securitization Entities and Canadian Securitization Entities, respectively, shall provide to the Trustee, the Servicer, the Back-Up Manager and each Rating Agency with respect to each Series of Notes Outstanding the following financial statements:

(i) as soon as available and in any event within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year (other than the fiscal quarter ending in March 2023, which shall be delivered within fifty-five (55) days after the end of such fiscal year), an unaudited consolidated balance sheet of the U.S. Securitization Entities and Canadian Securitization Entities, respectively, as of the end of such fiscal quarter and unaudited consolidated statements of operations and comprehensive income, changes in members’ equity and cash flows of such U.S. Securitization Entities and Canadian Securitization Entities, respectively, for such fiscal quarter and for the fiscal year-to-date period then ended (in the case of the second and third fiscal quarters of each fiscal year); provided, that solely with respect to the quarterly financial statements to be delivered for the fiscal quarter ending June 30, 2018, (x) the applicable balance sheet and unaudited consolidated statements of operations and comprehensive income, changes in members’ equity and cash flows shall be prepared for

 

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the U.S. Securitization Entities other than Take 5 Properties and (y) the U.S. Manager shall deliver a separate balance sheet and unaudited consolidated statements of operations and comprehensive income, changes in members’ equity and cash flows for Driven Sister Holdings, LLC and a supplementary schedule with an estimated balance sheet and statement of operations for Take 5 Properties; and

(ii) as soon as available and in any event within one hundred and twenty (120) days after the end of each fiscal year (other than the fiscal year ending in December 2022, which shall be delivered within one hundred forty-six (146) days after the end of such fiscal year), an audited consolidated balance sheet of the U.S. Securitization Entities and Canadian Securitization Entities, respectively, as of the end of such fiscal year and audited consolidated statements of operations and comprehensive income, changes in members’ equity and cash flows of such U.S. Securitization Entities and Canadian Securitization Entities, respectively, for such fiscal year, setting forth in comparative form (where appropriate) the comparable amounts for the previous fiscal year, prepared in accordance with GAAP and accompanied by an opinion thereon of the applicable Independent Auditors stating that such audited consolidated financial statements present fairly, in all material respects, the financial position of such U.S. Securitization Entities and Canadian Securitization Entities, respectively, and the results of their operations and cash flows in accordance with GAAP.

(h) Manager Financial Statements.

(i) So long as Driven Brands, Inc. is the U.S. Manager, the U.S. Manager on behalf of the U.S. Securitization Entities shall provide to the Trustee, the Servicer, the Back-Up Manager and each Rating Agency with respect to each Series of Notes Outstanding the following financial statements:

(A) as soon as available and in any event within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year (other than the fiscal quarter ending in March 2023, which shall be delivered within fifty-five (55) days after the end of such fiscal year), an unaudited consolidated balance sheet of the U.S. Manager as of the end of such fiscal quarter and unaudited consolidated statements of operations and comprehensive income and cash flows of the U.S. Manager for such fiscal quarter and for the fiscal year-to-date period then ended (in the case of the second and third fiscal quarters of each fiscal year); and

(B) as soon as available and in any event within one hundred and twenty (120) days after the end of each fiscal year (other than the fiscal year ending in December 2022, which shall be delivered within one hundred forty-six (146) days after the end of such fiscal year), an audited consolidated balance sheet of the U.S. Manager as of the end of such fiscal year and audited consolidated statements of operations and comprehensive income, changes in stockholders’ equity and cash flows of the U.S. Manager for such fiscal year, setting forth in comparative form (where appropriate) the comparable amounts for the previous fiscal year, prepared in accordance with GAAP and accompanied by an opinion thereon of the Independent Auditors stating that such audited consolidated financial statements present fairly, in all material respects, the financial position of the U.S. Manager and the results of its operations and cash flows in accordance with GAAP.

 

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(ii) So long as Driven Brands, Inc. is the U.S. Manager and a direct or indirect parent of the Canadian Manager, the U.S. Manager shall provide, as agent of the Canadian Manager on behalf of the Canadian Securitization Entities, to the Trustee, the Servicer, the Back-Up Manager and each Rating Agency with respect to each Series of Notes Outstanding the financial statements described in Section 4.1(h)(i)(A)-(B).

(iii) If Driven Brands, Inc. no longer serves as the U.S. Manager or is no longer a direct or indirect parent of the Canadian Manager, then so long as Driven Brands Canada Shared Services Inc. is the Canadian Manager, the Canadian Manager on behalf of the Canadian Securitization Entities shall provide to the Trustee, the Servicer, the Back-Up Manager and each Rating Agency with respect to each Series of Notes Outstanding financial statements consistent with the requirements of Section 4.1(h)(i)(A)-(B) as-applied to the Canadian Manager.

(i) DBH Financial Statements. The Managers on behalf of the U.S. Securitization Entities and Canadian Securitization Entities, respectively, shall provide to the Trustee, the Servicer, the Back-Up Manager and each Rating Agency with respect to each Series of Notes Outstanding the following financial statements for so long as the U.S. Securitization Entities and Canadian Securitization Entities, respectively, are consolidated with DBH for purposes of DBH’s financial statements in accordance with GAAP:

(i) as soon as available and in any event within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year, a consolidated balance sheet and related statements of income showing the financial position of DBH and its Subsidiaries as of the close of such fiscal quarter and the consolidated results of their operations during such fiscal quarter and the then-elapsed portion of the fiscal year and setting forth in comparative form the corresponding figures for the corresponding periods of the prior fiscal year; provided that the delivery or public filing of quarterly reports on Form 10-Q (or any successor or comparable form) of DBH and its consolidated subsidiaries shall be deemed to be delivery to the Trustee, the Servicer, the Back-Up Manager, and each Rating Agency of such quarterly reports and shall satisfy the requirements of this Section 4.1(i)(i) to the extent such quarterly reports include the information specified in this Section 4.1(i)(i); and

(ii) as soon as available and in any event within one hundred and twenty (120) days after the end of each fiscal year (commencing with the fiscal year ending on December 25, 2021), a consolidated cash flow statement, balance sheet and related statements of income showing the financial position of DBH and its Subsidiaries as of the close of such fiscal year and the consolidated results of their operations during such year and setting forth in comparative form the corresponding figures for the prior fiscal year, accompanied by an opinion of such accountants to the effect that such consolidated financial statements fairly present, in all material respects, the financial position and results of operations of the companies being reported on a consolidated basis in accordance with GAAP; provided that the delivery or public filing of annual reports on Form 10-K (or any successor or comparable form) of DBH and its consolidated subsidiaries shall be deemed to be delivery to the Trustee, the Servicer, the Back-Up Manager, and each Rating Agency of such annual reports and shall satisfy the requirements of this Section 4.1(i)(ii) to the extent such annual reports include the information specified in this Section 4.1(i)(ii).

 

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(j) Additional Information. Each Co-Issuer shall furnish, or cause to be furnished, from time to time such additional information regarding the financial position, results of operations or business of DBI or any U.S. Securitization Entity, in the case of the Issuer, or any Canadian Securitization Entity, in the case of the Canadian Co-Issuer, as the Trustee, the Servicer, the applicable Manager of such Co-Issuer or the Back-Up Manager may reasonably request, subject to Requirements of Law and to the confidentiality provisions of the Transaction Documents to which such recipient is a party.

(k) Instructions as to Withdrawals and Payments. Each Co-Issuer shall furnish, or cause to be furnished, to the Trustee or the Paying Agent, as applicable (with a copy to each of the Servicer, the Managers and the Back-Up Manager), written instructions to make withdrawals and payments from the Collection Accounts and any other Base Indenture Account or Series Account, as contemplated herein and in any Series Supplement; provided that such written instructions (other than those contained in Quarterly Noteholders’ Reports) shall be considered confidential information and shall not be disclosed by such recipients to any other Person without the prior written consent of the Co-Issuers; provided, further, that such written instructions shall be subject in all respects to the confidentiality provisions of any Transaction Documents to which such recipient is a party. The Trustee and the Paying Agent shall promptly follow any such written instructions.

(l) Copies to each Rating Agency. Each Co-Issuer shall deliver, or shall cause its respective Manager to deliver, a copy of each report, certificate or instruction, as applicable, described in this Section 4.1 to each Rating Agency at its address as listed in or otherwise designated pursuant to Section 14.1 or in the applicable Series Supplement, including any e-mail address.

Section 4.2 Annual Noteholders’ Tax Statement.

Unless otherwise specified in the applicable Series Supplement, on or before January 31 of each calendar year, beginning with calendar year 2018 (and beginning with calendar year 2021 with respect to any covenant of the Canadian Co-Issuer), the Paying Agent shall furnish, upon written request, to each Person who at any time during the preceding calendar year was a Noteholder a statement prepared by the Co-Issuers containing such information as the Co-Issuers deem necessary or desirable to enable the Noteholders to prepare their tax returns (each such statement, an “Annual Noteholders’ Tax Statement”); provided that such obligations to distribute the Annual Noteholders’ Tax Statement 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 Code or other applicable tax law as from time to time in effect.

Section 4.3 Rule 144A Information.

For so long as any of the Notes are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Co-Issuers agree to provide to any Noteholder or Note Owner, and to any prospective purchaser of Notes designated by such Noteholder or Note Owner upon the request of such Noteholder or Note Owner or prospective purchaser, any information required to be provided to such holder, owner or prospective purchaser to satisfy the conditions set forth in Rule 144A(d)(4) under the Securities Act.

Section 4.4 Reports, Financial Statements and Other Information to Noteholders.

(a) (a) This Base Indenture, the Guarantee and Collateral Agreements, each Series Supplement, the Quarterly Noteholders’ Reports, the Quarterly Compliance Certificates, the financial statements referenced in Section 4.1(g) and Section 4.1(h) and the reports referenced in Section 4.1(f) shall be made available to (a) each Rating Agency pursuant to Section 4.1(l) above and (b) the Servicer, the Managers, the Back-Up Manager, the Note Owners and the other Noteholders (but not to prospective investors)Permitted Recipients in a password-protected area of the Trustee’s internet website

 

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at www.sf.citidirect.com (or such other address as the Trustee may specify from time to time) or on a third-party investor information platform orand in addition, at the election of the Co-Issuers, such other address as the Co-Issuers may specify from time to time (it being agreed that in the event there is any discrepancy between any documentation or information posted on any such website hosted by the Co-Issuers and the documentation or information posted on the Trustee’s website, the Trustee’s website shall control). Assistance in using the Trustee’s internet website can be obtained by calling the Trustee’s customer service desk at (888) 855-9695 or such other telephone number as the Trustee may specify from time to time. The Trustee or any such third-party platform, as the case may be, shallwill require each party (other than the Servicer, the Managers, the Back-Up Manager and any Rating Agency) accessing such password-protected area to register as a NoteholderPermitted Recipient and to make the applicable representations and warranties described below in an Investor Requestin a Permitted Recipient Certification (which, for the avoidance of doubt, may take the form of an electronic submission). The; provided that Bloomberg and Intex will be permitted access to the password-protected area without completing a Permitted Recipient Certification; provided, further, that if any investor or prospective investor accesses any of the items described above via Bloomberg, Intex or any other third-party investor diligence or service provider, such investor or prospective investor will be deemed to have made each of the representations and certifications included in the Permitted Recipient Certification. The Trustee and any such third-party platform may disclaim responsibility for any information distributed by it for which the Trustee or such third-party, as the case may be, was not the original source. Each time a NoteholderPermitted Recipient accesses such internet website, it will be deemed to have confirmed such representations and warranties as of the date thereof. The Trustee or any such third-party platform shallwill provide the Servicer and the Managers with copies of such Investor RequestPermitted Recipient Certifications, including the identity, contact information, e-mail address and telephone number of such NoteholdersPermitted Recipients, upon request, but shallwill have no responsibility for any of the information contained therein. The Trustee shallwill have the right to change the way any such information is made available in order to make such distribution more convenient and/or more accessible to the Noteholders and the Trustee, and the Trustee shallwill provide timely and adequate notification to all above parties regarding any such changes. Notwithstanding the foregoing, if a Permitted Recipient is unwilling to execute a Permitted Recipient Certification, such Permitted Recipient will nonetheless be permitted to access the password-protected area of the Trustee’s interest website or other relevant third-party investor information platform with the prior written consent of the applicable Manager.

(b) The Trustee shall (or shall request that the Managers) make available, upon reasonable advance notice and at the expense of the requesting party, copies ofaccess to the Quarterly Noteholders’ Reports, the Quarterly Compliance Certificates, the financial statements referenced in Section 4.1(g) and Section 4.1(h) and the reports referenced in Section 4.1(f) to any Noteholder (or any Note Owner) and to any prospective investorPermitted Recipient (other than the Servicer, the Managers, the Back-Up Manager and any Rating Agency) that provides the Trustee with an Investor Requesta Permitted Recipient Certification executed by the requesting party generally to the effect that such party (i) is a Noteholder (or Note Owner) or prospective investor, as applicablePermitted Recipient, (ii) understands that the materials contain confidential information, (iii) is requesting the information solely for use in evaluating such party’s investment or potential investment, as applicable, in the Notes (or is otherwise a Permitted Recipient) and will keep such information strictly confidential (provided that such party may disclose such information only (A) to (1) those personnel employed by it who need to know such information, (2) its attorneys and outside auditors that have agreed to keep such information confidential and to treat the information as confidential information, or (3) a regulatory or self-regulatory authority pursuant to applicable law or regulation or (B) by judicial process), and (iv) is not a Competitor. Notwithstanding the foregoing, a recipient of such materials may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions and any related tax strategies to the extent necessary to prevent the transaction from being described as a “confidential transaction” under U.S. Treasury regulations Section 1.6011-4(b)(3).

 

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Section 4.5 Managers.

Pursuant to the applicable Management Agreement, each Manager has agreed to provide certain reports, notices, instructions and other services on behalf of the applicable Co-Issuer. The Noteholders by their acceptance of the Notes consent to the provision of such reports and notices to the Trustee by the Managers or the applicable Manager in lieu of the Co-Issuers or the applicable Co-Issuer. Any such reports and notices that are required to be delivered to the Noteholders hereunder shall be delivered by the Trustee. The Trustee shall have no obligation whatsoever to verify, reconfirm or recalculate any information or material contained in any of the reports, financial statements or other information delivered to it pursuant to this Article IV or the applicable Management Agreement. All distributions, allocations, remittances and payments to be made by the Trustee or the Paying Agent hereunder or under any Supplement or Class A-1 Note Purchase Agreement shall be made based solely upon the most recently delivered written reports and instructions provided to the Trustee or Paying Agent, as the case may be, by the applicable Manager (or Managers).

Section 4.6 No Constructive Notice.

Delivery of reports, information, Officer’s Certificates, Officers’ Certificates and documents to the Trustee is for informational purposes only, and the Trustee’s receipt of such reports, information, Officer’s Certificates, Officers’ Certificates and documents will not constitute constructive notice to the Trustee of any information contained therein or determinable from information contained therein, including any Securitization Entity’s, any Manager’s or any other Person’s compliance with any of its covenants under the Indenture, the Notes or any other Transaction Document (as to which the Trustee is entitled to rely exclusively on the most recent Quarterly Compliance Certificate described above).

ARTICLE V

ALLOCATION AND APPLICATION OF COLLECTIONS

Section 5.1 Management Accounts.

(a) Establishment of the Management Accounts. As of the Series 2020-1 Closing Date, the U.S. Manager and Canadian Manager, respectively, have caused (i) the Issuer and the Canadian Co-Issuer to establish in the name of and for the benefit of, respectively, the Issuer and the Canadian Co-Issuer, (A) for the Issuer, the U.S. Concentration Account and the related Lock-Box Accounts for the U.S. Securitization Entities and for the Canadian Co-Issuer, the Canadian Concentration Account and the related Lock-Box Accounts of the Canadian Co-Issuer, (B) the Asset Disposition Proceeds Accounts of the respective Co-Issuers, (C) the Insurance Proceeds Accounts of the respective Co-Issuers, and (D) for the Issuer, the Take 5 Securitization Lockbox; (ii) each other Canadian SPV Franchising Entity LP to establish in the name of and for the benefit of itself, the related Lock-Box Account for an applicable Driven Securitization Brand with operations in Canada; (iii) each Securitization Entity that owns Securitization-Owned Locations to establish in the name of and for its benefit one or more Securitization-Owned Location Concentration Accounts for an applicable Driven Securitization Brand; (iv) Driven Product Sourcing LLC to establish in the name of and for the benefit of Driven Product Sourcing LLC the Spire Supply Securitization Account; (v) Driven Product Sourcing LLC to establish in the name of Take 5 Properties and for the benefit of Driven Product Sourcing LLC the Oil Fleet Lockbox; (vi) Driven Canada Product Sourcing to establish in the name of and for its benefit one or more Product Sourcing Concentration Accounts and the Canadian Product Sourcing Lease Expense Account and (vii) Driven Canada Claims Management to establish in the name of and for its benefit one or more Claims Management Concentration Accounts and the Canadian Claims Management Lease Expense Account. Such accounts and lock-boxes, as of the Series 2018-1 Closing Date (or as of such later date of establishment of such account) and at all times thereafter, shall be (A) pledged to the Trustee for the benefit of the Secured Parties pursuant to Section

 

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3.1 or the Guarantee and Collateral Agreements and (B) if not established with the Trustee, subject to an Account Control Agreement; provided that only the Qualified Institution holding a Lock-Box Account shall have access to the items deposited therein. Each Management Account shall be an Eligible Account and, in addition, from time to time, the Issuer, the Canadian Co-Issuer, and any other Securitization Entity (or the applicable Manager on its behalf) may establish additional accounts for the purpose of depositing Collections therein (each such account and any investment accounts related thereto into which funds are transferred for investment purposes pursuant to Section 5.1(b), and excluding the Advertising Fund Accounts and any other Account of a Securitization Entity for the holding or disbursement of Excluded Amounts or other amounts constituting operating expenses of Securitization-Owned Locations, a Product Sourcing Business or a Claims Management Business and permitted to be paid under this Base Indenture, an “Additional Management Account”); provided that each such Additional Management Account is (A) an Eligible Account, (B) pledged by the Issuer, the Canadian Co-Issuer, or such other Securitization Entity to the Trustee for the benefit of the Secured Parties pursuant to Section 3.1 or the applicable Guarantee and Collateral Agreement, and (C) if not established with the Trustee, subject to an Account Control Agreement.

(b) Administration of the Management Accounts. The Issuer or the Canadian Co-Issuer (or the applicable Manager or Sub-Manager on its behalf) may invest any amounts held in the applicable Management Accounts in Eligible Investments, and such amounts may be transferred by the Issuer or the Canadian Co-Issuer (or the applicable Manager or Sub-Manager on its behalf), on behalf of itself or as such agent, as applicable, into an investment account for the sole purpose of investing in Eligible Investments so long as such investment account is (A) an Eligible Account, (B) pledged by the applicable Securitization Entity to the Trustee for the benefit of the Secured Parties pursuant to Section 3.1 or the applicable Guarantee and Collateral Agreement and (C) if not established with the Trustee, subject to an Account Control Agreement; provided that any such investment in any Management Account (or in any such investment account) shall mature not later than the Business Day prior to the next succeeding Weekly Calculation Date. Notwithstanding anything herein or in any other Transaction Document, no Co-Issuer or Manager shall transfer any funds into any such investment account pursuant to this Section 5.1(b) until such time as an Account Control Agreement is entered into with respect thereto (if such account is not established with the Trustee), it being agreed that the execution and delivery of such Account Control Agreement shall not be required as a condition precedent to the issuance of Notes on any Series Closing Date. All income or other gain from such Eligible Investments shall be credited to the related Management Account, and any loss resulting from such Eligible Investments shall be charged to the related Management Account (and the Issuer or Canadian Co-Issuer, or the other Securitization Entities, respectively). No Co-Issuer (or other Securitization Entity) shall direct (or permit) the disposal of any Eligible Investments prior to the maturity thereof if such disposal would result in a loss of any portion of the initial purchase price of such Eligible Investment. Prior to any Sub-Manager acting on behalf of any U.S. Securitization Entity or Canadian Securitization Entity, as applicable, in accordance with this Section, it will provide to the Trustee all applicable know-your-customer documentation required by the Trustee.

(c) Earnings from the Management Accounts. All interest and earnings (net of losses and investment expenses) paid on funds on deposit in the Management Accounts shall be deemed to be Investment Income of the Issuer or Canadian Co-Issuer, or the other Canadian Securitization Entities, as applicable, for distribution to the applicable Collection Account in accordance with Section 5.10.

(d) No Duty to Monitor. The Trustee shall have no duty or responsibility to monitor the amounts of deposits into or withdrawals from any Management Account.

 

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Section 5.2 Senior Notes Interest Reserve Accounts.

(a) Establishment of the Senior Notes Interest Reserve Accounts. As of the Series 2015-1 Closing Date, the Issuer has established with the Trustee an account attributable to the Issuer (denominated in U.S. Dollars) in the name of the Trustee for the benefit of the Senior Noteholders and the Trustee, solely in its capacity as trustee for the Senior Noteholders, bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the foregoing Secured Parties (the “Issuer Interest Reserve Account for Senior Notes”). As of the Series 2020-1 Closing Date, the Canadian Co-Issuer has established with the Trustee an account attributable to the Canadian Co-Issuer (denominated in U.S. Dollars) in the name of the Trustee for the benefit of the Senior Noteholders and the Trustee, solely in its capacity as trustee for the Senior Noteholders, bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the foregoing Secured Parties (the “Canadian Co-Issuer Interest Reserve Account for Senior Notes” and together with the Issuer Interest Reserve Account for Senior Notes, the “Senior Notes Interest Reserve Accounts”). The Senior Notes Interest Reserve Accounts shall be Eligible Accounts.

(b) Administration of the Senior Notes Interest Reserve Accounts. All amounts held in the Senior Notes Interest Reserve Accounts shall be invested in Eligible Investments at the written direction (which may be in the form of standing directions) of the Issuer or the Canadian Co-Issuer (or the applicable Manager on its behalf) into an investment account for the sole purpose of investing in Eligible Investments so long as such investment account is (A) an Eligible Account, (B) pledged by such Co-Issuer to the Trustee for the benefit of the Secured Parties pursuant to Section 3.1 and (C) if not established with the Trustee, subject to an Account Control Agreement; provided that any such investment in the Senior Notes Interest Reserve Accounts (or in any such investment account) shall mature not later than the Business Day prior to the next succeeding Weekly Calculation Date. In the absence of written investment instructions hereunder, funds on deposit in the Senior Notes Interest Reserve Accounts shall remain uninvested. All income or other gain from such Eligible Investments shall be credited to the applicable Senior Notes Interest Reserve Account, and any loss resulting from such Eligible Investments shall be charged to the applicable Senior Notes Interest Reserve Account (and the Issuer or the Canadian Co-Issuer). No Co-Issuer shall direct (or permit) the disposal of any Eligible Investments prior to the maturity thereof if such disposal would result in a loss of any portion of the initial purchase price of such Eligible Investment.

(c) Earnings from the Senior Notes Interest Reserve Accounts. All interest and earnings (net of losses and investment expenses) paid on funds on deposit in the Senior Notes Interest Reserve Accounts shall be deemed to be Investment Income on deposit for distribution to the applicable Collection Account in accordance with Section 5.10.

(d) Senior Notes Interest Reserve Account Excess Amount. On any Weekly Allocation Date when a deposit would otherwise be made to a Senior Notes Interest Reserve Account pursuant to priority (ix) of the Priority of Payments, the Co-Issuers (or the Managers on their behalf) may direct the Trustee pursuant to the applicable Weekly Manager’s Certificate to withdraw any Senior Notes Interest Reserve Account Excess Amount from the Senior Notes Interest Reserve Account of either Co-Issuer and transfer such Senior Notes Interest Reserve Account Excess Amount to the Senior Notes Interest Reserve Account of the other Co-Issuer and the allocation pursuant to priority (ix) of the Priority of Payments and calculation of the Senior Notes Interest Reserve Account Deficit Amount of the transferee Co-Issuer shall be deemed to occur after giving effect to such transfer of the Senior Notes Interest Reserve Account Excess Amount. Until such time as any such Senior Notes Interest Reserve Account Excess Amount is paid to any applicable third party (as opposed to transfers between Indenture Trust Accounts of the Co-Issuers pursuant to a Weekly Manager’s Certificate), the applicable Co-Issuer will hold such amount as agent on behalf of the other Co-Issuer. Following payment of any such Senior Notes Interest Reserve Account Excess Amount to a third party, such amount shall be treated as an intercompany loan with an interest rate determined by the applicable Manager in accordance with the applicable Managing Standard. For greater certainty, any payment out of a Co-Issuer’s Senior Notes Interest Reserve Account in respect of which a deposit has been made under this Section 5.2(b) shall be deemed to be paid first out of amounts allocated to such account out of such Co-Issuer’s own Collections and second out of any such Senior Notes Interest Reserve Account Excess Amount transferred from the other Co-Issuer.

 

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Section 5.3 Senior Subordinated Notes Interest Reserve Accounts.

(a) Establishment of the Senior Subordinated Notes Interest Reserve Accounts. Upon the issuance of any Senior Subordinated Notes, each of the Issuer and Canadian Co-Issuer shall establish with the Trustee an account (denominated in U.S. Dollars) in the name of the Trustee for the benefit of the Senior Subordinated Noteholders and the Trustee, solely in its capacity as trustee for the Senior Subordinated Noteholders, bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the foregoing Secured Parties (the “Issuer Senior Subordinated Notes Interest Reserve Account” and the “Canadian Co-Issuer Senior Subordinated Notes Interest Reserve Account” and together with the Issuer Senior Subordinated Notes Interest Reserve Account, the “Senior Subordinated Notes Interest Reserve Accounts”). The Senior Subordinated Notes Interest Reserve Accounts shall be Eligible Accounts.

(b) Administration of the Senior Subordinated Notes Interest Reserve Accounts. All amounts held in the Senior Subordinated Notes Interest Reserve Accounts (other than any Canadian Dollar-denominated Senior Subordinated Notes Interest Reserve Account) shall be invested in Eligible Investments at the written direction (which may be in the form of standing directions) of the applicable Co-Issuer (or the applicable Manager on its behalf), and such amounts may be transferred by such Co-Issuer (or the applicable Manager on its behalf) into an investment account for the sole purpose of investing in Eligible Investments so long as such investment account is (A) an Eligible Account, (B) pledged by such Co-Issuer to the Trustee for the benefit of the Secured Parties pursuant to Section 3.1 and (C) if not established with the Trustee, subject to an Account Control Agreement; provided that any such investment in the Senior Subordinated Notes Interest Reserve Accounts (or in any such investment account) shall mature not later than the Business Day prior to the next succeeding Weekly Calculation Date. In the absence of written investment instructions hereunder, funds on deposit in the Senior Subordinated Notes Interest Reserve Accounts shall remain uninvested. All income or other gain from such Eligible Investments shall be credited to the applicable Senior Subordinated Notes Interest Reserve Account, and any loss resulting from such Eligible Investments shall be charged to the applicable Senior Subordinated Notes Interest Reserve Account (and the Issuer or the Canadian Co-Issuer, respectively). No Co-Issuer shall direct (or permit) the disposal of any Eligible Investments prior to the maturity thereof if such disposal would result in a loss of any portion of the initial purchase price of such Eligible Investment.

(c) Earnings from the Senior Subordinated Notes Interest Reserve Accounts. All interest and earnings (net of losses and investment expenses) paid on funds on deposit in the Senior Subordinated Notes Interest Reserve Accounts shall be deemed to be Investment Income on deposit for distribution to the applicable Collection Account in accordance with Section 5.10.

(d) Senior Subordinated Notes Interest Reserve Account Excess Amount. On any Weekly Allocation Date when a deposit would otherwise be made to a Senior Subordinated Notes Interest Reserve Account pursuant to priority (ix) of the Priority of Payments, the Co-Issuers (or the Managers on their behalf) may direct the Trustee pursuant to the related Weekly Manager’s Certificate to withdraw any Senior Subordinated Notes Interest Reserve Account Excess Amount from the Senior Subordinated Notes Interest Reserve Account of either Co-Issuer and transfer such Senior Subordinated Notes Interest Reserve Account Excess Amount to the Senior Subordinated Notes Interest Reserve Account of the other Co-Issuer and the allocation pursuant to priority (ix) of the Priority of Payments and calculation of the Senior Subordinated Notes Interest Reserve Account Deficit Amount of the transferee Co-Issuer shall be deemed to occur after giving effect to such transfer of the Senior Subordinated Notes Interest Reserve Account Excess Amount. Until such time as any such Senior Subordinated Notes Interest Reserve Account Excess

 

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Amount is paid to any applicable third party (as opposed to transfers between Indenture Trust Accounts of the Co-Issuers pursuant to a Weekly Manager’s Certificate), the applicable Co-Issuer will hold such amount as agent on behalf of the other Co-Issuer. Following payment of any such Senior Subordinated Notes Interest Reserve Account Excess Amount, such amount shall be treated as an intercompany loan with an interest rate determined by the applicable Manager in accordance with the applicable Managing Standard. For greater certainty, any payment out of a Co-Issuer’s Senior Subordinated Notes Interest Reserve Account in respect of which a deposit has been made under this Section 5.3(b) shall be deemed to be paid first out of amounts allocated to such account out of such Co-Issuer’s own Collections and second out of any such Senior Subordinated Notes Interest Reserve Account Excess Amount transferred from the other Co-Issuer.

Section 5.4 Cash Trap Reserve Accounts.

(a) Establishment of the Cash Trap Reserve Accounts. As of the Series 2015-1 Closing Date, the Issuer has established with the Trustee an account designated as the Issuer Cash Trap Reserve Account in the name of the Trustee for the benefit of the Secured Parties, bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Secured Parties (the “Issuer Cash Trap Reserve Account”). As of the Series 2020-1 Closing Date, the Canadian Co-Issuer has established with the Trustee an account designated as the Canadian Co-Issuer Cash Trap Reserve Account in the name of the Trustee for the benefit of the Secured Parties, bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Secured Parties (the “Canadian Co-Issuer Cash Trap Reserve Account” and together with the Issuer Cash Trap Reserve Account, the “Cash Trap Reserve Accounts”). The Cash Trap Reserve Accounts shall be Eligible Accounts.

(b) Administration of the Cash Trap Reserve Accounts. All amounts held in the Cash Trap Reserve Accounts shall be invested in Eligible Investments at the written direction (which may be in the form of standing directions) of the applicable Co-Issuer (or the applicable Manager on its behalf), and such amounts may be transferred by such Co-Issuer (or the applicable Manager on its behalf) into an investment account for the sole purpose of investing in Eligible Investments so long as such investment account is (A) an Eligible Account, (B) pledged by such Co-Issuer to the Trustee for the benefit of the Secured Parties pursuant to Section 3.1 and (C) if not established with the Trustee, subject to an Account Control Agreement; provided that any such investment in the Cash Trap Reserve Accounts (or in any such investment account) shall mature not later than the Business Day prior to the next succeeding Weekly Calculation Date. In the absence of written investment instructions hereunder, funds on deposit in the Cash Trap Reserve Accounts shall remain uninvested. All income or other gain from such Eligible Investments shall be credited to the applicable Cash Trap Reserve Account, and any loss resulting from such Eligible Investments shall be charged to the applicable Cash Trap Reserve Account (and the Issuer or Canadian Co-Issuer, respectively). No Co-Issuer shall direct (or permit) the disposal of any Eligible Investments prior to the maturity thereof if such disposal would result in a loss of any portion of the initial purchase price of such Eligible Investment.

(c) Earnings from the Cash Trap Reserve Accounts. All interest and earnings (net of losses and investment expenses) paid on funds on deposit in the Cash Trap Reserve Accounts shall be deemed to be Investment Income on deposit for distribution to the applicable Collection Account in accordance with Section 5.10.

Section 5.5 Collection Accounts.

(a) Establishment of Collection Accounts. As of the Series 2020-1 Closing Date, the Trustee has established (i) two (2) segregated trust accounts denominated in U.S. Dollars designated as the “U.S. Collection Account” in the name of the Trustee for the benefit of the Secured Parties (x) one of which will hold U.S. Collections (the “Issuer U.S. Collection Account for U.S. Collections”) and (y) the other of which will hold any Canadian Allocation and Shortfall Payment Amount and any other Canadian

 

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Collections denominated in U.S. Dollars (the “Canadian Co-Issuer U.S. Collection Account for the Canadian Allocation and Shortfall Payment Amount”) and (ii) one (1) segregated trust accounts denominated in Canadian Dollars designated as the “Canadian Co-Issuer Canadian Collection Account for Canadian Collections” in the name of the Trustee for the benefit of the Secured Parties which will hold Canadian Collections (including any Canadian Allocation and Shortfall Payment Amount that will not be settled in U.S. Dollars). On or after the Series 2020-1 Closing Date, the Trustee shall establish, maintain, and administer one (1) segregated trust account denominated in Canadian Dollars which will hold any Canadian Dollar-denominated U.S. Shortfall Payment Amount. The Collection Accounts shall be Eligible Accounts.

(b) Administration of the Collection Accounts. All amounts held in the Collection Accounts (other than any Canadian Dollar-denominated Collection Account) shall be invested in Eligible Investments at the written direction (which may be in the form of standing directions) of the applicable Co-Issuer (or the applicable Manager on its behalf), and such amounts may be transferred by such Co-Issuer (or the applicable Manager on its behalf) into an investment account for the sole purpose of investing in Eligible Investments so long as such investment account is (A) an Eligible Account, (B) pledged by such Co-Issuer to the Trustee for the benefit of the Secured Parties pursuant to Section 3.1 and (C) if not established with the Trustee, subject to an Account Control Agreement; provided that any such investment in the Collection Accounts (or in any such investment account) shall mature not later than the Business Day prior to the next succeeding Weekly Calculation Date. In the absence of written investment instructions hereunder, funds on deposit in the applicable Collection Accounts shall remain uninvested. All income or other gain from such Eligible Investments shall be credited to the applicable Collection Account, and any loss resulting from such Eligible Investments shall be charged to the applicable Collection Account (and the Issuer or the Canadian Co-Issuer, respectively). No Co-Issuer shall direct (or permit) the disposal of any Eligible Investments prior to the maturity thereof if such disposal would result in a loss of any portion of the initial purchase price of such Eligible Investment.

(c) Earnings from the Collection Accounts. All interest and earnings (net of losses and investment expenses) paid on funds on deposit in the Collection Accounts shall be deemed to be Investment Income on deposit for distribution in accordance with Section 5.11.

Section 5.6 Collection Account Administrative Accounts.

(a) Establishment of Collection Account Administrative Accounts. The following administrative accounts associated with the Collection Accounts, each of which shall be an Eligible Account, shall be established by the Trustee in the name of the Trustee for the benefit of the Secured Parties, bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Secured Parties (collectively, the “Collection Account Administrative Accounts”), either as of the Series 2015-1 Closing Date or, with respect to the Senior Subordinated Notes or the Subordinated Notes, after the Series 2015-1 Closing Date in connection with the initial issuance of any such Notes or in the case of any Collection Account Administrative Accounts with respect to the Canadian Co-Issuer, on the Series 2020-1 Closing Date or thereafter:

(i) accounts denominated in U.S. Dollars for the Issuer (the “Issuer Class A-1 Notes Commitment Fees Account”), U.S. Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Class A-1 Notes Commitment Fees Account (USD)”), and Canadian Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Class A-1 Notes Commitment Fees Account (CAD)” and, collectively, with the Issuer Class A-1 Notes Commitment Fees Account and the Canadian Co-Issuer Class A-1 Notes Commitment Fees Account (USD), the “Class A-1 Notes Commitment Fees Accounts”), in each case for the deposit of the Class A-1 Notes Commitment Fees Amount;

 

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(ii) accounts denominated in U.S. Dollars for the Issuer (the “Issuer Senior Notes Interest Payment Account”), U.S. Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Senior Notes Interest Payment Account (USD)”), and Canadian Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Senior Notes Interest Payment Account (CAD)” and, collectively, with the Issuer Senior Notes Interest Payment Account and the Canadian Co-Issuer Senior Notes Interest Payment Account (USD), the “Senior Notes Interest Payment Accounts”), in each case, for the deposit of the Senior Notes Quarterly Interest Amount;

(iii) accounts denominated in U.S. Dollars for the Issuer (the “Issuer Senior Subordinated Notes Interest Payment Account”), U.S. Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Senior Subordinated Notes Interest Payment Account (USD)”), and Canadian Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Senior Subordinated Notes Interest Payment Account (CAD)” and, collectively, with the Issuer Senior Subordinated Notes Interest Payment Account and the Canadian Co-Issuer Senior Subordinated Notes Interest Payment Account (USD), the “Senior Subordinated Notes Interest Payment Accounts”), in each case, for the deposit of the Senior Subordinated Notes Quarterly Interest Amount, if any;

(iv) accounts denominated in U.S. Dollars for the Issuer (the “Issuer Subordinated Notes Interest Payment Account”), U.S. Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Subordinated Notes Interest Payment Account (USD)”), and Canadian Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Subordinated Notes Interest Payment Account (CAD)” and, collectively, with the Issuer Subordinated Notes Interest Payment Account and the Canadian Co-Issuer Subordinated Notes Interest Payment Account (USD), the “Subordinated Notes Interest Payment Accounts”), in each case, for the deposit of the Subordinated Notes Quarterly Interest Amount, if any;

(v) accounts denominated in U.S. Dollars for the Issuer (the “Issuer Senior Notes Principal Payment Account”), U.S. Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Senior Notes Principal Payment Account (USD)”), and Canadian Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Senior Notes Principal Payment Account (CAD)” and, collectively, with the Issuer Senior Notes Principal Payment Account and the Canadian Co-Issuer Senior Notes Principal Payment Account (USD), the “Senior Notes Principal Payment Accounts”), in each case, for the deposit of the amounts allocable to the payment of principal of the Senior Notes;

(vi) accounts denominated in U.S. Dollars for the Issuer (the “Issuer Senior Subordinated Notes Principal Payment Account”), U.S. Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Senior Subordinated Notes Principal Payment Account (USD)”), and Canadian Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Senior Subordinated Notes Principal Payment Account (CAD)” and, collectively, with the Issuer Senior Subordinated Notes Principal Payment Account and the Canadian Co-Issuer Senior Subordinated Notes Principal Payment Account (USD), the “Senior Subordinated Notes Principal Payment Accounts”), in each case, for the deposit of amounts allocable to the payment of principal of the Senior Subordinated Notes, if any;

(vii) accounts denominated in U.S. Dollars for the Issuer (the “Issuer Subordinated Notes Principal Payment Account”), U.S. Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Subordinated Notes Principal Payment Account (USD)”), and Canadian Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Subordinated Notes Principal Payment Account (CAD)” and, collectively, with the Issuer Subordinated Notes Principal Payment Account and the Canadian Co-Issuer Subordinated Notes Principal Payment Account (USD), the “Subordinated Notes Principal Payment Accounts”), in each case, for the deposit of amounts allocable to the payment of principal of the Subordinated Notes, if any;

 

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(viii) accounts denominated in U.S. Dollars for the Issuer (the “Issuer Post-ARD Additional Interest Account for Senior Notes”) and U.S. Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Post-ARD Additional Interest Account for Senior Notes” and together with the Issuer Post-ARD Additional Interest Account for Senior Notes, the “Senior Notes Post-ARD Additional Interest Accounts”), in each case, for the deposit of Senior Notes Quarterly Post-ARD Additional Interest;

(ix) accounts denominated in U.S. Dollars for the Issuer (the “Issuer Senior Subordinated Notes Post-ARD Additional Interest Account”) and U.S. Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Senior Subordinated Notes Post-ARD Additional Interest Account” and together with the Issuer Senior Subordinated Notes Post-ARD Additional Interest Account, the “Senior Subordinated Notes Post-ARD Additional Interest Accounts”), in each case, for the deposit of Senior Subordinated Notes Quarterly Post-ARD Additional Interest, if any;

(x) accounts denominated in U.S. Dollars for the Issuer (the “Issuer Subordinated Notes Post-ARD Additional Interest Account”) and U.S. Dollars for the Canadian Co-Issuer (the “Canadian Co-Issuer Subordinated Notes Post-ARD Additional Interest Account” and together with the Issuer Subordinated Notes Post-ARD Additional Interest Account, the “Subordinated Notes Post-ARD Additional Interest Accounts”), in each case, for the deposit of Subordinated Notes Quarterly Post-ARD Additional Interest, if any; and

(xi) accounts denominated in U.S. Dollars for the Issuer (the “Issuer Securitization Operating Expense Account”), U.S. Dollars for the Canadian Co-Issuer (the “Canadian Securitization Operating Expense Account (USD)”), and Canadian Dollars for the Canadian Co-Issuer (the “Canadian Securitization Operating Expense Account (CAD)” and, collectively, with the Issuer Senior Notes Principal Payment Account and the Canadian Co-Issuer Senior Notes Principal Payment Account (USD), the “Securitization Operating Expense Accounts”), in each case, for the deposit of Securitization Operating Expenses.

(b) Administration of the Collection Account Administrative Accounts. All amounts held in the Collection Account Administrative Accounts (other than any Canadian Dollar-denominated Collection Account Administrative Account) shall be invested in Eligible Investments at the written direction (which may be in the form of standing directions) of the applicable Co-Issuer (or the applicable Manager on its behalf), and such amounts may be transferred by such Co-Issuer (or the applicable Manager on its behalf) into an investment account for the sole purpose of investing in Eligible Investments so long as such investment account is (A) an Eligible Account, (B) pledged by such Co-Issuer to the Trustee for the benefit of the Secured Parties pursuant to Section 3.1 and (C) if not established with the Trustee, subject to an Account Control Agreement; provided that any such investment in the Collection Account Administrative Accounts (or in any such investment account) shall mature not later than the Business Day prior to the next succeeding Weekly Calculation Date. In the absence of written investment instructions hereunder, funds on deposit in the applicable Collection Account Administrative Accounts shall remain uninvested. All income or other gain from such Eligible Investments shall be credited to the applicable Collection Account Administrative Account, and any loss resulting from such Eligible Investments shall be charged to the applicable Collection Account Administrative Account (and the Issuer or the Canadian Co-Issuer, respectively). No Co-Issuer shall direct (or permit) the disposal of any Eligible Investments prior to the maturity thereof if such disposal would result in a loss of any portion of the initial purchase price of such Eligible Investment.

 

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(c) Earnings from the Collection Account Administrative Accounts. All interest and earnings (net of losses and investment expenses) paid on funds on deposit in the Collection Account Administrative Accounts shall be deemed to be Investment Income on deposit for distribution to the Collection Accounts in accordance with Section 5.10.

(d) Currency Conversions between certain Collection Account Administrative Accounts. On the Business Day following the tenth (10th) Weekly Allocation Date in each Quarterly Fiscal Period, the Trustee shall, pursuant to the FX Exchange Report appended to the Weekly Manager’s Certificate for such tenth (10th) Weekly Allocation Date, withdraw any Canadian Dollar-denominated amounts from the Class A-1 Notes Commitment Fees Account, Interest Payment Account, and Principal Payment Account for the Canadian Co-Issuer, transfer such amount to the FX Agent for a Currency Conversion and, following settlement of such Currency Conversion, deposit (or cause the FX Agent to deposit) the amount so converted in the corresponding U.S. Dollar-denominated Class A-1 Notes Commitment Fees Account, Interest Payment Account and Principal Payment Account of the Canadian Co-Issuer.

Section 5.7 Securitization-Owned Location Concentration Accounts; Product Sourcing Concentration Accounts; Claims Management Concentration Accounts.

(a) Securitization-Owned Location Concentration Accounts.

(i) On or prior to the Series 2020-1 Closing Date, the Securitization Entities that own Securitization-Owned Locations have established the Securitization-Owned Location Concentration Accounts (including the Take 5 Company Location Concentration Account established by Take 5 Properties on or prior to the Series 2018-1 Closing Date). Each Securitization-Owned Location Account (that is not a Securitization-Owned Location Concentration Account, including the Take 5 Securitization Lockbox and the Management Accounts in the name of Take 5 Properties opened as of the Series 2018-1 Closing Date) opened on and after the earliest applicable Series Closing Date, or such other date of contribution, with respect to Securitization Entities that own Securitization-Owned Locations is required to be (A) in the name of the applicable Securitization Entity and (B) either (x) subject to an Account Control Agreement or (y) a zero balance account which sweeps daily into an account subject to an Account Control Agreement (including a Securitization-Owned Location Concentration Account). After the opening of any such Securitization-Owned Location Concentration Account, the applicable Manager (on behalf of any applicable Securitization Entities or other Service Recipients) will deposit (or cause to be deposited) into the applicable Securitization-Owned Location Concentration Account:

(A) all cash revenues generated by the applicable Securitization-Owned Locations within two (2) Business Days following receipt of such cash revenues; and

(B) all credit card and debit card proceeds and any proceeds of the initial sale of gift cards at the applicable Securitization-Owned Locations; provided that if such proceeds are not deposited directly into a Securitization-Owned Location Concentration Account (including any applicable credit card and debit card sub-account of any Securitization-Owned Location Concentration Account), such proceeds will be deposited within two (2) Business Days for Securitization-Owned Locations located in the United States and three (3) Business Days for Securitization-Owned Locations located in Canada following receipt of such credit card and debit card proceeds and any proceeds of the initial sale of gift cards.

 

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(ii) Each Securitization Entity that owns Securitization-Owned Locations has established and will be permitted to maintain local and regional accounts opened prior to the earliest applicable Series Closing Date, or such other date, when the related assets for such Driven Securitization Brand were contributed to the Securitization Entities pursuant to a Contribution Agreement (or the Canadian Co-Issuer elected to remove the designation of “Excluded Location” in respect of any company-owned location), in connection with the collection of revenues of such Securitization-Owned Locations (the “Existing Local Securitization-Owned Location Accounts”). Each such Securitization Entity will be permitted to maintain amounts on deposit at the end of any banking day in Existing Local Securitization-Owned Location Accounts that are not subject to Account Control Agreements to the extent that (x) such Existing Local Securitization-Owned Location Accounts are zero balance accounts which sweep daily into an account subject to an Account Control Agreement, including the Take 5 Securitization Lockbox or any other Lock-Box Account of the Issuer or in the name of and for the benefit of Take 5 Properties or (y) the aggregate maximum amount held in all other Existing Local Securitization-Owned Location Accounts does not exceed $500,000; provided that, notwithstanding the foregoing requirement, no Existing Local Securitization-Owned Location Account for the Fix Auto Brand shall be required to be subject to an Account Control Agreement or in compliance with the foregoing conditions until one hundred twenty (120) days following the Series 2020-1 Closing Date.

(iii) The applicable Manager may withdraw available amounts on deposit in any Securitization-Owned Location Concentration Account at any time in accordance with the applicable Managing Standard and as otherwise set forth in the Transaction Documents in order to pay operating expenses that are incurred or committed to be paid by the applicable Securitization-Owned Locations in the ordinary course of business, such as the cost of goods sold, labor (including wages, worker’s compensation-related expenses and other labor-related expenses for employees of Securitization-Owned Locations), repair, remodeling and maintenance expenses, insurance (including self-insurance), local advertising expenses, advertising fees allocable to such Securitization-Owned Locations and lease and other occupancy expenses, litigation and settlement costs relating to the Managed Assets, Pass-Through Amounts and, without duplication, Excluded Amounts described in clause (ii) or (iii) of the definition thereof and, at the option of the applicable Canadian Securitization Entity, any such Excluded Amount required or reasonably expected to be payable at or prior to the immediately following four (4) Quarterly Payment Dates or for which a reserve is maintained on account of quarterly or annual payment of such Excluded Amounts; provided that, after the occurrence and during the continuance of any Cash Trapping Period, Rapid Amortization Event or Event of Default, all operating expenses withdrawn from the Securitization-Owned Location Concentration Accounts shall be consistent with a monthly budget submitted to, and approved by, the Control Party (in consultation with the Back-Up Manager) prior to such withdrawal and withdrawals of any operating expenses from any Securitization-Owned Location Concentration Account in excess of amounts set forth in the monthly budget will be subject to (i) the delivery by the applicable Manager to the Control Party and Back-Up Manager of an explanation in reasonable detail for the variance together with related information and (ii) the prior approval of the Control Party (in consultation with the Back-Up Manager).

(iv) The Canadian Manager may, at any time, acting in accordance with the applicable Managing Standard, permanently remove the designation of “Excluded Location” in respect of any company-owned location under a particular Driven Securitization Brand (including any individual brand comprising the Uniban Brand) or other brand described in clause (i) of the definition of “Excluded Location”, and as of such date of designation, such company-owned locations of such Driven Securitization Brand or other brand will be treated in the same manner as a newly acquired Securitization-Owned Location (or any analogous concept for the relevant Collateral) and the related assets (including any account for the collection of revenue) will constitute Securitization Assets.

 

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(b) Product Sourcing Concentration Accounts and Claims Management Concentration Accounts

(i) On or prior to the Series 2020-1 Closing Date, Driven Canada Product Sourcing and Driven Canada Claims Management have established the Canadian Product Sourcing Concentration Account and the Canadian Claims Management Concentration Account. Each Product Sourcing Account and Claims Management Account (that is not a Product Sourcing Concentration Account or Claims Management Concentration Account) opened on or after an applicable Series Closing Date, or such other date of contribution, with respect to Securitization Entities that own a Product Sourcing Business or Claims Management Business is required to be (A) in the name of the applicable Securitization Entity and (B) either (x) subject to an Account Control Agreement or (y) a zero balance account which sweeps daily into an account subject to an Account Control Agreement (including a Product Sourcing Concentration Account or Claims Management Concentration Account, as applicable). After the opening of any such Securitization-Owned Location Concentration Account, the applicable Manager (on behalf of any applicable Securitization Entities or other Service Recipients) will deposit (or cause to be deposited) into the applicable Securitization-Owned Location Concentration Account:

(A) all cash revenues generated by the applicable Product Sourcing Business or applicable Claims Management Business within three (3) Business Days following receipt of such cash revenues; and

(B) all credit card and debit card proceeds generated by the applicable Product Sourcing Business or applicable Claims Management Business; provided that if such proceeds are not deposited directly into an applicable Concentration Account (including any applicable credit card and debit card sub-account of any such Concentration Account), such proceeds will be deposited within three (3) Business Days following receipt of such credit card and debit card proceeds.

(ii) Each Securitization Entity that owns a Product Sourcing Business or Claims Management Business has established and is permitted to maintain local and regional accounts opened prior to the earliest applicable Series Closing Date, or such other date, when the related assets for such Product Sourcing Business or Claims Management Business were contributed to the Securitization Entities pursuant to a Contribution Agreement in connection with the collection of their respective revenues (the “Existing Local Product Sourcing Amounts” and the “Existing Local Claims Management Accounts” respectively, and collectively, the “Existing Local Product Sourcing and Claims Management Accounts”). Each Securitization Entity that owns a Product Sourcing Business or Claims Management Business may establish and is permitted to maintain amounts on deposit at the end of any banking day in Existing Local Product Sourcing and Claims Management Accounts that are not subject to Account Control Agreements to the extent that (x) such Existing Local Product Sourcing and Claims Management Accounts are zero balance accounts which sweep daily into an account subject to an Account Control Agreement or (y) the aggregate maximum amount held in all Existing Local Product Sourcing and Claims Management Accounts in respect of Canadian Securitization Entities does not exceed CAN$3,000,000 and in respect of any applicable U.S. Securitization Entities does not exceed $3,000,000 or such other amount approved by the

 

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Control Party (acting at the direction of the Controlling Class Representative); provided that, notwithstanding the foregoing requirements, no Existing Local Product Sourcing and Claims Management Account in respect of Driven Canada Product Sourcing or Driven Canada Claims Management shall be required to be subject to an Account Control Agreement or in compliance with the foregoing conditions until one hundred twenty (120) days following the Series 2020-1 Closing Date.

(iii) The applicable Manager may withdraw available amounts on deposit in any Product Sourcing Concentration Account or Claims Management Concentration Account at any time in accordance with the applicable Managing Standard and as otherwise set forth in the Transaction Documents in order to pay operating expenses that are incurred or committed to be paid in respect of the applicable Product Sourcing Business or Claims Management Business in the ordinary course of business, such as the cost of goods sold, labor (including wages, worker’s compensation-related expenses and other labor-related expenses for employees of the applicable Product Sourcing Business or Claims Management Business), insurance (including self-insurance), local advertising expenses, lease and other occupancy expenses, and litigation and settlement costs relating to the applicable Managed Assets and other Excluded Amounts, including insurance company rebates and other fees and payments payable to Franchisees, locations owned by Non-Securitization Entities, Excluded Locations or third parties and Excluded Amounts described in clause (ii) or (iii) of the definition thereof and, at the option of the applicable Securitization Entity, any such Excluded Amount required or reasonably expected to be payable at or prior to the immediately following four (4) Quarterly Payment Dates or for which a reserve is maintained on account of quarterly or annual payment of such Excluded Amounts; provided that, after the occurrence and during the continuance of any Cash Trapping Period, Rapid Amortization Event or Event of Default, all operating expenses withdrawn from any Product Sourcing Concentration Account or Claims Management Concentration Account shall be consistent with a monthly budget submitted to, and approved by, the Control Party (in consultation with the Back-Up Manager) prior to such withdrawal and withdrawals of any operating expenses from any such Product Sourcing Concentration Account or Claims Management Concentration Account in excess of amounts set forth in the monthly budget will be subject to (i) the delivery by the applicable Manager to the Control Party and Back-Up Manager of an explanation in reasonable detail for the variance together with related information and (ii) the prior approval of the Control Party (in consultation with the Back-Up Manager).

Section 5.8 Trustee as Securities Intermediary.

(a) The Trustee or other Person holding any Base Indenture Account held in the name of the Trustee for the benefit of the Secured Parties (collectively, the “Trustee Accounts”) shall be the “Securities Intermediary”. If the Securities Intermediary in respect of any Trustee Account is not the Trustee, the Issuer shall obtain the express agreement of such other Person to the obligations of the Securities Intermediary set forth in this Section 5.8.

(b) The Securities Intermediary agrees that:

(i) the Trustee Accounts are accounts to which “financial assets” within the meaning of Section 8-102(a)(9) (“Financial Assets”) of the New York UCC and each applicable STA will or may be credited;

(ii) the Trustee Accounts are “securities accounts” within the meaning of Section 8-501 of the New York UCC and each applicable STA and the Securities Intermediary qualifies as a “securities intermediary” under Section 8-102(a) of the New York UCC and each applicable STA;

 

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(iii) all securities or other property (other than cash) underlying any Financial Assets credited to any Trustee Account shall be registered in the name of the Securities Intermediary, indorsed to the Securities Intermediary or in blank or credited to another securities account maintained in the name of the Securities Intermediary, and in no case will any Financial Asset credited to any Trustee Account be registered in the name of the applicable Co-Issuer, payable to the order of the applicable Co-Issuer or specially indorsed to the applicable Co-Issuer;

(iv) all property delivered to the Securities Intermediary pursuant to this Base Indenture will be promptly credited to the appropriate Trustee Account;

(v) each item of property (whether investment property, security, instrument or cash) credited to a Trustee Account shall be treated as a Financial Asset under Article 8 of the New York UCC and each applicable STA;

(vi) if at any time the Securities Intermediary shall receive any entitlement order from the Trustee (including those directing transfer or redemption of any Financial Asset) relating to the Trustee Accounts, the Securities Intermediary shall comply with such entitlement order without further consent by the Issuer or any other Person;

(vii) the Trustee Accounts shall be governed by the laws of the State of New York, regardless of any provision of any other agreement; for purposes of all applicable UCCs and STAs and all issues specified in Article 2(1) of the Hague Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary, New York shall be deemed to be the Securities Intermediary’s jurisdiction, and the Trustee Accounts (as well as the “securities entitlements” (as defined in Section 8-102(a)(17) of the New York UCC and each applicable STA) related thereto) shall be governed by the laws of the State of New York;

(viii) the Securities Intermediary has not entered into, and until termination of this Base Indenture will not enter into, any agreement with any other Person relating to the Trustee Accounts and/or any Financial Assets credited thereto pursuant to which it has agreed to comply with entitlement orders (as defined in Section 8-102(a)(8) of the New York UCC and each applicable STA) of such other Person and the Securities Intermediary has not entered into, and until the termination of this Base Indenture will not enter into, any agreement with either Co-Issuer purporting to limit or condition the obligation of the Securities Intermediary to comply with entitlement orders as set forth in Section 5.8(b)(vi); and

(ix) except for the claims and interest of the Trustee, the Secured Parties, the Co-Issuers and the other Securitization Entities in the Trustee Accounts, neither the Securities Intermediary nor, in the case of the Trustee, any Trust Officer knows of any claim to, or interest in, the Trustee Accounts or any Financial Asset credited thereto; if the Securities Intermediary or the Trustee has Actual Knowledge of the assertion by any other person of any Lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process) against any Trustee Account or any Financial Asset carried therein, the Securities Intermediary will promptly notify the Trustee, the Servicer, the Managers, the Back-Up Manager and the Co-Issuers thereof.

 

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(c) At any time after the occurrence and during the continuation of an Event of Default, the Trustee shall possess all right, title and interest in all funds on deposit from time to time in the Trustee Accounts and in all Proceeds thereof, and (acting at the direction of the Controlling Class Representative) shall be the only Person authorized to originate entitlement orders in respect of the Trustee Accounts; provided that at all other times the applicable Co-Issuer (or the applicable Manager on its behalf) shall, subject to the terms of the Indenture and the other Transaction Documents, be authorized to instruct the Trustee to originate entitlement orders in respect of the applicable Trustee Accounts.

Section 5.9 Establishment of Series Accounts; Legacy Accounts.

(a) Establishment of Series Accounts. To the extent specified in the Series Supplement with respect to any Series of Notes, the Trustee may establish and maintain one or more Series Accounts and/or administrative accounts of any such Series Account in accordance with the terms of such Series Supplement.

(b) Legacy Accounts. In the case of any mandatory or optional redemption in full of any Class or Series of Notes issued pursuant to this Base Indenture, on the Notes Discharge Date with respect to such Class or Series of Notes, either or both Co-Issuers may (but are not required to) elect to have all or any portion of the funds held in any Legacy Account with respect to such Class or Series of Notes transferred to the applicable distribution account for such Class or Series of Notes, for application toward the prepayment of such Class or Series of Notes. If the Co-Issuers do not elect to have such funds so transferred, or if the Co-Issuers elect to have only a portion of such funds so transferred, any funds remaining in the applicable Legacy Account after the applicable Notes Discharge Date shall be deposited into the applicable Collection Account for application in accordance with the Priority of Payments. When the balance of any Legacy Account has been reduced to zero, the Trustee may close such account. The Trustee shall make the distributions and transfers and shall close any accounts as contemplated by this Section 5.9 pursuant to instructions delivered by the Co-Issuers to the Trustee.

Section 5.10 Collections; Investment Income; Currency Conversions.

(a) Deposits to the Concentration Accounts.

(i) Until the Indenture is terminated pursuant to Section 12.1, the Issuer shall deposit (or cause to be deposited) the following amounts to the U.S. Concentration Account, in each case, to the extent owed to it or the other U.S. Securitization Entities or any applicable Take 5 Company Locations located in the United States and promptly after receipt (unless otherwise specified below):

(A) all Franchisee Payments owed to the U.S. SPV Franchising Entities shall be deposited directly to the U.S. Concentration Account or made to a Lock-Box Account; provided that all Franchisee Payments owed to the U.S. SPV Franchising Entities made to a Lock-Box Account shall be deposited to the U.S. Concentration Account within two (2) Business Days following the receipt of such amounts in such Lock-Box Account;

(B) within five (5) Business Days after the end of each fiscal week, the Weekly Estimated Securitization-Owned Location Profits Amount;

(C) on or before the tenth (10th) Business Day following the last day of each Monthly Fiscal Period, the Monthly Securitization-Owned Location Profits True-up Amount, if any, from amounts on deposit in the Securitization-Owned Location Concentration Accounts, and/or draws on the Series 2019-3 Notes or the Series 2022-1 Class A-1 Notes;

 

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(D) within three (3) Business Days of receipt, all amounts received under any IP License Agreement (including any Canadian IP License Agreement or other IP License Agreement entered into with a Canadian Securitization Entity), other license fees and any other amounts received in respect of the applicable Securitization IP, including recoveries from the enforcement of the applicable Securitization IP;

(E) within three (3) Business Days of receipt, equity contributions, if any, made by any Non-Securitization Entity to the Issuer (directly or indirectly) to the extent such equity contributions are directed to be made to the U.S. Concentration Account; and

(F) within five (5) Business Days of receipt, all other amounts constituting Retained Collections with respect to the operation of the Driven Securitization Brands in the United States not referred to in the preceding clauses other than Indemnification Amounts, Release Prices, Insurance/Condemnation Proceeds, Asset Disposition Proceeds and other amounts required to be deposited directly to other Management Accounts of the U.S. Securitization Entities or to the U.S. Collection Account for U.S. Collections.

(ii) Until the Indenture is terminated pursuant to Section 12.1, the Canadian Co-Issuer shall deposit (or cause to be deposited) the following amounts to the Canadian Concentration Account, in each case, to the extent owed to it or the other Canadian Securitization Entities and promptly after receipt (unless otherwise specified below):

(A) all Franchisee Payments owed to the Canadian SPV Franchising Entities will be deposited directly to the Canadian Concentration Account or made to a Lock-Box Account; provided that all Franchisee Payments owed to the Canadian SPV Franchising Entities made to a Lock-Box Account will be deposited to the Canadian Concentration Account within three (3) Business Days following the receipt of such amounts in such Lock-Box Account;

(B) within five (5) Business Days after the end of each fiscal week, the Weekly Estimated Securitization-Owned Location Profits Amount, the Weekly Estimated Product Sourcing Profits Amount and Weekly Estimated Claims Management Profits Amount;

(C) on or before the tenth (10th) Business Day following the last day of each Monthly Fiscal Period, the Monthly Securitization-Owned Location Profits True-up Amount, the Monthly Product Sourcing Profits True-up Amount and the Monthly Claims Management Profits True-up Amount, if any, from amounts on deposit in the Securitization-Owned Location Concentration Accounts, Product Sourcing Concentration Accounts and Claims Management Concentration Accounts;

(D) within three (3) Business Days of receipt all amounts received under any IP License Agreement, other license fees and any other amounts received in respect of the applicable Securitization IP, including recoveries from the enforcement of the applicable Securitization IP;

 

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(E) within three (3) Business Days of receipt, equity contributions, if any, made by any Non-Securitization Entity to the Canadian Co-Issuer or any other Canadian Securitization Entity (in each case, directly or indirectly) to the extent such equity contributions are directed to be made to the Canadian Concentration Account; and

(F) within five (5) Business Days of receipt, all other amounts constituting Retained Collections with respect to the operations of the Driven Securitization Brands in Canada not referred to in the preceding clauses other than Indemnification Amounts, Release Prices, Insurance/Condemnation Proceeds, Asset Disposition Proceeds and other amounts required to be deposited directly to other Management Accounts of the Canadian Securitization Entities or to the Canadian Collection Account for Canadian Collections.

(b) Withdrawals from the Concentration Accounts.

(i) The U.S. Manager may (and in the case of sub-clauses (E) and (F) below, shall) withdraw (or cause to be withdrawn) available amounts on deposit in the U.S. Concentration Account (in the cases of sub-clauses (A)-(E) below and the U.S. Collection Account for U.S. Collections in the case of clausesub-clause (F)) below to make the following payments and deposits:

(A) on a daily basis, as necessary, to the extent of amounts deposited to the U.S. Concentration Account that the U.S. Manager determines were required to be deposited to another account or were deposited to the U.S. Concentration Account in error;

(B) on a daily basis, as necessary, to pay or distribute any Excluded Amounts (other than Advertising Fees and Product Sourcing Obligations) deposited therein;

(C) as soon as practicable, and in any event within five (5) Business Days of receipt, to transfer any Advertising Fees (other than any Maaco Net Advertising Commissions in the United States) deposited in the U.S. Concentration Account to the U.S. Advertising Fund Accounts (other than Advertising Co-op Funds, which will be transferred to the applicable Advertising Co-op Fund);

(D) on a daily basis, as necessary to pay Product Sourcing Obligations attributable to and in an amount not to exceed Product Sourcing Payments then on deposit in the U.S. Concentration Account (excluding, in each case, any Product Sourcing Obligations and Product Sourcing Payments of the U.S. Product Sourcing Business);

(E) on a weekly basis at or prior to 3:30 p.m. (New York City time) on each Weekly Calculation Date, all Retained Collections with respect to the related Weekly Collection Period then on deposit in the U.S. Concentration Account to the U.S. Collection Account for U.S. Collections (which, for the avoidance of doubt, will include the Weekly Estimated Securitization-Owned Location Profits Amount plus the Monthly Securitization-Owned Location Profits True-up Amount, if applicable, then on deposit in the U.S. Concentration Account) for application in the order of priority set forth in the Priority of Payments; and

 

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(F) for each Weekly Calculation Date relating to a Currency Conversion Weekly Allocation Date, on the Business Day following the deposit described in sub-clause (E) above for the related Weekly Collection Period, any U.S. Shortfall Payment Amount with respect to such related Weekly Collection Period then on deposit in the U.S. Collection Account for U.S. Collections to, following settlement of the respective Currency Conversion for such U.S. Shortfall Payment Amount pursuant to an FX Exchange Report not later than the second (2nd) Business Day following such related Weekly Calculation Date, deposit in the Canadian Collection Account for the U.S. Shortfall Payment Amount for application in the order of priority set forth in the Priority of Payments.

(ii) The Canadian Manager may (and in the case of sub-clauses (E) and (F) below, will be required toshall) withdraw (or cause to be withdrawn) available amounts on deposit in the Canadian Concentration Account (in the case of sub-clauses (A)-(E) below and the Canadian Collection Account for Canadian Collections in the case of clause (F)) below to make the following payments and deposits:

(A) on a daily basis, as necessary, to the extent of amounts deposited to the Canadian Concentration Account that the Canadian Manager determines were required to be deposited to another account or were deposited to the Canadian Concentration Account in error;

(B) on a daily basis, as necessary, to pay or distribute any Excluded Amounts (other than Advertising Fees and Product Sourcing Obligations) deposited therein;

(C) as soon as practicable, and in any event within five (5) Business Days of receipt, to transfer any Advertising Fees deposited in the Canadian Concentration Account to the Canadian Advertising Fund Accounts (other than Advertising Co-op Funds, which will be transferred to any applicable Advertising Co-op Fund);

(D) on a daily basis, as necessary, to pay Product Sourcing Obligations attributable to and in an amount not to exceed Product Sourcing Payments then on deposit in the Canadian Concentration Account (excluding, in each case, any Product Sourcing Obligations and Product Sourcing Payments of the Canadian Product Sourcing Business);

(E) on a weekly basis at or prior to 3:30 p.m. (New York City time) on each Weekly Calculation Date, all Retained Collections with respect to the related Weekly Collection Period then on deposit in the Canadian Concentration Account to the Canadian Collection Account for Canadian Collections (which, for the avoidance of doubt, will include the Weekly Estimated Securitization-Owned Location Profits Amount plus the Monthly Securitization-Owned Location Profits True-up Amount, the Weekly Estimated Product Sourcing Profits Amount plus the Monthly Product Sourcing Profits True-up Amount, and the Weekly Estimated Claims Management Profits Amount plus the Monthly Claims Management Profits True-up Amount, in each case if applicable, then on deposit in the Canadian Concentration Account) for application in the order of priority set forth in the Priority of Payments; and

(F) for each Weekly Calculation Date relating to a Currency Conversion Weekly Allocation Date, on the Business Day following the deposit described in clausesub-clause (E) above for the related Weekly Collection Period, any Canadian Allocation and Shortfall Payment Amount with respect to such related Weekly Collection Period then on deposit in the Canadian Collection Account for Canadian Collections tofor , following settlement of the respective Currency Conversion for such Canadian Allocation and Shortfall Payment Amount pursuant to an FX Exchange Report not later than the second (2nd) Business Day following such related Weekly Calculation Date, deposit in the U.S. Collection Account for the Canadian Allocation and Shortfall Payment Amount for application in the order of priority set forth in the Priority of Payments.

 

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(c) Deposits and Withdrawals from the Asset Disposition Proceeds Accounts.

(i) If any Service Recipient disposes of property pursuant to a Permitted Asset Disposition (other than pursuant to clause (xix) of the definition thereof), or any other disposition not permitted under the terms of this Base Indenture, (i) to the extent the proceeds thereof do not constitute Asset Disposition Proceeds as determined by the applicable Manager, on behalf of the related Service Recipient, such proceeds (net of, notwithstanding such proceeds not constituting Asset Disposition Proceeds, amounts described in clause (ii) of the definition of “Asset Disposition Proceeds” and, in the case of Post-Issuance Acquired Locations only (without duplication of any amounts in such clause (ii)), further net of the original cost of acquisition of such asset, including reasonable and customary related expenses) shall be treated as Collections with respect to the Quarterly Fiscal Period in which such proceeds are received; and (ii) to the extent such amounts constitute Asset Disposition Proceeds (including without limitation, any Asset Disposition Proceeds from any Refranchising Asset Disposition), such amounts will be promptly deposited (and in any event within (x) five (5) Business Days with respect to a disposition resulting in Asset Disposition Proceeds in excess of $25,000 and (y) 90 days with respect to a disposition resulting in Asset Disposition Proceeds less than or equal to $25,000) following receipt thereof by the applicable Service Recipients (or the applicable Manager on their behalf) to the applicable Asset Disposition Proceeds Account. At the election of such Service Recipient or the applicable Manager on its behalf, such Service Recipients may reinvest such Asset Disposition Proceeds in Eligible Assets within one (1) calendar year following receipt of such Asset Disposition Proceeds (or, on and after the 2022 Springing Amendments Implementation Date, if any Securitization Entity shall have entered into a binding commitment to reinvest such Asset Disposition Proceeds within one (1) calendar year following receipt of such Asset Disposition Proceeds, within eighteen (18) calendar months following receipt of such Asset Disposition Proceeds); provided that after the occurrence and during the continuance of any Rapid Amortization Period, (A) all amounts withdrawn from the Asset Disposition Proceeds Accounts shall be withdrawn substantially in accordance with a Quarterly Fiscal Period budget submitted to, and approved by, the Control Party (in consultation with the Back-Up Manager) prior to such withdrawal and (B) withdrawals of any amounts from the Asset Disposition Proceeds Accounts in excess in any material respect of amounts set forth in the Quarterly Fiscal Period budget shall be subject to (i) the delivery by the applicable Manager to the Control Party, the Trustee, and Back-Up Manager of an explanation in reasonable detail for the variance together with related information and (ii) the prior approval of the Control Party (in consultation with the Back-Up Manager); provided, further, that (A) with respect to the aggregate Asset Disposition Proceeds from Refranchising Asset Dispositions (such proceeds, “Refranchising Proceeds”) in excess of the Refranchising Proceeds Cap in any fiscal year if, after giving pro forma effect to such Refranchising Asset Disposition and any proposed reinvestment of the related Refranchising Proceeds in Eligible Assets (excluding the cash and cash equivalents maintained in the Asset Disposition Proceeds Accounts for netting purposes, as applicable), at the time of such proposed reinvestment (I) the pro forma Senior Leverage Ratio is greater than the Senior Leverage Ratio as of the Series 2018-1 Closing Date or (II) the pro forma DSCR is less

 

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than the DSCR as of the Series 2018-1 Closing Date, such Refranchising Proceeds will be applied in accordance with priority (i) of the Priority of Payments on the following Weekly Allocation Date) and (B) the Refranchising Proceeds in any fiscal year will otherwise be subject to reinvestment as set forth in this paragraph. To the extent such Asset Disposition Proceeds have not been so reinvested in Eligible Assets within such one-year period (or, on and after the 2022 Springing Amendments Implementation Date, if any Securitization Entity shall have entered into a binding commitment to reinvest such Asset Disposition Proceeds within one (1) calendar year following receipt of such Asset Disposition Proceeds, within such eighteen-month period, each such period, an “Asset Disposition Reinvestment Period”), the applicable Co-Issuer (or the applicable Manager on its behalf) shall withdraw an amount equal to all such un-reinvested Asset Disposition Proceeds no later than the Business Day immediately succeeding the expiration of the applicable Asset Disposition Reinvestment Period and deposit such amount to the applicable Collection Account to be applied in accordance with priority (i) of the Priority of Payments on the Weekly Allocation Date immediately following the deposit of such Asset Disposition Proceeds to the applicable Collection Account. In the event that such Securitization Entity has elected not to reinvestreinvested such Asset Disposition Proceeds, such Asset Disposition Proceeds shall be deposited to the applicable Collection Account promptly following such decision and applied in accordance with priority (i) of the Priority of Payments on the following Weekly Allocation Date.

(ii) The Canadian Co-Issuer will hold Asset Disposition Proceeds attributable to another Canadian Securitization Entity as agent for such Canadian Securitization Entity until such Asset Disposition Proceeds are applied pursuant to the Priority of Payments or reinvested in Eligible Assets in accordance with Section 5.10(c)(i). The Canadian Co-Issuer may enter into transactions with the other Canadian Securitization Entities to the extent permitted by Section 8.13, Section 8.18 and Section 8.21 to the extent necessary or helpful to give effect to the Priority of Payments (as determined by the Canadian Manager in accordance with the applicable Managing Standard) in order to acquire any such Asset Disposition Proceeds, for such other Canadian Securitization Entity to reinvest any such proceeds in accordance with Section 5.10(c)(i) or to allow the Canadian Co-Issuer to make a loan to the Issuer pursuant to Section 5.10(c)(iii).

(iii) Immediately prior to any application of such Asset Disposition Proceeds in accordance with priority (i) of the Priority of Payments, the applicable Co-Issuer (or the Manager on its behalf) shall be permitted to disregard the requirements of the Priority of Payments and deem a portion of such Asset Disposition Proceeds as a payment of the Residual Amount to the Issuer or the Canadian Residual Account, as applicable, so long as (x) the recipient Co-Issuer immediately thereafter uses such Residual Amount to make a loan to the other Co-Issuer in accordance with Section 8.13 with interest at a rate determined by the applicable Manager in accordance with the applicable Managing Standard, (y) after giving effect to such payment of such Residual Amount and such loan, the related Asset Disposition Proceeds are applied pursuant to the Priority of Payments by the Co-Issuers as if such loaned amount was Asset Disposition Proceeds of the recipient Co-Issuer and (z) the deemed payment of such Residual Amount is disregarded for purposes of the Weekly Manager’s Certificate.

(d) Deposits and Withdrawals from the Insurance Proceeds Accounts.

 

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(i) All Insurance/Condemnation Proceeds received by or on behalf of any Service Recipient in respect of the Collateral shall be promptly deposited (and in any event within five (5) Business Days following receipt thereof) to the applicable Insurance Proceeds Account. At the election of such Service Recipient (as notified by the applicable Manager to the Trustee, the Servicer and the Back-Up Manager promptly after receipt of the Insurance/Condemnation Proceeds) and so long as no Rapid Amortization Event has occurred and is continuing, the applicable Service Recipients may reinvest such Insurance/Condemnation Proceeds to repair or replace the assets in respect of which such proceeds were received within one (1) calendar year following receipt of such Insurance/Condemnation Proceeds (or, on and after the 2022 Springing Amendments Implementation Date, if any Securitization Entity shall have entered into a binding commitment to reinvest such Insurance/Condemnation Proceeds within one (1) calendar year following receipt of such Insurance/Condemnation Proceeds, within eighteen (18) calendar months following receipt of such Insurance/Condemnation Proceeds); provided that (i) in the event the applicable Manager has repaired or replaced the assets with respect to which such Insurance/Condemnation Proceeds have been received prior to the receipt of such Insurance/Condemnation Proceeds, such Insurance/Condemnation Proceeds shall be used to reimburse the applicable Manager for any expenditures in connection with such repair or replacement and (ii) any Insurance/Condemnation Proceeds received in connection with the exercise of any non-temporary condemnation, eminent domain or similar powers exercised pursuant to any Requirements of Law may be reinvested in Eligible Assets. To the extent such Insurance/Condemnation Proceeds have not been so reinvested within such one-year period (or, on and after the 2022 Springing Amendments Implementation Date, if any Securitization Entity shall have entered into a binding commitment to reinvest such Insurance/Condemnation Proceeds within one (1) calendar year following receipt of such Insurance/Condemnation Proceeds, within such eighteen-month period, each such period, a “Casualty Reinvestment Period”), the applicable Co-Issuer (or the applicable Manager on its behalf) shall withdraw an amount equal to all such un-reinvesteduninvested Insurance/Condemnation Proceeds no later than the Business Day immediately succeeding the expiration of the applicable Casualty Reinvestment Period and deposit such amounts to the applicable Collection Account to be applied in accordance with priority (i) of the Priority of Payments on the Weekly Allocation Date immediately following the deposit of such Insurance/Condemnation Proceeds to the applicable Collection Account. In the event that such Service Recipient has elected not to reinvest such Insurance/Condemnation Proceeds, such Insurance/Condemnation Proceeds shall instead be deposited to the applicable Collection Account promptly following such decision and applied in accordance with priority (i) of the Priority of Payments on the following Weekly Allocation Date.

(ii) The Canadian Co-Issuer will hold Insurance/Condemnation Proceeds attributable to another Canadian Securitization Entity as agent for such Canadian Securitization Entity until such Insurance/Condemnation Proceeds are applied pursuant to the Priority of Payments or reinvested in Eligible Assets in accordance with Section 5.10(d)(i). The Canadian Co-Issuer may enter into transactions with the other Canadian Securitization Entities to the extent permitted by Section 8.13, Section 8.18 and Section 8.21 to the extent necessary or helpful to give effect to the Priority of Payments (as determined by the Canadian Manager in accordance with the applicable Managing Standard) in order to acquire any such Insurance/Condemnation Proceeds, for such other Canadian Securitization Entity to reinvest any such proceeds in accordance with Section 5.10(d)(i) or to allow the Canadian Co-Issuer to make a loan to the Issuer pursuant to Section 5.10(d)(iii).

 

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(iii) Immediately prior to any application of such Insurance/Condemnation Proceeds in accordance with priority (i) of the Priority of Payments, the applicable Co-Issuer (or the Manager on its behalf) shall be permitted to disregard the requirements of the Priority of Payments and deem a portion of such Insurance/Condemnation Proceeds as a payment of the Residual Amount to the Issuer or the Canadian Residual Account, as applicable, so long as (x) the recipient Co-Issuer immediately thereafter uses such Residual Amount to make a loan to the other Co-Issuer in accordance with Section 8.13 with interest at a rate determined by the applicable Manager in accordance with the applicable Managing Standard, (y) after giving effect to such payment of such Residual Amount and such loan, the related Insurance/Condemnation Proceeds are applied pursuant to the Priority of Payments by the Co-Issuers as if such loaned amount was Insurance/Condemnation Proceeds of the recipient Co-Issuer and (z) the deemed payment of such Residual Amount is disregarded for purposes of the Weekly Manager’s Certificate.

(e) Deposits to the Collection Accounts. The Managers (or, with respect to clause (viii) below, the Trustee or the Control Party, as applicable) will deposit or cause to be deposited to the applicable Collection Account the following amounts, in each case, promptly after receipt (unless otherwise specified below):

(i) the amounts required to be withdrawn from the Concentration Accounts and deposited to the Collection Accounts pursuant to and in accordance with Section 5.10(b)(i)(E) and Section 5.10(b)(ii)(E);

(ii) Indemnification Amounts within two (2) Business Days following (A) with respect to the U.S. Manager, either (I) the receipt by the U.S. Manager of such amounts if DBI is not the U.S. Manager or (II) if DBI is the U.S. Manager, the date such amounts become payable by the related Contributor or by the U.S. Manager under the U.S. Management Agreement or any other Transaction Document and (B) with respect to the Canadian Manager, either (I) the receipt by the Canadian Manager of such amounts if the Initial Canadian Manager is not the Canadian Manager or (II) if the Initial Canadian Manager is the Canadian Manager, the date such amounts become payable by the related Contributor or by the Canadian Manager under the Canadian Management Agreement or any other Transaction Document;

(iii) Insurance/Condemnation Proceeds remaining in the applicable Insurance Proceeds Account on the immediately succeeding Business Day following the expiration of the applicable Casualty Reinvestment Period and such Insurance/Condemnation Proceeds where the applicable Service Recipient (or the applicable Manager on its behalf) elects not to reinvest such amounts promptly upon the later of such election and receipt of such Insurance/Condemnation Proceeds;

(iv) Asset Disposition Proceeds remaining in the applicable Asset Disposition Proceeds Account on the immediately succeeding Business Day following the expiration of the applicable Asset Disposition Reinvestment Period and such Asset Disposition Proceeds where the applicable Service Recipient (or the applicable Manager on its behalf) elects not to reinvest such amounts promptly upon the later of such election and receipt of such Asset Disposition Proceeds;

 

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(v) Release Prices immediately upon receipt of the proceeds of any Permitted Brand Disposition;

(vi) all amounts withdrawn from the Senior Notes Interest Reserve Accounts or the Senior Subordinated Notes Interest Reserve Accounts, as applicable, upon the occurrence of an Interest Reserve Release Event, provided (x) that amounts withdrawn from the Issuer’s Senior Notes Interest Reserve Account or the Issuer’s Senior Subordinated Notes Interest Reserve Account shall be deposited directly to the U.S. Collection Account for U.S. Collections and (y) amounts withdrawn from the Canadian Co-Issuer’s Senior Notes Interest Reserve Account or the Canadian Co-Issuer’s Senior Subordinated Notes Interest Reserve Account shall, at the instruction of the Canadian Co-Issuer (or the Canadian Manager on its behalf) pursuant to an FX Exchange Report, be converted into Canadian Dollars and transferred to the Canadian Collection Account for Canadian Collections;

(vii) any other amounts required to be deposited to the Collection Accounts hereunder or under any other Transaction Documents; and

(viii) amounts obtained by the Trustee or the Control Party on account of or as a result of the exercise by the Trustee or the Control Party of any of its rights under the Indenture, including, without limitation, under Article IX hereof, upon receipt thereof;

(f) Investment Income. By no later than (i) 10:00 a.m. (New York City time) on the Business Day before each Weekly Allocation Date, as applicable, each Co-Issuer (or the applicable Manager on its behalf) (x) shall instruct the Trustee in writing to transfer any Investment Income on deposit in the Indenture Trust Accounts (other than the Collection Account) to the applicable Collection Account and (y) shall transfer any Investment Income in respect of Eligible Investments denominated in U.S. Dollars on deposit in the Management Accounts to the applicable Collection Account, and (ii) 3:30 p.m. (New York City time) on each Weekly Calculation Date, as applicable, the Canadian Co-Issuer (or the Canadian Manager on its behalf) shall transfer any Investment Income in respect of Eligible Investments denominated in Canadian Dollars on deposit in the Management Accounts to the applicable Collection Account, in each case for application on the related Weekly Allocation Date (following, as applicable, the settlement of the requisite portion of any Investment Income pursuant to a Currency Conversion).

(g) Payment Instructions. In accordance with and subject to the terms of the applicable Management Agreement, each Co-Issuer shall cause the applicable Manager to instruct (i) each Franchisee obligated at any time to make any payment pursuant to any Franchise Document to make such payment to the applicable Concentration Account or a related Lock-Box Account and (ii) any Person (not an Affiliate of the applicable Co-Issuer) obligated at any time to make any payments with respect to the Collateral, including, without limitation, the Securitization IP, to make such payment to the applicable Concentration Account, the applicable Collection Account or a related Lock-Box Account or another applicable Management Account, as determined by the applicable Co-Issuer or the applicable Manager.

(h) Misdirected Collections. Each Co-Issuer agrees that if any Collections (other than Excluded Amounts) shall be received by such Co-Issuer or any other applicable Securitization Entity in an account other than an Account or in any other manner, such monies, instruments, cash and other proceeds will not be commingled by such Co-Issuer or such other Securitization Entity with any of their other funds or property, if any, but will be held separate and apart therefrom and shall be held in trust by such Co-Issuer or such other Securitization Entity for, and, within one (1) Business Day of the identification of such payment, paid over to, the Trustee, with any necessary endorsement. The Trustee shall withdraw from the applicable Collection Account any monies on deposit therein that the applicable Manager certifies to the Trustee and the Servicer are not Retained Collections and pay such amounts to or at the direction of such Manager. All monies, instruments, cash and other proceeds of the Collateral received by the Trustee pursuant to the Indenture shall be immediately deposited in the applicable Collection Account and shall be applied as provided in this Article V.

 

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(i) Currency Conversion Election Period.

(i) For each of the first ten (10) Weekly Allocation Dates with respect to any Quarterly Fiscal Period (each such period with respect to any Quarterly Fiscal Period, an “Initial Currency Conversion Election Period”) and, except for the eleventh (11th) Weekly Allocation Date with respect to such Quarterly Fiscal Period, for each Weekly Allocation Date following the Initial Currency Conversion Election Period with respect to such Quarterly Fiscal Period (each such period with respect to any Quarterly Fiscal Period, an “Extended Currency Conversion Election Period”) that is not, in each case, a Currency Conversion Opt-Out Excluded Weekly Allocation Date, the Co-Issuers (or their respective Managers, acting in good faith and in accordance with the applicable Managing Standard) may elect, in the manner described in the next paragraph and in their reasonable discretion, for U.S. Collections, including any U.S. Dollar-denominated U.S. Shortfall Payment Amount, and Canadian Collections, including any Canadian Direct Payment Amounts, any Canadian Dollar-denominated Canadian Allocation Amount and any Canadian Dollar-denominated Canadian Shortfall Payment Amount, on deposit in the Collection Accounts to be applied pursuant to the Priority of Payments for the immediately following Weekly Allocation Date either (x) without subjecting any such Collections to an immediate Currency Conversion (as defined below) (each such Weekly Allocation Date, a “Currency Conversion Opt-Out Weekly Allocation Date”) or (y) following the settlement of the requisite portion of such Collections pursuant to a Currency Conversion (each such Weekly Allocation Date, a “Currency Conversion Weekly Allocation Date”). The Co-Issuers may not elect for any Weekly Allocation Date to be a Currency Conversion Opt-Out Weekly Allocation Date if (i) a Cash Trapping Period, Manager Termination Event, Rapid Amortization Event or Event of Default has occurred and is continuing as of the related Weekly Calculation Date immediately preceding such Weekly Allocation Date, (ii) the Class A-1 Notes Renewal Date (after giving effect to any extensions) for one or more Series of Notes has occurred and the related Class A-1 Notes of such Series have not been repaid on or before such related Weekly Calculation Date, (iii) such Weekly Allocation Date is the eleventh (11th) Weekly Allocation Date with respect to the related Quarterly Fiscal Period or (iv) such Weekly Allocation Date is a Currency Conversion Opt-Out Excluded Weekly Allocation Date. Each Weekly Allocation Date for which the election described above is unavailable will automatically be a Currency Conversion Weekly Allocation Date. Except for Canadian Direct Payment Amounts paid to the Canadian Manager or a third party, in each case, pursuant to the Priority of Payments or pursuant to priority (v) or (xix) of the Priority of Payments, all payments (but not all allocations) made pursuant to the Priority of Payments will be denominated in U.S. Dollars.

(ii) On the fourth (4th) Business Day following the last day of each Weekly Collection Period (each a “Weekly Calculation Date”), the Co-Issuers (or their respective Managers, acting in good faith and in accordance with the applicable Managing Standard) will elect for the immediately following Weekly Allocation Date to be a Currency Conversion Opt-Out Weekly Allocation Date or a Currency Conversion Weekly Allocation Date by furnishing, or causing the Managers to furnish (in accordance with the applicable Managing Standard), to the Trustee the FX Exchange Report at or prior to 12:00 p.m. (New York City time) on such Weekly

 

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Calculation Date (each a “Currency Conversion Weekly Calculation Date Election Time”). If the Co-Issuers (or their respective Managers) have not delivered aan FX Exchange Report by the Currency Conversion Weekly Calculation Date Election Time, the following Weekly Allocation Date will be a Currency Conversion Opt-Out Weekly Allocation Date and the Co-Issuers (or their respective Managers, acting in good faith and in accordance with the applicable Managing Standard) will furnish, or cause the Managers to furnish (in accordance with the applicable Managing Standard), to the Trustee the Weekly Manager’s Certificate at or prior to 4:30 p.m. (New York City time) on such Weekly Calculation Date.

(iii) For each Currency Conversion Opt-Out Weekly Allocation Date, at or prior to 10:00 a.m. (New York City time) on the Business Day following the Weekly Calculation Date in respect of such Currency Conversion Opt-Out Weekly Allocation Date (which will be the fifth (5th) Business Day following the last day of the previous Weekly Collection Period) (for each Currency Conversion Opt-Out Weekly Allocation Date, the “Currency Conversion Opt-Out Weekly Allocation Time”), the Trustee will, based solely on the information contained in the Weekly Manager’s Certificate delivered by the Managers for such Currency Conversion Opt-Out Weekly Allocation Date, withdraw the U.S. Collections, including any U.S. Dollar-denominated U.S. Shortfall Payment Amount, and Canadian Collections, including any Canadian Direct Payment Amounts, any Canadian Dollar-denominated Canadian Allocation Amount and any Canadian Dollar-denominated Canadian Shortfall Payment Amount, on deposit in the Collection Accounts (without subjecting any such Collections to an immediate Currency Conversion) in respect of the preceding Weekly Collection Period for allocation or payment in accordance with the Priority of Payments. The Weekly Manager’s Certificate for such Currency Conversion Opt-Out Weekly Allocation Date will specify the payment or allocation pursuant to the Priority of Payments of any Canadian Allocation Amount (without subjecting any such Collections to an immediate Currency Conversion) based on the Deemed Spot Rate as of such Weekly Allocation Date.

(iv) For each Currency Conversion Weekly Allocation Date, following the preceding Weekly Calculation Date, the Trustee will, based solely on the information contained in the FX Exchange Report delivered by the Managers for such Currency Conversion Weekly Allocation Date, withdraw the Canadian Allocation and Shortfall Payment Amount or any U.S. Shortfall Payment Amount on deposit in the Canadian Collection Account for Canadian Collections or the U.S. Collection Account for U.S. Collections, as applicable, transfer such amount to the FX Agent for a Currency Conversion and, following settlement of such Currency Conversion not later than the second (2nd) Business Day following the Weekly Calculation Date in respect of such Currency Conversion Weekly Allocation Date (which will be the sixth (6th) Business Day following the last day of the previous Weekly Collection Period), notify the Co-Issuers (or the Managers on their behalf) of the Spot Rate and deposit (or cause the FX Agent to deposit) in the U.S. Collection Account for the Canadian Allocation Amount and Shortfall Payment Amount or the Canadian Collection Account for the U.S. Shortfall Payment Amount, as applicable, an amount equal to the U.S. Dollar-equivalent of such Canadian Allocation and Shortfall Payment Amount or Canadian Dollar-equivalentDollar equivalent of such U.S. Shortfall Payment Amount, as applicable, converted at the Spot Rate. Following the Currency Conversion for any Currency Conversion Weekly Allocation Date, and at or prior to 10:00 a.m. (New York City time) on the third (3rd) Business Day following the Weekly Calculation Date in

 

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respect of any Currency Conversion Weekly Allocation Date (which will be the seventh (7th) Business Day following the last day of the previous Weekly Collection Period) (for each Currency Conversion Weekly Allocation Date, the “Currency Conversion Weekly Allocation Time” and, together with the Currency Conversion Opt-Out Weekly Allocation Time, each, a “Weekly Allocation Time”), the Trustee will, based solely on the information contained in the Weekly Manager’s Certificate delivered by the Managers for such Currency Conversion Weekly Allocation Date, withdraw the U.S. Collections, U.S. Dollar-denominated Canadian Allocation and Shortfall Payment Amount and Canadian Collections on deposit in the Collection Accounts in respect of the preceding Weekly Collection Period for allocation or payment in accordance with the Priority of Payments.

Section 5.11 Application of Weekly Collections on Weekly Allocation Dates.

(a) On each Weekly Allocation Date, which may be a Currency Conversion Opt-Out Weekly Allocation Date or a Currency Conversion Weekly Allocation Date, following the immediately preceding Weekly Collection Period (unless the Co-Issuers shall have failed to deliver by 4:30 p.m. (New York City time) on the Business Day prior to such Weekly Allocation Date the Weekly Manager’s Certificate relating to such Weekly Allocation Date, in which case the application of Retained Collections relating to such Weekly Allocation Date shall occur on the Business Day immediately following the day on which such Weekly Manager’s Certificate is delivered), the Trustee shall, based solely on the information contained in the Weekly Manager’s Certificate (or, on and after the 2021 Springing Amendments Implementation Date (i) based solely on the information contained in the Weekly Manager’s Certificate or (ii) if delivered in accordance with the terms of the Transaction Documents, based on information contained in the Omitted Payable Sums Certificate to the extent of the information contained therein), withdraw the amount on deposit in the U.S. Collection Accounts (including any U.S. Dollar-denominated Canadian Allocation Amount and any other U.S. Dollar-denominated Canadian Allocation and Shortfall Payment Amount) and the Canadian Collection Accounts (including any Canadian Dollar-denominated U.S. Shortfall Payment Amount), as applicable, as of the applicable Weekly Allocation Time for allocation or payment in the following order of priority (except with respect to priority (ix)) in accordance with the Co-Issuers’ Allocable Shares (the “Priority of Payments”):

(i) first, solely with respect to any funds on deposit in the Collection Accounts on such Weekly Allocation Date consisting of Indemnification Amounts, Release Prices, Asset Disposition Proceeds and Insurance/Condemnation Proceeds, in the following order of priority: (A) from the U.S. Collection Accounts, to reimburse the Trustee and, then, the Servicer, for any unreimbursed Advances and, on and after the 2021 Springing Amendments Implementation Date, then the Back-Up Manager (and accrued interest thereon at the Advance Interest Rate), then (B) from the U.S. Collection Accounts to reimburse the U.S. Manager for any unreimbursed Manager Advances (and accrued interest thereon at the Advance Interest Rate) and from the Canadian Collection Accounts to reimburse the Canadian Manager for any unreimbursed Manager Advances (and accrued interest thereon at the Advance Interest Rate), then (C) from the applicable Collection Account, on and after any Class A-1 Notes Renewal Date (after giving effect to any extensions), to make an allocation to the Senior Notes Principal Payment Account, in the amount necessary to prepay and permanently reduce the commitments under all related Class A-1 Notes on a pro rata basis, then (D) from the applicable Collection Account, to make an allocation to the Senior Notes Principal Payment Account, in the amount necessary to prepay the Outstanding Principal Amount of all Senior Notes of all Series on a pro rata basis (other than the Class A-1 Notes) in alphanumerical order of designation, then (E) from the applicable Collection Account, to make an allocation to the Senior Subordinated Notes Principal Payment Account, in the amount necessary to prepay the Outstanding Principal

 

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Amount of all Senior Subordinated Notes of all Series on a pro rata basis in alphanumerical order of designation, and then (F) from the applicable Collection Account, to make an allocation to the Subordinated Notes Principal Payment Account, in the amount necessary to prepay the Outstanding Principal Amount of all Subordinated Notes of all Series on a pro rata basis in alphanumerical order of designation;

(ii) second, (A) from the U.S. Collection Accounts to reimburse the Trustee and, then, the Servicer, and, on and after the 2021 Springing Amendments Implementation Date, then, the Back-Up Manager, for any unreimbursed Advances (and accrued interest thereon at the Advance Interest Rate), then (B) from the U.S. Collection Accounts, to reimburse the U.S. Manager for any unreimbursed Manager Advances (and accrued interest thereon at the Advance Interest Rate) and from the Canadian Collection Accounts, to reimburse the Canadian Manager for any unreimbursed Manager Advances (and accrued interest thereon at the Advance Interest Rate), and then (C) from the U.S. Collection Accounts, to pay the Servicer all applicable Servicing Fees, Liquidation Fees and Workout Fees for such Weekly Allocation Date and, on and after the 2022 Springing Amendments Implementation Date, together with any previously accrued and unpaid Servicing Fees, Liquidation Fees and Workout Fees;

(iii) third, from the U.S. Collection Accounts, to pay Successor Manager Transition Expenses, if any, to any Successor Manager of the U.S. Manager and from the Canadian Collection Accounts, to pay any Successor Manager Transition Expenses, if any, to any Successor Manager of the Canadian Manager;

(iv) fourth, from the U.S. Collection Accounts, to pay the portion of the Weekly Management Fee allocable to the U.S. Manager and, on and after the 2022 Springing Amendments Implementation Date, together with any previously accrued and unpaid Weekly Management Fee allocable to the U.S. Manager and from the Canadian Collection Accounts, to pay the portion of the Weekly Management Fee allocable to the Canadian Manager and on and after the 2022 Springing Amendments Implementation Date, together with any previously accrued and unpaid Weekly Management Fee allocable to the Canadian Manager;

(v) fifth, (x) prior to the Amendment No. 4 Trigger Date, from the U.S. Collection Accounts, or Canadian Collection Accounts in respect of any Canadian Direct Payment Amount, pro rata, (A) to deposit to the applicable Securitization Operating Expense Account, an amount equal to any previously accrued and unpaid Securitization Operating Expenses together with any Securitization Operating Expenses that are expected to be payable prior to the immediately following Weekly Allocation Date, in an aggregate amount not to exceed the Capped Securitization Operating Expense Amount with respect to the annual period in which such Weekly Allocation Date occurs after giving effect to all deposits previously made to the applicable Securitization Operating Expense Account in such annual period, to be distributed pro rata based on the amount of each type of Securitization Operating Expense payable on such Weekly Allocation Date pursuant to this priority (v), and (B) so long as an Event of Default has occurred and is continuing, to the Trustee for payment of the Post-Default Capped Trustee Expenses Amount for such Weekly Allocation Date, and (y) on and after the Amendment No. 4 Trigger Date, from the U.S. Collection Accounts, or Canadian Collection Accounts in respect of any Canadian Direct Payment Amount, pro rata, to deposit to the applicable Securitization Operating Expense Account, an amount equal to any previously accrued and unpaid Securitization Operating Expenses together with any Securitization Operating Expenses that are expected to be payable prior to the immediately following Weekly Allocation Date, in an aggregate amount not to exceed the Capped Securitization Operating

 

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Expense Amount with respect to the annual period in which such Weekly Allocation Date occurs after giving effect to all deposits previously made to the applicable Securitization Operating Expense Account in such annual period, to be distributed pro rata based on the amount of each type of Securitization Operating Expense payable on such Weekly Allocation Date pursuant to this priority (v), provided, that the deposit to the Securitization Operating Expense Account of an amount equal to all accrued and unpaid fees, expenses and indemnities payable to the Trustee and all indemnities payable to the Servicer will not be subject to the Capped Securitization Operating Expense Amount if an Event of Default has occurred and is continuing;

(vi) sixth, from the applicable Collection Account, to deposit to the applicable Indenture Trust Account, ratably according to the amounts required to be deposited as set forth in subclauses (A) and (B) below, the following amounts until the amounts required to be deposited pursuant to subclauses (A) and (B) below are deposited in full: (A) to allocate to the applicable Senior Notes Interest Payment Account, pro rata by amount due within each such Class, an amount equal to the Senior Notes Accrued Quarterly Interest Amount and (B) to allocate to the applicable Class A-1 Notes Commitment Fees Account, the Class A-1 Notes Accrued Quarterly Commitment Fees Amount;

(vii) seventh, from the U.S. Collection Accounts, to pay to each Class A-1 Administrative Agent pursuant to the related Class A-1 Note Purchase Agreement for payment, pro rata by amount due, of the Capped Class A-1 Notes Administrative Expenses Amount due for such Weekly Allocation Date;

(viii) eighth, from the applicable Collection Account, to allocate to the applicable Senior Subordinated Notes Interest Payment Account, pro rata by amount due within each such Class, an amount equal to the Senior Subordinated Notes Accrued Quarterly Interest Amount;

(ix) ninth, from the U.S. Collection Accounts, to deposit in the applicable Senior Notes Interest Reserve Account of each Co-Issuer and the applicable Senior Subordinated Notes Interest Reserve Account of each Co-Issuer, an amount equal to any Senior Notes Interest Reserve Account Deficit Amount of such Co-Issuer and any Senior Subordinated Notes Interest Reserve Account Deficit Amount of such Co-Issuer for each Class of Senior Notes and Senior Subordinated Notes in alphanumerical order of designation;

(x) tenth, from the applicable Collection Account, to allocate to the Senior Notes Principal Payment Account of each Co-Issuer, an amount equal to the sum of (1) (only to the extent that the related Series Non-Amortization Test, if any, is not satisfied) any Senior Notes Accrued Scheduled Principal Payments Amount, (2) any Senior Notes Scheduled Principal Payment Deficiency Amount, (3) any amounts then known by the Managers that will become due under any Class A-1 Note Purchase Agreement prior to the immediately succeeding Quarterly Payment Date with respect to the cash collateralization of letters of credit issued under such Class A-1 Note Purchase Agreement and (4) in respect of any Series of Class A-1 Notes for which the Class A-1 Notes Renewal Date has not occurred, any outstanding amounts due and payable in respect of the outstanding principal amount of such Series;

(xi) eleventh, from the U.S. Collection Accounts, to pay the portion of the Supplemental Management Fee allocable to the U.S. Manager, together with any previously accrued and unpaid Supplemental Management Fee allocable to the U.S. Manager, and from the Canadian Collection Accounts, to pay the portion of the Supplemental Management Fee allocable to the Canadian Manager, together with any previously accrued and unpaid Supplemental Management Fee allocable to the Canadian Manager;

 

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(xii) twelfth, from the applicable Collection Account, on and after any Class A-1 Notes Renewal Date (after giving effect to any extensions) for one or more Series of Notes, if the related Class A-1 Notes of such Series have not been repaid on or before such date, 100% of the amounts remaining on deposit in the U.S. Collection Accounts to the applicable Senior Notes Principal Payment Accounts to allocate to such Class A-1 Notes of such Series on a pro rata basis (including a commensurate permanent reduction of any remaining related Class A-1 Note Commitments in respect thereof) until the Outstanding Principal Amount of such Class A-1 Notes of such Series will be reduced to zero on the next Quarterly Payment Date after giving effect to all deposits in the applicable Senior Notes Principal Payment Accounts allocable to such Class A-1 Notes;

(xiii) thirteenth, from the U.S. Collection Accounts, so long as no Rapid Amortization Event has occurred and is continuing, and such Weekly Allocation Date occurs during a Cash Trapping Period, to deposit into the U.S. Cash Trap Reserve Account an amount equal to the Issuer’s Cash Trapping Amount, if any, on such Weekly Allocation Date and to deposit into the Canadian Cash Trap Reserve Account an amount equal to the Canadian Co-Issuer’s Cash Trapping Amount, if any, on such Weekly Allocation Date;

(xiv) fourteenth, from the U.S. Collection Accounts, if a Rapid Amortization Event has occurred and is continuing, to allocate (x) first, 100% of the amounts remaining on deposit in the U.S. Collection Accounts to the applicable Senior Notes Principal Payment Accounts to each Class of Senior Notes, first, to the Class A-1 Notes on a pro rata basis (including a commensurate permanent reduction of any remaining Class A-1 Note Commitments) and then, second, to each remaining Class of Senior Notes on a pro rata basis until the Outstanding Principal Amount of each such Class of Senior Notes will be reduced to zero on the next Quarterly Payment Date after giving effect to all deposits in the applicable Senior Notes Principal Payment Accounts, and then (y) second, 100% of the amounts remaining on deposit in the U.S. Collection Accounts to the applicable Senior Subordinated Notes Principal Payment Accounts to each Class of Senior Subordinated Notes until the Outstanding Principal Amount of the Senior Subordinated Notes will be reduced to zero on the next Quarterly Payment Date after giving effect to all deposits in the applicable Senior Subordinated Notes Principal Payment Accounts;

(xv) fifteenth, from the applicable Collection Account, so long as no Rapid Amortization Event has occurred and is continuing, to allocate to the applicable Senior Subordinated Notes Principal Payment Accounts an amount equal to the sum of (1) the Senior Subordinated Notes Accrued Scheduled Principal Payments Amount, if any, and (2) the Senior Subordinated Notes Scheduled Principal Payment Deficiency Amount, if any;

(xvi) sixteenth, from the applicable Collection Account, to allocate to the applicable Subordinated Notes Interest Payment Accounts for each Class of Subordinated Notes, pro rata by amount due within each such Class, an amount equal to the Subordinated Notes Accrued Quarterly Interest Amount;

(xvii) seventeenth, from the applicable Collection Account, so long as no Rapid Amortization Event has occurred and is continuing, to allocate to the applicable Subordinated Notes Principal Payment Accounts an amount equal to the sum of (1) the Subordinated Notes Accrued Scheduled Principal Payments Amount, if any, and (2) the Subordinated Notes Scheduled Principal Payment Deficiency Amount, if any;

 

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(xviii) eighteenth, from the U.S. Collection Accounts, if a Rapid Amortization Event has occurred and is continuing, to allocate 100% of the amounts remaining on deposit in the U.S. Collection Accounts to the applicable Subordinated Notes Principal Payment Accounts to each Class of Subordinated Notes until the Outstanding Principal Amount of the Subordinated Notes will be reduced to zero on the next Quarterly Payment Date after giving effect to all deposits in the applicable Subordinated Notes Principal Payment Accounts;

(xix) nineteenth, from the U.S. Collection Accounts, or Canadian Collection Accounts in respect of any Canadian Direct Payment Amount, to deposit to the applicable Securitization Operating Expense Account, an amount equal to any accrued and unpaid Securitization Operating Expenses (together with any Securitization Operating Expenses that are expected to be payable prior to the immediately following Weekly Allocation Date) in excess of the Capped Securitization Operating Expense Amount after giving effect to priority (v) above;

(xx) twentieth, from the U.S. Collection Accounts, to each Class A-1 Administrative Agent pursuant to the related Class A-1 Note Purchase Agreement for payment, pro rata by amount due, of the Excess Class A-1 Notes Administrative Expenses Amounts due for such Weekly Allocation Date;

(xxi) twenty-first, from the U.S. Collection Accounts, to each Class A-1 Administrative Agent pursuant to the related Class A-1 Note Purchase Agreement for payment, pro rata by amount due, any Class A-1 Notes Other Amounts due for such Weekly Allocation Date;

(xxii) twenty-second, from the U.S. Collection Accounts, to allocate to the applicable Senior Notes Post-ARD Additional Interest Accounts, any Senior Notes Accrued Quarterly Post-ARD Additional Interest Amount for the Senior Notes for such Weekly Allocation Date;

(xxiii) twenty-third, from the U.S. Collection Accounts, to allocate to the applicable Senior Subordinated Notes Post-ARD Additional Interest Accounts, any Senior Subordinated Notes Accrued Quarterly Post-ARD Additional Interest Amount for the Senior Subordinated Notes for such Weekly Allocation Date;

(xxiv) twenty-fourth, from the U.S. Collection Accounts, to allocate to the applicable Subordinated Notes Post-ARD Additional Interest Accounts, any Subordinated Notes Accrued Quarterly Post-ARD Additional Interest Amount for the Subordinated Notes for such Weekly Allocation Date;

(xxv) twenty-fifth, from the U.S. Collection Accounts, to allocate to the applicable Principal Payment Accounts an amount equal to any unpaid premiums and make-whole prepayment consideration;

(xxvi) twenty-sixth, from the Canadian Collection Accounts, to deposit to the Canadian Product Sourcing Lease Expense Account and the Canadian Claims Management Lease Expense Account, respectively, an amount equal to any previously accrued and unpaid rent, tenancy costs or other similar costs and expenses of the Canadian Product Sourcing Business and the Canadian Claims Management Business, together with any such amounts that are expected to be payable prior to the last day of the immediately following fiscal month;

 

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(xxvii) twenty seventh, in the case of available funds with respect to the U.S. Collection Accounts, to the Canadian Residual Account the amount of any Shortfall Payments (and any accrued interest thereon specified in the Allocation Agreement) made by the Canadian Co-Issuer on any prior Weekly Allocation Date or Quarterly Payment Date or any other date and not previously reimbursed, and in the case of available funds with respect to the Canadian Collection Accounts, to the Issuer the amount of any Shortfall Payments (and any accrued interest thereon specified in the Allocation Agreement) made by the Issuer on any prior Weekly Allocation Date or Quarterly Payment Date or any other date and not previously reimbursed;

(xxviii) twenty eighth, from the Canadian Collection Accounts, to pay the Excess Canadian Weekly Management Fee allocable to the Canadian Manager; and

(xxix) twenty-ninth, from the U.S. Collection Accounts, to pay the U.S. Residual Amount at the direction of the Issuer, and from the Canadian Collection Accounts, to pay the Canadian Residual Amount to the Canadian Residual Account.

(b) If the Managers elect for the first Weekly Collection Period following the Series 2020-1 Closing Date with respect to any Canadian Collections to end at 11:59 p.m. (New York City time) on the Saturday of the second full weekly fiscal period following the Series 2020-1 Closing Date in the manner described in Section 4.1(a), on each Weekly Allocation Date that occurs prior to the end of such first Weekly Collection Period following the Series 2020-1 Closing Date, U.S. Collections will be applied pursuant to the Priority of Payments to make allocations or payments pursuant to priorities (i)-(iii) and priority (v) of the Priority of Payments and U.S. Collections for such Weekly Collection Period will otherwise remain in the U.S. Collection Accounts.

(c) Pursuant to the Allocation Agreement, each Co-Issuer will be obligated to make Shortfall Payments on behalf of the other Co-Issuer, as applicable. For the avoidance of doubt, all Collections (other than Excluded Amounts) constitute Collateral for the Notes and in no event will any amounts be released to any Securitization Entity from any Collection Account on any Payment Date, except as and only to the extent specifically provided for in priorities (v), (xix), (xxvi) and (xxvii), if any payments specified in priorities (i) through (xxviii) of the Priority of Payments set forth above remain unpaid on such Payment Date.

(d) Pursuant to Section 5.10(a)(ii), the Canadian Co-Issuer shall receive and hold in the Canadian Concentration Account any amounts owed to the Canadian Securitization Entities as agent on their respective behalf, provided that the Canadian Co-Issuer may enter into transactions with the other Canadian Securitization Entities to the extent permitted by Section 8.13, Section 8.18 and Section 8.21 (“Inter-Canada Transactions”) which may result in the Canadian Co-Issuer holding such amounts on its own behalf. Pursuant to Section 5.10(b)(ii) and Section 5.11, to the extent any payments made pursuant to the Priority of Payments are obligations of any of the Canadian SPV Franchising Entity LPs, Driven Canada Product Sourcing or Driven Canada Claims Management, such payments shall be made by the Canadian Co-Issuer on behalf of the applicable obligor and with funds of such obligor to the extent of available funds (and, thereafter, with any other Retained Collections in accordance with the Priority of Payments). To the extent funds of the Canadian Securitization Entities (other than the Canadian Co-Issuer) are held in an Indenture Trust Account of the Canadian Co-Issuer (or the Issuer, as applicable), the Canadian Co-Issuer (or the Issuer) shall hold such funds as agent for such Canadian Securitization Entities until (i) such funds are paid to a third party or the Canadian Manager, other than on behalf of the Canadian Securitization Entities as described in the preceding sentence, at which time such funds will be deemed to have been paid by the applicable Canadian Securitization Entity to the Canadian Co-Issuer in accordance with the Charter

 

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Documents of such Canadian Securitization Entity (and, if applicable, loaned to the Issuer by the Canadian Co-Issuer in accordance with this Indenture and the Allocation Agreement); (ii) the ownership of such funds by the applicable Canadian Securitization Entity is transferred to the Canadian Co-Issuer by virtue of an Inter-Canada Transaction (in which case, if held by the Issuer, such funds will be held as agent for the Canadian Co-Issuer); or (iii) such Canadian Securitization Entity is reimbursed in accordance with this Indenture.

(e) On and after the 2022 Springing Amendments Implementation Date, to the extent any amounts become payable by the Trustee to an account bank or securities intermediary under an Account Control Agreement with respect to any Management Accounts, amounts held in the Collection Account can be withdrawn and paid to such account bank or securities intermediary so long as the Trustee provides notice of such withdrawal to the Manager (with a copy to the Back-Up Manager and the Servicer).

Section 5.12 Quarterly Payment Date Applications.

(a) Senior Notes Interest Payment Accounts. On each Quarterly Calculation Date, each Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing on the following Quarterly Payment Date, after giving effect to any allocations set forth in the Priority of Payments on such date, (i) to withdraw the funds allocated to its respective U.S. Dollar-denominated Senior Notes Interest Payment Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period (or, to the extent necessary to cover its Allocable Share of any Class A-1 Notes Interest Adjustment Amount, the then-current Quarterly Fiscal Period) to be paid to the Senior Notes, up to its Allocable Share of the accrued and unpaid Senior Notes Quarterly Interest Amount, sequentially in order of alphanumerical designation and pro rata among each Class of Senior Notes of the same alphanumerical designation based upon the amount of the Senior Notes Quarterly Interest Amount payable with respect to each such Class, and deposit such funds into the applicable Series Distribution Accounts and (ii) if the amount of funds allocated to such Co-Issuer’s respective U.S. Dollar-denominated Senior Notes Interest Payment Account referred to in the foregoing sub-clause (i) is less than its Allocable Share of the accrued and unpaid Senior Notes Quarterly Interest Amount for the Interest Accrual Period with respect to each Class of Senior Notes ending most recently prior to such Quarterly Payment Date, to withdraw an amount equal to such insufficiency (with respect to each Co-Issuer, a “Senior Interest Shortfall”) (to the extent of funds available and pro rata with any Commitment Fees Shortfall of such Co-Issuer), from the following Accounts of such Co-Issuer: first, the Subordinated Notes Post-ARD Additional Interest Account, second, the Senior Subordinated Notes Post-ARD Additional Interest Account, third, the Senior Notes Post-ARD Additional Interest Account, fourth, the Subordinated Notes Principal Payment Account, fifth, the Subordinated Notes Interest Payment Account, sixth, the Senior Subordinated Notes Principal Payment Account, seventh, the Cash Trap Reserve Account, eighth, the Senior Subordinated Notes Interest Payment Account and ninth the Senior Notes Principal Payment Account, to be paid to the Senior Notes, up to the accrued and unpaid Senior Notes Quarterly Interest Amount of such Co-Issuer, sequentially in order of alphanumerical designation and pro rata among each Class of Senior Notes of the same alphanumerical designation based upon the amount of the Senior Notes Quarterly Interest Amount payable with respect to each such Class, and deposit such funds into the applicable Senior Notes Interest Payment Account for further deposit to the applicable Series Distribution Account. On each Quarterly Payment Date, the funds on deposit in each Senior Notes Interest Reserve Account (or, if the funds on deposit in such Senior Notes Interest Reserve Account are insufficient for such purpose, funds available to be drawn under any Interest Reserve Letter of Credit relating to the Senior Notes) shall be applied by the Trustee at the written instruction of the Managers (each acting on behalf of the applicable Co-Issuer) to pay in accordance with their respective Allocable Share, pro rata, any accrued and unpaid Senior Notes Quarterly Interest Amount of any Co-Issuer on the Senior Notes Outstanding and any accrued and unpaid Class A-1 Notes Commitment Fees of any Co-Issuer to the extent that amounts deposited into the applicable Series Distribution Account in accordance with the prior sentence are insufficient for such purposes. If on any

 

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Quarterly Calculation Date, the funds on deposit in any Co-Issuer’s respective U.S. Dollar-denominated Senior Notes Interest Payment Account in accordance with the first sentence of this subsection and the amounts deposited into the applicable Series Distribution Account on behalf of such Co-Issuer in accordance with the prior sentence are insufficient to pay such Co-Issuer’s Senior Interest Shortfall, then the Co-Issuers (or their Managers on their respective behalf) will instruct the Trustee in writing (to the extent of funds available and pro rata with any Commitment Fees Shortfall of such Co-Issuer) to withdraw an amount equal to any remaining such deficiency from the other Co-Issuer’s U.S. Dollar-denominated Accounts in the order described in the first sentence of this subsection and following the application of such sentence to such Accounts of the other Co-Issuer mutatis mutandis.

(b) Senior Notes Interest Shortfall Amount. On each Quarterly Calculation Date, the Co-Issuers (or the Managers on their behalf) shall determine the excess, if any (the “Senior Notes Interest Shortfall Amount”), of (i) the accrued and unpaid Senior Notes Quarterly Interest Amount for the Interest Accrual Period with respect to each Class of Senior Notes ending most recently prior to the next succeeding Quarterly Payment Date over (ii) the amount that will be available to make payments of interest on the Senior Notes in accordance with Section 5.12(a) on such Quarterly Payment Date. If, after giving effect to all Debt Service Advances made in accordance with Section 5.12(c) on such Quarterly Payment Date, the Senior Notes Interest Shortfall Amount with respect to such Quarterly Payment Date remains greater than zero, the payment of the Senior Notes Aggregate Quarterly Interest as reduced by such Senior Notes Interest Shortfall Amount to be distributed on such Quarterly Payment Date to the Senior Notes shall be paid to the Senior Notes, sequentially in order of alphanumerical designation and pro rata among each Class of Senior Notes of the same alphanumerical designation based upon the amount of the Senior Notes Quarterly Interest Amount payable with respect to each such Class; provided that such reduction shall not be deemed to be a waiver of any default caused by the existence of such Senior Notes Interest Shortfall Amount. An additional amount of interest shall accrue on the Senior Notes Interest Shortfall Amount for each subsequent Interest Accrual Period at the applicable Note Rate until the Senior Notes Interest Shortfall Amount is paid in full.

(c) Debt Service Advances. If the Senior Notes Interest Shortfall Amount as determined on any Quarterly Calculation Date pursuant to Section 5.12(b) is greater than zero, in accordance with the terms and conditions of the Servicing Agreement, by 3:00 p.m. (New York City time) on the Business Day preceding such Quarterly Payment Date, the Servicer shall make a Debt Service Advance in such amount unless the Servicer notifies the Co-Issuers, the Managers, the Back-Up Manager and the Trustee by such time that it has, reasonably and in good faith, determined such Debt Service Advance (and interest thereon) is a Nonrecoverable Advance or, on or after the 2021 Springing Amendments Implementation Date, the Managers elect to eliminate the obligation of the Servicer and/or the Trustee to provide Advances upon satisfaction of the Rating Agency Condition or an Advance Suspension Period is then in effect. If the Servicer fails to make such Debt Service Advance (unless the Servicer has, reasonably and in good faith, determined that such Debt Service Advance (and interest thereon) would be a Nonrecoverable Advance), pursuant to Section 10.1(l), the Trustee shall make the Debt Service Advance unless it determines that such Debt Service Advance (and interest thereon) is a Nonrecoverable Advance or, on or after the 2021 Springing Amendments Implementation Date, the Managers elect to eliminate the obligation of the Servicer and/or the Trustee to provide Advances upon satisfaction of the Rating Agency Condition or an Advance Suspension Period is then in effect. In determining whether any Debt Service Advance (and interest thereon) is a Nonrecoverable Advance, the Trustee may conclusively rely on the determination of the Servicer. All Debt Service Advances shall be deposited into the Senior Notes Interest Payment Account of the applicable Co-Issuer.

(d) Class A-1 Notes Commitment Fees Accounts. On each Quarterly Calculation Date, each Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing on the following Quarterly Payment Date, after giving effect to any allocations set forth in the Priority of Payments on such date, (i) to withdraw the funds allocated to its respective U.S. Dollar-denominated Class A-1 Notes

 

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Commitment Fees Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period to be paid to the applicable Class A-1 Notes, up to its Allocable Share of the Class A-1 Notes Commitment Fees Amount accrued and unpaid with respect to the applicable Class A-1 Notes, pro rata among each Series of Class A-1 Notes based upon such Allocable Share of the Class A-1 Notes Commitment Fees Amount payable with respect to each such Series, and deposit such funds into the applicable Series Distribution Account and (ii) if the amount of funds allocated to such Co-Issuer’s respective U.S. Dollar-denominated Class A-1 Notes Commitment Fees Account referred to in the foregoing sub-clause (i) with respect to the immediately preceding Quarterly Fiscal Period is less than its Allocable Share of the accrued and unpaid Class A-1 Notes Commitment Fees Amount for the Interest Accrual Period ending most recently prior to such Quarterly Payment Date, to withdraw an amount equal to such insufficiency (with respect to each Co-Issuer, a “Commitment Fees Shortfall”) (to the extent of funds available and pro rata with any Senior Interest Shortfall of such Co-Issuer) from the following U.S. Dollar-denominated Accounts of such Co-Issuer: first, the Subordinated Notes Post-ARD Additional Interest Account, second, the Senior Subordinated Notes Post-ARD Additional Interest Account, third, the Senior Notes Post-ARD Additional Interest Account, fourth, the Subordinated Notes Principal Payment Account, fifth, the Subordinated Notes Interest Payment Account, sixth, the Senior Subordinated Notes Principal Payment Account, seventh, the Cash Trap Reserve Account, eighth, the Senior Subordinated Notes Interest Payment Account, ninth the Senior Notes Principal Payment Account, and tenth the Senior Notes Interest Payment Account, to be paid to the Class A-1 Notes, up to the accrued and unpaid Class A-1 Notes Commitment Fees Amount of such Co-Issuer, pro rata among each Series of Class A-1 Notes based upon the Class A-1 Notes Commitment Fees Amount of such Co-Issuer payable with respect to each such Series, and deposit such funds into the applicable Series Distribution Account. On each Quarterly Payment Date, the funds on deposit in such Co-Issuer’s Senior Notes Interest Reserve Account (or, if the funds on deposit in such Senior Notes Interest Reserve Account are insufficient for such purpose, funds available to be drawn under any Interest Reserve Letter of Credit relating to the Senior Notes) shall be applied by the Trustee at the written instruction of the Managers (each acting on behalf of the applicable Co-Issuer) to pay in accordance with their respective Allocable Share, pro rata, any accrued and unpaid Senior Notes Quarterly Interest Amount of any Co-Issuer on the Senior Notes Outstanding and any accrued and unpaid Class A-1 Notes Commitment Fees of any Co-Issuer to the extent that amounts deposited into the applicable Series Distribution Account in accordance with the prior sentence are insufficient for such purposes. If on any Quarterly Calculation Date, the funds on deposit in any Co-Issuer’s U.S. Dollar-denominated Class A-1 Notes Commitment Fees Account in accordance with the first sentence of this subsection and the amounts deposited into the applicable Series Distribution Account on behalf of such Co-Issuer in accordance with the prior sentence are insufficient to pay such Co-Issuer’s Commitment Fees Shortfall, then the Co-Issuers (or their Managers on their respective behalf) will instruct the Trustee in writing (to the extent of funds available and pro rata with any Senior Interest Shortfall of such Co-Issuer) to withdraw an amount equal to any remaining such deficiency from the other Co-Issuer’s U.S. Dollar-denominated Accounts in the order described in the first sentence of this subsection and following the application of such sentence to such Accounts of the other Co-Issuer, mutatis mutandis.

(e) Class A-1 Notes Commitment Fees Shortfall Amount. On each Quarterly Calculation Date, the Co-Issuers (or the Managers on their behalf) shall determine the excess, if any (the “Class A-1 Notes Commitment Fees Shortfall Amount”), of (i) the accrued and unpaid Class A-1 Notes Commitment Fees Amount for the Interest Accrual Period ending most recently prior to the next succeeding Quarterly Payment Date over (ii) the amount that will be available to make payments on the Class A-1 Notes in accordance with Section 5.12(d) on such Quarterly Payment Date. If the Class A-1 Notes Commitment Fees Shortfall Amount with respect to any Quarterly Payment Date is greater than zero, the payment of the accrued and unpaid Class A-1 Notes Commitment Fees Amount as reduced by such Class A-1 Notes Commitment Fees Shortfall Amount to be distributed on such Quarterly Payment Date to the Class A-1 Notes shall be paid to the Class A-1 Notes, pro rata among each Class of Class A-1 Notes based upon the amount of Class A-1 Notes Commitment Fees Amount payable with respect to each such Class;

 

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provided that such reduction shall not be deemed to be a waiver of any default caused by the existence of such Class A-1 Notes Commitment Fees Shortfall Amount. An additional amount of interest shall accrue on the Class A-1 Notes Commitment Fees Shortfall Amount for each subsequent Interest Accrual Period at the applicable Note Rate until the Class A-1 Notes Commitment Fees Shortfall Amount is paid in full.

(f) Senior Subordinated Notes Interest Payment Accounts. On each Quarterly Calculation Date, each Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing on the following Quarterly Payment Date, after giving effect to any allocations set forth in the Priority of Payments on such date, (i) to withdraw the funds allocated to its respective U.S. Dollar-denominated Senior Subordinated Notes Interest Payment Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period to be paid to the Senior Subordinated Notes, up to such Co-Issuer’s Allocable Share of the accrued and unpaid Senior Subordinated Notes Quarterly Interest Amount, sequentially in order of alphanumerical designation and pro rata among each Class of Senior Subordinated Notes of the same alphanumerical designation based upon the amount of the Senior Subordinated Notes Quarterly Interest Amount payable with respect to each such Class, and deposit such funds into the applicable Series Distribution Account and (ii) if the amount of funds allocated to such Co-Issuer’s respective U.S. Dollar-denominated Senior Subordinated Notes Interest Payment Account referred to in the foregoing sub-clause (i) is less than its Allocable Share of the accrued and unpaid Senior Subordinated Notes Quarterly Interest Amount for the Interest Accrual Period with respect to each Class of Senior Subordinated Notes ending most recently prior to such Quarterly Payment Date, to withdraw an amount equal to such insufficiency (to the extent of funds available, after giving effect to any payments of higher priority to be made as of such Quarterly Payment Date from any Collection Account Administrative Account pursuant to Sections 5.12(a)(ii) and 5.12(d)(ii)) from the following U.S. Dollar-denominated Accounts of such Co-Issuer: first, the Subordinated Notes Post-ARD Additional Interest Account, second, the Senior Subordinated Notes Post-ARD Additional Interest Account, third, the Senior Notes Post-ARD Additional Interest Account, fourth, the Subordinated Notes Principal Payment Account, fifth, the Subordinated Notes Interest Payment Account, sixth, the Senior Subordinated Notes Principal Payment Account, and seventh, the Senior Notes Principal Payment Account, to be paid to the Senior Subordinated Notes, up to the accrued and unpaid Senior Subordinated Notes Quarterly Interest Amount of such Co-Issuer, sequentially in order of alphanumerical designation and pro rata among each Class of Senior Subordinated Notes of the same alphanumerical designation based upon the amount of the Senior Subordinated Notes Quarterly Interest Amount payable with respect to each such Class, and deposit such funds into the applicable Senior Subordinated Notes Interest Payment Account for further deposit to the applicable Series Distribution Account. On each Quarterly Payment Date, after the application of funds under the Priority of Payments, the funds on deposit in such Co-Issuer’s Senior Subordinated Notes Interest Reserve Account (or, if the funds on deposit in such Senior Subordinated Notes Interest Reserve Account are insufficient for such purpose, funds available to be drawn under any Interest Reserve Letter of Credit relating to the Senior Subordinated Notes) shall be applied by the Trustee at the written instruction of the Managers (each acting on behalf of the applicable Co-Issuer) to pay in accordance with their respective Allocable Share, pro rata, any accrued and unpaid Senior Subordinated Notes Quarterly Interest Amount of any Co-Issuer on the Senior Subordinated Notes Outstanding to the extent that amounts deposited into the applicable Series Distribution Account in accordance with the prior sentence are insufficient for such purposes. If on any Quarterly Calculation Date, the funds on deposit in any Co-Issuer’s U.S. Dollar-denominated Senior Subordinated Notes Interest Payment Account in accordance with the first sentence of this subsection and the amounts deposited into the applicable Series Distribution Account on behalf of such Co-Issuer in accordance with the prior sentence are insufficient to pay such Co-Issuer’s Allocable Share of the accrued and unpaid Senior Subordinated Notes Quarterly Interest Amount, then the Co-Issuers (or their Managers on their respective behalf) will instruct the Trustee in writing (to the extent of funds available) to withdraw an amount equal to any remaining such deficiency from the other Co-Issuer’s U.S. Dollar-denominated Accounts in the order described in the first sentence of this subsection and following the application of such sentence to such Accounts of the other Co-Issuer, mutatis mutandis.

 

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(g) Senior Subordinated Notes Interest Shortfall Amount. On each Quarterly Calculation Date, the Co-Issuers (or the Manager on their behalf) shall determine the excess, if any (the “Senior Subordinated Notes Interest Shortfall Amount”), of (i) the accrued and unpaid Senior Subordinated Notes Quarterly Interest Amount for the Interest Accrual Period with respect to each Class of Senior Subordinated Notes ending most recently prior to the next succeeding Quarterly Payment Date over (ii) the amount that will be available to make payments of interest on the Senior Subordinated Notes in accordance with Section 5.12(f) on such Quarterly Payment Date. If the Senior Subordinated Notes Interest Shortfall Amount with respect to such Quarterly Payment Date is greater than zero, the payment of the Senior Subordinated Notes Quarterly Interest Amount as reduced by such Senior Subordinated Notes Interest Shortfall Amount to be distributed on such Quarterly Payment Date to the Senior Subordinated Notes shall be paid to the Senior Subordinated Notes, sequentially in order of alphanumerical designation and pro rata among each Class of Senior Subordinated Notes of the same alphanumerical designation based upon the amount of the Senior Subordinated Notes Quarterly Interest Amount payable with respect to each such Class; provided that such reduction shall not be deemed to be a waiver of any default caused by the existence of such Senior Subordinated Notes Interest Shortfall Amount. An additional amount of interest shall accrue on the Senior Subordinated Notes Interest Shortfall Amount for each subsequent Interest Accrual Period at the applicable Note Rate until the Senior Subordinated Notes Interest Shortfall Amount is paid in full.

(h) Senior Notes Principal Payment Accounts.

(i) On each Quarterly Calculation Date, each Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to withdraw on the following Quarterly Payment Date, after giving effect to any allocations set forth in the Priority of Payments on such date, the funds allocated to its respective U.S. Dollar-denominated Senior Notes Principal Payment Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period, to be paid in the following order: (A) to each applicable Class of Senior Notes up to such Co-Issuer’s Allocable Share of the aggregate amount of Indemnification Amounts, Release Prices, Asset Disposition Proceeds and Insurance/Condemnation Proceeds in the order of priority set forth in priority (i) of the Priority of Payments and (B) to each applicable Class of Senior Notes in the amounts distributed to such Co-Issuer’s respective Senior Notes Principal Payment Account pursuant to priorities (x), (xii), (xiv) and (xxv) of the Priority of Payments owed to each such Class of Senior Notes (excluding any Principal Release Amounts), in the order of priority set forth in the Priority of Payments with respect to such priorities (x), (xii), (xiv) and (xxv), and deposit such funds into the applicable Series Distribution Account.

(ii) If a Rapid Amortization Event has occurred and is continuing or will occur on the following Quarterly Payment Date, the Co-Issuers (or the Managers on their behalf) shall instruct the Trustee in writing to withdraw on such Quarterly Payment Date, after giving effect to any allocations set forth in the Priority of Payments on such date, the amounts on deposit in the applicable Cash Trap Reserve Account (after giving effect to any payments to be made as of such Quarterly Payment Date from any Cash Trap Reserve Account pursuant to Sections 5.12(a)(ii), Section 5.12(d)(ii) and Section 5.12(f)(ii)), if any, and deposit such funds into the applicable Series Distribution Account, to be paid to each applicable Class of Senior Notes up to the Outstanding Principal Amount of all Senior Notes (after giving effect to the application of the amounts on deposit in the Senior Notes Principal Payment Accounts referred to in the foregoing clause (i)), sequentially in order of alphanumerical designation and pro rata among each Class of Senior Notes of the same alphanumerical designation based upon the Outstanding Principal Amount of the Senior Notes of such Class. Any amount withdrawn from a Cash Trap Reserve Account of a Co-Issuer in accordance with this clause (ii) and applied to reduce the other Co-Issuer’s Allocable Share of the Outstanding Principal Amount of all Senior Notes shall be deemed to be loaned to such other Co-Issuer with interest at a rate determined by the lending Co-Issuer’s Manager in accordance with its Managing Standard.

 

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(iii) If the aggregate amount of funds allocated to each Co-Issuer’s Senior Notes Principal Payment Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period is less than such Co-Issuer’s Allocable Share of the Senior Notes Scheduled Principal Payments Amount owed to each applicable Class of Senior Notes on such Quarterly Payment Date and/or the amount of funds allocated to such Co-Issuer’s Senior Notes Principal Payment Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period is less than such Co-Issuer’s Allocable Share of Indemnification Amounts, Release Prices, Asset Disposition Proceeds and Insurance/Condemnation Proceeds due to be applied as a mandatory prepayment on such Quarterly Payment Date with respect to each applicable Class of Senior Notes, such Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to withdraw an amount equal to such insufficiency (with respect to each Co-Issuer, a “Senior Principal Shortfall”) to the extent of funds available, after giving effect to any payments of higher priority to be made as of such Quarterly Payment Date from any Collection Account Administrative Account and the Cash Trap Reserve Accounts pursuant to Sections 5.12(a)(ii), 5.12(d)(ii) and 5.12(f)(ii)) from the following U.S. Dollar-denominated Accounts of such Co-Issuer: first, the Subordinated Notes Post-ARD Additional Interest Account, second, the Senior Subordinated Notes Post-ARD Additional Interest Account, third, the Senior Notes Post-ARD Additional Interest Account, fourth, the Subordinated Notes Principal Payment Account, fifth, the Subordinated Notes Interest Payment Account, sixth, the Senior Subordinated Notes Principal Payment Account, and seventh, the Cash Trap Reserve Account, and deposit such funds into the applicable Series Distribution Accounts, to be paid to each applicable Class of Senior Notes up to such Co-Issuer’s Allocable Share of the amount of unpaid Senior Notes Scheduled Principal Payments Amounts, Indemnification Amounts, Release Prices, Asset Disposition Proceeds and/or Insurance/Condemnation Proceeds, as the case may be, sequentially in order of alphanumerical designation and pro rata among each Class of Senior Notes of the same alphanumerical designation based upon the Outstanding Principal Amount of the Senior Notes of such Class. If on any Quarterly Calculation Date, the funds on deposit in any Co-Issuer’s U.S. Dollar-denominated Senior Notes Principal Payment Account in accordance with the previous sentence are insufficient to pay such Co-Issuer’s Senior Principal Shortfall, then the Co-Issuers (or their Managers on their respective behalf) will instruct the Trustee in writing (to the extent of funds available) to withdraw an amount equal to any remaining such deficiency from the other Co-Issuer’s U.S. Dollar-denominated Accounts in the order described in the previous sentence and following the application of such sentence to the other Co-Issuer’s such Accounts, mutatis mutandis.

(iv) If any payment of principal of any Class A-1 Notes of any Series of Notes pursuant to clause (i) or (ii) above requires the deposit of funds (the “Cash Collateral”) with the applicable L/C Provider to serve as collateral and act as security to guarantee any obligations of either Co-Issuer relating to any related letters of credit (the “Collateralized Letters of Credit”), then upon the expiration of the Collateralized Letters of Credit (x) so long as any Series of Notes remain Outstanding, the Cash Collateral shall be deposited into the applicable Collection Account by the applicable Co-Issuer to be applied in accordance with the Priority of Payments and (y) if no Series of Notes remain Outstanding, the Cash Collateral shall be returned to such Co-Issuer that deposited such Cash Collateral.

 

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(v) Notwithstanding any other provision hereof, each of the Co-Issuers (or the applicable Manager on its behalf) may elect on any Weekly Allocation Date that either (i) the U.S. Residual Amount or Canadian Residual Amount, as applicable, for such Weekly Allocation Date or (ii) amounts in respect of an equity contribution to such Co-Issuer not constituting a Retained Collections Contribution may be deposited directly into the applicable Senior Notes Principal Payment Account for the purpose of making an Optional Scheduled Principal Payment on the next Quarterly Payment Date, and such Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to so deposit and withdraw such amount.

(i) Senior Subordinated Notes Principal Payment Accounts.

(i) On each Quarterly Calculation Date, each Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to withdraw on the following Quarterly Payment Date, after giving effect to any allocations set forth in the Priority of Payments on such date, the funds allocated to its respective U.S. Dollar-denominated Senior Subordinated Notes Principal Payment Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period, to be paid in the following order: (A) to each applicable Class of Senior Subordinated Notes up to such Co-Issuer’s Allocable Share of the aggregate amount of Indemnification Amounts, Release Prices, Asset Disposition Proceeds and Insurance/Condemnation Proceeds in the order of priority set forth in priority (i) of the Priority of Payments and (B) to each applicable Class of Senior Subordinated Notes in the amounts distributed to such Co-Issuer’s respective Senior Subordinated Notes Principal Payment Account pursuant to priorities (xiv), (xv) and (xxv) of the Priority of Payments owed to each such Class of Senior Subordinated Notes, in the order of priority set forth in the Priority of Payments with respect to such priorities (xiv), (xv), and (xxv), and deposit such funds into the applicable Series Distribution Account.

(ii) If the aggregate amount of funds allocated to each Co-Issuer’s Senior Subordinated Notes Principal Payment Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period is less than such Co-Issuer’s Allocable Share of the Senior Subordinated Notes Scheduled Principal Payments Amount owed to each applicable Class of Senior Subordinated Notes on such Quarterly Payment Date and/or the amount of funds allocated to such Co-Issuer’s U.S. Dollar-denominated Senior Subordinated Notes Principal Payment Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period is less than such Co-Issuer’s Allocable Share of Indemnification Amounts, Release Prices, Asset Disposition Proceeds and Insurance/Condemnation Proceeds due to be applied as a mandatory prepayment on such Quarterly Payment Date with respect to each applicable Class of Senior Subordinated Notes, such Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to withdraw an amount equal to any such insufficiency (with respect to each Co-Issuer, a “Senior Subordinated Principal Shortfall”) (to the extent of funds available, after giving effect to any payments of higher priority to be made as of such Quarterly Payment Date from any Collection Account Administrative Account pursuant to Sections 5.12(a)(ii), 5.12(d)(ii), 5.12(f)(ii) and 5.12(h)(iii)) from the following U.S. Dollar-denominated Accounts of such Co-Issuer: first, the Subordinated Notes Post-ARD Additional Interest Account, second, the Senior Subordinated Notes Post-ARD Additional Interest Account, third, the Senior Notes Post-ARD Additional Interest Account, fourth, the Subordinated Notes Principal Payment Account, and fifth, the Subordinated Notes Interest Payment Account, and deposit such funds into the applicable Series Distribution Accounts, to be paid to each applicable Class of Senior Subordinated Notes up to such Co-Issuer’s Allocable Share of the amount of unpaid Senior Subordinated Notes Scheduled Principal Payments Amounts, Indemnification Amounts, Release Prices, Asset Disposition Proceeds and/or Insurance/Condemnation Proceeds, as the case may be,

 

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sequentially in order of alphanumerical designation and pro rata among each Class of Senior Subordinated Notes of the same alphanumerical designation based upon the Outstanding Principal Amount of the Senior Subordinated Notes of such Class. If on any Quarterly Calculation Date, the funds on deposit in any Co-Issuer’s U.S. Dollar-denominated Senior Subordinated Notes Principal Payment Account in accordance with the previous sentence are insufficient to pay such Co-Issuer’s Senior Subordinated Principal Shortfall, then the Co-Issuers (or their Managers on their respective behalf) will instruct the Trustee in writing (to the extent of funds available) to withdraw an amount equal to any remaining deficiency from the other Co-Issuer’s U.S. Dollar-denominated Accounts in the order described in the previous sentence and following the application of such sentence to the other Co-Issuer’s such Accounts, mutatis mutandis.

(j) Subordinated Notes Interest Payment Account. On each Quarterly Calculation Date, each Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing on the following Quarterly Payment Date, after giving effect to any allocations set forth in the Priority of Payments on such date, (i) to withdraw the funds allocated to its respective U.S. Dollar-denominated Subordinated Notes Interest Payment Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period to be paid to the Subordinated Notes, up to its Allocable Share of the accrued and unpaid Subordinated Notes Quarterly Interest Amount, sequentially in order of alphanumerical designation and pro rata among each Class of Subordinated Notes of the same alphanumerical designation based upon the amount of the Subordinated Notes Quarterly Interest Amount payable with respect to each such Class, and deposit such funds into the applicable Series Distribution Accounts and (ii) if the amount of funds allocated to such Co-Issuer’s respective U.S. Dollar-denominated Subordinated Notes Interest Payment Account referred to in the foregoing sub-clause (i) is less than its Allocable Share of the accrued and unpaid Subordinated Notes Quarterly Interest Amount for the Interest Accrual Period with respect to each Class of Subordinated Notes ending most recently prior to such Quarterly Payment Date and no Senior Notes or Senior Subordinated Notes are Outstanding, to withdraw an amount equal to such insufficiency (with respect to each C-Issuer, a “Subordinated Interest Shortfall”) (to the extent of funds available, after giving effect to any payments of higher priority to be made as of such Quarterly Payment Date from any Collection Account Administrative Account pursuant to Sections 5.12(a)(ii), 5.12(d)(ii), 5.12(f)(ii), 5.12(h)(iii) and 5.12(i)(ii)) from the following U.S. Dollar-denominated Accounts of such Co-Issuer: first, the Subordinated Notes Post-ARD Additional Interest Account, second, the Senior Subordinated Notes Post-ARD Additional Interest Account, third, the Senior Notes Post-ARD Additional Interest Account, and fourth, the Subordinated Notes Principal Payment Account, to be paid to the Subordinated Notes, up to the accrued and unpaid Subordinated Notes Quarterly Interest Amount of such Co-Issuer, sequentially in order of alphanumerical designation and pro rata among each Class of Subordinated Notes of the same alphanumerical designation based upon the amount of the Subordinated Notes Quarterly Interest Amount payable with respect to each such Class, and deposit such funds into the applicable Subordinated Notes Interest Payment Account for further deposit to the applicable Series Distribution Accounts. If on any Quarterly Calculation Date, the funds on deposit in any Co-Issuer’s U.S. Dollar-denominated Subordinated Notes Interest Payment Account in accordance with the first sentence of this subsection and the amounts deposited into the applicable Series Distribution Account on behalf of such Co-Issuer in accordance with the prior sentence are insufficient to pay such Co-Issuer’s Subordinated Interest Shortfall, then the Co-Issuers (or their Managers on their respective behalf) will instruct the Trustee in writing (to the extent of funds available) to withdraw an amount equal to any remaining such deficiency from the other Co-Issuer’s U.S. Dollar-denominated Accounts in the order described in the first sentence of this subsection and following the applicable of such sentence to such Accounts of the other Co-Issuer, mutatis mutandis.

 

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(k) Subordinated Notes Interest Shortfall Amount. On each Quarterly Calculation Date, the Co-Issuers (or the Managers on their behalf) shall determine the excess, if any (the “Subordinated Notes Interest Shortfall Amount”), of (i) the accrued and unpaid Subordinated Notes Quarterly Interest Amount for the Interest Accrual Period with respect to each Class of Subordinated Notes ending most recently prior to the next succeeding Quarterly Payment Date over (ii) the amount that will be available to make payments of interest on the Subordinated Notes in accordance with Section 5.12(j) on such Quarterly Payment Date. If the Subordinated Notes Interest Shortfall Amount with respect to such Quarterly Payment Date is greater than zero, the payment of the Subordinated Notes Quarterly Interest Amount as reduced by such Subordinated Notes Interest Shortfall Amount to be distributed on such Quarterly Payment Date to the Subordinated Notes shall be paid to the Subordinated Notes, sequentially in order of alphanumerical designation and pro rata among each Class of Subordinated Notes of the same alphanumerical designation based upon the amount of the Subordinated Notes Quarterly Interest Amount payable with respect to each such Class; provided that such reduction shall not be deemed to be a waiver of any default caused by the existence of such Subordinated Notes Interest Shortfall Amount. An additional amount of interest shall accrue on the Subordinated Notes Interest Shortfall Amount for each subsequent Interest Accrual Period at the applicable Note Rate until the Subordinated Notes Interest Shortfall Amount is paid in full.

(l) Subordinated Notes Principal Payment Accounts.

(i) On each Quarterly Calculation Date, each Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to withdraw on the following Quarterly Payment Date, after giving effect to any allocations set forth in the Priority of Payments on such date, the funds allocated to its respective U.S. Dollar-denominated Subordinated Notes Principal Payment Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period, to be paid in the following order: (A) to each applicable Class of Subordinated Notes up to such Co-Issuer’s Allocable Share of the aggregate amount of Indemnification Amounts, Release Prices, Asset Disposition Proceeds and Insurance/Condemnation Proceeds in the order of priority set forth in priority (i) of the Priority of Payments and (B) to each applicable Class of Subordinated Notes in the amounts distributed to such Co-Issuer’s respective Subordinated Notes Principal Payment Account pursuant to priorities (xvii), (xviii) and (xxv) of the Priority of Payments owed to each such Class of Subordinated Notes, in the order of priority set forth in the Priority of Payments with respect to such priorities (xvii), (xviii) and (xxv), and deposit such funds into the applicable Series Distribution Account.

(ii) If the aggregate amount of funds allocated to each Co-Issuer’s Subordinated Notes Principal Payment Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period is less than such Co-Issuer’s Allocable Share of the Subordinated Notes Scheduled Principal Payments Amount owed to each applicable Class of Subordinated Notes on such Quarterly Payment Date and/or the amount of funds allocated to such Co-Issuer’s U.S. Dollar-denominated Subordinated Notes Principal Payment Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period is less than such Co-Issuer’s Allocable Share of Indemnification Amounts, Release Prices, Asset Disposition Proceeds and Insurance/Condemnation Proceeds due to be applied as a mandatory prepayment on such Quarterly Payment Date with respect to each applicable Class of Subordinated Notes, such Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to withdraw an amount equal to any such insufficiency (with respect to each Co-Issuer, a “Subordinated Principal Shortfall” (to the extent of funds available, after giving effect to any payments of higher priority to be made as of such Quarterly Payment Date from any Collection Account Administrative Account pursuant to Sections 5.12(a)(ii), 5.12(d)(ii), 5.12(f)(ii), 5.12(h)(iii), 5.12(i)(ii) and 5.12(j)(ii)) from the following U.S. Dollar-denominated Accounts of such Co-Issuer: first, the Subordinated Notes Post-ARD Additional Interest Account, second, the Senior Subordinated Notes Post-ARD Additional Interest Account, and third, the Senior Notes Post-ARD

 

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Additional Interest Account, and deposit such funds into the applicable Series Distribution Accounts, to be paid to each applicable Class of Subordinated Notes up to such Co-Issuer’s Allocable Share of the amount of unpaid Subordinated Notes Scheduled Principal Payments Amounts, Indemnification Amounts, Release Prices, Asset Disposition Proceeds and/or Insurance/Condemnation Proceeds, as the case may be, sequentially in order of alphanumerical designation and pro rata among each Class of Subordinated Notes of the same alphanumerical designation based upon the Outstanding Principal Amount of the Subordinated Notes of such Class. If on any Quarterly Calculation Date, the funds on deposit in any Co-Issuer’s U.S. Dollar-denominated Subordinated Notes Principal Payment Account in accordance with the previous sentence are insufficient to pay such Co-Issuer’s Subordinated Principal Shortfall, then the Co-Issuers (or their Managers on their respective behalf) will instruct the Trustee in writing (to the extent of funds available) to withdraw an amount equal to any remaining such deficiency from the other Co-Issuer’s U.S. Dollar-denominated Accounts in the order described in the previous sentence and following the application of such sentence to the other Co-Issuer’s such Accounts, mutatis mutandis.

(m) Senior Notes Post-ARD Additional Interest Accounts.

(i) On each Quarterly Calculation Date, each Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to withdraw on the following Quarterly Payment Date, after giving effect to any allocations set forth in the Priority of Payments on such date, the funds allocated to its respective Senior Notes Post-ARD Additional Interest Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period, to be paid to each applicable Class of Senior Notes, up to its Allocable Share of the amount of Senior Notes Quarterly Post-ARD Additional Interest distributed to such administrative account owed to each such Class of Senior Notes, sequentially in order of alphanumerical designation and pro rata among each Class of Senior Notes of the same alphanumerical designation based upon the amount of Senior Notes Quarterly Post-ARD Additional Interest payable with respect to each such Class, and deposit such funds into the applicable Series Distribution Account.

(ii) If the aggregate amount of funds allocated to such Co-Issuer’s respective Senior Notes Post-ARD Additional Interest Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period pursuant to the foregoing sub-clause (i) is less than its Allocable Share of the amount of Senior Notes Quarterly Post-ARD Additional Interest owed to each such Class of Senior Notes for the Interest Accrual Period ending most recently prior to such Quarterly Payment Date, such Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to withdraw an amount equal to such insufficiency (to the extent of funds available, after giving effect to any payments of higher priority to be made as of such Quarterly Payment Date from any Collection Account Administrative Account pursuant to Sections 5.12(a)(ii), 5.12(d)(ii), 5.12(f)(ii), 5.12(h)(iii), 5.12(i)(ii), 5.12(j)(ii) and 5.12(l)(ii)) from the following Accounts of such Co-Issuer: first, the Subordinated Notes Post-ARD Additional Interest Account, and second, the Senior Subordinated Notes Post-ARD Additional Interest Account, to be paid to each Class of Senior Notes, up to the amount of Senior Notes Quarterly Post-ARD Additional Interest accrued and unpaid with respect to each applicable Class of Senior Notes, sequentially in order of alphanumerical designation and pro rata among each Class of Senior Notes of the same alphanumerical designation based upon the amount of Senior Notes Quarterly Post-ARD Additional Interest payable with respect to each such Class, and deposit such funds into the applicable Series Distribution Accounts. If on any Quarterly Calculation Date, the funds on deposit in any Co-Issuer’s respective Senior Notes Post-ARD Additional Interest Account in

 

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accordance with the previous sentence are insufficient to pay such Co-Issuer’s shortfall in the amount of Senior Notes Quarterly Post-ARD Additional Interest owed to each such Class of Senior Notes for the Interest Accrual Period ending most recently prior to such Quarterly Payment Date, then the Co-Issuers (or their Managers on their respective behalf) will instruct the Trustee in writing (to the extent of funds available) to withdraw an amount equal to any remaining such deficiency from the other Co-Issuer’s respective Accounts in the order described in the previous sentence and following the application of such sentence to the other Co Issuer’s such Accounts mutatis mutandis.

(n) Senior Subordinated Notes Post-ARD Additional Interest Accounts.

(i) On each Quarterly Calculation Date, each Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to withdraw on the following Quarterly Payment Date, after giving effect to any allocations set forth in the Priority of Payments on such date, the funds allocated to its respective Senior Subordinated Notes Post-ARD Additional Interest Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period, to be paid to each applicable Class of Senior Subordinated Notes, up to its Allocable Share of the amount of Senior Subordinated Notes Quarterly Post-ARD Additional Interest distributed to such administrative account owed to each such Class of Senior Subordinated Notes, sequentially in order of alphanumerical designation and pro rata among each Class of Senior Subordinated Notes of the same alphanumerical designation based upon the amount of Senior Subordinated Notes Quarterly Post-ARD Additional Interest payable with respect to each such Class, and deposit such funds into the applicable Series Distribution Account.

(ii) If the aggregate amount of funds allocated to such Co-Issuer’s respective Senior Subordinated Notes Post-ARD Additional Interest Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period pursuant to the foregoing sub-clause (i) is less than the amount of its Allocable Share of the Senior Subordinated Notes Quarterly Post-ARD Additional Interest owed to each such Class of Senior Subordinated Notes for the Interest Accrual Period ending most recently prior to such Quarterly Payment Date, the such Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to withdraw an amount equal to such insufficiency (to the extent of funds available, after giving effect to any payments of higher priority to be made as of such Quarterly Payment Date from any Collection Account Administrative Account pursuant to Sections 5.12(a)(ii), 5.12(d)(ii), 5.12(f)(ii), 5.12(h)(iii), 5.12(i)(ii), 5.12(j)(ii), 5.12(l)(ii) and 5.12(m)(ii)) from such Co-Issuer’s respective Subordinated Notes Post-ARD Additional Interest Account, to be paid to each Class of Senior Subordinated Notes, up to the amount of Senior Subordinated Notes Quarterly Post-ARD Additional Interest accrued and unpaid with respect to each applicable Class of Senior Subordinated Notes, sequentially in order of alphanumerical designation and pro rata among each Class of Senior Subordinated Notes of the same alphanumerical designation based upon the amount of Senior Subordinated Notes Quarterly Post-ARD Additional Interest payable with respect to each such Class, and deposit such funds into the applicable Series Distribution Account. If on any Quarterly Calculation Date, the funds on deposit in any Co-Issuer’s respective Senior Subordinated Notes Post-ARD Additional Interest Account in accordance with the previous sentence are insufficient to pay such Co-Issuer’s shortfall in the amount of Senior Subordinated Notes Quarterly Post-ARD Additional Interest owed to each such Class of Senior Notes for the Interest Accrual Period ending most recently prior to such Quarterly Payment Date, then the Co-Issuers (or their Managers on their respective behalf) will instruct the Trustee in writing (to the extent of funds available) to withdraw an amount equal to any remaining such deficiency from the other Co-Issuer’s respective Accounts in the order described in the previous sentence and following the application of such sentence to the other Co Issuer’s such Accounts mutatis mutandis.

 

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(o) Subordinated Notes Post-ARD Additional Interest Accounts. On each Quarterly Calculation Date, each Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to withdraw on the following Quarterly Payment Date, after giving effect to any allocations set forth in the Priority of Payments on such date, the funds allocated to such Co-Issuer’s respective Subordinated Notes Post-ARD Additional Interest Account on each Weekly Allocation Date with respect to the immediately preceding Quarterly Fiscal Period, to be paid to each applicable Class of Subordinated Notes, up to its Allocable Share of the amount of Subordinated Notes Quarterly Post-ARD Additional Interest distributed to such administrative account owed to each Class of Subordinated Notes, sequentially in order of alphanumerical designation and pro rata among each such Class of Subordinated Notes of the same alphanumerical designation based upon the amount of Subordinated Notes Quarterly Post-ARD Contingent Interest payable with respect to each such Class, and deposit such funds into the applicable Series Distribution Account. If on any Quarterly Calculation Date, the funds on deposit in any Co-Issuer’s respective Subordinated Notes Post-ARD Additional Interest Account in accordance with the previous sentence are insufficient to pay such Co-Issuer’s shortfall in the amount of Subordinated Notes Quarterly Post-ARD Additional Interest owed to each such Class of Senior Notes for the Interest Accrual Period ending most recently prior to such Quarterly Payment Date, then the Co-Issuers (or their Managers on their respective behalf) will instruct the Trustee in writing (to the extent of funds available) to withdraw an amount equal to any remaining such deficiency from the other Co-Issuer’s respective Subordinated Notes Post-ARD Additional Interest Account.

(p) Amounts on Deposit in the Senior Notes Interest Reserve Accounts, the Senior Subordinated Notes Interest Reserve Accounts and the Cash Trap Reserve Accounts.

(i) On each Quarterly Calculation Date (A) preceding any Quarterly Payment Date that is a Cash Trapping Release Date, the Co-Issuers (or the Managers on their behalf) shall instruct the Trustee in writing to withdraw on such Quarterly Payment Date from funds on deposit in the applicable Cash Trap Reserve Account an amount equal to the applicable Cash Trapping Release Amount (including any requisite settlement of a Currency Conversion to Canadian Dollars in respect of the Canadian Co-Issuer pursuant to aan FX Exchange Report) and deposit such funds into the applicable Collection Account for distribution in accordance with the Priority of Payments and (B) preceding the first Quarterly Payment Date following the commencement of the Rapid Amortization Period (including a Rapid Amortization Period due to an Event of Default), the Co-Issuers (or the Managers on their behalf) shall instruct the Trustee in writing to withdraw on such Quarterly Payment Date all funds then on deposit in the applicable Cash Trap Reserve Account (after giving effect to any payments to be made as of such Quarterly Payment Date from the Cash Trap Reserve Accounts pursuant to Sections 5.12(a)(ii), 5.12(d)(ii) and 5.12(h)(ii)), and, in each case, deposit such funds into the applicable U.S. Collection Account for distribution in accordance with the Priority of Payments.

(ii) So long as no Rapid Amortization Event or Event of Default is continuing, on each Quarterly Calculation Date, the Co-Issuers (or the Managers on their behalf) shall instruct the Trustee in writing to withdraw funds on deposit in the applicable Cash Trap Reserve Account and apply such funds on the following Quarterly Payment Date to the extent necessary to pay, in the following order of priority in accordance with the Allocable Share of the respective Co-Issuer (and any Shortfall Payments in respect thereof shall be paid in accordance with the Allocation Agreement), (A) unreimbursed Advances (with interest thereon), (B) unreimbursed Manager Advances (with interest thereon), (C) pro rata, Senior Notes Quarterly Interest Amounts and Class A-1 Notes Commitment Fees Amounts, (D) Senior Notes

 

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Scheduled Principal Payments Amounts and (E) pro rata, any required payments of principal on the Class A-1 Notes (including any payments of principal on the Class A-1 Notes required after the occurrence of any Class A-1 Renewal Date), in each case, after giving effect to other amounts available for payment of the foregoing amounts in accordance with this Section 5.12, including any withdrawals from the Cash Trap Reserve Account pursuant to Sections 5.12(a)(ii), 5.12(d)(ii) and 5.12(h)(iii)).

(iii) Amounts on deposit in the Cash Trap Reserve Accounts will also be available to make an optional prepayment of the Notes on behalf of the respective Co-Issuer.

(iv) If the Co-Issuers (or the Managers on their behalf) determine, with respect to any Series of Senior Notes, that the amount to be deposited in any Series Distribution Account in accordance with this Section 5.12 on any Series Legal Final Maturity Date related to such Series of Senior Notes is less than the Outstanding Principal Amount of such Series of Senior Notes, on the Quarterly Calculation Date immediately preceding such Series Legal Final Maturity Date, the Co-Issuers (or the Managers on their behalf) shall instruct the Trustee thereof in writing, and the Trustee shall, in accordance with such instruction on such Series Legal Final Maturity Date, withdraw from the Senior Notes Interest Reserve Accounts an amount equal to such insufficiency (in accordance with each Co-Issuer’s Allocable Share to the extent of funds available, and to the extent funds are not available, without regard to each Co-Issuer’s Allocable Share) (and, to the extent the amount in the Senior Notes Interest Reserve Accounts is insufficient, the Co-Issuers (or the Managers on their behalf) shall instruct the Control Party to draw on the applicable Interest Reserve Letter of Credit) and deposit such amount into the applicable Series Distribution Accounts, to be paid to the Senior Notes sequentially in order of alphanumeric designation and pro rata among each Class of Senior Notes of the same alphanumerical designation based upon the Outstanding Principal Amount of the Senior Notes of each such Class.

(v) If the Co-Issuers (or the Managers on their behalf) determine, with respect to any Series of Senior Subordinated Notes, that the amount to be deposited in any Series Distribution Account in accordance with this Section 5.12 on any Series Legal Final Maturity Date related to such Series of Senior Subordinated Notes is less than the Outstanding Principal Amount of such Series of Senior Subordinated Notes, on the Quarterly Calculation Date immediately preceding such Series Legal Final Maturity Date, the Co-Issuers (or the Managers on their behalf) shall instruct the Trustee thereof in writing, and the Trustee shall, in accordance with such instruction on such Series Legal Final Maturity Date, withdraw from the Senior Subordinated Notes Interest Reserve Account an amount equal to such insufficiency (in accordance with each Co-Issuer’s Allocable Share to the extent of funds available, and to the extent funds are not available, without regard to each Co-Issuer’s Allocable Share) (and, to the extent the amount in the Senior Subordinated Notes Interest Reserve Accounts is insufficient, the Co-Issuers (or the Managers on their behalf) shall instruct the Control Party to draw on the applicable Interest Reserve Letter of Credit) and deposit such amount into the applicable Series Distribution Accounts, to be paid to the Senior Subordinated Notes sequentially in order of alphanumeric designation and pro rata among each Class of Senior Subordinated Notes of the same alphanumerical designation based upon the Outstanding Principal Amount of the Senior Subordinated Notes of each such Class.

(vi) In the event of (w) any reduction in the Outstanding Principal Amount of any Senior Notes, (x) any reduction in any Class A-1 Notes Maximum Principal Amount, (y) any reduction in the Outstanding Principal Amount of the Class A-1 Notes or (z) any other Interest Reserve Release Event, the Co-Issuers (or the Managers on their behalf) shall instruct

 

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the Trustee in writing to withdraw each Co-Issuer’s Interest Reserve Release Amount, if any, from its respective Senior Notes Interest Reserve Account on the applicable Quarterly Payment Date and to deposit such amount into the applicable Co-Issuer’s Collection Account for U.S. Collections or Canadian Collections, respectively, for distribution in accordance with the Priority of Payments (and in the case of the amount withdrawn from the Canadian Co-Issuer’s Senior Notes Interest Reserve Account, instruct the FX Agent to convert such amount from U.S. Dollars to Canadian Dollars prior to depositing it into the applicable Canadian Collection Account for Canadian Collections pursuant to an FX Exchange Report).

(vii) On any date on which no Senior Notes are Outstanding, the Co-Issuers (or the Managers on their behalf) shall instruct the Trustee in writing to withdraw on such date any funds then on deposit in any Senior Notes Interest Reserve Account and to deposit all remaining funds into the applicable Collection Account for U.S. Collections or Canadian Collections based on the Co-Issuer that contributed such funds (including any requisite settlement of a Currency Conversion to Canadian Dollars in respect of the Canadian Co-Issuer pursuant to aan FX Exchange Report) and/or to return any outstanding Interest Reserve Letter of Credit maintained with respect to the Senior Notes Interest Reserve Accounts to the issuer thereof for cancellation.

(viii) On any date on which no Senior Subordinated Notes are Outstanding, the Co-Issuers (or the Managers on their behalf) shall instruct the Trustee in writing to withdraw on such date any funds then on deposit in any Senior Subordinated Notes Interest Reserve Account and to deposit all remaining funds into the applicable Collection Account for U.S. Collections or Canadian Collections based on the Co-Issuer that contributed such funds (including any requisite settlement of a Currency Conversion to Canadian Dollars in respect of the Canadian Co-Issuer pursuant to aan FX Exchange Report) and/or to return any outstanding Interest Reserve Letter of Credit maintained with respect to the Senior Subordinated Notes Interest Reserve Accounts to the issuer thereof for cancellation.

(q) Principal Release Amount.

(i) If a Rapid Amortization Event or an Event of Default is continuing, the Principal Release Amount shall remain on deposit in the Senior Notes Principal Payment Accounts and shall be applied in the order set forth in Section 5.12(h)(i) for amounts allocated to the Senior Notes Principal Payment Accounts.

(ii) If (x) no Rapid Amortization Event or Event of Default is continuing and (y) if any Class A-1 Notes Renewal Date has occurred and the related Class A-1 Notes have been paid, extended or otherwise refinanced in full, on each Quarterly Calculation Date, each Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to withdraw on such Quarterly Payment Date the Principal Release Amount from such Co-Issuer’s Senior Notes Principal Payment Account and apply such funds on such Quarterly Payment Date to the extent necessary to pay, in the following order of priority (and any Shortfall Payments in respect thereof shall be paid in accordance with the Allocation Agreement), (A) to the Trustee, unreimbursed Advances (with interest thereon at the Advance Interest Rate), (B) to the Servicer, unreimbursed Advances (with interest thereon at the Advance Interest Rate), (C) unreimbursed Manager Advances (with interest thereon at the Advance Interest Rate), (D) pro rata, Senior Notes Quarterly Interest Amounts and Class A-1 Notes Commitment Fees Amounts and (E) Senior Subordinated Notes Quarterly Interest Amounts, in each case, after giving effect to other amounts available for payment thereof as described in this Section 5.12. Such Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to distribute the remainder of the Principal Release Amount, if any, in the priority set forth in the Priority of Payments, beginning at priority (xii) thereof.

 

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(iii) If no Rapid Amortization Period or Event of Default is continuing, but a Class A-1 Notes Renewal Date has occurred and the related Class A-1 Notes have not been paid, extended or otherwise refinanced in full, each Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to withdraw on such Quarterly Payment Date the Principal Release Amount from such Co-Issuer’s Senior Notes Principal Payment Account to the extent necessary to pay such Co-Issuer’s Allocable Share of the Outstanding Principal Amount of the Class A-1 Notes, and deposit such funds into the applicable Series Distribution Account for distribution to the holders of the Class A-1 Notes, pro rata, after giving effect to other amounts available for payment thereof. If the funds on deposit in such Co-Issuer’s Senior Notes Principal Payment Account are insufficient to pay such Co-Issuer’s Allocable Share of the Outstanding Principal Amount of the Class A-1 Notes, then the Co-Issuers (or their Manager on their respective behalf) will instruct the Trustee in writing (to the extent of funds available) to withdraw an amount equal to any remaining such deficiency from the other Co-Issuer’s Senior Notes Principal Payment Account (following the withdrawal of such other Co-Issuer’s Allocable Share of the Outstanding Principal Amount of the Class A-1 Notes). Each Co-Issuer (or the applicable Manager on its behalf) shall instruct the Trustee in writing to distribute the remainder of such Co-Issuer’s Principal Release Amount, if any, in the priority set forth in the Priority of Payments, beginning at priority (xii) thereof.

(r) Securitization Operating Expense Accounts. On each Weekly Allocation Date, the Co-Issuers (or the Managers on their behalf) shall instruct the Trustee in writing to withdraw on such date an amount equal to the lesser of (i) the sum of all Securitization Operating Expenses then due and payable and (ii) the amount on deposit in the Securitization Operating Expense Accounts after giving effect to any deposits thereto pursuant to the Priority of Payments on such date and apply such funds to pay any Securitization Operating Expenses then due and payable.

(s) Optional Prepayments. The Co-Issuers shall have the right to optionally prepay the Outstanding Principal Amount of any Class of Notes, in whole or in part in accordance with the related Series Supplement; provided that all optional prepayments must be applied first, to Senior Notes, second, to Senior Subordinated Notes and third, to Subordinated Notes. The Co-Issuers shall instruct the Trustee in writing to withdraw on each applicable optional prepayment date, including each such prepayment date that does not occur on a Quarterly Payment Date, the prepayment amount on deposit in the applicable Series Distribution Account in accordance with the applicable Series Supplement.

Section 5.13 Determination of Quarterly Interest.

Quarterly payments of interest and fees on each Series of Notes shall be determined, allocated and distributed in accordance with the procedures set forth in the applicable Series Supplement.

Section 5.14 Determination of Quarterly Principal.

Quarterly payments of principal, if any, of each Series of Notes shall be determined, allocated and distributed in accordance with the procedures set forth in the applicable Series Supplement.

Section 5.15 Prepayment of Principal .

Mandatory prepayments of principal, if any, of each Series of Notes shall be determined, allocated and distributed in accordance with the procedures set forth in the applicable Series Supplement, if not otherwise described herein.

 

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Section 5.16 Retained Collections Contributions.

During the period commencing on the Series 2015-1 Closing Date and ending on the Final Series Legal Final Maturity Date, the Co-Issuers may (but are not required to) designate Retained Collections Contributions to be included in Net Cash Flow, but not more than (x) for all Retained Collections Contributions made in any Quarterly Fiscal Period, the greater of (A) 45% of Net Cash Flow over the immediately preceding four (4) Quarterly Fiscal Periods for which financial statements have been delivered as of the relevant date of determination and (B) $10,000,00017,500,000 , (y) for Retained Collections Contributions made during any period of four (4) consecutive Quarterly Fiscal Periods, the greater of (A) 815% of Net Cash Flow over the immediately preceding four (4) Quarterly Fiscal Periods for which financial statements have been delivered as of the relevant date of determination and (B) $20,000,00050,000,000 or (z) for Retained Collections Contributions made from the Series 2015-1 Closing Date to the Final Series Legal Final Maturity Date, the greater of (A) 1625% of Net Cash Flow over the immediately preceding four (4) Quarterly Fiscal Periods for which financial statements have been delivered as of the relevant date of determination and (B) $40,000,00085,000,000 ; provided, that any Retained Collections Contributions made to the Co-Issuers following a Quarterly Fiscal Period, but on or before the related Quarterly Calculation Date, may, at the Co-Issuers’ discretion as designated in the next Weekly Manager’s Certificate, Quarterly Noteholders’ Allocation Report or Quarterly Noteholders’ Report, as applicable, be included in Net Cash Flow for such Quarterly Fiscal Period; provided, further, that any Retained Collections Contributions shall be excluded from the amount of Net Cash Flow for purposes of calculating the New Series Pro Forma DSCR in connection with the issuance of any new Series. The amount of any Retained Collections Contribution included in Net Cash Flow for the purpose of calculating the DSCR shall be retained in the Collection Account until the Weekly Allocation Date on which either (i) the DSCR for the period of four Quarterly Fiscal Periods ended immediately prior to such Weekly Allocation Date is at least 1.50:1.00 without giving effect to the inclusion of such Retained Collections Contribution or (ii) such Retained Collections Contribution is required to pay any shortfall in the amounts payable under priorities (ii) through (xxviii) of the Priority of Payments, to the extent of any shortfall on such Weekly Allocation Date. The Co-Issuers may not designate equity contributions as Retained Collections Contributions to the extent such equity contributions were funded by the proceeds of a draw under any Class A-1 Notes. For the avoidance of doubt, Series 2015-1 Class A-2 Optional Scheduled Principal Payments, Series 2016-1 Optional Scheduled Principal Payments, Series 2018-1 Optional Scheduled Principal Payments, Series 2019-1 Optional Scheduled Principal Payments, Series 2019-2 Class A-2 Optional Scheduled Principal Payments, Series 2020-1 Class A-2 Optional Scheduled Principal Payments, Series 2020-2 Class A-2 Notes Optional Scheduled Principal Payments, Series 2021-1 Class A-2 Notes Optional Scheduled Principal Payments, Series 2022-1 Class A-2 Notes Optional Scheduled Principal Payments and any similar Optional Scheduled Principal Payments as defined in or under any applicable Series Supplement shall not constitute Retained Collections Contributions.

Section 5.17 Interest Reserve Letters of Credit.

(a) The Co-Issuers may, in lieu of funding (or as partial replacement for funding) the Senior Notes Interest Reserve Accounts and/or the Senior Subordinated Notes Interest Reserve Accounts in the amounts required hereunder, maintain one or more Interest Reserve Letters of Credit issued under any Class A-1 Note Purchase Agreement for the benefit of the Trustee, for the benefit of the Senior Noteholders or the Senior Subordinated Noteholders, as applicable, each in a face amount equal to the amounts required to be funded in respect of such account(s) had such Interest Reserve Letter of Credit not been issued. Where on any Quarterly Calculation Date any Co-Issuer (or the respective Manager on its behalf) instructs the Trustee to withdraw funds from the applicable Senior Notes Interest Reserve Account or the applicable Senior Subordinated Notes Interest Reserve Account for allocation or payment on the following Quarterly Payment Date, such funds shall be drawn first, from amounts on deposit in the applicable Senior Notes Interest Reserve Account or the applicable Senior Subordinated Notes Interest Reserve Account on such Quarterly Calculation Date and second, from amounts available to be drawn under any applicable Interest Reserve Letter of Credit.

 

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(b) Each such Interest Reserve Letter of Credit (i) shall name the Trustee, for the benefit of the Senior Noteholders or the Senior Subordinated Noteholders, as applicable, as the beneficiary thereof; (ii) shall allow the Trustee (or the Control Party on its behalf) to submit a notice of drawing in respect of such Interest Reserve Letter of Credit whenever amounts would otherwise be required to be withdrawn from the applicable Senior Notes Interest Reserve Account or the applicable Senior Subordinated Notes Interest Reserve Accounts, as applicable, pursuant to Section 5.12; (iii) shall have an expiration date of no later than ten (10) Business Days prior to the Class A-1 Notes Renewal Date (after giving effect to any extensions) specified in the related Class A-1 Note Purchase Agreement pursuant to which such Interest Reserve Letter of Credit was issued; and (iv) shall indicate by its terms that the proceeds in respect of drawings under such Interest Reserve Letter of Credit shall be paid directly into the applicable Senior Notes Interest Reserve Account or the applicable Senior Subordinated Notes Interest Reserve Account.

(c) If, on the date that is ten (10) Business Days prior to the expiration of any such Interest Reserve Letter of Credit, such Interest Reserve Letter of Credit has not been replaced or renewed and each Co-Issuer has not otherwise deposited funds into its respective Senior Notes Interest Reserve Account or Senior Subordinated Notes Interest Reserve Account, as applicable, in the amounts that would otherwise be required had such Interest Reserve Letter of Credit not been issued, the Control Party (on behalf of the Trustee) shall submit a notice of drawing under such Interest Reserve Letter of Credit and use the proceeds thereof to fund a deposit into the applicable Senior Notes Interest Reserve Account or the applicable Senior Subordinated Notes Interest Reserve Account in an amount equal to the Senior Notes Interest Reserve Account Deficit Amount or the Senior Subordinated Notes Interest Reserve Account Deficit Amount of each such Co-Issuer on such date, in each case calculated as if such Interest Reserve Letter of Credit had not been issued.

(d) If, on any day, (i) the short-term debt credit rating of any L/C Provider which has issued an Interest Reserve Letter of Credit is withdrawn by S&P or downgraded below “A-2” or (ii) the long-term debt credit rating of any L/C Provider is withdrawn by S&P or downgraded below “BBB+” (each of cases (i) and (ii), an “L/C Downgrade Event”), on the fifth (5^th) Business Day after the occurrence of such L/C Downgrade Event, the Control Party (on behalf of the Trustee) shall submit a notice of drawing under each Interest Reserve Letter of Credit issued by such L/C Provider and use the proceeds thereof to fund a deposit into the applicable Senior Notes Interest Reserve Account or the applicable Senior Subordinated Notes Interest Reserve Account in an amount equal to the Senior Notes Interest Reserve Account Deficit Amount or the Senior Subordinated Notes Interest Reserve Account Deficit Amount of the applicable Co-Issuer on such date, as if such Interest Reserve Letter of Credit had not been issued.

Section 5.18 Replacement of Ineligible Accounts.

If, at any time, any Management Account or any of the Senior Notes Interest Reserve Accounts, the Senior Subordinated Notes Interest Reserve Accounts, the Cash Trap Reserve Accounts, the Collection Accounts or any Collection Account Administrative Account shall cease to be an Eligible Account (each, an “Ineligible Account”), the applicable Co-Issuer shall (i) within five (5) Business Days of obtaining knowledge thereof, notify the Control Party thereof and (ii) within sixty (60) days of obtaining knowledge thereof, (A) establish, or cause to be established, a new account that is an Eligible Account in substitution for such Ineligible Account, (B) with the exception of any Management Account, following the establishment of such new Eligible Account, transfer, or, with respect to the Trustee Accounts maintained at the Trustee, instruct the Trustee in writing to transfer, all cash and investments from such Ineligible Account into such new Eligible Account, (C) in the case of a Management Account, following

 

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the establishment of such new Eligible Account, transfer, or cause to be transferred, all cash and investments from such Ineligible Account into such new Eligible Account, (D) in the case of a Management Account, transfer, or cause to be transferred, all items deposited in the lock-box related to such Ineligible Account to a new lock-box related to such new Eligible Account, and (E) pledge, or cause to be pledged, such new Eligible Account to the Trustee for the benefit of the Secured Parties and, if such Ineligible Account is required to be subject to an Account Control Agreement in accordance with the terms of the Indenture, cause such new Eligible Account to be subject to an Account Control Agreement in form and substance reasonably acceptable to the Control Party and the Trustee. In the event that any Collection Account, any Management Account or any Collection Account Administrative Account becomes an Ineligible Account, the applicable Manager shall, promptly following the establishment of such related new Eligible Account, notify each applicable Franchisee and any other relevant third-party payor of a change in payment instructions, if any.

ARTICLE VI

DISTRIBUTIONS

Section 6.1 Distributions in General.

(a) Unless otherwise specified in the applicable Series Supplement, on each Quarterly Payment Date, the Paying Agent shall pay to the Noteholders of each Series of record on the preceding Record Date the amounts payable thereto by wire transfer in immediately available funds released by the Paying Agent from the applicable Series Distribution Account no later than 12:30 p.m. (New York City time) if a Noteholder has provided to the Paying Agent and the Trustee wiring instructions at least five (5) Business Days prior to the applicable Quarterly Payment Date; provided that the final principal payment due on a Note shall only be paid upon due presentment and surrender of such Note for cancellation in accordance with the provisions of the Note at the applicable Corporate Trust Office.

(b) Unless otherwise specified in the applicable Series Supplement, in this Base Indenture or in any applicable Class A-1 Note Purchase Agreement, all distributions to Noteholders of all Classes within a Series of Notes shall be made from amounts allocated in accordance with the Priority of Payments among each Class of Notes in alphanumerical order (i.e., A-1, A-2, B-1, B-2 and not A-1, B-1, A-2, B-2) and pro rata among Holders of Notes within each Class of the same alphanumerical designation; provided that, unless otherwise specified in the applicable Series Supplement, in this Base Indenture or in any applicable Class A-1 Note Purchase Agreement, all distributions to Noteholders of all Classes within a Series of Notes having the same alphabetical designation shall be pari passu with each other with respect to the distribution of Collateral proceeds resulting from the exercise of remedies upon an Event of Default.

(c) Unless otherwise specified in the applicable Series Supplement, the Trustee shall distribute all amounts owed to the Noteholders of any Class of Notes pursuant to the instructions of the Co-Issuers whether set forth in a Quarterly Noteholders’ Report, Company Order or otherwise.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

The Co-Issuers hereby represent and warrant, for the benefit of the Trustee and the Noteholders, as follows as of each Series Closing Date:

 

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Section 7.1 Existence and Power.

Each Service Recipient (a) is duly organized, validly existing and in good standing (or its equivalent) under the laws of its jurisdiction of organization, (b) is duly qualified to do business (and licensed as a foreign entity to the extent applicable) and in good standing (or its equivalent) under the laws of each jurisdiction where the character of its property, the nature of its business or the performance of its obligations under the Transaction Documents make such qualification necessary, except to the extent that the failure to so qualify is not reasonably likely to result in a Material Adverse Effect, and (c) has all limited liability company, corporate, limited partnership or other powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and for purposes of the transactions contemplated by the Indenture and the other Transaction Documents.

Section 7.2 Company and Governmental Authorization.

The execution, delivery and performance by the Co-Issuers of this Base Indenture and any Series Supplement (or with respect to the Canadian Co-Issuer, any Supplement to the Base Indenture or any Series Supplement) and by the Co-Issuers and each other Service Recipient of the other Transaction Documents to which it is a party (a) is within such Service Recipient’s limited liability company, corporate, limited partnership or other powers and has been duly authorized by all necessary limited liability company, corporate, limited partnership or other action, (b) requires no action by or in respect of, or filing with, any Governmental Authority which has not been obtained (other than any actions or filings that may be undertaken after the Series 2020-1 Closing Date pursuant to the terms of this Base Indenture or any other Transaction Document) and (c) does not contravene, or constitute a default under, any Requirements of Law with respect to such Service Recipient or any Contractual Obligation with respect to such Service Recipient or result in the creation or imposition of any Lien on any property of any Service Recipient, except for Liens created by this Base Indenture or the other Transaction Documents, except in the case of clauses (b) and (c) above, solely with respect to the Contribution Agreements, the violation of which could not reasonably be expected to have a Material Adverse Effect. This Base Indenture and each of the other Transaction Documents to which each Service Recipient is a party has been executed and delivered by a duly Authorized Officer of such Service Recipient.

Section 7.3 No Consent.

Except as set forth on Schedule 7.3, no consent, action by or in respect of, approval or other authorization of, or registration, declaration or filing with, any Governmental Authority or other Person is required for the valid execution and delivery by the Co-Issuers of this Base Indenture and any Series Supplement (or with respect to the Canadian Co-Issuer, any Supplement to the Base Indenture or any Series Supplement) and by the Co-Issuers and each other Service Recipient of any Transaction Document to which it is a party or for the performance of any of the Service Recipients’ obligations hereunder or thereunder, other than such consents, approvals, authorizations, registrations, declarations or filings (a) as shall have been obtained or made by such Service Recipient prior to the Series 2018-1 Closing Date (or the Series 2020-1 Closing Date with respect to the Canadian Securitization Entities) or as are permitted to be obtained subsequent to the Series 2018-1 Closing Date (or the Series 2020-1 Closing Date with respect to the Canadian Securitization Entities) in accordance with Section 7.13 or Section 8.25, or (b) relating to the performance of any Franchise Document, the failure of which to obtain is not reasonably likely to have a Material Adverse Effect.

Section 7.4 Binding Effect.

This Base Indenture and each other Transaction Document to which a Service Recipient is a party is a legal, valid and binding obligation of each such Service Recipient enforceable against such Service Recipient in accordance with its terms (except as may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing).

 

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Section 7.5 Litigation.

There is no action, suit, proceeding or investigation pending against or, to the knowledge of the Co-Issuers, threatened against or affecting any Service Recipient or of which any property or assets of such Service Recipient is the subject before any court or arbitrator or any other Governmental Authority that, individually or in the aggregate, would affect the validity or enforceability of this Base Indenture or any Series Supplement or materially adversely affect the performance by the Service Recipients of their obligations hereunder or thereunder or is reasonably likely to have a Material Adverse Effect.

Section 7.6 Employee Benefit Plans.

No Securitization Entity or any member of a Controlled Group that includes a Securitization Entity has established, maintains, contributes to, or has any liability in respect of (or has in the past six years established, maintained, contributed to, or had any liability in respect of) any Pension Plan. No Securitization Entity has any contingent liability with respect to any post-retirement welfare benefits under a Welfare Plan, other than liability for continuation coverage described in Part 6 of Subtitle B of Title I of ERISA or other applicable continuation of coverage laws. Each Employee Benefit Plan presently complies and has been maintained in compliance with its terms and with the requirements of all applicable statutes, rules and regulations, including ERISA and the Code, except for such instances of noncompliance as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No “prohibited transaction” (within the meaning of Section 406 of ERISA or Section 4975 of the Code) has occurred with respect to any Employee Benefit Plan, other than transactions effected pursuant to a statutory or administrative exemption or such transactions as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as would not reasonably be expected to have a Material Adverse Effect, each such Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification. No Canadian Securitization Entity has sponsored, maintained, contributed to, or otherwise incurred liability under any Canadian Defined Benefit Plan.

Section 7.7 Tax Filings and Expenses.

Each Securitization Entity has filed, or caused to be filed, all federal, state, provincial, territorial, local and foreign Tax returns and all other Tax returns which, to the knowledge of the Co-Issuers, are required to be filed by, or with respect to the income, properties or operations of, such Securitization Entity (whether information returns or not), and has paid, or caused to be paid, all Taxes due, if any, pursuant to said returns or pursuant to any assessment received by any Securitization Entity or otherwise, except such Taxes, if any, as are being contested in good faith and by appropriate proceedings and for which adequate reserves have been set aside in accordance with GAAP. As of the Series 2018-1 Closing Date (or the Series 2020-1 Closing Date with respect to the Canadian Securitization Entities), except as set forth on Schedule 7.7, the Co-Issuers are not aware of any proposed Tax assessments against any Driven Brands Entity. Except as would not reasonably be expected to have a Material Adverse Effect, no tax deficiency has been determined adversely to any Securitization Entity, nor does any Securitization Entity have any knowledge of any tax deficiencies. Each Securitization Entity has paid all fees and expenses required to be paid by it in connection with the conduct of its business, the maintenance of its existence and its qualification as a foreign entity authorized to do business in each state, province, territory and foreign country in which it is required to so qualify, except to the extent that the failure to pay such fees and expenses is not reasonably likely to result in a Material Adverse Effect.

 

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Section 7.8 Disclosure.

All certificates, reports, statements, notices, documents and other information furnished to the Trustee or the Noteholders by or on behalf of the Service Recipients pursuant to any provision of the Indenture or any other Transaction Document, or in connection with or pursuant to any amendment or modification of, or waiver under, the Indenture or any other Transaction Document, are, at the time the same are so furnished, complete and correct in all material respects (when taken together with all other information furnished by or on behalf of the Driven Brands Entities to the Trustee or the Noteholders, as the case may be), and give the Trustee or the Noteholders, as the case may be, true and accurate knowledge of the subject matter thereof in all material respects, and the furnishing of the same to the Trustee or the Noteholders, as the case may be, shall constitute a representation and warranty by any Co-Issuer made on the date the same are furnished to the Trustee or the Noteholders, as the case may be, to the effect specified herein.

Section 7.9 Investment Company Act.

Neither Co-Issuer nor any other Securitization Entity is, or is controlled by, an “investment company” within the meaning of Section 3(a)(1) of the Investment Company Act.

Section 7.10 Regulations T, U and X.

The proceeds of the Notes will not be used to purchase or carry any “margin stock” (as defined or used in the regulations of the Board of Governors of the Federal Reserve System, including Regulations T, U and X thereof) in such a way that could cause the transactions contemplated by the Transaction Documents to fail to comply with the regulations of the Board of Governors of the Federal Reserve System, including Regulations T, U and X thereof. No Securitization Entity owns or is engaged in the business of extending credit for the purpose of purchasing or carrying any margin stock.

Section 7.11 Solvency.

Both before and after giving effect to the transactions contemplated by the Indenture and the other Transaction Documents, each U.S. Securitization Entity is solvent within the meaning of the Bankruptcy Code and any applicable state law, no Canadian Securitization Entity is bankrupt or an insolvent person within the meaning of the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act and any other applicable federal, provincial or territorial law, and no Securitization Entity is the subject of any voluntary or involuntary case or proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy or insolvency law, and no Event of Bankruptcy has occurred with respect to any Securitization Entity.

Section 7.12 Ownership of Equity Interests; Subsidiaries.

(a) All of the issued and outstanding limited liability company interests of the Issuer are directly owned by Funding Holdco, have been duly authorized and validly issued, are fully paid and non-assessable and are owned of record by Funding Holdco free and clear of all Liens other than Permitted Liens. All of the issued and outstanding shares of the Canadian Co-Issuer are directly owned by Canadian Funding Holdco, have been duly authorized and validly issued, are fully paid and non-assessable and are owned of record by Canadian Funding Holdco free and clear of all Liens other than Permitted Liens.

(b) All of the issued and outstanding limited liability company interests of Funding Holdco are directly owned by DBI, have been duly authorized and validly issued, are fully paid and non-assessable and are owned of record by DBI free and clear of all Liens other than Permitted Liens. All of the issued and outstanding shares of Canadian Funding Holdco are directly owned by Canco, have been duly authorized and validly issued, are fully paid and non-assessable and are owned of record by Canco free and clear of all Liens other than Permitted Liens.

 

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Section 7.13 Security Interests.

(a) Each of the Co-Issuers and each Guarantor owns and has good title to its Collateral, free and clear of all Liens other than Permitted Liens. Other than any real property contributed to the Co-Issuers, the Indenture Collateral consists of securities, loans, investments, accounts, commercial tort claims, inventory, equipment, fixtures, health care insurance receivables, chattel paper, money, deposit accounts, instruments, financial assets, documents, documents of title investment property, general intangibles, intangibles, letter of credit rights, and other supporting obligations (in each case, as defined in the UCC and PPSA, as applicable). This Base Indenture and the Guarantee and Collateral Agreements constitute a valid and continuing Lien on the Collateral in favor of the Trustee on behalf of and for the benefit of the Secured Parties, which Lien on the Collateral has been perfected (except as described on Schedule 8.11 or as permitted underand as subject to Section 8.25(c)) and is prior to all other Liens (other than Permitted Liens), and is enforceable as such as against creditors of and purchasers from each Co-Issuer and each Guarantor in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity, and by an implied covenant of good faith and fair dealing. The Co-Issuers and the Guarantors have received all consents and approvals required by the terms of the Collateral to the pledge of the Collateral to the Trustee hereunder and under the Guarantee and Collateral Agreements. The Co-Issuers and the Guarantors have caused, or shall have caused, the filing of all appropriate financing statements and other instruments in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the first-priority security interest (subject to Permitted Liens) in the Collateral granted to the Trustee hereunder or under the Guarantee and Collateral Agreements within ten (10) days of the date of this Agreement (or the Series 2020-1 Closing Date with respect to the Canadian Securitization Entities), or, in the case of Intellectual Property, shall take all additional action necessary to perfect such first-priority security interest (subject to Permitted Liens) consistent with the obligations and time periods set forth in Section 8.25(c).

(b) Other than the security interest granted to the Trustee hereunder, pursuant to the other Transaction Documents or any other Permitted Lien, no Co-Issuer nor any Guarantor has pledged, assigned, sold or granted a security interest in the Collateral. All action necessary (including the filing of UCC-1 financing statements, PPSA financing statements and/or financing change statements and filings with the USPTO, the USCO and the CIPO) to perfect, preserve, protect and evidence the Trustee’s security interest in the Collateral in the United States and Canada has been, or shall be, duly and effectively taken, consistent with the obligations set forth in Section 7.13(a), Section 8.25(c) and Section 8.25(d), except as described on Schedule 8.11. No security agreement, financing statement, equivalent security or lien instrument or continuation statement or financing change statement authorized by any Co-Issuer or any Guarantor and listing such Co-Issuer or such Guarantor as debtor covering all or any part of the Collateral is on file or of record in any jurisdiction, except in respect of Permitted Liens or such as may have been filed, recorded or made by such Co-Issuer or such Guarantor in favor of the Trustee on behalf of the Secured Parties in connection with this Base Indenture and the Guarantee and Collateral Agreements, and no Co-Issuer nor any Guarantor has authorized any such filing.

(c) All authorizations in this Base Indenture and the Guarantee and Collateral Agreements for the Trustee to endorse checks, instruments and securities and to execute financing statements, continuation statements, financing change statements, security agreements and other instruments with respect to the Collateral and to take such other actions with respect to the Collateral authorized by this Base Indenture and the Guarantee and Collateral Agreements are powers coupled with an interest and are irrevocable.

 

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Section 7.14 Transaction Documents.

The Indenture Documents, the Account Agreements, the Depository Agreements and the other Transaction Documents are in full force and effect. There are no outstanding defaults thereunder nor have events occurred which, with the giving of notice, the passage of time or both, would constitute a default thereunder.

Section 7.15 Non-Existence of Other Agreements.

Other than as permitted by Section 8.22, (a) no Securitization Entity is a party to any contract or agreement of any kind or nature and (b) no Securitization Entity is subject to any material obligations or liabilities of any kind or nature in favor of any third party, including, without limitation, Contingent Obligations. No U.S. Securitization Entity has engaged in any activities since its formation (other than those incidental to its formation, the authorization and the issuance of any Series of Notes, the execution of the Transaction Documents to which such Securitization Entity is a party and the performance of the activities referred to in or contemplated by such agreements).

Section 7.16 Compliance with Contractual Obligations and Laws.

No Service Recipient is in violation of (a) its Charter Documents, (b) any Requirement of Law with respect to such Service Recipient or (c) any Contractual Obligation with respect to such Service Recipient except, solely with respect to clauses (b) and (c), to the extent such violation could not reasonably be expected to result in a Material Adverse Effect.

Section 7.17 Other Representations.

All representations and warranties of each Service Recipient made in each Transaction Document to which it is a party are true and correct (i) if qualified as to materiality, in all respects and (ii) if not qualified as to materiality, in all material respects (unless stated to relate solely to an earlier date, in which case such representations and warranties were true and correct in all respects or in all material respects, as applicable, as of such earlier date), and are repeated herein as though fully set forth herein.

Section 7.18 Insurance.

The Securitization Entities maintain the insurance coverages (or self-insure for such risks) described on Schedule 7.18 hereto, in such amounts and covering such risks as is adequate for the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar businesses in similar industries. All policies of insurance of the Securitization Entities are in full force and effect, and the Securitization Entities are in compliance with the terms of such policies in all material respects. None of the Securitization Entities has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not reasonably be expected to have a Material Adverse Effect. All such insurance is primary coverage, all premiums therefor due on or before the date hereof have been paid in full, and the terms and conditions thereof are no less favorable to the Securitization Entities than the terms and conditions of insurance maintained by their Affiliates that are not Securitization Entities.

Section 7.19 Environmental Matters.

(a) None of the Service Recipients is subject to any liabilities or obligations pursuant to any Environmental Law or with respect to any Materials of Environmental Concern that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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(b) Other than exceptions to any of the following that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect:

(i) The Service Recipients (x) are, and within the period of all applicable statutes of limitation have been, in compliance with all applicable Environmental Laws, (y) hold all Environmental Permits (each of which is in full force and effect) required for any of their current or intended operations or for any property owned, leased, or otherwise operated by any of them and have obtained all Environmental Permits for any intended operations when such Environmental Permits are required and (z) are, and within the period of all applicable statutes of limitation have been, in compliance with all of their Environmental Permits.

(ii) Materials of Environmental Concern are not present at, on, under, in, or about any real property now or formerly owned, leased or operated by any Service Recipient, or at any other location (including, without limitation, any location to which Materials of Environmental Concern have been sent for re-use or recycling or for treatment, storage or disposal) which could reasonably be expected to (x) give rise to liability of any Service Recipient under any applicable Environmental Law or otherwise result in costs to any Service Recipient, (y) interfere with any Service Recipient’s continued operations or (z) impair the fair saleable value of any real property owned by any Service Recipient.

(iii) There is no judicial, administrative, or arbitral proceeding (including, without limitation, any notice of violation or alleged violation) under or relating to any Environmental Law to which any Service Recipient is, or to the knowledge of any Service Recipient will be, named as a party that is pending or, to the knowledge of any Service Recipient, threatened.

(iv) No Service Recipient has received any written request for information, or been notified that it is a potentially responsible party, under or relating to the U.S. federal Comprehensive Environmental Response, Compensation and Liability Act, as amended, or any other Environmental Law, or with respect to any Materials of Environmental Concern.

(v) No Service Recipient has entered into or agreed to any consent decree, order, or settlement or other agreement, or is subject to any judgment, decree, or order or other agreement, in any judicial, administrative, arbitral, or other forum for dispute resolution, relating to compliance with or liability under any Environmental Law.

Section 7.20 Intellectual Property.

(a) All of the registrations and applications included in the Securitization IP are subsisting, unexpired and have not been abandoned in any applicable jurisdiction except where such expiration or abandonment could not reasonably be expected to have a Material Adverse Effect.

(b) Except as set forth on Schedule 7.20, (i) the use of the Securitization IP and the operation of the Driven Securitization Brands do not infringe, misappropriate or otherwise violate the Intellectual Property rights of any third party in a manner that could reasonably be expected to have a Material Adverse Effect, (ii) to each Co-Issuer’s knowledge, the Securitization IP is not being infringed or violated by any third party in a manner that could reasonably be expected to have a Material Adverse Effect and (iii) there is no action or proceeding pending or, to the Issuer’s knowledge, threatened that could reasonably be expected to have a Material Adverse Effect.

 

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(c) Except as set forth on Schedule 7.20, no action or proceeding is pending or, to any Co-Issuer’s knowledge, threatened that seeks to limit, cancel or challenge the validity of any Securitization IP, or the use thereof, that could reasonably be expected to have a Material Adverse Effect.

(d) No Co-Issuer has made and will not hereafter make any assignment, pledge, mortgage, hypothecation or transfer of any of the Securitization IP other than Permitted Liens, Permitted Asset Dispositions and Permitted Brand Dispositions under Section 8.12 and Section 8.16.

Section 7.21 Payments on the Notes.

Payments on the Notes will not depend primarily on cash flow from self-liquidating financial assets within the meaning of Section 3(a)(79) of the Exchange Act.

ARTICLE VIII

COVENANTS

Section 8.1 Payment of Notes.

(a) The Co-Issuers shall pay or cause to be paid the principal of, and premium, if any, and interest, subject to Section 2.15(d), on the Notes when due pursuant to the provisions of this Base Indenture and any applicable Series Supplement. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent holds on that date money designated for and sufficient to pay all principal, premium, if any, and interest then due. Except as otherwise provided pursuant to any Class A-1 Note Purchase Agreement or any other Transaction Document, amounts properly withheld under the Code, the Tax Act or any applicable federal, state, provincial, territorial, local or foreign law by any Person from a payment to any Noteholder of interest or principal or premium, if any, shall be considered as having been paid by the Issuer to such Noteholder for all purposes of the Indenture and the Notes.

(b) By acceptance of its Notes, each Noteholder agrees that the failure to provide the Paying Agent with appropriate tax certifications (which includes (i) an Internal Revenue Service Form W-9 for United States persons (as defined under Section 7701(a)(30) of the Code), or any applicable successor form, or (ii) an applicable Internal Revenue Service Form W-8 for Persons other than United States persons, or any applicable successor form) may result in amounts being withheld from payments to such Noteholder under this Base Indenture and any Series Supplement and that amounts withheld pursuant to applicable laws shall be considered as having been paid by the Co-Issuers as provided in the foregoing clause (a).

Section 8.2 Maintenance of Office or Agency.

(a) The Co-Issuers will maintain an office or agency (which may be an office of the Trustee, the Registrar or co-registrar) where Notes may be surrendered for registration of transfer or exchange (or de-registration), where notices and demands to or upon the Co-Issuers in respect of the Notes and the Indenture may be served, and where, at any time when the Co-Issuers are obligated to make a payment of principal of, and premium, if any, on the Notes, the Notes may be surrendered for payment (or de-registered). The Co-Issuers will give prompt written notice to the Trustee and the Servicer of the location, and any change in the location, of such office or agency. If at any time the Co-Issuers shall fail to maintain any such required office or agency or shall fail to furnish the Trustee and the Servicer with the address thereof, such presentations and surrenders (or de-registrations) may be made or served at the Corporate Trust Office and notices and demands may be made at the address set forth in Section 14.1 hereof.

 

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(b) The Co-Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered (or de-registered) for any or all such purposes and may from time to time rescind such designations. The Co-Issuers will give prompt written notice to the Trustee and the Servicer of any such designation or rescission and of any change in the location of any such other office or agency. The Co-Issuers hereby designate the Corporate Trust Office as one such office or agency of the Co-Issuers.

Section 8.3 Payment and Performance of Obligations.

The Co-Issuers will, and will cause each other Service Recipient to, pay and discharge and fully perform, at or before maturity, all of their respective material obligations and liabilities, including, without limitation, Tax liabilities and other governmental claims levied or imposed upon any Service Recipient or upon the income, properties or operations of any Service Recipient, judgments, settlement agreements and all obligations of each Service Recipient under the Collateral Documents, except where the same may be contested in good faith by appropriate proceedings (and without derogation from the material obligations of the Co-Issuers hereunder and the Guarantors under the Guarantee and Collateral Agreements regarding the protection of the Collateral from Liens (other than Permitted Liens)), and will maintain, in accordance with GAAP, reserves as appropriate for the accrual of any of the same.

Section 8.4 Maintenance of Existence.

Each Co-Issuer will, and will cause each other Service Recipient to, maintain its existence as a limited liability company, corporation or limited partnership validly existing and in good standing (or its equivalent) under the laws of its jurisdiction of organization and duly qualified (and licensed to the extent applicable) under the laws of each jurisdiction in which the failure to so qualify would be reasonably likely to result in a Material Adverse Effect. The Issuer will, and will cause each other U.S. Securitization Entity (other than any such Future Securitization Entity organized in the United States, any State thereof or the District of Columbia that is a corporation) to, be treated as a disregarded entity within the meaning of U.S. Treasury regulation section 301.7701-2(c)(2), and the Issuer will not, and will not permit any other U.S. Securitization Entity (other than any such Future Securitization Entity organized in the United States, any State thereof or the District of Columbia that is a corporation) to, be classified as a corporation or as an association taxable as a corporation or a publicly traded partnership taxable as a corporation for United States federal income tax purposes.

Section 8.5 Compliance with Laws.

The Co-Issuers will, and will cause each other Service Recipient to, comply in all respects with all Requirements of Law with respect to such Co-Issuer or such other Service Recipient except where such non-compliance would not be reasonably likely to result in a Material Adverse Effect; provided that such non-compliance will not result in a Lien (other than a Permitted Lien) on any of the Collateral or any criminal liability on the part of any Service Recipient, the Managers or the Trustee.

Section 8.6 Inspection of Property; Books and Records.

The Co-Issuers will, and will cause each other Service Recipient to, keep proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions, business and activities in accordance with GAAP. Each Co-Issuer will, and will cause each other Service Recipient to, permit, at reasonable times upon reasonable notice, the Servicer, the Controlling Class Representative and the Trustee or any Person appointed by any of them to act as its agent to visit and inspect any of its properties, to examine and make abstracts from any of its books and records and to discuss its affairs, finances and accounts with its officers, directors, managers, employees and independent certified public accountants, and up to one such visit to either Co-Issuer and inspection by each of the Servicer, the Controlling Class Representative and the Trustee, or any Person appointed by them, shall be reimbursable

 

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as Securitization Operating Expenses of the Co-Issuers (allocated based upon their Allocable Share at the time of such one visit) per calendar year, with any additional visit or inspection by any such Person being at such Person’s sole cost and expense; provided that during the continuance of a Warm Back-Up Management Trigger Event, a Rapid Amortization Event, an Advance Period continuing for at least 60 days or an Event of Default, or to the extent expressly required without the instruction of any other party under the terms of any Transaction Documents, any such Person may visit and conduct such activities at any time and all such visits and activities will constitute Securitization Operating Expenses of the Co-Issuers (allocated based upon their Allocable Share at the time of such visit) and in addition, the Securitization Entities will cooperate with all reasonable requests of the Servicer, Control Party and/or Back-Up Manager in connection with the performance by such parties of their respective obligations under the Transaction Documents (including any duty as and to the extent required by any such parties under the Transaction Documents to obtain an appraisal of the Collateral, or perform an in-depth situation analysis of the Manager and its financial position and/or of the Collateral and/or the Securitization Entities during a Warm Back-Up Management Trigger Event, a Hot Back-Up Management Trigger Event, in connection with a Consent Request or in connection with a proposed Advance).

Section 8.7 Actions under the Transaction Documents.

(a) Except as otherwise provided in Section 8.7(d), no Co-Issuer will, nor will it permit any other Service Recipient to, take any action that would permit any Driven Brands Entity or any other Person party to a Transaction Document to have the right to refuse to perform any of its respective obligations under any of the Transaction Documents or that would result in the amendment, waiver, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any Transaction Document.

(b) Except as otherwise provided in Section 8.7(d), no Co-Issuer will, nor will it permit any other Service Recipient to, take any action which would permit any other Person party to a Franchise Document to have the right to refuse to perform any of its respective obligations under such Franchise Document or that would result in the amendment, waiver, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, such Franchise Document if such action when taken on behalf of any Service Recipient by the applicable Manager would constitute a breach by such Manager of the applicable Management Agreement.

(c) No Co-Issuer will, nor will it permit any other Service Recipient to, without the prior written consent of the Control Party, exercise any right, remedy, power or privilege available to it with respect to any obligor under a Collateral Document or under any instrument or agreement included in the Collateral, take any action to compel or secure performance or observance by any such obligor of its obligations to such Co-Issuer or such other Service Recipient or give any consent, request, notice, direction or approval with respect to any such obligor if such action when taken on behalf of any Service Recipient by the applicable Manager would constitute a breach by such Manager of the applicable Management Agreement.

(d) Each Co-Issuer agrees that it will not, and will cause each Service Recipient that is a Subsidiary of such Co-Issuer not to, without the prior written consent of the Control Party, amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, supplement, termination, waiver or surrender of, the terms of any of the Transaction Documents; provided, however, that each Co-Issuer and each Service Recipient may agree to any amendment, modification, supplement or waiver of any such term of any Transaction Document without any such consent (x) to the extent permitted under the terms of such other Transaction Documents, (y) solely with respect to any Indenture Document, as contemplated by Section 13.1 or (z) with respect to any Transaction Document that is not an Indenture Document, as follows:

 

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(i) to add to the covenants of any Securitization Entity for the benefit of the Secured Parties or to add to the covenants of any Driven Brands Entity for the benefit of any Securitization Entity;

(ii) to terminate any Transaction Document if any party thereto (other than a Service Recipient) becomes, in the reasonable judgment of the Co-Issuers, unable to pay its debts as they become due, even if such party has not yet defaulted on its obligations under the Transaction Document, so long as the Co-Issuers enter into a replacement agreement with a new party within 90 days of the termination of the Transaction Document;

(iii) to make such other provisions in regard to matters or questions arising under the Transaction Documents as the parties thereto may deem necessary or desirable, which are not inconsistent with the provisions thereof and which shall not materially and adversely affect the interests of any Noteholder, any Note Owner, or any other Secured Party; provided that an Officers’ Certificate shall be delivered to the Trustee and the Servicer to such effect; or

(iv) to make conforming changes related to the joinder or addition of new Service Recipients or Future Securitization Entities.; or

(v) in connection with a Series Refinancing Event.

For the avoidance of doubt, the prior written consent of the Control Party shall not be required for any amendment, modification, supplement, termination, waiver or surrender of, the terms of any of the Transaction Documents to the extent that all affected Noteholders have provided consent, either directly or indirectly through the purchase of Notes that include such terms.

In addition, notwithstanding anything to the contrary herein or in any other Transaction Document, at any time on and after the 2021 Springing Amendments Implementation Date, the Servicing Agreement, the Back-Up Management Agreement and the other Transaction Documents (other than the Indenture Documents) may be amended, amended and restated, supplemented or otherwise modified by the parties thereto, or the applicable Securitization Entities, the Managers, the Trustee and any other applicable party may enter into new Transaction Documents without the consent of the Control Party, the Servicer, the Back-Up Manager (except to the extent that such amendment, restatement, supplement, modification or new Transaction Document impacts the rights, indemnities, remedies, immunities, protections, liabilities, duties and/or obligations of the Control Party, the Servicer or the Back-Up Manager, in which case the consent of the Control Party, the Servicer or the Back-Up Manager, as applicable, shall be required to the extent that the Control Party, the Servicer or the Back-Up Manager, as applicable, shall continue to act as Control Party, Servicer or Back-Up Manager, as applicable, following the execution of any such amendment, restatement, supplement, modification or new Transaction Document, or to the extent any such party is no longer acting in its capacity as Control Party, Servicer or Back-Up Manager but such parties’ rights, indemnification, remedies, immunities, protections, liabilities, duties or obligations expressly survive), the Controlling Class Representative, or any Noteholder, for the purpose of modifying, replacing or subdividing the role of the Servicer, the Back-Up Manager, the Control Party or the Controlling Class Representative; provided that, Rating Agency Confirmation shall be required for any change in respect of any of such parties’ obligation(s) to make Advances.

 

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(e) Upon the occurrence of a Manager Termination Event under a Management Agreement, (i) the applicable Co-Issuer will not, nor will it permit any other applicable Service Recipient to, without the prior written consent of the Control Party, terminate the applicable Manager and appoint any successorSuccessor Manager in accordance with such Management Agreement and (ii) the applicable Co-Issuer will, and will cause each other applicable Service Recipient to, terminate the applicable Manager and appoint one or more successorSuccessor Managers in accordance with such Management Agreement if and when so directed by the Control Party.

Section 8.8 Notice of Defaults and Other Events.

Promptly (and in any event within two (2) Business Days) upon becoming aware of (i) any Potential Rapid Amortization Event, (ii) any Rapid Amortization Event, (iii) any Potential Manager Termination Event, (iv) any Manager Termination Event, (v) any Default, (vi) any Event of Default or (vii) any other default under any other Transaction Document, the applicable Co-Issuer shall give the Trustee, the Servicer, the Control Party, the Managers, the Back-Up Manager, the Controlling Class Representative and each Rating Agency with respect to each Series of Notes Outstanding notice thereof, together with an Officers’ Certificate setting forth the details thereof and any action with respect thereto taken or contemplated to be taken by the such Co-Issuer. The Co-Issuers shall, at their expense, promptly provide to the Servicer, the Managers, the Back-Up Manager, the Controlling Class Representative and the Trustee such additional information as the Servicer, the Managers, the Back-Up Manager, the Controlling Class Representative or the Trustee may reasonably request from time to time in connection with the matters so reported, and the actions so taken or contemplated to be taken.

Section 8.9 Notice of Material Proceedings.

Without limiting Section 8.27 or Section 8.25(b), promptly (and in any event within five (5) Business Days) upon the determination by either the Chief Financial Officer or the General Counsel of DBI that the commencement or existence of any litigation, arbitration or other proceeding with respect to any Driven Brands Entity would be reasonably likely to have a Material Adverse Effect, the Co-Issuers shall give written notice thereof to the Trustee, the Servicer and each Rating Agency.

Section 8.10 Further Requests.

The Co-Issuers will, and will cause each other Service Recipient to, promptly furnish to the Trustee such other information as, and in such form as, the Trustee may reasonably request in connection with the transactions contemplated hereby or by any Series Supplement.

Section 8.11 Further Assurances.

(a) Each Co-Issuer will, and will cause each other Securitization Entity to, do such further acts and things, and execute and deliver to the Trustee and the Servicer such additional assignments, agreements, powers and instruments, as are necessary or desirable to obtain or maintain the security interest of the Trustee in the Collateral on behalf of the Secured Parties as a perfected security interest subject to no prior Liens (other than Permitted Liens), to carry into effect the purposes of the Indenture or the other Transaction Documents or to better assure and confirm unto the Trustee, the Servicer, the Noteholders or the other Secured Parties their rights, powers and remedies hereunder including, without limitation, the filing of any financing statements, financing change statements, continuation statements or amendments or other instruments under the UCC or PPSA in effect in any jurisdiction with respect to the liens and security interests granted hereby and by the Guarantee and Collateral Agreements, except in each case as set forth on Schedule 8.11 or inand in each case subject to Section 8.25(c) or Section 8.25(d). Each Co-Issuer and the Guarantors intends the security interests granted pursuant to the Indenture and the Guarantee and Collateral Agreements in favor of the Secured Parties to be prior to all other Liens (other than Permitted Liens) in respect of the Collateral, and such Co-Issuer will, and will cause each other Securitization Entity to, take all actions necessary to obtain and maintain, in favor of the Trustee for the benefit of the Secured Parties, a first lien on and a first priority perfected security interest in the Collateral (except with respect to

 

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Permitted Liens and except as set forth on Schedule 8.11 or inand as subject to Section 8.25). If either Co-Issuer fails to perform any of its agreements or obligations under this Section 8.11(a), then the Servicer may perform such agreement or obligation, and the expenses of the Servicer incurred in connection therewith shall be payable by such Co-Issuer upon the Servicer’s demand therefor. The Servicer is hereby authorized to execute and file any financing statements, continuation statements, amendments, financing change statements or other instruments necessary or appropriate to perfect or maintain the perfection of the Trustee’s security interest in the Collateral.

(b) If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note, chattel paper or other instrument, such note, chattel paper or instrument shall be deemed to be held in trust and immediately pledged and within two (2) Business Days physically delivered to the Trustee hereunder, and shall, subject to the rights of any Person in whose favor a prior Permitted Lien has been perfected, be duly endorsed in a manner satisfactory to the Trustee and delivered to the Trustee promptly.

(c) Notwithstanding the provisions set forth in clauses (a) and (b) above, the Co-Issuers and the Guarantors shall not be required to perfect any security interest in any fixtures (other than through a filing of a UCC or PPSA financing statement), any Franchisee promissory notes or any real property.

(d) If during any Quarterly Fiscal Period the Issuer or any U.S. Guarantor shall obtain an interest in any commercial tort claim or claims (as such term is defined in the New York UCC) and such commercial tort claim or claims (when added to any past commercial tort claim or claims that were obtained by any U.S. Securitization Entity prior to such Quarterly Fiscal Period that are still outstanding) have an aggregate value equal to or greater than $5,000,000 as of the last day of such Quarterly Fiscal Period, the Issuer or such U.S. Guarantor shall notify the Servicer on or before the third (3^rd) Business Day prior to the next succeeding Quarterly Payment Date that it has obtained such an interest and shall sign and deliver documentation acceptable to the Servicer granting a security interest under this Base Indenture or the U.S. Guarantee and Collateral Agreement, as the case may be, in and to such commercial tort claim or claims whether obtained during such Quarterly Fiscal Period or prior to such Quarterly Fiscal Period.

(e) The Co-Issuers will, and will cause each other Securitization Entity to, warrant and defend the Trustee’s right, title and interest in and to the Collateral and the income, distributions and Proceeds thereof, for the benefit of the Trustee on behalf of the Secured Parties, against the claims and demands of all Persons whomsoever.

(f) On or before April 30 of each calendar year, commencing with April 30, 2019 (or April 30, 2021 with respect to the Canadian Co-Issuer), the Co-Issuers shall furnish to the Trustee, each Rating Agency and the Servicer (with a copy to the Back-Up Manager) (x) an Opinion of Counsel either stating that, in the opinion of such counsel, solely with respect to the U.S. Securitization Entities, (i) such action has been taken with respect to the recording, filing, re-recording and refiling of this Base Indenture, any indentures supplemental hereto, the U.S. Guarantee and Collateral Agreement and any other requisite documents and with respect to the execution and filing of any financing statements, continuation statements and amendments to financing statements and such other documents as are, subject to clause (c) above, necessary to maintain the perfection of the Lien and security interest created by this Base Indenture and the U.S. Guarantee and Collateral Agreement under Article 9 of the New York UCC and reciting the details of such action or (ii) no such action is necessary to maintain the perfection of such Lien and security interest and (y) an Opinion of Counsel either stating that, in the opinion of such counsel, solely with respect to the Canadian Securitization Entities, (i) such action has been taken with respect to the recording, filing, re-recording and refiling of this Base Indenture, any indentures supplemental hereto, the Guarantee and Collateral Agreements and any other requisite documents and with respect to the execution and filing of

 

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any financing statements, financing change statements, continuation statements, financing change statements and amendments to financing statements and such other documents as are, subject to clause (c) above, necessary to maintain the perfection of the Lien and security interest created by Base Indenture and the Guarantee and Collateral Agreements under the laws of the provinces of Ontario and Québec and reciting the details of such action or (ii) no such action is necessary to maintain the perfection of (or render opposable against third parties) such Lien and security interest. Each such Opinion of Counsel shall also describe the recording, filing, re-recording and refiling of this Base Indenture, any indentures supplemental hereto, the applicable Guarantee and Collateral Agreement and any other requisite documents and the execution and filing of any financing statements, financing change statements, continuation statements and amendments or other documents that will, in the opinion of such counsel, be required, subject to clause (c) above, to maintain the perfection of the lien and security interest of this Base Indenture and the applicable Guarantee and Collateral Agreement under Article 9 of the New York UCC in the Collateral in the United States or the laws of the provinces of Ontario and Québec, as the case may be, until April 30 in the following calendar year.

Section 8.12 Liens.

The Co-Issuers will not, and will not permit any other Securitization Entity to, create, incur, assume or permit to exist any Lien upon any of its property (including the Collateral), other than (i) Liens in favor of the Trustee for the benefit of the Secured Parties and (ii) other Permitted Liens.

Section 8.13 Other Indebtedness.

The Co-Issuers will not, and will not permit any other Securitization Entity to, create, assume, incur, guarantee, suffer to exist or otherwise become or remain liable in respect of any Indebtedness, other than (i) Indebtedness hereunder, including Indebtedness between the Securitization Entities, or under the Guarantee and Collateral Agreements or any other Transaction Documents or the Allocation Agreement, including the incurrence of indebtedness from one Canadian Securitization Entity to another Canadian Securitization Entity to the extent necessary or helpful to give effect to the Priority of Payments or the other provisions of this Base Indenture, and without any derogation thereof (as determined by the Canadian Manager acting in accordance with the applicable Managing Standard), including in respect of Asset Disposition Proceeds, other proceeds of Permitted Asset Dispositions, Release Prices, Insurance/Condemnation Proceeds, Indemnification Amounts and Canadian Tax Lien Reserve Amounts, (ii) any guarantee by any Securitization Entity of the obligations of any other Securitization Entity, including any guarantee of a Securitization Entity established pursuant to the Allocation Agreement or, (iii) any purchase money Indebtedness incurred in order to finance the acquisition, lease or improvement of equipment in the ordinary course of business or (iv) any derivative contract, swap, option, hedging contract, forward purchase contract or other similar agreement or instrument permitted under Section 8.29.

Section 8.14 Employee Benefit Plans.

No Service Recipient or any member of a Controlled Group that includes a Service Recipient shall establish, sponsor, maintain, contribute to, incur any obligation to contribute to or incur any liability in respect of any Pension Plan, other than as set forth on Schedule 8.14. No Service Recipient shall incur any material contingent liability with respect to any post-retirement welfare benefits under a Welfare Plan, other than liability for continuation coverage described in Part 6 of Subtitle B of Title I of ERISA or other applicable continuation of coverage laws and other than any Welfare Plan set forth on Schedule 8.14. No Canadian Securitization Entity shall sponsor, maintain, contribute to or otherwise incur liability under any Canadian Defined Benefit Plan.

 

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Section 8.15 Mergers.

On and after the Series 2020-1 Closing Date, no Co-Issuers will, and will it permit any other Securitization Entity to, merge, amalgamate or consolidate with or into any other Person (whether by means of a single transaction or a series of related transactions), other than any merger or consolidation of any U.S. Securitization Entity with any other U.S. Securitization Entity or any other entity to which the Control Party has given prior written consent or any merger, amalgamation or consolidation of any Canadian Securitization Entity with any other Canadian Securitization Entity or any other entity to which the Control Party has given prior written consent.

Section 8.16 Asset Dispositions.

(a) (a) No Co-Issuer will, nor will it permit any other applicable Securitization Entity to, sell, transfer, lease, license, liquidate or otherwise dispose of any of its property (whether by means of a single transaction or a series of related transactions), including any Equity Interests of any other applicable Securitization Entity, except in the case of (i) Permitted Asset Dispositions and (ii) Permitted Brand Dispositions.

(b) (b) In connection with any Permitted Brand Disposition, the applicable Securitization Entities (or the applicable Manager on their behalf) will deposit the related Release Price to the applicable Collection Account. The Release Price will be applied in accordance with priority (i) of the Priority of Payments, and any applicable Prepayment Consideration shall be due in connection with such mandatory prepayment.

(i) The Canadian Co-Issuer will hold proceeds of any Permitted Brand Disposition attributable to another Canadian Securitization Entity as agent for such Canadian Securitization Entity until such proceeds are applied pursuant to the Priority of Payments or reinvested in Eligible Assets in accordance with Section 8.16(b). The Canadian Co-Issuer may enter into transactions with the other Canadian Securitization Entities to the extent permitted by Section 8.13, Section 8.18 and Section 8.21 to the extent necessary or helpful to give effect to the Priority of Payments (as determined by the Canadian Manager in accordance with the applicable Managing Standard) in order to acquire any such proceeds of any Permitted Brand Disposition.

(ii) Immediately prior to any application of such proceeds of any Permitted Brand Disposition in accordance with priority (i) of the Priority of Payments, the applicable Co-Issuer (or the Manager on its behalf) shall be permitted to disregard the requirements of the Priority of Payments and deem a portion of such proceeds as a payment of the Residual Amount to the Issuer or the Canadian Residual Account, as applicable, so long as (x) the recipient Co-Issuer immediately thereafter uses such Residual Amount to make a loan to the other Co-Issuer in accordance with Section 8.13 with interest at a rate determined by the applicable Manager in accordance with the applicable Managing Standard, (y) after giving effect to such payment of such Residual Amount and such loan, the related proceeds of any Permitted Brand Disposition are applied pursuant to the Priority of Payments by the Co-Issuers as if such loaned amount was Residual Amount of the recipient Co-Issuer and (z) the deemed payment of such Residual Amount is disregarded for purposes of the Weekly Manager’s Certificate.

(c) (c) For the avoidance of doubt, neither the Managers nor any of the Securitization Entities will be permitted to sell, transfer, lease, license, liquidate or otherwise dispose of any of the Driven Securitization Brands other than pursuant to a Permitted Brand Disposition.

 

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Section 8.17 Acquisition of Assets..

The Co-Issuers will not, and will not permit any other Securitization Entity to, acquire, by long-term or operating lease or otherwise, any property (i) if such acquisition when effected on behalf of any Securitization Entity by the applicable Manager would constitute a breach by such Manager of the applicable Management Agreement or (ii) that is a lease, license or other contract or permit, if the grant of a lien or security interest in any of the applicable Securitization Entity’s right, title and interest in, to or under such lease, license, contract or permit in the manner contemplated by the Indenture and the Guarantee and Collateral Agreements (a) would be prohibited by the terms of such lease, license, contract or permit, (b) would constitute or result in the abandonment, invalidation or unenforceability of any right, title or interest of the applicable Securitization Entity therein or (c) would otherwise result in a breach thereof or the termination or a right of termination thereof, except to the extent that any such prohibition, breach, termination or right of termination is rendered ineffective pursuant to the UCC or PPSA or any other applicable law. Notwithstanding any language to the contrary in this Section 8.17, in the case of clause (ii) above, each Co-Issuer and each Securitization Entity will be in compliance with this Section 8.17, if each Issuer and each Securitization Entity uses commercially reasonable efforts to comply with clause (ii).

Section 8.18 Dividends, Officers’ Compensation, etc..

The Issuer will not declare or pay any distributions on any of its limited liability company interests and the Canadian Co-Issuer will not declare or pay any distributions on any of its shares; provided that, in each case, so long as no Potential Rapid Amortization Event, Rapid Amortization Event, Default or Event of Default has occurred and is continuing with respect to any Series of Notes Outstanding or would result therefrom, the Co-Issuers may declare and pay distributions to the extent permitted under applicable law and their respective Charter Documents, including in respect of any Permitted Asset Disposition described in clause (xix) of the definition thereof and any amount on deposit in the Canadian Residual Account and any Residual Amount paid to the Issuer pursuant to the Priority of Payments. No Co-Issuer will, nor will it permit any other Securitization Entity that is a Subsidiary of such Co-Issuer to, pay any wages or salaries or other compensation to its officers, directors, managers or other agents except out of earnings computed in accordance with GAAP or except for the fees paid to its Independent Managers or to the extent required by the Canadian Management Agreement. The Co-Issuers will not, and will not permit any other Securitization Entity to, redeem, purchase, retire or otherwise acquire for value any Equity Interest in or issued by such Securitization Entity or set aside or otherwise segregate any amounts for any such purpose except as expressly permitted by the Indenture or as consented to by the Control Party. The Co-Issuers may draw on Class A-1 Note Commitments with respect to any Series of Class A-1 Notes for general corporate purposes of the Securitization Entities and the Non-Securitization Entities, including to fund any acquisition by any Securitization Entity or Non-Securitization Entity; provided that the Co-Issuers shall not draw on such Class A-1 Note Commitments to pay dividends on Parent shares or to repurchase Parent shares.

Notwithstanding the foregoing, (a) each applicable Securitization Entity shall be permitted to make a distribution of any Large Franchisor Exemption Amount contributed to such Securitization Entity by any Non-Securitization Affiliate on or prior to any applicable Series Closing Date, or such other date of contribution, with respect to a Future Securitization Entity to such Non-Securitization Affiliate, (b) each U.S. Securitization Entity shall be permitted to make a distribution of any Tax Lien Reserve Amount to any other U.S. Securitization Entity or the direct parent of Funding Holdco solely to the extent permitted by, and in accordance with, Section 8.31(a) and (c) each Canadian Securitization Entity shall be permitted to make a distribution (i) to any other Canadian Securitization Entity to the extent necessary or helpful to give effect to the Priority of Payments or any other provision of this Base Indenture, and without any derogation thereof (as determined by the Canadian Manager acting in accordance with the applicable Managing Standard), including in respect of the distribution of Asset Disposition Proceeds, other proceeds of

 

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Permitted Asset Dispositions, Release Prices, Insurance/Condemnation Proceeds, Indemnification Amounts, and (ii) to any other Canadian Securitization Entity or the direct parent of Canadian Funding Holdco in respect of any Canadian Tax Lien Reserve Amount to any Canadian Securitization Entity or the direct parent of Canadian Funding Holdco solely to the extent permitted by, and in accordance with, Section 8.31(b).

Section 8.19 Legal Name, Location.

The Co-Issuers will not, and will not permit any other Securitization Entity to, change its location (within the meaning of Section 9-301 or 9-307 of the applicable UCC with respect to any U.S. Securitization Entity or the PPSA with respect to any Canadian Securitization Entity) or its legal name (including, with respect to any Canadian Securitization Entity, adding a French only name, combined French/English name and/or English/French name) without at least thirty (30) days’ prior written notice to the Trustee, the Servicer, the Managers, the Back-Up Manager and each Rating Agency with respect to each Series of Notes Outstanding. In the event that either Co-Issuer or any other Securitization Entity desires to so change its location or change its legal name, such Co-Issuer will, or will cause such other Securitization Entity to, make any required filings, and prior to actually changing its location or its legal name such Co-Issuer will, or will cause such other Securitization Entity to, deliver to the Trustee and the Servicer (i) an Officers’ Certificate confirming that all required filings have been made, subject to Section 8.11(c), to continue the perfected interest of the Trustee on behalf of the Secured Parties in the Collateral under Article 9 of the applicable UCC or PPSA in respect of the new location or new legal name of such Co-Issuer or other Securitization Entity and (ii) copies of all such required filings with the filing information duly noted thereon by the office in which such filings were made.

Section 8.20 Charter Documents.

No Co-Issuer will, nor will it permit any other Securitization Entity to, amend, or consent to the amendment of, any of the Charter Documents to which it is a party as a member, shareholder, general partner, or limited partner, as applicable, unless, prior to such amendment, the Control Party shall have consented thereto and the Rating Agency Condition with respect to each Series of Notes Outstanding shall have been satisfied with respect to such amendment; provided that the Co-Issuers and the other Securitization Entities shall be permitted to amend their Charter Documents without having to meet the Rating Agency Condition to cure any ambiguity, defect or inconsistency therein or if such amendments could not reasonably be deemed to be disadvantageous to any Noteholder in the reasonable judgment of the Control Party. The Control Party may rely on an Officers’ Certificate to make such determination. The Co-Issuers shall provide written notice to each Rating Agency (with a copy to the Servicer) of any amendment of any Charter Document of any Securitization Entity.

Section 8.21 Investments.

No Co-Issuer will, nor will it permit any other Securitization Entity to, make, incur or suffer to exist any loan, advance, extension of credit or other investment in any other Person if such investment when made on behalf of any Securitization Entity by the applicable Manager would constitute a breach by such Manager of the applicable Management Agreement, other than investments in (a) the Accounts, (b) any Franchisee promissory notes, (c) any other Securitization Entity, including investments by any Canadian Securitization Entity in any other Canadian Securitization Entity to the extent necessary or helpful to give effect to the Priority of Payments or any other provision of this Base Indenture, and without any derogation thereof (as determined by the Canadian Manager acting in accordance with the applicable Managing Standard), including in respect of Asset Disposition Proceeds, other proceeds of Permitted Asset Dispositions, Release Prices, Insurance/Condemnation Proceeds, Indemnification Amounts and Canadian Tax Lien Reserve Amounts or (d) the Non-Securitization Entities in connection with the transactions described in the proviso to Section 8.24(a)(vi).

 

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Section 8.22 No Other Agreements.

No Co-Issuer will, nor will it permit any other Securitization Entity to, enter into or be a party to any agreement or instrument (other than any Transaction Document, any Franchise Document, any other document expressly permitted by a Series Supplement or the Transaction Documents, as the same may be amended, supplemented or otherwise modified from time to time, any documents relating to the transactions described in the proviso to Section 8.24(a)(vi) or any documents or agreements incidental thereto) if such agreement when effected on behalf of any Securitization Entity by the applicable Manager would constitute a breach by such Manager of the applicable Management Agreement.

Section 8.23 Other Business.

No Co-Issuer will, nor will it permit any other Securitization Entity to, engage in any business or enterprise or enter into any transaction, other than the incurrence and payment of ordinary course operating expenses, the issuing and selling of the Notes and other activities related to or incidental to any of the foregoing or any other transaction which when effected on behalf of any Securitization Entity by the applicable Manager would not constitute a breach by such Manager of the applicable Management Agreement.

Section 8.24 Maintenance of Separate Existence.

(a) Each of the Co-Issuers will, and will cause each other Securitization Entity to, except as otherwise expressly contemplated by the Transaction Documents:

(i) maintain its own deposit and securities account or accounts, separate from those of any of its Affiliates (other than the other Securitization Entities, Take 5 Oil and Take 5) (such Affiliates, the “Non-Securitization Affiliates”), with commercial banking institutions and ensure that the funds of the Securitization Entities will not be diverted to any Person who is not a Securitization Entity or for other than the use of the Securitization Entities, nor will such funds be commingled with the funds of any of its Non-Securitization Affiliates other than as provided in the Transaction Documents;

(ii) ensure that all transactions between it and any of its Non-Securitization Affiliates, whether currently existing or hereafter entered into, shall be only on an arm’s length basis, it being understood and agreed that the transactions contemplated in the Transaction Documents and the transactions described in the proviso to the following clause (vi) meet the requirements of this clause (ii);

(iii) to the extent that it requires an office to conduct its business, (x) conduct its business from an office at a separate address from that of any of its Non-Securitization Affiliates; provided that segregated offices in the same building shall constitute separate addresses for purposes of this clause (iii); or (y) to the extent that it has a shared office with any Non-Securitization Affiliate, there shall be a fair and appropriate allocation of overhead costs among them, and each such entity shall bear its fair share of such expenses;

(iv) issue separate financial statements from all of its Non-Securitization Affiliates prepared at least quarterly and prepared in accordance with GAAP;

(v) conduct its affairs in its own name and in accordance with its Charter Documents and observe all necessary, appropriate and customary limited liability company, partnership or corporate formalities (as applicable), including, but not limited to, holding all regular and special meetings appropriate to authorize all of its actions, keeping separate and accurate minutes of its meetings, passing all resolutions or consents necessary to authorize actions taken or to be taken, and maintaining accurate and separate books, records and accounts, including, but not limited to, payroll and intercompany transaction accounts;

 

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(vi) not assume or guarantee any of the liabilities of any of its Non-Securitization Affiliates; provided that the Securitization Entities may, pursuant to any Letter of Credit Reimbursement Agreement, cause letters of credit to be issued pursuant to the Class A-1 Note Purchase Agreements that are for the sole benefit of one or more Non-Securitization Entities in the United States or Canada, as applicable, if the applicable Co-Issuer receives a fee from each Non-Securitization Entity whose obligations are secured by any such letter of credit in an amount equal to the cost to such Co-Issuer in connection with the issuance and maintenance of such letter of credit plus 25 basis points per annum, it being understood that such fee is an arm’s length fair market fee;

(vii) take, or refrain from taking, as the case may be, all other actions that are necessary to be taken or not to be taken in order to (x) ensure that the assumptions and factual recitations set forth in the Specified Bankruptcy Opinion Provisions remain true and correct in all material respects with respect to it and (y) comply in all material respects with those procedures described in such provisions which are applicable to it;

(viii) maintain at least two (2) Independent Managers on its board of managers or board of directors (other than with respect to the Canadian SPV Franchising Entity LPs, Driven Canada Product Sourcing and Driven Canada Claims Management, the respective Canadian Securitization Entity GP for which maintains at least two (2) Independent Managers on its board of directors), as the case may be, and with respect to the applicable Canadian Securitization Entities, one (1) of which Independent Manager is a Canadian resident;

(ix) to the fullest extent permitted by law, so long as any Notes remain Outstanding, remove or replace any Independent Manager only for Cause and only after providing the Trustee and the Control Party with at least five (5) days’ prior written notice of (A) any proposed removal of such Independent Manager and (B) the identity of the proposed replacement Independent Manager, together with a certification that such replacement satisfies the requirements for an Independent Manager set forth in its Charter Documents; and

(x) (A) provide, or cause the applicable Manager to provide, to the Trustee and the Control Party a copy of the executed agreement with respect to the appointment of any replacement Independent Manager and (B) provide, or cause the applicable Manager to provide, to the Trustee, the Control Party and each Noteholder written notice of the identity and contact information for each Independent Manager on an annual basis and at any time such information changes.

(b) The Issuer, on behalf of itself and each of the other U.S. Securitization Entities, confirms that the statements relating to the Issuer referenced in the opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP regarding substantive consolidation matters delivered to the Trustee on each Series Closing Date or such other date when the related assets for such Driven Securitization Brand were contributed to the U.S. Securitization Entities pursuant to a Contribution Agreement are true and correct with respect to itself and each other U.S. Securitization Entity, and that the Issuer will, and will cause each other U.S. Securitization Entity to, comply with any covenants or obligations assumed to be complied with by it therein as if such covenants and obligations were set forth herein in accordance with Section 8.24(a)(vii). The Canadian Co-Issuer, on behalf of itself and each of the other Canadian Securitization Entities, confirms that the statements relating to the Canadian Co-Issuer referenced in the opinion of Blake, Cassels & Graydon LLP regarding substantive consolidation matters delivered to the Trustee on each Series

 

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Closing Date (beginning with the Series 2020-1 Closing Date) or such other date when the related assets for such Driven Securitization Brand were contributed to the Canadian Securitization Entities pursuant to a Contribution Agreement are true and correct with respect to itself and each other Canadian Securitization Entity, and that the Canadian Co-Issuer will, and will cause each other Canadian Securitization Entity to, comply with any covenants or obligations assumed to be complied with by it therein as if such covenants and obligations were set forth herein in accordance with Section 8.24(a)(vii).

Section 8.25 Covenants Regarding the Securitization IP.

(a) The Co-Issuers will not, and will not permit any other Securitization Entity to, take or omit to take any action with respect to the maintenance, enforcement and defense of any applicable Securitization Entity’s rights in and to the Securitization IP that would constitute a breach by the applicable Manager of the applicable Management Agreement if such action were taken or omitted by such Manager on behalf of any applicable Securitization Entity.

(b) Each Co-Issuer will notify the Trustee, the Back-Up Manager and the Servicer in writing within fifteen (15) Business Days of such Co-Issuer’s first knowing or having reason to know that any application or registration relating to any material Securitization IP (now or hereafter existing) may become abandoned or dedicated to the public domain, or of any material adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the USPTO, the USCO or the CIPO or any court but excluding office actions in the course of prosecution and any non-final determinations (other than in an adversarial proceeding) of the USPTO, the USCO or the CIPO) regarding the validity or any Securitization Entity’s ownership of any material Securitization IP, its right to register the same, or to keep and maintain the same.

(c) With respect to the Securitization IP, (i) the Issuer caused each applicable U.S. SPV Franchising Entity (other than CARSTAR Franchisor, Take 5 Franchisor, ABRA Franchisor and FUSA Franchisor) to execute, deliver and file, within fifteen (15) days after the Series 2015-1 Closing Date, (ii) the Issuer caused CARSTAR Franchisor to execute, deliver and file, within fifteen (15) days after the Series 2016-1 Closing Date, (iii) the Issuer caused Take 5 Franchisor to execute, deliver and file, within thirty (30) days after the Series 2018-1 Closing Date, (iv) the Issuer caused ABRA Franchisor to execute, deliver and file, within thirty (30) days after October 4, 2019, and (v) the Issuer will cause FUSA Franchisor and the Canadian Co-Issuer will cause the Canadian SPV Franchising Entity LPs, Driven Canada Product Sourcing and Driven Canada Claims Management, as applicable, to execute, deliver and file, within thirty (30) days after the Series 2020-1 Closing Date, instruments substantially in the form of Exhibit D-1 hereto with respect to Trademarks, Exhibit D-2 hereto with respect to Patents and Exhibit D-3 hereto with respect to Copyrights, or otherwise in form and substance satisfactory to the Control Party, and any other instruments or documents as may be reasonably necessary or, in the Control Party’s opinion, desirable to perfect or protect the Trustee’s security interest granted under this Base Indenture and the Guarantee and Collateral Agreements in the Trademarks, Patents and Copyrights included in the Securitization IP in the United States and Canada.

(d) If either Co-Issuer or any Guarantor, either itself or through any agent, licensee or designee, files or otherwise acquires (other than for a Pre-Take 5 Conversion Brand) an application for the registration of any Patent, Trademark or Copyright with the USPTO, the USCO or the CIPO, such Co-Issuer or such Guarantor (i) shall give the Trustee and the Control Party written notice thereof and (ii) upon reasonable request of the Control Party, solely with respect to such applications filed in the United States and Canada, in a reasonable time after such filing (and in any event within ninety (90) days), shall execute and deliver all instruments and documents, and take all further action, that the Control Party may reasonably request in order to continue, perfect or protect the security interest granted hereunder or under the Guarantee and Collateral Agreements in the United States or Canada, as applicable, including, without limitation,

 

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executing and delivering (x) the Supplemental Notice of Grant of Security Interest in Trademarks substantially in the form attached as Exhibit E-1 hereto, (y) the Supplemental Notice of Grant of Security Interest in Patents substantially in the form attached as Exhibit E-2 hereto and/or (z) the Supplemental Notice of Grant of Security Interest in Copyrights substantially in the form attached as Exhibit E-3 hereto, as applicable.

(e) In the event that any material Securitization IP is infringed upon, misappropriated or diluted by a third party in a manner that could reasonably be expected to have a Material Adverse Effect, the applicable Securitization Entity upon becoming aware of such infringement, misappropriation or dilution shall promptly notify the Trustee and the Control Party in writing. The applicable Securitization Entity will take all reasonable and appropriate actions, at its expense, to protect or enforce such Securitization IP, including, if reasonable, suing for infringement, misappropriation or dilution and seeking an injunction (including, if appropriate, temporary and/or preliminary injunctive relief) against such infringement, misappropriation or dilution, unless the failure to take such actions on behalf of the applicable Securitization Entity by the applicable Manager would not constitute a breach by such Manager of the applicable Management Agreement; provided that if the applicable Securitization Entity decides not to take any action with respect to an infringement, misappropriation or dilution that could reasonably be expected to have a Material Adverse Effect, such Securitization Entity shall deliver written notice to the Trustee, the Managers, the Back-Up Manager and the Control Party setting forth in reasonable detail the basis for its decision not to act, and none of the Trustee, the Managers, the Back-Up Manager or the Control Party will be required to take any actions on its behalf to protect or enforce the Securitization IP against such infringement, misappropriation or dilution; provided, further, that the applicable Manager will be required to act if failure to do so would constitute a breach of the applicable Managing Standard.

(f) With respect to licenses of third-party Intellectual Property entered into after (i) the Series 2015-1 Closing Date by the Securitization Entities of the Series 2015-1 Closing Date, (ii) the Series 2016-1 Closing Date by the Securitization Entities as of the Series 2016-1 Closing Date, (iii) the Series 2018-1 Closing Date by the Securitization Entities as of the Series 2018-1 Closing Date, (iv) October 4, 2019 by the Securitization Entities as of October 4, 2019 and (v) the Series 2020-1 Closing Date by the Securitization Entities (including, in each case, for the avoidance of doubt, by the applicable Manager acting on behalf of the Securitization Entities, as applicable), the Securitization Entities (or the applicable Manager on their behalf) shall use commercially reasonable efforts to include terms permitting the grant by the Securitization Entities of a security interest therein to the Trustee for the benefit of the Secured Parties and to allow the applicable Manager (and any successorSuccessor Manager) the right to use such Intellectual Property in the performance of its duties under the applicable Management Agreement.

Section 8.26 Insurance.

The Co-Issuers shall cause the applicable Manager to list each applicable Service Recipient as an “additional insured” or “loss payee” on any insurance maintained by such Manager for the benefit of such Service Recipient pursuant to the applicable Management Agreement.

Section 8.27 Litigation.

If DBI or any of its parent entities is not then subject to Section 13 or 15(d) of the Exchange Act, the Co-Issuer shall, on each Quarterly Payment Date, provide a written report to the Servicer, the Managers, the Back-Up Manager and each Rating Agency that sets forth all outstanding litigation, arbitration or other proceedings against any Driven Brands Entity that would have been required to be disclosed in such entity’s annual reports, quarterly reports and other public filings which such entity would have been required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act if such entity were subject to such Sections.

 

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Section 8.28 Environmental.

The Co-Issuers shall, and shall cause each other Service Recipient to, promptly notify the Servicer, the Managers, the Back-Up Manager, the Trustee and each Rating Agency, in writing, upon receipt of any written notice pursuant to which any Service Recipient becomes aware from any source (including but not limited to a governmental entity) relating in any way to any possible material liability of any Service Recipient pursuant to any Environmental Law that could reasonably be expected to have a Material Adverse Effect. In addition, other than exceptions to any of the following that could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, the Co-Issuers shall, and shall cause each other Service Recipient to:

(a) (i) comply with all applicable Environmental Laws, (ii) hold all Environmental Permits (each of which is in full force and effect) required for any of their current operations or for any property owned, leased, or otherwise operated by any of them and obtain all Environmental Permits for any intended operations when such Environmental Permits are required and (iii) comply with all of their Environmental Permits; and

(b) undertake all investigative and remedial action required by Environmental Laws with respect to any Materials of Environmental Concern present at, on, under, in or about any real property owned, leased or operated by either Co-Issuer or any of its respective Affiliates, or at any other location (including, without limitation, any location to which Materials of Environmental Concern have been sent for re-use or recycling or for treatment, storage or disposal) which could reasonably be expected to (i) give rise to liability of either Co-Issuer or any of its respective Affiliates under any applicable Environmental Law or otherwise result in costs to either Co-Issuer or any of its respective Affiliates, (ii) interfere with either Co-Issuer’s or any of its respective Affiliates’ continued operations or (iii) impair the fair saleable value of any real property owned by either Co-Issuer or any of their its Affiliates.

Section 8.29 Derivatives Generally.

The Co-Issuers will not, and will not permit any other Securitization Entity to, enter into any derivative contract, swap, option, hedging contract, forward purchase contract or other similar agreement or instrument without the prior written consent of the Control Party (other than forward purchase agreements entered into by a Co-Issuer with third-party vendors on behalf of the Driven Securitization Brands in the ordinary course of business) if any such contract, agreement or instrument requires either Co-Issuer to expend any financial resources (other than amounts available to the Co-Issuers pursuant to priority (xxix) of the Priority of Payments) to satisfy any payment obligations owed in connection therewith.

Section 8.30 Future Securitization Entities and Future Brands.

(a) The Co-Issuers, in accordance with and as permitted under the Transaction Documents, may form or cause to be formed Future Securitization Entities without the consent of the Control Party, at the election of the Managers, in respect of (i) Securitization-Owned Locations (other than in the circumstances described in clause (x) below which shall be required) and (ii) acquisitions of additional franchise brand subsidiaries (which may include international subsidiaries) in connection with Future Brands; provided that (x) the applicable Manager (on behalf of the applicable Co-Issuer or Franchisor Holdco) shall be required to contribute to the applicable Securitization Entities any future Securitization-Owned Locations (1) located in the United States for the Take 5 Brand or Fix Auto Brand or (2) located in Canada for the CARSTAR Brand or Take 5 Brand, and (y) the applicable Manager (on behalf of the applicable Co-Issuer or Franchisor Holdco) shall be required to contribute to one or more applicable Securitization Entities any franchise brand, in each case, that, in the good faith determination of the applicable Manager in accordance with the applicable Managing Standard, is intended to compete against any Driven Securitization Brand in the United States or Canada, respectively. At the time any Future Securitization Entity is created or acquired, or any Future Brand is contributed into any Future Securitization Entity or any other Securitization Entity, the definitions of “SPV Franchising Entities”, “Driven Securitization Brands” and “Securitization IP” shall be read to include such Future Securitization Entity and Future Brand, respectively.

 

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(b) Each Future Securitization Entity shall be a Delaware limited liability company, a Delaware corporation, a Canadian corporation, or an Ontario limited partnership (so long as the use of such form is reasonably satisfactory to the Control Party) and shall have adopted Charter Documents substantially similar to the Charter Documents of the Securitization Entities that are Delaware limited liability companies, Delaware corporations, Canadian corporations, or Ontario limited partnerships, as applicable, as in existence on the Series 2020-1 Closing Date. If either Co-Issuer desires to create, incorporate, form or otherwise organize a Future Securitization Entity that does not comply with the immediately preceding sentence, such Co-Issuer shall first obtain the prior written consent of the Control Party, such consent not to be unreasonably withheld.

(c) Each Co-Issuer shall cause each Future Securitization Entity to promptly execute an assumption agreement in substantially the form set forth as Exhibit A to the U.S. Guarantee and Collateral Agreement and, in the case of any Future Securitization Entity organized as a Canadian corporation or Ontario limited partnership, the form attached to the Canadian Collateral Agreement (each, an “Assumption Agreement”) pursuant to which such Future Securitization Entity shall become jointly and severally obligated under the U.S. Guarantee and Collateral Agreement with the other Guarantors and, as applicable, the Canadian Collateral Agreement with the other Canadian Guarantors.

(d) Upon the execution and delivery of an Assumption Agreement as required in clause (c) above, any Future Securitization Entity party thereto will become a party to the U.S. Guarantee and Collateral Agreement and, as applicable, the Canadian Collateral Agreement, with the same force and effect as if originally named therein as a Guarantor and “PledgorGrantor”, respectively, and, without limiting the generality of the U.S. Guarantee and Collateral Agreement and, as applicable, the Canadian Collateral Agreement, will assume all obligations and liabilities of a Guarantor and “PledgorGrantor ” thereunder.

(e) After the Series 2020-1 Closing Date, the Co-Issuers may restructure the ownership of the Securitization Entities or create new Securitization Entities so long as such entities remain Securitization Entities.

(f) After the Series 2020-1 Closing Date, the Co-Issuers shall deliver, or shall cause the applicable Manager to deliver, to each Rating Agency any Opinion of Counsel regarding “true sale” or “true contribution” matters prepared in connection with the formation of any Future Securitization Entity that is party to a Contribution Agreement to the extent reasonably requested or reasonably anticipated to be reasonably requested by such Rating Agency.

Section 8.31 Tax Lien Reserve Amount.

(a) Upon receipt of any Tax Lien Reserve Amount by the Issuer or any U.S. Guarantor, the Issuer will remit such amount to a collateral deposit account established with and controlled by the Trustee in the name of the Trustee for the benefit of the Secured Parties, solely in its capacity as trustee, as security for the obligation of the Securitization Entities to have the related asserted lien released; provided that the Tax Lien Reserve Amount may only be released from such account as follows: (a) if evidence reasonably satisfactory to the Servicer is provided to the Trustee, the Servicer, the U.S. Manager, the Back-Up Manager and the Controlling Class Representative indicating that the related tax lien has been released, such amount will be withdrawn and paid according to the written instructions of the Issuer (or the U.S. Manager on its behalf); (b) all or a portion of such amount will be withdrawn and paid to the IRS on behalf

 

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of the Driven Brands Entities upon the written instructions of the Issuer (or the U.S. Manager on its behalf); or (c) after the occurrence and during the continuation of an Event of Default, or after the receipt by a U.S. Securitization Entity of notice that the IRS intends to execute on the related tax lien in respect of the assets of any such Securitization Entity, all or a portion of such Tax Lien Reserve Amount may be withdrawn and paid to the IRS upon the written instructions of the Control Party (with notice of such payment to DBI).

(b) In the event a Canadian Tax Lien Reserve Amount is contributed to any Canadian Securitization Entity, such amount will be held by the Canadian Co-Issuer on behalf of itself or as agent for any other Canadian Guarantor and held in an account in the name of the Trustee, for the benefit of the Secured Parties, solely in its capacity as trustee, as security for the obligation of the Canadian Securitization Entities to have the asserted lien released; provided that the Canadian Tax Lien Reserve Amount may only be released from such account as follows: (a) if evidence reasonably satisfactory to the Servicer is provided to the Trustee, the Servicer, the Canadian Manager, the Back-Up Manager and the Controlling Class Representative indicating that the related tax lien has been released, such amount will be withdrawn and paid according to the written instructions of the Canadian Co-Issuer and any applicable Canadian Guarantor (or the Canadian Manager on its behalf); (b) all or a portion of such amount will be withdrawn and paid to the CRA (or any other applicable regulatory authority) on behalf of the applicable Driven Brands Entities upon the written instructions of the Canadian Co-Issuer and any applicable Canadian Guarantor (or the Canadian Manager on its behalf); or (c) after the occurrence and during the continuation of an Event of Default, or after the receipt by a Canadian Securitization Entity of notice that the CRA (or any other applicable regulatory authority) intends to execute on the related tax lien in respect of the assets of any such Canadian Securitization Entity, all or a portion of such Canadian Tax Lien Reserve Amount may be withdrawn and paid to the CRA (or any other applicable regulatory authority) upon the written instructions of the Control Party (with notice of such payment to the Canadian Manager).

Section 8.32 Bankruptcy or Insolvency Proceedings.

Each Co-Issuer shall, and shall cause each other applicable Service Recipient to, promptly object to the institution of any bankruptcy or insolvency proceeding against it and take all necessary or advisable steps to cause the dismissal of any such proceeding (including, without limiting the generality of the foregoing, timely filing an answer and any other appropriate pleading objecting to (i) the institution of any proceeding to have any such Service Recipient, as the case may be, adjudicated as bankrupt or insolvent or (ii) the filing of any petition seeking relief, reorganization, arrangement, adjustment or composition or in respect of any Securitization Entity, as the case may be, under applicable bankruptcy or insolvency law or any other applicable law).

Section 8.33 Take 5 Accounts.

(a) Take 5 Properties (or the Manager on its behalf) shall cause all cash revenues, credit card and debit card proceeds of the Take 5 Company Locations and any proceeds of the initial sale of gift cards (excluding Pass-Through Amounts) at Take 5 Company Locations, in each case to the extent not deposited directly into a Take 5 Company Location Concentration Account, to promptly be deposited into a Take 5 Account.

(b) Take 5 Properties (or the Manager on its behalf) shall, on each Business Day, cause all available funds in excess of $500,000 posted to Existing Local Take 5 Company Location Accounts that are (x) not zero balance accounts which sweep daily into an account subject to an Account Control Agreement and (y) not subject to Account Control Agreements, to be remitted to a Take 5 Company Location Concentration Account or another Take 5 Account subject to an Account Control Agreement on such Business Day.

 

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ARTICLE IX

REMEDIES

Section 9.1 Rapid Amortization Events.

The Notes will be subject to rapid amortization in whole and not in part following the occurrence of any of the following events as declared by the Control Party (at the direction of the Controlling Class Representative) by written notice to the Co-Issuers (with a copy to the Managers, the Back-Up Manager and the Trustee) (each, a “Rapid Amortization Event”); provided that a Rapid Amortization Event described in clause (d) will occur automatically without any declaration thereof by the Control Party (at the direction of the Controlling Class Representative):

(a) the failure to maintain a DSCR of at least 1.20:1.00 as calculated on any Quarterly Calculation Date; provided, that, on and after the 2022 Springing Amendments Implementation Date, such threshold may be increased at the request of the Co-Issuers subject to approval by the Control Party and, to the extent that any Rapid Amortization Event has occurred and is continuing, each Noteholder of each Series of applicable Notes Outstanding;

(b) the occurrence of a Manager Termination Event;

(c) the occurrence of an Event of Default;

(d) the Co-Issuers have not repaid or refinanced any Series of Notes (or Class thereof) in full on or prior to the Series Anticipated Repayment Date relating to such Series of Notes or Class; or

(e) (x) prior to the System-Wide Sales Trigger Date, Driven Brands System-Wide Sales as calculated on any Quarterly Calculation Date are less than $640,000,000; provided that such threshold may be decreased in connection with a Permitted Brand Disposition subject to approval by the Control Party and receipt of the Rating Agency Confirmation and (y) on and after the System-Wide Sales Trigger Date, Driven Brands System-Wide Sales as calculated on any Quarterly Calculation Date are less than $1,500,000,000; provided that such threshold may be increased or decreased at the request of the Co-Issuers subject to approval by the Control Party and satisfaction of the Rating Agency Condition. On and after the System-Wide Sales Trigger Date, any changes to Section 9.1(e) of the Indenture related to approval of changes to the Driven Brands System-Wide Sales will be approved by the Control Party at the direction of the Co-Issuers and will not require any further consent or review by the Control Party, and the Control Party’s approval will be deemed to be consistent with the Servicing Standard.

Section 9.2 Events of Default.

If any one of the following events shall occur (each, an “Event of Default”):

(a) any Co-Issuer defaults in the payment of interest on any Notes Outstanding when the same becomes due and payable and such default continues for two (2) Business Days (or, in the case of a failure to pay such interest when due resulting solely from an administrative error or omission by the Trustee, such default continues for a period of two (2) Business Days after the Trustee has Actual Knowledge of such administrative error or omission); provided that failure to pay any contingent interest on any Series of Notes on any Quarterly Payment Date (including on any Series Legal Final Maturity Date) will not be an Event of Default;

 

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(b) any Co-Issuer (i) defaults in the payment of any principal of any Notes on the Series Legal Final Maturity Date for such Notes or as and when due in connection with any mandatory or optional prepayment or (ii) fails to make any other principal payments due from funds available in the Collection Accounts in accordance with the Priority of Payments on any Weekly Allocation Date; provided that, in the case of a failure to pay principal under either clause (i) or (ii) resulting solely from an administrative error or omission by the Trustee, such default continues for a period of two (2) Business Days after the Trustee receives written notice or the Trustee has Actual Knowledge of such administrative error or omission; provided, further, that the failure to pay any Prepayment Consideration on any prepayment of principal made during any Rapid Amortization Period occurring prior to the related Series Anticipated Repayment Date will not be an Event of Default;

(c) any Service Recipient fails to perform or comply with any of the covenants (other than those covered by clause (a) or clause (b) above) (including any covenant to pay any amount other than interest on or principal of the Notes when due in accordance with the Priority of Payments), or any of its representations or warranties contained in any Transaction Document to which it is a party proves to be incorrect in any material respect as of the date made or deemed to be made, and such default, failure or breach continues for a period of thirty (30) consecutive days (or, solely with respect to a failure to comply with (i) any obligation to deliver a notice, financial statement, report or other communication within the specified time frame set forth in the applicable Transaction Document, such failure continues for a period of five (5) consecutive Business Days after the specified time frame for delivery has elapsed or (ii) Section 8.7, 8.12, 8.13, 8.14, 8.15, 8.17, 8.18, 8.19, 8.20, 8.21, 8.22, 8.23, 8.24, 8.25, 8.32, or 8.33 such failure continues for a period of ten (10) consecutive Business Days), in each case, following the earlier to occur of the Actual Knowledge of such Service Recipient of such breach or failure and the default caused thereby or written notice to such Service Recipient by the Trustee, the Back-Up Manager or the Control Party (at the direction of the Controlling Class Representative) of such default, breach or failure; provided that no Event of Default will occur pursuant to this clause (c) if, with respect to any such representation deemed to have been false in any material respect when made which can be remedied by making a payment of an Indemnification Amount, (i) the relevant Contributor or Manager, as applicable, has paid the required Indemnification Amount in accordance with the terms of the Transaction Documents and (ii) such Indemnification Amount has been deposited into the applicable Collection Account;

(d) the occurrence of an Event of Bankruptcy with respect to any Securitization Entity;

(e) the Interest-Only DSCR as calculated as of any Quarterly Calculation Date is less than 1.10:1.00;

(f) the SEC or other regulatory body having jurisdiction reaches a final determination that any Securitization Entity is required to register as an “investment company” under the Investment Company Act or is under the “control” of a Person that is required to register as an “investment company” under the Investment Company Act;

(g) any of the Transaction Documents or any material portion thereof ceases to be in full force and effect or enforceable in accordance with its terms (other than (i) in accordance with the express termination provisions thereof) or DBI or any Service Recipient so asserts in writing; and (ii) on or after the 2022 Springing Amendments Implementation Date, (x) a termination in the ordinary course of business, which termination could not reasonably be expected to result in a Material Adverse Effect or (y) as a result of actions, omissions or breaches of representations or warranties by any party to such Transaction Document that is not a Securitization Entity or a Non-Securitization Entity so long as such Transaction Document, or any material portion thereof, is reinstated or replaced with a substantially similar document, agreement or arrangement within thirty (30) Business Days after such Transaction Document ceases to be in full force and effect or enforceable in accordance with its terms);

 

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(h) other than with respect to Collateral with an aggregate fair market value of less than $15,000,000(x) prior to the 2022 Springing Amendments Implementation Date, $15,000,000 or (y) on and after the 2022 Springing Amendments Implementation Date, the greater of $30,000,000 and 7% of Retained Collections for the immediately preceding four Quarterly Fiscal Periods, the Trustee ceases to have for any reason a valid and perfected first priority security interest in the Collateral (subject to Permitted Liens) in which perfection can be achieved under the UCC, the PPSA, or other applicable law in the United States or Canada to the extent required by the Transaction Documents or any Service Recipient or any Affiliate thereof so asserts in writing;

(i) any Service Recipient fails to perform or comply with any material provision of its organizational documents, or any Securitization Entity fails to comply with any provision of Section 8.24 or any affirmative covenant in the Guarantee and Collateral Agreements relating to legal separateness of the Securitization Entity, which failure is reasonably likely to cause the contribution or sale of the Collateral to such Securitization Entity pursuant to the Contribution Agreements to fail to constitute a “true contribution” or other absolute transfer of such Collateral pursuant to the Contribution Agreements or is reasonably likely to cause a court of competent jurisdiction to disregard the separate existence of such Securitization Entity relative to any Person other than another Securitization Entity and, in each case, such failure continues for more than thirty (30) consecutive days following the earlier to occur of the Actual Knowledge of such Service Recipient or written notice to such Service Recipient from the Trustee, the Back-Up Manager or the Control Party (at the direction of the Controlling Class Representative) of such failure;

(j) a final non-appealable ruling has been made by a court of competent jurisdiction that the contribution of the Collateral (other than any immaterial Collateral and any Collateral that has been disposed of to the extent permitted or required under the Transaction Documents) pursuant to a Contribution Agreement does not constitute a “true contribution” or other absolute transfer of such Collateral pursuant to such agreement;

(k) an outstanding final non-appealable judgment exceeding $5,000,000 (when aggregated with the amount of all other outstanding final non-appealable judgments) (to the extent not covered by independent third-party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been notified of the potential claim and does not dispute coverage) is rendered against any Securitization Entity, and either (i) enforcement proceedings are commenced by any creditor upon such judgment or order or (ii) there is any period of thirty (30) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, will not be in effect;

(l) the failure of (i) DBI to own 100% of the Equity Interests of Funding Holdco or to indirectly own 100% of the Equity Interests of Canadian Funding Holdco or (ii) Funding Holdco to own 100% of the Equity Interests of the Issuer or Canadian Funding Holdco to own 100% of the Equity Interests of the Canadian Co-Issuer; provided, that a Permitted Brand Disposition of the Equity Interests of all Canadian Securitization Entities shall not result in an Event of Default under clause (i) or (ii);

(m) other than as permitted under the Indenture or the other Transaction Documents, the SPV Franchising Entities collectively fail to have good title to any material portion of the Securitization IP or the Service Recipients collectively fail to have good title in or to the Contributed Franchise Agreements or the New Franchise Agreements or any material portion of the assets required to operate the Securitization-Owned Locations and the Take 5 Company Locations, the Product Sourcing Business or the Claims Management Business;

(n) (i) any Securitization Entity engages in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Pension Plan, (ii) any “accumulated funding deficiency” or failure to meet the “minimum funding standard” (as defined in Section 302 of ERISA), whether or not waived, exists with respect to any Pension Plan and is not discharged within thirty (30) days thereafter, (iii) any Lien in an amount equal to at least $1,000,000 in favor of the PBGC or a

 

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Pension Plan arises on the assets of any Securitization Entity and is not discharged within thirty (30) days thereafter, (iv) a Reportable Event occurs with respect to, or proceedings commence to have a trustee appointed, or a trustee is appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Control Party, likely to result in the termination of such Single Employer Plan for purposes of Title IV of ERISA, (v) any Single Employer Plan terminates for purposes of Title IV of ERISA, (vi) any Securitization Entity incurs, or in the reasonable opinion of the Control Party is likely to incur, any liability in connection with a complete or partial withdrawal from, or the Insolvency, Reorganization or termination of, a Multiemployer Plan, (vii) any other event or condition occurs or exists with respect to a Pension Plan or an Employee Benefit Plan, or (viii) a Securitization Entity terminates, winds-up, or fails to comply with applicable laws with respect to a Canadian Defined Benefit Plan, sponsored by such Securitization Entity; and in each case in clauses (i) through (viii) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect on any Securitization Entity;

(o) the IRS files notice of a lien pursuant to Section 6323 of the Code with regard to the assets of any U.S. Securitization Entity and such lien has not been released within sixty (60) days, unless (i) DBI has provided evidence that payment to satisfy the full amount of the asserted liability has been provided to the IRS, and the IRS has released such asserted lien within sixty (60) days of such payment, or (ii) such lien or the asserted liability is being contested in good faith and DBI has contributed to Funding Holdco funds in the amount necessary to satisfy the asserted liability (the “Tax Lien Reserve Amount”), which such funds are set aside and remitted to a collateral deposit account as provided in Section 8.31; or

(p) on and after the Amendment No. 4 Trigger Date, Any Advance Period shall have occurred and be continuing for ninety (90) or more consecutive days;

then (i) in the case of any event described in each clause above (except for clause (d) thereof) that has occurred and is continuing, the Trustee, at the direction of the Control Party (acting at the direction of the Controlling Class Representative) and on behalf of the Noteholders, by written notice to the Co-Issuers, will declare the Outstanding Principal Amount of all Series of Notes Outstanding to be immediately due and payable and, upon any such declaration, such Outstanding Principal Amount, together with all accrued and unpaid interest thereon and all other amounts payable to the Noteholders and the other Secured Parties under the Indenture Documents, shall become immediately due and payable or (ii) in the case of any event described in clause (d) above that has occurred and is continuing, the Outstanding Principal Amount of all Series of Notes Outstanding, together with all accrued and unpaid interest thereon and all other amounts payable to the Noteholders and the other Secured Parties under the Indenture Documents, shall immediately and without further act become due and payable.

If any Securitization Entity obtains Actual Knowledge that a Default or an Event of Default has occurred and is continuing, such Securitization Entity shall promptly notify the Trustee and the Control Party. Promptly following the Trustee’s receipt of written notice hereunder of any Event of Default, the Trustee shall send a copy thereof to each Co-Issuer, the Servicer, each Rating Agency, the Controlling Class Representative, the Managers, the Back-Up Manager, each Noteholder and each other Secured Party.

At any time after such a declaration of acceleration of maturity with respect to the Notes has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee, as hereinafter provided in this Article IX, the Control Party (at the direction of the Controlling Class Representative), by written notice to each Co-Issuer and to the Trustee, may rescind and annul such declaration and its consequences, if (i) the Co-Issuers have paid or deposited with the Trustee a sum sufficient to pay (a) all overdue installments of interest and principal on the Notes (excluding principal amounts due solely as a result of the acceleration) and (b) all unpaid taxes, administrative expenses and

 

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other sums paid or advanced by the Trustee or the Servicer under the Transaction Documents and the reasonable compensation, expenses, disbursements and Advances of the Trustee and the Servicer, their agents and counsel, and any unreimbursed Advances (with interest thereon at the Advance Interest Rate), Servicing Fees, Liquidation Fees or Workout Fees and (ii) all existing Events of Default, other than the non-payment of the principal of the Notes which has become due solely by such declaration of acceleration, have been cured or waived as provided in Section 9.7. No such rescission shall affect any subsequent default or impair any right consequent thereon. Any Default or Event of Default described in clause (d) above and any acceleration resulting therefrom will not be subject to waiver without the consent of the Control Party (acting at the direction of the Controlling Class Representative) and each Noteholder. Any other Default or Event of Default may be waived by the Control Party (at the direction of the Controlling Class Representative) by notice to the Trustee.

Section 9.3 Rights of the Control Party and Trustee upon Event of Default.

(a) Payment of Principal and Interest. The Co-Issuers covenant that if (i) default is made in the payment of any interest on any Series of Notes Outstanding when the same becomes due and payable, (ii) the Notes are accelerated following the occurrence of an Event of Default or (iii) default is made in the payment of the principal of or premium, if any, on any Series of Notes Outstanding when due and payable, the Co-Issuers shall, to the extent of funds available, upon demand of the Trustee, at the direction of the Control Party (subject to Section 11.4(e), at the direction of the Controlling Class Representative), pay to the Trustee, for the benefit of the Noteholders, the whole amount then due and payable on the Notes for principal, premium, if any, and interest, and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of interest, at the applicable Note Rate and any default rate, as applicable, and in addition thereto such further amount as shall be sufficient to cover costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel.

(b) Proceedings To Collect Money. In case the Co-Issuers shall fail forthwith to pay such amounts upon such demand, the Trustee at the direction of the Control Party (at the direction of the Controlling Class Representative), 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 and collect in the manner provided by law out of the property of the Co-Issuers, wherever situated, the moneys adjudged or decreed to be payable.

(c) Other Proceedings. If and whenever an Event of Default shall have occurred and be continuing, the Trustee, at the direction of the Control Party (subject to Section 11.4(e), at the direction of the Controlling Class Representative) shall take one or more of the following actions:

(i) proceed to protect and enforce its rights and the rights of the Noteholders and the other Secured Parties, by such appropriate Proceedings as the Control Party (at the direction of the Controlling Class Representative) shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in the Indenture or any other Transaction Document or in aid of the exercise of any power granted therein, or to enforce any other proper remedy or legal or equitable right vested in the Trustee by the Indenture or any other Transaction Document or by law, including any remedies of a secured party under applicable law;

(ii) (A) direct each Co-Issuer to exercise (and each such Co-Issuer agrees to exercise) all rights, remedies, powers, privileges and claims of such Co-Issuer against any party to any Collateral Document arising as a result of the occurrence of such Event of Default or otherwise, including the right or power to take any action to compel performance or observance

 

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by any such party of its obligations to such Co-Issuer, and any right of such Co-Issuer to take such action independent of such direction shall be suspended, and (B) if (x) such Co-Issuer shall have failed, within ten (10) Business Days of receiving the direction of the Trustee (given at the direction of the Control Party (at the direction of the Controlling Class Representative)), to take commercially reasonable action to accomplish such directions of the Trustee, (y) such Co-Issuer refuses to take such action or (z) the Control Party (at the direction of the Controlling Class Representative) reasonably determines that such action must be taken immediately, take (or the Control Party on behalf of the Trustee shall take) such previously directed action (and any related action as permitted under the Indenture thereafter determined by the Trustee or the Control Party to be appropriate without the need under this provision or any other provision under the Indenture to direct such Co-Issuer to take such action);

(iii) institute Proceedings from time to time for the complete or partial foreclosure of the Indenture or, to the extent applicable, any other Transaction Document with respect to the Collateral; provided that the Trustee will not be required to take title to any real property in connection with any foreclosure or other exercise of remedies hereunder or under such Transaction Documents and title to such property will instead be acquired in an entity designated and (unless owned by a third party) controlled by the Control Party; and/or

(iv) sell all or a portion of the Collateral at one or more public or private sales called and conducted in any manner permitted by law; provided that the Trustee shall not proceed with any such sale without the prior written consent of the Control Party (at the direction of the Controlling Class Representative), and the Trustee will provide notice to each Co-Issuer and each Holder of Subordinated Notes and Senior Subordinated Notes of a proposed sale of the Collateral.

(d) Sale of Collateral. In connection with any sale of the Collateral hereunder, under either Guarantee and Collateral Agreements (which may proceed separately and independently from the exercise of remedies under the Indenture) or under any judgment, order or decree in any judicial proceeding for the foreclosure or involving the enforcement of the Indenture, either Guarantee and Collateral Agreements or any other Transaction Document:

(i) any of the Trustee, any Noteholder and/or any other Secured Party may bid for and purchase the property being sold, and upon compliance with the terms of the sale may hold, retain, possess and dispose of such property in its own absolute right without further accountability;

(ii) the Trustee (at the direction of the Control Party (at the direction of the Controlling Class Representative)) may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold;

(iii) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of any Securitization Entity of, in and to the property so sold shall be divested; and such sale shall be a perpetual bar both at law and in equity against such Securitization Entity and its successors and assigns, and against any and all Persons claiming or who may claim the property sold or any part thereof from, through or under such Securitization Entity or its successors or assigns; and

(iv) the receipt of the Trustee or of the officer thereof making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for its or their purchase money, and such purchaser or purchasers, and its or their assigns or personal representatives, shall not, after paying such purchase money and receiving such receipt of the Trustee or of such officer therefor, be obliged to see to the application of such purchase money or be in any way answerable for any loss, misapplication or non-application thereof.

 

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(e) Application of Proceeds. Any amounts obtained by the Trustee or the Control Party on account of or as a result of the exercise by the Trustee or the Control Party of any right hereunder or under the Guarantee and Collateral Agreements shall be held by the Trustee as additional collateral for the repayment of the Obligations, shall be deposited into the Collection Account and shall be applied as provided in the priority set forth in the Priority of Payments (without regard to the Allocable Share); provided on and after the 2022 Springing Amendments Implementation Date, such amounts will be applied first to pay a depository bank in respect of amounts owed to it under the related Account Control Agreement (so long as the Trustee has provided the applicable Manager with notice of any amounts owed to a depository bank with respect of an Account Control Agreement (with a copy of such notice also being provided to the Servicer and the Back-Up Manager)) and then as provided in the priority set forth in the Priority of Payments; provided, further that, unless otherwise provided in this Article IX, with respect to any distribution to any Class of Notes, notwithstanding the provisions of Article V, such amounts shall be distributed sequentially in order of alphabetical (as opposed to alphanumerical) designation and pro rata among each Class of Notes of the same alphabetical designation based upon the Outstanding Principal Amount of the Notes of each such Class.

(f) Receiver. With respect to the Canadian Co-Issuer, the Trustee (acting at the direction of the Control Party (at the direction of the Controlling Class Representative)) may appoint by instrument in writing one or more Receivers of the Canadian Co-Issuer or any or all of its Indenture Collateral with such rights, powers and authority (including any or all of the rights, powers and authority of the Trustee under this Base Indenture) as may be provided for in the instrument of appointment or any supplemental instrument, and remove and replace any such Receiver from time to time. To the extent permitted by applicable law, any Receiver appointed by the Trustee shall (for purposes relating to responsibility for the Receiver’s acts or omissions) be considered to be the agent of the Canadian Co-Issuer and not of the trustee or any of the other Secured Parties.

(g) Court-Appointed Receiver. With respect to the Canadian Co-Issuer, the Trustee (acting at the direction of the Control Party (at the direction of the Controlling Class Representative)) may obtain from any court of competent jurisdiction an order for the appointment of a Receiver of the Canadian Co-Issuer or any or all of its Indenture Collateral.

(h) Additional Remedies. In addition to any rights and remedies now or hereafter granted hereunder or under applicable law with respect to the Collateral, the Trustee shall have all of the rights and remedies of a secured party under the UCC, PPSA and similar laws as enacted in any applicable jurisdiction.

(i) Proceedings. 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, and any such Proceeding instituted by the Trustee shall be in its own name as trustee. All remedies are cumulative to the extent permitted by law.

(j) Power of Attorney. To the fullest extent permitted by applicable law, each Co-Issuer hereby grants to the Trustee an absolute and irrevocable power of attorney to sign, upon the occurrence and during the continuance of an Event of Default, any document which may be required by the USPTO, the USCO or the CIPO, any similar office or agency in each foreign country in which any Securitization IP is located, or any other Governmental Authority in order to effect an absolute assignment of all right, title and interest in or to any Securitization IP, and record the same.

 

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Section 9.4 Waiver of Appraisal, Valuation, Stay and Right to Marshaling. To the extent it may lawfully do so, each Co-Issuer for itself and for any Person who may claim through or under it hereby:

(a) agrees that neither it nor any such Person will step up, plead, claim or in any manner whatsoever take advantage of any appraisal, valuation, stay, extension or redemption laws, now or hereafter in force in any jurisdiction, which may delay, prevent or otherwise hinder (i) the performance, enforcement or foreclosure of the Indenture or the Guarantee and Collateral Agreements, (ii) the sale of any of the Collateral or (iii) the putting of the purchaser or purchasers thereof into possession of such property immediately after the sale thereof;

(b) waives all benefit or advantage of any such laws;

(c) waives and releases all rights to have the Collateral marshaled upon any foreclosure, sale or other enforcement of the Indenture or the Guarantee and Collateral Agreements; and

(d) consents and agrees that, subject to the terms of the Indenture and the Guarantee and Collateral Agreements, all the Collateral may at any such sale be sold by the Trustee as an entirety or in such portions as the Trustee may (upon direction by the Control Party (at the direction of the Controlling Class Representative)) determine.

Section 9.5 Limited Recourse.

Notwithstanding any other provision of the Indenture, the Notes or any other Transaction Document or otherwise, the liability of the Securitization Entities to the Noteholders and any other Secured Parties under or in relation to the Indenture, the Notes or any other Transaction Document or otherwise, is limited in recourse to the Collateral. The Collateral having been applied in accordance with the terms hereof, none of the Noteholders or any other Secured Parties shall be entitled to take any further steps against any Securitization Entity to recover any sums due but still unpaid hereunder, under the Notes or under any of the other agreements or documents described in this Section 9.5, all claims in respect of which shall be extinguished.

Section 9.6 Optional Preservation of the Collateral.

If the maturity of the Outstanding Notes of each Series has been accelerated pursuant to Section 9.2 following an Event of Default, and such declaration and its consequences have not been rescinded and annulled, the Trustee, at the direction of the Control Party (acting at the direction of the Controlling Class Representative), shall elect to maintain possession of such portion, if any, of the Collateral as the Control Party (acting at the direction of the Controlling Class Representative) shall in its discretion determine.

Section 9.7 Waiver of Past Events.

Prior to the declaration of the acceleration of the maturity of each Series of Notes Outstanding as provided in Section 9.2 and subject to Section 13.2, the Control Party (at the direction of the Controlling Class Representative), by notice to the Trustee, each Rating Agency and the Servicer (with a copy to the Back-Up Manager), may waive any existing Default or Event of Default described in any clause of Section 9.2 (except Section 9.2(d)) and its consequences; provided that, before any waiver may be effective, the Trustee, the Back-Up Manager and the Servicer must have received any reimbursement then due or payable in respect of unreimbursed Advances (including interest thereon) or any other amounts then due to the Servicer, the Back-Up Manager or the Trustee hereunder or under the other Transaction Documents; provided, further, that the Control Party shall provide written notice of any such waiver to each

 

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Rating Agency (with a copy to the Servicer and the Back-Up Manager). 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 the Indenture, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. A Default or an Event of Default described in Section 9.2(d) shall not be subject to waiver without the consent of the Control Party (acting at the direction of the Controlling Class Representative) and each Noteholder. Subject to Section 13.2, the Control Party (with the consent of the Controlling Class Representative), by notice to the Trustee, each Rating Agency and the Servicer, may waive any existing Potential Rapid Amortization Event or any existing Rapid Amortization Event; provided that a Rapid Amortization Event pursuant to clause (d) of Section 9.1 relating to a particular Series of Notes (or Class thereof) shall not be permitted to be waived by any party unless each affected Noteholder has consented to such waiver.

Section 9.8 Control by the Control Party.

Notwithstanding any other provision hereof, the Control Party (subject to Section 11.4(e), at the direction of the Controlling Class Representative) may cause the institution of and direct the time, method and place of conducting any proceeding in respect of any enforcement of the Collateral, in respect of any enforcement of Liens on the Collateral or conducting any proceeding for any remedy available to the Trustee and to direct the exercise of any trust or power conferred on the Trustee; provided that:

(a) such direction of time, method and place shall not be in conflict with any rule of law, the Servicing Standard or the Indenture;

(b) the Control Party (at the direction of the Controlling Class Representative) may take any other action deemed proper by the Control Party (at the direction of the Controlling Class Representative) that is not inconsistent with such direction (as the same may be modified by the Control Party (with the consent of the Controlling Class Representative)); and

(c) such direction shall be in writing;

provided, further, that, subject to Section 10.1, the Trustee need not take any action that it determines might involve it in liability unless it has received an indemnity for such liability as provided herein.

Section 9.9 Limitation on Suits.

Any other provision of the Indenture to the contrary notwithstanding, a Holder of Notes may pursue a remedy with respect to the Indenture or any other Transaction Document only if:

(a) the Noteholder gives to the Trustee, the Control Party and the Controlling Class Representative written notice of a continuing Event of Default;

(b) the Noteholders of at least 25% of the aggregate principal amount of all then Outstanding Notes make a written request to the Trustee, the Control Party and the Controlling Class Representative to pursue the remedy;

(c) such Noteholder or Noteholders offer and, if requested, provide to the Trustee, the Control Party and the Controlling Class Representative indemnity satisfactory to the Trustee, the Control Party and the Controlling Class Representative against any loss, liability or expense;

(d) the Trustee does not comply with the request within sixty (60) days after receipt of the request and the offer and, if requested, the provision of indemnity reasonably satisfactory to it;

 

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(e) during such sixty (60) day period, the Majority of Senior Noteholders do not give the Trustee a direction inconsistent with the request; and

(f) the Control Party (at the direction of the Controlling Class Representative) has consented to the pursuit of such remedy.

A Noteholder may not use the Indenture or any other Transaction Document to prejudice the rights of another Noteholder or to obtain a preference or priority over another Noteholder.

Section 9.10 Unconditional Rights of Noteholders to Receive Payment.

Notwithstanding any other provision of the Indenture, the right of any Holder of a Note to receive payment of principal of and premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note, or to bring suit for the enforcement of any such payment on or after such respective dates, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder of the Note.

Section 9.11 The 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), the Noteholders and any other Secured Party (as applicable) allowed in any judicial proceedings relative to the Co-Issuers (or any other obligor upon the Notes), their creditors or their property, and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claim, and any custodian in any such judicial proceeding is hereby authorized by each Noteholder and each other Secured Party 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 Noteholders or any other Secured Party, to pay 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 10.5. 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 10.5 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 and other properties which any of the Noteholders or any other Secured Party 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 Noteholder or any other Secured Party any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Noteholder or any other Secured Party, or to authorize the Trustee to vote in respect of the claim of any Noteholder or any other Secured Party in any such proceeding.

Section 9.12 Undertaking for Costs.

In any suit for the enforcement of any right or remedy under the 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 any undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, 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 9.12 does not apply to a suit by the Trustee, a suit by a Noteholder pursuant to Section 9.9, the Control Party or a suit by Noteholders of more than 10% of the Aggregate Outstanding Principal Amount of all Series of Notes.

 

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Section 9.13 Restoration of Rights and Remedies.

If the Trustee, any Noteholder or any other Secured Party has instituted any Proceeding to enforce any right or remedy under the Indenture or any other Transaction Document and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Trustee or to such Noteholder or other Secured Party, then and in every such case the Trustee and the Noteholders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee, the Noteholders and the other Secured Parties shall continue as though no such Proceeding had been instituted.

Section 9.14 Rights and Remedies Cumulative.

No right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Notes or any other Secured Party is intended to be exclusive of any other right or remedy, and every right or remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given under the Indenture or any other Transaction Document or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy under the Indenture or any other Transaction Document, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Section 9.15 Delay or Omission Not Waiver.

No delay or omission of the Trustee, the Control Party, the Controlling Class Representative, any Holder of any Note or any other Secured Party to exercise any right or remedy accruing upon any Potential Rapid Amortization Event, Rapid Amortization Event, Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Potential Rapid Amortization Event, Rapid Amortization Event, Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article IX or by law to the Trustee, the Control Party, the Controlling Class Representative, the Holders of Notes or any other Secured Party may be exercised from time to time to the extent not inconsistent with the Indenture, and as often as may be deemed expedient, by the Trustee, the Control Party, the Controlling Class Representative, the Holders of Notes or any other Secured Party, as the case may be.

Section 9.16 Waiver of Stay or Extension Laws.

Each Co-Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of the Indenture or any other Transaction Document; and each Co-Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantages of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, the Control Party or the Controlling Class Representative, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE X

THE TRUSTEE

Section 10.1 Duties of the Trustee.

(a) If an Event of Default or a Rapid Amortization Event of which the Trustee shall have Actual Knowledge has occurred and is continuing, the Trustee shall (except in the case of the receipt of directions with respect to such matter from the Control Party in accordance with the terms of this Base

 

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Indenture or any other Transaction Document in which event the Trustee’s sole responsibility will be to act or refrain from acting in accordance with such directions) exercise the rights and powers vested in it by this Base Indenture and the other Transaction Documents, 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; provided that the Trustee will have no liability in connection with any action or inaction taken, or not taken, by it upon the deemed occurrence of an Event of Default, a Rapid Amortization Event, a Manager Termination Event or a Servicer Termination Event of which a Trust Officer has not received written notice; provided, further, that the Trustee will have no liability in connection with any action or inaction due to the acts or failure to act of the Control Party or the Controlling Class Representative in connection with any Event of Default, Rapid Amortization Event, Manager Termination Event or Servicer Termination Event, or for acting or refraining from acting due to any direction or lack of direction from the Control Party or the Controlling Class Representative. The preceding sentence shall not have the effect of insulating the Trustee from liability arising out of the Trustee’s negligence, fraud, bad faith or willful misconduct. The Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Trustee which are specifically required to be furnished pursuant to any provision of the Indenture, shall examine them to determine whether they conform to the requirements of the Indenture; provided that the Trustee shall not be responsible for the accuracy or content of any resolution, certificate, statement, opinion, report, document, order or other instrument furnished by any Co-Issuer under the Indenture.

(b) Except during the occurrence and continuance of an Event of Default or a Rapid Amortization Event of which the Trustee shall have Actual Knowledge:

(i) the Trustee undertakes to perform only those duties that are specifically set forth in the Indenture or any other Transaction Document to which it is a party and no others, the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in the Indenture or any other Transaction Document to which it is a party, and no implied covenants or obligations shall be read into the Indenture or any other Transaction Document 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 the Indenture and any other applicable Transaction Document; provided that, in the case of any such certificates or opinions which by any provision of the Indenture are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine such certificates or opinions to determine whether or not they conform to the requirements of the Indenture and shall promptly notify the party of any non-conformity.

(c) The Trustee may not be relieved from liability for its own negligence, fraud, bad faith or willful misconduct, except that:

(i) this clause (c) does not limit the effect of clause (a) of this Section 10.1;

(ii) the Trustee will not be liable in its individual capacity for any error of judgment made in good faith by a Trust Officer, unless it is proven that the Trustee was grossly negligent in ascertaining the pertinent facts;

(iii) the Trustee will not be liable in its individual capacity with respect to any action it takes or omits to take in good faith in accordance with the direction of the Control Party or the requisite Noteholders in accordance with this Base Indenture relating to the time, method and place for conducting any proceeding for any remedy available to the Trustee, exercising any trust or power conferred upon the Trustee under this Base Indenture or any other circumstances in which such direction is required or permitted by the terms of this Base Indenture; and

 

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(iv) the Trustee shall not be charged with knowledge of any Default, Event of Default, Potential Rapid Amortization Event, Rapid Amortization Event, Manager Termination Event, Potential Manager Termination Event or Servicer Termination Event or the commencement and continuation of a Cash Trapping Period until such time as the Trustee shall have Actual Knowledge or shall have received written notice thereof, and in the absence of such Actual Knowledge or receipt of such notice the Trustee may conclusively assume that no such event has occurred or is continuing.

(d) Notwithstanding anything to the contrary contained in the Indenture or any of the other Transaction Documents, no provision of the Indenture or the other Transaction Documents shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties or exercise of its rights or powers hereunder or thereunder, if it has reasonable grounds for believing that the repayment of such funds or adequate security or indemnity against such risk or liability is not reasonably assured to it by the terms of the Indenture or the Guarantee and Collateral Agreements. The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity reasonably satisfactory to it against any risk, loss, liability or expense.

(e) In the event that the Paying Agent or the Registrar shall fail to perform any obligation, duty or agreement in the manner or on the day required to be performed by the Paying Agent or the Registrar, as the case may be, under the Indenture, the Trustee shall be obligated as soon as practicable upon Actual Knowledge thereof and receipt of appropriate records and information, if any, to perform such obligation, duty or agreement in the manner so required.

(f) Subject to Section 10.3, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law or the Indenture or any of the other Transaction Documents.

(g) Whether or not therein expressly so provided, every provision of the Indenture and the other Transaction Documents relating to the conduct of, affecting the liability of, or affording protection to, the Trustee shall be subject to the provisions of this Section 10.1.

(h) The Trustee shall not be responsible (i) for the existence, genuineness or value of any of the Collateral, (ii) for the validity, perfection, priority or enforceability of the Liens in any of the Collateral, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, except to the extent such action or omission constitutes negligence, bad faith or willful misconduct on the part of the Trustee, (iii) for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, (iv) for the validity of the title of the Securitization Entities to the Collateral, (v) for insuring the Collateral or (vi) for the payment of Taxes, charges, assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral, except as otherwise provided by Section 10.1(e). Except as otherwise provided herein, the Trustee shall have no duty to inquire as to the performance or observance of any of the terms of the Indenture or the other Transaction Documents by the Securitization Entities or Service Recipients.

(i) The 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 the Indenture at the direction of the Servicer, the Control Party, the Controlling Class Representative or the requisite percentage of Noteholders, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, under the Indenture.

 

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(j) The Trustee shall have no duty (i) to see to any recording, filing or depositing of this Base Indenture or any agreement referred to herein or any financing statement, financing change statement or continuation statement evidencing a security interest, or to see to the maintenance of any such recording, filing or depositing or to any rerecording, refiling or redeposition of any thereof; (ii) to see to any insurance; (iii) except as otherwise provided by Section 10.1(e), to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind; or (iv) to confirm or verify the contents of any reports or certificates of either or both Co-Issuers, either or both Managers, the Control Party, the Back-Up Manager or the Servicer delivered to the Trustee pursuant to this Base Indenture or any other Transaction Document believed by the Trustee to be genuine and to have been signed or presented by the proper party or parties.

(k) The Trustee shall not be personally liable for special, indirect, consequential or punitive damages arising out of, in connection with or as a result of the performance of its duties under the Indenture.

(l) (i) Notwithstanding anything to the contrary in this Section 10.1, the Trustee shall make Debt Service Advances to the extent and in the manner set forth in Section 5.12(c) hereof and Collateral Protection Advances to the extent the Servicer fails to make such Collateral Protection Advances; provided that, notwithstanding anything herein or in any other Transaction Document to the contrary, the Trustee will not be responsible for advancing any principal on the Senior Notes, any make-whole prepayment consideration, any Class A-1 Notes Administrative Expenses, any Class A-1 Notes Commitment Fees, any Post-ARD Additional Interest or any reserve amounts or any interest or principal payable on, or any other amount due with respect to, the Senior Subordinated Notes or the Subordinated Notes; provided that, for the avoidance of doubt, the Trustee will not be required to make any Debt Service Advance in respect of any Class A-1 Notes Interest Adjustment Amount to the extent such Debt Service Advance would be duplicative of a Debt Service Advance already made with respect to such Quarterly Calculation Date.

(ii) Notwithstanding anything herein to the contrary, no Debt Service Advance or Collateral Protection Advance shall be required to be made hereunder by the Trustee if the Trustee determines such Debt Service Advance or Collateral Protection Advance (including interest thereon) would, if made, constitute a Nonrecoverable Advance or, on or after the 2021 Springing Amendments Implementation Date, if the Managers elect to eliminate the obligation of the Servicer and/or the Trustee to provide Advances upon satisfaction of the Rating Agency Condition or an Advance Suspension Period is then in effect. The determination by the Trustee that it has made a Nonrecoverable Advance, or that any proposed Debt Service Advance or Collateral Protection Advance, if made, would constitute a Nonrecoverable Advance, shall be made by the Trustee in its reasonable good faith judgment. The Trustee is entitled to conclusively rely on the determination of the Servicer that an Advance is or would be a Nonrecoverable Advance. Any such determination will be conclusive and binding on the Noteholders. The Trustee may update or change its nonrecoverability determination at any time, and may decide that a requested Debt Service Advance or Collateral Protection Advance that was previously deemed to be a Nonrecoverable Advance shall have become recoverable. Notwithstanding the foregoing, all outstanding Debt Service Advances and Collateral Protection Advances made by the Trustee and any accrued interest thereon will be paid strictly in accordance with the Priority of Payments, even if the Trustee determines that any such advance is a Nonrecoverable Advance after such Advance has been made. In no event shall the Trustee be required to make a Collateral Protection Advance, including a Requested Collateral Protection Advance, unless the Servicer has determined that such Collateral Protection Advance has been approved, the Servicer has subsequently failed to make such Collateral Protection Advance and the Trustee has not determined that such Collateral Protection Advance would be a “Nonrecoverable Advance” in accordance with the terms of this Indenture.

 

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(iii) The Trustee shall be entitled to receive interest at the Advance Interest Rate accrued on the amount of each Debt Service Advance or Collateral Protection Advance made thereby (with its own funds) for so long as such Debt Service Advance or Collateral Protection Advance is outstanding. Such interest with respect to any Debt Service Advance or Collateral Protection Advance made pursuant to this Section 10.1(l) shall be payable out of Collections in accordance with the Priority of Payments pursuant to Section 5.11 hereof and the other applicable provisions of the Transaction Documents.

Section 10.2 Rights of the Trustee. Except as otherwise provided by Section 10.1:

(a) The Trustee may conclusively rely and shall be fully protected in acting or refraining from acting based upon any resolution, Officer’s Certificate, Officers’ Certificate, certificate of a Manager, Opinion of Counsel, certificate, instrument, report, consent, order, document or other paper reasonably believed by it to be genuine and to have been signed by or presented by the proper person.

(b) 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 agents, custodians and nominees and shall not be liable for any misconduct or negligence on the part of, or for the supervision of, any such non-affiliated agent, custodian or nominee so long as such agent, custodian or nominee is appointed with due care; provided that the Trustee shall have received the consent of the Servicer prior to the appointment of any agent, custodian or nominee performing any material obligation of the Trustee hereunder.

(d) The Trustee shall not be liable for any action it takes, suffers or omits to take in the absence of negligence, fraud, bad faith and willful misconduct which it believes to be authorized or within the discretion or rights or powers conferred upon it by the Indenture or the other applicable Transaction Documents.

(e) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Base Indenture, any Series Supplement or any other Transaction Document, or to institute, conduct or defend any litigation hereunder or thereunder or in relation hereto or thereto, at the request, order or direction of the Servicer, the Control Party, the Controlling Class Representative, any of the Noteholders or any other Secured Party pursuant to the provisions of this Base Indenture, any Series Supplement or any other Transaction Document, unless the Trustee has been offered security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities that may be incurred by it in compliance with such request, order or direction.

(f) Prior to the occurrence of an Event of Default or Rapid Amortization Event, the Trustee shall not be bound to make any investigation into the facts of matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document, unless requested in writing so to do by the Noteholders of at least 25% of the Aggregate Outstanding Principal Amount of all then Outstanding Notes. If the Trustee is so requested or determines in its own discretion to make such further inquiry or investigation into such facts or matters as it sees fit, the Trustee shall be entitled to examine the books, records and premises of the Service Recipients, personally or by agent or attorney, at the sole cost of the Co-Issuers, and the Trustee shall incur no liability by reason of such inquiry or investigation.

 

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(g) The right of the Trustee to perform any discretionary act enumerated in this Base Indenture shall not be construed as a duty, and the Trustee shall be not be liable in the absence of negligence, fraud, bad faith or willful misconduct for the performance of such act.

(h) In accordance with the USA PATRIOT Act, to help fight the funding of terrorism and money laundering activities, the Trustee will obtain, verify and record information that identifies individuals or entities that establish a relationship or open an account with the Trustee. The Trustee will ask for the name, address, tax identification number and other information that will allow the Trustee to identify the individual or entity who is establishing the relationship or opening the account. The Trustee may also ask for formation documents such as articles of incorporation, an offering memorandum, or other identifying documents to be provided.

(i) Notwithstanding anything to the contrary herein, any and all communications (both text and attachments) by or from the Trustee that the Trustee in its sole discretion deems to contain confidential, proprietary or sensitive information and sent by electronic mail will be encrypted. The recipient of the e-mail communication will be required to complete a one-time registration process.

(j) The Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God, earthquakes, fires, floods, wars, civil or military disturbances, sabotage, epidemics, riots, interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service, accidents, labor disputes, acts of civil or military authority or governmental actions (it being understood that the Trustee shall use commercially reasonable efforts to resume performance as soon as practicable under the circumstances).

(k) The Trustee shall not be required to give any bond or surety in respect of the execution of the trust created hereby or the powers granted hereunder.

(l) All rights of action and claims under this Base Indenture may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, any such proceeding instituted by the Trustee shall be brought in its own name or in its capacity as Trustee. Any recovery of judgment shall, after provision for the payments to the Trustee provided for in Section 10.5, be distributed in accordance with the Priority of Payments.

(m) The Trustee may request written direction from any applicable party any time the Indenture provides that the Trustee may be directed to act.

(n) Any request or direction of any Co-Issuer mentioned herein shall be sufficiently evidenced by a Company Order.

(o) Whenever in the administration of the Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee may, in the absence of bad faith, gross negligence or willful misconduct on its part, rely upon an Officer’s Certificate or Officers’ Certificate of each applicable Co-Issuer, any applicable Manager or the Servicer and shall incur no liability for its reliance thereon.

 

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(p) The Trustee shall not be responsible for the accuracy of the books or records of, or for any acts or omissions of, DTC, any transfer agent (other than the Trustee itself acting in that capacity), Clearstream, Euroclear, any calculation agent (other than the Trustee itself acting in that capacity), or any agent appointed by it with due care or any Paying Agent (other than the Trustee itself acting in that capacity).

(q) The Trustee and its Affiliates are permitted to receive additional compensation that could be deemed to be in the Trustee’s economic self-interest for (i) serving as an investment advisor, administrator, shareholder servicing agent, custodian or sub-custodian with respect to certain Eligible Investments, (ii) using Affiliates to effect transactions in certain Eligible Investments and (iii) effecting transactions in certain Eligible Investments. The Trustee does not guarantee the performance of any Eligible Investments.

(r) The Trustee shall have no obligation to invest and reinvest any cash held in the absence of timely and specific written investment direction as specified herein. In no event shall the Trustee be liable for the selection of investments or for investment losses incurred thereon. The Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any investment prior to its stated maturity or the failure of the Servicer or the Co-Issuers to provide timely written investment direction.

(s) The Trustee shall have no obligation to calculate nor shall it be responsible or liable for any calculation of the DSCR, the Interest-Only DSCR, the New Series Pro Forma DSCR or the Cash Trapping DSCR Threshold.

(t) 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 case, with respect to its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

(u) The Trustee shall be afforded, in each Transaction Document, all of the rights, powers, immunities and indemnities granted to it in this Base Indenture as if such rights, powers, immunities and indemnities were specifically set out in each such Transaction Document.

(v) For any purpose under the Transaction Documents, the Trustee may conclusively assume without incurring liability therefor that no Notes are held by any of the Securitization Entities, any other obligor upon the Notes, any Manager or any Affiliate of any of them unless a Trust Officer has received written notice at the Corporate Trust Office that any Notes are so held by any of the Securitization Entities, any other obligor upon the Notes, any Manager or any Affiliate of any of them.

(w) The Trustee shall not have any responsibility to make any inquiry or investigation as to, and shall have no obligation in respect of, the terms of an engagement of an Independent Auditor by any Co-Issuer (or any respective Manager on behalf of a Co-Issuer) or the terms of any agreed upon procedures in respect of such engagement; provided that the Trustee shall be authorized, upon receipt of a Company Order directing the same, to execute any acknowledgment or other agreement with the Independent Auditors required for the Trustee to receive any of the reports or instructions provided herein, which acknowledgment or agreement may include, among other things, (i) acknowledgment that each Co-Issuer has agreed that the procedures to be performed by the Independent Auditors are sufficient for such Co-Issuer’s purposes, (ii) releases by the Trustee (on behalf of itself and the Holders) of claims against the Independent Auditors, and (iii) restrictions or prohibitions on the disclosure of information or documents provided to it by such firm of Independent Auditors (including to the Holders). Notwithstanding the foregoing, in no event shall the Trustee be required to execute any agreement in respect of the Independent Auditors that the Trustee reasonably determines adversely affects it.

 

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Section 10.3 Individual Rights of the Trustee.

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Securitization Entities or any Affiliate of the Securitization Entities with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights.

Section 10.4 Notice of Events of Default and Defaults.

If an Event of Default, a Default, a Rapid Amortization Event or a Potential Rapid Amortization Event occurs and is continuing and if the Trustee has Actual Knowledge thereof, or written notice of the existence thereof has been delivered to the Trustee at the Corporate Trust Office, the Trustee shall promptly provide the Noteholders, the Servicer, the Managers, the Back-Up Manager, each Co-Issuer, any Class A-1 Administrative Agent and each Rating Agency with notice of such Event of Default, Default, Rapid Amortization Event or Potential Rapid Amortization Event, to the extent that the Notes of such Series are Book-Entry Notes by telephone and facsimile and otherwise by first class mail.

Section 10.5 Compensation and Indemnity.

(a) The Co-Issuers shall, jointly and severally, promptly pay to the Trustee from time to time compensation for its acceptance of the Indenture and services hereunder and under the other Transaction Documents to which the Trustee is a party as the Trustee and the Co-Issuers shall from time to time agree in writing. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Co-Issuers shall, jointly and severally, 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 in accordance with the provisions of the Indenture (including, without limitation, the Priority of Payments). Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and outside counsel. The Co-Issuers shall not be required to reimburse any expense incurred by the Trustee through the Trustee’s own willful misconduct, bad faith or negligence. When the Trustee incurs expenses or renders services after an Event of Default or Rapid Amortization Event occurs, the expenses and the compensation for the services are post-filing expenses and intended to constitute expenses of administration under the Bankruptcy Code or the Bankruptcy and Insolvency Act or the Companies’ Creditors Arrangement Act.

(b) The Co-Issuers shall, jointly and severally, indemnify and hold harmless the Trustee or any predecessor Trustee and their respective directors, officers, agents and employees from and against any loss, liability, claim, expense (including taxes, other than taxes based upon, measured by or determined by the income of the Trustee or such predecessor Trustee), damage or injury suffered or sustained by reason of any acts, omissions or alleged acts or omissions arising out of or in connection with (i) the activities of the Trustee or such predecessor Trustee pursuant to this Base Indenture, any Series Supplement or any other Transaction Documents to which the Trustee is a party and (ii) the security interest granted hereby, whether arising by virtue of any act or omission on the part of a Co-Issuer or otherwise, including but not limited to any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses reasonably incurred in connection with the defense of any actual or threatened action, proceeding, claim (whether asserted by either Co-Issuer, the Servicer, the Control Party or any Noteholder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder or under any other Transaction Document, the preservation of any of its rights to, or the realization upon, any of the Collateral, or in connection with enforcing the provisions of this Section 10.5(b); provided, however, that the Co-Issuers shall not indemnify the Trustee, any predecessor Trustee or their respective directors, officers, employees or agents if such acts, omissions or alleged acts or omissions constitute willful misconduct, bad faith or negligence by the Trustee or such predecessor Trustee, as the case may be.

 

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(c) The provisions of this Section 10.5 shall survive the termination of the Indenture and the resignation and removal of the Trustee.

Section 10.6 Replacement of the Trustee.

(a) A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 10.6.

(b) The Trustee may, after giving thirty (30) days’ prior written notice to the Co-Issuers, the Noteholders, the Servicer, the Managers, the Back-Up Manager, the Controlling Class Representative, the Class A-1 Administrative Agent and each Rating Agency, resign at any time from its office and be discharged from the trust hereby created; provided that no such resignation of the Trustee will be effective until a successor Trustee has assumed the obligations of the Trustee hereunder. The Control Party or the Co-Issuers may remove the Trustee, or any Noteholder may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee, if at any time:

(i) the Trustee fails to comply with Section 10.8;

(ii) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under the Bankruptcy Code;

(iii) the Trustee fails generally to pay its debts as such debts become due; or

(iv) the Trustee becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in the office of the Trustee for any reason, the Co-Issuers shall promptly, with the prior written consent of the Control Party, appoint a successor Trustee. Within one year after the successor Trustee takes office, the Majority of Controlling Class Members (with the prior written consent of the Control Party) may appoint a successor Trustee to replace the successor Trustee appointed by the Co-Issuers.

(c) If a successor Trustee is not appointed and an instrument of acceptance by a successor Trustee is not delivered to the Trustee within thirty (30) days after the retiring Trustee resigns or is removed, at the direction of the Control Party, the retiring Trustee, at the expense of the Co-Issuers, may petition any court of competent jurisdiction for the appointment of a successor Trustee.

(d) If the Trustee after written request by the Servicer or any Noteholder fails to comply with Section 10.8, the Servicer or such Noteholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(e) A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Servicer and the Co-Issuers. Thereupon the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all of the rights, powers and duties of the Trustee under this Base Indenture, any Series Supplement and any other Transaction Document to which the Trustee is a party. The successor Trustee shall mail a notice of its succession to the Noteholders and the Class A-1 Administrative Agent. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, so long as all sums owing to the retiring Trustee hereunder have been paid. Notwithstanding replacement of the Trustee pursuant to this Section 10.6, the Co-Issuer’s obligations under Section 10.5 will continue for the benefit of the retiring Trustee.

 

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(f) No successor Trustee may accept its appointment unless at the time of such acceptance such successor is qualified and eligible under this Base Indenture, a Rating Agency Notification has been provided and the Control Party has provided its consent with respect to such appointment.

Section 10.7 Successor Trustee by Merger, etc.

Subject to Section 10.8, 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, so long as (i) written notice of such consolidation, merger or conversion shall be provided to the Co-Issuers, the Servicer, the Noteholders, the Back-Up Manager and the Class A-1 Administrative Agent and (ii) the resulting or successor corporation is eligible to be a Trustee under Section 10.8.

Section 10.8 Eligibility Disqualification.

(a) There shall at all times be a Trustee hereunder which shall (i) be a bank or trust company organized and doing business under the laws of the United States of America or of any state thereof authorized under such laws to exercise corporate trustee power, (ii) be subject to supervision or examination by federal or state authority, (iii) have a combined capital and surplus of at least $250,000,000 as set forth in its most recent published annual report of condition, (iv) be reasonably acceptable to the Servicer and (v) have a long-term unsecured debt rating of at least “BBB+” by Standard & Poor’s.

(b) At any time the Trustee shall cease to satisfy the eligibility requirements of Section 10.8(a), the Trustee shall resign immediately after written request to do so by the Co-Issuers or by the Control Party at the direction of the Controlling Class Representative.

Section 10.9 Appointment of Co-Trustee or Separate Trustee.

(a) Notwithstanding any other provisions of this Base Indenture, any Series Supplement or any other Transaction Document, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Collateral may at the time be located, the Trustee shall have the power, upon notice to the Control Party, the Co-Issuers and each Class A-1 Administrative Agent, and may execute and deliver all instruments, to appoint one or more Persons to act as co-trustee or co-trustees, or separate trustee or separate trustees, for all or any part of the Collateral, and to vest in such Person or Persons, in such capacity and for the benefit of the Noteholders and the other Secured Parties, such title to the Collateral, or any part thereof, and, subject to the other provisions of this Section 10.9, such powers, duties, obligations, rights and trusts as the Trustee may consider necessary or desirable. Any co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 10.8 or shall be otherwise acceptable to the Servicer. No notice to the Noteholders of the appointment of any co-trustee or separate trustee shall be required under Section 10.6. No co-trustee shall be appointed without the consent of the Servicer and the Co-Issuers unless such appointment is required as a matter of state law or to enable the Trustee to perform its functions hereunder.

(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) the Notes of each Series (other than Uncertificated Notes) shall be authenticated and delivered solely by the Trustee or an authenticating agent appointed by the Trustee;

 

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(ii) all rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by the 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 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 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 Collateral or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Trustee;

(iii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, and such appointment shall not, and shall not be deemed to, constitute any such trustee or co-trustee as an agent of the Trustee; and

(iv) the 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 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 Base Indenture and the conditions of this Article X. 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 Trustee or separately, as may be provided therein, subject to all the provisions of this Base Indenture, any Series Supplement and any other Transaction Documents to which the Trustee is a party, specifically including every provision of this Base Indenture, any Series Supplement, or any other Transaction Document which the Trustee is a party relating to the conduct of, affecting the liability of, or affording protection to, the Trustee. Every such instrument shall be filed with the Trustee and a copy thereof given to the Servicer and the Co-Issuers.

(d) Any separate trustee or co-trustee may at any time constitute the Trustee, its agent or its attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect to this Base Indenture, any Series Supplement or any other Transaction Document 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 Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.

Section 10.10 Representations and Warranties of Trustee.

The Trustee represents and warrants to the Co-Issuers and the Noteholders that:

(a) the Trustee is a national banking association, organized, existing and in good standing under the laws of the United States;

(b) the Trustee has full power, authority and right to execute, deliver and perform this Base Indenture, any Series Supplement issued concurrently with this Base Indenture and each other Transaction Document to which it is a party and to authenticate the Notes (other than Uncertificated Notes, which shall be registered), and has taken all necessary action to authorize the execution, delivery and performance by it of this Base Indenture, any Series Supplement issued concurrently with this Base Indenture and any such other Transaction Document and to authenticate the Notes;

(c) this Base Indenture and each other Transaction Document to which it is a party has been duly executed and delivered by the Trustee; and

 

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(d) the Trustee meets the requirements of eligibility as a trustee hereunder set forth in Section 10.8(a).

ARTICLE XI

CONTROLLING CLASS REPRESENTATIVE AND CONTROL PARTY

Section 11.1 Controlling Class Representative.

(a) Within five (5) Business Days following the occurrence of a CCR Re-Election Event or, prior to the 2022 Springing Amendments Implementation Date, Annual Election Date, the Trustee shall deliver a notice to the Controlling Class Members, in the form of Exhibit H attached hereto, through the Applicable Procedures of the applicable Clearing Agency with respect to Book-Entry Notes and to the registered address of any Holders of Definitive Notes and shall post a notice to the Trustee’s password-protected internet website at www.sf.citidirect.com (together with a copy thereof to the Managers and the Co-Issuers), in the form of Exhibit H attached hereto, announcing that there will be a CCR Electionan election of, and soliciting nominations of candidates for, the Controlling Class Representative (a “CCR Election Notice”)Nomination Notice”) on its password-protected internet website at www.sf.citidirect.com, and deliver the CCR Nomination Notice (i) with respect to the Book-Entry Notes, through the Applicable Procedures of DTC and (ii) with respect to any Class A-1 Notes, via email to each Class A-1 Administrative Agent. During any CCR Election Period or any communications with respect thereto, both the Trustee and the Controlling Class Members shall be entitled to rely on the Applicable Procedures of the Clearing Agencies for all Book-Entry Notes and the information contained in the Note Register from all Definitive Notes notices and communications.

(b) Each Controlling Class Member will be allowed to nominate itself or one Eligible Third Party Candidate (as defined below) as a CCR Candidate (and will not be permitted to nominate any other Person as a CCR Candidate; provided, however, that any nomination submitted by a Controlling Class Member may be submitted by means of the Applicable Procedures through its DTC custodian) by submitting a nomination directly to the Trustee in writing in the form of Exhibit I attached hereto (a “CCR Nomination”) no later than 5:00 p.m. (New York City time) within the period specified in such noticethe CCR Nomination Notice, which will be five (5) Business Days after the date of the CCR ElectionNomination Notice (such period, the “CCR Nomination Period”). A candidate does not have to be a Controlling Class Member, but if it is not a Controlling Class Member, it must certify that (i) it is an established enterprise in the business of providing credit support, governance or other advisory services to holders of notes similar to the Notes issued by the Co-Issuers and (ii) not (w) a Competitor, (x) a Franchisee, (y) any of the certain disqualified Persons identified by the Manager to the Trustee on or before the Series 2018-1 Closing Date or (z) formed solely to act as the Controlling Class Representative (the candidate described in clauses (i) and (ii), an “Eligible Third-Party Candidate”). Each Controlling Class Member submitting a CCR Nomination shall represent and warrant that as of a date not more than ten (10) Business Days prior to the date of the CCR Election NoticeNomination Notice (each such date, a “CCR Nomination Record Date”), (i) it was the Note Owner or Noteholder (or the DTC custodian of the Note Owner or Noteholder), as applicable, of the Outstanding Principal Amount of Notes of the Controlling Class specified in its CCR Nomination and (ii) the CCR Candidate is a Controlling Class Member or an Eligible Third-Party Candidate. CCR Nominations may be submitted by Controlling Class Members (or its DTC custodian on its behalf) to the Trustee in pdf format via e-mail at the e-mail address for such purpose set forth in the CCR ElectionNomination Notice, and no originals, notarizations or medallion signature guarantees shall be required, and the Trustee will be entitled to conclusively rely on, and will be fully protected in relying on, CCR Nominations submitted in such manner. Each nomination shallmust include a contact for the CCR Candidate that willtogether with such contact’s direct email and phone number. The contact must be available to answer any questions raised by a Noteholder or Note Owner. Such contact information will be posted on the Trustee’s internet website. For the avoidance of doubt, there is no minimum denomination required to be held by a Controlling Class Member for it to nominate itself or an Eligible Third-Party Candidate. Each CCR Nomination shall become irrevocable upon receipt by the Trustee of a valid and complete CCR Nomination.

 

 

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(c) Based upon the CCR Nominations that are received by the Trustee byno later than 5:00 p.m. (New York City time) on the last day of the CCR Nomination Period, (i) if no CCR Nomination has been received by the Trustee and there is no Controlling Class Representative, the Trustee shall notify the Managers, the Co-Issuers, the Servicer, the Back-Up Manager and the Controlling Class Members that no CCR Nominations have been received and that no CCR Election will be held, (ii) if one or more CCR Nomination has beenNominations have been received by the Trustee, the Trustee shall prepare and send to each applicable Controlling Class Member a ballot in the form of Exhibit J attached hereto (the “CCR Ballot”) naming the top three candidates based upon the highest aggregate Outstanding Principal Amount of Notes of Controlling Class Members nominating such candidate (or, if fewer than three (3) candidates are nominated, the CCR Ballot will list all candidates), or (iii) if no CCR Nomination has been received by the Trustee and there is a Controlling Class Representative at such time, the Person serving as the Controlling Class Representative will be deemed re-elected and will continue to serve as the Controlling Class Representative; provided that, for purposes of such nomination and determining the CCR Candidates pursuant to Section 11.1(c), with respect to each Series of Class A-1 Notes Outstanding, the Class A-1 Notes Voting Amount shall be used in place of the Outstanding Principal Amount of such Series. Each Controlling Class Member (or its DTC custodian on its behalf) may, in its sole discretion, indicate its vote for a CCR Candidate in a CCR Election by returning a completed CCR Ballot directly to the Trustee withinno later than 5:00 p.m. (New York City time) within the time period specified in the CCR Ballot, which will be five (5) Business Days after the date of the CCR Ballot (a “CCR Election Period”) certifying that, as of the date of the CCR Ballot (the “CCR Voting Record Date”), such Controlling Class Member was the owner or beneficial owner of(or the DTC custodian of the owner or beneficial owner) of the Outstanding Principal Amount of Notes of the Controlling Class specified by such Controlling Class Member in the CCR Ballot, and including a notarization or medallion signature guarantee; provided that, for purposes of such certification and the tabulation of votes pursuant to Section 11.1(d), with respect to each Series of Class A-1 Notes Outstanding, the Class A-1 Notes Voting Amount shall be used in place of the Outstanding Principal Amount of such Series. In completing a CCR Ballot, the Controlling Class Member (or its DTC custodian on its behalf) shall vote the full Outstanding Principal Amount (or, with respect to Class A-1 Notes, the Class A-1 Notes Voting Amount) of Notes of the Controlling Class specified in the CCR Ballot to one (1) candidate and, for the avoidance of doubt, no more than one (1) candidate shall be indicated per CUSIP. CCR Ballots may be submitted by Controlling Class Members to the Trustee in pdf format via e-mail at the e-mail address for such purpose set forth in the CCR Ballots., and no originals shall be required, and the Trustee will be entitled to conclusively rely on, and will be fully protected in relying on, CCR Ballots submitted in such manner. Each CCR Ballot shall become irrevocable upon receipt by the Trustee of a valid and complete CCR Ballot.

(d) At the end of the CCR Election Period, the Trustee will tabulate the votes based on the CCR Ballots that it received no later than 5:00 p.m. (New York City time) on the last day of the CCR Election Period; provided that, for purposes of such tabulation of votes pursuant to this Section 11.1(d), with respect to each Series of Class A-1 Notes Outstanding, the Class A-1 Notes Voting Amount shall be used in place of the Outstanding Principal Amount of such Series. If a CCR Candidate receives votes from the Majority of Controlling Class Members, such CCR Candidate will be elected the Controlling Class Representative. Notes of the Controlling Class held by a Co-Issuer or any Affiliate of the Co-Issuers will not be considered Outstanding for such voting purposes. If two CCR Candidates both receive votes from Controlling Class Members owning (or owning any beneficial interest) exactly 50% of the CCR Voting Amount, the Co-Issuers (or the Managers on their behalf pursuant to the Management Agreements) shall select the Controlling Class Representative from among such CCR Candidates receiving votes from

 

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Controlling Class Members owning (or owning any beneficial interest) exactly 50% of the CCR Voting Amount. If no CCR Candidate receives 50% of the CCR Voting Amount, the Trustee shall notify the Managers, the Securitization Entities, the Servicer, the Back-Up Manager, each Rating Agency and the Controlling Class Members that appointeda Controlling Class Representative will not be elected. Until a CCR Re-election Event occurs and a Controlling Class Representative is elected or chosen pursuant to the terms set forth in this Article XI, (i) the Control Party shall exercise the rights of the Controlling Class Representative in accordance with the Servicing Standard and (ii) any deliverable or notice that is required to be provided to the Controlling Class Representative under a Transaction Document shall be delivered to the Control Party. The prior Controlling Class Representative (if any) will cease to be the Controlling Class Representative at the end of any CCR Election Period following a CCR Re-election Event (so long as a CCR Election is held at such time) unless it is re-elected as Controlling Class Representative after such CCR Election Period as described above, even if no candidate is elected as a successor Controlling Class Representative at the end of such CCR Election Period. Following a CCR Re-election Event, the Trustee shall repeat the election procedures described above.

(e) If a CCR Candidate is elected or chosen pursuant to Section 11.1(d), the Trustee shall forward an acceptance letter in the form of Exhibit K attached hereto (a “CCR Acceptance Letter”) to such elected CCR Candidate for execution. No elected CCR Candidate shall be appointed Controlling Class Representative unless it executes such CCR Acceptance Letter within fifteen (15) Business Days of its receipt thereof, pursuant to which it shall (i) agree to act as the Controlling Class Representative, (ii) provide its name and contact information and permit such information to be shared with the Managers, the Securitization Entities, the Servicer, the Control Party, the Back-Up Manager, each Rating Agency and the Controlling Class Members and (iii) represent and warrant that it is a Controlling Class Member or Eligible Third-Party Candidate. Within two (2) Business Days of receipt of such CCR Acceptance Letter, the Trustee shall promptly forward copies thereof, or provide the new Controlling Class Representative’s name and addresscontact information, to the Managers, the Securitization Entities, the Servicer, the Control Party, the Back-Up Manager, each Rating Agency and the Controlling Class Members.

(f) Within two (2) Business Days of any other change in the name or address of the Controlling Class Representative of which the Trustee has received notice from the Controlling Class Representative, the Trustee shall deliver to each Noteholder,a copy of such notice to the Co-Issuers, the Managers, the Back-Up Manager and the Servicer a notice setting forth the name and address of the new Controlling Class Representative.. The Trustee will post such notice on its password-protected website at http://www.sf.citidirect.com and deliver such notice i) with respect to the Book-Entry Notes, through the Applicable Procedures of DTC and (ii) with respect to any Class A-1 Notes, via email to each Class A-1 Administrative Agent.

(g) The Trustee shall be entitled to conclusively rely on, and will be fully protected in all actions taken or not taken by it with respect to, (i) the e-mail information provided by the Class A-1 Administrative Agent and the Applicable Procedures of the Clearing Agencies (and the registered address of any Holders of Definitive Notes) for delivery of the CCR ElectionNomination Notices and the CCR Ballots to Note Owners of Notes of the Controlling Class and (ii) the representations and warranties of the Persons submitting CCR Nominations, CCR Ballots and CCR Acceptance Letters.

(h) Each of the Servicer (in its capacity as Servicer and Control Party) and the Back-Up Manager shall be entitled to rely on the identity of the Controlling Class Representative provided by the Trustee with respect to any obligation or right hereunder or under any other Transaction Document that the Servicer (in its capacity as Servicer and Control Party) or the Back-Up Manager, as the case may be, may have to deliver information or otherwise communicate with the Controlling Class Representative or any of the Noteholders of the Controlling Class, with no liability to it for such reliance.

 

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(i) The Controlling Class Representative shall be entitled to receive from the Trustee, upon request, any memoranda delivered to the Trustee by the Back-Up Manager pursuant to the Back-Up Management Agreement; provided that it shall have first executed a confidentiality agreement, in form and substance satisfactory to the Managers, and such confidentiality agreement remains in effect. Any such memoranda shall be deemed to contain confidential information.

Section 11.2 Resignation or Removal of the Controlling Class Representative. The Controlling Class Representative may at any time resign as such by giving written notice to the Trustee, the Servicer and to each Noteholder of the Controlling Class. As of any Record Date, a Majority of Controlling Class Members shall be entitled to remove any existing Controlling Class Representative by giving written notice to the Trustee, the Servicer and such existing Controlling Class Representative. No resignation or removal of the Controlling Class Representative shall be effective until a successor Controlling Class Representative has been appointed pursuant to Section 11.1 or until the end of the CCR Election Period (or, if no CCR Election Period has occurred after a CCR Nomination Period, until the end of the related CCR Nomination Period) following such resignation or removal; provided that any Controlling Class Representative that has been removed pursuant to this Section 11.2 may subsequently be nominated as a CCR Candidate and appointed as Controlling Class Representative pursuant to Section 11.1; provided, further, that an existing Controlling Class Representative shall cease to be the Controlling Class Representative at the end of a CCR Election Period, even if no successor is re-elected pursuant to Section 11.1, unless such Controlling Class Representative is elected during such CCR Election Period (except that, if no CCR Nomination has been received by the Trustee and there is a Controlling Class Representative at such time, the Person serving as the Controlling Class Representative will be deemed re-elected and will continue to serve as the Controlling Class Representative). In addition to the foregoing, within two (2) Business Days of the selection, resignation or removal of the Controlling Class Representative, the Trustee shall notify the Servicer, the Back-Up Manager and the parties to this Base Indenture of such event.

Section 11.3 Expenses and Liabilities of the Controlling Class Representative.

(a) The Controlling Class Representative shall have no liability to the Noteholders for any action taken, or for refraining from the taking of any action, in good faith pursuant to the Indenture or for errors in judgment; provided that the Controlling Class Representative shall not be protected against any liability that would otherwise be imposed by reason of willful misfeasance, gross negligence or reckless disregard of its obligations or duties under the Indenture. Each Noteholder acknowledges and agrees, by its acceptance of its Notes or interests therein, that (i) the Controlling Class Representative may have special relationships and interests that conflict with those of Noteholders of one or more Classes of Notes, or that conflict with other Noteholders, (ii) the Controlling Class Representative may act solely in the interests of the Controlling Class Members or in its own interest, (iii) the Controlling Class Representative does not have any duties to Noteholders other than the Controlling Class Members, (iv) the Controlling Class Representative may take actions that favor the interests of the Controlling Class Members over the interests of Noteholders of one or more other Classes of Notes, or that favor its own interests over those of other Noteholders or other Controlling Class Members, (v) the Controlling Class Representative shall not be deemed to have been grossly negligent or reckless, or to have acted in bad faith or engaged in willful misfeasance, by reason of its having acted solely in the interests of the Controlling Class Members or in its own interests, and (vi) the Controlling Class Representative shall have no liability whatsoever for having so acted pursuant to clauses (i) through (v), and no Note Owner or Noteholder may take any action whatsoever against the Controlling Class Representative for having so acted or against any director, officer, employee, agent or principal thereof for having so acted.

 

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(b) Any and all expenses of the Controlling Class Representative for acting in its capacity as Controlling Class Representative shall be borne by the Controlling Class Members (and not by any other party), pro rata according to their respective Outstanding Principal Amounts of Notes of the Controlling Class. Notwithstanding the foregoing, if a claim is made against the Controlling Class Representative in an action to which the Servicer and/or the Trustee are also named parties and, in the sole judgment of the Servicer, the Controlling Class Representative had acted in good faith, without gross negligence or willful misconduct, with regard to the subject of such claim, the Servicer on behalf of the Trustee shall be required to assume the defense (with any costs incurred in connection therewith being deemed to be reimbursable as a Collateral Protection Advance) of any, subject to a nonrecoverability determination) of such claim against the Controlling Class Representative, so long as there is no potential for the Servicer or the Trustee to be an adverse party in the same action as regards the Controlling Class Representative.

Section 11.4 Control Party.

(a) Pursuant to the Indenture and the other Transaction Documents, the Control Party is authorized to consent to and implement, subject to the Servicing Standard, any Consent Request that does not require the consent of any Noteholder, including the Controlling Class Representative.

(b) For any Consent Request that requires, pursuant to the terms of the Indenture or the other Transaction Documents, the consent or direction of the Controlling Class Representative, the Control Party shall evaluate such Consent Request, form a Consent Recommendation and then promptly deliver such Consent Request and such Consent Recommendation to the Controlling Class Representative (if a Controlling Class Representative exists at such time). Subject to Section 11.4(e) and except as provided in the following sentence, until the Controlling Class Representative consents to, waives or provides direction in connection with a Consent Request, the Control Party is not authorized to implement such Consent Request; provided that the Control Party shall work in good faith with the Controlling Class Representative to obtain such consent. Notwithstanding anything in any Transaction Document to the contrary, if at any time there is no Controlling Class Representative (including prior to the CCR Election Period resulting from the issuance of the Series 2020-12022-1 Notes and prior to the election and appointment of a substitute Controlling Class Representative or following the resignation or removal of aan existing Controlling Class Representative) or if thean existing Controlling Class Representative does not approve or reject a Consent Request within ten (10) Business Days after receipt of such Consent Request and the related Consent Recommendation to the Controlling Class Representative or if there is no Controlling Class Representative at such time (including, without limitation, following the resignation or removal of the Controlling Class Representative), the Control Party is authorized (but not required) to consent and implement such Consent Request or reject such Consent Request, in each case, in accordance with the Servicing Standard, whether or not the Indenture or any other Transaction Document indicates that the Control Party is required to act with the consent or at the direction of the Controlling Class Representative with respect to any specific matter relating to such Consent Request, other than with respect to the waiver of any Servicer Termination Events.

(c) For any Consent Request that requires, pursuant to the terms of Section 13.2, the consent of any affected Noteholders or 100% of the Noteholders, the Control Party shall evaluate such Consent Request and shall formulate and present a Consent Recommendation to the Trustee, which shall forward such Consent Request and such Consent Recommendation to each Noteholder or each affected Noteholder, as applicable. Subject to Section 11.4(e) and except as provided in the following sentence, until the consent of each Noteholder that is required to consent to any such Consent Request has been obtained and the Control Party is provided with notice of such consents being obtained by the Trustee, the Control Party is not authorized to implement such Consent Request; provided that the Control Party shall work in good faith with the Trustee to identify and deliver to the Trustee for delivery by the Trustee to such Noteholders such additional information and Consent Recommendations as may be appropriate in accordance with the Servicing Standard to obtain such consent.

 

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(d) The Control Party shall promptly notify the Trustee, the Managers, the Back-Up Manager, the Co-Issuers and the Controlling Class Representative if the Control Party determines, in accordance with the Servicing Standard, not to implement a Consent Request or has not received the requisite consent of the Controlling Class Representative or the Noteholders, if applicable, to implement a Consent Request. The Trustee shall promptly notify the Control Party, the Managers, the Back-Up Manager, the Co-Issuers and the Controlling Class Representative if the Trustee has not received the requisite consent of the required percentage of Noteholders to implement a Consent Request.

(e) Notwithstanding anything herein to the contrary, no advice, direction or objection from or by the Controlling Class Representative may (i) require or cause the Trustee or the Control Party to violate applicable law, the terms of this Indenture, the Notes, the Servicing Agreement or the other Transaction Documents, including, without limitation, with respect to the Control Party, the Control Party’s obligation to act in accordance with the Servicing Standard, (ii) expose the Control Party, the Servicer or the Trustee, or any of their respective Affiliates, officers, directors, members, managers, employees, agents or partners, to any material claim, suit or liability, or (iii) materially expand the scope of the Servicer’s responsibilities under the Servicing Agreement or the Trustee’s responsibility under this Indenture, the Notes and the other Transaction Documents. The Trustee and the Control Party will not be required to follow any such advanceadvice , direction or objection. In addition, notwithstanding anything herein or in the other Transaction Documents to the contrary, the Controlling Class Representative shall not be able to prevent the Control Party from transferring the ownership of all or any portion of the Collateral if any Advance is outstanding and the Control Party determines in accordance with the Servicing Standard that such transfer of ownership would be in the best interest of the Noteholders (taken as a whole).

(f) Notwithstanding anything herein to the contrary, any Consent Request affecting the rights of the Noteholders of any Class A-1 Notes will also require the consent of the related Class A-1 Administrative Agent.

Section 11.5 Note Owner List.

(a) To facilitate communication among Note Owners, the Managers, the Trustee, the Control Party and the Controlling Class Representative, a Note Owner may elect, but is not required, to notify the Trustee of its name, address and other contact information, which will be kept in a register maintained by the Trustee.

(b) Any Note Owners holding beneficial interests of not less than $50,000,000 in aggregate principal amount of Notes that wish to communicate with the other Note Owners with respect to their rights under the Indenture or under the Notes may request in writing that the Trustee deliver a notice or communication to the other Note Owners through the Applicable Procedures of each Clearing Agency with respect to all Series of Notes Outstanding. If such a request is made and is accompanied by (i) a certificate substantially in the form of Exhibit L certifying that such Note Owners hold beneficial interests of not less than $50,000,000 in aggregate principal amount of Notes (each, a “Note Owner Certificate”) (upon which the Trustee may conclusively rely) and (ii) a copy of the communication which such Note Owners propose to transmit, then the Trustee, after having been adequately indemnified by such Note Owners for its costs and expenses, shall, within five (5) Business Days after receipt of the request, transmit the requested communication to the other Note Owners through the Applicable Procedures of each Clearing Agency with respect to all Series of Notes Outstanding and give each Co-Issuer, the Servicer and the Controlling Class Representative notice that such request and transmission has been made. The Trustee shall have no obligation of any nature whatsoever with respect to any requested communication other than to transmit it in accordance with and subject to the terms hereof and to give notice of such request and transmission to the Co-Issuers, the Servicer and the Controlling Class Representative.

 

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ARTICLE XII

DISCHARGE OF INDENTURE

Section 12.1 Termination of the Co-Issuers’ and Guarantors’ Obligations.

(a) Satisfaction and Discharge. The Indenture and the Guarantee and Collateral Agreements shall be discharged and cease to be of further effect when all Outstanding Notes theretofore authenticated and issued (other than destroyed, lost or stolen Notes which have been replaced or paid) have been delivered to the Trustee for cancellation (or de-registration), the Co-Issuers have paid all sums payable hereunder and under each other Transaction Document, all commitments to extend credit under all Class A-1 Note Purchase Agreements have been terminated and all payments by the Co-Issuers thereunder have been paid or otherwise provided for; except that (i) the Co-Issuers’ obligations under Section 10.5 and the Guarantors’ guaranty thereof, (ii) the Trustee’s and the Paying Agent’s obligations under Sections 12.2 and 12.3 and (iii) the Noteholders’ and the Trustee’s obligations under Section 14.13 shall survive. The Trustee, on demand of the Securitization Entities, will execute proper instruments acknowledging confirmation of, and discharge under, the Indenture and the Guarantee and Collateral Agreements.

(b) Indenture Defeasance. The Co-Issuers may terminate all of their obligations under the Indenture and all obligations of the Guarantors under the Guarantee and Collateral Agreements in respect thereof and release all Collateral so long as:

(i) the Co-Issuers irrevocably deposit in trust with the Trustee, or with a trustee reasonably satisfactory to the Control Party, the Trustee and the Co-Issuers, U.S. Dollars and/or Government Securities in an amount sufficient, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee, to pay all principal, premiums, make-whole prepayment consideration, if any, and interest on the Outstanding Notes (including additional interest that accrues after an anticipated repayment date or renewal date, if applicable) to the applicable prepayment date, redemption date or maturity date, as the case may be, and to pay all other sums payable by them under this Base Indenture, the Servicing Agreement, the Back-Up Management Agreement and each other Transaction Document; provided that any Government Securities shall provide for the scheduled payment of all principal and interest thereon not later than the Business Day prior to the applicable prepayment date, redemption date or maturity date, as the case may be; and the Trustee shall have been irrevocably instructed by either Co-Issuer to apply such funds to the payment of principal, premiums, make-whole prepayment consideration and interest with respect to the Notes and such other sums;

(ii) all commitments under all Class A-1 Note Purchase Agreements have been terminated on or before the date of such deposit;

(iii) the Co-Issuers deliver notice of such deposit to Noteholders not more than twenty (20) Business Days prior to the date of such deposit, and such notice is expressly stated to be, or as of the date of such deposit has become, irrevocable;

(iv) the Co-Issuers deliver notice of such deposit to the Control Party, the Managers, the Back-Up Manager and each Rating Agency on or before the date of the deposit; and

(v) an Opinion of Counsel is delivered to the Trustee and the Servicer by the Co-Issuers to the effect that all conditions precedent set forth herein with respect to such termination have been satisfied.

 

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Upon satisfaction of such conditions, the Indenture and the Guarantee and Collateral Agreements shall be discharged and cease to be of further effect; except that (i) the rights and obligations of the Trustee hereunder, including, without limitation, the Trustee’s rights to compensation and indemnity under Section 10.5, and the Guarantor’s guaranty thereof, (ii) the Trustee’s and the Paying Agent’s obligations under Section 12.2 and Section 12.3, (iii) the Noteholders’ and the Trustee’s obligations under Section 14.13, (iv) this Section 12.1(b) and (v) the Noteholders’ rights to registration of transfer and exchange under Section 2.8 and to replacement or substitution of mutilated, destroyed, lost or stolen Notes under Section 2.10(a) shall survive. The Trustee, on demand of the Securitization Entities, shall execute proper instruments acknowledging confirmation of and discharge under the Indenture and the Guarantee and Collateral Agreements.

(c) Series Defeasance. Except as may be provided to the contrary in any Series Supplement, the Co-Issuers, solely in connection with an optional prepayment in full, a mandatory prepayment in full or a redemption in full of all Outstanding Notes of a particular Series (the “Defeased Series”) or in connection with the Series Legal Final Maturity Date of a particular Series of Notes, may terminate all Series Obligations with respect to such Series of Notes and all Obligations of the Guarantors under the Guarantee and Collateral Agreements in respect of such Series of Notes as of any Business Day (the “Series Defeasance Date”) so long as:

(i) the Co-Issuers irrevocably deposit in trust with the Trustee, or with a trustee reasonably satisfactory to the Control Party, the Trustee and the Co-Issuers, U.S. Dollars and/or Government Securities in an amount sufficient, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee, to pay without duplication:

(A) all principal, premiums, make-whole prepayment consideration, commitment fees, administrative expenses, Class A-1 Notes Other Amounts, interest on the Outstanding Notes of such Series (including additional interest that accrues after the anticipated repayment date or renewal date, if applicable) any other Series Obligations that will be due and payable by the Co-Issuers solely with respect to the Defeased Series as of the applicable prepayment date, redemption date or Series Legal Final Maturity Date, as applicable, and to pay all other sums payable by them under this Base Indenture and each other Transaction Document with respect to the Defeased Series;

(B) all Weekly Management Fees, Supplemental Management Fees, unreimbursed Advances (and outstanding interest thereon) and Manager Advances (and outstanding interest thereon), all fees, indemnities, reimbursements and expenses due to the Trustee, the Managers, the Servicer and the Back-Up Manager, and all Successor Manager Transition Expenses and Successor Servicer Transition Expenses, in each case that will be due and payable as of the following Quarterly Calculation Date; and

(C) all Securitization Operating Expenses, all Class A-1 Notes Administrative Expenses for the Defeased Series, all Class A-1 Notes Interest Adjustment Amounts for the Defeased Series, in each case, that are due and unpaid as of the Series Defeasance Date to the Actual Knowledge of either Manager;

provided that any Government Securities shall provide for the scheduled payment of all principal and interest thereon not later than the Business Day prior to the applicable prepayment date, redemption date or Series Legal Final Maturity of the Defeased Series, as the case may be; and the Trustee shall have been irrevocably instructed by either Co-Issuer to apply such funds to the payment of principal, premiums, make-whole prepayment consideration and interest with respect to the Notes of such Series and such other sums;

 

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(ii) all commitments under all Class A-1 Note Purchase Agreements with respect to the Defeased Series shall have been terminated on or before the Series Defeasance Date;

(iii) the Co-Issuers deliver notice of prepayment, redemption or maturity of such Series of Notes in full to the Noteholders of the Defeased Series, the Managers, the Trustee, the Control Party, the Servicer, the Controlling Class Representative, the Back-Up Manager and each Rating Agency not more than twenty (20) Business Days prior to the Series Defeasance Date, and such notice is expressly stated to be, or as of the date of the deposit has become, irrevocable;

(iv) after giving effect to the deposit, if any other Series of Notes is Outstanding, the Co-Issuers deliver to the Trustee an Officers’ Certificate stating that no Potential Rapid Amortization Event, Rapid Amortization Event, Default or Event of Default shall have occurred and be continuing on the date of such deposit;

(v) the Co-Issuers deliver to the Trustee an Officers’ Certificate stating that the defeasance was not made by the Co-Issuers with the intent of preferring the holders of the Defeased Series over other creditors of any Co-Issuer or with the intent of defeating, hindering, delaying or defrauding other creditors;

(vi) the Co-Issuers deliver notice of such deposit to the Control Party, the ManagerManagers, the Back-Up Manager and each Rating Agency on or before the date of the deposit;

(vii) such defeasance will not result in a breach or violation of, or constitute a default under, the Indenture or any other Indenture Document;

(viii) the Rating Agency Condition is satisfied with respect to each Series of Notes Outstanding, if any, other than the Defeased Series; and

(ix) the Co-Issuers deliver to the Trustee an Opinion of Counsel to the effect that all conditions precedent set forth herein with respect to such termination have been satisfied.

Upon satisfaction of such conditions, the Indenture and the Guarantee and Collateral Agreements shall be discharged and cease to be of further effect with respect to such Defeased Series, the Co-Issuers and the Guarantors shall be deemed to have paid and been discharged from their Series Obligations with respect to such Defeased Series and thereafter such Defeased Series shall be deemed to be “Outstanding” only for purposes of (1) the Trustee’s and the Paying Agent’s obligations under Section 12.2 and Section 12.3, (2) the Noteholders’ and the Trustee’s obligations under Section 14.13 and (3) the Noteholders’ rights to registration of transfer and exchange under Section 2.8 and to replacement or substitution of mutilated, destroyed, lost or stolen Notes under Section 2.10(a). The Trustee, on demand of the Securitization Entities, shall execute proper instruments acknowledging confirmation of and discharge under the Indenture and the Guarantee and Collateral Agreements of such Series Obligations.

(d) After the conditions set forth in Section 12.1(a) have been met, or after the irrevocable deposit is made pursuant to Section 12.1(b) and satisfaction of the other conditions set forth therein have been met, the Trustee upon request of the Securitization Entities shall reassign (without recourse upon, or any warranty whatsoever by, the Trustee) and deliver all Collateral and documents then in the custody or possession of the Trustee promptly to the applicable Securitization Entities.

 

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Section 12.2 Application of Trust Money.

The Trustee or a trustee satisfactory to the Servicer, the Trustee and either Co-Issuer shall hold in trust money or Government Securities deposited with it pursuant to Section 12.1. The Trustee shall apply the deposited money and the money from Government Securities through the Paying Agent in accordance with this Base Indenture and the other Transaction Documents to the payment of principal, premium, if any, and interest on the Notes and the other sums referred to above. The provisions of this Section 12.2 shall survive the expiration or earlier termination of the Indenture.

Section 12.3 Repayment to the Co-Issuers.

(a) The Trustee and the Paying Agent shall promptly pay to the Co-Issuers upon written request any excess money or, pursuant to Sections 2.10 and 2.14, return any cancelled Notes held by them at any time.

(b) Subject to Section 2.6(c), the Trustee and the Paying Agent shall pay to the Co-Issuers upon written request any money held by them for the payment of principal, premium or interest that remains unclaimed for two years after the date upon which such payment shall have become due.

(c) The provisions of this Section 12.3 shall survive the expiration or earlier termination of the Indenture.

Section 12.4 Reinstatement.

If the Trustee is unable to apply any funds received under this Article XII by reason of any proceeding, order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Co-Issuers’ obligations under the Indenture and the other Indenture Documents and in respect of the Notes and the Guarantors’ obligations under the Guarantee and Collateral Agreements shall be revived and reinstated as though no deposit had occurred, until such time as the Trustee is permitted to apply all such funds or property in accordance with this Article XII. If the Co-Issuers or Guarantors make any payment of principal, premium or interest on any Notes or any other sums under the Indenture Documents while such obligations have been reinstated, the Co-Issuers and the Guarantors shall be subrogated to the rights of the Noteholders or Note Owners or other Secured Parties who received such funds or property from the Trustee to receive such payment in respect of the Notes.

ARTICLE XIII

AMENDMENTS

Section 13.1 Without Consent of the Controlling Class Representative or the Noteholders.

(a) Without the consent of any Noteholder, the Control Party, the Controlling Class Representative or any other Secured Party, each Co-Issuer and the Trustee, at any time and from time to time, may enter into one or more Supplements hereto (or, in the case of clause (viii) below, amend, modify or supplement any Supplement, the Guarantee and Collateral Agreements or any other Indenture Document), in form satisfactory to the Trustee, for any of the following purposes:

(i) to create a new Series of Notes in accordance with Section  2.2(b);, and in connection therewith, on and after the 2022 Springing Amendments Implementation Date, notwithstanding the Specified Payment Amendment Provisions, to add or modify Events of Default, Rapid Amortization Events and Manager Termination Events to the extent that any such modifications render such events more restrictive from the perspective of the Securitization Entities;

 

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(ii) to add to the covenants of the Securitization Entities for the benefit of any Noteholders or any other Secured Parties (and if such covenants are to be for the benefit of less than all Series of Notes, stating that such covenants are expressly being included solely for the benefit of such Series) or to surrender for the benefit of the Noteholders and the other Secured Parties any right or power herein conferred upon the Securitization Entities; provided that the Co-Issuers will not, pursuant to this Section 13.1(a)(ii), surrender any right or power it has under the Transaction Documents;

(iii) to mortgage, pledge, convey, assign and transfer to the Trustee any property or assets as security for the Obligations; and to specify the terms and conditions upon which such property or assets are to be held and dealt with by the Trustee and to set forth such other provisions in respect thereof as may be required by the Indenture or as may, consistent with the provisions of this Base Indenture, be deemed appropriate by the Co-Issuers, or to correct or to amplify the description of any such property or assets at any time so mortgaged, pledged, conveyed and transferred to the Trustee for the benefit of the Secured Parties;

(iv) to correct any manifest error or defect or to cure any ambiguity, defect or inconsistency or to correct or supplement any provisions herein or, in any Series Supplement or in any Notes, or in the Guarantee and Collateral Agreements or any other Indenture Document to which the Trustee is a party which may be inconsistent with any other provision herein or therein or with any related offering memorandum;

(v) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(vi) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Notes of one or more Series and to add to or change any of the provisions of the Indenture or the Guarantee and Collateral Agreements as will be necessary to provide for or facilitate the administration of the trusts hereunder or thereunder by more than one Trustee;

(vii) (A) to correct or supplement any provision in this Base Indenture that may be inconsistent with any other provision or to make consistent any other provisions with respect to matters or questions arising under this Base Indenture, any Supplement, the Guarantee and Collateral Agreements or any other Indenture Document to which the Trustee is a party;

(viii) and (B) to correct or supplement any provision in any Supplement, the Guarantee and Collateral Agreements or any other Indenture Document to which the Trustee is a party that may be inconsistent with any other provision or to make consistent any other provisions with respect to matters or questions arising under this Base Indenture, any Supplement, the Guarantee and Collateral Agreements or any other Indenture Document to which the Trustee is a party;

(viii) (ix) to comply with Requirements of Law (as evidenced by an Opinion of Counsel);

(ix) (x) to facilitate the transfer of Notes in accordance with applicable Law (as evidenced by an Opinion of Counsel);

 

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(x) (xi) to take any action necessary or helpful to avoid the imposition, under and in accordance with applicable lawRequirements of Law, of any Tax, including withholding Tax;

(xi) to amend the terms of any Series Supplement or Class A-1 Note Purchase Agreement in connection with the implementation of a successor rate to any applicable benchmark rate;

(xii) to provide for mechanical provisions in respect of the issuance of Senior Subordinated Notes or Subordinated Notes;

(xiii) (xii) to add provisions in respect of hedging and enhancement mechanics, including the addition of swap and hedge counterparties as Secured Parties under the Indenture and the other Transaction Documents, the payment of hedge and enhancement payments (other than termination payments) on a pari passu basis with interest on the Senior Notes and the payment of hedge termination and other amounts due to swap and hedge counterparties prior to the payment of unpaid premiums and make-whole prepayment consideration;

(xiv) to amend, amend and restate or otherwise modify any Indenture Document in connection with a Series Refinancing Event; provided that such modifications shall take effect simultaneously with or following such payment in full, satisfaction and discharge or defeasance;

(xv) (xiii) to take any action necessary and appropriate to facilitate the origination of FranchiseManaged Documents or the management and preservation of the FranchiseManaged Documents, in each case, in accordance with the applicable Managing Standard; or

(xiv) to provide for mechanical provisions in respect of the issuance of Subordinated Notes;

(xvi) in the case of any Class A-1 Note Purchase Agreement, to amend, modify, supplement or waive any of the terms thereof, pursuant to the terms of such agreement;

provided that, as evidenced by an Officers’ Certificate delivered to thein the case of any Supplement pursuant to any of clauses (iii), (iv), (vii), (x), (xi), (xii), (xiii), (xiv), (xv) or (xvi) above, the Trustee, the Servicer and the Back-Up Manager, shall have received an Officer’s Certificate certifying such action could not reasonably be expected to adversely affect in any material respect the interests of any Noteholder, any Note Owner, the Trustee, the Servicer, the Back-Up Manager or any other Secured Party.

The Managers, on behalf of the applicable Securitization Entities, will have the authority to close or otherwise terminate any Management Account and to amend or terminate any related Account Control Agreement without the consent of the Control Party, subject to the delivery by such Manager of an Officer’s Certificate to the Control Party and the Trustee (a) stating that such account has been closed or is dormant, (b) there are no remaining Collections or other Collateral credited thereto and (c) such Manager has taken reasonable best efforts (including, if applicable, notifying third parties) to ensure that no Collections or other Collateral will be deposited to such account thereafter. To the extent any Collections or other Collateral are deposited in any such account thereafter, each Manager agrees to cause such Collections or other Collateral to be transferred within three (3) Business Days (unless such transfer requires an international funds transfer, in which case such funds must be deposited to the applicable account within five (5) Business Days) to an account that is subject to an Account Control Agreement or established with the Trustee.

 

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