UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 27, 2006
Consumer Portfolio Services Inc.
(Exact name of Registrant as Specified in Charter)
| California | 001-14116 | 33-0459135 | ||
|
(State or other Jurisdiction of Incorporation or Organization) |
(Commission File Number) |
(IRS Employer Identification Number) |
16335 Laguna Canyon Road, Irvine, CA 92618
(Address of Principal Executive Offices, including Zip Code)
(949) 753-6800
(Registrant's telephone number, including area code)
Not Applicable
(Former name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
The information contained in Item 2.03 of this report is hereby incorporated by reference into this Item 1.01.
On September 27, 2006, the registrant ("CPS") and its wholly owned subsidiary CPS Receivables Two Corp. ("Subsidiary") entered into a series of agreements under which Subsidiary purchased from CPS, and sold to CPS Auto Receivables Trust 2006-C, a Delaware statutory trust (the "Trust") approximately $172.2 million of subprime automotive receivables (the "Initial Receivables"). Subsidiary also committed to purchase and to sell to the Trust, and CPS committed to sell to Subsidiary, an additional $75.3 million of similar automotive receivables (the "Subsequent Receivables").
CPS disclaims any implication that the agreements relating to such transactions are other than agreements entered into in the ordinary course of CPS's business.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
CPS, Subsidiary, the Trust and others on September 27, 2006 entered into a series of agreements that, among other things, created long-term obligations that are material to CPS, Subsidiary and the Trust. Under these agreements (i) CPS sold the Initial Receivables to Subsidiary, and committed to sell the Subsequent Receivables to Subsidiary not later than October 31, 2006, (ii) Subsidiary sold the Initial Receivables to the Trust, and committed to sell the Subsequent Receivables to the Trust, (iii) the Trust pledged the Initial Receivables, and committed to pledge the Subsequent Receivables, to Wells Fargo Bank, N.A. ("Wells"), as indenture trustee for benefit of the holders of the Notes (as defined below), and for benefit of the Insurer (as defined below), (iv) the Trust issued and sold $220.275 million of asset-backed Notes, in four classes (such Notes collectively, the "Notes"), (v) a portion of the proceeds from the sale of the Notes was pledged to Wells as trustee for benefit of the holders of the Notes, to be used to fund the purchase price of the Subsequent Receivables, (vi) an insurance company, XL Capital Assurance Inc. (the "Insurer"), issued a policy (the "Policy") guaranteeing payment of principal and interest on the Notes, and (vii) a cash deposit (the "Reserve Account") in the amount of 2.00% of the aggregate balance of the Initial Receivables was pledged for the benefit of the Insurer.
Security for the repayment of the Notes consists of the Initial Receivables and, when and if sold, the Subsequent Receivables (together, the "Receivables"), and the rights to payments relating to such receivables. The Receivables were originated or purchased by CPS and CPS will act as the servicer of the Receivables. Credit enhancement for the Notes consists of over-collateralization, the Reserve Account, and the Policy, which guarantees the obligations of the Trust to pay interest on, and repay the principal balance of, the Notes. Wells will act as collateral agent and trustee on behalf of the secured parties, and is the backup servicer.
The Notes are obligations only of the Trust, and not of Subsidiary nor of CPS. Nevertheless, the Notes are properly treated as long-term debt obligations of CPS. The sale and issuance of the Notes, treated as secured financings for accounting and tax purposes, are treated as sales for all other purposes, including legal and bankruptcy purposes. None of the assets of the Trust or Subsidiary are available to pay other creditors of CPS or its affiliates.
Upon completion of the anticipated October 2006 sale of the Subsequent Receivables to the Trust, the Trust will hold a fixed pool of amortizing assets. The Trust is obligated to pay principal and interest on the Notes on a monthly basis. Interest is payable at fixed rates on the outstanding principal balance of each of the four classes of the Notes, and principal is payable by reference to the aggregate principal balance of the Receivables (adjusted for chargeoffs and prepayments, among other things) and agreed required over-collateralization. Principal is payable serially; that is all payable principal is directed first to the class A-1 Notes until such class is paid in full, then to the class A-2 Notes until such class is paid in full, and so on. The following table sets forth the interest rates and initial principal amounts of the four classes of
Notes:
| Note Class | Amount | Interest Rate |
| A-1 | $38.900 million | 5.38568% |
| A-2 | $70.000 million | 5.31000% |
| A-3 | $41.300 million | 5.14000% |
| A-4 | $70.075 million | 5.14000% |
The 2006-C transaction has initial credit enhancement consisting of a cash deposit and subordinated interests in the aggregate amount of 13.00% of the original receivable pool balance. That enhancement level is to be supplemented by accelerated payment of principal on the Notes to reach a combined level of 18.75% of the then-outstanding receivable pool balance.
At such time as the aggregate outstanding principal balance of the 2006-C Receivables is less than 10% of the initial aggregate balance of $247.5 million, CPS will have the option to purchase the Trust estate at fair market value, provided that such purchase price is sufficient to cause the Notes to be redeemed and paid in full, and to cause other obligations of the Trust to be met.
If an event of default were to occur under the agreements, the Insurer would have the right to accelerate the maturity of the Notes, and the required amount of the Reserve Account would increase to an amount equal to the outstanding aggregate principal balance of the Notes. Such increase would have the effect of redirecting to the Reserve Account the cash proceeds of the Receivables that otherwise would be released to Subsidiary, until such time, if any, as the Reserve Account reached the increased required level. Events of default include pool performance ratios, in addition to such events as failure to make required payments on the Notes, breaches of warranties, representations or covenants under any of the agreements or specified bankruptcy-related events. In addition, if the Receivables (pledged as security for the Notes) were to experience net loss ratios, delinquency ratios, or default rates that are higher than specified levels, the existence of such a "trigger event" would also increase the Reserve Account requirements, though to a lesser extent, which would also have the effect of redirecting to the Reserve Account certain cash proceeds of the Receivables that otherwise would be released to Subsidiary.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
Two exhibits are furnished herewith:
| Exhibit Number | Description | |
| 4.16 | Indenture re Notes issued by CPS Auto Receivables Trust 2006-C. | |
| 99.1 | Consumer Portfolio Services, Inc. September 27, 2006 press release |
Signature
Pursuant to the requirements of the Securities Exchange Act of l934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Consumer Portfolio Services, Inc. | ||||
| (Registrant) | ||||
| Date: September 28, 2006 | By: |
/s/ Jeffrey P. Fritz |
||
| Name: | Jeffrey P. Fritz | |||
| Title: | Senior Vice President and Chief Financial Officer | |||
| Signing on behalf of the registrant | ||||
| and as Principal Financial Officer | ||||
EXHIBIT INDEX
|
Exhibit Number |
Description |
|
| 4.16 | Indenture re Notes issued by CPS Auto Receivables Trust 2006-C. | |
| 99.1 | Consumer Portfolio Services, Inc. September 27, 2006 press release. |
Exhibit 4.16
Exhibit 99.1
 |
NEWS RELEASE |
CPS Announces $247.5 Million Securitization with Improved Enhancement Levels
IRVINE, Calif. - September 27, 2006 - Consumer Portfolio Services, Inc. (Nasdaq: CPSS) announced that it closed a term securitization transaction today, issuing $220.275 million of investment grade Notes backed by automotive receivables.
In the transaction, qualified institutional buyers purchased $220,275,000 of Notes backed by automotive receivables originated by Consumer Portfolio Services. The Notes, issued by CPS Auto Receivables Trust 2006-C, consist of four classes. The ratings of the Notes were provided by Standard & Poor's and Moody's Investors Services and were based on the structure of the transaction, CPS's experience as a servicer and a financial guaranty insurance policy issued by XL Capital Assurance Inc.
|
Note Class |
Amount |
Interest Rate |
Average Life |
Price |
Standard & Poor's Rating |
Moody's Rating |
|
A-1 |
$38.900 million |
5.38568% |
0.23 years |
100.000 |
A-1+ |
P-1 |
|
A-2 |
$70.000 million |
5.31000% |
1.00 years |
99.997 |
AAA |
Aaa |
|
A-3 |
$41.300 million |
5.14000% |
2.00 years |
99.992 |
AAA |
Aaa |
|
A-4 |
$70.075 million |
5.14000% |
3.36 years |
99.991 |
AAA |
Aaa |
The weighted average effective coupon on the Notes is approximately 5.18%.
The 2006-C transaction has initial credit enhancement consisting of a cash deposit in the amount of 2.00% of the original receivable pool balance, plus subordinated interests of 11.00%. That enhancement level is to be supplemented by accelerated payment of principal on the Notes to reach a combined level of 18.75% of the then-outstanding receivable pool balance. These levels represent a decrease of 150 basis points from CPS's 2006-B transaction.
The transaction utilized a pre-funding structure, in which CPS sold approximately $172.2 million of receivables today and plans to sell approximately $75.3 million of additional receivables during October 2006. This further sale is intended to provide CPS with financing for receivables originated primarily in the month of September.
The transaction was a private offering of securities, not registered under the Securities Act of 1933, or any state securities law. All of such securities having been sold, this announcement of their sale appears as a matter of record only.
About Consumer Portfolio Services, Inc.
Consumer Portfolio Services, Inc. is a specialty finance company engaged in purchasing and servicing new and used retail automobile contracts originated primarily by franchised automobile dealerships and to a lesser extent by select independent dealers of used automobiles in the United States. We serve as an alternative source of financing for dealers, facilitating sales to sub-prime customers, who have limited credit history, low income or past credit problems and who otherwise might not be able to obtain financing from traditional sources.
Investor Contact
| Robert E. Riedl |
| Consumer Portfolio Services |
| 949-753-6800 |
INDENTURE
Dated as of September 1, 2006
between
CPS AUTO RECEIVABLES TRUST 2006-C, as Issuer
and
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
TABLE OF CONTENTS
Page
ARTICLE I - Definitions and Incorporation by Reference.....................3
SECTION 1.1 Definitions................................................3
SECTION 1.2 Reserved...................................................10
SECTION 1.3 Other Definitional Provisions..............................10
ARTICLE II - The Notes.....................................................11
SECTION 2.1 Form.......................................................11
SECTION 2.2 Execution, Authentication and Delivery.....................11
SECTION 2.3 Temporary Notes............................................12
SECTION 2.4 Registration; Registration of Transfer and Exchange........12
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes.................14
SECTION 2.6 Persons Deemed Owner.......................................15
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest......15
SECTION 2.8 Cancellation...............................................16
SECTION 2.9 Release of Collateral......................................17
SECTION 2.10 Book-Entry Notes...........................................17
SECTION 2.11 Notices to Clearing Agency.................................18
SECTION 2.12 Definitive Notes...........................................18
SECTION 2.13 Restrictions on Transfer of Notes..........................18
ARTICLE III - Covenants....................................................20
SECTION 3.1 Payment of Principal and Interest..........................20
SECTION 3.2 Maintenance of Office or Agency............................20
SECTION 3.3 Money for Payments to be Held in Trust.....................21
SECTION 3.4 Existence..................................................22
SECTION 3.5 Protection of Trust Estate.................................22
SECTION 3.6 Opinions as to Trust Estate................................23
SECTION 3.7 Performance of Obligations; Servicing of Receivables.......23
SECTION 3.8 Negative Covenants.........................................24
SECTION 3.9 Annual Statement as to Compliance..........................25
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms.........26
SECTION 3.11 Successor or Transferee....................................28
SECTION 3.12 No Other Business..........................................28
SECTION 3.13 No Borrowing...............................................28
SECTION 3.14 Servicer's Obligations.....................................28
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities..........28
SECTION 3.16 Capital Expenditures.......................................29
SECTION 3.17 Compliance with Laws.......................................29
SECTION 3.18 Restricted Payments........................................29
SECTION 3.19 Notice of Events of Default................................29
SECTION 3.20 Further Instruments and Acts...............................29
SECTION 3.21 Amendments of Sale and Servicing Agreement and Trust
Agreement..................................................29
i
SECTION 3.22 Income Tax Characterization................................29
SECTION 3.23 Separate Existence of the Issuer...........................30
SECTION 3.24 Representations and Warranties of the Issuer...............30
ARTICLE IV - Satisfaction and Discharge....................................31
SECTION 4.1 Satisfaction and Discharge of Indenture....................31
SECTION 4.2 Application of Trust Money.................................32
SECTION 4.3 Repayment of Moneys Held by Note Paying Agent..............32
ARTICLE V - Remedies.......................................................32
SECTION 5.1 Events of Default..........................................32
SECTION 5.2 Rights Upon Event of Default...............................34
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee....................................................35
SECTION 5.4 Remedies...................................................37
SECTION 5.5 Optional Preservation of the Receivables...................38
SECTION 5.6 Priorities.................................................38
SECTION 5.7 Limitation of Suits........................................39
SECTION 5.8 Unconditional Rights of Noteholders To Receive Principal
and Interest...............................................40
SECTION 5.9 Restoration of Rights and Remedies.........................40
SECTION 5.10 Rights and Remedies Cumulative.............................40
SECTION 5.11 Delay or Omission Not a Waiver.............................41
SECTION 5.12 Control by Noteholders.....................................41
SECTION 5.13 Waiver of Past Defaults....................................41
SECTION 5.14 Undertaking for Costs......................................42
SECTION 5.15 Waiver of Stay or Extension Laws...........................42
SECTION 5.16 Subrogation................................................42
SECTION 5.17 Preference Claims; Direction of Proceedings................42
ARTICLE VI - The Trustee...................................................43
SECTION 6.1 Duties of Trustee..........................................43
SECTION 6.2 Rights of Trustee..........................................45
SECTION 6.3 Individual Rights of Trustee...............................46
SECTION 6.4 Trustee's Disclaimer.......................................46
SECTION 6.5 Notice of Defaults.........................................46
SECTION 6.6 Reports by Trustee to Holders..............................47
SECTION 6.7 Compensation and Indemnity.................................47
SECTION 6.8 Replacement of Trustee.....................................48
SECTION 6.9 Successor Trustee by Merger................................48
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee..............49
SECTION 6.11 Eligibility: Disqualification..............................50
SECTION 6.12 Reserved...................................................50
SECTION 6.13 Appointment and Powers.....................................50
SECTION 6.14 Performance of Duties......................................51
SECTION 6.15 Limitation on Liability....................................51
SECTION 6.16 Reserved...................................................51
SECTION 6.17 Successor Trustee..........................................51
SECTION 6.18 Reserved...................................................52
ii
SECTION 6.19 Representations and Warranties of the Trustee..............52
SECTION 6.20 Waiver of Setoffs..........................................53
SECTION 6.21 Control by the Controlling Party...........................53
ARTICLE VII - Noteholders' Lists and Reports...............................53
SECTION 7.1 Issuer To Furnish To Trustee Names and Addresses of
Noteholders................................................53
SECTION 7.2 Preservation of Information; Communications to
Noteholders................................................53
ARTICLE VIII - Collection of Money and Releases of Trust Estate............54
SECTION 8.1 Collection of Money........................................54
SECTION 8.2 Release of Trust Estate....................................54
SECTION 8.3 Opinion of Counsel.........................................54
ARTICLE IX - Supplemental Indentures.......................................55
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.....55
SECTION 9.2 Supplemental Indentures with Consent of Noteholders........56
SECTION 9.3 Execution of Supplemental Indentures.......................57
SECTION 9.4 Effect of Supplemental Indenture...........................58
SECTION 9.5 Reserved...................................................58
SECTION 9.6 Reference in Notes to Supplemental Indentures..............58
ARTICLE X - Redemption of Notes............................................58
SECTION 10.1 Redemption.................................................58
SECTION 10.2 Form of Redemption Notice..................................59
SECTION 10.3 Notes Payable on Redemption Date...........................59
ARTICLE XI - Miscellaneous.................................................59
SECTION 11.1 Compliance Certificates and Opinions, etc..................59
SECTION 11.2 Form of Documents Delivered to Trustee.....................61
SECTION 11.3 Acts of Noteholders........................................62
SECTION 11.4 Notices, etc., to Trustee, Issuer and Rating Agencies......62
SECTION 11.5 Notices to Noteholders; Waiver.............................64
SECTION 11.6 Alternate Payment and Notice Provisions....................64
SECTION 11.7 Reserved...................................................64
SECTION 11.8 Effect of Headings and Table of Contents...................64
SECTION 11.9 Successors and Assigns.....................................65
SECTION 11.10 Severability...............................................65
SECTION 11.11 Benefits of Indenture......................................65
SECTION 11.12 Legal Holidays.............................................65
SECTION 11.13 Governing Law..............................................65
SECTION 11.14 Counterparts...............................................65
SECTION 11.15 Recording of Indenture.....................................65
SECTION 11.16 Trust Obligation...........................................65
SECTION 11.17 No Petition................................................66
SECTION 11.18 Inspection.................................................66
SECTION 11.19 Action Upon Direction of Noteholders.......................66
iii
INDENTURE dated as of September 1, 2006, between CPS AUTO RECEIVABLES
TRUST 2006-C, a Delaware statutory trust (the "Issuer"), and WELLS FARGO BANK,
NATIONAL ASSOCIATION, a national banking association, as trustee (the
"Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer's Class A-1 5.38568%
Asset-Backed Notes (the "Class A-1 Notes"), Class A-2 5.31% Asset-Backed Notes
(the "Class A-2 Notes"), Class A-3 5.14% Asset-Backed Notes (the "Class A-3
Notes") and Class A-4 5.14% Asset-Backed Notes (the "Class A-4 Notes" and,
together with the Class A-1 Notes, the Class A-2 Notes and the lass A-3 Notes,
the "Notes"):
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Notes, the Issuer has agreed to assign
the Collateral (as defined below) as collateral to the Trustee for the benefit
of the Noteholders.
XL Capital Assurance Inc. (the "Note Insurer") has issued and delivered
a financial guaranty insurance policy, dated the Closing Date (with
endorsements, the "Note Policy"), pursuant to which the Note Insurer guarantees
Scheduled payments, as defined in the Note Policy.
As an inducement to the Note Insurer to issue and deliver the Note
Policy, the Issuer and the Note Insurer have executed and delivered the
Insurance and Indemnity Agreement, dated as of September 27, 2006 (as amended
from time to time, in accordance with the terms thereof, the "Insurance
Agreement") among the Note Insurer, the Issuer, Consumer Portfolio Services,
Inc., Wells Fargo Bank, National Association and CPS Receivables Two Corp.
(the "Seller")
As an additional inducement to the Note Insurer to issue the Note Policy,
and as security for the performance by the Issuer of the Insurer Secured
Obligations (as defined below) and as security for the performance by the
Issuer of the Trustee Secured Obligations (as defined below),the Issuer has
agreed toassign the Collateral (as defined below) as collateral to the Trustee
for the benefit of the Issuer Secured Parties (as defined below), as their
respective interests may appear.
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee at the Closing Date, for the
benefit of the Issuer Secured Parties, all right, title and interest of the
Issuer, whether now existing or hereafter arising, in and to the following:
(i) the Initial Receivables listed in Schedule A to the Sale and
Servicing Agreement and all monies received thereunder (other than the
Additional Servicing Compensation) after the Initial Cutoff Date and all Net
Liquidation Proceeds and Recoveries received with respect to such Initial
Receivables after the Initial Cutoff Date;
(ii) the Subsequent Receivables listed in Schedule A to the
related Subsequent Transfer Agreement and all monies received thereunder
(other than the Additional Servicing Compensation) after the related
Subsequent Cutoff Date and all
1
Net Liquidation Proceeds and Recoveries received with respect to such
Subsequent Receivables after the related Subsequent Cutoff Date;
(iii) the security interests in the Financed Vehicles granted by the
related Obligors pursuant to the Receivables and any other interest of the
Issuer in such Financed Vehicles, including the certificates of title or, with
respect to such Financed Vehicles in the Non-Certificated Title States, all
other evidence of ownership with respect to such Financed Vehicles issued by
the applicable Department of Motor Vehicles or similar authority;
(iv) any proceeds from claims on any physical damage, credit life and
credit accident and health insurance policies or certificates relating to the
Financed Vehicles securing the Receivables or the Obligors thereunder;
(v) all proceeds from recourse against Dealers with respect to the
Receivables;
(vi) all of the Seller's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under the Purchase
Agreements, including a direct right to cause CPS to purchase Receivables from
the Issuer and to indemnify the Issuer pursuant to the Purchase Agreements
under the circumstances specified therein;
(vii) the Issuer's rights and benefits, but none of its obligations or
burdens, under the Sale and Servicing Agreement and each Subsequent Transfer
Agreement (including all rights of the Seller under the Purchase Agreements);
(viii) refunds for the costs of extended service contracts with respect
to Financed Vehicles securing Receivables, refunds of unearned premiums with
respect to credit life and credit accident and health insurance policies or
certificates covering an Obligor or Financed Vehicle or his or her obligations
with respect to a Financed Vehicle and any recourse to Dealers for any of the
foregoing;
(ix) the Receivable File related to each Receivable;
(x) all amounts and property from time to time held in or credited
to the Collection Account, the Pre-Funding Account, the Capitalized Interest
Account, the Note Distribution Account and the Lockbox Account;
(xi) all property (including the right to receive future Net
Liquidation Proceeds) that secures a Receivable that has been acquired by or on
behalf of CPS, the Seller or the Issuer pursuant to a liquidation of such
Receivable; and
(xii) all present and future claims, demands, causes and choses in
action in respect of any or all of the foregoing and all payments on or under
and all proceeds of every kind and nature whatsoever in respect of any or all of
the foregoing, including all proceeds of the conversion, voluntary or
involuntary,into cash or other liquid property, all cash proceeds, accounts,
accountsreceivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any
and every kind and other forms of obligations and receivables, instruments
and other property
2
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing (collectively, the property described in this Granting
Clause the "Collateral").
In addition, the Issuer shall cause the Note Policy to be issued for the
benefit of the Noteholders.
The foregoing Grant is made in trust to the Trustee, for the benefit of
the Holders of the Notes and the Issuer Secured Parties, as their interests may
appear, to secure the payment of the Issuer Secured Obligations and to secure
compliance with this Indenture. The Trustee hereby acknowledges such Grant,
accepts the trusts under this Indenture in accordance with the provisions of
this Indenture and agrees to perform its duties as required in this Indenture to
the end that the interests of such parties, recognizing the priorities of their
respective interests, may be adequately and effectively protected.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1 Definitions. Except as otherwise specified herein, the
following terms have the respective meanings set forth below for all purposes
of this Indenture and the definitions of such terms are equally applicable to
both the singular and plural forms of such terms and to each gender.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to them in the Sale and Servicing Agreement or, if not
defined therein, in the Trust Agreement.
"Act" has the meaning specified in Section 11.3(a).
"Affiliate" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with
such Person. For purposes of this definition of "Affiliate", the term "control"
(including the terms "controlling", "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause a direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Amount Financed" with respect to a Receivable shall have the meaning
specified in the Sale and Servicing Agreement.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate
of finance charges stated in the Receivable.
"Authorized Officer" means, with respect to the Issuer and the Servicer,
any officer or agent acting pursuant to a power of attorney of the Owner
Trustee or the Servicer, as applicable, who is authorized to act for the Owner
Trustee or the Servicer, as applicable, in matters relating to the Issuer
and who isidentified on the list of Authorized Officers delivered by each of the
3
Owner Trustee and the Servicer to the Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
"Basic Documents" means this Indenture, the Certificate of Trust, the
Trust Agreement, the Sale and Servicing Agreement, each Subsequent Transfer
Agreement, the Master Spread Account Agreement, the Spread Account Supplement,
the Insurance Agreement, the Indemnification Agreement, the Lockbox Agreement,
the Servicing Assumption Agreement, the Purchase Agreements, the Placement
Agency Agreement, the Notes, the Residual Pass-through Certificates, any trust
agreement, indenture or other agreement to which the Seller, CPS or the
Trust or any of their respective Affiliates is a party entered into in
connection with a transfer of any interest in the Residual Pass-through
Certificates, any securities representing direct or indirect interests in the
Residual Pass-through Certificates and other documents and certificates
delivered in connection with the foregoing.
"Book Entry Notes" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.10.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in Wilmington, Delaware, New York, New York,
Minneapolis, Minnesota, the State in which the executive offices of the
Servicer are located or the State in which the principal place of business of
the Note Insurer is located shall be authorized or obligated by law, executive
order, or governmental decree to be closed.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Class A-1 Interest Rate" means 5.38568% per annum.
"Class A-1 Notes" means the Class A-1 5.38568% Asset-Backed Notes,
substantially in the form of Exhibit A-1.
"Class A-2 Interest Rate" means 5.31% per annum.
"Class A-2 Notes" means the Class A-2 5.31% Asset-Backed Notes,
substantially in the form of Exhibit A-2.
"Class A-3 Interest Rate" means 5.14% per annum.
"Class A-3 Notes" means the Class A-3 5.14% Asset-Backed Notes,
substantially in the form of Exhibit A-3.
"Class A-4 Interest Rate" means 5.14% per annum.
"Class A-4 Notes" means the Class A-4 5.14% Asset-Backed Notes,
substantially in the form of Exhibit A-4.
4
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act, or any successor provision
thereto. The initial Clearing Agency shall be The Depository Trust Company.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means September 27, 2006.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
"Commission" means the United States Securities and Exchange Commission.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at date of the execution of this Agreement is located at Sixth
Street and Marquette Avenue, MAC N9311-161, Minneapolis, Minnesota 55479,
Attention: Corporate Trust Services/Asset Backed Administration - CPS 2006-C,
or at such other address as the Trustee may designate from time to ime by
notice to the Noteholders, the Note Insurer, the Servicer and the Issuer, or
the principal corporate trust office of any successor Trustee (the address of
which the successor Trustee will otify the Noteholders and the Issuer).
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
"Depositor" means the Seller, in its capacity as such under the Trust
Agreement.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or
the Treasurer of such corporation; with respect to any limited liability
company, the manager; and with respect to any partnership, any general partner
thereof.
"Grant" means to mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of ny other
agreement or instrument shall include all rights, powers and options (but none
of the bligations) of the granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other
5
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring proceedings in the name of the granting party or otherwise and generally
to do and receive anything that the granting party is or may be entitled to do
or receive thereunder or with respect hereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time,
(a) indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, otes or other instruments, or for the deferred
purchase price of property or services (including trade obligations);
(b) obligations of such Person as lessee under leases which should be, in
accordance with generally accepted accounting principles, recorded as capital
leases; (c) current liabilities of such Person in respect of unfunded vested
benefits under plans covered by Title IV of ERISA; (d) obligations issued for
or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"Indenture" means this Indenture as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Independent" means, when used with respect to any specified Person, that
the person (a) is in fact independent of the Issuer, any other obligor upon the
Notes, the Seller and any Affiliate of any of the foregoing persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obligor, the Seller or any Affiliate of any of the foregoing Persons as
an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions.
"Insolvency Event" means, with respect to a specified Person, (a) the
institution of a proceeding or the filing of a petition against such Person
seeking the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any substantial
part of its property in an involuntary case under any applicable Federal or
State bankruptcy, insolvency or other similar law now or hereafter in effect,
or the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part
of its property, or ordering the winding-up or liquidation or such Person's
affairs, and such petition, decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or (b) the commencement by such Person
of a voluntary case under any applicable Federal or State bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent
by such Person to the entry of an order for relief in an involuntary case
under any such law, or the consent by such Person to
6
the appointment of or taking possession by, a receiver, liquidator, assignee,
custodian, trustee, sequestrator, or similar official for such Person or for
any substantial part of its property, or the making by such Person of any
general assignment for the benefit of creditors, or the failure by such
Person generally to pay its debts as such debts become due, or the
taking of action by such Person in furtherance of any of the foregoing.
"Insurance Agreement Indenture Cross Default" has the meaning specified
therefor in the Insurance Agreement.
"Insurer Secured Obligations" means all amounts and obligations which the
Issuer may at any time owe to or on behalf of the Note Insurer under this
Indenture, the Insurance Agreement or any other Basic Document.
"Interest Rate" means, with respect to (i) the Class A-1 Notes, the Class
A-1 Interest Rate, (ii) the Class A-2 Notes, the Class A-2 Interest Rate, (iii)
the Class A-3 Notes, the Class A-3 Interest Rate and (iv) the Class A-4 Notes,
the Class A-4 Interest Rate.
"Issuer" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes
of any provision contained herein, each other obligor on the Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Trustee.
"Issuer Secured Obligations" means the Insurer Secured Obligations and
the Trustee Secured Obligations.
"Issuer Secured Parties" means each of the Trustee, in respect of the
Trustee Secured Obligations, and the Note Insurer, in respect of the Insurer
Secured Obligations.
"Mandatory Redemption Date" means the first Payment Date occurring on or
after the last day of the Funding Period.
"Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note or
a Class A-4 Note.
"Note Insurer" has the meaning specified in the Preamble.
"Note Majority" means Holders of Notes collectively evidencing more than
50% of the aggregate outstanding Note Balance of each Class of Notes.
"Note Owner" means, with respect to a Book Entry Note, the person who is
the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency articipant or as an pindirect
participant, in each case in accordance with the rules of such Clearing
Agency).
"Note Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and is
7
authorized by the Issuer to make the payments to and distributions from the
Collection Account and the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Note Policy" means the financial guaranty insurance policy
(No. CA03292A) issued by the Note Insurer with respect to the Notes, including
any endorsements
thereto.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.4.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Owner Trustee, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, and
delivered to the Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees
of orcounsel to the Issuer and who shall be satisfactory to the Trustee and,
if addressed to the Note Insuer, satisfactory to the Note Insurer, and which
shall comply with any applicable requirements of Section 11.1, and shall be
in form and substance satisfactory to the Trustee, and if addressed to the
Note Insurer, satisfactory to the Note Insurer.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Trustee or any Note
Paying Agent in trust for the Holders of such Notes (provided, however, that if
such Notes are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture, satisfactory to the Trustee); and
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Trustee is presented that any such Notes are held by a bona
fide purchaser; provided, however, that Notes which have been paid with
proceeds of the Note Policy shall continue to remain Outstanding for purposes
of this Indenture until the Note Insurer has been paid as subrogee hereunder or
reimbursed pursuant to the Insurance Agreement as evidenced by a written notice
from the Note Insurer delivered to the Trustee, and the Note Insurer shall
be deemed to be the Holder thereof to the extent of any payments thereon made
by the Note Insurer; provided, further, that in determining whether the Holders
of the requisite Outstanding Amount of the Notes have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or
under any Basic Document, Notes owned by the Issuer, any other obligor upon
the Notes, the Seller or any Affiliate of any of the foregoing Persons shall
be disregarded and deemed not to be Outstanding,
8
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes that a Responsible Officer of the Trustee either actually
knows to be so owned or has received written notice thereof shall be so
disregarded. Notes so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Notes and
that the pledgee is not the Issuer, any other obligor upon the Notes,
the Seller or any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means, with respect to any date of determination,
the aggregate principal amount of all Notes, or class of Notes, as applicable,
Outstanding at such date of determination.
"Ownership Interest" means, as to any Note, any ownership or security
interest in such Note, including any interest in such Note as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial, as owner or as pledgee.
"Owner Trustee" means Wilmington Trust Company, and its successors.
"Payment Date" has the meaning specified in the Notes.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced
by such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Purchase Agreements" means the Receivables Purchase Agreement and each
Subsequent Receivables Purchase Agreement, collectively.
"Rating Agency" means each of Moody's and Standard & Poor's, so long
as such Persons maintain a rating on the Notes; and if either Moody's or
Standard & Poor's no longer maintains a rating on the Notes, such other
nationally recognized statistical rating organization selected by the
Seller and (so long as an Insurer Default shall not have occurred and be
continuing) acceptable to the Note Insurer.
"Record Date" means, with respect to the first Payment Date, the
Closing Date, and with respect to any subsequent Payment Date or Redemption
Date, the last calendar day of the month preceding the month in which such
Payment Date or Redemption Date occurs.
"Redemption Date" means, in the case of a redemption of the Notes
pursuant to Section 10.1(a), the Payment Date specified by the Servicer or
the Issuer pursuant to Section 10.1(a).
9
"Redemption Price" means, in the case of a redemption of the Notes
pursuant to Section 10.1(a), an amount equal to the unpaid principal amount
of each class of Notes being redeemed plus accrued and unpaid interest
thereon to but excluding the Redemption Date.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any Vice
President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary, or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also, with respect to a particular matter, any other officer to whom
such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of September 1, 2006, among the Issuer, the Seller, the Servicer, and
the Trustee, as Backup Servicer and Trustee, as the same may be amended or
supplemented from time to time.
"Scheduled Payments" has the meaning specified in the Note Policy.
"Seller" means CPS Receivables Two Corp., a Delaware corporation, and its
successors.
"State" means any one of the 50 states of the United States of America or
the District of Columbia.
"Termination Date" means the latest of (i) the expiration of the Note
Policy and the return of the Note Policy to the Note Insurer for cancellation,
(ii) the ate on which the Note Insurer shall have received payment and
performance of all nsurer Secured Obligiations and (iii) the date on which
the Trustee shall have received payment and performance of all Trustee secured
Obligations and disbursed such payments in accordance with the Basic Documents.
"Trust Agreement" means the Trust Agreement dated as of May 23, 2006,
between CPS Receivables Corp., as depositor, and the Owner Trustee, as amended
and restated by the Amended and Restated Trust Agreement dated as of September
27, 2006, by and among CPS Receivables Corp., as original depositor, the
Seller, as depositor, and the Owner Trustee, as the same may be further
amended or supplemented from time to time in accordance with the terms
thereof.
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest
of this Indenture for the benefit of the Issuer Secured Parties (including
the Collateral Granted to the Trustee hereunder), including all proceeds
thereof.
"Trustee" means Wells Fargo Bank, National Association, a national
banking association, not in its individual capacity but as trustee under
this Indenture, or any successor trustee under this Indenture.
"Trustee Secured Obligations" means all amounts and obligations which the
Issuer may at any time owe to the Trustee for the benefit of the Noteholders
under this Indenture or the Notes or any other Basic Document.
10
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended
from time to time.
SECTION 1.2 Reserved.
SECTION 1.3 Other Definitional Provisions. Unless the context
otherwise requires:
(a) All references in this instrument to designated "Articles,
"Sections," "Subsections" and other subdivisions are to the designated
Articles, Sections, Subsections and other subdivisions of this instrument as
originally executed.
(b) The words "herein," "hereof," "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section, Subsection or other subdivision.
(c) an accounting term not otherwise defined herein has the meaning
assigned to it in accordance with generally accepted accounting principles as
in effect from time to time;
(d) "or" is not exclusive; and
(e) "including" means including without limitation.
ARTICLE II
The Notes
SECTION 2.1 Form.
(a) The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes, in each case together with the Trustee's certificate of
authentication, hall be in substantially the form set forth in Exhibits A-1,
A-2, A-3 and A-4, espectively, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistently herewith,
be determined by the officers executing such Notes, as evidenced by their
execution of the Notes. Any portion of the text of any Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face
of the Note.
(b) The Definitive Notes shall be typewritten, printed,
lithographed or engraved or produced by any combination of these methods (with
or without steel engraved borders), all as determined by the officers executing
such Notes, as evidenced by their execution of such Notes.
(c) Each Note shall be dated the date of its authentication. The
terms of the Notes set forth in Exhibits A-1, A-2, A-3 and A-4 are part of the
terms of this Indenture.
11
SECTION 2.2 Execution, Authentication and Delivery.
(a) The Notes shall be executed on behalf of the Issuer by any of
its Authorized Officers. The signature of any such Authorized Officer on the
Notes may be manual or facsimile.
(b) Notes bearing the manual or facsimile signature of individuals
who were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
(c) The Trustee shall upon receipt of the Note Policy and Issuer
Order authenticate and deliver Class A-1 Notes for original issue in an
aggregate principal amount of $38,900,000, Class A-2 Notes for original issue
in an aggregate principal amount of $70,000,000, Class A-3 Notes for original
issue in an aggregate principal amount of $41,300,000 and Class A-4 Notes for
original issue in an aggregate principal amount of $70,075,000. Class A-1
Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes outstanding at
any time may not exceed such amounts except as provided in Section 2.4.
(d) Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes in the minimum denomination of
$25,000 and in integral multiples of $1,000 in excess thereof (except for one
Note of each class which may be issued in a lesser denomination and other
than an integral multiple of $1,000).
(e) No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears on such Note
a certificate of authentication substantially in the form provided for herein,
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.3 Temporary Notes.
(a) Pending the preparation of Definitive Notes, the Issuer may
execute, and upon receipt of an Issuer Order the Trustee shall authenticate
and deliver, temporary Notes which are printed, lithographed, typewritten,
mimeographed or otherwise produced, of the tenor of the Definitive Notes in
lieu of which they are issued and with such variations not inconsistent with
the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
(b) If temporary Notes are issued, the Issuer will cause
Definitive Notes to be prepared without unreasonable delay. After the
preparation of Definitive Notes, the temporary Notes shall be exchangeable
without charge to the Holder for Definitive Notes upon surrender of the
temporary Notes at the office or agency of the Issuer to be maintained as
provided in Section 3.2. Upon surrender for cancellation of any one or more
temporary Notes, the Issuer shall execute and the Trustee shall authenticate
and deliver in exchange therefor a like principal amount of Definitive Notes
12
of authorized denominations. Until so exchanged, the temporary Notes shall in
all respects be entitled to the same benefits under this Indenture as
Definitive Notes.
SECTION 2.4 Registration; Registration of Transfer and Exchange.
(a) The Issuer shall cause to be kept a register (the "Note
Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of Notes and the
registration of transfers of Notes. The Trustee is hereby initially
appointed "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided. Upon any resignation or removal of
any Note Registrar, the Issuer shall promptly appoint a successor or, in
the absence of such an appointment, assume the duties
of Note Registrar.
(b) If a Person other than the Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names
and addresses of the Holders of the Notes and the principal amounts and number
of such Notes.
(c) Subject to Sections 2.10 and 2.12 hereof, upon surrender for
registration of transfer of any Note at the office or agency of the Issuer to
be maintained as provided in Section 3.2, if the requirements of Section
8-401(a)of the UCC are met, the Issuer shall execute, and upon request by
the Issuer the Trustee shall authenticate, and the Noteholder shall obtain
from the Trustee, in the name of the designated transferee or transferees,
one or more new Notes in any authorized denominations of the same class and
a like aggregate principal amount.
(d) At the option of the Holder, Notes may be exchanged for other
Notes in any authorized denominations, of the same class and a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office
or agency. Whenever any Notes are so surrendered for exchange, subject to
Sections 2.10 and 2.12 hereof, if the requirements of Section 8-401(a) of
the UCC are met the Issuer shall execute, and upon request by the Issuer
the Trustee shall authenticate, and the Noteholder shall obtain from the
Trustee, the Notes which the Noteholder making the exchange is
entitled to receive.
(e) All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
(f) Every Note presented or surrendered for registration of transfer
or exchange shall be (i) duly endorsed by, or accompanied by a written
instrument of transfer in the form attached to Exhibits A-1, A-2, A-3 and A-4
and duly executed by, the Holder thereof or such Holder's attorney, duly
authorized in
13
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar which requirements include
membership or participation in Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act and (ii) accompanied by such other documents
as the Trustee may require.
(g) Each Noteholder by its acquisition of any Notes (or a
beneficial interest therein) shall be deemed to have represented and warranted
for the benefit of the Issuer, the Owner Trustee, the Trustee and the
Noteholders, that either (i) it is not acquiring any Notes with the assets of
any "employee benefit plan" as defined in Section 3(3) of ERISA which is
subject to Title I of ERISA or any "plan" as defined in Section 4975 of the
Internal Revenue Code or (ii) the acquisition and holding of the Notes will
be covered by Prohibited Transaction Class Exemption ("PTCE") 84-14, PTCE 90-1,
PTCE 91-38, PTCE 95-60, PTCE 96-23 or a similar U.S. Department of Labor class
exemption orother similar exemption.
(h) No service charge shall be made to a Holder for any registration
of transfer or exchange of Notes, but the Note Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
(i) The preceding provisions of this Section 2.4 notwithstanding,
the Issuer shall not be required to make and the Note Registrar shall not
register transfers or exchanges of Notes selected for redemption or of any
Note for a period of 15 days preceding the due date for any payment with
respect to the
Notes.
(j) Notwithstanding anything to the contrary in this Indenture or
any other Basic Document, (i) the transfer of a Note, including the right to
receive principal and any stated interest thereon, may be effected only by
surrender of the old Note (or satisfactory evidence of the destruction, loss
or theft of such Note) to the Note Registrar, and the issuance by the Issuer
(through the Note Registrar) of a new Note to the new Holder, and (ii) each
Note must be registered in the name of the Holder thereof as to both principal
and any stated interest with the Note Registrar.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes.
(a) If (i) any mutilated Note is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, and (ii) there is delivered to the Trustee and the
Note Insurer (unless an Insurer Default shall have occurred and be
continuing) such security or indemnity as may be required by each of the
Issuer, the Trustee and the Note Insurer to hold it harmless, then, in the
absence of notice to the Issuer, the Note Registrar or the Trustee that such
Note has been acquired by a bona fide purchaser, and, provided that the
requirements of Section 8-405 and 8-406 of the UCC are met, the Issuer shall
execute, and upon request by the Issuer, the Trustee shall authenticate and
14
deliver in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a replacement Note; provided, however, that if any such
destroyed, lost or stolen Note, but not a mutilated Note, shall have become,
or within seven days shall be, due and payable or shall have been called for
redemption, instead of issuing a replacement Note, the Issuer may direct the
Trustee, in writing, to pay such destroyed, lost or stolen Note when so due
or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note or payment of a destroyed, lost or
stolen Note pursuant to the proviso to the preceding sentence, a bona fide
purchaser of the original Note in lieu of which such replacement Note was
issued, presents for payment such original Note, the Issuer, the Trustee and
the Note Insurer shall be entitled to recover such replacement Note (or
such payment) from the Person to whom it was delivered or any Person
taking such replacement Note from such Person to whom such replacement
Note was delivered or any assignee of such Person, except a bona fide
purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred
by the Issuer or the Trustee in connection therewith.
(b) Upon the issuance of any replacement Note under this Section,
the Issuer 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) connected therewith.
(c) Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute
an original additional contractual obligation of the Issuer, whether or not
the mutilated, destroyed, lost or stolen Note shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Notes duly issued hereunder.
(d) The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee, the Note Insurer
and any agent of the Issuer, the Trustee or the Note Insurer may treat the
Person in whose name any Note is registered (as of the applicable Record Date)
as the owner of such Note for the purpose of receiving payments of principal of
and interest, if any, on such Note, for all other purposes whatsoever and
whether or not such Note be overdue, and none of the Issuer, the Note Insurer,
the Trustee nor any agent of the Issuer, the Note Insurer or the Trustee shall
be affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest as provided in the forms of the
Class A-1 Note, the Class A-2 Note, the Class A-3 Note, the Class A-4 Note set
forth in Exhibits A-1, A-2, A-3 and A-4, respectively, and such interest shall
be payable on each Payment Date as specified therein. Any installment of
interest or principal, if any, payable on any Note which is punctually paid
or duly provided for by the Issuer on the applicable Payment Date shall be paid
15
to the Person in whose name such Note (or one or more Predecessor Notes) is
registered on the related Record Date, by check mailed first-class, postage
prepaid, to such Person's address as it appears on the Note Register on such
Record Date, or by wire transfer in immediately available funds to the account
designated in writing to the Trustee by such Person at least five Business Days
prior to the related Record Date, except that, unless Definitive Notes have
been issued pursuant to Section 2.12, with respect to Notes registered on the
related Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payment will be made by wire
transfer in immediately available funds to the account designated by such
nominee, except for the final installment of principal payable with respect
to such Note on a Payment Date or on the Final Scheduled Payment Date (and
except for the Redemption Price for any Note called for redemption
pursuant to Section 10.1), which shall be payable as provided below. The
funds represented by any such checks returned undelivered shall be held i
in accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments on
each Payment Date as provided in the forms of the Class A-1 Note, the Class A-2
Note, the Class A-3 Note, the Class A-4 Note set forth in Exhibits A-1, A-2,
A-3 and A-4, respectively. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable, if not previously paid,
on the date on which an Event of Default shall have occurred and be continuing
in the manner and under the circumstances provided in Section 5.2. All principal
payments on each class of Notes shall be made pro rata to the Noteholders of
such class entitled thereto. Upon written notice from the Issuer, the Trustee
shall notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Payment Date on which the Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed or transmitted by facsimile prior
to such final Payment Date and shall specify that such final installment will
be payable only upon presentation and surrender of such Note and shall specify
the place where such Note may be presented and surrendered for payment
of such installment. Notices in connection with redemptions of Notes shall
be mailed to Noteholders as provided in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the Notes,
the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the applicable Interest Rate in any
lawful manner. The Issuer may pay such amounts to the Persons who are
Noteholders on a subsequent special record date, which date shall be at
least five Business Days prior to the Payment Date. The Issuer shall fix or
cause to be fixed any such special record date and Payment Date, and, at
least 15 days before any such special record date, the Issuer shall
mail to each Noteholder and the Trustee a notice that states the
special record date, the Payment Date and the amount
of defaulted interest to be paid.
(d) Promptly following the date on which all principal of and
interest on the Notes has been paid in full and the Notes have been surrendered
to the Trustee, the Trustee shall, if the Note Insurer has paid any amount in
respect of the Notes under the Note Policy or otherwise which has not been
reimbursed to it, deliver such surrendered Notes to the Note Insurer.
16
SECTION 2.8 Cancellation. Subject to Section 2.7(d), all Notes
surrendered for payment, registration of transfer, exchange or redemption
shall, if surrendered to any Person other than the Trustee, be delivered to
the Trustee and shall be promptly canceled by the Trustee. Subject to Section
2.7(d), the Issuer may at any time deliver to the Trustee for cancellation
any Notes previously authenticated and delivered hereunder which the Issuer
may have acquired in any manner whatsoever, and all Notes so delivered
shall be promptly canceled by the Trustee. No Notes shall be authenticated
in lieu of or in exchange for any Notes canceled as provided in this Section,
except as expressly permitted by this Indenture. Subject to Section 2.7(d),
all canceled Notes may be held or disposed of by the Trustee in accordance
with its standard retention or disposal policy as in effect at the time
unless the Issuer shall direct by an Issuer Order that they be destroyed
or returned to it; provided that such Issuer Order is timely and the
Notes have not been previously disposed of by the Trustee.
SECTION 2.9 Release of Collateral. The Trustee shall, on or after
the Termination Date, release any remaining portion of the Trust Estate from
the lien created by this Indenture and deposit in the Collection Account any
funds then on deposit in any other Trust Account. The Trustee shall release
property from the lien created by this Indenture pursuant to this Section 2.9
only upon receipt of an Issuer Request accompanied by an Officer's Certificate
and an Opinion of Counsel meeting the applicable requirements of Section 11.1.
SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance,
will be issued in the form of typewritten Notes representing the Book-Entry
Notes, to be delivered to DTC or to the Trustee as custodian for the initial
Clearing Agency, by, or on behalf of, the Issuer. Such Notes shall initially
be registered on the Note Register in the name of Cede & Co., the nominee of
the initial Clearing Agency, and no Note Owner will receive a Definitive Note
representing such Note Owner's interest in such Note, except as provided in
Section 2.12. Unless and until definitive, fully registered Notes (the
"Definitive Notes") have been issued to Note Owners pursuant to Section 2.12:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Trustee shall be entitled to deal
with the Clearing Agency for all purposes of this Indenture (including the
payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole Holder of the Notes, and
shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants. Unless and until Definitive Notes are issued
pursuant to Section 2.12, the Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit payments of
principal of and interest on the Notes to such Clearing Agency Participants;
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes evidencing
a specified percentage of the Outstanding Amount of the Notes, the Clearing
Agency shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Note Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered such
instructions to the Trustee;
(vi) Note Owners may receive copies of any reports sent to
Noteholders pursuant to this Indenture, upon written request, together with
a certification that they are Note Owners and payment of reproduction and
postage expenses associated with the distribution of such reports, from the
Trustee at the Corporate Trust Office; and
17
(vii) Note Owners may only hold positions in the Book-Entry Notes
in minimum denominations of $25,000.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to
Section 2.12, the Trustee shall give all such notices and communications
specified herein to be given to Holders of the Notes to the Clearing Agency
and shall have no obligation to deliver such notices or communications to
the Note Owners.
SECTION 2.12 Definitive Notes. If (i) the Servicer advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities with respect to the Notes, and the
Servicer is unable to locate a qualified successor, (ii) the Servicer at its
option advises the Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence
of an Event of Default, Note Owners representing beneficial interests
aggregating at least a majority of the Outstanding Amount of the Notes
advise the Trustee through the Clearing Agency in writing that the
continuation of a book entry system through the Clearing Agency
is no longer in the best interests of such Note Owners, then the
Clearing Agency shall notify all Note Owners and the Trustee of the
occurrenceof any such event and of the availability of Definitive Notes
to Note Owners requesting the same. Upon surrender to the Trustee of the
typewritten Note or Notes representing the Book-Entry Notes by the
Clearing Agency, accompanied by registration instructions, the Issuer
shall execute and the Trustee shall authenticate the Definitive Notes
in accordance with the instructions of the Clearing Agency. None of the
Issuer, the Note Registrar or the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of
Definitive Notes, the Trustee shall recognize the Holders of the Definitive
Notes as Noteholders.
SECTION 2.13 Restrictions on Transfer of Notes
(a) The Notes have not been registered or qualified under the
Securities Act of 1933, as amended (the "1933 Act"), or any State securities
laws or "Blue Sky" laws, and the Notes are being offered and sold in reliance
upon exemptions from the registration requirements of the 1933 Act and such
18
Blue Sky or State securities laws. No transfer, sale, pledge or other
disposition of any Note shall be made unless such disposition is made pursuant
to an effective registration statement under the 1933 Act and effective
registration or qualification under applicable State securities laws or
"Blue Sky" laws, or is made in a transaction which does not require such
registration or qualification. In the event that a transfer of an Ownership
Interest in a Book-Entry Note is to be made in reliance upon an exemption from
the 1933 Act, the transferee will be deemed to have made the same
representations and warranties as required of an initial purchaser of such
Ownership Interest, as set forth in Section 2.13(b) below. In the event that
a transfer of an Ownership Interest in a Note which is not a Book-Entry Note is
to be made in reliance upon an exemption from the 1933 Act, the Trustee or the
Note Registrar shall require, in order to assure compliance with the 1933 Act,
that the Noteholder desiring to effect such disposition and such Noteholder's
prospective transferee each (A) certify to the Trustee or the Note Registrar
in writing the facts surrounding such disposition pursuant to a letter,
substantially in the form of Exhibit B hereto, or (B) provide to the Trustee
or the Note Registrar such other evidence satisfactory to the Transferor, the
Trustee and the Note Registrar that the transfer is in compliance with the
1933 Act. The Trustee may also, unless such transfer occurs more than three
years after the Closing Date or is made pursuant to Rule 144A promulgated
under the 1933 Act, require an opinion of counsel satisfactory to it that
such transfer may be made pursuant to an exemption from the 1933 Act, which
opinion of counsel shall not be an expense of the Trustee. None of the Seller,
the Servicer, the Issuer, the Owner Trustee or the Trustee is obligated
under this Indenture to register the Notes under the 1933 Act or any other
securities law or to take any action not otherwise required under this
Indenture to permit the transfer of such Notes without such registration
or qualification.
Notwithstanding the foregoing, any transfer of a Note from a
Noteholder to the Seller or an Affiliate of the Seller shall be deemed to
have been made pursuant to an exemption from the registration requirements of
the 1933 Act, applicable State securities laws and "Blue Sky" laws, and none
of the conditions precedent set forth in this Section. 2.13(a) to the transfer
of the Notes shall be applicable to such transfer and such transferee shall
not be deemed to have made the representations and warranties in Section
2.13(b).
(b) Each Person (other than the Seller or an Affiliate of the
Seller) who has or who acquires an Ownership Interest in a Book-Entry Note
in reliance upon an exemption from the 1933 Act shall be deemed by the
acceptance or acquisition of such Ownership Interest to have represented and
agreed, as follows:
(i) Such Person is a qualified institutional buyer as defined
in Rule 144A under the 1933 Act, is aware that the seller of the Note may
be relying on the exemption from the registration requirements of the 1933
Act provided by Rule 144A and is acquiring such Note for its own account,
for the account of one or more qualified institutional buyers for whom it
is authorized to act.
(ii) Such Person understands that the Notes have not been and
will not be registered under the 1933 Act and may be offered, sold,
pledged or otherwise transferred only to a person whom the seller reasonably
19
believes is a qualified institutional buyer in a transaction meeting the
requirements of Rule 144A under the 1933 Act and in accordance with any
applicable securities laws of any State.
(iii) Such Person understands that a single certificate in respect
of each Class of Notes has been registered in the name of the nominee of DTC,
or in the case of Definitive Notes, such Definitive Notes have been registered
in the name of such Person or its nominee, and bears a legend to the following
effect:
"THIS NOTE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES ("BLUE SKY
LAWS"), AND THIS NOTE MAY NOT BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A UNDER THE 1933 ACT IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (B) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
1933 ACT, (C) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED UNDER THE 1933 ACT (IF
AVAILABLE), OR (D) TO THE SELLER OR AN AFFILIATE
OF THE SELLER, IN EACH CASE IN ACCORDANCE WITH
THE INDENTURE AND ALL APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION. NO
REPRESENTATION IS MADE AS TO THE AVAILABILITY
OF THE EXEMPTION PROVIDED BY RULE 144A FOR
RESALES OF THIS NOTE."
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest. The Issuer
will duly and punctually pay the principal of and interest on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting
the foregoing, the Issuer will cause to be distributed on each Payment Date
all amounts deposited in the Note Distribution Account pursuant to the Sale
and Servicing Agreement (i) for the benefit of the Class A-1 Notes, to the
Class A-1 Noteholders, (ii) for the benefit of the Class A-2 Notes, to the
Class A-2 Noteholders, (iii) for the benefit of the Class A-3 Notes, to the
Class A-3 Noteholders and (iv) for the benefit of the Class A-4 Notes, to
the Class A-4 Noteholders. Amounts properly withheld under the Code or any
applicable State law by any Person from a payment to any Noteholder of
interest and/or principal shall be considered as having been paid by the
Issuer to such Noteholder for all purposes of this Indenture.
20
SECTION 3.2 Maintenance of Office or Agency. The Issuer will
maintain in Minneapolis, Minnesota, an office or agency where Notes may be
surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Issuer in respect of the Notes and this Indenture may be
served. The Issuer hereby initially appoints the Trustee to serve as its agent
for the foregoing purposes. The Issuer will give prompt written notice to
the Trustee of the location, and of any change in the location, of any such
office or agency. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Trustee as its agent to
receive all such surrenders, notices and demands.
SECTION 3.3 Money for Payments to be Held in Trust.
(a) On or before each Payment Date and Redemption Date, the
Issuer shall deposit or cause to be deposited in the Note Distribution
Account from the Collection Account an aggregate sum sufficient to pay
the amounts then becoming due under the Notes, such sum to be held in
trust for the benefit of the Persons entitled thereto and (unless
the Note Paying Agent is the Trustee) shall promptly notify the
Trustee of its action or failure so to act.
(b) The Issuer shall cause each Note Paying Agent other than the
Trustee to execute and deliver to the Trustee and the Note Insurer an
instrument in which such Note Paying Agent shall agree with the Trustee (and
if the Trustee acts as Note Paying Agent, it hereby so agrees), subject to
the provisions of this Section, that such Note Paying Agent shall:
(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 Issuer
(or any other obligor upon the Notes) of which it has actual knowledge in the
making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Note Paying Agent;
(iv) immediately resign as a Note 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 Note
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
21
(c) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Note Paying Agent to pay to the Trustee all sums
held in trust by such Note Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which the sums were held by such Note
Paying Agent; and upon such a payment by any Note Paying Agent to the
Trustee, such Note Paying Agent shall be released from all further liability
with respect to such money.
(d) Subject to applicable laws with respect to the escheat of
funds, any money held by the Trustee or any Note 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 Issuer on Issuer Request
with the consent of the Note Insurer (unless an Insurer Default shall have
occurred and be continuing) and shall be deposited by the Trustee in the
Collection Account; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof
(but only to the extent of the amounts so paid to the Issuer), and all
liability of the Trustee or such Note Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that if such
money or any portion thereof had been previously deposited by the Note
Insurer with the Trustee for the payment of principal or interest on the
Notes, to the extent any amounts are owing to the Note Insurer, such
amounts shall be paid promptly to the Note Insurer upon receipt of a
written request by the Note Insurer to such effect, and provided, further,
that the Trustee or such Note Paying Agent, before being required to make
any such repayment, shall at the expense of the Issuer cause to be published
once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the City of
New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will
be repaid to the Issuer. The Trustee shall also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including mailing notice of such repayment to Holders whose
Notes have been called but have not been surrendered for redemption or
whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Trustee or of any Note Paying
Agent, at the last address of record for each such Holder).
SECTION 3.4 Existence. Except as otherwise permitted by the
provisions of Section 3.10, the Issuer will keep in full effect its existence,
rights and franchises as a statutory trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Estate.
SECTION 3.5 Protection of Trust Estate. The Issuer intends
the security interest Granted pursuant to this Indenture in favor of
22
the Issuer Secured Parties to be prior to all other liens in respect of
the Trust Estate, and the Issuer shall take all actions necessary to
obtain and maintain, in favor of the Trustee, for the benefit of the Issuer
Secured Parties, a first lien on and a first priority, perfected security
interest in the Trust Estate. The Issuer will from time to time prepare
(or shall cause to be prepared), execute and deliver all such supplements
\and amendments hereto and all such financing statements, continuation
statements, instruments of further assurance and other instruments, and
will take such other action necessary or advisable to:
(i) Grant more effectively all or any portion of the Trust Estate;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) in favor of the Trustee for the benefit of the Issuer Secured
Parties created by this Indenture or carry out more effectively the purposes
hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust Estate and the rights
of the Trustee in such Trust Estate against the claims of all persons and
parties; and
(vi) pay all taxes or assessments levied or assessed upon the Trust
Estate when due.
The Issuer hereby designates the Trustee its agent and attorney-in-fact
to execute any financing statement, continuation statement or other instrument
required by the Trustee pursuant to this Section.
SECTION 3.6 Opinions as to Trust Estate.
(a) On the Closing Date, and on the date of execution of each
indenture supplemental hereto, the Issuer shall furnish to the Trustee and
the Note Insurer an Opinion of Counsel either stating that, in the opinion
of such counsel, such action has been taken with respect to the recording
and filing of this Indenture, any indentures supplemental hereto, and any
other requisite documents, and with respect to the filing of any financing
statements and continuation statements, as are necessary to perfect and make
effective the first priority lien and security interest in favor of the Trustee
in the Receivables, for the benefit of the Issuer Secured Parties, created by
this Indenture and reciting the details of such action, or stating that, in
the opinion of such counsel, no such action is necessary to make such lien
and security interest effective.
(b) Within 90 days after the beginning of each calendar year,
commencing in 2009, the Issuer shall furnish to the Trustee and the Note
Insurer an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording, filing,
re-recording and re-filing of this Indenture, any indentures supplemental
hereto and any other requisite documents and with respect to the filing of
any financing statements and continuation statements as are necessary to
maintain the first priority lien and security interest created by this
23
Indenture in the Receivables and reciting the details of such action or
stating that in the opinion of such counsel no such action is necessary
to maintain such lien and security interest. Such Opinion of Counsel shall
also describe any action necessary (as of the date of such opinion) to be
taken in the following year to maintain the lien and security interest
of this Indenture.
SECTION 3.7 Performance of Obligations; Servicing of Receivables.
(a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in
the amendment, hypothecation, subordination, termination or discharge of or
impair the validity or effectiveness of, any such instrument or agreement,
except as ordered by any bankruptcy or other court or as expressly provided
in this Indenture, the Basic Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to the
Note Insurer (so long as no Insurer Default shall have occurred and be
continuing) to assist it in performing its duties under this Indenture, and
any performance of such duties by a Person identified to the Trustee and the
Note Insurer in an Officer's Certificate of the Issuer shall be deemed to be
action taken by the Issuer. Initially, the Issuer has contracted with the
Servicer to assist the Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate, including
preparing (or causing to be prepared) and filing (or causing to be filed)
all UCC financing statements and continuation statements required to be
filed by the terms of this Indenture and the Sale and Servicing Agreement
in accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the consent of the Trustee, the Note Insurer or, if an Insurer
Default has occurred and is continuing, a Note Majority.
(d) If a responsible officer of the Owner Trustee shall have
written notice or actual knowledge of the occurrence of a Servicer Termination
Event under the Sale and Servicing Agreement, the Issuer shall promptly notify
the Trustee, the Note Insurer and the Rating Agencies thereof in accordance
with Section 11.4, and shall specify in such notice the action, if any, the
Issuer is taking in respect of such default. If a Servicer Termination Event
shall arise from the failure of the Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the
Receivables, the Issuer shall take all reasonable steps available to it to
remedy such failure.
(e) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Seller of their respective duties under the
Basic Documents (x) without the prior consent of the Note Insurer (unless an
Insurer Default shall have occurred and be continuing) or (y) if the effect
thereof would adversely affect the Holders of the Notes.
24
SECTION 3.8 Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or the Basic
Documents, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the Trust
Estate, without the satisfaction of the Rating Agency Condition and unless
directed to do so by the Controlling Party or unless the Controlling Party
has approved such disposition;
(ii) claim any credit on, or make any deduction from the principal or
interest payable in respect of, the Notes (other than amounts properly withheld
from such payments under the Code) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes levied or assessed upon
any part of the Trust Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien in favor of the Trustee created by this
Indenture to be amended, hypothecated, subordinated, terminated or discharged,
or permit any Person to be released from any covenants or obligations with
respect to the Notes under this Indenture or any other Basic Document except
as may be expressly permitted hereby or thereby, (B) permit any lien, charge,
excise, claim, security interest, mortgage or other encumbrance (other than
the lien of this Indenture) to be created on or extend to or otherwise
arise upon or burden the Trust Estate, any Collateral or any part thereof
or any interest therein or the proceeds thereof (other than tax liens,
mechanics' liens and other liens that arise by operation of law, in each
case on a Financed Vehicle and arising solely as a result of an action or
omission of the related Obligor), (C) permit the lien of this Indenture
not to constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) perfected security interest in the Trust
Estate or any Collateral; or
(D) amend, modify or fail to comply with the provisions of the Basic Documents
without the prior written consent of the Controlling Party, and if such
amendments or modifications would adversely affect the interests of any
Noteholder in any material respect, the satisfaction of the Rating Agency
Condition; or
(iv) engage in any business or activity other than as permitted by
the Trust Agreement; or
(v) incur or assume any indebtedness or guarantee any indebtedness
of any Person, except for such indebtedness incurred pursuant to Section 3.15;
or
(vi) dissolve or liquidate in whole or in part or merge or
consolidate with any other Person, other than in compliance with Section 3.10;
or
(vii) take any action that would result in the Issuer becoming
taxable as a corporation for federal income tax purposes or for the purposes of
any applicable State tax.
25
SECTION 3.9 Annual Statement as to Compliance. The Issuer will
deliver to the Trustee and the Note Insurer, on or before March 31 of each
year, beginning March 31, 2007, an Officer's Certificate, dated as of December
31 of the preceding calendar year, stating, as to the Authorized Officer
signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such preceding
year (or such shorter period, in the case of the first such Officer's
Certificate) and of its performance under this Indenture has been made under
such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants under
this Indenture throughout such year (or such shorter period, in the case of
the first such Officer's Certificate), or, if there has been a default in
the compliance of any such condition or covenant, specifying each such default
known to such Authorized Officer and the nature and status thereof.
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Delaware Statutory Trust or a similar
trust organized and existing under the laws of any other State and shall
expressly assume, by an indenture supplemental hereto, executed and delivered
to the Trustee, in form satisfactory to the Trustee and the Note Insurer (so
long as no Insurer Default shall have occurred and be continuing), the due and
punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture
on the part of the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Trustee and the Note Insurer (so
long as no Insurer Default shall have occurred and be continuing)) to the
effect that such transaction will not have any material adverse tax
consequence to the Trust, the Note Insurer, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
26
(vi) the Issuer shall have delivered to the Trustee and the Note
Insurer an Officer's Certificate and an Opinion of Counsel each stating that
such consolidation or merger and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating to
such transaction have been complied with; and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Note Insurer written notice of such
consolidation or merger at least 20 Business Days prior to the consummation of
such action and shall have received the prior written approval of the Note
Insurer of such consolidation or merger and the Issuer or the Person (if other
than the Issuer) formed by or surviving such consolidation or merger has a net
worth, immediately after such consolidation or merger, that is (a) greater than
zero and (b) not less than the net worth of the Issuer immediately prior to
giving effect to such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially
all of its properties or assets, including those included in the Trust Estate,
to any Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which
is hereby restricted shall (A) be a Delaware Statutory Trust or a similar
trust organized and existing under the laws of any other State, (B)
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, and the
Note Insurer (so long as no Insurer Default shall have occurred and be
continuing), the due and punctual payment of the principal of and interest
on all Notes and the performance or observance of every agreement and
covenant of this Indenture and each of the Basic Documents on the part
of the Issuer to be performed or observed, all as provided herein, (C)
expressly agree by means of such supplemental indenture that all right,
title and interest so conveyed or transferred shall be subject and
subordinate to the rights of Holders of the Notes, (D) unless otherwise
provided in such supplemental indenture, expressly agree to indemnify,
defend and hold harmless the Issuer against and from any loss, liability
or expense arising under or related to this Indenture and the Notes and
(E) expressly agree by means of such supplemental indenture that such
Person (or if a group of persons, then one specified Person) shall
prepare (or cause to be prepared) and make all filings with the
Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Trustee and the Note Insurer (so long as
27
no Insurer Default shall have occurred and be continuing)) to the effect that
such transaction will not have any material adverse tax consequence to the
Trust, the Note Insurer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Trustee and the Note
Insurer an Officers' Certificate and an Opinion of Counsel each stating that
such conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating to
such transaction have been complied with; and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Note Insurer written notice of such
conveyance or transfer at least 20 Business Days prior to the consummation of
such action and shall have received the prior written approval of the Note
Insurer of such conveyance or transfer and the Issuer or the Person (if other
than the Issuer) formed by or surviving such conveyance or transfer has a net
worth, immediately after such conveyance or transfer, that is (a) greater than
zero and (b) not less than the net worth of the Issuer immediately prior to
giving effect to such conveyance or transfer.
SECTION 3.11 Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance
with Section 3.10(a), the Person formed by or surviving such consolidation or
merger (if other than the Issuer) shall succeed to, and be substituted for,
and may exercise every right and power of, the Issuer under this Indenture with
the same effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties
of the Issuer pursuant to Section 3.10(b), CPS Auto Receivables Trust 2006-C
will be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery of written notice to the Trustee stating that
CPS Auto Receivables Trust 2006-C is to be so released.
SECTION 3.12 No Other Business. The Issuer shall not engage in
any business other than financing, purchasing, owning, selling and managing
the Receivables in the manner contemplated by this Indenture and the Basic
Documents and activities incidental thereto. After the end of the Funding
Period, the Issuer will not purchase any additional Receivables.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for
any Indebtedness except for (i) the Notes (ii) obligations owing from time to
time to the Note Insurer under the Insurance Agreement and (iii) any other
Indebtedness permitted by or arising under the Basic Documents. The proceeds
of the Notes shall be used exclusively to fund the Issuer's purchase of the
Receivables and the other assets specified in the Sale and Servicing Agreement,
28
to fund the Pre-Funding Account, the Capitalized Interest Account and (on
behalf of the Seller) the Spread Account and to pay the Issuer's
organizational, transactional and start-up expenses.
SECTION 3.14 Servicer's Obligations. The Issuer shall cause the
Servicer to comply with Sections 4.9, 4.10, 4.11 and 5.11 of the Sale and
Servicing Agreement.
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Basic Documents, the Issuer shall not make any
loan or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or performance on
any obligation or capability of so doing or otherwise), endorse or otherwise
become contingently liable, directly or indirectly, in connection with the
obligations, stocks or dividends of, or own, purchase, repurchase or acquire
(or agree contingently to do so) any stock, obligations, assets or securities
of, or any other interest in, or make any capital contribution to, any other
Person.
SECTION 3.16 Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17 Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability
of the Issuer to perform its obligations under the Notes, this Indenture or any
other Basic Document.
SECTION 3.18 Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire
or otherwise acquire for value any such ownership or equity interest or
security or (iii) set aside or otherwise segregate any amounts for any such
purpose; provided, however, that the Issuer may make, or cause to be made,
distributions to the Servicer, the Owner Trustee, the Trustee, the Collateral
Agent, the Backup Servicer, the Note Insurer, the Noteholders and the
Certificateholders as permitted by, and to the extent funds are available for
such purpose under, the Sale and Servicing Agreement, the Master Spread
Account Agreement, the Trust Agreement or any other Basic Document. The Issuer
will not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Indenture and the Basic
Documents.
SECTION 3.19 Notice of Events of Default. Upon a responsible
officer of the Owner Trustee having notice or actual knowledge thereof,
the Issuer agrees to give the Trustee, the Note Insurer and the Rating
Agencies prompt written notice of each Event of Default hereunder and each
default on the part of the Servicer or the Seller of its obligations under
any of the Basic Documents.
SECTION 3.20 Further Instruments and Acts. Upon request of the
Trustee or the Note Insurer, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper
to carry out more effectively the purpose of this Indenture.
29
SECTION 3.21 Amendments of Sale and Servicing Agreement and Trust
Agreement. The Issuer shall not agree to any amendment to Section 13.1 of
the Sale and Servicing Agreement or Section 11.1 of the Trust Agreement to
eliminate the requirements thereunder that the Trustee, the Note Insurer or the
Holders of the Notes consent to amendments thereto as provided therein.
SECTION 3.22 Income Tax Characterization. For purposes of federal
income tax, State and local income tax, franchise tax and any other income
taxes, the Issuer and each Noteholder, by its acceptance of its Note or in
the case of a Note Owner, by its acceptance of a beneficial interest in a
Note, will treat the Notes as indebtedness of the Issuer and hereby instructs
the Trustee to treat the Notes as indebtedness of the Issuer for federal and
State tax reporting purposes.
SECTION 3.23 Separate Existence of the Issuer. During the term of
this Indenture, the Issuer shall observe the applicable legal requirements for
the recognition of the Issuer as a legal entity separate and apart from its
Affiliates, including as follows:
(a) The Issuer shall maintain business records and books of account
separate from those of its Affiliates;
(b) Except as otherwise provided in the Basic Documents, the
Issuer shall not commingle its assets and funds with those of its Affiliates;
(c) The Issuer shall at all times hold itself out to the public
under the Issuer's own name as a legal entity separate and distinct from its
Affiliates; and
(d) All transactions and dealings between the Issuer and its
Affiliates will be conducted on an arm's-length basis.
SECTION 3.24 Representations and Warranties of the Issuer.
The Issuer hereby makes the following representations and warranties as
to the Trust Estate to the Note Insurer and the Trustee for the benefit of the
Noteholders:
(i) Creation of Security Interest. This Indenture creates a valid
and continuing security interest (as defined in the UCC) in the Trust Estate in
favor of the Trustee for the benefit of the Noteholders and the Note Insurer,
which security interest is prior to all other Liens (except, as to priority,
for any tax liens or mechanics' lien which may arise after the Closing Date or
as a result of an Obligor's failure to pay its obligations, as applicable) and
is enforceable as such as against creditors of and purchasers from the Issuer.
(ii) Perfection of Security Interest in Trust Property. The Issuer
has caused, on or prior to the Closing Date, the filing of all appropriate
financing statements in the proper filing office in the appropriate
jurisdictions under applicable law in order to perfect the security interest
30
in the Trust Estate Granted to the Trustee for the benefit of the Noteholders
and the Note Insurer hereunder.
(iii) No other Security Interests. Other than the security interest
Granted to the Trustee for the benefit of the Noteholders and the Note Insurer
hereunder, the Issuer has not pledged, assigned, sold, granted a security
interest in, or otherwise conveyed any of the Trust Estate. The Issuer has
not authorized the filing of and is not aware of any financing statements
filed against the Issuer that include a description of collateral covering
the Trust Estate other than any financing statement relating to the security
interest Granted to the Trustee for the benefit of the Noteholders and the Note
Insurer hereunder or that has been terminated. The Issuer is not aware of any
judgment or tax lien filings against the Issuer.
(iv) Notations on Contracts; Financing Statement Disclosure. The
Servicer has in its possession copies of all the original Contracts that
constitute or evidence the Initial Receivables and, from and after each
Subsequent Transfer Date, will have in its possession copies of all the
original Contracts that constitute or evidence the related Subsequent
Receivables. The Contracts that constitute or evidence the Receivables do not
and will not have any marks or notations indicating that they have been
pledged, assigned or otherwise conveyed to any Person other than the Issuer
and/or the Trustee for the benefit of the Noteholders and the Note Insurer.
All financing statements filed or to be filed against the Issuer in favor
of the Trustee in connection herewith describing the Trust Estate contain a
statement to the following effect: "A purchase of or security interest in
any collateral described in this financing statement will violate the rights
of Wells Fargo Bank, National Association, as Trustee and secured party."
(v) Title. Immediately prior to the Grant herein contemplated, the
Issuer had good and marketable title to each Receivable and the other property
Granted hereunder and was the sole owner thereof, free and clear of all liens,
claims, encumbrances, security interests, and rights of others, and,
immediately upon the transfer thereof, the Trustee for the benefit of the
Noteholders and the Note Insurer shall have good and marketable title to each
such Receivable and other property and will be the sole owner thereof, free and
clear of all liens, encumbrances, security interests, and rights of others, and
the transfer has been perfected under the UCC.
The representations and warranties of the Issuer in this Section 3.24 may
not be waived, modified or amended in any material respect without the prior
written consent of the Trustee, the Note Insurer and the Rating Agencies, and
shall survive the satisfaction and discharge of this Indenture.
31
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes
except as to (i) rights of registration of transfer and exchange, (ii)
substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights
of Noteholders to receive payments of principal thereof and interest
thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8, 3.10, 3.12, 3.13, 3.20, 3.21,
3.22 and 11.17, (v) the rights, obligations and immunities of the Trustee
hereunder (including the rights of the Trustee under Section 6.7 and the
obligations of the Trustee under Section 4.2) and (vi) the rights of
Noteholders as beneficiaries hereof with respect to the property so
deposited with the Trustee payable to all or any of them, and the Trustee,
on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture
with respect to the Notes, when
(a) all Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 2.5 and (ii) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Issuer and thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.3) have been delivered to the Trustee for cancellation
and the Note Policy has expired and been returned to the Note Insurer for
cancellation;
(b) the Issuer has paid or caused to be paid all Insurer Secured
Obligations and all Trustee Secured Obligations; and
(c) the Issuer has delivered to the Trustee and the Note Insurer
an Officer's Certificate and an Opinion of Counsel, each meeting the applicable
requirements of Section 11.1(a) and each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
SECTION 4.2 Application of Trust Money. All moneys deposited with
the Trustee pursuant to Section 4.1 hereof shall be held in trust and applied
by it, in accordance with the provisions of the Notes and this Indenture, to
the payment, either directly or through any Note Paying Agent, as the Trustee
may determine, to the Holders of the particular Notes for the payment or
redemption of which such moneys have been deposited with the Trustee, of all
sums due and to become due thereon for principal and interest; but such moneys
need not be segregated from other funds except to the extent required herein or
in the Sale and Servicing Agreement or required by law.
SECTION 4.3 Repayment of Moneys Held by Note Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect
to the Notes, all moneys then held by any Note Paying Agent other than the
Trustee under the provisions of this Indenture with respect to such Notes
shall, upon demand of the Issuer, be paid to the Trustee to be held and
applied according to Section 3.3 and thereupon such Note Paying Agent shall
be released from all further liability with respect to such moneys.
32
ARTICLE V
Remedies
SECTION 5.1 Events of Default.
(a) "Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) so long as an Insurer Default shall have occurred and be
continuing, default in the payment of any interest on any Note when the same
becomes due and payable, and such default shall continue for a period of five
days (solely for purposes of this clause, a payment on the Notes funded by the
Note Insurer or the Collateral Agent pursuant to the Master Spread Account
Agreement shall be deemed to be a payment made by the Issuer); or
(ii) so long as an Insurer Default shall have occurred and be
continuing, default in the payment of the principal of or any installment
of the principal of any Note when the same becomes due and payable and
such default shall continue for a period of five days (solely for purposes
of this clause, a payment on the Notes funded by the Note Insurer or the
Collateral Agent pursuant to the Master Spread Account Agreement shall be
deemed to be a payment made by the Issuer); or
(iii) so long as no Insurer Default shall have occurred and be
continuing, an Insurance Agreement Indenture Cross Default shall have occurred;
provided, however, that the occurrence of an Insurance Agreement Indenture
Cross Default may not form the basis of an Event of Default unless the Note
Insurer shall, upon prior written notice to the Rating Agencies, have delivered
to he Issuer and the Trustee and not rescinded a written notice specifying that
such Insurance Agreement Indenture Cross Default constitutes an Event of
Default under this Indenture; or
(iv) so long as an Insurer Default shall have occurred and be
continuing, a default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere in
this Section specifically dealt with), or any representation or warranty of the
Issuer made in this Indenture or in any certificate or other writing delivered
pursuant hereto or in connection herewith proving to have been incorrect in any
material respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or condition in
respect of which such misrepresentation or warranty was incorrect shall not
have been eliminated or otherwise cured, for a period of 30 days (or for such
longer period, not in excess of 90 days, as may be reasonably necessary to
remedy such default; provided that such default is capable of remedy within 90
days or less
33
and the Servicer on behalf of the Owner Trustee delivers an Officer's
Certificate to the Trustee to the effect that the Issuer has commenced, or will
promptly commence and diligently pursue, all reasonable efforts to remedy such
default) after there shall have been given, by registered or certified mail,
to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders
of at least 25% of the Outstanding Amount of each class of Notes, a written
notice specifying such default or incorrect representation or warranty and
requiring it to be remedied and stating that such notice is a "
Notice of Default" hereunder; or
(v) so long as an Insurer Default shall have occurred and be
continuing, the occurrence of an Insolvency Event with respect to the Issuer,
the Servicer or the Seller.
(b) The Issuer shall deliver to the Trustee and the Note Insurer,
within five days after the occurrence thereof, written notice in the form of
an Officer's Certificate of any event which with the giving of notice and the
lapse of time would become an Event of Default under clause (iii), its status
and what action the Issuer is taking or proposes to take with respect thereto.
SECTION 5.2 Rights Upon Event of Default.
(a) So long as no Insurer Default has occurred and is continuing,
if an Event of Default shall have occurred and be continuing, then the
Controlling Party shall have the right, but not the obligation, upon prior
written notice to each Rating Agency, to declare by written notice to the
Issuer and the Trustee that the Notes become immediately due and payable,
and upon any such declaration the unpaid principal amount of the Notes,
together with accrued and unpaid interest thereon, shall become immediately
due and payable. The Trustee will have no discretion with respect to the
acceleration of the Notes under the foregoing circumstances. If an Event of
Default shall have occurred and be continuing, the Controlling Party may
exercise any of the remedies specified in Section 5.4. In the event of any
acceleration of the Notes, the Trustee shall continue to make claims under
the Note Policy pursuant to the Sale and Servicing Agreement for Scheduled
Payments on the Notes. Subject to the terms of the Note Policy, payments
under the Note Policy following acceleration of any Notes shall be applied
by the Trustee:
FIRST: to Noteholders for amounts due and unpaid on the
Notes for interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for
interest;
SECOND: to the Noteholders for amounts due and unpaid
on the Notes for principal, ratably and without preference or
priority of any kind, according to the amounts then due and
payable on the Notes for principal.
34
(b) In the event any Notes are accelerated due to an Event of
Default, the Note Insurer shall have the right (in addition to its obligation
to pay Scheduled Payments on the Notes in accordance with the Note Policy),
but not the obligation, to make payments under the Note Policy or otherwise of
interest and principal due on such Notes, in whole or in part, on any date or
dates following such acceleration as the Note Insurer, in its sole discretion,
shall elect.
(c) If an Insurer Default shall have occurred and be continuing and
an Event of Default shall have occurred and be continuing, the Trustee in its
discretion may, or if so requested in writing by a Note Majority, shall declare
by written notice to the Issuer that the Notes become, whereupon they shall
become, immediately due and payable at par, together with accrued interest
thereon.
(d) At any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter provided in this Article V, the
Note Insurer in its sole discretion, or if an Insurer Default has occurred and
is continuing, a Note Majority, by written notice to the Issuer and the
Trustee, may rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay
(A) all payments of principal of and interest on all Notes and all
other amounts that would then be due hereunder or upon such Notes if the Event
of Default giving rise to such acceleration had not occurred; and
(B) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee
and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration, have
been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
(a) The Issuer covenants that if (i) default is made in the payment
of any interest on any Note when the same becomes due and payable, and such
default continues for a period of five days, or (ii) default is made in the
payment of the principal of or any installment of the principal of any Note
when the same becomes due and payable and such default continues for a period
of five days, the Issuer will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of the Notes, the whole amount then due and payable on
such Notes for principal and interest, with interest upon the overdue
principal, and, to the extent payment at
35
such rate of interest shall be legally enforceable, upon overdue installments
of interest, at the applicable Interest Rate and in addition thereto such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee and its agents and counsel.
(b) Each Issuer Secured Party hereby irrevocably and unconditionally
appoints the Controlling Party as the true and lawful attorney-in-fact of such
Issuer Secured Party for so long as such Issuer Secured Party is not the
Controlling Party, with full power of substitution, to execute, acknowledge and
deliver any notice, document, certificate, paper, pleading or instrument and to
do in the name of the Controlling Party as well as in the name, place and stead
of such Issuer Secured Party such acts, things and deeds for or on behalf of
and in the name of such Issuer Secured Party under this Indenture (including
specifically under Section 5.4) and under the Basic Documents which such Issuer
Secured Party could or might do or which may be necessary, desirable or
convenient in such Controlling Party's sole discretion to effect the purposes
contemplated hereunder and under the Basic Documents and, without limitation,
following the occurrence of an Event of Default, exercise full right, power
and authority to take, or defer from taking, any and all acts with respect to
the administration,maintenance or disposition of the Trust Estate.
(c) If an Event of Default occurs and is continuing, the Trustee may
in its discretion subject to the consent of the Controlling Party and shall,
at the direction of the Controlling Party, proceed to protect and enforce its
rights and the rights of the Noteholders by such appropriate Proceedings as
the Trustee or the Controlling Party shall deem most effective to protect
and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy or legal or equitable
right vested in the Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, proceedings under Title 11 of the United States
Code or any other applicable Federal or State bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors
or property of the Issuer or such other obligor, the Trustee, irrespective
of whether the principal of any Notes shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section, subject to the direction of the Controlling Party, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for reasonable
36
compensation to the Trustee and each predecessor Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee, except as a result of negligence, bad faith or willful
misconduct) and of the Noteholders allowed in such proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby trustee
or person performing similar functions in any such proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Trustee on their behalf;
and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee or
the Holders of Notes allowed in any judicial proceedings relative to the
Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar
official in any such proceeding is hereby authorized by each of such
Noteholders to make payments to the Trustee, and, in the event that the
Trustee shall consent to the making of payments directly to such Noteholders,
to pay to the Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Trustee, each predecessor Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor Trustee
except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on behalf
of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Noteholder in
any such proceeding except, as aforesaid, to vote for the election of a
trustee in bankruptcy or similar person.
(f) All rights of action and of asserting claims under this
Indenture, the Master Spread Account Agreement, any other Basic Document
or under any of the Notes, may be enforced by the Trustee without the
possession of any of the Notes or the production thereof in any trial or
other proceedings relative thereto, and any such action or proceedings
instituted by the Trustee shall be brought in its own name as trustee of
an express trust, and any recovery of judgment, subject to the payment of
the expenses, disbursements and compensation of the Trustee, each
predecessor Trustee and their respective agents and attorneys, shall be
for the ratable benefit of the Holders of the Notes.
(g) In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this
37
Indenture, the Master Spread Account Agreement or any other Basic Document),
the Trustee shall be held to represent all the Holders of the Notes, and
it shall not be necessary to make any Noteholder a party to any such
proceedings.
SECTION 5.4 Remedies. If an Event of Default shall have occurred
and be continuing, the Controlling Party may do one or more of the following
(subject to Section 5.5):
(i) institute or direct the Trustee to institute Proceedings in
its own name and as trustee of an express trust for the collection of all
amounts then payable on the Notes or under this Indenture with respect
thereto, whether by declaration or otherwise, enforce any judgment obtained,
and collect from the Issuer and any other obligor upon such Notes moneys
adjudged due;
(ii) institute or direct the Trustee to institute Proceedings from
time to time for the complete or partial foreclosure of this Indenture with
respect to the Trust Estate;
(iii) exercise or direct the Trustee to exercise any remedies of
a secured party under the UCC and take any other appropriate action to
protect and enforce the rights and remedies of the Trustee and the Issuer
Secured Parties; and
(iv) sell or direct the Trustee to sell the Trust Estate or any
portion thereof or rights or interest therein, at one or more public or
private sales called and conducted in any manner permitted by law; provided,
however, that if the Trustee is the Controlling Party, the Trustee may not
sell or otherwise liquidate the Trust Estate following an Event of Default
unless (A) such Event of Default is of the type described in Section 5.1(i)
or (ii) or (B) either (x) the Holders of 100% of the Outstanding Amount of
the Notes consent thereto, or (y) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to discharge in full all
amounts then due and unpaid upon such Notes for principal and interest.
In determining such sufficiency or insufficiency with respect to
clause (y), the Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
SECTION 5.5 Optional Preservation of the Receivables. If
the Trustee is the Controlling Party and if the Notes have been declared to
be due and payable under Section 5.2 following an Event of Default and such
declaration and its consequences have not been rescinded and annulled,
the Trustee may, but need not, elect to maintain possession of the Trust
Estate. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal
of and interest on the Notes and amounts due to the Note Insurer, and the
Trustee shall take such desire into account when determining whether or not
to maintain possession of the Trust Estate. In determining whether to
maintain possession of the Trust Estate, the Trustee may, but need not,
obtain and rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such
purpose.
38
SECTION 5.6 Priorities.
(a) Following (1) the acceleration of the Notes pursuant to Section
5.2 or (2) if an Insurer Default shall have occurred and be continuing, the
occurrence of an Event of Default pursuant to Section 5.1(a)(i), 5.1(a)(ii)
or 5.1(a)(v) of this Indenture, the Total Distribution Amount, including
any money or property collected pursuant to Section 5.4 of this Indenture
shall be applied by the Trustee on the related Payment Date in the following
order of priority:
FIRST: amounts due and owing and required to be distributed pursuant
to priorities (i) through (iv) of Section 5.7(a) of the Sale and Servicing
Agreement and not previously distributed to the Persons set forth therein,
in the order of such priorities and without preference or priority of any
kind within such priorities, and, if applicable, subject to the monetary
limitations set forth therein;
SECOND: to the Noteholders for amounts due and unpaid
on the Notes for interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Notes
for interest;
THIRD: to the Noteholders for amounts due and unpaid on
the Notes for principal, ratably and without preference of priority
of any kind, to the Noteholders of each Class of Notes, according
to the amounts due and payable on the Notes, until the outstanding
principal amount of the Notes has been reduced to zero;
FOURTH: amounts due and owing and required to be
distributed to the Note Insurer pursuant to priority (viii) of Section
5.7(a) of the Sale and Servicing Agreement and not previously
distributed;
FIFTH: amounts due and owing and required to be
distributed to the Residual Certificateholders, pro rata, pursuant to
priorities (vi) and (xiii) of Section 5.7(a) of the Sale and Servicing
Agreement and not previously distributed;
SIXTH: in the event any Person other than the Backup
Servicer becomes the successor Servicer, to such successor
Servicer, to the extent not previously paid by the predecessor
Servicer pursuant to the Sale and Servicing Agreement, or pursuant
to priority FIRST hereof, reasonable transition expenses (up to a
maximum of $50,000 for all such expenses during the term of this
Indenture) incurred in becoming the successor Servicer and all
other amounts due and owing to the Backup Servicer pursuant to
Section 5.7(a)(xii) of the Sale and Servicing Agreement;
39
SEVENTH: to the Residual Certificateholders, pro rata, in
reduction of the Residual Certificate Notional Balance until the
Residual Certificate Notional Balance equals zero; and
EIGHTH: to the Residual Certificateholders, pro rata, any
remaining amount;
provided that any amounts collected from the Pre-Funding Account or
the Capitalized Interest Account shall be applied solely to the
payment of amounts due and unpaid on the Notes first, in accordance
with Section 10.1(b) and second, in accordance with Section 5.8(a)(ii)
of the Sale and Servicing Agreement and third, in accordance with
priorities FIRST through EIGHTH above.
(b) The Trustee may fix a record date and payment date for
any payment to Noteholders pursuant to this Section. At least 15 days
before such record date the Issuer shall mail to each Noteholder and
the Trustee a notice that states such record date, the payment date
and the amount to be paid.
SECTION 5.7 Limitation of Suits. No Holder of any Note shall have
any right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount of
each class of Notes have made written request to the Trustee to institute such
proceeding in respect of such Event of Default in its own name as Trustee
hereunder;
(iii) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to it against the costs, expenses and liabilities to
be incurred in complying with such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such proceedings;
(v) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by a Note Majority; and
(vi) an Insurer Default shall have occurred and be continuing;
it being understood and intended that no one or more Holders of Notes
shall have any right in any manner whatever by virtue of, or by availing of,
any provision of this Indenture to affect, disturb or prejudice the rights of
any other Holders of Notes or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
except in the manner herein provided.
40
In the event an Insurer Default has occurred and is continuing and the
Trustee shall receive conflicting or inconsistent requests and indemnity from
two or more groups of Holders of Notes, each representing less than a majority
of the Outstanding Amount of each class of Notes, the Trustee in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provisions of this Indenture.
SECTION 5.8 Unconditional Rights of Noteholders To Receive
Principal and Interest. Notwithstanding any other provisions of this
Indenture, the Holder of any Note shall have the right, which is absolute
and unconditional, to receive payment of the principal of and interest, if
any, on such Note on or after the respective due dates thereof expressed in
such Note or in this Indenture (or, in the case of redemption, on or after
the Redemption Date) and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder.
SECTION 5.9 Restoration of Rights and Remedies. If the Controlling
Party or any Noteholder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee or
to such Noteholder, then and in every such case the Issuer, 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 and the Noteholders shall continue as
though no such proceeding had been instituted.
SECTION 5.10 Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Controlling Party or to the
Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 5.11 Delay or Omission Not a Waiver. No delay or omission
of the Controlling Party or any Holder of any Note to exercise any right or
remedy accruing upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this
Article V or by law to the Trustee or to the Noteholders may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by
the Noteholders, as the case may be.
SECTION 5.12 Control by Noteholders. If the Trustee is the
Controlling Party, a Note Majority shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee with respect to the Notes or exercising any trust or power conferred
on the Trustee; provided that
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
41
(ii) subject to the express terms of Section 5.4, any direction to
the Trustee to sell or liquidate the Trust Estate shall be by the Holders of
Notes representing not less than 100% of the Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have been satisfied
and the Trustee elects to retain the Trust Estate pursuant to such Section,
then any direction to the Trustee by Holders of Notes representing less than
100% of the Outstanding Amount of each class of Notes to sell or liquidate the
Trust Estate shall be of no force and effect; and
(iv) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to
such action.
SECTION 5.13 Waiver of Past Defaults. Prior to the declaration of
the acceleration of the maturity of the Notes as provided in Section 5.4, the
Note Insurer or, if an Insurer Default has occurred and is continuing, a Note
Majority may waive any past Default or Event of Default and its consequences
except a Default or Event of Default (i) in payment of principal of or
interest on any of the Notes or (ii) in respect of a covenant or provision
hereof which cannot be modified or amended without the consent of the Holder
of each Note. In the case of any such waiver, the Issuer, the Trustee and
the Holders of the Notes shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
Upon any such waiver, such Default or Event of Default shall cease to
exist and be deemed to have been cured and not to have occurred, and any
Event of Default arising therefrom shall be deemed to have been cured and
not to have occurred, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or Event of Default
or impair any right consequent thereto.
SECTION 5.14 Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or
in any suit against the Trustee for any action taken, suffered or omitted by
it as Trustee, the filing by any party litigant in such suit of an undertaking
to pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to (a) any suit instituted by the Trustee, (b) any suit
instituted by any Noteholder, or group of Noteholders, in each case holding
in the aggregate more than 10% of the Outstanding Amount of each class of
Notes or (c) any suit instituted by any Noteholder for the enforcement of
the payment of principal of or interest on any Note on or after the respective
due dates expressed in such Note and in this Indenture (or, in the case of
redemption, on or after the Redemption Date).
42
SECTION 5.15 Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
\upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it will not hinder, delay or impede the execution of any power granted to the
Trustee herein and any right of the Issuer to take such action shall be
suspended.
SECTION 5.16 Subrogation. The Note Insurer shall, to the extent
it makes any payment with respect to the Notes, become subrogated to the
rights of the recipients of such payments to the extent of such payments.
Subject to and conditioned upon any payment with respect to the Notes by or
on behalf of the Note Insurer, each Noteholder shall be deemed, without
further action to have directed the Trustee to assign to the Note Insurer
all rights to the payment of interest or principal with respect to the
Notes which are then due for payment to the extent of all payments made by
the Note Insurer and the Note Insurer may exercise any option, vote, right,
power or the like with respect to the Notes to the extent that it has made
payment pursuant to the Note Policy. Notwithstanding the foregoing, the order
of priority of payments to be made pursuant to Section 5.7(a) of the Sale
and Servicing Agreement shall not be modified by this clause. To evidence
such subrogation, the Note Registrar shall note the Note Insurer's rights
as subrogee upon the register of Noteholders upon receipt from the Note
Insurer of proof of payment by the Note Insurer of any Scheduled Payment.
SECTION 5.17 Preference Claims; Direction of Proceedings. (a)
In the event that the Trustee has received a certified copy of an order of
the appropriate court that any Scheduled Payment paid on a Note has been
avoided in whole or in part as a preference payment under applicable
bankruptcy law, the Trustee shall so notify the Note Insurer, shall
comply with the provisions of the Note Policy to obtain payment by the
Note Insurer of such avoided payment, and shall, at the time it provides
notice to the Note Insurer, notify Holders of the Notes by mail that,
in the event that any Noteholder's payment is so recoverable, such
Noteholder will be entitled to payment pursuant to the terms of the
Note Policy. Pursuant to the terms of the Note Policy, the Note
Insurer will make such payment on behalf of the Noteholder to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Final Order (as defined in the Note Policy) and not to the
Trustee or any Noteholder directly (unless a Noteholder has previously
paid such payment to the receiver, conservator, debtor-in-possession or
trustee in bankruptcy named in the Final Order, in which case the Note
Insurer will make such payment to the Trustee for payment, in accordance
with the instructions to be provided by the Note Insurer, to such
Noteholder).
(b) Each Payment Notice (as defined in the Note Policy)
shall provide that the Trustee, on its behalf and on behalf of the
Noteholders, thereby appoints the Note Insurer as agent and attorney in
fact for the Trustee and each Noteholder in any legal proceeding with
respect to the Notes. The Trustee shall promptly notify the Note Insurer
of any proceeding or the institution of any action (of which a Responsible
Officer of the Trustee has actual knowledge) seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (a "Preference Claim") of any payment made
with respect to the Notes. Each Holder of the Notes, by its purchase of
43
Notes, and the Trustee hereby agree that so long as a Note Insurer Default
shall not have occurred and be continuing, the Note Insurer may at any time
during the continuation of any proceeding relating to a Preference Claim
direct all matters relating to such Preference Claim including (i) the
direction of any appeal of any order relating to any Preference Claim
and (ii) the posting of any surety, supersedeas or performance bond
pending any such appeal at the expense of the Note Insurer, but subject
to the reimbursement as provided in the Insurance Agreement. In
addition, and without limitation of the foregoing, the Note Insurer
shall be subrogated to, and each Noteholder and the Trustee hereby
delegate and assign, to the fullest extent permitted by law, the rights
of the Trustee and each Noteholder in the conduct of any proceeding
with respect to a Preference Claim, including all rights of any party
to an adversary proceeding action with respect to any court order issued in
connection with any such Preference Claim.
ARTICLE VI
The Trustee
SECTION 6.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture
and the Basic Documents and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture;
however, the Trustee shall examine the certificates and opinions to
determine whether or not they conform on their face to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
44
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.12.
(d) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuer.
(e) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law or the terms of the Basic
Documents.
(f) No provision of this Indenture shall require the Trustee in
any of its capacities to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds to believe that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
(h) The Trustee shall permit any representative of the Note
Insurer, during the Trustee's normal business hours, to examine all books of
account, records, reports and other papers of the Trustee relating to the
Notes, to make copies and extracts therefrom and to discuss the Trustee's
affairs and actions, as such affairs and actions relate to the Trustee's
duties with respect to the Notes, with the Trustee's officers and employees
responsible for carrying out the Trustee's duties with respect to the Notes.
(i) The Trustee shall, and hereby agrees that it will, perform
all of the obligations and duties required of it under the Basic Documents.
(j) The Trustee shall, and hereby agrees that it will, hold the
Note Policy in trust, and will hold any proceeds of any claim on the Note
Policy in trust solely for the use and benefit of the Noteholders.
(k) In no event shall Wells Fargo Bank, National Association,
in any of its capacities hereunder, be deemed to have assumed any duties of
the Owner Trustee under the Delaware Statutory Trust Statute, common law, or
the Trust Agreement.
(l) Except for actions expressly authorized by this Indenture,
the Trustee shall take no action reasonably likely to impair the security
interests created or existing under any Receivable or Financed Vehicle or
to impair the value of any Receivable or Financed Vehicle.
(m) All information obtained by the Trustee regarding the
Obligors and the Receivables, whether upon the exercise of its rights under
this Indenture or otherwise, shall be maintained by the Trustee in confidence
and shall not be disclosed to any other Person, other than the Trustee's
attorneys, accountants and agents unless such disclosure is required by
this Indenture or any applicable law or regulation.
45
SECTION 6.2 Rights of Trustee.
(a) Subject to Sections 6.1 and 6.2, the Trustee shall be
protected and shall incur no liability to the Issuer or any Issuer Secured
Party in relying upon the accuracy, acting in reliance upon the contents,
and assuming the genuineness of any notice, demand, certificate, signature,
instrument or other document reasonably believed by the Trustee to be
genuine and to have been duly executed by the appropriate signatory, and,
except to the extent the Trustee has actual knowledge to the contrary or as
required pursuant to Section 6.1 or Section 6.2(g) the Trustee shall not be
required to make any independent investigation with respect thereto.
(b) Before the Trustee acts or refrains from acting, it may
require an Officer's Certificate. Subject to Section 6.1(c), the Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on the Officer's Certificate.
(c) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of
Consumer Portfolio Services, Inc., or any other such agent, attorney,
custodian or nominee appointed with due care by it hereunder.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice of such
counsel or any opinion of counsel with respect to legal matters relating to
the Basic Documents and the Notes shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(f) The Trustee shall be under no obligation to institute, conduct
or defend any litigation under this Indenture or in relation to this Indenture
or any of the Basic Documents, at the request, order or direction of any of
the Holders of Notes or the Controlling Party, pursuant to the provisions of
this Indenture, unless such Holders of Notes or the Controlling Party shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred therein or thereby; provided,
however, that the Trustee shall, upon the occurrence of an Event of Default
(that has not been cured or waived), exercise the rights and powers vested in
it by this Indenture in accordance with Section 6.1.
(g) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
the Note Insurer (so long as no Insurer Default shall have occurred and
be continuing) or (if an Insurer Default shall have occurred and be continuing)
by the Holders of Notes evidencing not less than 25% of the Outstanding Amount
46
of each class thereof; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is, in the opinion of
the Trustee, not reasonably assured to the Trustee by the security afforded to
it by the terms of this Indenture or the Sale and Servicing Agreement, the
Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to so proceeding; the reasonable expense of every
such examination shall be paid by the Person making such request, or, if paid
by the Trustee, shall be reimbursed by the Person making such request upon
demand.
SECTION 6.3 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its Affiliates with the same rights
it would have if it were not the Trustee. Any Note Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Trustee must comply with Section 6.11.
SECTION 6.4 Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy
of this Indenture, any Basic Documents, the Trust Estate, the Collateral or
the Notes, it shall not be accountable for the Issuer's use of the
proceeds from the Notes, and it shall not be responsible for any statement
of the Issuer in this Indenture or in any document issued in connection
with the sale of the Notes or in the Notes other than the Trustee's certificate
of authentication.
SECTION 6.5 Notice of Defaults. If an Event of Default occurs and
is continuing and if it is either known by, or written notice of the existence
thereof has been delivered to, a Responsible Officer of the Trustee, the
Trustee shall mail to each Noteholder notice of the Default within 30 days
after such knowledge or notice occurs. Except in the case of a Default in
payment of principal of or interest on any Note (including payments pursuant to
the mandatory redemption provisions of such Note, if any), the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers
in good faith determines that withholding the notice is in the interests of
Noteholders.
SECTION 6.6 Reports by Trustee to Holders. The Trustee shall on
behalf of the Issuer deliver to each Noteholder such information as may be
reasonably required to enable such Holder to prepare its Federal and State
income tax returns.
SECTION 6.7 Compensation and Indemnity.
(a) Pursuant to Section 5.7(a) of the Sale and Servicing Agreement,
the Issuer shall pay to the Trustee from time to time compensation for its
services, as separately agreed. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The
Issuer shall reimburse the Trustee, pursuant to Section 5.7(a) of the Sale
and Servicing Agreement, for all reasonable out-of-pocket expenses incurred or
made by it, including costs of collection, in addition to the compensation for
its services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. The Issuer shall or shall cause the Servicer to
indemnify the Trustee against any and all loss, liability or expense incurred
by the Trustee without willful misfeasance, negligence or bad faith on the
47
Trustee's part arising out of or in connection with the acceptance or
the administration of this trust and the performance of its duties hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection therewith and including any loss, liability or
expense directly or indirectly incurred (regardless of negligence on the
part of the Trustee or the Issuer) by the Trustee as a result of any penalty
or other cost imposed by the Internal Revenue Service or other taxing authority
(except any penalties arising out of fees paid to the Trustee or as a result
of any action taken contrary to the Indenture) related to the tax status of
the Issuer or the Notes. The Trustee shall notify the Issuer and the Servicer
promptly of any claim for which it may seek indemnity. Failure by the Trustee
to so notify the Issuer and the Servicer shall not relieve the Issuer of
its obligations hereunder or the Servicer of its obligations under Article XII
of the Sale and Servicing Agreement. The Trustee may have separate counsel and
the Issuer shall or shall cause the Servicer to pay the fees and expenses of
such counsel. Neither the Issuer nor the Servicer need reimburse any expense
or indemnify against any loss, liability or expense incurred by the Trustee
through the Trustee's own willful misconduct, negligence or bad faith.
(b) The Issuer's payment obligations to the Trustee pursuant to this
Section shall survive the discharge of this Indenture. When the Trustee
incurs expenses after the occurrence of a Default specified in Section
5.1(a)(v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States
Code or any other applicable Federal or State bankruptcy, insolvency or
similar law. Notwithstanding anything else set forth in this Indenture
or the Basic Documents, the recourse of the Trustee hereunder and under
the Basic Documents shall be to the Trust Estate only and specifically
shall not be recourse to the assets of the Seller, the Depositor, any
Noteholder or any Residual Certificateholder. In addition, the Trustee
agrees that its recourse to the Trust Estate and amounts held pursuant
to the Master Spread Account Agreement shall be limited to the right to
receive the distributions referred to in Section 5.7(a) of the Sale and
Servicing Agreement.
SECTION 6.8 Replacement of Trustee. The Issuer may, with the
consent of the Note Insurer, and at the request of the Note Insurer (unless
an Insurer Default shall have occurred and be continuing), shall, remove
the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) an Insolvency Event with respect to the Trustee occurs; or
(iii) the Trustee otherwise 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 Trustee in such event being
referred to herein as the retiring Trustee), the Issuer shall promptly
appoint a successor Trustee acceptable to the Note Insurer (so long as
an Insurer Default shall not have occurred and be continuing). If the
Issuer fails to appoint such a successor Trustee, the Note Insurer may
appoint a successor Trustee.
48
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee, the Note Insurer (provided that no Insurer Default
shall have occurred and be continuing) and the Issuer, whereupon, the
resignation or removal of the retiring Trustee shall become effective,
and the successor Trustee shall have all the rights, powers and duties of the
retiring Trustee under this Indenture, subject to satisfaction of the Rating
Agency Condition. The successor Trustee shall mail a notice of its succession
to each Noteholder. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer,
the Note Insurer or a Note Majority may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor Trustee pursuant to
Section 6.8.
Notwithstanding the replacement of the Trustee pursuant to this Section,
the Issuer's and the Servicer's obligations under Section 6.7 shall continue
for the benefit of the retiring Trustee.
SECTION 6.9 Successor Trustee by Merger.
(a) If the Trustee consolidates with, merges or converts into,
or transfers all or substantially all its corporate trust business or assets
to, another corporation or banking association, the resulting, surviving
or transferee corporation without any further act shall be the successor
Trustee. The Trustee shall provide the Rating Agencies and the Note
Insurer with written notice of any such transaction.
(b) In case at the time such successor or successors to the
Trustee by merger, conversion or consolidation shall succeed to the trusts
created by this Indenture any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor to the
Trustee; and in all such cases such certificates shall have the full force
which it is anywhere in the Notes or in this Indenture provided that the
certificate of the Trustee shall have.
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Indenture, at
any time, for the purpose of meeting any legal requirement of any jurisdiction
in which any part of the Trust Estate may at the time be located, the
Trustee with the consent of the Note Insurer (so long as an Insurer Default
shall not have occurred and be continuing) shall have the power and may
execute and deliver all instruments to appoint one or more Persons to act
as a co-trustee or co-trustees, or separate trustee or separate trustees, of
all or any part of the Trust Estate, and to vest in such Person or Persons,
in such capacity and for the benefit of the Noteholders, such title to the
Trust Estate, or any part hereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts
49
as the Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 6.11 and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the 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 Trust 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;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder, including acts or
omissions of predecessor or successor trustees; and
(iii) 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 Agreement
and the conditions of this Article VI. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Trustee, its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, dissolve, become insolvent, 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.
50
SECTION 6.11 Eligibility: Disqualification. The Trustee, and any
successor thereto, shall at all times have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition and subject to supervision or examination by federal or State
authorities and satisfactory to the Note Insurer; and having a rating, both
with respect to long-term and short-term unsecured obligations, of not less
than investment grade by the Rating Agencies. The Trustee shall provide
copies of such reports to the Note Insurer upon request.
SECTION 6.12 Reserved.
SECTION 6.13 Appointment and Powers. Subject to the terms and
conditions hereof, each of the Issuer Secured Parties hereby appoints Wells
Fargo Bank, National Association as the Trustee with respect to the Collateral,
and Wells Fargo Bank, National Association hereby accepts such appointment and
agrees to act as Trustee with respect to the Collateral for the Issuer Secured
Parties, to maintain custody and possession of such Collateral (except as
otherwise provided hereunder) and to perform the other duties of the Trustee in
accordance with the provisions of this Indenture and the other Basic Documents.
Each Issuer Secured Party hereby authorizes the Trustee to take such action on
its behalf, and to exercise such rights, remedies, powers and privileges
hereunder, as the Controlling Party may direct and as are specifically
authorized to be exercised by the Trustee by the terms hereof, together with
such actions, rights, remedies, powers and privileges as are reasonably
incidental thereto. The Trustee shall act upon and in compliance with the
written instructions of the Controlling Party delivered pursuant to this
Indenture promptly following receipt of such written instructions; provided
that the Trustee shall not act in accordance with any instructions (i) which
are not authorized by, or in violation of the provisions of, this Indenture,
(ii) which are in violation ofany applicable law, rule or regulation or
(iii) for which the Trustee has not received reasonable indemnity. Receipt
of such instructions shall not be a condition to the exercise by the Trustee
of its express duties hereunder, except where this Indenture provides that
the Trustee is permitted to act only following and in accordance with such
instructions.
SECTION 6.14 Performance of Duties. The Trustee shall have
no duties or responsibilities except those expressly set forth in this
Indenture and the other Basic Documents to which the Trustee is a party or
as directed by the Controlling Party in accordance with this Indenture.
The Trustee shall not be required to take any discretionary actions hereunder
except at the written direction and with the indemnification of the Controlling
Party and as provided in Section 5.12. The Trustee shall, and hereby agrees
that it will, perform all of the duties and obligations required of it under
the Sale and Servicing Agreement.
SECTION 6.15 Limitation on Liability. Neither the Trustee nor
any of its directors, officers or employees shall be liable for any action
taken or omitted to be taken by it or them in good faith hereunder, or in
connection herewith, except that the Trustee shall be liable for its
negligence, bad faith or willful misconduct. Notwithstanding any term or
provision of this Indenture, the Trustee shall incur no liability to the
Issuer or the Issuer Secured Parties for any action taken or omitted by the
Trustee in connection with the Collateral, except for the negligence, bad
faith or willful misconduct on the part of the Trustee, and, further, shall
incur no liability to the Issuer Secured Parties except for negligence, bad
faith or willful misconduct in carrying out its duties to the Issuer Secured
Parties. The Trustee shall at all times be free independently to establish to
51
its reasonable satisfaction, but shall have no duty to independently verify,
the existence or nonexistence of facts that are a condition to the exercise
or enforcement of any right or remedy hereunder or under any of the Basic
Documents. The Trustee may consult with counsel, and shall not be liable for
any action taken or omitted to be taken by it hereunder in good faith and in
accordance with the written advice of such counsel. The Trustee shall not be
under any obligation to exercise any of the remedial rights or powers vested
in it by this Indenture or to follow any direction from the Controlling Party
unless it shall have received reasonable security or indemnity satisfactory
to the Trustee against the costs, expenses and liabilities which might be
incurred by it.
SECTION 6.16 Reserved.
SECTION 6.17 Successor Trustee.
(a) Merger. Any Person into which the Trustee may be converted
or merged, or with which it may be consolidated, or to which it may sell
or transfer its trust business and assets as a whole or substantially as
a whole, or any Person resulting from any such conversion, merger,
consolidation, sale or transfer to which the Trustee is a party, shall
(provided it is otherwise qualified to serve as the Trustee hereunder) be
and become a successor Trustee hereunder and be vested with all of the
title to and interest in the Collateral and all of the trusts, powers,
discretions, immunities, privileges and other matters as was its predecessor
without the execution or filing of any instrument or any further act,
deed or conveyance on the part of any of the parties hereto, anything herein
to the contrary notwithstanding, except to the extent, if any, that any
such action is necessary to perfect, or continue the perfection of, the
security interest of the Issuer Secured Parties in the Collateral;
provided that any such successor shall also be the successor Trustee
under Section 6.9.
(b) Removal. The Trustee may be removed by the Note Insurer
(or, if an Insurer Default has occurred and is continuing, by a Note Majority)
at any time, with or without cause, by an instrument or concurrent instruments
in writing delivered to the Trustee, the other Issuer Secured Party and the
Issuer. A temporary successor may be removed at any time to allow a successor
Trustee to be appointed pursuant to subsection (c) below. Any removal pursuant
to the provisions of this subsection (b) shall take effect only upon the
date which is the latest of (i) the effective date of the appointment of a
successor Trustee and the acceptance in writing by such successor Trustee of
such appointment and of its obligation to perform its duties hereunder in
accordance with the provisions hereof, and (ii) receipt by the Controlling
Party of an Opinion of Counsel to the effect described in Section 3.6.
(c) Acceptance by Successor. The Controlling Party shall have the
sole right to appoint each successor Trustee. Every temporary or permanent
successor Trustee appointed hereunder shall execute, acknowledge and deliver
to its predecessor and to the Trustee, each Issuer Secured Party and the Issuer
an instrument in writing accepting such appointment hereunder and the relevant
predecessor shall execute, acknowledge and deliver such other documents and
instruments as will effectuate the delivery of all Collateral to the successor
52
Trustee, whereupon such successor, without any further act, deed or conveyance,
shall become fully vested with all the estates, properties, rights, powers,
duties and obligations of its predecessor. Such predecessor shall,
nevertheless, on the written request of either Issuer Secured Party or the
Issuer, execute and deliver an instrument transferring to such successor
all the estates, properties, rights and powers of such predecessor hereunder.
In the event that any instrument in writing from the Issuer or an Issuer
Secured Party is reasonably required by a successor Trustee to more fully
and certainly vest in such successor the estates, properties, rights, powers,
duties and obligations vested or intended to be vested hereunder in the
Trustee, any and all such written instruments shall at the request of the
temporary or permanent successor Trustee, be forthwith executed, acknowledged
and delivered by the Trustee or the Issuer, as the case may be. The designation
of any successor Trustee and the instrument or instruments removing any Trustee
and appointing a successor hereunder, together with all other instruments
provided for herein, shall be maintained with the records relating to the
Collateral and, to the extent required by applicable law, filed or recorded
by the successor Trustee in each place where such filing or recording is
necessary to effect the transfer of the Collateral to the successor Trustee
or to protect or continue the perfection of the security interests granted
hereunder.
SECTION 6.18 Reserved.
SECTION 6.19 Representations and Warranties of the Trustee. The
Trustee represents and warrants to the Issuer and to each Issuer Secured Party
as follows: (a) Due Organization. The Trustee is a national banking
association, duly organized, validly existing and in good standing under the
laws of the United States and is duly authorized and licensed under applicable
law to conduct its business as presently conducted.
(b) Corporate Power. The Trustee has all requisite right, power
and authority to execute and deliver this Indenture and to perform all of
its duties as Trustee hereunder.
(c) Due Authorization. The execution and delivery by the Trustee
of this Indenture and the other Basic Documents to which it is a party,
and the performance by the Trustee of its duties hereunder and thereunder,
have been duly authorized by all necessary corporate proceedings and no
further approvals or filings, including any governmental approvals, are
required for the valid execution and delivery by the Trustee, or the
performance by the Trustee, of this Indenture and such other Basic Documents.
(d) Valid and Binding Indenture. The Trustee has duly executed
and delivered this Indenture and each other Basic Document to which it is a
party, and each of this Indenture and each such other Basic Document
constitutes the legal, valid and binding obligation of the Trustee,
enforceable against the Trustee in accordance with its terms, except as
(i) such enforceability may be limited by bankruptcy, insolvency,
reorganization and similar laws relating to or affecting the enforcement of
creditors' rights generally and (ii) the availability of equitable remedies
may be limited by equitable principles of general applicability.
53
SECTION 6.20 Waiver of Setoffs. The Trustee hereby expressly waives
any and all rights of setoff that the Trustee may otherwise at any time have
under applicable law with respect to any Trust Account and agrees that
amounts in the Trust Accounts shall at all times be held and applied
solely in accordance with the provisions hereof.
SECTION 6.21 Control by the Controlling Party. The Trustee shall
comply with notices and instructions given by the Issuer only if accompanied
by the written consent of the Controlling Party, except that if any Event of
Default shall have occurred and be continuing, the Trustee shall act upon and
comply with notices and instructions given by the Controlling Party alone
in the place and stead of the Issuer.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish To Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Trustee
(a) not more than five days after the earlier of (i) each Record Date and (ii)
three months after the last Record Date, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders as of such
Record Date, (b) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the
time such list is furnished; provided, however, that so long as the Trustee
is the Note Registrar, no such list shall be required to be furnished. If
the Notes are Definitive Notes, the Trustee or, if the Trustee is not the
Note Registrar, the Issuer shall furnish to the Note Insurer in writing on
an annual basis on each March 31 and at such other times as the Note Insurer
may request a copy of the list.
SECTION 7.2 Preservation of Information; Communications to
Noteholders. The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders contained in the most
recent list furnished to the Trustee as provided in Section 7.1 and the names
and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided
in such Section 7.1 upon receipt of a new list so furnished.
ARTICLE VIII
Collection of Money and Releases of Trust Estate
SECTION 8.1 Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property
payable to or receivable by the Trustee pursuant to this Indenture and the
Sale and Servicing Agreement. The Trustee shall apply all such money
received by it as provided in this Indenture and the Sale and Servicing
Agreement. Except as otherwise expressly provided in this Indenture or
in the Sale and Servicing Agreement, if any default occurs in the making
of any payment or performance under any agreement or instrument that
is part of the Trust Estate, the Trustee may take such action as may
be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings. Any such action
54
shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as
provided in Article V.
SECTION 8.2 Release of Trust Estate.
(a) Subject to the payment of its fees and expenses pursuant
to Section 6.7, the Trustee may, and when required by the provisions of
this Indenture shall, execute instruments to release property from the
lien of this Indenture, in a manner and under circumstances that are
not inconsistent with the provisions of this Indenture. No party
relying upon an instrument executed by the Trustee as provided in this
Article VIII shall be bound to ascertain the Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any moneys.
(b) The Trustee shall, at such time as there are no Notes
outstanding, all Issuer Secured Obligations have been paid in full and
all sums due the Trustee pursuant to Section 6.7 have been paid, release
any remaining portion of the Trust Estate that secured the Notes from
the lien of this Indenture and release to the Issuer or any other Person
entitled thereto any funds then on deposit in the Trust Accounts. The
Trustee shall release property from the lien of this Indenture pursuant
to this Section 8.2(b) only upon receipt of an Issuer Request accompanied
by an Officer's Certificate and an Opinion of Counsel meeting the
applicable requirements of Section 11.1.
SECTION 8.3 Opinion of Counsel. The Trustee shall receive
at least seven days' notice when requested by the Issuer to take any
action pursuant to Section 8.2(a), accompanied by copies of any instruments
involved, and the Trustee shall also require as a condition to such action,
an Opinion of Counsel in form and substance satisfactory to the Trustee,
stating the legal effect of any such action, outlining the steps required
to complete the same, and concluding that all conditions precedent to the
taking of such action have been complied with and such action will not
materially and adversely affect the security for the Notes or the rights of
the Issuer Secured Parties in contravention of the provisions of this
Indenture; provided, however, that such Opinion of Counsel shall not be
required to express an opinion as to the fair value of the Trust Estate.
Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Trustee in connection with any such action.
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without Consent of
Noteholders.
(a) Without the consent of the Holders of any Notes but with
the consent of the Note Insurer (unless an Insurer Default shall have
occurred and be continuing) and with prior notice to the Rating Agencies
by the Issuer, the Issuer and the Trustee, when authorized by an Issuer
Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of
the Trust Indenture Act as in force at the date of the execution thereof),
in form satisfactory to the Trustee, for any of the following purposes;
55
provided, however, if any party to this Indenture is unable to sign any
supplemental indenture due to its dissolution, winding up or comparable
circumstances, then the consent of the Note Insurer or a Note Majority
shall be sufficient to amend this Indenture without such party's
signature:
(i) to correct or amplify the description of any property
at any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and
in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of
the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be inconsistent
with any other provision herein or in any supplemental indenture or to
make any other provisions with respect to matters or questions arising
under this Indenture or in any supplemental indenture; provided that
such action shall not adversely affect the interests of the Holders
of the Notes or the rating of the Notes; or
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as shall
be necessary to facilitate the administration of the trusts hereunder
by more than one trustee, pursuant to the requirements of Article VI.
The Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained not
inconsistent with the foregoing.
(b) The Issuer and the Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Holders
of the Notes but with prior notice to the Rating Agencies by the Issuer
and with the prior written consent of the Note Insurer (unless an
Insurer Default shall have occurred and be continuing), enter into an
indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights
of the Holders of the Notes under this Indenture; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel, adversely
affect the interests of any Noteholder in any material respect. Any
such action shall not be deemed to adversely affect in any material
respect the interests of any Noteholder if the Rating Agency Condition
has been satisfied.
56
SECTION 9.2 Supplemental Indentures with Consent of Noteholders.
The Issuer and the Trustee, when authorized by an Issuer Order, also may, with
prior notice to the Rating Agencies and with the consent of the Note Insurer
(unless an Insurer Default shall have occurred and be continuing) or, if an
Insurer Default shall have occurred and be continuing, with the consent of a
Note Majority, by Act of such Holders delivered to the Issuer and the Trustee,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, if any party to
this Indenture is unable to sign any supplemental indenture due to its
dissolution, winding up or comparable circumstances, then the consent of the
Note Insurer (unless an Insurer Default shall have occurred and be continuing)
or, if an Insurer Default shall have occurred and be continuing, the consent of
a Note Majority shall be sufficient to amend this Indenture without such
party's signature; provided, further however, that, subject to the express
rights of the Note Insurer under the Basic Documents and notwithstanding
Section 11.20, no such supplemental indenture shall, without the consent of
the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal of
or interest on any Note, or reduce the principal amount thereof, the interest
rate thereon or the Redemption Price with respect thereto, change the provision
of this Indenture relating to the application of collections on, or the proceds
of the sale of, the Trust Estate to payment of principal of or interest on the
Notes, or change any place of payment where, or the coin or currency in which,
any Note or the interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due on
the Notes on or after the respective due dates thereof (or, in the case of
redemption, on or after the Redemption Date);
(iii) reduce the percentage of the Outstanding Amount of the Notes,
the consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any waiver
of compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Trustee to direct the Issuer to sell or liquidate the
Trust Estate pursuant to Section 5.4;
(vi) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional provisions
of this Indenture or the Basic Documents cannot be modified or waived without
the consent of the Holder of each Outstanding Note affected thereby;
57
(vii) modify any of the provisions of this Indenture in such manner
as to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the calculation of
any of the individual components of such calculation) or as to affect the
rights of the Holders of Notes to the benefit of any provisions for the
mandatory redemption of the Notes contained herein; or
(viii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the Trust
Estate or, except as otherwise permitted or contemplated herein or in any of
the Basic Documents, terminate the lien of this Indenture on any property at
any time subject hereto or deprive the Holder of any Note of the security
provided by the lien of this Indenture.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to
the Holders of the Notes to which such amendment or supplemental indenture
relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Trustee to mail such notice, or
any defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures. In executing,
or permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may,
but shall not be obligated to, enter into any such supplemental indenture
that affects the Trustee's own rights, duties, liabilities or immunities
under this Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations
of rights, obligations, duties, liabilities and immunities under this Indenture
of the Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5 Reserved.
SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes
58
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Issuer shall, bear a
notation in form approved by the Issuer as to any matter provided for in
such supplemental indenture. If the Issuer shall so determine, new Notes so
modified as to conform, in the opinion of the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Trustee in exchange for Outstanding Notes.
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption.
(a) The Notes are subject to redemption in whole, but not in part,
at the direction of the Servicer pursuant to Section 11.1(a) of the Sale and
Servicing Agreement, on any Payment Date on which the Servicer exercises its
option to purchase the Trust Estate pursuant to said Section 11.1(a), for a
purchase price at least equal to the Redemption Price; provided, however,
that the Issuer has available funds sufficient to pay the Redemption Price
and all amounts due to the Note Insurer under the Basic Documents. The Servicer
or the Issuer shall furnish the Note Insurer and the Rating Agencies notice
of such redemption. If the Notes are to be redeemed pursuant to this Section
10.1(a), the Servicer or the Issuer shall furnish notice of such election to
the Trustee not later than 35 days prior to the Redemption Date and the
Servicer shall deposit with the Trustee in the Note Distribution Account the
Redemption Price of the Notes to be redeemed at least one Business Day prior
to the Redemption Date. If the Servicer fails to so deposit the Redemption
Price with the Trustee at least one Business Day prior to the Redemption Date,
such redemption shall be deemed to be automatically rescinded and the
Noteholders shall receive the payments of interest and principal that would
be due to the Noteholders on such Payment Date as if such option to redeem
the Notes had never been exercised. For the avoidance of any doubt, no
Event of Default shall occur solely as a result of such rescission.
(b) If, on the Mandatory Redemption Date, the Pre-Funded Amount
is greater than zero after giving effect to the purchase of all Subsequent
Receivables during the Funding Period, including any such purchase on the
last day of the Funding Period, the Notes will be redeemed in part pursuant
to Section 5.8(a)(ii) of the Sale and Servicing Agreement in an amount equal
to the Note Prepayment Amount.
SECTION 10.2 Form of Redemption Notice.
(a) Notice of redemption under Section 10.1 shall be given by
the Trustee by facsimile or by first-class mail, postage prepaid,
transmitted or mailed prior to the applicable Redemption Date to each
Holder of Notes, as of the close of business on the Record Date preceding
the applicable Redemption Date, at such Holder's address appearing in the
Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
59
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such Redemption
Date is not applicable and that payments shall be made only upon presentation
and surrender of such Notes and the place where such Notes are to be
surrendered for payment of the Redemption Price (which shall be the office
or agency of the Issuer to be maintained as provided in Section 3.2); and
(iv) that interest on the Notes shall cease to accrue on the
Redemption Date.
Notice of redemption of the Notes shall be given by the Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption,
or any defect therein, to any Holder of any Note shall not impair or affect
the validity of the redemption of any other Note.
(b) Prior notice of redemption under Section 10.1(b) is not
required to be given to Noteholders.
SECTION 10.3 Notes Payable on Redemption Date. The Notes to be
redeemed shall, following notice of redemption as required by Section 10.2
(in the case of redemption pursuant to Section 10.1), on the Redemption Date
become due and payable at the Redemption Price and (unless the Issuer shall
default in the payment of the Redemption Price) no interest shall accrue on
the Redemption Price for any period after the date to which accrued interest is
calculated for purposes of calculating the Redemption Price.
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Trustee
to take any action under any provision of this Indenture, the Issuer shall
furnish to the Trustee and to the Note Insurer (i) an Officer's Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with, and (ii) an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with except that, in the case of any
such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition and
the definitions herein relating thereto;
60
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is necessary
to enable such signatory to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Trustee that is to be made the basis for the release of
any property or securities subject to the lien of this Indenture, the Issuer
shall, in addition to any obligation imposed in Section 11.1(a) or elsewhere
in this Indenture, furnish to the Trustee and the Note Insurer an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (on the date of such deposit) to the Issuer of
the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Trustee and
the Note Insurer an Officer's Certificate certifying or stating the opinion of
any signer thereof as to the matters described in clause (i) above, the Issuer
shall also deliver to the Trustee and the Note Insurer an Independent
Certificate as to the same matters, if the fair value to the Issuer of the
securities to be so deposited and of all other such securities made the basis
of any such withdrawal or release since the commencement of the then-current
fiscal year of the Issuer, as set forth in the certificates delivered pursuant
to clause (i) above and this clause (ii) is 10% or more of the Outstanding
Amount of the Notes, but such a certificate need not be furnished with respect
to any securities so deposited, if the fair value thereof to the Issuer as set
forth in the related Officer's Certificate is less than $25,000 or less than
1% of the Outstanding Amount of the Notes.
(iii) Other than with respect to the release of any Purchased
Receivables or Liquidated Receivables, whenever any property or securities are
to be released from the lien of this Indenture, the Issuer shall also furnish
to the Trustee and the Note Insurer an Officer's Certificate certifying or
stating the opinion of each person signing such certificate as to the fair
value (within 90 days of such release) of the property or securities proposed
to be released and stating that in the opinion of such person the proposed
release will not impair the security under this Indenture in contravention
of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Trustee and
the Note Insurer an Officer's Certificate certifying or stating the opinion of
any signer thereof as to the matters described in clause (iii) above, the
Issuer shall also furnish to the Trustee and the Note Insurer an Independent
Certificate as to the same matters if the fair value of the property or
securities and of all other property other than Purchased Receivables and
Defaulted Receivables, or securities released from the lien of this Indenture
since the commencement of the then current calendar year, as set forth in the
certificates required by clause (iii) above and this clause (iv), equals 10%
or more of the Outstanding Amount of the Notes, but such certificate need not
be furnished in the case of any release of property or securities if the fair
value thereof as set forth in the related Officer's Certificate is less than
$25,000 or less than 1% of the then Outstanding Amount of the Notes.
61
(v) Notwithstanding Section 2.9 or any provision of this Section,
the Issuer may (A) collect, liquidate, sell or otherwise dispose of Receivables
as and to the extent permitted or required by the Basic Documents and (B) make
cash payments out of the Trust Accounts as and to the extent permitted or
required by the Basic Documents.
SECTION 11.2 Form of Documents Delivered to Trustee.
(a) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion of, only one
such Person, or that they be so certified or covered by only one document, but
one such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an Authorized Officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to the matters upon which his or her
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by,
an officer or officers of the Servicer, the Seller or the Issuer, stating that
the information with respect to such factual matters is in the possession of
the Servicer, the Seller or the Issuer, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
(c) Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
(d) Whenever in this Indenture, in connection with any
application or certificate or report to the Trustee, it is provided that
the Issuer shall deliver any document as a condition of the granting of
such application, or as evidence of the Issuer's compliance with any term
hereof, it is intended that the truth and accuracy, at the time of the granting
of such application or at the effective date of such certificate or report
(as the case may be), of the facts and opinions stated in such document shall
in such case be conditions precedent to the right of the Issuer to have such
application granted or to the sufficiency of such certificate or report. The
foregoing shall not, however, be construed to affect the Trustee's right
to rely upon the truth and accuracy of any statement or opinion contained
in any such document as provided in Article VI.
62
SECTION 11.3 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by
agents duly appointed in writing; and except as herein otherwise expressly
provided such action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly required, to
the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1) conclusive in
favor of the Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any customary manner of the Trustee.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of
every Note issued upon the registration thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be done
by the Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 11.4 Notices, etc., to Trustee, Issuer, Note Insurer
and Rating Agencies.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or Act of Noteholders or other documents provided or
permitted by this Indenture to be made upon, given or furnished to or
filed with:
(i) the Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if personally delivered, delivered
by overnight courier or mailed certified mail, return receipt requested
and shall be deemed to have been duly given upon receipt to the Trustee
at its Corporate Trust Office;
(ii) the Issuer by the Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if personally delivered, delivered
by overnight courier or mailed certified mail, return receipt requested and
shall deemed to have been duly given upon receipt to the Issuer addressed
to: CPS Auto Receivables Trust 2006-C, in care of Wilmington Trust Company,
Rodney Square North, 1100 N. Market Street, Wilmington, Delaware 19890-0001,
or at such other address previously furnished in writing to the Trustee by
64
the Issuer. The Issuer shall promptly transmit any notice received by it
from the Noteholders to the Trustee; or
(iii) the Note Insurer by the Issuer or the Trustee shall be
sufficient for any purpose hereunder if in writing and mailed by registered
mail or personally delivered or telexed or telecopied to the recipient as
follows:
To the Note Insurer:
XL Capital Assurance Inc.
1221 Avenue of the Americas
New York, New York 10020-1001
Attention: Surveillance
Telecopy No.: (212) 478-3400
Confirmation: (212) 478-3587
(In each case in which notice or other communication to the Note Insurer
refers to an Event of Default, a claim on the Note Policy or with respect to
which failure on the part of the Note Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of the General Counsel and
the Head Financial Guaranty Group "URGENT MATERIAL ENCLOSED" at the foregoing
address.)
(b) Notices required to be given to the Rating Agencies by the
Issuer, the Trustee or the Owner Trustee shall be in writing, personally
delivered, electronically delivered, delivered by overnight courier or
mailed certified mail, return receipt requested to (i) in the case of Moody's,
at the following address: Moody's Investors Service, Inc., 99 Church Street,
New York New York 10004 and (ii) in the case of S&P, via electronic
delivery to Servicer_reports@sandp.com; for any information not available in
electronic format, send hard copies to: Standard & Poor's Ratings Services,
55 Water Street, 41st Floor, New York, New York 10041-0003, Attention: ABS
Surveillance Group; or as to each of the foregoing, at such other address
as shall be designated by written notice to the other parties.
SECTION 11.5 Notices to Noteholders; Waiver.
(a) Where this Indenture provides for notice to Noteholders of
any event, such notice shall be sufficiently given (unless otherwise
expressly provided herein) if in writing and mailed, first-class, postage
prepaid to each Noteholder affected by such event, at his address as it
appears on the Note Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice.
In any case where notice to Noteholders s given by mail, neither the
failure to mail such notice nor any defect in any notice so mailed to any
particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed
in the manner herein provided shall conclusively be presumed to have
been duly given.
64
(b) Where this Indenture provides for notice in any manner,
such notice may be waived in writing by any Person entitled to receive
such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Noteholders shall
be filed with the Trustee but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such a
waiver.
(c) In case, by reason of the suspension of regular mail
service as a result of a strike, work stoppage or similar activity, it
shall be impractical to mail notice of any event to Noteholders when
such notice is required to be given pursuant to any provision of this
Indenture, then any manner of giving such notice as shall be satisfactory
to the Trustee shall be deemed to be a sufficient giving of such notice.
(d) Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights
or obligations created hereunder, and shall not under any circumstance
constitute a Default or Event of Default.
SECTION 11.6 Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Trustee or any Note
Paying Agent to such Holder, that is different from the methods provided for
in this Indenture for such payments or notices, provided that such methods
are reasonable and consented to by the Trustee (which consent shall not
be unreasonably withheld). The Issuer will furnish to the Trustee a copy of
each such agreement and the Trustee will cause payments to be made and notices
to be given in accordance with such agreements.
SECTION 11.7 Reserved.
SECTION 11.8 Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns. All covenants and agreements
in this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 11.10 Severability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
SECTION 11.11 Benefits of Indenture. The Note Insurer and its
successors and assigns shall be third-party beneficiaries to the provisions of
this Indenture, and shall be entitled to rely upon and directly to enforce
such provisions of this Indenture so long as no Insurer Default shall have
occurred and be continuing. Nothing in this Indenture or in the Notes, express
or implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Noteholders, and any other party secured
hereunder, and any other person with an ownership interest in any part of the
Trust Estate,
65
any benefit or any legal or equitable right, remedy or claim under this
Indenture. The Note Insurer may disclaim any of its rights and powers under
this Indenture (in which case the Trustee may exercise such right or power
hereunder), but not its duties and obligations under the Note Policy, upon
delivery of a written notice to the Trustee.
SECTION 11.12 Legal Holidays. In any case where the date on
which any payment is due shall not be a Business Day, then (notwithstanding
any other provision of the Notes or this Indenture) payment need not be made
on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the date on which nominally due, and no
interest shall accrue for the period from and after any such nominal date.
SECTION 11.13 Governing Law. THIS INDENTURE SHALL BE CONSTRUED
IN ACCORDANCE WITH, AND THIS INDENTURE AND ALL MATTERS ARISING OUT OF OR
RELATING IN ANY WAY TO THIS INDENTURE SHALL BE GOVERNED BY, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
SECTION 11.14 Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15 Recording of Indenture. If this Indenture is subject
to recording in any appropriate public recording offices, such recording
is to be effected by the Issuer and at its expense accompanied by an Opinion
of Counsel (which may be counsel to the Trustee or any other counsel
reasonably acceptable to the Trustee and the Note Insurer) to the effect that
such recording is necessary either for the protection of the Noteholders or
any other person secured hereunder or for the enforcement of any right or
remedy granted to the Trustee under this Indenture or to the Collateral Agent
under the Master Spread Account Agreement.
SECTION 11.16 Trust Obligation. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer, the Seller, the
Servicer, the Depositor, the Owner Trustee or the Trustee on the Notes or under
this Indenture or any certificate or other writing delivered in connection
herewith or therewith, against (i) the Seller, the Servicer, the Depositor,
the Trustee or the Owner Trustee in its individual capacity, (ii) any owner of
a beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director, employee or agent of the Seller, the Servicer,
the Depositor, the Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Seller, the
Servicer, the Depositor, the Owner Trustee or the Trustee or of any successor
or assign of the Seller, the Servicer, the Depositor, the Trustee or the
Owner Trustee in its individual capacity, except as any such Person
may have expressly agreed (it being understood that the Trustee and the Owner
Trustee have no such obligations in their individual capacity) and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity. For all purposes of this Indenture, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Articles VI, VII and
VIII of the Trust Agreement.
66
SECTION 11.17 No Petition. The Trustee, by entering into this
Indenture, and each Noteholder and Note Owner, by accepting a Note or a
beneficial interest therein, hereby covenant and agree that they will not at
any time institute against the Seller, the Depositor, or the Issuer, or join
in any institution against the Seller, the Depositor, or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents.
SECTION 11.18 Inspection. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Trustee or of the Note
Insurer, during the Issuer's normal business hours, to examine all the books
of account, records, reports, and other papers of the Issuer, to make copies
and extracts therefrom, to cause such books to be audited by independent
certified public accountants, and to discuss the Issuer's affairs, finances
and accounts with the Issuer's officers, employees, and independent
certified public accountants, all at such reasonable times and as often as
may be reasonably requested. The Trustee shall and shall cause its
representatives to hold in confidence all such information except to the
extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that
the Trustee may reasonably determine that such disclosure is consistent
with its Obligations hereunder.
SECTION 11.19 Action Upon Direction of Noteholders. Except
where this Indenture specifically states otherwise, the Trustee, provided
it has sent out notices in accordance with this Indenture, may act as
directed by a Note Majority responding in writing to such request for
amendment or written direction, provided however, that a Note Majority
as of the time such voting response is due back to the Trustee must have
responded in writing to the Trustee's notice to amend or for written
direction. In addition, the Trustee shall not have any liability to any
Noteholder or Note Owner with respect to any action taken pursuant to
such notice if the Noteholder or Note Owner does not respond to such
notice within the time period set forth in such notice. By acceptance
of a Note, each Noteholder and Note Owner agree to the foregoing
provisions.
SECTION 11.20 Note Insurer as Controlling Party. Each
Noteholder by purchase of the Notes held by it acknowledges that the
Trustee, as partial consideration of the issuance of the Note Policy, has
agreed that the Note Insurer shall have certain rights hereunder for so
long as no Insurer Default shall have occurred and be continuing. So
long as no Insurer Default has occurred and is continuing, except as
otherwise provided herein, whenever Noteholder action, consent or approval
is required under this Indenture, such action, consent or approval shall be
deemed taken or given on behalf of, and shall be binding upon, all
Noteholders if the Note Insurer agrees to take such action or give such
consent or approval. So long as an Insurer Default has occurred and is
continuing, any provision giving the Note Insurer the right to direct,
appoint or consent to, approve of, or take any action as Controlling
Party under this Indenture shall be inoperative during the period of
such Insurer Default and such right shall instead vest in the Trustee
acting, unless otherwise specified, at the direction of a Note Majority.
The Note Insurer may disclaim any of its rights and powers under this
Indenture (but not its duties and obligations under the Note Policy)
upon delivery of a written notice to the Trustee. The Note Insurer may
give or withhold any consent hereunder in its sole and absolute discretion.
67
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Indenture
to be duly executed by their respective officers, hereunto duly authorized,
all as of the day and year first above written.
CPS AUTO RECEIVABLES TRUST 2006-C,
By: WILMINGTON TRUST COMPANY,
not in its individual capacity, but solely as
Owner Trustee
By: /s/ Dorri E. Wolhar
Name: Dorri E. Wolhar
Title: Financial Services Officer
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By: /s/ Marianna C. Stershic
Name: Marianna C. Stershic
Title: Vice President
68
EXHIBIT A-1
Form of Class A-1 Note
REGISTERED $___________________
No. R-A1 - [__]
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 12619B AA1
[Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested
by an authorized representative of DTC (and any payment is made to Cede & Co.
or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co.,
has an interest herein.]
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES ("BLUE SKY LAWS"), AND THIS NOTE MAY NOT BE OFFERD,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE 1933 ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT,
(C) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE 1933 ACT
(IF AVAILABLE) OR (D) TO THE SELLER OR AN AFFILIATE OF THE SELLER, IN EACH CASE
IN ACCORDANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION. NO
REPRESENTATION IS MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY
RULE 144A FOR RESALES OF THIS NOTE.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CPS AUTO RECEIVABLES TRUST 2006-C
CLASS A-1 5.38568% ASSET-BACKED NOTES
CPS Auto Receivables Trust 2006-C, a statutory trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for
A-1-1
value received, hereby promises to pay to [CEDE & CO.], or registered assigns,
the principal sum of __________________________________________ AND NO/100
DOLLARS payable on each Payment Date in an amount equal to the aggregate
amount, if any, payable from the Note Distribution Account in respect of
principal on the Class A-1 Notes pursuant to Section 3.1 of the Indenture
and Section 5.7 of the Sale and Servicing Agreement; provided, however, that
the entire unpaid principal amount of this Note shall be due and payable on
the Payment Date occurring in October 2007 (the "Class A-1 Final Scheduled
Payment Date"). The Issuer will pay interest on this Note at the rate per
annum shown above on each Payment Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Payment Date (after giving effect to all
payments of principal made on the preceding Payment Date). Interest on
this Note will accrue for each Payment Date from the most recent
Payment Date on which interest has been paid to but excluding such current
Payment Date; provided that for the October 2006 Payment Date interest will
accrue for the number of days from and including the Closing Date to and
including October 15, 2006. Interest will be computed on the basis of a
360-day year and the actual number of days in the period commencing on the
Payment Date in the month preceding the month in which the related Payment
Date occurs and ending on the day prior to the day of the month on which
the related Payment Date occurs. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made
by the Issuer with respect to this Note shall be applied first to interest
due and payable on this Note as provided above and then to the unpaid
principal of this Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Policy") issued by XL Capital Assurance Inc. (the "Note Insurer"),
pursuant to which the Note Insurer has unconditionally guaranteed payments of
the Scheduled Payments (as defined in the Policy), all as more fully set forth
in the Indenture.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.Unless the certificate of authentication hereon has been
executed by the Trustee whose name appears below by manual signature, this
Note shall not be entitled to any benefit under the Indenture referred to on
the reverse hereof, or be valid or obligatory for any purpose.
A-1-2
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer as of the date set forth
below.
CPS AUTO RECEIVABLES TRUST 2006-C
By: WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Owner Trustee
By: ____________________________
Name: __________________________
Title:__________________________
A-1-3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
WELLS FARGO BANK, NATIONAL
ASSOCIATION, not in its individual capacity, but
solely as Trustee
By:_____________________________
Authorized Signatory
Date: ____________, 20__
A-1-4
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-1 5.38568% Asset-Backed Notes (herein called the
"Class A-1 Notes"), all issued under an Indenture dated as of September 1,
2006 (such indenture, as supplemented or amended, is herein called the
"Indenture"), between the Issuer and Wells Fargo Bank, National Association,
as trustee (the "Trustee", which term includes any successor Trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Trustee and the Holders of the
Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture,
as so supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class A-1 Notes will be payable on each Payment Date in
an amount described on the face hereof. "Payment Date" means the fifteenth day
of each month, or, if any such date is not a Business Day, the next succeeding
Business Day, commencing October 16, 2006.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Class A-1 Final Scheduled Payment Date
and the Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture.
In addition, a portion of the unpaid principal balance of this Note shall
be due and payable on the Mandatory Redemption Date, if any, pursuant to
Section 10.1(b) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable (i) on the date
on which an Event of Default shall have occurred and be continuing so long as
an Insurer Default shall not have occurred and be continuing and the Note
Insurer has declared the Notes to be immediately due and payable in the
manner provided in Section 5.2 of the Indenture, or (ii) if an Insurer Default
shall have occurred and be continuing, on the date on which an Event of Default
shall have occurred and be continuing and the Trustee or a Note Majority has
declared the Notes to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments on the Class A-1
Notes shall be made pro rata to the Class A-1 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Holder of this Note (or one or more Predecessor Notes) in the
A-1-5
Note Register as of the close of business on each Record Date or by wire
transfer of immediately available funds to the account designated in writing
to the Trustee by such Person at least five Business Days prior to the related
Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Such checks shall be mailed
to the Person entitled thereto at the address of such Person as it appears on
the Note Register as of the applicable Record Date without requiring that this
Note be submitted for notation of payment. Any reduction in the principal
amount of this Note (or any one or more Predecessor Notes) effected by any
payments made on any Payment Date shall be binding upon all future Holders of
this Note and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof, whether or not noted hereon. If funds
are expected to be available, as provided in the Indenture, for payment in
full of the then remaining unpaid principal amount of this Note on a Payment
Date, then the Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the Holder hereof as of the Record Date preceding
such Payment Date by notice mailed prior to such Payment Date and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Trustee's principal Corporate Trust Office.
The Issuer shall pay interest on overdue installments of interest at
the Class A-1 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed (a) pursuant to
Section 10.1(a) of the Indenture, in whole, but not in part, at the option of
the Servicer, on any Payment Date on or after the date on which the Collateral
Balance is less than or equal to 10% of the Original Collateral Balance; and
(b) pursuant to Section 10.1(b) of the Indenture, in part, on a pro rata basis,
on the Mandatory Redemption Date if any Pre-Funded Amount remains on deposit
in the Pre-Funding Account after giving effect to the purchase of all
Subsequent Receivables during the Funding Period.
The Seller or its designated affiliate has the option to purchase from
the Issuer on the last day of each Collection Period any Defaulted Receivables
the Obligors of which reside in the State of Texas or the Financed Vehicles of
which are located in the State of Texas.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or
agency designated by the Issuer pursuant to the Indenture, (i) duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar
which requirements include membership or participation in Securities Transfer
Agents Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Exchange Act, and (ii) accompanied
by such other documents as the Trustee may require, and thereupon one
or more new Notes of authorized denominations and in the same aggregate
principal amount will be issued to the designated transferee or transferees.
No service charge will be charged for any registration of transfer or
exchange of this Note, but the transferor may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
Notwithstanding anything to the contrary in the Indenture or any other
Basic Document, (i) the transfer of a Note, including the right to receive
principal and any stated interest thereon, may be effected only by surrender
of the old Note (or satisfactory evidence of the destruction, loss or theft
of such Note) to the Note Registrar, and the issuance by the Issuer (through
the Note Registrar) of a new Note to the new Holder, and (ii) each Note must
be registered in the name of the Holder thereof as to both principal and any
stated interest with the Note Registrar.
A-1-6
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note agrees to treat the
Notes as indebtedness of the Issuer for Federal and State income tax
reporting purposes and further covenants and agrees that no recourse may be
taken, directly or indirectly, with respect to the obligations of the Issuer,
the Owner Trustee or the Trustee on the Notes or under the Indenture or any
certificate or other writing delivered in connection therewith, against (i)
the Seller, the Servicer, the Depositor, the Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Issuer, the Seller, the Servicer, the Depositor, the Trustee
or the Owner Trustee in its individual capacity, any holder of a beneficial
interest in the Issuer, the Seller, the Servicer, the Depositor, the Owner
Trustee or the Trustee or of any successor or assign of the Issuer, the
Seller, the Servicer, the Depositor, the Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees by
accepting the benefits of the Indenture that such Noteholder will not at
any time institute against the Depositor or the Issuer or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or
other proceedings, under any United States Federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Basic Documents.
Each Noteholder by its acquisition of any Notes (or a beneficial
interest therein) shall be deemed to have represented and warranted for
the benefit of the Issuer, the Trustee, the Owner Trustee and the Noteholders,
that either (i) it is not acquiring any Notes with the assets of any
"employee benefit plan" as defined in Section 3(3) of ERISA which is subject
to Title I of ERISA or any "plan" as defined in Section 4975 of the Internal
Revenue Code or (ii) the acquisition and holding of the Notes will be
covered by Prohibited Transaction Class Exemption ("PTCE") 84-14,
PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 or a similar U.S. Department
of Labor class exemption or other similar exemption.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and the Note Insurer and any agent of the
Issuer, the Trustee or the Note Insurer may treat the Person in whose
name this Note (as of the day of determination or as of such other date
as may be specified in the Indenture) is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice
to the contrary.
The Indenture permits, subject to certain limitations and
exceptions as therein provided, the amendment thereof and the modification
of the rights and obligations of the Issuer and the rights of the Holders of
the Notes under the Indenture at any time by the Issuer with the consen of
the Note Insurer (unless an Insurer Default has occurred and is continuing)
but without the consent of Noteholders. The Indenture also contains
provisions permitting the Note Insurer and/or the Holders of Notes
representing specified percentages of the Outstanding Amount of each
class of Notes, on behalf of the Holders of all the Notes, to waive
compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences.
A-1-7
Any such consent or waiver by the Holder of this Note (or any one of
more Predecessor Notes) shall be conclusive and binding upon such Holder
and upon all future Holders of this Note and of any Note issued upon
the registration of transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent or waiver is made upon
this Note. The Indenture also permits the Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the
consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to
the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the
Trustee and the Holders of Notes under the Indenture.The Notes are
issuable only in registered form in denominations as provided in the
Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of
law provisions, and the obligations, rights and remedies of the parties
hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of
and interest on this Note at the times, place and rate, and in the
coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Indenture or the Basic Documents, neither
the Owner Trustee in its individual capacity, any owner of a beneficial
interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any
of them for, the payment of principal of or interest on, or performance
of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being
expressly understood that said covenants, obligations and indemnifications
have been made by the Owner Trustee for the sole purposes of binding the
interests of the Owner Trustee in the assets of the Issuer. The Holder of
this Note by the acceptance hereof agrees that except as expressly provided
in the Indenture or the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the
foregoing for any deficiency, loss or claim therefrom; provided, however,
that nothing contained herein shall be taken to prevent recourse to, and
enforcement against, the assets of the Issuer for any and all liabilities,
obligations and undertakings contained in the Indenture or in this Note.
A-1-8
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of
assignee:___________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
_________________________________________________________________
_________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints, attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated: _________________________
1/ Signature Guaranteed:________________________
1/ NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
A-1-9
EXHIBIT A-2
[Form of Class A-2 Note]
REGISTERED $_______________
No. R-A2 - [__]
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 12619B AB9
[Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede &
Co. or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co.,
has an interest herein.]
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES ("BLUE SKY LAWS"), AND THIS NOTE MAY NOT BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE 1933 ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (B) PURSUANTTO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT,
(C) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE 1933 ACT (IF
AVAILABLE) OR (D) TO THE SELLER OR AN AFFILIATE OF THE SELLER, IN EACH CASE IN
ACCORDANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION. NO REPRESENTATION
IS MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144A FOR
RESALES OF THIS NOTE.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CPS AUTO RECEIVABLES TRUST 2006-C
CLASS A-2 5.31% ASSET-BACKED NOTES
CPS Auto Receivables Trust 2006-C, a statutory trust organized and
existing under the laws of the State of Delaware (herein referred to as the
A-2-1
"Issuer"), for value received, hereby promises to pay to [CEDE & CO.], or
registered assigns, the principal sum of ___________________________________
AND NO/100 DOLLARS payable on each Payment Date in an amount equal to the
aggregate amount, if any, payable from the Note Distribution Account in
respect of principal on the Class A-2 Notes pursuant to Section 3.1 of the
Indenture and Section 5.7 of the Sale and Servicing Agreement provided,
however, that the entire unpaid principal amount of this Note shall be due
and payable on the Payment Date occurring in March 15, 2010 (the "Class A-2
Final Scheduled Payment Date"). The Issuer will pay interest on this Note at
the rate per annum shown above on each Payment Date until the principal of this
Note is paid or made available for payment, on the principal amount of this
Note outstanding on the preceding Payment Date (after giving effect to all
payments of principal made on the preceding Payment Date). Interest on this
Note will accrue for each Payment Date from the most recent Payment Date
on which interest has been paid to but excluding such current Payment Date;
provided that for the October 2006 Payment Date interest will accrue for the
number of days from and including the Closing Date to and including October 14,
2006. Interest will be computed on the basis of a 360-day year of twelve
30-day months. Such principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Policy") issued by XL Capital Assurance Inc. (the "Note Insurer"),
pursuant to which the Note Insurer has unconditionally guaranteed payments of
the Scheduled Payments (as defined in the Policy), all as more fully set
forth in the Indenture.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
A-2-2
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer as of the date set forth
below.
CPS AUTO RECEIVABLES TRUST 2006-C
By: WILMINGTON TRUST COMPANY,
not in its individual capacity, but solely as
Owner Trustee
By:
Name:
Title:
A-2-3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
WELLS FARGO BANK, NATIONAL
ASSOCIATION,
not in its individual capacity, but solely as
Trustee
By:
Authorized Signatory
Date: ___________, 20__
A-2-4
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-2 5.31% Asset-Backed Notes (herein called the
"Class A-2 Notes"), all issued under an Indenture dated as of September 1, 2006
(such indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and Wells Fargo Bank, National Association, as trustee
(the "Trustee", which term includes any successor Trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights and obligations thereunder of
the Issuer, the Trustee and the Holders of the Notes. The Notes are subject
to all terms of the Indenture. All terms used in this Note that are defined
in the Indenture, as supplemented or amended, shall have the meanings assigned
to them in or pursuant to the Indenture, as so supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes (collectively, the "Notes") are and will be equally and
ratably secured by the collateral pledged as security therefor as provided
in the Indenture.
Principal of the Class A-2 Notes will be payable on each Payment Date
in an amount described on the face hereof. "Payment Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing October 16, 2006.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class A-2 Final Scheduled
Payment Date and the Redemption Date, if any, pursuant to Section 10.1(a)
of the Indenture. In addition, a portion of the unpaid principal balance of
this Note shall be due and payable on the Mandatory Redemption Date, if any,
pursuant to Section 10.1(b) of the Indenture. Notwithstanding the foregoing,
the entire unpaid principal amount of the Notes shall be due and payable (i)
on the date on which an Event of Default shall have occurred and be continuing
so long as an Insurer Default shall not have occurred and be continuing and the
Note Insurer has declared the Notes to be immediately due and payable in the
manner provided in Section 5.2 of the Indenture, or (ii) if an Insurer Default
shall have occurred and be continuing, on the date on which an Event of Default
shall have occurred and be continuing and the Trustee or a Note Majority has
declared the Notes to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments on the Class A-2 Notes
shall be made pro rata to the Class A-2 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Note (or one or more Predecessor Notes)
in the Note Register as of the close of business on each Record Date or by
wire transfer of immediately available funds to the account designated in
writing to the Trustee by such Person at least five Business Days prior to
A-2-5
the related Record Date, except that with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially,
such nominee to be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee. Such
checks shall be mailed to the Person entitled thereto at the address of such
Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Note be submitted for notation of payment. Any
reduction in the principal amount of this Note (or any one or more Predecessor
Notes) effected by any payments made on any Payment Date shall be binding upon
all future Holders of this Note and of any Note issued upon the registration
of transfer hereof or in exchange hereof or in lieu hereof, whether or not
noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal
amount of this Note on a Payment Date, then the Trustee, in the name
of and on behalf of the Issuer, will notify the Person who was the Holder
hereof as of the Record Date preceding such Payment Date by notice mailed
prior to such Payment Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Trustee's
principal Corporate Trust Office.
The Issuer shall pay interest on overdue installments of interest at the
Class A-2 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed (a) pursuant to
Section 10.1(a) of the Indenture, in whole, but not in part, at the option of
the Servicer, on any Payment Date on or after the date on which the Collateral
Balance is less than or equal to 10% of the Original Collateral Balance; and
(b) pursuant to Section 10.1(b) of the Indenture, in part, on a pro rata basis,
on the Mandatory Redemption Date if any Pre-Funded Amount remains on deposit
in the Pre-Funding Account after giving effect to the purchase of all
Subsequent Receivables during the Funding Period.
The Seller or its designated affiliate has the option to purchase from
the Issuer on the last day of each Collection Period any Defaulted Receivables
the Obligors of which reside in the State of Texas or the Financed Vehicles of
which are located in the State of Texas.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, (i) duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar which requirements
include membership or participation in Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may
be determined by the Note Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Exchange Act, and (ii) accompanied by
such other documents as the Trustee may require, and thereupon one
or more new Notes of authorized denominations and in the same aggregate
principal amount will be issued to the designated transferee or transferees.
No service charge will be charged for any registration of transfer or exchange
of this Note, but the transferor may be required to pay a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any such registration of transfer or exchange. Notwithstanding anything
to the contrary in the Indenture or any other Basic Document, (i) the transfer
of a Note, including the right to receive principal and any stated interest
thereon, may be effected only by surrender of the old Note (or satisfactory
evidence of the destruction, loss or theft of such Note) to the Note
Registrar, and the issuance by the Issuer (through the Note Registrar) of
a new Note to the new Holder, and (ii) each Note must be registered in the
name of the Holder thereof as to both principal and any stated interest
with the Note Registrar.
A-2-6
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note agrees to treat the Notes as
indebtedness of the Issuer for federal and State income tax reporting purposes
and further covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Trustee on the Notes or under the Indenture or any certificate or other
writing delivered in connection therewith, against (i) the Seller, the
Servicer, the Depositor, the Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director or employee of the
Issuer, the Seller, the Servicer, the Depositor, the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in
the Issuer, the Seller, the Servicer, the Depositor, the Owner Trustee or
the Trustee or of any successor or assign of the Issuer, the Seller, the
Servicer, the Depositor, the Trustee or the Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that the Trustee and the Owner Trustee have no such obligations
in their individual capacity) and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note covenants and agrees
by accepting the benefits of the Indenture that such Noteholder will not at
any time institute against the Depositor or the Issuer or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or
other proceedings, under any United States Federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Basic Documents.
Each Noteholder by its acquisition of any Notes (or a beneficial
interest therein) shall be deemed to have represented and warranted for
the benefit of the Issuer, the Trustee, the Owner Trustee and the
Noteholders, that either (i) it is not acquiring any Notes with the assets
of any "employee benefit plan" as defined in Section 3(3) of ERISA which
is subject to Title I of ERISA or any "plan" as defined in Section 4975
of the Internal Revenue Code or (ii) the acquisition and holding of the
Notes will be covered by Prohibited Transaction Class Exemption ("PTCE")
84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 or a similar U.S.
Department of Labor class exemption or other similar exemption.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and the Note Insurer and any agent of the
Issuer, the Trustee or the Note Insurer may treat the Person in whose name
this Note (as of the day of determination or as of such other date as may
be specified in the Indenture) is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Issuer,
the Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture permits, subject to certain limitations and exceptions
as therein provided, the amendment thereof and the modification of the rights
and obligations of the Issuer and the rights of the Holders of the Notes
under the Indenture at any time by the Issuer with the consent of the Note
Insurer (unless an Insurer Default has occurred and is continuing) but
A-2-7
without the consent of Noteholders. The Indenture also contains provisions
permitting the Note Insurer and/or the Holders of Notes representing
specified percentages of the Outstanding Amount of each class of Notes, on
behalf of the Holders of all the Notes, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note (or any one of more Predecessor Notes) shall be
conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent
or waiver is made upon this Note. The Indenture also permits the Trustee to
amend or waive certain terms and conditions set forth in the Indenture
without the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holders
of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this
Note at the times, place, and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither the Owner Trustee
in its individual capacity, any owner of a beneficial interest in the Issuer,
nor any of their respective partners, beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable
for, nor shall recourse be had to any of them for, the payment of principal
of or interest on, or performance of, or omission to perform, any of the
covenants, obligations or indemnifications contained in this Note or the
Indenture, it being expressly understood that said covenants, obligations
and indemnifications have been made by the Owner Trustee for the sole
purposes of binding the interests of the Owner Trustee in the assets of
the Issuer. The Holder of this Note by the acceptance hereof agrees that
except as expressly provided in the Indenture or the Basic Documents,
in the case of an Event of Default under the Indenture, the Holder shall
have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall
be taken to prevent recourse to, and enforcement against, the assets
of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
A-2-8
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of
assignee:___________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
_________________________________________________________________
_________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints, attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated: _________________________
1/ Signature Guaranteed:________________________
1/ NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
A-2-9
EXHIBIT A-3
[Form of Class A-3 Note]
REGISTERED $_______________
No. R-A3-[__]
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 12619B AC7
[Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued
is registered in the name of Cede & Co. or in such other name as is requested
by an authorized representative of DTC (and any payment is made to Cede &
Co. or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co.,
has an interest herein.]
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES ("BLUE SKY LAWS"), AND THIS NOTE MAY NOT BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE 1933 ACT IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (B) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE 1933 ACT, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION
PROVIDED UNDER THE 1933 ACT (IF AVAILABLE) OR (D) TO THE SELLER OR AN
AFFILIATE OF THE SELLER, IN EACH CASE IN ACCORDANCE WITH THE INDENTURE
AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION. NO REPRESENTATION IS MADE AS TO THE
AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144A FOR RESALES OF THIS
NOTE.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CPS AUTO RECEIVABLES TRUST 2006-C
CLASS A-3 5.14% ASSET-BACKED NOTES
CPS Auto Receivables Trust 2006-C, a statutory trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to [CEDE & CO.], or
A-3-1
registered assigns, the principal sum of ___________________________________
AND NO/100 DOLLARS payable on each Payment Date in an amount equal to the
aggregate amount, if any, payable from the Note Distribution Account in
respect of principal on the Class A-3 Notes pursuant to Section 3.1 of the
Indenture and Section 5.7 of the Sale and Servicing Agreement provided,
however, that the entire unpaid principal amount of this Note shall be
due and payable on the Payment Date occurring in January 2011 (the "Class
A-3 Final Scheduled Payment Date"). The Issuer will pay interest on this
Note at the rate per annum shown above on each Payment Date until the
principal of this Note is paid or made available for payment, on the
principal amount of this Note outstanding on the preceding Payment Date
(after giving effect to all payments of principal made on the preceding
Payment Date). Interest on this Note will accrue for each Payment Date
from the most recent Payment Date on which interest has been paid to but
excluding such current Payment Date; provided that for the October 2006
Payment Date interest will accrue for the number of days from and
including the Closing Date to and including October 14, 2006. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts. All
payments made by the Issuer with respect to this Note shall be applied
first to interest due and payable on this Note as provided above and
then to the unpaid principal of this Note.The Notes are entitled to
the benefits of a financial guaranty insurance policy (the "Policy")
issued by XL Capital Assurance Inc. (the "Note Insurer"), pursuant to
which the Note Insurer has unconditionally guaranteed payments of the
Scheduled Payments (as defined in the Policy), all as more fully
set forth in the Indenture.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though
fully set forth on the face of this Note.
Unless the certificate of authentication hereon has been executed
by the Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
A-3-2
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer as of the
date set forth below.
CPS AUTO RECEIVABLES TRUST 2006-C
By: WILMINGTON TRUST COMPANY,
ot in its individual capacity, but solely as
Owner Trustee
By:
Name:
Title:
A-3-3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
WELLS FARGO BANK, NATIONAL
ASSOCIATION,
not in its individual capacity, but solely
as Trustee
By:
Authorized Signatory
Date: ___________, 20__
A-3-4
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-3 5.14% Asset-Backed Notes (herein called the "Class
A-3 Notes"), all issued under an Indenture dated as of September 1, 2006
(such indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and Wells Fargo Bank, National Association, as trustee
(the "Trustee", which term includes any successor Trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Trustee and the Holders of the Notes. The Notes
are subject to all terms of the Indenture. All terms used in this Note that
are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented
or amended.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes (collectively, the "Notes") are and will be equally and
ratably secured by the collateral pledged as security therefor as provided
in the Indenture.
Principal of the Class A-3 Notes will be payable on each Payment Date
in an amount described on the face hereof. "Payment Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing October 16, 2006.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Class A-3 Final Scheduled Payment Date
and the Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture.
In addition, a portion of the unpaid principal balance of this Note shall be
due and payable on the Mandatory Redemption Date, if any, pursuant to Section
10.1(b) of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable (i) on the date on which
an Event of Default shall have occurred and be continuing so long as an Insurer
Default shall not have occurred and be continuing and the Note Insurer has
declared the Notes to be immediately due and payable in the manner provided in
Section 5.2 of the Indenture, or (ii) if an Insurer Default shall have occurred
and be continuing, on the date on which an Event of Default shall have occurred
and be continuing and the Trustee or a Note Majority has declared the Notes to
be immediately due and payable in the manner provided in Section 5.2 of the
Indenture. All principal payments on the Class A-3 Notes shall be made pro rata
to the Class A-3 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Holder of this Note (or one or more Predecessor Notes) in the
Note Register as of the close of business on each Record Date or by wire
transfer of immediately available funds to the account designated in writing
to the Trustee by such Person at least five Business Days prior to the related
Record Date, except that with respect to Notes registered on the Record Date
in the name of
A-3-5
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note
be submitted for notation of payment. Any reduction in the principal amount
of this Note (or any one or more Predecessor Notes) effected by any payments
made on any Payment Date shall be binding upon all future Holders of this Note
and of any Note issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not noted hereon. If funds are expected
to be available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Payment Date, then the
Trustee, in the name of and on behalf of the Issuer, will notify the Person
who was the Holder hereof as of the Record Date preceding such Payment Date
by notice mailed prior to such Payment Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Trustee's principal Corporate Trust Office.
The Issuer shall pay interest on overdue installments of interest at
the Class A-3 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed (a) pursuant
to Section 10.1(a) of the Indenture, in whole, but not in part, at the
option of the Servicer, on any Payment Date on or after the date on which
the Collateral Balance is less than or equal to 10% of the Original Collateral
Balance; and (b) pursuant to Section 10.1(b) of the Indenture, in part, on a
pro rata basis, on the Mandatory Redemption Date if any Pre-Funded Amount
remains on deposit in the Pre-Funding Account after giving effect to the
purchase of all Subsequent Receivables during the Funding Period.
The Seller or its designated affiliate has the option to purchase from
the Issuer on the last day of each Collection Period any Defaulted Receivables
the Obligors of which reside in the State of Texas or the Financed Vehicles
of which are located in the State of Texas.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note
Register upon surrender of this Note for registration of transfer at the
office or agency designated by the Issuer pursuant to the Indenture, (i)
duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Trustee duly executed by, the Holder hereof or
his attorney duly authorized in writing, with such signature guaranteed by
an "eligible guarantor institution" meeting the requirements of the Note
Registrar which requirements include membership or participation in
Securities Transfer Agents Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as the Trustee
may require, and thereupon one or more new Notes of authorized denominations
and in the same aggregate principal amount will be issued to the designated
transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor
may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
registration of transfer or exchange. Notwithstanding anything to the
contrary in the Indenture or any other Basic Document, (i) the transfer
of a Note, including the right to receive principal and any stated interest
thereon, may be effected only by surrender of the old Note (or satisfactory
evidence of the destruction, loss or theft of such Note) to the Note
Registrar, and the issuance by the Issuer (through the Note Registrar)
of a new Note to the new Holder, and (ii) each Note must be registered
in the name of the Holder thereof as to both principal and any stated
interest with the Note Registrar.
A-3-6
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note agrees to treat the
Notes as indebtedness of the Issuer for federal and State income tax
reporting purposes and further covenants and agrees that no recourse may
be taken, directly or indirectly, with respect to the obligations of the
Issuer, the Owner Trustee or the Trustee on the Notes or under the Indenture
or any certificate or other writing delivered in connection therewith,
against (i) the Seller, the Servicer, the Depositor, the Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Issuer, the Seller, the Servicer,
the Depositor, the Trustee or the Owner Trustee in its individual capacity,
any holder of a beneficial interest in the Issuer, the Seller, the Servicer,
the Depositor, the Owner Trustee or the Trustee or of any successor or
assign of the Issuer, the Seller, the Servicer, the Depositor, the
Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay
any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note covenants and agrees
by accepting the benefits of the Indenture that such Noteholder will not
at any time institute against the Depositor or the Issuer or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or
other proceedings, under any United States Federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Basic Documents.
Each Noteholder by its acquisition of any Notes (or a beneficial
interest therein) shall be deemed to have represented and warranted for
the benefit of the Issuer, the Trustee, the Owner Trustee and the
Noteholders, that either (i) it is not acquiring any Notes with the
assets of any "employee benefit plan" as defined in Section 3(3) of
ERISA which is subject to Title I of ERISA or any "plan" as defined in
Section 4975 of the Internal Revenue Code or (ii) the acquisition and
holding of the Notes will be covered by Prohibited Transaction Class
Exemption ("PTCE") 84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE
96-23 or a similar U.S. Department of Labor class exemption or other
similar exemption.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and the Note Insurer and any agent of
the Issuer, the Trustee or the Note Insurer may treat the Person in
whose name this Note (as of the day of determination or as of such
other date as may be specified in the Indenture) is registered as
the owner hereof for all purposes, whether or not this Note be overdue,
and neither the Issuer, the Trustee nor any such agent shall be affected
by notice to the contrary.
The Indenture permits, subject to certain limitations and
exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Issuer and the rights
of the Holders of the Notes under the Indenture at any time by the Issuer
with the consent of the Note Insurer (unless an Insurer Default has
occurred and is continuing) but without the consent of Noteholders. The
Indenture also contains provisions permitting the Note Insurer and/or
the Holders of Notes representing specified percentages of the Outstanding
Amount of each class of
A-3-7
Notes, on behalf of the Holders of all the Notes, to waive compliance by
the Issuer with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent
or waiver by the Holder of this Note (or any one of more Predecessor Notes)
shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent or waiver is made upon this Note. The Indenture
also permits the Trustee to amend or waive certain terms and conditions
set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the
Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this
Note at the times, place, and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither the Owner Trustee
in its individual capacity, any owner of a beneficial interest in the
Issuer, nor any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on, or performance of, or omission to perform,
any of the covenants, obligations or indemnifications contained in this Note
or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Owner Trustee for
the sole purposes of binding the interests of the Owner Trustee in the
assets of the Issuer. The Holder of this Note by the acceptance hereof
agrees that except as expressly provided in the Indenture or the Basic
Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency,
loss or claim therefrom; provided, however, that nothing contained herein
shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
A-3-8
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of
assignee:___________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
_________________________________________________________________
_________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints,attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated: _________________________
1/ Signature Guaranteed:________________________
1/ NOTE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Note
in every particular, without alteration, enlargement or any change whatsoever.
A-3-9
EXHIBIT A-4
[Form of Class A-4 Note]
REGISTERED $_______________
No. R-A4-[__]
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 12619B AD5
[Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or
its agent for registration of transfer,exchange or payment, and any Note
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES ("BLUE SKY LAWS"), AND THIS NOTE
MAY NOT BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE 1933 ACT IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, (C) PURSUANT TO AN EXEMPTION
FROM REGISTRATION PROVIDED UNDER THE 1933 ACT (IF AVAILABLE) OR (D) TO THE
SELLER OR AN AFFILIATE OF THE SELLER, IN EACH CASE IN ACCORDANCE WITH THE
INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION. NO REPRESENTATION IS MADE
AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144A FOR RESALES
OF THIS NOTE.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CPS AUTO RECEIVABLES TRUST 2006-C
CLASS A-4 5.14% ASSET-BACKED NOTES
CPS Auto Receivables Trust 2006-C, a statutory trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to [CEDE & CO.], or
A-4-1
registered assigns, the principal sum of __________________________________
AND NO/100 DOLLARS payable on each Payment Date in an amount equal to the
aggregate amount, if any, payable from the Note Distribution Account in
respect of principal on the Class A-4 Notes pursuant to Section 3.1 of the
Indenture and Section 5.7 of the Sale and Servicing Agreement provided,
however, that the entire unpaid principal amount of this Note shall be due
and payable on the Payment Date occurring in June 2013 (the "Class A-4
Final Scheduled Payment Date"). The Issuer will pay interest on this Note
at the rate per annum shown above on each Payment Date until the principal
of this Note is paid or made available for payment, on the principal amount
of this Note outstanding on the preceding Payment Date (after giving effect
to all payments of principal made on the preceding Payment Date). Interest
on this Note will accrue for each Payment Date from the most recent Payment
Date on which interest has been paid to but excluding such current Payment
Date; provided that for the October 2006 Payment Date interest will accrue
for the number of days from and including the Closing Date to and including
October 14, 2006. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by
the Issuer with respect to this Note shall be applied first to interest due
and payable on this Note as provided above and then to the unpaid principal
of this Note.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Policy") issued by XL Capital Assurance Inc.
(the "Note Insurer"), pursuant to which the Note Insurer has unconditionally
guaranteed payments of the Scheduled Payments (as defined in the Policy),
all as more fully set forth in the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof,which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
A-4-2
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer as of the date set forth
below.
CPS AUTO RECEIVABLES TRUST 2006-C
By: WILMINGTON TRUST COMPANY,
not in its individual capacity, but solely as
Owner Trustee
By:
Name:
Title:
A-4-3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
WELLS FARGO BANK, NATIONAL
ASSOCIATION,
not in its individual capacity, but solely as Trustee
By:______________________
Authorized Signatory
Date: ___________, 20__
A-4-4
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-4 5.14% Asset-Backed Notes (herein called the
"Class A-4 Notes"), all issued under an Indenture dated as of September 1,
2006 (such indenture, as supplemented or amended, is herein called the
"Indenture"), between the Issuer and Wells Fargo Bank, National Association,
as trustee (the "Trustee", which term includes any successor Trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms
used in this Note that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in or pursuant to the
Indenture, as so supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes (collectively, the "Notes") are and will be equally and
ratably secured by the collateral pledged as security therefor as provided
in the Indenture.
Principal of the Class A-4 Notes will be payable on each Payment Date
in an amount described on the face hereof. "Payment Date" means the
fifteenth day of each month, or, if any such date is not a Business Day,
the next succeeding Business Day, commencing October 16, 2006.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class A-4 Final Scheduled
Payment Date and the Redemption Date, if any, pursuant to Section 10.1(a)
of the Indenture. In addition, a portion of the unpaid principal balance
of this Note shall be due and payable on the Mandatory Redemption Date,
if any, pursuant to Section 10.1(b) of the Indenture. Notwithstanding
the foregoing, the entire unpaid principal amount of the Notes shall be
due and payable (i) on the date on which an Event of Default shall have
occurred and be continuing so long as an Insurer Default shall not have
occurred and be continuing and the Note Insurer has declared the Notes
to be immediately due and payable in the manner provided in Section 5.2
of the Indenture, or (ii) if an Insurer Default shall have occurred and be
continuing, on the date on which an Event of Default shall have occurred
and be continuing and the Trustee or a Note Majority has declared the Notes
to be immediately due and payable inthe manner provided in Section 5.2 of
the Indenture. All principal payments on the Class A-4 Notes shall be made
pro rata to the Class A-4 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent
not in full payment of this Note, shall be made by check mailed to the
Person whose name appears as the Holder of this Note (or one or more
Predecessor Notes) in the Note Register as of the close of business on
each Record Date or by wire transfer of immediately available funds to
the account designated in writing to the Trustee by such Person at
least five Business Days prior to the related Record Date, except that
with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks
shall be mailed to the Person entitled thereto at the address of such
Person as it
A-4-5
appears on the Note Register as of the applicable Record Date without
requiring that this Note be submitted for notation of payment. Any reduction
in the principal amount of this Note (or any one or more Predecessor Notes)
effected by any payments made on any Payment Date shall be binding upon
all future Holders of this Note and of any Note issued upon the registration
of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided
in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Trustee, in the
name of and on behalf of the Issuer, will notify the Person who was the
Holder hereof as of the Record Date preceding such Payment Date by notice
mailed prior to such Payment Date and the amount then due and payable shall
be payable only upon presentation and surrender of this Note at the Trustee's
principal Corporate Trust Office.
The Issuer shall pay interest on overdue installments of interest at the
Class A-4 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed (a) pursuant to
Section 10.1(a) of the Indenture, in whole, but not in part, at the option of
the Servicer, on any Payment Date on or after the date on which the Collateral
Balance is less than or equal to 10% of the Original Collateral Balance; and
(b) pursuant to Section 10.1(b) of the Indenture, in part, on a pro rata basis,
on the Mandatory Redemption Date if any Pre-Funded Amount remains on deposit
in the Pre-Funding Account after giving effect to the purchase of all
Subsequent Receivables during the Funding Period.
The Seller or its designated affiliate has the option to purchase from
the Issuer on the last day of each Collection Period any Defaulted Receivables
the Obligors of which reside in the State of Texas or the Financed Vehicles
of which are located in the State of Texas.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note
Register upon surrender of this Note for registration of transfer at the
office or agency designated by the Issuer pursuant to the Indenture, (i)
duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Trustee duly executed by, the Holder hereof or his
attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution meeting the requirements of the Note Registrar
which requirements include membership or participation in Securities Transfer
Agents Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Exchange Act, and (ii) accompanied by
such other documents as the Trustee may require, and thereupon one or more
new Notes of authorized denominations and in the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or exchange of this
Note, but the transferor may be required to pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection
with any such registration of transfer or exchange. Notwithstanding anything
to the contrary in the Indenture or any other Basic Document, (i) the transfer
of a Note, including the right to receive principal and any stated interest
thereon, may be effected only by surrender of the old Note (or satisfactory
evidence of the destruction, loss or theft of such Note) to the Note Registrar,
and the issuance by the Issuer (through the Note Registrar) of a new Note to
the new Holder, and (ii) each Note must be registered in the name of the
Holder thereof as to both principaland any stated interest with the Note
Registrar.
A-4-6
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note agrees to treat the
Notes as indebtedness of the Issuer for federal and State income tax
reporting purposes and further covenants and agrees that no recourse may be
taken, directly or indirectly, with respect to the obligations of the Issuer,
the Owner Trustee or the Trustee on the Notes or under the Indenture or any
certificate or other writing delivered in connection therewith, against (i)
the Seller, the Servicer, the Depositor, the Trustee or the Owner Trustee
in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Issuer, the Seller, the Servicer, the Depositor, the Trustee
or the Owner Trustee in its individual capacity, any holder of a beneficial
interest in the Issuer, the Seller, the Servicer, the Depositor, the Owner
Trustee or the Trustee or of any successor or assign of the Issuer, the
Seller, the Servicer, the Depositor, the Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed
(it being understood that the Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note covenants and agrees by accepting
the benefits of the Indenture that such Noteholder will not at any time
institute against the Depositor or the Issuer or join in any institution
against the Depositor or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings,
under any United States Federal or State bankruptcy or similar law in
connection with any obligations relating to the Notes, the Indenture or
the Basic Documents.
Each Noteholder by its acquisition of any Notes (or a beneficial
interest therein) shall be deemed to have represented and warranted for
the benefit of the Issuer, the Trustee, the Owner Trustee and the Noteholders,
that either (i) it is not acquiring any Notes with the assets of any
"employee benefit plan" as defined in Section 3(3) of ERISA which is subject
to Title I of ERISA or any "plan" as defined in Section 4975 of the Internal
Revenue Code or (ii) the acquisition and holding of the Notes will be covered
by Prohibited Transaction Class Exemption ("PTCE") 84-14, PTCE 90-1, PTCE
91-38, PTCE 95-60, PTCE 96-23 or a similar U.S. Department of Labor class
exemption or other similar exemption.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Note Insurer and any agent of the Issuer,
the Trustee or the Note Insurer may treat the Person in whose name this Note
(as of the day of determination or as of such other date as may be specified
in the Indenture) is registered as the owner hereof for all purposes, whether
or not this Note be overdue, and neither the Issuer, the Trustee nor any
such agent shall be affected by notice to the contrary.
The Indenture permits, subject to certain limitations and exceptions
as therein provided, the amendment thereof and the modification of the
rights and obligations of the Issuer and the rights of the Holders of the
Notes under the Indenture at any time by the Issuer with the consent of the
Note Insurer (unless an Insurer Default has occurred and is continuing)
but without the consent of Noteholders. The Indenture also contains
provisions permitting the Note Insurer and/or the Holders of Notes
representing specified percentages of the Outstanding Amount of each class of
A-4-7
Notes, on behalf of the Holders of all the Notes, to waive compliance
by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent
or waiver by the Holder of this Note (or any one of more Predecessor Notes)
shall be conclusive and binding upon such Holder and upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof
or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note. The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holders
of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither the Owner Trustee
in its individual capacity, any owner of a beneficial interest in the Issuer,
nor any of their respective partners, beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture, it
being expressly understood that said covenants, obligations and
indemnifications have been made by the Owner Trustee for the sole purposes of
binding the interests of the Owner Trustee in the assets of the Issuer. The
Holder of this Note by the acceptance hereof agrees that except as expressly
provided in the Indenture or the Basic Documents, in the case of an Event of
Default under the Indenture, the Holder shall have no claim against any of the
foregoing for any deficiency, loss or claim therefrom; provided, however,
that nothing contained herein shall be taken to prevent recourse to, and
enforcement against, the assets of the Issuer for any and all liabilities,
obligations and undertakings contained in the Indenture or in this Note.
A-4-8
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of
assignee:___________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
_________________________________________________________________
_________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated: _________________________
1/ Signature Guaranteed:________________________
1/ NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
A-4-9
EXHIBIT B
Form of Transferee Representation Letter
_____________, 20___
Wells Fargo Bank, National Association, as Note Registrar
MAC N9311-161, Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust Services/Asset Backed Administration, CPS 2006-C
Re: CPS Auto Receivables Trust 2006-C
[Class A-1][Class A-2][Class A-3][Class A-4] Note (the "Notes")
Dear Sirs:
This letter is delivered to you in connection with the transfer by
________________ (the "Transferor") to ____________________________ (the
"Transferee") of the captioned Notes (the "Notes"), pursuant to Section 2.13(a)
of the Indenture (the "Indenture"), dated as of September 1, 2006, between
CPS Auto Receivables Trust 2006-C, as Issuer, and Wells Fargo Bank, National
Association, as Trustee. All terms used herein and not otherwise defined shall
have the respective meanings set forth in the Indenture. The Transferee hereby
certifies, represents and warrants to you, as Note Registrar, that:
1. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") under the Securities Act of 1933
(the "Securities Act") and has completed one of the forms of certification
to that effect attached hereto as Annex 1 and Annex 2. The Transferee
is aware that the sale to it is being made in reliance on Rule 144A. The
Transferee is acquiring the Notes for its own account or for the account
of a qualified institutional buyer. The Transferee understands that the
Notes have not been and will not be registered under the Securities Act or any
State securities laws, that neither the Transferor nor the Note Registrar
is required to so register the Notes, and that the Notes may be resold,
pledged or transferred only (x) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for
the account of a qualified institutional buyer to whom notice is given that
the resale, pledge or transfer is being made in reliance on Rule 144A or
(y) pursuant to another exemption from registration under the Securities Act.
2. The Transferee is not a pension, profit-sharing or other
employee benefit plan within the meaning of Section 3(3) of ERISA or an
individual retirement account, a Keogh plan or any other plan within the
meaning of Section 4975 of the Internal Revenue Code of 1986, as amended
(each, a "Benefit Plan") and is not acquiring any Notes with the assets
of a Benefit Plan or its acquisition and continued holding of such Note
will be covered by Prohibited Transaction Class Exemption ("PTCE") 84-14,
PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 or a similar U.S.
Department of Labor class exemption or other similar exemption.
B-1
3. The Transferee has received a copy of the Confidential Private
Placement Memorandum dated September 22, 2006, relating to the Notes and has
been furnished with all information that it has requested regarding (a) the
Notes and payments thereon, (b) the Trust Estate, and (c) the Indenture. The
Transferee understands that substantial risks are involved in an investment
in the Notes and the Transferee represents that in making its investment
decision to acquire the Notes, it has not relied on representations,
warranties, opinions, projections, financial or other information or analysis,
if any, supplied to it by any person, including UBS Securities LLC or
Bear, Stearns & Co. Inc., as Placement Agents, except as expressly set forth
in the Confidential Private Placement Memorandum. The Transferee has had an
opportunity, within a reasonable period of time prior to purchasing the Notes,
to ask questions concerning the Notes and the Trust Estate and has received
satisfactory answers to such questions.
4. The Transferee will comply with all applicable federal and State
securities laws, rules and regulations in connection with any subsequent
resale of the Notes by the Transferee.
5. The Transferee understands that the Notes may not be presented or
surrendered to the Note Registrar or any Transfer Agent for registration of
transfer or for exchange unless they are accompanied by (i) a written
instrument of transfer in form satisfactory to the Note Registrar, duly
executed by the holder thereof or his attorney duly authorized in writing,
with guaranty of signature and (ii) either (A) a Transferee Letter from the
person transferring such Note in the form of Exhibit B to the Indenture, or
(B) an opinion of counsel satisfactory to the Note Registrar to the effect
that such transfer is exempt from registration under the Securities Act
and applicable State securities laws.
6. The Transferee understands that the Notes will bear a legend to the
following effect:
"THIS NOTE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES ("BLUE SKY LAWS"),
AND THIS NOTE MAY NOT BE OFFERED, RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING
OF RULE 144A UNDER THE 1933 ACT IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (B)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT, (C) PURSUANT TO AN EXEMPTION
FROM REGISTRATION PROVIDED UNDER THE 1933 ACT (IF
AVAILABLE) OR (D) TO THE SELLER OR AN AFFILIATE OF
THE SELLER, IN EACH CASE IN ACCORDANCE WITH THE
INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION. NO REPRESENTATION IS
B-2
MADE AS TO THE AVAILABILITY OF THE EXEMPTION
PROVIDED BY RULE 144A FOR RESALES OF THIS NOTE."
Very truly yours,
_________________
(Transferee)
By:______________
Name:_____________
Title:____________
B-3
ANNEX I TO EXHIBIT B
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and Wells Fargo Bank, National Association, as Trustee,
with respect to the Notes (the "Notes") described in the Transferee
Certificate to which this certification relates and to which this
certification is an Annex:
(i) As indicated below, the undersigned is the chief financial
officer, a person fulfilling an equivalent function, or other executive
officer of the entity purchasing the Notes (the "Transferee").
(ii) The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A under the Securities Act of 1933 ("Rule 144A")
because (i) the Transferee owned and/or invested on a discretionary basis
$_________________(*1) in securities (other than the excluded securities
referred to below) as of the end of the Transferee's most recent fiscal
year (such amount being calculated in accordance with Rule 144A) and (ii)
the Transferee satisfies the criteria in the category marked below.
___ Corporation, etc. The Transferee is a corporation (other than a
bank,savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986.
___ Bank. The Transferee (a) is a national bank or a banking
institution organized under the laws of any State, U.S. territory '
or the District pf Columbia, the business of which is substantially
confined to banking and is supervised by the State or territorial
banking commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto, as of a date not
more than 16 months preceding the date of sale of the Notes in the
case of a U.S. bank, and not more than 18 months preceding such
date of sale for a foreign bank or equivalent institution.
___ Savings and Loan. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised
and examined by a State or Federal authority having supervision over
any such institutions or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth of at
least $25,000,000 as demonstrated in
(*1) Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
B-4
its latest annual financial statements, a copy of which is attached
hereto, as of a date not more than 16 months preceding the date of
sale of the Notes in the case of a U.S. savings and loan association,
and not more than 18 months preceding such date of sale for a foreign
savings and loan association or equivalent institution.
___ Broker-dealer. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Transferee is an insurance company whose
primary and predominant business activity is the writing of insurance
or the einsuring of risks underwritten by insurance companies and
which is subject to supervision by the insurance commissioner or a
similar official or agency of a State, U.S. territory or the District
of Columbia.
___ State or Local Plan. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Transferee is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act
of 1974.
___ Investment Advisor. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.
___ Other. (Please supply a brief description of the entity and a
cross-reference to the paragraph and subparagraph under subsection
(a)(1) of Rule 144A pursuant to which it qualifies. Note that
registered investment companies should complete Annex 2 rather than
this Annex 1.)
(iii) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee, (ii)
securities that are part of an unsold allotment to or subscription by the
Transferee, if the Transferee is a dealer, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii)
currency, interest rate and commodity swaps. For purposes of determining
the aggregate amount of securities owned and/or invested on a discretionary
basis by the Transferee, the Transferee did not include any of the securities
referred to in this paragraph.
(iv) For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Transferee,
the Transferee used the cost of such securities to the Transferee, unless the
Transferee reports its securities holdings in its financial statements on the
basis of their market value, and no current information with respect to the
cost of those securities has been published, in which case the securities
were valued at market. Further, in determining such aggregate amount, the
Transferee may have included securities owned by subsidiaries of the
B-5
Transferee, but only if such subsidiaries are consolidated with the
Transferee in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Transferee's direction. However,
such securities were not included if the Transferee is a majority-owned,
consolidated subsidiary of another enterprise and the Transferee is
not itself a reporting company under the Securities Exchange Act of 1934.
(v) The Transferee acknowledges that it is familiar with Rule
144A and understands that the Transferor and other parties related to the
Notes are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Notes
Yes No only for the Transferee's own account?
(vi) If the answer to the foregoing question is "no", then in
each case where the Transferee is purchasing for an account other than its
own, such account belongs to a third party that is itself a "qualified
institutional buyer" within the meaning of Rule 144A, and the "qualified
institutional buyer" status of such third party has been established by
the Transferee through one or more of the appropriate methods contemplated
by Rule 144A.
(vii) The Transferee will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the Notes
will constitute a reaffirmation of this certification as of the date of such
purchase. In addition, if the Transferee is a bank or savings and loan as
provided above, the Transferee agrees that it will furnish to such parties
any updated annual financial statements that become available on or before
the date of such purchase, promptly after they become available.
Print Name of Transferee:_________________
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Date:_____________________________________
B-6
ANNEX 2 TO EXHIBIT B
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and Wells Fargo Bank, National Association, as Trustee,
with respect to the Notes (the "Notes") described in the Transferee
Certificate to which this certification relates and to which this
certification is an Annex:
1. As indicated below, the undersigned is the chief
financial officer, a person fulfilling an equivalent function, or other
executive officer of the entity purchasing the Notes (the "Transferee") or,
if the Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act of 1933 ("Rule 144A") because
the Transferee is part of a Family of Investment Companies (as defined
below), is an executive officer of the investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer"
as defined in Rule 144A because (i) the Transferee is an investment company
registered under the Investment Company Act of 1940, and (ii) as marked
below, the Transferee alone owned and/or invested on a discretionary basis,
or the Transferee's Family of Investment Companies owned, at least
$100,000,000 in securities (other than the excluded securities referred to
below) as of the end of the Transferee's most recent fiscal year. For
purposes of determining the amount of securities owned by the Transferee
or the Transferee's Family of Investment Companies, the cost of such
securities was used, unless the Transferee or any member of the Transferee's
Family of Investment Companies, as the case may be, reports its securities
holdings in its financial statements on the basis of their market value,
and no current information with respect to the cost of those securities
has been published, in which case the securities of such entity were
valued at market.
___ The Transferee owned and/or invested on a discretionary basis
$________________ in securities (other than the excluded securities
referred to below) as of the end of the Transferee's most recent
fiscal year (such amount being calculated in accordance with Rule
144A).
___ The Transferee is part of a Family of Investment Companies which
owned in the aggregate $________________ in securities (other
than the excluded securities referred to below) as of the end of
the Transferee's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used
herein means two or more registered investment companies (or series thereof)
that have the same investment adviser or investment advisers that are
affiliated (by virtue of being majority owned subsidiaries of the same parent
or because one investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the Transferee or are part
B-7
of the Transferee's Family of Investment Companies, (ii) bank deposit notes
and certificates of deposit, (iii) loan participations, (iv) repurchase
agreements, (v) securities owned but subject to a repurchase agreement and
(vi) currency, interest rate and commodity swaps. For purposes of determining
the aggregate amount of securities owned and/or invested on a discretionary
basis by the Transferee, or owned by the Transferee's Family of Investment
Companies, the securities referred to in this paragraph were excluded.
5. The Transferee is familiar with Rule 144A and
understands that the parties to which this certification is being made are
relying and will continue to rely on the statements made herein because
one or more sales to the Transferee will be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Notes
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no",
then in each case where the Transferee is purchasing for an account other
than its own, such account belongs to a third party that is itself a
"qualified institutional buyer" within the meaning of Rule 144A, and the
"qualified institutional buyer" status of such third party has been
established by the Transferee through one or more of the appropriate methods
contemplated by Rule 144A.
7. The undersigned will notify the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice, the Transferee's purchase of the Notes will
constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.
Print Name of Transferee or Adviser:
By:_________________________________
Name:_______________________________
Title:______________________________
IF AN ADVISER:______________________
Print Name of Transferee:___________
B-8