<PAGE>
EXHIBIT 4.27
INDENTURE
DATED AS OF MARCH 1, 2008
BETWEEN
CPS AUTO RECEIVABLES TRUST 2008-A, AS ISSUER
AND
WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE
<PAGE>
<TABLE>
<S> <C>
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....................................................16
SECTION 2.10
Book-Entry
Notes.........................................................16
SECTION 2.11
Notices to
Clearing
Agency...............................................17
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...................................20
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.......................25
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.....................................................28
SECTION 3.17
Compliance with
Laws.....................................................28
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
SECTION 3.22
Income Tax
Characterization..............................................29
-i-
<PAGE>
SECTION 3.23
Separate
Existence of the
Issuer.........................................29
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...............................................31
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.............................................33
SECTION 5.3
Collection
of Indebtedness and Suits for Enforcement by
Trustee..........34
SECTION 5.4
Remedies.................................................................37
SECTION 5.5
Optional
Preservation of the
Receivables.................................37
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...........................................40
SECTION 5.12
Control by
Noteholders...................................................40
SECTION 5.13
Waiver of Past
Defaults..................................................41
SECTION 5.14
Undertaking for
Costs....................................................41
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........................................................44
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............................................46
SECTION 6.7
Compensation and
Indemnity...............................................46
SECTION 6.8
Replacement of
Trustee...................................................47
SECTION 6.9
Successor
Trustee by
Merger..............................................48
SECTION 6.10
Appointment of
Co-Trustee or Separate Trustee............................48
SECTION 6.11
Eligibility:
Disqualification............................................49
SECTION 6.12
Reserved.................................................................49
SECTION 6.13
Appointment and
Powers...................................................50
SECTION 6.14
Performance of
Duties....................................................50
SECTION 6.15
Limitation on
Liability..................................................50
SECTION 6.16
Reserved.................................................................51
SECTION 6.17
Successor
Trustee........................................................51
SECTION 6.18
Reserved.................................................................52
-ii-
<PAGE>
SECTION 6.19
Representations
and Warranties of the Trustee...........................52
SECTION 6.20
Waiver of
Setoffs.......................................................52
SECTION 6.21
Control by the
Controlling Party........................................52
ARTICLE VII - Noteholders' Lists and
Reports..............................................52
SECTION 7.1
Issuer To
Furnish To Trustee Names and Addresses of
Noteholders.........52
SECTION 7.2
Preservation of Information; Communications to
Noteholders..............53
ARTICLE VIII - Collection of Money and Releases of Trust
Estate...........................53
SECTION 8.1
Collection
of Money.....................................................53
SECTION 8.2
Release of
Trust Estate.................................................53
SECTION 8.3
Opinion of
Counsel......................................................54
ARTICLE IX - Supplemental
Indentures......................................................54
SECTION 9.1
Supplemental Indentures Without Consent of
Noteholders..................54
SECTION 9.2
Supplemental Indentures with Consent of
Noteholders.....................55
SECTION 9.3
Execution
of Supplemental
Indentures....................................57
SECTION 9.4
Effect of
Supplemental
Indenture........................................57
SECTION 9.5
Reserved................................................................57
SECTION 9.6
Reference
in Notes to Supplemental
Indentures...........................57
ARTICLE X - Redemption of
Notes...........................................................57
SECTION 10.1
Redemption..............................................................57
SECTION 10.2
Form of
Redemption
Notice...............................................58
SECTION 10.3
Notes Payable on
Redemption Date........................................58
ARTICLE XI -
Miscellaneous................................................................59
SECTION 11.1
Compliance
Certificates and Opinions, etc...............................59
SECTION 11.2
Form of
Documents Delivered to
Trustee..................................60
SECTION 11.3
Acts of
Noteholders.....................................................61
SECTION 11.4
Notices, etc.,
to Trustee, Issuer and Rating Agencies...................62
SECTION 11.5
Notices to
Noteholders; Waiver..........................................63
SECTION 11.6
Alternate
Payment and Notice
Provisions.................................63
SECTION 11.7
Reserved................................................................63
SECTION 11.8
Effect of
Headings and Table of
Contents................................64
SECTION 11.9
Successors and
Assigns..................................................64
SECTION 11.10
Severability............................................................64
SECTION 11.11
Benefits of
Indenture...................................................64
SECTION 11.12
Legal
Holidays..........................................................64
SECTION 11.13
Governing
Law...........................................................64
SECTION 11.14
Counterparts............................................................64
SECTION 11.15
Recording of
Indenture..................................................64
SECTION 11.16
Trust
Obligation........................................................65
SECTION 11.17
No
Petition.............................................................65
SECTION 11.18
Inspection..............................................................65
SECTION 11.19
Action Upon Direction
of Noteholders....................................65
</TABLE>
-iii-
<PAGE>
INDENTURE dated as of March 1, 2008, between CPS AUTO RECEIVABLES
TRUST
2008-A, 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 3.4695%
Asset-Backed Notes (the "Class A-1 Notes"), Class A-2 4.95%
Asset-Backed Notes
(the "Class A-2 Notes"), Class A-3 6.48% Asset-Backed Notes (the
"Class A-3
Notes") and Class A-4 7.13% Asset-Backed Notes (the "Class A-4
Notes" and,
together with the Class A-1 Notes, the Class A-2 Notes and the
Class 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.
Financial Security 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 April 10, 2008 (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., CPS
Receivables Funding Trust and CPS Receivables LLC (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
Issuer Secured
Obligations (as defined below) the Issuer has agreed to assign 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 Receivables listed in Schedule A to the Sale and
Servicing Agreement and all monies received thereunder (other than
the
Additional Servicing Compensation) after the Cutoff Date and all
Net
Liquidation Proceeds and Recoveries received with respect to
such
Receivables after the Cutoff Date;
(ii) 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;
-1-
<PAGE>
(iii) 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;
(iv) all proceeds from recourse against Dealers or Consumer
Lenders with respect to the Receivables;
(v) all of the Seller's right, title and interest in its
rights and benefits, but none of its obligations or burdens, under
the
Purchase Agreement, including a direct right to cause CPS to
purchase
Receivables from the Issuer and to indemnify the Issuer pursuant to
the
Purchase Agreement under the circumstances specified therein;
(vi) the Issuer's rights and benefits, but none of its
obligations or burdens, under the Sale and Servicing Agreement
(including all rights of the Seller under the Purchase
Agreement);
(vii) 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 or Consumer Lenders for any of the
foregoing;
(viii) the Receivable File related to each Receivable;
(ix) all amounts and property from time to time held in or
credited to the Collection Account, the Note Distribution Account
and
the Lockbox Account;
(x) 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
(xi) 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, accounts receivable,
notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
insurance
proceeds, condemnation awards, rights to payment of any and every
kind
and other forms of obligations and receivables, instruments and
other
property which at any time constitute all or part of or are
included in
the proceeds of any of the foregoing (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 Issuer Secured Parties, as their interests may appear, to
secure the payment
and performance 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
-2-
<PAGE>
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 is identified on the list of Authorized Officers delivered
by each of
the 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, the Master
Spread Account
Agreement, the Spread Account Supplement, the Insurance Agreement,
the
Indemnification Agreement, the Lockbox Agreement, the Servicing
Assumption
Agreement, the Purchase Agreement, 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
-3-
<PAGE>
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 3.4695% per annum.
"Class A-1 Notes" means the Class A-1 3.4695% Asset-Backed
Notes,
substantially in the form of Exhibit A-1.
"Class A-2 Interest Rate" means 4.95% per annum.
"Class A-2 Notes" means the Class A-2 4.95% Asset-Backed Notes,
substantially in the form of Exhibit A-2.
"Class A-3 Interest Rate" means 6.48% per annum.
"Class A-3 Notes" means the Class A-3 6.48% Asset-Backed Notes,
substantially in the form of Exhibit A-3.
"Class A-4 Interest Rate" means 7.13% per annum.
"Class A-4 Notes" means the Class A-4 7.13% Asset-Backed Notes,
substantially in the form of Exhibit A-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 April 10, 2008.
"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.
-4-
<PAGE>
"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 2008-A, or
at such other address as the Trustee may designate from time to
time 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 notify 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 Investment
Officer, Chief
Financial Officer, President, Senior 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 any
other agreement
or instrument shall include all rights, powers and options (but
none of the
obligations) of the granting party thereunder, including the
immediate and
continuing right to claim for, collect, receive and give receipt
for principal
and interest payments in respect of the Collateral and all other
moneys payable
thereunder, to give and receive notices and other communications,
to make
waivers or other agreements, to exercise all rights and options, to
bring
proceedings in the name of the granting party or otherwise and
generally to do
and receive anything that the granting party is or may be entitled
to do or
receive thereunder or with respect thereto.
"Holder" or "Noteholder" means 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, notes 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
-5-
<PAGE>
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 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.
-6-
<PAGE>
"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,
the
Residual Certificate Secured Obligations and the Trustee Secured
Obligations,
collectively.
"Issuer Secured Parties" means each of (i) the Trustee, in respect
of
the Trustee Secured Obligations, (ii) the Residual
Certificateholders, in
respect of the Residual Certificate Secured Obligations and (iii)
the Note
Insurer, in respect of the Insurer Secured Obligations.
"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 Participant or as an indirect
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
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.
51897-N) 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.
-7-
<PAGE>
"Opinion of Counsel" means one or more written opinions of counsel
who
may, except as otherwise expressly provided in this Indenture, be
employees of
or counsel to the Issuer and who shall be satisfactory to the
Trustee and, if
addressed to the Note Insurer, 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, 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.
-8-
<PAGE>
"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, not in its
individual
capacity, but solely as Owner Trustee under the Trust Agreement,
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 Agreement" means the Receivables Purchase Agreement.
"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, the Payment Date specified by the
Servicer or the
Issuer pursuant to Section 10.1.
"Redemption Price" means, in the case of a redemption of the
Notes
pursuant to Section 10.1, 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.
"Residual Certificate Secured Obligations" means all amounts
and
obligations that the Issuer may at any time owe to the Residual
Certificateholders under the Sale and Servicing Agreement or any
other Basic
Document.
"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.
-9-
<PAGE>
"Sale and Servicing Agreement" means the Sale and Servicing
Agreement
dated as of March 1, 2008, 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 LLC, a Delaware limited
liability
company, 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 date on which the Note Insurer shall have received payment
and
performance of all Insurer Secured Obligations 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 November
15,
2007, between CPS Receivables Corp., as depositor, and the Owner
Trustee, as
amended and restated by the Amended and Restated Trust Agreement
dated as of
January 14, 2008, by and between the Seller (as successor by merger
to CPS
Receivables Corp.), as depositor, and the Owner Trustee, and as
further amended
and restated by that Second Amended and Restated Trust Agreement
dated as of
April 10, 2008, 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.
"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:
-10-
<PAGE>
(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, shall be in substantially the form set forth in
EXHIBITS A-1,
A-2, A-3 AND A-4, respectively, with such appropriate insertions,
omissions,
substitutions and other variations as are required or permitted by
this
Indenture and may have such letters, numbers or other marks of
identification
and such legends or endorsements placed thereon as may,
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.
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.
-11-
<PAGE>
(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 $39,130,000, Class A-2 Notes for original issue
in an
aggregate principal amount of $95,059,000, Class A-3 Notes for
original issue in
an aggregate principal amount of $88,220,000 and Class A-4 Notes
for original
issue in an aggregate principal amount of $22,000,000. 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 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
-12-
<PAGE>
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
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 or
other
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
-13-
<PAGE>
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 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.
-14-
<PAGE>
(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 and the
Class A-4 Note
attached hereto as 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 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 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 and the Class A-4 Note attached hereto as
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
-15-
<PAGE>
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.
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
later of (i) the Termination Date and (ii) the date upon which all
Issuer
Secured Obligations have been satisfied, 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
-16-
<PAGE>
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
(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.
-17-
<PAGE>
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
occurrence of 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 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.
-18-
<PAGE>
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 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
-19-
<PAGE>
APPLICABLE JURISDICTION. NO REPRESENTATION IS MADE AS
TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE
144A FOR RESALES OF THIS NOTE."
(c) The Issuer shall provide to any Noteholder and any
prospective
transferee designated by any such Noteholder, information regarding
the Notes,
the Trust Estate and such other information as shall be necessary
to satisfy the
condition to eligibility set forth in Rule 144A(d)(4) for transfer
of any such
Note without registration thereof under the Securities Act pursuant
to the
registration exemption provided by Rule 144A. The Trustee shall
cooperate with
the Issuer in providing the Rule 144A information referenced in the
preceding
sentence, including providing to the Issuer such information
regarding the
Notes, the Trust Estate and other matters as the Issuer shall
reasonably request
to meet its obligation under the preceding sentence. Each
Noteholder desiring to
effect such transfer shall, and does hereby agree to, indemnify the
Issuer and
the Trustee against any liability that may result if the transfer
is not so
exempt or is not made in accordance with such Federal and State
laws.
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.
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
-20-
<PAGE>
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.
(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),
-21-
<PAGE>
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 the Trustee
for the
benefit of 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;
-22-
<PAGE>
(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 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
-23-
<PAGE>
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.
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
-24-
<PAGE>
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 consent of such
Noteholder or 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.
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, 2009, 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, in the case of the first such
Officer's Certificate, since the Closing Date) 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, in the case of the first such Officer's
Certificate, since the Closing Date), 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:
-25-
<PAGE>
(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;
(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
-26-
<PAGE>
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 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.
-27-
<PAGE>
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
2008-A 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 2008-A is to be so released.
SECTION 3.12 NO OTHER BUSINESS. The Issuer shall not engage in
any
business other than financing, purchasing, owning, selling and
managing the
Receivables in the manner contemplated by this Indenture and the
Basic Documents
and 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,
to fund (on behalf of the Seller) the Series 2008-A 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.
-28-
<PAGE>
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.
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;
-29-
<PAGE>
(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 Issuer Secured Parties, 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
in the Trust Estate Granted to the Trustee for the benefit of
the Issuer Secured Parties hereunder.
(iii) NO OTHER SECURITY INTERESTS. Other than the
security interest
Granted to the Trustee for the benefit of
the Issuer Secured Parties 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 Issuer Secured Parties
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
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 Issuer Secured Parties. 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."
-30-
<PAGE>
(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 Issuer Secured Parties 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.
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 2.9, 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
-31-
<PAGE>
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.
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 from the Series 2008-A
Spread Account 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 from the Series 2008-A Spread Account
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 the 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
-32-
<PAGE>
(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 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 (or, so long
as CPS is Servicer, any Specified Affiliate).
(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:
-33-
<PAGE>
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.
(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.
-34-
<PAGE>
(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 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:
-35-
<PAGE>
(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 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.
-36-
<PAGE>
(g) In any proceedings brought by the Trustee (and also any
proceedings
involving the interpretation of any provision of this 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 (acting at the direction of Noteholders) 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
(acting at the direction of Noteholders) 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
-37-
<PAGE>
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.
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
-38-
<PAGE>
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;
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.
(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 Residual Certificateholder
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 while any Trustee Secured Obligations or
Note Insurer
Secured Obligations remain outstanding. No Holder of any Note shall
have any
right to institute any proceeding, judicial or otherwise, with
respect to this
Indenture, or fo
