EXECUTION COPY
IRREVOCABLE LETTER OF CREDIT
No. DBS-17240
October 10, 2006
Citibank, N.A., as Indenture Trustee (the
“ Indenture Trustee ”)
388 Greenwich Street, 14th
Floor
New York, New York 10013
Attention:
Structured Finance Agency and
Trust
Franklin Auto 2006-1
Dear Sirs:
The undersigned (the “ Letter of
Credit Bank ”) hereby establishes, at the request and for
the account of Franklin Auto Trust 2006-1, a Delaware statutory
trust (the “ Account Party ”), in your favor, as
Indenture Trustee under the Indenture, dated as of September 1,
2006 (the “ Indenture ”; defined terms used
herein and not otherwise defined herein shall have the meaning
ascribed to such term in the Indenture ) between the Account Party
and Citibank, N.A., as Indenture Trustee, this Irrevocable Letter
of Credit No. DBS-17240, in the amount of TWELVE MILLION FOUR
HUNDRED TWENTY FIVE THOUSAND DOLLARS ($12,425,000) (the “
Stated Amount ”) (such amount, as the same may be
reduced as provided herein, being the “ Letter of Credit
Available Amount ”), effective immediately and expiring
at 3:00 p.m. (New York time) at our office at 60 Wall Street, New
York, N.Y. 10005, Attention: Global Loan Operations, Standby Letter
of Credit Unit (such office or any other office which may be
designated by the Letter of Credit Bank by written notice delivered
to you, being the “ Letter of Credit Bank’s
Office ”) on October 9, 2007 (the “ Stated
Expiration Date ”); provided, however, the Stated
Expiration Date shall be automatically extended for an additional
year, but not beyond July 21, 2014, unless the Letter of Credit
Bank sends notice to you, at least forty-five (45) days prior to
the then current Stated Expiration Date, that it is not extending
the Letter of Credit for an additional year.
As used in this Letter of Credit and
unless the context requires a different meaning, capitalized terms
defined in the text hereof shall have their defined meanings when
used herein, and capitalized terms not otherwise defined herein
shall have the meanings assigned to such terms in the Indenture.
“ Business Day ” means any day other than
a Saturday, a Sunday or other day on which commercial banks located
in the states of California, Delaware, Utah or New York are
authorized or obligated to close.
The Letter of Credit Bank irrevocably
authorizes you to draw on it, in accordance with the terms and
conditions and subject to the reductions in amount as hereinafter
set forth, (1) in one or more drawings by one or more of your
drafts, each drawn on the Letter of Credit Bank at the Letter of
Credit Bank’s Office, payable at sight on a Business Day, and
accompanied by your written and completed certificate signed by you
in substantially the form of Annex A attached hereto (any such
draft accompanied by such certificate being your “ Credit
Demand ”), an amount equal to the face amount of each
such draft but in the aggregate amount not exceeding the Letter of
Credit Available Amount as in effect on such Business Day, and (2)
in a single drawing by your draft, drawn on the Letter of Credit
Bank at the Letter of Credit Bank’s Office, payable at sight
on a Business Day, and accompanied by your written and completed
certificate signed by you in substantially the form of Annex B
attached hereto (such draft accompanied by such certificate being
your “ Termination Demand ”), an amount equal to
the face amount of such draft which shall be equal to the Letter of
Credit Available Amount as in effect on such Business Day.
Upon the Letter of Credit Bank honoring
any Credit Demand presented by you to it hereunder, the Letter of
Credit Available Amount shall automatically be decreased by an
amount equal to the amount of such Credit Demand. Upon
receipt by the Letter of Credit Bank of a written and completed
certificate signed by you in substantially the form of Annex C
attached hereto (a “ Reduction Certificate ”),
the Letter of Credit Available Amount shall automatically be
decreased by an amount equal to the amount specified in such
Reduction Certificate. In addition to the foregoing
reductions, upon the Letter of Credit Bank honoring any Termination
Demand presented by you to it hereunder, the amount available to be
drawn under this Letter of Credit Available Amount shall
automatically be reduced to zero and this Letter of Credit shall be
terminated.
Each Credit Demand, Reduction Certificate
and Termination Demand shall be dated the date of its presentation,
and shall be presented to the Letter of Credit Bank at the Letter
of Credit Bank’s Office. Presentation may be made by
hand delivered to the Letter of Credit Bank at the Letter of Credit
Bank’s Office or by telecopy sent to telecopy number: (212)
797-0403. If the Letter of Credit Bank receives any Credit
Demand or Termination Demand at the Letter of Credit Bank’s
Office, all in strict conformity with the terms and conditions of
this Letter of Credit, not later than 2:00 p.m. (New York City
time) on a Business Day prior to the expiration or termination
hereof, the Letter of Credit Bank will make such funds available to
you by 11:00 a.m. (New York City time) on the fourth Business Day
following the date of such presentation in accordance with your
payment instructions. If the Letter of Credit Bank receives
any Credit Demand or Termination Demand at such office, all in
strict conformity with the terms and conditions of this Letter of
Credit, after 2:00 p.m. (New York City time) on a Business Day
prior to the expiration or termination hereof, the Letter of Credit
Bank will make the funds available to you by 11:00 a.m. (New York
City time) on the fifth Business Day following the date of such
presentation in accordance with your payment instructions. If
you so request the Letter of Credit Bank, payment under this Letter
of Credit may be made by wire transfer of Federal Reserve Bank of
New York funds to your account in a bank on the Federal Reserve
wire system or by deposit of same day funds into a designated
account.
Upon the earliest of (i) the date on
which the Letter of Credit Bank honors your Termination Demand
presented hereunder, (ii) the date on which the Letter of Credit
Bank receives a Replacement Certificate, substantially in the form
of Annex E attached hereto, from you that an alternate letter of
credit or other credit facility has been substituted for this
Letter of Credit, (iii) the date on which the Letter of Credit Bank
receives written notice from you that there are no longer any Notes
outstanding and (iv) the Stated Expiration Date, this Letter of
Credit shall automatically terminate and you shall surrender this
Letter of Credit to the undersigned Letter of Credit Bank on such
day (provided, however, that your failure to surrender this Letter
of Credit shall not render such automatic termination
ineffective).
This Letter of Credit is transferable in
its entirety to any transferee who you certify to the Letter of
Credit Bank has succeeded you as Indenture Trustee under the
Indenture, and may be successively transferred. Transfer of
this Letter of Credit to such transferee shall be effected by the
presentation to the Letter of Credit Bank of this Letter of Credit
accompanied by a certificate in substantially the form of Annex D
attached hereto. Upon such presentation the Letter of Credit
Bank shall forthwith transfer this Letter of Credit to your
transferee or, if so requested by your transferee, issue a letter
of credit to your transferee with provisions therein consistent
with this Letter of Credit.
This Letter of Credit sets forth in full
the undertaking of the Letter of Credit Ban
