EXHIBIT 10.7


 


EXECUTION VERSION


 


CLI FUNDING LLC


 


Issuer


 


and


 


U.S. BANK NATIONAL ASSOCIATION


 


Indenture Trustee


 






 


SERIES 2006-1 SUPPLEMENT


 


Dated as of August 24, 2006


 


to


 


SECOND AMENDED AND RESTATED INDENTURE


 


August 24, 2006


 






 


FLOATING RATE ASSET BACKED NOTES, SERIES 2006-1


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
   

  
	
  Definitions;
  Calculation Guidelines

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  
	
  Creation of the Series 2006-1
  Notes

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
  Designation

  	
  6

  
	
  Section 2.02

  	
  Authentication and
  Delivery

  	
  7

  
	
  Section 2.03

  	
  Interest Payments on
  the Series 2006-1 Notes

  	
  8

  
	
  Section 2.04

  	
  Principal Payments on
  the Series 2006-1 Notes

  	
  8

  
	
  Section 2.05

  	
  Prepayment of Principal
  on the Series 2006-1 Notes

  	
  9

  
	
  Section 2.06

  	
  Payments of Principal
  and Interest

  	
  10

  
	
  Section 2.07

  	
  Restrictions on
  Transfer

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  
	
  Series 2006-1
  Series Account and

  
	
  Allocation and
  Application of Amounts Therein; Policy

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Series 2006-1
  Series Account

  	
  16

  
	
  Section 3.02

  	
  Distributions from
  Series 2006-1 Series Account

  	
  16

  
	
  Section 3.03

  	
  The Policy

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  
	
  Additional
  Covenants

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Other Information

  	
  22

  
	
  Section 4.02

  	
  Use of Proceeds

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  
	
  Conditions to
  Issuance

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Conditions to Issuance

  	
  22

  



 


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  ARTICLE VI

  
	
   

  
	
  Representations
  and Warranties

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Existence

  	
  22

  
	
  Section 6.02

  	
  Authorization

  	
  23

  
	
  Section 6.03

  	
  No Conflict; Legal
  Compliance

  	
  23

  
	
  Section 6.04

  	
  Validity and Binding
  Effect

  	
  23

  
	
  Section 6.05

  	
  Financial Statements

  	
  23

  
	
  Section 6.06

  	
  Place of Business

  	
  23

  
	
  Section 6.07

  	
  No Agreements or
  Contracts

  	
  23

  
	
  Section 6.08

  	
  Consents and Approvals

  	
  24

  
	
  Section 6.09

  	
  Margin Regulations

  	
  24

  
	
  Section 6.10

  	
  Taxes

  	
  24

  
	
  Section 6.11

  	
  Other Regulations

  	
  24

  
	
  Section 6.12

  	
  Solvency and
  Separateness

  	
  25

  
	
  Section 6.13

  	
  No Default

  	
  25

  
	
  Section 6.14

  	
  Litigation and
  Contingent Liabilities

  	
  26

  
	
  Section 6.15

  	
  Title; Liens

  	
  26

  
	
  Section 6.16

  	
  Subsidiaries

  	
  26

  
	
  Section 6.17

  	
  No Partnership

  	
  26

  
	
  Section 6.18

  	
  Pension and Welfare
  Plans

  	
  26

  
	
  Section 6.19

  	
  Ownership of the Issuer

  	
  26

  
	
  Section 6.20

  	
  Security Interest
  Representations

  	
  26

  
	
  Section 6.21

  	
  Use of Proceeds

  	
  28

  
	
  Section 6.22

  	
  Survival of
  Representations and Warranties

  	
  28

  
	
  Section 6.23

  	
  ERISA Lien

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII 

  
	
   

  
	
  Miscellaneous
  Provisions

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
  Ratification of
  Indenture

  	
  28

  
	
  Section 7.02

  	
  Counterparts

  	
  28

  
	
  Section 7.03

  	
  Governing Law

  	
  28

  
	
  Section 7.04

  	
  Notices to Rating
  Agencies

  	
  28

  
	
  Section 7.05

  	
  Statutory References

  	
  29

  
	
  Section 7.06

  	
  Amendments and
  Modifications

  	
  29

  
	
  Section 7.07

  	
  Consent to Jurisdiction

  	
  29

  
	
  Section 7.08

  	
  Waiver of Jury Trial

  	
  29

  
	
  Section 7.09

  	
  Third Party
  Beneficiaries

  	
  30

  
	
  Section 7.10

  	
  Notices to the
  Series Enhancer

  	
  30

  



 


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EXHIBITS


 


	
  EXHIBIT A-1

  	
  Form of 144A
  Global Notes

  
	
  EXHIBIT A-2

  	
  Form of Regulation
  S Temporary Global Note

  
	
  EXHIBIT A-3

  	
  Form of Permanent
  Regulation S Global Note

  
	
  EXHIBIT A-4

  	
  Form of Note
  Issued to Institutional Accredited Investors

  
	
  EXHIBIT B

  	
  Form of
  Certificate to be Given by Noteholder

  
	
  EXHIBIT C

  	
  Form of
  Certificate to be Given by Euroclear or Clearstream

  
	
  EXHIBIT D

  	
  Form of
  Certificate to be Given by Transferee of Beneficial Interest In a  Regulation S Temporary Global Note

  
	
  EXHIBIT E

  	
  Form of Transfer
  Certificate for Exchange or Transfer From 144A Book  Entry Note to Regulation S Book Entry
  Note

  
	
  EXHIBIT F

  	
  Form of Transfer
  Certificate for Exchange or Transfer From Regulations S  Book Entry Note to a 144A Book Entry
  Note

  
	
  EXHIBIT G

  	
  Form of Initial
  Purchaser Exchange Instructions

  
	
  EXHIBIT H

  	
  Form of Purchaser
  Letter

  



 


SCHEDULES


 


	
  SCHEDULE 1

  	
  Targeted Principal
  Balances

  



 


iii

















 


Series 2006-1 SUPPLEMENT, dated as August 24,
2006 (as amended, modified, and supplemented from time to time in accordance
with the terms hereof, this “Supplement”), between CLI Funding LLC, a
limited liability company organized and existing under the laws of the State of
Delaware (the “Issuer”), and U.S. Bank National Association, a national
banking association, as Indenture Trustee (the “Indenture Trustee”).


 


WHEREAS,
pursuant to the Second Amended and Restated Indenture, dated as of August 24,
2006 (as amended and supplemented from time to time in accordance with its
terms, the “Indenture”), between the Issuer and the Indenture Trustee,
the Issuer may from time to time direct the Indenture Trustee to authenticate
one or more new Series of Notes. The Principal Terms of any new Series are
to be set forth in a Supplement to the Indenture.


 


WHEREAS,
pursuant to Section 1006 of the Indenture, this Supplement is entered into
by the Issuer and the Indenture Trustee to create a new Series of Notes (“Series 2006-1”)
and to specify the Principal Terms thereof.


 


NOW
THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto agree as follows:


 


ARTICLE I


 


Definitions; Calculation Guidelines


 


Section 1.01
Definitions. (a) Whenever used in this Supplement, the following
words and phrases shall have the following meanings, and the definitions of
such terms are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of
such terms.


 


“144A
Global Notes” means the 144A Global Notes substantially in the form of Exhibit A-1
hereto.


 


“Aggregate
Series 2006-1 Note Principal Balance” means, as of any date of
determination, an amount equal to the sum of the Series 2006-1 Note
Principal Balances of all Series 2006-1 Notes then Outstanding, which as
of the Closing Date shall be Six Hundred Eighty-Five Million Dollars
($685,000,000).


 


“Clearing
Agency” means, with respect to any Global Note, any Person designated as
such by the Issuer, which Person must be registered as a “clearing agency”
pursuant to Section 17A of the Securities Exchange Act of 1934.


 


“Control
Party” means with respect to the Series 2006-1 Notes, the Series Enhancer,
unless the Series Enhancer has defaulted (and not cured) in its payment
obligations under the Policy or it remains subject to an insolvency proceeding,
in which case the Control Party will be the holders of more than 50% of the
then Unpaid Principal Balance of such Series 2006-1 Notes.


 

















 


“Default
Fees” means, the incremental interest specified in Section 203(b) hereof
over the amount of interest otherwise payable on such Payment Date pursuant to Section 203(a) hereof,
payable by the Issuer resulting from (i) the failure of the Issuer to pay
in full on any Payment Date any accrued and unpaid interest, fees, or
indemnities on any Series of Notes then Outstanding, (ii) the failure
of the Issuer to pay in full on the Legal Final Maturity Date of the Series with
latest occurring Legal Final Maturity Date, the then Unpaid Principal Balance
of the related Series of Notes, or (iii) the failure of the Issuer to
pay the Unpaid Principal Balance upon the occurrence of an Event of Default and
the acceleration of the Notes in accordance with the provisions of the
Indenture.


 


“Default
Rate” means, for any date of determination, an interest rate per annum
equal to the sum of (i) two percent (2%) per annum, plus (ii) the
interest rate per annum payable on such Note prior to the event giving rise to
such Default Fees.


 


“Deficiency
Amount” means the Interest Payment Deficiency Amount and/or the Principal
Deficiency Amount, as applicable.


 


“DTC”
shall have the meaning set forth in Section 207.


 


“Deutsche
Bank” means Deutsche Bank Securities Inc, a Delaware corporation and its
successors and permitted assigns.


 


“Federal
Funds Rate” means as of any date of determination, a fluctuating interest
rate per annum equal to the weighted average of the federal funds rates and
confirmed in Federal Reserve Board Statistical Release H.15 (519) or any
successor or substitute publication selected by the Indenture Trustee (or, if
such day is not a Business Day, the next preceding Business Day), or, if, for
any reason, such rate is not available on any day, the rate determined, in the
sole opinion of the Indenture Trustee, to be the rate at which federal funds
are being offered for sale in the national federal funds market at 9:00 a.m.
(New York City time).


 


“Initial
Commitment” means Six Hundred Eighty-Five Million Dollars ($685,000,000).


 


“Initial
Purchaser” means each of Deutsche Bank and Wachovia.


 


“Institutional
Accredited Investors” shall have the meaning set forth in Section 207.


 


“Insured
Payment” shall have the meaning set forth in the Policy.


 


“Interest
Payment Deficiency Amount” shall have the meaning set forth in the Policy.


 


“Letter
of Representations” means the Letter of Representations, dated as of August 24,
2006, between the Issuer and the Clearing Agency.


 


“Minimum
Principal Payment Amount” means, for the Series 2006-1 Notes then
Outstanding on any Payment Date, an amount equal to the excess, if any, of (x) the
Aggregate


 


2

















 


Series 2006-1 Note
Principal Balance on such Payment Date (prior to giving effect to any payments
to be made on such date), over (y) the Minimum Targeted Principal Balance
for such Series 2006-1 Notes for such Payment Date.


 


“Minimum
Targeted Principal Balance” means for the Series 2006-1 Notes for each
Payment Date, the amount set forth opposite such Payment Date on Schedule 1
hereto under the column entitled “Minimum Targeted Principal Balance”, based on
an approximately fifteen (15) year level amortization schedule.


 


“Notice”
means the telephonic or telegraphic notice, promptly confirmed in writing by
telecopy in the form required by the Policy, the original of which is
subsequently delivered by registered or certified mail, for the Indenture
Trustee specifying the Insured Amount which shall be due and owing on the
applicable Payment Date.


 


“Payment
Date” means the eighteenth (18th)
calendar day of each month or, if such day is not a Business Day, the next
succeeding Business Day, commencing on September 18, 2006.


 


“Permanent
Regulation S Global Notes” means the Permanent Regulation S Global Notes
substantially in the form of Exhibit A-3.


 


“Policy”
means, with respect to the Series 2006-1 Notes, the financial guaranty
insurance policy number AB1016BE issued by Ambac.


 


“Preference
Amount” shall have the meaning set forth in the Policy.


 


“Premium”
shall have the meaning set forth in the Premium Letter.


 


“Premium
Letter” means the letter, dated as of August 24, 2006, among the
Issuer, Carlisle, and the Series Enhancer related to the Policy.


 


“Principal
Deficiency Amount” shall have the meaning set forth in the Policy.


 


“Qualified
Institutional Buyers” shall have the meaning set forth in Section 207.


 


“Rating
Agencies” means, for Series 2006-1, each of S&P and Moody’s. “Regulation
S” shall have the meaning set forth in Section 207 hereof.


 


“Regulation
S Global Notes” Collectively, the Regulation S Temporary Global Notes and
the Permanent Regulation S Global Notes.


 


“Regulation
S Temporary Global Notes” means the Regulation S Temporary Global Notes
substantially in the form of Exhibit A-2.


 


“Reimbursement
Amount” shall have the meaning set forth in the Policy.


 


“Rule 144A”
shall have the meaning set forth in Section 207 hereof.


 


3

















 


“S&P”
means Standard & Poor’s Ratings Services, a division of The McGraw
Hill Companies, Inc., and any successor thereto.


 


“Scheduled
Principal Payment Amount” means, for the Series 2006-1 Notes then
Outstanding on each Payment Date, an amount equal to the excess, if any, of (x) the
Aggregate Series 2006-1 Note Principal Balance (after giving effect to any
payment of the Minimum Principal Payment Amount for the Series 2006-1
Notes then Outstanding actually paid on such Payment Date), over (y) the
Scheduled Targeted Principal Balance for the Series 2006-1 Notes for such
Payment Date.


 


“Scheduled
Targeted Principal Balance” means, for the Series 2006-1 Notes for
each Payment Date, the amount based on an approximately ten (10) year
level amortization schedule, as set forth in Schedule 1.


 


“Series Enhancer”
means Ambac.


 


“Series Enhancer
Default” means the occurrence and continuance of any of the following
events:


 


1. the Series Enhancer shall have failed to pay
an Insured Amount required under the Policy in accordance with its terms;


 


2. the Series Enhancer shall have (i) filed
a petition or commenced any case or proceeding under any provision or chapter
of the United States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization, (ii) made a general assignment for the benefit of its
creditors, or (iii) had an order for relief entered against it under the
United States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization which is final and nonappealable; or


 


3. a court of competent jurisdiction, the Wisconsin
Department of Insurance or other competent regulatory authority shall have entered
a final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent, or receiver for the Series Enhancer or for all
or any material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent, or receiver of the Series Enhancer
(or the taking of possession of all or any material portion of the property of
the Series Enhancer).


 


“Series 2001-1
Notes” means the Series of Notes issued under the Series 2001-1
Supplement.


 


“Series 2001-1
Supplement” means the Series 2001-1 Supplement to the Indenture, dated
as of October 26, 2001, between the Issuer and the Indenture Trustee.


 


“Series 2001-1
Transaction Documents” shall have the meaning set forth in the Series 2001-1
Supplement.


 


4

















 


“Series 2003-1
Transaction Documents” shall have the meaning set forth in the Series 2003-1
Supplement.


 


“Series 2003-2
Transaction Documents” shall have the meaning set forth in the Series 2003-2
Supplement.


 


“Series 2006-1”
means the Series of Notes the terms of which are specified in this
Supplement.


 


“Series 2006-1
Legal Final Maturity Date” means the Payment Date occurring in August,
2021.


 


“Series 2006-1
Note” means any one of the notes issued pursuant to the terms of Section 201(a) of
this Supplement, substantially in the form of any of Exhibit A-1, A-2,
A-3, or A-4 to this Supplement, and any and all replacements or substitutions
of such note.


 


“Series 2006-1
Note Interest Payment” means, for each Payment Date, an amount equal to the
product of (i) the Aggregate Series 2006-1 Note Principal Balance as
of the first day of the related Interest Accrual Period, and (ii) an
annual rate of interest equal to One-Month LIBOR for such Interest Accrual
Period plus 0.18%.


 


“Series 2006-1
Note Principal Balance” means, with respect to any Series 2006-1 Note
as of any date of determination, an amount equal to the excess of (x) the
Initial Commitment of such Series 2006-1 Note as of the Closing Date, over
(y) the cumulative amount of all Minimum Principal Payment Amounts,
Scheduled Principal Payment Amounts and any other principal payments actually
paid to the Series 2006-1 Noteholders subsequent to the Closing Date.


 


“Series 2006-1
Note Purchase Agreement” means the Series 2006-1 Note Purchase
Agreement, dated as of August 16, 2006, among the Issuer, Carlisle and the
Initial Purchasers.


 


“Series 2006-1
Noteholder” means, at any time of determination for the Series 2006-1
Notes, any Person in whose name a Series 2006-1 Note is registered in the
Note Register.


 


“Series 2006-1
Series Account” means the account of that name established in
accordance with Section 301 hereof.


 


“Series 2006-1
Transaction Documents” shall mean, with respect to this Agreement, any and
all of the Indenture, this Supplement, the Series 2006-1 Notes, the
Management Agreement, the Contribution and Sale Agreement, the Series 2006-1
Note Purchase Agreement, the Policy, the Premium Letter, the Insurance
Agreement, the Director Services Agreement, the Intercreditor Agreement, the
Manager Transition Agreement, the Pledge Agreement, any Interest Rate Hedge
Agreements, together with any insurance policies related thereto, and any and
all other agreements, documents, and instruments executed and delivered by or
on behalf or in support of the Issuer with respect to the issuance and sale or
administration of the Series 2006-1 Notes, as any of the foregoing may
from time to time be amended, modified, supplemented, or renewed.


 


5

















 


“Series 2006-2
Transaction Documents” means any and all of the Indenture, the Series 2006-2
Supplement, the Series 2006-2 Notes, the Management Agreement, the
Contribution and Sale Agreement, the Series 2006-2 Note Purchase
Agreement, the Series 2006-2 Policy, the Premium Letter, the Insurance
Agreement, the Liquidity Agreements, the Manager Transition Agreement, the
Director Services Agreement, the Intercreditor Agreement, the Pledge Agreement,
any Interest Rate Hedge Agreements, together with any insurance policies
related thereto, and any and all other agreements, documents, and instruments
executed and delivered by or on behalf or in support of the Issuer with respect
to the issuance and sale or administration of the Series 2006-2 Notes, as
any of the foregoing may from time to time be amended, modified, supplemented,
or renewed.


 


“Transferor”
shall have the meaning set forth in Section 207 hereof.


 


“U.S.
Person” shall have the meaning set forth in Section 207 hereof.


 


“Wachovia”
means Wachovia Capital Markets, LLC, a limited liability company organized
under the laws of the State of Delaware and its successors and permitted
assigns.


 


(b) Capitalized
terms used herein and not otherwise defined shall have the meaning set forth in
the Indenture or, if not defined therein, as defined in the Series 2006-1
Note Purchase Agreement.


 


ARTICLE II


 


Creation of the Series 2006-1 Notes


 


Section 2.01
Designation.


 


(a) There
is hereby created a Series of Notes to be issued in one Class pursuant
to the Indenture and this Supplement to be known as “CLI Funding LLC
Floating Rate Asset Backed Notes, Series 2006-1”. The Series 2006-1
Notes will be issued in the initial principal balance of $685,000,000 and will
not have priority over any other Series, except to the extent set forth in the
Supplement for such other Series, and will not be subordinate to any other
Series. The issuance date of the Series 2006-1 Notes is August 24,
2006.


 


(b) The
Payment Date with respect to the Series 2006-1 Notes shall be the
eighteenth (1 8th) calendar day of each month, commencing September 18,
2006 or, if such day is not a Business Day, the immediately following Business
Day.


 


(c) Payments
of principal on the Series 2006-1 Notes shall be payable from funds on
deposit in the Series 2006-1 Series Account or otherwise at the times
and in the amounts set forth in Article III of the Indenture and Article III
of this Supplement.


 


(d) The
Series 2006-1 Notes are not classified as a “VFN”, as such term is
used in the Indenture.


 


6

















 


(e) The
Policy and Insurance Agreement shall constitute Enhancement Agreements with
respect to Series 2006-1, and Ambac shall constitute a Series Enhancer
with respect to Series 2006-1.


 


(f) In
the event that the Series 2006-1 Note Interest Payment is paid by the Series Enhancer,
then the Series Enhancer’s rights to be reimbursed therefor under the
Insurance Agreement, together with interest thereon at the interest rate
described in Section 203(a), shall also be considered an “Interest
Payment” with respect to Series 2006-1.


 


(g) The
“Expected Final Maturity Date” for Series 2006-1, as such term is
used in the Indenture, is the Payment Date occurring in August 2016.


 


(h) All
of the Early Amortization Events set forth in Article XII of the Indenture
are applicable to Series 2006-1.


 


(i) The
“Advance Rate” for Series 2006-1, as such term is used in the
Indenture, is 85%.


 


(j) The
“Related Documents” for Series 2006-1, as such term is used in the
Indenture, shall be the Series 2006-1 Transaction Documents.


 


(k) In
the event that any term or provision contained herein shall conflict with or be
inconsistent with any term or provision contained in the Indenture, the terms
and provisions of this Supplement shall govern.


 


Section 2.02
Authentication and Delivery.


 


(a) On
the Closing Date, the Issuer shall sign, and shall direct the Indenture Trustee
in writing pursuant to Section 201 of the Indenture to duly authenticate,
and the Indenture Trustee, upon receiving such direction, shall (i) authenticate,
subject to compliance with the conditions precedent set forth in Section 501
hereof, the Series 2006-1 Notes in accordance with such written
directions, and (ii) subject to compliance with the conditions precedent
set forth in Section 501 hereof, deliver such Series 2006-1 Notes to
the Initial Purchasers in accordance with such written directions.


 


(b) In
accordance with Section 202 of the Indenture, the Series 2006-1 Notes
sold in reliance on Rule 144A shall be represented by one or more Rule 144A
Global Notes. Any Series 2006-1 Notes sold in reliance on Regulation S
shall be represented by one or more Regulation S Global Notes. Any Series 2006-1
Notes sold to Institutional Accredited Investors shall be represented by one or
more Definitive Notes.


 


(c) The
Series 2006-1 Notes shall be executed by manual or facsimile signature on
behalf of the Issuer by any officer of the Issuer and shall be substantially in
the forms of Exhibit A-1, A-2, A-3 and A-4 hereto, as applicable.


 


(d) The
Series 2006-1 Notes shall be issued in minimum denominations of $250,000
and in integral multiples of $250,000; provided that one Note may be issued in
a non-standard denomination.


 


7














 


Section
2.03 Interest Payments on the Series 2006-1 Notes.


 


(a) Interest
on Series 2006-1 Notes. Interest on each Series 2006-1 Note shall (i) accrue
during each Interest Accrual Period at a rate per annum equal to the sum of (x)
One-Month LIBOR for such Interest Accrual Period and (y) 0.18%, (ii) be
calculated on the basis of actual days elapsed during such Interest Accrual
Period over a year consisting of 360 days, (iii) be due and payable on each
Payment Date, (iv) be calculated based on the Series 2006-1 Note Principal
Balance of such Series 2006-1 Note, and (v) be payable from the Series 2006—1 Series
Account in accordance with Section 302 hereto. To the extent that the amount of
interest which is due and payable on any Payment Date is not paid in full on
such date, such shortfall, together with interest thereon at the Default Rate,
shall be due and payable on the immediately succeeding Payment Date.


 


(b) Default
Fees on Overdue Amounts. If the Issuer shall default in the payment of (i) the
Series 2006-1 Note Principal Balance of any Series 2006-1 Notes on the Series 2006-1
Legal Final Maturity Date, or (ii) the Series 2006-1 Note Interest Payment on
any Series 2006-1 Note on any Payment Date, or (iii) any other amount becoming
due under this Supplement, the Issuer shall, from time to time, pay default
fees on such unpaid amounts, to the extent permitted by Applicable Law, at a
rate per annum equal to the Default Rate, for the period during which such
principal, interest or other amount shall be unpaid from the due date of such
payment to, but not including, the date of actual payment thereof (as well as
before judgment). Default Fees shall be payable at the times and subject to the
priorities set forth in Section 302 of this Supplement.


 


(c) Maximum
Interest Rate. In no event shall the interest charged with respect to a Series
2006-1 Note exceed the maximum amount permitted by Applicable Law. If at any
time the interest rate charged with respect to the Series 2006-1 Notes exceeds
the maximum rate permitted by Applicable Law, the rate of interest to accrue
pursuant to this Supplement and such Series 2006-1 Note shall be limited to the
maximum rate permitted by Applicable Law, but any subsequent reductions in the
One-Month LIBOR shall not reduce the interest to accrue on such Series 2006-1
Note below the maximum amount permitted by Applicable Law until the total
amount of interest accrued on such Series 2006-1 Note equals the amount of
interest that would have accrued if a varying rate per annum equal to the interest
rate had at all times been in effect. If the total amount of interest paid or
accrued on the Series 2006-1 Note under the foregoing provisions is less than
the total amount of interest that would have accrued if the interest rate had
at all times been in effect, the Issuer agrees to pay to the Series 2006-1
Noteholders an amount equal to the difference between (a) the lesser of (i) the
amount of interest that would have accrued if the maximum rate permitted by
Applicable Law had at all times been in effect, or (ii) the amount of interest
that would have accrued if the interest rate had at all times been in effect,
and (b) the amount of interest accrued in accordance with the other provisions
of this Supplement.


 


Section
2.04 Principal Payments on the Series 2006-1 Notes. The principal
balance of the Series 2006-1 Notes shall be payable on each Payment Date from
amounts on deposit in the Series 2006-1 Series Account in an amount equal to (i)
so long as no Early Amortization Event nor an Event of Default is continuing,
the Minimum Principal Payment Amount, the Scheduled Principal Payment Amount,
and the allocable portion of the


 


8

















 


Supplemental Principal
Payment Amount (if any) for such Series 2006-1 Note for such Payment Date to
the extent that funds are available for such purpose in accordance with the
provisions of Part I of Section 302 of the Indenture, (ii) if an Early
Amortization Event, but not an Event of Default, has occurred and is
continuing, the Minimum Principal Payment Amount, the Scheduled Principal
Payment Amount and the Aggregate Series 2006-1 Note Principal Balance on such
Payment Date (after giving effect to any payment of the Minimum Principal
Payment Amount and the Scheduled Principal Amount for the Series 2006-1 Notes
then outstanding actually paid on such Payment Date) to the extent that funds
are available for such purposes in accordance with the provisions of Part (II) of
Section 302 of the Indenture or (iii) if an Event of Default has occurred and
is then continuing, the Minimum Principal Payment Amount, the Scheduled
Principal Payment Amount and the Aggregate Series 2006-1 Note Principal Balance
(after giving effect to any payment of the Minimum Principal Payment Amount and
the Scheduled Principal Amount for the Series 2006-1 Notes then outstanding
actually paid on such Payment Date) to the extent that funds are available for
such purposes in accordance with the provisions of Part (III) of Section 302 of
the Indenture. Payment of the Supplemental Principal Payment Amount on each
Payment Date is subordinated to payment in full on such Payment Date of the
Minimum Principal Payment Amount and the Scheduled Principal Payment Amount for
the Series 2006-1 Notes and any other Notes then Outstanding. The unpaid
principal amount of each Series 2006-1 Note, together with all unpaid interest
(including all Default Fees), indemnifications, fees, expenses, costs, and
other amounts payable by the Issuer to the Series 2006-1 Noteholders, the
Indenture Trustee, any Interest Rate Hedge Provider, and the Series Enhancer
pursuant to the terms of the Indenture and this Supplement, shall be due and
payable in full on the earlier to occur of (x) the date on which an Event of
Default shall occur and the Series 2006-1 Notes have been accelerated in
accordance with the provisions of Section 802 of the Indenture and (y) the Series
2006-1 Legal Final Maturity Date.


 


Section
2.05 Prepayment of Principal on the Series 2006-1 Notes.


 


(a) The
Issuer will be permitted, on any Payment Date, to make an optional Prepayment,
in accordance with Section 702(b) of the Indenture, of all, or a portion of,
the principal balance of the Series 2006-1 Notes in a minimum amount of Two
Hundred Fifty Thousand Dollars ($250,000), together with accrued interest
thereon and any early termination fees owing pursuant to the terms of any
Interest Rate Hedge Agreement. If such Prepayment is made on any of the 1st through and
including the 12th Payment Dates following the Series 2006-1
Closing Date, the Noteholders shall receive a Prepayment premium in an amount
equal to one percent (1.0%) of the then Unpaid Principal Balance of the Series 2006-1
Notes being prepaid. If such Prepayment is made on any of the 13 through and
including the 24th Payment Dates following the Series 2006-1
Closing Date, the Noteholders shall receive a Prepayment premium in an amount
equal to one-half of one percent (0.5%) of the then Unpaid Principal Balance of
the Series 2006-1 Notes being prepaid. If such Prepayment is made prior to the
25th Payment Date following the Series 2006-1
Closing Date, the Issuer shall also pay any Prepayment premium then due and
owing to the Series Enhancer. If such Prepayment is made on any of the 25th or subsequent
Payment Dates following the Series 2006-1 Closing Date, such Prepayment shall
be made without penalty or premium to the Noteholders of the Offered Notes or
to the Series Enhancer. Nothing contained herein shall prohibit any allocation
to the Series 2006-1 Noteholders of Supplemental Principal Payment Amounts in
accordance with Section 702(a) of the Indenture on any Payment Date on or prior
to the Payment Date occurring in August 2008.


 


9

















 


Any optional Prepayment
of the Series 2006-1 Note Principal Balance shall also include any early
termination fees owing pursuant to the terms of the Premium Letter and any
Interest Rate Hedge Agreement and accrued interest to the date of Prepayment on
the amount being prepaid. The Issuer may not make such optional Prepayment from
funds in the Trust Account, the Series 2006-1 Series Account, the Restricted
Cash Account, the Manager Collection Account, or the Manager Transition
Account, except to the extent that funds in any such account would otherwise be
payable to the Issuer in accordance with the terms of this Supplement. In the
event of any optional Prepayment of the Notes in accordance with this Section 205
or any other provision of the Indenture, the Issuer shall pay any termination,
notional reduction, breakage or other fees or costs assessed by any Interest
Rate Hedge Provider.


 


(b) Any
Prepayment of less than the Aggregate Series 2006-1 Note Principal Balance of
the Series 2006-1 Notes made in accordance with the provisions of Section 205
hereof shall be applied to reduce, on a prorated basis, the Minimum Targeted
Principal Balances and Scheduled Targeted Principal Balances in respect of each
subsequent Payment Date by the amount of such Prepayment.


 


(c) The
Issuer shall provide at least three (3) Business Days’ prior written notice of
any Prepayment to the Indenture Trustee, the Series Enhancer, and the Holders
of the Series 2006-1 Notes.


 


Section
2.06 Payments of Principal and Interest. All payments of principal and
interest on the Series 2006-1 Notes shall be paid to the Series 2006-1
Noteholders reflected in the Note Register as of the related Record Date by
wire transfer of immediately available funds for receipt prior to 2:00 p.m.
(New York City time) on the related Payment Date. Any payments received by the Series
2006-1 Noteholders after 2:00 p.m. (New York City time) on any day shall be
considered to have been received prior to 2:00 p.m. (New York City time) on the
next succeeding Business Day.


 


Section
2.07 Restrictions on Transfer.


 


(a) On
the Closing Date, the Issuer shall sell the Series 2006-1 Notes to the Initial
Purchasers pursuant to the Series 2006-1 Note Purchase Agreement and deliver
such Series 2006-1 Notes in accordance herewith and therewith. Thereafter, no Series
2006-1 Note may be sold, transferred, or otherwise disposed of except in
compliance with the provisions of the Indenture and except as follows:


 


(A) to Persons that the
transferring Person reasonably believes are Qualified Institutional Buyers in
reliance on the exemption from the registration requirements of the Securities
Act provided by Rule 144A promulgated thereunder (“Rule 144A”);


 


(B) not to a U.S. Person
in offshore transactions in reliance on Regulation S under the Securities Act (“Regulation
S”); or


 


(C) to institutional “accredited
investors” within the meaning of Rule 501 (a)(1), (2), (3) or (7) of Regulation
D under the Securities Act (“Institutional Accredited Investors “) that
take delivery of such Series 2006-1 Note in an


 


10

















 


amount of at least $250,000 and that deliver an
Purchaser Letter substantially in the form of Exhibit H to this Supplement to
the Indenture Trustee.


 


The Indenture Trustee
shall have no obligations or duties with respect to determining whether any
transfers of the Series 2006-1 Notes are made in accordance with the Securities
Act or any other law; provided that with respect to Definitive Notes, the
Indenture Trustee shall enforce such transfer restrictions in accordance with
the terms set forth in this Supplement.


 


(b) Each
purchaser (other than the Initial Purchasers) of the Series 2006-1 Notes
(including any purchaser, other than the Initial Purchasers, of an interest in
the Series 2006-1 Notes which are Global Notes) shall be deemed to have
acknowledged and agreed as follows:


 


(i) It is (A) a qualified
institutional buyer as defined in Rule 144A (“Qualified Institutional Buyer”)
and is acquiring such Series 2006-1 Notes for its own institutional account or
for the account or accounts of a Qualified Institutional Buyer, (B) purchasing
such Series 2006-1 Notes in a transaction exempt from registration under the
Securities Act and in compliance with the provisions of this Supplement and in
compliance with the legend set forth in clause
(iv) below, or (C) not a U.S. Person as defined in Regulation S (a “U.S.
Person”) and is acquiring such Series 2006-1 Notes outside of the United
States;


 


(ii) It represents and
warrants to the Initial Purchasers, the Issuer, the Indenture Trustee, and the
Manager that (a) either (1) it is not, and is not acting on behalf of, a Plan
or a governmental, church or non-U.S. plan which is subject to any federal,
state, local, or non-U.S. law that is similar to the prohibited transaction
provisions of Section 406 of ERISA or Section 4975 of the Code, and no part of
the assets to be used by it to purchase or hold the Notes or any interest
therein constitutes the assets of any Plan or such a governmental, church, or
non-U.S. plan; or (2) (A) the acquisition, holding, and disposition of the Note
will not give rise to a nonexempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code (or, in the case of a governmental, church,
or non-U.S. plan, a violation of any similar federal, state, local, or non-U.S.
law) and (B) the Notes are rated investment grade or better and such Person
believes that the Notes are properly treated as indebtedness without
substantial equity features for purposes of Section 25 10.3-101 of the
regulations issued by the U.S. Department of Labor, and agrees to so treat the
Notes; and (b) it will not sell or otherwise transfer the Notes or any interest
therein otherwise than to a purchaser or transferee that represents and agrees
with respect to its purchase, holding, and disposition of the Notes to the same
effect as the purchaser’s representation and agreement set forth in this clause
(b)(ii) of Section 207;


 


(iii) It understands that
the Series 2006-1 Notes are being transferred to it in a transaction not
involving any public offering within


 


11

















 


the meaning of the Securities Act, and that, if in the
future it decides to resell, pledge, or otherwise transfer any Series 2006-1
Notes, such Series 2006-1 Notes may be resold, pledged or transferred only in
accordance with applicable state securities laws and (1) in a transaction
meeting the requirements of Rule 144A, to a Person that the seller reasonably
believes is a Qualified Institutional Buyer that purchases for its own account
(or for the account or accounts of a Qualified Institutional Buyer) and to whom
notice is given that the resale, pledge, or transfer is being made in reliance
on Rule 1 44A, (2) to a Person that is an Institutional Accredited Investor, is
taking delivery of such Series 2006-1 Notes in an amount of at least $250,000,
and delivers a Purchaser Letter to the Indenture Trustee, or (3) in an offshore
transaction in accordance with Rule 903 or 904 of Regulation S; and


 


(iv) It understands that
each Series 2006-1 Note shall bear a legend substantially to the following
effect:


 


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


 


THIS NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THE
HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT SUCH NOTE MAY BE RESOLD,
PLEDGED, OR TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES
LAWS AND (1) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”), TO A PERSON THAT THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT
(OR FOR THE ACCOUNT OR ACCOUNTS OF A QUALIFIED INSTITUTIONAL BUYER) AND TO WHOM
NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER


 


12

















 


TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, OR (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE
904 OF REGULATION S UNDER THE SECURITIES ACT OR (3) TO A PERSON THAT IS AN
INSTITUTIONAL “ACCREDITED INVESTOR,” WITHIN THE MEANING OF RULE
501(a)(1), (2), (3), OR (7) OF REGULATION D UNDER THE SECURITIES ACT, IS TAKING
DELIVERY OF SUCH NOTE IN AN AMOUNT OF AT LEAST $250,000 AND DELIVERS A
PURCHASER LETTER TO THE INDENTURE TRUSTEE IN THE FORM ATTACHED TO THE
SUPPLEMENTS.


 


EACH PURCHASER OF A NOTE SHALL
REPRESENT OR BE DEEMED TO REPRESENT AND WARRANT TO THE INITIAL PURCHASERS, THE
ISSUER, THE INDENTURE TRUSTEE, AND THE MANAGER THAT (A) EITHER (1) IT IS NOT,
AND IS NOT ACTING ON BEHALF OF, A PLAN OR A GOVERNMENTAL, CHURCH, OR NON-U.S.
PLAN WHICH IS SUBJECT TO ANY FEDERAL, STATE, LOCAL, OR NON-U.S. LAW THAT IS
SIMILAR TO THE PROHIBITED TRANSACTION PROVISIONS OF SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE, AND NO PART OF THE ASSETS TO BE USED BY IT TO PURCHASE OR
HOLD THE NOTES OR ANY INTEREST THEREIN CONSTITUTES THE ASSETS OF ANY PLAN OR
SUCH A GOVERNMENTAL, CHURCH, OR NON-U.S. PLAN; OR (2) (A) THE ACQUISITION,
HOLDING, AND DISPOSITION OF THE NOTE WILL NOT GIVE RISE TO A NONEXEMPT
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE
(OR, IN THE CASE OF A GOVERNMENTAL, CHURCH, OR NON-U.S. PLAN, A VIOLATION OF
ANY SIMILAR FEDERAL, STATE, LOCAL, OR NON-U.S. LAW) AND (B) THE NOTES ARE RATED
INVESTMENT GRADE OR BETTER AND SUCH PERSON BELIEVES THAT THE SERIES 2006-1
NOTES ARE PROPERLY TREATED AS INDEBTEDNESS WITHOUT SUBSTANTIAL EQUITY FEATURES
FOR PURPOSES OF SECTION 2510.3-101 OF THE REGULATIONS ISSUED BY THE U.S.
DEPARTMENT OF LABOR, AND AGREES TO SO TREAT THE NOTES; AND (B) IT WILL NOT SELL
OR OTHERWISE TRANSFER THE NOTES OR ANY INTEREST THEREIN OTHERWISE THAN TO A
PURCHASER OR TRANSFEREE THAT REPRESENTS AND AGREES WITH RESPECT TO ITS
PURCHASE, HOLDING, AND DISPOSITION OF THE NOTES TO THE SAME EFFECT AS THE
PURCHASER’S REPRESENTATION AND AGREEMENT SET FORTH IN THIS SENTENCE.


 


THIS NOTE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.]


 


13

















 


(v) It is not a
Competitor.


 


(vi) Each investor
described in Section 207(a)(B) understands that the Series 2006-1 Notes have
not and will not be registered under the Securities Act, that any offers,
sales, or deliveries of the Series 2006-1 Notes purchased by it in the United
States or to U.S. Persons prior to the date that is 40 days after the later of (i)
the commencement of the distribution of the Series 2006-1 Notes and (ii) the
Closing Date, may constitute a violation of United States law, and that
distributions of principal and interest will be made in respect of such Series 2006-1
Notes only following the delivery by the holder of a certification of non-U.S.
beneficial ownership or the exchange of beneficial interest in Regulation S
Temporary Global Notes for beneficial interests in the related 144A Book-Entry
Global Notes (which in each case will itself require a certification of
non-U.S. beneficial ownership), at the times and in the manner set forth in
this Supplement.


 


(vii) The Regulation S
Temporary Global Notes representing the Series 2006-1 Notes sold to each
investor described in Section 207(a)(B) will bear a legend to the following
effect, unless the Issuer determines otherwise consistent with Applicable Law:


 


[FOR REGULATION S TEMPORARY GLOBAL
NOTES ONLY:


 


1. EACH INVESTOR IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT UNDERSTANDS THAT THE NOTES HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT, THAT ANY OFFERS, SALES, OR DELIVERIES OF
THE NOTES PURCHASED BY IT IN THE UNITED STATES OR TO U.S. PERSONS PRIOR TO THE
DATE THAT IS 40 DAYS AFTER THE LATER OF (I) THE COMMENCEMENT OF THE
DISTRIBUTION OF THE NOTES AND (II) THE CLOSING DATE, MAY CONSTITUTE A VIOLATION
OF UNITED STATES LAW, AND THAT DISTRIBUTIONS OF PRINCIPAL AND INTEREST WILL BE
MADE IN RESPECT OF SUCH NOTES ONLY FOLLOWING THE DELIVERY BY THE HOLDER OF A
CERTIFICATION OF NON-U.S. BENEFICIAL OWNERSHIP OR THE EXCHANGE OF BENEFICIAL INTEREST
IN REGULATION S TEMPORARY BOOK-ENTRY NOTES FOR BENEFICIAL INTERESTS IN THE
RELATED RULE 144A BOOK-ENTRY NOTES (WHICH IN EACH CASE WILL ITSELF REQUIRE A
CERTIFICATION OF NON-U.S. BENEFICIAL OWNERSHIP), AT THE TIMES AND IN THE MANNER
SET FORTH IN THE INDENTURE AND THE SUPPLEMENT.


 


14

















 


2. THE REGULATION S TEMPORARY
BOOK-ENTRY NOTES REPRESENTING THE NOTES SOLD TO EACH INVESTOR IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT WILL BEAR A LEGEND TO THE FOLLOWING EFFECT, UNLESS THE ISSUER
DETERMINES OTHERWISE CONSISTENT WITH APPLICABLE LAW:


 


THIS NOTE HAS NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) AND, PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF (I) THE
COMPLETION OF THE DISTRIBUTION OF THE NOTES AND (II) THE CLOSING DATE, MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A
U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE PROCEDURES SPECIFIED IN
THE INDENTURE.]


 


(viii) It is purchasing
one or more Series 2006-1 Notes in an amount of at least $250,000 and it understands
that such Series 2006-1 Notes may be resold, pledged, or otherwise transferred
on in an amount of at least $250,000.


 


(ix) The Indenture
Trustee shall not permit the transfer of any Series 2006-1 Notes unless such
transfer complies with the terms of the foregoing legends and, in the case of a
transfer to an Institutional Accredited Investor (other than a Qualified
Institutional Buyer), the transferee delivers a completed Purchaser Letter to
the Trustee.


 


(c) Forms
substantially in the form of Exhibit(s) B through G, as appropriate, shall be
completed in connection with any transfer of the Series 2006-1 Notes.


 


Any
notice to the Holders of Notes will be validly given (i) by either of (a) the
information contained in such notice appearing on the relevant page of the
Reuters Screen or such other medium for the electronic display of data as may
be approved by the Issuer with notice to Holders of the Notes or (b) publication
in the Financial Times and The Wall Street Journal (National Edition)
or, if either newspaper will cease to be published or timely publication
therein will not be practicable, in such English language newspaper or
newspapers as the Issuer will approve having a general circulation in Europe
and the United States and (ii) until such time as any Definitive Notes are
issued in exchange for the Notes and, so long as such Notes are registered in
the name of a nominee for DTC, Euroclear, and/or Clearstream, delivery of the
relevant notice to DTC, Euroclear, and/or Clearstream for communication by them
to the Holders of the Notes.


 


15

















 


ARTICLE III


 


Series 2006-1 Series Account and


 


Allocation and Application of Amounts Therein; Policy


 


Section
3.01 Series 2006-1 Series Account. The Indenture Trustee shall establish
on or prior to the Closing Date and maintain, so long as any Series 2006-1 Note
is Outstanding, an Eligible Account which shall be designated as the Series 2006-1
Series Account, which account shall be held in the name of the Indenture Trustee
(in its capacity as Securities Intermediary of the Indenture Trustee) for the
benefit of the Series 2006-1 Noteholders and the Series Enhancer. In
furtherance of the Grant set forth in the Indenture, the Issuer hereby Grants
to the Indenture Trustee for the benefit of the Series 2006-1 Noteholders and
the Series Enhancer, among other things, a Lien on the Series 2006-1 Series Account.
All deposits of funds by or for the benefit of the Series 2006-1 Noteholders
from the Trust Account, shall be accumulated in, and withdrawn from, the Series
2006-1 Series Account in accordance with the provisions of the Indenture and
this Supplement.


 


Section
3.02 Distributions from Series 2006-1 Series Account. On each Payment
Date, the Indenture Trustee shall distribute funds then on deposit in the Series
2006-1 Series Account in accordance with the provisions of either subsection
(I), (II) or (III) of this Section 302.


 


(I) If
neither an Early Amortization Event nor an Event of Default shall have occurred
and be continuing with respect to any Series of Notes:


 


(1) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to its pro rata portion of the Series 2006-1 Note
Interest Payment (exclusive of Default Fees) then due and payable for such
Payment Date;


 


(2) To the Series Enhancer,
an amount equal to reimbursement of Series 2006-1 Note Interest Payments (and
interest thereon) made by the Series Enhancer under the Enhancement Agreement;


 


(3) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to its pro rata portion of the Minimum Principal
Payment Amount then due and payable to the Holders of the Series 2006-1 Notes
on such Payment Date;


 


(4) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to its pro rata portion of the Scheduled
Principal Payment Amount then due and payable to the Holders of the Series 2006-1
Notes on such Payment Date;


 


(5) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to its pro rata portion of the Supplemental
Principal Payment Amount then due and payable to the Holders of the Series 2006-1
Notes on such Payment Date, if any;


 


16

















 


(6) To (i) the Series Enhancer,
an amount equal to indemnification, expenses, and any other Reimbursement
Amounts then due and owing to the Series Enhancer (excluding any Prepayment
penalties), and (ii) each Holder of a Series 2006-1 Note on the immediately
preceding Record Date, an amount equal to indemnification, expenses, and any
other amounts (including Default Fees) then due and owing, pro rata;


 


(7) To the Series Enhancer,
an amount equal to any Prepayment penalties due and owing to the Series Enhancer
under the related Enhancement Agreement; and


 


(8) After application of
the amounts required to be paid pursuant to Section 302 of the Indenture, to
the Issuer, any remaining Available Distribution Amounts.


 


(II) If
an Early Amortization Event shall have occurred and be continuing with respect
to any Series but no Event of Default shall have occurred and be continuing
with respect to any Series:


 


(1) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to its pro rata portion of the Series 2006-1 Note
Interest Payments (exclusive of Default Fees) then due and payable on such
Payment Date;


 


(2) To the Series Enhancer,
an amount equal to reimbursement of Series 2006-1 Note Interest Payments (and
interest thereon) made by the Series Enhancer under the Insurance Agreement;


 


(3) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to its pro rata portion of the Minimum Principal
Payment Amount then due and payable to the Holders of the Series 2006-1 Notes
on such Payment Date;


 


(4) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to its pro rata portion of the Scheduled
Principal Payment Amount then due and payable to the Holders of the Series 2006-1
Notes on such Payment Date;


 


(5) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to the
Aggregate Series 2006-1 Note Principal Balance, pro rata, based on the then Unpaid Principal Balance for Series
2006-1;


 


(6) To the Series Enhancer,
an amount equal to reimbursement of principal payments (and interest thereon)
made by the Series Enhancer under the related Enhancement Agreement;


 


(7) First, to the Series Enhancer,
indemnification, expenses and any other Reimbursement Amounts due and owing to
the Series Enhancer (excluding, prepayment penalties) and second, indemnification, expenses and any
other amounts


 


17

















 


(exclusive of Default Fees) due and owing to each
Holder of a Series 2006-1 Note on the immediately preceding Record Date; provided that, if a Series Enhancer Event
shall have occurred and be continuing, then, pro
rata with the Holders of the Series 2006-1 Notes then Outstanding;


 


(8) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to the
Default Fees then due and payable to the Holders of a Series 2006-1 Note,
including accrued and unpaid Default Fees, pro
rata;


 


(9) To the Series Enhancer,
an amount equal to any Prepayment penalties due and owing to the Series Enhancer,
then due and payable under the related Enhancement Agreement; and


 


(10) After application of
the amounts required to be paid pursuant to Section 302 of the Indenture, to
the Issuer, any remaining Available Distribution Amounts.


 


(III) If
an Event of Default shall have occurred and be continuing with respect to any
Series:


 


(1) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to its pro rata portion of the Series 2006-1 Note
Interest Payments (exclusive of Default Fees) then due and payable on such
Payment Date;


 


(2) To the Series Enhancer,
an amount equal to reimbursement of Series 2006-1 Note Interest Payments (and interest
thereon) made by the Series Enhancer under the Insurance Agreement;


 


(3) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to the
Minimum Principal Payment Amount then due and payable on such Payment Date, pro rata, based on the Unpaid Principal
Balance at the time of such Event of Default;


 


(4) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to the
Scheduled Principal Payment Amount then due and payable on such Payment Date, pro rata, based on the Unpaid Principal
Balance at the time of such Event of Default;


 


(5) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to the
Aggregate Series 2006-1 Note Principal Balance, pro rata, based on the then Unpaid Principal Balance of Series
2006-1 at the time of such Event of Default;


 


(6) To the Series Enhancer,
an amount equal to reimbursement of principal payments (and interest thereon)
made by the Series Enhancer, then due and payable under the related Enhancement
Agreement;


 


18

















 


(7) To the Series Enhancer,
an amount equal to indemnification and expenses and other Reimbursement Amounts
due and owing to the Series Enhancer (excluding any Prepayment penalties);


 


(8) To each Holder of a Series
2006-1 Note on the immediately preceding Record Date, an amount equal to any
other amounts (including Default Fees) then due and payable to the Holders of Series
2006-1 Note, including accrued and unpaid Default Fees, pro rata;


 


(9) To the Series Enhancer,
an amount equal to any Prepayment penalties due and owing to the Series Enhancer
under the related Enhancement Agreement; and


 


(10) After application of
the amounts required to be paid pursuant to Section 302 of the Indenture, to
the Issuer, any remaining Available Distribution Amounts.


 


Any amounts payable to a
Noteholder or the Series Enhancer shall be made by wire transfer of immediately
available funds to the account that such Noteholder or Series Enhancer has
designated to the Indenture Trustee in writing on or prior to the Business Day
immediately preceding the Payment Date.


 


Section
3.03 The Policy.


 


(a) On
each Determination Date, the Indenture Trustee shall determine, with respect to
the immediately following Payment Date, based solely on the information
contained in the Manager Report, whether there exists a Deficiency Amount.


 


(b) If
there exists a Deficiency Amount which is an Insured Amount with respect to a
Payment Date, the Indenture Trustee shall complete a Notice in the form of Exhibit
A to the Policy and submit such claim for such Insured Amount to the Series Enhancer
in accordance with the terms of the Policy. Any payment made by the Series Enhancer
under the Policy shall be applied solely to the payment of principal or
interest (other than Default Fees) on the Series 2006-1 Notes subject to the
terms of the Policy.


 


(c) The
Indenture Trustee shall (i) receive Insured Payments as attorney-in-fact of
each of the Series 2006-1 Noteholders and (ii) disburse such Insured Amount
directly to the Series 2006-1 Noteholders. The Issuer hereby agrees for the
benefit of the Series Enhancer (and each Series 2006-1 Noteholder, by
acceptance of its Series 2006-1 Notes, will be deemed to have agreed) that,
without limiting any other rights of the Series Enhancer, to the extent the Series
Enhancer pays, or causes to be paid, Insured Payments, either directly or
indirectly (as by paying through distribution to the Indenture Trustee), to the
Series 2006-1 Noteholders, the Series Enhancer will be entitled to receive the
related Reimbursement Amount pursuant to Section 302 hereof in lieu of the
Noteholders and will be subrogated to their payment rights thereunder.


 


(d) The
Series 2006-1 Notes will be insured by the Policy pursuant to the terms set
forth therein, notwithstanding any provisions to the contrary contained in this


 


19






 










 


Supplement. All amounts
received under the Policy shall be used solely for the payment when due to the Series
2006-1 Noteholders of the Insured Amount.


 


(e) If
a Corporate Trust Officer of the Indenture Trustee at any time has actual
knowledge that a Deficiency Amount will exist on the applicable Payment Date,
the Indenture Trustee shall immediately notify the Series Enhancer and each
Interest Rate Hedge Provider of the amount of such deficiency.


 


(f) Anything
herein to the contrary notwithstanding, any payment with respect to the
principal of or interest on the Series 2006-1 Notes which is made with monies
received pursuant to the terms of the Policy shall not be considered payment by
the Issuer of the Series 2006-1 Notes, shall not discharge the Issuer in
respect of its obligation to make such payment, and shall not result in the
payment of, or the provision for the payment of, the principal of or interest
on, the Series 2006-1 Notes for purposes of Section 203 hereof or of the
Indenture. The Issuer and the Indenture Trustee acknowledge that, without the
need for any further action on the part of the Series Enhancer, the Issuer, the
Indenture Trustee or the Note Registrar, (i) to the extent the Series Enhancer
makes payments, directly or indirectly, on account of principal of, or interest
on, the Series 2006-1 Notes to the Series 2006-1 Noteholders, the Series Enhancer
will be fully subrogated to the rights of such Series 2006-1 Noteholders to
receive such principal and interest from the Issuer, and (ii) the Series Enhancer
shall be paid such principal and interest in its capacity as partial subrogee
of the Series 2006-1 Noteholders, but only from the sources and in the manner
provided herein for the payment of such principal and interest. To evidence the
Series Enhancer’s subrogation to the rights of the Series 2006-1 Noteholders,
the Note Registrar shall note the Series Enhancer’s rights as subrogee upon the
register of Series 2006-1 Noteholders upon receipt from the Series Enhancer of
proof of payment by the Series Enhancer of any Insured Amount.


 


(g) The
parties hereto grant to the Series Enhancer, as long as no Series Enhancer
Default shall have occurred and is continuing, the right of prior approval of
amendments, waivers or supplements to the Related Documents (other than the Series
2006-1 Note Purchase Agreement and except to the extent expressly set forth in Section
706 hereof) available to the Series 2006-1 Noteholders thereunder and of the
exercise of any option, vote, right, power, or the like available to the Series
2006-1 Noteholders hereunder.


 


(h) The
Indenture Trustee shall keep a complete and accurate record of the amount and
allocation of Insured Payments and the Series Enhancer shall have the right to
inspect such records at reasonable times upon three (3) Business Days’ prior
written notice to the Indenture Trustee.


 


(i) In
the event that a Preference Amount is payable under the Policy, the Indenture
Trustee shall so notify the Series Enhancer, shall comply with the provisions
of the Policy to obtain payment by the Series Enhancer of such avoided payment,
and shall, at the time it provides notice to the Series Enhancer, notify the Series
2006-1 Noteholders by mail that, in the event that any Series 2006-1 Noteholder’s
payment is so recoverable, the Indenture Trustee on behalf of such Series 2006-1
Noteholder will be entitled to payment thereof pursuant to the terms of the
Policy. The Indenture Trustee shall furnish to the Series Enhancer, at its
written request, the requested records it holds in its possession evidencing
the payments of principal of


 


20

















 


and interest on the Series
2006-1 Notes, if any, which have been made by the Indenture Trustee and
subsequently recovered from the Series 2006-1 Noteholders, and the dates on
which such payments were made.


 


Without
limiting any rights of the Series Enhancer under the Policy or any other Series
2006-1 Transaction Document, and without modifying or otherwise affecting any
terms or conditions of the Policy, each Series 2006-1 Noteholder, by its
purchase of the Series 2006-1 Notes, and the Indenture Trustee hereby agree
that, the Series Enhancer (so long as no Series Enhancer Default exists) may at
any time during the continuation of any Proceeding relating to a Preference
Amount direct all matters relating to such Preference Amount, including,
without limitation, (i) the direction of any appeal of any order relating to
any Preference Amount and (ii) the posting of any surety, supersede as, or
performance bond pending any such appeal. In addition, and without limitation
of the foregoing, the Series Enhancer shall be subrogated to the rights of the
Indenture Trustee and each such Series 2006-1 Noteholder, in the conduct of any
such Preference Amount, including, without limitation, all rights of any party
to an adversary proceeding action with respect to any order issued in
connection with any such Preference Amount. Insured Payments paid by the Series
Enhancer to the Indenture Trustee shall be received by the Indenture Trustee,
as agent to the Series 2006-1 Noteholders. The Indenture Trustee, as agent to
the Series 2006-1 Noteholders, hereby acknowledges and affirms that the rights
of the Series 2006-1 Noteholders to any monies paid or payable in respect of
the Series 2006-1 Notes shall be fully subrogated to the Series Enhancer to the
extent of any payment made by the Series Enhancer pursuant to the terms of the
Policy, and any interest due thereon.


 


(j) By
acceptance of a Series 2006-1 Note, each Series 2006-1 Noteholder agrees to be
bound by the terms of the Policy, including, without limitation, the method and
timing of payment and the Series Enhancer’s right of subrogation.


 


(k) Notwithstanding
the foregoing, in the event that payments on the Series 2006-1 Notes are
accelerated, such accelerated payments will not be covered by the Series Enhancer
under the Policy, unless the Series Enhancer shall elect to make such
accelerated payments in accordance with and subject to the terms of the Policy.


 


(l) The
Indenture Trustee shall be entitled to enforce on behalf of the Series 2006-1
Noteholders the obligations of the Series Enhancer under the Policy.
Notwithstanding any other provision of this Supplement or any Series 2006-1
Transaction Document, the Series 2006-1 Noteholders are not entitled to make
any claims under the Policy or institute Proceedings directly against the Series
Enhancer.


 


(m) Nothing
in this Section 3.03 or in any other Section hereof shall or is intended to
modify any of the terms, provisions or conditions of the Policy.


 


21

















 


ARTICLE IV


 


Additional Covenants


 


In
addition to the covenants set forth in Article VI of the Indenture, the Issuer
hereby makes the following additional covenants for the benefit of the Series 2006-1
Noteholders:


 


Section
4.01 Other Information. For so long as any of the Series 2006-1 Notes
are “restricted securities” within the meaning of Rule 144(a)(3) under
the Securities Act and the Issuer is not subject to Section 13 or 15(d) of the
Exchange Act, the Issuer will, and shall cause the Manager to (i) provide or
cause to be provided to any Series 2006-1 Noteholder, or to any prospective
purchaser thereof designated by such Series 2006-1 Noteholder, upon the request
of such Noteholder or prospective Series 2006-1 Noteholder, the information
required to be provided to such Holder or prospective purchaser by Rule 144A(d)(4)
under the Securities Act; and (ii) update such information to prevent such
information from becoming materially false and materially misleading in a
manner adverse to any Series 2006-1 Noteholder.


 


Section
4.02 Use of Proceeds. The proceeds from the issuance of the Series 2006-1
Notes shall be used as follows: (i) to acquire additional Sold Assets, (ii) to
reduce certain outstanding Indebtedness of the Issuer, including satisfaction
of all of the amounts owing with respect to the Series 2003-2 Notes, (iii) to
pay the costs of issuance of the Series 2006-1 Notes, and (iv) for other
general business purposes.


 


ARTICLE V


 


Conditions to Issuance


 


Section
5.01 Conditions to Issuance. The Indenture Trustee shall not
authenticate the Series 2006-1 Notes unless (i) all conditions to the issuance
of the Series 2006-1 Notes under the Series 2006-1 Note Purchase Agreement
shall have been satisfied, and (ii) the Issuer shall have delivered a
certificate to the Indenture Trustee to the effect that all conditions set
forth in the Series 2006-1 Note Purchase Agreement shall have been satisfied.


 


ARTICLE VI


 


Representations and Warranties


 


To
induce the Series 2006-1 Noteholders to purchase the Series 2006-1 Notes
hereunder, the Issuer hereby represents and warrants as of the Closing Date to
the Series Enhancer and the Indenture Trustee for the benefit of the Series 2006-1
Noteholders that:


 


Section
6.01 Existence. The Issuer is a limited liability company duly organized
and validly existing under the laws of the State of Delaware. The Issuer is in
good standing and is duly qualified to do business in each jurisdiction where
the failure to do so would have a material adverse effect upon the financial
condition and business of the Issuer, including, without limitation, its
ability to collect payments under the Leases.


 


22

















 


Section
6.02 Authorization. The Issuer has the power and is duly authorized to
execute and deliver the Indenture, this Supplement, and the other Related
Documents to which it is a party; the Issuer is and will continue to be duly
authorized to borrow monies hereunder and under the Indenture; and the Issuer
is and will continue to be authorized to perform its obligations under the
Indenture, this Supplement, and the other Related Documents. The execution,
delivery, and performance by the Issuer of the Indenture, this Supplement, and
the other Related Documents to which it is a party and the borrowings hereunder
do not and will not require any consent or approval of any Governmental
Authority, the Manager, or any other Person which has not already been
obtained.


 


Section
6.03 No Conflict; Legal Compliance. The execution, delivery, and
performance of the Indenture, this Supplement, and each of the other Related
Documents and the execution, delivery, and payment of the Series 2006-1 Notes
will not: (a) contravene any provision of the Issuer’s constituent or
organizational documents; (b) contravene, conflict with, or violate any
Applicable Law or regulation, or any order, writ, judgment, injunction, decree,
determination, or award of any Governmental Authority; or (c) violate or result
in the breach of, or constitute a default under the Indenture, the other
Related Documents, any other indenture or other loan or credit agreement, or
other agreement or instrument to which the Issuer is a party or by which the
Issuer, or its property and assets may be bound or affected. The Issuer is not
in violation or breach of or default under any law, rule, regulation, order,
writ, judgment, injunction, decree, determination, or award or any contract,
agreement, lease, license, indenture, or other instrument to which it is a
party.


 


Section
6.04 Validity and Binding Effect. Each of this Supplement and each Series
2006-1 Transaction Document to which the Issuer is a party, when duly executed
and delivered, will be the legal, valid and binding obligations of the Issuer,
enforceable against the Issuer in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, or other similar laws
of general application affecting the enforcement of creditors’ rights or by general
principles of equity limiting the availability of equitable remedies.


 


Section
6.05 Financial Statements. Since December 31, 2005, there has been no
Material Adverse Change in the financial condition of any of the Seller, the
Manager, or the Issuer.


 


Section
6.06 Place of Business. The Issuer’s only “place of business” (within
the meaning of 9-307 of the UCC) is located at c/o Container Leasing
International, LLC, One Maynard Drive, Park Ridge, New Jersey 07656.


 


Section
6.07 No Agreements or Contracts. The Issuer is not now and has not been
a party to any contract or agreement (whether written or oral) other than the Series
2001-1 Transaction Documents, the Series 2003-1 Transaction Documents, the Series
2003-2 Transaction Documents, the Related Documents and the Series 2006-2
Transaction Documents (as each term not defined herein is defined in the
Supplement for such Series and provided that all obligations under the Series 2001-1
Notes and the Series 2003-1 Notes have previously been terminated and all
obligations Series 2003-2 Notes shall be terminated concurrent with the
issuance of the Series 2006-1 Notes).


 


23

















 


Section
6.08 Consents and Approvals. No approval, authorization, or consent of
any trustee or holder of any Indebtedness or obligation of the Issuer or of any
other Person under any agreement, contract, lease, or license or similar
document or instrument to which the Issuer is a party or by which the Issuer is
bound, is required to be obtained by the Issuer in order to make or consummate
the transactions contemplated under the Related Documents, except for those
approvals, authorizations, and consents that have been obtained on or prior to
the Closing Date. All consents and approvals of, filings and registrations
with, and other actions in respect of, all Governmental Authorities required to
be obtained by the Issuer in order to make or consummate the transactions
contemplated under the Related Documents have been, or prior to the time when
required will have been, obtained, given, filed, or taken and are or will be in
full force and effect.


 


Section
6.09 Margin Regulations. The Issuer does not own any “margin security”,
as that term is defined in Regulation U of the Federal Reserve Board, and the proceeds
of the Series 2006-1 Notes issued under this Supplement will be used only for
the purposes contemplated hereunder. None of such proceeds will be used,
directly, or indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any Indebtedness which was
originally incurred to purchase or carry any margin security or for any other
purpose which might cause any of the loans under this Supplement to be
considered a “purpose credit” within the meaning of Regulations T, U, and X.
The Issuer will not take or permit any agent acting on its behalf to take any
action which might cause this Supplement or any document or instrument
delivered pursuant hereto to violate any regulation of the Federal Reserve Board.


 


Section
6.10 Taxes. All federal, state, local, and foreign tax returns, reports,
and statements required to be filed by the Issuer have been filed with the
appropriate Governmental Authorities, and all taxes and other impositions shown
thereon to be due and payable by the Issuer have been paid prior to the date on
which any fine, penalty, interest, or late charge may be added thereto for
nonpayment thereof, or any such fine, penalty, interest, late charge, or loss
has been paid, or the Issuer is contesting its liability therefor in good faith
and has fully reserved all such amounts according to GAAP in the financial
statements provided pursuant to Section 626 of the Indenture. The Issuer has
paid when due and payable all material charges upon the books of the Issuer and
no Governmental Authority has asserted any Lien against the Issuer with respect
to unpaid taxes. Proper and accurate amounts have been withheld by the Issuer
from its employees for all periods in full and complete compliance with the tax,
social security, and unemployment withholding provisions of applicable federal,
state, local, and foreign law and such withholdings have been timely paid to
the respective Governmental Authorities.


 


Section
6.11 Other Regulations. The Issuer is not an “investment company,” or an
“affiliated person” of, or a “promoter” or “principal underwriter” for, an “investment
company,” as such terms are defined in the Investment Company Act of 1940, as
amended. The issuance of the Series 2006-1 Notes hereunder and the application
of the proceeds and repayment thereof by the Issuer and the performance of the
transactions contemplated by the Indenture, this Supplement and the other
Related Documents will not violate any provision of the Investment Company Act,
or any rule, regulation, or order issued by the Securities and Exchange
Commission thereunder.


 


24

















 


Section
6.12 Solvency and Separateness.


 


(i) The capital of the
Issuer is adequate for the business and undertakings of the Issuer.


 


(ii) Other than with
respect to the transactions contemplated hereby and by the other Related
Documents, the Issuer is not engaged in any business transactions with the
Manager, except as permitted by the Management Agreement or with the Seller
except as permitted under the Contribution and Sale Agreement.


 


(iii) At all times, at
least two (2) members of the Board of Managers of the Issuer comply with the
definition of Independent Person.


 


(iv) The Issuer’s funds
and assets are not, and will not be, commingled with those of the Seller or the
Manager, except as permitted by the Management Agreement and the Intercreditor
Agreement.


 


(v) The limited liability
company agreement of the Issuer requires it to maintain (A) correct and
complete books and records of account, and (B) minutes of the meetings and
other proceedings of its members.


 


(vi) The Issuer has not
engaged in any business activities, except as permitted by the present and
express terms of the Related Documents, the Series 2006-2 Transaction Documents
and Section 2.3 of its limited liability company agreement.


 


(vii) The Issuer is not
insolvent under the Insolvency Law and will not be rendered insolvent by the
transactions contemplated by the Related Documents and after giving effect to
such transactions, the Issuer will not be left with an unreasonably small
amount of capital with which to engage in its business nor will the Issuer have
intended to incur, or believe that it has incurred, debts beyond its ability to
pay such debts as they mature. The Issuer does not contemplate the commencement
of insolvency, bankruptcy, liquidation, or consolidation Proceedings or the
appointment of a receiver, liquidator, trustee, or similar official in respect
of the Issuer or any of its assets.


 


(viii) The Issuer is not
liable for any unbonded or uninsured final non-appealable judgments or
liabilities which in aggregate exceed $50,000.


 


Section
6.13 No Default. No Event of Default or Early Amortization Event has
occurred and is continuing. No event or condition which with the giving of
notice or passage of time (or both) could reasonably be expected to constitute
an Event of Default or Early Amortization Event has occurred or is continuing.


 


25

















 


Section
6.14 Litigation and Contingent Liabilities. No claims, litigation,
arbitration Proceedings, or governmental Proceedings by any Governmental
Authority are pending or, to the Issuer’s knowledge, threatened against the
Issuer the results of which might interfere with the consummation of any of the
transactions contemplated by the Indenture, this Supplement or any document
issued or delivered in connection herewith.


 


Section
6.15 Title; Liens. On the Closing Date, the Issuer will have good,
legal, and marketable title to each of its respective assets, and none of such
assets is subject to any Lien, except for Permitted Encumbrances.


 


Section
6.16 Subsidiaries. The Issuer has no Subsidiaries.


 


Section
6.17 No Partnership. The Issuer is not a partner or joint venturer in
any partnership or joint venture.


 


Section
6.18 Pension and Welfare Plans. The Issuer does not maintain or
contribute to, and has never maintained or contributed to, any Plan. The Issuer
does not have any obligation under any collective bargaining agreement. As of
the Closing Date, the Issuer is not an employee benefit plan within the meaning
of ERISA or a “plan” within the meaning of section 4975 of the Code and
assets of the Issuer do not constitute “plan assets” within the meaning
of section 25 10.3-101 of the regulations of the United States Department of
Labor.


 


Section
6.19 Ownership of the Issuer. On the Closing Date, all the equity
interests in the Issuer are owned by the Seller.


 


Section
6.20 Security Interest Representations.


 


(a) This
Supplement and the Indenture create a valid and continuing security interest
(as defined in the UCC) in the Collateral in favor of the Indenture Trustee,
for the benefit of the Noteholders, each Series Enhancer, and each Interest
Rate Hedge Provider, which security interest is prior to all other Liens, and
is enforceable as such as against creditors of and purchasers from the Issuer.


 


(b) The
Containers constitute “goods” or “inventory” within the meaning of the
applicable UCC. The Leases constitute “tangible chattel paper” within the
meaning of the UCC. The Lease receivables constitute “accounts” or “proceeds”
of the Leases within the meaning of the UCC. The Trust Account, the Restricted
Cash Account, the Series 2006-1 Series Account, and Manager Transition Account
constitute “securities accounts” within the meaning of the UCC. The Issuer’s
contractual rights under any Interest Rate Hedge Agreements, the Contribution
and Sale Agreement, and the Management Agreement constitute “general
intangibles” within the meaning of the UCC.


 


(c) The
Issuer owns and has good and marketable title to the Collateral, free and clear
of any Lien (whether senior, junior, or pari
passu), claim or encumbrance of
any Person, except for Permitted Encumbrances.


 


(d) The
Issuer has caused the filing of all appropriate financing statements or
documents of similar import in the proper filing office in the appropriate


 


26

















 


jurisdictions under
Applicable Law in order to perfect the security interest in the Collateral
granted to the Indenture Trustee in this Supplement and the Indenture. All
financing statements filed against the Issuer in favor of the Indenture Trustee
in connection herewith describing the Collateral 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 the Indenture Trustee.”


 


(e) Other
than the security interest granted to the Indenture Trustee pursuant to this
Supplement and the Indenture, the Issuer has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Collateral,
except as permitted pursuant to the Indenture. The Issuer has not authorized
the filing of, and is not aware of, any financing statements against the Issuer
that include a description of collateral covering the Collateral other than any
financing statement or document of similar import (i) relating to the security
interest granted to the Indenture Trustee in this Supplement or the Indenture
or (ii) that has been terminated. The Issuer has no actual knowledge of any
judgment or tax lien filings against the Issuer.


 


(f) The
Issuer has received a written acknowledgment from the Manager that the Manager
is holding the Leases on behalf of, and for the benefit of, the Indenture
Trustee. None of the Leases that constitute or evidence the Collateral have any
marks or notations indicating that they have been pledged, assigned, or
otherwise conveyed to any Person other than the Indenture Trustee. The Seller
has caused the filing of all appropriate financing statements or documents of
similar import in the proper filing office in the appropriate jurisdictions
under Applicable Law in order to perfect the security interest of the Issuer
(and the Indenture Trustee as its assignee) in the Leases (to the extent that
such Leases are related to the Containers) granted to the Issuer in the
Contribution and Sale Agreement.


 


(g) The
Issuer has received all necessary consents and approvals required by the terms
of the Collateral to the pledge to the Indenture Trustee of its interest and
rights in such Collateral hereunder or under the Indenture.


 


(h) The
Issuer has taken all steps necessary to cause U.S. Bank National Association
(in its capacity as securities intermediary) to identify in its records the
Indenture Trustee as the Person having a Security Entitlement in each of the
Trust Account, the Restricted Cash Account, the Series 2006-1 Series Account,
and the Manager Transition Account.


 


(i) The
Trust Account, the Restricted Cash Account, Series 2006-1 Series Account and
the Manager Transition Account are not in the name of any Person other than the
Indenture Trustee. The Issuer has not given its consent to U.S. Bank National
Association (as the securities intermediary of the Trust Account, the
Restricted Cash Account, the Series 2006-1 Series Account, and the Manager
Transition Account) to comply with entitlement orders of any Person other than
the Indenture Trustee. The Manager Collection Account is subject to a control
agreement which has perfected the security interest of the Collateral Agent
therein on Gross Revenues for the benefit of the Indenture Trustee as the named
party thereunder.


 


(j) No
creditor of the Issuer (other than the Manager in its capacity as Manager under
the Management Agreement) has in its possession any goods that constitute or
evidence the Collateral.


 


27

















 


The representations and
warranties set forth in this Section 6.20 shall survive until this Supplement
is terminated in accordance with its terms and the terms of the Indenture. Any
breaches of the representations and warranties set forth in this Section 6.20
may be waived by the Indenture Trustee, only with the prior written consent of
the Control Party and with prior written notice to the Rating Agencies.


 


Section
6.21 Use of Proceeds. The Issuer shall use the proceeds from the
issuance of the Notes to (i) to acquire additional Sold Assets, (ii) to reduce
certain outstanding Indebtedness of the Issuer, including satisfaction of all
of the amounts owing with respect to the Series 2003-2 Notes, (iii) to pay the
costs of issuance of the Series 2006-1 Notes and (iv) for other general
business purposes.


 


Section
6.22 Survival of Representations and Warranties. So long as any of the Series
2006-1 Notes shall be Outstanding and until payment and performance in full of
the aggregate Outstanding Obligations, the representations and warranties
contained herein shall have a continuing effect as having been true when made.


 


Section
6.23 ERISA Lien. As of the Closing Date, the Issuer has not received
notice that any Lien arising under ERISA has been filed against the assets of
the Issuer.


 


ARTICLE VII


 


Miscellaneous Provisions


 


Section
7.01 Ratification of Indenture. As supplemented by this Supplement, the
Indenture is in all respects ratified and confirmed and the Indenture as so
supplemented by this Supplement shall be read, taken, and construed as one and
the same instrument.


 


Section
7.02 Counterparts. This Supplement may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument. Delivery of an executed counterpart of this Supplement by facsimile
or by electronic means shall be equally effective as of the delivery of an
originally executed counterpart.


 


Section
7.03 Governing Law. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTIONS 5-1401 AND 5-1402 OF
THE GENERAL OBLIGATIONS LAWS BUT OTHERWISE WITHOUT REFERENCE TO ITS CONFLICTS
OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.


 


Section
7.04 Notices to Rating Agencies. Whenever any notice or other
communication is required to be given to the Rating Agencies pursuant to the
Indenture or this Supplement, such notice or communication shall be delivered
as follows: (i) to Moody’s at Moody’s Investors Service, Inc., 99 Church
Street, New York, New York 10007, fax: (2 12/553-4392), email:
servicerreports@moodys.com, Attention: ABS Monitoring Group and (ii) if to
S&P at Standard & Poor’s Ratings Services, 55 Water Street, 41st Floor,
New York, New York 10041, Attention: Asset-Backed Surveillance Group - phone:
(212/438-2435), fax: (212/438-


 


28

















 


2664). Any rights to
notices conveyed to a Rating Agency pursuant to the terms of this Supplement
shall terminate immediately if such Rating Agency no longer has a rating
outstanding with respect to the Series 2006-1 Notes.


 


Section
7.05 Statutory References. References in this Supplement and any other Series
2006-1 Transaction Document to any section of the Uniform Commercial Code or
the UCC shall mean, on or after the effective date of adoption of any revision
to the Uniform Commercial Code or the UCC in the applicable jurisdiction, such
revised or successor section thereto.


 


Section
7.06 Amendments and Modifications. The terms of the Supplement may be
waived, modified, or amended only in a written instrument signed by each of the
Issuer, the Control Party, and the Indenture Trustee and, with respect to the
matters set forth in (and subject to the terms of) Section 1001 of the
Indenture, only with the prior written consent of the Requisite Global Majority
or, with respect to the matters set forth in Section 1002(b) of the Indenture,
the prior written consent of the Requisite Global Majority and the Holders of
all Series 2006-1 Notes then Outstanding and each Series Enhancer affected
thereby.


 


Section
7.07 Consent to Jurisdiction. ANY LEGAL SUIT, ACTION, OR PROCEEDING
AGAINST THE ISSUER ARISING OUT OF OR RELATING TO THIS SUPPLEMENT, OR ANY TRANSACTION
CONTEMPLATED HEREBY, MAY BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK AND THE ISSUER HEREBY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION, OR PROCEEDING, AND, SOLELY FOR THE PURPOSES OF ENFORCING THIS
SUPPLEMENT, THE ISSUER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING. THE ISSUER HEREBY
IRREVOCABLY APPOINTS AND DESIGNATES CORPORATION SERVICE COMPANY, HAVING AN
ADDRESS AT 1133 AVENUE OF THE AMERICAS, SUITE 3100, NEW YORK, NY 10036-6710,
ITS TRUE AND LAWFUL ATTORNEY-IN-FACT AND DULY AUTHORIZED AGENT FOR THE LIMITED
PURPOSE OF ACCEPTING SERVICING OF LEGAL PROCESS AND THE ISSUER AGREES THAT SERVICE
OF PROCESS UPON SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE OF SUCH PROCESS ON
SUCH PERSON. THE ISSUER SHALL MAINTAIN THE DESIGNATION AND APPOINTMENT OF SUCH
AUTHORIZED AGENT UNTIL ALL AMOUNTS PAYABLE UNDER THIS SUPPLEMENT SHALL HAVE
BEEN PAID IN FULL. IF SUCH AGENT SHALL CEASE TO SO ACT, THE ISSUER SHALL
IMMEDIATELY DESIGNATE AND APPOINT ANOTHER SUCH AGENT SATISFACTORY TO THE
INDENTURE TRUSTEE AND SHALL PROMPTLY DELIVER TO THE INDENTURE TRUSTEE EVIDENCE
IN WRITING OF SUCH OTHER AGENT’S ACCEPTANCE OF SUCH APPOINTMENT.


 


Section
7.08 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, AS AGAINST THE OTHER PARTIES HERETO, ANY RIGHTS IT MAY HAVE TO A JURY
TRIAL IN RESPECT OF ANY CIVIL ACTION OR PROCEEDING (WHETHER ARISING IN CONTRACT
OR TORT OR OTHERWISE), INCLUDING ANY COUNTERCLAIM, ARISING UNDER OR RELATING TO
THIS


 


29

















 


AGREEMENT OR ANY OTHER
OPERATIVE DOCUMENT, INCLUDING IN RESPECT OF THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT HEREOF OR THEREOF.


 


Section
7.09 Third Party Beneficiaries. The Series Enhancer is an express third
party beneficiary and shall be entitled to rely on all representations,
warranties, covenants, and agreements contained herein, and in the Indenture to
the extent related hereto, as if made directly to it and as if it were a party
hereto.


 


Section
7.10 Notices to the Series Enhancer. Whenever any notice or other
communication is required to be given to the Series Enhancer pursuant to the
Indenture, this Supplement, or any other Series 2006-1 Transaction Document,
such notice or communication shall be delivered as follows: Ambac Assurance
Corporation, One State Street Plaza, 19th Floor, New York, New York 10004,
Attention: Structured Finance Department - ABS; Facsimile: 212-208-3547, or to
such other address as notified to the Issuer, the Indenture Trustee, the
Manager, the Initial Purchasers, each Interest Rate Hedge Provider and the
Transition Agent.


 


[Signature page follows.]


 


30

















 


IN
WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Supplement to be duly executed and delivered by their respective officers all
as of the day and year first above written.


 


 


	
   

  	
  CLI FUNDING LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel P. DeBlasio

  
	
   

  	
   

  	
  Name:

  	
  Daniel P. DeBlasio

  
	
   

  	
   

  	
  Title:

  	
  VP & Chief
  Financial Officer

  



 

















 


	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION, 

  as

  Indenture Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Diane L. Reynolds

  
	
   

  	
   

  	
  Name:

  	
  Diane L. Reynolds

  
	
   

  	
   

  	
  Title:

  	
  Vice President