POOLING AND SERVICING AGREEMENT
Dated as of ____________, 20__
among
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
Depositor
and
LONG BEACH ACCEPTANCE CORP.
Originator and Servicer
and
[NAME OF TRUSTEE]
Trustee, Back-up Servicer, Custodian [and Collateral Agent]
Long Beach Auto Receivables Trust 20__-_
$______________ ____% Class A Certificates
TABLE OF CONTENTS
Section Page
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ARTICLE I
Definitions
SECTION 1.1. Definitions...........................................................................1
SECTION 1.2. Usage of Terms.......................................................................25
SECTION 1.3. Section References...................................................................25
SECTION 1.4. Limitation on Trust Activities.......................................................25
SECTION 1.5. Calculations.........................................................................25
SECTION 1.6. Action by or Consent of Certificateholders...........................................26
SECTION 1.7. Material Adverse Effect..............................................................26
ARTICLE II
The Trust and Trust Property
SECTION 2.1. Creation of Trust....................................................................26
SECTION 2.2. Conveyance of Receivables............................................................26
SECTION 2.3. Transfer Intended as Sale; Precautionary Security Interest...........................33
SECTION 2.4. Acceptance by Trustee................................................................34
SECTION 2.5. Assignment by Depositor..............................................................34
SECTION 2.6. Delivery of Legal Files and Receivable Files.........................................34
SECTION 2.7. Acceptance of Legal Files by Custodian...............................................35
SECTION 2.8. Access to Receivable Files and Legal Files; Servicer's Duties
with Respect to Receivable Files;
Custodian's Duties with Respect to Legal Files............................36
SECTION 2.9. Covenants of the Custodian...........................................................37
ARTICLE III
Administration and Servicing of Receivables
SECTION 3.1. Duties of Servicer...................................................................39
SECTION 3.2. Collection and Allocation of Receivable Payments.....................................40
SECTION 3.3. Realization Upon Receivables.........................................................41
SECTION 3.4. Physical Damage Insurance; Other Insurance...........................................42
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles...............................43
SECTION 3.6. Additional Covenants of Servicer.....................................................44
SECTION 3.7. Purchase of Receivables Upon Breach..................................................44
SECTION 3.8. Servicing Fee........................................................................45
SECTION 3.9. Servicer's Certificate...............................................................45
SECTION 3.10. Annual Statement as to Compliance; Notice of Default.................................46
SECTION 3.11. Annual Independent Certified Public Accountant's Report..............................46
SECTION 3.12. Servicer Expenses....................................................................47
SECTION 3.13. [Retention and Termination of Servicer...............................................47
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SECTION 3.14. Access to Certain Documentation and Information Regarding Receivables................48
SECTION 3.15. Verification of Servicer's Certificate...............................................48
SECTION 3.16. Fidelity Bond........................................................................49
SECTION 3.17. Delegation of Duties.................................................................49
SECTION 3.18. Delivery of Back-up Tapes of Back-up Servicer........................................50
ARTICLE IV
Distributions; Accounts;
Statements to Certificateholders
SECTION 4.1. Accounts; Lock-Box Account...........................................................51
SECTION 4.2. Collections..........................................................................53
SECTION 4.3. Application of Collections...........................................................53
SECTION 4.4. Payaheads 54
SECTION 4.5. Additional Deposits..................................................................54
SECTION 4.6. Distributions; Policy Claims.........................................................54
SECTION 4.7. [Reserved] 58
SECTION 4.8. Statements to Certificateholders; Tax Returns........................................59
SECTION 4.9. [Reserved] 61
SECTION 4.10. Reliance on Information from the Servicer............................................61
SECTION 4.11. [Optional Deposits by the Certificate Insurer........................................61
SECTION 4.12. [Spread Account......................................................................62
SECTION 4.13. [Policy 62
SECTION 4.14. [Withdrawals from Spread Account.....................................................62
SECTION 4.15. [Claims Under Policy.................................................................62
SECTION 4.16. [Preference Claims; Direction of Proceedings.........................................64
SECTION 4.17. [Surrender of Policy.................................................................65
SECTION 4.18. Simple Interest Advances.............................................................65
SECTION 4.19. [Pre-Funding Account.................................................................65
SECTION 4.20. [Capitalized Interest Account........................................................66
ARTICLE V
The Certificates
SECTION 5.1. The Certificates.....................................................................68
SECTION 5.2. Appointment of Paying Agent..........................................................68
SECTION 5.3. Authenticating Agent.................................................................69
SECTION 5.4. Authentication of Certificates.......................................................70
SECTION 5.5. Registration of Transfer and Exchange of Certificates................................70
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Certificates....................................74
SECTION 5.7. Persons Deemed Owners................................................................74
SECTION 5.8. Access to List of Certificateholders' Names and Addresses............................74
SECTION 5.9. Maintenance of Office or Agency......................................................74
SECTION 5.10. Book-Entry Certificates..............................................................75
SECTION 5.11. Notices to Clearing Agency...........................................................76
SECTION 5.12. Definitive Certificates..............................................................76
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ARTICLE VI
The Depositor
SECTION 6.1. Representations of Depositor.........................................................76
SECTION 6.2. Liability of Depositor; Indemnities..................................................78
SECTION 6.3. Merger or Consolidation of, or Assumption of the Obligations of, Depositor...........79
SECTION 6.4. Limitation on Liability of Depositor and Others......................................80
SECTION 6.5. Depositor May Own Certificates.......................................................80
ARTICLE VII
The Servicer
SECTION 7.1. Representations of Servicer..........................................................80
SECTION 7.2. Indemnities of Servicer..............................................................82
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations of, Servicer
or Back-up Servicer ..........................................................84
SECTION 7.4. Limitation on Liability of Servicer and Others.......................................85
SECTION 7.5. Servicer and Back-up Servicer Not to Resign..........................................85
ARTICLE VIII
Default
SECTION 8.1. Events of Default....................................................................86
SECTION 8.2. Appointment of Successor.............................................................89
SECTION 8.3. Notification to Certificateholders...................................................91
SECTION 8.4. [Reserved] 91
SECTION 8.5. Action Upon Certain Failures of the Servicer.........................................91
ARTICLE IX
The Trustee
SECTION 9.1. Duties of Trustee....................................................................91
SECTION 9.2. Trustee's Certificate................................................................93
SECTION 9.3. Certain Matters Affecting Trustee....................................................93
SECTION 9.4. Trustee Not Liable for Certificates or Receivables...................................95
SECTION 9.5. Trustee May Own Certificates.........................................................96
SECTION 9.6. Indemnity of Trustee and Custodian...................................................96
SECTION 9.7. Eligibility Requirements for Trustee.................................................96
SECTION 9.8. Resignation or Removal of Trustee....................................................97
SECTION 9.9. Successor Trustee....................................................................98
SECTION 9.10. Merger or Consolidation of Trustee...................................................98
SECTION 9.11. Co-Trustee; Separate Trustee.........................................................98
SECTION 9.12. Representations and Warranties of Trustee...........................................100
SECTION 9.13. No Bankruptcy Petition..............................................................100
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SECTION 9.14. Trustee May Enforce Claims Without Possession of Certificates.......................100
SECTION 9.15. [Rights of Certificate Insurer to Direct Trustee....................................101
ARTICLE X
Termination
SECTION 10.1. Termination of the Trust............................................................101
SECTION 10.2. Optional Purchase of All Receivables................................................102
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1. Amendment .........................................................................103
SECTION 11.2. Protection of Title to Trust.......................................................104
SECTION 11.3. Limitation on Rights of Certificateholders.........................................106
SECTION 11.4. GOVERNING LAW......................................................................107
SECTION 11.5. Notices ...........................................................................107
SECTION 11.6. Severability of Provisions.........................................................108
SECTION 11.7. Assignment.........................................................................108
SECTION 11.8. Certificates Nonassessable and Fully Paid..........................................108
SECTION 11.9. Nonpetition Covenant...............................................................108
SECTION 11.10. Third Party Beneficiaries..........................................................108
SECTION 11.11. [Certificate Insurer as Controlling Party..........................................109
EXHIBITS
Exhibit A Form of Class A Certificate
Exhibit B Form of Excess Cash Flow Certificate
Exhibit C [Reserved]
Exhibit D-1 Form of Trustee's Certificate
Exhibit D-2 Form of Trustee's Certificate
Exhibit E-1 Form of Monthly Certificateholder Statement
Exhibit E-2 Form of Loan Master File Layout
Exhibit F-1 Form of "Qualified Institutional Buyer" Transferee's Certificate
Exhibit F-2 Form of "Accredited Investor" Transferee's Certificate
Exhibit F-3 Form of Transferor's Certificate
Exhibit G Form of ERISA Representation Letter
Exhibit H Form of Depository Agreement
Exhibit I Payment Application Procedures
Exhibit J Payment Deferment and Due Date Change Policies
Exhibit K Documentation Checklist
Exhibit L Form of Request for Transfer of Possession
Exhibit M Form of Custodial Letter
Exhibit N [Form of Transfer Agreement]
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SCHEDULES
Schedule A Schedule of Receivables
Schedule B Location of Receivable Files;
Location of Legal Files
Schedule C Delivery Requirements
v
POOLING AND SERVICING AGREEMENT dated as of _____________, 20__ (the
"Agreement") among Long Beach Acceptance Receivables Corp., a Delaware
corporation, as depositor (the "Depositor"), Long Beach Acceptance Corp., a
Delaware corporation, as originator of the receivables ("LBAC"), and as servicer
(in such capacity, the "Servicer"), and [NAME OF TRUSTEE], a
___________________, as trustee, back-up servicer, custodian [and collateral
agent] (the "Trustee", "Back-up Servicer", "Custodian" [and "Collateral Agent"],
respectively).
In consideration of the premises and of the mutual agreements herein
contained, and other good and valuable consideration, the receipt of which is
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, whenever
capitalized shall have the following meanings:
"Actuarial Receivable" means any Receivable under which the portion of
a payment allocable to interest and the portion of a payment allocable to
principal is determined in accordance with the "actuarial" method.
["Addition Notice" means, with respect to the transfer of Subsequent
Receivables to the Trust pursuant to this Agreement and a Transfer Agreement, a
written notice which shall be given to the Trustee, [the Certificate Insurer]
(in addition to such notice, the Trustee [and the Certificate Insurer] shall
both receive an electronic transmission, in a format acceptable to the Trustee
[and the Certificate Insurer], of the designated Subsequent Receivables to be
sold to the Trust) and each Rating Agency pursuant to Section 2.2(c) not later
than five Business Days prior to the related Subsequent Transfer Date, of the
Depositor's designation of Subsequent Receivables to be sold to the Trust and
the aggregate Principal Balance of such Subsequent Receivables as of the related
Subsequent Cutoff Date.]
"Affiliate" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with
such Person. For purposes of this definition of "Affiliate", the term "control"
(including the terms "controlling", "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause a direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agency Agreement" means the Agency Agreement dated as of __________,
____ among __________, LBAC, GCFP and other Program Parties as defined therein,
as
amended, modified or supplemented from time to time in accordance with the
terms thereof, including a Program Party Counterpart pursuant to Section 2
thereof among ___________, as agent thereunder, the Trustee and LBAC, dated as
of the Closing Date.
"Agreement" means this Pooling and Servicing Agreement, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof.
"AMC" means Ameriquest Mortgage Company, a Delaware corporation, or, as
applicable, its successors.
"Amount Financed" with respect to a Receivable means the aggregate
amount originally advanced under the Receivable toward the purchase price of the
Financed Vehicle and any related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate
of finance charges stated in the Receivable. If after the Closing Date in the
case of an [Initial] Receivable, or the related Subsequent Transfer Date, in the
case of a Subsequent Receivable, the annual rate with respect to such Receivable
as of the Closing Date or related Subsequent Transfer Date, as applicable, is
reduced as a result of (i) an insolvency proceeding involving the related
Obligor or (ii) pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended, the Annual Percentage Rate or APR shall refer to such reduced rate.
"Assumption Date" has the meaning set forth in Section 8.2.
"Authenticating Agent" has the meaning assigned to such term in Section
5.3.
"Back-up Servicer" means [Name of trustee], in its capacity as Back-up
Servicer pursuant to the terms of the Servicing Assumption Agreement or such
Person as shall have been appointed Back-up Servicer pursuant to Section 8.2(c).
"Back-up Servicer Fee" means the fee payable to the Back-up Servicer so
long as LBAC is the Servicer, calculated in the same manner, on the same basis
and for the same period as the Servicing Fee is calculated pursuant to Section
3.8, based on the Back-up Servicer Fee Rate rather than the Servicing Fee Rate.
"Back-up Servicer Fee Rate" shall be _______% per annum, payable
monthly.
"Bankruptcy Remote Entity" means any special or limited purpose
corporation, partnership or other entity generally structured in accordance with
the guidelines of one or more nationally recognized statistical rating
organizations for such entities, whose certificate of incorporation, partnership
agreement or other governing document includes limitations on purpose;
limitations on amendments to the certificate of incorporation and bylaws,
partnership agreement or other governing documents; limitations on ability to
incur debt; limitations on liquidation, consolidation and merger or the sale of
all or a substantial part of its assets; covenants to maintain separateness from
affiliates; a special purpose bankruptcy remote equity owner, in the case of a
partnership; and at least two
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independent directors (of such corporation or of the corporate partner of such
partnership).
"Basic Documents" means this Agreement, [each Transfer Agreement], the
Purchase Agreement, [the Spread Account Agreement, the Servicer Termination Side
Letter, the Insurance Agreement, the Indemnification Agreement, the Guaranty,]
the Underwriting Agreement, [the Premium Letter,] the Lock-Box Agreement, the
Agency Agreement, the Servicing Assumption Agreement, [the Stock Pledge
Agreement,] and the Release.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which commercial banking institutions or trust companies in the City of New
York, the State of New Jersey, or the city in which the Corporate Trust Office
of the Trustee is relocated subject to prior written notice with respect to such
address to the Certificateholders, the Depositor, the Servicer [and the
Certificate Insurer] or any other location of any successor Servicer, successor
Trustee [or successor Collateral Agent] shall be authorized or obligated by law,
executive order, or governmental decree to be closed.
["Capitalized Interest Account" means the account designated as such,
established and maintained pursuant to Section 4.1.]
["Capitalized Interest Account Deposit" shall have the meaning assigned
to such term in Section 4.20(a).]
["Capitalized Interest Account Property" shall have the meaning
assigned to such term in Section 4.20(b).]
"Casualty" means, with respect to a Financed Vehicle, the total loss or
destruction of such Financed Vehicle.
"Certificate" means any one of the certificates executed by the Trustee
on behalf of the Trust and authenticated by the Trustee in substantially the
form set forth in Exhibit A or Exhibit B hereto.
"Certificate Account" means the account designated as such, established
and maintained pursuant to Section 4.1.
["Certificate Insurer" means [Name of certificate insurer], a
_______________ incorporated under the laws of the State of _________, or its
successors in interest as issuer of the Policy.]
"Certificate Owner" means, with respect to any Certificate registered
in the name of the Clearing Agency or its nominee, the Person who is the
beneficial owner of such Certificate, as reflected on the books of the Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
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"Certificate Register" and "Certificate Registrar" mean, respectively,
the register maintained and the Certificate Registrar appointed pursuant to
Section 5.5.
"Certificateholder" or "Holder" means the Person in whose name a
Certificate shall be registered in the Certificate Register, except that so long
as any Certificates are outstanding, solely for the purposes of giving any
consent, waiver, request or demand pursuant to this Agreement, the interest
evidenced by any Certificate registered in the name of the Depositor, LBAC, the
Servicer or any of their respective Affiliates, shall not be taken into account
in determining whether the requisite percentage necessary to effect any such
consent, waiver, request or demand shall have been obtained.
"Certificates" means, collectively, the Class A Certificates and the
Excess Cash Flow Certificate.
"Chargeback Obligation" means, with respect to any Receivable
liquidated or prepaid in full, any obligation of a Dealer, as provided by the
related Dealer Agreement, to refund to LBAC certain portions of amounts
previously paid to the Dealer upon origination of such Receivable on account of
the APR of such Receivable exceeding the related buy rate.
"Class A Certificate" means any one of the ___% Class A Certificates,
executed by the Trustee on behalf of the Trust and authenticated by the Trustee
in substantially the form set forth in Exhibit A hereto.
"Class A Certificate Balance" shall equal, initially, the sum of the
Original Pool Balance [and the Original Pre-Funded Amount] and, thereafter,
shall equal the initial Class A Certificate Balance, reduced by all amounts
previously distributed to Class A Certificateholders and allocable to principal.
"Class A Certificateholder" means the Person in whose name a Class A
Certificate shall be registered in the Certificate Register.
"Class A Distributable Amount" means, for any Distribution Date, an
amount equal to the sum of the Class A Principal Distributable Amount for such
Distribution Date and the Class A Interest Distributable Amount for such
Distribution Date.
"Class A Interest Carryover Shortfall" means, as of the close of
business on any Distribution Date, the excess of the Class A Interest
Distributable Amount for such Distribution Date and (without duplication) any
outstanding Class A Interest Carryover Shortfall from the preceding Distribution
Date plus interest on such outstanding Class A Interest Carryover Shortfall, to
the extent permitted by applicable law, at the Class A Pass-Through Rate from
such preceding Distribution Date through the current Distribution Date
(calculated on the basis of a [360-day year consisting of twelve 30-day
months]), over the amount of interest that the Holders of the Class A
Certificates actually received on such current Distribution Date.
"Class A Interest Distributable Amount" means, for any Distribution
Date, an amount equal to thirty (30) days of interest at the Class A
Pass-Through Rate on the Class
4
A Certificate Balance as of the close of business on the last day of the related
Collection Period (calculated on the basis of a [360-day year consisting of
twelve 30-day months]).
"Class A Pass-Through Rate" means ___% per annum.
"Class A Pool Factor" means, with respect to any Distribution Date, a
seven-digit decimal figure equal to the Class A Certificate Balance as of the
close of business on the last day of the related Collection Period divided by
the initial Class A Certificate Balance. The Class A Pool Factor will be
1.0000000 as of the Closing Date; thereafter, the Class A Pool Factor will
decline to reflect reductions in the Class A Certificate Balance.
"Class A Principal Carryover Shortfall" means, as of the close of
business on any Distribution Date, the excess of the Class A Principal
Distributable Amount and (without duplication) any outstanding Class A Principal
Carryover Shortfall from the preceding Distribution Date, over the amount of
principal that the Holders of the Class A Certificates actually received on such
current Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date other than the Final Scheduled Distribution Date, the sum of
the following amounts (without duplication): (i) the principal portion as
calculated in accordance with Section 4.3 of all Scheduled Payments due during
the related Collection Period and all prior Collection Periods received during
the related Collection Period on Precomputed Receivables (including amounts
transferred from the Payahead Account to the Certificate Account to be applied
to the principal portion of Scheduled Payments but excluding Recoveries) and all
payments of principal received on Simple Interest Receivables during such
Collection Period (excluding Recoveries); (ii) the principal portion of all
prepayments in full received during the related Collection Period (including
prepayments in full resulting from collections with respect to a Receivable
received during the related Collection Period plus the transfer of the Payahead
Balance with respect to such Receivable to the Certificate Account pursuant to
Section 4.6(a)(ii)); (iii) the portion of the Purchase Amount allocable to
principal of each Receivable that became a Purchased Receivable as of the last
day of the related Collection Period and, [at the option of the Certificate
Insurer,] the Principal Balance of each Receivable that was required to be but
was not so purchased or repurchased; (iv) the Principal Balance of each
Receivable that first became a Liquidated Receivable during the related
Collection Period and (v) the aggregate amount of Cram Down Losses with respect
to the Receivables that have occurred during the related Collection Period. [In
addition, (i) on the Final Funding Period Distribution Date, the Class A
Principal Distributable Amount will include the Prepayment Amount and (ii) on
the Final Scheduled Distribution Date, the Class A Principal Distributable
Amount will equal the Class A Certificate Balance as of the Final Scheduled
Distribution Date.]
"Class I Receivable" means each Receivable identified as a "Class 1
Receivable" on the Schedule of Receivables.
5
"Class IIA Receivable" means each Receivable identified as a "Class 5
Receivable" on the Schedule of Receivables.
"Class IIB Receivable" means each Receivable identified as a "Class 2
Receivable" on the Schedule of Receivables.
"Class III Receivable" means each Receivable identified as a "Class 3
Receivable" on the Schedule of Receivables.
"Class IV Receivable" means each Receivable identified as a "Class 4
Receivable" on the Schedule of Receivables.
"Class Servicing Fee Rate" means, with respect to any (i) Class I
Receivable, ____% per annum, (ii) Class IIA Receivable, ____% per annum, (iii)
Class IIB Receivable, ____% per annum, (iv) Class III Receivable, ____% per
annum, and (v) Class IV Receivable, ____% per annum. Notwithstanding the
foregoing, with respect to any Receivable as of any Determination Date, in the
event that the sum of (i) the Class A Pass-Through Rate and (ii) the applicable
Class Servicing Fee Rate with respect to such Receivable as of such
Determination Date, exceeds the adjusted APR on such Receivable, the applicable
Class Servicing Fee Rate with respect to such Receivable shall be adjusted
downward in an amount equal to such excess; provided, that in no event shall
such Class Servicing Fee Rate be less than zero.
"Class Successor Servicing Fee Rate" means, with respect to any (i)
Class I Receivable, ____% per annum, (ii) Class IIA Receivable, ____% per annum,
(iii) Class IIB Receivable, ____% per annum, (iv) Class III Receivable, ____%
per annum, and (v) Class IV Receivable, ____% per annum.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means ___________, 20__.
"Code" means the Internal Revenue Code of 1986, including any successor
or amendatory provisions.
["Collateral Agent" means, as applicable: (a) with respect to the
Spread Account, [the Collateral Agent] named in the Spread Account Agreement,
and any successor thereto pursuant to the terms of the Spread Account Agreement,
or (b) with respect to the Capitalized Interest Account, the Trustee, in its
capacity as collateral agent pursuant to Section 4.20(b).]
"Collected Interest" means for any Collection Period the sum of (i) the
portion of all payments made by or on behalf of the Obligors of Simple Interest
Receivables in
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respect of which any payment is actually received during such Collection Period
and (ii) all Liquidation Proceeds and Purchase Amounts with respect to such
Simple Interest Receivables, in each case that are allocable to interest in
accordance with the Servicer's customary servicing procedures.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 4.1.
"Collection Period" means each calendar month during the term of this
Agreement. Any amount stated "as of the close of business on the last day of a
Collection Period" shall give effect to the following calculations as determined
as of the end of the day on such last day: (1) all applications of collections,
(2) all current and previous Payaheads, (3) all applications of Payahead
Balances and (4) all distributions. The term "related Collection Period" shall
mean the Collection Period ended on the last day of the month preceding a date
of determination.
"Confidential Information" means, in relation to any Person, any
written information delivered or made available by or on behalf of LBAC or the
Depositor to such Person in connection with or pursuant to this Agreement or the
transactions contemplated hereby which is proprietary in nature and clearly
marked or identified as being confidential information, other than information
(i) which was publicly known, or otherwise known to such Person, at the time of
disclosure (except pursuant to disclosure in connection with this Agreement),
(ii) which subsequently becomes publicly known through no act or omission by
such Person, or (iii) which otherwise becomes known to such Person other than
through disclosure by LBAC or the Depositor.
"Corporate Trust Office" means the principal office of the Trustee at
which its corporate trust business shall be administered, which office at the
date of this Agreement is located at ________________, _____________,
________________, Attention: Global Trust Services - Long Beach Acceptance Auto
Receivables Trust 20__-_.
"Cram Down Loss" means, with respect to a Receivable (other than a
Liquidated Receivable), if a court of appropriate jurisdiction in an insolvency
proceeding issues a ruling that reduces the amount owed on a Receivable or
otherwise modifies or restructures the Scheduled Payments to be made thereon, an
amount equal to (a) the Principal Balance of the Receivable immediately prior to
such order minus the Principal Balance of such Receivable as so reduced,
modified or restructured plus (b) if such court shall have issued an order
reducing the effective rate of interest on such Receivable, the excess of (i)
the net present value (using a discount rate equal to the adjusted APR on such
Receivable) of the Scheduled Payments as so modified or restructured over (ii)
the net present value (using a discount rate equal to the original APR on such
Receivable) of the Scheduled Payments as so modified or restructured. A Cram
Down Loss will be deemed to have occurred on the date of issuance of such order.
"Custodial Letter" shall have the meaning assigned to such term in
Section 2.8(c).
7
"Custodian" means the Trustee and its successors-in-interest, acting in
its capacity as such under this Agreement.
"Dealer" means, with respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to the Originator
pursuant to a Dealer Agreement, who in turn sold such Receivable to the
Depositor.
"Dealer Agreement" means each agreement between a Dealer and the
Originator pursuant to which such Dealer assigned a Receivable to the
Originator.
"Dealer Title Addendum" means, with respect to each Receivable as to
which the Dealer Title Guaranty, if applicable, is included in the related
Dealer Agreement, a schedule of Dealers delivered to the Custodian listing all
Dealers for which the Dealer Title Guaranty is included in the related Dealer
Agreement.
"Dealer Title Guaranty" means, where, for reasons that are reasonably
acceptable to the Servicer, the relevant Dealer is temporarily unable to furnish
a Lien Certificate, a written guaranty of such Dealer (which may be included in
the related Dealer Agreement if so indicated on the Dealer Title Addendum); each
of such documents having been signed where required by the Dealer in the
appropriate spaces, and with all blanks properly filled in and otherwise
correctly prepared.
"Defaulted Receivable" means, with respect to any Distribution Date, a
Receivable with respect to which the earlier of any of the following shall have
occurred: (i) the related Obligor has failed to pay at least 95% of a Scheduled
Payment by its due date and such failure continues for 90 days (calculated based
on a 360-day year of twelve 30-day months), (ii) the Servicer has repossessed
the related Financed Vehicle (and any applicable redemption period has expired)
or (iii) such Receivable is in default and the Servicer has determined in good
faith that payments thereunder are not likely to be resumed.
["Deficiency Claim Amount" shall have the meaning specified in Section
4.14(a).]
["Deficiency Claim Date" means, with respect to any Distribution Date,
the fourth Business Day immediately preceding such Distribution Date.]
["Deficiency Notice" shall have the meaning specified in Section
4.14(a).]
"Deficient Liquidated Receivable" means a Liquidated Receivable with
respect to which the Servicer has repossessed and disposed of the related
Financed Vehicle, or with respect to which the Financed Vehicle has suffered a
total loss through casualty, confiscation or other cause, and following the
application of the Recoveries received by the Servicer as a result of the
repossession and disposition or other loss of such Financed Vehicle, the
Principal Balance of such Liquidated Receivable (assuming for purposes hereof
that such Principal Balance is not deemed to be zero) remains in excess of zero.
8
"Delivery" means, with respect to any Eligible Investments, the
perfection and priority of a security interest in which is governed by the law
of a jurisdiction which has adopted the 1994 Revision to Article 8 of the UCC:
1. With respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC (other than
certificated securities) and are susceptible of physical delivery, transfer
thereof to the Trustee by physical delivery to the Trustee, indorsed to, or
registered in the name of, the Trustee or its nominee or indorsed in blank
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Eligible Investments to the Trustee free and clear of any adverse claims,
consistent with changes in applicable law or regulations or the
interpretation thereof;
2. With respect to a "certificated security" (as defined in Section
8-102(a)(4) of the UCC), transfer thereof:
(a) by physical delivery of such certificated security to the
Trustee, provided that if the certificated security is in
registered form, it shall be indorsed to, or registered in the
name of, the Trustee or indorsed in blank; or
(b) by physical delivery of such certificated security in registered
form to a "securities intermediary" (as defined in Section
8-102(a)(14) of the UCC) acting on behalf of the Trustee if the
certificated security has been specially endorsed to the Trustee
by an effective endorsement.
3. With respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book entry regulations, the following
procedures, all in accordance with applicable law, including applicable
federal regulations and Articles 8 and 9 of the UCC: book-entry
registration of such property to an appropriate book-entry account
maintained with a Federal Reserve Bank by a securities intermediary which
is also a "depositary" pursuant to applicable federal regulations and
issuance by such securities intermediary of a deposit advice or other
written confirmation of such book-entry registration to the Trustee of the
purchase by the securities intermediary on behalf of the Trustee of such
book-entry security; the making by such securities intermediary of entries
in its books and records identifying such book-entry security held through
the Federal Reserve System pursuant to Federal book-entry regulations as
belonging to the Trustee and indicating that such securities intermediary
holds such book-entry security solely as agent for the Trustee; and such
additional or alternative procedures as may hereafter become appropriate to
effect complete transfer of ownership of any such Eligible Investments to
the Trustee free of any adverse claims, consistent with changes in
applicable law or regulations or the interpretation thereof;
9
4. With respect to any item of Eligible Investments that is an
"uncertificated security" (as defined in Section 8-102(a)(18) of the UCC)
and that is not governed by clause (3) above, transfer thereof:
(a) (x) by registration to the Trustee as the registered owner
thereof, on the books and records of the issuer thereof; or (y)
by another Person (not a securities intermediary) who either
becomes the registered owner of the uncertificated security on
behalf of the Trustee, or having become the registered owner
acknowledges that it holds for the Trustee; or
(b) the issuer thereof has agreed that it will comply with
instructions originated by the Trustee without further consent of
the registered owner thereof.
5. With respect to a "security entitlement" (as defined in Section
8-102(a)(17) of the UCC), if a securities intermediary (A) indicates by
book entry that a "financial asset" (as defined in Section 8-102(a)(9) of
the UCC) has been credited to be the Trustee's "securities account" (as
defined in Section 8-501(a) of the UCC), (B) receives a financial asset (as
so defined) from the Trustee or acquires a financial asset for the Trustee,
and in either case, accepts it for credit to the Trustee's securities
account (as so defined), (C) becomes obligated under other law, regulation
or rule to credit a financial asset to the Trustee's securities account, or
(D) has agreed that it will comply with "entitlement orders" (as defined in
Section 8-102(a)(8) of the UCC) originated by the Trustee without further
consent by the "entitlement holder" (as defined in Section 8-102(a)(7) of
the UCC), of a confirmation of the purchase and the making by such
securities intermediary of entries on its books and records identifying as
belonging to the Trustee of (I) a specific certificated security in the
securities intermediary's possession, (II) a quantity of securities that
constitute or are part of a fungible bulk of certificated securities in the
securities intermediary's possession, or (III) a quantity of securities
that constitute or are part of a fungible bulk of securities shown on the
account of the securities intermediary on the books of another securities
intermediary.
In each case of Delivery contemplated pursuant to paragraphs 1 though 5 above,
the Trustee shall make appropriate notations on its records, and shall cause
same to be made of the records of its nominees, indicating that such Eligible
Investments are held in trust pursuant to and as provided herein.
"Depositor" means Long Beach Acceptance Receivables Corp., a Delaware
corporation, as the seller of the Receivables under --------- this Agreement,
and each of its successors pursuant to Section 6.3.
"Depository Agreement" means the agreement entered into among the
Depositor, the Trustee, and The Depository Trust Company, as the initial
Clearing Agency, in connection with the issuance of the Class A Certificates,
substantially in the form of Exhibit H hereto.
10
"Determination Date" means, with respect to any Distribution Date, the
fourth Business Day preceding such Distribution Date.
"Distribution Date" means, for each Collection Period, the __th day of
the following month, or if the __th day is not a Business Day, the next
following Business Day, commencing ______________, _____.
"Documentation Checklist" means the form attached hereto as Exhibit K.
"Draw Date" means, with respect to any Distribution Date, the third
Business Day (as defined in the Policy) immediately preceding such Distribution
Date.
"Eligible Account" means (i) a segregated trust account that is
maintained with a depository institution acceptable to [the Certificate Insurer
(so long as an Insurer Default shall not have occurred and be continuing)], or
(ii) a segregated direct deposit account maintained with a depository
institution or trust company organized under the laws of the United States of
America, or any of the States thereof, or the District of Columbia, having a
certificate of deposit, short-term deposit or commercial paper rating of at
least "A-1+" by Standard & Poor's and "P-1" by Moody's [and (so long as an
Insurer Default shall not have occurred and be continuing) acceptable to the
Certificate Insurer.] [In either case, such depository institution or trust
company shall have been approved by the Controlling Party (as defined in the
Spread Account Agreement), acting in its discretion, by written notice to [the
Collateral Agent].]
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to the
full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State thereof and subject to supervision and
examination by Federal or State banking or depository institution authorities;
provided, however, that at the time of the investment or contractual commitment
to invest therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on the
credit of a Person other than such depository institution or trust company)
thereof shall be rated "A-1+" by Standard & Poor's and "P-1" by Moody's;
(c) commercial paper that, at the time of the investment or contractual
commitment to invest therein, is rated "A-1+" by Standard & Poor's and "P-1" by
Moody's;
(d) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(e) repurchase obligations with respect to any security pursuant to a
written agreement that is a direct obligation of, or fully guaranteed as to the
full and timely
11
payment by, the United States of America or any agency or instrumentality
thereof the obligations of which are backed by the full faith and credit of the
United States of America, in either case entered into with (i) a depository
institution or trust company (acting as principal) described in clause (b) or
(ii) a depository institution or trust company the deposits of which are insured
by the Federal Deposit Insurance Corporation and whose commercial paper or other
short-term unsecured debt obligations are rated "A-1+" by Standard & Poor's and
"P-1" by Moody's and long-term unsecured debt obligations are rated "AAA" by
Standard & Poor's and "Aaa" by Moody's;
(f) [with the prior written consent of the Certificate Insurer], money
market mutual funds registered under the Investment Company Act of 1940, as
amended, having a rating, at the time of such investment, from each of the
Rating Agencies in the highest investment category granted thereby; and
(g) any other investment as may be acceptable to [the Certificate
Insurer and] the Rating Agencies, as evidenced by [the Certificate Insurer's
prior written consent to that effect, as may from time to time be confirmed in
writing to the Trustee by the Certificate Insurer, and] only upon notification
to each of Moody's and Standard & Poor's.
Any Eligible Investments may be purchased by or through the Trustee or
any of its Affiliates and shall include such securities issued by the Trustee or
its affiliates.
"Eligible Servicer" means LBAC, the Backup Servicer or another Person
which at the time of its appointment as Servicer, (i) is servicing a portfolio
of motor vehicle retail installment sale contracts and/or motor vehicle
installment loans, (ii) is legally qualified and has the capacity to service the
Receivables, (iii) has demonstrated the ability professionally and competently
to service a portfolio of motor vehicle retail installment sale contracts and/or
motor vehicle installment loans similar to the Receivables with reasonable skill
and care, and (iv) is qualified and entitled to use, pursuant to a license or
other written agreement, and agrees to maintain the confidentiality of, the
software which the Servicer uses in connection with performing its duties and
responsibilities under this Agreement or otherwise has available software which
is adequate to perform its duties and responsibilities under this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" means an event specified in Section 8.1.
"Excess Cash Flow Certificate" means the Excess Cash Flow Certificate
executed by the Trustee on behalf of the Trust and authenticated by the Trustee
in substantially the form set forth in Exhibit B hereto.
"Excess Cash Flow Certificateholder" means the Person in whose name the
Excess Cash Flow Certificate shall be registered in the Certificate Register,
which initially shall be the Depositor.
12
"Expected Interest" means, with respect to any Collection Period, the
product of (i) one-twelfth of the weighted average of the APRs (calculated based
on a 360-day year of twelve 30-day months) of Simple Interest Receivables which
were neither 30 days or more delinquent (calculated based on a 360-day year of
twelve 30-day months) nor Defaulted Receivables as of the first day of the
current Collection Period, weighted on the basis of the aggregate Principal
Balances of such Simple Interest Receivables as of the first day of the current
Collection Period and (ii) the aggregate Principal Balances of Simple Interest
Receivables which were neither 30 days or more delinquent (calculated based on a
360-day year of twelve 30-day months) nor Defaulted Receivables as of the close
of business on the last day of the immediately preceding Collection Period.
["Final Funding Period Distribution Date" means the Distribution Date
immediately succeeding the date on which the Funding Period ends (or the
Distribution Date on which the Funding Period ends if the Funding Period ends on
a Distribution Date).]
"Final Scheduled Distribution Date" shall be the Distribution Date in
__________.
"Financed Vehicle" means a new or used automobile, van, sport utility
vehicle or light duty truck, together with all accessions thereto, securing an
Obligor's indebtedness under a Receivable.
"Fractional Undivided Interest" means the fractional undivided interest
in the Trust that is evidenced by a Certificate.
["Funding Period" means the period from the Closing Date until the
earliest to occur of (i) the date on which the remaining Pre-Funded Amount is
less than $100,000, (ii) the date on which an Event of Default under this
Agreement occurs or (iii) the close of business on _____________, ____.]
["Guaranteed Distributions" shall have the meaning assigned to such
term in the Policy.]
"Guaranty" means the Guaranty, dated as of ______________, ___, by AMC
in favor of the Trustee (in its capacity as such and for the benefit of the
Certificateholders), the Back-up Servicer, the Custodian, [[the Collateral
Agent] and the Certificate Insurer], as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
["Indemnification Agreement" means the Indemnification Agreement dated
as of _____________, ______, among [Name of underwriter], the Depositor and the
Certificate Insurer, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.]
"[Initial] Cutoff Date" means the close of business on _____________,
20__.
13
"[Initial] Receivables" means the Receivables initially transferred by
the Depositor to the Trust pursuant to this Agreement on the Closing Date, which
Receivables are listed on the Schedule of Receivables.
["Insurance Agreement" means the Insurance and Indemnity Agreement
dated as of ____________, 20__ among LBAC, the Depositor [and the Certificate
Insurer], as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.]
["Insurance Agreement Event of Default" means an "Event of Default" as
defined in the Insurance Agreement.]
["Insurer Default" shall mean any one of the following events shall
have occurred and be continuing:
(i) the Certificate Insurer fails to make a payment required
under the Policy;
(ii) the Certificate Insurer (A) files any petition or commences
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, (B) makes a general assignment for the benefit of its
creditors or (C) has 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
(iii) a court of competent jurisdiction, the New York Department
of Insurance or other competent regulatory authority enters a final
and nonappealable order, judgment or decree (A) appointing a
custodian, trustee, agent or receiver for the Certificate Insurer or
for all or any material portion of its property or (B) authorizing the
taking of possession by a custodian, trustee, agent or receiver of the
Certificate Insurer (or the taking of possession of all or any
material portion of the property of the Certificate Insurer).]
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"LBAC" means Long Beach Acceptance Corp., a Delaware corporation, and
its successors.
"Legal Files" means, with respect to each Receivable, the following
documents held by the Custodian pursuant to Section 2.7: the fully executed
original of such Receivable with fully executed assignment from the related
Dealer to the Originator, (together with any agreements modifying the
Receivable, including, without limitation, any extension agreements), a fully
executed assignment in blank from the Originator, the Lien Certificate or the
Title Package, the fully executed original of any form legally required to be
executed by a co-▇▇▇▇▇▇, evidence of verification of physical damage
14
insurance coverage and the original of each credit application fully executed by
the related Obligor in respect of the such Receivable. Notwithstanding the
foregoing, in the event that customary procedures and practices of any
applicable state permit the use of any instrument or document in lieu of
evidence of verification of physical damage insurance coverage, the term "Legal
Files" shall be deemed to include any such instrument or document in lieu of
evidence of verification of physical damage insurance coverage.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens, and any liens
that may attach to a Financed Vehicle by operation of law.
"Lien Certificate" means, with respect to a Financed Vehicle, an
original certificate of title, certificate of lien or other notification issued
by the Registrar of Titles of the applicable state to a secured party or such
other evidence acceptable to the Registrar of Titles of the applicable state, in
each case, which indicates that the lien of the secured party on the Financed
Vehicle is recorded on the original certificate of title. In any jurisdiction in
which the original certificate of title is required to be given to the Obligor,
the terms "Lien Certificate" shall mean only a certificate or notification
issued to a secured party.
"Liquidated Receivable" means any Receivable with respect to which the
earlier of any of the following shall have occurred (without duplication): (i)
the Receivable has been liquidated by the Servicer through the sale of the
Financed Vehicle, (ii) the related Obligor has failed to pay at least 95% of a
Scheduled Payment by its due date and such failure continues for 60 days
(calculated based on a 360-day year of twelve 30-day months) after the first day
on which the Servicer may legally sell or otherwise dispose of the related
Financed Vehicle following its repossession, (iii) the related Obligor fails to
pay at least 95% of a Scheduled Payment by its due date and such failure
continues for 150 or more consecutive days (calculated based on a 360-day year
of twelve 30-day months) as of the end of a Collection Period or (iv) proceeds
have been received which, in the Servicer's good faith judgment, constitute the
final amounts recoverable in respect of such Receivable.
"Liquidation Proceeds" means, with respect to a Liquidated Receivable,
the monies collected from whatever source during the Collection Period in which
such Receivable became a Liquidated Receivable, net of the reasonable costs of
liquidation, including the unreimbursed reasonable expenses incurred by the
Servicer in connection with (i) such liquidation and (ii) the liquidation of any
other Liquidated Receivable with respect to which the Servicer believes in good
faith that any additional monies are unlikely to be collected, plus any amounts
required by law to be remitted to the Obligor; provided, however, that the
Liquidation Proceeds with respect to any Receivable shall in no event be less
than zero.
"Lock-Box" means the post-office box or boxes, maintained pursuant to
Section 4.1, into which the Servicer shall direct each Obligor under each
Receivable to forward all payments in respect of such Receivable.
15
"Lock-Box Account" means the segregated account or accounts designated
as such, established and maintained pursuant to Section 4.1.
"Lock-Box Agreement" means the Tri-Party Remittance Processing
Agreement, dated as of ____________, ____, among the Servicer, the Lock-Box
Processor and the Trustee, as amended, modified or supplemented from time to
time in accordance with the terms thereof, unless such Agreement shall be
terminated in accordance with its terms or the terms hereof, in which event
"Lock-Box Agreement" shall mean such other agreement, [in form and substance
acceptable to the Certificate Insurer,] among the Servicer, the Lock-Box
Processor and the Trustee.
"Lock-Box Bank" means, as of any date, a depository institution named
by the Servicer [and acceptable to the Certificate Insurer] at which a Lock-Box
Account is established and maintained as of such date.
"Lock-Box Processor" means initially [Name of trustee] and its
successors or any replacement or subcontracted Lock-Box Processor [acceptable to
the Certificate Insurer] under the Lock-Box Agreement.
"Monthly Dealer Participation Fee" means, with respect to any
Distribution Date and Monthly Dealer Participation Fee Receivable, the portion
of the related dealer participation fee earned during the related Collection
Period as specified in the related Dealer Agreement.
"Monthly Dealer Participation Fee Distributable Amount" means, with
respect to any Distribution Date, an amount equal to the aggregate collections
allocable to Monthly Dealer Participation Fees actually received in respect of
all Monthly Dealer Participation Fee Receivables for the related Collection
Period.
"Monthly Dealer Participation Fee Receivable" means any Receivable to
be paid in accordance with the Originator's "As-Earned Program" and designated
as such on the Schedule of Receivables.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., and any successors
thereof.
["Negative Carry Amount" means, with respect to any Distribution Date
relating to the Funding Period, the amount, if any, by which (i) the Pre-Funding
Interest Amount exceeds (ii) the earnings received by the Trustee for such
Collection Period from investment of such Pre-Funded Amount.]
"Non-Registered Certificate" means a Certificate other than a
Registered Certificate.
["Notice of Claim" means written or telecopied notice from the Trustee
to the Certificate Insurer, substantially in the form of Exhibit A to the
Policy.]
16
"Obligor" on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle or any other Person who owes or may be liable for
payments under such Receivable.
"Officer's Certificate" means a certificate signed by the chairman of
the board, the president, any vice chairman of the board, any vice president,
the treasurer, the controller or any assistant treasurer or any assistant
controller of LBAC, the Depositor or the Servicer, as appropriate.
"Opinion of Counsel" means a written opinion of counsel who may but
need not be counsel to the Depositor or the Servicer, which counsel shall be
acceptable to the Trustee [and the Certificate Insurer] and which opinion shall
be acceptable to the Trustee [and the Certificate Insurer] in form and
substance.
"Optional Purchase Percentage" means 10%.
"Original Pool Balance" means $___________.
["Original Pre-Funded Amount" means $_____________.]
"Origination Date" means, with respect to any Receivable, the date
specified in such Receivable as the date of execution thereof.
"Originator" means LBAC, as originator of the Receivables.
"Payable" means, with respect to any Precomputed Receivable, the sum of
(i) any amount received from or on behalf of the related Obligor which, pursuant
to the Payment Application Procedures, is to be applied as a partial principal
prepayment which is not to be applied to Scheduled Payments on such Receivable
until the earlier of (a) such time as such application would result in such
Precomputed Receivable being paid in full, including the payment of late charges
and miscellaneous fees and (b) the Collection Period in which such Precomputed
Receivable became a Liquidated Receivable, and (ii) any amounts received by the
Servicer in respect of any rebatable items (such as amounts in respect of
cancelled service contracts, extended warranties or insurance policies and
similar items, the cost of which was included in the Amount Financed for such
Precomputed Receivable) relating to such Precomputed Receivable which is not to
be applied as a prepayment of principal until the earlier of (a) such time as
such application would result in such Precomputed Receivable being paid in full,
including the payment of late charges and miscellaneous fees and (b) the
Collection Period in which such Precomputed Receivable became a Liquidated
Receivable.
"Payahead" on a Precomputed Receivable means the amount, including,
without limitation, any Payable, as of the close of business on the last day of
a Collection Period, determined in accordance with Section 4.4 with respect to
such Receivable.
"Payahead Account" means the account designated as such, established
and maintained pursuant to Section 4.1. The Payahead Account shall be held by
the Trustee
17
but shall be primarily for the benefit of the Obligors of Precomputed
Receivables and shall not be part of the Trust.
"Payahead Balance" on a Precomputed Receivable means the sum, as of the
close of business on the last day of a Collection Period, of all Payaheads made
by or on behalf of the Obligor with respect to such Precomputed Receivable, as
reduced by applications of previous Payaheads with respect to such Precomputed
Receivable, pursuant to Sections 4.3 and 4.4.
"Paying Agent" has the meaning assigned to such term in Section 5.2.
"Payment Application Procedures" means the Payment Application
Procedures attached hereto as Exhibit I.
"Payment Deferment and Due Date Change Policies" means the Payment
Deferment Policy and the Due Date Change Policy attached hereto as Exhibit J, as
such policies may be amended from time to time, [with the prior written consent
of the Certificate Insurer,] upon delivery to the Trustee of the Opinion of
Counsel required by Section 3.2.
"Person" means any individual, corporation, limited liability company,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"Plan" means any Person that is (i) an "employee benefit plan" (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (ii) a "plan" (as defined in Section 4975(e)(1) of the Code) that is
subject to Section 4975 of the Code or (iii) an entity whose underlying assets
include assets of a plan described in (i) or (ii) above by reason of such plan's
investment in the entity.
["Policy" means the financial guaranty insurance policy No. ________
issued by the Certificate Insurer for the benefit of the Holders of the Class A
Certificates issued hereunder, including any endorsements thereto.]
["Policy Claim Amount" shall have the meaning set forth in Section
4.15(a).]
["Policy Payments Account" means the account designated as the Policy
Payments Account in, and which is established and maintained pursuant to,
Section 4.1.]
"Pool Balance" as of the close of business on the last day of a
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Liquidated Receivables and Purchased Receivables).
"Precomputed Receivable" means any Actuarial Receivable or Rule of 78's
Receivable.
"Preference Claim" shall have the meaning set forth in Section 4.16(b).
18
["Pre-Funded Amount" means, with respect to (i) the first Distribution
Date, the Original Pre-Funded Amount, and (ii) any Distribution Date thereafter,
the amount on deposit in the Pre-Funding Account (not including any investment
earnings thereon).]
["Pre-Funding Account" means the account designated as such and
established and maintained pursuant to Section 4.1(b).]
["Pre-Funding Interest Amount" means, with respect to any Distribution
Date relating to the Funding Period, an amount equal to one month's interest on
the Pre-Funded Amount on deposit in the Pre-Funding Account as of the last day
of the related Collection Period at a rate equal to the sum of (a) the Class A
Pass-Through Rate, (b) the Trustee Fee Rate and (c) the rate at which the
Premium for the Policy is calculated.]
["Premium" has the meaning assigned to such term in the Insurance
Agreement.]
["Premium Letter" means the letter agreement dated the Closing Date
among AMC, LBAC, the Trustee and the Certificate Insurer referring to payment of
the Premium.]
["Prepayment Amount" means, as of the Final Funding Period Distribution
Date, the Pre-Funded Amount.]
"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period, means the Amount Financed minus the sum of the
following amounts (without duplication): (i) in the case of a Precomputed
Receivable, that portion of all Scheduled Payments actually received on or prior
to such day allocable to principal using the actuarial or constant yield method
(excluding Payaheads retained in the Payahead Account, but including Payaheads
that have been applied to reduce the Principal Balance of such Receivable); (ii)
in the case of a Simple Interest Receivable, that portion of all Scheduled
Payments actually received on or prior to such day allocable to principal using
the Simple Interest Method; (iii) any payment of the Purchase Amount with
respect to the Receivable allocable to principal; (iv) any Cram Down Loss in
respect of such Receivable; and (v) any prepayment in full or any partial
prepayment applied to reduce the Principal Balance of the Receivable; provided,
however, that the Principal Balance of a Receivable that has become a Liquidated
Receivable shall equal zero.
"Purchase Agreement" means the Purchase Agreement dated as of
__________, ____, between the Depositor and LBAC, as the same may be amended,
modified or supplemented from time to time in accordance with the terms thereof,
relating to the purchase of the Receivables by the Depositor from LBAC.
"Purchase Amount" means, with respect to a Receivable, the amount, as
of the close of business on the last day of a Collection Period, required to
prepay in full such Receivable (after giving effect to the application of any
Liquidation Proceeds and Recoveries collected in respect of such Receivable on
or prior to the last day of such Collection Period) under the terms thereof
including accrued and unpaid interest thereon to the end of the month of
purchase. The Purchase Amount relating to any Receivable
19
that became a Liquidated Receivable during any Collection Period preceding the
month of purchase shall be treated as Recoveries in respect of such Receivable.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 3.7 or by LBAC pursuant to Section 2.7.
"Rated Entity" means a Person whose long-term unsecured debt
obligations (at the time of the transfer under Section 5.5) are rated within the
investment grade categories of each Rating Agency.
"Rating Agency" means Standard & Poor's and ▇▇▇▇▇'▇ and any successors
thereof. If such organization or successor is no longer in existence, "Rating
Agency" shall be such nationally recognized statistical rating organization or
other comparable Person [designated by the Certificate Insurer], notice of which
designation shall be given to the Trustee and the Servicer.
"Receivable" means each retail installment sale contract for a Financed
Vehicle which shall appear on the Schedule of Receivables (which Schedule of
Receivables may be in the form of microfiche) and all rights and obligations
thereunder except for Receivables that shall have become Purchased Receivables.
"Receivable Files" means the documents specified in Section 2.6(b).
"Record Date" means, with respect to any Distribution Date or
Determination Date, the close of business on the last day of the calendar month
immediately preceding the month in which such Distribution Date or Determination
Date occurs.
"Recoveries" means, with respect to a Liquidated Receivable, the monies
collected from whatever source during any Collection Period following the
Collection Period in which such Receivable became a Liquidated Receivable, net
of the reasonable costs of liquidation, including the unreimbursed reasonable
expenses incurred by the Servicer in connection with (i) such liquidation and
(ii) the liquidation of any other Liquidated Receivable with respect to which
the Servicer believes in good faith that any additional monies are unlikely to
be collected, plus any amounts required by law to be remitted to the Obligor.
"Registered Certificate" means a Certificate that was sold pursuant to
a registration statement that has been filed and has become effective under the
Securities Act.
"Registrar of Titles" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
["Reimbursement Obligations" means, with respect to each Distribution
Date, any amounts due to the Certificate Insurer under the terms hereof or under
the Insurance
20
Agreement and with respect to which the Certificate Insurer has not been
previously paid whether or not LBAC is obligated to pay such amounts.]
"Release" means the security interest release executed as of
__________.
"Responsible Officer", as to the Trustee and the Back-up Servicer or at
such time as [Name of trustee] is the Servicer, the Servicer, an officer of the
Trustee, with knowledge of the Trust.
"Rule of 78's Receivable" means any Receivable under which the portion
of a payment allocable to earned interest (which may be referred to in the
related retail installment sale contract as an add-on finance charge) and the
portion allocable to the Amount Financed is determined according to the method
commonly referred to as the "Rule of 78's" method, the "sum of periodic
balances" method, the "sum of monthly balances" method or any equivalent method.
"Scheduled Payment" means, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid by
the Obligor in such Collection Period. If after the Closing Date in the case of
an [Initial] Receivable, or the related Subsequent Transfer Date in the case of
a Subsequent Receivable, the Obligor's obligation under such Receivable with
respect to a Collection Period has been modified so as to differ from the amount
specified in such Receivable as a result of (i) the order of a court in an
insolvency proceeding involving the Obligor, (ii) pursuant to the Soldiers' and
Sailors' Civil Relief Act of 1940, as amended or (iii) modifications or
extensions of the Receivable permitted by Section 3.2, the Scheduled Payment
with respect to such Collection Period shall refer to the Obligor's payment
obligation with respect to such Collection Period as so modified.
"Schedule of Receivables" means the Schedule of Receivables attached as
Schedule A to this Agreement, as the same may be amended or supplemented
(including, without limitation, pursuant to any Transfer Agreement) from time to
time.
"Securities Act" means the Securities Act of 1933, as amended.
"Servicer" means LBAC as the servicer of the Receivables and each
successor to LBAC (in the same capacity) pursuant to Section 7.3(a) or 8.2,
other than with respect to representations and warranties of the Servicer under
Section 7.1.
"Servicer's Certificate" means a certificate completed and executed by
a Servicing Officer pursuant to Section 3.9, substantially in the form of
Exhibit E-1.
"Servicing Assumption Agreement" means the Servicing Assumption
Agreement, dated as of ___________, ____, among LBAC, the Back-up Servicer and
the Trustee, as the same may be amended or supplemented from time to time in
accordance with its terms.
"Servicing Fee" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to Section
3.8.
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"Servicing Fee Rate" means, with respect to any Distribution Date, the
weighted average of the Class Servicing Fee Rates for the Receivables weighted
on the basis of the Principal Balance of the Receivables of each Class as of the
close of business on the last day of the second preceding Collection Period;
provided, however, that if the Back-up Servicer or another entity becomes the
successor Servicer, the "Servicing Fee Rate" shall be equal to a rate not to
exceed the Successor Servicing Fee Rate.
"Servicing Officer" means any person whose name appears on a list of
Servicing Officers delivered by the Servicer to the Trustee [and the Certificate
Insurer], as the same may be amended from time to time.
"Simple Interest Advance" means the amount of interest, as of the close
of business on the last day of a Collection Period, which the Servicer is
required to advance on the Simple Interest Receivables pursuant to Section 4.18.
"Simple Interest Excess" means, for any Collection Period, the excess,
if any, of (i) Collected Interest over (ii) Expected Interest for such
Collection Period.
"Simple Interest Method" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid principal balance multiplied by the period of time
(expressed as a fraction of a year, based on the actual number of days in the
calendar month and the actual number of days in the calendar year) elapsed since
the preceding payment of interest was made and the remainder of such payment is
allocable to principal.
"Simple Interest Receivable" means any Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Simple Interest Shortfall" means, for any Collection Period, the
excess, if any, of (i) Expected Interest over (ii) Collected Interest for such
Collection Period.
["Spread Account" means the Spread Account established and maintained
pursuant to the Spread Account Agreement.]
["Spread Account Agreement" means the Master Spread Account Agreement
dated as of __________, ____, among the Depositor, the Certificate Insurer, the
Trustee and [the Collateral Agent], as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.]
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and any successors thereof.
["Stock Pledge Agreement" means the Stock Pledge and Collateral Agency
Agreement dated as of ________, _____, among LBAC, the Certificate Insurer, the
Trustee and [the Collateral Agent], as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.]
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"State" means any State of the United States of America, or the
District of Columbia.
["Subsequent Cutoff Date" means the close of business on the last day
of the calendar month immediately preceding the related Subsequent Transfer
Date, as set forth in the related Transfer Agreement.]
["Subsequent Receivables" means the Receivables transferred by the
Depositor to the Trust pursuant to a Transfer Agreement on the related
Subsequent Transfer Date, which Receivables will be listed on Schedule A to the
related Transfer Agreement and will be treated as incorporated by reference in
the Schedule of Receivables pursuant to the related Transfer Agreement.]
["Subsequent Spread Account Deposit" shall have the meaning specified
in the Spread Account Agreement.]
["Subsequent Transfer Date" shall have the meaning specified in the
related Transfer Agreement.]
"Successor Servicing Fee Rate" means, with respect to any Distribution
Date, the weighted average of the Class Successor Servicing Fee Rates for the
Receivables, weighted on the basis of the Principal Balance of Receivables of
each Class as of the close of business on the last day of the second preceding
Collection Period.
"Title Package" means (i) a Lien Certificate noting the lien of the
Originator of the Financed Vehicle, (ii) evidence that documentation has been
submitted to the appropriate state motor vehicle authority to obtain a Lien
Certificate noting the lien of the Originator of the Financed Vehicle or (iii) a
Dealer Title Guaranty, if any.
"Total Distribution Amount" shall mean, for each Distribution Date, the
sum of the following amounts (without duplication) with respect to the related
Collection Period: (i) all collections on Receivables (including amounts
transferred from the Payahead Account to the Certificate Account pursuant to
Section 4.6(a)(ii) and amounts received in connection with extensions, rebates
or adjustments on Receivables granted by the Servicer pursuant to Section 3.2,
but excluding amounts deposited in the Payahead Account); (ii) Liquidation
Proceeds received during such Collection Period with respect to Receivables that
became Liquidated Receivables during such Collection Period in accordance with
the Servicer's customary servicing procedures; (iii) proceeds from Recoveries
with respect to Liquidated Receivables; (iv) the Purchase Amount of each
Receivable that became a Purchased Receivable as of the last day of such
Collection Period; (v) any earnings on investments of funds in the Collection
Account, the Pre-Funding Account (only to the extent required to cover the
Pre-Funding Interest Amount as set forth in Section 4.1(b)) and the Payahead
Account pursuant to Section 4.1(b); (vi) the amount of any Simple Interest
Advance actually deposited to the Collection Account by the Servicer pursuant to
Section 4.18 with respect to such Collection Period; and (vii) the Negative
Carry Amount, if any, for such Collection Period to the extent it is deposited
to the Certificate Account pursuant to Section 4.6(a)(iv); provided, that the
Total
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Distribution Amount with respect to any Distribution Date shall not include any
Simple Interest Excess remitted to the Servicer or deposited in the Excess Cash
Flow Sub-account pursuant to Section 4.18.
["Transfer Agreement" means each Transfer Agreement, substantially in
the form of Exhibit N, dated as of the related Subsequent Cutoff Date, among the
Depositor, the Originator and the Trustee, pursuant to which Subsequent
Receivables are conveyed to the Trust, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with the terms thereof.]
"Trigger Event" shall have the meaning assigned to such term in the
Spread Account Agreement.
"Trust" means the trust created by this Agreement, the estate of which
shall consist of the Trust Assets.
"Trust Assets" means that property set forth in items (i) through (xi)
in Section 2.2(a), the Policy for the benefit of the Class A Certificateholders
and that property set forth in items (i) through (x) of Section 2.2(b);
provided, that the Payahead Account, the Spread Account and the Capitalized
Interest Account shall not under any circumstances be deemed to be a part of or
otherwise includible in the Trust or the Trust Assets.
"Trustee" means the Person acting as Trustee under this Agreement, its
successor-in-interest, and any successor trustee pursuant to Section 9.10.
"Trustee Fee" means the monthly fee payable on each Distribution Date
to the Trustee in its capacities as Trustee, Custodian [and Collateral Agent]
hereunder for services rendered during the preceding Collection Period in an
amount equal to the product of (i) one twelfth of the Trustee Fee Rate and (ii)
the Class A Certificate Balance as of the last day of the second preceding
Collection Period; provided, however, that with respect to the initial
Distribution Date, the Trustee Fee will equal the product of one-twelfth of the
Trustee Fee Rate and the initial Class A Certificate Balance.
"Trustee Fee Rate" means ________% per annum.
"Trustee Officer" means any vice president, any assistant vice
president, any assistant secretary, any assistant treasurer, any trust officer,
or any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Trustee's Certificate" means a certificate completed and executed for
the Trustee by a Trustee Officer pursuant to Section 9.2, substantially in the
form of, in the case of an assignment to LBAC, Exhibit D-1 and in the case of an
assignment to the Servicer, Exhibit D-2.
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"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
"Underwriting Agreement" means the Underwriting Agreement relating to
the Class A Certificates, dated as of ____________, 20__, among Long Beach
Acceptance Receivables Corp., Long Beach Acceptance Corp. and [Name of
underwriter], as the same may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof.
"VSI Policy" means, as of the Closing Date, (i) the vendor's single
interest physical damage insurance policy No. __________ issued by ___________,
(ii) the vendor's single interest physical damage insurance policy No.
____________ issued by ___________, (iii) the vendor's single interest physical
damage insurance policy No. __________ issued by ________________ or (iv) the
vendor's single interest physical damage insurance policy No. ___________ issued
by ______________, as applicable, with respect to the Financed Vehicles covered
thereby, in each case in which LBAC is the named insured and the Trustee is an
additional named insured; provided, that in the reasonable discretion of the
Servicer any of the aforementioned policies may be cancelled and replaced with a
substitute insurance policy, or, [with the prior written consent of the
Certificate Insurer,] the Servicer may self-insure against the risk previously
covered by the cancelled policy.
SECTION 1.2. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
SECTION 1.3. Section References. All section references shall be to
Sections in this Agreement.
SECTION 1.4. Limitation on Trust Activities. Notwithstanding any other
provision in this Agreement to the contrary, the Trustee shall have no power to
vary the investment of the Certificateholders within the meaning of Treasury
Department Regulation ss. 301.7701-4(c) or to cause the Trust to engage in
business except as expressly set forth herein, or in the documents and
instruments executed in connection herewith, unless the Trustee [and the
Certificate Insurer] shall have received an Opinion of Counsel that such
activity shall not cause the Trust to be an association taxable as a corporation
for federal income tax purposes.
SECTION 1.5. Calculations. All calculations of the amount of interest
accrued on the Certificates and all calculations of the amount of the Servicing
Fee, the Back-up Servicer Fee, and the Trustee Fee shall be made on the basis of
a [360-day year consisting of twelve 30-day months]. All references to the
Principal Balance of a
25
Receivable as of the last day of a Collection Period shall refer to the close of
business on such day.
SECTION 1.6. Action by or Consent of Certificateholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken or
consented to by Certificateholders, any Certificate registered in the name of
the Depositor, LBAC, the Servicer or any Affiliate thereof shall be deemed not
to be outstanding and shall not be taken into account in determining whether the
requisite interest necessary to effect any such action or consent has been
obtained; provided, however, that, solely for the purpose of determining whether
the Trustee is entitled to rely upon any such action or consent, only
Certificates which the Trustee knows to be so owned shall be so disregarded.
SECTION 1.7. Material Adverse Effect. Whenever a determination is to be
made under this Agreement as to whether a given event, action, course of conduct
or set of facts or circumstances could or would have a material adverse effect
on the Trust or the Certificateholders (or any similar or analogous
determination), such determination shall be made without taking into account the
insurance provided by the Policy. Whenever a determination is to be made under
this Agreement whether a breach of a representation, warranty or covenant has or
could have a material adverse effect on a Receivable or the interest therein of
the Trust, the Certificateholders [or the Certificate Insurer] (or any similar
or analogous determination), [such determination shall be made by the
Certificate Insurer in its sole discretion, so long as no Insurer Default shall
have occurred and be continuing.]
ARTICLE II
The Trust and Trust Property
SECTION 2.1. Creation of Trust. Upon the execution of this Agreement by
the parties hereto, there is hereby created the Long Beach Acceptance Auto
Receivables Trust 20__-_.
SECTION 2.2. Conveyance of Receivables. (a) In consideration of the
Trustee's delivery of Certificates in an aggregate principal amount equal to the
sum of the Original Pool Balance [and the Pre-Funded Amount] to or upon the
written order of the Depositor, the Depositor does hereby sell, transfer,
assign, set over and otherwise convey to the Trustee, in trust for the benefit
of the Certificateholders, without recourse, all right, title and interest of
the Depositor in and to:
(i) the [Initial] Receivables listed in Schedule A hereto and (A) with
respect to any such [Initial] Receivables that are Precomputed Receivables,
all monies received thereon on and after the [Initial] Cutoff Date
(including
26
Scheduled Payments due or to become due thereon on and after the [Initial]
Cutoff Date and Scheduled Payments due prior to the [Initial] Cutoff Date
but received on or after the [Initial] Cutoff Date), principal prepayments
relating to such Scheduled Payments due on or after the [Initial] Cutoff
Date but received by the Depositor or LBAC before the [Initial] Cutoff
Date, and any Payaheads received with respect to payments due on the
[Initial] Receivables on or after the [Initial] Cutoff Date (which
Payaheads shall be held in the Payahead Account until the Collection Period
in which such payments are actually due with respect to the related
Receivable, at which time such Payaheads shall be applied as a component of
the Total Distribution Amount), (B) with respect to any such [Initial]
Receivables that are Simple Interest Receivables, all monies received
thereunder on and after the [Initial] Cutoff Date (including Scheduled
Payments due before the [Initial] Cutoff Date but received by the Depositor
or LBAC on or after the [Initial] Cutoff Date) and (C) all Liquidation
Proceeds and Recoveries received with respect to such [Initial]
Receivables;
(ii) the security interests in the related Financed Vehicles granted
by the related Obligors pursuant to the [Initial] Receivables and any other
interest of the Depositor in such Financed Vehicles, including, without
limitation, the certificates of title and any other evidence of ownership
with respect to such Financed Vehicles;
(iii) any proceeds from claims on any physical damage, credit life and
credit accident and health insurance policies or certificates or the VSI
Policy, if any, relating to the related Financed Vehicles or the related
Obligors, including any rebates and premiums;
(iv) property (including the right to receive future Liquidation
Proceeds) that secures an [Initial] Receivable and that has been acquired
by or on behalf of the Trust pursuant to the liquidation of such [Initial]
Receivable;
(v) the Purchase Agreement and the Guaranty including, without
limitation, a direct right to cause LBAC to purchase [Initial] Receivables
from the Trust upon the occurrence of a breach of any of the
representations and warranties contained in Section 3.2(b) of the Purchase
Agreement and/or Section 4 of the related Transfer Agreement, or the
failure of LBAC to timely comply with its obligations pursuant to Section
5.5 of the Purchase Agreement;
(vi) refunds for the costs of extended service contracts with respect
to the related Financed Vehicles, refunds of unearned premiums with respect
to credit life and credit accident and health insurance policies or
certificates covering a related Obligor or Financed Vehicle or his or her
obligations with respect to such Financed Vehicle and any recourse to
Dealers for any of the foregoing;
(vii) the Legal Files and the Receivable Files related to each
[Initial] Receivable and any and all other documents that LBAC keeps on
file in
27
accordance with its customary procedures relating to the [Initial]
Receivables, the related Obligors or the related Financed Vehicles;
(viii) all amounts and property from time to time held in or credited
to the Collection Account, [the Pre-Funding Account] or the Certificate
Account;
(ix) all amounts and property from time to time held in or credited to
the Lock-Box Account, to the extent such amounts and property relate to the
[Initial] Receivables;
(x) any proceeds from recourse against Dealers (other than any
Chargeback Obligations), including, without limitation, any Dealer Title
Guaranties with respect to the [Initial] Receivables, with respect to the
sale of the [Initial] Receivables; and
(xi) the proceeds of any and all of the foregoing.
[In addition, the Depositor shall cause the Policy to be issued to and
delivered to the Trust for the benefit of the Class A Certificateholders.]
(b) [Subject to the conditions set forth in Section 2.2(c) and the
related Transfer Agreement, in consideration of the Trustee's delivery to or
upon the order of the Depositor of the purchase price for the Subsequent
Receivables, in each case as described below and set forth in the related
Transfer Agreement, the Depositor shall on each Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey to the Trustee, in trust for the
benefit of the Certificateholders, without recourse, all right, title and
interest of the Depositor in and to:
(i) the Subsequent Receivables listed in Schedule A to the related
Transfer Agreement and (A) with respect to any such Subsequent Receivables
that are Precomputed Receivables, all monies received thereon on and after
the related Subsequent Cutoff Date (including Scheduled Payments due or to
become due thereon on and after the related Subsequent Cutoff Date and
Scheduled Payments due prior to the related Subsequent Cutoff Date but
received on or after the related Subsequent Cutoff Date), principal
prepayments relating to Scheduled Payments due on or after the related
Subsequent Cutoff Date but received by the Depositor or LBAC before the
related Subsequent Cutoff Date, and any Payaheads received with respect to
any payments due on such Receivable on or after the related Subsequent
Cutoff Date (which Payaheads shall be held in the Payahead Account until
the Collection Period in which such payments are actually due with respect
to the related Receivable, at which time such Payaheads shall be applied as
part of the Total Distribution Amount), (B) with respect to any such
Subsequent Receivables that are Simple Interest Receivables, all monies
received thereunder on and after the related Subsequent Cutoff Date
(including Scheduled Payments due before the related Subsequent Cutoff Date
but received by the Depositor or LBAC on or after the related Subsequent
Cutoff Date) and (C)
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all Liquidation Proceeds and Recoveries received with respect to such
Subsequent Receivables;
(ii) the security interests in the related Financed Vehicles granted
by the related Obligors pursuant to such Subsequent Receivables and any
other interest of the Depositor in such Financed Vehicles, including,
without limitation, the certificates of title and any other evidence of
ownership with respect to such Financed Vehicles;
(iii) any proceeds from claims on any physical damage, credit life and
credit accident and health insurance policies or certificates or the VSI
Policy, if any, relating to the related Financed Vehicles or the related
Obligors, including any rebates and premiums;
(iv) property (including the right to receive future Liquidation
Proceeds) that secures a Subsequent Receivable and that has been acquired
by or on behalf of the Trust pursuant to the liquidation of such Subsequent
Receivable;
(v) the related Transfer Agreement, the Purchase Agreement and the
Guaranty, including, without limitation, a direct right to cause LBAC to
purchase Subsequent Receivables from the Trust upon the occurrence of a
breach of any of the representations and warranties contained in Section
3.2(b) of the Purchase Agreement, or Section 4 of the related Transfer
Agreement, or the failure of LBAC to timely comply with its obligations
pursuant to Section 5.5 of the Purchase Agreement;
(vi) refunds for the costs of extended service contracts with respect
to the related Financed Vehicles, refunds of unearned premiums with respect
to credit life and credit accident and health insurance policies or
certificates covering a related Obligor or Financed Vehicle or his or her
obligations with respect to a related Financed Vehicle and any recourse to
Dealers for any of the foregoing;
(vii) the Legal Files and the Receivable Files related to each such
Subsequent Receivable and any and all other documents that LBAC keeps on
file in accordance with its customary procedures relating to such
Subsequent Receivables, the related Obligors or the related Financed
Vehicles;
(viii) all amounts and property from time to time held in or credited
to the Lock-Box Account, to the extent such amounts and property relate to
such Subsequent Receivables;
(ix) any proceeds from recourse against Dealers (other than any
Chargeback Obligations), including, without limitation, any Dealer Title
Guaranties with respect to such Subsequent Receivables, with respect to the
sale of such Subsequent Receivables; and
(x) the proceeds of any and all of the foregoing.]
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[The purchase price to be paid by the Trust on each Subsequent Transfer
Date for the Subsequent Receivables so sold shall be set forth in the related
Transfer Agreement and shall be paid from monies released from the Pre-Funding
Account pursuant to Section 4.19(b). Such purchase price shall equal the
aggregate Principal Balance of such Subsequent Receivables as of the related
Subsequent Cutoff Date.]
(c) [The Depositor shall transfer to the Trustee the Subsequent
Receivables and the other property and rights related thereto described in
Section 2.2(b) [only upon the prior written consent of the Certificate Insurer
acting in its sole and absolute discretion] and the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) the Depositor shall have provided the Trustee, [the Certificate
Insurer] and each Rating Agency with an Addition Notice not later than five
Business Days prior to the related Subsequent Transfer Date and shall also
have provided the Trustee [and the Certificate Insurer] with an electronic
transmission of the information on the related Subsequent Transfer
Receivables set forth in such Addition Notice in a format acceptable to
each of the Trustee [and the Certificate Insurer] no later than such fifth
Business Day prior to the related Subsequent Transfer Date;
(ii) the Depositor shall have delivered to the Trustee an executed
Transfer Agreement in substantially the form of Exhibit N hereto, which
shall include a list of the Subsequent Receivables so transferred attached
thereto as Schedule A, and a copy thereof to [the Certificate Insurer and]
each Rating Agency;
(iii) the Depositor shall have caused the Servicer to deposit in the
Collection Account all collections on or in respect of the Subsequent
Receivables (to the extent conveyed to the Trust as specified in Section
2.2(b)) received prior to the related Subsequent Transfer Date;
(iv) the Depositor shall have deposited or caused to be deposited the
related Subsequent Spread Account Deposit into the Spread Account pursuant
to Section 4.12;
(v) as of each Subsequent Transfer Date, neither the Servicer nor the
Depositor was insolvent nor will either of them have been made insolvent by
such transfer nor is any of them aware of any pending insolvency;
(vi) such addition will not result in a material adverse federal tax
consequence to the Trust or the Certificateholders as evidenced by an
Opinion of Counsel;
(vii) the Funding Period shall not have terminated;
(viii) the Depositor shall have delivered to the Trustee, [the
Certificate Insurer] and each Rating Agency an Officer's Certificate
confirming
30
the satisfaction of each condition precedent specified in this paragraph
(c) and in Section 5 of the related Transfer Agreement and certifying that:
(A) such sale of Subsequent Receivables by the Depositor to the
Trust on the date hereof was made in good faith for legitimate business purposes
and was not made with intent to hinder, delay or defraud any Person to which the
Depositor has been, is or will become, on or after the date hereof, indebted;
(B) the Depositor did not receive less than a reasonably
equivalent value in exchange for the sale of the Subsequent Receivables by the
Depositor to the Trustee on the related Subsequent Transfer Date pursuant to the
related Transfer Agreement;
(C) the Depositor is not insolvent on the related Subsequent
Transfer Date and will not become insolvent as a result of the sale of the
Subsequent Receivables by the Depositor to the Trustee on the related Subsequent
Transfer Date hereof pursuant to the related Transfer Agreement;
(D) the Depositor is not engaged in a business or transaction,
and is not about to engage in a business or transaction, for which any property
remaining with the Depositor after such business or transaction would be an
unreasonably small amount of capital; and
(E) the Depositor has not incurred, and does not believe that it
will incur, debts that would be beyond the Depositor's ability to pay as such
debts mature;
(ix) the Originator shall have delivered to the Trustee, the
Certificate Insurer and each Rating Agency an Officer's Certificate
confirming the satisfaction of each condition precedent specified in this
paragraph (c) and in Section 5 of the related Transfer Agreement and
certifying that:
(A) that such sale of Subsequent Receivables by the Originator
to the Depositor on the date hereof was made in good faith for legitimate
business purposes and was not made with intent to hinder, delay or defraud any
Person to which the Originator has been, is or will become, on or after the date
hereof, indebted;
(B) the Originator did not receive less than a reasonably
equivalent value in exchange for the sale of the Subsequent Receivables by the
Originator to the Depositor on the related Subsequent Transfer Date pursuant to
the Purchase Agreement and the related Assignment;
(C) the Originator is not insolvent on the related Subsequent
Transfer Date and will not become insolvent as a result of the sale of the
Subsequent Receivables by the Originator to the Depositor on the related
Subsequent Transfer Date hereof pursuant to the Purchase Agreement and the
related Assignment;
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(D) the Originator is not engaged in a business or transaction,
and is not about to engage in a business or transaction, for which any property
remaining with the Originator after such business or transaction would be an
unreasonably small amount of capital; and
(E) the Originator has not incurred, and does not believe that
it will incur, debts that would be beyond the Originator's ability to pay as
such debts mature;
(x) the Depositor shall have delivered to each Rating Agency, [the
Certificate Insurer] and the Trustee Opinions of Counsel with respect to
the transfer of the Subsequent Receivables substantially in the form of the
Opinions of Counsel delivered to each Rating Agency, the Certificate
Insurer and the Trustee on the Closing Date regarding true sale,
non-consolidation, perfection, and other such matters satisfactory in form
and substance to each of the Certificate Insurer and the Trustee in its
sole discretion;
(xi) the Depositor shall have taken all action required to maintain
the first perfected security interest (as defined in the UCC) of the Trust
in the assets of the Trust;
(xii) no selection procedures believed by the Depositor or the
Originator to be adverse to the interests of the Certificateholders [or the
Certificate Insurer] shall have been utilized in selecting the Subsequent
Receivables;
(xiii) the conveyance of the Subsequent Receivables shall not result
in a qualification, modification or withdrawal of the then-current ratings
of the Class A Certificates; provided, that written confirmation of such
ratings shall not be required from the Rating Agencies;
(xiv) the Depositor shall have provided the Trustee with a supplement
to the Schedule of Receivables setting forth the Subsequent Receivables to
be transferred on such Subsequent Transfer Date;
(xv) the Depositor shall have caused a firm of independent accountants
to deliver to the Trustee [and the Certificate Insurer] written
confirmation that the Receivables, including the related Subsequent
Receivables, meet the following criteria:
(1) the weighted average remaining term of the Receivables will
be no more than __ months and the weighted average original term for the
Receivables will be no more than __ months;
(2) each Receivable will have a minimum APR of ____%;
(3) each Receivable will have an original term of no more than
__ months;
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(4) no more than __% of the Receivables will be originated in
California;
(5) the weighted average APR for the Receivables will be greater
than or equal to ____%;
(6) ____% or less of the aggregate Principal Balance of the
Receivables will be Class I Receivables, ____% or less of the aggregate
Principal Balance of the Receivables will be Class IIA Receivables, ____% or
less of the aggregate Principal Balance of the Receivables will be Class IIB
Receivables, _____% or less of the aggregate Principal Balance of the
Receivables will be Class III Receivables and the remainder (but not to exceed
____%) of the aggregate Principal Balance of the Receivables will be Class IV
Receivables; and
(7) not more than ____% of the aggregate Principal Balance of
the Receivables will represent loans to finance the purchase of used Financed
Vehicles;
(xvi) the Depositor shall satisfy the document delivery requirements
for such Subsequent Receivables as specified in Section 2.6;
(xvii) the representations and warranties made by the Depositor and
the Servicer in Sections 6.1 and 7.1, respectively, shall be true and
correct on and as of such Subsequent Transfer Date and the representations
and warranties made by the Originator with respect to each such Subsequent
Receivable being transferred to the Trust on such Subsequent Transfer Date
in Section 4 of the related Transfer Agreement and Section 3.2(d) of the
Purchase Agreement shall be true and correct as of such Subsequent Transfer
Date;
(xviii) on or before such Subsequent Transfer Date, the Depositor
shall have provided any information reasonably requested by the Rating
Agencies, [the Certificate Insurer] or the Trustee with respect to any
Subsequent Receivables;
(xix) the Custodian shall acknowledge receipt of files which the
Depositor shall represent are the Legal Files relating to the Subsequent
Receivables and the Custodian shall have reviewed the Legal Files relating
to the Subsequent Receivables and shall have determined that it has
received a Legal File for each Receivable identified in the supplement to
the Schedule of Receivables attached as Schedule A to the related
Subsequent Transfer Agreement; and
(xx) the Servicer shall deliver the loan master file and history
information and the information required to be set forth in Demographic
File Report in the form attached hereto as Exhibit E-2 as specified in
Section 3.18.
SECTION 2.3. Transfer Intended as Sale; Precautionary Security
Interest. Each conveyance to the Trust of the property set forth in Section 2.2
above is intended as a sale
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free and clear of all Liens, and it is intended that the property of the Trust
shall not be part of the Depositor's estate in the event of the filing of a
bankruptcy petition by or against the Depositor under any bankruptcy law. In the
event, however, that notwithstanding the intent of LBAC, the Depositor and the
Trustee, any transfer under this Agreement is held not to be a sale, this
Agreement shall constitute a grant of a security interest in the property
described in Section 2.2 above, for the benefit of the Certificateholders [and
the Certificate Insurer as their interests may appear herein].
SECTION 2.4. Acceptance by Trustee. The Trustee does hereby accept all
consideration conveyed by the Depositor pursuant to Section 2.2, and declares
that the Trustee shall hold such consideration upon the trusts herein set forth
for the benefit of all present and future Certificateholders [and the
Certificate Insurer], subject to the terms and provisions of this Agreement.
SECTION 2.5. Assignment by Depositor. The Depositor does hereby
transfer, assign and otherwise convey unto the Trustee, for the benefit of the
Certificateholders [and the Certificate Insurer], its right to any recourse to
LBAC resulting from the occurrence of a breach of any of their respective
representations and warranties contained in Section 3.2 of the Purchase
Agreement or from the failure of LBAC to comply with its obligations pursuant to
Section 5.5 of the Purchase Agreement. The provisions of this Section 2.5 are
intended to grant the Trustee a direct right against LBAC to demand performance
under the terms of the Purchase Agreement.
SECTION 2.6. Delivery of Legal Files and Receivable Files. (a) On or
prior to the Closing Date in the case of the [Initial] Receivables, [and on or
prior to the third Business Day immediately preceding the related Subsequent
Transfer Date in the case of the Subsequent Receivables,] the Depositor shall
transfer and deliver to the Custodian at the offices specified in Schedule B to
this Agreement the Legal Files with respect to each applicable Receivable.
(b) On or prior to the Closing Date in the case of the [Initial]
Receivables, [and on or prior to the related Subsequent Transfer Date in the
case of the Subsequent Receivables,] the Depositor shall transfer and deliver to
the Servicer with respect to each applicable Receivable the following, either in
hard copy or in an electronic format:
(i) a copy of the fully executed original of the Receivable with a
copy of the fully executed assignment from the related Dealer to the
Originator (together with copies of any agreements modifying the
Receivable, including, without limitation, any extension agreements);
(ii) a copy of the original credit application fully executed by the
Obligor;
(iii) a copy of the Lien Certificate or Title Package, as applicable;
(iv) all other documents listed on the Documentation Checklist in
effect on the [Initial] Cutoff Date [or the related Subsequent Cutoff Date,
as applicable,] relating to such Receivable, except that the Receivable
Files shall
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contain a copy of those documents the original of which constitutes a part
of the Legal File; and
(v) any and all other documents that the Servicer or the Originator
shall keep on file, in accordance with its customary procedures, relating
to a Receivable, an Obligor or a Financed Vehicle.
SECTION 2.7. Acceptance of Legal Files by Custodian. The Custodian
acknowledges receipt of files which the Depositor has represented are the Legal
Files relating to the [Initial] Receivables. The Custodian shall hold the Legal
Files subject to the terms and conditions of this Agreement. The Custodian may
perform its duties in respect of custody of the Legal Files by or through its
agents or employees. The Custodian has reviewed the Legal Files relating to the
[Initial] Receivables and has determined that it has received a file for each
Receivable identified in Schedule A to this Agreement. The Custodian declares
that it holds and will continue to hold such files and any amendments,
replacements or supplements thereto [(including, without limitation, the Legal
Files relating to any Subsequent Receivables)] and all other Trust Assets as
custodian, agent and bailee for the Trustee in trust for the use and benefit of
all present and future Certificateholders. The Custodian shall review each Legal
File delivered to it no later than the Closing Date [or the related Subsequent
Transfer Date, as the case may be,] to determine whether, and shall certify on
the Closing Date [or the related Subsequent Transfer Date, as the case may be,]
that, such Legal Files contain the documents referred to in the definition of
the term "Legal File". In addition, in the case of any Legal File which does not
contain either an original Lien Certificate or a Dealer Title Guaranty for the
related Financed Vehicle, the Custodian shall certify that the related Dealer is
listed on the Dealer Title Addendum. If the Custodian finds during its review of
the Legal Files or at any time thereafter that a Legal File for a Receivable has
not been received or that any of the documents referred to in the definition of
the term "Legal File" are not contained in a Legal File or, if applicable, the
related Dealer is not listed on the Dealer Title Addendum, the Custodian shall
promptly inform the Trustee (if at such time the Trustee is not also the
Custodian hereunder), LBAC, the Depositor, the Back-up Servicer [and the
Certificate Insurer] promptly, in writing, of the failure to receive a Legal
File with respect to such Receivable (or of the failure of any of the
aforementioned documents to be included in the Legal File or the failure of the
related Dealer to be so listed) (it being understood that the Custodian's
obligation to review the contents of any Legal File and the Dealer Title
Addendum shall be limited as set forth in the preceding sentence). Unless any
such defect with respect to such Receivable shall have been cured by the last
day of the second Collection Period following discovery thereof by the
Custodian, LBAC shall repurchase any such Receivable as of such last day. In
consideration of the purchase of the Receivable, LBAC shall remit the Purchase
Amount, in the manner specified in Section 4.5. The sole remedy of the Trustee,
the Trust, or the Certificateholders with respect to a breach pursuant to this
Section 2.7 shall be to require LBAC to purchase the Receivables pursuant to
this Section 2.7. Upon receipt of the Purchase Amount and written instructions
from the Servicer, the Trustee shall cause the Custodian to release to LBAC or
its designee the related Legal File and shall execute and deliver all reasonable
instruments of transfer or assignment, without recourse, as are prepared by LBAC
and delivered to the Trustee and are necessary to vest
35
in LBAC or such designee the Trustee's right, title and interest in the
Receivable. The Custodian shall make a list of Receivables for which an
application for a certificate of title or a Dealer Title Guaranty but not a Lien
Certificate is included in the Legal File as of the date of its review of the
Legal Files and deliver a copy of such list to the Servicer, the Trustee [and
the Certificate Insurer]. On the date which is 90 days following the Closing
Date or the related Subsequent Transfer Date, as the case may be, or in either
case, the next succeeding Business Day, the Custodian shall inform LBAC and the
other parties to this Agreement [and the Certificate Insurer] of any Receivable
for which the related Legal File on such date does not include a Lien
Certificate, and LBAC shall repurchase any such Receivable as of the last day of
the Collection Period in which the date which is 150 days following the Closing
Date, in the case of the [Initial] Receivables, [or the related Subsequent
Transfer Date, in the case of the Subsequent Receivables,] occurs if the related
Legal File does not include a Lien Certificate as of the close of business on
such 150th day. In consideration of the purchase of such Receivable, LBAC shall
remit the Purchase Amount in the manner specified in Section 4.5. The Depositor
shall have no obligation to repurchase any Receivable upon a breach pursuant to
this Section 2.7. The Depositor shall have no liability for any action taken or
omitted to be taken by LBAC pursuant to this Section 2.7.
SECTION 2.8. Access to Receivable Files and Legal Files; Servicer's
Duties with Respect to Receivable Files; Custodian's Duties with Respect to
Legal Files. (a) The Servicer and the Custodian shall, upon reasonable notice,
permit the Originator, the Trustee, the Depositor, [and the Certificate Insurer]
access to the Receivable Files and the Legal Files, respectively, at all
reasonable times, upon reasonable notice and during the Servicer's or the
Custodian's normal business hours. In addition, the Servicer and the Custodian
shall provide such access to any Certificateholder upon reasonable notice at all
reasonable times during the Servicer's or the Custodian's normal business hours,
as the case may be, in cases where the Certificateholders shall be required by
applicable statutes or regulations to review such documentation; provided,
however, that the Servicer or the Custodian shall be entitled to rely upon an
Opinion of Counsel as to such fact. In each case, such access shall be afforded
without charge but only upon reasonable request. Each Certificateholder shall be
deemed to have agreed by its acceptance of a Certificate to use its best efforts
to hold in confidence all Confidential Information in accordance with its then
customary procedures; provided that nothing herein shall prevent any
Certificateholder from delivering copies of any financial statements and other
documents whether or not constituting Confidential Information, and disclosing
other information, whether or not Confidential Information, to (i) its
directors, officers, employees, agents and professional consultants, (ii) any
other institutional investor that holds Certificates, (iii) any prospective
institutional investor transferee in connection with the contemplated transfer
of a Certificate or any part thereof or participation therein who is subject to
confidentiality arrangements at least substantially similar hereto, (iv) any
governmental authority, (v) the National Association of Insurance Commissioners
or any similar organization, (vi) any nationally recognized rating agency in
connection with the rating of the Certificates by such agency or (vii) any other
Person to which such delivery or disclosure may be necessary or appropriate (a)
in compliance with any applicable law, rule, regulation or order, (b) in
response to any subpoena or other legal process, (c) in
36
connection with any litigation to which such Certificateholder is a party, or
(d) in order to protect or enforce such Person's investment in any Certificate.
(b) Upon instruction from the Trustee, the Servicer shall release any
Receivable Files to the Trustee, the Trustee's agent or the Trustee's designee,
as the case may be, at such place or places as the Trustee may designate, as
soon as practicable. The Servicer shall not be responsible for the safekeeping
of such Receivable Files following such release to the Trustee unless and until
such Receivable Files is returned to the Servicer.
(c) The Custodian shall, within two Business Days of the request of the
Servicer, the Trustee [or the Certificate Insurer], execute such documents and
instruments as are prepared by the Servicer, the Trustee [or the Certificate
Insurer] and delivered to the Custodian, as the Servicer, the Trustee [or the
Certificate Insurer] deems necessary to permit the Servicer, in accordance with
its customary servicing procedures, to enforce the Receivable on behalf of the
Trust and any related insurance policies (including the VSI Policy, if any)
covering the Obligor, the Receivable or Financed Vehicle. The Custodian shall
not be obligated to release any document from any Legal File unless it receives
a request for transfer of possession signed, or, if such request is transmitted
electronically, transmitted by a Servicing Officer in the form of Exhibit L to
this Agreement and a custodial letter signed, or, if such request is transmitted
electronically, transmitted by a Servicing Officer in the form of Exhibit M to
this Agreement (the "Custodial Letter"). Such Custodial Letter shall obligate
the Servicer to return such document(s) to the Custodian when the need therefor
no longer exists. At all times while any Legal File is in the Servicer's
possession, the Servicer shall hold such Legal File in trust on behalf of the
Trust, the Trustee [and the Certificate Insurer].
SECTION 2.9. Covenants of the Custodian.
(a) The Custodian, either directly or by acting through an agent or
nominee (which agent shall not be the Originator or any Affiliate thereof),
shall hold the Legal File and all other documents relating to any Receivable
that comes into its possession for the exclusive use and benefit of the Trust
and shall make disposition thereof only in accordance with the provisions of
this Agreement. The Custodian shall segregate the Legal Files and such other
documents from all other motor vehicle retail installment sale contracts and
similar documents in its possession and maintain continuous custody of the Legal
File and such other documents received by it in secure facilities in accordance
with customary standards for such custody and shall not release such documents
or transfer such documents to any other party, including any subcustodian,
except as otherwise expressly provided herein.
(b) The Custodian covenants and warrants to the Trustee, the Servicer
[and the Certificate Insurer] that to the knowledge of its Responsible Officers,
as of the related date on which the Custodian makes the certification required
under Section 2.7 with respect to the Legal Files, it holds no adverse interest,
by way of security or otherwise, in any Receivable, except as Trustee on behalf
of the Trust.
37
(c) Instructions to the Custodian relating to this Agreement will be
carried out by the Custodian, in accordance with the terms and provisions of
this Agreement. The Custodian is authorized to conclusively rely on any such
instruction that it believes in good faith to have been given by the Servicer
pursuant to and in accordance with the terms and provisions of this Agreement.
The Custodian may record any such instructions given by telephone, and any other
telephone discussions with respect to this Agreement.
(d) The Custodian shall not by reason of this Agreement have a
fiduciary relationship in respect of the Servicer or LBAC or any Affiliate
thereof, and nothing in this Agreement, express or implied, is intended to or
shall be so construed so as to impose upon the Custodian any obligations in
respect of this Agreement except as expressly set forth in it. The Custodian,
acting as custodian, shall have no responsibility for (i) ascertaining or taking
action with respect to exchanges, maturities, tenders or other matters relative
to any Receivables, whether or not the Custodian has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against any parties with respect to any Receivables, except as otherwise
expressly set forth herein in its capacity as Trustee of the Trust or as
Custodian. The Custodian, acting as custodian, does not assume and shall have no
responsibility for, and makes no representations as to, monitoring the value of
the Receivables and the related Legal Files. The Custodian, acting as custodian,
may rely upon the validity of documents delivered to it, without investigation
as to their authority or legal effectiveness.
(e) Each of the Servicer, the Depositor and LBAC acknowledges and
agrees that the Custodian:
(i) shall not be responsible for any of the agreements set forth in
the Purchase Agreement or any other documents or instruments other than
this Agreement, including its Exhibits, but shall be obligated only for the
performance of such duties as are specifically set forth in this Agreement;
(ii) shall not be obligated to take any legal or other action that, in
its judgment, might involve any expense or liability unless it shall have
been furnished with indemnification acceptable in form and substance to the
Custodian;
(iii) may rely on, and shall be protected in acting or refraining from
acting in good faith on, any written notice, instruction, instrument,
statement, request or document furnished to it under this Agreement and
reasonably believed by it to be genuine and to have been signed or
presented by the proper Person, and shall have no responsibility for
determining the accuracy thereof, and
(iv) may consult with counsel satisfactory to it, including in-house
counsel, and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action reasonably taken,
suffered or omitted by it under this Agreement in good faith and in
accordance with the opinion of such counsel.
38
(f) If the Custodian shall request instructions from the Servicer or
LBAC with respect to any act or action (including failure to act) in connection
with this Agreement, the Custodian shall be entitled to refrain from such act or
taking such action unless and until the Custodian shall have received
instructions from such Person; and the Custodian shall not incur liability to
such Person or any other Person by reason of so refraining. Without limiting the
foregoing, neither the Servicer, nor LBAC, nor any other Person shall have any
right of action whatsoever against the Custodian as a result of the Custodian's
acting or refraining from acting in accordance with the Servicer's instructions
hereunder, other than any such action arising out of the Custodian's negligence,
bad faith or willful misconduct in so acting or refraining from acting.
(g) The Custodian shall physically segregate the Legal Files for the
Receivables from all other instruments similar in nature to such Legal Files in
its possession, and shall hold the Legal Files so as to reflect the ownership of
the Trust. The Custodian shall ▇▇▇▇ its books, accounts and records to reflect
such fact. At its own expense, the Custodian shall maintain at all times during
which this Agreement is in effect, fidelity insurance in amounts customary for
similar transactions. Such insurance may be maintained by the Custodian in the
form of self-insurance.
(h) The Trustee's Fee payable to [Name of trustee], as Trustee,
pursuant to Section 4.6(c)(ii), shall be the only amount payable to the
Custodian for its services as Custodian hereunder.
ARTICLE III
Administration and Servicing of Receivables
SECTION 3.1. Duties of Servicer. The Servicer, as agent for the Trust
(to the extent provided herein), and in such capacity, shall manage, service,
administer and make collections on the Receivables with reasonable care, using
that degree of skill and attention customary and usual for institutions which
service motor vehicle retail installment contracts similar to the Receivables
and, to the extent more exacting, that the Servicer exercises with respect to
all comparable automotive receivables that it services for itself or others. The
Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on such Receivables, investigating
delinquencies, sending payment statements to Obligors, reporting tax information
to Obligors, accounting for collections, furnishing monthly and annual
statements to the Trustee, the Back-Up Servicer [and the Certificate Insurer]
with respect to distributions and complying with the terms of the Lock-Box
Agreement. The Servicer shall also administer and enforce all rights and
responsibilities of the holders of the Receivables provided for in the Dealer
Agreements to the extent that such Dealer Agreements relate to the Receivables,
the Financed Vehicles or the Obligors. Without limiting the generality of the
foregoing, and subject to the servicing standards set forth in this Agreement,
the Servicer is authorized and empowered by the Trustee to execute and deliver,
on behalf of itself, the Trust, the Certificateholders or any of them, any and
all instruments of satisfaction or cancellation, or partial or full release or
discharge, and all other
39
comparable instruments, with respect to such Receivables or to the Financed
Vehicles securing such Receivables and/or the certificates of title or other
evidence of ownership with respect to such Financed Vehicles; provided, however,
that notwithstanding the foregoing, the Servicer shall not, except pursuant to
an order from a court of competent jurisdiction, release an Obligor from payment
of any unpaid amount under any Receivable or waive the right to collect the
unpaid balance of any Receivable from the Obligor, except that the Servicer may
forego collection efforts if the amount subject to collection is de minimis and
if it would forego collection in accordance with its customary procedures. If
the Servicer shall commence a legal proceeding to enforce a Receivable, the
Trustee shall thereupon be deemed to have automatically assigned, solely for the
purpose of collection, such Receivable to the Servicer. If in any enforcement
suit or legal proceeding it shall be held that the Servicer may not enforce a
Receivable on the ground that it shall not be a real party in interest or a
holder entitled to enforce such Receivable, the Trustee shall, at the Servicer's
expense and direction, take steps to enforce such Receivable, including bringing
suit in its name or the name of the Certificateholders. The Servicer shall
prepare and furnish and the Trustee shall execute, any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
SECTION 3.2. Collection and Allocation of Receivable Payments.
Consistent with the standards, policies and procedures required by this
Agreement, the Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Receivables as and when the
same shall become due and shall follow such collection procedures as it follows
with respect to all comparable automotive receivables that it services for
itself or others; provided, however, that the Servicer shall notify each Obligor
prior to the Closing Date in the case of the [Initial] Receivables, [and prior
to the related Subsequent Transfer Date, in the case of the Subsequent
Receivables,] to make all payments with respect to the Receivables to the
Lock-Box and shall make reasonable efforts to cause Obligors to make all such
payments to such Lock-Box. The Servicer will provide each Obligor with a monthly
statement in order to notify such Obligors to make payments directly to the
Lock-Box. The Servicer shall allocate collections between principal and interest
in accordance with the customary servicing procedures it follows with respect to
all comparable automotive receivables that it services for itself or others and
in accordance with the terms of this Agreement. The Servicer, for so long as
LBAC is the Servicer, may grant extensions, rebates or adjustments on a
Receivable in accordance with the customary servicing procedures it follows with
respect to all comparable automotive receivables that it services for itself,
which shall not modify the original due date of the Scheduled Payments on any
Receivable other than (i) in accordance with the Payment Deferment and Due Date
Change Policies, (ii) with respect to a Deficient Liquidated Receivable and
(iii) with the prior written consent of the Certificate Insurer, with respect to
any other Liquidated Receivable. The Servicer shall not modify the Payment
Deferment and Due Date Change Policies without the prior written consent of the
Certificate Insurer and delivering to the Trustee [and the Certificate Insurer]
an Opinion of Counsel to the effect that such modification will not adversely
affect the status of the Trust as a grantor trust for Federal income tax
purposes provided, however, that no Opinion of Counsel shall be required for
modification of the Payment Deferment and Due Date Change Policies if either (i)
such modification is necessary to
40
permit the work out of defaulted Receivables or (ii) the Servicer reasonably
believes that such modification is necessary to permit extensions designed to
prevent the default of Receivables. The Servicer shall notify ▇▇▇▇▇'▇ of any
modification to the Payment Deferment and Due Date Change Policies. If the
Servicer is not LBAC, the Servicer may not make any extension on a Receivable
without the prior written consent of the Certificate Insurer. The Servicer may
in its discretion waive any late payment charge or any other fees that may be
collected in the ordinary course of servicing a Receivable if it would forgo
collection of such amount in accordance with its customary procedures.
Notwithstanding anything to the contrary contained herein, the Servicer (i)
shall not agree to any alteration of the interest rate on any Receivable or of
the amount of any Scheduled Payment on any Receivable, except (a) as otherwise
required by applicable law, (b) with respect to a Deficient Liquidated
Receivable and (c) with the prior written consent of the Certificate Insurer,
with respect to any other Liquidated Receivable, and (ii) shall not agree to any
modification that would result in a material adverse effect on a Receivable
(other than a Deficient Liquidated Receivable [and, with the prior written
consent of the Certificate Insurer, any other Liquidated Receivable]) or the
interest therein of the Trust, the Certificateholders [or the Certificate
Insurer] other than a modification in accordance with the Payment Deferment and
Due Date Change Policies or would constitute reinvestment adversely affecting
the status of the Trust as a grantor trust for Federal income tax purposes
including, without limitation, any modification that would result in a "deemed
exchange" of a Receivable under Section 1001 of the Code on account of such
modification being made at a time when the obligations of the Obligor under the
Receivable neither are in default nor, in the reasonable good faith judgment of
the Servicer, probably will be in default in the reasonably foreseeable future.
On each Business Day, the Servicer shall prepare and transmit to the
Trustee and the Back-up Servicer in a form acceptable to the Trustee and the
Back-up Servicer, a record setting forth the aggregate amount of collections on
the Receivables processed by the Servicer on the second preceding Business Day.
SECTION 3.3. Realization Upon Receivables. (a) On behalf of the
Trust, the Certificateholders [and the Certificate Insurer], the Servicer shall
use its best efforts, consistent with the servicing procedures set forth herein,
to repossess or otherwise convert the ownership of the Financed Vehicle securing
any Receivable as to which the Servicer shall have determined eventual payment
in full is unlikely. The Servicer shall commence efforts to repossess or
otherwise convert the ownership of a Financed Vehicle on or prior to the date
that an Obligor has not paid at least 95% of a Scheduled Payment thereon for 120
consecutive days or more; provided, however, that the Servicer may elect not to
commence such efforts within such time period if in its good faith judgment it
determines either that it would be impracticable to do so or that the proceeds
ultimately recoverable with respect to such Receivable would be increased by
forbearance. The Servicer shall follow such customary and usual practices and
procedures as it shall deem necessary or advisable in its servicing of
automotive receivables, consistent with the standards of care set forth in
Section 3.1, which may include reasonable efforts to realize upon any recourse
to Dealers and selling the Financed Vehicle at public or private sale. The
foregoing shall be subject to the provision that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in connection
41
with the repair or the repossession of such Financed Vehicle unless it shall
determine in its discretion that such repair and/or repossession will increase
the proceeds ultimately recoverable with respect to such Receivable by an amount
greater than the amount of such expenses. All Liquidation Proceeds and
Recoveries received shall be remitted directly by the Servicer to the Collection
Account, without deposit into any intervening account as soon as practicable,
but in no event later than the second Business Day after receipt thereof.
(b) (1) The Servicer agrees that within 45 days from the Closing Date
it shall make such filings and effect such notices as are necessary under
Section 9-114(1) of the New York UCC (or comparable section of the UCC of any
applicable state) to preserve its ownership interest (or security interest, as
the case may be) in any repossessed Financed Vehicles delivered for sale to
Dealers.
(2) The Servicer agrees that at any time after 45 days from the
Closing Date there will be (a) no more than 25 repossessed Financed Vehicles in
the aggregate delivered for sale to any Dealer and (b) no more than 50
repossessed Financed Vehicles in the aggregate delivered for the sale to all
Dealers with respect to which the actions referred to in (b)(1) above have not
been effected. The Servicer agrees that prior to delivering additional Financed
Vehicles for sale to any such Dealer, it shall make such filings and effect such
notices as are necessary under Section 9-114(1) of the New York UCC (or
comparable section of the applicable UCC) to preserve its ownership interest (or
security interest, as the case may be) in any such repossessed Financed Vehicle.
SECTION 3.4. Physical Damage Insurance; Other Insurance. (a) The
Servicer shall continue to maintain the VSI Policy or another collateral
protection insurance policy providing physical damage insurance coverage to at
least the same extent as the VSI Policy with respect to all Financed Vehicles,
unless the Servicer shall have received the prior written consent of the
Certificate Insurer allowing the Servicer to no longer maintain any of such
polices. The Servicer, in accordance with the servicing procedures and standards
set forth herein, shall require that (i) each Obligor shall have obtained
insurance covering the Financed Vehicle, as of the date of the execution of the
Receivable, insuring against loss and damage due to fire, theft, transportation,
collision and other risks generally covered by comprehensive and collision
coverage and each Receivable requires the Obligor to maintain such physical loss
and damage insurance naming LBAC and its successors and assigns as an additional
insured, (ii) each Receivable that finances the cost of premiums for credit life
and credit accident and health insurance is covered by an insurance policy or
certificate naming LBAC as policyholder (creditor) and (iii) as to each
Receivable that finances the cost of an extended service contract, the
respective Financed Vehicle which secures the Receivable is covered by an
extended service contract.
(b) To the extent applicable, the Servicer shall not take any action
which would result in noncoverage under any of the insurance policies referred
to in Section 3.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trustee, shall take such
reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected
42
by the Servicer under any of the foregoing insurance policies shall be deposited
in the Collection Account pursuant to Section 4.2. In the event of the
cancellation or non-renewal of the insurance referred to in Section 3.4(a)(i)
above with respect to any Financed Vehicle, the Servicer will endeavor, in
accordance with its customary servicing standards and procedures, to cause the
related Obligor to obtain a replacement insurance policy. In no event shall the
Servicer be required to force place insurance on a Financed Vehicle.
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles.
(a) Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps as are necessary to maintain
perfection of the security interest created in the name of LBAC by each
Receivable in the related Financed Vehicle, including, but not limited to,
obtaining the execution by the Obligors and the recording, registering, filing,
re-recording, re-registering and refiling of all security agreements, financing
statements and continuation statements or instruments as are necessary to
maintain the security interest granted by Obligors under the respective
Receivables. The Trustee hereby authorizes the Servicer to take such steps as
are necessary to re-perfect or continue the perfection of such security interest
on behalf of the Trust in the event of the relocation of a Financed Vehicle or
for any other reason.
(b) [Upon the occurrence of an Insurance Agreement Event of Default,
the Certificate Insurer may (so long as an Insurer Default shall not have
occurred and be continuing) instruct the Trustee and the Servicer to take or
cause to be taken, or, if an Insurer Default shall have occurred and be
continuing, upon the occurrence of an Event of Default, the Trustee shall direct
the Servicer to take and the Servicer shall take or cause to be taken such
action as may, in the opinion of counsel to the Certificate Insurer (or, if an
Insurer Default shall have occurred and be continuing, the Trustee), which
opinion shall not be an expense of the Certificate Insurer or the Trustee (as
applicable), be necessary to perfect or reperfect the security interests in the
Financed Vehicles securing the Receivables in the name of the Trustee on behalf
of the Trust by amending the title documents of such Financed Vehicles to
reflect the security interest of the Trustee in the related Financed Vehicles or
by such other reasonable means as may, in the opinion of counsel to the
Certificate Insurer or the Trustee (as applicable), which opinion shall not be
an expense of the Certificate Insurer or the Trustee, be necessary or prudent.
The Servicer hereby agrees to pay all expenses related to such perfection or
reperfection and to take all action necessary therefor. In addition, prior to
the occurrence of an Insurance Agreement Event of Default, the Certificate
Insurer may (unless an Insurer Default shall have occurred and be continuing)
instruct the Trustee and the Servicer to take or cause to be taken such action
as may, in the opinion of counsel to the Certificate Insurer, be necessary to
perfect or reperfect the security interest in the Financed Vehicles securing the
Receivables in the name of the Trustee on behalf of the Trust, including by
amending the title documents of such Financed Vehicles to reflect the security
interest of the Trustee in the related Financed Vehicle or by such other
reasonable means as may, in the opinion of counsel to the Certificate Insurer,
be necessary or prudent; provided, however, that if the Certificate Insurer
requests (unless an Insurer Default shall have occurred and be continuing) that
the title documents be amended prior to the occurrence
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of an Insurance Agreement Event of Default, the out-of-pocket expenses of the
Servicer or the Trustee in connection with such action shall be reimbursed to
the Servicer or the Trustee, as applicable, by the Certificate Insurer.]
In addition to the foregoing, in the event any of the events described
in Section 8.1(iii) or (iv) shall have occurred, or in the event LBAC shall have
been removed or replaced as Servicer pursuant to Section 7.3, Section 7.5, or
otherwise pursuant to Section 8.1, then LBAC and/or the Servicer shall
immediately cause each Lien Certificate for a Financed Vehicle to be marked to
reflect the security interest of the Trustee in the Financed Vehicle at the
expense of the Servicer.
The Servicer hereby makes, constitutes, and appoints the Trustee acting
through its duly appointed officers or any of them, its true and lawful
attorney, for it and in its name and on its behalf, for the sole and exclusive
purpose of authorizing said attorney to execute and deliver as attorney-in-fact
or otherwise, any and all documents and other instruments and to do or
accomplish all other acts or things necessary or appropriate to show the Trustee
as lienholder or secured party on the related Lien Certificates relating to a
Financed Vehicle.
SECTION 3.6. Additional Covenants of Servicer. The Servicer hereby
makes the following covenants to the other parties hereto [and the Certificate
Insurer] on which the Trustee shall rely in accepting the Receivables in trust
and issuing the Certificates [and on which the Certificate Insurer shall rely in
issuing the Policy]: (i) the Servicer shall not release the Financed Vehicle
securing any Receivable from the security interest granted by such Receivable in
whole or in part except in the event of payment in full by the Obligor
thereunder or repossession or other liquidation of such Financed Vehicle, (ii)
the Servicer shall not impair the rights of the Certificateholders, the Trust
[or the Certificate Insurer] in such Receivables, (iii) the Servicer shall not
amend a Receivable (other than a Deficient Liquidated Receivable [and, with the
prior written consent of the Certificate Insurer, any other Liquidated
Receivable]), except that modifications may be made in accordance with Section
3.2, and (iv) the Servicer shall service the Receivables as required by the
terms of this Agreement and in material compliance with its current servicing
procedures for servicing of all its other comparable motor vehicle receivables.
SECTION 3.7. Purchase of Receivables Upon Breach. The Servicer, the
Depositor or the Trustee shall inform the other parties hereto [and the
Certificate Insurer] promptly, in writing, upon the discovery by the Servicer,
the Depositor or a Responsible Officer of the Trustee, as the case may be, of
any breach of the provisions of Section 3.2 relating to extensions, rebates,
adjustments or other modifications of the Receivables, or any breach of Sections
3.4, 3.5 or 3.6; provided, however, that the failure to give such notice shall
not affect any obligation of the Servicer hereunder. Unless the breach shall
have been cured by the last day of the second Collection Period following such
discovery by or notice to the Servicer of such breach, the Servicer shall
purchase any Receivable with respect to which such breach has a material adverse
effect on such Receivable or the interest therein of the Trust, the
Certificateholders [or the Certificate Insurer]; provided, however,
notwithstanding the foregoing, the Servicer shall purchase any Receivable with
respect to which any breach of clause (ii) of the last sentence of the first
paragraph of
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Section 3.2 has occurred immediately upon discovery by or notice to the Servicer
of such breach. In consideration of the purchase of such Receivable, the
Servicer shall remit the Purchase Amount in the manner specified in Section 4.5.
For purposes of this Section, the Purchase Amount shall, whenever applicable,
consist in part of a release by the Servicer of all rights to receive Simple
Interest Excess with respect to the related Receivable. The sole remedy of the
Trustee, the Trust, [the Certificate Insurer] or the Certificateholders with
respect to a breach of the provisions of Section 3.2 relating to extensions,
rebates, adjustments or other modifications of the Receivables or any breach of
Sections 3.4, 3.5 or 3.6 shall be to require the Servicer to repurchase
Receivables pursuant to this Section 3.7; provided, however, that the Servicer
shall indemnify the Trustee, the Back-up Servicer, the Custodian, the Depositor,
[the Certificate Insurer,] the Trust and the Certificateholders and each of
their respective officers, employees, directors, agents and representatives
against all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach. The Depositor shall have no
obligation to repurchase the Receivables upon a breach of the provisions of
Section 3.2 relating to extensions, rebates, adjustments or other modifications
of the Receivables, or any breach of Sections 3.4, 3.5 or 3.6. The Depositor
shall have no liability for actions taken or omitted to be taken by the Servicer
pursuant to this Section 3.7.
SECTION 3.8. Servicing Fee. The Servicing Fee for the initial
Distribution Date shall equal the product of (a) one-twelfth of the Servicing
Fee Rate and (b) the Original Pool Balance. Thereafter, the Servicing Fee for a
Distribution Date shall equal the product of (i) one-twelfth of the Servicing
Fee Rate and (ii) the Pool Balance as of the last day of the second preceding
Collection Period. The Servicing Fee shall in addition include all late fees,
prepayment charges including, in the case of a Rule of 78's Receivable that is
prepaid in full, to the extent not required by law to be remitted to the related
Obligor, the difference between the Principal Balance of such Rule of 78's
Receivable (plus accrued interest to the date of prepayment) and the principal
balance of such Receivable computed according to the "Rule of 78's", and other
administrative fees or similar charges allowed by applicable law with respect to
Receivables, collected (from whatever source) on the Receivables.
The Servicer shall be required to pay all expenses incurred by it in
connection with its activities under this Agreement (including taxes imposed on
the Servicer, expenses incurred by the Servicer in connection with distributions
and reports to Certificateholders, the Trustee [and the Certificate Insurer] and
all other fees and expenses of the Trust including taxes levied or assessed
against the Trust, and claims against the Trust in respect of indemnification
not expressly stated under this agreement to be for the account of the Trust).
SECTION 3.9. Servicer's Certificate. (a) By 10:00 a.m., New York City
time, on each Determination Date, the Servicer shall deliver to the Trustee, the
Back-up Servicer, [the Collateral Agent], the Depositor, [the Certificate
Insurer] and the Rating Agencies, a Servicer's Certificate containing all
information necessary to make the distributions pursuant to Section 4.6
(including, if required, withdrawals from or deposits
45
to the Payahead Account and withdrawals from the Spread Account, [the
Pre-Funding Account] and the Capitalized Interest Account) for the Collection
Period preceding the date of such Servicer's Certificate and all information
necessary for the Trustee to send statements to Certificateholders [and the
Certificate Insurer] pursuant to Section 4.8. Receivables to be purchased by the
Servicer or to be purchased by LBAC shall be identified by the Servicer by
account number with respect to such Receivable (as specified in the Schedule of
Receivables).
(b) [In addition to the information required by Section 3.9(a), the
Servicer shall include in the copy of the Servicer's Certificate delivered to
the Certificate Insurer (i) the Delinquency Ratio, the Average Delinquency
Ratio, the Cumulative Default Rate, and the Cumulative Loss Rate (as such terms
are defined in the Spread Account Agreement), (ii) whether any Trigger Event (as
such term is defined in the Spread Account Agreement) has occurred as of such
Determination Date, (iii) whether any Trigger Event that may have occurred as of
a prior Determination Date is Deemed Cured (as defined in the Spread Account
Agreement) as of such Determination Date, and (iv) whether to the knowledge of
the Servicer an Insurance Agreement Event of Default has occurred. The Servicer
shall in addition give notice of the occurrence of any Trigger Event or any
Insurance Agreement Event of Default to each Rating Agency.]
SECTION 3.10. Annual Statement as to Compliance; Notice of Default. (a)
The Servicer shall deliver to the Trustee, the Back-up Servicer, [the Collateral
Agent], the Depositor [and the Certificate Insurer], on or before March 31 of
each year beginning March 31, ____, an Officer's Certificate, dated as of
December 31 of the preceding calendar year, stating that (i) a review of the
activities of the Servicer during such preceding calendar year and of its
performance under this Agreement has been made under such officer's supervision
and (ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
year, or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. The Trustee shall send a copy of such certificate to the Rating
Agencies.
(b) The Servicer shall deliver to the Trustee, the Back-up Servicer,
[the Collateral Agent], the Depositor, [the Certificate Insurer] and the Rating
Agencies, promptly after having obtained knowledge thereof, but in no event
later than 2 Business Days after having obtained such knowledge, written notice
in an Officer's Certificate of any event which with the giving of notice or
lapse of time, or both, would become an Event of Default under Section 8.1.
SECTION 3.11. Annual Independent Certified Public Accountant's Report.
The Servicer shall cause a firm of nationally recognized independent certified
public accountants, who may also render other services to the Servicer or to the
Depositor, to deliver to the Trustee, the Back-up Servicer, [the Collateral
Agent], the Certificateholders, [the Certificate Insurer] and each Rating Agency
on or before April 30 of each year beginning April 30, ____, a report dated as
of December 31 of the preceding calendar year and reviewing the Servicer's
activities during such preceding calendar year, addressed to the Board of
Directors of the Servicer, and to the Trustee, the Back-up
46
Servicer, [the Collateral Agent], the Depositor, [and the Certificate Insurer],
to the effect that such firm has audited the financial statements of the
Servicer and issued its report therefor and that such audit (a) was made in
accordance with generally accepted auditing standards, and accordingly included
such tests of the accounting records and such other auditing procedures as such
firm considered necessary in the circumstances; (b) included tests relating to
automotive loans serviced for others in accordance with the requirements of the
Uniform Single Attestation Program for Mortgage Bankers (the "Program"), to the
extent the procedures in the Program are applicable to the servicing obligations
set forth in this Agreement; (c) included an examination of the delinquency and
loss statistics relating to the Servicer's portfolio of automobile, van, sport
utility vehicle and light duty truck installment sales contracts; and (d) except
as described in the report, disclosed no exceptions or errors in the records
relating to automobile, van, sport utility vehicle and light duty truck loans
serviced for others that, in the firm's opinion, the Program requires such firm
to report. The accountant's report shall further state that (1) a review in
accordance with agreed upon procedures was made of three randomly selected
Servicer's Certificates; (2) except as disclosed in the report, no exceptions or
errors in the Servicer's Certificates were found; and (3) the delinquency and
loss information relating to the Receivables contained in the Servicer's
Certificates were found to be accurate.
The report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 3.12. Servicer Expenses. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer, and expenses incurred in connection with distributions and reports
to Certificateholders.
SECTION 3.13. [Retention and Termination of Servicer. The Servicer
hereby covenants and agrees to act as such under this Agreement for an initial
term, commencing on the Closing Date and ending on ________, ____, which term
shall be extendible by [the Certificate Insurer]for successive quarterly terms
ending on each successive June 30, September 30, December 31 and March 31 (or,
pursuant to revocable written standing instructions from time to time to the
Servicer and the Trustee, for any specified number of terms greater than one),
until the termination of the Trust. Each such notice (including each notice
pursuant to standing instructions, which shall be deemed delivered at the end of
successive quarterly terms for so long as such instructions are in effect) (a
"Servicer Extension Notice") shall be delivered by [the Certificate Insurer] to
the Trustee and the Servicer. The Servicer hereby agrees that, as of the date
hereof and upon its receipt of any such Servicer Extension Notice, the Servicer
shall become bound, for the initial term beginning on the date hereof and for
the duration of the term covered by such Servicer Extension Notice, to continue
as the Servicer subject to and in accordance with the other provisions of this
Agreement. Until such time as an Insurer Default shall have occurred and be
continuing, the Trustee agrees that if as of the fifteenth day prior to the last
day of any term of the Servicer, the Trustee shall not have received any
Servicer Extension Notice from [the Certificate Insurer], the Trustee will,
within five days thereafter, give written notice of such non-receipt to the
Certificate Insurer, the Back-up Servicer (or any
47
alternate successor servicer appointed by [the Certificate Insurer] pursuant to
Section 7.5) and the Servicer and the Servicer's terms shall not be extended
unless a Servicer Extension Notice is received on or before the last day of such
term.]
SECTION 3.14. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Trustee, [the
Collateral Agent], the Back-up Servicer, the Depositor, [and the Certificate
Insurer] reasonable access to documentation and computer systems and information
regarding the Receivables and shall provide such access to Certificateholders in
such cases where the Certificateholders are required by applicable law or
regulation to review such documentation. In each case, such access shall be
afforded without charge but only upon reasonable request and during normal
business hours. Nothing in this Section 3.14 shall derogate from the obligation
of the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors, and the failure of the Servicer to provide
access as provided in this Section 3.14 as a result of such obligation shall not
constitute a breach of this Section 3.14.
SECTION 3.15. Verification of Servicer's Certificate. (a) On or before
the fourth Business Day of each month, the Servicer will deliver to the Trustee
and the Back-up Servicer a computer diskette (or other electronic transmission)
in a format acceptable to the Trustee and the Back-up Servicer containing such
information with respect to the Receivables as of the close of business on the
last day of the preceding Collection Period as is necessary for preparation of
the Servicer's Certificate. The Back-up Servicer shall use such computer
diskette (or other electronic transmission) to verify certain information
specified in Section 3.15(b) contained in the Servicer's Certificate delivered
by the Servicer, and the Back-up Servicer shall certify to the Certificate
Insurer that it has verified the Servicer's Certificate in accordance with this
Section 3.15 and shall notify the Servicer, [the Certificate Insurer] and the
Trustee of any discrepancies, in each case, on or before the related Deficiency
Claim Date. In the event that the Back-up Servicer reports any discrepancies,
the Servicer and the Back-up Servicer shall attempt to reconcile such
discrepancies prior to the related Deficiency Claim Date, but in the absence of
a reconciliation, the Servicer's Certificate shall control for the purpose of
calculations and distributions with respect to the related Distribution Date. In
the event that the Back-up Servicer and the Servicer are unable to reconcile
discrepancies with respect to a Servicer's Certificate by the related
Distribution Date, (i) the Back-Up Servicer will notify [the Certificate
Insurer] and the Trustee, and (ii) the Servicer shall cause a firm of
independent certified public accountants, at the Servicer's expense, to audit
the Servicer's Certificate and, prior to the fifth calendar day of the following
month, reconcile the discrepancies. The effect, if any, of such reconciliation
shall be reflected in the Servicer's Certificate for such next succeeding
Determination Date. [In addition, the Servicer shall, if so requested by the
Certificate Insurer (unless an Insurer Default shall have occurred and be
continuing) deliver to the Back-up Servicer (i) within five (5) Business Days of
demand therefor a computer tape containing as of the close of business on the
date of demand all of the data maintained by the Servicer in computer format in
connection with servicing the Receivables and (ii) within fifteen (15) Business
Days of demand therefor a copy of such other information as is reasonably
requested by the Certificate Insurer for the purpose of reconciling such
discrepancies.] Other than the
48
duties specifically set forth in this Agreement, the Back-up Servicer shall have
no obligations hereunder, including, without limitation, to supervise, verify,
monitor or administer the performance of the Servicer. The Back-up Servicer
shall have no liability for any actions taken or omitted by the Servicer. The
duties and obligations of the Back-up Servicer shall be determined solely by the
express provisions of this Agreement and no implied covenants or obligations
shall be read into this Agreement against the Back-up Servicer.
(b) The Back-up Servicer shall review each Servicer's Certificate
delivered pursuant to Section 3.15(a) and shall, based upon the information
provided from the Servicer under Section 3.15(a):
(i) confirm that such Servicer's Certificate is complete on its face;
(ii) load the computer diskette (which shall be in a format acceptable
to the Back-up Servicer) received from the Servicer pursuant to Section
3.15(a) hereof, confirm that such computer diskette is in a readable form
and calculate and confirm the Principal Balance of each Receivable for the
most recent Distribution Date; and
(iii) confirm that the Total Distribution Amount, the Class A
Distributable Amount, the Class A Principal Distributable Amount, the Class
A Interest Distributable Amount, the Back-up Servicer Fee, the Servicing
Fee, the Trustee Fee, [the amount on deposit in the Pre-Funding Account,
the amount on deposit in the Capitalized Interest Account, the amount on
deposit in the Spread Account and the Premium] in the Servicer's
Certificate are accurate based solely on the recalculation of the
Servicer's Certificate.
SECTION 3.16. Fidelity Bond. The Servicer shall maintain a fidelity
bond in such form and amount as is customary for entities acting as custodian of
funds and documents in respect of consumer contracts on behalf of institutional
investors.
SECTION 3.17. Delegation of Duties. The Servicer may at any time
delegate duties under this Agreement to sub-contractors who are in the business
of servicing automotive receivables [with the prior written consent of the
Certificate Insurer (so long as an Insurer Default shall not have occurred and
be continuing) or] the Trustee [(if an Insurer Default shall have occurred and
be continuing)]; provided, however, that no such delegation or sub-contracting
of duties by the Servicer shall relieve the Servicer of its responsibility with
respect to such duties. In the event the Servicer shall for any reason no longer
be the servicer of the Receivables (including by reason of an Event of Default),
the Back-up Servicer, its designee or any successor Servicer will thereupon
assume all of the rights and obligations of the predecessor Servicer under one
or more subservicing agreements that may have been entered into by the
predecessor Servicer by giving notice of such assumption to the related
subservicer or subservicers within ten (10) Business Days of the termination of
the Servicer as servicer of the Receivables. Upon the giving of such notice, the
Back-up Servicer, its designee or the successor Servicer shall be deemed to have
assumed all of the predecessor Servicer's interest therein and to have
49
replaced the predecessor Servicer as a party to the subservicing agreement to
the same extent as if the subservicing agreement had been assigned to the
assuming party except that the predecessor Servicer and the subservicer, if any,
shall not thereby be relieved of any liability or obligations accrued up to the
date of the replacement of the Servicer under the subservicing agreement and the
subservicer, if any, shall not be relieved of any liability or obligation to the
predecessor Servicer that survives the assignment or termination of the
subservicing agreement. The Back-up Servicer shall notify each Rating Agency
[and the Certificate Insurer] if any subservicing agreement is assumed by the
Back-up Servicer, its designee or the successor Servicer. The predecessor
Servicer shall, upon request of the Trustee, the Back-up Servicer or any
successor Servicer, but at the expense of the predecessor Servicer, deliver to
the assuming party all documents and records relating to the subservicing
agreement and the Receivables then being serviced and an accounting of amounts
collected and held by it and otherwise use its reasonable efforts to effect the
orderly and efficient transfer of the subservicing agreement to the assuming
party.
SECTION 3.18. Delivery of Back-up Tapes of Back-up Servicer. (a) In
addition to the information to be delivered by the Servicer to the Back-up
Servicer on or before the fourth Business Day of each month pursuant to Section
3.15(a), the Servicer shall deliver to the Back-up Servicer, or its designated
agent, a computer diskette (or other electronic transmission), in a format
acceptable to the Back-up Servicer or its designated agent, as the case may be,
with the loan master file and history information in the form attached hereto as
Exhibit E-2 on or prior to the Closing Date in the case of the [Initial]
Receivables, [and on or prior to the related Subsequent Transfer Date in the
case of Subsequent Receivables,] which loan master file and history information
shall be sufficiently detailed to enable the Back-up Servicer to maintain
records sufficient to assume the role of successor Servicer pursuant to this
Agreement.
(b) In addition to the information required to be delivered by the
Servicer to the Back-up Servicer or its designated agent on or before the fourth
Business Day of each month pursuant to Section 3.15(a) and on or prior to the
Closing Date [and each Subsequent Transfer Date] pursuant to Section 3.18(a),
the Servicer shall deliver the loan master file and history information to the
Back-up Servicer or its designated agent on the Determination Date occurring in
___________ (with respect to the period from and including the [Initial] Cutoff
Date to the last day of the related Collection Period) and on the Determination
Date occurring every six months thereafter in the form attached hereto as
Exhibit E-2 in writing and on a computer diskette (or other electronic
transmission) in a format acceptable to the Back-up Servicer or its designated
agent, as the case may be, and as at such other times as may be requested by
[the Certificate Insurer or] the Back-up Servicer upon prior written notice to
the Servicer, [provided that the Back-up Servicer shall deliver a copy of any
such notice by the Back-up Servicer to the Certificate Insurer simultaneously
with its delivery of such notice to the Servicer.]
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ARTICLE IV
Distributions; Accounts;
Statements to Certificateholders
SECTION 4.1. Accounts; Lock-Box Account. (a) The Servicer has
established the Lock-Box Account as two Eligible Accounts, one established with
the Trustee entitled "Long Beach Acceptance Corp., [Name of trustee] of
__________________" account number _________, and one established with
______________ entitled "Long Beach Acceptance Corp., [Name of trustee] of
______________," account number ____________; provided, that the Servicer, [with
the prior written consent of the Certificate Insurer,] may from time to time (a)
establish additional or substitute Lock-Box Accounts, each of which shall be an
Eligible Account, and (b) close or terminate the use of any of the
aforementioned accounts or any subsequently established accounts, each of which
accounts, at such time, shall no longer be deemed to be a Lock-Box Account;
provided, further, that pursuant to the Lock-Box Agreement, the Lock-Box
Processor and no other person, save the Trustee or the Servicer, has authority
to direct disposition of funds related to the Receivables on deposit in the
Lock-Box Account consistent with the provisions of this Agreement and the
Lock-Box Agreement. The Trustee shall have no liability or responsibility with
respect to the Lock-Box Processor's or the Servicer's directions or activities
as set forth in the preceding sentence. The Lock-Box Account shall be
established pursuant to and maintained in accordance with the Lock-Box Agreement
and shall be a demand deposit account which shall at all times be an Eligible
Account, initially established and maintained with [Name of trustee] or, [at the
request of the Certificate Insurer,] an Eligible Account satisfying clause (i)
of the definition thereof. The Servicer has established and shall maintain the
Lock-Box at a United States Post Office Branch. Notwithstanding the Lock-Box
Agreement or any of the provisions of this Agreement relating to the Lock-Box
and the Lock-Box Agreement, the Servicer shall remain obligated and liable to
the Trustee and the Certificateholders for servicing and administering the
Receivables and the other Trust Assets in accordance with provisions of this
Agreement without diminution of such obligation or liability by virtue thereof.
In the event the Servicer shall for any reason no longer be acting as
such, the Lock-Box Agreement shall terminate in accordance with its terms and
funds on deposit in the Lock-Box Account shall be distributed by [Name of
trustee], as agent for the beneficial owners of funds in the Lock-Box Account at
such time (including the Trust), and [Name of trustee] shall deposit any such
funds relating to the Receivables to such other account as shall be identified
by the Back-up Servicer or successor Servicer for deposit therein; provided,
however, that the outgoing Servicer shall not thereby be relieved of any
liability or obligations on the part of the outgoing Servicer to the Lock-Box
Bank under such Lock-Box Agreement. The outgoing Servicer shall, upon request of
the Trustee, but at the expense of the outgoing Servicer, deliver to the
successor Servicer all documents and records relating to the Lock-Box Agreement
and an accounting of amounts collected and held in the Lock-Box Account or held
by the Lock-Box Processor in respect of the Receivables and otherwise use its
best efforts to effect the orderly and efficient transfer of any Lock-Box
Agreement to the successor Servicer. In the event that the Lock-Box Account
fails at any time to qualify as an Eligible Account,
51
the Servicer, at its expense, shall cause the Lock-Box Bank to deliver, at the
direction of [the Certificate Insurer (so long as an Insurer Default shall not
have occurred and be continuing) or[ the Trustee [(if an Insurer Default shall
have occurred and be continuing)] to the Trustee or a successor Lock-Box Bank,
all documents and records relating to the Receivables and all amounts held (or
thereafter received) on deposit in the Lock Box Account or held by the Lock-Box
Processor in respect of the Receivables (together with an accounting of such
amounts) and shall otherwise use its best efforts to effect the orderly and
efficient transfer of the lock-box arrangements, and the Servicer shall promptly
notify the Obligors to make payments to any new Lock-Box.
(b) In addition to the Lock-Box Account, the Trustee shall establish,
with itself, the Collection Account, the Certificate Account in the name of the
Trustee for the benefit of the Certificateholders [and the Certificate Insurer],
[the Pre-Funding Account in the name of the Trustee for the benefit of the
Certificateholders] [and the Certificate Insurer], [the Capitalized Interest
Account in the name of the Trustee for the benefit of the Certificateholders
[and the Certificate Insurer], [and the Policy Payments Account in the name of
the Trustee for the benefit of the Class A Certificateholders]. In addition, the
Trustee shall establish with itself the Payahead Account in the name of the
Trustee for the benefit of Obligors of Receivables who make payments thereon in
excess of Scheduled Payments to the extent described in Section 4.3, and
applicable late fees and miscellaneous fees and for the benefit, to the extent
of earnings on investments of funds in the Payahead Account, of the
Certificateholders. The Payahead Account, [the Capitalized Interest Account and
the Spread Account established pursuant to the Spread Account Agreement] shall
not be included in the Trust. Any amounts held on deposit in the Payahead
Account and any investment earnings thereon are owned by, and will be taxable
to, LBAC for federal income tax purposes. The Collection Account, the
Certificate Account, [the Pre-Funding Account,] the Payahead Account [and the
Policy Payments Account] shall be Eligible Accounts initially established with
the Trustee; provided, however, if any of such accounts shall cease to be an
Eligible Account, the Servicer, [with the consent of the Certificate Insurer (so
long as no Insurer Default has occurred and is continuing),] within 5 Business
Days shall, cause such accounts to be moved to an institution so that such
account meets the definition of Eligible Account. The Servicer shall promptly
notify the Rating Agencies and the Depositor of any change in the location of
any of the aforementioned accounts.
All amounts held in the Collection Account, [the Pre-Funding Account]
and the Payahead Account shall be invested by the Trustee at the written
direction of the Depositor in Eligible Investments in the name of the Trustee as
trustee of the Trust and shall mature no later than one Business Day immediately
preceding the Distribution Date next succeeding the date of such investment.
Such written direction shall certify that any such investment is authorized by
this Section. No investment may be sold prior to its maturity. Amounts in the
Certificate Account [and the Policy Payments Account] shall not be invested. The
amount of earnings on investments of funds in the Collection Account and
Payahead Account during the Collection Period related to each Distribution Date
shall be deposited into the Certificate Account on each Distribution Date, and
shall be available for distribution pursuant to Section 4.6(c). [The amount of
earnings on investments of funds in the Pre-Funding Account during the
Collection Period related to
52
each Distribution Date shall be deposited in the Certificate Account on each
Distribution Date in an amount not to exceed the Pre-Funding Interest Amount,
and such amount shall be available for distribution pursuant to Section 4.6(c),
and any remaining investment earnings on the funds in the Pre-Funding Account
shall remain on deposit in the Pre-Funding Account and shall be distributed by
the Trustee to the Depositor at the end of the Funding Period. The amount of
earnings on investments of funds in the Capitalized Interest Account during the
Collection Period related to each Distribution Date shall be deposited into the
Capitalized Interest Account on such Distribution Date prior to making any
transfer from the Capitalized Interest Account to the Certificate Account
pursuant to Section 4.6(a)(iv).] For purposes of this paragraph, the Trustee
will take delivery of the Eligible Investments in accordance with Schedule C.
(c) The Trustee shall on or prior to each Distribution Date (and prior
to the transfer from the Collection Account to the Certificate Account described
in Section 4.6(a)) transfer from the Collection Account (i) to the Payahead
Account all Payaheads as described in Section 4.3 received during the related
Collection Period, (ii) to the Servicer, as additional servicing compensation,
the amount, if any, required to be paid to the Servicer pursuant to Section
4.18, and (iii) to [the Collateral Agent] for deposit into the Excess Cash Flow
Sub-account, the amount of any contribution on behalf of the Servicer required
to be made thereto pursuant to Section 4.18 as certified to the Trustee by the
Servicer in accordance with Section 4.6(b) received during the related
Collection Period.
SECTION 4.2. Collections. The Servicer shall use reasonable efforts to
cause the Lock-Box Processor to transfer any payments in respect of the
Receivables from or on behalf of Obligors received in the Lock-Box to the
Lock-Box Account on the Business Day on which such payments are received,
pursuant to the Lock-Box Agreement. Within two Business Days of receipt of such
funds into the Lock-Box Account, the Servicer shall cause the Lock-Box Bank to
transfer available funds related to the Receivables from the Lock-Box Account to
the Collection Account, and if such funds are not available funds, as soon
thereafter as they clear (i.e., become available for withdrawal from the
Lock-Box Account). In addition, the Servicer shall remit all payments by or on
behalf of the Obligors received by the Servicer with respect to the Receivables
(other than Purchased Receivables), and all Liquidation Proceeds no later than
the second Business Day following receipt into the Lock-Box Account or the
Collection Account.
SECTION 4.3. Application of Collections. All collections for each
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments actually received from or on behalf of the Obligor (other than any such
payment allocable to a Payable) shall be applied hereunder, in the case of a
Precomputed Receivable, first, to the Scheduled Payment of such Precomputed
Receivable, with interest and principal being allocated on an actuarial basis,
second, in connection with the redemption of a defaulted Receivable, to
reimburse the Servicer for reasonable and customary out-of-pocket expenses
incurred by the Servicer in connection with such Receivable, and third, to any
late fees accrued with respect to such Precomputed Receivable and, in the case
of a Simple Interest Receivable, first, to interest and principal in accordance
with the Simple
53
Interest Method to the extent necessary to bring such Simple Interest Receivable
current, second, in connection with the redemption of a defaulted Receivable, to
reimburse the Servicer for reasonable and customary out-of-pocket expenses
incurred by the Servicer in connection with such Receivable, third, to late fees
and fourth, to principal in accordance with the Simple Interest Method. With
respect to any Precomputed Receivable, any remaining excess shall be added to
the Payahead Balance, and shall be applied to prepay the Precomputed Receivable,
but only if the sum of such excess and the previous Payahead Balance shall be
sufficient to prepay the Precomputed Receivable in full. Otherwise, any such
remaining excess payments with respect to a Precomputed Receivable shall
constitute a Payahead, shall increase the Payahead Balance and shall be applied
as set forth in Section 4.4.
SECTION 4.4. Payaheads. As of the close of business on the last day of
each Collection Period, if the payments by or on behalf of the Obligor on a
Precomputed Receivable (other than a Purchased Receivable) shall be less than
the Scheduled Payment and accrued late fees with respect to such Receivable, the
Payahead Balance of an Obligor, other than the portion, if any, of such Payahead
Balance which constitutes a Payable, shall be applied by the Servicer to the
extent of the shortfall and such Payahead Balance shall be reduced accordingly.
The portion, if any, of the Payahead Balance of an Obligor which constitutes a
Payable shall be applied by the Servicer as a payment on the related Receivable
upon the earliest to occur of (i) the Collection Period in which such Receivable
becomes a Liquidated Receivable and (ii) payment in full of all other amounts
due and owing on such Receivable, including the payment of late charges and
miscellaneous fees.
SECTION 4.5. Additional Deposits. The following additional deposits
shall be made in immediately available funds on the dates indicated: (i) on the
Business Day immediately preceding each Determination Date, the Servicer or
LBAC, as the case may be, shall deposit or cause to be deposited in the
Collection Account the aggregate Purchase Amount with respect to Purchased
Receivables, (ii) on the Business Day immediately preceding each Determination
Date, the Originator or the Servicer, as the case may be, shall deposit in the
Collection Account all amounts to be paid under Section 10.2, (iii) [on the
Determination Date immediately succeeding the date on which the Funding Period
ends (or on the Determination Date on which the Funding Period ends, if the
Funding Period ends on a Determination Date), the Trustee shall remit the
remaining Pre-Funded Amount on deposit in the Pre-Funding Account to the
Certificate Account pursuant to Section 4.19(c)] [and (iv) on or before each
Draw Date,] the Trustee shall remit to the Collection Account any amounts
delivered to the Trustee by [the Collateral Agent].
SECTION 4.6. Distributions; [Policy Claims]. (a) On each Distribution
Date, the Trustee shall cause to be made the following transfers and
distributions based solely on the amounts set forth in the Servicer's
Certificate for the related Distribution Date:
(i) from the Collection Account to the Certificate Account, in
immediately available funds, an amount equal to the excess of the sum of
(a) all funds that were deposited in the Collection Account, plus (b)
earnings on
54
investments of funds in the Collection Account pursuant to Section 4.1(b),
for the related Collection Period over all funds transferred from the
Collection Account with respect to such Collection Period pursuant to
Section 4.1(c);
(ii) from the Payahead Account to the Certificate Account, in
immediately available funds, the aggregate previous Payaheads to be applied
to Scheduled Payments on Precomputed Receivables or prepayments for the
related Collection Period pursuant to Sections 4.3 and 4.4, plus earnings
on investments of funds in the Payahead Account for the related Collection
Period pursuant to Section 4.1(b);
(iii) [from the Pre-Funding Account to the Certificate Account, in
immediately available funds, earnings on investments of funds in the
Pre-Funding Account for the related Collection Period pursuant to Section
4.1(b); and]
(iv) [from the Capitalized Interest Account to the Certificate
Account, an amount equal to the Negative Carry Amount for the related
Collection Period, if any.]
(b) Prior to each Distribution Date, the Servicer shall on the related
Determination Date calculate the Total Distribution Amount, the Class A
Distributable Amount, the Class A Interest Distributable Amount, the Class A
Principal Distributable Amount, the Monthly Dealer Participation Fee
Distributable Amount, the amount, if any, required to be withdrawn from the
Collection Account and paid to the Servicer as additional servicing compensation
[or contributed to the Spread Account on behalf of the Servicer], in each case
pursuant to Section 4.18 and, based on the Total Distribution Amount and the
other amounts available for distribution on such Distribution Date, determine
the amount distributable to the Certificateholders.
(c) On each Distribution Date, the Trustee shall [(x) distribute all
amounts delivered by the Certificate Insurer to the Trustee for deposit into the
Collection Account pursuant to Section 4.11 for distribution in the amounts and
priority as directed by the Certificate Insurer, and (y)] (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 3.9) subject to subsection (d) hereof,
make the following distributions from the Total Distribution Amount withdrawn
from the Certificate Account and from the other sources described below in the
following order of priority:
(i) first, to LBAC, from the Total Distribution Amount, the Monthly
Dealer Participation Fee Distributable Amount and all unpaid Monthly Dealer
Participation Fee Distributable Amounts from prior Collection Periods, and
second, to the Servicer, from the Total Distribution Amount (as the Total
Distribution Amount has been reduced by payments pursuant to subclause
first of this clause (i)), the Servicing Fee and all unpaid Servicing Fees
from prior Collection Periods [and, if the Total Distribution Amount is
insufficient to pay such Servicing Fee and such unpaid Servicing Fees from
prior Collection Periods, the Servicer will receive such deficiency from
the Deficiency Claim Amount with
55
respect to such Distribution Date, if any, to the extent received by the
Trustee from [the Collateral Agent]];
(ii) to the Trustee, the Back-up Servicer and the Custodian, from the
Total Distribution Amount (as such Total Distribution Amount has been
reduced by payments pursuant to clause (i) above), the Trustee Fee, the
Back-up Servicer Fee and all unpaid Trustee Fees and Back-up Servicer Fees
from prior Collection Periods and, if the Total Distribution Amount is
insufficient, the Trustee and Back-up Servicer will receive such deficiency
from the remaining portion of the Deficiency Claim Amount with respect to
such Distribution Date, if any, to the extent received by the Trustee from
[the Collateral Agent], after application thereof pursuant to clause (i)
above;
(iii) to the Class A Certificateholders, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) and (ii) above), an amount equal to the sum of the
Class A Interest Distributable Amount and any Class A Interest Carryover
Shortfall as of the close of business on the preceding Distribution Date
(plus (without duplication) interest on such outstanding Class A Interest
Carryover Shortfall, to the extent permitted by applicable law, at the
Class A Pass-Through Rate from such preceding Distribution Date through the
current Distribution Date (calculated on the basis of a [360-day year
consisting of twelve 30-day months])) [and, if the Total Distribution
Amount is insufficient, the Class A Certificateholders will receive such
deficiency from the following sources in the following order of priority:
(A) from the remaining portion of the Deficiency Claim Amount with respect
to such Distribution Date, if any, to the extent received by the Trustee
from [the Collateral Agent], after application thereof pursuant to clauses
(i) and (ii) above and (B) from the Policy Claim Amount with respect to
such Distribution Date, if any, received by the Trustee from the
Certificate Insurer];
(iv) to the Class A Certificateholders, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through (iii) above) and, if such Distribution Date
is the Final Funding Period Distribution Date, from any Prepayment Amount,
an amount equal to the sum of the Class A Principal Distributable Amount
and any Class A Principal Carryover Shortfall as of the close of business
on the preceding Distribution Date [and, if the Total Distribution Amount
is insufficient, the Class A Certificateholders will receive such
deficiency from the following sources in the following order of priority:
(A) from the remaining portion of the Deficiency Claim Amount with respect
to such Distribution Date, if any, to the extent received by the Trustee
from [the Collateral Agent], after application thereof pursuant to clauses
(i) through (iii) above, plus (B) the remaining portion of the Policy Claim
Amount with respect to such Distribution Date, if any, after application
thereof pursuant to clause (iii) above];
56
(v) [first, to the Certificate Insurer, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through (iv) above), an amount equal to the
Reimbursement Obligations and, if the Total Distribution Amount is
insufficient, the Certificate Insurer shall receive such deficiency from
the remaining portion of the Deficiency Claim Amount with respect to such
Distribution Date, if any, to the extent received by the Trustee from [the
Collateral Agent], after application thereof pursuant to clauses (i)
through (iv) above,] second, to the Trustee, the Back-up Servicer and the
Custodian, as applicable, from the Total Distribution Amount (as such Total
Distribution Amount has been reduced by payments pursuant to clauses (i)
through (iv) above [and subclause first of this clause (v)]), all
reasonable out-of-pocket expenses of the Trustee, the Back-up Servicer and
the Custodian (including reasonable counsel fees and expenses), including,
without limitation, costs and expenses required to be paid by the Servicer
to the Back-up Servicer under Section 8.2(a), to the extent not paid by the
Servicer, and all unpaid reasonable out-of-pocket expenses of the Trustee,
the Back-up Servicer and the Custodian (including reasonable counsel fees
and expenses) from prior Collection Periods; provided, however, that unless
an Event of Default shall have occurred and be continuing, expenses payable
to the Trustee, the Back-up Servicer and the Custodian pursuant to this
subclause second of clause (v) shall be limited to a combined aggregate
amount of $__________ per annum, and third to the Back-up Servicer, from
the Total Distribution Amount (as such Total Distribution Amount has been
reduced by payments pursuant to clauses (i) through (iv) above and
subclauses first and second of this clause (v)), in the event that the
Back-up Servicer shall have assumed the obligations of Servicer pursuant to
Section 8.2(a) and the Servicer fails to pay the Back-up Servicer for
system conversion expenses as required by said section, an aggregate amount
not to exceed $100,000 in payment of such system conversion expenses; and
(vi) [to [the Collateral Agent] on behalf of the Certificate Insurer,
the Trustee (on behalf of the Class A Certificateholders) and the trustees
for certain other trusts, if any, to be established by the Depositor, the
remaining Total Distribution Amount (as such Total Distribution Amount has
been reduced by payments pursuant to clauses (i) through (v) above) for
application in accordance with the provisions of the Spread Account
Agreement.]
In addition, on each Distribution Date, after giving effect to the
distributions specified in clauses (i) through [(vi)] above, the Trustee shall
distribute to the Excess Cash Flow Certificateholder the amount, if any, to be
released to the Excess Cash Flow Certificateholder [pursuant to the terms of the
Spread Account Agreement].
(d) Each Certificateholder, by its acceptance of its Certificate, will
be deemed to have consented to the provisions of Section 4.6(c) relating to the
priority of distributions, and will be further deemed to have acknowledged that
no property rights in any amount or the proceeds of any such amount shall vest
in such Certificateholder until such amounts have been distributed to such
Certificateholder pursuant to such provisions; provided, that the foregoing
shall not restrict the right of any Certificateholder, upon
57
compliance with the provisions hereof from seeking to compel the performance of
the provisions hereof by the parties hereto. [Each Certificateholder, by its
acceptance of the Certificate, will be deemed to have further agreed that
withdrawals of funds by [the Collateral Agent] from the Spread Account for
application hereunder, shall be made in accordance with the provisions of the
Spread Account Agreement.]
[In furtherance of and not in limitation of the foregoing, the Excess
Cash Flow Certificateholder by acceptance of the Excess Cash Flow Certificate,
specifically acknowledges that no amounts shall be received by it, nor shall it
have any right to receive any amounts, unless and until such amounts have been
distributed pursuant to Section 4.6(c) or released pursuant to priority SEVENTH
of Section 3.03(b) of the Spread Account Agreement for distribution to the
Excess Cash Flow Certificateholder pursuant to Section 4.6(c). The Excess Cash
Flow Certificateholder, by its acceptance of the Excess Cash Flow Certificate,
further specifically acknowledges that it has no right to or interest in any
moneys at any time held pursuant to the Spread Account Agreement prior to the
release of such moneys as aforesaid, such moneys being held in trust for the
benefit of the Class A Certificateholders and the Certificate Insurer as their
interests may appear prior to such release. Notwithstanding the foregoing, in
the event that it is ever determined that any property held in the Spread
Account constitute a pledge of collateral, then the provisions of this Agreement
and the Spread Account Agreement shall be considered to constitute a security
agreement and the Depositor and the Excess Cash Flow Certificateholder hereby
grant to [the Collateral Agent] and to the Trustee, respectively, a first
priority perfected security interest in such amounts, to be applied as set forth
in Section 3.03(b) of the Spread Account Agreement. In addition, the Excess Cash
Flow Certificateholder, by acceptance of its Certificate, hereby appoints the
Depositor as its agent to pledge a first priority perfected security interest in
the Spread Account, and any property held therein from time to time to [the
Collateral Agent] for the benefit of the Trustee and the Certificate Insurer
pursuant to the Spread Account Agreement and agrees to execute and deliver such
instruments of conveyance, assignment, grant, confirmation, etc., as well as any
financing statements, in each case as the Certificate Insurer shall consider
reasonably necessary in order to perfect [the Collateral Agent]'s Security
Interest in the Collateral (as such terms are defined in the Spread Account
Agreement).]
(e) Subject to Section 10.1 respecting the final payment upon
retirement of each Certificate, the Servicer shall on each Distribution Date
instruct the Trustee to distribute to each Certificateholder of record on the
preceding Record Date either (i) by wire transfer, in immediately available
funds to the account of such Holder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder is the Clearing Agency or such
Holder's Certificates in the aggregate evidence an original principal balance of
at least $1,000,000, and if such Certificateholder shall have provided to the
Trustee appropriate instructions prior to the Record Date for such Distribution
Date, or (ii) by check mailed to such Certificateholder at the address of such
Holder appearing in the Certificate Register, such Holder's Fractional Undivided
Interest of the Class A Distributable Amount in accordance with the Servicer's
Certificate.
SECTION 4.7. [Reserved]
58
SECTION 4.8. Statements to Certificateholders; Tax Returns. (a) With
each distribution from the Certificate Account to the Certificateholders made on
a Distribution Date, the Servicer shall provide to [the Certificate Insurer],
the Depositor, and to the Trustee, with a copy to each Rating Agency, for the
Trustee to forward to each Certificateholder of record a statement (prepared by
the Servicer) substantially in the form of Exhibit E-1 hereto setting forth at
least the following information as to the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal of the
Class A Certificates;
(ii) the amount of such distribution allocable to interest on the
Class A Certificates;
(iii) the number of Receivables, the weighted average APR of the
Receivables, the weighted average maturity of the Receivables, the Pool
Balance, the weighted average Monthly Dealer Participation Fee and the
Class A Pool Factor as of the close of business on the last day of the
preceding Collection Period;
(iv) the Class A Certificate Balance as of the close of business on
the last day of the preceding Collection Period, after giving effect to
payments allocated to principal reported under clause (i) above;
(v) the amount of the Monthly Dealer Participation Fee Distributable
Amount paid to LBAC, the amount of the Servicing Fee paid to the Servicer
and the amount of the Back-up Servicer Fee paid to the Back-up Servicer
with respect to the related Collection Period, the sum of the Servicing Fee
and the Back-up Servicer Fee, the amount of any unpaid Servicing Fees and
any unpaid Back-up Servicer Fees and the change in such amounts from the
prior Distribution Date;
(vi) the amount of the Class A Interest Carryover Shortfall, if
applicable, on such Distribution Date and the Class A Principal Carryover
Shortfall, if applicable, on such Distribution Date, and the change in such
amounts from the prior Distribution Date;
(vii) [the amount paid, if any, to Class A Certificateholders from
funds received under the Policy for such Distribution Date;]
(viii) [the amount distributable to the Certificate Insurer on such
Distribution Date;]
(ix) the aggregate amount in each of the Payahead Account [and the
Spread Account] and the change in each such amount from the preceding
Distribution Date;
59
(x) the number of Receivables and the aggregate outstanding principal
amount scheduled to be paid thereon, for which the related Obligors are
delinquent in making Scheduled Payments between 30 and 59 consecutive days,
60 and 89 consecutive days, 90 and 119 consecutive days and 120 consecutive
days or more (in each case calculated on the basis of a 360-day year of
twelve 30-day months), as of the last day of the related Collection Period,
and the percentage of the aggregate principal amount which such
delinquencies represent;
(xi) the number and the aggregate Purchase Amount of Receivables that
became Purchased Receivables during the related Collection Period and
summary information as to losses and delinquencies with respect to the
Receivables;
(xii) the cumulative number and amount of Liquidated Receivables, the
cumulative amount of any Liquidation Proceeds and Recoveries, since the
[Initial] Cutoff Date to the last day of the related Collection Period, the
number and amount of Liquidated Receivables for the related Collection
Period and the amount of Recoveries in the related Collection Period;
(xiii) [the Average Delinquency Ratio, the Cumulative Default Rate and
the Cumulative Loss Rate (as such terms are defined in the Spread Account
Agreement) for such Distribution Date;]
(xiv) [whether any Trigger Event has occurred as of such Determination
Date;]
(xv) [whether any Trigger Event that may have occurred as of a prior
Determination Date is Deemed Cured (as such term is defined in the Spread
Account Agreement) or otherwise waived as of such Determination Date;]
(xvi) [whether an Insurance Agreement Event of Default has occurred;]
(xvii) the number and amount of Cram Down Losses, the number and
dollar amount of repossessions, the aging of repossession inventory with
respect to Liquidated Receivables, the aging and repossession inventory
with respect to Receivables which are not Liquidated Receivables and the
dollar amount of Recoveries;
(xviii) [for Distribution Dates during the Funding Period and the
Distribution Date immediately succeeding the Final Funding Period
Distribution Date, the amount withdrawn from the Pre-Funding Account to
purchase Subsequent Receivables during the related Collection Period and
the remaining Pre-Funded Amount on deposit in the Pre-Funding Account];
(xix) [for Distribution Dates during the Funding Period and the
Distribution Date immediately succeeding the Final Funding Period
Distribution Date, the Negative Carry Amount in respect of the related
Collection Period
60
withdrawn from the Capitalized Interest Account and the amount remaining on
deposit in the Capitalized Interest Account; and]
(xx) [for the first Distribution Date that is on or immediately
following the end of the Funding Period, the amount of the Pre-Funded
Amount (if any) that has not been used to purchase Subsequent Receivables
and is being distributed as a payment of principal to Offered
Certificateholders].
Each amount set forth pursuant to subclauses (i), (ii), and (v) above shall be
expressed as a dollar amount per $1,000 of original principal balance of a
Certificate.
(b) No later than January 31 of each calendar year, commencing January
31, 20__, the Servicer shall send to the Trustee, and the Trustee shall,
provided it has received the necessary information from the Servicer, promptly
thereafter furnish to each Person who at any time during the preceding calendar
year was a Certificateholder of record and received any payment thereon (a) a
report (prepared by the Servicer) as to the aggregate of amounts reported
pursuant to subclauses (i), (ii) and (v) of Section 4.8(a) for such preceding
calendar year or applicable portion thereof during which such person was a
Certificateholder, and (b) such information as may be reasonably requested by
the Certificateholders or required by the Internal Revenue Code and regulations
thereunder, to enable such Holders to prepare their Federal and State income tax
returns. The obligation of the Trustee set forth in this paragraph shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Servicer pursuant to any requirements of
the Code.
(c) The Servicer, at its own expense, shall cause a firm of nationally
recognized accountants to prepare any tax returns required to be filed by the
Trust, and the Trustee shall execute and file such returns if requested to do so
by the Servicer. The Trustee, upon request, will furnish the Servicer with all
such information known to the Trustee as may be reasonably requested by the
Servicer in connection with the preparation of all tax returns of the Trust.
SECTION 4.9. [Reserved]
SECTION 4.10. Reliance on Information from the Servicer.
Notwithstanding anything to the contrary contained in this Agreement, all
distributions from any of the accounts described in this Article IV and any
transfer of amounts between such accounts shall be made by the Trustee in
reliance on information provided to the Trustee by the Servicer in writing,
whether by way of a Servicer's Certificate or otherwise.
SECTION 4.11. [Optional Deposits by the Certificate Insurer. The
Certificate Insurer shall at any time, and from time to time, with respect to a
Distribution Date, have the option (but shall not be required, except as
provided in Section 4.6(d)) to deliver amounts to the Trustee for deposit into
the Collection Account for any of the following purposes: (i) to provide funds
in respect of the payment of fees or expenses of any provider of services to the
Trust with respect to such Distribution Date, (ii) to distribute as a component
of the Class A Principal Distributable Amount to the extent that the Class
61
A Certificate Balance as of the Determination Date preceding such Distribution
Date exceeds the Pool Balance as of such Determination Date, or (iii) to include
such amount as part of the Class A Distributable Amount for such Distribution
Date to the extent that without such amount a draw would be required to be made
on the Policy.]
SECTION 4.12. [Spread Account. The Depositor agrees, simultaneously
with the execution and delivery of this Agreement, to execute and deliver the
Spread Account Agreement and, pursuant to the terms thereof, to deposit
$__________ in the Spread Account on the Closing Date. [In addition, on each
Subsequent Transfer Date, pursuant to the terms of the Spread Account Agreement,
the Depositor shall deposit the related Subsequent Spread Account Deposit in the
Spread Account]. Although the Depositor as Excess Cash Flow Certificateholder,
has pledged the Spread Account to [the Collateral Agent] and the Certificate
Insurer pursuant to the Spread Account Agreement, the Spread Account shall not
under any circumstances be deemed to be a part of or otherwise includible in the
Trust or the Trust Assets.]
SECTION 4.13. [Policy. The Originator agrees, simultaneously with the
execution and delivery of this Agreement, to cause the Certificate Insurer to
issue the Policy for the benefit of the Class A Certificateholders in accordance
with the terms thereof.]
SECTION 4.14. [Withdrawals from Spread Account. (a) In the event that
the Servicer's Certificate with respect to any Determination Date shall state
that the amount of the Total Distribution Amount with respect to such
Determination Date is less than the sum of the amounts payable on the related
Distribution Date pursuant to clauses (i) through (iv) and subclause first of
clause (v) of Section 4.6(c) (such deficiency being a "Deficiency Claim Amount")
then on the Deficiency Claim Date immediately preceding such Distribution Date,
the Trustee shall deliver to [the Collateral Agent], the Certificate Insurer,
the Fiscal Agent (as such term is defined in the Insurance Agreement), if any,
the Servicer, by hand delivery, telex or facsimile transmission, a written
notice (a "Deficiency Notice") specifying the Deficiency Claim Amount for such
Distribution Date. Such Deficiency Notice shall direct [the Collateral Agent] to
remit such Deficiency Claim Amount (to the extent of the funds available to be
distributed pursuant to the Spread Account Agreement) to the Trustee for deposit
in the Collection Account.
(b) Any Deficiency Notice shall be delivered by 10:00 a.m., New York
City time, on the related Deficiency Claim Date. The amounts distributed by [the
Collateral Agent] to the Trustee pursuant to a Deficiency Notice shall be
deposited by the Trustee into the Collection Account pursuant to Section 4.5.]
SECTION 4.15. [Claims Under Policy. (a) In the event that the Trustee
has delivered a Deficiency Notice with respect to any Determination Date, the
Trustee shall determine on the related Draw Date whether the sum of (i) the
amount of Total Distribution Amount with respect to such Determination Date (as
stated in the Servicer's Certificate with respect to such Determination Date)
plus (ii) the amount of the Deficiency Claim Amount, if any, available to be
distributed pursuant to the Spread Account Agreement by [the Collateral Agent]
to the Trustee pursuant to a Deficiency
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Notice delivered with respect to such Distribution Date (as stated in the
certificate delivered on the immediately preceding Deficiency Claim Date by [the
Collateral Agent] pursuant to Section 3.03(a) of the Spread Account Agreement)
would be insufficient, after giving effect to the distributions required by
Section 4.6(c)(i) and (ii), to pay the Guaranteed Distributions for the related
Distribution Date, then in such event the Trustee shall furnish to the
Certificate Insurer no later than 12:00 noon New York City time on the related
Draw Date a completed Notice of Claim in the amount of the shortfall in amounts
so available to pay the Guaranteed Distributions with respect to such
Distribution Date (the amount of any such shortfall being hereinafter referred
to as the "Policy Claim Amount"). Amounts paid by the Certificate Insurer under
the Policy shall be deposited by the Trustee into the Policy Payments Account
and thereafter into the Certificate Account for payment to Class A
Certificateholders on the related Distribution Date (or promptly following
payment on a later date as set forth in the Policy).
(b) Any notice delivered by the Trustee to the Certificate Insurer
pursuant to Section 4.15(a) shall specify the Policy Claim Amount claimed under
the Policy and shall constitute a "Notice of Claim" under the Policy. In
accordance with the provisions of the Policy, the Certificate Insurer is
required to pay to the Trustee the Policy Claim Amount properly claimed
thereunder by 12:00 noon, New York City time, on the later of (i) the second
Business Day (as defined in the Policy) following receipt on a Business Day (as
defined in the Policy) of the Notice of Claim, and (ii) the applicable
Distribution Date. Any payment made by the Certificate Insurer under the Policy
shall be applied solely to the payment of the Class A Certificates, and for no
other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each Class A
Certificateholder any Policy Claim Amount from the Certificate Insurer and (ii)
deposit the same in the Policy Payments Account for disbursement to the Class A
Certificateholders as set forth in clauses (iii) and (iv) of Section 4.6(c). Any
and all Policy Claim Amounts disbursed by the Trustee from claims made under the
Policy shall not be considered payment by the Trust or from the Spread Account
with respect to such Class A Certificates, and shall not discharge the
obligations of the Trust with respect thereto. The Certificate Insurer shall, to
the extent it makes any payment with respect to the Class A Certificates, become
subrogated to the rights of the recipients of such payments to the extent of
such payments. Subject to and conditioned upon any payment with respect to the
Class A Certificates by or on behalf of the Certificate Insurer, each Class A
Certificateholder shall be deemed, without further action, to have directed the
Trustee to assign to the Certificate Insurer all rights to the payment of
interest or principal with respect to the Class A Certificates which are then
due for payment to the extent of all payments made by the Certificate Insurer
[and the Certificate Insurer] may exercise any option, vote, right, power or the
like with respect to the Class A Certificates to the extent that it has made
payment pursuant to the Policy. Notwithstanding the foregoing, the order of
priority of payments to be made pursuant to Section 4.6(c) shall not be modified
by this clause (c). To evidence such subrogation, the Certificate Registrar
shall note the Certificate Insurer's rights as subrogee upon the register of
Class A Certificateholders upon receipt from the Certificate Insurer of proof of
payment by the Certificate Insurer of any Class A Interest Distributable Amount
or Class A Principal Distributable Amount.
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(d) The Trustee shall be entitled, but not obligated, to enforce on
behalf of the Class A Certificateholders the obligations of the Certificate
Insurer under the Policy. Notwithstanding any other provision of this Agreement,
the Class A Certificateholders are not entitled to institute proceedings
directly against the Certificate Insurer.]
SECTION 4.16. [Preference Claims; Direction of Proceedings. (a) In the
event that the Trustee has received a certified copy of an order of the
appropriate court that any Guaranteed Distribution paid on a Class A Certificate
has been avoided in whole or in part as a preference payment under applicable
bankruptcy law, the Trustee shall so notify the Certificate Insurer, shall
comply with the provisions of the Policy to obtain payment by the Certificate
Insurer of such avoided payment, and shall, at the time it provides notice to
the Certificate Insurer, shall comply with the provisions of the Policy to
obtain payment by the Certificate Insurer, notify Holders of the Class A
Certificates by mail that, in the event that any Class A Certificateholder's
payment is so recoverable, such Class A Certificateholder will be entitled to
payment pursuant to the terms of the Policy. Pursuant to the terms of the
Policy, the Certificate Insurer will make such payment on behalf of the Class A
Certificateholder to the receiver, conservator, debtor-in-possession or trustee
in bankruptcy named in the Order (as defined in the Policy) and not to the
Trustee or any Class A Certificateholder directly (unless a Class A
Certificateholder has previously paid such payment to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy, in which case the Certificate
Insurer will make such payment to the Trustee for distribution, in accordance
with the instructions to be provided by the Certificate Insurer, to such Class A
Certificateholder upon proof of such payment reasonably satisfactory to the
Certificate Insurer).
(b) Each Notice of Claim shall provide that the Trustee, on its behalf
and on behalf of the Class A Certificateholders, thereby appoints the
Certificate Insurer as agent and attorney-in-fact for the Trustee and each Class
A Certificateholder in any legal proceeding with respect to the Class A
Certificates. The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action (of which a Responsible Officer of
the Trustee has actual knowledge) seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership, rehabilitation
or similar law (a "Preference Claim") of any distribution made with respect to
the Class A Certificates. Each Holder of Class A Certificates, by its purchase
of Class A Certificates, and the Trustee hereby agree that so long as an Insurer
Default shall not have occurred and be continuing, the Certificate Insurer may
at any time during the continuation of any proceeding relating to a Preference
Claim direct all matters relating to such Preference Claim including, without
limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal at the expense of the Certificate Insurer, but
subject to reimbursement as provided in the Insurance Agreement. In addition,
and without limitation of the foregoing, as set forth in Section 4.15(c), the
Certificate Insurer shall be subrogated to, and each Class A Certificateholder
and the Trustee hereby delegate and assign, to the fullest extent permitted by
law, the rights of the Trustee and each Class A Certificateholder in the conduct
of any proceeding with respect to a Preference Claim, including, without
limitation, all rights of any party to an adversary
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proceeding action with respect to any court order issued in connection with any
such Preference Claim.]
SECTION 4.17. [Surrender of Policy. The Trustee shall surrender the
Policy to the Certificate Insurer for cancellation upon its expiration in
accordance with the terms thereof.]
SECTION 4.18. Simple Interest Advances. On each Determination Date, the
Servicer shall determine the amount, if any, of any Simple Interest Shortfall or
Simple Interest Excess for the related Collection Period. If the Servicer
determines that there is a Simple Interest Shortfall for such related Collection
Period, the Servicer shall make an advance (a "Simple Interest Advance") in the
amount of such Simple Interest Shortfall and deposit such Simple Interest
Advance into the Collection Account on or before the Business Day immediately
preceding the next succeeding Distribution Date. If, however, the Servicer
determines that there is a Simple Interest Excess for such Collection Period,
the Trustee shall withdraw the amount of such Simple Interest Excess from the
Collection Account on the next Distribution Date and pay the amount of such
Simple Interest Excess to the Servicer as additional servicing compensation.
[Notwithstanding the immediately preceding sentence, to the extent that the
aggregate amount of Simple Interest Advances made by the Servicer with respect
to all prior Collection Periods does not exceed the aggregate amount of all
Simple Interest Excesses with respect to such prior Collection Periods, such
excess shall be deposited pursuant to Section 4.6(b) into the Spread Account and
shall be treated as a contribution to the Spread Account by the Servicer for the
benefit of the Holder of the Excess Cash Flow Certificate for federal income tax
purposes.]
SECTION 4.19. [Pre-Funding Account.
(a) Pursuant to Section 4.1(b), the Trustee shall establish and
maintain the Pre-Funding Account as an Eligible Account in the name of the
Trustee on behalf of the Trust for the benefit of the Certificateholders [and
the Certificate Insurer].
(b) On the Closing Date, the Depositor will deposit in the Pre-Funding
Account an amount equal to the Original Pre-Funded Amount from the proceeds of
the sale of the Class A Certificates. On each Subsequent Transfer Date, the
Servicer shall instruct the Trustee in writing to withdraw from the Pre-Funding
Account an amount equal to the Principal Balance of the Subsequent Receivables
(as of the related Subsequent Cutoff Date) sold to the Trust on such Subsequent
Transfer Date and pay such amount to or upon the order of the Depositor upon
satisfaction of the conditions set forth in this Agreement and in the related
Transfer Agreement with respect to such transfer.
(c) If (i) the Pre-Funded Amount has not been reduced to zero by the
close of business on the Final Funding Period Distribution Date or (ii) the
Pre-Funded Amount has been reduced to $__________ or less as of any Distribution
Date during the Funding Period, in either case after giving effect to any
reductions in the Pre-Funded Amount on such Distribution Date pursuant to
Section 4.19(b), the Servicer shall instruct the Trustee to withdraw such
remaining portion of the Pre-Funded Amount from the Pre-Funding
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Account and deposit it in the Certificate Account on such Distribution Date to
be applied to a partial prepayment of the Class A Certificates, in addition to
the payment of principal and interest that otherwise would be payable with
respect to such Class A Certificates on such Distribution Date.]
SECTION 4.20. [Capitalized Interest Account.
(a) Pursuant to Section 4.1(b), the Capitalized Interest Account shall
be an Eligible Account established by the Trustee in the name of the Trustee for
the benefit of the Certificateholders [and the Certificate Insurer] and
maintained with [the Collateral Agent]. On the Closing Date, the Depositor will
deposit in the Capitalized Interest Account an amount equal to $________ (such
amount, the "Capitalized Interest Account Deposit").
(b) In order to assure availability of the amounts maintained in the
Capitalized Interest Account, the Depositor, on behalf of itself, its successors
and assigns, hereby sells, conveys and transfers to [the Collateral Agent] and
its successors and assigns, the Capitalized Interest Account Deposit and all
proceeds thereof, and hereby pledges to [the Collateral Agent] and its
successors and assigns, for the benefit of the Trustee [and the Certificate
Insurer], all amounts deposited in or credited to the Capitalized Interest
Account from time to time under this Agreement, all Eligible Investments made
with amounts on deposit therein, all earnings and distributions thereon and
proceeds thereof, subject, however, to the limitations set forth below, and
solely for the purpose of securing and providing for payment of distributions on
the Certificates, in each case to the extent provided in Section 4.6 (all the
foregoing, subject to the limitations set forth below, being the "Capitalized
Interest Account Property"), to have and to hold all the aforesaid property,
rights and privileges unto [the Collateral Agent], its successors and assigns,
for the benefit of the Trustee [and the Certificate Insurer], in trust for the
uses and purposes, and subject to the terms and provisions, set forth in this
Section. The Collateral Agent on behalf of the Trustee [and the Certificate
Insurer] hereby acknowledges such transfer and accepts the trusts hereunder and
shall hold and distribute the Capitalized Interest Account Property in
accordance with the terms and provisions of this Section.
(i) Consistent with the limited purposes for which such trust is
granted on each Distribution Date, the amounts on deposit in the
Capitalized Interest Account shall be available for deposit to the
Certificate Account pursuant to Section 4.6(a)(iv) for distribution as
provided in Section 4.6(c). On the Final Funding Period Distribution Date,
any remaining amounts in the Capitalized Interest Account will be paid
directly to the Depositor. Upon any such distribution to the Depositor, the
Class A Certificateholders will have no further rights in, or claims to,
such amounts.
(c) Amounts held in the Capitalized Interest Account shall be invested
by [the Collateral Agent] in Eligible Investments which shall mature no later
than the Business Day immediately preceding the next Distribution Date in
accordance with written instructions from the Depositor and such investments
shall not be sold or disposed of prior to their maturity. All such investments
shall be deemed to be made at the direction
66
of the Trustee and shall be made for the benefit of the Trustee, and all income
and gain realized thereon shall be solely for the benefit of, and taxable to,
the Depositor subject to the security interest of the Trustee created under
Section 4.20(b)(i). Realized losses, if any, on investment of the Capitalized
Interest Account Property shall be charged first against undistributed
investment earnings attributable to the Capitalized Interest Account Property.
The Trustee and the Depositor on behalf of itself, its successors and
assigns, agree that:
(i) any Capitalized Interest Account Property that is held in deposit
accounts shall be held solely in the name of [the Collateral Agent]. Each
such deposit account shall be subject to the exclusive custody and control
of [the Collateral Agent], and [the Collateral Agent] shall have sole
signature authority with respect thereto;
(ii) any Capitalized Interest Account Property that is a bankers
acceptance or is commercial paper, negotiable certificates of deposit or
another obligation that constitutes "instruments" within the meaning of
Section 9-105(1)(i) of the UCC or that is a "certificated security" as
defined in Section 8-102 of the UCC shall be delivered to [the Collateral
Agent] in accordance with paragraph (a) or (b), as applicable, of the
definition of "Delivery" and shall be held, pending maturity or
disposition, solely by [the Collateral Agent] or its securities
intermediary as described in such paragraphs (a) and (b), and in accordance
with Section 9-115 of the UCC;
(iii) any Capitalized Interest Account Property that is a book-entry
security held through the Federal Reserve System pursuant to Federal
book-entry regulations shall be delivered in accordance with paragraph (c),
as applicable, of the definition of "Delivery" and shall be maintained by
[the Collateral Agent], pending maturity or disposition, through continued
book-entry registration of such Capitalized Interest Account Property as
described in such paragraph, and additionally, shall be maintained in
accordance with Section 9-115 of the UCC; and
(iv) any Capitalized Interest Account Property that is an
uncertificated security as defined in Section 8-102(1)(b) of the UCC and
that is not governed by clause (ii) above shall be delivered to [the
Collateral Agent] in accordance with paragraph (d) of the definition of
"Delivery" and shall be maintained by [the Collateral Agent], pending
maturity or disposition, through continued registration of [the Collateral
Agent]'s (or its nominee's) ownership of such security, and additionally,
shall be maintained in accordance with Section 9-115 of the UCC.
Each of the Depositor, the Servicer, [the Collateral Agent] and the
Trustee agrees to take or cause to be taken such further actions, to execute,
deliver and file or cause to be executed, delivered and filed such further
documents and instruments (including, without
67
limitation, any UCC financing statements or this Agreement) as may be determined
to be necessary to perfect the interests created by this Section in favor of the
Trustee or [the Collateral Agent] and otherwise fully to effectuate the
purposes, terms and conditions of this Section. Except as heretofore provided
with respect to investment, [the Collateral Agent] shall not comply or agree to
comply with any order from the Depositor or any other Person except the Trustee
with respect to the disposition of the Capitalized Interest Account Property.
The Depositor shall:
(i) promptly execute, deliver and file any financing statements,
amendments, continuation statements, assignments, certificates and
other documents with respect to such interests and perform all such
other acts as may be necessary in order to perfect or to maintain the
perfection of [the Collateral Agent]'s security interest in the
Capitalized Interest Account Property; and
(ii) make the necessary filings of financing statements or
amendments thereto within ten business days after the occurrence of
any of the following: (1) any change in its corporate name or any
trade name; (2) any change in the location of its chief executive
office or principal place of business; and (3) any merger or
consolidation or other change in its identity or corporate structure
and promptly notify the Trustee of any such filings.]
ARTICLE V
The Certificates
SECTION 5.1. The Certificates. The Trustee shall, upon written order or
request signed in the name of the Depositor by one of its officers authorized to
do so and delivered to a Trustee Officer, execute on behalf of the Trust,
authenticate and deliver the Certificates to, or upon the order of, the
Depositor in the aggregate principal amount and denominations as set forth in
such written order or request. The Class A Certificates shall be issuable in
minimum denominations of one hundred thousand dollars ($100,000) and integral
multiples of one thousand dollars ($1,000) in excess thereof. The Class A
Certificates shall be issued in fully registered book-entry form. The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of a Trustee Officer. Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trustee, shall be valid and
binding obligations of the Trust, notwithstanding that such individuals or any
of them shall have ceased to be so authorized prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of such
Certificates.
SECTION 5.2. Appointment of Paying Agent. The Trustee may act as or
appoint one or more paying agents (each, a "Paying Agent"). The Paying Agent
shall make distributions to Certificateholders from amounts delivered by the
Trustee to the Paying
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Agent from amounts on deposit in the Certificate Account pursuant to Article IV.
Either the Trustee [or the Certificate Insurer] may remove the Paying Agent if
such Person determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect.
The Paying Agent shall initially be the Trustee. A co-paying agent may be chosen
by the Trustee. Any co-paying agent or any successor Paying Agent shall be
permitted to resign as Paying Agent, co-paying agent or successor Paying Agent,
as the case may be, upon 30 days' written notice to the Trustee, the Depositor
[and the Certificate Insurer]. In the event that the Trustee, any co-paying
agent or any successor Paying Agent shall no longer be the Paying Agent,
co-paying agent or successor Paying Agent, as the case may be, the Trustee, with
the Certificate Insurer's reasonable consent, shall appoint a successor to act
as Paying Agent or co-paying agent. The Trustee shall cause each Paying Agent
and each successor Paying Agent or any additional Paying Agent appointed by the
Trustee (other than the Trustee, which hereby agrees) to execute and deliver to
the Trustee an instrument in which such Paying Agent, successor Paying Agent or
additional Paying Agent shall agree with the Trustee that, as Paying Agent, such
Paying Agent, successor Paying Agent or additional Paying Agent will hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto in an Eligible Account (which
may be maintained with such Paying Agent) until such sums shall be paid to such
Certificateholders and shall promptly notify the Trustee of any default in
making such payment. The Paying Agent shall return all unclaimed funds to the
Trustee and upon removal of a Paying Agent shall also return all funds in its
possession to the Trustee. The provisions of Sections 9.3 and 9.4 shall apply to
each Paying Agent in its role as Paying Agent. The fees of any Paying Agent or
co-paying agent shall be paid by the Trustee. Each Paying Agent and co-paying
agent must be acceptable to the Depositor.
SECTION 5.3. Authenticating Agent. (a) The Trustee may appoint one or
more authenticating agents with respect to the Certificates which shall be
authorized to act on behalf of the Trustee in authenticating the Certificates in
connection with the issuance, delivery, registration of transfer, exchange or
repayment of the Certificates (the "Authenticating Agent"). Whenever reference
is made in this Agreement to the authentication of Certificates by the Trustee
or the Trustee's certificate of authentication, such reference shall be deemed
to include authentication by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent must be acceptable to the Depositor [and the
Certificate Insurer]. The Trustee is hereby appointed as the initial
Authenticating Agent.
(b) Any institution succeeding to the corporate agency business of an
Authenticating Agent shall continue to be an Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Depositor. The Trustee may at
any time terminate the agency of an Authenticating Agent by giving notice of
termination to such Authenticating Agent and to the Depositor. Upon receiving
such a notice of resignation
69
or upon such a termination, or in case at any time an Authenticating Agent shall
cease to be acceptable to the Trustee or the Depositor [or the Certificate
Insurer], the Trustee may appoint a successor Authenticating Agent. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder with like effect as if originally named as an Authenticating Agent. No
successor Authenticating Agent shall be appointed unless acceptable to the
Trustee, the Depositor [and the Certificate Insurer].
(d) The Trustee agrees to pay to each Authenticating Agent from its own
funds from time to time reasonable compensation for its services under this
Section 5.3.
(e) The provisions of Sections 9.3 and 9.4 shall be applicable to any
Authenticating Agent.
(f) Pursuant to an appointment made under this Section 5.3, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Certificates described in the Pooling and Servicing
Agreement.
[ ]
as Authenticating Agent for the Trustee,
By
Authorized Signatory
SECTION 5.4. Authentication of Certificates. The Trustee shall cause
the Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the written order of the Depositor, signed by its chairman
of the board, its president, or any vice president, without further corporate
action by the Depositor, in authorized denominations, pursuant to this
Agreement. No Certificate shall entitle its Holder to any benefit under this
Agreement, or shall be valid for any purpose, unless there shall appear on such
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A executed by the Trustee by manual or facsimile signature; such
authentication shall constitute conclusive evidence that such Certificate shall
have been duly authenticated and delivered hereunder. All Certificates issued on
the Closing Date shall be dated the Closing Date. All Certificates issued upon
transfer or exchange thereafter shall be dated the date of their authentication.
SECTION 5.5. Registration of Transfer and Exchange of Certificates. (a)
The Certificate Registrar shall maintain a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Certificate
Register shall provide for the registration of Certificates and transfers and
exchanges of Certificates as provided in this Agreement. The Trustee is hereby
initially appointed Certificate Registrar for the purpose of registering
Certificates and transfers and exchanges of Certificates as provided in this
Agreement. In the event that, subsequent to the Closing Date, the Trustee
notifies the Depositor that it is unable to act as Certificate Registrar, the
Depositor shall appoint
70
another bank or trust company, having an office or agency located in the Borough
of Manhattan, The City of New York, agreeing to act in accordance with the
provisions of this Agreement applicable to it, and otherwise acceptable to the
Trustee, to act as successor Certificate Registrar under this Agreement.
(b) All Certificates issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Trust, and entitled to
the same benefits under this Agreement, as the Certificates surrendered upon
such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in the form attached to Exhibit A duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Certificate Registrar which requirements include membership
or participation in Securities Transfer Agents Medallion Program ("Stamp") or
such other "signature guarantee program" as may be determined by the Certificate
Registrar in addition to, or in substitution for, Stamp, all in accordance with
the Exchange Act, and (ii) accompanied by such other documents as the Trustee
may require.
Notwithstanding the foregoing, in the case of any sale or other
transfer of a Definitive Certificate, the transferor of such Definitive
Certificate shall be required to represent and warrant in writing that the
prospective transferee either (a) is not (i) an employee benefit plan (as
defined in section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), which is subject to the provisions of Title I of ERISA,
(ii) a plan (as defined in section 4975(e)(1) of the Code), which is subject to
Section 4975 of the Code, or (iii) an entity whose underlying assets are deemed
to be assets of a plan described in (i) or (ii) above by reason of such plan's
investment in the entity (any such entity described in clauses (i) through
(iii), a "Benefit Plan Entity") or (b) is a Benefit Plan Entity and the
acquisition and holding of the Definitive Note by such prospective transferee is
covered by a Department of Labor Prohibited Transaction Class Exemption. Each
transferee of a Book Entry Certificate that is a Benefit Plan Entity shall be
deemed to represent that its acquisition and holding of the Book Entry
Certificate is covered by a Department of Labor Prohibited Transaction Class
Exemption.
(c) No transfer of an Excess Cash Flow Certificate shall be made unless
(I) such transfer (i) is made pursuant to an effective registration statement
under the Securities Act and any applicable state securities laws or (ii) is
exempt from the registration requirements under the Securities Act and such
state securities laws, and (II) such transfer is to a Person that satisfies the
requirements of paragraph (a)(2)(i) or (a)(2)(ii) of Rule 3a-7 as then in effect
or any successor rule ("Rule 3a-7") under the Investment Company Act. Each
prospective purchaser of an Excess Cash Flow Certificate shall deliver a
completed and duly executed Transferee's Certificate (in the form of Exhibit F-1
for "qualified institutional buyers" or Exhibit F-2 for "accredited investors");
except that in the case of a transfer of the Excess Cash Flow Certificate to a
Bankruptcy Remote Entity or a business trust as permitted under Section 5.5(d),
such Transferee's Certificate shall be delivered by the equity owner of, or
owner of the beneficial ownership interest in,
71
such Bankruptcy Remote Entity or business trust and, in such case, the
Transferee's Certificate that is delivered shall pertain to such Person's
acquisition of such equity or beneficial ownership interest (and the form for
the appropriate Transferee's Certificate shall contain such modifications as the
Trustee may approve so that it pertains to the acquisition of such equity or
beneficial ownership interest, rather than to acquisition of Certificates) and
no such Transferee's Certificate need be delivered, in such case, in the name of
the Bankruptcy Remote Entity or business trust with respect to the transfer
thereto of the Excess Cash Flow Certificate. Each prospective transferor of an
Excess Cash FlowCertificate shall deliver a completed and duly executed
transferor's Certificate in the form of Exhibit F-3 to the Trustee for
inspection prior to effecting any requested transfer. The Depositor and the
Trustee may rely conclusively upon the information contained in any such
Transferee's Certificate and transferor's Certificate in the absence of
knowledge to the contrary. In connection with any transfer, the Trustee may
require an Opinion of Counsel to the effect that such transfer may be effected
without registration under the Securities Act, which Opinion of Counsel, if so
required, shall be addressed to the Depositor and the Trustee and shall be
secured at the expense of the Holder. The Trustee may rely upon the
representation of any Transferee made to the Trustee, and upon such Opinion of
Counsel, and shall be fully protected in so doing. Any Certificate Owners shall
be deemed to have agreed to these restrictions on transfer.
No transfer of the Excess Cash Flow Certificate shall be made to any
Person unless the Trustee and the Depositor have received (A) a certificate
(substantially in the form of Exhibit G) from such transferee to the effect that
such transferee (i) is not a Plan or a Person that is using the assets of a Plan
to acquire such Certificate or (ii) is an insurance company investing assets of
its general account and the exemptive relief provided by Sections I and III of
Department of Labor Prohibited Transaction Class Exemption 95-60, 60 Fed. Reg.
35925 (July 12, 1995) (the "Exemption") is available with respect to the
transferee's acquisition and holding of any such Certificate; provided, however,
that the Trustee will not require such certificate in the event that, as a
result of a change of law or otherwise, counsel satisfactory to the Trustee, the
Servicer and the Depositor has rendered an opinion to the effect that the
purchase and holding of any such Certificate by a Plan or a Person using the
assets of a Plan will not constitute or result in a prohibited transaction under
ERISA or Section 4975 of the Code. The preparation and delivery of the
certificate and opinion referred to above shall not be an expense of the Trust,
the Trustee, the Servicer or the Depositor but shall be borne by the transferor.
(d) No transfer, pledge or encumbrance of the Excess Cash Flow
Certificate shall be made to any Person unless such Person is a Rated Entity, a
Bankruptcy Remote Entity or a business trust established under Chapter 38 of
Title 12 of the Delaware Code, 12 Del. C. ss. 3801 et seq. that is a Bankruptcy
Remote Entity. Notice of any transfer of the Excess Cash Flow Certificates shall
be given by the transferor to ▇▇▇▇▇'▇. In addition, no transfer of the Excess
Cash Flow Certificate shall be made unless the related transferor (i) has
delivered to each of the Trustee [and the Certificate Insurer] an Opinion of
Counsel addressed to each of the Trustee [and the Certificate Insurer], in form
and substance satisfactory to each of the Trustee [and the Certificate Insurer],
stating that such transfer will not (A) adversely affect the status of the Trust
as a grantor trust pursuant to subpart E, part I of the subchapter J of the Code
[and (B) cause the Spread
72
Account to be treated as taxable as a corporation] and (ii) has delivered to
▇▇▇▇▇'▇ [and the Certificate Insurer] (A) notice of the identity of the
prospective transferee and (B) in the case of a Bankruptcy Remote Entity, an
Opinion of Counsel relating to non-consolidation of the assets of such
Bankruptcy Remote Entity with the assets of its parent entity. For purposes of
the preceding sentence, a transfer shall not include a transfer to a party that
is a member of the transferor's "Affiliate Group" as that term is defined in
Section 1501 of the Internal Revenue Code. The Excess Cash Flow Certificate
shall at all times be registered in the name of a single holder.
(e) The Excess Cash Flow Certificate shall bear a legend stating that
it has not been registered under the Securities Act and is subject to the
restrictions on transfer described in Section 5.5(c).
(f) In order to preserve the exemption for resales and transfers
provided by Rule 144A under the Securities Act, the Depositor shall provide to
any Holder of an Excess Cash Flow Certificate and any prospective purchaser
designated by such Holder, upon request of such Holder or such prospective
purchaser, such information required by Rule 144A as will enable the resale of
such Excess Cash Flow Certificate to be made pursuant to Rule 144A. The Servicer
and the Trustee shall cooperate with the Depositor in providing the Depositor
such information regarding the Excess Cash Flow Certificate, the Receivables and
other matters regarding the Trust as the Depositor shall reasonably request to
meet its obligations under the preceding sentence.
(g) Upon surrender for registration of transfer of any Certificate at
the Corporate Trust Office, the Trustee shall execute, authenticate and deliver,
in the name of the designated transferee or transferees, one or more new
Certificates of the same Class in authorized denominations of a like aggregate
principal amount.
(h) At the option of a Certificateholder, such Holder's Certificates
may be exchanged for other Certificates of the same Class in authorized
denominations of a like aggregate principal amount, upon surrender of the
Certificates to be exchanged at any such office or agency. Whenever any
Certificates are so surrendered for exchange the Trustee on behalf of the Trust
shall execute, authenticate and deliver the Certificates that the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the Holder thereof or his
attorney duly authorized in writing.
(i) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(j) All Certificates surrendered for registration of transfer or
exchange shall be cancelled and subsequently destroyed by the Trustee.
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SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss, or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar, the Trustee [and the Certificate Insurer] such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, the Trustee on behalf of the Trust shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
denomination. In connection with the issuance of any new Certificate under this
Section 5.6, the Trustee and the Certificate Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section 5.6 shall constitute conclusive evidence of ownership in the Trust,
as if originally issued, whether or not the lost, stolen, or destroyed
Certificate shall be found at any time.
SECTION 5.7. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate shall be registered
as the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 4.6 and for all other purposes whatsoever, and neither the
Trustee nor the Certificate Registrar shall be bound by any notice to the
contrary.
SECTION 5.8. Access to List of Certificateholders' Names and Addresses.
The Trustee shall furnish or cause to be furnished to the Servicer [or the
Certificate Insurer], at the expense of the Trust, within 15 days after receipt
by the Trustee of a request therefor from the Servicer [or the Certificate
Insurer], as the case may be, in writing, a list of the names and addresses of
the Certificateholders as of the most recent Record Date. If three or more Class
A Certificateholders or one or more Holders of Class A Certificates evidencing
not less than 25% of the Class A Certificate Balance apply in writing to the
Trustee, and such application states that the applicants desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates and such application shall be accompanied by a copy of
the communication that such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt for such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Holder, by receiving and holding a Certificate, shall
be deemed to have agreed to hold none of the Servicer, [the Certificate Insurer]
or the Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 5.9. Maintenance of Office or Agency. The Trustee shall
maintain in ________________, _____________, an office or offices or agency or
agencies where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Trustee in respect of the
Certificates and this Agreement may be served. The Trustee initially designates
its office located at _______________, _________, _____________, ______________,
____________, as its office for such
74
purposes. The Trustee shall give prompt written notice to the Servicer and to
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 5.10. Book-Entry Certificates. The Certificates, upon original
issuance, will be issued in the form of typewritten Certificates representing
the Book-Entry Certificates, to be delivered to The Depository Trust Company,
the initial Clearing Agency, by, or on behalf of, the Trust. Such Certificates
shall initially be registered on the Certificates Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a Definitive Certificate representing such Certificate Owner's interest
in such Certificate, except as provided in Section 5.12. Unless and until
definitive, fully registered Certificates (the "Definitive Certificates") have
been issued to Certificate Owners pursuant to Section 5.12:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Certificate Registrar and the Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Agreement (including
the payment of principal of and interest on the Certificates and the giving
of instructions or directions hereunder) as the sole Holder of the
Certificates, and shall have no obligation to the Certificate Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this Section
shall control;
(iv) the rights of Certificate Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency and/or
the Clearing Agency Participants. Unless and until Definitive Certificates
are issued pursuant to Section 5.12, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive and
transmit payments of principal of and interest on the Certificates to such
Clearing Agency Participants;
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Certificateholders evidencing a
specified percentage of the Outstanding Amount of the Certificates, the
Clearing Agency shall be deemed to represent such percentage only to the
extent that it has received instructions to such effect from Certificate
Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the
Certificates and has delivered such instructions to the Trustee; and
(vi) Certificate Owners may receive copies of any reports sent to
Certificateholders pursuant to this Agreement, upon written request,
together with a certification that they are Certificate Owners and payment
75
of reproduction and postage expenses associated with the distribution of
such reports, from the Trustee at the Corporate Trust Office.
SECTION 5.11. Notices to Clearing Agency. Whenever a notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 5.12, the Trustee shall give all such notices and
communications specified herein to be given to the Certificateholders to the
Clearing Agency, and shall have no obligation to the Certificate Owners.
SECTION 5.12. Definitive Certificates. If (i) the Servicer advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities with respect to the Certificates, and
the Servicer is unable to locate a qualified successor, (ii) the Servicer at its
option advises the Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency or (iii) after the occurrence of an Event of
Default, Certificate Owners representing beneficial interests aggregating at
least a majority of the Outstanding Amount of the Certificates advise the
Trustee through the Clearing Agency in writing that the continuation of a book
entry system through the Clearing Agency is no longer in the best interests of
the Certificate Owners, then the Clearing Agency shall notify all Certificate
Owners and the Trustee of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of the typewritten Certificate or
Certificates representing the Book-Entry Certificates by the Clearing Agency,
accompanied by registration instructions, the Trust shall execute and the
Trustee shall authenticate the Definitive Certificates in accordance with the
instructions of the Clearing Agency. None of the Trust, the Certificate
Registrar or the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be fully protected in
relying on, such instructions. Upon the issuance of Definitive Certificates, the
Trustee shall recognize the Holders of the Definitive Certificates as
Certificateholders.
ARTICLE VI
The Depositor
SECTION 6.1. Representations of Depositor. The Depositor makes the
following representations to the Originator, [the Certificate Insurer] and the
Trustee, [on which the Certificate Insurer relied in executing and delivering
the Policy,] on which the Trustee on behalf of itself and the Certificateholders
relied in accepting the [Initial] Receivables in trust and executing and
authenticating the Certificates [and on which the Trustee on behalf of itself
and the Certificateholders shall rely in accepting any Subsequent Receivables in
trust.] The representations speak as of the execution and delivery of this
Agreement in the case of the [Initial] Receivables, [and as of the related
Subsequent Transfer Date in the case of the Subsequent Receivables,] and [in
each case] shall survive the sale of the related Receivables to the Trustee.
76
(i) Organization and Good Standing. The Depositor has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware, with the corporate power and authority
to conduct its business as such business is presently conducted and to
execute, deliver and perform its obligations under this Agreement and the
other Basic Documents to which it is a party.
(ii) Due Qualification. The Depositor is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions required for the performance of
its obligations under this Agreement and the other Basic Documents to which
it is a party other than where the failure to obtain such license or
approval or qualification would not have a material adverse effect on the
ability of the Depositor to perform such obligations or on any Receivable
or on the interest therein of the Trust, the Certificateholders [or the
Certificate Insurer].
(iii) Power and Authority. The Depositor has the corporate power and
authority to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to carry out their respective terms;
the Depositor has full corporate power and authority to sell and assign the
property sold and assigned to and deposited with the Trustee as part of the
Trust and has duly authorized such sale and assignment to the Trustee by
all necessary corporate action; and the execution, delivery, and
performance of this Agreement and the other Basic Documents to which it is
a party have been duly authorized by the Depositor by all necessary
corporate action.
(iv) Valid Sale; Binding Obligation. This Agreement effects a valid
sale, transfer and assignment of the Receivables and the other property
conveyed to the Trust pursuant to Section 2.2, enforceable against
creditors of and purchasers from the Depositor; and this Agreement and the
other Basic Documents to which the Depositor is a party shall constitute
legal, valid and binding obligations of the Depositor enforceable in
accordance with their respective terms except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(v) No Violation. The execution, delivery and performance by the
Depositor of this Agreement and the other Basic Documents to which the
Depositor is a party and the consummation of the transactions contemplated
hereby and thereby and the fulfillment of the terms hereof and thereof do
not conflict with, result in any breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of time) a default
under, the certificate of incorporation or by-laws of the Depositor, or any
material indenture, agreement, mortgage, deed of trust, or other instrument
to which the Depositor is a party or by which it is bound or any of its
properties are subject; nor result in the
77
creation or imposition of any material lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust, or other instrument (other than the Basic Documents and the Credit
and Security Agreement); nor violate any law, order, rule, or regulation
applicable to the Depositor of any court or of any Federal or State
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its properties.
(vi) No Proceedings. There are no proceedings or investigations
pending, or to the Depositor's best knowledge, threatened, before any
court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its properties:
(A) asserting the invalidity of this Agreement or the other Basic Documents
to which the Depositor is a party or the Certificates, (B) seeking to
prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement or the other Basic Documents to
which the Depositor is a party, (C) seeking any determination or ruling
that might materially and adversely affect the performance by the Depositor
of its obligations under, or the validity or enforceability of, this
Agreement or the other Basic Documents to which the Depositor is a party or
the Certificates, or (D) relating to the Depositor and which might
adversely affect the Federal or State income, excise, franchise or similar
tax attributes of the Certificates or (E) that could have a material
adverse effect on the Receivables.
(vii) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required to be
obtained by the Depositor for the issuance or sale of the Certificates or
the consummation of the other transactions contemplated by this Agreement
and the other Basic Documents to which the Depositor is a party, except
such as have been duly made or obtained or where the failure to obtain such
consent, approval, authorization, order or declaration, or to make such
filing, would not have a material adverse effect on the ability of the
Depositor to perform its obligation under the Basic Documents to which it
is a party and would not have a material adverse effect on any Receivable
or the interest therein of the Trust, the Certificateholders [or the
Certificate Insurer].
(viii) Chief Executive Office. The Depositor hereby represents and
warrants to the Trustee that the Depositor's principal place of business
and chief executive office is, and for the four months preceding the date
of this Agreement, has been, located at: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 6.2. Liability of Depositor; Indemnities. The Depositor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement and the
representations made by the Depositor in this Agreement. The Depositor shall
indemnify, defend, and hold harmless the Originator, the Servicer, the Trustee,
the Custodian, the Back-up Servicer, [the Collateral Agent] [and the Certificate
Insurer] and each of their respective officers, employees and directors
78
from and against any loss, liability or expense incurred by reason of (a) the
Depositor's willful misfeasance, bad faith, or negligence in the performance of
its duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement or (b) the Depositor's violation of
Federal or State securities laws in connection with the sale of the
Certificates.
Indemnification under this Section 6.2 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Depositor shall have made any indemnity payments to the Trustee, the
Custodian, [the Collateral Agent] or the Back-up Servicer pursuant to this
Section and the Trustee or the Back-up Servicer thereafter shall collect any of
such amounts from others, the Trustee, the Custodian, [the Collateral Agent] or
the Back-up Servicer shall repay such amounts to the Depositor, without
interest.
SECTION 6.3. Merger or Consolidation of, or Assumption of the
Obligations of, Depositor. Any Person (a) into which the Depositor may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Depositor shall be a party, or (c) which may succeed to the properties and
assets of the Depositor substantially as a whole, which person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Depositor under this Agreement, shall be the successor to the Depositor
hereunder without the execution or filing of any document or any further act by
any of the parties to this Agreement; provided, however, as a condition to the
consummation of any of the transactions referred to in clauses (a), (b) or (c)
above, (i) immediately after giving effect to such transaction, (x) no
representation or warranty made pursuant to Section 6.1 would have been breached
(for purposes hereof, such representations and warranties shall speak as of the
date of the consummation of such transaction) and (y) no event that, after
notice or lapse of time, or both, would become an Event of Default shall have
happened and be continuing, (ii) the Depositor shall have delivered to [the
Certificate Insurer and] the Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger, or succession and such
agreement or assumption comply with this Section 6.3 and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
have been complied with, (iii) the Depositor shall have delivered [to the
Certificate Insurer and] the Trustee an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee in the
Receivables, and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interest, (iv) immediately after giving effect to such transaction,
no Insurance Agreement Event of Default and no event that, after notice or lapse
of time, or both, would become an Insurance Agreement Event of Default shall
have happened and be continuing, (v) the organizational documents of the Person
surviving or resulting from such transaction shall contain provisions similar to
those of the Depositor's certificate of incorporation in respect of the issuance
of debt, independent directors and bankruptcy remoteness and (vi) the Depositor
shall have received confirmation from each Rating Agency that the then current
rating of the Class A Certificates will not be downgraded as a result of such
merger, consolidation or succession. A copy of such confirmation shall
79
be provided to the Trustee. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with clause
(i), (ii), (iii) or (iv) above shall be conditions to the consummation of the
transactions referred to in clause (a), (b) or (c) above.
SECTION 6.4. Limitation on Liability of Depositor and Others. The
Depositor and any director or officer or employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor shall not be under any obligation to appear in,
prosecute, or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 6.5. Depositor May Own Certificates. The Depositor and any
Person controlling, controlled by, or under common control with the Depositor
may in its individual or any other capacity become the owner or pledgee of
Certificates with the same rights as it would have if it were not the Depositor
or an affiliate thereof, except as otherwise provided in the definition of
"Certificateholder" specified in Section 1.1 and in Section 1.6. Certificates so
owned by or pledged to the Depositor or such controlling or commonly controlled
Person shall have an equal and proportionate benefit under the provisions of
this Agreement, without preference, priority, or distinction as among all of the
Certificates except as otherwise provided herein or by the definition of
Certificateholder.
ARTICLE VII
The Servicer
SECTION 7.1. Representations of Servicer. The Servicer makes the
following representations to the Depositor, [the Certificate Insurer,] the
Trustee, [the Collateral Agent] and the Back-up Servicer, on which the Depositor
relies in executing and delivering this Agreement, [on which the Certificate
Insurer relies in executing and delivering the Policy,] on which the Trustee on
behalf of itself and the Certificateholders relies in accepting the [Initial]
Receivables in trust and executing and authenticating the Certificates [and on
which the Trustee on behalf of itself and the Certificateholders shall rely in
accepting any Subsequent Receivables in trust]. The representations speak as of
the execution and delivery of this Agreement in the case of the [Initial]
Receivables, [and as of the related Subsequent Transfer Date in the case of the
Subsequent Receivables,] and [in each case] shall survive the sale of the
related Receivables to the Trustee.
(i) Organization and Good Standing. The Servicer is duly organized and
validly existing as a corporation in good standing under the laws of the
State of Delaware, with the corporate power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and had at all
relevant times, and has,
80
the corporate power, authority, and legal right to acquire, own, sell and
service the Receivables and to hold the Receivable Files as custodian.
(ii) Due Qualification. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement and the performance of its other
obligations under this Agreement and the other Basic Documents to which it
is a party) shall require such qualifications.
(iii) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and the other Basic Documents to which
it is a party and to carry out their respective terms; and the execution,
delivery, and performance of this Agreement and the other Basic Documents
to which it is a party have been duly authorized by the Servicer by all
necessary corporate action.
(iv) Binding Obligation. This Agreement and the other Basic Documents
to which it is a party constitute legal, valid and binding obligations of
the Servicer enforceable in accordance with their respective terms except
as enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered a
proceeding in equity or at law.
(v) No Violation. The execution, delivery and performance by the
Servicer of this Agreement and the other Basic Documents to which the
Servicer is a party and the consummation of the transactions contemplated
hereby and thereby and the fulfillment of the terms hereof and thereof do
not conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default
under, the certificate of incorporation or by-laws of the Servicer, or any
material indenture, agreement, mortgage, deed of trust, or other instrument
to which the Servicer is a party or by which it is bound or any of its
properties are subject; or result in the creation or imposition of any
material lien upon any of its properties pursuant to the terms of any
indenture, agreement, mortgage, deed of trust, or other instrument (other
than this Agreement); or violate any law, order, rule, or regulation
applicable to the Servicer of any court or of any Federal or State
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its properties.
(vi) No Proceedings. There are no proceedings or investigations
pending, or to the Servicer's best knowledge, threatened, before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its properties:
(A) asserting the invalidity of this Agreement or the other Basic Documents
to which the Servicer is a party
81
or the Certificates, (B) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by
this Agreement or the Certificates or the other Basic Documents to which
the Servicer is a party, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement or
the Certificates or the other Basic Documents to which the Servicer is a
party, (D) relating to the Servicer and which might adversely affect the
Federal or State income, excise, franchise or similar tax attributes of the
Certificates or (E) that could have a material adverse effect on the
Receivables.
(vii) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required for the
issuance or sale of the Certificates or the consummation of the other
transactions contemplated by this Agreement and the other Basic Documents
to which the Servicer is a party, except such as have been duly made or
obtained.
(viii) Taxes. The Servicer has filed on a timely basis all tax returns
required to be filed by it and paid all taxes, to the extent that such
taxes have become due.
(ix) Chief Executive Office. The Servicer hereby represents and
warrants to the Trustee that the Servicer's principal place of business and
chief executive office is, and for the four months preceding the date of
this Agreement, has been, located at: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 7.2. Indemnities of Servicer. (a) The Servicer shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement and the representations made by
the Servicer herein.
(i) The Servicer shall defend, indemnify, and hold harmless the
Trustee, [the Collateral Agent], the Back-up Servicer, the Custodian, the
Trust, [the Certificate Insurer,] the Certificateholders and the Depositor,
and their respective officers, directors, agents and employees from and
against any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from the use, ownership, or
operation by the Servicer or any affiliate thereof of a Financed Vehicle.
(ii) The Servicer shall indemnify, defend and hold harmless the
Trustee, [the Collateral Agent], the Back-up Servicer, the Custodian, the
Trust, [the Certificate Insurer] and the Depositor, and their respective
officers, directors, agents and employees from and against any taxes (other
than net income, gross receipts, franchise or other similar taxes) that may
at any time be asserted against the Trustee, [the Collateral Agent], the
Back-up Servicer, the Trust, [the Certificate Insurer] or the Depositor,
with respect to the transactions contemplated herein, including, without
limitation, any sales, general corporation, tangible
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personal property, privilege, or license taxes and costs and expenses in
defending against the same.
(iii) The Servicer shall indemnify, defend, and hold harmless the
Trustee, [the Collateral Agent], the Custodian, the Back-up Servicer, the
Custodian, the Depositor, [the Certificate Insurer,] the Trust and the
Certificateholders, and their respective officers, directors, agents and
employees from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss,
claim, damage, or liability arose out of, or was imposed upon the Trustee,
[the Collateral Agent], the Back-up Servicer, the Depositor, the Trust or
the Certificateholders, and their respective officers, directors, agents
and employees through the negligence, willful misfeasance, or bad faith of
the Servicer in the performance of its duties under this Agreement or by
reason of reckless disregard of its obligations and duties under this
Agreement.
(iv) The Servicer shall indemnify, defend, and hold harmless the
Trustee, [the Collateral Agent], the Back-up Servicer, the Depositor, and
the Custodian, and their respective officers, directors, agents and
employees from and against all costs, expenses, losses, claims, damages,
and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties herein contained, if
any, except to the extent that such cost, expense, loss, claim, damage or
liability: (a) shall be due to the willful misfeasance, bad faith, or
negligence (except for errors in judgment) of the Trustee, [the Collateral
Agent], the Back-up Servicer or the Custodian, as applicable; (b) relates
to any tax other than the taxes with respect to which the Servicer shall be
required to indemnify the Trustee, [the Collateral Agent], the Back-up
Servicer or the Custodian; or (c) shall arise from the Trustee's breach of
any of its representations or warranties set forth in Section 9.12.
(v) Notwithstanding the foregoing, the Servicer shall not be obligated
to defend, indemnify, and hold harmless any Certificateholder for any
losses, claims, damages or liabilities incurred by any Certificateholders
arising out of claims, complaints, actions and allegations relating to
Section 406 of ERISA or Section 4975 of the Code as a result of the
purchase or holding of a Certificate by such Certificateholder with the
assets of a plan subject to such provisions of ERISA or the Code or the
servicing, management and operation of the Trust.
(b) For purposes of this Section, in the event of the termination of
the rights and obligations of a Servicer (or any successor thereto pursuant to
Section 7.3) as Servicer pursuant to Section 8.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 8.2.
The provisions of this Section 7.2(b) shall in no way affect the survival
pursuant to Section 7.2(c) of the indemnification by the outgoing Servicer
provided by Section 7.2(a).
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(c) Indemnification under this Section 7.2 shall survive the
termination of this Agreement and any resignation or removal of LBAC as Servicer
and shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer shall have made any indemnity payments pursuant to
this Section and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts to the Servicer, without
interest.
(d) In no event shall the Servicer be liable under this Agreement to
any Person for the acts or omissions of any successor Servicer, nor shall any
successor Servicer be liable under this Agreement to any Person for any acts or
omissions of a predecessor Servicer.
SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer or Back-up Servicer. (a) The Servicer shall not merge
or consolidate with any other Person, convey, transfer or lease substantially
all its assets as an entirety to another Person, or permit any other Person to
become the successor to the Servicer's business unless, after the merger,
consolidation, conveyance, transfer, lease or succession, the successor or
surviving entity shall be an Eligible Servicer and shall be capable of
fulfilling the duties of the Servicer contained in this Agreement and the other
Basic Documents to which the Servicer is a party. Any Person (a) into which the
Servicer may be merged or consolidated, (b) which may result from any merger or
consolidation to which the Servicer shall be a party, (c) which may succeed to
the properties and assets of the Servicer substantially as a whole, or (d) or
succeeding to the business of the Servicer shall execute an agreement of
assumption to perform every obligation of the Servicer hereunder, and whether or
not such assumption agreement is executed, shall be the successor to the
Servicer under this Agreement without further act on the part of any of the
parties to this Agreement; provided, however, that nothing contained herein
shall be deemed to release the Servicer from any obligation hereunder; provided,
further, however, that (i) immediately after giving effect to such transaction,
no representation or warranty made pursuant to Section 7.1 hereof or made by the
Servicer in the Purchase Agreement shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction), no Event of Default or Insurance Agreement
Event of Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default or Insurance Agreement Event of Default shall
have occurred and be continuing, (ii) the Servicer shall have delivered to the
Trustee [and the Certificate Insurer] an Officer's Certificate and an Opinion of
Counsel in form and substance satisfactory to the Trustee [and the Certificate
Insurer] each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 7.3 and that all conditions
precedent provided for in this Agreement relating to such transaction have been
complied with, (iii) the Servicer shall have delivered to the Trustee [and the
Certificate Insurer] an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables and reciting
the details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such interest
and (iv) nothing herein shall be deemed to release the Servicer from any
obligation. The Servicer shall provide notice of any merger, consolidation or
succession pursuant to this Section 7.3(a)
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to the Trustee, the Back-up Servicer, [the Collateral Agent], [the Certificate
Insurer,] the Certificateholders and each Rating Agency. Notwithstanding
anything herein to the contrary, the execution of the foregoing agreement of
assumption and compliance with clauses (i), (ii) or (iii) above shall be
conditions to the consummation of the transactions referred to in clause (a),
(b) or (c) above.
(b) Any Person (a) into which the Back-up Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Back-up Servicer shall be a party, or (c) which may succeed to the properties
and assets of the Back-up Servicer substantially as a whole, or (d) succeeding
to the business of the Back-up Servicer, shall execute an agreement of
assumption to perform every obligation of the Back-up Servicer hereunder, and
whether or not such assumption agreement is executed, shall be the successor to
the Back-up Servicer under this Agreement without further act on the part of any
of the parties to this Agreement; provided, however, that nothing herein shall
be deemed to release the Back-up Servicer from any obligation.
SECTION 7.4. Limitation on Liability of Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement; provided, however,
that this provision shall not protect the Servicer or any such person against
any liability that would otherwise be imposed by reason of a breach of this
Agreement or willful misfeasance, bad faith, or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement. The Servicer and any director or officer or employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute, or defend any legal action that shall
not be incidental to its duties to service the Receivables in accordance with
this Agreement, and that in its opinion may involve it in any expense or
liability.
SECTION 7.5. Servicer and Back-up Servicer Not to Resign. Subject to
the provisions of Section 7.3, neither the Servicer nor the Back-up Servicer may
resign from the obligations and duties hereby imposed on it as Servicer or
Back-up Servicer, as the case may be, under this Agreement except upon
determination that by reason of a change in legal requirements the performance
of its duties under this Agreement would cause it to be in violation of such
legal requirements in a manner which would result in a material adverse effect
on the Servicer or Back-up Servicer, as the case may be, [and the Certificate
Insurer] does not elect to waive the obligations of the Servicer or Back-up
Servicer, as the case may be, to perform the duties which render it legally
unable to act or does not elect to delegate those duties to another Person.
Notice of any such determination permitting the resignation of the Servicer or
Back-up Servicer, as the case may be, shall be communicated to the Depositor,
the Trustee, [the Certificate Insurer,] and each Rating Agency at the earliest
practicable time (and, if such communication is
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not in writing, shall be confirmed in writing at the earliest practicable time)
and any such determination by the Servicer or Back-up Servicer, as the case may
be, shall be evidenced by an Opinion of Counsel to such effect delivered to and
satisfactory to the Depositor, the Trustee [and the Certificate Insurer]
concurrently with or promptly after such notice. No such resignation of the
Servicer shall become effective until a successor servicer shall have assumed
the responsibilities and obligations of LBAC in accordance with Section 8.2 and
the Servicing Assumption Agreement, if applicable. No such resignation of the
Back-up Servicer shall become effective until an entity acceptable to [the
Certificate Insurer] shall have assumed the responsibilities and obligations of
the Back-up Servicer; provided, however, that if no such entity shall have
assumed such responsibilities and obligations of the Back-up Servicer within 60
days of the resignation of the Back-up Servicer, the Back-up Servicer may
petition a court of competent jurisdiction for the appointment of a successor to
the Back-up Servicer.
ARTICLE VIII
Default
SECTION 8.1. Events of Default. If any one of the following events
("Events of Default") shall occur and be continuing:
(i) Any failure by the Servicer or, for so long as LBAC is the
Servicer, the Depositor, to deliver to the Trustee for distribution to
Certificateholders [or deposit in the Spread Account] any proceeds or
payment required to be so delivered under the terms of the Certificates,
the Purchase Agreement, any Transfer Agreement and this Agreement
(including deposits of Purchase Amounts) that shall continue unremedied for
a period of two Business Days after written notice is received by the
Servicer from the Trustee [or the Certificate Insurer] or after discovery
of such failure by the Servicer (but in no event later than the five
Business Days after the Servicer is required to make such delivery or
deposit); or
(ii) The certificate required by Section 3.9 shall not have been
delivered to the Trustee [and the Certificate Insurer] within one Business
Day of the date such certificate is required to be delivered; the statement
required by Section 3.10, or the report required by Section 3.11 shall not
have been delivered within five (5) days after the date such certificates
or statements or reports, as the case may be, are required to be delivered;
or
(iii) Failure on the part of the Servicer to observe its covenants and
agreements set forth in Section 7.3 or, for so long as LBAC is the
Servicer, failure on the part of the Depositor to observe its covenants and
agreements set forth in Section 6.3; or
(iv) Failure on the part of LBAC, the Servicer or, for so long as LBAC
is the Servicer, the Depositor, as the case may be, duly to observe or to
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perform in any material respect any other covenants or agreements of LBAC,
the Servicer or the Depositor (as the case may be) set forth in the
Certificates, the Purchase Agreement, any Transfer Agreement or in this
Agreement, which failure shall continue unremedied for a period of 30 days
after the date on which written notice of such failure requiring the same
to be remedied, shall have been given (1) to LBAC, the Servicer or the
Depositor (as the case may be), by the Certificate Insurer or the Trustee,
or (2) to LBAC, the Servicer or the Depositor (as the case may be), and to
the Trustee [and the Certificate Insurer] by the Holders of Class A
Certificates evidencing not less than 25% of the Class A Certificate
Balance; or
(v) The entry of a decree or order for relief by a court or regulatory
authority having jurisdiction in respect of LBAC or the Servicer (or, so
long as LBAC is the Servicer, the Depositor, or any of the Servicer's other
Affiliates, if the Servicer's ability to service the Receivables is
adversely affected thereby) in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or another present or
future, federal or state, bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of LBAC, the Servicer (or the
Depositor or any other Affiliate of LBAC, if applicable) or of any
substantial part of their respective properties or ordering the winding up
or liquidation of the affairs of LBAC or the Servicer (or the Depositor or
any other Affiliate of LBAC, if applicable) or the commencement of an
involuntary case under the federal or state bankruptcy, insolvency or
similar laws, as now or hereafter in effect, or another present or future,
federal or state bankruptcy, insolvency or similar law with respect to LBAC
or the Servicer (or the Depositor or any other Affiliate of LBAC, if
applicable) and such case is not dismissed within 60 days; or
(vi) The commencement by LBAC or the Servicer (or, so long as LBAC is
the Servicer, the Depositor or any of the Servicer's other Affiliates, if
the Servicer's ability to service the Receivables is adversely affected
thereby) of a voluntary case under the federal bankruptcy laws, as now or
hereafter in effect, or any other present or future, federal or state,
bankruptcy, insolvency or similar law, or the consent by LBAC or the
Servicer (or the Depositor or any other Affiliate of LBAC, if applicable)
to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of
LBAC or the Servicer (or the Depositor or any other Affiliate of LBAC, if
applicable) or of any substantial part of its property or the making by
LBAC or the Servicer (or the Depositor or any other Affiliate of LBAC, if
applicable) of an assignment for the benefit of creditors or the failure by
LBAC or the Servicer (or the Depositor or any other Affiliate of LBAC, if
applicable) generally to pay its debts as such debts become due or the
taking of corporate action by LBAC or the Servicer (or the Depositor or any
other Affiliate of LBAC, if applicable) in furtherance of any of the
foregoing; or
(vii) Any representation, warranty or statement of LBAC or the
Servicer or, for so long as LBAC is the Servicer, the Depositor, made in
this Agreement and, with respect to LBAC and the Depositor, the Purchase
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Agreement, any Transfer Agreement or in each case any certificate, report
or other writing delivered pursuant hereto shall prove to be incorrect as
of the time when the same shall have been made (excluding, however, any
representation or warranty set forth in Section 3.2(b) of the Purchase
Agreement and/or any Transfer Agreement), and the incorrectness of such
representation, warranty or statement has a material adverse effect on the
Trust and, within 30 days after written notice thereof shall have been
given (1) to LBAC, the Servicer or the Depositor (as the case may be) by
the Trustee [or the Certificate Insurer] or (2) to LBAC, the Servicer or
the Depositor (as the case may be), and to the Trustee [and the Certificate
Insurer] by the Holders of Class A Certificates evidencing not less than
25% of the Class A Certificate Balance, the circumstances or condition in
respect of which such representation, warranty or statement was incorrect
shall not have been eliminated or otherwise cured; or
(viii) [The occurrence of an Insurance Agreement Event of Default; or]
(ix) [A claim is made under the Policy; or]
(x) [So long as an Insurer Default shall not have occurred and be
continuing, the Certificate Insurer shall not have delivered a Servicer
Extension Notice pursuant to Section 3.13;]
then, and in each and every case, so long as an Event of Default shall not have
been remedied; provided, [(i) no Insurer Default shall have occurred and be
continuing, the Certificate Insurer in its sole and absolute discretion, or (ii)
if an Insurer Default shall have occurred and be continuing, then] either the
Holders of Class A Certificates evidencing not less than 51% of the Class A
Certificate Balance, or the Trustee acting at the direction of such Holders, by
notice then given in writing to the Servicer (and to the Trustee if given by the
Certificate Insurer or by the Certificateholders) [or by the Certificate
Insurer's failure to deliver a Servicer Extension Notice pursuant to Section
3.13,] may terminate all of the rights and obligations of the Servicer under
this Agreement. The Servicer shall be entitled to its pro rata share of the
Servicing Fee for the number of days in the Collection Period prior to the
effective date of its termination. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Certificates or the Receivables or
otherwise, shall without further action, pass to and be vested in (i) the
Back-up Servicer or (ii) such successor Servicer as may be appointed under
Section 8.2; provided, however, that the successor Servicer shall have no
liability with respect to any obligation which was required to be performed by
the predecessor Servicer prior to the date the successor Servicer becomes the
Servicer or any claim of a third party (including a Certificateholder) based on
any alleged action or inaction of the predecessor Servicer as Servicer; and,
without limitation, the Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the predecessor Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of the
Receivables and
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related documents, or otherwise. The predecessor Servicer shall cooperate with
the successor Servicer and the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer for administration by it of all
cash amounts that shall at the time be held or should have been held by the
predecessor Servicer for deposit, or shall thereafter be received with respect
to a Receivable and the delivery to the successor Servicer of all files and
records concerning the Receivables and a computer tape in readable form
containing all information necessary to enable the successor Servicer to service
the Receivables and the other property of the Trust. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with transferring
the Receivable Files to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section 8.1 shall be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses. In addition, any successor Servicer shall be entitled
to payment from the immediate predecessor Servicer for reasonable transition
expenses incurred in connection with acting as successor Servicer, and in
connection with system conversion costs, an aggregate amount not to exceed for
such conversion costs of $__________, and to the extent not so paid, such
payment shall be made pursuant to Section 4.6(c) hereof. Upon receipt of notice
of the occurrence of an Event of Default, the Trustee shall give notice thereof
to the Rating Agencies and the Depositor. The predecessor Servicer shall grant
the Depositor, the Trustee, the Back-up Servicer [and the Certificate Insurer]
reasonable access to the predecessor Servicer's premises at the predecessor
Servicer's expense. If requested by the Certificate Insurer, the Back-up
Servicer or successor Servicer shall terminate any arrangements relating to (i)
the Lock-Box Account with the Lock-Box Bank, (ii) the Lock-Box or (iii) the
Lock-Box Agreement, and direct the Obligors to make all payments under the
Receivables directly to the Servicer at the predecessor Servicer's expense (in
which event the successor Servicer shall process such payments directly, or,
through a Lock-Box Account with a Lock-Box Bank at the direction of [the
Certificate Insurer]). The Trustee shall send copies of all notices given
pursuant to this Section 8.1 [to the Certificate Insurer so long as no Insurer
Default shall have occurred and be continuing, and] to the Certificateholders
[if an Insurer Default shall have occurred and be continuing.]
SECTION 8.2. Appointment of Successor. (a) Upon the Servicer's receipt
of notice of termination pursuant to Section 8.1 or the Servicer's resignation
in accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, in the case
of termination, only until the date specified in such termination notice or, if
no such date is specified in a notice of termination, until receipt of such
notice, and, in the case of resignation, until the later of (x) the date 45 days
from the delivery to the Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of termination of the Servicer,
[Name of trustee], as Back-up Servicer, shall assume the obligations of Servicer
hereunder on the date specified in such written notice (the "Assumption Date")
pursuant to the Servicing Assumption Agreement or, in the event that the
Certificate Insurer shall have determined that a Person other than the Back-
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up Servicer shall be the successor Servicer in accordance with Section 8.2(c),
on the date of the execution of a written assumption agreement by such Person to
serve as successor Servicer. In the event of assumption of the duties of
Servicer by the Back-Up Servicer, the Back-Up Servicer shall be entitled to be
paid by the Servicer for the system conversion costs, an amount not to exceed
$__________. In the event that such amount shall not have been timely paid by
the Servicer, such amount shall be paid under Section 4.6(c)(v) hereof;
provided, however, the payment of such amount pursuant to Section 4.6(c)(v)
shall not relieve the Servicer of any obligation or liability to pay such
amount. Notwithstanding the Back-up Servicer's assumption of, and its agreement
to perform and observe, all duties, responsibilities and obligations of LBAC as
Servicer under this Agreement arising on and after the Assumption Date, the
Back-up Servicer shall not be deemed to have assumed or to become liable for, or
otherwise have any liability for, any duties, responsibilities, obligations or
liabilities of LBAC or any predecessor Servicer arising on or before the
Assumption Date, whether provided for by the terms of this Agreement, arising by
operation of law or otherwise, including, without limitation, any liability for,
any duties, responsibilities, obligations or liabilities of LBAC or any
predecessor Servicer arising on or before the Assumption Date under Sections 3.7
or 7.2 of this Agreement, regardless of when the liability, duty, responsibility
or obligation of LBAC or any predecessor Servicer therefor arose, whether
provided by the terms of this Agreement, arising by operation of law or
otherwise. In addition, if the Back-up Servicer shall be legally unable to act
as Servicer or shall have delivered a notice of resignation pursuant to Section
7.5 hereof [and an Insurer Default shall have occurred and be continuing,] the
Back-up Servicer, the Trustee or Class A Certificateholders holding Class A
Certificates evidencing not less than 66-2/3% of the Class A Certificate Balance
may petition a court of competent jurisdiction to appoint any successor to the
Servicer. Pending appointment pursuant to the preceding sentence, the Back-up
Servicer shall act as successor Servicer unless it is legally unable to do so,
in which event the predecessor Servicer shall continue to act as Servicer until
a successor has been appointed and accepted such appointment. In the event that
a successor Servicer has not been appointed at the time when the predecessor
Servicer has ceased to act as Servicer in accordance with this Section 8.2, then
[the Certificate Insurer,] in accordance with Section 8.2(c) shall appoint, or
petition a court of competent jurisdiction to appoint a successor to the
Servicer under this Agreement.
(b) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all of the rights granted to the predecessor Servicer, by the terms and
provisions of this Agreement.
(c) [So long as no Insurer Default has occurred and is continuing, the
Certificate Insurer may exercise at any time its right to appoint as Back-up
Servicer or as successor Servicer a Person other than the Person serving as
Back-up Servicer at the time, and shall have no liability to the Trustee, LBAC,
the Depositor, the Person then serving as Back-up Servicer, any
Certificateholder or any other person if it does so. Subject to Section 7.5, no
provision of this Agreement shall be construed as relieving the Back-up Servicer
of its obligation to succeed as successor Servicer upon the termination of the
Servicer pursuant
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to Section 8.1 or resignation of the Servicer pursuant to Section 7.5. If upon
any such resignation or termination, the Certificate Insurer appoints a
successor Servicer other than the Back-up Servicer, the Back-up Servicer shall
not be relieved of its duties as Back-up Servicer hereunder.]
SECTION 8.3. Notification to Certificateholders. Upon any termination
of, or appointment of a successor to, the Servicer pursuant to this Article
VIII, the Trustee shall give prompt written notice thereof to Certificateholders
at their respective addresses appearing in the Certificate Register and to each
of the Rating Agencies.
SECTION 8.4. [Reserved].
SECTION 8.5. Action Upon Certain Failures of the Servicer. In the event
that a Responsible Officer of the Trustee shall have knowledge of any failure of
the Servicer specified in Section 8.1 which would give rise to a right of
termination under such Section upon the Servicer's failure to remedy the same
after notice, the Trustee shall give notice thereof to the Depositor, the
Servicer [and the Certificate Insurer]. For all purposes of this Agreement, the
Trustee shall not be deemed to have knowledge of any failure of the Servicer as
specified in Section 8.1 unless notified thereof in writing by the Depositor,
the Servicer, [the Certificate Insurer] or by a Certificateholder. The Trustee
shall be under no duty or obligation to investigate or inquire as to any
potential failure of the Servicer specified in Section 8.1.
ARTICLE IX
The Trustee
SECTION 9.1. Duties of Trustee. The Trustee, both prior to the
occurrence of an Event of Default and after an Event of Default shall have been
cured or waived, shall undertake to perform such duties and only such duties as
are specifically set forth in this Agreement. If an Event of Default shall have
occurred and shall not have been cured or waived, the Trustee may, [and at the
direction of the Certificate Insurer (or, if an Insurer Default shall have
occurred and is continuing, the Class A Certificateholder), shall] exercise such
of the rights and powers vested in it by this Agreement and shall use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that shall be specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
The Trustee shall take and maintain custody of the Schedule of
Receivables included as Schedule A to this Agreement and shall retain copies of
all Servicer's Certificates prepared hereunder.
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No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own bad faith; provided, however, that:
(i) Prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as shall be
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely on the truth of the statements and the correctness of the
opinions expressed in any certificates or opinions furnished to the Trustee
and conforming to the requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of judgment made in
good faith by a Trustee Officer, unless it shall be proved that the Trustee
shall have been negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be liable with respect to any action
taken, suffered, or omitted to be taken in good faith in accordance with
this Agreement or at the direction of [the Certificate Insurer or, after an
Insurer Default,] the Holders of Class A Certificates evidencing not less
than 25% of the Class A Certificate Balance, relating to the time, method,
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under
this Agreement;
(iv) The Trustee shall not be charged with knowledge of any Event of
Default, unless a Trustee Officer assigned to the Trustee's Corporate Trust
Office receives written notice of such Event of Default from the Servicer
or the Depositor, as the case may be, [the Certificate Insurer or, after an
Insurer Default,] the Holders of Class A Certificates evidencing not less
than 25% of the Class A Certificate Balance (such notice shall constitute
actual knowledge of an Event of Default by the Trustee); and
(v) The Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and reasonably believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement.
The Trustee may, but shall not be required to, expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, unless it
shall have been provided with indemnity against such risk or liability in form
and substance satisfactory to the Trustee, and none of the provisions contained
in this Agreement shall in any event require the Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer under this Agreement except during such time, if any, as the Trustee,
in its capacity as Back-up Servicer, shall be the successor to, and be vested
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with the rights, duties, powers, and privileges of, the Servicer in accordance
with the terms of this Agreement.
Except for actions expressly authorized by this Agreement, the Trustee
shall take no action reasonably likely to impair the security interests created
or existing under any Receivable or Financed Vehicle or to impair the value of
any Receivable or Financed Vehicle.
All information obtained by the Trustee regarding the Obligors and the
Receivables, whether upon the exercise of its rights under this Agreement or
otherwise, shall be maintained by the Trustee in confidence and shall not be
disclosed to any other Person; provided that, nothing herein shall prevent the
Trustee from delivering copies of such information whether or not constituting
confidential information, and disclosing other information, whether or not
confidential information to (i) its directors, officers, employees, agents and
professional consultants to the extent necessary to carry on the Trustee's
business in the ordinary course, (ii) any Certificateholder [or the Certificate
Insurer] to the extent that such Certificateholder [or the Certificate Insurer]
is entitled to such information under this Agreement, but not otherwise (iii)
any governmental authority which specifically requests (or as to which
applicable regulations require) such information, (iv) any nationally recognized
rating agency in connection with the rating of the Certificates by such agency,
(v) any other Person to which such delivery or disclosure may be necessary or
appropriate, (a) in compliance with any applicable law, rule, regulation or
order, (b) in response to any subpoena or other legal process, (c) in connection
with any litigation to which the Trustee is a party, or (d) in order to protect
or enforce the rights of the Certificateholders [and the Certificate Insurer]
under the Trust established hereunder.
SECTION 9.2. Trustee's Certificate. On or as soon as practicable after
each Distribution Date on which Receivables shall be assigned to LBAC or the
Servicer, as applicable, pursuant to this Agreement, based on amounts deposited
to the Collection Account, notices received pursuant to this Agreement and the
information contained in the Servicer's Certificate for the related Collection
Period, identifying the Receivables purchased by LBAC pursuant to Section 2.7 or
purchased by the Servicer pursuant to Section 3.7 or 10.2, the Trustee shall
execute a Trustee's Certificate (in the form of Exhibit D-1 or D-2, as
applicable), and shall deliver such Trustee's Certificate, accompanied by a copy
of the Servicer's Certificate for such Collection Period to LBAC or the
Servicer, as the case may be. The Trustee's Certificate submitted with respect
to such Distribution Date shall operate, as of such Distribution Date, as an
assignment, without recourse, representation, or warranty, to LBAC or the
Servicer, as the case may be, of all the Trustee's right, title, and interest in
and to such repurchased Receivable, and all security and documents relating
thereto, such assignment being an assignment outright and not for security.
SECTION 9.3. Certain Matters Affecting Trustee. Except as otherwise
provided in the second paragraph of Section 9.1:
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(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
Servicer's Certificate, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond, or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties.
(ii) The Trustee may consult with counsel, and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it under this Agreement in good
faith and in accordance with such Opinion of Counsel.
(iii) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct,
or defend any litigation under this Agreement or in relation to this
Agreement, at the request, order or direction of any of the
Certificateholders [or the Certificate Insurer] pursuant to the provisions
of this Agreement, unless such Certificateholders [or the Certificate
Insurer] shall have offered to the Trustee reasonable security or indemnity
in form and substance reasonably satisfactory to the Trustee against the
costs, expenses, and liabilities that may be incurred therein or thereby;
nothing contained in this Agreement, however, shall relieve the Trustee of
the obligations, upon the occurrence of an Event of Default (that shall not
have been cured or waived), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(iv) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, or other paper or document (other than for its duties pursuant to
Section 2.7), unless requested in writing to do so by the Certificate
Insurer, the Depositor or Holders of Class A Certificates evidencing not
less than 25% of the Class A Certificate Balance; provided, however, that,
if the payment within a reasonable time to the Trustee of the costs,
expenses, or liabilities likely to be incurred by it in the making of such
investigation shall be, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require indemnity in form and substance
satisfactory to it against such cost, expense, or liability as a condition
to so proceeding. The reasonable expense of every such examination shall be
paid by the Person making such request or, if paid by the Trustee, shall be
reimbursed by the Person making such request upon demand.
(v) The Trustee may execute any of the trusts or powers hereunder or
perform any duties under this Agreement either directly or by or through
agents or attorneys or a custodian. The Trustee shall not be responsible
for any misconduct or negligence of any such agent or custodian appointed
with due care
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by it hereunder, or of any agent or custodian of the Servicer in its
capacity as Servicer or custodian or otherwise.
(vi) Except as may be expressly required by Sections 2.7 and 10.1,
subsequent to the sale of the Receivables by the Depositor to the Trust,
the Trustee shall have no duty of independent inquiry, and the Trustee may
rely upon the representations and warranties and covenants of the Depositor
and the Servicer contained in this Agreement with respect to the
Receivables and the Receivable Files.
(vii) The Trustee may rely, as to factual matters relating to the
Depositor or the Servicer, on an Officer's Certificate of the Depositor or
Servicer, respectively.
(viii) The Trustee shall not be required to take any action or refrain
from taking any action under this Agreement, or any related documents
referred to herein, nor shall any provision of this Agreement, or any such
related document be deemed to impose a duty on the Trustee to take action,
if the Trustee shall have been advised by counsel that such action is
contrary to (i) the terms of this Agreement, (ii) any such related document
or (iii) law.
SECTION 9.4. Trustee Not Liable for Certificates or Receivables. The
recitals contained herein and in the Certificates (other than the certificate of
authentication on the Certificates) shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee shall make no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates),
or of any Receivable or related document. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity, and
enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be distributed
to Certificateholders under this Agreement, including, without limitation: the
existence, condition, location, and ownership of any Financed Vehicle; the
existence and enforceability of any physical damage insurance thereon; except as
required by Section 2.7, the existence, contents and completeness of any
Receivable or any Receivable Files or any computer or other record thereof; the
validity of the assignment of any Receivable to the Trust or of any intervening
assignment; except as required by Section 2.7, the performance or enforcement of
any Receivable; the compliance by the Depositor or the Servicer with any
warranty or representation made under this Agreement or in any related document
and the accuracy of any such warranty or representation prior to the Trustee's
receipt of notice or other actual knowledge by a Responsible Officer of any
noncompliance therewith or any breach thereof; any investment of monies by or at
the direction of the Servicer [or the Certificate Insurer] or any loss resulting
therefrom (it being understood that the Trustee shall remain responsible for any
Trust Property that it may hold); the acts or omissions of the Depositor, the
Servicer, or any Obligor; any action of the Servicer taken in the name of the
Trustee; or any action by the Trustee taken
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at the instruction of the Servicer; provided, however, that the foregoing shall
not relieve the Trustee of its obligation to perform its duties under this
Agreement. Except with respect to a claim based on the failure of the Trustee to
perform its duties under this Agreement or based on the Trustee's negligence or
willful misconduct, no recourse shall be had for any claim based on any
provision of this Agreement, the Certificates, or any Receivable or assignment
thereof against the Trustee in its individual capacity, the Trustee shall not
have any personal obligation, liability, or duty whatsoever to any
Certificateholder or any other Person with respect to any such claim, and any
such claim shall be asserted solely against the Trust or any indemnitor who
shall furnish indemnity as provided in this Agreement. The Trustee shall not be
accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Servicer in respect of the Receivables. The
Depositor hereby certifies to the Trustee that the Rating Agencies rating the
Class A Certificates are Standard & Poor's and Moody's and that their addresses
are as set forth in Section 11.5. The Trustee may rely on the accuracy of such
certification until it receives from the Depositor an Officer's Certificate
superseding such certification.
SECTION 9.5. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
and may deal with the Depositor and the Servicer in banking transactions with
the same rights as it would have if it were not Trustee.
SECTION 9.6. Indemnity of Trustee and Custodian. The Servicer shall
indemnify the Trustee, the Custodian and each officer, director and employee of
the Trustee and the Custodian for, and hold each such Person harmless against,
any loss, liability, or expense incurred without willful misfeasance,
negligence, or bad faith on its part, arising out of or in connection with the
acceptance or administration of the Trust, or performance of duties as Custodian
of the Legal Files including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any of
its powers or duties under this Agreement. Additionally the Depositor, pursuant
to Section 6.2, shall indemnify the Trustee and the Custodian with respect to
certain matters, the Servicer, pursuant to Section 7.2, shall indemnify the
Trustee and the Custodian with respect to certain matters, and
Certificateholders, pursuant to Section 9.3 shall, upon the circumstances
therein set forth, indemnify the Trustee and the Custodian under certain
circumstances. The provisions of this Section 9.6 shall survive the termination
of this Agreement or any resignation or removal of LBAC as Servicer.
SECTION 9.7. Eligibility Requirements for Trustee. The Trustee under
this Agreement shall at all times be organized and doing business under the laws
of the United States of America; authorized under such laws to exercise
corporate trust powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities satisfactory to [the Certificate Insurer]; and having a rating, both
with respect to long-term and short-term unsecured obligations, of not less than
investment grade by each Rating Agency. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the
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aforesaid supervising or examining authority, then for the purpose of this
Section 9.7, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 9.7, the Trustee
shall resign immediately in the manner and with the effect specified in Section
9.8.
SECTION 9.8. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving 30 days'
prior written notice thereof to the Servicer. Upon receiving such notice of
resignation, with the prior written consent of [the Certificate Insurer and] the
Holders of Class A Certificates evidencing not less than 66-2/3% of the Class A
Certificate Balance, the Servicer shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor Trustee. If no
successor Trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, [the Certificate
Insurer] may appoint a successor Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and have accepted appointment within 60 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee. The Trustee may be
removed at any time by written demand of the Certificate Insurer delivered to
the Trustee and the Servicer.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.7 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged bankrupt or insolvent, or a receiver,
conservator or liquidator of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then [the Certificate Insurer shall (so long as no Insurer Default
shall have occurred and be continuing), or] the Servicer may (if an Insurer
Default shall have occurred and be continuing) remove the Trustee. If the
Certificate Insurer or the Servicer shall remove the Trustee under the authority
of the immediately preceding sentence, the Servicer [or the Certificate
Insurer], as the case may be, shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor Trustee, and
pay all fees and expenses owed to the outgoing Trustee, provided that any
successor Trustee appointed by the Servicer shall be acceptable to the
Certificate Insurer.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.8 shall
not become effective until acceptance of appointment by the successor Trustee
pursuant to Section 9.9 and payment of all fees and expenses owed to the
outgoing Trustee. The Servicer shall provide notice of such resignation or
removal of the Trustee to each of the Rating Agencies and the Depositor.
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If the Trustee and the Back-up Servicer shall be the same Person and
the rights and obligations of the Back-up Servicer shall have been terminated
pursuant to this Section 9.8, then [the Certificate Insurer (or, if an Insurer
Default shall have occurred and be continuing,] Holders of Class A Certificates
evidencing a majority of the Class A Certificate Balance outstanding) shall have
the option, by 60 days' prior notice in writing to the Servicer and the Trustee,
to remove the Trustee, [and the Certificate Insurer] shall not have any
liability to the Trustee, LBAC, the Depositor, the Servicer or any
Certificateholder in connection with such removal.
SECTION 9.9. Successor Trustee. Any successor Trustee appointed
pursuant to Section 9.8 shall execute, acknowledge, and deliver to the
Depositor, the Servicer, the Certificate Insurer and to its predecessor Trustee
an instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties, and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Trustee. The predecessor Trustee shall upon payment of its fees and expenses
deliver to the successor Trustee all documents and statements and monies held by
it under this Agreement; and the Servicer, [the Certificate Insurer] and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties, and
obligations.
No successor Trustee shall accept appointment as provided in this
Section 9.9 unless at the time of such acceptance such successor Trustee shall
be eligible pursuant to Section 9.7.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 9.9, the Servicer shall mail notice of the successor of such Trustee
under this Agreement to all Holders of Certificates at their addresses as shown
in the Certificate Register, the Depositor, and to the Rating Agencies. If the
Servicer shall fail to mail such notice within 10 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Servicer.
SECTION 9.10. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 9.7, without the execution or
filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided that the
Trustee shall mail notice of such merger or consolidation to the Rating
Agencies, the Depositor [and the Certificate Insurer].
SECTION 9.11. Co-Trustee; Separate Trustee. Notwithstanding any other
provisions of this Agreement, at any time, for the purpose of meeting any legal
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requirements of any jurisdiction in which any part of the Trust or any Financed
Vehicle may at the time be located, the Servicer, [the Certificate Insurer
(provided an Insurer Default shall not have occurred and be continuing)] and the
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more persons approved by the Trustee to act as
co-trustee, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust, and to vest in such Person, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section 9.11, such
powers, duties, obligations, rights, and trusts as the Servicer, [the
Certificate Insurer] and the Trustee may consider necessary or desirable. If the
Servicer [and the Certificate Insurer] shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, or in the case an
Event of Default shall have occurred and be continuing, the Trustee alone shall
have the power to make such appointment. No co-trustee or separate trustee under
this Agreement shall be required to meet the terms of eligibility as a successor
trustee pursuant to Section 9.7, except that the co-trustee or its parent shall
comply with the rating requirements set forth therein, and no notice of a
successor trustee pursuant to Section 9.9 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required pursuant
to Section 9.9.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred or imposed
upon the Trustee shall be conferred upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee under this Agreement or, in
its capacity as Back-up Servicer, as successor to the Servicer under this
Agreement), the Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties, and obligations
(including the holding of title to the Trust or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
(ii) No trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) [Provided no Insurer Default shall have occurred and be
continuing, the Certificate Insurer may, and, in the event an Insurer
Default shall have occurred and be continuing, then,] the Servicer and the
Trustee acting jointly may, at any time accept the resignation of or remove
any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the other then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee
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shall refer to this Agreement and the conditions of this Article IX. Each
separate trustee and co-trustee, upon its acceptance of the trusts conferred,
shall be vested with the estates or property specified in its instrument of
appointment, either jointly with the Trustee or separately, as may be provided
therein, subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Each such instrument
shall be filed with the Trustee and a copy thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee,
its agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 9.12. Representations and Warranties of Trustee. The Trustee
shall make the following representations and warranties on which the Depositor,
the Servicer, the Originator, [the Certificate Insurer] and Certificateholders
shall rely:
(i) The Trustee is a national banking association duly organized,
validly existing, and in good standing under the laws of the United States
of America and has the corporate power, authority and legal right, as
Trustee and Back-up Servicer on behalf of the Trust, to acquire, own, sell
and service the Receivables, and to hold the Legal Files as Custodian.
(ii) The Trustee has full corporate power authority and legal right to
execute, deliver, and perform this Agreement and shall have taken all
necessary action to authorize the execution, delivery and performance by it
of this Agreement.
(iii) This Agreement shall have been duly executed and delivered by
the Trustee and this Agreement constitutes a legal, valid and binding
obligation of the Trustee enforceable in accordance with its terms, subject
to (x) applicable bankruptcy, insolvency, reorganization, moratorium, and
other similar laws affecting creditor's rights generally and (y) general
principles of equity.
SECTION 9.13. No Bankruptcy Petition. The Trustee covenants and agrees
that prior to the date which is one year and one day after the payment in full
of all securities issued by the Depositor or by a trust for which the Depositor
was the depositor it will not institute against, or join any other Person in
instituting against, the Depositor or the Trust any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any Federal or State bankruptcy or similar law.
SECTION 9.14. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates
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or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as
Trustee. Any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Certificateholders in
respect of which such judgment has been obtained.
SECTION 9.15. [Rights of Certificate Insurer to Direct Trustee. Subject
to clause (iii) of Section 9.3, unless an Insurer Default shall have occurred
and be continuing, the Certificate Insurer, after giving written notice to the
Trustee, shall have the right to direct the time, method and place at or by
which the Trustee conducts any proceeding for any remedy available to the
Trustee, or exercises any such trust or power conferred upon the Trustee;
provided, however, that subject to Section 9.1, the Trustee shall have the right
to decline to follow any such direction of the Certificate Insurer if the
Trustee, being advised by counsel, determines that the action so directed may
not lawfully be taken, or if the Trustee in good faith shall, by a Responsible
Officer of the Trustee, determine that the proceedings so directed would be in
violation of any Basic Document or illegal or involve it in personal liability
against which its has not been provided indemnity in form and substance
satisfactory to it or be unduly prejudicial to the rights of Certificateholders;
provided, that nothing in this Agreement shall impair the right of the Trustee
to take any action deemed proper by the Trustee and which is not inconsistent
with such direction of the Certificate Insurer. Notwithstanding the foregoing,
neither the Trustee [nor the Certificate Insurer] has the right to liquidate the
Collateral under this Agreement or any other Basic Document.]
ARTICLE X
Termination
SECTION 10.1. Termination of the Trust. The respective obligations and
responsibilities of LBAC, the Depositor, the Servicer, the Custodian and the
Trustee created hereby and the Trust created by this Agreement shall terminate
upon the payment to Certificateholders of all amounts required to be paid to
them pursuant to this Agreement, [satisfaction of all Reimbursement
Obligations,] and the expiration of any preference period related thereto and
the disposition of all property held as part of the Trust; provided, however, in
any case there shall be delivered to the Trustee [and the Certificate Insurer]
an Opinion of Counsel that all applicable preference periods under federal,
state and local bankruptcy, insolvency and similar laws have expired with
respect to the payments pursuant to this Section 10.1; provided, further,
however, that in no event shall the trust created by this Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the United States of
America to the Court of St. ▇▇▇▇▇, living on the date of this Agreement. The
Servicer shall promptly notify the Trustee, the Depositor, each Rating Agency
[and the Certificate Insurer] of any prospective termination pursuant to this
Section 10.1.
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Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to Certificateholders mailed not earlier than the 15th day
and not later than the 25th day of the month next preceding the specified
Distribution Date stating (A) the Distribution Date upon which final payment of
the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Trustee therein designated, (B) the amount of
any such final payment, and (C) if applicable, that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Trustee shall give such notice to the Depositor and the
Certificate Registrar (if other than the Trustee) at the time such notice is
given to Certificateholders. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
amounts distributable on such Distribution Date pursuant to Section 4.6.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee shall take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement or, if none, from LBAC. Notwithstanding the foregoing,
any funds remaining on deposit in the Certificate Account for the payment of the
Certificates and not applied but remaining unclaimed for two years after the
date upon which principal and interest on such Certificates shall have become
due and payable, shall, at the election of the Trustee or upon the written
request of LBAC and unless otherwise required by mandatory provisions of law, be
paid to the National Stroke Council by the Trustee, and the holder of any
Certificate [and the Certificate Insurer], shall, unless otherwise required by
mandatory provisions of law, thereafter look only to the Depositor for any
payment which such Person may be entitled to collect, and all liability of the
Trustee with respect to such funds and all obligations (other than obligations
which by their express terms survive termination of the Trust) of the Trustee
under this Agreement shall thereupon cease.
SECTION 10.2. Optional Purchase of All Receivables. On the last day of
any Collection Period as of which the Pool Balance shall be less than or equal
to the Optional Purchase Percentage multiplied by the sum of the Original Pool
Balance [and the aggregate Principal Balance of all Subsequent Receivables
conveyed to the Trust as of the related Subsequent Cutoff Dates,] the Originator
or the Servicer shall have the option to purchase the corpus of the Trust [(with
the consent of the Certificate Insurer, if such purchase would result in a claim
on the Policy or would result in any amount owing to the Certificate Insurer or
to the Holders of the Class A Certificates remaining unpaid)]; provided,
however, that if both the Originator and the Servicer desire to effect such
purchase, the Originator shall have the preferential right to effect such
purchase;
102
provided, further, that neither the Originator nor the Servicer may effect any
such purchase unless the Originator shall have received an Opinion of Counsel,
and shall have delivered it to the Trustee to the effect that such purchase
would not constitute a fraudulent conveyance. The Originator or the Servicer, as
applicable, shall notify each Rating Agency of such purchase. To exercise such
option the Originator or the Servicer ([or the Certificate Insurer], if
applicable) shall deposit pursuant to Section 4.5 in the Collection Account an
amount equal to the aggregate Purchase Amount for the Receivables (including
defaulted Receivables), plus the appraised value of any other property held by
the Trust, such value to be determined by an appraiser mutually agreed upon by
the Originator or the Servicer, as applicable, [the Certificate Insurer] and the
Trustee, and shall succeed to all interests in and to the Trust. For purposes of
this Section, the Purchase Amount shall not be less than the amount necessary to
permit the full distribution of the Class A Certificate Balance, plus accrued
and unpaid interest thereon, as of such date of repurchase.
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1. Amendment. This Agreement may be amended from time to
time by the Depositor, the Servicer, and the Trustee [with the consent of the
Certificate Insurer and] with the consent (which consent of any Holder of a
Certificate given pursuant to this Section or pursuant to any other provision of
this Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Certificate and of any Certificate issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon the Certificate) of the Holders of Class A
Certificates evidencing not less than 51% of the Class A Certificate Balance for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement, or of modifying in any manner the
rights of the Holders of Certificates; provided, however, that no such amendment
shall (a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, or change the allocation or priority of, collections of payments
on Receivables or distributions that shall be required to be made on any
Certificate or change the Class A Pass-Through Rate without the consent of each
Certificateholder affected thereby, (b) reduce the aforesaid percentage of the
Class A Certificate Balance required to consent to any such amendment, without
the consent of the Holders of all Class A Certificates then outstanding or
eliminate the right of the Excess Cash Flow Certificateholder to consent to any
change described in clause (a) affecting the Excess Cash Flow Certificateholder
without the consent of the Excess Cash Flow Certificateholder or (c) result in a
downgrade or withdrawal of the then current rating of the Class A Certificates
by either of the Rating Agencies without the consent of all the Class A
Certificateholders.
The Trustee shall furnish prior notice of any such proposed amendment
to each Rating Agency and promptly after the execution of any such amendment or
consent, the Trustee shall furnish a copy of such amendment or consent to each
Certificateholder, each of the Rating Agencies and the Lock-Box Processor.
103
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement and
the Opinion of Counsel referred to in Section 11.2(i)(1). The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties or immunities under this Agreement or otherwise.
SECTION 11.2. Protection of Title to Trust. (a) Each of the Depositor,
as to itself, and the Servicer, as to itself, shall execute and file such
financing statements and cause to be executed and filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain, and protect the interest of the Certificateholders,
the Trustee [and the Certificate Insurer] in its interest in the Receivables and
the other Trust Assets and in the proceeds thereof. Each of the Depositor, as to
itself, and the Servicer, as to itself, shall deliver (or cause to be delivered)
to the Trustee [and the Certificate Insurer] file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Depositor nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of ss. 9-402(7) of
the UCC, unless it shall have given the Trustee, [the Certificate Insurer] and
the other party at least thirty days' prior written notice thereof, shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements and shall have delivered an Opinion of
Counsel (A) stating that, in the opinion of such counsel, all amendments to all
previously filed financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the interest
of the Trustee in the Receivables and the other Trust Assets, and reciting the
details of such filings, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interest.
(c) Each of the Depositor and the Servicer shall have an obligation to
give the Trustee, the Certificate Insurer and the other party at least thirty
days' prior written notice of any relocation of its principal executive office
if, as a result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement, shall promptly file
any such amendment and shall deliver an Opinion of Counsel (A) stating that, in
the opinion of such counsel, all amendments to all previously filed financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee in the
Receivables, and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interest. The Servicer shall at all times maintain each office from
which it shall service Receivables, and its principal executive office, within
the United States of America.
104
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Certificate
Account and Payahead Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Trustee,
the Servicer's master computer records (including any back-up archives) that
refer to a Receivable shall indicate clearly the interest of Long Beach
Acceptance Auto Receivables Trust 20__-_ in such Receivable and that such
Receivable is owned by the Trust. Indication of the Trust's ownership of a
Receivable shall be deleted from or modified on the Servicer's computer systems
when, and only when, such Receivable shall have been paid in full or
repurchased.
(f) If at any time the Depositor or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Servicer shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or printouts (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold to and is owned by the
Trust.
(g) The Servicer shall, upon reasonable notice, permit the Depositor,
the Trustee, the Back-up Servicer [and the Certificate Insurer] and its agents
at any time during normal business hours to inspect, audit, and make copies of
and abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Depositor, the
Trustee, the Back-up Servicer or to [the Certificate Insurer], within five
Business Days, a list of all Receivables (by contract number and name of
Obligor) then held as part of the Trust, together with a reconciliation of such
list to the Schedule of Receivables and to each of the Servicer's Certificates
furnished before such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee [and the Certificate
Insurer]:
(1) promptly after the execution and delivery of this Agreement
and of each amendment hereto and after the execution and delivery of
each amendment to any financing statement, an Opinion of Counsel
either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the
Trustee in the Receivables, and reciting the details of such filings
or referring to prior Opinions of Counsel in which such details are
given, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest; and
105
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three
months after the [Initial] Cutoff Date, an Opinion of Counsel, dated
as of a date during such 90-day period either (A) stating that, in the
opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables,
and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given or (B) stating
that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i) (1) or (i) (2) above
shall specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
(j) For the purpose of facilitating the execution of this Agreement and
for other purposes, this Agreement may be executed simultaneously in any number
of counterparts, each of which counterparts shall be deemed to be an original,
and all of which counterparts shall constitute but one and the same instrument.
SECTION 11.3. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties to
this Agreement or any of them.
No Certificateholder shall have any right to vote (except as
specifically provided herein including in Section 11.1) or in any manner
otherwise control the operation and management of the Trust, or the obligations
of the parties to this Agreement, nor shall anything in this Agreement set
forth, or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken pursuant to any provision of this
Agreement.
[So long as no Insurer Default has occurred and is continuing, except
as otherwise specifically provided herein, whenever Class A Certificateholder
action, consent or approval is required under this Agreement, such action,
consent or approval shall be deemed to have been taken or given on behalf of,
and shall be binding upon, all Class A Certificateholders if the Certificate
Insurer agrees to take such action or give such consent or approval.]
[If an Insurer Default shall have occurred and be continuing,] no Class
A Certificateholder shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, and unless also
106
the Holders of Class A Certificates evidencing not less than 25% of the Class A
Certificate Balance shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee under this
Agreement and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby and the Trustee, for 30 days after its receipt of such notice,
request, and offer of indemnity, shall have neglected or refused to institute
any such action, suit or proceeding and during such 30-day period no request or
waiver inconsistent with such written request has been given to the Trustee
pursuant to this Section or Section 8.4; no one or more Holders of Class A
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the Class A
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right, under this Agreement except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Class A Certificateholders. For the protection and enforcement of the
provisions of this Section 11.3, each Class A Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
Nothing in this Agreement shall be construed as giving the Class A
Certificateholders any direct right to make a claim on the Policy.
SECTION 11.4. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (EXCEPT
WITH REGARD TO THE UCC).
SECTION 11.5. Notices. All demands, notices, and communications upon or
to the Depositor, the Servicer, the Trustee, [the Certificate Insurer,] Standard
& Poor's or Moody's under this Agreement shall be in writing, and delivered (i)
personally, (ii) by certified mail, return receipt requested, (iii) by Federal
Express or similar overnight courier service or (iv) by telecopy, and shall be
deemed to have been duly given upon receipt (a) in the case of the Depositor, at
the following address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: General Counsel, or at such other address
as shall be designated by the Depositor in a written notice to the Trustee, (b)
in the case of the Servicer, at the following address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: General
Counsel, (c) in the case of the Trustee, at its principal Corporate Trust Office
(Telecopy: ______________), (d) in the case of Standard & Poor's, at the
following address: ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Asset Backed Surveillance Department, (e) in the case of Moody's, at the
following address: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ABS
Monitoring Department and (f) in the case of the Certificate Insurer, at the
following address: ____________, __________, _______________, Attention:
________________, Re: Long Beach Acceptance Auto Receivables Trust 20__-_. Any
notice required or permitted to be mailed to a Certificateholder shall be given
by Federal Express or similar overnight courier service, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any
107
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder shall receive such notice.
The Trustee shall give prompt written notice to each of the Depositor,
the Rating Agencies and each Class A Certificateholder of [(i) any amendments to
the Insurance Agreement or the Policy (upon receipt of written notice of any
such amendments from LBAC or the Servicer), (ii)] any change in the identity of
the Paying Agent [and (iii) any failure to make payment under the Policy.]
SECTION 11.6. Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
SECTION 11.7. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.3 and 8.3 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Depositor or the Servicer without the
prior written consent of [the Certificate Insurer,] LBAC, the Trustee and the
Holders of Class A Certificates evidencing not less than 51% of the Class A
Certificate Balance.
SECTION 11.8. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and upon
authentication thereof by the Trustee pursuant to Section 5.4 or 5.5,
Certificates shall be deemed fully paid.
SECTION 11.9. Nonpetition Covenant. None of the Depositor, the
Servicer, the Trustee, the Custodian, the Back-up Servicer or LBAC shall, prior
to the date which is one year and one day after the termination of this
Agreement with respect to the Trust or the Depositor, petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Trust or the Depositor under any
Federal or State bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust or the Depositor or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Trust or the
Depositor.
SECTION 11.10. Third Party Beneficiaries. Except as otherwise
specifically provided herein with respect to Certificateholders, the parties to
this Agreement hereby manifest their intent that no third party other than [the
Certificate Insurer and] the Custodian with respect to the indemnification
provisions set forth herein, shall be deemed a third party beneficiary of this
Agreement, and specifically that the Obligors are not third party beneficiaries
of this Agreement. [The Certificate Insurer and its successors and assigns shall
be a third-party beneficiary to the provisions of this Agreement, and
108
shall be entitled to rely upon and directly enforce such provisions of this
Agreement so long as no Insurer Default shall have occurred and be continuing.
Except as expressly stated otherwise herein or in the Basic Documents, any right
of the Certificate Insurer to direct, appoint, consent to, approve of, or take
any action under this Agreement, shall be a right exercised by the Certificate
Insurer in its sole and absolute discretion. The Certificate Insurer may
disclaim any of its rights and powers under this Agreement (but not its duties
and obligations under the Policy) upon delivery of a written notice to the
Trustee.]
SECTION 11.11. [Certificate Insurer as Controlling Party. Each
Certificateholder by purchase of the Certificates held by it acknowledges that
each such Certificateholder and the Trustee, as partial consideration of the
issuance of the Policy, have agreed that the Certificate Insurer shall have
certain rights hereunder for so long as no Insurer Default shall have occurred
and be continuing. So long as an Insurer Default has occurred and is continuing,
any provision giving the Certificate Insurer the right to direct, appoint or
consent to, approve of, or take any action under this Agreement shall be
inoperative during the period of such Insurer Default and such right shall
instead vest in the Trustee acting at the direction of the Holders of Class A
Certificates evidencing, unless otherwise specified, not less than 51% of the
Class A Certificate Balance. The Certificate Insurer may disclaim any of its
rights and powers under this Agreement (but not its duties and obligations under
the Policy) upon delivery of a written notice to the Trustee. The Certificate
Insurer may give or withhold any consent hereunder in its sole and absolute
discretion.]
109
IN WITNESS WHEREOF, the Depositor, the Originator, the Servicer, the
Trustee, the Back-up Servicer, the Custodian and [the Collateral Agent] have
caused this Pooling and Servicing Agreement to be duly executed by their
respective officers as of the day and year first above written.
LONG BEACH ACCEPTANCE RECEIVABLES
CORP., as Depositor
By:
----------------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE CORP.,
as Originator and Servicer
By:
----------------------------------------
Name:
Title:
[NAME OF TRUSTEE] ________________________,
as Trustee, Back-up Servicer, Custodian and
Collateral Agent
By:
----------------------------------------
Name:
Title:
110
EXHIBIT A: FORM OF CLASS A CERTIFICATE SEE REVERSE FOR
CERTAIN
DEFINITIONS
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 20__-_
___% ASSET BACKED CERTIFICATE
CLASS A
evidencing a beneficial ownership interest in the Trust, as defined below, the
property of which includes a pool of retail installment sale contracts secured
by new and used automobiles, vans, sport utility vehicles and light duty trucks
and sold to the Trust by Long Beach Acceptance Receivables Corp.
(This Certificate does not represent an interest in or obligation of Long Beach
Acceptance Receivables Corp., Long Beach Acceptance Corp., the Trustee or any of
their respective affiliates, except to the extent described below.)
NUMBER R-___________ CUSIP No. __________
$____________ (of Final Scheduled
$___________ issued) Distribution Date:
------------, ----
THIS CERTIFIES THAT _____________ is the registered owner of a
______________ Dollars ($_________) nonassessable, fully-paid, beneficial
ownership interest in the Long Beach Acceptance Auto Receivables Trust 20__-_
(the "Trust") formed by Long Beach Acceptance Receivables Corp., a Delaware
corporation (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of _____________, 20__ (the "Agreement") among the
Depositor, Long Beach Acceptance Corp., as originator and as servicer (the
"Servicer") and [Name of trustee] of __________________, as trustee (the
"Trustee"), Custodian, Collateral Agent and Back-up Servicer, a summary of
certain of the pertinent provisions of which is set forth below. To the extent
not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Agreement. This Certificate is one of the duly
A-1
authorized Certificates designated as "____% Asset Backed Certificates, Class A"
(herein called the "Class A Certificates"). Also issued under the Agreement are
Certificates designated as "Excess Cash Flow Certificates" (the "Excess Cash
Flow Certificates"). The Class A Certificates and the Excess Cash Flow
Certificates are hereinafter collectively called the "Certificates". This Class
A Certificate is issued under and is subject to the terms, provisions, and
conditions of the Agreement, to which Agreement the Holder of this Class A
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound. The property of the Trust includes (i) a pool of retail installment
sale contracts for new and used automobiles, vans, sport utility vehicles and
light duty trucks (the "Receivables"), and with respect to Precomputed
Receivables, all monies received thereon after the close of business on
___________, _____ (the "[Initial] Cutoff Date") in the case of the [Initial]
Receivables, [or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables] (including [in each case] Scheduled Payments due or to
become due thereon on and after the [Initial] Cutoff Date in the case of the
[Initial] Receivables, [or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables,] and Scheduled Payments due prior to the [Initial]
Cutoff Date in the case of the [Initial] Receivables, [or the related Subsequent
Cutoff Date in the case of the Subsequent Receivables,] but received on or after
the [Initial] Cutoff Date in the case of the [Initial] Receivables, [or the
related Subsequent Cutoff Date in the case of the Subsequent Receivables]),
principal prepayments relating to such Scheduled Payments due on or after the
[Initial] Cutoff Date in the case of the [Initial] Receivables, [or the related
Subsequent Cutoff Date in the case of the Subsequent Receivables,] but received
by the Depositor or LBAC before the [Initial] Cutoff Date in the case of the
[Initial] Receivables, and any Payaheads received with respect to payments due
on the [Initial] Receivables on or after the [Initial] Cutoff Date (which
Payaheads shall be held in the Payahead Account until the Collection Period in
which such payments are actually due with respect to the related Receivable, at
which time such Payaheads shall be applied as a component of the Total
Distribution Amount), ]or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables,] and with respect to Simple Interest Receivables, all
monies received thereunder on and after the [Initial] Cutoff Date in the case of
the [Initial] Receivables, [or the related Subsequent Cutoff Date in the case of
the Subsequent Receivables] (including in each case Scheduled Payments due
before the [Initial] Cutoff Date in the case of the [Initial] Receivables, [or
the related Subsequent Cutoff Date in the case of the Subsequent Receivables,]
but received by the Depositor or LBAC on or after the [Initial] Cutoff Date in
the case of the [Initial] Receivables, [or the related Subsequent Cutoff Date in
the case of the Subsequent Receivables),] security interests in the vehicles
financed thereby, proceeds from claims on certain insurance policies and certain
other rights under the Agreement, certain bank accounts and the proceeds
thereof, all right, title and interest of the Depositor in and to the Purchase
Agreement, all right, title and interest of the Depositor in and to certain
refunds, the Receivable Files related to each Receivable and the proceeds of any
or all of the foregoing; [and (ii) a Financial Guaranty Insurance Policy issued
for the benefit of the Class A Certificateholders by _______________ (the
"Policy").]
Under the Agreement, there will be distributed on the __th day of each
month or, if such __th day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on ____________, _____, to the person in whose
name this Class A
A-2
Certificate is registered at the close of business on the last day of the
calendar month immediately preceding the month in which such Distribution Date
occurs (the "Record Date"), such Class A Certificateholder's percentage interest
(determined by dividing the denominations of this Class A Certificate by the
aggregate original denomination of all Class A Certificates) in the amounts
distributed to Class A Certificateholders pursuant to the Agreement.
[Full and complete payment of the Class A Distributable Amount on each
Distribution Date is unconditionally and irrevocably guaranteed pursuant to the
Policy.]
Distributions on this Class A Certificate will be made by the Trustee
by (i) wire transfer, in immediately available funds to the account of such
Class A Certificateholder at a bank or other entity having appropriate
facilities therefor, if such Class A Certificateholder is the Clearing Agency or
such Class A Certificateholder's Class A Certificates in the aggregate evidence
a denomination of at least $1,000,000, and, if such Class A Certificateholder
shall have provided to the Trustee appropriate instructions prior to such
Distribution Date, or (ii) by check mailed to the Class A Certificateholder of
record in the Certificate Register without the presentation or surrender of this
Class A Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Class A Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Class A Certificate at the office or agency maintained for that purpose by the
Trustee specified in such notice.
[Under the Agreement, the Trustee and Certificateholders agree that the
Certificate Insurer shall be subrogated to all of the rights to payment of the
Class A Certificateholders or in relation thereto to the extent that any payment
of principal or interest was made to such Class A Certificateholders with
payments made under the Policy by the Certificate Insurer.]
[As provided in the Agreement, so long as no Insurer Default has
occurred and is continuing, with certain exceptions whenever Class A
Certificateholder action, consent or approval is required under the Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Class A Certificateholders if the
Certificate Insurer agrees to take such action or give such consent or
approval.] [If an Insurer Default shall have occurred and is continuing,] no
Certificateholder shall have any right by virtue or by availing itself of any
provisions of the Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to the Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as provided in the Agreement and unless also the
Holders of Certificates evidencing not less than 51% of the sum of the Class A
Certificate Balance shall have made written request upon the trustee to
institute such action, suit or proceeding in its own name as trustee under the
Agreement. The rights of the Class A Certificateholders are subject to certain
limitations as set forth in Section 11.3 of the Agreement.
A-3
Reference is hereby made to the further provisions of this Class A
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Class A Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A Certificate to be duly executed.
LONG BEACH ACCEPTANCE AUTO
RECEIVABLES TRUST 20__-_
By: [Name of trustee] of
______________________, not in its
individual capacity but solely in
its capacity as Trustee
By:______________________________
Authorized Signatory
Dated: ________ __, 20__
This is one of the Class A Certificates referred to in the
within-mentioned Agreement.
[Name of trustee] of
___________________, not in its
individual capacity but solely in
its capacity as Trustee
By:___________________________
Authorized Signatory
A-4
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest in,
the Depositor, LBAC, the Servicer, the Trustee or any affiliate of any of them.
The Class A Certificates are limited in right of payment to certain collections
and recoveries respecting the Receivables [and claims made under the Policy],
all as more specifically set forth in the Agreement. A copy of the Agreement may
be examined during normal business hours at the principal office of the
Depositor, and at such other places, if any, designated by the Depositor, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Servicer and the Trustee [with the consent of the
Certificate Insurer and] with the consent of the Holders of Certificates
evidencing not less than 51% of the Class A Certificate Balance. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Trustee in its capacity as
Certificate Registrar or by any successor Certificate Registrar, in
__________________, ______________, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Class A Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $100,000 and integral multiples of
$1,000 in excess thereof. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or governmental
charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Authenticating Agent may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trustee, the
Certificate Registrar, nor any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts
A-5
required to be paid to them pursuant to the Agreement, the payment of all
Reimbursement Obligations, and the expiration of any preference period with
respect thereto and the disposition of all property held as part of the Trust.
The Originator or the Servicer of the Receivables may at its option purchase the
corpus of the Trust at a price specified in the Agreement, and such purchase of
the Receivables and other property of the Trust will effect early retirement of
the Certificates; however, such right of purchase is exercisable only as of the
last day of any Collection Period as of which the Pool Balance is less than or
equal to 10% of the sum of the original aggregate Principal Balance of the
[Initial] Receivables [and the aggregate Principal Balance of all Subsequent
Receivables conveyed to the Trust as of the related Subsequent Cutoff Dates].
A-6
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
--------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
--------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________________________ Attorney to transfer said Certificate
on the books of the Certificate Registrar, with full power of substitution in
the premises.
Dated:
*
------------------------------------------
*
------------------------------------------
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever.
A-7
EXHIBIT B: FORM OF EXCESS CASH SEE REVERSE FOR
FLOW CERTIFICATE CERTAIN
DEFINITIONS
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT AS DESCRIBED IN THE
AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY STATE.
ACCORDINGLY, TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET
FORTH IN SECTION 5.5(c) OF THE AGREEMENT. BY ITS ACCEPTANCE OF THIS CERTIFICATE
THE HOLDER OF THIS CERTIFICATE IS DEEMED TO REPRESENT TO THE DEPOSITOR AND THE
TRUSTEE (I) THAT IT IS AN INSTITUTIONAL INVESTOR THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D
PROMULGATED UNDER THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR")
AND THAT IT IS ACQUIRING THIS CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR THE
ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE
INSTITUTIONAL ACCREDITED INVESTORS UNLESS THE HOLDER IS A BANK ACTING IN ITS
FIDUCIARY CAPACITY) FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, THE PUBLIC DISTRIBUTION HEREOF OR (II) THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
AND IS ACQUIRING THIS CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT
OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE
QUALIFIED INSTITUTIONAL BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE BY ANY PERSON
UNLESS EITHER (I) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO THE DEPOSITOR,
(II) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT EXECUTES A CERTIFICATE, SUBSTANTIALLY IN THE FORM SPECIFIED IN THE
AGREEMENT, TO THE EFFECT THAT IT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACTING
FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR
AGENT FOR OTHERS (WHICH OTHERS ALSO ARE INSTITUTIONAL ACCREDITED INVESTORS
UNLESS THE HOLDER IS A BANK ACTING IN ITS FIDUCIARY CAPACITY), (III) SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO A PERSON WHO THE
TRANSFEROR REASONABLY BELIEVES AFTER DUE INQUIRY IS A "QUALIFIED
B-1
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A), ACTING FOR ITS OWN ACCOUNT (AND
NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH
OTHERS ALSO ARE QUALIFIED INSTITUTIONAL BUYERS) TO WHOM NOTICE IS GIVEN THAT THE
SALE, PLEDGE OR TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (IV) SUCH
SALE, PLEDGE OR OTHER TRANSFER IS OTHERWISE MADE IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN WHICH CASE (A) THE
TRUSTEE SHALL REQUIRE THAT BOTH THE PROSPECTIVE TRANSFEROR AND THE PROSPECTIVE
TRANSFEREE CERTIFY TO THE TRUSTEE AND THE DEPOSITOR IN WRITING THE FACTS
SURROUNDING SUCH TRANSFER, WHICH CERTIFICATION SHALL BE IN FORM AND SUBSTANCE
SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND (B) THE TRUSTEE MAY REQUIRE A
WRITTEN OPINION OF COUNSEL (WHICH SHALL NOT BE AT THE EXPENSE OF THE DEPOSITOR
OR THE TRUSTEE) SATISFACTORY TO THE DEPOSITOR AND THE TRUSTEE TO THE EFFECT THAT
SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT. NO SALE, PLEDGE OR OTHER
TRANSFER MAY BE MADE TO ANY ONE PERSON FOR CERTIFICATES WITH A FACE AMOUNT OF
LESS THAN $100,000 AND, IN THE CASE OF ANY PERSON ACTING ON BEHALF OF ONE OR
MORE THIRD PARTIES (OTHER THAN A BANK (AS DEFINED IN SECTION 3(A)(2) OF THE
SECURITIES ACT) ACTING IN ITS FIDUCIARY CAPACITY), FOR CERTIFICATES WITH A FACE
AMOUNT OF LESS THAN $100,000 FOR EACH SUCH THIRD PARTY.
THIS EXCESS CASH FLOW CERTIFICATE MAY NOT BE ACQUIRED BY OR WITH THE ASSETS OF
(I) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO
THE PROVISIONS OF TITLE I OF ERISA, (II) A "PLAN" (AS DEFINED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE")) THAT
IS SUBJECT TO SECTION 4975 OF THE CODE OR (III) ANY ENTITY WHOSE UNDERLYING
ASSETS INCLUDE ASSETS OF A PLAN DESCRIBED IN (I) OR (II) ABOVE BY REASON OF SUCH
PLAN'S INVESTMENT IN THE ENTITY (EACH, A "BENEFIT PLAN"), UNLESS THE PERSON
ACQUIRING THIS CERTIFICATE IS AN INSURANCE COMPANY INVESTING THE ASSETS OF ITS
GENERAL ACCOUNT AND THE EXEMPTIVE RELIEF PROVIDED BY SECTIONS I AND III OF
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 95-60, 60 FED. REG.
35925 (JULY 12, 1995) ("PTE 95-60") IS AVAILABLE WITH RESPECT TO THE PURCHASE
AND HOLDING OF THIS CERTIFICATE. NO TRANSFER OF THIS CERTIFICATE SHALL BE
PERMITTED TO BE MADE TO ANY PERSON UNLESS THE TRUSTEE HAS RECEIVED A CERTIFICATE
FROM SUCH TRANSFEREE TO THE EFFECT THAT EITHER (I) IT IS NOT A BENEFIT PLAN AND
IS NOT USING THE ASSETS OF A BENEFIT PLAN TO ACQUIRE THIS CERTIFICATE OR (II) IT
B-2
IS AN INSURANCE COMPANY INVESTING ASSETS OF ITS GENERAL ACCOUNT AND SECTIONS I
AND III OF PTE 95-60 APPLY TO THE TRANSFEREE'S ACQUISITION AND HOLDING OF THIS
CERTIFICATE.
THE HOLDER OF THIS EXCESS CASH FLOW CERTIFICATE REPRESENTS, BY VIRTUE OF ITS
ACCEPTANCE HEREOF, (I) THAT IT IS ACQUIRING THE EXCESS CASH FLOW CERTIFICATE FOR
ITS OWN BEHALF AND IS NOT ACTING AS AGENT OR CUSTODIAN FOR ANY OTHER PERSON OR
ENTITY IN CONNECTION WITH SUCH ACQUISITION, (II) IF THE HOLDER IS A PARTNERSHIP,
GRANTOR TRUST OR S CORPORATION FOR FEDERAL INCOME TAX PURPOSES (A "FLOW-THROUGH
ENTITY"), ANY EXCESS CASH FLOW CERTIFICATES OWNED BY SUCH FLOW-THROUGH ENTITY
WILL REPRESENT LESS THAN 50% OF THE VALUE OF ALL THE ASSETS OWNED BY SUCH
FLOW-THROUGH ENTITY AND NO SPECIAL ALLOCATION OF INCOME, GAIN, LOSS, DEDUCTION
OR CREDIT FROM SUCH EXCESS CASH FLOW CERTIFICATES WILL BE MADE AMONG THE
BENEFICIAL OWNERS OF SUCH FLOW-THROUGH ENTITY, AND (III) THE HOLDER IS A UNITED
STATES PERSON WITHIN THE MEANING OF THE CODE.
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 20__-_
EXCESS CASH FLOW CERTIFICATE
evidencing a beneficial ownership interest in the Trust, as defined below, the
property of which includes a pool of retail installment sale contracts secured
by new and used automobiles, vans, sport utility vehicles and light duty trucks
and sold to the Trust by Long Beach Acceptance Receivables Corp.
(This Certificate does not represent an interest in or obligation of Long Beach
Acceptance Receivables Corp., Long Beach Acceptance Corp., the Trustee or any of
their respective affiliates, except to the extent described below.)
NUMBER R-___________
Percentage Interest: 100%
THIS CERTIFIES THAT ______________________________ is the registered
owner of a 100% nonassessable, fully-paid, interest in the Excess Cash Flow
Certificate, which Excess Cash Flow Certificate represents a beneficial
ownership interest in the Long Beach Acceptance Auto Receivables Trust 20__-_
(the "Trust") formed by Long Beach Acceptance Receivables Corp., a Delaware
corporation (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of ___________, 20__ (the "Agreement") among the
Depositor, Long Beach Acceptance Corp., as originator and as servicer (the
"Servicer") and [Name of trustee] of _________________, as trustee (the
"Trustee"), Custodian, Collateral Agent and Back-up Servicer, a summary of
certain of the pertinent provisions of which is set forth below.
B-3
To the extent not otherwise defined herein, the capitalized terms used herein
have the meanings assigned to them in the Agreement. This Certificate is one of
the duly authorized Certificates designated as "Excess Cash Flow Certificates"
(herein called the "Excess Cash Flow Certificates"). Also issued under the
Agreement are Certificates designated as "___% Asset Backed Certificates, Class
A" (the "Class A Certificates"). The Class A Certificates and the Excess Cash
Flow Certificates are hereinafter collectively called the "Certificates." This
Excess Cash Flow Certificate is issued under and is subject to the terms,
provisions, and conditions of the Agreement, to which Agreement the Holder of
this Excess Cash Flow Certificate by virtue of the acceptance hereof assents and
by which such Holder is bound. The property of the Trust includes (i) a pool of
retail installment sale contracts for new and used automobiles, vans, sport
utility vehicles and light duty trucks (the "Receivables"), and with respect to
Precomputed Receivables, all monies received thereon after the close of business
on __________, ____ (the "[Initial] Cutoff Date") in the case of the [Initial]
Receivables, [or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables] (including in each case Scheduled Payments due or to
become due thereon on and after the [Initial] Cutoff Date in the case of the
[Initial] Receivables, [or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables,] and Scheduled Payments due prior to the [Initial]
Cutoff Date in the case of the [Initial] Receivables, [or the related Subsequent
Cutoff Date in the case of the Subsequent Receivables,]but received on or after
the [Initial] Cutoff Date in the case of the [Initial] Receivables, [or the
related Subsequent Cutoff Date in the case of the Subsequent Receivables]),
principal prepayments relating to such Scheduled Payments due on or after the
[Initial] Cutoff Date in the case of the [Initial] Receivables, [or the related
Subsequent Cutoff Date in the case of the Subsequent Receivables,] but received
by the Depositor or LBAC before the [Initial] Cutoff Date in the case of the
[Initial] Receivables, [or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables,] and any Payaheads received with respect to payments due
on the Receivables on or after the [Initial] Cutoff Date in the case of the
[Initial] Receivables, [or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables] (which Payaheads shall be held in the Payahead Account
until the Collection Period in which such payments are actually due with respect
to the related Receivable, at which time such Payaheads shall be applied as a
component of the Total Distribution Amount), and with respect to Simple Interest
Receivables, all monies received thereunder on and after the [Initial] Cutoff
Date in the case of the [Initial] Receivables, [or the related Subsequent Cutoff
Date in the case of the Subsequent Receivables] (including in each case
Scheduled Payments due before the [Initial] Cutoff Date in the case of the
[Initial] Receivables, [or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables,] but received by the Depositor or LBAC on or after the
[Initial] Cutoff Date in the case of the [Initial] Receivables, [or the related
Subsequent Cutoff Date in the case of the Subsequent Receivables),] security
interests in the vehicles financed thereby, proceeds from claims on certain
insurance policies and certain other rights under the Agreement, certain bank
accounts and the proceeds thereof, all right, title and interest of the
Depositor in and to the Purchase Agreement, all right, title and interest of the
Depositor in and to certain refunds, the Receivable Files related to each
Receivable and the proceeds of any or all of the foregoing; [and (ii) a
Financial Guaranty Insurance
B-4
Policy issued for the benefit of the Class A Certificateholders by
________________ (the "Policy").]
Under the Agreement, the rights of the Excess Cash Flow
Certificateholders to receive distributions and principal in respect of the
Excess Cash Flow Certificates on a Distribution Date are subordinated to the
payment of the amounts due to the Servicer, the Trustee, the Back-up Servicer,
[the Collateral Agent], the Custodian, the Certificate Insurer, the Class A
Certificateholders and the Spread Account distributable pursuant to Sections
4.6(c)(i) through (vi) of the Agreement, except as otherwise set forth in the
Agreement.
Under the Agreement, there will be distributed on the __th day of each
month or, if such __th day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on __________, ____, to the person in whose
name this Excess Cash Flow Certificate is registered at the close of business on
the last day of the calendar month immediately preceding the month in which such
Distribution Date occurs (the "Record Date"), such Excess Cash Flow
Certificateholder's percentage interest (set forth above) in the amounts
distributed to Excess Cash Flow Certificateholders pursuant to the Agreement.
Any distributions on this Excess Cash Flow Certificate will be made by
the Trustee by (i) wire transfer, in immediately available funds to the account
of such Excess Cash Flow Certificateholder at a bank or other entity having
appropriate facilities therefor, if such Excess Cash Flow Certificateholder
shall have provided to the Trustee appropriate instructions prior to such
Distribution Date, or (ii) by check mailed to the Excess Cash Flow
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Excess Cash Flow Certificate or the making of any notation
hereon. Except as otherwise provided in the Agreement and notwithstanding the
above, the final distribution on this Excess Cash Flow Certificate will be made
after due notice by the Trustee of the pendency of such distribution and only
upon presentation and surrender of this Excess Cash Flow Certificate at the
office or agency maintained for that purpose by the Trustee specified in such
notice.
[Each Certificateholder by purchase of the Certificates held by it
acknowledges that the Trustee, as partial consideration of the issuance of the
Policy, has agreed that the Certificate Insurer shall have certain rights
hereunder for so long as no Insurer Default shall have occurred and be
continuing. So long as an Insurer Default has occurred and is continuing, any
provision giving the Certificate Insurer the right to direct, appoint or consent
to, approve of, or take any action under the Agreement shall be inoperative
during the period of such Insurer Default and such right shall instead vest in
the Trustee acting at the direction of the Class A Certificateholders. The
Certificate Insurer may disclaim any of its rights and powers under the
Agreement (but not its duties and obligations under the Policy) upon delivery of
a written notice to the Trustee. The Certificate Insurer may give or withhold
any consent hereunder in its sole and absolute discretion.]
B-5
By acceptance of this Certificate, the Holder hereof acknowledges and
agrees that (i) it shall be bound by the terms and provisions of the Agreement,
a copy of which may be obtained from the Trustee upon request; (ii) no amounts
shall be received by such Holder, nor shall such Holder have any property rights
in or any right to receive any amounts unless and until such amounts are (a)
available for distribution to such Holder pursuant to Section 4.6(c) of the
Agreement [or (b) are released pursuant to priority SEVENTH of Section 3.03(b)
of the Spread Account Agreement for distribution to such Holder pursuant to
Section 4.6(c) of the Agreement]; (iii) such Holder has no right to or interest
in any moneys at any time held pursuant to [the Spread Account Agreement or] the
Agreement prior to the release of such moneys as aforesaid, such moneys being
held in trust for the benefit of the Class A Certificateholders [and the
Certificate Insurer, as their interests may appear] prior to such release; [(iv)
in the event that it is ever determined that any property held in the Spread
Account constitutes property of the Holder, then pursuant to Section 2.03 of the
Spread Account Agreement the Depositor as agent for such purpose for the Excess
Cash Flow Certificateholders has granted to [the Collateral Agent] for the
benefit of [Name of certificate insurer] and the Trustee on behalf of the Class
A Certificateholders a first priority perfected security interest in such
amounts, to be applied as set forth in Section 3.03(b) of the Spread Account
Agreement; and (v) the Holder hereof hereby appoints the Depositor as its agent
to pledge a first priority perfected security interest in the Spread Account and
any amounts held therein from time to time to [the Collateral Agent] for the
benefit of the Trustee and the Certificate Insurer pursuant to the Spread
Account Agreement and agrees to execute and deliver such instruments of
conveyance, assignment, grant, confirmation, etc., as well as any financing
statements, in each case as the Certificate Insurer shall consider reasonably
necessary in order to perfect [the Collateral Agent]'s Security Interest in the
Collateral (as such terms are defined in the Spread Account Agreement).]
Reference is hereby made to the further provisions of this Excess Cash
Flow Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Excess Cash Flow Certificate shall not entitle the Holder hereof to any benefit
under the Agreement or be valid for any purpose. No transfer of this Certificate
may be made if the transfer would cause there to be more than 100 holders of the
Excess Cash Flow Certificate and any purchasers of this Certificate that are
partnerships or other tax-transparent vehicles must certify either (i) the
Excess Cash Flow Certificate makes up less than 50% of their assets by value or
(ii) the number of equity holders in such vehicles.
B-6
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Excess Cash Flow Certificate to be duly
executed.
LONG BEACH ACCEPTANCE AUTO
RECEIVABLES TRUST 20__-_
By: [Name of trustee] of __________________,
not in its individual capacity but solely in
its capacity as Trustee
By:
-----------------------------------------
Authorized Signatory
Dated: ________, 20__
This is one of the Excess Cash Flow Certificates referred to in the
within-mentioned Agreement.
[Name of trustee] of ______________________,
not in its individual capacity but solely in
its capacity as Trustee
By:
-----------------------------------------
Authorized Signatory
B-7
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest in,
the Depositor, the Servicer, the Trustee or any affiliate of any of them. This
Excess Cash Flow Certificate is limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more specifically
set forth in the Agreement. A copy of the Agreement may be examined during
normal business hours at the principal office of the Depositor, and at such
other places, if any, designated by the Depositor, by any Certificateholder upon
request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Servicer and the Trustee [with the consent of the
Certificate Insurer and] with the consent of the Holders of Certificates
evidencing not less than 51% of the Class A Certificate Balance; provided that
the consent of each Excess Cash Flow Certificateholder is required to increase
or reduce in any manner the amount of, or accelerate or delay the timing of, or
change the allocation or priority of, collection of payments on Receivables if
such change would affect the Excess Cash Flow Certificateholder. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Trustee in its capacity as
Certificate Registrar, or by any successor Certificate Registrar, in the
________________, _______________, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Excess Cash Flow Certificates are issuable only as registered
Certificates without coupons and shall be registered in the name of a single
Holder at all times. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or governmental
charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Authenticating Agent may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trustee, the
Certificate Registrar, nor any such agent shall be affected by any notice to the
contrary.
B-8
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement, [the payment
of all Reimbursement Obligations,] and the expiration of any preference period
with respect thereto and the disposition of all property held as part of the
Trust. The Originator or the Servicer of the Receivables may at its option
purchase the corpus of the Trust at a price specified in the Agreement, and such
purchase of the Receivables and other property of the Trust will effect early
retirement of the Certificates; however, such right of purchase is exercisable
only as of the last day of any Collection Period as of which the Pool Balance is
less than or equal to 10% of the sum of the original aggregate Principal Balance
of the [Initial] Receivables [and the aggregate Principal Balance of all
Subsequent Receivables conveyed to the Trust as of the related Subsequent Cutoff
Dates.]
B-9
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
--------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
--------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________________________ Attorney to transfer said Certificate
on the books of the Certificate Registrar, with full power of substitution in
the premises.
Dated:
*
------------------------------------
*
------------------------------------
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever.
▇-▇▇
▇▇▇▇▇▇▇ ▇
[▇▇▇▇▇▇▇▇]
▇-▇
▇▇▇▇▇▇▇ ▇-▇
Trustee's Certificate
pursuant to Section 2.7
of the Pooling and Servicing
Agreement
[Name of trustee] _____________________, as trustee (the "Trustee") of
Long Beach Acceptance Auto Receivables Trust 20__-_ created pursuant to the
Pooling and Servicing Agreement (the "Agreement"), dated as of __________, 20__
among Long Beach Acceptance Receivables Corp. (the "Depositor"), Long Beach
Acceptance Corp. ("LBAC"), as originator and as servicer and the Trustee, does
hereby sell, transfer, assign, and otherwise convey to LBAC, without recourse,
representation, or warranty, all of the Trustee's right, title, and interest in
and to all of the Receivables (as defined in the Agreement) identified in the
attached Servicer's Certificate as "Purchased Receivables," which are to be
repurchased by LBAC pursuant to Section 2.7 of the Agreement, and all security
and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of
________________, 20__.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
Trustee's Certificate
pursuant to Section 3.7 or 10.2
of the Pooling and Servicing
Agreement
[Name of trustee] _____________________, as trustee (the "Trustee") of
Long Beach Acceptance Auto Receivables Trust 20__-_ created pursuant to the
Pooling and Servicing Agreement (the "Agreement"), dated as of __________, 20__
among Long Beach Acceptance Receivables Corp., Long Beach Acceptance Corp., as
originator and as Servicer (the "Servicer") and the Trustee, does hereby sell,
transfer, assign, and otherwise convey to the Servicer, without recourse,
representation, or warranty, all of the Trustee's right, title, and interest in
and to all of the Receivables (as defined in the Agreement) identified in the
attached Servicer's Certificate as "Purchased Receivables," which are to be
purchased by the Servicer pursuant to Section 3.7 or 10.2 of the Agreement, and
all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of
________________, 20__.
----------------------------
D-1-2
EXHIBIT E-1
MONTHLY CERTIFICATEHOLDER STATEMENT
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 20__-_
___% CLASS A ASSET-BACKED CERTIFICATES
E-1-1
EXHIBIT E-2
Form of Loan Master File Layout
E-2-1
EXHIBIT F-1
[FORM OF "QUALIFIED INSTITUTIONAL BUYER"
TRANSFEREE'S CERTIFICATE]
[date]
Long Beach Acceptance Receivables Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
[Name of trustee]
---------------------
---------------------
-----------, -----------
Attention:
-------------------
Re: Long Beach Acceptance Auto Receivables Trust 20__-_
Asset Backed Certificates
---------------------------------------------------
Dear Sirs:
In connection with the proposed purchase by the buyer listed below (the
"Buyer") of the Excess Cash Flow Certificates (the "Certificates") issued
pursuant to the Pooling and Servicing Agreement dated as of __________, 20__
(the "Pooling and Servicing Agreement") among Long Beach Acceptance Receivables
Corp., as depositor (the "Depositor"), Long Beach Acceptance Corp., as
Originator and Servicer, and [Name of trustee] _____________________, as trustee
(the "Trustee"), Custodian, Collateral Agent and Back-up Servicer relating to
Long Beach Acceptance Auto Receivables Trust 20__-_ Asset Backed Certificates
(the "Certificates"), the Buyer advises you as follows: (i) the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended (the "1933 Act") and is acquiring beneficial
ownership of the Certificates for its own account or for the account of not more
than __ persons, each of which is a "qualified institutional buyer"; and (ii)
the Buyer satisfies the requirements of paragraph (a)(2)(ii) of Rule 3a-7 under
the Investment Company Act of 1940, as amended (the "1940 Act"). In addition to
the foregoing, you may rely on the information provided in Annex 1 or 2, as
applicable, attached hereto and incorporated herein.
The Buyer understands that the Certificates have not been registered
under the 1933 Act or the securities laws of any state. The Buyer acknowledges
that it has independently conducted such investigation and evaluation of the
merits and the risks involved in an investment in the Certificates and has
received such information (whether from the Depositor, the Servicer, the
transferor from which it proposes to purchase Certificates, or from any other
source) as the Buyer has deemed necessary and advisable in order to make its
investment decision. The Buyer has had any questions arising from such
investigation and evaluation answered by the Depositor to the satisfaction of
the Buyer. The Buyer is a sophisticated institutional investor, having such
knowledge and
F-1-1
experience in financial and business matters generally, and with
respect to asset-backed securities and investments in "non-prime" automobile
loans specifically, that it is capable of independently evaluating the merits
and risks of investment in the Certificates. In the normal course of its
business, the Buyer invests in or purchases securities similar to the
Certificates. The Buyer is aware that it may be required to bear the economic
risk of an investment in the Certificates for an indefinite period of time, and
it is able to bear such risk for an indefinite period.
Very truly yours,
[BUYER]
By:
-------------------------------------
Name:
Title:
Taxpayer ID:
-------------------------
Name in which
Certificate is
to be Registered:
--------------------
Address for Notices:
-----------------
-----------------
-----------------
Payment Instructions:
F-1-2
ANNEX 1 TO EXHIBIT F-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to the parties listed in
the "Qualified Institutional Buyer" Transferee's Certificate to which this
certification relates with respect to the Rule 144A Securities described
therein:
(a) As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
(b) In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested
on a discretionary basis $_____________1 in securities (except for the excluded
securities referred to below) as of the end of the Buyer's most recent fiscal
year (such amount being calculated in accordance with Rule 144A) and (ii) the
Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
State or territorial banking commission or similar official or
is a foreign bank or equivalent institution, and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
--------
(1) Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.
F-1-3
__ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State,
territory or the District of Columbia.
__ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
__ ERISA Plan. The Buyer is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
__ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisers Act of 1940.
__ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
__ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940.
__ Trust Fund. The Buyer is a trust fund whose trustee is a
bank or trust company and whose participants are exclusively
State or Local Plans or ERISA Plans as defined above, and no
participant of the Buyer is an individual retirement account
or an H.R. 10 (▇▇▇▇▇) plan.
(c) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
(d) For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated
F-1-4
subsidiary of another enterprise and the Buyer is not itself a reporting company
under the Securities Exchange Act of 1934.
(e) The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
(f) Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of Rule 144A Securities will constitute a reaffirmation of
this certification as of the date of such purchase. In addition, if the Buyer is
a Bank or Savings and Loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
---------------------------------
Print Name of Buyer
By:
------------------------------
Name:
Title:
Date:
----------------------------
F-1-5
ANNEX 2 TO EXHIBIT F-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers that are Registered Investment Companies]
The undersigned hereby certifies as follows to the parties listed in
the "Qualified Institutional Buyer" Transferee's Certificate to which this
certification relates with respect to the Rule 144A Securities described
therein:
(a) As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
(b) In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, and (ii)
as marked below, the Buyer alone, or the Buyer's Family of Investment Companies,
owned at least $100,000,000 in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year. For
purposes of determining the amount of securities owned by the Buyer or the
Buyer's Family of Investment Companies, the cost of such securities was used,
except (i) where the Buyer or the Buyer's Family of Investment Companies reports
its securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market.
___The Buyer owned $________________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
___The Buyer is part of a Family of Investment Companies which
owned in the aggregate $__________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
(c) The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
(d) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of deposit, (iii) loan participations,
F-1-6
(iv) repurchase agreements, (v) securities owned but subject to a repurchase
agreement and (vi) currency, interest rate and commodity swaps.
(e) The Buyer is familiar with Rule 144A and understands that the
parties listed in the Qualified Institutional Buyer Transferee's Certificate to
which this certification relates are relying and will continue to rely on the
statements made herein because one or more sales to the Buyer will be in
reliance on Rule 144A. In addition, the Buyer will only purchase for the Buyer's
own account.
(f) Until the date of purchase of the Rule 144A Securities, the
undersigned will notify each of the parties to which this certification is made
of any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of Rule 144A Securities will constitute a
reaffirmation of this certification by the undersigned as of the date of such
purchase.
--------------------------------
Print Name of Buyer or Adviser
By:_____________________________
Name:
Title:
IF AN ADVISER:
--------------------------------
Print Name of Buyer
Date:___________________________
F-1-7
EXHIBIT F-2
[FORM OF "ACCREDITED INVESTOR" TRANSFEREE'S CERTIFICATE]
[date]
Long Beach Acceptance Receivables Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
[Name of trustee]
---------------------
---------------------
-----------, -----------
Attention:
-------------------
Re: Long Beach Acceptance Auto Receivables Trust 20__-_
Asset Backed Certificates
---------------------------------------------------
Dear Sirs:
In connection with the proposed purchase by the buyer listed below (the
"Buyer") of the Excess Cash Flow Certificates (the "Certificates") issued
pursuant to the Pooling and Servicing Agreement dated as of __________, 20__
(the "Pooling and Servicing Agreement") among Long Beach Acceptance Receivables
Corp., as depositor (the "Depositor"), Long Beach Acceptance Corp., as
Originator and Servicer and [Name of trustee] _____________________, as trustee
(the "Trustee"), Custodian, Collateral Agent and Back-up Servicer, relating to
Long Beach Acceptance Auto Receivables Trust 20__-_ Asset Backed Certificates
(the "Certificates"), the Buyer confirms that:
(a) The Buyer understands that the Certificates have not been
registered under the Securities Act of 1933, as amended (the "1933
Act"), and may not be sold except as permitted in the following
sentence. The Buyer agrees, on its own behalf and on behalf of any
accounts for which it is acting as hereinafter stated, that such
Certificates may be resold, pledged or transferred only: (i) so long as
such Certificates are eligible for resale pursuant to Rule 144A under
the 1933 Act ("Rule 144A"), to a person who the Buyer reasonably
believes is a "qualified institutional buyer" as defined in Rule 144A
(a "QIB") that purchases for its own account or for the account of a
QIB, to whom notice is given that the resale, pledge or transfer is
being made in reliance on Rule 144A, (ii) pursuant to an exemption from
registration under the 1933 Act provided by Rule 144 (if applicable)
under the 1933 Act or (iii) to an institution that is an "Accredited
Investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the 1933
Act (an "Accredited Investor") that is acquiring the Certificates for
investment purposes and not for distribution, in each case in
accordance with any applicable securities laws of any state of the
United States, and the Buyer will notify any purchaser of the
Certificates from it of the above resale restrictions. The Buyer
further understands that in connection with any transfer of the
Certificates to an Accredited Investor by it that the Depositor or
Trustee may request, and if so requested the Buyer will furnish, such
certificates and other information as they
F-2-1
may reasonably require to confirm any such transfer with the foregoing
restrictions.
(b) The Buyer is an institutional investor which is an
Accredited Investor or, if the Certificates are to be purchased for one
or more institutional accounts ("investor accounts") for which it is
acting as fiduciary or agent (except if it is a bank as defined in
Section 3(a)(2) of the 1933 Act, or a savings and loan association or
other institution as described in Section 3(a)(5)(A) of the 1933 Act,
whether acting in its individual or in a fiduciary capacity), each such
investor account is an institutional investor and an Accredited
Investor on a like basis. In the normal course of its business, the
Buyer invests in or purchases securities similar to the Certificates.
(c) The Buyer satisfies the requirements of paragraph
(a)(2)(i) of Rule 3a-7 of the Investment Company Act of 1940.
(d) The Buyer acknowledges that it has independently conducted
such investigation and evaluation of the merits and the risks involved
in an investment in the Certificates and has received such information
(whether from the Depositor, the Servicer, the transferor from which it
proposes to purchase Certificates, or from any other source) as the
Buyer has deemed necessary and advisable in order to make its
investment decision. The Buyer has had any questions arising from such
investigation and evaluation answered by the Depositor to the
satisfaction of the Buyer. The Buyer is a sophisticated institutional
investor, having such knowledge and experience in financial and
business matters generally, and with respect to asset-backed securities
and investments in "non-prime" automobile loans specifically, that it
is capable of independently evaluating the merits and risks of
investment in the Certificates. In the normal course of its business,
the Buyer invests in or purchases securities similar to the
Certificates. The Buyer is aware that it (or any investor account) may
be required to bear the economic risk of an investment in the
Certificates for an indefinite period of time, and it (or such account)
is able to bear such risk for an indefinite period.
Very truly yours,
[BUYER]
By: __________________________
Name:
Title:
F-2-2
EXHIBIT F-3
[FORM OF TRANSFEROR'S CERTIFICATE]
Date:
Long Beach Acceptance Receivables Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
[Name of trustee]
-----------------------
---------------------
-----------, -----------
Attention:
----------------
Re: Long Beach Acceptance Auto Receivables Trust 20__-_
Asset Backed Certificates
---------------------------------------------------
Ladies and Gentlemen:
In connection with the disposition by the transferor listed below (the
"Transferor") of the Excess Cash Flow Certificates (the "Certificates") issued
pursuant to the Pooling and Servicing Agreement dated as of __________, 20__
(the "Pooling and Servicing Agreement") among Long Beach Acceptance Receivables
Corp., as depositor (the "Depositor"), Long Beach Acceptance Corp., as
Originator and Servicer and [Name of trustee] _____________________, as trustee
(the "Trustee"), relating to Long Beach Acceptance Auto Receivables Trust 20__-_
Asset Backed Certificates (the "Certificates"), the Transferor certifies that:
(a) the Transferor understands that the Certificates have not
been registered under the Securities Act of 1933, as amended
(the "1933 Act"), and are being disposed of by the Transferor
in a transaction that is exempt from the registration
requirements of the 1933 Act; and
(b) the Transferor has not offered or sold any Certificates
to, or solicited offers to buy any Certificates from, any
person, or otherwise approached or negotiated with any person
with respect thereto, in a manner that would be deemed, or
taken any other action which would result in, a violation of
Section 5 of the 1933 Act.
Very truly yours,
----------------------------
Name of Transferor
By: ______________________
Name: ____________________
Title: _____________________
F-3-1
EXHIBIT G
[Form of ERISA Representation Letter]
[date]
Long Beach Acceptance Receivables Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
[Name of trustee]
---------------------
---------------------
-----------, -----------
Attention:
-------------------
Re: Long Beach Acceptance Auto Receivables Trust 20__-_
Asset Backed Certificates
----------------------------------------------------
Ladies and Gentlemen:
[NAME OF OFFICER] ______________________ hereby certifies that:
1. That he [she] is [Title of Officer] __________________ of [Name of
Transferee] _________________________________________ (the "Transferee"), a
[savings institution] [corporation] duly organized and existing under the laws
of [the State of ____________] [the United States], on behalf of which he [she]
makes this affidavit.
2. The Transferee (i) is not, and on ________________ [insert date of
transfer of Certificate to Transferee] will not be, and on such date will not be
investing the funds of, (a) an "employee benefit plan" (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to the provisions of Title I of ERISA, (b) a "plan"
(as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (the "Code")) that is subject to Section 4975 of the Code or (c) an
entity whose underlying assets are deemed to be assets of a plan described in
(a) or (b) above by reason of such plan's investment in the entity (each, a
"Benefit Plan") or (ii) is an insurance company investing assets of its general
account and the exemptive relief provided by Sections I and III of Department of
Labor Prohibited Transaction Class Exemption 95-60, 60 Fed. Reg. 35925 (July 12,
1995) (the "Exemption") is available with respect to the transferee's
acquisition and holding of such Certificate.
3. The Transferee hereby acknowledges that under the terms of the
Pooling and Servicing Agreement (the "Agreement") among Long Beach Acceptance
Receivables Corp., as depositor (the "Depositor"), Long Beach Acceptance Corp.,
as Originator and servicer (the "Servicer") and [Name of trustee]
_____________________, as Trustee, Back-up Servicer and Custodian and Collateral
Agent (the "Trustee") dated as of __________, 20__ no transfer of any Excess
Cash Flow Certificate (as defined in the Agreement) shall be permitted to be
made to any person unless the Trustee has received a
G-1
certificate from such transferee to the effect that such transferee (A) is not a
Benefit Plan and is not using the assets of any such Benefit Plan to acquire any
such Excess Cash Flow Certificate or (B) is an insurance company investing
assets of its general account and Sections I and III of the Exemption apply to
the transferee's acquisition and holding of such Excess Cash Flow Certificate;
provided, however, that the Trustee will not require such certificate in the
event that, as a result of change of law or otherwise, counsel satisfactory to
the Trustee, the Servicer and the Depositor has rendered an opinion to the
effect that the purchase and holding of any such Excess Cash Flow Certificate by
a Benefit Plan or a person using the assets of a Benefit Plan will not
constitute or result in a prohibited transaction under ERISA or Section 4975 of
the Code.
[4. The Certificates shall be registered in the name of _______________
______________________________________ as nominee for the Transferee.]
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] _______________ __________________, this ____ day of
_________, 20__.
--------------------------------
[Name of Transferee]
By:___________________________
Name:
Title:
G-2
The undersigned hereby acknowledges
that it is holding and will hold
the Certificates at the exclusive direction
of and as nominee of the Investor named above.
-----------------------------------
[name of nominee]
By:________________________________
Name:
Title:
G-3
EXHIBIT H
Form of Depository Agreement
H-1
EXHIBIT I
PAYMENT APPLICATION PROCEDURES
I-1
EXHIBIT J
PAYMENT DEFERMENT POLICY
DUE DATE CHANGE POLICY
J-1
EXHIBIT K
Documentation Checklist
CUSTOMER:
----------------------------------------------------------------------
ACCOUNT NUMBER:
----------------------------------------------------------------
This funding package contains the following initialed items:
1. Installment contract with proper
signatures and Dealer endorsements 1.______
2. Copy of signed credit application 2.______
3. References as described in the Program Guidelines 3.______
4. Proof of income as described in the
Program Guidelines 4.______
5. Copy of driver's license for all
licensed signors 5.______
6. Title information (application and copy of existing
title, receipt of registration, or title copy
already received) with lien notation thereon, or
Dealer Title Guaranty 6.______
7. Invoice or copy of computer screen
printout showing NADA value, NADA
book page, ▇▇▇▇▇▇ printout or ▇▇▇▇▇▇
Blue Book page 7.______
8. In the case of a used Financed
Vehicle, odometer statement (if not
on title info) 8.______
9. Signed agreement to provide
insurance and verification paper
or other evidence of verification of
insurance coverage 9.______
10. Notice to cosignor, if required 10.______
11. Service contract or warranty papers 11.______
K-1
12. Life, accident, health and GAP
insurance policy copies, as
applicable 12.______
13. Signed purchase order from dealer to
customer 13.______
K-2
EXHIBIT L
[Form of Request for Transfer of Possession]
___________, 20__
[Name of trustee], as Custodian
------------------------
----------, ------------
Attention: __________
Telephone: ___________
Telecopy: ____________
Ladies and Gentlemen:
Reference is made to the Pooling and Servicing Agreement dated as of
__________, 20__ (the "Pooling and Servicing Agreement"), among LONG BEACH
ACCEPTANCE RECEIVABLES CORP., a Delaware corporation, as depositor, LONG BEACH
ACCEPTANCE CORP., a Delaware corporation, as originator and servicer, and [NAME
OF TRUSTEE] _____________________, as trustee, back-up servicer and custodian
(the "Custodian"). Capitalized terms used but not defined in this letter have
the meanings set forth in the Pooling and Servicing Agreement.
The Servicer hereby requests that the Custodian transfer possession of
the Legal Files, or such portion of the Legal Files as is identified herein,
relating to the Receivables listed in Annex A hereto to [the Servicer]
[________________ as subservicer (the "Subservicer") for the Servicer] [for
purposes of collection or presentation, renewal or registration of transfer
(unless the related Receivables' Owner objects to this request to the Custodian
(i) by 5:00 PM on the same Business Day this request is made if it is made by
1:00 PM, or (ii) by 11:00 AM on the next Business Day if this request is made
after 1:00 PM] [for purposes of correcting deficiencies in the Legal Files], the
possession of which is transferred pursuant to this request will be transferred
subject to a Custodial Letter duly executed by [the Servicer] [the Subservicer]
and a Transfer Notice duly executed by the Custodian. [The portion of the Legal
Files requested for transfer of possession hereunder is ___________.]
Very truly yours,
LONG BEACH ACCEPTANCE CORP.
By: ___________________________
Name: _________________________
Title: __________________________
L-1
EXHIBIT M
[Form of Custodial Letter]
___________, 20__
[Name of trustee], as Custodian
--------------------
---------, ---------
Attention: __________
Telephone: ___________
Telecopy: ____________
Ladies and Gentlemen:
Reference is made to the Pooling and Servicing Agreement dated as of
__________, 20__ (the "Pooling and Servicing Agreement"), among LONG BEACH
ACCEPTANCE RECEIVABLES CORP., a Delaware corporation, as depositor, LONG BEACH
ACCEPTANCE CORP., a Delaware corporation, as originator and servicer, and [NAME
OF TRUSTEE] _____________________, as trustee (the "Trustee"), back-up servicer
and custodian (the "Custodian"). Capitalized terms used but not defined in this
letter have the meanings set forth in the Pooling and Servicing Agreement.
[The Servicer] [_____________________, as Subservicer (the
"Subservicer") for the Servicer] acknowledges that the Trust is owner of all
Receivables (and their proceeds). The Agreement provides that the Servicer, or
the Subservicer, may request from time to time that possession of all or a
portion of the Legal Files delivered to and held by the Custodian pursuant to
the Pooling and Servicing Agreement be transferred to [the Servicer] [the
Subservicer] [for purposes of collection, or presentation, renewal or
registration of transfer] [for purposes of correcting deficiencies in the Legal
Files]. Subject to the terms of the Pooling and Servicing Agreement, the
Custodian is authorized to so transfer possession of such Legal Files, or
portion thereof, such transfer of possession to be accomplished pursuant to a
Transfer Notice substantially in the form of Annex A to this Custodial Letter.
[The Servicer] [The Subservicer] hereby agrees as follows:
(a) [The Servicer] [The Subservicer] acknowledges that the possession
of any such Legal Files will be so transferred subject to this Custodial Letter
and that they are and will continue to be the sole property of the Trust.
(b) [The Servicer] [The Subservicer] agrees that such Legal Files will
be returned to the Custodian immediately upon notice by the Custodian or the
Trustee that sixty (60) days have elapsed from the date of such transfer;
provided, that instead of sixty (60) days, the time limit applicable to any
certificate of title is one hundred twenty (120) days.
(c) The Legal Files will not be used for any purpose other than that
for which [the Servicer] [the Subservicer] hereby requests such transfer of
possession.
M-1
(d) At all times while the Legal Files are in [the Servicer's] [the
Subservicer's] possession, [the Servicer] [the Subservicer] will hold the Legal
Files IN TRUST for the Trust, the Trustee [and the Certificate Insurer].
(e) [The Servicer] [The Subservicer] will include this Custodial Letter
and each Transfer Notice in its business records.
(f) [The Servicer] [The Subservicer] will not deliver the Legal Files
to any person other than the Custodian except with the prior written consent of
the Trustee.
This Custodial Letter shall be governed by and construed in accordance
with the laws of the State of Texas.
LONG BEACH ACCEPTANCE CORP.
By: __________________________
Name: ________________________
Title: _________________________
[SUBSERVICER'S NAME]
By: __________________________
Name: ________________________
Title: _________________________
M-2
EXHIBIT M - ANNEX A to Custodial Letter
[Form of Transfer Notice]
[Long Beach Acceptance Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇]
[Subservicer (the "Subservicer")
Address
Address
Telecopy:_______________________]
Ladies and Gentlemen:
Reference is made to the Pooling and Servicing Agreement dated as of
__________, 20__ (the "Pooling and Servicing Agreement"), among LONG BEACH
ACCEPTANCE RECEIVABLES CORP., a Delaware corporation, LONG BEACH ACCEPTANCE
CORP., a Delaware corporation, and [NAME OF TRUSTEE] _____________________, as
trustee, back-up servicer and custodian. Capitalized terms used but not defined
in this letter have the meanings set forth in the Pooling and Servicing
Agreement.
The possession of the Legal Files relating to the Receivables listed in
Annex A is transferred to you IN TRUST for the Trust, the Trustee [and the
Certificate Insurer], subject to the terms and provisions of the Pooling and
Servicing Agreement, and subject to the Custodial Letter you executed pursuant
to Section 2.8(c) of the Pooling and Servicing Agreement.
Very truly yours,
[NAME OF TRUSTEE]
By: ______________________
Name: ____________________
Title: ___________________
M-3
EXHIBIT M - ANNEX A to Transfer Notice
Receivable Amount of Name of
Number Receivable Receivable Borrower
------ ---------- -------------------
M-4
EXHIBIT N
[FORM OF TRANSFER AGREEMENT]
TRANSFER NO. __________ OF SUBSEQUENT RECEIVABLES,
dated as of ___________, 20__, among LONG BEACH
ACCEPTANCE AUTO RECEIVABLES TRUST 20__-_ (the
"Trust"), LONG BEACH ACCEPTANCE CORP., a Delaware
corporation ("LBAC" or the "Originator"), LONG
BEACH ACCEPTANCE RECEIVABLES CORP., a Delaware
corporation (the "Depositor"), and [NAME OF
TRUSTEE] _____________________, as trustee (in such
capacity, the "Trustee"), back-up servicer,
custodian and collateral agent pursuant to the
Pooling and Servicing Agreement referred to below.
W I T N E S S E T H:
WHEREAS, LBAC, the Depositor and the Trustee are parties to the Pooling
and Servicing Agreement, dated as of __________, 20__ (the "Pooling and
Servicing Agreement");
WHEREAS, LBAC and the Depositor are parties to the Purchase Agreement,
dated as of __________, 20__ (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement LBAC desires to convey
certain Subsequent Receivables to the Depositor and pursuant to the Pooling and
Servicing Agreement and this Agreement the Depositor desires to convey such
Subsequent Receivables to the Trust; and
WHEREAS, the Trustee is willing to accept such conveyance subject to
the terms and conditions hereof.
NOW, THEREFORE, the Trustee, the Depositor and LBAC hereby agree as
follows:
Section 1. Defined Terms. Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in the Pooling and
Servicing Agreement.
"Agreement" means this Transfer Agreement and all amendments hereof and
supplements hereto.
"Subsequent Cutoff Date" means, with respect to the Subsequent
Receivables conveyed hereby, the close of business of the last day of the
calendar month immediately preceding the Subsequent Transfer Date, which date is
_________, 20__.
"Subsequent Receivables" means the Receivables identified on the
supplement to the Schedule of Receivables attached as Schedule A hereto.
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"Subsequent Receivables Purchase Price" means $__________.
"Subsequent Spread Account Deposit" means $__________.
"Subsequent Transfer Date" means, with respect to the Subsequent
Receivables conveyed hereby, ___________, 20__.
"Subsequent Transferred Property" shall have the meaning specified in
Section 2.3(a) of the Purchase Agreement.
Section 2. Schedule of Subsequent Receivables. Annexed hereto as
Schedule A is a supplement to the Schedule of Receivables listing the Subsequent
Receivables to be conveyed by the Depositor to the Trust pursuant to this
Agreement and the Pooling and Servicing Agreement on the Subsequent Transfer
Date.
Section 3. Conveyance of Subsequent Receivables. Subject to the
conditions set forth in Section 5 hereof, in consideration of the payment of the
Subsequent Receivables Purchase Price to or upon the written order of the
Depositor, the Depositor does hereby sell, transfer, assign, set over and
otherwise convey to the Trustee, in trust for the benefit of the
Certificateholders, without recourse, all right, title and interest of the
Depositor in and to:
(1) the Subsequent Receivables listed in Schedule A
hereto and (A) with respect to any such Subsequent Receivables that are
Precomputed Receivables, all monies received thereon on and after the
Subsequent Cutoff Date (including Scheduled Payments due or to become
due thereon on and after the Subsequent Cutoff Date and Scheduled
Payments due prior to the Subsequent Cutoff Date but received on or
after the Subsequent Cutoff Date), principal prepayments relating to
Scheduled Payments due on or after the Subsequent Cutoff Date but
received by the Depositor or LBAC before the Subsequent Cutoff Date,
and any Payaheads received with respect to payments due on the
Subsequent Receivables on or after the related Subsequent Cutoff Date
(which Payaheads shall be held in the Payahead Account until the
Collection Period in which such payments are actually due with respect
to the related Receivable, at which time such Payaheads shall be
applied as a component of the Total Distribution Amount), (B) with
respect to any such Subsequent Receivables that are Simple Interest
Receivables, all monies received thereunder on and after the Subsequent
Cutoff Date (including Scheduled Payments due before the Subsequent
Cutoff Date but received by the Depositor or LBAC on or after the
Subsequent Cutoff Date) and (C) all Liquidation Proceeds and Recoveries
received with respect to such Subsequent Receivables;
(2) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Subsequent Receivables and any
other interest of the Depositor in such Financed Vehicles, including,
without limitation, the certificates of title and any other evidence of
ownership with respect to such Financed Vehicles;
(3) any proceeds from claims on any physical damage,
credit life and credit accident and health insurance policies or
certificates or the VSI
N-2
Policy, if any, relating to the related Financed Vehicles or the
related Obligors, including any rebates and premiums;
(4) property (including the right to receive future
Liquidation Proceeds) that secures a Subsequent Receivable and that has
been acquired by or on behalf of the Trust pursuant to the liquidation
of such Subsequent Receivable;
(5) this Agreement, the Purchase Agreement and the
Guaranty, including, without limitation, a direct right to cause LBAC
to purchase Subsequent Receivables from the Trust upon the occurrence
of a breach of any of the representations and warranties contained in
Section 3.2 of the Purchase Agreement, or Section 4 of this Agreement
or the failure of LBAC to timely comply with its obligations pursuant
to Section 5.5 of the Purchase Agreement or this Agreement;
(6) refunds for the costs of extended service
contracts with respect to the related Financed Vehicles, refunds of
unearned premiums with respect to credit life and credit accident and
health insurance policies or certificates covering a related Obligor or
Financed Vehicle or his or her obligations with respect to a related
Financed Vehicle and any recourse to Dealers for any of the foregoing;
(7) the Legal Files and the Receivable Files related
to each such Subsequent Receivable and any and all other documents that
LBAC keeps on file in accordance with its customary procedures relating
to such Subsequent Receivables, the Obligors or the Financed Vehicles;
(8) all amounts and property from time to time held
in or credited to the Lock-Box Account, to the extent such amounts and
property relate to the Subsequent Receivables;
(9) any proceeds from recourse against the Dealers
(other than any Chargeback Obligations), including, without limitation,
any Dealer Title Guaranties with respect to such Subsequent
Receivables, with respect to the sale of such Subsequent Receivables;
and
(10) the proceeds of any and all of the foregoing.
Section 4. Representations and Warranties of the Originator. The
Originator makes the following representations and warranties as to the
Subsequent Receivables and the other Transferred Property relating thereto on
which the Depositor relies in accepting the Subsequent Receivables and the other
Transferred Property relating thereto [and on which the Certificate Insurer will
rely in issuing the Policy]. Such representations and warranties speak as of the
execution and delivery of this Agreement, but shall survive the sale, transfer,
and assignment of the Subsequent Receivables and the other Transferred Property
relating thereto to the Depositor and the subsequent assignment and transfer
pursuant to the Pooling and Servicing Agreement:
N-3
(1) Origination Date. Each Subsequent Receivable has an
Origination Date on or after ______________, 20__.
(2) Principal Balance/Number of Contracts. As of the Subsequent
Cutoff Date, the total aggregate Principal Balance of the Subsequent
Receivables was $_______________. The Subsequent Receivables are
evidenced by _______ retail installment sale contracts.
(3) Maturity of Subsequent Receivables. Each Subsequent
Receivable has an original term to maturity of not less than [__]
months and not more than [__] months; the weighted average original
term to maturity of the Subsequent Receivables is [___] months as of
the Subsequent Cutoff Date; the remaining term to maturity of each
Subsequent Receivable was __ months or less as of the Subsequent
Cutoff Date; the weighted average remaining term to maturity of the
Subsequent Receivables was [___] months as of the Subsequent Cutoff
Date.
(4) Characteristics of Subsequent Receivables. (A) Each
Subsequent Receivable (1) has been originated in the United States of
America by a Dealer for the retail sale of a Financed Vehicle in the
ordinary course of such Dealer's business, such Dealer had all
necessary licenses and permits to originate such Subsequent
Receivables in the State where such Dealer was located, has been fully
and properly executed by the parties thereto and has been purchased by
LBAC from such Dealer under an existing Dealer Agreement with LBAC, in
connection with the sale of Financed Vehicles by the Dealers, and was
validly assigned by such Dealer to LBAC in accordance with its terms,
(2) has created a valid, subsisting, and enforceable first priority
security interest in favor of LBAC in the Financed Vehicle, which
security interest is assignable and has been validly assigned by LBAC
to the Depositor, which in turn has been validly assigned by the
Depositor to the Trustee pursuant to the Pooling and Servicing
Agreement, (3) contains customary and enforceable provisions such that
the rights and remedies of the holder or assignee thereof shall be
adequate for realization against the collateral of the benefits of the
security, (4) provides for level monthly payments that fully amortize
the Amount Financed over the original term (except for the first or
last payment, which may be minimally different from the level payment)
and yield interest at the Annual Percentage Rate, (5) has an Annual
Percentage Rate of not less than ____%, (6) in the case of a
Subsequent Receivable that is a Precomputed Receivable, in the event
that such Subsequent Receivable is prepaid, provides for a prepayment
that fully pays the Principal Balance and includes, unless prohibited
by applicable law, a full month's interest, in the month of
prepayment, at the Annual Percentage Rate, (7) is a Precomputed
Receivable or a Simple Interest Receivable, and (8) was originated by
a Dealer to an Obligor and was sold by the Dealer to LBAC without any
fraud or misrepresentation on the part of such Dealer or on the part
of the Obligor; and (B) approximately [ ]% of the aggregate Principal
Balance of the Subsequent Receivables, constituting [ ]% of the number
of contracts, as of the Subsequent Cutoff Date, represents financing
of used automobiles, vans, sport utility vehicles or light duty
trucks; the remainder of the Subsequent Receivables represent
financing of new automobiles, vans, sport utility vehicles or light
duty trucks; approximately [ ]% of the aggregate Principal Balance of
the Subsequent Receivables as of the Subsequent Cutoff Date were
originated under the LBAC class I program; approximately [ ]% of the
aggregate Principal Balance of the Subsequent Receivables as of the
Subsequent Cutoff Date were originated under the LBAC class IIA
program; approximately [ ]% of the aggregate Principal Balance of the
Subsequent Receivables as of the Subsequent Cutoff
N-4
Date were originated under the LBAC Class IIB program; approximately
[ ]% of the aggregate Principal Balance of the Subsequent Receivables
as of the Subsequent Cutoff Date were originated under the LBAC class
III program; the remainder of the Subsequent Receivables as of the
Subsequent Cutoff Date were originated under the LBAC limited credit
program; no Subsequent Receivable shall have a payment that is more
than 29 days overdue (calculated on the basis of a 360-day year of
twelve 30-day months) as of the Subsequent Cutoff Date; [ ]% of the
Subsequent Receivables are Precomputed Receivables and [ ]% of the
Subsequent Receivables are Simple Interest Receivables; each
Subsequent Receivable shall have a final scheduled payment due no
later than _____________, 20___; each Subsequent Receivable has an
original term to maturity of at least 12 months and not more than __
months and a remaining term to maturity of not less than __ months nor
greater than __ months; and each Subsequent Receivable was originated
on or before the Subsequent Cutoff Date.
(5) Scheduled Payments. Each Subsequent Receivable had an
original Principal Balance of not less than $______ nor more than
$__________, has an outstanding Principal Balance as of the Subsequent
Cutoff Date of not less than $_______ and not more than $__________
and has a first Scheduled Payment due, in the case of Precomputed
Receivables, or a scheduled due date, in the case of Simple Interest
Receivables, on or prior to ____________, 20__.
(6) No Bankruptcies. No Obligor was bankrupt at the time of
origination of the related Subsequent Receivable and no Obligor on any
Subsequent Receivable as of the Subsequent Cutoff Date was noted in
the related Receivable File as having filed for bankruptcy since
origination of the Subsequent Receivable.
(7) Origination of Subsequent Receivables. Based on the location
of the Dealers and the Principal Balances as of the Subsequent Cutoff
Date, approximately [ ]% of the Subsequent Receivables were originated
in California, approximately [ ]% of the Subsequent Receivables were
originated in Illinois and the remaining [ ]% of the Subsequent
Receivables were originated in other States.
(8) Lockbox. Prior to the Subsequent Transfer Date, the Depositor
will notify each Obligor to make payments with respect to its
respective Subsequent Receivable after the Subsequent Cutoff Date
directly to the Lockbox, and will provide each Obligor with a monthly
statement in order to enable such Obligor to make payments directly to
the Lockbox.
(9) Location of Legal Files; One Original. A complete Legal File
with respect to each Subsequent Receivable has been or prior to the
Subsequent Transfer Date will be delivered to the Custodian at the
location listed in Schedule
N-5
B to the Pooling and Servicing Agreement. There is only one original
executed copy of each Subsequent Receivable.
(10) Schedule of Subsequent Receivables; Selection Procedures.
The information with respect to the Subsequent Receivables set forth
in the Schedule A to this Agreement is true and correct in all
material respects as of the close of business on the Subsequent Cutoff
Date and the Subsequent Transfer Date, and no selection procedures
adverse to the Trust, the Certificateholders or to the Certificate
Insurer have been utilized in selecting the Subsequent Receivables.
The computer tape or other listing regarding the Subsequent
Receivables made available to the Depositor and its assigns is true
and correct as of the Subsequent Cutoff Date and the Subsequent
Transfer Date in all respects. By the Subsequent Transfer Date, LBAC
will have caused the portions of LBAC's servicing records relating to
the Subsequent Receivables to be clearly and unambiguously marked to
show that the Subsequent Receivables constitute part of the Trust
Assets and are owned by the Trust in accordance with the terms of the
Pooling and Servicing Agreement.
(11) Compliance with Law. Each Subsequent Receivable, the sale of
the Financed Vehicle and the sale of any physical damage, credit life
and credit accident and health insurance and any extended service
contracts complied at the time the related Subsequent Receivable was
originated or made and at the execution of this Agreement complies in
all material respects with all requirements of applicable Federal,
State and local laws, and regulations thereunder including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's Regulations B
and Z (including amendments to the Federal Reserve's Official Staff
Commentary to Regulation Z effective October 1, 1998 concerning
negative equity loans), the Soldiers' and Sailors' Civil Relief Act of
1940, as amended, the California Automobile Sales Finance Act, the
Texas Credit Code, and state adaptations of the National Consumer Act
and of the Uniform Consumer Credit Code, and other consumer credit
laws and equal credit opportunity and disclosure laws.
(12) Binding Obligation. Each Subsequent Receivable represents
the genuine, legal, valid and binding payment obligation in writing of
the Obligor, enforceable by the holder thereof in accordance with its
terms and all parties to each Subsequent Receivable had full legal
capacity to execute and deliver such Subsequent Receivable and all
other documents related thereto and to grant the security interest
purported to be granted thereby.
(13) No Government, Corporate or Fleet Obligor. None of the
Subsequent Receivables are due from the United States of America or
any State or from any agency, department, or instrumentality of the
United States of America or any State. All of the Subsequent
Receivables are due from Obligors who are natural persons or, if any
Obligor is not a natural person, (a) such entity is an obligor with
respect to five or fewer Financed Vehicles and (b) the related
Subsequent Receivable or Subsequent Receivables have the benefit of
the
N-6
personal guaranty of a natural person or persons. No Subsequent
Receivable has been included in a "fleet" sale (i.e., a sale to any
single Obligor of more than five Financed Vehicles).
(14) Security Interest in Financed Vehicle. Immediately prior to
the sale, assignment, and transfer thereof, each Subsequent Receivable
shall be secured by a validly perfected first priority security
interest in the Financed Vehicle in favor of LBAC as secured party,
and such security interest is prior to all other liens upon and
security interests in such Financed Vehicle which now exist or may
hereafter arise or be created (except, as to priority, for any tax
liens or mechanics' liens which may arise after the Subsequent
Transfer Date), and either (i) all necessary and appropriate actions
have been taken that would result in the valid perfection of a first
priority security interest in the Financed Vehicle in favor of LBAC as
secured party, and the Lien Certificate for each Financed Vehicle
shows, or if a new or replacement Lien Certificate is being applied
for a new or replacement Lien Certificate will be received within 150
days of the Subsequent Transfer Date and will show LBAC named as the
original secured party under any such Subsequent Receivable and the
holder of a first priority security interest in such Financed Vehicle,
or (ii) a Dealer Title Guaranty has been obtained with respect to such
Financed Vehicle. With respect to each Subsequent Receivable for which
the Lien Certificate has not yet been submitted to, or returned from,
the Registrar of Titles, LBAC has received either (i) written evidence
from the related Dealer that such Lien Certificate showing LBAC as the
first lienholder has been applied for or (ii) a Dealer Title Guaranty
with respect to such Financed Vehicle. Immediately after the sale,
transfer and assignment thereof to the Trust, each Subsequent
Receivable will be secured by an enforceable first priority security
interest in the Financed Vehicle in favor of the Trust as secured
party, which security interest is prior to all other liens upon and
security interests in such Financed Vehicle which now exist or may
hereafter arise or be created (except, as to priority, for any lien
for taxes, labor or materials affecting a Financed Vehicle arising
subsequent to the Subsequent Transfer Date).
(15) Subsequent Receivables in Force. No Subsequent Receivable
has been satisfied, subordinated or rescinded, nor has any Financed
Vehicle been released from the lien granted by the related Subsequent
Receivable in whole or in part. No provisions of any Subsequent
Receivable have been waived, altered or modified in any respect since
its origination, except by instruments or documents identified in the
related Legal File on the Subsequent Transfer Date. No Subsequent
Receivable has been modified as a result of application of the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
(16) No Waiver. No provision of a Subsequent Receivable has been
waived.
(17) No Amendments. No Subsequent Receivable has been amended
except to the extent reflected in the related Legal File on the
Subsequent Transfer Date.
N-7
(18) No Defenses. As of the Subsequent Transfer Date, no right of
rescission, setoff, counterclaim or defense exists or has been
asserted or threatened with respect to any Subsequent Receivable. The
operation of the terms of any Subsequent Receivable or the exercise of
any right thereunder will not render such Subsequent Receivable
unenforceable in whole or in part or subject to any such right of
rescission, setoff, counterclaim, or defense.
(19) No Liens. As of the Subsequent Transfer Date, there are no
liens or claims existing or which have been filed for work, labor,
storage, materials or taxes relating to a Financed Vehicle that shall
be liens prior to, or equal or coordinate with, the security interest
in the Financed Vehicle granted by the Subsequent Receivable.
(20) No Default; Repossession. Except for payment delinquencies
continuing for a period of not more than twenty-nine days (calculated
on the basis of a 360-day year of twelve 30-day months), as of the
Subsequent Cutoff Date, no default, breach, violation or event
permitting acceleration under the terms of any Subsequent Receivable
has occurred and not been cured; and no continuing condition that with
notice or the lapse of time would constitute a default, breach,
violation, or event permitting acceleration under the terms of any
Subsequent Receivable has arisen; and LBAC shall not waive and has not
waived any of the foregoing; and no Financed Vehicle shall have been
repossessed as of the Subsequent Cutoff Date.
(21) Insurance; Other. (A) Each Obligor has obtained insurance
covering the Financed Vehicle as of the execution of the Subsequent
Receivable insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by
comprehensive and collision coverage which is in an amount at least
equal to the lesser of (x) its maximum insurable value or (y) the
principal amount due from the Obligor under the related Subsequent
Receivable and names LBAC and its successors and assigns as loss payee
and each Subsequent Receivable requires the Obligor to obtain and
maintain such insurance naming LBAC and its successors and assigns as
an additional insured, (B) each Subsequent Receivable that finances
the cost of premiums for credit life and credit accident or health
insurance is covered by an insurance policy and certificate of
insurance naming LBAC as policyholder (creditor) under each such
insurance policy and certificate of insurance and (C) as to each
Subsequent Receivable that finances the cost of an extended service
contract, the respective Financed Vehicle which secures the Subsequent
Receivable is covered by an extended service contract.
(22) Title. It is the intention of LBAC that the transfer and
assignment of the Subsequent Receivables contemplated in the Purchase
Agreement constitute a sale of the Subsequent Receivables from LBAC to
the Depositor and that the beneficial interest in and title to such
Subsequent Receivables not be part of the debtor's estate in the event
of the filing of a bankruptcy petition by or against LBAC under any
bankruptcy law. No Subsequent Receivable has been sold, transferred,
assigned, or pledged by LBAC to any Person other than the Depositor or
by the Depositor to any Person other than the Trustee except with
N-8
respect to any such pledge that has been released on or prior to the
Subsequent Transfer Date. Immediately prior to the transfer and
assignment of the Subsequent Receivables contemplated in the Purchase
Agreement, LBAC had good and marketable title to each Subsequent
Receivable, and was the sole owner thereof, free and clear of all
Liens, claims, encumbrances, security interests, and rights of others
and, immediately upon the transfer thereof, the Depositor shall have
good and marketable title to each such Subsequent Receivable, and will
be the sole owner thereof, free and clear of all Liens, encumbrances,
security interests, and rights of others, and each such transfer has
been perfected under the UCC. Immediately prior to the transfer and
assignment by the Depositor to the Trust contemplated by this
Agreement and the Pooling and Servicing Agreement, the Depositor shall
have good and marketable title to each Subsequent Receivable, and
shall be the sole owner thereof, free and clear of all Liens, claims,
encumbrances, security interests, and rights of others and,
immediately upon the transfer thereof pursuant to this Agreement and
the Pooling and Servicing Agreement, the Trust shall have good and
marketable title to each such Subsequent Receivable, and will be the
sole owner thereof, free and clear of all Liens, encumbrances,
security interests and rights of others, and each such transfer has
been perfected under the UCC. Without limiting the generality of the
foregoing, no Dealer has any right, title or interest in respect of
any Subsequent Receivable. Neither the Depositor nor LBAC has taken
any action to convey any right to any Person that would result in such
Person having a right to payments received under any insurance
policies related to the Subsequent Receivables or the Financed
Vehicles or the related Dealer Agreements or to payments due under
such Subsequent Receivables.
(23) Lawful Assignment. No Subsequent Receivable has been
originated in, or is subject to the laws of, any jurisdiction under
which the sale, transfer, and assignment of such Subsequent Receivable
under the Purchase Agreement, this Agreement or the Pooling and
Servicing Agreement shall be unlawful, void, or voidable. LBAC has not
entered into any agreement with any account debtor that prohibits,
restricts or conditions the assignment of any portion of the
Subsequent Receivables.
(24) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Trustee a first priority perfected ownership interest in the
Subsequent Receivables and the proceeds thereof and the other
Transferred Property (other than the Financed Vehicles) have been
made.
(25) Chattel Paper. Each Subsequent Receivable constitutes
"chattel paper" under the UCC.
(26) Valid and Binding Obligation of Obligor. Each Subsequent
Receivable is the legal, valid and binding obligation of the Obligor
thereunder and is enforceable in accordance with its terms, except
only as such enforcement may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally,
and all parties to such contract had full legal capacity
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to execute and deliver such contract and all other documents related
thereto and to grant the security interest purported to be granted
thereby.
(27) Tax Liens. As of the Subsequent Transfer Date, there is no
lien against the related Financed Vehicle for delinquent taxes.
(28) Title Documents. (A) If the Subsequent Receivable was
originated in a State in which notation of security interest on the
title document of the related Financed Vehicle is required or
permitted to perfect such security interest, the title document for
such Subsequent Receivable shows, or if a new or replacement title
document is being applied for with respect to such Financed Vehicle,
the title document will be received within 180 days following the
Subsequent Transfer Date and will show, LBAC named as the original
secured party under the related Subsequent Receivable as the holder of
a first priority security interest in such Financed Vehicle and (B) if
the Subsequent Receivable was originated in a State in which the
filing of a financing statement under the UCC is required to perfect a
security interest in motor vehicles, such filings or recordings have
been duly made and show LBAC named as the original secured party under
the related Subsequent Receivable, and in either case, the Trustee has
the same rights as such secured party has or would have (if such
secured party were still the owner of the Subsequent Receivable)
against all parties claiming an interest in such Financed Vehicle.
With respect to each Subsequent Receivable for which the relevant
Dealer is temporarily unable to furnish either an original Lien
Certificate or satisfactory evidence that the appropriate lien has
been recorded on the related certificate of title or documentation has
been submitted to the appropriate state motor vehicle authority to
record such lien on such certificate of title, LBAC has received the
related Dealer Title Guaranty.
(29) Casualty. As of the Subsequent Cutoff Date, no Financed
Vehicle related to a Subsequent Receivable has suffered a Casualty.
(30) Obligation to Dealers or Others. The Depositor and its
assignees will assume no obligation to Dealers or other originators or
holders of the Subsequent Receivables (including, but not limited to
under dealer reserves) as a result of its purchase of the Subsequent
Receivables.
(31) Full Amount Financed Advanced. The full Amount Financed of
each Subsequent Receivable has been advanced to or on behalf of each
Obligor, and there are no requirements for future advances thereunder.
The Obligor with respect to the Subsequent Receivable does not have
any option under the Subsequent Receivable to borrow from any person
additional funds secured by the Financed Vehicle.
(32) No Impairment. Neither LBAC nor the Depositor has done
anything to convey any right to any Person that would result in such
Person having a right to payments due under the Subsequent Receivables
or otherwise to impair the rights of the Trust, the Certificateholders
[or the Certificate Insurer] in any Subsequent Receivable or the
proceeds thereof.
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(33) Subsequent Receivables Not Assumable. No Subsequent
Receivable is assumable by another Person in a manner which would
release the Obligor thereof from such Obligor's obligations to the
Depositor or LBAC with respect to such Subsequent Receivable.
(34) Servicing. The servicing of each Subsequent Receivable and
the collection practices relating thereto have been lawful and in
accordance with the standards set forth in the Pooling and Servicing
Agreement; other than LBAC and any Back-up Servicer arrangement that
has been entered into, no other person has the right to service the
Subsequent Receivable.
(35) Illinois Subsequent Receivables. (a) LBAC does not own a
substantial interest in the business of a Dealer within the meaning of
Illinois Sales Finance Agency Act Rules and Regulations, Section
160.230(l) and (b) with respect to each Subsequent Receivable
originated in the State of Illinois, (i) the printed or typed portion
of the related Form of Subsequent Receivable complies with the
requirements of 815 ILCS 375/3(b) and (ii) LBAC has not, and for so
long as such Subsequent Receivable is outstanding shall not, place or
cause to be placed on the related Financed Vehicle any collateral
protection insurance in violation of 815 ILCS 180/10.
(36) California Subsequent Receivables. Each Subsequent
Receivable originated in the State of California has been, and at all
times during the term of the Pooling and Servicing Agreement will be,
serviced by the Servicer in compliance with Cal. Civil Codess.2981, et
seq.
Section 5. Conditions Precedent. The obligation of the Trust to acquire
the Subsequent Receivables hereunder is subject to the satisfaction, on or prior
to the Subsequent Transfer Date, of the following conditions precedent:
(a) Representations and Warranties. (i) Each of the
representations and warranties made by LBAC in Section 3.2 of the
Purchase Agreement and Section 4 of this Agreement and (ii) each of
the representations and warranties made by the Depositor in Section
6.1 of the Pooling and Servicing Agreement and Section 3.1 of the
Purchase Agreement, shall be true and correct as of the date of this
Agreement and as of the Subsequent Transfer Date.
(b) Pooling and Servicing Agreement Conditions. Each of the
conditions set forth in Section 2.2(c) to the Pooling and Servicing
Agreement shall have been satisfied.
(c) Purchase Agreement Conditions. LBAC shall have complied with
the requirements of Section 4.1 of the Purchase Agreement and shall
have delivered all documents required to be delivered pursuant to
Section 5.5 of the Purchase Agreement.
(d) Security Interest Perfection. In connection with the
conveyance contemplated by this Agreement, the Depositor agrees to
record and file, at its own expense, a financing statement with
respect to the related Subsequent
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Receivables now existing and hereafter created for the sale of chattel
paper (as defined in the UCC as in effect in the State of New Jersey)
meeting the requirements of applicable state law in such manner as is
sufficient to perfect the sale and assignment of such Subsequent
Receivables to the Trust, and the proceeds thereof (and any
continuation statements as are required by applicable state law), and
to deliver a file-stamped copy of each such financing statement (or
continuation statement) or other evidence of such filings (which may,
for purposes of this Section, consist of telephone confirmation of
such filing with the file stamped copy of each such filing to be
provided to the Trustee in due course), as soon as is practicable
after the Depositor's receipt thereof.
In connection with such conveyance, the Depositor further
agrees, at its own expense, on or prior to the Subsequent Transfer Date
(i) to annotate and indicate in its computer files that the Subsequent
Receivables have been transferred to the Trust pursuant to the Pooling
and Servicing Agreement and this Agreement and (ii) to deliver to the
Trustee a computer file printed or microfiche list containing a true
and complete list of all such Subsequent Receivables, identified by
account number and by the Principal Balance of each Subsequent
Receivable as of the Subsequent Cutoff Date.
(e) Additional Information. The Depositor shall have delivered or
caused to be delivered to the Trustee on behalf of the Trust [and the
Certificate Insurer] such information as was reasonably requested by
the Trustee on behalf of the Trust [or the Certificate Insurer] to
satisfy itself as to (i) the accuracy of the representations and
warranties set forth in Section 4 of this Agreement and Section 6.1 of
the Pooling and Servicing Agreement and (ii) the satisfaction of the
conditions set forth in this Section.
(f) Deposits to Accounts. On or prior to the Subsequent Transfer
Date, the Depositor shall deposit or cause to be deposited:
(1) [the Subsequent Spread Account Deposit into the Spread
Account; and]
(2) $__________, which represents all monies received
pursuant to Section 3(1)(A) and (B), into the Collection Account.
Section 6. Ratification of Agreement. As supplemented by this
Agreement, the Pooling and Servicing Agreement is in all respects ratified and
confirmed and the Pooling and Servicing Agreement as so supplemented by this
Agreement shall be read, taken and construed as one and the same instrument.
Section 7. Third Party Beneficiaries. Except as otherwise specifically
provided herein with respect to Certificateholders, the parties to this
Agreement hereby manifest their intent that no third party [other than the
Certificate Insurer] shall be deemed a third party beneficiary of this
Agreement, and specifically that the Obligors are not third party beneficiaries
of this Agreement. [The Certificate Insurer and its successors and assigns shall
be a third-party beneficiary to the provisions of this Agreement, and shall be
entitled to rely upon and directly enforce the provisions of this Agreement so
long as no Insurer
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Default shall have occurred and be continuing. Except as expressly stated
otherwise herein or in the Basic Documents, any right of the Certificate Insurer
to direct, appoint, consent to, approve of, or take any action under this
Agreement, shall be a right exercised by the Certificate Insurer in its sole and
absolute discretion. The Certificate Insurer may disclaim any of its rights and
powers under this Agreement (but not its duties and obligations under the
Policy) upon delivery of a written notice to the Trustee.]
Section 8. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (EXCEPT
WITH REGARD TO THE UCC).
Section 9. Amendments. This Agreement may be amended from time to time
by a written amendment duly executed and delivered by the Trust, LBAC, the
Depositor and the Trustee [with the prior written consent of the Certificate
Insurer].
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IN WITNESS WHEREOF, the Trustee, LBAC and the Depositor have caused
this Agreement to be duly executed and delivered by their respective duly
authorized officers as of the day and the year first above written.
LONG BEACH ACCEPTANCE CORP.
By: _______________________________
Name:
Title:
LONG BEACH ACCEPTANCE
RECEIVABLES CORP.
By: _______________________________
Name:
Title:
[NAME OF TRUSTEE], as Trustee
By: _______________________________
Name:
Title:
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Schedule A
Schedule of Receivables
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Schedule B
Location of Receivable Files
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Location of Legal Files
[Custodian Address]
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Schedule C
Delivery Requirements
The Trustee shall have sole control over each such investment and the
income thereon, and any certificate or other instrument evidencing any such
investment, if any shall, except for clearing corporation securities, be
delivered directly to the Trustee or its agent, together with each document of
transfer, if any, necessary to transfer title to such investment to the Trustee
in a manner that complies with this Agreement and the requirements of the
definition of Eligible Investments.
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